International Economic Law and Policy Blog

The Geneva Consensus

See Pascal Lamy's major speech on the "Geneva Consensus."  Obviously, he is distinguishing the more focused market-oriented Washington Consensus.  His Geneva Consensus involves a focus on adjustment:

We must create a new “Geneva consensus”: a new basis for the opening up of trade that takes into account the resultant cost of adjustment. Trade opening is necessary, but it is not sufficient in itself. It also implies assistance: to help the least-developed countries to build up their stocks and therefore adequate productive and logistical capacity; to increase their capacity to negotiate and to implement the commitments undertaken in the international trading system; and to deal with the imbalances created between winners and losers from trade opening — imbalances that are the more dangerous to the more fragile economies, societies or countries.

Lamy also points out the broader problem of governance in globalization.  I have taken to referring to this problem, in progressive terms, as the "governance lag."  Society has changed in response to changes in technology and commerce, but governance mechanisms have not kept up.  I read Lamy's call for better governance as a call to remedy this "lag."  However, it is by no means easy to determine the scope of the lag, and to ensure that local autonomy is not compromised inappropriately.  This lag may be described in terms of the relationship between the Washington Consensus and the Geneva Consensus.  The Washington Consensus helped to bring us globalization.  In order to sustain and improve the results of globalization, Lamy's Geneva Consensus responds.  This is the same idea, on a global scale, as that expressed in The Great Transformation by Karl Polanyi, as updated by John Ruggie.  See also my recent paper on the topic.  It is clear that Lamy is right, but it is less clear what the details of action should be. 

Race to the top?

Well, something is happening at Davos.  There has been more discussion of the Doha agenda, and suggestions by Peter Mendelson that the developing countries will need to make some non-agricultural market access concessions in order to allow him to sell further agricultural liberalizatoin to Europe. 

But I have wondered whether any policy can really be made with the assemblage of the great and good (we can argue about the proportions).  Perhaps the real role of Davos is in marketing.  This seems to be what India is doing.  Marcus Walker of the Wall St. Journal reports today that

The Indian argument [that its existing democracy promises stability] implies that investors flocking to China must bear in mind that China could undergo severe political disruption in coming years, which may cost them money. China has seen a rash of violent protests recently by residents fighting official plans for industrial development. China's critics say this highlights the scope for conflict in a system that lacks a safety valve for political opposition.

India is marketing its attractions as a place to invest on the basis of its long experience with democracy.  The argument seems to assume that China will have to implement democracy sooner or later, and at that time we are likely to see costly disruption of the Chinese economy.  So, invest in India, where democracy has been absorbed and won't cause disruption. 

How will China respond?  In the 1989 Tienanmen disaster, it was alleged that Deng Xiaoping stated "It is worth getting rid of 20,000 for 20 years of stability."  So, I suppose we have three years before the rent on China's stability comes due.  Investors will vote with their feet for democracy or non-democracy, but their decisions may actually be self-fulfilling.  Greater investment may itself produce greater stability.  So, India's marketing campaign seems to make some sense. 

Off-Message Jack Goldsmith

Well, this blog is about international economic law, so I am a bit conflicted about mentioning this.  On the other hand, it is a good international law story, and the arguments regarding the President's authority in the U.S. have important implications for U.S. foreign relations law in the economic area.  That is, does the claim of extensive commander in chief power affect our understanding of the President's role in international economic relations? 

So, with that apology, check out the Newsweek story about Jack Goldsmith's time in the Justice Department.  It is a good story about the difficulty of being an insider, and of judging insiders. 

Corporate Social Responsibility--Who's Crazy?

For years, my question to advocates of corporate social responsibility was "why should corporations be treated differently from other citizens."  In the international context, the question was "why should foreign corporations be treated differently from local corporations?"  "Why impose supra-standard regulation on firms, just because they are firms?" 

These questions came from an unreconstructed rationalist perspective that the role of corporations, like the rest of us, is to maximize preferences under constraints.  The constraints are largely legal, but also include social norms enforced through public opinion.  Just like the constraints under which individuals labor.  Governments impose the general level of regulation that they deem sensible, applicable to corporations and individuals alike, and all is for the best in the best of all possible worlds. 

