International Economic Law and Policy Blog

More on Non-Market Economies

The last two posts deal with the issue of China's non-market economy status under WTO rules.  I've been reluctant to weigh in on this, as there is a lot I don't know about the issue.  So, instead of taking a position, let me ask a question.  My understanding is that the EU currently treats a number of countries as non-market economies.  Albania is one of these.  Looking at Albania's accession documents, though, I didn't see anything equivalent to the Chinese Accession Protocol language discussed in the last two posts.  Here's my question:  What's the legal justification under WTO rules for treating Albania as a non-market economy?  There may be a simple answer that I've missed (I didn't look into this too thoroughly). If so, let me know.

If you don't believe in the 2012 myth, do you believe in the 2016 myth?

I've been asked by a colleague to comment on this post by Bernard O’Connor at VoxEU. In the post, he claims that the view that China will automatically get market economy status (MES) after 2016 is "an urban myth that seems to have gone global. It has gone viral even in a world were the underlying agreements are freely available to all on the Internet."

His key message is this:

"The 2016 myth seems to have been born in paragraph (d) of Article 15. This paragraph provides that China must establish whether it is a market economy according to the law of the importing WTO member. If it can establish that it is a market economy then some of the transitional provisions on comparison methodologies will terminate. However, there are no dates in relation to China establishing that it is a market economy.

The paragraph further provides that one specific comparison methodology set out in one subparagraph of the Article will expire, in any event, fifteen years after Chinese accession. China became a WTO member in Doha in December 2001. Add fifteen years and you get 2016.

This provision does not say that China will get market-economy status. It just says that a very specific provision of Article 15 will cease to apply. The other parts of Article 15 continue to apply. And to interpret the expiry of one subparagraph as a deadline for the granting of market-economy status is not only to read into the Article something that is not there, but it is also to negate all the other provisions, something that international treaty interpretation simply does not allow. The expiry of one subparagraph does not change the rest of the law."

This is what Art 15 of China's Accession Protocol says:

"Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("Anti-Dumping Agreement") and the SCM Agreement shall apply in proceedings involving imports of Chinese origin into a WTO Member consistent with the following:

(a) In determining price comparability under Article VI of the GATT 1994 and the Anti Dumping Agreement, the importing WTO Member shall use either Chinese prices or costs for the industry under investigation or a methodology that is not based on a strict comparison with domestic prices or costs in China based on the following rules:

(i) If the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product, the importing WTO Member shall use Chinese prices or costs for the industry under investigation in determining price comparability;

(ii) The importing WTO Member may use a methodology that is not based on a strict comparison with domestic prices or costs in China if the producers under investigation cannot clearly show that market economy conditions prevail in the industry producing the like product with regard to manufacture, production and sale of that product.


(b) In proceedings under Parts II, III and V of the SCM Agreement, when addressing subsidies described in Articles 14(a), 14(b), 14(c) and 14(d), relevant provisions of the SCM Agreement shall apply;  however, if there are special difficulties in that application, the importing WTO Member may then use methodologies for identifying and measuring the subsidy benefit which take into account the possibility that prevailing terms and conditions in China may not always be available as appropriate benchmarks.  In applying such methodologies, where practicable, the importing WTO Member should adjust such prevailing terms and conditions before considering the use of terms and conditions prevailing outside China.

(c) The importing WTO Member shall notify methodologies used in accordance with subparagraph (a) to the Committee on Anti-Dumping Practices and shall notify methodologies used in accordance with subparagraph (b) to the Committee on Subsidies and Countervailing Measures.

(d) Once China has established, under the national law of the importing WTO Member, that it is a market economy, the provisions of subparagraph (a) shall be terminated provided that the importing Member's national law contains market economy criteria as of the date of accession.  In any event, the provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession.  In addition, should China establish, pursuant to the national law of the importing WTO Member, that market economy conditions prevail in a particular industry or sector, the non market economy provisions of subparagraph (a) shall no longer apply to that industry or sector."

Basically, para (a) contains 2 scenarios:
i. if producers can prove market economy conditions, then the importing country has to use China's own costs;
ii. if the producers cannot prove market economy conditions, then the investigating authority may use a surrogate price, say price in India or Singapore.

By stating that "the provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession", para (d) basically states that (a.ii) will not apply after 2016. Instead, only (a.i) will apply, which means that the investigating authorities have to use China;s own costs NO MATTER WHETHER the producers can prove market economy conditions. THIS MEANS CHINA WILL GET MARKET ECONOMY STATUS POST 2016.

