Protecting Public Morals in a Digital Era: Revisiting the WTO Rulings in US – Gambling and China – Publications and Audiovisual Products

Abstract

Competing values such as promoting free trade in services or protecting public morality coexist in a perilous balance nowadays. This interaction appears to be exacerbated by the manifold possibilities of supplying services that the digital age brings with it. Technological advances and rapid innovations transform the manner that services are supplied and call for swift reaction by regulatory authorities. Furthermore, electronic communications erode long-standing traditions in regulating various services industries (supply side) and consumer behaviour (consumption side) and sometimes allow for easy circumvention of law. The US – Gambling and China – Audiovisual Products rulings are the first pronouncements of the WTO judiciary on the possible clash between trade expansion, on the one hand, and protection of public morals, on the other. After a critical review of these two important recent rulings on the concept of public morality and its treatment by the WTO judiciary, the paper goes on to discuss the changing scope of regulatory sovereignty regarding the protection of public morality in a digital landscape; the paradigm shift in regulatory approaches that technological advances bring about and the ability of WTO Members to adapt to this new environment; and the role of courts and non-state actors.

Full text

Tilburg Law and Economics Center (TILEC) Law and Economics
Discussion Paper No. 2010-41
~ and ~
Tilburg Law School Legal Studies
Research Paper No. 06/2011
November 25, 2010
Protecting Public Morals in a Digital Era: Revisiting the WTO
Rulings in US – Gambling and China – Publications and
Audiovisual Products
Panagiotis Delimatsis
Tilburg University
World Trade Institute
Tilburg Law School
This paper can be downloaded free of charge from the
Social Science Research Network at:
http://ssrn.com/abstract=1715063

Electronic copy available at: http://ssrn.com/abstract=1715063
TILEC Discussion Paper
TILEC
Protecting public morals in a digital era:
Revisiting the WTO rulings in US –
Gambling and China – Publications and
Audiovisual Products
By Panagiotis Delimatsis
DP 2010-041
ISSN 1572-4042
November 2010
http://ssrn.com/abstract=1715063

Electronic copy available at: http://ssrn.com/abstract=1715063
1
Protecting public morals in a digital era: Revisiting the WTO rulings in US –
Gambling and China – Publications and Audiovisual Products
PANAGIOTIS DELIMATSIS
Abstract
Competing values such as promoting free trade in services or protecting public morality
coexist in a perilous balance nowadays. This interaction appears to be exacerbated by the
manifold possibilities of supplying services that the digital age brings with it. Technological
advances and rapid innovations transform the manner that services are supplied and call for
swift reaction by regulatory authorities. Furthermore, electronic communications erode long-
standing traditions in regulating various services industries (supply side) and consumer
behaviour (consumption side) and sometimes allow for easy circumvention of law. The US –
Gambling and China – Audiovisual Products rulings are the first pronouncements of the
WTO judiciary on the possible clash between trade expansion, on the one hand, and
protection of public morals, on the other. After a critical review of these two important recent
rulings on the concept of public morality and its treatment by the WTO judiciary, the paper
goes on to discuss the changing scope of regulatory sovereignty regarding the protection of
public morality in a digital landscape; the paradigm shift in regulatory approaches that
technological advances bring about and the ability of WTO Members to adapt to this new
environment; and the role of courts and non-state actors.
Key words: World Trade Organization; public morals; filtering; cyberspace and human
rights; digital age; US - Gambling; China - Audiovisual Products; necessity test; general
exceptions
JEL classification: F13; K33; L83; L86; O38
Assistant Professor of Law and Tilburg Law and Economics Center (TILEC), Tilburg University, the
Netherlands; and Senior Research Fellow, World Trade Institute, Berne, Switzerland. My thanks go to Hans
Lindahl and Mireille Hildebrandt and the World Trade Forum 2010 participants for very insightful comments.
Contact: p.delimatsis@uvt.nl.

Electronic copy available at: http://ssrn.com/abstract=1715063
2Protecting public morals in a digital era
A. Introductory Remarks
Competing values such as promoting free trade or protecting public morality coexist in a
perilous balance nowadays.1The fact that the WTO Agreement is a balancing act in any event
leaves the question as to where to draw the dividing line by default unanswered. This
interaction between different values, ‘in a position of opposition’,2
Morals and its regulation has been the subject of philosophical and sociological discussions
since Aristotle’s work.
appears to be exacerbated
by the fading conventional wisdom about the state monopoly in protecting public morals and
the manifold possibilities of supplying goods and services that the digital age brings with it.
Technological advances and rapid innovations transform the manner that trade occurs and call
for swift reaction by regulatory authorities. Furthermore, electronic communications erode
long-standing traditions in regulating various industries (supply side) and consumer behaviour
(consumption side) and sometimes allow for easy circumvention of law, notably because the
traditional concept of jurisdiction evaporates slowly, as more and more services become
capable of being supplied cross-border through electronic means.
3Scholars, when discussing public morals in the context of the
GATT/WTO, interpreted ‘public morals’ as encompassing measures related to alcohol, sex,
gambling and betting, slavery, animal torture and drugs.4More controversial appears to be the
issue whether this concept can also encompass the protection of human rights and core labour
rights,5especially when such measures do not envisage protecting citizens within a given
country, but rather incorporate ostensibly domestic perceptions and preferences vis-à-vis
immoral practices taking place in another country, which are deemed offensive for the
morality of nationals.6In the area of e-commerce, measures to curb obscenity; prohibit
internet gambling; or regulate online content were considered as potentially coming within
Article XIV GATS.7
At the outset, we share the view that one of public morality’s distinguishing features (which
actually adds to the current interpretive conundrum) is an amorphous,8albeit evolutionary
term9
1M. Wu, ‘Free Trade and the Protection of Public Morals: An Analysis of the Newly Emerging Public Morals
Clause Doctrine’ 33 Yale Journal of International Law (2008) 215.
covering manifold activities taking place in a polity that can be deemed a community,
2P. Eeckhout, ‘The Scales of Trade – Reflections on the Growth and Functions of the WTO Adjudicative
Branch’ 13:1 Journal of International Economic Law (2010) 3, at 21.
3See also A. Hunt, Governing Morals : A Social History of Moral Regulation (Cambridge University Press,
1999). However, ethics is a common theme that philosophers in Ancient Greece deal with, among others
Socrates, Plato, but also Protagoras, one of the leading figures of the sophistic movement.
4S. Charnovitz, ‘The Moral Exception in Trade Policy’ 38 Vanderbilt Journal of International Law (1998) 698,
717; M. Gonzalez, ‘Trade and Morality: Preserving “Public Morals” Without Sacrificing the Global Economy’
39 Vanderbilt Journal of Transnational Law (2006) 939, 967.
5It was suggested that core labour rights could also come under an evolutionary interpretation of Article XX(e)
GATT. See P. van der Bossche, The Law and Policy of the World Trade Organization – Text, Cases and
Materials, 2nd edn (Cambridge University Press, 2008), at 640.
6Such extraterritorial application of the general exceptions aiming at promoting social change abroad seems hard
for Panels to accept, not least because it is susceptible to intepretations that open a dangerous Pandora’s box. In
EC – Tariff Preferences, for instance, the Panel dismissed EU’s argument that its additional tariff preferences
under the Grug Arrangements aimed to protect human health by supporting measures taken by other countries
against the illicit production and trafficking of those substances. The Panel noted that the policy reflected in the
Drug Arrangements was not designed to protect human life or health in the European Communities. Panel
Report, EC – Tariff Preferences, WT/DS246/R, para. 7.210.
7S/C/W/68, para 26; S/C/8, pp. 9-10; and CTS, S/C/W/108.
8Cf. J. Raz, Between Authority and Interpretation (Oxford University Press, 2009), pp. 184-5.
9Indeed, protecting public morality can only be deemed legitimate if legislation is in line with contemporary

3
which nevertheless are not necessarily confined within certain geographical boundaries.10
The US – Gambling and China – Publications and Audiovisual Products rulings are the first
pronouncements of the WTO judiciary on the possible clash between trade expansion, on the
one hand, and protection of public morals, on the other. At the same time, however, they are
two internet-related cases, for all practical purposes: In the US – Gambling, at issue was an
alleged total prohibition of the supply of online gambling and betting services within the US
based on public morals concerns.
In
fact, such activities may be the reason for disputes within a given demos, just as along several
demoi.
11 This was the first case where the WTO judiciary
confirmed the application of GATS rules to e-commerce and electronically supplied
services,12 but also where the scope of the public morals exception under Article XIV(a)
GATS was reviewed. In China – Publications and Audiovisual Products, the WTO judiciary
found a series of measures that China adopted relating to the importation and distribution
(including through electronic means) of various publications and digital products (including
books, newspapers, periodicals, videocassettes, DVDs, sound recordings, and films for
theatrical release) to be violating China’s obligations under its Accession Protocol13 and the
GATT, and China’s commitments under the GATS.14
In a nutshell, that the two most important disputes relating to the GATS since its inception are
raised now and relate to the supply of services electronically (taking advantage of the
universalization of the internet) is no coincidence. This trend should be expected to multiply
in the near future, simply because, back in the early 90s when WTO Members were finalising
their schedules of commitments, internet was viewed as just another services sector rather
than a mode of supply in itself through which virtually all services can be supplied. A cursory
look at the Services Sectoral Classification List (the Harmonised System counterpart for
services)
Again, that was the first case where the
proper meaning of Article XX(a) GATT, the counterpart of Article XIV(a) GATS, was
discussed.
15
Against this backdrop, this paper discusses the impact of the digital age on the protection of
public morals and the changing role of the State, as exemplified by the two aforementioned
WTO verdicts. After a critical review of these two important recent rulings on the concept of
proves as much.
beliefs. Cf C. Sunstein, ‘What Did Lawrence Hold? Of Autonomy, Desuetude, Sexuality, and Marriage’,
Supreme Court Review (2003) 27, 30 (commenting the US Supreme Court decision on Lawrence v. Texas).
10 Cf. Charnovitz, above note 4, pp. 704-5. Having said this, morality can refer to the values of a given person, or
the public morality as enunciated in domestic legislation in written form. See also C. Sunstein,
‘Incommensurability and Kinds of Valuation: Some Applications in Law’ in R. Chang (ed), Incommensurability,
Incomparability, and Practical Reason (Harvard University Press, 1997), p. 234.
11 P. Delimatsis, ‘Don’t Gamble with GATS – The Interaction between Articles VI, XVI, XVII and XVIII GATS
in the Light of the US – Gambling Case’ 40:6 Journal of World Trade (2006) 1059.
12 S. Wunsch-Vincent, ‘The Internet, cross-border trade in services, and the GATS: lessons from US –
Gambling’, 5:3 World Trade Review (2006) 319, at 323.
13 Protocol on the Accession of the People’s Republic of China to the WTO, WT/L/432.
14 It bears mention that China is subject not only to the ordinary obligations enshrined in the WTO agreements,
but also to obligations that derive from its commitments laid down in the its Accession Protocol or in paragraphs
of the Report of the Working Party on the Accession of China to the WTO (China’s Accession Working Party
Report, WT/ACC/CHN/49 of 1 October 2001) that are incorporated into the Accession Protocol. The Accession
Protocol forms integral part of the WTO Agreement. See Appellate Body Report, China – Publications and
Audiovisual Products, WT/DS363/AB/R, para. 133. Also J. Qin, ‘“WTO-Plus” Obligations and their
Implications for the World Trade Organization Legal System: An Appraisal of the China Accession Protocol’
37:3 Journal of World Trade (2003) 483.
15 See GATT, Group of Negotiations on Services, ‘Services Sectoral Classification List’, MTN.GNS/W/120, 10
July 1991.