But as I was recently reviewing the public choice perspective on government, I understood that the public choice perspective suggests that organizations are not simply mechanisms of individual satisfaction of preferences.  We understand governments to be beset by agency costs, which suggests that a penalty imposed on the government that would induce rational behavior by a perfectly representative government, may not induce rational behavior by governments as they are.  See my paper on remedies at the WTO. 

If this is true of governments, it is also true of firms.  Remedies that assume rational individual preference-maximizing behavior by firms may not induce the desired behavior.  Corporate social responsibility is necessitated by imperfect corporate governance, in the following way.  There are two corporate governance problems.  First, the commonly understood one:  corporations do not necessarily maximize shareholder wealth.  But the second is more difficult and is exacerbated by efforts to remedy the first.  Corporations are structured to ignore values beyond shareholder wealth maximization.  We may assume that states have the regulation they want--labor, environmental, health and safety, etc--with the penalties they want.  CSR is not necessarily a basis for increasing the goals of regulation.  But we cannot assume that these rules, assuming that they were designed to regulate individuals, will have the desired behavioral effect on corporations.  We cannot assume that they will achieve their goals.

One way of saying this is that if a corporation were an individual, it would be at great risk for psychosis.  Its brain--its organizational decision-making--is structured in a rather narrow, short-sighted and single-minded way.  This point will take further analysis and development.  But the point is that given differences in the structure of the corporate brain, a different and in some cases more stringent set of rules may be required. 

So that suggests a rationalist explanation of CSR arguments for greater responsibilities applicable to firms.  What about greater responsibilities applicable to foreign firms compared to local firms?  Here, there is not as obvious an explanation.  But one response is to analyze the reason why the firm is categorized as "foreign."  If the management has a foreign culture and location, it may be less attuned to the social signals of the host country environment than a local firm.  There also may be a kind of externalization here.  If management is based in another culture and location, they may simply not care about social norms that make up part of the set of constraints in the host country.  Those incentives may simply be inapplicable.  Another kind of psychosis.  So, a special legal regime may be appropriate to compensate for the failure of the informal regime to constrain MNCs. 

Richard Posner, critical legal theorist (or, Original Intent, again)

In two recent statements, Judge Richard Posner, one of the fathers of law and economics, has seemed to reject the "rule of law."  See the Jeffrey Toobin piece in The New Yorker, commenting on Posner's recent piece in the Harvard Law Review:

Of the 2004-05 Supreme Court term, he wrote, “Almost a quarter century as a federal appellate judge has convinced me it is rarely possible to say with a straight face of a Supreme Court constitutional decision that it was decided correctly or incorrectly.” This was because the most important pronouncements of the Court were invariably political in nature, rather than strictly legal. Constitutional cases, Posner asserted, “can be decided only on the basis of a political judgment, and a political judgment cannot be called right or wrong by reference to legal norms.” The Justices, guided only by the majestic generalities of the Constitution, and the malleable (and sometimes disposable) precedents of the Court itself, enjoy a degree of authority and freedom of action that is without parallel in our system of government.

Or see Posner's current piece in The New Republic: 

Lawyers who are busily debating legality without first trying to assess the consequences of the program have put the cart before the horse. Law in the United States is not a Platonic abstraction but a flexible tool of social policy. In analyzing all but the simplest legal questions, one is well advised to begin by asking what social policies are at stake. Suppose the NSA program is vital to the nation's defense, and its impingements on civil liberties are slight. That would not prove the program's legality, because not every good thing is legal; law and policy are not perfectly aligned. But a conviction that the program had great merit would shape and hone the legal inquiry. We would search harder for grounds to affirm its legality, and, if our search were to fail, at least we would know how to change the law--or how to change the program to make it comply with the law--without destroying its effectiveness. Similarly, if the program's contribution to national security were negligible--as we learn, also from the Times, that some FBI personnel are indiscreetly whispering--and it is undermining our civil liberties, this would push the legal analysis in the opposite direction."

