A. Introduction
Decision-making processes leading to governmental measures affecting trade involve various socio-cognitive processes and biases. The legal prohibition of discrimination against imported products constitutes a fundamental principle of World Trade Organization (WTO) law, and notwithstanding multiple prohibitions against employing national measures to discriminate against imported goods—“national treatment” obligationsFootnote 1—in WTO law,Footnote 2 discrimination against foreign products is widespread.Footnote 3 International trade law literature generally overlooks or underestimates the socio-cognitive processes and biases that often underpin discrimination against imported products. This study is aimed at exploring the potential contribution of social cognitive studies—primarily cognitive psychology, social psychology, and cognitive sociology—to international trade literature concerning the “national treatment” obligation. Social cognitive studies constitute a valuable tool to gain better understanding of pervasive trade discrimination and can generate insights regarding certain legal strategies to cope with discrimination against foreign products.Footnote 4 Discrimination against imported goods also involves rational and political factors, and socio-cognitive analysis of this multifaceted phenomenon is not a substitute for other modes of analysis.
One of the most contested issues regarding GATT Article III relates to the role of regulators’ intent in establishing a breach of the national treatment obligation. It is common to distinguish between objective intention manifested in the regulatory measure itself (revealed, for example, from the design and the structure of a measure) and subjective intention, discerned from a variety of sources, such as regulators’ statements.Footnote 5 The current approach undertaken by the WTO Appellate Body is characterized by adopting the objective test for regulators’ intentions and a reluctance to take into account regulators’ subjective intentions and ingroup favoritism norms.Footnote 6 This approach can be explained by adjudicators’ concerns regarding the difficulty of engaging with elusive subjective factors, and this inclination is particularly understandable in a community of experts marked by rational economic thinking. In contrast to the approach adopted by the WTO’s Appellate Body, this contribution suggests that WTO tribunals openly and seriously consider regulators’ intentions manifested in both “objective” evidence (revealed from the regulatory measure itself) and “subjective” evidence (revealed from a broad range of additional items of evidence). Thus, once presented with credible evidence, it is advisable that WTO adjudicators assign adequate probative weight to regulators’ intentions manifested in both the regulatory measure itself and the surrounding circumstances, as well as to relevant social norms prevailing in the particular key role regulator social environment. As elaborated below, assigning a probative weight to regulators’ subjective intentions and relevant norms is justified by the significant influence of intentions, related biases and norms on the prospects of discriminatory behavior. The significance of regulators’ intentions is not limited to objective intentions revealed in the regulatory measure itself but rather applies also to subjective intentions discerned from a variety of other types of evidence. Ascertaining regulators’ subjective intentions and favoritism norms presents WTO tribunals with some difficulties, but tribunals in other fields cope with similar challenges.
The following discussion on three principal types of regulators’Footnote 7 mindsets highlights regulators’ intentions, their susceptibility to influence by certain cognitive biases, and ingroup favoritism norms. Mindful regulators deliberately intend to restrict internal sale of imported goods through discriminatory measures; they are aware that their intention is discriminatory, but are often unaware that this motivation engages some cognitive biases tending to further exacerbate discrimination. Mindless regulators do not aim to discriminate against imported goods, and the disparate impacts of their regulations are relegated to the background. Such regulators are commonly influenced by sociocultural factors, like ingroup favoritism norms, and related cognitive biases. Bias-resisting regulators intend to grant equal treatment to domestic and imported products and resist ingroup biases; while they consciously aim at applying equal regulatory treatment, their decision-making process often involves some less conscious elements which are more vulnerable to socio-mental biases. The discussion on these three types of regulators’ mindsets highlights some features of discrimination against foreign goods and is accompanied by certain recommendations for the WTO tribunals.
The contribution is focused on GATT Article III which embodies the central legal provision regarding “national treatment”, and Part B introduces the central elements of this Article. Part C briefly outlines some key insights gained from social cognitive and sociological literature relating to human discrimination. Following a discussion on close links between ingroup favoritism and discriminatory tendencies against imported products, Part D addresses three principal mindsets of key role government officials engaged in shaping national regulations applied to domestic and imported goods—mindful, mindless, and bias-resisting regulators. The discussion on each mindset highlights some aspects of discrimination against imported goods and suggests a legal strategy to cope with such discrimination. Part E briefly addresses some practical difficulties relating to detecting regulators’ subjective intentions and biases that are often associated with “mind-reading”—attempts to detect other people’s mental state. Part F concludes.
