International Economic Law and Policy Blog

Different attitudes in European Courts to International Law

An appeal has been lodged in the Yusuf case (T-306/01), decided by the European Court of First Instance decided in September last year. The case is not about WTO Law, but is of interest to those following the EU/WTO direct effect saga before the European courts.

Yusuf concerns a challenge to an EU regulation implementing Security Council Resolutions on sanctions, as part of the fight against terrorism. The contested regulation freezes the funds of certain persons alleged to be associated with Usama bin Laden. The CFI decided that the EC had competence to enact the regulation (relying in part on the 'necessary and proper' clause in Article 308 EC (along with Articles 60 and 301 EC which provide a 'bridge' between the EU and the EC Treaties; on the basis that it was necessary to achieve an objective of the EU rather than the EC Treaty, under the 2nd pillar.

More importantly, from the point of view of this blog, the CFI determined that it did not have jurisdiction to review the regulation in the light of the EC's general principle relating to the protection of fundamental human rights. Its reasoning is telling. First, it lays emphasis upon the primacy of the UN Charter over EC law (including Security Council Resolutions), and makes a determination that review on this basis would imply, indirectly, review of the relevant Security Council Resolutions:

'Para. 276: It must therefore be considered that the resolutions of the Security Council at issue fall, in principle, outside of the Court's judicial review and that the Court has no authority to call in question, even indirectly, their lawfulness, even indirectly, in the light of Community law.'

It is notable that the CFI cites the International Fruit case in order to justify its finding that the UN Charter, and Security Council Resolutions, are binding on the EC. There, the similarity with the GATT/WTO case law ends. In relation to the WTO, the European Courts have declined to find direct effect, even in the wake of a decision of the DSB, and even where the EC has indicated an intention to comply.  It stresses the policy autonomy of the EC's political institutions, relying on nature of the dispute settlement system as spelt out in the DSU.    In Yusuf, by contrast, the CFI ties the hands of the political bodies, finding that they have no discretion to adjust requirements laid down by the Security Council.  Since they have no discretion, and since they are bound by the higher law of the UN Charter, their actions escape review on the basis of Community law norms.  In the WTO cases, WTO law is not relevant enough to the EU legal order for it to be a ground for review. In the Yusuf case, UN Charter law is so relevant and sacrosanct that it precludes the possibility of review, lest this imply that it be called into question, even indirectly.  The CFI's reasoning in Yusuf draws in part upon Article 27 VCTL, and in this sense would seem to be of broader application than just the UN Charter (see, for example, para. 232).

Piet Eeckhout suggests, cynically but fairly, that the difference between this case and the WTO cases in Yusuf international law is used to uphold an EC Regulation, but in the WTO cases international law is used in an attempt to undermine such a regulation.  ('Does Europe's Constitution Stop at the Water's Edge?' at: http://www.law.kuleuven.ac.be/ccle/publications_detail.php?type=wvg&number=10)

For EU and international lawyers, Yusuf is of note also because the CFI is willing to review the legality of the regulation in the light of its conformity with norms of jus cogens, which are binding also on the Security Council. Nonetheless it upholds the regulation as being consistent with these, in large part because of the (arguably inadequate) mechanism set up providing for the re-examination of individual cases.  The CFI acknowledges that this does not confer rights directly on individuals, and thus that persons are 'dependent, essentially, on the diplomatic protection afforded by the States to their nationals'. Though the protection provided in this instance is weak, it does represent an interesting instance of a judicial body looking to the review functions of non-judicial bodies, as a means of securing accountability. In this sense the 'judicial abdication' which Eeckhout ascribes to this case (rightly I think) is, at least in principle, contingent, in the sense that the abdication of authority seemed to depend upon the existence of some system for review, judicial or otherwise; albeit a palpably inadequate on in this case.

"Soft in Wood and Head"

That is the title of the FT's editorial on the softwood lumber settlement.  The FT concludes "In the end, the softwood sata shows the limits of international disputes procedures when the two parties are determined to ignore them and go on slugging it out."  Was the law epiphenomenal here?  Did it produce or affect the settlement?

Peace in Our Time (Softwood Lumber)

Today's NYT reports a settlement of the U.S.-Canada lumber dispute.  To say that this dispute has generated a lot of litigation is an understatement.   And I suppose that the fact that the parties were willing to pay for all this litigation suggests that it had an effect on the outcome, at least at the margins.  There are at least two interesting features of the settlement. 