While Posner accepts that there are limits, he refuses to accept a clear line between interpretation and policy-making.  This line is, if not the definition of the "rule of law," a critical component of the rule of law.  Posner rejects the separation between law and politics.  While this is no doubt true descriptively, is it acceptable normatively?  Should judges, as Posner suggests, search for the best public policy solution even if it is the less compelling interpretative solution?  For me, this depends not on the philosophy of the judge, but on the explicit or implicit scope of agency assigned to the judge.  In the recent Supreme Court hearings, Roberts and Alito have been required to foreswear broad scope of judicial agency.  While I am uncertain whether this is normatively attractive as a general matter, it certainly seems to be the consensus position, and it seems starkly inconsistent with Posner's position. 

Waiting for GMO (with apologies to Beckett)

AFP reports that a U.S. official has said that the GMO report will arrive next Wednesday.  But in keeping with Beckett's work, it will not really arrive.  Rather, it will be an interim report that will be distributed to the parties, with the results immediately leaked.  So, even after Wednesday, those of us interested in the reasoning will still be waiting for GMO. 

TRIPS to China

The FT reported yesterday that the U.S. is asking for more information about Chinese enforcement, including criminal enforcement, and penalties, for intellectual property infringement.  The U.S. is threatening WTO litigation for non-compliance with this request.  The U.S. made its request under Art. 63.3 of TRIPS.  Here is the relevant text of Art. 63.1 and 63.3:

1.         Laws and regulations, and final judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of this Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published, or where such publication is not practicable made publicly available, in a national language, in such a manner as to enable governments and right holders to become acquainted with them.  Agreements concerning the subject matter of this Agreement which are in force between the government or a governmental agency of a Member and the government or a governmental agency of another Member shall also be published.

3.         Each Member shall be prepared to supply, in response to a written request from another Member, information of the sort referred to in paragraph 1.  A Member, having reason to believe that a specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual property rights affects its rights under this Agreement, may also request in writing to be given access to or be informed in sufficient detail of such specific judicial decisions or administrative rulings or bilateral agreements.

Paragraph 1 seems to call for information about final judicial decisions of general application, while the second sentence of paragraph 3, would seem to call for information only about specific decisions, not about decisions generally. So, one wonders what the U.S. theory is?

This dispute would seem to lend support to those who argued that China's entry into the WTO might help reform its rather opaque domestic legal system.  However, it is not clear that pressure on intellectual property rights will have spillovers into other fields.

Jose Bove Likes the WTO

Jose Bove is advocating use of the WTO DSB by African states to attack the EU's agricultural policies. 

"African government leaders and heads of state have to attack the European Union in the tribunal of the World Trade Organization for the distortion and destruction of their local economies," the peasant leader told a meeting in the Mali capital Bamako."

While there are important concerns regarding the utility of the WTO dispute settlement system for poor countries, it is good to see Bove recognize that the WTO can be part of the solution. 

Something Happening at Davos?

It seems as though Davos is to host a mini-ministerial in parallel to the World Economic Forum.  See the story.  USTR Portman is playing the Fast Track card, and saying that the ball is in the EU court. 

Wolfowitz and Chad, again

The New Republic has a story about Wolfowitz' confrontation with the government of Chad: 

"WHY LIBERALS SHOULD BE APPLAUDING WOLFOWITZ. Bank Statement by Jai Singh    Only at TNR Online | Post date 01.24.06

It's not front-page news, but Paul Wolfowitz is taking on a dictator again. And liberals, many of whom were aghast last year that an architect of the Iraq war had been tapped to lead the World Bank, should be applauding. In fact, some already are.

Two weeks ago, Chad's authoritarian president Idriss Déby effectively revoked a law requiring his government to spend 80 percent of the country's oil revenues on health, education, and infrastructure while placing 10 percent of the revenue in a fund for future generations. The law was part of a 2000 agreement in which the World Bank and an ExxonMobil-led oil consortium agreed to fund a massive project to extract Chadian oil and pipe it through Cameroon for export."

I quickly looked to see if this was a reference to me (how did Singh know I was a liberal?).  It wasn't.  I guess blogging doesn't provide instant celebrity status.  Oh well.   Singh's article has a good description of the original transaction. 