B. The National Treatment Obligation in GATT Law
GATT Article III embodies the national treatment obligation that applies to internal governmental measures, and their scrutiny by GATT/WTO tribunals has generated concerns regarding unjustified intrusion into states’ legitimate regulatory space.Footnote 8 Thus, it is unsurprising that GATT Article III is one of the most contentious provisions of the GATT. The case-law interpreting the elements of Article III law is not always clearFootnote 9 and some of its components are unsettled. Article III includes a general statement of the non-discrimination obligation, Article III:1, and two main operative obligations: Article III:2 prohibits tax discrimination and Article III:4 bans using non-tax regulatory measures discriminating against imported products. This section is not intended to provide a comprehensive review of GATT/WTO jurisprudence in this complex field but rather to succinctly expose the main legal provisions and expand on the role of regulators’ intent.
GATT Article III:1 lays down the general non-discrimination principle informing the remaining provisions of Article III.Footnote 10 The WTO Appellate Body clarified that Article III mandates WTO members to provide equality of competitive conditions for imported and locally manufactured products.Footnote 11 Actual trade volumes are not protected by Article III. The provision applies to both actual and potential discrimination, direct and indirect discrimination, and formally even-handed but de facto discriminatory measures.Footnote 12 Article III:1 provides that internal taxes and regulations affecting internal sale should not be applied to imported or domestic products “so as to afford protection to domestic production”; this phrase involves the contested question regarding regulatory intent and it is discussed below with regard to tax measures as well as non-tax regulatory measures.
GATT Article III:2 prohibits discrimination against imported goods through the employment of tax measures and it contains two separate sentences: The first sentence bans tax discrimination between like products, and the second sentence prohibits tax discrimination between directly competitive or substitutable goods. The first sentence requires the examination of three questions: (i) Whether the particular measure is an internal tax or other charge applied to products; (ii) whether the imported and domestic products are “like” products; and (iii) whether imported goods are taxed in excess of domestic products.Footnote 13 The first element concerns “internal tax or other charges applied to products,” and the second component focuses on “like” products. “Likeness”Footnote 14 is determined according to the product’s end-uses in a given market, consumers’ tastes and habits, as well as the products’ properties, nature, and quality.Footnote 15
The role of intent of regulators was addressed in some decisions concerning the “aims and effects” doctrine, prominently in the context of determining “likeness” under the first sentence of Article III:2.Footnote 16 In the early 1990s, two GATT panels developed the approach under which “likeness” is found if the aim and effect of the particular measure were to protect the local products.Footnote 17 The “aims and effects” test was later rejected in the Panel Report in Japan – Alcoholic Beverages II Footnote 18 and the Appellate Body implicitly confirmed this conclusion.Footnote 19 Though the “aims and effects”Footnote 20 doctrine was formally rejected, some well-known experts observe that “it would seem that its demise has been less complete that one would think when reading the pertinent Appellate Body Report.”Footnote 21
The third element is related to the question of whether the imported goods are taxed in excess of domestic products. The prohibition of discriminatory taxation is not conditioned upon the effects of the particular measure on trade flows; it rather protects expectations of equal competitive relationship.Footnote 22
The second sentence of Article III:2 prohibits the imposition of internal taxation on imported and domestic measures in a manner contrary to the principles set out in Article III:1. The interpretative note to this sentence clarifies that the obligation is breached in cases where competition is involved between the taxed product and a “directly competitive or substitutable product,” and the two products are not similarly taxed. Thus, to establish a violation of this provision, it is necessary to show that (i) the particular measure is an internal tax or charge applied to products; (ii) the imported and domestic goods are directly competitive or substitutable; (iii) the products are dissimilarly taxed; and (iv) that the dissimilar taxation is applied “so as to afford protection to domestic production.”Footnote 23