4Protecting public morals in a digital era
public morality and its treatment by the WTO judiciary, the paper goes on to discuss the
changing scope of regulatory sovereignty regarding the protection of public morality in a
digital landscape, taking into account WTO Members’ increasing discomfort with the new
digital environment which is having a profound impact not only on their trade relations, but
most importantly on human attitude and relationships, culture, traditional societal values,
privacy and security.16
B. Prolegomena on the legal nature of the general exception provision
WTO law seeks to walk the tightrope between different policy goals, typically through a
general exception provision such as Articles XX GATT or XIV GATS. After all, the
existence of such safety valves is one of the reasons that have traditionally led Members to
join the organisation in the first place because they feel that the contract is sufficiently
flexible to accommodate – or, better, lean over – their domestic policy concerns and
legitimate governmental intervention.17
Typically, the WTO general exception provisions – also called – ‘affirmative defences’18 –
enumerate in an exhaustive manner several objectives that are broadly regarded as legitimate.
In other words and put rather crudely, unless a given governmental objective can fit one of the
policy objectives explicitly identified in a general exception provision, a Member cannot
justify an otherwise WTO-inconsistent measure. To outweigh this imbalance, and taking into
account that the list of legitimate objectives was drafted in the late 50s, the WTO judiciary
has arguably interpreted these objectives in a rather expansive (and sometimes evolutionary19)
manner, which goes beyond their ordinary meaning or negotiators’ intent.20
WTO-inconsistent measures for pre-defined purposes are allowed, but they are subject to
certain strict requirements. More specifically, such measures can be maintained if they are
directly germane or ‘necessary’ to achieve a given policy objective of those enumerated in a
general exception provision and their application does not lead to an arbitrary or unjustifiable
discrimination or a disguised trade restriction (so-called requirements of the chapeau). Thus,
the WTO is about the justiciability of means rather than ends.21 Provided that ends are
relatively important, the WTO judiciary has been ready to accept the necessity of certain
measures of highly restrictive nature, ranging from certain modalities and streamlining of
trade flows to total import bans. Cases such as Korea – Beef,EC – Asbestos,US – Shrimp, or
Brazil – Retreaded Tyres are informative in this respect.22
16 Security concerns associated with cyberspace are outside the scope of this paper. It is nevertheless worrisome
that internet traffic is made possible owing to just 13 clusters of ‘potentially vulnerable domain-name servers’.
See The Economist, ‘War in the fifth domain’, 3 July 2010.
17 H. Horn; G. Maggi; and R. W. Staiger, ‘Trade Agreements as Endogenously Incomplete Contracts’, NBER
Working Paper No 12745, December 2006. This is also in accordance with Ruggie’s concept of embedded
liberalism. See A. Lang, ‘Reconstructing Embedded Liberalism: John Gerard Ruggie and Constructivist
Approaches to the Study of the International Trade Regime’ 9:1 Journal of International Economic Law (2006)
87.
18 Appellate Body Report, US – Gasoline, WT/DS2/AB/R, 22-23; Appellate Body Report, US – Wool Shirts and
Blouses, WT/DS33/AB/R, 15-16; Appellate Body Report, EC – Tariff Preferences, WT/DS246/AB/R, para. 88;
Appellate Body Report, US – Gambling, WT/DS285/AB/R, paras 282, 309.
19 That was the case for instance in the US – Shrimp Appellate Body Report, which was in line with the rise of
public consciousness about the environment. Cf A. Lowenfeld, International Economic Law, 2nd edn. (Oxford
University Press, 2008), at 411.
20 Cf Appellate Body Report, US – Shrimp, WT/DS58/AB/R.
21 P. Mavroidis, Trade in Goods (Oxford: Oxford University Press, 2008), pp. 254ff.
22 In EC – Hormones, the Appellate Body reminded that the WTO judicial review is not about de novo review as

5
The WTO judiciary typically applies a two-tier test when the general exception provisions are
invoked. First, it should be determined whether the impugned measure falls under one of the
legitimate, exhaustively listed objectives and thus is provisionally justified. For this, the
measure has to (or be designed to) address the relevant public interest at issue,23 whereas a
sufficient nexus or degree of connection between the measure and the objective pursued is
warranted. This latter element is determined by the wording of the provision, using words
such as ‘necessary’, or ‘relating to’.24 When the measure has to be necessary, the first tier of
the test encompasses the so-called ‘necessity test’.25 It bears mention that the analysis of
necessity has been uniform regardless of whether a measure intends to protect public morals
or order, public health or to secure compliance with a WTO-consistent domestic regulation.
Once the measure is found to be provisionally justified, the second tier of the test needs to be
satisfied and this is the most difficult part of the test.26
While in the GATT years, necessity was interpreted in a rather narrow manner, in the WTO
years the Korea – Beef ruling heralded a more lenient approach in that the Appellate Body
ruled that measures which are not ‘indispensable’ or ‘of absolute necessity’ can still be
regarded as necessary within the meaning of Article XX GATT.27 In such cases, there may be
other alternative measures which are reasonably available to the respondent. For a measure to
qualify as a genuine alternative, it has to achieve the level of protection sought by the
regulating State equally effectively, while generating a lower level of trade-restrictiveness
when compared to the challenged measure.28 The Appellate Body suggested that, in
determining necessity, a ‘weighing and balancing’ process is to take place. Thus, as
confirmed in the China – Publications and Audiovisual Products:29
…an assessment of ‘necessity’ involves ‘weighing and balancing’ a number of distinct
factors relating both to the measure sought to be justified as ‘necessary’ and to
possible alternative measures that may be reasonably available to the responding
Member to achieve its desired objective.
It follows that the Appellate Body has traditionally approached this test as a sequential
process during which several factors are to be weighed and balanced, including the relative
importance of the objective furthered by the impugned measure; the contribution of the
measure to the realisation of the objective; and the trade restrictiveness of the measure
chosen.30
such nor ‘total deference’, but rather the objective assessment of the facts and the applicability of and conformity
with the relevant WTO agreements. Appellate Body Report, EC – Hormones, WT/DS26&48/AB/R, paras 116-
119.
Notably the second factor, the contribution of the measure to the realisation of the
objective, was the subject of the appeals in both Brazil – Retreaded Tyres and China –
Publications and Audiovisual Products. In the first dispute, the Appellate Body suggested that
when the measure ranks among the most trade-restrictive ones in a government’s arsenal such
as an import ban, the measure can be necessary only if it is apt to produce a material
23 Appellate Body Report, Mexico – Taxes on Soft Drinks, WT/DS308/AB/R, para. 72; also Appellate Body
Report, US – Shrimp, para. 116.
24 Appellate Body Report, US – Gambling, para. 292.
25 See P. Delimatsis, ‘Determining the Necessity of Domestic Regulations in Services – The Best is Yet to
Come’ 19:2 European Journal of International Law (2008) 365.
26 Appellate Body Report, US – Gasoline,p. 23.
27 Appellate Body Report, Korea – Beef, WT/DS161&169/AB/R para. 161.
28 Appellate Body Report, Brazil – Retreaded Tyres, WT/DS332/AB/R, para. 156.
29 Appellate Body Report, China – Publications and Audiovisual Products, para. 239.
30 In the most recent report on the topic, the Appellate Body clearly attempts to solidify the precedent as to the
necessity test under the general exception provision. See Appellate Body Report, China – Publications and
Audiovisual Products, para. 242 and footnote 455.

6Protecting public morals in a digital era
contribution to the objective sought.31 In the second dispute, the Appellate Body found that,
when examining this second factor, the panel must always assess the actual contribution made
by the measure to the objective pursued.32 Previously, in the Mexico – Soft Drinks case, the
Appellate Body had found that a measure complies with this second factor of the weighing
and balancing test if it is suitable or capable to contribute to the achievement of the objective
sought.33
As to the third factor, i.e. the trade-restrictiveness of the impugned measure, the Appellate
Body discussed it extensively in the China – Publications and Audiovisual Products.34 First,
the Appellate Body noted that the restrictive effect of a measure can be relevant both for
determining the violation of a substantive obligation and the necessity of a given measure
under Article XX GATT; yet the restrictive effect forms part of two distinct analytical
inquiries, as in the latter case the WTO judiciary is required to examine how the restrictive
effect of a given measure comports with the other two criteria of the weighing and balancing
test. It is worth noting that in previous cases discussing the general exception provision, the
reader gets the impression that adopting a highly trade-restrictive measure such as an import
ban is the safest choice for a regulator especially when the level of protection is set relatively
high, which of course has been regarded as a paradox.35
To be sure this effort started in Brazil – Retreaded Tyres. First, in Brazil – Retreaded Tyres,
the Appellate Body clarified that when the measure chosen is highly trade-restrictive, the
measure chosen should not only contribute to the realisation of the objective; it should rather
be apt to generate a material contribution, thereby raising the burden of proof for the
respondent. By the same token, in China – Publications and Audiovisual Products, the
Appellate Body warned against choosing highly trade-restrictive measures once again. Here,
in examining the third factor, the Appellate Body emphasised that in those cases the
regulating Member should ensure that the measure is designed in a manner that the other two
factors can outweigh the third factor (ie the restrictive effect), when balanced against the
latter.
In China – Publications and
Audiovisual Products, the Appellate Body appears to have finalised its effort to correct this
approach.
36
On the basis of the three factors mentioned above, a comparison should be had between the
challenged measure and the proposed alternative. This comparison should be made in the light
of the importance of the values at stake and is aimed at confirming the necessity of the
challenged measure.37
In its US – Gambling ruling, the Appellate Body clarified the burden of proof for each of the
parties to the dispute.
This means that if the respondent proposed an alternative measure, the
measure at issue cannot be found to comply with the necessity requirement until it is
juxtaposed to the proposed alternative.
38
31 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
First, the respondent is called upon to establish the necessity of its
measure to pursue an objective that falls under those listed in the general exception provision.
This is not an easy task, considering that it should allow the Panel to assess the challenged
32 Appellate Body Report, China – Publications and Audiovisual Products, para. 252.
33 Appellate Body Report, Mexico – Soft Drinks, para. 74.
34 Appellate Body Report, paras 300-10.
35 See P. Delimatsis, International Trade in Services and Domestic Regulations – Necessity, Transparency, and
Regulatory Diversity (Oxford University Press, 2007).
36 Appellate Body Report, China – Publications and Audiovisual Products, para. 310.
37 Appellate Body Report, Brazil – Retreaded Tyres, para. 178; also Appellate Body Report, China –
Publications and Audiovisual Products, paras 240-1.
38 Appellate Body Report, US – Gambling, paras 309-311. See also Appellate Body Report, China –
Publications and Audiovisual Products, para. 319.

