International Economic Law and Policy Blog

Pointing Blame the Other Way

A couple of Danish researchers have constructed a methodology for evaluating states' preferences for liberalization, and the degree of difference in their positions.  Their conclusion:  the EU is more at fault for the breakdown of Doha negotiations than the U.S.  I didn't read the paper or fully understand the methodology, so caveat emptor. 

Rob Howse on David Unterhalter's Appointment to the AB

Rob Howse is away and asked me to post this for him:

David Unterhalter, new Appellate Body Member

David Unterhalter, a South African practitioner and law professor, (at Wits), has just been appointed to the Appellate Body to fill the spot left vacant by the untimely death of AB Member Lockhardt.  Unterhalter is a very intelligent, politically engaged jurist--a quite dynamic fellow and he happens to be the same age as I am.  That means I probably know some ex- of his...I'm scratching my head...  Anyhow, he has written or publicly commented on many legal, political and social controversies and bloggers might be interested in seeing some of his positions.  For example on the Danish cartoons controversy, he takes a rather absolutist (for my taste) "freedom of expression" position, abstracted from social context.  See http://www.sundaytimes.co.za/Articles/TarkArticle.aspx?ID=1894632

The point is obviously not whether one agrees with him on this or that but I think his tendency to express his mind openly ought to be be good for the AB, which I believe needs to be a little more upfront on the normative trade offs it is faced with in interpreting the law and more explicit on the underlying considerations that are driving its rulings--and a lot less afraid of the "Membership" in what they say--not only what they do.

Blowback?

Apparently, the term blowback was coined in a CIA report on its efforts to overthrow the Mossadegh government in Iran. In that report, and since, the term has come to refer to the unintended consequences of government policy. More recently it has been applied to describe the effect of decisions by the U.S. government to have its intelligence agencies support the mujahedeen fighting the Soviet Union in Afghanistan. Several years later, of course, some of these "freedom fighters" masterminded the attacks of 9/11.

What does this have to do with international trade? Although the now-moribund Doha Round negotiations revealed profound disagreements among the world’s major trading powers, it seems that there is one item on which consensus exists: the root of the current impasse is found in agriculture.

So it may be worth recalling why GATT disciplines on agriculture were so weak in the first place. The conventional wisdom, of course, traces the original GATT treatment of agriculture to U.S. policy. The literature here is vast, and the story is complex; for these purposes I’ll summarize the arguments developed by Judith Goldstein in her excellent 1989 piece in International Organization.

The agricultural sector in the U.S. began to decline following the end of World War I, and by the 1920s, agricultural prices began to fall precipitously. Thereafter, the government embarked on a series of programs designed, in effect, to create and maintain artificially high domestic prices. The stock market crash and Great Depression undermined these plans. However, the experience led to a widespread belief among relevant elites that government intervention in this sector was appropriate and necessary. In addition, the experience of the 1920s largely discredited export-oriented recovery plans. Moreover, the accepted economic wisdom in the 1930s was that foreign markets would not be able to absorb U.S. surpluses on a sustained basis.

As a result, policymakers in the 1930s focused on the domestic market. The Democratic Congress that was elected with Roosevelt passed a number of laws designed to create long-term interventions to increase farm income. These laws, inter alia, authorized the government to raise market prices through acreage reduction; authorized payments for farmers who switched from the production of surplus crops; authorized creation of marketing agreements among producers; and authorized price subsidization through direct payments and nonrecourse loans. Significantly, by the time Congress enacted these laws there was general consensus that tariffs were ineffective, at least with respect to agricultural goods. And finally, much of the relevant legislation was passed before and independently of trade liberalization legislation, such as the RTAA. Even post-RTAA agricultural legislation looked to domestic, rather than international markets, to solve agriculture’s economic problems.

Of course, if the government was going to support artificially high prices at home, it had to worry about increased imports undermining its efforts, and the amended Agricultural Adjustment Act mandated import quotas. Several years later, article 22 of the AAA was amended to require the executive branch to restrict agricultural imports notwithstanding any "trade agreement or other international agreement heretofore or hereafter entered into by the United States." This amended language led to the U.S. request for a GATT waiver, which was granted in 1955. Readers of this blog will be familiar with efforts to create disciplines on agricultural policies in intervening years.

