International Economic Law and Policy Blog

OPEC WTO Legislation Introduced

From a press release by Senator Frank Lautenberg:

Late last week, U.S. Sen. Frank R. Lautenberg (D-NJ) introduced legislation to force action against the Organization of the Petroleum Exporting Countries (OPEC) for its anti-competitive practices and illegal export quotas on oil, which ultimately lead to higher gas prices here at home.

    “While OPEC and the oil companies have seen record profits, American families are paying record gas prices at the pump,” Sen. Lautenberg said.  “The illegal actions of OPEC nations have gone on for too long, and it is time to stand up to this cartel and protect the interests of the American people.”

    Sen. Lautenberg’s bill would require the United States Trade Representative to initiate consultations with countries that are members of both OPEC and the World Trade Organization (WTO).  If consultations failed, the U.S. would request that the WTO convene a dispute settlement panel to judge the case.  If the case were decided in the U.S.'s favor, OPEC would be required to cease its illegal operations or the U.S. would be able to impose trade remedies.

    ...

    Under WTO rules, countries are prohibited from placing restrictions on exports.  Yet despite this prohibition, by negotiating among themselves, OPEC sets export quotas for each of its member nations, and is able to exercise a great deal of control over the international price of oil.

...

    The bill, the OPEC Accountability Act of 2008 (S. 2964), is co-sponsored by Sens. Carl Levin (D-MI), Byron Dorgan (D-ND), Bob Casey (D-PA) and Bernie Sanders (I-VT).  It is based on similar legislation Sen. Lautenberg first introduced in 2004.

Note the statement that "OPEC sets export quotas for each of its member nations."  If they can prove that, maybe they have a case.

Here is the bill: http://www.govtrack.us/congress/billtext.xpd?bill=s110-2964  From the Congressional "Findings" in the bill: "The agreement among OPEC member nations to limit oil exports is an illegal prohibition or restriction on the exportation or sale for export of a product under article XI of the GATT 1994."  Obviously, converting these Congressional findings into WTO panel findings is going to be their challenge. 

The specific actions they complain about are somewhat broader than I expected:

(1) IN GENERAL- Notwithstanding any other provision of law, the President shall, not later than 15 days after the date of enactment of this Act, initiate consultations with the countries described in paragraph (2) to seek the elimination by those countries of any action that--

(A) limits the production or distribution of oil, natural gas, or any other petroleum product;

(B) sets or maintains the price of oil, natural gas, or any petroleum product; or

(C) otherwise is an action in restraint of trade with respect to oil, natural gas, or any petroleum product, when such action constitutes an act, policy, or practice that is unjustifiable and burdens and restricts United States commerce.

Trade in Everything: Crime

I'm going to rip-off Simon's regular series title to seek comments on an upcoming article of mine co-authored with my colleague, Dr. Doron Teichman, an expert on crime displacement. Entitled "Outsourcing and Insourcing International Crime: The Political Economy of Globalized Criminal Activity" (forthcoming in the Vanderbilt Law Review) the article draws a broad comparison between legitimate economic activity and criminalized profit-oriented activity such as money-laundering, the drug trade, sex tourism and, yes, gambling. We try to answer three questions: (From the abstract) -

"First, why does crime travel across national borders? The Article demonstrates that in the globalized economy, profit-driven crime (e.g., money laundering, drug trafficking, gaming and the sex trade) responds - much like legitimate economic activity - to local regulation, by shifting to the territorial jurisdictions in which it incurs lower expected sanctions, making it most profitable for criminals. Second, how do governments react to the international mobility of criminal activity? The Article argues that the crime control policies adopted by individual states influence the global distribution of transnational crime, and that they subsequently impact upon the crime control policies adopted by other states. More specifically, it demonstrates how in a dynamic setting states engage in two types of regulatory crime control races, depending on differential national attitudes towards the activity involved. The first is the outsourcing race, in which increasingly strict policies cause crime to shift to other states. The second is the insourcing race, in which increasingly lenient policies attract crime to the state. In each of these races, states impose externalities upon each other, and inefficient levels of both enforcement and crime arise, in what may be seen as a global collective action problem. Finally, how should global crime control be designed to enhance global welfare? Building on theories of public choice and international relations, the Article offers a critique of existing policies in the area, and explores innovative crime control policies."