7
measure based on the three factors of the ‘weighing and balancing’ process set out in Korea –
Beef. Provided that the respondent makes a prima facie case regarding the necessity of the
measure at issue, the burden of proof shifts to the complainant who is required to identify a
concrete WTO-consistent (or less WTO-inconsistent) alternative measure which the
respondent could have been reasonably expected to use. To this end, the complainant has to
show that the alternative measure can achieve the level of protection sought by the respondent
in an equally effective manner.39 If the complainant meets its burden of proof, the respondent
is required to explain the reasons why the measure proposed by the complainant is not, in fact,
reasonably available taking into account the interests and values at stake and the respondent’s
desired level of protection. In this respect, the respondent may seek to demonstrate that the
measure does not achieve the desired level of protection and thus it is not a genuine
alternative or that it is not reasonably available.40 In US – Gambling, the Appellate Body
found that a measure is not reasonably available ‘…where it is merely theoretical in nature,
for instance, where the responding Member is not capable of taking it, or where the measure
imposes an undue burden on that Member, such as prohibitive costs or substantial technical
difficulties.’41
Turning to the test under the chapeau, we should start by emphasising that it rather focuses on
the WTO-consistent application or enforcement of the measure at stake.
These arguments, however, that the respondent will invoke will be evaluated
on a case-by-case basis.
42 Here again it is for
the respondent to demonstrate that the challenged measure that was provisionally justified
also satisfies the requirements of the chapeau. Absent any pieces of adequate evidence, the
neutral wording of the measure at stake (together with some supporting material from the
legislative history of the measure, for instance) may suffice for the respondent to establish a
prima facie case and can be the only decisive element where the analysis on discrimination
may be based on.43 In this regard, proper evidence may entail evidence regarding the overall
number of service suppliers, and the patterns of enforcement, as well as the reasons for
particular instances of non-enforcement and whether discrimination may be substantiated
through this evidence.44
The chapeau has been interpreted by the Appellate Body to contain three, fairly broad in
scope and reach, standards, i.e. ‘first, arbitrary discrimination between countries where the
same conditions prevail; second, unjustifiable discrimination between countries where the
same conditions prevail; and third, a disguised restriction on international trade’.45 These
standards are cumulative in nature46 and are aimed at preventing any abuse of the general
exceptions provisions (abus de droit) or any frustration of the rights accorded to other
Members by the WTO substantive obligations, in accordance with the principle of good
faith.47
39 Note that it is generally accepted in the WTO context that the level of protection is unilaterally defined by the
regulating State. Cf. Appellate Body Report, Korea – Beef, para. 176 (level of enforcement); Appellate Body
Report, EC – Asbestos, WT/DS135/AB/R, para. 168 (level of health).
Hence, the chapeau aims at balancing the Member's duty to respect the obligations it
has undertaken under the Agreement and its right to invoke a justification under WTO law.
40 Appellate Body Report, Brazil – Retreaded Tyres, para. 156.
41 Appellate Body Report, US – Gambling, para. 308; also Appellate Body Report, Dominican Republic – Import
and Sales of Cigarettes, WT/DS302/AB/R, para. 70; also Appellate Body Report, China – Publications and
Audiovisual Products, paras 318, 327.
42 Cf. Appellate Body Report, US – Gasoline, p. 22; also Appellate Body Report, US – Gambling, para. 339.
43 Ibid., para. 357.
44 Ibid., para. 356.
45 Appellate Body Report, US – Shrimp, para. 150; endorsed by the Panel in US – Gambling, para. 6.581.
46 This means that, whereas the respondent has to ensure that he complies with all three standards, proving the
violation of just one of these standard would suffice for the complainant to establish a violation of the chapeau.
47 Appellate Body Report, US – Gambling, para. 339.

8Protecting public morals in a digital era
C. Interpreting the Concept of Public Morals: Whose prerogative, what role for
courts?
Protecting public morals is considered as one of the policy objectives that the WTO
Agreement recognizes as legitimate and therefore constitutes sufficient ground for derogating
from the WTO substantive obligations.48 While largely undefined as a concept, law and
morals has been a perennial subject throughout human history, but also in the very early years
of the GATT.49
The European Convention of Human Rights (ECHR) equally allows derogations from the
obligation to respect fundamental rights such as the freedom of expression, assembly or
thought to protect public morals.
Furthermore, a moral exception clause has typically appeared in most trade
deals concluded around the globe as a legitimate objective whose protection can justify
derogations from otherwise vehement obligations agreed on by the parties to the deals.
50 However, it has become clear that the fundamental right of
expression, just as every fundamental right, is not absolute.51 This balancing between
fundamental rights and the imposition of state restrictions to protect public morality or
maintain public order is of course one of the most enduring questions that courts at all levels –
be it sub-national, national, federal, supranational or international – have had to deal with in
modern history.52
In Miller v. California, the US Supreme Court, when discussing the unsolicited distribution of
obscene material, famously ruled that obscene material can be subject to regulation when (a)
the average person, applying contemporary community (i.e. not necessarily nation-wide)
standards, would find that the work, taken as a whole, appeals to the prurient interest in sex;
(b) the work depicts or describes, in a patently offensive way, sexual conduct specifically
defined by the applicable state law; and (c) the work, taken as whole, lacks serious literary,
artistic, political, or scientific value.53 The Supreme Court applied this test in Ashcroft v. Free
Speech Coalition,54
48 Back in the late 40s, when the GATT was adopted, the exceptions relating to public morals and national
security were arguably the most important ones that countries wanted to see protected. It certainly is no
coincidence that public morals is the first justification mentioned in Art. XX GATT.
a case discussing the Child Pornography Prevention Act (CPPA) of 1996.
The Free Speech Coalition, advocating for the distribution, sale and use of adult content,
49 U.S. Department of State, ‘Suggested Charter for an International Trade Organization of the United Nations’
(1946).
50 Convention for the Protection of Human Rights and Fundamental Freedoms, Nov. 4, 1950, arts. 8-11, 213
U.N.T.S. 221, 230-32.
51 Indeed, its exercise may be subject to restriction, ‘if the particular restriction proposed is required in order to
protect the State from destruction or from serious injury, political, economic or moral’. See U.S. Supreme Court,
Whitney v California, 274 U.S. 357, 373. Later on, the Supreme Court referred to the duty of the Courts to
determine, in case of conflicting interests, the one that demands the greater protection under the specific
circumstances of the case. See American Communications Ass’n v. Douds, 339 U.S. 382, 399 (1950). In Simon
& Schuster, Inc. v. Members of N. Y. State Crime Victims Bd, the Supreme Court found that freedom of speech
does not embrace certain categories of speech, including defamation, incitement, obscenity, and pornography
produced with real children: 502 U.S. 105, 127 (1991).
52 See, for instance, the evolution of the ‘clear and present danger’ doctrine in the US Supreme Court case-law.
In Schenck v United States, the Supreme Court, following Justice Holmes, found that freedom of speech can be
restricted if words ‘are used in such circumstances and are of such a nature as to create a clear and present
danger that they will bring about the substantive evils that Congress has a right to prevent. It is a question of
proximity and degree’: 249 U.S. 47, 52 (1919). Several years later, the Supreme Court refined this doctrine by
underscoring that ‘the constitutional guarantees of free speech and free press do not permit a State to forbid or
proscribe >a given@advocacy unless such advocacy is directed to inciting or producing imminent lawless action
and is likely to incite or produce such action’ (emphasis added). See Brandenburg v Ohio, 395 U.S. 444, 447
(1969).
53 US Supreme Court, Miller v. California, 413 U.S. 15, 24-25 (1973).
54 US Supreme Court, Ashcroft v. Free Speech Coalition, 535 U.S. 234 (2002)

9
claimed that the CPPA was overbroad and failed the Miller test because, first, it prohibited
images that appeared to be of minors engaging in sexually explicit conduct; and, second, it
prohibited any sexually explicit image conveying the impression that it depicts minors
engaged in sexual activity.
The Supreme Court started by noting that child pornography is indeed a reason for limiting
freedom of speech, as found in New York v. Ferber.55 Indeed, ‘the sexual abuse of a child is a
most serious crime and an act repugnant to the moral instincts of a decent people’.56
Nonetheless, the Court found that the CPPA went beyond the Miller test, as for this Act any
depiction of sexually explicit activity, no matter how it was presented, was prohibited. In
addition, such depiction need not be patently offensive. More crucially, though, the CPPA
totally disregarded the possible serious artistic, literary or political value of such depiction. A
visual depiction of ‘teenagers engaging in sexual activity is a fact of modern society and has
been a theme in art and literature throughout the ages’, Romeo and Juliet being the prime
example, but also more recent works, such as academy-award winning movies such as Traffic
or American Beauty.57 The CPPA would qualify such works as obscene without considering
the work’s redeeming value, when taken as a whole. Importantly, the Court suggested that,
when legislating, speech ‘fit for adults’ should also be taken into account and complete bans
in an attempt to shield children from adult content would most likely amount to suppression
of the right of free speech.58
The task of supranational courts is in no way easier. On the contrary, it is even more delicate
due to legitimacy and capacity reasons,59 thereby leading to the adoption of a less intrusive
approach, which, in turn, led to the adoption of the ‘margin of appreciation’ doctrine.60 The
case-law of the European Court of Human Rights (ECtHR) has confirmed the evolutionary,
but still state-centric character of the concept of morality.61 In Handyside, the ECtHR found:62
…>i@t is not possible to find in the domestic law of the various Contracting States >of
the European Convention of Human Rights@a uniform European conception of
morals. The view taken by their respective laws of the requirements of morals varies
from time to time and from place to place, especially in our era which is characterised
by a rapid and far-reaching evolution of opinions on the subject. By reason of their
direct and continuous contact with the vital forces of their countries, State authorities
are in principle in a better position than the international judge to give an opinion on
the exact content of these requirements as well as on the 'necessity' of a 'restriction' or
'penalty' intended to meet them. The Court notes at this juncture that, whilst the
adjective 'necessary', within the meaning of Article 10 (2), is not synonymous with
'indispensable', neither has it the flexibility of such expressions as 'admissible',
55 US Supreme Court, New York v. Ferber, 458 U.S. 747 (1982).
56 Ashcroft v. Free Speech Coalition, at 239.
57 Ibid., at 242.
58 Referring to the case United States v. Playboy Entertainment Group, Inc, 529 U.S. 803, 814 (2000), where the
importance of the identification of less restrictive alternatives was emphasized.
59 Cf. Y. Shany, ‘Toward a General Margin of Appreciation Doctrine in International Law?’ 16 European
Journal of International Law (2005) 907, at 908-909.
60 See M. Hutchinson, ‘The Margin of Appreciation Doctrine in the European Court of Human Rights’ 48
International and Comparative Law Quarterly (1999) 638; also Y. Arai-Takahashi, The Margin of Appreciation
Doctrine and the Principle of Proportionality in the Jurisprudence of the ECHR (Intersentia, 2001).
61 The ECtHR emphasized that the ECHR itself is a ‘living instrument which must be interpreted in light of
present-day conditions’: Tyrer v United Kingdom, judgment of 25 April 1978, para. 31. See also G. Letsas,
‘Strasbourg’s Interpretive Ethic: Lessons for the International Lawyer’ 21:3 European Journal of International
Law (2010) 509, at 527.
62 ECtHR, Handyside v United Kingdom, judgment of 7 December 1976, para. 48.

