International Economic Law and Policy Blog

Wisconsin and International Labor Law

I have not seen too much discussion of the international law features of Gov. Walker's proposal to end collective bargaining rights for state workers in Wisconsin.  The right to collective bargaining is one of the so-called "core labor rights" that the U.S. uses for GSP conditionality, and the 2002 TPA required labor rights to be a negotiating objective in U.S. PTAs.  Wisconsin's statute, if passed, will make this a bit ticklish.  I wonder whether the right to collective bargaining is now viewed as customary international law.  I take it that there is no treaty that the U.S. has signed that contains that right directly.  Article 6 of the US-Jordan FTA , for example, however, requires that each party "strive" to ensure that its laws incorporate freedom of association and the right to collective bargaining.  I suppose King Abdullah might be a bit preoccupied at the moment, but it is tantalizing.  (I assume but would like confirmation that Wisconsin is exempted from the NLRA.) 

National Treatment in the NAFTA Chapter 11 Cargill Award

The Cargill v. Mexico NAFTA Chapter 11 award is available here.  It was sent to the parties in September 2009, but it is just now being released publicly.

In this post, I'm just going to make a quick point about the National Treatment analysis.  When I first started reading the "less favorable treatment" section, I thought the tribunal was going to take an "individual" investor approach.  In this regard, they present the issue by saying they will consider:

whether Cargill de Mexico, as a supplier of HFCS, received "less favorable treatment" than the suppliers of cane sugar.

(para. 215)  When I saw the reference to the specific company, Cargill de Mexico, I thought for sure they would undertake a comparison of the one foreign investment to one or more domestic investments.

But then when they get to the reasoning, things take a different turn:

219. In the Tribunal's view, there is no question but that, as a result of the IEPS Tax, the treatment received by suppliers of HFCS to the Mexican soft drinks industry was less favourable than the treatment received by suppliers of cane sugar. HFCS suppliers could no longer compete as a result of the IEPS Tax, whereas cane sugar suppliers were not affected.

220. Moreover, the Tribunal also concludes that the discrimination was based on nationality both in intent and effect. The IEPS Tax was taken avowedly to bring pressure on the United States government. By its very design, then, it was directed at United States producers of HFCS because only in that way would pressure be brought to bear on the United States government. The import permit requirement, which was intended by the Mexican government to be a substitute for the IEPS Tax, was even more directly targeted at United States producers, even though it may have affected other nationals as well. The whole history of this case, as set out by both Claimant and Respondent, indicates that it is about measures directed at United States producers and suppliers of HFCS.

Paragraph 219 talks about discrimination against HFCS suppliers and in favor of sugar suppliers.  I'm never sure what to make of this kind of statement.  Does the tribunal think that discrimination against a particular product is enough for a violation?  If so, on what basis?

Then along comes paragraph 220.  It's not clear how the two paragraphs relate, but regardless, I really like paragraph 220, so I'm going to focus on that one.  Here, the tribunal says that "the discrimination was based on nationality both in intent and effect."  Regular readers of this blog can probably guess that I'm a big fan of this sentence.  Not only do they talk about "nationality" based discrimination, but they also rely on "intent and effect."

Of course, it's important to note that they are not saying intent and effect are the only factors to consider, or are required factors.  Nevertheless, the tribunal did take these into account as key issues in its "less favorable treatment" analysis.

The Seal Products Dispute: Blocked for Now

The EU has blocked the first panel request in the WTO seal products dispute.  From Bloomberg:

The European Union blocked Canadian efforts to have the World Trade Organization decide whether an EU ban on trade in seal products breaks global trade rules. The EU won’t be able to prevent a second request, likely in March.

The next regularly scheduled DSB meeting is March 25, but Canada could request a special meeting before that.

In other seal-related news, AFP reports that this year's seal hunt has started:

Canada's controversial annual seal hunt was expected to get underway Thursday off Hay Island, Nova Scotia after bad weather delayed its opening by one week, the fisheries department said.

"Hunters couldn't go out last week because of storms, but they're hoping to go out onto the ice tomorrow," an official told AFP.

The hunting quota for grey seals was upped from 50,000 to 60,000 this year, the official said, adding that the grey seal population has grown to more than 350,000.

Also, there's a new hunting method being tried:

Nova Scotia fishermen will test an alternative method for killing seals as part of the hunt set to start Thursday.

Sealers will use small-calibre ammunition that should cause the immediate death of seals and eliminate the risk of ricochet for sealer safety.

And Asia is being developed as an alternative to the EU market:

Northeast Coast Sealers Cooperative of Newfoundland sees potential markets in Asian countries for the meat of grey seals, like it will be buying from a hunt on Hay Island off Cape Breton.

The sealers co-operative has already done work on developing grey seal meat products and introducing them to potential customers, including those already buying harp seal products, says executive director Shannon Lewis.

 

Will the WTO Become Obsolete?

Writing in Newsweek, Daniel Altman argues that the future of free trade lies with bilateral and regional trade talks, and says "good riddance" to the WTO.  I think he elaborates on his views in this book, but I haven't read it yet so I'll focus on the Newsweek piece.  Some key passages:

... trade negotiations would actually go much further if the WTO simply closed down its talks altogether.

...

... it’s not as though trade negotiations have been paralyzed during the past 10 years. Countries have been signing free-trade agreements, both in pairs and at the regional level, more rapidly than ever before. And this is where the future of free trade lies: in pragmatic regional deals, not utopian global ones.

...

In practice, getting all 153 members to agree to lower trade barriers has been akin to teaching puppies synchronized swimming. A few countries have always taken an obstructive stance, either on principle or to push their own priorities. Canada, for example, has insisted that its unique system of supply management be enshrined in any global deal. And France won’t even entertain the idea of reducing its massive farm subsidies without major concessions from poor countries.

...