The first element of “internal tax or charge” is discussed above in the context of the first sentence of Article III:2.Footnote 24 The second element of “directly competitive or substitutable” refers to a broader concept than “like” products established under the first sentence of Article III:2.Footnote 25 Products are considered “directly competitive or substitutable” when they are interchangeable or when they offer alternative ways of satisfying a particular need or taste of customers.Footnote 26 The third element concerns “dissimilar” taxation and it focuses on the disparate effect of the tax measures on imported products, compared to domestic ones.Footnote 27
The fourth element of the second sentence of Article III:2 requires establishing that the dissimilar taxation is applied “so as to afford protection to domestic products.”Footnote 28 This requirement brings to the fore the issue of regulatory intent underlying the particular tax measure. The WTO Appellate Body ruled that in examining the element of “so as to afford protection,” it is not necessary to consider the subjective intent of regulators or legislators.Footnote 29 Tribunals should rather apply an objective test of regulatory intention and examine the purpose of the legislature to the extent that it is given objective expression in the legislation itself. The Appellate Body stated in the Japan – Alcoholic Beverages case that: “Although it is true that the aim of a measure may not be easily ascertained, nevertheless its protective application can most often be discerned from the design, the architecture, and the revealing structure of a measure.”Footnote 30 Notwithstanding this statement, some experts noted that in certain cases, the Appellate Body made apparent reference to subjective intent considerations,Footnote 31 and that it is likely that some tribunals would take into account, implicitly or explicitly, some evidence regarding subjective intentions.Footnote 32
GATT Article III:4 concerns non-tax regulatory measures and to establish a violation of this provision, three elements must be satisfied: (i) The imported and domestic products are “like products”; (ii) the challenged regulatory measure is a law or regulation affecting the products’ internal sale, transportation or use; and (iii) the imported products are accorded “less favorable” treatment than that accorded to like domestic products.Footnote 33 The first element concerns “likeness,” and the determination of “like products” focuses on the extent of competitive relationships between the imported and domestic products.Footnote 34 The second element regarding “law or regulation affecting internal sale, transportation or use” applies to all governmental measures that may adversely modify competition between imported and domestic goods.Footnote 35 The third element refers to “treatment less favorable” and it requires effective equality of opportunities for imported products to compete with like domestic goods.Footnote 36 If the particular governmental measure has a detrimental effect on the conditions of competition (and not necessarily on actual trade effects) that detrimental impact will amount to a less favorable treatment.Footnote 37
Though Article III:4 does not explicitly refer to the general principles set out in Article III:1, the Appellate Body ruled that Article III:4 should be harmoniously interpreted in light of the principles of Article III:1, including the criterion of “so as to afford protection”Footnote 38 regarding regulatory intent.
The above discussion indicates that the practical role of regulators’ subjective intentions in establishing a breach of Article III has not been finally settled. Though the Appellate Body is generally reluctant to consider regulators’ subjective intentions (which are not revealed in the regulatory measure itself), some experts observed that it is likely that some WTO tribunals will take into account evidence regarding regulators’ subjective intentions, either explicitly or implicitly.Footnote 39
C. Socio-Cognitive Process, Biases, and Discrimination
Discrimination is widespread in daily life and some cognitive mechanisms (and biases) feed and reinforce discriminatory behavior.Footnote 40 These mental processes are often infused with sociocultural factors, such as norms or socialization.Footnote 41 Numerous social cognitive studies have examined diverse processes and biases involved in discrimination between human beings (for example, racial or gender discrimination)—and while human and trade discrimination should not be equated, a significant part of studies on human discrimination may shed light on trade discrimination. As elaborated below, the link between human and trade discrimination is notable in social psychological literature on intergroup relations. Sociological studies are also pertinent to discrimination between goods manufactured by local and foreign workers, prominently scholarship concerning “loyalty” norms, socialization, and social control mechanisms. This section briefly outlines key insights arising from social cognitive scholarship applicable to discrimination between imported and domestic products.