Food Fights

This from today's Wall St. Journal:

"EU Executive Arm
Endorses Labels
On 'Humane' Food

By MARY JACOBY
Staff Reporter of THE WALL STREET JOURNAL
January 24, 2006; Page A19

BRUSSELS – A special label should be applied to poultry, beef, pork and fish produced by "humane" farming methods to encourage European grocery shoppers to buy it, the European Union's policy-making arm said.

The proposed food label is part of a five-year EU plan to promote animal welfare. In addition to encouraging consumers to buy free-range chicken and other products with minimal agricultural processing, the EU aims to reduce the use of animals in medical and product-safety tests and develop more scientific methods for gauging animals' well-being."

Let's focus on the humane farming label.  The EU, if it implements this Commission proposal, will have to justify its system under WTO law.   If the proposal is implented as a  voluntary scheme, whereby those who farm humanely are encouraged to label their goods accordingly, it is difficult to imagine a successful challenge.  If the proposal is implemented as a mandatory regulation, perhaps requiring inhumanely produced meat to be labeled as such, it will raise the product-process distinction issue under Article III of GATT.  If it is understood as a product standard--establishing technical regulations under the WTO Agreement on Technical Barriers to Trade--it will raise further issues.  These issues will include the question of whether it is "more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create" (Art. 2.2). 

ASIL International Economic Law Group

The ASIL International Economic Law Group (ASILIELG) has published an announcement of its upcoming conference in Bretton Woods in November, as well as a call for papers.  The topic of the conference will be

"The state of practice and service within the field; The direction, methods and relevance of research in the subject; and Perhaps most importantly, we hope to consider our present and future efforts to teach and train practitioners and researchers in this important field."

It is a great location for an international economic law conference. 

Trade and Poverty

The World Bank Trade group has published a new collection of papers entitled Poverty and the WTO.  This work may be responsive to some of the questions raised in the debate between RSquared and Aaron Cosby below.  I would suggest that, at least in a sense, both are right.  The WTO constitutive documents, as Aaron Cosby points out, call for the WTO to respond to poverty.  On the other hand, the current form of negotiations may not be terribly responsive to poverty.  See the work by GDAE on this topic.  There is no particular legal barrier to expanding the scope of negotiations, but there are substantial political barriers. 

Economic Sanctions and Collective Security

Laurence Boisson de Chazournes has recently published an analysis of the relationship between collective security measures and international economic law, under the auspices of the International Peace Academy.  It is entitled "Taking the International Rule of Law Seriously:  Economic Instruments and Collective Security."  Given that most collective security actions take the form of economic boycotts and other economic measures, this work provides an important analysis.

"The paper argues that respect for the international rule of law should not be based solely on adherence to the UN Charter when reviewing collective security measures of an economic nature. The promotion and integration of principles such as fair competition, non-discrimination and transparency would help enhance the legitimacy of the UN Security Council."

Internet jurisdiction again--Yahoo in 9th Circuit

The U.S. Federal Court of Appeals for the 9th Circuit decided last week to reject an appeal by Yahoo in a U.S. echo of the French Nazi memorabilia case.  Today's FT has a story.  After losing in France, Yahoo sought a declaratory judgment in the U.S. that the French judgements should not be recognized or enforced in the U.S. because enforcement would violate the First Amendment. 

A majority of the court found personal jurisdiction over the defendant, La Ligue Contre le Racisme et L'Antisemitisme.  But a minority found no personal jurisdiction, and another minority found the basic issue of recognition and enforcement not to be ripe, and so the court declined to adjudicate it.   

Following is the dispositive language from the court:

"An eight-judge majority of the en banc panel holds, as explained in Part II of this opinion, that the district court properly exercised specific personal jurisdiction over defendants LICRA and UEJF under the criteria of Calder. A three-judge plurality of the panel concludes, as explained in Part III of this opinion, that the suit is unripe for decision under the criteria of Abbott Laboratories. When the votes of the three judges who conclude that the suit is unripe are combined with the votes of the three dissenting judges who conclude that there is no personal jurisdiction over LICRA and UEJF, there are six votes to dismiss Yahoo!’s suit."