I do not wish to suggest that it is possible to draw a direct line from the U.S. experience in the 1920s and legislative reaction in the 1930s to the current impasse over agriculture. The story is much more complex, and would need to account for practices in Europe, Japan, and elsewhere; strategic arguments about the need for self-sufficiency in agriculture; economic arguments about the volatility of agricultural prices; political economy arguments about the ability of entrenched agricultural interests to disproportionately impact policy; and more recent debates over the multifunctionality of agriculture. Moreover, trade politics is fluid rather than deterministic. Nevertheless, it may not be terribly farfetched to see at least the roots of current difficulties as deriving in significant part from a series of decisions made by well-meaning U.S. policymakers in an era when none of them could have imagined either today’s globalized economy or the WTO.

Doha Denied

            We can lay the blame for Doha’s delay at lots of doorsteps. But fundamentally, we would hope that if the deal were rich enough, if it improved welfare enough, people would find a way to agree.

            Economists know that dismantling barriers to trade makes the world better off:  this is the fundamental theorem of welfare economics. But the WTO is a complex entity, and some of its rules dismantle barriers, while others allow barriers to remain in place. And the improvement that welfare economics points to is an aggregate improvement:  no particular individual, and no particular state, can be assured of improvement. Some rules seem to reduce the welfare of the poorest.  What economists don’t seem to know is whether any particular country would benefit from the Doha Round proposals currently on the table. But what if we had this information?  What if negotiations in the future were based on the principle that every state should get an improvement in welfare, of about the same per capita size, and that the poorest states should get a bigger improvement than the wealthy ones? What if we appointed a committee of professional economists to supervise the work to ensure this outcome, and to rewrite the existing package of rules accordingly? This work could be performed openly, and could be subjected to the scrutiny of the community of professional economists.

            If a package were developed this way, what state would decline to accept the outcome?  What government could explain to its citizens its refusal to do so?

Lamy's Lament

Today's IHT has an interesting letter from Pascal Lamy to the trade ministers.  He includes the following:

The pity in all of this is that what is on the table now constitutes greater progress in rolling back farm subsidies and tariffs than anything seen before in global negotiations. Even the least ambitious proposals would have cut trade distorting farm subsidies by two to three times the previous round of talks. Export subsidies would have been eliminated. For the first time members would have limited fishery subsidies, which contribute to the depletion of our oceans. 

The vast majority of exports from the very poorest countries would have faced no barriers to trade, and practices that had crippled African cotton farmers would have been substantially reformed.

A large part of the debate, and the allocation of blame, seems to hinge on the relative equivalence of the proposed cuts in tariffs and subsidies, respectively.  But Lamy's main concern, and that of The Economist's story, is that states are taking a defensive, mercantilist, position.  This from The Economist:

Old hands need to look with new eyes, for this week's debacle constitutes the biggest threat yet to the post-war trading system. It marked the trade diplomats' surrender to the confidence trick on which the system is founded. And it betrayed a reckless disregard for the value not just of the Doha round, but also of the smooth working of world trade.

The confidence trick referenced is the mercantilist idea that states need to be compensated for reducing their own barriers to trade. 

Alternatives to "Least Trade Restrictive"

The GATS today does not contain a direct requirement that domestic regulatory measures be the least trade restrictive (Article VI:5 combines this test with a nullification or impairment requirement).  This may be contrasted with Article 2.2 of the TBT Agreement and Article 2.2 of the SPS Agreement.  Neither the TBT Agreement provision nor the SPS Agreement provision has been the basis for significant successful litigation--even in GMOs. 

However, in the GATS context, there appears to be a great deal of concern regarding the possibility of extending this type of standard to services.  In a 2003 letter to the USTR, the National Conference of State Legislatures wrote as follows:

We also urge the United States to advocate for trade rules that contain legal standards consistent with the U.S. Constitution and applicable case law. For example, international agreements that include standards such as "least trade restrictive" or "least burdensome" are inconsistent with the U.S. Constitution and may affect a state or municipality's ability to implement effective economic development programs and zoning laws. Instead, we support legal standards that provide a lesser burden for state and local governments to defend their legitimate governmental interests that are consistent with existing law. The Supreme Court has often held that the burden on state or local governments to defend their laws is merely to show that the standard is "rationally related to a legitimate governmental interest." A standard, such as "least burdensome," on the other hand, is, on its face, far more stringent that a test that merely asks if the standard rationally serves a legitimate government interest. Moreover, such a standard inherently places the burden on governments to defend the legitimacy and scope of their regulations, rather than on the plaintiff to show that the regulation is arbitrary and capricious.