Of course, O’Connor is technically correct as Art 15 NEVER EXPLICITLY state that WTO Members have to GRANT China market economy status. Instead, it only states that they MAY NOT CONTINUE TO APPLY THE NON-MARKET ECONOMY METHODOLOGY post 2016. O’Connor's theory could be correct is there are 3 possibilities, i.e., ME, NME, & something else. Is there a "something else" category? No. Because para (a) only list 2 scenarios, i.e, (i) & (ii). Furthermore, para (a) starts by stating that  the importing WTO Member shall use "either Chinese prices OR [the NME] methodology". Thus, there are ONLY TWO scenarios. By excluding the NME scenario through para (d), the only conclusion we can draw is that China will be treated as a ME post 2016.

O’Connor further states that "to interpret the expiry of one subparagraph as a deadline for the granting of market-economy status is not only to read into the Article something that is not there, but it is also to negate all the other provisions, something that international treaty interpretation simply does not allow. The expiry of one subparagraph does not change the rest of the law." My responses are:

1. Technically speaking, the EU can still refuse to grant China MES post 2016. However, doing that would be in violation of EU's WTO obligations, as Art 15(d) has expired, and the EU cannot continue to use it as justification for refusal to grant China MES.

2. The EU might cite to the 2nd supplementary provision to para 1 of GATT Art. VI as the basis for its denial of MES to China, but this provision requires the exporting country to have "a COMPLETE or substantial complete monopoly of its trade AND where ALL domestic prices are fixed by the State". This has not been the case in China since the mid-90s, and it is unlikely that it will be the case in 2016. Thus EU cannot cite this article.

3. In essence, while I agree with O’Connor that the expiry of this provision doesn't mandate the granting of MES to China by the EU, I do not agree that this means that China shall not be treated as a ME post 2016. The truth is that, whether the EU grants MES or not post 2016, the EU IS OBLIGED to treat China as a ME, otherwise it will be found in violation of its WTO obligation. While O’Connor is technically correct by stating that "to interpret the expiry of one subparagraph as a deadline for the granting of market-economy status is ... to read into the Article something that is not there", by refusing to acknowledge the de facto (and de jure as well) automatic MES China is entitled to post 2016, he made an even bigger mistake by "omitting something which is there" or failing to interpret the treaty language in its ordinary meaning and proper context.

4. O'Conner also claims that the interpretation of automatic MES post 2016 "negates all the other provisions" and attempts to "change the rest of the law". Again this claim is flawed because the other paras in Art 15 DO NOT MENTION the NME issue and thus are IRRELEVANT TO THE QUESTION. For example, if I say:

I. The sun has different temperatures in a day:
a. it is hot in the daytime
b. it is cold in the nighttime
II. The sun is big
III. The sun is round.

If we discover that I.b is wrong because the sun is hot even in the night, how can you say that II and III has also been negated by the discovery of this mistake?

When Will China's NME Status End?

Over at vox, trade lawyer Bernard O'Connor argues that the end of China's NME status might be further off than many people think:

There is nothing in the WTO rules, or elsewhere, to provide that China automatically gets market-economy status in 2016. The idea that it will is a misunderstanding shared by many in China, the EU and the US.

Chinese premier Wen Jiabao, speaking at the September 2011 World Economic Forum at Dalian mentioned the “2016 deadline” when he asked, once again, the EU to grant China market-economy status. The supposed deadline is repeated by most Chinese trade and commerce officials. Last month, Business Europe, the European confederation of industries, stated with concern in a report on ‘Rising to the China Challenge’ that China will automatically be granted market-economy status in 2016. The participants in the China-US Strategic and Economic Dialogue seem to accept that there is a deadline as does one of the leading EU books on trade law (Van Bael and Bellis 2011). Every one seems to agree.

But despite all these affirmations, there is no deadline. There is no provision setting any date in the WTO agreements themselves and there is no deadline in the protocol signed by China when it acceded to the WTO. The idea that there is a deadline is an urban myth that seems to have gone global. It has gone viral even in a world were the underlying agreements are freely available to all on the Internet.

...

There is one provision of the Chinese WTO Accession Protocol dealing with dumping. This is Article 15. It addresses techniques in the comparison of costs and prices in antidumping procedures. There is nothing providing that market-economy status can be automatic.

The 2016 myth seems to have been born in paragraph (d) of Article 15. This paragraph provides that China must establish whether it is a market economy according to the law of the importing WTO member. If it can establish that it is a market economy then some of the transitional provisions on comparison methodologies will terminate. However, there are no dates in relation to China establishing that it is a market economy.

The paragraph further provides that one specific comparison methodology set out in one subparagraph of the Article will expire, in any event, fifteen years after Chinese accession. China became a WTO member in Doha in December 2001. Add fifteen years and you get 2016.

This provision does not say that China will get market-economy status. It just says that a very specific provision of Article 15 will cease to apply. The other parts of Article 15 continue to apply. And to interpret the expiry of one subparagraph as a deadline for the granting of market-economy status is not only to read into the Article something that is not there, but it is also to negate all the other provisions, something that international treaty interpretation simply does not allow. The expiry of one subparagraph does not change the rest of the law.

...