10 Protecting public morals in a digital era
'ordinary', 'useful', 'reasonable' or 'desirable'. Nevertheless, it is for the national
authorities to make the initial assessment of the reality of the pressing social need
implied by the notion of 'necessity' in this context. Consequently, Article 10 (2) leaves
to the Contracting States a margin of appreciation. This margin is given both to the
domestic legislator ('prescribed by law') and to the bodies, judicial amongst others,
that are called upon to interpret and apply the laws in force. (emphasis added)
The ECtHR emphasized that this appreciation will be subject to judicial review by the
ECtHR, which nevertheless is thereby limited in its scope of application. Such review will
examine the necessity of the measure at issue and its application, as well as any relevant
judgments delivered by domestic courts.63 Practice shows that the review will also vary
depending on the nature of the legitimate aim as well as the nature of the interference at
stake.64
As to the European Court of Justice, which is well-known for its decisive role in the
development of the European Union (EU) project and the high level of scrutiny that it
exercises in applying EU law,65 it has been very reluctant to develop a pan-European concept
of morality.66 Such an evolution would have been more apposite for such an increasingly
integrated area with medium-term constitutional aspirations,67 if viewed within a broader
effort to construe narrowly any exception invoked by the Member States (MS).68 On the other
side, deference may be justified by the fact that, in practice, the morality exception,69 contrary
to other state objectives, has been invoked rather rarely, which can be taken as a sign that MS
do not try to circumvent their obligations by invoking this exception. Early in its case-law, the
Court found that ‘>i@n principle, it is for each Member State to determine in accordance with
its own scale of values and in the form selected by it the requirements of public morality in its
territory.’70
63 Also ECtHR, Müller and Others v. Switzerland, 133 Eur. Ct. H.R. (ser. A) (1988). For the inconsistencies of
the ECtHR when examining justifications of possible derogations from substantive obligations, see J. Gerards
and H. Senden, ‘The structure of fundamental rights and the European Court of Human Rights’ 7:4 International
Journal of Constitutional Law (2009) 619.
When discussing the more comprehensive concept of public policy, the Court,
while accepting a certain margin of manoeuvre for state authorities, noted that its scope is
64 See ECtHR, Leander v Sweden, 9 EHRR (1987) 433, para. 59. For a critique of the ECtHR’s methodology
which may affect its long-term legitimacy, see A. McHarg, ‘Reconciling Human Rights and the Public Interest:
Conceptual Problems and Doctrinal Uncertainty in the Jurisprudence of the European Court of Human Rights’
62:5 Modern Law Review (1999) 671, at 687.
65 F. Jacobs, ‘The Evolution of the European Legal Order’ 41 Common Market Law Review (2004) 303.
66 Note, however that the Preamble of the Charter of Fundamental Rights of the EU (which after the Treaty of
Lisbon has become primary law, equivalent to the Treaties pursuant to Art 6:1 TEU), refers to the Union’s
‘spiritual and moral heritage’ as if a common denominator existed.
67 See N. Walker, ‘Reframing EU Constitutionalism’ in J. Dunoff and J. Trachtman (eds), Ruling the World?
Constitutionalism, International Law, and Global Governance (Cambridge University Press, 2009), p. 149.
68 Note that the protection of public morality is one of the express derogations that the Treaty on the Functioning
of the European Union (TFEU) incorporates.
69 The morality exception is to be found in Art 36 TFEU. Interestingly, such an exception is allowed only in the
case of restrictions relating to free movement of goods. When it comes to free movement of persons, services, or
freedom of establishment, the TFEU allows derogations which are based not on public morality, but public
policy considerations. Arguably, a textual interpretation of the TFEU would lead us to conclude that public
policy does not cover public morality, because in the chapter on free movement of goods, the two objectives are
distinct. Thus the absence of public morality in the other free movement chapters should have some meaning.
Nevertheless, as we explain below, moral considerations have been discussed under the other chapters as well,
either through the imperative requirements doctrine or as part of the public policy express derogation.
70 ECJ Case 34/79, Henn and Darby >1979@ECR 3795, para. 15.

11
limited and shall be interpreted narrowly:71
The concept of public policy in the context of the Community >sic@and where, in
particular, it is used as a justification for derogating from the fundamental principle of
freedom of movement for workers, must be interpreted strictly, so that its scope
cannot be determined unilaterally by each Member State without being subject to
control by the institutions of the Community. Nevertheless, the particular
circumstances justifying recourse to the concept of public policy may vary from one
country to another and from one period to another, and it is therefore necessary in this
matter to allow the competent national authorities an area of discretion within the
limits imposed by the Treaty. (emphasis added)
Few years later, in Schindler, the Court, after admitting that it is impossible to disregard the
moral, religious or cultural factors, and the morally and financial consequences associated
with gambling, ruled that national authorities need to have a sufficient degree of latitude to
ensure consumer protection and maintain societal order, in accordance with their own scale of
values.72 In Jany, the Court confirmed that Union law does not impose on MS a uniform scale
of values when it comes to public policy.73 Such leeway may justify restrictions and even
outright prohibitions, as long as they are non-discriminatory and proportionate.74 When
examining the measure, the Court clarified that no consistency along different EU MS is
necessary, thereby acknowledging the existence of potentially divergent views among MS
with regard to the most appropriate regulatory intervention and the nature thereof.75 The
Court rather ruled that the measure at issue is to assessed ‘solely by reference to the objective
pursued and the level of protection’ sought by a given MS.76
In Conegate, the ECJ emphasized that a MS cannot seriously invoke public morality as a
justification for an import ban against products that are actually considered as lawfully
marketed when produced domestically.77 However, in Van Duyn, the Court found that the
host MS can refuse a national of another MS to enter its soil because the activity at stake
(working for the Church of Scientology) was regarded as socially harmful, although such
limitation was not imposed to the nationals of the host MS.78 Nevertheless, this approach was
surpassed by subsequent case-law. In a series of cases relating to prostitution, the Court found
that restrictions to the exercise of this activity by migrants were not allowed if the host state
did not apply the same restrictions to its nationals. Nor were any limitations on entry and
residence acceptable.79
In the case of non-discriminatory measures, as manifested by cases such as Omega or
Dynamic Medien, the ECJ will follow a similar standard of review, but will apply a higher
It follows that measures discriminating on the basis of nationality or
place of establishment will most likely be outlawed.
71 Case 41/74, Van Duyn >1974@ECR 1337, para. 18.
72 See also joined Cases C-316, 358, 359, 360, 409 and 410/07, Stoß, judgment of 8 September 2010 (nyr), para.
75. Just as in the US – Gambling ruling, the Court here fails to distinguish between public order and public
morality, but the maintainance of public order seems to be the consequence of successfully protecting public
morals.
73 C-268/99, Jany >2001@ECR I-8615, para. 60.
74 C-275/92, Schindler >1994@ECR I-1039, para 60-61; also C-6/01, Anomar and Others >2003@ECR I-8621,
para. 88.
75 See joined Cases C-316, 358, 359, 360, 409 and 410/07, Stoß, para. 80. Also C-36/02, Omega >2004@ECR I-
9609, paras 37-38.
76 C-244/06, Dynamic Medien >2008@ECR I-505, para. 49.
77 Case 121/85, Conegate >1986@ECR 1007.
78 Case 41/74, Van Duyn, paras 21-22.
79 Cases 115 and 116/81, Adoui and Cornuaille >1982@ECR 1665; C-268/99, Jany.

12 Protecting public morals in a digital era
level of deference, especially when the balancing exercise entails the protection of
fundamental rights.80
In Omega, at stake was a prohibition against commercialization of a laser gun which allowed
so-called ‘playing at killing’ games within a laser installation (‘laserdrome’). Based on human
dignity considerations, the German authorities prohibited such games involving the simulated
killing of human beings. The ECJ reminded that any measures applying the public policy
derogation are subject to judicial review and that, in turn, public policy can be threatened only
by the existence of a genuine and sufficiently serious threat to a fundamental interest of
society.81 When it comes to the protection of human rights, such as human dignity, the
Court’s role is to safeguard such rights which attained the status of general principles of
law.82 In Dynamic Medien, the ECJ had to rule on a prohibition of sale by mail of imported
image storage media which were classified by the home-country authorities and bear an age-
limit label, but have not been classified by the host-country authorities, thereby having no
label indicating from which age they may be viewed. The ECJ followed the line of reasoning
adopted in Omega, suggesting that protection of the rights of the child is a legitimate interest
the pursuit of which justifies a certain margin of discretion for the state authorities, notably in
the absence of common conceptions among MS.83 However, the level of protection sought
has to be conform to the principle of proportionality. Interestingly enough, the Court did not
refer to the principle of mutual recognition or, at least, whether, in this case, the host-country
authorities should have taken into account the examination and classification undertaken by
the home-country authorities.84 Instead, the Court merely referred to the need for having in
place an examination procedure which is readily available, expedited and subject to legal
remedies.85
A similar deferential approach has also been adopted by the ECJ in an ever-increasing number
of cases relating to gambling and free movement.86 The landscape of regulating games of
chance in the EU has been rather static: First, states managed to exempt gambling services
from the purview of the Services Directive. Second, and most importantly, the supreme
liberalising organ in the EU, the European Court of Justice, embraced state-centered
arguments and perceptions with regard to the need for restricting free movement of gambling
services through electronic means. The Court appeared to have no other choice; as it
underscored recently in Liga Portuguesa,87
the legislation of games of chance is one of the areas in which there are significant
80 Compare with the Lawrence case where the US Supreme Court, by using human-rights-like argumentation,
outlawed legislation in Texas which was considering homosexual sodomy as a criminal offence based on moral
grounds. See 539 US 558, 564-567 (2003); also T. E. Pettys, ‘Sodom’s Shadow: The Uncertain Line Between
Public and Private Morality’, University of Iowa Legal Studies Research Paper No 10-01, January 2010, pp. 25-
27, available at: http://ssrn.com/abstract=1528446 (visited on 9 September 2010); and C. Grostic, ‘Evolving
Objective Standards: A Developmental Approach to Constitutional Review of Morals Legislation’ 105 Michigan
Law Review (2006) 151.
81 In para. 8 of the Adoui and Cornuaille judgment, the Court found that ‘Community law does not impose upon
the Member States a uniform scale of values as regards the assessment of conduct which may be regarded as
contrary to public policy’: para. 8.
82 See, inter alia, C-112/00, Schmidberger >2003@ECR I-5659, para. 71.
83 C-244/06, Dynamic Medien, para. 44.
84 See, by analogy, the ‘professional qualifications’ cases: C-340/89, Vlassopoulou >1991@ECR I-2357, or, more
recently, C-345/08, 3HĞOD, judgment of 10 December 2009 (nyr).
85 Cf. Case 222/86, Heylens >1987@ECR 4097.
86 See A. Littler, ‘Regulatory Perspectives on the Future of Interactive Gambling in the Internal Market’ 33:2
European Law Review (2008) 211.
87 See Case C-42/07, Liga Portuguesa de Futebol Profissional and Bwin International >2009@ECR I-7633, para.
57.

13
moral, religious and cultural differences between the Members States. In the absence
of Community >sic@harmonization in the field, it is for each Member State to
determine in those areas, in accordance with its own scale of values, what is required
in order to ensure that the interests in question are protected.
Thus, in the absence of any harmonization in the gaming sector, the Court offers MS a broad
scope for manoeuvre in this area considered as ideologically sensitive or associated with
particular risks.88
The ECJ thus found that no mutual recognition can be claimed in this respect, as the
authorization to supply such services in one MS, in which a given company is established,
‘cannot be regarded as amounting to a sufficient assurance that national consumers will be
protected against the risks of fraud and crime, in the light of the difficulties liable to be
encountered in such a context by the authorities of the MS of establishment in assessing the
professional qualities and integrity of operators.’
The Court suggested that, in such a complex context, the existence of a
certain margin of manoeuvre for the domestic regulatory authorities is justified. However, in
Sporting Exchange, the Court reiterated the wide scope for discretion that national authorities
may have taking into account moral, religious or cultural factors and the morally and
financially harmful consequences of gambling for the individual and for society. Importantly,
the Court rejected Betfair’s argument that a gaming service operator lawfully active in one
MS should be in principle allowed to supply its services through the internet across the EU.
89 The Court went on to underscore the sui
generis nature of online gambling services. It contended that the lack of direct contact
between consumer and operators makes games of chance delivered via the internet susceptible
to different and more substantial risks of fraud by operators against recipients of such services
compared with the traditional non-electronic markets for such games of chance such as
casinos.90
Of course, this finding relating to the electronic supply of gaming services is highly
problematic when viewed within the context of the discussion as to the role of the internet in
supplying services. Whereas during the 90s the internet was regarded as a services sector in
itself, we nowadays have moved towards an approach that considers internet as yet another
means of supplying services. Thus, the approach adopted in Sporting Exchange, which was
also implicitly accepted in the WTO US – Gambling ruling, contradicts with the principle of
technological neutrality enshrined in the GATS, according to which the means through which
a service is supplied cannot alter the nature of the service.
More recently, in Stoß, the ECJ elaborated on its case-law allowing monopolies in the gaming
sector justified by considerations relating to more effective consumer protection and state
supervision without however finding it necessary to draw a line between offline and online
gambling. First, the Court suggested that a monopoly can only be justified when a given MS
aims to pursue a high level of consumer protection. Second, it confirmed that it is for MS to
ensure that a legislative framework is in place which allows the monopoly to effectively
pursue the public policy objectives sought in a consistent and systematic manner. This can be
achieved through ‘means of a supply that is quantitatively measured and qualitatively planned
by reference to the said objective and subject to strict control by the public authorities’.91
88 See the Opinion of AG Stix-Hackl in Omega, para. 102; and C-338/04, C-359/04 and C-360/04, Placanica
and Others >2007@ECR I-1891, para. 47.Also C. Barnard, The Substantive Law of the EU – The Four Freedoms
(Oxford University Press, 2010), p. 534. Such considerations may be brought forward by the ECJ also in other
‘sensitive’ areas such as road traffic. See C-518/06, Commission v. Italy >2009@ECR I-3491, para. 84.
89 C-203/08, Sporting Exchange, judgment of 3 June 2010 (nyr), para. 33. See also joined Cases C-316, 358,
359, 360, 409 and 410/07, Stoß, para. 112.
90 C-203/08, Sporting Exchange, para. 34. See also Case C-42/07, Liga Portuguesa, para. 70.
91 Joined Cases C-316, 358, 359, 360, 409 and 410/07, Stoß, para. 83.