The majority of nations can simply leave the obstructionists behind and move forward with regional trading partners. Eventually, most of the world’s trading nations will arrange themselves into just a few big blocs.

...

... the big blocs will have a very strong economic motive to start talking to each other.

This is how global trade talks will work in the future. Trade barriers will fall, just as the WTO hoped, and with the same result that should have been its goal all along: its own obsolescence.

In a nutshell, he says that the WTO process involves too many countries, some of whom are resisting trade liberalization.  The trade liberalization process would work better, he argues, if those in favor of free trade went forward on their own, creating large trade blocs, which would eventually force the hold outs to go along.

Here are a few thoughts on this.

First off, it's no doubt true that it's easier to reach agreement among just a couple countries than it is among 153.  I don't know if that justifies calling smaller deals "pragmatic" and global deals "utopian," though.  We are currently operating under a complex and detailed set of global rules that all the major trading countries agreed to not very long ago.  So, it can be done, and has been done in the recent past.

Second, he seems to want to draw a distinction between "regional" and "global" trade deals.  But just to be clear, what's going on now is, for the most part, not regional economic integration agreement, such as the EU, NAFTA and MERCOSUR.  Rather, it is a spaghetti bowl/noodle bowl involving a massive web of agremeents between and among hundreds of countries.  It is not clear how this will result in trade "blocs" that could negotiate with each other in the future.  More likely, it will just lead to preferential treatment for some countries at the expense of others, and lots of confusion in customs administration.

And speaking of "preferential treatment," it is important to recognize that just because an agreement has "free trade" in the title, that doesn't necessarily mean this is what it achieves.  There's a pretty good argument that what these bilateral and regional trade agreements accomplish is preferential and discriminatory trade, not free trade, with more trade diversion than trade creation.  So while it's easier to get them signed, they may not be anywhere near as valuable as a global deal would be in terms of economic welfare benefits.

Along the same lines, Altman suggests that one of the hold-ups with a global deal is certain countries resisting trade liberalization, for example France and agriculture subsidies.  It is true that bilateral and regional deals avoid these issues, but these are important issues, and perhaps they shouldn't be avoided.  If you go with bilateral and regional agreements that don't address subsidies and other hard issues (e.g., anti-dumping) that must be dealt with multilaterally, you create a system where international trade rules allow these kinds of measures to undermine trade liberalization.  There's no question that some of these issues are difficult.  But sticking to the easier issues seems a bit like "free trade lite."

Turning back to his suggestion of negotiations between trade blocs, the idea that a few regional trade blocs will eventually negotiate with each other is an old one.  Putting aside the earlier objection that regional trade blocs is not what we are seeing with the current trade deals, let's assume that these blocs do develop.  If we want these blocs to negotiate with each other, it would be very helpful to have some sort of forum where they could talk about the trade that occurs not just within their region, but world-wide.  Some kind of organization to support these talks, and to enforce the new world-wide rules, would also be useful.  It occurs to me that what might be good in this regard is some kind of ... hmm, what to call it? ... I know, a World Trade Organization!

More on Anti-Dumping Payments

Here's more on the issue of cash payments to settle anti-dumping cases, from a reader who wants to remain anonymous:

The Wall Street Journal article has been picked up and commented on by others.  See, e.g., http://www.cato-at-liberty.org/tony-soprano-meets-the-antidumping-law/; http://www.furnituretoday.com/article/535913-Antidumping_cash_settlements_attract_national_media_attention.php.  Private settlements of U.S. antidumping cases appear to be growing and widespread, including most notably in the huge shrimp antidumping case.  

In the Wooden Bedroom Furniture from China antidumping case covered by the Journal article, settlements got much attention in the sunset review process. While it appeared that neither the U.S. International Trade Commission (ITC) nor the US Department of Commerce (DOC) were happy about them, both seem to wash their hands of them saying they had no authority to address, and indicate it is the jurisdiction of those responsible for competition/antitrust law.  

Private settlements do raise competition issues since competitors (petitioner US producers) jointly agree to as what are effectively restrictions on trade/competition (imports) outside of  any statutory authorization (e.g., the antidumping statute).  Indeed, the antidumping statute only allows for DOC settlement of antidumping cases.  Such anticompetitive actions are the jurisdiction of the U.S. Justice Department, more than the ITC or DOC.  Such anticompetitive concerns are compounded by indications that those Chinese wooden bedroom furniture exporters who sell to U.S. petitioner producers get better settlement terms than those who do not.  

A further concern is that the U.S. Congress eliminated the Bryd Amendment.  As a result, petitioner U.S. producers are no longer supposed to receive antidumping duty payments.  But then right thereafter that Congressional action U.S. petitioner producers have devised private schemes to do what Congress sought to end.  While Congressmen have continued to testify at ITC/DOC for strong dumping law, they have been totally quiet as to the effective quiet transition of U.S. antidumping law into a vehicle for private settlements outside of the public scrutiny, where the true administrators of the antidumping law becomes private practitioner counsel. 

These private settlements seem to pay for continued antidumping litigation by U.S. petitioners that would not otherwise occur.  That raises concerns similar to concerns (both domestically and internationally) about the Byrd Amendment.  But individual foreign exporters can have little choice but to settle under petitioner U.S. producer terms, especially when (as in the case of  Wooden Bedroom Furniture from China) the vast bulk of imports are at lower prices from countries not subject to antidumping action (e.g., Vietnam, Malaysia, Indonesia), with total imports up, such that the issue is which country imports supply the U.S. market, and not U.S. production versus imports.