Human beings strive to belong to social groups and have the tendency to differentiate themselves by group membership.Footnote 42 When individuals categorize themselves as group members, the ingroup becomes integrated with the self and individuals come to recognize the characteristics of the ingroup as representing part of themselves.Footnote 43 The intergroup context emerges when social identities are salient and individuals interact with one another in terms of these social group identities.Footnote 44 As famously shown by Tajfel and his colleagues, the mere perception of belonging to two distinct groups is sufficient to provoke intergroup responses by ingroup members.Footnote 45 Empirical studies have persuasively demonstrated that once people identify with a particular social group, they are likely to provide ingroup members better treatment.Footnote 46 Intergroup discrimination is frequently motivated by positive favoritism toward ingroup members rather than by direct hostility towards outgroup members.Footnote 47 This discriminatory tendency is also discerned in settings characterized by the absence of any history of intergroup contact or conflict.Footnote 48
Generally, ingroup members are believed to be trustworthy, cooperative, peaceful, and honest; whereas outgroup members are often perceived as untrustworthy, competitive, quarrelsome, and dishonest.Footnote 49 Group affiliation also tends to affect the radius of one’s “moral circle”,Footnote 50 suggesting that members of a particular group readily excuse unfair acts if the transgressors belong to the subject’s group.Footnote 51 Intergroup attitudes and behavior can be activated without full awareness, and subliminal primingFootnote 52 (for example, by using certain vocabulary) is often sufficient to elicit typical inter-group responses.Footnote 53 Ingroup favoritism is often facilitated and supported by sociological factors and processes, such as social construction of certain categories (“the way we classify the world”)Footnote 54 and norms guiding a group’s members to provide preferential treatment to ingroups.Footnote 55 Community members are commonly socialized to norms of “loyalty”Footnote 56 and pressured by social control mechanisms to comply with those norms.Footnote 57 As Crandall, Eshleman, and O’Brien conclude in their study on social norms and prejudice against other groups’ members: “Social norms are powerful predictors of attitudes and behaviors, and prejudice and discrimination are no exception.”Footnote 58
D. Three Regulators’ Mindsets and Trade Discrimination
I. Ingroup Favoritism and Trade Discrimination
Government regulators adopt diverse measures affecting the sale and consumption of domestic and imported products, including tax measures, marketing restrictions, or environmental standards. Decision-making processes leading to such regulations commonly involve various socio-cognitive processes, such as categorization, risk perception, and interpreting information concerning the relevant products. In addition, public regulation influencing trade is developed in a social environment and is frequently influenced by sociocultural factors and processes such as norms, identity, and socialization.
Though not all social cognitive studies concerning discrimination between humans are applicable to discrimination between products in international trade, one type of trade discrimination is notably pertinent to these studies – the above-discussed national treatment principle that prohibits granting preferential treatment to locally manufactured goods (to the detriment of imported products). Ample studies have pointed out that ingroup bias affects behavior in the economic realm.Footnote 59 Mansfield and Mutz have shown that perceptions of trade’s impact on the nation as a whole (as well as out-group anxiety) affect attitudes toward trade.Footnote 60 More importantly, empirical studiesFootnote 61 have shown that ingroup favoritism is significantly correlated with attitudes concerning international trade. Mutz and Kim have demonstrated that nationalistic sentiments are related to attitudes towards trade preferences,Footnote 62 and that “compatriotism”Footnote 63 is pertinent to attitudes regarding trade policy. Compatriotism clearly enhances people’s support for trade policy benefiting their own country, comparing to their support of trade policy generating benefits to other trading countries’ citizens.Footnote 64 Favoring local producers because they are fellow citizens appears to be highly socially acceptable.Footnote 65
Government officials entrusted with preparing regulatory measures affecting trade are often senior government workers who have served their country for long periods, identify with their country, and aspire to promote its national economy.Footnote 66 Though it is not possible to precisely attribute a set of intentions and related socio-cognitive features to a group of decision-makers, it is possible to identify three approximate mindsets of regulators playing a key role in shaping regulatory measures affecting trade. The three major mindsets discussed below refer to regulators’ intentions towards discrimination against imported goods and their susceptibility to influence by social factors, such as norms or socialization, and related biases: Mindful, mindless, and bias-resisting regulator. As elaborated below, these intentions and susceptibility to bias are likely to influence regulators’ cognitive processes and their inclination to grant favorable treatment to domestic products.
II. The Mindful Regulator
Mindful regulators are aware of competitive relationships between imported and domestic products and they primarily intend to restrict internal sale of foreign goods through discriminatory measures. Intended cognitive processes and behavior represent one of the highest points on the automatic–controlled scale.Footnote 67 Generally, intentional thought is characterized by having options, a belief regarding capacity to implement the intention, and enacting it by paying attention to implementing the particular intent.Footnote 68 Mindful regulators are also often influenced by ingroup favoritism norms prevailing in their society. The image of mindful regulators is pervasively present in mainstream WTO legal literature and they are commonly perceived as rational players. Mindful regulators present some significant features of rational actorsFootnote 69 but it is well-known in behavioral international law and economics scholarship that they are prone to diverse cognitive biases.Footnote 70
Mindful regulators are aware of their intention to discriminate but are often unaware that this motivation frequently engages some biases tending to exacerbate discrimination against foreign products. Regulatory decision-making commonly involves seeking, collecting, interpreting, assessing the reliability of information regarding the particular products, and weighing alternative regulatory measures. Social cognitive studies reveal that motivations are likely to bias information processing in a way that steers decision-makers towards their desired goals.Footnote 71 “Confirmation bias” refers to a less consciously one-sided case-building process, involving selective acquisition and interpretation of information in ways that support previously established beliefs.Footnote 72 For example, when having to process large amounts of data, people often direct their attention to information confirming the desired conclusion and overlook information undermining their desired conclusion.Footnote 73 Expectancy-confirming information is better remembered than expectancy-disconfirming information.Footnote 74 Thus, mindful regulators are likely to be influenced by confirmation bias, inducing them to seek new evidence that supports their discriminatory goals and interpret available data in a manner which promotes their goal of discriminating against imported products. This bias is expected to further intensify discriminatory results for foreign products—more than planned by such regulators.
