International Economic Law and Policy Blog

The Collapse of the Doha Round Negotiation: Some Reflections

Why did it fail?

Immediate causes:

On the last day (Day 9) of the talks, the core negotiating group (G 7: Australia, US, EU, Japan, China, India, and Brazil), more narrowly the U.S. and India/China/Indonesia, failed to close their gaps in some details (depth) of the “special safeguard mechanism” which would allow developing countries to protect their crops from the surge of imports to secure food (and livelihood) security and rural development. Yes, it is frustrating to see that the once rekindled hope was shattered by this quite technical matter. The deal was so close! Well, of course, this happens all the time in any negotiation…

Underlying factors:

Most commentators view that the current domestic political situations in major negotiating parties, such as the U.S., the EU, India, have not been amenable to concessions, thereby leading to the lack of political support for a deal in general. Key elections are pending in the U.S. and India. The EU has a new president (Sarkozy), who has not been very cooperative to the Doha round. Also, protectionist sentiments prevail in both sides of the Atlantic.

What would be the impact?

Certainly, it is not the end of the world as well as of the global trading system. The impact would be more symbolic yet systematic, rather than commercial. Pascal Lamy estimated that as much as US$130 billion in potential tariff saving a year ($35 billion saving in agriculture and $95 billion in industrial goods) has evaporated. More importantly, however, it is definitely a blow to the credibility of the WTO as an institution and would undermine the business sentiment all over the world in this depressing era of various economic woes. Protectionism is likely to gather steam. Bilateral deals will continue to rule. Possibly more litigations in the WTO might ensue. Yet, a daily basis of the WTO operation, including the dispute settlement mechanism, will remain largely intact.

What’s the next?

Tomorrow never dies. The trade talks will resume somehow some day. The problem is that nobody knows exactly how and when. Big shots, such as Lamy and Mandelson, all seemed to agree that it would not restart some time in the foreseeable future. Perhaps a “new” round after the U.S. November presidential election?

Could Doha Ever Be Saved?

Well, some argue that there should be yet another ministerial after the August break. But, this is unlikely. Maybe, only maybe, there might be something that our captain Pascal Lamy could do as a last resort. Lamy might combine all those convergences achieved thus far with his own magic bullets (some creative alternative proposals on the last two sticking points (special safeguard mechanism and cotton). Then, this “Lamy Draft” could be thrust upon the concentric circles (from G-7 to the Green Room to the whole membership) for an agreement. Perhaps he should fly to Beijing to meet key leaders on the sidelines of the Olympic opening ceremony. He might be able to pick up some political capital necessary to materialize his Draft. Of course, this would not be easy: nobody thinks it would be. But, it might be worth trying. Any way, his term as a Director-General will expire next year or so.

THE LAW OF UNINTENDED CONSEQUENCES FOR DEVELOPING COUNTRIES AFTER THE FAILURE OF THE DOHA ROUND

Developing Countries who wanted absolutely to make this round a "development round" (as they understand the meaning of this expression) are surely now thinking about the consequences of the failure of the Doha Round. As always, the most important consequences for them will be unintended. The following Statement by Teamsters General President Jim Hoffa gives us a foretaste of these unintended consequences:

It's an outrage that labor rights and the environment are not even a consideration at the WTO. Just this past weekend, the United States once again got desperate and actually suggested the possibility of negotiating on 'Mode 4,' which would essentially be making immigration policy at the WTO. This is not just unacceptable, but it is unconstitutional.

So my intuition is that the failure of the Doha Round would bring on the table of the next Round labor rights and environmental issues which are at the heart of the comparative advantages of many developing countries.As we know, this has already happened in bilateral deals, and I am not sure if developing countries would be happy to see these issues in the menu of the next Round, as a result of the failure of Doha.

A Bridge Too Far: The Eventual Collapse of the Doha Round

Tue Jul 29, 2008 1:17pm EDT

GENEVA (Reuters) – “Marathon talks on a new wave of trade liberalization collapsed on Tuesday after nine days of intense but ultimately fruitless negotiations.”

More soon.

"Sovereignty, Supremacy and Subsidiarity"

As the WTO Members try to make some new international law through the Doha Round, and Congress questions the role of Appellate Body rulings, this new book asks the time timely question "how should the authority to make and interpret international law be allocated among states, international organizations and tribunals":

The Shifting Allocation of Authority in International Law: Considering Sovereignty, Supremacy and Subsidiarity

Edited by Tomer Broude and Yuval Shany

International law is fragmented and complex, and at the same time increasingly capable of shaping reality in areas as diverse as human rights, trade and investment, and environmental law. The increased influences of international law and its growing institutionalization and judicialization invites reconsideration of the question how should the authority to make and interpret international law be allocated among states, international organizations and tribunals, or in other words, "who should decide what" in a system that formally lacks a central authority? This is not only a juridical question, but one that lies at the very heart of the political legitimacy of international law as a system of governance, defining the relationship between those who create the law and those who are governed by it in a globalizing world.

In this book, leading international legal scholars address a broad range of theoretical and practical aspects of the question of allocation of authority in international law and debate the feasibility of three alternative paradigms for international organization: Sovereignty, Supremacy and Subsidiarity. The various contributions transcend technical solutions to what is in essence a problem of international constitutional dimensions. They deal, inter alia, with the structure of the international legal system and the tenacity of sovereignty as one of its foundations, assess the role of supremacy in inter-judicial relations, and draw lessons from the experience of the European Union in applying the principle of subsidiarity.

This volume will be of great interest to scholars and practitioners of international law alike.

Surprise! Surprise! The Doha Round Is Still Alive and Kicking!

At long last, a lay of hope shone on the stalemated Doha round negotiation yesterday (July 26th: Beware the time difference.) On the verge of the collapse of the talk, Mon Capitán Pascal Lamy managed to persuade negotiators to continue negotiating by presenting a critical "package of elements," which might be coined the "Lamy Plan," if not "Lamy Draft." This deal-salvaging package is nothing but a thoughtful compromise proposal which is based on the most recent draft modalities on the agriculture and NAMA (non-agriculture market access, which concerns industrial tariffs reduction) yet attuned to the more recent consultations among major WTO members.