Ontario's Dairy Restrictions under Canada's Agreement on Internal Trade

Sometimes when you just can't get enough international trade law, you have to look to domestic trade law.  I've talked about the U.S. dormant commerce clause jurisprudence before.  Now I see an opportunity to move North, with some discussion of the Canadian Agreement on Internal Trade (AIT), which has some parallels.  The AIT is "an intergovernmental trade agreement signed by Canadian First Ministers that came into force in 1995."  Its purpose is "to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services, and investment within Canada and to establish an open, efficient, and stable domestic market."  I was vaguely aware of this Agreement previously, but didn't know much about the case law.  Recently, though, a Canadian friend of mine mentioned a panel decision from last year regarding Ontario measures that restrict the manufacture and sale of certain dairy products.  Reading over the decision, it quickly became clear that the AIT rules and the panel's reasoning have a lot in common with WTO rules and decisions on non-discrimination and trade restrictions.  It's always interesting to see the variations in how different jurisdictions approach these issues.

Here are the basics of the case.

The measures at issue were Ontario regulations that "make the following classes of products illegal to be manufactured or sold in Ontario":

● Dairy Blends – Fluids – (i) fluid milk products, such as milk, cream or whipping cream containing any vegetable oil or fats;  and (ii) milk beverages that contain 51% or more (by volume) of milk and contain vegetable oil or fats; and

● Dairy Blends – Spreads – any product that combines vegetable oil ingredients with less than 50% milk fat that is a substitute for butter

The primary measure was Regulation 753, which establishes compositional standards for milk products.  The effect of the compositional standards and other provisions of the Regulation is that "many dairy blends, specifically filled milk, are banned."  Similarly, "dairy edible-oil spreads that compete with butter and with vegetable oil as the primary fat or oil component are also prohibited."  In a nutshell, roughly speaking, "pure" dairy products are permited, but certain blended dairy products (combining milk and vegetable oils/fats) are banned.  (I'm assuming that Ontario production focuses on milk rather than vegetable oils/fats, thus causing the trade conflict.)

(A few years prior, there had been a similar AIT case brought against an earlier version of these regulations.  A panel in that case found the measures to be in violation.)

As to the legal claims, in very general terms, the complainant (Alberta, supported by several other Canadian provinces) contended that the purpose of regulating Dairy Blends "is not related to health or protection of consumers because the national food regulations  system is effective in protecting consumers from misrepresentation and fraud by vegetable oil dairy alternatives."  Alberta argued that the panel dealing with the prior regulations "found injury in the loss of opportunity:  (1) for packagers and manufacturers of Dairy Blends to sell their products in Ontario, and (2) for oilseed producers and processors to sell their products to manufacturers of Dairy Blends across Canada because of the lack of market in Ontario, and that this denial of opportunity continues under the Regulations."

In response, Ontario argued that the measures are non-discriminatory, in that "all filled milk products and dairy edible oils spreads are treated in a uniform manner under the Regulations, irrespective of the province of origin."  Furthermore, if a violation is found, Ontario contended that the measures "can be maintained as [pursuing] legitimate objectives, in particular consumer protection and the protection of health.

Now we get into the specific provisions, which are similar to WTO rules, but differ in important ways.

The first claim was under Article 401 of the AIT, "Reciprocal Non-Discrimination."  Paragraph 1 of this provision states:

1. Subject to Article 404, each Party shall accord to goods of any other Party treatment no less favourable than the best treatment it accords to:

(a) its own like, directly competitive or substitutable goods; and 

(b) like, directly competitive or substitutable goods of any other Party or non-Party.

As the Panel explained, previous panels have held that two factors must be considered with respect to Article 401(1):

1. Does the measure discriminate against the goods of one Party to the benefit of the goods of another Party?

2. Are the goods discriminated against "like, directly competitive or substitutable" with the goods of another Party?

With respect to the second question, the Panel referred to the prior panel that examined the previous Ontario measure, which had found that Dairy Blends are "like" or "directly competitive" goods to dairy products.  This Panel said it agreed with that conclusion.

As to the first question, the Panel said that "by prohibiting filled milk and certain types of spreads from being sold in the province, Ontario fails to accord these goods produced in other provinces the best treatment it provides to dairy products in Ontario."  Therefore, the Panel found that the measures are inconsistent with Article 401.

On the "best treatment" point, I've made clear my views on best treatment before (see here and here), so I won't go through all of that again.  The AIT provision is different from certain international trade law provisions in the sense that it actually uses the phrase "best treatment" (although that could be considered to mean the "best" as between "national" and that provided to other countries).  But let me also note that given the broad scope of the next two provisions, I'm not sure it matters much how the non-discrimination provision is interpreted.  Even if non-discrimination is based on a discriminatory effect determined through a nationality comparison, and thus is more narrow, it is likely that violations of other provisions would be found, as seen below.

Next up, we have Article 402, which deals with the "Right of Entry and Exit."  This provision states: "Subject to Article 404, no Party shall adopt or maintain any measure that restricts or prevents the movement of persons, goods, services or investments across provincial boundaries."  Interpreting this provision, the Panel said it agreed with "the majority of the other Panels that the meaning of Article 402 includes a restriction on entry of a good into a province."  Applied here, the Panel concluded that Ontario Regulation 753 "prohibits filled milk and many types of spreads from being sold in Ontario" and thus "bars entry of these products from other provinces into the Ontario market."  Therefore, the measures are inconsistent with Article 402.

There is also Article 403, titled "No Obstacles."  This provision states: "Subject to Article 404, each Party shall ensure that any measure it adopts or maintains does not operate to create an obstacle to internal trade."  Applying this provision to the Ontario measures, the Panel noted that "[t]he prohibition on the sale of Dairy Blends, specifically filled milk and certain types of dairy edible-oil spreads, has a direct negative impact on both the sale of existing products that are competitive to dairy products and the development of new products of this nature."  It also stated, "[b]y restricting the sale and manufacture of competitive products (i.e. dairy blends) through the Regulations, an obstacle is created not only to the sale of such products manufactured in other provinces, but also to the development of new competitive products in other provinces and in Ontario."  Finally, "[w]ith respect to the ban on the manufacture of dairy blends in Ontario, the Regulations create an obstacle to trade in vegetable oils from other provinces that Ontario plants would utilize in their production."  On this basis, the Panel found that the measures are not consistent with Article 403.