Mindful regulators are concerned about threats posed by imported products to local producers. Studies concerning the “availability heuristic” indicate that people tend to judge probabilities based on how quickly particular instances or risks come to their mind.Footnote 75 Being preoccupied with the threat expected from imported goods to domestic manufacturers, mindful regulators are likely to overestimate the probability and adverse effects of import competition, and establish discriminatory measures that harm imported products more than they intend.
The WTO law: An examination of the GATT/WTO jurisprudence indicates that the practical role of regulators’ intent in establishing a violation of Article III has not been finally settled. The element of discriminatory intent resurfaces in each of the three provisions of Article III discussed above; either in the context of the “aims and effects” doctrine relating to tax measures (under the first sentence of Article III:2) or in the context of “so as to afford protection” relating to non-tax measures (under Articles III:1 and III:4).Footnote 76 The WTO Appellate Body rejected the “aims and effects” test adopted by previous tribunals’ decisions concerning the need to examine regulators’ subjective intentions.Footnote 77 Some well-known scholars noted, however, that certain WTO tribunals continue to take into account the intention of regulators discerned from various objective and subjective statements or documents.Footnote 78 More importantly, with regard to the Appellate Body’s rejection of the role of subjective intention under the notion of “so as to afford protection” in the second sentence of Article III:2, Lester, Mercurio and Davies observe:
However, it should be noted in an earlier case, the Appellate Body did make apparent reference to these kinds of subjective intent considerations, although it is not clear what weight they were given. Regardless of whether subjective intent is a formal part of the standard, it is likely that some panels will take such evidence into account nonetheless, either explicitly or implicitly.Footnote 79 [Emphasis added]
The ambivalent approach undertaken by GATT/WTO tribunals regarding regulators’ subjective intent can be explained by the tension between two inconsistent tendencies. On the one hand, WTO tribunals’ rejection of the role of subjective intent reflects disquiet concerning difficulties in discerning regulators’ subjective intentions,Footnote 80 and an aversionFootnote 81 towards psychological factors particularly ingrained in a community of experts characterized by rational economic thinking.Footnote 82 On the other hand, human beings have an inescapable inclination to “mindreading,” trying to detect other people’s mental state, for making sense and navigating the social world.Footnote 83 The inclination to seek understanding of the content of others’ minds develops early in life and is virtually an automatic process.Footnote 84 These two inconsistent tendencies can explain why some WTO tribunals, though formally guided by the Appellate Body’s repudiation of the role of regulators’ subjective intentions, are still likely to seek information regarding regulators’ intentions in diverse sources (and not only in the regulatory measure itself) and be influenced by such evidence.
Cognitive processes often steer behavior,Footnote 85 and a discriminatory intention increases the likelihood of discriminatory behavior.Footnote 86 The significance of regulators’ intentions is not limited to “objective” intentions revealed in the regulatory measure itself, but rather also applies to “subjective” intentions discerned from a variety of other types of evidence.
Thus, where it is credibly proven—either by objective evidence related to the regulatory measure itself or by subjective items of evidence—that such a discriminatory intentionedFootnote 87 regulator played a key role in the decision-making leading to the challenged regulatory measure,Footnote 88 it is desirable to assign it a significant probative weight,Footnote 89 (reinforcing a finding of a breach of Article III). Granting a significant probative weight to evidence regarding key role regulators’ intentionsFootnote 90 manifested in various sources (alongside additional factors)Footnote 91 is justified not only by the above-noted significant impact of intentions on behavior but also by biases related to motivated cognition. As previously mentioned, once decision-makers intend to discriminate against foreign products, that motivation often engenders confirmation and availability biases which are likely to affect the collection, interpretation, and assessment of information in a way that increases the prospects of discrimination. In such cases, it is reasonable to expect that the resulting regulatory measures will impose on imported products a heavier burden than that planned by mindful regulators.