First, the U.S. will refund $4 billion of the $5 billion wrongfully collected.  Half of the remaining billion goes to the U.S. softwood lumber industry.  That should just about cover the litigation costs . . . .

Second, if Canadian export prices fall below a "threshold determined through a complex formula, Canadian provinces will have to impose export controls, export taxes or a combination of the two. Unlike the tariffs, those taxes will be retained by the Canadian provinces."  As I understand it, the goal is to limit Canadian producers to about one-third of the U.S. market, which is what they presently have. 

So, a payoff to the U.S. industry (presumably under the grandfather provisions of Byrd Amendment repeal), and a move to managed trade.  I guess you could say that hard cases make bad economics. 

Are Reports of Doha's Death Premature?

It seems that the vultures are beginning to circle Doha.  Given increasing economic arguments that the potential surpluses of a Doha deal (a lot depends on what that deal eventually is!) are not so large, and that only a small portion would be captured by the poor countries, I can't say that this should lead the list of our worries.  See the brief analysis by Kevin Gallagher and Tim Wise.  The magnitude of the surplus would, in theory, serve as the motivating force for early agreement. 

However, I can't imagine that the round would simply be abandoned.  The Uruguay Round continued for 8 years, with lots of brinkmanship and delays.  And even though Fast Track will expire, I imagine it will be renewed at some point in the future when the benefits of a deal seem attractive.  So, I am sanguine that eventually there will be a Doha deal, but I wonder how other see this impasse. 

Bretton Woods Redux and IMF Governance

There are two things going on at the IMF.

First, the IMF is turning its focus to global trade imbalances.  This suggests a return to the original Bretton Woods vision of coordinated trade and monetary policy.  See the Paul Bluestein story in the Washington Post.  I wonder how the IMF's functions would change to implement this change in focus, and what if any coordination with the WTO may be required.  The idea seems to be merely to hold multi-country conferences at which "spillovers and linkages" between countries are "highlighted."  An "Economic Policy Review Mechanism?"  See the IMF communique. 

The second, and related, issue, is reallocating voting rights.  It seems difficult to get anyone to accept a reallocation of voting rights in which their own rights are diluted, although Bluestein reports that the U.S. has said it would accept a small reduction. 

A Farewell to Zeroing

On April 18, 2006, the Appellate Body (AB) released its decision on the U.S. "zeroing" dispute which the EU initiated. (UNITED STATES – LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS ("ZEROING"), WT/DS294/AB/R) http://www.wto.org/english/tratop_e/dispu_e/294abr_e.pdf (If anyone wants an edited (10 pages) version of this AB decision, please email me.)

"Zeroing" stands for a specific methodology in calculating a general dumping margin for a product in question under which negative individual dumping margins are treated as zero (thus "zeroed") before aggregating all individual dumping margins. The U.S. court has recently upheld this cherry-picking practice. (Corus Staal B.A. v. United States, 395 F.3d 1343 (Fed. Cir. 2005); Timken Co. v. United States, 354 F.3d 1334, 1343-44 (Fed. Cir. 2004)). However, this practice has been severely criticized by many because it tends to inflate dumping margins and thus make it easier for the Commerce Department (DOC) to find dumping. The AB has already struck down the EU’s zeroing practice (European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, the Appellate Body Rport circulated on Mar. 1, 2001, WT/DS141/AB/R, paras. 54-55) as well as the U.S. particular, discrete zeroing practices (United States – Anti-Dumping Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea, Panel Report circulated on Dec. 22, 2000, WT/DS179/R, para. 6.105; U.S. – Final Dumping Determination on Soft Lumber from Canada, WT/DS264/AB/R, circulated on Aug. 11, 2004, para. 183 (a)). Even a recent NAFTA Chapter 19 panel (Softwood Lumber) invalidated this practice, invoking the celebrated Charming Betsy doctrine and thus viewing that the U.S. should follow the AB decision in Softwood Lumber. (Softwood Lumber Products from Canada, No. USA-CDA-2002-1904-2, Jun. 9, 2005, at 43-44)

