International Economic Law and Policy Blog

To Seal or Not to Seal

Reports are that Canada has filed a complaint against the EU over the Dutch and Belgian bans on seal products (which currently or soon will outlaw the manufacture and commercialization of all products containing seal) and perhaps the Italian and Luxembourg regulations which refuse to grant import licenses to seal products.The bans apparently stem from both the manner in which seals are traditionally killed – by clubbing – and from a decline in the seal population dating from the 1980s.

By contrast, Canada - which foreshadowed this move in a late-July press release - claims that over two-thirds of non-Inuit hunting occurs not by clubbing but by guns (there is also an Inuit exception to the Belgian law). Moreover, the seal population, while declining in the early 1980s, has apparently recovered (and in fact grown by more than three times in the last twenty years).

I am unfamiliar with the exact nature of the claim at this stage, but Francois Jubinville, a spokesman for Canada's minister of international trade, indicated the nature of Canada’s compliant when stating: ‘These bans have no basis in scientific fact … We don't believe there is any basis from the point of view of science or conservation to justify banning imports of seal products.’

More on Trade Measures and the Environment

Past blog discussions on trade measures designed to promote environmental protection have focused on proposals by Joseph Stiglitz and various EU officials (see here, here, here and here).  Now it seems that the U.S. is getting into the act.

Retaliatory steps that comply with world trade rules could be found against China and India if they fail to help international efforts to cut emissions of carbon dioxide, a senior U.S. diplomat said on Tuesday.

Speaking before a meeting on climate change in Washington to be attended by the world's 16 biggest greenhouse gas emitters, U.S. ambassador to the European Union C. Boyden Gray said steps could include a tax on carbon emitted by manufacturers.

Gray said it was vital to get China and India on board in reducing emissions.

"We just can't do without them," he told a news briefing.

"I think there are mechanisms that could be retaliatory ... that could be utilised if China and India don't engage.

"You could probably find a WTO-compliant way -- for example you could require goods to have to pay a fee related to the carbon expended in manufacture," he said.

It's a little unclear to me what is meant by this.  If it's a measure that targets only Chinese and Indian goods, that is clearly a problem under WTO rules.  On the other hand, if it's a general charge on all goods based on the carbon emissions from their production process, that would be easier to do consistently within the rules, although there would still be some challenges.

The Gambling Case: Both Tracks Moving Forward

Both tracks of the Gambling case continue to move ahead, with the parties still trying to reach agreement (and not getting that close, it seems).

With regard to the U.S. withdrawal of its Gambling services commitments, the Financial Times reports that the U.S. compensation proposal to the EU "involves opening opportunities in the storage, warehouse services and technical testing sectors to make up for the gaming restrictions."  The FT further notes:  "This is not thought to equate to the estimated $4bn (£2bn, €2.8bn) a year that EU companies are losing, and the same concessions are also being offered as part of US moves under the Doha round of world trade talks."

As for the Article 22.6 arbitration, Antigua proposed $3.4 billion in sanctions, and the U.S. came back with a much lower number:  $500,000 (or at the most $3.3 million).  The U.S. submission is here.  I only glanced at the submission quickly, but my sense was that the U.S. was arguing the following.  The finding of violation related to horse-racing only, and thus calculating nullification or impairment should be based on the lost value to Antigua of gambling on horse-racing only.  The total value of Antigua's [ADDED: This should be "other commercial services" exports] service exports was (in 2001) $47 million. Since horse-racing makes up 7 percent of the U.S. gambling market, the value of lost horse-racing gambling services is at most $3.3 million.  But even that overstates things says the U.S.:

The United States believes that this $3.3 million figure would overstate current levels of nullification and impairment, because (1) it is based on services exports to the world (not just to the United States), and (2) Antigua itself asserts that since 2001 its level of market share has fallen drastically from 50 percent worldwide, is currently only 7 percent, and will level off at only a 5 percent market share. If Antigua’s own claims of loss in market share are taken into account, then the $3.3 million per year figure (reflecting exports of horseracing gambling services in 2001) would need to be reduced by the ratio of 7 percent (Antigua’s claimed market share in 2001) over 50 percent (Antigua’s claimed current market share), or to approximately $500,000 per year in lost exports to the world of horserace gambling services.