Ingroup favoritism norms prevailing in regulators’ social environment tend to increase the prospect of discriminatory behavior towards foreign products.Footnote 92 Thus, where it is credibly proven that the particular key regulator’s social environment is characterized by significant favoritism norms, it is desirable to grant some probative weight to such norms.Footnote 93
III. The Mindless Regulator
While the image of mindful regulators pervades mainstream WTO legal literature, the real-life of many regulatory environments is arguably more influenced by mindless regulators.Footnote 94 Mindless regulators do not aim to discriminate against imported goods and do not pay significant attention to disparate impacts of their measures on imported/local goods. Rather, they are characterized by intention to promote non-trade interests, like raising government revenues or protecting public health. Such regulators are generally aware of competitive relations between local and foreign producers but this fact is relegated to the background. Mindless regulators do not operate in a social vacuum; they are commonly influenced by sociocultural factors infusing their social groups and are susceptible to certain related cognitive biases.
Empirical studies have persuasively demonstrated that once people identify with a social group, they are likely to grant ingroup members preferential treatment. Ingroup favoritism attitudes and behavior are often elicited or supported by social norms guiding people to be “loyal” to their group.Footnote 95 Even when people did not internalize ingroup favoritism norms during their socialization process, deviating from those norms is expected to encounter social pressure and adverse social reactions.Footnote 96 Public officials involved in the formation of regulatory measures influencing trade are often senior government servants who have served their country for long periods; many of them identify with their nation and have been socialized to promote the public and societal interest.Footnote 97 Thus, mindless regulators do not purposefully intend to discriminate against imported products, but they are likely to be influenced—often below the conscious level—by their social identity, ingroup trade favoritism norms,Footnote 98 and exposed to social pressure to conform with those norms. Decision-making processes undertaken by such regulators are also susceptible to cognitive biases accompanying “loyalty” norms, such as those involved in selecting one of the alternative regulatory measures affecting trade.
Mindless regulators preparing various safety measures—for example, concerning public health—are susceptible to the influence of trust deficit towards outgroup producers. Adopting a relatively stringent or lenient regulatory measure depends, inter alia, on the expected risk from the particular imported good. Risk perceptions of products are associated with trust in manufacturers. Intergroup studies indicate that generally ingroup members are believed to be trustworthy and honest, whereas outgroup members are often perceived as untrustworthy and dishonest.Footnote 99 Lower levels of trust in foreign producersFootnote 100 can influence regulators to apply more stringent (and onerous) requirements to foreign goods, not due to discriminatory intention but rather because of trust deficit and genuine anxieties concerning risk expected from outgroup manufacturers.
WTO law does not bind all member states to adopt the same set of regulatory standards in a particular field, and shaping distinct national measures applicable to domestic and imported products is vulnerable to representative bias. The “representative heuristic” concerns assessment of the probability that some event will occur, and it refers to the tendency to base risk estimation on a generalization of a previously acquired representative category of events.Footnote 101 The assumed probability of an event is judged by how much it resembles one of the alternatives being considered by the person,Footnote 102 sometimes based on partial information or stereotypes.Footnote 103 Mindless regulators’ risk estimations are likely to be influenced by their previous experience and information derived from their own national environment. The assumed probability (relied on the local environment) does not necessarily reflect the realityFootnote 104 of foreign manufacturing. Thus, while those risk assessments relating to foreign products are not intentionally designed to discriminate against imported products, the tendency to rely on estimations relating to the regulator’s local environment may occasionally generate regulatory measures that practically favor the interests of local producers. Such practical preference of the interests of local producers may arise where the risk expected from manufacturing a product abroad is lower than the risk of producing that good in the regulator’s country, but the regulator erroneously assesses the risk expected from production abroad as higher than production in her/his country.
The WTO law: Mindless regulators do not consciously intend to discriminate against imported products, but unconscious cognitive processes rely heavily and uncritically on culturally available norms and schemata. Schemata are knowledge structures and provide default assumptions about their characteristics, relationships, and consequences under conditions of incomplete information.Footnote 105 Thus, due to ingroup favoritism norms, trust deficit in foreign manufacturers, and representative bias, mindless regulators may often establish discriminatory regulatory regimes imposing an unequal burden on foreign goods.