What Lamy did was to present some concrete headline numbers on several major sticking issues (ranging from farm subsidies to industrial tariffs reduction) in an articulated fashion out of the intense consultations among the seven key negotiating parties (G 7: the U.S., the EU, Australia, Japan, China, Brazil and India). Under the Lamy Plan, the U.S. should cut the current bound level of farm subsidies (US$ 48 billion) to US$ 14 billion (which is still lot lower than the actual spending last year of US$ 7 billion). Developing countries are also allowed to shelter some (12% of all covered products) of their crops, which are critical to their development concerns (food, livelihood security or rural development reasons) and called "special products," from the tariff reductions based on the NAMA modalities. Developing countries are obliged to cut their industrial tariffs averagely to 20, 22, or 25% (coefficients) depending on three different "flexibility" mechanisms which they will choose to protect some of their strategic products more than others within these limits.

Of course, one should not be misled to believe that we have a genuine "breakthrough" in the Doha talks. Not yet, but better sooner than later. There are still so many (maybe TOO many) other issues, ranging from cotton to geographical indications. From a realistic standpoint, they need to be either fudged or set aside for a while to get the job done. In particular, the upcoming "signaling conference" for the services talk seems quite decisive for the destiny of the current negotiation.

For the WTO coverage in this topic, click here. For the Financial Times coverage, click here. If you are interested in more details on the Lamy Plan (the package of elements), a very informative coverage by the ICTSD is here.

What if They Held Trade Talks and Nobody Protested?

From Reuters (via IATP):

Some diplomats said the lack of protests also put a damper on the talks, in which ministers are seeking to agree on cuts to politically sensitive farm subsidies and import duties.

"It makes me feel less important," joked one official.

Call for Papers: International Multi-Sourced Equivalent Norms

Those interested in further exploring problems of fragmentation in international law may want to consider this call for papers related to a research group headed by my Hebrew University colleague, Yuval Shany, which will culminate in a conference to be held in Jerusalem in May, 2009. The research group (which for some reason is predominated by trade law people, although the approach is more to wear the hat of "generalists" and the topic relates to all areas of international law) has been discussing issues related to "international multi-sourced equivalent norms" (MSENs), defined as "as two or more norms which are (1) binding upon the same international legal subjects; (2) similar or identical in their normative content (in the words of the ILC, "point in the same direction"); and (3) have been established through different international instruments or "legislative" procedures or are applicable to different substantive areas of the law." We are particularly interested in contributions that discuss MSEN-related issues that cut across substantive areas of international law, as discussed in the call below:   

The Leonard Davis Institute for International Relations and the International Law Forum of the Hebrew University of Jerusalem announce AN INTERNATIONAL CONFERENCE ON THE LAW AND POLICY OF INTERNATIONAL MULTI-SOURCED EQUIVALENT NORMS

INTRODUCTION: The Leonard Davis Institute for International Relations and the International Law Forum of the Hebrew University of Jerusalem are organizing a two-day international conference on the international law and policy governing the creation and operation of Multi-Sourced Equivalent Norms ("MSENs"). The conference will be held in Jerusalem on 24-25 May 2009. Recipients of this call for papers are invited to submit proposals to present a paper at the conference. Authors of the selected proposals will be offered coverage of their flight expenses to Israel and accommodation for the duration of the conference

BACKGROUND: Recent decades have witnessed an impressive process of normative development in international law. As a result, international relations have now reached an unprecedented level of normative density and intensity. While these developments clearly have some positive implications - e.g., they promote the rule of international law, advance important values and facilitate inter-state cooperation - they also present several theoretical challenges worthy of further investigation. One major challenge identified by the International Law Commission (ILC) has been the fragmentation of international law. According to the ILC report on the subject, in the absence of a central authority in international relations, the rapid normative development by different and uncoordinated legal regimes might lead to "conflicts between rules or rule-systems, deviating institutional practices and, possibly, the loss of an overall perspective on the law." One somewhat neglected specific aspect of legal fragmentation is the existence of situations in which distinct international legal rules direct similar or identical behavior, that is, situations governed by multi- sourced equivalent norms (Please see more on multi-sourced equivalent norms/MSENs below.) In 2007, the Leonard Davis Institute for International Relations and the International Law Forum of the Hebrew University of Jerusalem established a research project addressing this field. The participants in the study group are Lorand Bartels (Cambridge University), Tomer Broude (Hebrew University), Guy Harpaz (Hebrew University), Moshe Hirsch (Hebrew University), Andre Nollkaemper (University of Amsterdam), Joost Pauwelyn (Graduate Institute of International and Development Studies, Geneva), Yuval Shany (Hebrew University) and Isabelle Van Damme (Cambridge University).

AIMS OF THE CONFERENCE: The conference will present the work of the study group and other scholars and practitioners interested in the methodological and theoretical questions associated with the creation and operation of MSENs. TOPICS: Among the topics to be discussed in the conference are: The relations between normative and institutional fragmentation as illustrated by the creation and application of MSENs MSENs and questions of jurisdiction and applicable law before international courts and tribunals Analysis of specific case studies illustrating problems that the application of MSENs may entail The operation of MSENs in specific branches of international law Harmonization of background principles governing MSENs and the need for institutional cooperation Fragmentation, MSENs and 'post-modern anxieties' - evaluation of the discourse on MSENs The focus on MSENs would hopefully enable the conference participants to closely examine the impact of differences background principles (e.g., interpretative principles, responsibility allocating principles, exceptions and defenses) and norm-applying institutions on the fragmentation of international law, and to develop a better understanding of international fragmentation, the problems it creates and the solutions which may or may not be developed to address it.

LOGISTICS: The conference will be held at the Hebrew University of Jerusalem on 24-25 May, 2009. The papers presented in the conference will be published online as a International Law Forum working papers on http://www.SSRN.Com and subsequently, (subject to a refereeing process) published in a special law journal symposium or in a collection of essays.

PAPER SUBMISSION PROCEDURE: Respondents to the call for papers are requested to submit a one page proposal + their curriculum vitae to:

CONTACT: Prof. Yuval Shany Email: MAILTO:[email protected] by no later than 1 Nov. 2008. The selection committee - comprised of all members of the aforementioned study group - will complete the selection process by 1 Dec. 2008. Successful applicants are expected to deliver their draft papers by 1 May 2009. The conference will incur the travel (economy-class) and accommodation costs of the selected participants.

MSENS: MSENs can be defined as two or more norms which are (1) binding upon the same international legal subjects; (2) similar or identical in their normative content (in the words of the ILC, "point in the same direction"); and (3) have been established through different international instruments or "legislative" procedures or are applicable to different substantive areas of the law. MSENs may be found virtually all fields subject to international regulations, including economic relations (where parallel standards may be created by trade and investment instruments - e.g., the national treatment principle), the protection of human rights and the environment (where parallel standards may be created by regional and global standards - e.g., the ICCPR and the ECHR, UNCLOS and the parallel EC Regulations) and use of force (where parallel standards may be created by treaty and customary law standards - see e.g., Nicaragua).