So, the arbitrator is faced with the unenviable task of trying to find a reasonable compromise between $3.4 billion and $500,000.

From Dubai Ports to Dubai Stocks

One of the earliest topics on this blog was the Dubai Ports controversy (see here, here and here).  Now another Dubai company's purchase of U.S. assets is in the news: "Nasdaq Stock Market Inc. struck a complex deal to sell a 20 percent stake to the state-owned Borse Dubai in return for control of Sweden's leading stock market ... ."  It seems unlikely that this issue will become as prominent as the ports issue, because the security concerns are not the same.  President Bush had this reaction:

Q: Mr. President, there's a deal taking place this morning where the government of Dubai would buy a share of — a stake in the NASDAQ stock market.

And there is some concern being expressed on Capitol Hill about this; it's another deal involving people overseas that we might not trust.

What's your reaction to it? And also, what's your level of concern about protectionism in general?

BUSH: My reaction is, is that we have a reform process in place that will be able to deal with this issue. In other words, we're going to take a good look at it, as to whether or not it has any national security implications involved in the transaction. And I'm comfortable with the process to go forward.

Nevertheless, key Congressional Democrats are raising questions:

Senator Charles Schumer of New York, who chairs the Joint Economic Committee, said today that he would ask the Treasury Department to review the deal, and indicated he could oppose it as he has opposed other foreign government efforts to take stakes in key US properties.

'This deal raises serious questions that must be answered,' Schumer said. 'Those questions will include -- should we allow foreign governments to take over our financial exchanges and how much control and influence should those foreign governments have?'

Senate Banking Committee Chairman Christopher Dodd of Connecticut also said the deal must be reviewed to ensure there are no national security implications, and said he would await a review by the Committee on Foreign Investment in the US (CFIUS) before judging the arrangement.

Call for Submissions: Chinese (Taiwan) Yearbook of International Law and Affairs

Call for Submissions

 

The Chinese (Taiwan) Yearbook of International Law and Affairs commenced publication in 1981 under the auspices of the Chinese (Taiwan) Society of International Law. The Yearbook publishes on multi-disciplinary topics with a focus on international and comparative law issues regarding Taiwan, Mainland China and cross-strait relations. In addition, the Yearbook is considered to be one of the foremost publications in the world concentrating on issues of greater China.

 

The Yearbook accepts submissions of articles, comments and book reviews.  Although we do not have a limit on article length, we encourage the submission of articles under 25,000 words or 50 journal pages, including text and footnotes. Authors are requested to conform to the latest version of The Bluebook: A Uniform System of Citation. In addition, the Pinyin system of translation should be used in reference to publications in Chinese.

 

We strongly prefer electronic submissions of manuscripts. Please attach the manuscript, a cover letter and a resume in Word format to an e-mail to [email protected] . Alternatively, we also accept paper submissions. Please send manuscripts to the following address:

 

Chinese (Taiwan) Yearbook of International Law and Affairs

Attn: Professor Chun-i CHEN

P.O. Box 1-556 Wenshan, Taipei 116

Taiwan    ROC

 

Editorial Board,

Chinese (Taiwan) Yearbook of International Law and Affairs

New WTO Docs

For those who are interested, here is China's WTO consultations request related to U.S. AD/CVDs on coated paper: http://www.worldtradelaw.net/cr/ds368-1(cr).pdf

Also of interest is Korea's notification of an other appeal in the Japan - DRAMS CVDs case.  A few weeks ago, Marc Benitah had a post that was critical of the Panel's findings under SCM Agreement Article 12.9, and the post generated a lot of discussion.  Well, Korea may have agreed with him, as they appealed the Article 12.9 issue (point 3 of the appeal).  It's not clear yet what specific argument they plan to make, though, so perhaps they have something else in mind.

More Appellate Body Nominations

Over at the International Law Reporter blog, Jacob Katz Cogan reports that:

China also submitted two nominations: Zhang Yuejiao (a law professor and former government official who was also nominated for an earlier opening) and Zhang Yuqing (an attorney and former government official). Japan has nominated Shotaro Oshima, its former ambassador and permanent representative to the international organizations in Geneva.