Should the absence of discriminatory intention obstruct a legal finding that the particular discriminatory measures breach GATT Article III? Ample studies show that routine discriminatory processes are performed unconsciously, and discriminatory practices are often unintentional.Footnote 106 These studies support current WTO jurisprudence that does not demand proof of discriminatory intention as a prerequisite for the establishment of a breach of Article III.Footnote 107 It should be emphasized that the justification here for not preconditioning violation of Article III by a proof of intention does not relate to difficulties in proving subjective intent, but rather to the absence of discriminatory intent in numerous cases of granting favorable treatment to national products.
Mindless regulators are often influenced by ingroup favoritism norms and certain biases pertaining to outgroup manufacturers, often below the conscious level; consequently, it is advisable that WTO tribunals consider if significant “loyalty” norms prevail in the social environment in which the particular key role regulators operates. Where it is credibly proven that the questionable regulatory measure has been developed in a social group characterized by such discriminatory norms, it is recommended to assign some probative weight to such norms (reinforcing a finding of a breach of Article III).Footnote 108
IV. The Bias-Resisting Regulator
Bias-resisting regulators intend to grant equal treatment to domestic and imported products and resist ingroup biases. They are interested in promoting certain non-trade objectives (such as environmental protection), are aware of competitive relations between the particular products, and aim to override protectionist tendencies in their social environment.Footnote 109 Of the three categories of regulators discussed here, these ones are the least prone to adopt discriminatory measures. Though bias-resisting regulators consciously aim at applying equal regulatory treatment, decision-making processes often involve less conscious elements, which are more susceptible to discriminatory tendencies. Social cognition scholarship on “automaticity in goal pursuit” points out that conscious goal-pursuit implicates some mental processes outside conscious awareness, such as habitual responses to cues or automatic evaluation.Footnote 110 The latter non-conscious processes are more vulnerable to mental biases and sociocultural schemata.Footnote 111 While engaged in deliberate-intentional thinking, decision-makers may inhibit and override latent tendencies and automatically-activated biases.Footnote 112 Such deliberate processes are mentally effortful, requiring, for example, constant re-evaluation of existing assessments and correcting biases, and thus necessitating more cognitive resources.Footnote 113
Bias-resisting regulators who aim at overcoming discriminatory biases have to continuously review information and assessments provided by other government officials (who are often swayed by conscious or unconscious favoritism inclinations), re-evaluate the latter’s interpretation and reconsider the weight to be accorded to submitted data. Such regulators aim to resist discriminatory norms and associated biases, but the required cognitive resources may not be available to them at critical junctures of the decision-making process. In the latter cases, routinized mental processes that are more susceptible to cognitive and sociocultural biases are likely to influence bias-resisting regulators. Even where such regulators have the necessary mental resources to resist discriminatory biases, non-compliance with ingroup favoritism norms is likely to encounter social pressure exerted by other group members. Where bias-resisting regulators do not have the required cognitive resources or cannot withstand the surrounding social pressure, the above biases associated with mindless discrimination are likely to infuse regulatory decision-making, and lead to certain discriminatory practices against foreign products.
The WTO law: Social cognition literature reveals that cognitive processes (prominently intentions) often steer behavior.Footnote 114 Anti-discriminatory intention increases the likelihood of non-discriminatory behavior and it suggests that where it is credibly proven that bias-resisting regulators played a key role in the decision-making leading to the challenged regulatory measure, it is desirable that WTO tribunals assign to such evidence significant probative weight (bolstering the argument for non-violation of Article III). Since the influence of regulators’ intentions is not limited to objective intentions revealed in the regulatory measure itself, this suggestion applies to non-discriminatory intentions evidenced both in the regulatory measure or in other items of evidence. In parallel to the previous discussion on discriminatory intentions,Footnote 115 assigning significant probative value to credible evidence regarding intention to resist discrimination is justified by the significant effect of intentions on behavior.
The above recommendation does not suggest that regulators’ anti-discriminatory (or discriminatory) intentions should constitute a precondition or determinative factor in assessing the lawfulness/unlawfulness of a particular regulatory measure under GATT Article III. Additional items of evidence relating to the other elements of Article III (such as the adverse effects on conditions of competition) should also be considered by the WTO tribunals. For example, in some cases, notwithstanding key decision-makers’ anti-discriminatory intentions, origin-neutral rules may lead to a violation of Article III. Such a breach of the national treatment obligation may arise from discriminatory implementation of neutral regulatory measures by other government officials, who are influenced by ingroup favoritism norms.