Along the way, the court preliminarily examined some of the substantive aspects of the case, including the question of whether enforcement of the French judgment would violate California public policy and the First Amendment.  One aspect of this inquiry addressed the question of whether suppression of Nazi memorabilia notices in France would offend California public policy and the First Amendment.  This is an interesting case, occasioned by the internet, of conflict of strong public policy between the U.S. and France.  To me, the most interesting thing about it is that in this context we use doctrines of personal jurisdiction, choice of law, and recognition and enforcement of judgments to determine how to interrelate these important and somewhat divergent national public policies.  I say "somewhat" divergent because of course France also protects free speech, but obviously with different exceptions.  I believe that to some extent these private international law doctrines, along with the ripeness doctrine, allow us to isolate, and to some extent avoid, the fundamental conflict.

Bulk Tequila

See Julian Ku's post at opinio juris, noting that the U.S. and Mexico have settled a dispute regarding Mexico's restrictions on exports of tequila in bulk.  This type of restriction could have been addressed under either NAFTA or WTO law.  Under WTO law, it would seem to violate the prohibition on export restraints contained in Art. XI of GATT.  There might also be an argument that the export restriction implicitly subsidies the domestic bottling industry.  However, in the U.S.-Export Restraints case, a WTO panel found that Canadian export restraints on logs could not constitute a subsidy under the Subsidies and Countervailing Measures Agreement, because they do not involve a "financial contribution" by government. 

Welcoming Petros Mavroidis

I heartily welcome Prof. Petros Mavroidis as an additional member of the IELP blogocracy.  Petros, of Columbia Law School and Neuchatel, is one of the world's leading scholars and practitioners of international trade law.  We are fortunate indeed to have his erudite commentary.

Bob Loblaw's Law Blog

A friend writes:

"By the way, I don't know if you watch the TV show called Arrested Development, but I think you might like it. Smart, suble, and witty humor.

Anyway, there's a character on the show who's a lawyer, and his name is Bob Loblaw (say it out loud). And Bob recently started a law blog, so it's Bob Loblaw's law blog."

Sovereignty/jurisdiction in cyberspace

See this Boston Globe commentary about the forthcoming book by Jack Goldsmith and Tim Wu.  http://www.boston.com/business/technology/articles/2006/01/15/sovereignty_in_cyberspace/  (See below)

The basic thrust is that it's still the same old story, a fight for love and glory, a case of do or die.  Well, time really does go by.  And technological change can have important effects on the exercise of jurisdiction, and on sovereignty.  These effects arise from the velocity, frequency, scope and cost of communication.  Coincidentally, there is a story in today's Wall St. Journal about child pornography.  Here is the headline and first couple of paragraphs, suggesting that at least on the violation side, it is by no means the same old story:

Dangerous Mix
Internet Transforms Child Porn
Into Lucrative Criminal Trade

Company in Belarus Collected
Millions From Pedophiles;
A Landmark Prosecution

Agent's Rendezvous in Paris

By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
January 17, 2006; Page A1

On a Saturday morning in October 2003, federal agents raided the apartment of Chicago pediatrician Howard Marc Watzman. They found two computers with more than 3,000 images of boys and girls as young as 4 years old being sexually exploited. Mr. Watzman was later sentenced to five years in prison for possessing child pornography.

The case is one of more than a thousand stemming from a broad international probe into a company called Regpay Co. in the former Soviet republic of Belarus. Regpay gathered lurid images and sold them to pedophiles around the world with the help of U.S. companies that collected credit-card payments.

Regpay offers a window into how the Internet has transformed what was once a cottage industry into a sophisticated business. The company is at the center of what U.S. law-enforcement officials call the largest Internet child-pornography investigation to date and the first to follow the international financial trail of child-porn sales. The probe has discovered the names of some 40,000 Americans who downloaded child porn and led to more than 1,400 arrests world-wide including about 330 in the U.S. At least three users arrested in the U.S. have committed suicide.

[end of excerpt from WSJ story]

On the violation side, it is not the same old story, and on the enforcement/jurisdiction side, it cannot be the same old story.  Goldsmith and Wu understand this, but it is worth underlining.  For more of my analysis, see my paper, Cyberspace, Sovereignty, Jurisdiction and Modernism, 5 Indiana Journal of Global Legal Studies 561 (1998).  I also addressed a narrower set of issues more recently in Global Cyberterrorism, Jurisdiction, and International Organization, in The Law and Economics of Cybersecurity (Mark Grady & Francesco Parisi, eds. 2005).