With obligations this broad, it seems likely that the key to many AIT cases will be the defense.  Here, Ontario invoked Article 404, titled "Legitimate Objectives."  This provision states:

"Where it is established that a measure is inconsistent with Article 401, 402 or 403, that measure is still permissible under this Agreement where it can be demonstrated that:

(a) the purpose of the measure is to achieve a legitimate objective; 

(b) the measure does not operate to impair unduly the access of persons, goods, services or investments of a Party that meet that legitimate objective; 

(c) the measure is not more trade restrictive than necessary to achieve that legitimate objective; and 

(d) the measure does not create a disguised restriction on trade."

The definition of a legitimate objective is found in Article 200 as follows:

legitimate objective means any of the following objectives pursued within the territory of a Party:

(a) public security and safety;

(b) public order;

(c) protection of human, animal or plant life or health;

(d) protection of the environment;

(e) consumer protection;

(f) protection of the health, safety and well-being of workers; or

(g) affirmative action programs for disadvantaged groups;

Ontario pointed to (c) protection of human health and (e) consumer protection, as legitimate objectives that are pursued by the Regulations.  The Panel considered this defense as follows.

In reviewing Ontario's arguments and evidence, the Panel "found little to support a claim that the measures under dispute support a legitimate objective."  With respect to protection of human health, it noted, "the record does not explain the need for a prohibition on dairy blends when dairy products themselves can be produced, distributed and sold lawfully."  In this regard, it observed that "Ontario’s submissions on the health and consumer safety issues do not include expert evidence, scientific or technical literature, or reasoned explanations by regulatory authorities that support the contested prohibitions and restrictions," and "[t]here is no indication of how health or consumer safety problems have actually arisen in the provinces that have permitted the manufacture and sale of the contested products."  The Panel emphasized that Ontario has the burden of proof, and stated that "Ontario’s evidence before the … Panel does not establish that bona fide and significant concerns about quality were the objective of the Commission in adopting the contested regulations, rather than promoting the economic interests of producers."

Furthermore, "[e]ven if Ontario had been able to identify objectives compatible with the Agreement for its measures, such as health or consumer protection, it would have to demonstrate that the measures it adopted do not restrict trade 'unduly' and that they are not 'more trade restrictive than necessary.'"  On the latter point, the Panel said that "Ontario has not shown that the only measure available to protect human health and consumers are the prohibitions and restrictions contained in the Regulations," and that "[i]t would appear that there are many avenues that could be explored to achieve legitimate objectives in a less trade distorting manner."

On this basis, the Panel found that the measures are inconsistent with Articles 401, 402 and 403 and are not permissible under Article 404 as "necessary to achieve a legitimate objective."

As I understand it, there are now monetary penalties for violations of the AIT rules, so perhaps we will see more of these cases in the future.  The reasoning of this Panel was fairly brief, but if the case load increases, there may be more detailed findings.  For those of us who enjoy these issues, this will provide another avenue for the development of jurisprudence on issues such as "non-discrimination" and "trade restrictions."

The Seal Products Panel Requests

There are two of them, one for the DS369 dispute and one for the DS400 dispute.  These were both brought by Canada; no word yet on whether Norway will be making a panel request to follow its consultations request in DS401.

DS369 deals with consultations from 2007, relating to Belgian and Dutch trade restrictions on seal products.  From the panel request:

The Belgian trade ban prohibits the preparation for sale or delivery to consumers, transport for sale or delivery, possession for the purpose of sale, importation, distribution and transfer of seal products.  The Belgian import licensing requirement imposes a requirement that an import licence be issued for the importation of seal products.

The Dutch trade ban prohibits the importation of and trade in all harp seal and hooded seal products regardless of the animal's age.  This includes a prohibition against asking for the sale, the buying or acquisition, the holding for sale or in stock, the selling or offering for sale, the transportation or offering for transport, the delivery, the use for commercial profit, the renting or hiring, the exchange or offer in exchange, the  trade or exhibiting for commercial purposes or the bringing or possessing within or outside the territory of the Netherlands, of harp seal and hooded seal products.   

There are claims under GATT Articles I:1, III:4, XI:1 and several provisions of Article V, as well as TBT Agreement Articles 2.1 and 2.2

DS400 deal with an EU-wide regulation and implementing rules.  From the panel request:

The European Union trade ban prohibits the importation and the placing on the market for sale in the European Union customs territory of any seal product except: (a) those derived from hunts traditionally conducted by Inuit and other indigenous communities, which contribute to their subsistence; and (b) those that are by-products of a hunt regulated by national law and with the sole purpose of sustainable management of marine resources.  In addition, seal products for personal use may be imported but may not be placed on the market.  The effect of the trade ban, in combination with the implementing measure, is to restrict virtually all trade in seal products within the European Union, and in particular with respect to seal products of Canadian origin.   

There are claims under GATT Articles I:1, III:4 and XI:1, as well as TBT Agreement Articles 2.1 and 2.2 and certain other provisions of TBT Agreement Articles 5 and 7.

There are also references in both requests to GATT Article XXIII:1(b), the non-violation remedy, but it's not clear whether those claims will be pursued.  Sometimes non-violation is mentioned in the panel request but the claims never go anywhere.

It may be harder to follow this case as it progresses than it is for cases involving the U.S.  As far as I know, Canada does not generally post its submissions online.  The EU does post its submissions, but often not until the proceeding is finished.  Maybe the EU will make an exception for this case, in order to try to win the PR battle.  The U.S. will post its third party submissions, if any, but it's not clear to what extent it will want to get involved in a sensitive case like this one. 