Is the Panel Report on China - Auto Parts Biased toward "Exporting" Countries?

At long last, the panel report in China – Auto Parts has come out. Regarding my previous posting on this dispute, click here. For two "preview" postings by Simon, click here and here. For another posting on the interim report by Henry, click here. Unsurprisingly (yet still frustratingly) it is a very "long" report, about 380 pages in total. Yes, it may be commercially significant and politically sensitive. Nonetheless, its sheer length would simply scare potential readers away. And, the way it is written is not inviting as well. For a brighter future of the global trading community, these unfortunate aspects must be changed somehow. More people should actually "read" panel reports to broaden the circle of the community of (trade) law. (How about appointing "permanent" panelists? I know it may be politically infeasible, yet still has lots of merits.)

Any way, what is this case all about? First, some background. Did you know that China’s auto market ($19bn ) is the world’s third largest, only after the U.S. and Japan? This means a lot of money. So, it is no wonder that all the plaintiffs in this case (the U.S., the EC and Canada) are interested in exporting auto parts to China. Yet China also wants to develop its own auto industries, and this has recently been quite successful. (e.g., Chery) In the same vein, China may want to use more domestic auto parts in manufacturing made-in-China automobiles. Such consideration is reflected on the Chinese tariffs on autos and auto parts. If you export auto parts to China, you should pay an ad valorem tariff of 10%; if you export autos to China, the tariff is 25%. However, if you export many auto parts "in multiple shipments" to China and if the Chinese government decides according to its criteria (Article 21 of Decree 125) that these multiple parts are likely to be assembled into a complete auto in China, you should pay a 25% tariff ex post on your auto parts. In other words, in the latter case the Chinese government deems that you have actually exported a complete car, not merely its parts. (If you are really curious on how this system operates, see paras. 7.67-7.69) The way in which the system works is similar to the "local content requirement" according to the plaintiffs.

There are many issues in this case, but let us focus on most contentious ones. First, is this 25% charge an "ordinary custom duty" under GATT Article II:1 (b) or an internal charge (taxation) under Article III:2? China argued that it was a tariff and therefore it could do whatever it wants as a matter of tariff classification. The plaintiffs claimed that first, it was a discriminatory tax violating Article III:2, and then even if it was a tariff, as China argued, it still violated Article II:1 (b). The panel sided with the plaintiff in both counts. Of course, logically a charge cannot be a tariff and a tax at the same time. One might reasonably speculate that once the panel ruled that the Chinese measure violated Article III:2, it should stop there in the name of judicial economy. Yet the panel went on to rule on the Article II:1 (b) issue as well.

First, the panel viewed that the charge under the measure (some combination of the Decree 125 and the Announcement 4) was an "internal charge" under GATT Article III:2, citing several case laws.

[7.130. We also find useful guidance from previous GATT jurisprudence on the question of whether a charge is subject to the disciplines of Articles II or III of the GATT 1994. For example, in the GATT Panel Belgium – Family Allowances, the Panel considered that because a levy was "collected only on products purchased by public bodies for their own use and not on imports as such, and that the levy was charged, not at the time of importation, but when the purchase price was paid by the public body" as enough reason to characterize such a levy as an "internal charge" under Article III:2 (…)]

The panel basically viewed that "when or where the internal charge is collected is not necessarily the decisive criterion to indicate that it falls within the scope of Article III:2 of the GATT 1994." (para. 7.133). Nonetheless, for a charge to constitute an "ordinary custom duty," as China argued, the panel ruled, it should be levied "on" (at the time of) the importation. Therefore, according to the panel the strict temporal dimension is required only under Article II (tariff), not under Article III (domestic taxation).

[7.166 With the above conclusion in mind, we consider that, taken together, the terms "on their [products] importation" and "into the territory" in the first sentence of Article II:1(b) suggest that "ordinary customs duties" are charges which the obligation to pay accrues based on the products as they enter the customs territory of another Member. In particular, the strict temporal element of the word "on", which points to the precise moment of the action it modifies, indicates that an "ordinary customs duty" must be assessed on the basis of a good at the moment of importation.]

The panel relied on a strict textualism to reach this conclusion, also looking at both the French and the Spanish version of Article II:1 (b). While the panel seemingly tried to create a semblance of taking into account the object and purpose of the WTO Agreement, I think it largely failed simply because of the lack of sufficient explanation in this regard. (See para. 7.211). Moreover, the panel’s accentuation on the "security and predictability" appeared to tilt toward the "exporting" countries (U.S., EU and Canada)’ concerns, not fully taking account of those of the "importing" country (China).

Once the panel viewed that the charge was an internal tax under Article III:2, the rest of the reasoning (like product etc.) was quite routine. (domestic and foreign auto parts are like and 25% tax only on the latter) As a next step, China tried to justify the measure with Article XX (d). China basically claimed that such measure was necessary to prevent "circumvention" of the tariff provisions of motor vehicles. However, the panel found that China failed to prove that the measure did potentially or actually "secure compliance" with its tariff schedules (paras. 7.314, 7.346) and that China could have thought of less trade-restrictive alternatives, such as "investigating individual cases as the need arises." (para. 7.364)

Turning to the panel’s response to the plaintiff’s conditional (alternative) claim that the charge also violated Article II:1 (b), the panel interpreted China’s tariff schedules on auto parts with the help of the expert organization (World Customs Organization (WCO)). The key issue here is "whether, under China's Schedule of Concessions, the tariff provisions for motor vehicles include in their scope auto parts imported separately in multiple shipments that are found to have the essential character of a motor vehicle based on their assembly into a motor vehicle." (para. 7.373) Interestingly, the panel interpreted itself the "General Interpretative Rules (GIRs)" for the Harmonized System (HS), although it did consult the WCO.

[7.393 GIR 2(a) provides:

"Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled."]

So, whether China’s position is valid depends on how one interprets the GIR 2(a). Critically, the WCO viewed that the GIR 2(a) is quite open-ended. For example, "the WCO Secretariat adds that the HS is silent on "as presented" and the HS Committee has not considered its meaning except in the context of the issue of split consignments." (para. 7.408)

[7.409 The WCO Secretariat replies that during the HS Committee discussions at issue, the Committee reaffirmed its earlier decision that the possible treatment of split consignments as a single entity for purposes of GIR 2(a) was a matter to be handled exclusively at the discretion of each individual administration, taking into account national laws and regulations. This decision was never codified in legal or Explanatory Note texts, although it was informally noted by the Committee from time to time. The WCO Secretariat notes that, based on the Secretariat's experience, national regulations and laws appear to differ with respect to the applicability of GIR 2(a) to split consignments. The WCO Secretariat also notes that it would expect that those administrations which permit such consolidation of entries would consider requests for that treatment on a case-by-case basis, applying standards set forth in national laws and regulations.]