On the basis of analysis carried out in the US and in the EU it is unlikely that China would be considered a market economy according to the normal standards applicable in EU law. And Article 15 of the China WTO accession protocol requires that the evaluation be carried out on the basis of the law of the importing WTO member.

If China wants to be treated as a market economy it has to prove to the EU that it is one by satisfying the five criteria. The granting of market-economy status to China is not automatic now or in 2016 or afterwards.

If you want to see the specific language, the accession protocol is here: http://www.worldtradelaw.net/misc/ChinaAccessionProtocol.pdf

Trade in Everything: Turkey Tails

This Bloomberg article talks about the difficulties certain Pacific nations have had with taking measures to restrict imports of unhealthy food, without violating WTO rules.  The focus is on Samoa's accession committments related to imports of turkey tails:

After a 13-year wait, the South Pacific island nation of Samoa should win approval to join the World Trade Organization next month after dropping its ban on turkey tails. The WTO welcomed the nation, with a population of about 193,000 (a bit more than Knoxville, Tenn.) once Samoa agreed to end its ban on the fatty poultry scraps and impose import tariffs instead. That’s good news for U.S. turkey farmers, who will regain a market for the low-value trimmings that often end up in pet food, says Roman Grynberg, a trade official for the Pacific region until 2009.

For Samoa, one of the world’s most obese nations, the deal is a mixed blessing. “These are the contradictions we have to face—where health is compromised for the sake of trade and development,” says Palanitina Tupuimatagi Toelupe, Samoa’s director general of health. The U.S. food industry sees the issue differently. “We feel it’s the consumers’ right to determine what foods they wish to consume, not the government’s,” says James H. Sumner, president of the USA Poultry & Egg Export Council.

Samoan negotiators defend ending the ban as the only way to enjoy the increased trade and lowered costs of imports that WTO membership confers. “It filters down to the normal customer who will now have access to a wider variety of goods,” Namulauulu Sami Leota, president of the Chamber of Commerce, told the Samoa Observer newspaper. Reaching an agreement “was not an easy task,” added Namulauulu, who was involved in the final talks. Keith Rockwell, a spokesman for the WTO in Geneva, says the ban “was an issue on which Samoa took quite a tough line.”

As a general matter, it seems to me that it would be very easy to come up with domestic regulations that restrict unhealthy foods, without violating trade agreements.  At the same time, I'm not sure exactly what accession commitments Samoa has made on this issue.  Here's a summary from the WTO's announcement about the Working Party's adoption of Samoa's membership package: 

Samoa would within 12 months of its accession eliminate the prohibition on the importation and domestic distribution of turkey tails and turkey tail products in Samoa. As transitional measures, a domestic ban on the sale of turkey tails and turkey tail products would be in place and an import duty of 300% would apply to the imports. This is to allow time to develop and implement a nation-wide programme promoting healthier diet and life style choices.  After two years, the domestic sale ban would be lifted and the import duty would be reduced to 100% or replaced by another tax regulation or by recommendations from the programme.

From the date of accession, Samoa would not introduce, re-introduce or apply quantitative restrictions on imports, or other non-tariff measures such as licensing, quotas, prohibitions, bans and other restrictions having equivalent effect that cannot be justified under the provisions of the WTO Agreement with the exception of those related to the import ban of left-hand drive vehicles, automobiles older than 12 years and the domestic sale prohibition of turkey tails and turkey tail products (see sections above for Samoa’s commitments in relation to these exemptions). 

Based on this summary (as far as I can tell, the full accession documents are not public yet), I would say there is some flexibility to take measures that restrict turkey tail consumption, if that's what Samoa wants to do.  But I'd want to see the actual text of the accession commitments before reaching a final conclusion.

At the same time, it does seem clear that U.S. turkey tail exporters lobbied hard to get their products into Samoa, and were able to obtain some sort of market opening commitment. Here's a little more about turkey tails:

Jason Garman, media and communications adviser for Oxfam New Zealand, says turkey tails have poor nutritional values.

“They are the fattiest part of the turkey. Most Americans don’t even know they exist and wouldn’t consider eating them.” 

So why are Samoans and the wider Pacific allowing these nutrition imports? 

Dr Roman Grynberg, a Pacific authority on trade, says the reason is simple – many Pacific Islanders are poor “and these foods are cheap”. 

“Local healthy foods such as fresh fish, vegetables and root crops are much more expensive,” he says.

