Article 37 of the EEC Treaty: State Trading under Scrutiny

Waller, Spencer Weber | January 1, 1981

This comment will explore the judicial development of standards applied in analyzing state trading under Article 37. The success of Article 37 in curtailing the harmful effects of state trading is in marked contrast with the attempts to regulate state trading found within the General Agreement on Tariffs and Trade (GATT).4 In part, this can be explained by the development of judicial rather than political standards for limiting the role of state monopolies within the EEC. The European Court of Justice (ECJ) has chosen to focus on the effects of state trading, banning the practice when used to disguise quotas, but allowing it when necessary to implement national economic goals which do not discriminate against other Member States. This flexible standard is a promising step towards the general regulation of state trading under GATT. This comment suggests the strengthening of GATT obligations through the negotiation of a comprehensive multilateral agreement on state trading, urging the adoption of a code incorporating the positive obligations of Article 37 as the beginning of effective general regulation of state trading.