Despite the likely existence of the margin of appreciation in this area, the panel went ahead and found that "in light of the evidence discussed above, we are not persuaded that an interpretative rule on tariff classification under the HS was intended to address issues relating to the circumvention of tariff duties." (para. 7.449) Subsequently in the "object and purpose’ section, the panel once again revealed its export bias.

[7.460 Considered in this context, an interpretation of the tariff term "motor vehicles" to include auto parts and components imported in multiple shipments for assembly into a motor vehicle in the importing country could indeed undermine the objective and purpose of maintaining security and predictability of the reciprocal market access arrangements in China's tariff concessions. This is particularly so given that one of the objects and purposes of the WTO Agreement in general as well as of the GATT 1994 is directed to the substantial reduction of tariffs and other barriers to trade, as found by the Appellate Body.]

Final words. I would say the real commercial impact of this case (decision) would be rather limited. Many foreign and domestic car makers in China now wants to use cheaper domestic auto parts, rather than importing more expensive foreign ones. Moreover, more foreign auto parts makers are relocating in China to produce their own parts there. Nonetheless, China might want to appeal the panel decision if it would like the Appellate Body to correct some of the alleged "export biases" of the panel report, not only for the sake of this particular dispute, but rather for the sake of possible similar cases in the future.

Now the floor is open. What do you think?

The New House Trade Bill on the Role of Precedent

From a new House bill introduced by Congressmen Rangel and Levin (full text here):

SEC. 205. ROLE OF WTO APPELLATE BODY RULINGS IN THE WTO DISPUTE SETTLEMENT SYSTEM.

(a) Findings- Congress finds the following:

(1) The United States and other members of the World Trade Organization made clear when they established the World Trade Organization that the text of the WTO agreements, and not interpretations of those agreements by the Appellate Body or any other international tribunal, establishes the rights and obligations of WTO members. The WTO members determined that `in their findings and recommendations, the panel and Appellate Body cannot add to or diminish the rights and obligations' in the text of an agreement. Instead, a dispute settlement panel is to make an `objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements'. The WTO members themselves, by a three-fourths majority, have the `exclusive authority' to adopt binding interpretations of the WTO agreements.

(2) Accordingly, in 1996, the WTO Appellate Body stated that past dispute settlement decisions `create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute. However, they are not binding, except with respect to resolving the particular dispute between the parties to that dispute.'.

(3) In 2008, however, the Appellate Body criticized a dispute settlement panel for conducting its own objective assessment of a legal issue and refusing to follow the Appellate Body's past interpretations of provisions of WTO agreements. The Appellate Body stated that it was `deeply concerned about the Panel's decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues'.

(4) The notion that a dispute settlement panel is obligated to follow Appellate Body precedent, rather than its own objective assessment of the relevant WTO agreements, is inconsistent with the text of those agreements and ultimately may have a chilling effect on future negotiations to further open markets and strengthen the global trading system.

(b) Sense of Congress- It is the sense of the Congress that the United States should state unequivocally that--

(1) it in inconsistent with the express mandate of limited authority to the WTO Appellate Body under the Understanding on Rules and Procedures Governing the Settlement of Disputes for the Appellate Body to establish a new legal standard that dispute settlement panels must apply in deciding cases; and

(2) a dispute settlement panel is obligated to follow the text of an agreement negotiated by the WTO members themselves, and not the `jurisprudence' of the WTO Appellate Body.

I have two questions about this.

First, what would the practical impact be of panels being explicitly authorized to follow their own views rather than those of the Appellate Body?  Won't the Appellate Body just reverse any panel decisions that are contrary to its jurisprudence?

Second, DSU Article 3.2 says that the dispute settlement system "serves ... to clarify the existing provisions of [the covered] agreements in accordance with customary rules of interpretation of public international law."  Don't these "clarifications" establish at least some degree of de facto precedent?

A Ruling in the Kaplan Case: The WTO Gambling Decision is not a Defense

So says a magistrate judge.  As you may recall, the defendants invoked the WTO Gambling decision as a defense against their prosecution for various gambling related crimes.  Some excerpts from the ruling:

As an initial matter, the defendants do not have standing to raise alleged violations of the GATS or the rulings of any WTO body. “However, ‘WTO decisions are not binding on the United States, much less this court’”.

...

Defendants have no standing to raise the argument that the instant prosecution is prohibited by the GATS. Even if they did, based on the enabling legislation, as set out above, their arguments are without merit and their Motions to Dismiss on that ground should be denied.

...

... the Charming Betsy canon has no application to United States statutes concerning the GATS and its dispute resolution process.

...

The defendants rely on the GATS treaty and the rulings of the WTO Appellate Body as a defense to the charges. This treaty does not create private or individual rights. It does not directly impact domestic law. The defendants have no standing under the GATS to challenge this prosecution. The federal statutes authorizing the Uruguay Round Agreements preclude reference to the GATS, WTO panel reports or appellate body rulings in determining the legality, application and scope of United States statutes. The defendants’ various Motions to Dismiss the Superseding Indictment on the ground that the instant prosecution constitutes a violation of United States treaty obligations should be denied.

Not a particularly surprising result, but fun to see it argued nonetheless.

The DLC: More Trade Litigation, Please

In a recent policy report, the Democratic Leadership Committee proposes the following for U.S. trade policy:

3. Revive Trade Enforcement. Many of America’s major trade interests, finally, are already covered by WTO agreements. These include intellectual property rights, subsidies, market access for manufactured goods, and fair treatment for farm products. The first Clinton administration helped defend our rights and secure these interests—and in the process, strengthened public support for open-market policies—through 66 WTO cases which opened markets in India, won market access for high-tech exporters in Europe, and so on.

The Bush administration, arguing that we cannot litigate our way into foreign markets, has made enforcement a secondary focus of trade policy and filed only 19 WTO cases—even as foreigners filed 46 cases against the United States in farm policy, trade remedies, and many other areas. Meanwhile, compliance failures have worsened. Intellectual-property piracy and counterfeiting in China, for example, remain a commercial threat and are now a public-health hazard, spreading counterfeit medicines and consumer goods to many poor countries and sometimes America too. The effect has been to weaken America’s ability to protect its rights in trade, and convince much of the American public that trade agreements create obligations for the United States and rights for foreigners. The next administration must reinvigorate enforcement, appointing an ambassador-level trade enforcement chief to oversee case filings and protect American rights, and making much more frequent use of WTO dispute settlement rights in priority areas.