I find some of these concerns curious.  First, given that this standard already applies in goods, it is strange to see such strong legal criticism.  Second, I am not certain what the basis is for claims that a least trade restrictive standard would be "inconsistent with the Constitution."  "Inconsistency" is not the same is "violation", and it may be that the authors of this letter are simply referring to the fact that "least trade restrictive" is more stringent than the domestic rule under the Commerce Clause.  Even here, while it is true that necessity testing is generally used in the U.S. after a finding of discrimination, it is certainly not true that least trade restrictive alternative analysis is foreign to U.S. constitutional jurisprudence.  Furthermore, a Pike v. Bruce Church type balancing test would seem even more intrusive than a least trade restrictive alternative test. 

But the important point is that I can see no violation of the U.S. Constitution that would arise from the acceptance by the U.S. of least trade restrictive alternative analysis in GATS.  As a matter of fact, that discipline already exists in GATS, but now can only be invoked after a finding of nullification or impairment.  This makes it unlikely to be the basis for successful litigation, although some aspects of the U.S. Sarbanes Oxley law (those restricting the consulting business of auditors) appear to be somewhat vulnerable. 

The Doha Failure: Plenty of Blame to Go Around

People have not been shy about assigning blame for the failure of the Doha talks.  The G-6 WTO Members who met in an effort to get things moving were Australia, Brazil, the EU, India, Japan and the U.S.  Most are blaming the U.S., while the U.S. is pointing mainly to the EU.  Here's a brief rundown of what some of the key players from each country have said about the apparent collapse of the talks:

United States:  Susan Schwab "accused the EU and others of "pocketing" an offer the United States made last year to reduce farm subsidies and pushing for deeper U.S. cuts without offering significant new market access in return."  Schwab also said "aside from Australia, none of the other players had come up with enhanced offers to open up their markets to foreign goods."  Senate finance committee chairman Chuck Grassley said that as long as the EU and India "wear their blinders, we'll never see eye to eye on a good trade deal, and poorer countries will pay the highest price".  Bill Thomas, chairman of the Ways and Means Committee in the House of Representatives, said the EU had "made a mockery" of the Doha negotiations.

European Union:  Peter Mandelson "accused the United States of "stone-walling" by refusing to offer deeper cuts in U.S. trade-distorting domestic farm subsidies, which now total about $20 billion annually."

Brazil:  Celso Amorim said the main deal-breaker was the demand for cuts in subsidies to agriculture, where "it was up to the United States to make the gesture. ... It is a pity that we have not managed to move forward, in part due to the US refusal to eliminate domestic (farm) subsidies, ..."

India:  Kamal Nath, without naming the United States, said in a statement that “...unfortunately one member is unable to make any effective reduction in trade distorting subsidies, but at the same time, is insisting that developing countries open up their markets to provide access to their subsidised products.”

I couldn't find any comment by a Japanese official indicating who was to blame, but one article said that Japan was among the countries blaming the U.S.  As for Australia, I didn't see them blame anyone in particular, and no one seemed to blame them.

Trade negotiations are not my area of expertise, so I don't have much of an opinion on this.  But if anyone else does, feel free to comment.  (Note that you can comment anonymously if you have something to say but don't want people to know it was you who said it).

UPDATE: Alan Beattie of the Financial Times spreads the blame around nicely (and the rest of the article is worth a read, too):

The European Union should have offered deeper cuts in farm tariffs. The US should have signalled compromise on farm subsidies earlier, and should not have changed trade representative mid-stream. India and other developing countries should not have insisted on huge loopholes in their tariff reductions.

...

The price the EU paid for pacifying the French-led rebellion of agrarian member states was making a pretty weak, though skilfully spun, offer to cut farm tariffs. The Indian government, acutely aware that its predecessor lost an electionby ignoring the villages, pandered shamelessly to its protectionist farmers and seemed almost gleeful when the talks broke up.

The US trade representative maintained complete harmony with Capitol Hill throughout, but only by promising farmers new agricultural export markets that they were unlikely to get.

Doha Delayed

It appears that the last gasp of hope for some kind of Doha deal this year has expired.  It is curious that the G-8 expressed commitment last week, and then its ministers declined to deliver the goods in Geneva. 