Yet, this AB report is a final blow to the U.S. long-held zeroing practice in that the AB upheld the panel’s finding which overthrew the zeroing methodology "as such," at least as far as the "original investigations" under Article 5 of the WTO AD Code are concerned. In other words, the DOC is no longer able to use this zeroing methodology to find dumping margins in its initial investigations. In its appeal, the U.S. challenged the panel’s finding under Article 11 of DSU by arguing that the zeroing methodology itself cannot be a "measure" because it does not "mandate" a WTO violation nor "preclude" a WTO-consistent action. However, the AB rejected this argument, sidestepping the thorny issue of mandatory/discretionary distinction. Worse (to the U.S.), the AB even reversed the panel’s finding on the EU’s "as applied" claims as to the DOC’s zeroing practice under the "administrative review" process (an annual calculation of antidumping duties). The panel had originally ruled that the zeroing in the administrative review was not inconsistent with the AD Code. However, the AB, in a stern tone, viewed that zeroing methodology itself violated Article 9.3 of the AD Code ("The amount of the anti-dumping duty shall not exceed the margin of dumping as established under Article 2") since it results in higher dumping margins and hence higher antidumping duties than otherwise on account of the DOC’s "systematic disregard" of those export prices higher than normal values (para. 133). Therefore, to the AB zeroing is not an acceptable practice throughout the antidumping proceeding.

This ruling is an important development in the WTO jurisprudence. In a sense, the AB made a huge contribution to free trade, which could not be made by negotiations alone. Considering that the U.S., along with the EU, is still a main user of AD measures, this ruling is great news to usual AD targets, especially developing countries. Granted, sovereigntists might not favor such development. To them, this would be an unacceptable judicial activism or judicial legislation, which they had not bargained for under the Uruguay Round negotiations when they drafted the AD Code. The U.S.’ Trojan Horse, i.e., Article 17.6, does not seem to have helped since the AB so effortlessly ruled that its ruling was compatible with the Article (para. 134). (After all, the AB, not the U.S., has a final say on the Article 17.6 issue.)

It remains to be seen whether and how the U.S. will implement this ruling in the election year, or the year after…

Regarding the EU’s reaction, http://www.eurunion.org/News/press/2006/20060028.htm

Regarding a consumer organization’s reaction,

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/04-18-2006/0004342396&EDATE

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Treaty-Making and Adjudication

SSRN includes a post of a new paper by Daniel Rodriquez and Barry Weingast.  The abstract and reference are below.  The idea is that interest group strategies to expand the scope of regulatory statutes through adjudicative action have backfired:  they have made it difficult for legislators to agree on new progressive regulatory statutes.  If you buy this argument, I have another one for you:  could it be that fidelity to text in the international trade treaty field, and modest adherence by trade judges to their mandate, is the best way to ensure the ability of diplomats to reach new agreements. 

Is this another take on Joe Weiler's famous The Transformation of Europe story:  it wasn't that judicial activisim substituted for legislative capacity--judicial activism suppressed the development of legislative capacity?

Just some blog speculation . . . .

"The Paradox of Expansionist Statutory Interpretations"
     San Diego Legal Studies Paper No. 07-39

  Contact:  DANIEL B. RODRIGUEZ
              University of San Diego School of Law
    Email:  [email protected]
Auth-Page:  http://ssrn.com/author=45840

Co-Author:  BARRY R. WEINGAST
              Stanford University - The Hoover
              Institution on War, Revolution and Peace
    Email:  [email protected]
Auth-Page:  http://ssrn.com/author=15647

Full Text:  http://ssrn.com/abstract=895604

In this article, we revisit the relationship between judicial
interpretation of legislation and policymaking in the modern
Congress. We develop a model of legislative decisionmaking, drawn
from the influential work of positive political theory, and use
this model to consider a puzzle in the contemporary lawmaking
process, that is, what explains the dearth of progressive social
legislation in the period from the early 1970's to the present?
We argue that much of this demise of the progressive legislative
agenda can be attributed to the decision of influential interest
groups to push aggressively for expansionist interpretations of
regulatory statutes, interpretations that go well beyond the
terms of the statute and, as well, beyond the expectations of the
legislators whose support was critical in securing the passage of
this legislation. Paradoxically, as we explain, these expansions
have made it more difficult for legislators to reach agreements
within the lawmaking process and thereby defeated the very
agendas for which interest groups have pushed. Moreover, these
expansionist interpretations have contributed to the growing
polarization within the modern Congress.