I think I've talked about this issue before.  The raw numbers do show a big decline in WTO complaints from the Clinton to the Bush administrations.  The report says there were 66 cases under Clinton and 19 under Bush.  Our figures show 68 under Clinton and 22 under Bush.  (The different numbers are probably the result of some minor methodological difference.)  That certainly is a big decline.  However, over the same period, complaints by other WTO Members declined as well.  For example, based on our figures, the EU went from 55 in the Clinton era to 23 in the Bush era; India went from 11 in the Clinton era to 6 in the Bush era; and Japan went from 9 in the Clinton era to 4 in the Bush era.  So, there may be more to this than just the different trade policies of Democratic and Republican administrations.

Having said that, I do think that, as a general matter, the Democrats are more likely to bring trade complaints than are the Republicans. 

Mankiw Calls McCain Out on Free Trade

John McCain has been going around declaring himself to be a free trader.  ("There's no greater free trader in the Senate than I am," he says).  But Greg Mankiw, in the context of raising some election issues that are important to economists, brings up the uncomfortable issue of anti-dumping laws:

Economists are nearly unanimous in their support of an unfettered system of world trade. Here, Senator Obama lags behind Senator McCain. Senator Obama’s bad-mouthing of Nafta and his opposition to free-trade pacts with Colombia and South Korea make most economists cringe.

Many economists would go even further than Senator McCain has suggested by, for example, repealing antidumping laws. The ostensible purpose of these laws is to prevent foreign companies from selling in the United States at prices below fair value, but the law’s notion of “fair” rarely makes sense. In practice, these laws are little more than an excuse for special interests to shield themselves from competition. (emphasis added)

Not that it's likely to happen, but it would be interesting to see Senator McCain's response to this.  He says he is a free trader, but how far is he willing to go with that?  My guess is that he would respond with the usual "free and fair trade" qualification, but I suppose you never know.

Loyola University of Chicago: Wing Tat Lee Chair in International Law

Wing Tat Lee Chair in International Law

The Loyola University Chicago School of Law, a well established urban Jesuit law school is currently seeking candidates to fill its recently vacated chair in international law named in honor of Hong Kong businessman Wing Tat Lee.

This twelve month position will entail an appointment to an endowed chair to be made at the level of full Professor of Law.

The responsibilities of the Wing Tat Lee Chair include:
1) Scholarly research and publication,
2) Teaching courses in international law and related areas of individual expertise, both in Chicago and in overseas programs,
3) Participation in faculty governance,
4) Active involvement in student mentoring and counseling,
5) Engagement with faculty on international law matters both within the School of Law and throughout the University,
6) Together with other chairs and senior faculty, providing leadership for integrative research activities,
7) Significant engagement with academic institutions and professional organizations in international law, including frequent participation in meetings and symposia.

The qualifications required for the Wing Tat Lee chair are:
1) Juris Doctor (J.D.)  and /or Ph.D. in Law, LL.B.,
2) Broad recognition for scholarly distinction in a recognized area of public or private international law,
3) Established publication record in an international law specialty,
4) Clearly developed long term research agenda,
5) Extensive teaching experience.

Additional valued qualifications include:
1) Significant practice experience in international law,
2) Facility with relevant foreign languages,
3) Strong commitment to social justice issues,
4) History of active engagement in international law circles.

Interested candidates should submit an application at www.careers.luc.edu.  At that location they should provide:
1) A letter of interest highlighting experiences and accomplishments relevant to the position,
2) A current curriculum vitae
3) Names of and contact information regarding three professional references.

For further inquiries, please contact the search committee at [email protected].  Review of applications will begin in the fall and continue until the position is filled.

For further information about Loyola University Chicago, consult: www.luc.edu. Loyola University Chicago, is an Equal Opportunity/Affirmative Action employer with a strong commitment to diversifying its faculty. 

Schizophrenia on Foreign Investment

The Economist has an interesting article on reactions to foreign investment in the United States.  It seems that on the one hand, individual U.S. states are making concerted efforts to lure foreign investors.  For example, officials from Alabama fly overseas to convince big manufacturers to set up shop in their state.  On the other hand, many foreign takeovers seem to generate a great deal of nationalist sentiment.  Witness the recent concern expressed over the Anheuser-Busch takeover by InBev.

Someone quoted in the article described the current environment regarding inward foreign invesment as "schizophrenic."  But I'm not so sure that's the right characterization.  Instead, there may be a simple distinction here.  When foreign investment creates new jobs (e.g., when a foreign company builds a new factory), most people are happy about it.  However, when foreign investors are simply buying existing assets, and therefore the number of jobs stays the same, or may even decline due to cost cutting, people are upset.

This leads me to a suggestion for future purchases of "sensitive" assets (apparently that includes beer):  If you're going to be throwing around sums like $52 billion (the amount of the Anheuser-Busch deal), maybe promise to set aside a little bit of money for new job creation.  It could help with the public relations aspects and, as a result, may even mean that the deal can go through for less money than it would otherwise take.

Colbert's Take on the Sale of Anheuser-Busch

Light on policy, but heavy on laughs:

ADDED:  It occurs to me that not everyone will be familiar with Stephen Colbert.  Hence, I feel compelled to mention that this was satire.  It was probably obvious, but he once had a guest accidentally refer to him as Bill (as in O'Reilly), so he can be pretty convincing!

The AB Oral Hearing in the Hormones Sanctions Case

The Appellate Body has just issued instructions for registering for the Hormones Sanctions hearings on July 28-29: http://www.wto.org/english/tratop_e/dispu_e/public_hearing_july08_e.htm

If there are any students (or others) in the Geneva area who want to attend and have a report published on this blog, let me know (you can email me at [email protected]).

ADDED: The deadline for registering is very short.  According to the notice: "Applications will be accepted until midnight Geneva time, on 18 July 2008."

The Appellate Body Opens Its Doors to the Public

In a big victory for transparency, the Appellate Body has decided, in response to the parties' requests, to open its oral hearing in the Hormones Sanctions cases (DS320 and DS321) to public observation.  Here's the EU press release:

EU welcomes first opening of WTO Appellate Body hearing to the public

The European Union has today welcomed the decision of the Appellate Body of the World Trade Organization (WTO) to open to the public for the first time an oral hearing in a WTO dispute appeal. The public will be able observe the hearing that will take place on 28 and 29 July 2008 over US and Canadian sanctions on EU goods, following a dispute on hormone-treated meat. It is the first time in the history of the WTO that the public will be able to follow such a hearing before the Appellate Body, the highest judicial body of the WTO. The EU and several other WTO Members argue that opening up hearings allows for greater transparency in WTO dispute settlement, and shows that trade disputes are conducted in a fair, unbiased and professional manner. 