Shameless Self Promotion

I am happy to post the following announcement from Cambridge University Press:

The Limits of Leviathan
Contract Theory and the Enforcement of International Law
Robert E. Scott
Paul B. Stephan
Much of international law, like much of contract, is enforced not by
independent sanctions but rather through cooperative interaction
among the parties, with repeat dealings, reputation and a preference for
reciprocity doing most of the enforcement work. The Limits of Leviathan
identifies the areas in international law where formal enforcement
provides the most promising means of promoting cooperation, and where
it does not. In particular it looks at the International Criminal Court, the
rules for world trade, efforts to enlist domestic courts to enforce orders
of the International Court of Justice, domestic judicial enforcement
of the Geneva Convention, the domain of international commercial
agreements, and the question of odious debt incurred by sovereigns.
This book explains how international law, like contract, depends
largely on the willingness of responsible parties to make commitments.

Table of Contents
Foreword; 1. Introduction; 2. States, firms, and the enforcement of
international law; 4. A model of optimal enforcement; 5. Patterns of
international law enforcement; 6. The choice between formal and
informal enforcement; 7. The future of international law enforcement;
Glossary; Table of authorities; Index.

To Be Published August 2006
Hardback 9780521858465
(ISBN-10: 0521858461)
USD 70.00
264 pages
For more details, please visit:
www.cambridge.org/0521858461

Derestriction of GATT 1947 Documents

This from Mark Stratman, at the suggestion of John Jackson:

The WTO General Council has made a decision to derestrict all GATT 1947 documents.  This is an important step towards greater transparency, and greatly reduces some of the confusion about what documents might still be restricted from the GATT days.  The full text of the WTO document holding the decision is as follows:
 

World Trade Organization
	WT/L/647 13 June 2006
	(06-2825)

DERESTRICTION of OFFICIAL GATT 1947 Documents

Decision of 15 May 2006
 
            The General Council,
 
            Having regard to the agreement of 8 December 1994 between the GATT CONTRACTING PARTIES, the Preparatory Committee for the WTO and the Interim Commission for the International Trade Organization (ICITO), approved by the WTO General Council on 31 January 1995 (WT/L/36), providing inter alia for the transfer of assets and records of the GATT to the WTO;
 
            Considering that, in the interest of a better access of the general public to the work of the GATT 1947, a general derestriction of official GATT 1947 documents is in order;
 
            Decides as follows:
 
All official restricted GATT 1947 documents shall be derestricted as of 1 June 2006.
 

Special and Differential Treatment in Biotech

Still ploughing on with Biotech! I am struck today by the panel's (excessively) cautious approach to the interpretation of the special and differential treatment obligation in Article 10.1 of the SPS Agreement. The panel concluded that while Members must take the interests of developing countries into account in the formulation of their SPS measures, this neither prescribes any specific result to be achieved, nor prevents Members from having regard to other intersts; consumer, environmental and so on. Fine. But the panel insists that the initial burden of demonstrating that the interests of developing countries have been taken into account rests with the complaining party (in this case, Argentina). That burden will not be satisfied by showing that special and differential treatment has not been granted, nor by showing that there is no reference to such treatment in the measure. The absence of any reference does not demonstrate fails to take these interests into account. So how is the complaining party meant to show this? Given the issue at stake, this would be a good area for the AB to consider a reversal in the initial burden of proof, or the introduction of a weaker or stronger procedural obligation to show that such interests have been taken into account, perhaps through the imposition of a reason giving requirement. The panel went out of its way to rule on this issue, giving Argentina the benefit of interpretative doubt in the manner in which its case was presented. Given the subject matter at hand, it read Argentina's argument as pertaining both to the de facto moratorium (not an SPS measure) and the EC approval procedures (an SPS measure). Small consolation when the panel's reading of the obligation is so restrictive. (See paras. 7.1598-7.1616.)

The Death of Globalisation?

The well known British jornalist and political commentator, Martin Jacques, has a piece in today's GUARDIAN called 'The death of Doha Signals the Demise of Globalisation'. He concludes that the deadlock in Doha is final and that it suggests not so much the end of globalisation as the death of multilateralism. He points in particular to the US turn to bilateralism and suggests that this is directly tied to developments in the WTO. In particular it suggests that the US only favours multilateralism when it gets it suits its interests, and that changing relations between the developed and developing world in the WTO is such that the WTO is now beginning to resemble the UN, with the result that the US can no longer guarantee getting its own way. He argues this is of great symbolic signifance, marking the end of the process of globalisation that has been in train since the 1970s. He suggests that the WTO will now be relegated to the backburner and that this is 'redolent with significance' because of the unique importance of the WTO as an institutional expression of globalisation.He adds that though the WTO is the first casualty it is unlikely to be the last, reflecting a broader shift in economic power from developed to developing countries, citing India and China as prime examples. The rise of China in particular is said to generate pressure for protectionism, and on this Jacques cited James Kynges book, CHINA STAKES THE WORLD. He claims that current events present the irony that though the west has traditionally been the key defender of free trade (tying this to an unequivocal statement that free trade always favour the most powerful and advanced countries) it is now likely to seek protection behind barriers. 'In a sense, the death of Doha is a dress rehearsal, albeit an early one, for the end of globalisation. And those who bury it will be those who designed it and proselytised for it - the US and Europe'.