Food (Aid) for Thought

The debate on food aid in the agriculture talks is getting interesting beyond the substantive economic issue of the extent to which ostensibly benevolent food aid can/does cause "commercial displacement" in aid-recipient countries. It is becoming, in potentia, another interface between the WTO and non-WTO international organizations. A key question is who decides that a state actually needs aid even if such aid might formally violate agricultural subsidy disciplines. Following African/LDC state proposals, the ag negotiations chairperson, Amb. Crawford Falconer, has circulated a paper, available here, according to which:

"9.        [...]  it might be possible, as a first step, to provide for the following: 

Food aid transactions shall be exempt from the provisions of [...], where such aid is provided in response to an emergency appeal from:

 

(i)              a relevant United Nations agency, the United Nations Consolidated Appeals Process, the International Committee of the Red Cross or the International Federation of Red Cross and Red Crescent Societies.

 

10.    In principle, it would seem to be sensible also to accept the judgement of reputable and responsible international intergovernmental bodies.  The issue would then resolve itself down to a more narrowly technical one of ensuring a reliable technical description, but without over-negotiating this. 

11.                   But would it be necessary to confine this "trigger" standard only to purely intergovernmental bodies? This, at the moment, seems to be the view of some delegations. It cannot be denied, of course, that there are non-governmental and private institutions that have real repute in the field, albeit that there may be a view that it is unlikely that the relevant intergovernmental bodies are going to have, or at least very often, a differing view from these private or non-governmental bodies. But, bearing that in mind, is it warranted to have a blanket opposition to an appeal from them as representing an appropriate trigger in its own right? 

12.                   This, it seems to me, comes down to an empirical and practical question as to whether, as a matter of performance in the field, these organisations "get it wrong".  If the answer is that they do, or that some of them do, there might be understandable reticence to include their appeals as a standard.[fn. deleted] But if the answer is that they don’t, why would inclusion of an appeal from them be a problem? I have in mind such bodies as MSF, OXFAM, etc. It seems hardly credible to deny their expertise and role. 

13.                   Thus the idea was advanced by the African and LDC Groups of "collaboration" between non-governmental organisations, private charitable bodies and relevant international humanitarian organisations as being a standard to apply so as to be responsibly inclusive of such organisations.  Therefore, it is now for Members to consider what, if any, other agencies or relevant international humanitarian organisations could or should be added to this list.  For example, could we not try: 

(ii)            a relevant intergovernmental or regional humanitarian agency, non-governmental organisation, or private charitable body, working in collaboration with a relevant United Nations agency, the International Red Cross and Red Crescent Movement or relevant international humanitarian organisation. 

Are there other bodies that should be included?"

This proposal also raises the question of the formal role of NGOs such as Oxfam, as surrogates for intergovernmental organizations in what lawyers would classify as "determinations of fact".

One odd aspect, to my limited understanding, is that an emergency situation could be determined by the recipient state only in urgent,"exceptional circumstances": Recognising that, in exceptional circumstances, where the urgency of the food aid need is such that to wait for an appeal as set out in (i) or (ii) above would result in an undue delay in the provision of food aid, food aid provided in response to an urgent official government request by a recipient country shall also be exempt from the provisions of [...].  Under such circumstances, both the donor country and recipient government shall notify [...]. 

I would have imagined that if the recipient state has made a formal appeal for aid, that would be sufficient to estop any claims by the same state that subsequent aid received constituted "commercial disruption".

Indeed, what is more interesting is the vesting of intergovernmental organizations,perhaps even NGOs, with the de facto authority to determine that (a) a state needs aid; and (b) that subsidy disciplines do not apply, the position of the recipient state notwithstanding.

If we transpose this debate to the use of force/humanitarian intervention (see Ryan Goodman's thoughtful article, "Humanitarian Intervention and Pretexts for War", 100 American Journal of International Law, prepublication version here ), would we let Amnesty International determine that a given political human rights situation should allow - or mandate - military intervention?   

Which re-raises the question of legitimacy, a possible response to some of Crawford's rhetorical questions. Who are these "relevant" NGOs? and what responsibility might they bear for their determinations?

T.   

       

Lies, Damn Lies and Immigrants

Sunday's New York Times has a piece by Eduardo Porter commenting on the literature evaluating the effects of immigrants on the wages of low-wage workers in the U.S.  See the excerpts on the Washington Monthly blog. 