It would be particularly interesting to hear what people who focus on "legitimate" international economic activity think of this theory of regulatory competition. My own sentiment is that you/they would find it quite natural, but perhaps I am mistaken.

T.

Possible New Investment Treaty Rules for Non-Discrimination

From a Norwegian draft model BIT (MS Word document) that reader Perry Bechky pointed me to:

Article 3: NATIONAL TREATMENT

1. Each Party shall accord to investors of the other Party and to their investments, treatment no less favourable than the treatment it accords in like circumstances[FN2] to its own investors and their investments, in relation to the establishment, acquisition, expansion, management, conduct, operation and disposal of investments.

[FN2] The Parties agree/ are of the understanding that a measure applied by a government in pursuance of legitimate policy objectives of public interest such as the protection of public health, safety and the environment, although having a different effect on an investment or investor of another Party, is not inconsistent with national treatment ... when justified by showing that it bears a reasonable relationship to rational policies not motivated by preference of domestic over foreign owned investment.

Here are a few initial thoughts on this provision.

First, my sense is that perhaps the footnote would only apply to situations involving de facto discrimination.  De jure discrimination (i.e., explicit distinctions between foreign and domestic investors/investments) would be governed by the main text alone.  But I'm not absolutely sure about this.

Second, the substance of the footnote indicates that disparate impact/discriminatory effect on foreign investment/investors will not lead to a violation of national treatment rules in all instances.  Specifically, there will be no violation if the following conditions are met: (1) The measure pursues "legitimate policy objectives of public interest"; (2) the measure "bears a reasonable relationship to rational policies"; and (3) the "policies" at issue are "not motivated by preference of domestic over foreign owned investment."  The first two elements seem to overlap; I'm not sure exactly how they relate to one another.  The last element, the "motivation" behind the measure, involves intent.  However, it's not clear what kind of intent the drafters had in mind, subjective or objective.

Third, what happens if there is no discriminatory effect on foreign investors/investments as a whole?  Does that mean there cannot be a violation?  There are WTO cases that have found a violation where one individual foreign product is treated unfavorably even though there is no overall discriminatory effect against foreign products.  I wonder how the quoted provision would deal with the equivalent situation in the investment context.  The reference to "an investment or investor" makes me think the "individual" test might be applied.

Fourth, it sounds like the burden is on the defending party to show that the measure "bears a reasonable relationship to rational policies not motivated by preference of domestic over foreign owned investment."  So, the complainant first makes its claim of less favorable treatment, but the defending party can then respond with a defense of this kind.

Finally, I thought it was interesting that they put the footnote after "like circumstances."  There is some disagreement over which part of the national treatment provision is the key, with some emphasizing the "less favorable treatment" part and others focusing on the "like"-ness part.  By putting the footnote where they did, it seems that perhaps these drafters thought "like"-ness was the key.

Clinton and Obama on Currency

From the campaign trail, Hillary Clinton takes on the China currency issue:

The China Currency Coalition ("CCC") today greeted enthusiastically the announcement by Senator Hillary Clinton (D-NY) that she has become a co-sponsor of S. 796, the Fair Currency Act of 2007, also known as the Bunning-Stabenow-Bayh bill after Senators Jim Bunning (R-KY), Debbie Stabenow (D-MI), and Evan Bayh (D-IN).

...

The Fair Currency Act of 2007 and its counterpart, H.R. 2942 in the House, recognize exchange-rate misalignment - whether by China or by any other country - as an export subsidy.  Under this bill U.S. companies and workers will finally be able to take corrective action under U.S. trade laws.

And Obama is on board, too:

Democratic presidential candidate Barack Obama said on Thursday he supported a Senate bill to offset China's "currency manipulation," one day after his rival Hillary Clinton added her name to the list of legislation's co-sponsors.

...

The Stabenow-Bunning bill would define currency manipulation as a subsidy under U.S. trade laws, opening the door for the Commerce Department to impose countervailing duties on a broad array of Chinese goods. Individual companies or industries would still have to petition for the relief before duties are imposed.

