In this paper, we have examined the WTO-consistency of the European Union’s
Timber Regulation. The Regulation is the most recent contribution to the existing
international regulatory framework on forestry governance. Some authors have
questioned the WTO-consistency of both the U.S. Lacey Act and the Australian Illegal
Logging Prohibition Bill. Similar to these examples, the aim of the Timber Regulation
is to address the problem of illegal logging by introducing a prohibition on the
marketing of illegally logged timber. The Regulation does not lay down any product
characteristics or process and production methods and is therefore unlikely to fall
within the scope of the World Trade Organization’s Agreement on Technical Barriers
to Trade. As the Regulation covers goods—timber—it has to fulfill the requirements
set out by the General Agreement on Tariffs and Trade 1994. The authors conclude
that since the Regulation only makes a distinction between legally and illegally
harvested timber, it does not discriminate between ‘like products’ as there is no
competitive relationship between these two groups of products. As such, the
Regulation appears to be consistent with Articles I:1 and III:4 of the GATT. However,
the Regulation makes the marketing of illegally logged timber a criminal offence and
therefore creates a ‘de facto’ restriction on the importation of timber. Thus, the
Regulation would most likely constitute a violation of Article XI GATT. The question is,
however, whether the Regulation constitutes a ‘border measure’ (Article XI) or an
‘internal measure’ (Article III:4). Since the Regulation applies equally to both domestic
and imported products, it is likely that it would be an internal measure and as such
would be analyzed under Article III:4. Even if a violation of one of the substantive
provisions of GATT 1994 were to be found by a panel, we conclude that the
Regulation can most likely be justified based on Article XX GATT. Although several
legal questions (as noted, questions on trade in illicit goods, likeness between legal
and illegal goods, a potential disparate impact and hence de facto discrimination
resulting from the due diligence requirements) remain unanswered, this paper’s
theoretical analysis shows that the regulatory approach taken by the EU with the
Timber Regulation may well become an important technique to use the EU internal
market as leverage for achieving non-trade objectives.