As usual, there are several ways to view the situation of U.S. low wage workers, and to suggest correlation with the rise of immigrants.  The New York Times article suggests that conclusions that immigrants have suppressed wages are exaggerated. 

What we really seem to need in the U.S. is a way to improve the competition for CEO salaries.  Is there international mobility of CEOs?  Presumably these people are not willing to be illegal immigrants, so perhaps there are greater barriers to their mobility than to unskilled worker mobility? 

Just when things were going so well. . . .

This from the Wall St. Journal

President Bush nominated Trade Representative Rob Portman as the White House budget director, turning to a Washington insider and longtime friend as part of an effort to re-energize the administration and boost the president's record-low approval ratings. Mr. Bush also selected Susan Schwab, the deputy trade representative, to move up to the top job, replacing Mr. Portman. If confirmed by the Senate, Mr. Portman will succeed Joshua Bolten, who stepped down as director of the Office of Management and Budget to become White House chief of staff.

Georgetown Trade Law and Policy Program

From John Jackson, via the ASIL IELG listserve: 

I am writing to inform you that the Institute of International Economic Law (IIEL) at Georgetown Law has launched a new, non-degree course on WTO law and policy, to be offered as a week-long Academy beginning in Fall 2006.  The dates for the first program are October 23-27, 2006.  The purpose of the IIEL Academy is to provide an intensive course in the legal obligations and policy underpinnings of the WTO and its agreements, in the context of how the WTO operates and how it relates to national governments.  The program is designed to help governments, educational institutions, and others build the capacity to take advantage of the multilateral trading system, by training legal professionals, government officials, academics, policy makers and others -- including those from developing countries and transition economies.

For more information, see http://www.law.georgetown.edu/iielacademy/ and to register go to https://www.law.georgetown.edu/cle/showEventDetail.cfm?ID=137.

Peter Van den Bossche on Biotech

Preliminary conclusions of the Panel in the EC – Biotech Products dispute

Much Ado About Little?

Peter Van den Bossche

Last February I have been amazed, and occasionally horrified, by the media and civil society reactions on the EC – Biotech Products dispute currently pending before a WTO dispute settlement panel in Geneva. In this dispute about trade in GMOs between the US, Canada and Argentina (complainants) and the EC (respondent), the WTO Panel sent its preliminary conclusions to the parties on 6 February 2006. Because these conclusions are preliminary and possibly still subject to revision, they are confidential. Nevertheless, as in previous politically sensitive WTO disputes, the conclusions were leaked to the media. In an official statement on 7 February 2006, the US Trade Representative Rob Portman ‘claimed victory’ in this dispute and stated: ‘[T]he facts on agricultural biotechnology are clear and compelling. It is a safe and beneficial technology that is improving food security and helping to reduce poverty worldwide.’ Also on 7 February 2006, Friends of the Earth, a prominent environmentalist NGO, issued a statement condemning the Panel’s conclusions as ‘an inappropriate intrusion into decisions about what food people eat’.  According to a campaigner for Friends of the Earth Europe, the WTO Panel ‘has bluntly ruled that European safeguards should be sacrificed to benefit biotech corporations.’ Much of the reporting by the media and commentary by politicians, companies and NGOs - on both sides of the Atlantic- was ill-informed, misleading, inflammatory and unnecessarily alarmist.First of all, it is important to state clearly what the EC – Biotech Products dispute is about, and what it is not about. This dispute concerns three categories of measures: (a) an alleged general EC moratorium since 1998 on the approval of biotech products (the ‘general EC moratorium’); (b) various product-specific EC measures affecting the approval of specific biotech products (the ‘product-specific EC measures’); and (c) various EU Member State safeguard measures prohibiting specific biotech products (the ‘EU Member State safeguard measures’). The complainants claimed that these measures are inconsistent with various obligations of the European Communities under WTO law. This dispute is not about whether biotech products are in general safe or not; not about whether biotech products are ‘like’ their conventional counterparts and thus should be subject to the same regulations; not about whether the EC has a right to require approval of biotech products; and not about whether the EC approval procedures, which provide for a product-by-product assessment requiring scientific consideration of various potential risks, are WTO consistent. Again, it is not about the conclusions of the relevant EC scientific committees regarding the safety evaluation of specific biotech products. In fact, the panel explicitly stated in its conclusions that it did not examine any of these issues, primarily because they were not raised by the complainants and were, therefore, outside the jurisdiction of the Panel. At issue in this dispute is not the WTO-consistency of the EC’s current legislation and policy on GMOs; at issue is merely the WTO-consistency of the three categories of measures referred to above.