Upcoming WTO Scholars' Forum Events

Some upcoming events in London:

The Directors of the WTO Scholars' Forum would like to invite you to a series of events organized in May:

1. Talk by Professor Don Regan on 'What Are Trade Agreements For?'
Thursday 15 May 2008, 2-4pm, Moot Court, UCL Laws, London (map: http://www.ucl.ac.uk/laws/faculty/index.shtml?laws_map)
Chair: Dr Fiona Smith, Faculty of Laws UCL, Co-Director WTO Scholars' Forum

Speaker: Professor Don Regan, William W. Bishop Jr. Collegiate Professor of Law, University of Michigan

More information available at: http://www.ucl.ac.uk/laws/wto-forum/index.shtml?events_new

2. Roundtable Discussion with Professor John H. Jackson on 'The Changing Nature of Sovereignty'

Tuesday 20 May 2008, 3-5.30pm, Moot Court, UCL Laws, London (map: http://www.ucl.ac.uk/laws/faculty/index.shtml?laws_map)

Chair: Professor Dan Sarooshi, Queen's College, University of Oxford

Speaker: Professor John H. Jackson, Georgetown University Law Center, Director Institute of International Economic Law, and Editor-in-Chief of the Journal of International Economic Law

More information available at: http://www.ucl.ac.uk/laws/wto-forum/index.shtml?events_new

All events organized by the WTO Scholars' Forum are free of charge and all are welcome (http://www.ucl.ac.uk/laws/wto-forum/index.shtml).  If you would like to be added to our email-list or confirm your attendance of both events, please contact Ms Ann Tucker, the Forum's administrator at UCL on [email protected].

We look forward to seeing you at both events.

Best wishes,

Dr. Fiona Smith and Dr. Isabelle Van Damme

Directors of the WTO Scholars' Forum

New Book Release: International Economic Law - The State and Future of the Discipline

Just a heads up that the book derived from the papers presented at the ASIL-IELG 2006 conference in Bretton Woods, NH (yes, that Bretton Woods!) is now out.  

Many of the contributions are from familiar names to this Blog (such as Douglas Arner, Andrea Bjorklund, Karen Bravo, Tomer Broude, Isabella Bunn, Sara Dillon, Tracey Epps, David Gantz, Franklin Gevurtz, Andrew Lang, Andreas Lowenfeld, Rose Ann MacGillivray, Federico Ortino, Matteo Ortino, Colin Picker, Amy Porges, Seema Sapra, Rumu Sarkar, Gregory Shaffer, Joel Trachtman, Elizabeth Trujillo, Emmanuel Voyiakis, Constance Wagner, and Chen-Yu Wang). 

Thanks to my co-editors Isabella Bunn and Douglas Arner, and of course to Hart, a wonderfully supportive publisher. 

Hart has provided the following details for those wishing to buy the book:

International Economic Law: The State and Future of the Discipline
Edited by Colin B Picker, Isabella D Bunn and Douglas W Arner

The volume is organised into three sections, each covering one of the three pillars in the discipline of international economic law: research and scholarship; teaching; and practice/service. It begins with an assessment of the state and future of research in the field, including chapters on questions such as: what is international economic law? Is it a branch of international law or of economic law? How do fields outside of law, such as economics and international relations, relate to international economic law? How do research methodologies influence policy outcomes? The next section looks at the state and future of teaching in the subject. Chapters cover topics such as: how should international economic law be taught, and when and to whom? Should it be taught in different ways in different places? Is the training provided in the law schools suitable for future academics, government officials, or practitioners? How might regional shortcomings in academic resources be addressed? The final section of the book focuses on the state and future of international economic law practice in the Bretton Woods era, including institutional reform. The contributors consider issues such as: what is the nature of international economic law practice? What are the needs of practitioners in government, private practice, international and non-governmental organisations? How can pro-bono service in the field be encouraged? Finally, how have the Bretton Woods institutions adapted to these and other challenges - and how might they better respond in the future? 

This book will be of interest to lawyers, economists and other professionals throughout the world- whether in the private, public, academic or non-governmental sectors - seeking both fresh insights and expert assessments in this expanding field. Indeed, the book itself promises to play a role in the next phase of the development of international economic law.

April 08 344pp 9781841137551 £35 US$60 

For US orders please contact our distributors in America:

ISBS, (International Specialised Book Services),

920 NE 58th Avenue, Suite 300, Portland, OR 97213-3786, USA

Tel No: +1 503 287 3093; Fax No: +1 503 280 8832; E-mail: [email protected]

http://www.hartpublishingusa.com/books/details.asp?isbn=9781841137551

For UK, Europe and Rest of World orders please contact Hart Publishing directly or click on the link below:

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Tel No: 01865 517530; Fax No: 01865 510710; E-mail: [email protected]

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