14 Protecting public morals in a digital era
Furthermore, the Court reminded that restrictions in that sector are accepted as long as they
contribute to reducing gambling opportunities and limiting betting activities in a consistent
and systematic manner. 92 This can also be achieved through policies of controlled expansion
of gaming activities, including advertising or the introduction of new games.93
Nevertheless, not all limitations to this activity will be accepted by the Court. In Engelmann,
the ECJ considered as disproportionate and not justified by the objective to combat crime a
national measure that required suppliers of games of chance to be established in the territory
of the host MS.94
In sum, since questions relating to morality seem to divide societies like no other, allowing
domestic organs to decide on their perception of morality (and enforcing this through national
courts) may be a convenient, wise and at the same time effective solution in an area of
seemingly imperfect alternatives and pressing calls for applying subsidiarity.95 The fact that
we have moved to a digital age does not alter this. The more the boundaries of the traditional
sovereign jurisdiction become unidentifiable,96 the more likely it is – quite paradoxically – to
have recourse to domestic perceptions, as moral variations worldwide make it impossible to
clearly describe a common concept of morality in the contemporary global society whose
essential characteristic is differentiation. This may also be the result of the transitional period
that the global society is currently confronted with, as different categories or generations of
people (e.g. the ‘digital natives’ versus ‘digital immigrants’)97 have been exposed to varying
forms of content, images and media and therefore do not necessarily share the same level of
open-mindedness or the same views of what offensive content consists of.98
Endeavours to identify common denominators are exacerbated further by the fact that digital
micro-communities with varying levels of morality co-exist in cyberspace.99
92 C-67/98, Zenatti >1999@ECR I-7289, paras 36-37. The Court elaborated on the meaning of this requirement in
Stoß and Ladbrokes (C-258/08, judgment of 3 June 2010, nyr). See also G. Mathisen, Consistency and
Coherence as Conditions for Justification of Member State Measures Restricting Free Movement’ 47:4 Common
Market Law Review (2010) 1021.
This is an
inevitable repercussion of internet’s nature being a network of networks. Compare, for
instance, a religious website to an adult content website run by people who may be
neighbours in real life sharing the same courtyard. Hence, new technologies and freedom of
expression may be leading to an unprecedented fragmentation of the concept of morality
already at the household level. Regulators appear to be perplexed. Handy regulatory solutions
are difficult to find and overregulation may be the solution that regulators choose absent any
sophisticated expertise. In this regard, courts do not feel that an intrusive approach would be
apposite, thereby perpetuating fragmentation of markets and societies.
93 Also C-338/04, C-359/04 and C-360/04, Placanica, para. 55.
94 C-64/08, Engelmann, judgment of 9 September 2010 (nyr), paras 32, 34-38.
95 Cf. A. D. Murray, The Regulation of Cyberspace: Control in the Online Environment (Routledge, 2007), p.
208.
96 B. Maier, ‘How has the Law Attempted to Tackle the Borderless Nature of the Internet?’ 18 International
Journal of Law and Information Technology (2010) 142.
97 For these categories, see J. Palfrey and U. Gasser, Born Digital – Understanding the First Generation of
Digital Natives (Basic Books, 2008).
98 For a depiction of this, see Global Kids, Inc. (The GoodPlay Project at Harvard University’s Project Zero),
‘Meeting of Minds: Cross-Generational Dialogue on the Ethics of Digital Life’, October 2009.
99 Murray, above note 95, p. 210.

15
D. Public morals and on-line gambling: The US – Gambling ruling
Other than the existence of a general exception provision (Article XIV)100 which is generally
applicable, the idiomorphic nature of the General Agreement on Trade in Services (GATS)
lies to the fact that this balance is partly sought and achieved through the principle of
progressive liberalisation (which is, inter alia, substantiated through commitments that are
unilaterally decided)101
The obligations relating to trade in services undertaken under the GATS by Members, notably
those relating to non-discrimination and market access, can, under certain circumstances,
severely restrict Members’ freedom to pursue otherwise legitimate objectives aimed at the
protection of public interests and values. The protection of interests such as public health,
environment or public morals requires more often than not the adoption of measures that are
unilaterally decided and have negative spillovers of variable magnitude on trade flows.
and inherent limitations as to the outreach of the GATS.
102
Article XIV GATS follows the model of Article XX GATT 1994 which ever since has been
the cornerstone of the system allowing for the pursuit of other legitimate non-economic policy
goals and avoiding, at the same time, that general exemptions are used to pursue rent-seeking,
protectionist policies, undermining existing obligations and commitments. The general
exception provision under Article XIV allows Members to accommodate other policy goals
pursued in line with domestic law and policy choices made in accordance with societal values
and preferences. Exemptions therefore vary from Member to Member and do not show
uniform traits. WTO law, however, offers a common framework to which domestic policies
and law need to respond and comply with in order to establish overall WTO compatibility of
measures taken.
Depending on the commitments undertaken, such governmental action may result in a direct
conflict with GATS commitments undertaken at an earlier point of time, either during a
negotiating round or at the point of the acceptance of accession to the WTO.
The particularity of the GATS general exception which may lead to a different interpretation
between GATT and GATS103 is that, along with the protection of public morals, Article
XIV(a) equally aims to allow for the maintenance of public order as an additional justification
for a deviation from the GATS substantive obligations. As the public order exception is fairly
broad and inclusive, it was submitted that the GATS condones regulatory autonomy and
diversity to a greater extent than the GATT.104 However, in a clear attempt to narrow down
the meaning of public order, footnote 5 to Article XIV(a) clarifies that the ordre public
exception can be invoked ‘only where a genuine and sufficiently serious threat is posed to one
of the fundamental interests of society.’105
100 For a detailed analysis of Art XIV GATS, see T. Cottier; P. Delimatsis; and N. Diebold, ‘Article XIV GATS
(General Exceptions)’ in R. Wolfrum; P.-T. Stoll; C. Feinäugle (eds), Max-Planck Commentaries on World
Trade Law,Volume 6: WTO-Trade in Services (Brill Publishers, 2008), p. 287.
(emphasis added)
101 Appellate Body Report, China – Publications and Audiovisual Products, para. 394.
102 Appellate Body Report, US – Shrimp, para. 121, where the Appellate Body famously ruled that ‘conditioning
access to a Member’s domestic market on whether exporting Members comply with, or adopt, a policy or
policies unilaterally prescribed by the importing Member may, to some degree, be a common aspect of measures
falling within the scope of one or another of the exceptions (a) to (j) of Article XX >GATT@.’
103 Indeed, in the US – Gambling ruling, the Appellate Body clearly suggested that the different wording between
the two provisions, with the GATS including the maintenance of public order, should have some meaning. See
Appellate Body Report, US – Gambling, para. 291, fn 349.
104 However, this statement is somehow tempered by the US – Gambling ruling, where the Appellate Body left
untouched the Panel’s finding that the public morals and public order, while two distinct concepts, may overlap,
as they seek to protect largely similar societal values. Panel Report, US – Gambling, para. 6.468.
105 Cf ECJ Case 30/77, Bouchereau >1977@ECR 1999, para. 35. This same wording finds now expression in
footnote 5 to the GATS.

16 Protecting public morals in a digital era
Again, the only jurisprudential finding on this score, made by the US – Gambling Panel,
interpreted the footnote in a rather broad manner by finding that ‘“public order” refers to the
preservation of the fundamental interests of a society, as reflected in public policy and law.
These fundamental interests can relate, inter alia, to standards of law, security and
morality,’106 thereby implying that public order encompasses public morality. Indeed, it
appears plausible to suggest that any interest relating to public morals will at the same time be
subject to public order as well. Thus, the concept of public order can be regarded as a catch-
all term that comprehends the other justifications enshrined in the general exception
provision. For instance, the prevention of underage gambling or the protection of pathological
gamblers through restrictions to internet gambling may primarily relate to public morals, but
they have fundamental repercussions for public order.107 However, footnote 5 to Article
XIV(a) GATS appears to be the key in limiting the scope of the public order exception in the
context of this specific provision.108 It is submitted that this is so even if the Appellate Body
in US – Gambling suggested that a Panel is not obliged to make a separate, explicit
determination that the standard set out in footnote 5 is satisfied.109
Focusing now on the concept of morality as interpreted in the US – Gambling case, the Panel
demonstrated its propensity towards more flexibility and deference. Indeed, it noted that ‘the
content of >public morality@can vary in time and space, depending upon a range of factors,
including prevailing social, cultural, ethical and religious values’.
Be this as it may, it appears
likely to us that future respondents will adopt the litigation strategy that the US advanced in
the US – Gambling case, that is, submit that the measures at issue are aimed to protect both
public order and public morals, already because of the broader type of defence that such an
argument ensures.
110 More importantly, the
Panel went on to note that WTO Members, when applying this type of societal concepts,
‘should be given some scope to define and apply for themselves >the concept of public
morals@in their respective territories, according to their own systems and scales of values’
(emphasis added).111
Based on a literal interpretation of Article XIV(a) through recourse to dictionary
definitions,112 the Panel held that the ‘term “public morals” denotes standards of right and
wrong conduct maintained by or on behalf of a community or nation.’113 Later on, the Panel
confirmed this finding by having recourse to supplementary means of interpretation
corroborating the view that governmental measures that restrict gaming activities, especially
those that take place through electronic means, should fall within the public morals
exception.114
106 Panel Report, US – Gambling, para. 6.467, and Appellate Body Report, US – Gambling, para. 323.
The Panel found that the US measures served societal interests that can be
107 Panel Report, US – Gambling, para. 6.469; in para. 6.470, the Panel noted that “[Judge Lauterpacht] further
stated that ‘the protection of the interest of minors ... falls naturally within the notion of ordre public.’ (emphasis
added). Cf ECJ Case C-42/07, Liga Portuguesa, para. 56.
108 Cf. Cottier et al, above note 100.
109 Appellate Body Report, US – Gambling, para. 298.
110 Panel Report, US – Gambling, para. 6.461.
111 Ibid. Also Panel Report, China – Publications and Audiovisual Products, para. 7.759.
112 For a criticism of the WTO judiciary’s practice to use dictionaries to identify the ordinary meaning of a given
WTO provision, see P. Mavroidis, ‘No Outsourcing of Law? WTO Law as Practiced by WTO Courts’, 102:3
American Journal of International Law (2008) 421, at 446.
113 Ibid., para. 6.465. Also C. Feddersen, ‘Focusing on Substantive Law in International Economic Relations:
The Public Morals of GATT’s Article XX(a) and “Conventional” Rules of Interpretation’ 7 Minnesota Journal
of Global Trade (1998) 75, at 106.
114 Panel Report, US – Gambling, paras 6.470-2.