Secondly, it is important to analyze in a careful and dispassionate manner the conclusions reached by the Panel on the various claims of WTO-inconsistency. With regard to the claims relating to the EC general moratorium, the Panel established that the EC had indeed applied a general de facto moratorium on the approval of biotech products, but only for the period from June 1999 to August 2003. While this moratorium was not itself a sanitary and phytosanitary (SPS) measure within the meaning of the WTO SPS Agreement, it did affect the operation of the EC approval procedures, which are SPS measures. Article 8 of the SPS Agreement requires WTO Members to observe the provisions of Annex C to the SPS Agreement in the operation of approval procedures. Paragraph 1 (a) of Annex C states: ‘Members shall ensure, with respect to any procedure to check and ensure the fulfilment of sanitary or phytosanitary measures, that: (a) such procedures are undertaken and completed without undue delay and in no less favourable manner for imported products than for like domestic products;  …’. The Panel concluded that the general de facto moratorium resulted in a failure to complete individual approval procedures without undue delay, and that the EC thus acted inconsistently with paragraph 1(a), first clause, of Annex C to the SPS Agreement, and, consequently, with Article 8 of the SPS Agreement. The complainants argued that the moratorium also constituted a violation of a number of other obligations under of the SPS Agreement, including the key obligations set out in Article 2.2 (obligation to base SPS measures on scientific evidence); Article 2.3 (obligation to ensure that SPS measures do not arbitrarily and unjustifiably discriminate); Article 5.1 (obligation to base SPS measures on a risk assessment) and Article 5.5 (obligation to avoid arbitrary or unjustifiable distinctions in the appropriate levels of sanitary protection). However, the Panel rejected all these claims. Moreover, while the Panel found that the moratorium violated Article 8 and Annex C.1(a), the Panel did not recommend that the EC should take action of any sort. This is because, according to the Panel, the general moratorium that existed at the time of the complaint no longer exists today. In fact, since 2004 the EC has approved nine biotech products for import and sale in the EC.

With regard to the claims relating to the ‘product-specific EC measures’, the Panel noted that it had examined applications for final approval concerning 27 specified biotech products. It found that in respect of 24 of the 27 products (including specific types of maize, sugar beet, oil seed rape and cotton), there had been ‘undue delay’ in the completion of the approval procedure. The Panel thus concluded that the EC’s approval procedures concerning these 24 biotech products are inconsistent with Article 8 and Annex C.1(a) of the SPS Agreement, discussed above. The Panel recommended that the EC bring the product-specific measures into conformity with its obligations under Article 8 and Annex C.1(a) of the SPS Agreement. This means that to the extent the applications for final approval are still pending, the EC should complete these procedures without undue delay. This does not mean that the EC should approve these biotech products for use within the EC. As with regard to the general EC moratorium, the complainants also argued with regard to the product-specific EC measures, that the EC acted in violation of key SPS obligations, such as Article 2.2, Article 5.1 and Article 5.5 of the SPS Agreement. Again, the Panel rejected these claims.

