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Article III:4 of the GATT requires the Members of the WTO to accord imported products treatment no less favourable than that accorded to like domestic products. Article 2.1 of the TBT Agreement imposes the same obligation in respect of technical regulations. In a series of cases, the Appellate Body has ruled in essence that imported and domestic products are ‘like products’ within the meaning of Article III:4 of the GATT if they directly compete in the market and that the imported product is accorded ‘less favourable treatment’ within the meaning of that provision if it is accorded less favourable competitive opportunities.Regulations that distinguish between different types of products and accord one of them less favourable treatment are typically adopted precisely because the market does not make the distinction that the regulator considers necessary. Many, if not most, regulations are thus likely to be inconsistent with Article III:4 according to the Appellate Body’s jurisprudence. The ten policy goals listed in Article XX of the GATT do not comprise all legitimate policy goals that Members pursue through measures covered by Article III. There is consequently a range of perfectly legitimate internal regulations that are not applied so as to afford protection but are nevertheless not justifiable under Article XX. This includes all regulations that distinguish between competing products for the purpose of harmonising standards, improving the efficiency of production, reducing transaction costs for consumers or preventing deceptive practices. They distinguish between groups of competing products, treat one group less favourably than the other and serve a purpose not listed in Article XX. The Appellate Body’s market-oriented approach renders all of them inconsistent with Article III:4 and gives Article XX a function that it cannot fulfill.

The Scope of Regulatory Autonomy of WTO Members Under Article III:4 of the GATT: A Critical Analysis of the Jurisprudence of the WTO Appellate Body