Grand River Enterprises Update

I talked about the non-discrimination aspects of the Grand River Enterprises NAFTA Chapter 11 dispute here, here and here.  Based on the arguments made by the parties, I was hopeful that the decision would have something interesting to say about these issues.  Alas, it was not to be.  The decision is here.  The non-discrimination parts are in paras. 156-172, but the tribunal rejects the claim without getting into the systemic issues I discussed in the previous posts.

Other aspects of the decision, such as the existence of an "investment," the expropriation claim, and the fair and equitable treatment claim, were more detailed.  Also, I'll just mention that, at first glance, this decision seemed pretty well-written and readable, so if you've been intimidated by certain NAFTA Chapter 11 decisions in the past (as I have been!), this is not a bad place to start.

Cash Payments to Petitioners to Avoid Higher Anti-Dumping Duties

Via a tradelawnews tweet, I came across this WSJ article:

Some U.S. furniture makers and their lawyers have found a reliable way to extract cash from Chinese competitors deemed by U.S. officials to have "dumped" their products in the U.S., selling them at unfairly low prices.

Each year since 2006, they have asked the Commerce Department to review the U.S. duties paid by Chinese manufacturers on imports of wooden bedroom furniture. Many Chinese firms, fearing a steep rise in duties, agreed within months each time to pay cash to their U.S. competitors in return for being removed from the review list.

"Everybody in the industry in the U.S. and China understands that these payments are clever shakedowns," said William Silverman, a lawyer representing U.S. furniture retailers, big importers of Chinese products, at an October hearing of the U.S. International Trade Commission.

Representatives of the furniture makers, including La-Z-Boy Inc. and Vaughan-Bassett Furniture Co., say the payments are legal. Late last month, those two companies and about 15 other U.S. furniture makers sought the latest review, listing 110 Chinese firms.

About $13 million was paid to a group of 20 U.S. furniture makers from 2006 through 2009, according to a November ITC report. The U.S. firms told the ITC that a much larger, but unspecified, amount of money went to pay the U.S. firms' lawyers. The ITC report didn't include 2010 payments.

Two of six ITC commissioners expressed misgivings about the payments. Commissioner Charlotte Lane said at the October hearing that she was "very, very troubled" by the settlements, adding: "I cannot figure out for the life of me how they are actually legal."
In a note included in a December ITC report, Commissioner Daniel Pearson said the settlements create "additional costs and distortions" in furniture trade, "with little evidence that these distortions have yielded any benefits to the industry overall, the U.S. consumer, or the U.S. taxpayer."

Since 2005, the Commerce Department has imposed antidumping duties on wooden bedroom furniture from China after determining those products were being dumped on the U.S. market at "less than fair value." The tariffs range from less than 1% to more than 200% of the import value.

U.S. trade law allows the companies hurt by dumping to submit to the department once a year a list of exporters for review. The department has up to 18 months to determine whether the listed companies should be subject to tougher duties.

A Commerce Department spokesman said it didn't approve of the private settlements but lacked "authority to investigate or police agreements between private parties." The normally secret settlements surfaced during that hearing, which was held to determine whether the U.S. should continue applying the duties. A November vote by the ITC kept the duties in force.

Even though this has a Byrd Amendment feel to it, with money going directly to the domestic industry, it's hard to imagine that the private settlements by themselves violate any WTO rules.  But is there some obligation on domestic authorities to prevent the settlements?  Could a failure to crack down on this practice make the U.S. government subject to a WTO claim of some sort?  This is probably a stretch, but could there be a finding that the U.S. government's decision to allow the practice is a "specific action against dumping of exports from another Member" that is not "in accordance with the provisions of  GATT 1994, as interpreted by [the AD] Agreement," under AD Agreement Article 18.1?  It doesn't seem like a particularly strong argument.

There's also the issue of who would challenge the practice.  Presumably the Chinese exporters feel they are better off with the cash payments, so why complain?

More on Banning Plastic Bags

In the comments, Chris Wold, a law prof at Lewis and Clark law school in Oregon who specializes in trade and environment issues, adds some details about the proposed ban on plastic bags in Oregon:

the bill may look discriminatory to a panel: no plastic bags are made in Oregon but plenty of paper bags are.

He adds:  "That is likely to complicate any discrimination analysis under Art. III and Art. XX."

That definitely complicates things.  There's a clear benefit to the Oregon paper bag industry from the measure.  I would think a panel would take that into account, either implicitly or explicitly.  But would that be the end of the story?  Could a panel get past this and find no violation, or find that the measure is justified?  What could they use to reach that conclusion?  Chris mentions the following:

The motivation for the bill is clearly environmental: environmentalists have been trying to get such a bill passed in Oregon for years now because plastic bags clog recycling machines and frequently wind up in rivers, oceans, etc.

Would this be enough?

IEL Essay Prizes

From the SIEL:

A prize has been established by the Society of International Economic Law and Cambridge University Press for the best essay submitted on any topic in any field of international economic law.

The competition is open to current students and those who have graduated within the last five years.

The prize consists of £200, as well as £300 of Cambridge University Press book vouchers and a three year subscription to the World Trade Review. The winning essay will be submitted to the World Trade Review for publication.

Closing date for submissions is 30 September 2011.

For submission details and terms and conditions, please see http://www.sielnet.org/essayprize

The flier is here.

And from the WTO:

The WTO launched on 15 February the “2011 Essay Award for Young Economists”. The Award aims to promote high-quality research on the WTO and WTO-related issues among young economists and to reinforce the relationship between the WTO and the academic community.