The PMI Plain Packaging BIT Claim

The Notification of Claim in the Philip Morris/Plain Packaging BIT claim is available from Australia DFAT here: http://www.dfat.gov.au/foi/downloads/dfat-foi-11-20550.pdf

Here's an excerpt:

(b) Specific contraventions of the Hong Kong-Australia BIT

44. The effect of plain packaging leglslalion, and for the same reasons the GHW regulation, is plainly equivalent to deprivation of title to the intellectual property and goodwill. Moreover, the effect of plain packaging legislation will be substantially to deprive PM Asia of the commercial value of its investments In Australia. In all these senses, plain packaging legislation breaches Article 6 of the Hong Kong-Australia BIT. Article 6 protects investments from measures by a host State that have an effect equivalent to deprivation, except under due process of law, for a public purpose related to the internal needs of the host State, on a non·discriminatory basis and against compensation. While it is not yet clear if the Government will follow due process in passing plain packaging legislation, it is clear that there Is no credible evidence that plain packaging legislation will have the claimed effect of enhanced public health (indeed there is evidence to suggest that it may have the opposite effect and no compensation has been paid). The effective extinguishment of the intellectual property by way of legislation also manifests a failure by Australia to afford full protection and security to PM Asia's investments as required by Article 2(2) of the Hong Kong·Australia BIT.

45. Neither is plain packaging legislation (and for the same reasons the GHW regulation) fair and equitable, as required by Article 2(2) of the Hong Kong-Australia BIT. Plain packaging legislation will severely curtail the commercial utility of the intellectual property and goodwill and has a severe negative impact on the value of PM Asia's investments in Australia. It contravenes Australia's international obligations under TRIPS, the Paris Convention, and the TBT. There is no credible evidence that it will reduce smoking prevalence, while other measures that do affect prevalence and do not severely curtail the intellectual property or goodwill are available to the Government. Its contributioon to public health is purely speculative and there is, in fact, evidence, that it will have a negative effect in this regard. Its promotion and imminent enactment appear to be motivated by political concerns rather than a genuine desire for fair and equltable regulation. In short, the benefits of the legislation (if any) are entirely disproportionate to the harm it will cause to PM Asia's investments; accordingly, the legislation is not fair and equitable in any sense.

46. For the same reasons, plain packaging legislation and the GHW regulation each constitute an unreasonable impairment to the management, maintenance, use, enjoyment or disposal of PM Asia's investments in Australia in breach of Article 2(2) of the BIT. Finally, and also pursuant to Article 2(2) of the BlT, contravention of Australia's international trade treaty obligations results in a failure by Australia to observe obligations entered into with regard to investments of investors in its territory.

Thanks to Amy Porges for the tip.

Video Interviews of the Birth of the WTO etc.

Just a heads up about a very interesting on-going project that Gabrielle Marceau is working on.  http://www.youtube.com/thewtocreation . 

As described at the website itself:

This project began as a tribute to Ambassador Paul Trân Van Thinh on the occasion of his 80th birthday. We set out to retrace, through interviews with friends and colleagues, Paul Trân's exceptional journey. Paul Trân, who served as Ambassador of Europe to the GATT, not only impacted those who worked alongside him, but played an instrumental role in the crucial GATT years that eventually gave birth to the World Trade Organization (WTO). While the individuals interviewed offer rich accounts of Paul Trân's work and the mark he left on Europe, they also share their thoughts and insights on the global vision that paved the way for today's WTO.

The production of this historical documentary has been welcomed by the WTO and GATT community. The contributions of the ambassadors and ministers who worked on the finalization of the Uruguay Round, and the creation of the WTO, can offer valuable lessons for the ongoing effort to liberalize trade, an issue of truly global concern.

The participants were all asked to respond to a similar set of questions, touching upon such important issues as the institutional architecture of the WTO, tensions between industrialized and developing countries, as well as liberalization of key sectors such as agriculture, textiles and services.

At the moment the clips are limited by youtube to the usual short length, but an autonomous website is being created and more interviews are being added.  But, in the meantime, it is well worth checking out – and likely to be a great resource for trade law classes. 

Thanks to Gabrielle for putting it together.

 

 

The Latest Global Trade Alert Rankings

From Simon Evenett and Global Trade Alert, here is some data on who has been most protectonist recently:

Which countries have inflicted the most harm? Certain emerging markets and European nations

Rank	Metric, Country in specified rank, Number
	Ranked by number of (almost certainly) discriminatory measures imposed	Ranked by the number of tariff lines (product categories) affected by (almost certainly) discriminatory measures	Ranked by the number of sectors affected by (almost certainly) discriminatory measures	Ranked by the number of trading partners affected by (almost certainly) discriminatory measures
1.	EU27 (242)	Viet Nam (927)	Algeria (62)	China (195)
2.	Russian Federation(112)	Venezuela (786)	EU27 (58)	EU27 (181)
3.	Argentina (111)	Kazakhstan (729)	China (47)	Argentina (175)
4.	UK (59)	China (698)	Nigeria (45)	Germany (161)
5.	Germany (58)	Nigeria (599)	Kazakhstan (43)	India (154)     UK (154)
6.	India (56)	EU27 (550)	Germany (42)         US (42)
				Belgium (153)   Finland (153)
7.	China (55)	Algeria (476)
8.	France (51)	Russian Federation (439)	Ghana (41)
9.	Brazil (49)	Argentina (429)	Indonesia (40) Russian Federation(40)	Indonesia (151)
10.	Italy (47)	Indonesia (388)		France (150)

 

 

Romney and Huntsman Debate the Nuances of WTO Law

Well, sort of.  It's more detail on WTO law than one usually gets from politicians, at least.  Here's something from a recent debate:

Scott Pelley: That's time, Governor. But I would like to ask you a follow-up on that point. You-- you talked about all the things that China should be doing. How do you affect that as commander in chief? How do you make China do these things?