17
characterised as vital and important in the highest degree.115
A central issue in this dispute was whether online gambling (in the case’s vernacular ‘remote
gambling’) should be treated similarly to non-remote (for instance, in casinos) gambling and
betting services.116 The United States did not argue that, as a general rule, services supplied
physically and services supplied electronically can never be like.117 Quite the contrary,
actually, as back in 1999, the United States had advocated the view that market access and
national treatment commitments encompass the supply of a given service through electronic
means, in line with the principle of technological neutrality as to the means of delivery.118
Rather, the United States focused in this case on the particularities of the electronic supply of
gambling services in terms of consumer perceptions; law enforcement; protection of health
and minors; and risks associated with the means of supplying this type of services.119 The
Panel found that several of the concerns regarding gambling relate to both electronic and non-
electronic supply of gambling services. Having found so, the Panel also noted that the US
regulatory reaction for the latter was, at best, light and tolerant. However, it accepted the
existence of concerns specific to the electronic supply of gambling services relating to money
laundering, fraud, health and underage gambling.120 The Appellate Body left these factual
findings unchallenged, summarising certain characteristics and concerns specific to online
gambling: (a) the volume, speed and international reach of remote gambling transactions; (b)
the virtual anonymity of such transactions; (c) low barriers to entry in the context of the
remote supply of gambling and betting services; and the (d) isolated and anonymous
environment in which such gambling occurs.121 At a later stage of its analysis, the Appellate
Body dismissed Antigua’s argument that remote and non-remote supply of gambling services
should be treated as one for the purposes of examining the fulfilment of the requirements of
the chapeau.122
From the aforementioned ruling, a clear need for regulatory co-ordination at a supra-national
level emerges if countries are to exploit the numerous possibilities that technological
advances offer nowadays in recreational services. As analyzed in the previous section, even in
highly integrated areas such as the EU, fragmented regulations of the gaming industry have
prevailed, as domestic regulatory authorities failed to adopt a proactive attitude vis-à-vis
important technological innovations taking place in this field which would allow for a
coordinated response to the current challenges.
Thus, according to the Appellate Body, if discrimination in the application of
a given measure is to be examined, only a comparison between remote supply of foreign and
domestic gambling services would be apposite.
E. Public morals, cultural goods and the digital age: The China – Publications and
Audiovisual Products ruling
On 27 November 2007, a Panel was established to examine a US complaint brought against
China relating to certain measures restricting the importation and distribution (the so-called
‘trading rights commitments’ of China) of imported films for theatrical release; audiovisual
115 Ibid, para. 6.492.
116 Note that Antigua’s Article XVII GATS claim was not discussed based on judicial economy considerations.
117 Panel Report, US – Gambling, para. 3.155, fn 281.
118 WTO, ‘Work Programme on Electronic Commerce’, Submission by the United States, WT/GC/16, 1999.
119 See also N. Dow Schull, ‘Digital Gambling: The Coincidence of Desire and Design’ 597 Annals of the
American Academy of Political and Social Science (2005) 65.
120 Panel Report, US – Gambling, paras 6.498-6.521, 6.533.
121 Appellate Body Report, US – Gambling, para. 323.
122 Ibid, paras 346-7.

18 Protecting public morals in a digital era
home entertainment products (eg DVDs); sound recordings (recorded audio tapes); and
publications (books, newspapers, but also electronic publications).
China – Publications and Audiovisual Products is a typical case exemplifying the incremental
problem of interpretive technological translation, i.e. applying WTO texts to technologies not
envisaged at the time of drafting.123
An additional factor that threatens to spoil any objective analysis of this phenomenon is the
fact that it is obnubilated by the trade versus culture debate that is raised, times and again, in
any discussion relating to the treatment of digital products within the WTO.
The manifold possibilities that internet offers of
supplying services (and goods) to every possible corner of the world finds governments ill-
equipped in terms of adequate regulatory responses. Only to make things more complicated,
the GATS is a powerful tool for opening markets, notably if commitments are undertaken in
sectors that increasingly ‘go digital’.
124 Without
attempting to delve into this debate thoroughly,125 culture is a manifestation of diversity
among States, but is also an element of diversity within a given State.126 The issue of
protecting cultural identity through trade-restrictive measures was discussed during the
Uruguay Round,127 but the protection of culture as a legitimate objective did not find its way
into the final list of the GATS Article XIV. Faute de mieux, the GATS was given a very
supple structure, allowing MFN exemptions and limitations to market access and national
treatment through a hybrid approach, which leans towards positive listing of sectors to be
liberalised. Because commitments and obligations under GATS vary from Member to
Member, each Member is in principle entitled to refrain from liberalising those sectors that it
considers as ‘sensitive’. However, as the China – Publications and Audiovisual Products case
amply demonstrates, goods incorporating services (such as most publications and audiovisual
products) would still need to comply with the loadstar of non-discrimination under the GATT,
which, contrary to the GATS, is unqualified.128
The dispute over China’s policy relating to content review of publications and audiovisual
products is fascinating in many respects. The case raised several questions of systemic
importance for both the GATT and the GATS, but also the relationship thereof.
In that case, recourse may be had only to
Article XX GATT to justify any trade restrictions.
129
123 See T. Wu, ‘The World Trade Law of Censorship and Internet Filtering’ 7 Chicago Journal of International
Law 263, at 264.
For
instance, one of the most interesting interpretive questions in this dispute was whether China
was right to suggest that the entry ‘sound recording distribution services’ only covers the
supply of such services in physical form, while the electronic supply of such services should
be regarded as coming under a new type of service sector, that is, ‘network music services’,
which has emerged as a result of changes in digital technologies and communication
networks. The Panel appeared to understand China’s argument that technical feasibility and
124 Cf the case of audiovisual services and the EU’s exception culturelle. Also S. Wunsch-Vinvent and J.
McIntosh, WTO, E-Commerce and Information Technologies – From the Uruguay Round through the Doha
Development Agenda (UN ICT Task Force, 2005), at 136.
125 See M. Burri-Nenova, ‘Trade versus Culture in the Digital Environment: An Old Conflict in Need of a New
Definition’ 12:1 Journal of International Economic Law (2009) 17.
126 F. Francioni, ‘Beyond State Sovereignty : The Protection of Cultural Heritage as a Shared Interest of
Humanity’, 25 Michigan Journal of International Law (2004) 1209.
127 See, for instance, MTN.GNS/AUD/1, paras 25-30.
128 Cf. Appellate Body Report, China – Publications and Audiovisual Products, para. 195.
129 These include the scope of the accession protocol; whether Art. XX GATT can be invoked as an affirmative
defence to justify a violation of a commitment enshrined in the accession protocol; the remit of the public morals
exception; the nature of goods that incorporate services; the content of the terms ‘trading right’ and ‘right to
regulate; or the (evolutionary or not) interpretation of GATS schedules.

19
commercial reality of a services at the time of a service commitment should be taken into
account in any future interpretation of that commitment.130 However, the Appellate Body
underscored that Schedules of commitments are also to be interpreted in an evolutionary
manner, because otherwise similar commitments can be given varying meanings depending
on the date of their entry into force, thereby undermining the legal security and predictability
of the multilateral trading system.131
While this dispute is a landmark case in several respects, the lack of any comprehensive
discussion on technological neutrality is puzzling. Technological neutrality was discussed by
the parties, but the Panel tried to avoid the issue, whilst the Appellate Body, just as in the US
– Gambling case, has not made any reference to this principle at all.132
Furthermore, this dispute raised a fundamental political issue relating to the current state
control that Chinese authorities exert with respect to information flows from abroad. As a
result of this case, discussions about the potential of the WTO to act as a vector not only for
trade liberalisation but also for reform of domestic politics will be intensified.133
China’s accession to the WTO was officially confirmed during the Doha Ministerial
Conference in December 2001. The ensuing accession protocol establishes a contractual
relationship between China and WTO Members in their joint capacity and reflects the terms
of entry into the WTO.
However,
such views should not be presented light-heartedly, as the impact of the WTO in such
processes should not be overestimated.
134 To achieve the objective of becoming Member of the WTO, China
has accepted to adopt an impressively liberal regime (thus to ‘lock-in’ future liberalisation)
for goods and services.135 A central provision in this dispute was paragraph 5.1 of the
Accession Protocol. This provision requires that China grant to all enterprises in China the
right to trade in all goods within three years of its accession to the WTO.136 The term ‘all
enterprises in China’ was understood by the WTO judiciary to cover wholly Chinese-invested
companies, regardless of whether they are privately or state-owned; foreign-invested
enterprises, which include wholly foreign foreign-owned companies; and joint ventures
between Chinese and foreign suppliers, whether in equity or contractual form.137
In this dispute, China contended that its measures, taken together, aimed at establishing a
content review mechanism and a system for the selection of import entities for certain goods
However,
such trading right is to be granted ‘without prejudice to China’s right to regulate trade in a
manner consistent with the WTO Agreement’ (emphasis added).
130 Panel Report, China – Publications and Audiovisual Products, para. 7.1237.
131 Appellate Body Report, China – Publications and Audiovisual Products, paras 396-7.
132 Nonetheless, the Appellate Body did allude to this principle. See Appellate Body Report, China –
Publications and Audiovisual Products, paras 377-9. The principle of technological neutrality was referred to in
a progress report within the auspices of the work programme on e-commerce, which was adopted by the Council
for Trade in Services in 1999. WTO, ‘Work Programme on Electronic Commerce – Progress Report to the
General Council’, adopted by the Council for Trade in Services on 19 July 1999, S/L/74, 27 July 1999, para. 4.
However, the Report points to several concerns by certain Members as to the complexity of issues relating to
digital trade and new technologies.
133 Cf A. Chander, ‘International Trade and Internet Freedom’, UC Davis Legal Studies Research Paper No 201,
January 2010.
134 R. Bhala, ‘Enter the Dragon: An Essay on China’s WTO Accession Saga’ 15 American University
International Law Review (2000) 1469, 1473-74.
135 See A. Mattoo, ‘China’s Accession to the WTO: The Services Dimension’ 6:2 Journal of International
Economic Law (2003) 299.
136 A precise set of products listed in Annexes 2A and 2B of the Protocol, which is subject to state trading, was
excepted from this obligation.
137 Panel Report, China – Publications and Audiovisual Products, paras 7.249, 7.251-2.

20 Protecting public morals in a digital era
that the Chinese authorities deemed to be ‘cultural goods’138 and whose content could affect
negatively public morals in China.139 The Chinese regulatory scheme establishing the content
review mechanism is applicable to both imported and domestic goods. Contrary to the US –
Gambling case, where Antigua and Barbuda claimed that online gambling does not go against
public morals in the United States, in the China – Publications and Audiovisual Products case
it was undisputed that the content of certain audiovisual products and reading materials could
be harmful to Chinese perceptions about public morality and societal values.140 In the
following, we will focus exclusively on the rulings relating to the defence of Article XX(a)
GATT that China invoked to justify certain measures found to violate China’s trading rights
commitments vis-à-vis foreign-invested enterprises in China.141
Regardless of the final outcome, which was not favourable to China’s allegations relating to
threats of public morals had its measures been outlawed, it bears mention that both the Panel
and the Appellate Body left unchallenged China’s claim that measures envisaging the creation
of a content review mechanism of certain publications and audiovisual products (alias,
cultural goods) can constitute a WTO-consistent policy to protect public morals in a given
WTO Member.142
A first procedural issue that the WTO judiciary was requested to tackle was whether Article
XX can be invoked to justify a violation of a substantive obligation deriving from the
Accession Protocol. The Panel shied away from the question by making an arguendo
analysis, that is, it assumed that the affirmative defence was available to China only to find
later that the China did not meet its burden of proof and thus the two-tier test of Article XX(a)
was not fulfilled. That was an unsustainable legal construction and judicial technique, which
however had been earlier used by the Appellate Body.
This is a significant remark that goes against any optimistic view about
enhanced freedom of expression in the aftermath of this ruling. For even if the scheme
becomes more transparent, this should not be taken to imply ipso facto that content control
will become more democratic.
143 On appeal, the Appellate Body
refrained from using this technique once again and instead decided (thereby, implicitly
rejecting its previous jurisprudence, but also acknowledging the systemic importance of the
matter raised on appeal)144
The Appellate Body started by giving a sweeping meaning to a Member’s right to regulate,
recognizing that it is ‘an inherent power enjoyed by a Member’s government, rather than a
right bestowed by international treaties such as the WTO Agreement’,
to examine the thorny question of whether Article XX can justify a
violation of an obligation enshrined in the Accession Protocol, which, after a meticulous
analysis, it ultimately answered in the affirmative.
145
138 Appellate Body Report, China – Publications and Audiovisual Products, para. 141; also, generally, T. Voon,
Cultural Products and the World Trade Organization (Cambridge University Press, 2007).
which, nevertheless,
is constrained by the obligation of conformity with the WTO disciplines. As this conformity
can also be the result of successfully invoking an affirmative defence under the WTO
agreements, the Appellate Body had no difficulty in finding that China is entitled to invoke
Article XX to justify a violation of a provision of the Accession Protocol. This is a logical
conclusion, notably after the Appellate Body’s finding that the obligations enshrined in
paragraph 5 of the Accession Protocol are, for all practical purposes, similar to the obligations
139 Panel Report, China – Publications and Audiovisual Products, para. 7.712-7.714.
140 Cf. Panel Report, China – Publications and Audiovisual Products, para. 7.762.
141 Appellate Body Report, China – Publications and Audiovisual Products, para. 205.
142 Panel Report, paras 7.712, 7.766; left untouched by the Appellate Body.
143 Appellate Body Report, US – Customs Bond Directive and US – Shrimp (Thailand), WT/DS343&345/AB/R,
para. 310.
144 Cf. Appellate Body Report, China – Publications and Audiovisual Products, para. 213.
145 Appellate Body Report, China – Publications and Audiovisual Products, para. 222.