The annual WTO Essay Award consists of a prize of CHF 5,000 to the author(s) of the winning essay. In the case of a co-authored paper, the prize will be equally divided among the authors. The winning paper will be officially announced at the annual meeting of the European Trade Study Group (ETSG), which is currently the largest conference specializing in international trade. The award ceremony will take place in September 2011 in Copenhagen, Denmark. The winning author(s) will receive funding to attend the meeting.

...

The paper must address issues related to the economics of the WTO.  Possible topics include the effects and design of trade agreements, contingent protection, trade facilitation, Aid for Trade, the economic aspects of dispute settlement, regional versus multilateral integration, trade agreements and the environment. The author(s) of the paper must possess or be engaged in the completion of a PhD degree and, if over 30 years of age, be no more than two years past a PhD defence. In the case of co-authored papers, this requirement shall apply to all authors. In addition, to be considered for the Award, essays cannot exceed 15,000 words.

...

Essays must be submitted by 3 June 2011. The Economic Research and Statistics Division of the WTO Secretariat will shortlist eligible papers by 17 June 2011 and the Selection Panel will take a final decision by 15 July 2011. Only the author(s) of short-listed essays will be notified.

Uranium Subsidies?

From The Economist:

ONE might not have too much sympathy for fossil fuel companies, currently enjoying all the benefits of high coal and oil prices. But they are crying foul in their competition with an (admittedly undersized) non-hydrocarbon fuel—uranium. According to America’s mining act of 1872, framed at a time when spurring development of the wide-open West was all the rage, no government agency can refuse a mining permit on federal land, or charge a royalty. And uranium is treated just like other hardrock minerals such as gold and copper. Oil, gas, coal and timber companies, by contrast, all have to pay substantial royalties, of up to 12.5% of gross income, when they extract from federal lands.

Under SCM Agreement Article 1.1(a)(1)(ii):

1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if: 

 (a)(1) there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as "government"), i.e. where: 

...

  (ii) government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits)

By exempting uranium mining from royalties, does the 1872 mining act forego government revenue (i.e., the royalties) that is otherwise due, and therefore constitute a "financial contribution"?   In U.S. - FSC (Article 21.5), the Appellate Body said this when examining a tax measure:

91. In identifying the normative benchmark, there may be situations where the measure at issue might be described as an "exception" to a "general" rule of taxation.  In such situations, it may be possible to apply a "but for" test to examine the fiscal treatment of income absent the contestedmeasure.  We do not, however, consider that Article 1.1(a)(1)(ii) always requires panels to identify, with respect to any particular income, the "general" rule of taxation prevailing in a Member.  Given the variety and complexity of domestic tax systems, it will usually be very difficult to isolate a "general" rule of taxation and "exceptions" to that "general" rule.  Instead, we believe that panels should seek to compare the fiscal treatment of legitimately comparable income to determine whether the contested measure involves the foregoing of revenue which is "otherwise due", in relation to the income in question.

92. In addition, it is important to ensure that the examination under Article 1.1(a)(1)(ii) involves a comparison of the fiscal treatment of the relevant income for taxpayers in comparable situations. ...

Assuming the "treatment of legitimately comparable income" standard could be applied in the context of charging royalties, are royalties for uranium mining legitimately comparable with those for oil, gas, coal and timber extraction?  Are the "situations" comparable?

WTO Dispute Settlement 2010: Cases and Developments

If you'll be in Geneva on March 8, you may want to attend this:

Fourth Annual Update on WTO Dispute Settlement  A Presentation and Debate on Cases & Developments in WTO Dispute Settlement during 2010 Tuesday, 8th March 2011  I  17.00 to 19.00

	Background
	At the beginning of each year, on the occasion of the release of the Appellate Body’s Annual Report, the Centre gathers the chairs of the WTO Appellate Body, the Dispute Settlement Body, and the Negotiating Group on DSU Review in an Annual Update on WTO Dispute Settlement. Presentations by the chairs are followed by a roundtable discussion of the most important cases and developments of the past year. The Roundtable is composed of representatives of academia, the trade law bar, press and NGOs.

Programme   WTO Dispute Settlement Body Developments in 2010                  17.00 - 18.00 H.E. Mr. Yonov Frederick Agah, (Nigeria) Chairperson of the DSB   Presentation on the 2010 Annual Report of the Appellate Body Ms. Lilia R. Bautista, Chairperson of the Appellate Body   Roundtable discussion on WTO Dispute Settlement in 2010         18.00 - 19.00       with     •Thomas Cottier,        Director, World Trade Institute, University of Bern     • Kirsten Hillman,        Counsellor, Canadian Mission to the WTO     • Nicolas Lockhart,        Partner, Sidley Austin, Geneva     • Bruce Wilson,        Partner, King & Spalding, Washington DC

	Moderator: Joost Pauwelyn, Professor of International Law, Graduate Institute

******************************************************************

Here are the cases they are likely to be talking about:

Appellate Body Reports

Australia - Apples (AB)	Australia - Measures Affecting the Importation of Apples from New Zealand	DS367	Nov 29, 2010	Dec 17, 2010	DSU, SPS
China - Publications and Audiovisual Products (AB)	China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products	DS363	Dec 21, 2009	Jan 19, 2010	GATS, GATT, Accession