There is much that could be said; not least the incompatibility of the statement about free trade invariably favouring the powerful and advanced countries with Jacques' acceptance that the developed world can no longer get its way in the WTO. Perhaps more important though is the sense of finality which emerges, just as it did with the demise of the failed European Constitution. Failure in the high politics of Doha, or in the ratification process of the Constitution for Europe, doesn't mean that these organizations stop working. Disputes continue, and continue to be resolved. This is true most visibly in the dispute settlement organs, but more importantly in practice in the plethora of committees and councils which comprise the WTO. In this more humdrum world, developed countries never got it all their own way, and developing countries continue to make recourse to these mechanisms to resolve tensions at an early stage, and to secure technical assistance packages which mitigate the impact of regulatory initiatives in the developed world. (I have a recent paper 'Regulatory Cooperation in the WTO: The Case of the SPS Committee' on this topic). Jacques is clearly right to point to the demise of Doha but it seems unlikely to spell the demise of the WTO, much less globalisation. Whatever, globalism will proceed just as far and fast under bilateralism as it does under multilateralism, and without the safeguards associated with the multilateral gaze. For those who have watched the TRIPS saga unfold over the years, this is all too clear.

The Gambling Dispute: Raising the Stakes

The Gambling compliance dispute is heating up on two fronts.

First, Antigua has now filed its panel request with the WTO.  It expands slightly on its earlier consultations request, but is mostly the same.

Second, the U.S. House of Representatives is currently debating an internet gambling bill that will make U.S. legal prohibitions more stringent:

The legislation would clarify existing law to spell out that it is illegal to gamble online.

To enforce that ban, the bill would prohibit credit cards and other payment forms, such as electronic transfers, from being used to settle online wagers. It also would give law enforcement officials the authority to work with Internet providers to block access to gambling Web sites.

However, and this is a key issue for the WTO dispute, there appears to be an exception from the general prohibition for certain bets on horse racing:

The horse racing industry also supports the bill because of the exemption it would get. Betting operators would not be prohibited from any activity allowed under the Interstate Horseracing Act. That law written in the 1970s set up rules for interstate betting on racing. It was updated a few years ago to clarify that betting on horse racing over the Internet is allowed.

BUT, although the proposed statute may say one thing about this point, the Justice Department takes a different view:

The Justice Department has taken a different view on the legality of Internet betting on horse races. In a World Trade Organization case involving Antigua, the department said online betting on horse racing remains illegal under the 1961 Wire Act despite the existence of the more recently passed Interstate Horseracing Act.

The department hasn't actively enforced its stance, but observers say it is possible the agency and the racing industry could face off in court in the future.

UPDATE:  The bill passed in the House.  However, according to an AP news report, "passage isn't a safe bet in the Senate, where Republican leaders have not considered the measure a high priority."

Transnational litigation--from Opinio Juris from SSRN

This was posted by Roger Alford on Opinio Juris:

Buxbaum on Transnational Regulatory Litigation

by Roger Alford

Hannah Buxbaum has just posted on SSRN an interesting article on "Transnational Regulatory Litigation." You can download the document here. In particular she includes an illuminating section on global class actions. Here is the abstract:

Recent years have seen much debate about the role of national courts in addressing global harms. That debate has focused on the application by domestic courts of international law - for instance, in civil actions brought in U.S. courts to enforce human rights law. This article identifies a parallel development in the area of economic regulation. It classifies and analyzes a category of cases that seek the application of regulatory law by domestic courts in situations involving global economic misconduct. Like the public international law cases, these cases highlight the tension between the benefits to be gained by enhanced enforcement of global substantive norms and the need to observe the jurisdictional norms that order the exercise of authority within the international community. On the one hand, traditional jurisdictional rules unnecessarily foreclose valid arguments for marshaling the resources of national courts in order to improve the global welfare. On the other hand, however, those rules reflect legitimate concerns of foreign states about the exercise of power and authority within the international community. The Article seeks a resolution to that tension in the economic context. Situating transnational regulatory litigation within the broader framework of transgovernmental theory, it proposes a more functional approach to certain jurisdictional rules, as well as a procedural mechanism for use in cross-border class actions, that would legitimize the evolving role of national courts in implementing global regulatory strategies.