With regard to the claims relating to the ‘EU Member State safeguard measures’, the Panel noted that these nine measures were in the form of prohibitions imposed by an individual Member State (Austria, Belgium, France, Germany, Italy or Luxembourg) on a particular biotech product that had been approved by the EC for use within the EC. The complainants claimed that the EU Member State safeguard measures are inconsistent with the obligations set out in Articles 2.2 and 5.1 of the SPS Agreement and could not be justified as ‘provisional measures’ under Article 5.7 of the SPS Agreement. The Panel agreed with the complainants. It found that none of the nine EU Member State safeguard measures at issue was based on a risk assessment as required by Article 5.1 of the SPS Agreement. Moreover, the Panel agreed that these safeguard measures could not be justified as ‘provisional measures’ under Article 5.7 of the SPS Agreement. The latter provision, which incorporates the precautionary principle, allows WTO Members provisionally to adopt SPS measures that are not based a risk assessment ‘when the relevant scientific evidence is insufficient’. The Panel noted that for each of the biotech products concerned the EC’s relevant scientific committee had evaluated the potential risks to human health and/or the environment before granting EC-wide approval. Subsequently, the relevant committee had reviewed the evidence submitted by the Member State to justify the safeguard measure and had found no reason to call into question its earlier EC-wide approval. The Panel thus considered that the evaluation of potential risks by the EC scientific committees clearly showed that sufficient scientific evidence was available to permit a risk assessment as required by the Article 5.1 of the SPS Agreement. Therefore, according to the Panel, this was not a situation in which Members are allowed to adopt ‘provisional measures’ under Article 5.7 of the SPS Agreement. The Panel also found that by maintaining measures that are inconsistent with Articles 5.1 and 5.7 of the SPS Agreement, the EC had, by implication, also acted inconsistently with the obligations under Article 2.2 of the SPS Agreement. The latter provision requires WTO Member to base SPS measures on scientific principles and not to maintain an SPS measure without sufficient scientific evidence. In light of its conclusions that SPS-inconsistencies existed, the Panel recommended that the EC bring the EU Member State safeguard measures into conformity with its obligations under the SPS Agreement. The European Commission, at least, should not find this hard to accept. It is generally known that the Commission has tried and failed in the past to get EU Member States to remove their safeguard measures on biotech products that are EC-wide approved. The European Commission will now find support for its efforts to remove these measures in the conclusions of the Panel.

As a spokesperson for the European Commission correctly stated, the conclusions reached by the Panel in the EC – Biotech Products dispute will ‘not alter the system or framework within which the EU takes decisions on GMOs’. Articles, reports and statements suggesting the contrary are mistaken and were definitely much ado about little. However, the EC – Biotech Products dispute is undoubtedly only the first in a series of disputes on trade in GMOs. In future disputes, the WTO-consistency of the EC’s current legislation and policy on GMOs is likely to be contested. Such disputes would bring into focus the right of  WTO Members to enact their own regulation of GMOs and the extent to which WTO law limits that right. Challenges to the EU rules on GMO traceability and labelling of GMO products are looming in the dark.

Geneva. The author thanks Jill Roche for her very able assistance.

My weekend at Cornell

I had a nice 5-hour drive from Boston to Cornell (Ithaca New York) Friday morning, and returned today. On the way, I listened to a "book on tape," which was a nice way to pass the time. 

I attended two conferences.  The first was organized by the very able students at Cornell International Law Journal, under the guidance of Robert Hockett.  It was on global justice.  I could not attend all of the conference, because I had earlier committed to attending another simultaneous conference at Cornell, but this conference had a very interesting array of political philosophers, lawyers and economists, and I am convinced that the interdiscipinary approach is necessary in this field.   

I also attended another conference about evaluating the public side of private international law, organized by Karen Knop and Annelise Riles.  This conference examined a number of interesting issues.  For me, it was interesting how wide a scope of issues is included in the term "private law" and "private international law."  For some private international law specialists, even rules of prescriptive jurisdiction in regulation may be included in "private international law."  From here, it may not be such a large step to include authority allocation rules contained in WTO law.  For example, the disputed product-process distinction, and the disputed question of the territorial scope of Article XX(b) of GATT have authority allocating consequences.  I'll just mention briefly a couple of interesting papers. Teemu Ruskola presented an interesting historical analysis of the U.S. "extraterritorial" extrusion of judicial authority into China during the late 19th and early 20th centuries.  This discussion showed just how fractured concepts of jurisdiction and citizenship can become, and how sometimes nationality can overcome territoriality.  Ralk Michaels had an interesting paper on the law and economics of private international law. 

I originally came to WTO law because of an interest in issues of allocation of regulatory authority, so it is interesting for me to see what those who work in this area are doing. 

Highway 301 Revisited

Having failed to promote the de-judicializing ideas included in its 2003 proposal on DSU review (jointly with Chile), calling for increased Member "review", "control" and "guidance" to/of the dispute settlement process, the US has recently introduced some new ideas to DSU review that generally seem to be aimed at curtailing the normative power of the dispute settlement system. There may be an additional, more specific though unstated aim, however: making Section 301 and its special- and super-sized versions WTO-kosher, or at least more difficult to attack in WTO dispute settlement.

