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Comment: Canada – Wheat: discrimination, non-commercial considerations, and the right to regulate through state trading enterprises

Paragraph (a) of Article XVII : 1 of the GATT provides that state trading enterprises shall, in their purchases or sales involving imports or exports, act in a manner ‘consistent with the general principles of non-discriminatory treatment’ prescribed by the GATT for government measures affecting imports or exports by private traders. According to paragraph (b) of Article XVII : 1, paragraph (a) shall be understood to mean that state trading enterprises shall make their purchases or sales involving imports or exports ‘solely in accordance with commercial considerations’. In Canada – Wheat Exports and Grain Imports, the Appellate Body made clear that paragraph (b) does not establish an independent obligation to ensure that state trading enterprises act solely in accordance with commercial considerations; it merely defines the obligation set out in paragraph (a). The Appellate Body thereby endorsed the finding of the GATT Panel on Canada – FIRA, which had ruled in 1984 that ‘the commercial considerations criterion becomes relevant only after it has been determined that the governmental action at issue falls within the scope of the general principles of nondiscriminatory treatment prescribed by the General Agreement’. The ruling of the Appellate Body confirms that the Members of the WTO may use state trading enterprises to pursue noncommercial policy objectives provided they act consistently with GATT’s general principles of nondiscriminatory treatment. The fundamental question that has been left