More on Sanchez-LLamas and Hamdan

I don't have much to add to Rosa's analysis of Sanchez-Llamas and Hamdan, but as an interested party (author of an amicus brief in Sanchez-Llamas) l will elaborate a bit on the general approach to the relationship between international and domestic law that these two decisions represent. First, there are four Justices on the Court that seem skeptical of efforts to incorporate international law into domestic law absent a clear statement of incorporation by Congress. There are four votes on the Court for generous interpretations of legislation to incorporate international law, and perhaps to apply international law in other cases where a statute does not clearly forbid doing so. Justice Kennedy has not made his position clear. In Sanchez-Llamas, all nine Justices described the relationship of the SCOTUS and the ICJ as one of respect but not authority; that is to say, SCOTUS will listen to interpretations of international law adumbrated by the ICJ but feels free to reject those with which they disagree. For five justices, this stance was consistent with rejecting the (in my opinion poorly reasoned) decisions of the ICJ in LaGrand and Avena regarding procedural default. For three justices, this stance led to a (in my opinion heroic) interpretation of LaGrand and Avena that allowed room for a remand to the lower courts to determine whether state procedural rules "gave effect" to treaty obligations without any expectation of a different result. The majority in Sanchez-Llamas also referred to the deference that the judiciary owes to the Executive's interpretation of a treaty to which the US is a party, and the outcome reached was consistent with the Executive's position. The Court did not, however, allow that deference to substitute for its own independent analyis of the treaty in question.

Hamdan, and especially Justice Kennedy's crucial fifth-vote opinion, emphasizes the role of statutory incorporation of the laws of war; the decision does not support the claim that the Geneva Conventions would provide a rule of decision applicable in domestic litigation absent the incorporation that existing statutes mandate, although one can guess that at least four of the Justices would find that outcome congenial.

Lastly, nothing in the opinions suggests any direct limitation on the power of Congress to enact legislation that may be inconsistent with US obligations under international law. Again, four Justices seem strongly inclined to interpret statutory enactments in a manner that would minimize conflicts with international law; four recognize the principle but do not seem to regard it as having a high priority; and Justice Kennedy is enigmatic.

Is “novel” EC AD measures WTO-consistent? --from Lan Yuo

A guest blog from Lan Yuo:

On 3 July, the Council issued the finalised text of a Regulation imposing a definitive anti-dumping duty on potassium chloride from Belarus and Russia. (http://register.consilium.europa.eu/pdf/en/06/st10/st10609.en06.pdf)

Generally speaking, it is not a high profile (i.e. economically or politically important) AD case which may draw attention of most academics and practitioners. The “novel” format of the AD measures, however, has raised some eyebrows.

In this case, the Commission took a “relatively new approach” called Delayed Duty System (DDS). It basically takes the form of allowing imports up to a quantitative ceiling to enter the EU duty-free with the price above a Minimum Import Price (MIP). After the quantitative ceiling is reached, additional imports are subject to a “normal” AD duty at the dumping level established in the investigation.

According to it, Belarusian producers can export 700,000 tonnes per year of goods into the EU duty-free, provided that MIP is respected. Beyond that, exports are subject to a duty of 27.5%. (Paragraph 167-173 of the Regulation)

The Commission has also indicated the DDS (or revised version of DDS) may be applied to Chinese and Vietnamese exporters in the Footwear case.

The legal questions raise as: first, whether the ADA permits one AD investigation generating two different measures against the same kind of dumped exports (or “like produce”?); second, whether the first form of measure falls into the “specific action against dumping” prohibited under Art 18.1 of the ADA.

On its face, this “novel” AD measure looks more similar with safeguard measure, i.e. with an intention to stop the surge of imports, rather than addressing to the dumping price problems. But is it WTO-consistent?

Any comments?

What is an SPS measure?