Mitt Romney: Well number one, on day one, it's acknowledging something which everyone knows, they're a currency manipulator. And on that basis, we also go before the W.T.-- the W.T.O. and bring an action against them as a currency manipulator. And that allows us to apply, selectively, tariffs where we believe they are stealing our intellectual property, hacking into our computers, or artificially lowering their prices and killing American jobs. We can't just sit back and let China run all over us. People say, "Well, you'll start a trade war." There's one goin' on right now, folks. They're stealing our jobs. And we're gonna stand up to China.

Major Garrett: Governor Huntsman, Governor Romney just said we're in the middle of a war that's-- we're not even declared or we're not even aware of. And Governor Perry said China will end up on the ash heap of history. You've been in China. You were the ambassador for our nation there under President Obama. What's your reaction?

Jon Huntsman: Well, the re-- reality's a little different as it usually is when you're on the ground. And I've tried to figure this out for 30 years of my career. First of all, I don't think, Mitt, you can take-- China to the W.T.O. on currency-related issues. Second, I-- I don't know that this country needs a trade war with China. Who does it hurt? Our small businesses in South Carolina, our exporters-- our agriculture producers.

We don't need that at a time when China is about to embark on a generational position. So what should we be doing? We should be reaching out to our allies and constituencies within China. They're called the young people. They're called the internet generation. There are 500 million internet users in China.

Huntsman elaborated on these views in a subsequent interview: 

HUNT: Let’s go to China, where you were the former ambassador. You and Governor Romney had at it a little bit in that debate last Saturday where you - you at one point said that you really can’t take currency to WTO. I think you really can, according to our experts, but is the real problem - is your fear is that we might lose it if we were to take it to the WTO?

HUNTSMAN: Well, there’s no provision there for it. And so you take it to the WTO. They’re going to bring a countersuit and you’re wasting a whole lot of time on an issue that is getting no traction. Meanwhile, you slap a tariff that Governor Romney is proposing. They will then say, “Whoa. Your quantitative easing programs in the United States have done the same thing to the dollar. We’re going to slap a counter-tariff on you,” and you got a trade war.

I saw the same thing with the Tires 421 case about three years ago. They hit a counter-tariff on poultry and, you know, it - it really hit us both. And it was a reminder that this is where the relationship is these days. And we are - it’s unavoidable. You sit down. You negotiate your way through these issues. It’s tough. It’s a grind, but you also have to realize that it’s a multi-faceted relationship.

So Romney wants to challenge China's currency practices at the WTO, whereas Huntsman's view seems to be that there is no WTO provision that covers currency issue, so there's no case to bring.

Clearly, there are provisions that could be invoked -- GATT Article XV:4, the SCM Agreement and the non-violation provisions have all been discussed at great length as possible options -- so in that sense Huntsman is wrong.  Whether a claim would be successful is another question, of course, as the interviewer notes.

If Romney becomes the Republican nominee, and continues to press the view that a WTO complaint should be brought, I wonder if this issue will become even more prominent.

Van Harten on Investor-State Reform

In a paper posted on SSRN, law prof Gus Van Harten proposes some investor-state reforms:

In border and trade talks with the US and the European Union, Canada should seek to improve the institutional framework of investor-state arbitration. As it happens, one of the best models appears to be a Canadian one: the Agreement on Internal Trade. Based on this model and its underlying principles, Canada should target these improvements in investor-state arbitration:

• a pre-set roster from which all arbitrators would be appointed;

• an objective method to select tribunal chairs where the parties do not agree;

• rigorous checks on outside remunerative activities by arbitrators;

• a binding code of conduct for arbitrators;

• a duty to resort to reasonably-available local remedies, especially in the case of states with mature domestic court systems; and

• an independent screening process to weed out claims that are frivolous, harassing, or unlikely to succeed.

For those who support investor-state, do these proposals go too far?  For those who oppose it, do they go far enough?  Is there a middle ground to be found here?

New Appellate Body Members

The WTO press release is here:

The WTO Dispute Settlement Body (DSB) appointed on 18 November 2011 the following two new members to the seven-member Appellate Body: Messrs Ujal Singh Bhatia of India and Thomas R. Graham of the United States for four years commencing on 11 December 2011.

