Understanding De Jure and De Facto Discrimination in Public Policy Regulations


In the realm of public policy regulations, the distinction between de jure (explicit) and de facto (implicit) discrimination plays a crucial role. While regulations may not overtly differentiate between products based on their origin, they can inadvertently affect the competition between similar products from different origins. This distinction is essential in the context of international trade agreements, where non-discrimination obligations are interpreted to encompass both de jure and de facto discrimination.

Interpretation of Non-Discrimination Obligations:

The World Trade Organization (WTO) law interprets non-discrimination obligations to cover both explicit and implicit discrimination. Case law, particularly regarding Articles I and III of the General Agreement on Tariffs and Trade (GATT), establishes that seemingly neutral measures may still disadvantage products from certain countries. This understanding extends to Article 2.1 of the Agreement on Technical Barriers to Trade (TBT Agreement), ensuring that both de jure and de facto discriminatory measures are subject to scrutiny.

Justification Possibility:

Article XX of the GATT provides a framework for justifying violations of non-discrimination obligations when measures pursue legitimate policy objectives. However, explicit discrimination based on origin (de jure discrimination) poses challenges in meeting the requirements for justification under Article XX. Policies that explicitly target specific countries are less likely to pass the test of non-arbitrary or justifiable discrimination.

Exclusion of De Jure Discrimination:

In its jurisprudence on Article 2.1 of the TBT Agreement, the WTO Appellate Body has excluded cases of de jure discrimination from the flexibility allowed under the provision. This exclusion means that regulations explicitly discriminating against imports are not eligible for the carve-out that applies to cases where the impact stems exclusively from legitimate regulatory distinctions. Thus, if a regulation de jure discriminates against imports, it violates Article 2.1 if it affects the conditions of competition between like products.

Rationale Behind Exclusion:

The Appellate Body’s decision to exclude cases of de jure discrimination reflects its attempt to set clear limits on the flexibility of regulatory measures to bypass the prohibition of discrimination. This caution is necessary because the provision itself does not contain explicit textual limits on the availability of such flexibility. However, concerns may arise regarding whether this exclusion goes beyond the conditions specified in Article XX of the GATT, as it is not explicitly based on any conditions outlined in the agreement.

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