Like many of us, much of my summer is devoted to reading EC - Biotech! Today's chunk made me think again about the concept of an SPS measure. As many will know, the panel decided that the EC's de facto moratorium is not an SPS measure. It is neither a requirement or a procedure within the meaning of Annex A.1. This is of course a judgment call. The line between a decision to delay approval (not SPS) and a provisional ban (SPS) is so fine as to threaten to disappear. More significantly though, in systemic terms, is the way in which the panel construes the relationship between Annex A.1 and the obligations laid down in the SPS Agreement. It sees the question of whether something is an SPS measure as a contextual rather than an abstract judgment with context being provided by the distinct obligations laid down. So, it reaches a provisional conclusion on the basis of its reading of Annex A.1 but then looks to the obligation in question to see whether this calls the provisional conclusion into question. So a single measure could end up being an SPS measure for the purpose of one obligation but not for the purpose of another. On the one occasion when this approach could have yielded interesing results (Annex C.1 which unlike Annex A.1, covers the operation of SPS procedures) the panel changes tack (although this is not always clear from the manner of presentation), positing the approval procedures as the measure, and the moratorium simply as a factor contributing to the undue delay. I'm left wondering whether the approach of the panel is a sensible one? Might it not be more sensible to see Annex A.1 as positing a general definition, while recognising that not all obligations will bite in the case of all SPS measures? Surely something is or is not an SPS measure regardless of under which specific obligation it is being attacked? It's a small point, but as so often reading the report I wonder whether many pages could not have been compressed into a small number but for the somewhat counter-intuitive interpretative approach adopted. If others are being as pedantic as I am, I'd be very happy to hear opinions on this.

Am I still an "international trade lawyer"?

As part of the normal course of my professional life, I find myself attending social functions in elegant venues, in some of the world's great cities. In the past year, the cities have included Prague, Brussels, London, DC and Montreal. I mention these cities not to impress (as there are those far more well-travelled than myself on this list) but rather to explain that the people I meet at these functions frequently have no idea who I am or what I do (nor I them). I do know one thing about them though; they have some interest in the teaching, research or practice of "international law" and they often do "that which they do" within the general geographic area of our meeting.

I made my name (to the extent that I actually have any sort of "name") working on the earliest NAFTA Chapter 11 investor-state disptues. I fell into the practice after working briefly in international trade policy for the Canadian Federal Government and serving as a Federal Court clerk. My professional passion, at the time, was international regulatory policy and reform. Academically, I hoped to identify and exploit the links between regulatory reform at the domestic level and international trade obligations, using the hard obligations of the new WTO Agreement and the soft law mechanisms of the OECD and APEC.

At the time I had run a successful e-mail discussion group and a web page of hard-to-find links on regulatory reform. Soon after my career change, however, the discussion group was dropped and the web sites became: www.naftaclaims.com (since 1998, to be complemented last year by: www.investmentclaims.com).

I was invited to work on the earliest NAFTA claims against Canada because I had some experience in the subject of one dispute (softwood lumber for Pope & Talbot v. Canada) and because I had published an article explaining how the process of implementing what would become the measure in the other dispute (S.D. Myers v. Canada) was violative of Canada's Federal Government Regulatory Policy and Canada's international trade obligations. Both of these cases demonstrated how a measure can simultaneously attract liability under a State's international trade obligations AND its international investment obligations. That a measure could be conceived as affecting "trade" or "investment" obligations would come as no surprise to the average business person - given that the distinction between trade and investment is one that is readily made by policy-makers, but not nearly so easily understood within the context of "the real world." In reality, most measures will have an impact on trade (on the macro level) and investment (both on macro- and micro-levels).

This short personal history brings me to the subject of today's blog: when I meet somebody at a cocktail party and they ask me "What do you do?" what should be my succinct yet sufficiently informative answer?

Sometimes I say "I am a trade lawyer" - where "trade" is proxy for "international economic law". Sometimes I say "I sue governments under investment protection treaties" - but I advise governments too (when it is to their advantage to seek the perspective of someone with more experience on the claimants' side of the bar)... and how many people know what an "investment protection treaty" is anyway? "I teach and practice international economic law" works, in that it says I'm an academic and that I spend my time on international law and that it has an economic component (and likely alerts the person that I am really quite dull and it's either time to switch the topic quickly to sports or refill his or her drink) - but I don't have a permanent teaching appointment anywhere and - outside of the many "followers of Hudec & Jackson" - not many lawyers know what "international economic law" really means.

Exascerbating this problem is the fact that I run in two circles: (1) historically and acedmically, I know a lot of trade law types (trade remedy lawyers, WTO scholars and enthusiasts, etc.; but (2) currently I spend my time with international commercial arbitration lawyers. This latter crowd inhereted all of the earliest investor-state treaty arbitration work because the drafters of these many treaties chose the international commercial arbitration model for the settlement of investor-state disputes. While most of their time was spent in resolving disputes between large multinationals, these practitioners would spend some time working on the odd expropriation case. For those lucky enough to work on international claims tribunals, or who had a public international law inclination, there was a chance to make investor-state dispute settlement a focus of their practices (focusing almost exclusively on expropriation).

