Mandatory and Discretionary Legislation: The Continued Relevance of the Distinction under the WTO

There is a considerable body of GATT-WTO dispute settlement practice which stands for the principle that legislation mandating a violation of WTO obligations can be WTO-incompatible, whereas legislation that merely gives the executive a discretion to violate those obligations cannot, by itself, be WTO-incompatible. However, in US -- Section 301 the Panel in effect held that under certain circumstances discretionary legislation can violate WTO obligations. As a result, considering the significance of the distinction between mandatory and discretionary legislation in the WTO context may be a useful exercise. This paper examines the GATT-WTO case law on mandatory-discretionary legislation and explains why discretionary legislation may sometimes be WTO-inconsistent. It then discusses the implications of subjecting at least some discretionary laws to WTO discipline. However, requiring WTO-consistency of all discretionary laws may not be realistic. Accordingly, the paper also explores ways in which panels may, where appropriate, defer to discretionary legislation of Members. It concludes by noting that the distinction will continue to be relevant under the WTO given that legislation mandating a WTO-inconsistency will undoubtedly be regarded as WTO-incompatible. However, the WTO-compatibility of discretionary legislation will have to be addressed by the panels on a case-by-case basis. Copyright Oxford University Press 2002, Oxford University Press.