First, under the proposal, Panels would be obliged to first determine whether a challenged measure actually does what the complainant claims it does (a factual determination, in the US view), before analyzing whether that outcome would be inconsistent with a covered agreement. This stipulation is justified, according to the proposal, by the understanding that the "purpose of the dispute settlement system is not to produce reports or to "make law," but rather to help Members resolve trade disputes among them", limiting panels and the AB from making findings that are not aimed at resolving the dispute. I wonder, to what extent this is an overture to rewriting Article 3.8 DSU, ie, violation complaints would first be required to show nullification and impairment, before violation. If applied to 301, this would mean that a technical foul would not be enough to call it out of the game.

Second, the proposal includes a half-hearted attempt to limit the meaning of the all-important (or meaningless, depending on one's perspective) of "measure", by excluding legislative history, statements without independent effect, and obiter dicta in court decisions. This seems to be aimed at restricting recourse to context in interpreting the meaning of measures. What springs to mind, among other cases, is the 301 Panel's reference to congressional hearings for interpretative purposes.

Third, the proposal explicitly seeks to restrict panels from finding that discretionary measures are inconsistent with covered agreements, if those measures allow compliance. I think there is a non sequitur in the way this idea is presented in the proposal: the idea that panels should not "presume" that a member will choose to violate a covered agreement does not mean that discretionary measures that allow both compliance and violation do not of themselves have trade restrictive "chilling" effects, as the (unappealed) 301 Panel found.   

The common denominator of these proposals seems to be the Section 301 family, but surely this doesn't mean that the US actually intends to make use of it. Like Abe said, "Man, you must be putting me on...".

With apologies to Robert Zimmerman, the US proposal, TN/DS/W/82/Add.2, can be downloaded here.

T.

What is the Trade Regime?

Blogs serve many functions – including the dissemination of information, analysis of recent panel and AB decisions, and scholarly exchange. Many blogs also highlight notable recent and forthcoming scholarship. Assuming that IELP readers are interested in current scholarship but may not always have time to review the current literature, from time to time it might be useful to flag particularly interesting or important articles.

The current Journal of International Economic Law contains several interesting articles, including Bill Davey’s overview of the current state of play of the Doha negotiations; Joost Pauwelyn’s effort to untangle the complex interplay of US-Mexico disputes over softwood lumber and sweeteners; doctrinal analyses of the Gambling dispute and the Cotton decision; an examination of whether WTO authorized trade retaliation really serves to rebalance concessions, and Kara Leitner and Simon Lester’s annual statistical analysis of WTO dispute settlement.

All of these papers are well worth reading, but perhaps the most challenging article in the issue is Andrew Lang’s paper, entitled Reconstructing Embedded Liberalism: John Gerard Ruggie and Constructivist Approaches to the Study of the International Trade Regime. Although several IELP bloggers, including me, have discussed Ruggie’s theory of embedded liberalism, Lang argues that we have largely missed the point. In particular, Lang argues that "while the narrative of embedded liberalism itself has been relatively well reproduced," legal scholars have neglected the constructivist framework upon which Ruggie’s argument is based. Lang tries to demonstrate the ways in which constructivist approaches can enhance our understanding of how the trade regime evolves, as well as of our understanding of the consequences of the trade regime – its effects on behavior and outcomes. In short, the paper argues that our preoccupation with conventional materialist and interest-based analyses should be supplemented by attention to the role of ideational factors in constituting the trade regime.

Lang presents a powerful and challenging argument. Assuming many ILEP readers will be attending the upcoming WTO conference at Columbia later this week, it might be fun to read Lang’s article on the flight to the conference, and, afterwards, reflect on how the presentations/discussions at the conference might have differed if they had taken the constructivist challenge seriously.

Doha Despair?

Inside U.S. Trade reports that

House Ways and Means Committee Chairman Bill Thomas (R-CA) today (April 3) called on the Bush Administration to acknowledge that the ongoing Doha round of trade negotiations is completely stalled over European intransigence, and refocus its energies on completing negotiations for free trade agreements already launched before fast-track negotiating authority expires in July 2007.

Thomas is concerned about anti-free trade forces within the U.S., and about alleged EU intransigence.  He wants to continue to move forward with FTAs.  This seems the Bush administration's implicit strategy anyway, but it is interesting that Thomas wishes to make it explicit.