The Chapeau: Stringent Threshold or Good Faith Requirement

Abstract

The international trading order has lately come under increased pressure: the Comprehensive Economic and Trade Agreement (CETA) struggles to pass ratification; the Regional Comprehensive Economic Partnership (RCEP) negotiations are stalled; and the Trans- Pacific Partnership (TPP) has been downsized. The overarching issue is to find the right balance between trade liberalization, on the one hand, and non-trade values, on the other hand. Critics of the current system point out that the law as it stands emphasizes excessive trade liberalization to the detriment of the regulatory autonomy of national lawmakers. The author submits that the key clause affecting the entire system is the introductory clause of the general exceptions: the chapeau. This clause also features in free trade agreements (FTAs) and international investment agreements, as it is common practice to draw on the language of the WTO Agreement. The interpretative conflict pivots around two extremes: On one end of the spectrum, the chapeau is read as a stringent threshold requirement, thus reducing the policy space of states to regulate public welfare matters. On the other end, the chapeau reaffirms the tenet of good faith, which guides the performance of every treaty in any event. The author argues that the meaning of the chapeau should be clarified by negotiators in future FTAs, such as RCEP, with a view to curtailing its restrictive clout while maintaining its potential to promote good governance, notably administrative due process, and advances a concrete proposal to this effect.