21
laid down in the GATT, notably Articles III and XI, as the latter are also concerned with
measures that restrict the rights of traders when they trade goods.146 However, the Appellate
Body cautioned that not all measures could benefit from Article XX, but rather the WTO
judiciary should ensure that a clearly discernible and objective link exists between the
measure at stake and the regulation of trade in goods.147
The Appellate Body devoted the remaining discussion of Article XX(a) defence on the
Panel’s analysis with respect to the necessity test under XX(a). In this regard, the Appellate
Body discussed issues relating to the contribution of the measures to the protection of public
morals in China; the restrictive effect of the measure when juxtaposed to the objective
pursued; and the existence of genuine alternatives. As to the analytical approach of the Panel
when examining necessity, the Appellate Body expressed the view that case-law is
crystallised and the Panel did respect this precedent. Moving to discuss the contribution of the
measures to the protection of public morals, the Appellate Body examined more closely three
core measures of the Chinese content review mechanism: (a) the State-ownership
requirement, i.e. that only state-owned enterprises can function as publications import
entities;148 (b) the exclusion of foreign-invested enterprises from engaging in the importation
of publications and audiovisual products (including electronic publications; sound recordings;
and films for theatrical release);149
Coming to the restrictive effect of the measures on international commerce, the Appellate
Body found that the Panel was correct to assess the potential effect of the measures at stake
on those wishing to engage in importing, because the relevant substantive obligation,
paragraph 5.1 of the Accession Protocol, also had a ratione personae focus, ie who is entitled
to engage in trading.
and (c) the State plan requirement, i.e. that publication
import entities can be approved on condition that they conform to the State plan for the
number, structure, and geographical coverage of publication import entities. For the first two
measures, the Appellate Body agreed with the Panel that China did not adduce sufficient
evidence proving that these measures make a material contribution to the protection of public
morals. More particularly, according to the Appellate Body, China failed to establish a causal
connection between the exclusive ownership of the State in the equity of a publications import
entity or the exclusion of foreign-invested enterprises from importation of the relevant
products, on the one side, and the protection of public morals in China, on the other side.
Finally, as far as the State plan requirement is concerned, the Appellate Body reversed the
Panel’s finding that the measure was necessary based on procedural grounds and the absence
of any evidence whatsoever as to what this State plan requirement consisted of.
150
It remains to be seen whether this approach is case-specific, or rather we witness the
emergence of a new doctrine which is reminiscent of the ‘effet dissuasif’ or ‘obstacle’
doctrine under EU law, which is much more trader-centered rather than product-centered and
focuses on the protection of the economic rights of traders.151 For instance, in Canal Satélite,
the ECJ outlawed a prior authorisation scheme because it deterred economic operators from
pursuing their business plan.152
146 Ibid, paras 226, 229.
Similarly, in Dynamic Medien, the ECJ found that the
measure at stake would discourage the parties to the franchising agreement yet to be signed to
147 Ibid, para. 230.
148 Chinese-owned enterprises which are not wholly State-owned are equally prohibited from engaging in
importation of the products at stake.
149 When viewed together with the State-ownership requirement, this measure is the flip side of the same coin.
150 Appellate Body Report, China – Publications and Audiovisual Products, para. 307.
151 Cf. Panel Report, US – Section 301 Trade Act (WT/DS152/R), where the indirect effect of the WTO
agreements over individuals was acknowledged for the first time.
152 See C-390/99, Canal Satélite Digital >2002@ECR I-607, para. 41.

22 Protecting public morals in a digital era
have any future contractual relationship.
The Appellate Body concluded its analysis on necessity with the issue as to whether a genuine
alternative existed that China could have employed. 153
This approach is in sharp contrast with previous case-law. In Brazil – Retreaded Tyres, the
Appellate Body took a much more lenient and flexible stance with regard to the reasonable
(un)availability of genuine alternatives. The Appellate Body started with recalling that
proposed alternatives ‘carry >…@their own risks or require the commitment of substantial
resources, or advanced technologies or know-how’ and that ‘the capacity of a country to
implement remedial measures that would be particularly costly, or would require advanced
technologies, may be relevant to the assessment of whether such measures or practices are
reasonably available alternatives to a preventive measure’ which is less costly or does not
entail any substantial technical difficulties’.
The United States suggested that
giving sole responsibility for conducting content review to the Chinese government would
constitute a genuine alternative. According to the US proposal, instead of having incorporated
wholly state-owned enterprises reviewing the content of the relevant products, such content
review would be conducted by non-incorporated offices comprising the government of China.
The quintessential argument of the US was concerned with the dissociation of importation
from content review. China suggested that the alternative measure would create an undue
burden to China. The US took issue with this view, suggesting that the Chinese government
already finances content review of imported publications and thus no considerable additional
costs should be expected. The Appellate Body agreed with the US, without any thorough
analysis of the benchmark that itself established in US – Gambling and Brazil – Retreaded
Tyres, but it is unclear whether this outcome was inevitable because of the poor evidence in
the Panel record.
154 However, the Appellate Body went on to
underscore that ‘substituting one element of >a government’s@comprehensive policy for
another would weaken the policy by reducing the synergies between its components, as well
as its total effect’155 and that when examining the reasonable availability of an alternative, a
Panel should take into account the risks that such an alternative may carry.156
Even more strikingly, the Appellate Body subscribed to the US view that essentially the
Chinese government set a mechanism to effectively control content. Thus, even this reluctant
policy of decentralised content review through State-owned import publications entities that
China has applied to date cannot prevail over a policy which may be less trade-restrictive,
because even foreign-owned enterprises could import the relevant products, such a
proposition by the Appellate Body constitutes a crude backslide towards less openness and
more circumscribed freedom of expression. Of course, one should be reminded of the poor
Chinese defence of its measures, for instance, when it was focusing more on the costs of
content review which may be unbearable to private enterprises, rather than putting an accent
on the public function that those publication import entities serve. In several instances of the
Appellate Body report, the frustration of the Appellate Body Members by the lack of
transparency and the submission of worthy evidence from the respondent is also evident.
However, this is
the type of inquiry that the Appellate Body should have applied to examine the proposed US
measure.
However, it is argued that the Appellate Body should have had the foresight to realise that the
measure it accepted as genuine would lead to a less democratic regime in China with respect
153 See Section B above.
154 Appellate Body Report, Brazil – Retreaded Tyres, para. 171.
155 Ibid, para. 172.
156 Ibid, para. 181.

23
to access to information and publications from abroad. However, economic studies would
suggest that trade performance is improved when a democratic regime is in place; and trade
promotion and expansion is among the most significant WTO objectives. Indeed, the
Appellate Body appears to have misunderstood the function that genuine alternatives are there
to play. One wonders whether, it would have made more sense for the Appellate Body to
consider the measures as necessary157
F. O tempora o mores: The changing scope of regulatory sovereignty in protecting
public morals in cyberspace
and then move to analyze the measures under the
chapeau of Article XX. Arguably, and based on the previous analysis of case-law by other
courts, the WTO adjudicating bodies do not seem to be well-suited to undertake the type of
balancing that, for instance, the ECtHR or the ECJ could undertake. This is because the
mission of the latter is much broader, as it does include, inter alia, the adequate protection of
human rights. To avoid irrational results such as that reached in China – Publications and
Audiovisual Products, it is submitted that this type of sensitive cases entailing human rights
considerations shall be adjudicated before the WTO only based on a mere non-discrimination
test of the type included in the chapeau of Article XX GATT. The necessity test included in
the subparagraphs of the said provision shall be applied, but should not result in considering a
given measure as unnecessary so lightly. There should rather be presumed to be necessary
unless the proposed alternative is significantly less trade-restrictive.
Protection of public morality is regarded as one of the core prerogatives of any State and
governmental action, typically occurring in the field of criminal law, frequently is aimed to
identify and achieve a certain level of protection of societal values which many times is
country- or community-specific. It is precisely in this context that the state will not only
decide on the type of intervention (light versus heavy regulation), but also whether it will not
intervene at all putting aside its inherently paternalistic nature.158 Such deference may be
simply due to the fact that a given situation merely affects individual preferences with no
spillovers on other individuals of the community and thus there is no danger for the cohesion
of society.159
The impressive leap in communication technologies leads to a thorough rethinking of
conventional regulatory theories which are surpassed by an ever-changing reality. This reality
alters the way that international law operates.
Thus, the determination of what constitutes private morality is essentially made
in the public domain.
160 International law is increasingly configured
and deployed through a fluid transnational legal process in which public and private actors
intermingle at several fora at the domestic and international level to prepare, interpret, enforce
and internalise rules of transnational law.161
157 In this respect, possible indices of bad faith should play against the respondent. See N. Diebold, ‘The Morals
and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole’ 11:1 Journal of
International Economic Law (2008) 43, at 60.
In the current heterarchical order of diverse
autonomous regimes of public and private governance, the traditional State has conceded part
of its powers to other actors that can (re-)act more swiftly and efficiently. Such actors,
through transnational networks, define rules of a tremendous transnational effect that impact
158 See, generally, R. Baldwin; M. Cave and M. Lodge (eds), The Oxford Handbook of Regulation (Oxford
University Press, 2010).
159 Cf. H.L.A. Hart, ‘Social Solidarity and the Enforcement of Morality’ 35 University of Chicago Law Review
(1967-1968) 1.
160 Cf R. Domingo, The New Global Order (Cambridge University Press, 2010), p. 53.
161 H. Hongju Koh, ‘Transnational Legal Process’, 75 Nebraska Law Review (1996) 181, at 183-4; and for the
quote at A. Chander, ‘Globalization and Distrust’ 114 Yale Law Journal (2005) 1193, at 1196.