Here's an article about the Oshima nomination with a little background.

ADDED:

Some background on each of them:

Zhang Yuejiao

Zhang Yuqing

Shotaro Oshima (and also here)

More from the BusinessWeek Gambling Debate

Yesterday I mentioned the BusinessWeek debate on how the U.S. should respond to the WTO Gambling decision.  The user comments on the debate continue, and I found one aspect somewhat interesting.  One of the comments came from a "G Clark," who I think was one of the original two debate participants, Guy Clark of the National Coalition Against Legalized Gambling.  Part of the comment was:

"In the original determination of the GATS by the WTO, the U.S. submitted the category on entertainment, keeping gambling out. The WTO used another schedule for entertainment and slipped gambling into our agreement without our knowledge. We signed the GATS without knowing that they had slipped that in. Gambling on the Internet was never the intent of our trade negotiators. The U.S. tried to work around the mistake, but it was obviously a flawed policy. They should have objected immediately when they found that the WTO had stiffed them, but they were trying to avoid making waves. They have recently applied to get that category corrected to exclude gambling."

Now, this is a clear mis-characterization of what happened in the decision, as anyone familiar with the case knows (and the U.S. would probably acknowledge).  The U.S. did not exclude "gambling," they excluded "sporting" services, and argued that gambling fell within that category.  They had a credible argument, but it was far from clear that their interpretation was the correct one. And the suggestion that the WTO "used another schedule" and "slipped gambling" in really stretches things.  One commenter responded as follows:

"You are grossly misinformed. There was no switching of the U.S. schedules. The original panel found that the U.S. had made a commitment in the remote gaming area. That decision was later upheld by the WTO Appellate Body.

In both instances, it was based on the same schedule the U.S. spent years developing. I'm sure they had hundreds of people look it over. It was no oversight on the part of the U.S. At the time, the U.S. viewed itself as potentially one of the largest exporters of gambling services in the world, so they left it in the schedule. Many other countries opted out. You can be sure every schedule was reviewed by the U.S."

I thought this second comment characterized the finding much better, although I'm not sure it's true that this really was anything more than an oversight on the part of the U.S.  (Only a few people probably know for sure what really happened and I'm not one of them.)   What I found most interesting about the comment, though, was the author:  Jay Cohen.  Is this commenter the same Jay Cohen who was a U.S. citizen convicted in the U.S. of running an Antiguan online gambling company, and who, it has been suggested (http://www.therx.com/blog_jay-cohen-used-the-wto-to-exact-his-revenge-on-the-united-states.php), pushed for Antigua's WTO complaint?  Seems plausible. This case really makes for some great stories.

Globalization Backlash and WTO PR: Things Go Better with Coke

It seems as though one of the prerequesites for a successful round of trade negotiations is support by U.S. business.  Coke seems to be leading the way in drumming up the support, according to today's FT: 

Neville Isdell, chief executive of Coca-Cola, has criticised corporate leaders for not speaking out against protectionism, warning that the failure of big business  to convince politicians and public opinion of the benefits of free trade will harm global growth and companies’ profits.

And over at Opinio Juris, Roger Alford reports on a counterattack against anti-globalization forces by Deputy USTR Veroneau.  Could this be part of a concerted PR blitz to move things forward?  Perhaps today, not only do you need the support of business, but you also need to beat back the anti-globalizers. 

AB Public Forum in October

Appellate Body to host session in the Public Forum 2007 on the impact of the WTO dispute settlement mechanism

The session will examine the role of the WTO dispute settlement mechanism in the multilateral trading system and, more generally, in the broader context of the deepening and specialization of international law. The participants will be:

Chair:              Mr. Giorgio Sacerdoti, Chairman of the Appellate Body

Panelists:         Ms. Merit Janow, Member, Appellate Body

Mr. Georges Abi-Saab, Member, Appellate Body

H.E. Mr. Bruce Gosper, Chairman of the WTO Dispute Settlement Body and        Ambassador and Permanent Representative of Australia to the WTO

Professor Joel Trachtman, Fletcher School, Tufts University.