The international commercial arbitration crowd still handle the bulk of investor-state arbitration, and the ranks of arbitrators in these disputes are drawn from the same pool. But they are no longer alone. The earliest NAFTA cases (that deserve a large amount of credit for acting as catalyst for the relative explosion of investor-state cases we are now witnessing) were not brought by international commercial arbitration lawyers; many were brought, and defended, by people whose background was in international trade law (such as me). The claims we made, and the law we argued, was heavily influenced by the development of what Weiler suggested might be the common law of international trade (as well as older strains of public international law). This evolution was "natural" because the obligations contained within investment protection treaties, including also NAFTA Chapter 11, are very similar to those found in other international economic agreements, including the WTO agreements as elaborated by the GATT and WTO acquis.

So today we have trade lawyers and international commercial arbitration lawyers working in the same "new" field: investor-state arbitration. As the number of cases grow, but the ranks of well-established international commercial arbitrators remains constant, the list of those who serve as arbitrator grows to include the same people who sit on WTO panels or the Appellate Body. Similarly, those who study the development of this (relatively "sexy") field include academics with backgrounds in public international law, alternative dispute settlement and international trade law. Still, however, the social circles have not yet meshed. When I mention a leading name in one field to someone who hails from another, they often don't know of whom I am speaking (and this phenomenon runs deeply: e.g. the name "John Jackson" often will not ring a bell with those from a commercial arbitration background; just as the name "Jan Paulsson" means little to the average trade lawyer).

For how long will this state of affairs continue (and, more trivially, for how long will I struggle to find a phrase describing myself and my work in investor state arbitration / international economic law)? There is already clear evidence of a convergence on the ground and in the substantive law. Perhaps the convergence can only be completed at the practice level when these two groups of international lawyers become one.

Thoughts?

Hamdan (and Sanchez-Llamas)

In case you were wondering how the Hamdan decision might relate to international economic law, and how the Supreme Court came to apply the Geneva Conventions, there is a nice post by Rosa Brooks at the Georgetown faculty blog explaining how Hamdan approaches international law.  Basically, the relevant portions of the Geneva Conventions (common article 3) are specifically incorporated by reference in U.S. domestic law, and become judicially applicable (at least) to that extent. 

Bad News Bulletin

From Inside U.S. Trade: 

U.S. Trade Representative Susan Schwab said at a July 1 press conference ministers had failed to "find closure or even narrow the range" of differences on any aspects of how sensitive and special agriculture products should be designated and treated. "The experience of the last several days has been somewhat disheartening," she said.

So, as a friend writes, should we now start thinking about 2009, assuming that Mark Warner or Al Gore or Hilary Clinton is able to get fast track passed? 

Do negotiation theorists have anything to say about this.  Was the round unripe, was there not enough surplus, is it mere brinksmanship competing for the surplus?  Was it the failure to make it a development round?  I think we can now do an autopsy, even if the patient may jump off the table. 

Shades of Luxembourg

Today's FT reports that the WTO negotiations are bogged down.  Not a surprise, and it reinforces a kind of facile comparison to the Uruguay Round.  Oh yes, agricultural brinksmanship again.  The parties are playing chicken and the one with the most to lose will swerve at the last moment.  Oh, but when exactly is the last moment?  And who has the most to lose?  Sometimes these guys just crash.

The EC Commissioner for trade, Mandelson, said he had been granted some flexibility by the Council to offer a bigger cut than the initial 39% average cut initially offered--something "just below" the Group of 20 proposal of 54%.  He was immediately contradicted by Christine Lagarde, the French trade minister.  He commented in response "The French are the French."  This is also reminiscent of the Uruguay Round, and the scuttled Blair House deal, where the French asserted the Luxembourg Compromise/Ioannina compromise--to the effect that for really important issues, majority voting won't apply.  That is, the French (or any other country) may veto the package despite the broader agreement to majority voting.  This is an area of some uncertainty.  In fact, the better formal legal position appears to be that no such veto exists.   But what's to stop France from pursuing the "chaise vide" tactics of Degaulle in the 1960s? 

France's position may contribute to the stalemate, but it might equally, or more likely, be blamed on the U.S., which is declining to do a Doha lite deal.  Why?