Panel Reports

U.S. - Tyres (Panel) United States - Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China DS399 Dec 13, 2010   GATT, Accession EC - Fasteners (Panel) European Communities - Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China DS397 Dec 03, 2010   AD, GATT, WTO Thailand - Cigarettes (Philippines) (Panel) Thailand - Customs and Fiscal Measures on Cigarettes from the Philippines DS371 Nov 15, 2010   Customs, GATT U.S. - Anti-Dumping and Countervailing Duties (China) (Panel) United States - Definitive Anti-Dumping and Countervailing Duties on Certain Products from China DS379 Oct 22, 2010   AD, GATT, SCM, Accession U.S. - Poultry (China) (Panel) United States - Certain Measures Affecting Imports of Poultry from China Ds392 Sep 29, 2010 Oct 25, 2010 GATT, SPS EC - IT Products (Panel) European Communities and Its Member States - Tariff Treatment of Certain Information Technology Products DS375,376,377 Aug 16, 2010 Sep 21, 2010 GATT Australia - Apples (Panel) Australia - Measures Affecting the Importation of Apples from New Zealand DS367 Aug 09, 2010 Dec 17, 2010 SPS EC - Aircraft (Panel) European Communities and Certain Member States - Measures Affecting Trade in Large Civil Aircraft DS316 Jun 30, 2010   SCM U.S. - AD Measures on Carrier Bags (Panel) United States - Anti-Dumping Measures on Polyethylene Retail Carrier Bags from Thailand DS383 Jan 22, 2010 Feb 18, 2010 AD China - Publications and Audiovisual Products (Panel) China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products DS363 Aug 12, 2009 Jan 19, 2010 GATS, GATT, Accession

The first date is the circulation date.  The second date is adoption, if it has occurred at this point.

It was a slow year.  I had to sneak in the China - Publications case, which was circulated in 2009 but adopted in 2010, to make the Appellate Body's workload look more substantial!  But of course, they are making up for that long break with some of the cases going on now and those coming up.

A Panel Request in the Seal Products Case

Reuters reports that Canada is requesting a panel in the Seal Products WTO case (DS400):

Canada asked the World Trade Organization on Friday to set up a panel to resolve its dispute with the European Union over the EU's ban on trade in seal products, Fisheries Minister Gail Shea said.

The European Union closed its borders to seal products last year, when an EU court allowed the ban to proceed even though a Canadian legal challenge was still in progress.

"By moving ahead with this World Trade Organization challenge, we stand behind the thousands of Canadians in coastal and northern communities who depend on the seal harvest to provide a livelihood for their families," Shea said.

...

Shea said the panel would help take the emotion out of a ban that she said had "no basis in fact or in science." Animals rights activists said the harvest, which involves shooting or clubbing the animals to death, is inhumane.

A while back, I looked briefly at the possible legal issues in the case in an ASIL Insight here.  Quickly glancing at the piece again, I think everything there still applies.  However, with all that is going on with non-discrimination issues and the TBT Agreement in U.S. - Tuna II (DS381) (DSC subscribers see here and here), U.S. - Clove Cigarettes (DS406) (see here and here) and a couple other cases, I'm not sure I would know how to argue the Seal Products case right now!  It might be worth waiting to see what the panels and the Appellate Body say first about those cases before getting too deep into the substance of the Seal Products case.

Environmental Policy Making Through the Tariff Schedule

Frequent commenter Charles Benoit has an article coming out in the Georgetown Journal of International Law entitled "Picking Tariff Winners: Non-Product Related PPMs and DSB Interpretations of “Unconditionally within Article I:1."  The SSRN version is here.  Here's the abstract:

This paper proposes how WTO Members seeking a proportional increase in the consumption of “sustainable” ethanol can defend a unilaterally introduced tariff advantage for ethanol conditioned on green house gas emission life-cycle assessments. This explanation applies a WTO-contextual taxonomy of non-product-related process and production methods to argue that life-cycle assessments should not be interpreted as a prohibited PPM, and in fact are supported by the text of the WTO Preamble and the WTO Dispute Settlement Body’s flexible interpretations of “unconditionally.” The purpose of the paper is to advance an emerging view of GATT Article I:1’s most-favored-nation principle, and as such there is no reliance on derogations of the MFN principle found in the GATT Article XX exceptions or the Enabling Clause.

Some key passages:

Ethanol is a volatile, flammable, colorless biofuel liquid with a specific molecular formula. The energy contained in ethanol is originally captured by the photosynthesis of various feedstocks, such as sugar cane or corn, which are then transformed into ethanol, which will have the same properties regardless of which feedstock was used. When ethanol is blended with gasoline, a vehicle’s green-house gas (“GHG”) emissions are reduced as compared to the vehicle’s use of non-ethanol blended gasoline. However, depending on the feedstock used to produce the ethanol, this reduction may just be an elaborate version of  “hide the GHG ball.” This is because the energy required – and GHGs emitted – in certain ethanol production processes – for example, distilling ethanol from corn – can outstrip any GHG savings in vehicle emissions. To determine whether the ethanol blended gasoline will be a net GHG saver or contributor, i.e., “sustainable” for climate change purposes, one must look to the production process.

In order to promote sustainable ethanol, he proposes "a tariff advantage for ethanol imports conditioned on how effectively the ethanol reduces GHGs; i.e., its sustainability."  In other words, higher tariffs for less sustainable ethanol and lower tariffs for more sustainable ethanol.

Of course, there's a GATT Article I:1 issue here, if the different types of ethanol are considered to be "like."  But, relying on certain aspects of the jurisprudence, he thinks it can be done in a way that does not violate Article I:1:

it would be easy for a WTO Panel to find a tariff conditioned on a non-product related PPM to be inconsistent with the GATT, but this does not mean that it must. As seen in Canada-Autos, the MFN requirement need not mean that a condition cannot be attached to a tariff advantage. If the attacked measure seeks only to advantage ethanol blends that result in GHG savings, and this is done not by specifying the production process but simply through a LCA, it is not apparent why it must follow that the conditioned measure discriminates as to origin. Such a measure bears no resemblance to measures struck down in other Article I cases. And of course, the Panel would enjoy the considerable support of the WTO’s preamble, which can surely be read to encourage the development of Article I in a way that promotes sustainable development. 

This would be a fascinating Article I:1 case, if it were ever to arise.

Putting aside the legal arguments, this all makes me think of the various income tax deductions designed to encourage certain activities.  Should the tariff schedule be used as a policy tool in this way, by linking lower tariffs to various non-trade policies?