The session will take place on Thursday, 4 October 2007, from 1615 to 1815 hrs, at the WTO headquarters in Geneva.

The Public Forum is open to all interested individuals.  Further information about the Public Forum and instructions on how to register are available at the following website:

http://www.wto.org/english/forums_e/public_forum2007_e/public_forum07_e.htm

The War Has Finally Broken Out

It seems that the battles the US took against China in the WTO has just turned into a full-blown trade war, with China returning the shots, for the first time (not counting the steel safeguard case in 2003) since it joined the WTO, by formally requesting consultations under the DSU with the US on its antidumping and countervailing measures against imports of coated papers from China today.

There are several things worth noting about this case:

1. For 23 years, the US has not applied the subsidy countervailing duty (CVD) laws against China, as China was not regarded as a market economy (I remember that there were discussions on this by the blog members earlier). Now that the US government has changed its stance, the CVD laws are going to have a huge impact on Chinese firms in other industries such as steel, plastics or textile. Actually the Chinese government tried to challenge the Commerce Dept. decision in the Court of International Trade earlier this year, so this is another latest addition to that saga.

2. If the US tries to apply both the antidumping and CVD duties against China, that would be a possible violation of Art. VI.5 of the GATT which says you cannot have two bites at the same apple.

3. The domestic CVD procedures in the US are taken at the same time as the US subsidy case against China. Thus there is a possibility that the US violated the prohibition on taking both the multilateral action (WTO dispute) and unilateral action (CVD) against the same subsidy.

This case would have far-reaching implications on China. I would be really interested to hear the comments from fellow blog members on this case.

WTO Forum: Are RTAs Stepping Stones or Obstacles to the WTO?

There is an interesting webcasting on the WTO website (WTO Forum), featuring a brief, yet well-pointed, debate on the merits and demerits of regional trading agreements (RTAs) between Jagdish Bhagwati (an international trade guru, Columbia University Professor) and Gary Hufbauer (a well-known trade commentator at the Peterson Institute). Prof. Bhagwati has observed that RTAs, compatible with the GATT/WTO in principle (GATT Article XXIV), marginalize the WTO and its MFN (non-discrimination) principle in the current form of proliferation (350-400 RTAs). He has also problematized the "spaghetti bowl" phenomenon of rules of origin as well as development concerns that RTAs tend to generate. He used the Latin phrase ("caveat emptor") in warning poor countries negotating RTAs with rich countries, such as the U.S. He has argued that while their preferential tariffs are soon to be eroded by other occasions of trade liberalization, many unfair elements tolerated in return for such tariff preferences will remain. In contrast, Mr. Hufbauer has emphasized that any form of trade liberalization is a virtue and that a main reason for the current proliferation of RTAs should be found in the stalemate of the multilateral trade rounds under the WTO. He has also viewed that the current WTO membership (151) makes any trade negotiation in it tedious and that some domestic governments prefer quicker results.

The "Wrath" of the WTO

It sounds like a Star Trek movie, but it's actually from a BusinessWeek debate sub-titled "The U.S. should heed the wrath of the World Trade Organization by making betting games legal on the Web. Pro or con?"

For the "pro" side was Martin Owens.  Here's an excerpt:

It remains too early to tell how much this untenable war against Internet gaming will cost the U.S. in trade flows, innovation, and moral authority. But it is perfectly clear that it is time for America to stop pretending that the rule of law is a one-way street.

On the "con" side was Guy Clark.  An excerpt:

The U.S. government’s obligation to protect its citizens from a toxic, addictive product exceeds its responsibility to please the gnomes at the WTO.

...

The WTO ruling claims foreign interests should have access to all American homes, because some states allow people to bet on horse races via the Internet. That makes as much sense as allowing foreign heroin and cocaine producers to offer drugs over the Internet simply because some pharmacies sell codeine cough syrup. Considering the implications for the U.S., this is not a slippery slope; it is a cliff.

I checked out the comments on the debate, and it seems to be running 6 to 5 in favor of the "pro" side, for whatever that's worth.  Some sample quotes:

"We signed the WTO treaty and ratified it so it is the law of the United States. By not abiding by the legal rulings of the WTO, we are no better than a run-of-the-mill bandit."