Messrs Bhatia and Graham will replace Ms. Lilia Bautista and Ms. Jennifer Hillman whose terms of office expire on 10 December 2011. ...

Here's one thing that jumped out at me:

Mr. Graham served as Deputy General Counsel in the Office of the U.S. Trade Representative where he was instrumental in the negotiation of the Tokyo Round Agreement on Technical Barriers to Trade and where he represented the U.S. Government in dispute settlement proceedings under the GATT.

Given the likely appeals early next year in three TBT cases that went against the U.S. -- Clove Cigarettes, Tuna II, and COOL (coming out today I hear) -- Mr. Graham's addition to the Appellate Body could be particularly interesting.  How does the TBT non-discrimination obligation in Article 2.1 compare to that of GATT Article III:4? How should we think about the "more trade-restrictive than necessary" obligation in Article 2.2, both in general and in relation to non-discrimination obligations?  What is the scope of the TBT Agreement in terms of its coverage of "technical regulations" and "standards"?  The Appellate Body may be faced with all of these questions soon, in cases that are politically sensitive for the U.S.

Investor State in the KORUS FTA

My knowledge of Korean politics is pretty limited, so I wasn't sure what to make of this:

President Lee Myung-bak told members of the ruling and opposition party leadership Tuesday that if the National Assembly asked him for renegotiations on the South Korea-U.S. Free Trade Agreement’s (KORUS FTA) investor-state dispute (ISD) provisions, he would pass the request on the U.S. and bring it into renegotiations within three months, participants reported.

The president was meeting with the ruling and opposition to urge passage of the KORUS FTA ratification. His announcement of plans to demand renegotiations with the U.S. on the ISD provisions, the most contentious issue with the agreement, marks a new stage in the saga of the KORUS FTA ratification passage. If the Democratic Party (DP) and other opposition parties accept the proposal, procedures will begin for a “consensus passage” of the ratification. But if they refuse, the ruling Grand National Party (GNP) will take this as an end to discussions and embark upon unilateral passage. Observers say the ball is effectively in the DP’s court.

Observers are also predicting a high probability that the Lee administration and GNP will force the ratification through, arguing that the DP’s initial demands were met with the president’s pledge.

The GNP has already begun efforts at using the pledge to pressure the party. Floor leader Hwang Woo-yea said, “The head of state has guaranteed renegotiations in the ISD issue.” The two strands in the GNP advocating dialogue on one hand and forced passage on the other are unanimous in arguing that the “time for a decision has come,” regardless of whether the opposition takes the president up on his proposal.

The DP plans to hold a general lawmakers’ meeting Wednesday to decide on a position regarding the proposal. DP spokesman Lee Yong-sup said, “[DP] Chairman Sohn Hak-kyu has repeatedly affirmed that the ISD provisions at least must be abandoned if the KORUS FTA is to be passed.”

“But since the president has made this proposal, he said he would communicate this within the party,” Lee added.

Lee went on to say, “Chairman Sohn made it clear that if the president proposes renegotiations on the ISD provisions but they fail to develop, he would allow the president to take responsibility and work for ISD renegotiations.”

Following the meeting Tuesday, Sohn met separately to consult with DP floor leader Kim Jin-pyo, but the two were unable to reach an agreement.

Opinions within the DP are currently divided as to whether to reject or consider the proposal. Observers are predicting conflict within the party over the method of passage, with divisions into camps in favor of negotiation or a more militant approach.

A DP official said, “What President Lee said is no different from the content of a previous bipartisan floor leader consensus that fell through because the Democratic Party rejected it.”

“Even if President Lee made a pledge, it will end in nothing if the ratification passes and they say, ‘The U.S. won’t agree to renegotiations,’” the official added.

“President Lee has had many opportunities to meet with President [Barack] Obama, and the fact that he did not discuss the matter then makes it difficult to trust him now,” the official said.

Is there any chance the U.S. would agree to renegotiations?  I suspect the answer is no, but I'm not sure what this means for the Korean political process.

More Talk about Tobacco at the TBT Committee

From a recent TBT Committee meeting:

Tobacco: Australia’s plain packaging

This issue attracted the most attention in this meeting even though it had already been discussed at length in the June meeting. Because it affects trademarks it has also been discussed in the Council for Trade Related Aspects of Intellectual Property Rights (the TRIPS Council). (See also this Australian government web page, which includes sample images of the proposed packaging.)

For

Responding to concerns raised by a number of members, Australia repeated its defence of its bill on plain packaging and health warnings for tobacco products, which it said is needed to deal with a serious health problem by making the products less attractive, removing the last possible way to advertise them, and reducing consumption. It cited evidence that these measures work, noted that the bill has been amended in response to comments and concluded that the bill conforms to WTO agreements, including TBT.

Australia pointed out that it is not a major importer of tobacco, accounting for 0.5% of trade in these products, and that many critics of the bill do not export to Australia. It insisted that it had consulted fully and answered members’ questions. Australia said no alternative measures with less of an impact on trade could have the same result.