CRITICAL FACULTIES

Sovereignty in cyberspace

Two legal scholars puncture the myth of the borderless, lawless Internet

By Christopher Shea  |  January 15, 2006

LESS THAN a decade ago, in his famous ''Declaration of the Independence of Cyberspace," the Internet theorist John Perry Barlow wrote, ''Governments of the Industrial World, you weary giants of flesh and steel....You have no sovereignty where we gather."

How quickly things change. In a 2000 case, a French court ruled that Yahoo, an American company, had to follow French law and make sure that no Nazi memorabilia could be purchased online in France via Yahoo auction sites. Yahoo first decried the effort as censorship, then claimed it was impossible to identify French Web surfers. Now, just as French judges demanded, Yahoo uses geographic-filtering software to make sure websites viewable in France comply with French standards. (It uses that same software to give French viewers French-language ads.)

China, another flesh-and-steel giant, has also proved itself surprisingly agile. Chinese officials use Cisco hardware to keep any website with an ''offensive" message from getting through its borders and Microsoft products to screen words like ''democracy" and ''multiparty elections" from blogs. Last fall, Chinese officials demanded that Yahoo trace the identity of a journalist who had leaked information about a Communist Party meeting to an American website. Yahoo complied, and the man is now serving a 10-year sentence.

In other words, forget all that talk about a borderless utopia and about blogs dissolving dictatorships-or at least tamp it down. When it comes to the Internet, ''The story of the next 10 years will be one of rising government power," says Tim Wu, a former marketing executive for a Silicon Valley company who now teaches law at Columbia. While some countries are committed to a fundamentally ''closed" Internet, others want it open. Since technology permits both approaches, Wu adds, ''I wouldn't be surprised if we saw an Internet version of the Cold War."

Wu is coauthor, with Harvard law professor Jack L. Goldsmith, of the iconoclastic forthcoming book, ''Who Controls the Internet?" (an excerpt of which appears this month in Legal Affairs magazine). The book, to be published in March, could be called an example of ''cyberrealism" in two ways. It grafts the hard-nosed ''realist" school of foreign policy-states and state interests are what matters-onto an analysis of what's going on with the Web today. It also tries to deflate hype by arguing that most of the supposedly unprecedented issues raised by the Internet can be handled by existing concepts in international law.

. . .

Goldsmith, an international law expert hired by Harvard in 2004, has a history of contrarianism. He has already shaken up his field with his claims that treaties never force nations to do anything that isn't already in their interest to do. In ''The Limits of International Law" (2005), cowritten with Eric A. Posner, of the University of Chicago, Goldsmith and Posner argued that there are various reasons a country might decide to end torture-if it wants to take an issue away from dissidents or to gain access to American markets. But human-rights treaties and ''international law talk" are mostly window dressing.

That book infuriated some international-affairs scholars, and the new book-which contains entertaining accounts of key episodes in Internet history as well as legal arguments-similarly flouts conventional wisdom.

For example, what do you think protects eBay customers from fraud? Is it the much-lauded ''feedback" system that lets buyers and sellers rate one another's trustworthiness-the feature the columnist and globalization guru Thomas Friedman says has made eBay a ''self-governed nation-state." Or can you shop on eBay safely for the same reason Friedman can walk New York streets without getting mugged: American laws and American cops?

In fact, Goldsmith and Wu observe, eBay's ''level of integration with and dependence on law enforcement is remarkable." The company employs hundreds of internal security experts, who mine data for suspicious patterns of activity and alert US officials when they detect scams. Indeed, eBay has found it can't operate in countries-like Russia-without strong legal systems.

The rising importance of national borders creates headaches for online stores and publishers, but Wu and Goldsmith mostly shrug at the difficulties-unlike many of their peers. Some civil libertarians find it rather ominous that foreign nations have claimed their citizens' right to file libel suits against American websites. But Wu and Goldsmith note that England's wanting to ban libelous speech (by its standards) streaming across its borders is no different than America's wanting to keep shoddy Chinese cars from crossing its. And international law already handles cases-like pollution drift-in which domestic events have effects abroad.