"allowing WTO authority in this argument overrides all states' rights."

It makes me a little nervous to have the WTO dealing with such a contentious issue, but I think ultimately it is for the good to have the issues out there in the public debate.

WTO Conference on "Multilateralizing Regionalism"

An interesting, and timely, conference on trade regionalism is taking place in Geneva. It is co-organized by the Graduate Institute of International Studies, Geneva, and the WTO Secretariat. Here is the progam with papers. http://www.wto.org/english/tratop_e/region_e/conference_sept07_e.htm  And, here is Pascal Lamy's speech on the "breeding concern." http://www.wto.org/english/news_e/sppl_e/sppl67_e.htm

Appellate Body Nominations

In a previous post, I mentioned that the following AB members will be stepping down soon:

• Merit Janow, United States (December 10, 2007)
• Yasuhei Taniguchi, Japan (December 10, 2007)
• Georges Abi-Saab, Egypt (May 31, 2008)
• A.V. Ganesan, India (May 31, 2008)

The WTO now reports the following about nominations for replacements:

The DSB chair announced that nominations to fill the four positions in the Appellate Body had been received from Pakistan, China, the Philippines, Japan, Korea and Benin. The deadline to propose candidates expired on 31 August 2007.

I'm a little suprised by the absence of a U.S. nomination.  Am I missing something here?  Is the U.S. giving up on a position this time around?

UPDATE:  I'm not sure what the quoted passage means exactly, but as I understand it from other sources, the U.S. did in fact nominate some candidates.

UPDATE II:  In the comments, David Palmeter mentions the two U.S. nominees: Jane Bradley (http://www.law.georgetown.edu/curriculum/tab_faculty.cfm?Status=Faculty&Detail=1956) and Jennifer Hillman (an old bio: http://www.usitc.gov/ext_relations/about_itc/hillman.htm).

Agricultural Subsidies and Dumping

When there are accusations of "dumping" in foreign markets as a result of agricultural subsidies, it is usually the U.S. and EU and other rich countries that are accused of wrongdoing.  So I thought it was interesting to see that India was being accused of the same thing, by an industry group in Bangladesh:

India is allegedly providing a considerable amount of subsidy for sugar export to Bangladesh as part of its strategy to dump the essential item.

Chief Marketing Executive of Bangladesh Sugar and Food Industries Corporation (BSFIC) ATM Alamgir made the allegation saying that both the central and provincial governments in India are giving huge subsidies to sugar exporters.

“The central government (of India) provides US$ 35 against per tonne sugar export to Bangladesh, while provincial governments, particularly that of Maharastra, gives US$ 30 in this regard,” the BSFIC senior official told a meeting here yesterday.

A New IEL Journal

There's a new IEL journal starting up:  The Indian Journal of International Economic Law.  It's part of the National Law School of India.  Here is its call for papers:

Indian Journal of International Economic Law invites submission of articles and case-notes dealing with current topics in international economic law for its 2007-2008 issue. To expedite processing and the editorial process kindly conform to the following guidelines:

All manuscripts must be accompanied by a covering letter stating the title, author's full name, and author's contact details, a 300 word abstract and a short biographical note about the author. Manuscripts must be typed in Microsoft Word (.doc) format.

Formatting:

Main Body Times New Roman font, size 12, double spaced, justified, with a margin of at least 1 inch on all sides.

Footnotes to be indicated by superscript figures in the text and should be used for listing references. Substantive footnoting is permitted.

The citation style must conform to THE BLUEBOOK: A UNIFORM METHOD OF CITATION (Columbia Law Review Ass'n et al. eds., 18th ed. 2005). Please send an electronic version of your manuscript by email to
[email protected] and a carbon copy (CC) to [email protected]. A confirmatory email of receipt of the manuscript shall be dispatched within seven days of receipt.

If you desire to send hard copies please mail a CD along with the manuscript to:

The Indian Journal of International Economic Law,
Student Bar Association,
National Law School of India University,
Nagarbhavi,
Bangalore- 560072.

