Volume 40 (2006) / Issue 4
Some production processes, such as organic or animal welfare friendly systems, can become embedded as credence characteristics in consumer goods. Market mechanisms, involving voluntary labelling schemes and accreditation systems might be developed to ensure the delivery of many of the credence characteristics sought out by consumers. However, when credence characteristics capture ethical concerns then voluntary labelling may be insufficient, as it is the production as well as the consumption of the product that causes offence. Thus a ban on unacceptable production methods may emerge as the political response. Any attempt to extend the ban to imported products, in the form of mandatory labelling, or a ban on imports not produced in the manner laid down in the home jurisdiction, will potentially fall foul of WTO rules. GATT’s Article XX does provide for some general public policy exceptions, but animal welfare is not one, and there is a strong presumption against the recognition of process methods for differentiating between goods. It is argued that there are circumstances in which mandatory labelling of imports could be justified, and these are spelt out. Both producers, and lawmakers, need to respect consumer requirements. A producer-focused unwillingness to disentangle “like products”, because of undue deference to the theory of comparative advantage, will not enhance the WTO’s authority.
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