The Appellate Body made the decision to open up the hearing following a joint request by the EU, the United States and Canada. The WTO panel that first ruled on this dispute made a similar decision on 1 August 2005, with the result that that panel’s hearings in 2005 and 2006 were open to public observation.

The EU believes that public hearings are useful in order to strengthen public  confidence in the WTO. Open hearings in WTO disputes bring WTO panels and the Appellate Body closer to other international tribunals and national courts, whose hearings are generally public.

Background

The Appellate Body renders final decisions on legal questions in WTO disputes; it clarifies trade rules that have important effects on governments and citizens of WTO members.  The present dispute illustrates this importance, as it relates to questions of high public concern, including the legitimacy of a law protecting the health of citizens by banning the use of growth-promoting hormones in cattle. The US and Canadian trade sanctions which the EU is challenging in this dispute were imposed in 1999 following an EU ban on meat treated with growth hormones. The sanctions were maintained even after the EU had adopted a new measure based on a new risk assessment of the hormones in question.

No link yet, but the press release will probably be up on the DG Trade web site later.  More details on how to attend are sure to follow.

The groundwork for this decision was laid when a number of panels (including the one in this same dispute) opened their hearings to the public.  But the legal provisions for Appellate Body proceedings are slightly different, so there was no guarantee the Appellate Body would follow suit.

The U.S./EU submissions on this issue can be seen online:

• EU request for an open hearing
• EU comments on third party submissions
• EU statement at the hearing
• U.S. request for an open hearing
• U.S. comments on third party statements
• U.S. statement at the hearing

UPDATE:  Here's a link to the EU press release.

And here's USTR's notice about the hearing.

Obama on the Doha Round

Well, one of Obama's advisers, anyway:

Democratic presidential candidate Barack Obama wants a successful end to long-running world trade talks, but will closely review any deal reached by the Bush administration, an Obama adviser said on Wednesday.

"Sen. Obama believes we need to change our trade focus from the Bush years so there is a true focus on workers, jobs, farmers and on ensuring that we are lifting standards of living overseas," Jason Furman, Obama economic adviser said in a statement in response to request by Reuters.

"That is the focus that as president he would bring to seeking completion of a successful Doha round," Furman said.

Furman issued the remarks before a meeting later this month in Geneva that World Trade Organization Director General Pascal Lamy has described as the "moment of truth" for the Doha round, which was launched nearly seven years ago.

"While (Obama) would be skeptical of any agreement done by the Bush administration -- especially in the last few months -- it would be premature to comment until there was an agreement and details to review," Furman said.

Of course, this may all be moot, because it's not clear a deal is coming at all.  Still, this statement does not sound particularly positive (he is "skeptical" of any deal that Bush might conclude).   Without any specifics on what he would want to see in a trade deal, though, I'm not quite sure what to make of it.   

Free Trade and Low Prices

I get nervous when I, armed only with my undergraduate degree, question the economic analysis of real economists, but there are times I just can't resist.  Hopefully I won't get myself into too much trouble here.

This post by Dani Rodrik is getting a bit old at this point (he did a follow-up here), but it has been nagging at me.  He writes:

Advocates of globalization love to argue that free trade lowers prices, and the argument seems sensible enough. Think of all the cheap goods from China that we can buy at Wal-Mart.  But anyone who understands comparative advantage knows that free trade affects relative prices, not the price level (the latter being the province of macro and monetary factors).  When a country opens up to trade (or liberalizes its trade), it is the relative price of imports that comes down; by necessity, the relative prices of its exports must go up!  Consumers are better off to the extent that their consumption basket is weighted towards importables, but we cannot always rely on this to be the case.

As an example of prices going up, he notes:

... when the U.S. gets better market access abroad for its agricultural exports (a key demand under the Doha round), you can be sure that this will raise domestic prices for these goods, not lower them. 

So the argument is that with free trade, prices will come down on goods for which the country is a net importer.  However, prices will go up on goods for which the country is a net exporter. My understanding of the reason for the price rise on net exported goods is that there is a reduced supply of those goods in the domestic market.  As more goods are exported, the domestic supply falls and the price goes up.

The impact of all this is that while prices might fall for some people, they will rise for others, depending on the basket of goods they consume.  Thus, according to Rodrik, there is no general decline in prices due to free trade.

In an update on the post, Rodrik did acknowledge one possible reason prices might come down more generally: scale economies.  In addition to that point, though, it seemed to me there are some other reasons to think the price decline might be broader than he indicates.

First, while it is true that an increase in exports might trigger a domestic price rise for those products in the short term, over the longer term won't producers increase investment in the goods at issue in order to meet the additional export demand, thereby increasing supply and bringing prices back down to the old level?

Second, doesn't free trade lead to more competition in all markets, which should bring prices down?  This seems to be the standard thinking in antitrust/competition policy, for example, that fewer firms in an industry often leads to higher prices.  If we can increase the number of competitors in a market by letting in imports, I would think that could help lower prices in many industries.

And finally, given that tariffs are a tax on goods, and thus a cost that is passed along to consumers, wouldn't the reduction of tariffs lower producers' costs generally and therefore lead to lower prices?

Obama's Reaction to the Proposed Budweiser Deal

From Reuters:

Democratic presidential candidate Barack Obama weighed in Monday, saying it would be a "a shame" if the iconic American brewer was acquired by a foreign company.

"I don't think we can pass a law to prevent Budweiser's shareholders -- Anheuser Busch's shareholders -- from selling their company. That's part of the free market system," Obama said.

"I do think it would be a shame if Bud is foreign owned. I think we should be able to find an American company that is interested in purchasing Anheuser Busch if in fact Anheuser Busch feels that it's necessary to sell."

Hmm.  We could, in theory, pass a law preventing the sale of Budweiser to a foreign company.  The question I have for Obama is, should we?  The latter part of his answer hints that he thinks something along those lines would be a good idea.  Or perhaps he just wants to mobilize American investors to offer more money.

ASIL IELIG Regional Meeting in Geneva, July 15, 2008

The American Society of International Law's International Economic Law Interest Group will meet in Geneva just before the inaugural meeting of the Society of International Economic Law (SIEL). Rufus Yerxa, Deputy Director General of the WTO, will speak on recent developments at the WTO. Future activities and ways to get involved with the Interest Group will be discussed.