The bill passed the Senate on 10 November and is expected to be approved finally by the lower house on 21 November, Australia said. Revisions in the Senate now allow branded packaging to be imported before repackaging in Australia to comply with the new law. Anti-counterfeiting features can be included in the packaging, and the law will now protect the right of trademark owners to prevent unauthorized use of the marks by others. All products will have to comply with the law by the end of 2012 (October 2012 if made in Australia), the delegation said.

Supporting Australia were Norway, Uruguay and New Zealand. They said that under WTO rules countries have the right to give priority to public health, and some of them cited the WHO Framework Convention on Tobacco Controamong the evidence that the measures in the bill are recognized as legitimate internationally. Some of them said they are also considering new measures.

Against

Objecting to the bill in this meeting were Ukraine, Dominican Rep, Mexico, Nigeria, Colombia, Chile, Honduras, Turkey, Indonesia, Zambia, El Salvador, Zimbabwe, Nicaragua, Jordan, and Russia (an observer). Cuba was concerned about the impact on cigars; Australia said consultations continue on packaging for products that are not cigarettes.

These countries challenged Australia’s scientific evidence. They said Australia’s measures will therefore restrict trade unnecessarily (a key issue in TBT) because the public health objective — which they support —can be met by other means. The argued that plain packaging will cause confusion among consumers because trademarks will not be available for them to distinguish between products, and will encourage smuggling.

Non-committal

In this meeting, the EU, Japan and Hong Kong China were non-committal. The EU said it is also considering plain packaging and is therefore studying the situation. It urged Australia to reply to questions asked previously and to give manufacturers enough time to adjust.

Hong Kong China said it recognizes Australia’s right but given the weight of concerns expressed, Australia should consult other members to ensure its measure does not unnecessarily restrict trade. Japan said Australia should answer the many questions asked.

WHO

The World Health Organization said the health problems caused by smoking are on the scale of an epidemic and described in detail its Framework Convention on Tobacco Control (www.who.int/fctc). Honduras, Mexico, Dominican Rep and Zimbabwe, said the WHO, which is an observer organization, should not comment on whether measures comply with WTO agreements.

Tobacco: Brazil’s additives ban

Brazil defended its proposed ban on additives and maximum levels of tar and carbon monoxide in tobacco products, arguing that this is necessary for public health concerns. The ban on additives is needed because attractive flavouring and other features encourage young smokers, while experience shows that banning flavours does not work, Brazil said.

Objecting to the measure as an unjustifiable restriction on trade were: the EU, Mexico, Nigeria, the Philippines, Indonesia, Turkey, Colombia, Honduras, Zimbabwe, Chile, Zambia and Russia (an observer).

A TPP Poll

I have had long doubts as to whether the proposed Trans Pacific Partnership (TPP) will ever be completed.  Too many countries, too many issues.  With Japan now talking about joining, I'm even more skeptical.  But hey, what do I know?  Let me ask others what they think with this poll question: 

When will the TPP negotiations be successfully completed?
	2012
	2013
	2014
	Some time after 2014
	Never
pollcode.com free polls

To be clear, the poll is not about whether you think the TPP should be completed.  Rather, I'm trying to survey the expert readers of this blog as to what will happen. 

(For those who read this blog by email or RSS reader, I think you'll have to go the web page to vote.)

ADDED:  Canada and Mexico are now talking about joining as well.  Does that further complicate the TPP negotiations?  And on a completely different point, if NAFTA gets subsumed in the TPP, would that satisfy Obama's campaign pledge to renegotiate NAFTA?

UPDATE:  With 45 votes in, here are the results:

When will the TPP negotiations be successfully completed?
Selection		Votes
2012	2%	1
2013	16%	7
2014	13%	6
Some time after 2014	40%	18
Never	29%	13
45 votes total
pollcode.com free polls

 

I don't make any claim that this poll is scientific, but nonetheless, it seems that those voting expect that it will be a while before we see a completed TPP. 

Research Conference on Post - Crisis International Financial Regulation: Fragmentation, Harmonization and Coordination

From the International Economic Law Interest Group (IEcLIG) of American Society of International Law (ASIL) and Suffolk University School of Law:

 

Post - Crisis International Financial Regulation: Fragmentation, Harmonization and Coordination

December 2, 2011

Suffolk University School of Law

8:30-9:00

Continental Breakfast

9:00-9:15

General Introduction: Elizabeth Trujillo, Suffolk University School of Law, Co-Vice Chair, IEcLIG