24 Protecting public morals in a digital era
on manifold aspects of everyday life.162 The shifting role of the regulatory State appears to be
concentrated on the challenge of how to protect societal values from dangers that the nature
and pace of ICT advances pose.163 Crucially, tackling moral issues involving
cybertechnology164 becomes daunting due to the emergence of transboundary courses of
action.165 Just to make things more challenging, several forms of global law co-exist and
‘claim worldwide validity independently of the law of the nation-states and in relative
distance to the rules of international law’,166 thereby creating penumbras where legal
uncertainty reigns. Their advantage over traditional national legal orders is that the former do
not face the challenge of spatial closure; that is, they are de-localized.167
However, the digital age brings an unwelcome paradox with it: the more the internet evolves
technologically opening new paths for the humankind the more interested governments
become in harnessing it;168 and nowadays, technological advances, along with traditional
business practices have managed to unveil the initial anonymity and allegedly uncontrolled
nature of the internet.169 This means that governments have found ways to circumvent
internet’s early unlimited freedom.170 Nowadays, what is more of concern is whether
cyberspace increasingly becomes the ‘guinea pig’ of state regulation, along with a battle to
control it.171 This is so because control of information flowing in the cyberspace proves to be
the most effective means of exercising power.172 In this respect, governments for instance can
prohibit or otherwise restrict access to certain content to the people residing in their territories
through control/supervision of internet service providers (ISPs) or unbalanced agreements
with specific IT colossi such as Google or Yahoo.173
162 F. Cafaggi, ‘New Foundations of Transnational Private Regulation’, EUI Working Paper RSCAS 2010/53,
June 2010; also P. Delimatsis, ‘The Fragmentation of International Trade Law’ 45:1 Journal of World Trade
(2011) (in press).
Protection of public morality in the
163 Cf. M. Hildebrandt and B.-J. Koops, ‘The Challenges of Ambient Law and Legal Protection in the Profiling
Era’ 73:3 Modern Law Review (2010) 428.
164 Cyberethics indeed becomes a conundrum for every agent involved in the drafting of norms regulating human
behaviour. See H. Tavani, Ethics and Technology – Controversies, Questions, and Strategies for Ethical
Computing, 3rd edn (Wiley, 2010)
165 This transboundary element has arguably transformed previous theories relating to sovereignty. It was argued
that the concept of state sovereignty is being transformed in a manner that allows state action only if the latter
aims to respect and promote human rights, interests, needs and security. For this discussion arguing for an
‘individual-FHQWHUHG¶ LQWHUQDWLRQDO V\VWHP VHH $ 3HWHUV µ+XPDQLW\ DV WKH $ DQG ȍ RI 6RYHUHLJQW\¶ 
European Journal of International Law (2009) 513.
166 G. Teubner, ‘Foreword: Legal regimes of Global Non-state Actors’ in G. Teubner (ed), Global Law Without a
State (Aldershot: Dartmouth, 1997), xiii.
167 Such emergence, however, may be leading to new forms of re-localization. See H. Lindahl, ‘A-Legality:
Postnationalism and the Question of Legal Boundaries’ 73:1 Modern Law Review (2010) 30.
168 One can anticipate at least two reasons for this, both relating to power: First, even if societies evolve, the role
of the state as the ultimate power-seeker which competes with other states remains the same throughout the
centuries; a second, more benign explanation can be that governments may want to avoid domination of the
medium, the internet, by an uncontrolled corporate power. For this second view, see T. Wu, The Master Switch –
The Rise and Fall of Information Empires (Knopf Doubleday Publishing, 2010).
169 For a highly influential treatise on this issue, see L. Lessig, Code and Other Laws of Cyberspace (Basic
Books, 1999).
170 Cf J. Goldsmith and T. Wu, Who Controls the Internet? Illusions of a Borderless World (Oxford University
Press, 2008). See also L. Lessig, ‘The Law of the Horse: What Cyberlaw Might Teach’ 113 Harvard Law
Review (1999) 501.
171 Regulation should be regarded here as a broader concept which may consist of a patchwork of state
regulation, mandatory and voluntary technical standards as well as informal codes of conduct. See J. Feick and
R. Werle, ‘Regulation of Cyberspace’ in Baldwin et al. (eds), above note 158, p. 523.
172 S. Braman, Change of State, Information, Policy, and Power (MIT Press, 2006).
173 Cf. J. Zittrain and J. Palfrey, ‘Internet Filtering: the Politics and Mechanics of Control’ in R. Deibert; J.
Palfrey; R. Rohozinski; and J. Zittrain (eds), Access Denied: The Practice and Policy of Global Internet

25
digital age has become the prime justification for censorship or filtering, accompanied by
sometimes disproportionate fines and criminal sanctions.174
Additionally, in an era of increased judicialisation in international relations, the proliferation
of courts at the regional and international level appear to be a vital catalyst as to the way
protection of public morality is perceived and the level of protection of fundamental rights.
There are courts such as the ECJ that advance supranational concepts of legitimate objectives
justifying derogations from international obligations; yet, public morality remains one of the
areas in which the otherwise progressive ECJ is more reluctant to advance its rhetoric of
exceptions that are to be interpreted narrowly if they hamper the free movement rules.
Such limitations and restrictions
clearly bear on the related (albeit more encompassing) freedom of speech as a fundamental
right.
175 In
Karner, the ECJ reflected upon the relative importance of freedom of expression in the
following manner:176
Whilst the principle of freedom of expression is expressly recognised by Article 10
ECHR and constitutes one of the fundamental pillars of a democratic society, it
nevertheless follows from the wording of Article 10(2) that freedom of expression is
also subject to certain limitations justified by objectives in the public interest, in so far
as those derogations are in accordance with the law, motivated by one or more of the
legitimate aims under that provision and necessary in a democratic society, that is to
say justified by a pressing social need and, in particular, proportionate to the
legitimate aim pursued …
It is common ground that the discretion enjoyed by the national authorities in
determining the balance to be struck between freedom of expression and the
abovementioned objectives varies for each of the goals justifying restrictions on that
freedom and depends on the nature of the activities in question. When the exercise of
the freedom does not contribute to a discussion of public interest and, in addition,
arises in a context in which the MS have a certain amount of discretion, review is
limited to an examination of the reasonableness and proportionality of the
interference. This holds true for the commercial use of freedom of expression,
particularly in a field as complex and fluctuating as advertising.
In the aftermath of the entry into force of the Treaty of Lisbon which attributes a primary-law
status to the Charter of Fundamental Rights of the European Union, everyone awaits with
great interest the ECJ’s treatment of the related rights enshrined in the Charter. For instance,
Article 11, entitled ‘Freedom of expression and information’ protects freedom of expression
and the circulation of information and ideas ‘without interference by public authority and
regardless of frontiers’, while requiring the respect of the freedom and pluralism of the media.
However, real change is likely to occur through channels and processes other than judicial
systems. The emergence of transnational non-state actors and the globalization of business
allowing (or obliging) people to become more mobile should be expected to affect and
perhaps modernise State assertions about the adequate meaning of public morals, as the latter
may not be aligning with contemporary emerging governance patterns.177
Filtering (MIT Press, 2008), at 45.
Contemporary
174 Filtering of course can be the result of private action nowadays, in our attempt to only receive information
that matches our personal search criteria. See C. Sunstein, ‘Democracy and the Internet’ in J. van den Hoven and
J. Weckert (eds), Information Technology and Moral Philosophy (Cambridge University Press, 2008), p. 93.
175 Cf. 34/79, Henn and Darby.
176 C-71/02, Karner >2004@ECR I-3025, paras 50-51.
177 cf. A. Fischer-Lescano and G. Teubner, ‘Regime-Collisions: The Vain Search for Legal Unity in the

26 Protecting public morals in a digital era
doctrine would even argue for ethical pluralism and the emergence of global ethics.178 In this
case, states would be called upon to adequately protect such concepts at a domestic level,
thereby acting as agents protecting values that transcend borders. Such a system has many
chances to become increasingly human-centered, putting more weight on individual duties
(accompanied by less state intervention) when protection of morality within the digital
ecology is at stake.179 Such an approach would discard any outright prohibitions of specific
means of delivery, as they arguably harm innovation and are not suitable to achieve the
objective pursued in that less restrictive means can attain that objective equally effectively.180
G. Conclusion
Cyberspace trade increasingly becomes a reliable alternative, notably due to the increasing
trustworthiness of remote transactions and the willingness to avoid extant barriers when
products and services are supplied physically. Information services and digital products
delivered remotely through electronic communication systems come to the forefront as an
inevitable result of the internet becoming a global trading platform. Most crucially, such
disputes put an accent on current weaknesses of, and should be expected to transform, global
legal engineering notably with regard to interpretation, jurisdiction, protection of human
rights and legitimate public interests.181
Within this complex reality, this paper puts an accent on WTO Members’ struggle as to how
best to protect public morality domestically in a digital age. From a WTO perspective such
concerns are deemed legitimate, whereas no uniformization of values is warranted. As
evidenced by consistent WTO case-law, the WTO judiciary will be more intrusive when
discriminatory treatment is to trace, as exemplified by the US – Gambling case. However, the
China – Publications and Audiovisual Products, which this paper also discussed in extenso,
raises more questions than it actually manages to answer, notably with respect to the scope of
the public morals exception and the appropriate standard of review applied by the WTO
judiciary.
The concern obviously relates to the avoidance of circumvention of extensively negotiated
substantive obligations under the WTO framework. Proposals are brought forward: For
instance, Wu suggests that only measures which are, in effect, statutes passed through a
legislative process, be allowed to qualify under the public morals exception. However, as the
author himself acknowledges, this approach does not seem to offer any analytical results in
the case of States where the distribution of power is uneven like China.182
Fragmentation of Global Law’ 25 Michigan Journal of International Law (2004) 999.
The weaknesses of
his proposal, which argues for a global ‘near-consensus’ or a ‘near-universal agreement’ as to
the public morality aspects of a given issue, became apparent in China – Publications and
Audiovisual Products. In a diverse world which evolves in a varying pace over time and
space, such an approach would diminish the value of the WTO exceptions. It also seems to
178 See C. Ess, ‘Culture and Global Networks: Hope for a Global Ethics?’ in van den Hoven Weckert (eds),
above note 174, p. 195.
179 Philosophers would recognize here the teachings of one of the leaders of the sophistic movement in Athens,
Protagoras, which were based on human subjectivism (‘ʌȐȞIJȦȞ ȤȡȘȝȐIJȦȞ ȝȑIJȡȠȞ ȐȞșȡȦʌȠȢ’).
180 Such an approach could draw from the political liberalism theory arguing for individualism, individual
freedom and autonomy: W. Whitman, ‘Democratic Vistas’, in J. Kaplan (ed.), Complete Poetry and Collected
Prose (Library of America, 1982), p. 929.
181 A. Chander, ‘Trade 2.0’ 34 Yale Journal of International Law (2009) 282.
182 In China, the State Council is the highest executive body. In the China – Audiovisual Products case, none of
the measures at stake were laws enacted by China’s legislature, that is, the National People’s Congress or its
Standing Committee.

27
neglect domestic societal values and to unduly bring the WTO into the uncomfortable
position of having to intermingle with a domestic political system. Quite paradoxically, the
most striking feature of the China – Publications and Audiovisual Products ruling is the
measure that the WTO adjudicating bodies accepted as a genuine, reasonably available
alternative measure: Both the Panel and the Appellate Body concurred with the US view that
aState content review mechanism would do. In other words, the WTO judiciary advanced the
view that a more democracy-impairing measure would be a less trade-restrictive measure.
Arguably, the WTO judiciary fell into the trap of ‘judicial babble’, as the current Chinese
content review mechanism on trial was implicitly controlled by the Chinese State anyway.
This is so because of the requirement that the import companies be wholly State-owned.
Therefore, the paper argued for the application of a light necessity test (notably its ‘genuine
alternative’ component), coupled with a ‘non-discrimination in application’ test pursuant to
the chapeau of Article XX GATT.
Finally, one cannot help but identify an odd paradox that emerges from the case-law under
review: At first, the WTO judiciary theologically follows the technological neutrality
principle first established in the US – Gambling Panel, which would arguably be in favour of
freedom of expression and promotion of digital innovation. However, on the occasion of
discussing the Chinese practices, the WTO judiciary appears ready to go only half-way
through: When analyzing the exception provision, it takes a very reluctant and perhaps
counterproductive stance.
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