Time: 15 July 2008, 4 to 5 pm

Place: Graduate Institute of International and Development Studies (HEI), 132 rue de Lausanne, in room AJF (in the Institute cafeteria building near the Villa Barton).

All interested in international economic law are welcome to attend, even if you are not registered to attend the SIEL conference.

Also note the Call for Papers for the Interest Group's November 14-15, 2008 conference in Washington DC, available here; the July 20 deadline for submissions is just two weeks off!

Other regional meetings, as well as an organizational meeting of Women in International Economic Law (WIEL) well be held on the same afternoon. For additional details please consult the SIEL program online.

Coming Soon: The China - Auto Parts Decision (Part II)

Last week, I did a short post summarizing the soon-to-be-circulated WTO panel report in China - Auto parts.  I focused on the complainants' claims, based on a quick read of the EC/U.S. first submissions.  Then an anonymous commenter pointed out that China raised an Article XX(d) defense.  China's submissions are not online (as far as I know), but the subsequent EC/U.S. submissions made reference to it.  The Article XX(d) defense is even more interesting than the claims, so now I'm going to describe this part of the case briefly as well.

Article XX(d) sets out an exception for measures that are:

necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;

Recall that China has a 10% tariff duty on auto parts, but a 25% duty on automobiles.  To reduce the amount of duties paid, foreign companies have an incentive to export parts rather than completed automobiles.  The parts can then be assembled into finished automobiles after they arrive in the country.  In response to this possibility, China adoped measures under which some imported parts that are subsequently assembled into automobiles after entry are not treated as parts for duty purposes, but rather are treated as automobiles subject to the 25% tariff.  The justification is that by importing auto parts that are then assembled into automobiles, the exporter is evading the 25% rate for automobile imports.

Noting again that I have not seen the Chinese submissions, China's argument appears to be along the following lines.  The 25% tariff on automobiles is a measure that is consistent with the GATT.  The measures at issue here, which extend the 25% tariff to certain imported parts that are assembled into automobiles in China, "secure compliance" with the 25% automobile duty by ensuring that foreign companies do not evade this duty.

Thus, two interesting and important questions for the Panel will be:  (1) do these measures "secure compliance" with the 25% tariff?  And (2) are they "necessary" to do so?

And, of course, there is the Article XX chapeau to get past, too.

Women in International Economic Law: organizational meeting

From the founders of Women in International Economic Law:

Women in International Economic Law (WIEL), a new global organization in international law, will hold its organizational meeting from 1.30 to 3 pm on Tuesday 15 July, in conjunction with the inaugural meeting of the Society of International Economic Law (SIEL) in Geneva. Jennifer Hillman, Member of the WTO Appellate Body, will speak on the past, present and future of women in international economic law and the group will discuss its objectives for the future and how it can best serve the needs of its members.

The WIEL meeting will take place at the Institut de Hautes Etudes Internationales et du Developpement/Graduate Institute of International and Development Studies, 132 rue de Lausanne, in room AJF (above the coffee-bar in the park near the Villa Barton). All those interested in women in international economic law are welcome to attend, including those who are not registered for the SIEL conference. Please contact either Susan Franck ([email protected]) or Tracey Epps ([email protected]) for any further information.

Trade in Everything: Fireworks (July 4th Edition)

From MSNBC:

It was eerily quiet at Aaron Waugh’s fireworks stand in Princeton, W.Va.

“Pretty slow, pretty slow,” he concluded. “More people need to come in.”

The solitude at Rocket World, which opened last week, is being replicated at fireworks shops and seasonal stands across the country. Just a few days before the Fourth of July weekend, fireworks sales are down dramatically.

It’s a double blast. Authorities scared of setting off wildfires in drought conditions have imposed new bans on fireworks displays across a swath of the West and the Southwest. At the same time, a massive explosion at fireworks factories in China created a global shortage that has driven prices beyond the means not only of many backyard revelers but even of many local governments, forcing them to cancel municipal celebrations.

Here's a press release on the issue from the National Fireworks Association:

International Shipping Problems Affect the US Fireworks Industry

2008 is proving to be a very difficult year for the Fireworks Industry in the United States.

Recent problems in China which include a shortage of shipping lines and ports, are now causing a severe shortage of fireworks.  This will affect both consumer fireworks stores and stands, as well as the annual July 4th Display in many cities and towns across America.  Most companies are reporting dramatic increases in both product and shipping costs.  Many companies are reporting a severe shortage  of inventory as fireworks that have been ordered and in many cases, paid for, are still sitting in China with little or no chance to arrive in time for the busy July 4th season.

Reports from China indicate that the current port accepting fireworks for shipment may close at any time as China prepares for the Olympic Games.

Fireworks Company owners are at a loss as they have no control over the severe price increases nor the lack of shipping coming from China.

There is no indication when or if this situation will get better.

Trade, Inequality and Wal-Mart

Over at VoxEU, Christian Broda argues:

Conventional wisdom says globalisation has increased US income inequality. This column says that is dead wrong, as China and Wal-Mart have increased the purchasing power of the poor more than the rich.

He explains:

Inflation differentials between the rich and poor dramatically change our view of the evolution of inequality in America. Inflation of the richest 10 percent of American households has been 6 percentage points higher than that of the poorest 10 percent over the period 1994 – 2005. This means that real inequality in America, if you measure it correctly, has been roughly unchanged. And the reason is just as dramatic as the result. Why has inflation for the poor been lower than that for the rich? In large part it is because of China and Wal-Mart!

Poor families in America spend a larger share of their income on goods whose prices are directly affected by trade – like clothing and food – relative to wealthier families. By contrast, the higher your income, the more you spend on services, which are less subject to competition from abroad

60,000 Pages of WTO Jurisprudence

That's what the Economist says.  Does that sound right?  I've never tried to count, although people have suggested the idea to me before.  I probably should, I just can't face the prospect of opening each report and checking page counts.  And dealing with methodological questions such as how to take into account descriptive parts/attached submissions and what to do with multiple reports in certain cases.

Investment Treaty Empiricism

Over at Opinio Juris, Susan Franck talks about empiricism and international law, with a focus on investment treaty decisions, noting the differences between the rhetoric and the reality of investment treaty decisions.  David Zaring offers some comments.