In light of the discussion above on the likely effects of “loyalty” norms on decision-makers, societies characterized by significant ingroup pro-favoritism norms are likely to undermine genuine efforts undertaken by bias-resisting regulators to grant equal treatment; once credibly established, such ingroup favoritism norms call for granting some probative weight to such items of evidence (bolstering the argument for a breach of Article III).Footnote 116
E. Elusive Factors and Mindreading
Regulators’ subjective intentions are not directly accessible to adjudicators and frequently not easily ascertained by tribunals. This difficulty, as well as the rational-economic thinking infusing the WTO legal system,Footnote 117 can explain the general reluctance of WTO tribunals to assign probative weight to evidence regarding regulators’ subjective intentions (that are not manifested in the regulatory measure itself). Notwithstanding the above hurdles, regulators’ subjective intentions, either discriminatory or anti-discriminatory, can occasionally be discerned from various expressions outside the specific regulatory measure. Such subjective intentions are taken into account by some international tribunalsFootnote 118 (including some reports of the WTO tribunals regarding discrimination).Footnote 119 Thus, for example, international tribunals engage in ascertaining whether some elusive legal-mental elements are satisfied in specific circumstances relating to “good faith,” interpretation of treaties according to the intentions of the parties,Footnote 120 or whether a state’s unilateral declaration was made with an intent to commit itself.Footnote 121
Some concerns regarding taking into account regulators’ subjective intentions refer to the fact that decision-making processes leading to governmental measures involve multiple actors, and that these actors occasionally have multiple intentions.Footnote 122 Addressing these concerns, this contribution suggests granting probative weight only to evidence regarding the intentions of regulators who played a key role in the particular decision-making process. And where key regulators have multiple intentions, it is proposed granting probative weight to the intention that dominated the decision-making process. Societal norms concerning ingroup favoritism and related social processes are often subtle, but can be discerned from diverse sources (such as social perceptions indexes or international organizations’ reports). Thus, while addressing such elusive cognitive or social concepts present difficulties for WTO adjudicators, once they are presented with credible evidence proving their presence in a particular case, it is desirable to seriously consider such items of evidence (together with additional items of evidence) and grant them adequate probative weight.
While this contribution suggests that WTO tribunals should seriously consider credible evidence derived from a variety of sources concerning key role regulators’ intentions and biases, adjudicators approaching this task should be aware of certain biases that often accompany attempts to “mindread” other people’s intentions. Attribution of mental states to other people is frequently influenced by the perceiver’s mental dispositionsFootnote 123 and is often inferred from categorizing other humans to a particular group. Where the other person belongs to the perceiver’s social group (or a similar group), the perceiver tends to project a mental state characterizing herself/himself in a similar situation. If the other person does not appear to belong to the perceiver’s group, there is an inclination to assign a mental state corresponding to the perceiver’s pre-existing conception of how people belonging to the other group typically think (“prototyping”).Footnote 124 Thus, WTO adjudicators engaged in discerning the intention of key regulators should be aware of this bias and make efforts to override it by shifting their own thinking to a deliberative mode.
F. Concluding Remarks
Regulators’ subjective intentions, cognitive biases, and social norms supporting ingroup trade favoritism explain (at least partially) why discrimination against foreign products is prevalent in the international trading system. It is not realistic to eradicate trade discrimination against imported goods, and the WTO legal regime aiming to mitigate discrimination during the current period (marked by rising national sentiments) faces an uphill battle. Experience from other fields characterized by widespread discrimination, such as discrimination against women or people belonging to the LGBTQ community, indicates, however, that in the long run, social norms and socio-cognitive patterns can change and discrimination can be lessened.
The preceding sections have highlighted the role of socio-cognitive and social factors in discriminatory behavior against foreign products, primarily key regulators’ intentions, ingroup favoritism norms, and related cognitive biases. Although detecting such subjective factors presents WTO tribunals with certain difficulties, ignoring or underestimating them does not reflect the real life of trade discrimination and is not in line with the human tendency (including among adjudicators) to “mindread” other people. International tribunals in other fields often cope with such tasks, for example, with regard to findings regarding “good faith” or treaty interpretation according to the parties’ intention. Thus, where WTO tribunals are presented with credible evidence regarding key role regulators’ intentions (discerned from both objective and subjective items of evidence”) or relevant norms prevailing in their social groups, it is desirable that they openly and seriously take into account such evidence and grant it appropriate probative weight.
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