The Appellate Body Finally Gets Some Work

It has been a slow year for the Appellate Body.  Up until last week, there had been just two notices of appeal filed, and those were back in January and February.  But now they finally have something to do, as two appeals were filed in the past week.  First came Japan's appeal in the Japan - DRAMS CVDs case: http://www.worldtradelaw.net/na/ds336-8(na).pdf  Then a couple days later came the EC's appeal in the Brazil - Tyres case: http://www.worldtradelaw.net/na/ds332-9(na).pdf  On the latter, the EC technically "won" the case before the panel, as Brazil was found in violation.  But based on the panel's reasoning, it seemed possible for Brazil to implement in a way that would not help EC exporters much.  The Tyres case has a lot of potentially interesting issues in it, such as the status of an exemption for Mercosur countries under WTO rules.  However, the extent to which these issues get addressed depends on how much "judicial economy" the Appellate Body decides to exercise.

Trade Law Goes Hollywood

This should bring some glitz to the trade law field (maybe Brad Pitt and Angelina Jolie will testify):

A group representing Hollywood below-the-line workers is planning to file a complaint today with the U.S. government, alleging that Canadian film and TV subsidies are unfairly attracting U.S. shoots northward.

Tim McHugh, the Los Angeles-based chairman of the Film and Television Action Committee -- a grass-roots organization composed largely of IATSE members -- said last week that his group will file a 301 petition against Canada with the U.S. trade representative.

In the complaint, the FTAC argues for an end to Canadian subsidies that it argues unfairly lure U.S. production across the border.

"We feel that film workers in the U.S. have been severely harmed by the practice of paying producers to bring their movies out of the country, in this case to Canada," McHugh said.

The FTAC plans to ask the USTR to first negotiate with the Canadian government to put an end to tax credits and other incentives it offers foreign producers. If those talks make no headway, the FTAC wants action initiated through the World Trade Organization.

Should the FTAC succeed in undermining the Canadian subsidies model through a favorable WTO ruling, McHugh ventured that it could turn its fire on other countries offering similar incentives for U.S. producers to shoot abroad.

It looks like they have a web site set up on the issue: http://www.ftac.net/index.php  I don't see the 301 petition there, but I would guess it will be up soon.  And here's a law review article by Professor Claire Wright on the topic: http://www.uakron.edu/law/lawreview/docs/Wright393.pdf

The Path to Development

A few weeks ago, I quoted Ha-Joon Chang of the University of Cambridge writing the following in the Independent:

Both the history of rich countries and the recent records of developing countries point to the same conclusion. Economic development requires tariffs, regulation of foreign investment, permissive intellectual property laws, and other policies that help their producers accumulate productive capabilities.

This article was based on a book he wrote, which The Economist has just reviewed.   I think the review makes two good criticisms of the argument for "industrial policy" as necessary for economic development:

• Many countries have tried this approach with very negative results: "many poor countries turned their back on trade with tragi-comic results. Cosseted industries turned out finished goods that were worth less than the imported materials from which they were made. Thomas Jefferson had warned the Hamiltonians that “the use of [subsidies] has been found almost inseparable from abuse.” In post-war Africa, Latin America and South Asia, he was proved right."
• In those countries where development was achieved, factors other than industrial policy may have been the cause: "... South Korea was blessed with a young, literate and biddable workforce; it also lacked large tracts of arable land or rich deposits of natural resources. Even without the visible hand of government to guide it, the country's future clearly lay in making stuff, rather than drilling, mining or growing it. Once its military government devalued the currency and loosened restrictions on imported materials, South Korea was free to fulfil its destiny. It began with light manufacturing, using simple technologies that did not require a long apprenticeship to master. Its growth was certainly impressive. But a country that saves and invests as heavily as South Korea did can arguably transform itself even without recourse to any Hamiltonian magic."

This debate has been going on for a long time now, and there is a good chance these same issues will continue to be debated into the next century.  Part of the problem, I think, is that there are few "pure" interventionist and neo-liberal models to look at.  Almost every country is a mix of both.  As a result, it's very easy for political economists on both sides to focus on the particular policies that they favor as the cause of development in specific countries. 

The U.S. Record at the WTO

Ben Muse asks, "How is the U.S. doing in WTO litigation?", and concludes: "On balance, the U.S. seems to be doing fairly well."