New Paper: "Currency Manipulation" and World Trade

Robert Staiger and Alan Sykes have a new Working Paper on "'Currency Manipulation' and World Trade."  Here's the abstract:

Central bank intervention in foreign exchange markets may, under some conditions, stimulate exports and retard imports. In the past few years, this issue has moved to center stage because of the foreign exchange policies of China. China has regularly intervened to prevent the RMB from appreciating relative to other currencies, and over the same period has developed large global and bilateral trade surpluses. Numerous public officials and commentators argue that China has engaged in impermissible "currency manipulation," and various proposals for stiff action against China are now pending on Capitol Hill. This paper clarifies the theoretical relationship between exchange rate policy and international trade, and addresses the question of what content can be given to the concept of "currency manipulation" as a measure that may impair the commitments made in trade agreements. The analysis goes to the proper relationship between IMF obligations and WTO obligations and to the question whether trade measures can be an appropriate response to exchange rate policies. Our conclusions are at odds with much of what is currently being said in Washington. For example, it is often asserted that China's currency policies have real effects that are equivalent to an export subsidy. In fact, however, if prices are flexible the effect of exchange rate intervention parallels that of a uniform import tariff and export subsidy, which will have no real effect on trade, an implication of Lerner's symmetry theorem. With sticky prices, the real effects of exchange rate intervention and the translation of that intervention into trade-policy equivalents depend critically on how traded goods and services are priced. We show how the effects differ, according to whether exporters invoice in the local currency of the producer, in the currency of the buyer, or in a "vehicle" currency such as dollars. The real effects of China's policies are thus potentially quite complex, are not readily translated into trade-policy equivalents, and are dependent on the time frame over which they are evaluated (because prices are less "sticky" over a longer time frame). Accordingly, we are skeptical about many of the policy responses now under consideration in Washington both on economic and legal grounds.

The paper has lots of good economic and legal analysis (including GATT Article XV, the SCM Agreement and Non-Violation Nullification or Impairment) of many of the issues surrounding currency manipulation and trade rules.  Here's a brief excerpt from the paper, on the issue of whether such manipulation constitutes an "export subsidy":

The specificity requirement is met if exchange market intervention can indeed be characterized as an export subsidy -- i.e., as a subsidy "contingent upon export performance." Article 2.3 provides that all such subsidies are "specific." Exchange market intervention, of course, does not expressly confer benefits on firms "contingent" on their export performance. All firms will operate in the environment of an altered exchange rate irrespective of their export performance. A respectable argument might be made, however, that an undervalued exchange rate tends to favor exporting firms if it has any real effects at all (assuming that prices have not adjusted to offset it). Even if not formally contingent on export performance, therefore, any export stimulus resulting from an undervalued exchange rate is plausibly characterized as an export subsidy.

For me, this raises the fundamental question of what "export contingent" means.  Does export have to be a necessary and/or sufficient condition for receiving the subsidy?   Does export simply need to be "tied" to the subsidy, the term used in footnote 4?  If "tied" is the standard, what constitutes evidence of a "tie"?  The authors describe the issue as follows: "an undervalued exchange rate tends to favor exporting firms."  I see two ways to interpret this.  First, the undervalued exchange rate favors exporting firms over their foreign competitors.  But all subsidies do this, so I don't think this what they had in mind.  Second, the undervalued exchange rate favors domestic exporting firms over domestic non-exporting firms.  I think they probably had this one in mind.  I hope they did, anyway, because I've always thought something like this should be the standard for export contingency.  I had thought of it in these terms: whether the subsidy provides an incentive for domestic firms to engage in export sales rather than domestic sales.

Anyway, that's a bit of a digression away from the currency issues, which are elaborated at great length in the paper.

Strong Words from Bhagwati about Preferential Trade

From his new book:

The Pandemic of PTAs

There is yet another irony. The interwar proliferation of preferences was a result of an uncoordinated pursuit of protectionism, itself aided by the breakdown of financial stability and macroeconomic equilibrium in the world economy. But the current tide of preferences has been a result of politicians mistakenly, and in an uncoordinated fashion, pursuing free trade agreements because they think (erroneously) that they are pursuing a free trade agenda.

So today we have a cumulative total of over 350 PTAs reported to the WTO. Even if only active PTAs are counted, the estimated total is still large. By either count, the PTAs are evidently increasing continually.

Among economists, I was the earliest to warn against PTAs, starting in 1990 when I sensed that we were facing a systemic threat to the principle of nondiscrimination in world trade. I was then in a minority of one, even among economists, many of whom thought I was a "multilateralist freak." Arrayed on the other side were truly eminent economists, among them Larry Summers, who became the U.S. Treasury Secretary, and the remarkable Paul Krugman, my former MIT student and now New York Times columnist.

But now that the proliferation and its many downsides have become evident, and ever more threatening, I daresay that the profession has moved like a herd into my corner. Pascal Lamy, currently the Director General of the WTO, once remarked that half the economists in the world were now opposed to FTAs. I retorted mischievously that this was an English understatement by a distinguished Frenchman; in fact, nearly all were.

I discovered that the European Union which started the pandemic while the United States had grossly aggravated it, applied its MFN tariff to only six countries--Australia, New Zealand, Canada, Japan, Taiwan, and the United States--with all other nations enjoying more favorable tariffs. I asked Pascal Lamy, who was then the E.U. Trade Commissioner, Why not call it the LFN (least favored nation) tariff?

In short, we now have once again a world marred by discriminatory trade, much as we had in the 1930s. And we know how that turned out.

Domestic Tap Water Versus Imported Bottled Water

From AFP:

A debate over water is boiling over in the United States and elsewhere amid growing environmental concerns about bottled water and questions about safety of tap water.

The US Conference of Mayors in June passed a resolution calling for a phasing out of bottled water by municipalities and promotion of the importance of public water supplies.

While largely symbolic, the vote highlighted a growing movement opposing regular use of bottled water because of its plastic waste and energy costs to transport drinking supplies.

...

The Pacific Institute, a California think thank on sustainability issues, contends that producing bottles for US water consumption required the equivalent of more than 17 million barrels of oil in 2006, not including the energy for transportation.

The group says bottling water for Americans produces more than 2.5 million tons of carbon dioxide and consumes three liters of water for each liter of bottled water produced.

I assume that public (tap) water supplies are almost exclusively of domestic origin (probably a safe assumption, although I suppose there could be some exceptions in border areas).  By contrast, bottled water is sometimes imported (I'm not sure what the percentages are, and they probably vary by country).  So, would government action to promote public water over bottled water violate GATT Article III:4, by favoring domestic products over imported ones?  A key question:  Is bottled water "like" tap water?  It is probably "substitutable" to some extent, but "like" may be a harder question.

This is all putting aside the Article XX issues, of course.