Wu and Goldsmith argue that a varied patchwork of national laws will be more representative of peoples' desires than any Internet-wide standard could possibly be. Filtering software makes it relatively easy for media companies to keep information out of countries that don't want it-and individual bloggers are probably unreachable by foreign lawsuits, since they have no assets in those countries. Plus, people like the bordered, geographically rooted Internet. What good is that delightful 1-800 FLOWERS ad if you live in Kenya?

That will surely sound a bit too neat to the cyberlaw theorists who think it is new that anyone with a website is now subject to the laws of hundreds of nations.

Still others will contest the book's claims that China has gotten so good at controlling the Internet that its liberating possibilities are effectively counterbalanced. ''There's no doubt the [Chinese] government is tightening controls on the Internet," says Robert Wright, author of ''Nonzero: The Logic of Human Destiny," ''and there's a reason for that: The old controls aren't working."

It's too soon, Wu responds, to know whether China will master thought control on the Internet. He thinks it might. But the authors' larger point is unassailable. National laws, national borders, and physical bodies matter a lot more online than people used to think. ''There is this surprising lasting relevance to physical coercion," Wu says. It still matters-for online writers, eBay scamsters, and Chinese dissidents alike.

Christopher Shea's column appears biweekly in Ideas. E-mail [email protected].

American trade politics and the Doha Round

Now that Hong Kong has failed, and the Doha round is on a slow track, one of the critical issues for the success of the round is the duration of fast track (re-labeled "trade promotion authority") in the U.S.  Fast track allows the U.S. Congress to ratify a trade agreement by a mere majority in each house, without amendments after introduction of a bill, without being bottled up in committee and without filibuster.  It gives negotiating partners confidence that the U.S., having negotiated a deal, will either take it or leave it, but not renegotiate it.  Current fast track authority expires on July 1, 2007, meaning, given its requirements for detailed consultation with Congress prior to formal introduction of a bill, that the U.S. needs progress relatively soon. 

However, U.S. trade politics are not conducive to either a quick deal or to further extension of fast track.  See Daniel Drezner's recent discussion at  http://danieldrezner.com/policy/Tradetalk.pdf .  So it is entirely possible that Doha negotiations will founder on the reef of U.S. approval. 

Oxfam on Hong Kong

Oxfam has published a preliminary report on the Hong Kong Ministerial of the WTO.  More on this later, but two conclusions seem clear.  First, for those expecting developed countries to make altruistic contributions to the anti-poverty agenda through the WTO, the Doha Development Agenda is so far a disappointment.  Second, the critical path of the Doha Development Agenda is still blocked by agricultural protection and subsidies in the EU and U.S., among others. 

Original Intent

In the U.S., the two recent candidates for appointment to the Supreme Court, Roberts and Alito, have both pledged allegiance to the text of the constitution.  Their right wing supporters acquiesce in their decision to foreswear judicial activism on the side of the right, perhaps in order to forestall judicial activism on the side of the left.  Their opponents are comforted that they will not be activist judges. 

In the WTO, we seem to have avoided this type of ritual, surely in part because Appellate Body nominees do not go through public, televised hearings.  Yet, the same type of issue arises.  U.S. trade remedies lawyers criticize the "judicial activism" of the Appellate Body, especially in its safeguards jurisprudence.  Without much dissent, the Appellate Body adopted the Shrimp-Turtle decision, which provided an evolutionary understanding of "exhaustible natural resources" under Article XX(d) of GATT, and also found that the chapeau of Article XX required it to search for a "line of equilibrium."   

In Asbestos, the Appellate Body gave new meaning to the term "less favourable treatment", allowing a nuanced approach to discrimination under Article III of GATT, and also adopted a balancing test approach to the necessity tests in Article XX.  This is judicial activism, but as Richard Steinberg writes in his article on Judicial Law-Making at the WTO in the American Journal of International Law, there are significant constraints on judicial activism. 

