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The measure implemented is still highly prejudiced and does little to spur economic growth or to regulate trade in an open and effective manner, and as such should be easily defeated by a Panel review.
The need to create accountability, transparency, and to eliminate corruption is a compelling interest of governments and business alike, and the WTO and GATT were certainly not meant to help perpetuate corruption. This does not mean that the United States' decision to impose trade restrictions on Eastasia is automatically justifiable either on the facts or the law, however, and in fact it could be difficult to prove that such a ban is actually in keeping with the articles of GATT and their interpretation. Given the nature of Eastasia's recent development and the corruption inherent to such patterns of development, however, this law and its implementation can likely stand.
First and foremost, the law is entirely defensible on its face under sections (a) and (d) of Article XX of GATT, which allows exceptions to the provisions of GATT and the WTO's intervention in cases where the protection of public morals is necessary in the case of section (a), and when it is necessary to secure compliance with other laws including those that attempt to prevent deceptive practices in the case of section (d). Corruption in businesses, governments, and especially in cases involving collusion between government and business entities is unquestionably degrading to public morals, and is perhaps the most degrading allowance there is -- it is through corruption that all other moral degradation is allowed to occur. Corruption by its very nature also tends to be deceitful; even when corruption is obvious, it is almost always denied, and very often relationships and/or acts that show evidence corruption take place/are practiced in a deliberately hidden or deceitful manner.
In order to demonstrate the prima facie validity of the United States' new law under the provisions of GATT and the auspices of the World Trade Organization, the argument only needs to be made that without the general proposed trade restrictions the corruption would be allowed to continue and perhaps even to flourish. This would lead to a further degradation of public morals not only corrupt countries/countries that do not actively fight corruption in their businesses, but also in the United States through its dealings with such countries. This would also perpetuate the deceptive practices of and related to/stemming from corrupted acts, when GATT explicitly allows for the creation of provisions that assure compliance with anti-deception laws (Article XX).
Once the basic validity of the law and its compatibility with the provisions and restrictions laid out in GATT has been established through these arguments, the validity of applying this law to Eastasia becomes a matter of fact rather than of law. That is, the corruption suspected in Eastasia would need to be demonstrated before the law could be fairly applied according to the terms of the GATT contract. As the United States has yet to adopt any strict or codified criteria in this regard, there might actually be some issues in trying to prove that corruption exists in Eastasia. Additionally, the United States would not be able to apply the law selectively and remain in accordance with the provisions or the overall intent of the GATT and WTO contract/organization, which has been demonstrated to have a certain degree of legal standing (Appellate Review of Japan's Liquor Tax). Without an approved chair, a set of guidelines, or codified internal policies, the United States will have a difficult time demonstrating that Eastasia's corruption is of the magnitude and type that the United States is particularly focusing on in all of its trading partners.
Though the general purpose of the GATT conyract and the World Trade Organization is to promote freer trade throughout its member nations, this is not an absolute. There are several provisions that allow the United States to implement trade barriers that help to protect Solario's business, and thus the country's own economy (at least in part). Bringing in CAA might cloud the issue, and it is simple enough to push for protection in a smaller fashion.
Articles II ad III of the GATT contract explicitly allows for any charge to be levied against an import that is equivalent to domestic charges for domestically produced like products. As zenan is of a demonstrably and known higher quality than imported products, the argument could be made that it is not a lie product, and taxes could be imposed on the lower-quality imported products while allowing zenan to remain competitive. Though outright protectionism is frowned upon by the World Trade Organization and all but condemned in Article III of GATT, in this instance consumer protection would also be achieved -- the market is being flooded by cheaper and lower-quality imports, and the dissolution of the United States' manufacturer of zenan, Solario. would be of detriment to domestic and foreign consumers. Differentiating the products and imposing a tax on the lower-quality products coming into the country is entirely within the scope of the GATT contract.
The legacy of Article XX of the GATT contract has been mixed, to say the least. This is not to ay that the Appellate Board has been inconsistent in its application and interpretation of specific sections and provisions within this article, but the different sections have led to very different results. Overall, Article XX still seems to be in formation, though with greater latitude given to internal sales and trade issues. Generally speaking, Article XX has not often been used very effectively to maintain a questionable import or export policy, despite the breadth of issues that its many different sections seem to cover.
In the U.S. shrimp case, even efforts to save endangered species were not seen as a justifiable reason for implementing trade restrictions against specific countries; though there were not strong protectionist effects or efforts had by the mandate by the United States that shrimping trawlers take certain measures to protect other marine life, this law was still seen as in conflict with certain principles of the GATT contract, and the Appellate Board recommended that the United States adjust this law to keep it in accordance with GATT. Similar conclusions were reached in the Brazil tyre case and the Japan Liquor Tax case. Both countries received recommendations to adjust their laws for a more appropriate and cohesive keeping with the GATT contract, Brazil for a variety of complex reasons but ultimately coming down to a question of facts to a large degree, and Japan because the liquor tax the country imposed was seen as almost directly protectionist, again flying in the very face of the GATT contract and the principles of the World Trade Organization. In all of these cases, Article XX exceptions were sought to known/acknowledged violations of other articles within the GATT contract, and in all of these cases the Article XX arguments were rejected by the Board.
China met with success, however, earning the right to continue creating and distributing certain types of media through state-controlled channels. This created some unfair practice accusations, but using a public moral argument China was able to maintain its rather protectionist stance. As a more internal manner, it is possible the Appellate Board was less inclined to vigorously pursue potential violations.
WTO. (2007). Brazil -- Measures Affecting imports of Retreaded Tyres. Report of the Appellate Body.
WTO. (2009). China -- Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products. Report of the Appellate Body.
WTO. (2011). General Agreement on Tariffs and Trade. Accessed 17 December 2011. http://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm
WTO. (2011). General Agreement on Trade in Services. Accessed 17 December 2011. http://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm
WTO. (1996). Japan -- Taxes on Alcoholic Beverages. Report f the Appellate Body.[continue]
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