Implementing Australia - Apples

Australia and New Zealand have agreed (Word doc) on a period of 9 months (from DSB adoption) for implementing the Australia - Apples findings, with the period ending on August 17, 2011.  Here's something from their agreement:

The agreed period of time for implementation will allow Australia to be in a position to issue import permits for New Zealand apples from that date, based on any conditions that may arise out of the current review.

This sentence has me thinking that the dispute could very well end up in a DSU Article 21.5 proceeding.  It's good -- from a free trade perspective -- to hear that Australia will be issuing import permits for New Zealand apples.  However, it wouldn't surprise me if the "conditions that may arise" for issuing those permits may not be to New Zealand's liking.

International Courts Asking Governments To Help With Interpretation

Speaking of New Zealand and investor-state dispute settlement, in the last post, NZ Prime Minister John Key mentioned the China - NZ FTA, so I looked it up.  While skimming through the investor-state provisions, I came accross something I had not seen before:

Article 155 Interpretation of Agreement

1. The tribunal shall, on request of the state party, request a joint interpretation of the Parties of any provision of this Agreement that is in issue in a dispute. The Parties shall submit in writing any joint decision declaring their interpretation to the tribunal within 60 days of delivery of the request.

2. A joint decision issued under paragraph 1 by the Parties shall be binding on the tribunal, and any award must be consistent with that joint decision. If the Parties fail to issue such a decision within 60 days, the tribunal shall decide the issue on its own account. 

Basically, if the government defending the case so requests, the tribunal "shall" request an interpretation by the Parties to the agreement of a relevant legal provision, and this interpretation is binding on the tribunal.

As I like to emphasize, I'm no investor-state expert, so perhaps this is a fairly common provision, and I was simply unaware of it.  But let me ask those who are knowledgeable about this sort of thing:  Does this kind of provision exist in other agreements?  Has it ever been used?

Update on New Zealand and Investor-State

Is New Zealand re-thinking its opposition to investor-state?  This is from Radio New Zealand:

The New Zealand Government could be opening itself to being sued by American multinationals in trade talks - contradicting assurances from Prime Minister John Key.

A top United States trade official says New Zealand is ready to accept investor-state disputes in the nine-country TransPacific Partnership trade agreement (TPP).

Radio New Zealand's economics correspondent says investor-state dispute clause allows multinational companies to sue goverments if they lose profits as a result of new regulation.

They are a feature of US trade deals.

Mr Key last year said it was far-fetched to suggest New Zealand would accept them in the TPP.

But Babara Wiesel, a top US official, says Mr Key's statement has been retracted and New Zealand will agree to the clause.

More here and here.

UPDATE:  John Key clarifies:

Prime Minister John Key says he stands by statements he made about the possibility of investor-states suing New Zealand in the Trans-Pacific Partnership (TPP) agreement.

Key today said he had not retracted comments that it was "far-fetched" to suggest an investor could sue New Zealand.

"We don't believe the way the provisions would be structured would allow frivolous claims and in our view, the way we pass regulations and laws in this country, it's extremely unlikely, far-fetched, that we would be sued," he said.

"It's not new for New Zealand to include these provisions in trade deals. We did that with China."

Key's comments followed reports that US Government representatives told a recent Washington DC briefing that a statement made by the New Zealand Prime Minister last year about TPP had since been retracted.

Green Party co-leader Russel Norman said Key needed to explain why US trade representative Barbara Wiesel considered statements made by him no longer stood.

Key said he wasn't aware of any comments made by Wiesel and he had not retracted his comments.

"Either I've done it telepathically or I haven't done it at all, and I think that the latter is the likelier."

Banning Plastic Bags in Stores

The state of Oregon is considering banning plastic bags in retail stores:

Oregon lawmakers will consider whether the state should become the first to pass a ban on plastic bags, a measure recycling advocates believe would trigger a domino effect among other states.

A bill co-sponsored by two Republicans and two Democrats would outlaw throwaway plastic check-out bags at all retail stores in Oregon, a state that is already a leader in passing green legislation. Shoppers would be forced to bring their own bag or pay a nickel apiece for recycled paper bags under SB536.

We've already had a WTO dispute over plastic bags used at stores, related to an anti-dumping measure, so it's clear there are foreign producers who care about trade restrictions.  Will these producers raise concerns about such a ban at the WTO?

The End of the Doha Round: Bhagwati/Sutherland Report

The Report is here.  Its title is stark:  The Doha Round:  Setting a Deadline; Defining a Final Deal.  Aside from the fact that the report urges a "realish" deadline of the end of this year, the most striking thing for me was the magnitude of gains from concluding the round that appear to be assumed.  Another striking thing was the authorship--I have heard of only a few of the members of the group.  Finally, I suppose the emphasis on the "rule of trade law" is always a bit surprising to me.  Perhaps a more careful read will reveal other points of note. 

WTI Postdoc Fellowships

I just received this from WTI:

Please find below the links of the Post-doc Research Fellowships description. You will find all information concerning the job description as well as the PDF to download on our website. Please feel free to distribute the link to your networks and personal contacts.

 http://www.wti.org/vacancies/

http://www.nccr-trade.org/jobs/

 

 

Sausage

The NYT has an interesting op-ed today regarding developments in congressional antics regarding GSP, Trade Adjustment Assistance, Andean Preferences, and the Colombia-US FTA.  I won't try to replicate its description of the linkages among these, which remind us of Bismarck's observation that there are two things you don't want to see being made, and one of them is legislation.  But what I found interesting was the NYT's assertion that GSP is valuable for developing countries.  The last time I looked, there was little evidence of benefits for developing countries from GSP. A nice paper by Ozden and Reinhardt cast a great deal of doubt on the benefits of htese programs.   I suppose that observation might extend to the Andean Preferences.  Is there evidence that these preferences provide benefits?