This text-based, but evolutionary, approach to interpretation seems inconsistent with the Scalia attempt to determine what the framers of the Constitution had in mind at the time.  There is an important distinction between fidelity to original intent and fidelity to text.  Fidelity to text can accept that the authors of the Constitution had something in particular in mind, but that they entered into a commitment that was not time-limited and that allowed for evolution as the social, technological and legal context changes.  This seems to be the right approach both for the WTO and for the U.S. Constitution, as it allows for text-limited interpretation that responds to change.  This seems especially important in light of the fact that it is difficult to amend the Constitution and the WTO Charter. 

Caviar

The Convention on International Trade in Endangered Species (CITES) secretariat has recently refused to approve export quotas for caviar from Caspian Sea sturgeon.  This decision raises important issues of WTO law. 

The first question is who would complain?  It is most likely in this case that the exporting states would complain about import restrictions imposed by importing states.  However, it would be surprising if these exporting states were to bring this case to the WTO. 

Second, to what extent does compliance with CITES represent a defense to a claim of violation of GATT Article XI, which prohibits import and export quotas?  The answer is that under WTO law, compliance with CITES is not directly a defense.  On the other hand, Article XX(g) of GATT allows an exception for certain measures related to protection of exhaustible natural resources.  It is not clear that this provision is available to importing states concerned about exhaustible natural resources in exporting states or in the global commons.  But compliance with CITES would go a long way to establish compliance with the chapeau of Article XX , to the effect that the challenged measure may not constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade. 

Third, there are 169 members of CITES and 149 members of the WTO.  The knotty problem of whether in WTO dispute settlement to refer to a treaty that does not include all WTO members in its membership is not clearly resolved under the Vienna Convention on the Law of Treaties.  In connection with interpretation under the VCLT, would the WTO treaty be interpreted differently depending on the other treaty obligations of the disputants?  In connection with modification of the WTO treaty, is it possible for states to modify their WTO obligations by entering into other international legal norms?   I believe that the other international legal norms are not directly applicable as law in WTO dispute settlement.  This position rests on the mandate to WTO panels in the WTO Dispute Settlement Understanding.  I also believe that the WTO treaty does not permit modification other than through the established procedures specified therein, and that this intent is respected under the VCLT. 

Chad, Liberia: Conditionality, Control, Colonialism

Paul Wolfowitz has ordered the suspension of World Bank loans to Chad, because of Chad's non-compliance with the "lock box" features of its offshore oil pipeline.  The pipeline was financed by the World Bank on condition that funds be held in an offshore account and applied only for specified development-friendly purposes.  This dispute bodes poorly for Liberia's GEMAP, which has similar features. 

Wolfowitz is reported by Reuters to have said "This agreement ... has been very important to this institution and whole development community and that's why we're making enormous efforts to try to see if there can be an agreed basis in which we can go forward and also why we can't accept that one side unilaterally alters the terms of the agreement.''

Specifically, the GEMAP involves broader control of Liberian government expenditures by requiring foreign advisors to approve expenditures. 

While both of these programs may be understood as constraints on sovereignty, they are better understood as constraints on bad governance.  It would be a shame if these experiments fail due to a lack of resolve by the donors, and it is good to see the World Bank dig in its heels.

EU GMO Scofflaw

In a statement yesterday, the EU Commission has declared the ineffectiveness of WTO law to influence its conduct.  Speaking of the anticipated WTO panel report in GMOs:  "Only products recognised as safe will be allowed and the WTO report will not influence the decision-making process in the EU."  There are two ways to understand this statement.  First, the EU is simply a scofflaw, and is saying that it is above the law.  Perhaps this attitude is contagious.  Second, the EU is taking the same position it took in 1996 in the Hormones case:  it is willing to pay the price of disobedience.  This latter position is not necessarily disloyal to WTO law, but implies the attitude that "as long as you pay, you can go on as you are."  (The material in quotes is what Pascal Lamy once said about WTO countermeasures.)  It is consistent with the idea of efficient breach, although given the disarray in the law of WTO remedies, there can be no assurance that any particular breach/countermeasure combination is efficient.  I think the better understanding is the second one, while the first one may be temporarily pleasing to the EU's constituencies.  What is troubling about the statement is the apparent willingness to talk down the WTO for short term internal political gain.