Welcome Remarks: Dean Camille A. Nelson, Suffolk University School of Law

9:15- 10:45

Panel 1: International Financial Regulation in a Time of Crisis: The Big Picture

Moderator:     Professor Kathleen Engel, Suffolk Law School           

1. Pierre Verdier, University of Virginia School of Law, “Why Regulate International Finance”
2. David Zaring, The Wharton School, University of Pennsylvania, “Domestic and International Reform”
3. Juscelino F. Colares, Case Western Reserve University School of Law, “Trade Imbalances and Liquidity-Induced Bubbles: Replacing the View of Trade and Finance Flows as a Morality Play with Concrete International Monetary Reform Proposals”

10:45-11:00

Coffee break

11:00-12:30

Panel 2: Institutional Responses to Financial Crisis: Regional and Domestic Perspectives

Moderator: Claire Kelly, Brooklyn Law School, Co-Chair, IEcLIG

1. Christop Henkel, Mississippi College School of Law & Wulf Kaal, University of Saint Thomas University School of Law “Taking Contingent Capital Seriously” 
2. Andromachi Georgosouli, School of Law, University of Leicester, “Post-Crisis Financial Regulation And the Pursuit of Policy Coherence”  
3. Stephen Kingah, UN University, Belgium, “How Regional and Global Development Banks Responded”

12:30-1:30

Lunch: Keynote Speech by Joel Trachtman, The Fletcher School, Tufts University

1:45-3:15

Panel 3: Institutional Responses to Financial Crisis: Global Perspectives

Moderator:  Professor Jason Yackee, University of Wisconsin School of Law (Madison), Co-Vice Chair, IEcLIG 

1. Jennifer Welch, Lewis, Rice & Fingersh, “The Financial Crisis in the European Union” 
2. Monique Egli Costi, Former New Zealand Securities Commission/Financial Markets Authority, Head of International Affairs, “The International Organization of Securities Commissions (IOSCO)”
3. Hanna Boeckmann, Fellow, Institute of International Economic Law, Georgetown University School of Law, “The Financial Sector Surveillance after the Crisis”
4. Panagiotis Delimatsis, Tilburg Law and Economics Center (TILEC), Tilburg University, “Financial Innovation and Prudential Regulation: The New Basel III Rules”

 3:15-3:30

 Closing Remarks: Sungjoon Cho, Chicago-Kent College of Law, Co-Chair, IEcLIG

 Please register at http://asil.org/activities_calendar.cfm?action=detail&rec=211.

Russia is (Just About) in the WTO

From the WTO announcement:

Russia’s accession to the WTO cleared a major hurdle when the WTO Working Party on its accession approved, ad referendum on 10 November 2011, the package spelling out Russia’s terms of entry to the organization. The Working Party will now send its accession recommendation to the 15 —17 December Ministerial Conference, where Ministers are expected to approve the documents and accept Russia as a WTO Member.

Some details:

Market access for goods — tariff and quota commitments

On average, the final legally binding tariff ceiling for the Russian Federation will be 7.8% compared with a 2011 average of 10% for all products:

• The average tariff ceiling for agriculture products will be 10.8%, lower than the current average  of 13.2%
• The ceiling average for manufactured goods will be 7.3% vs. the 9.5% average today on manufactured imports.

Russia has agreed to lower its tariffs on a wide range of products. Average duties after full implementation of tariff reductions will be:  

• 14.9% for dairy products (current applied tariff 19.8%)
• 10.0% for cereals (current applied tariff 15.1%)
• 7.1% for oilseeds, fats and oils (current applied tariff 9.0%)
• 5.2% for chemicals (current applied tariff 6.5%)
• 12.0% for automobiles (current applied tariff 15.5%)
• 6.2% for electrical machinery (current applied tariff 8.4%)
• 8.0% for wood and paper (current applied tariff 13.4%)
• US$ 223 per ton for sugar (current applied tariff US$ 243 per ton)

Tariffs will be bound at zero for cotton and information technology (ITA) products (current applied tariff on ITA products is 5.4%).

The final bound rate will be implemented on the date of accession for more than one third of national tariff lines with another quarter of the tariff cuts to be put in place three years later. The longest implementation period is 8 years for poultry, followed by 7 years for motor cars, helicopters and civil aircraft.

Tariff rate quotas (TRQs) would be applied to beef, pork, poultry and some whey products. Imports entering the market within the quota will face lower tariffs while higher duties will be applied to products imported outside the quota.

The in-quota and out of quota rates are listed below with the out of quota rates in parentheses:

• For beef 15% (and 55%)
• For pork zero (and 65%). The TRQ for pork will be replaced by a flat top rate of 25% as of 1 January 2020.
• 25% (and 80%) for some selected poultry products
• 10% (and 15%) for some whey products
• Some of these quotas are also subject to member-specific allocations

Market access for services

The Russian Federation has made specific commitments on 11 services sectors and on 116 sub-sectors.

On telecommunications, the foreign equity limitation (49%) would be eliminated four years after accession. The Russian Federation also agreed to apply the terms of the WTO’s Basic Telecommunications Agreement.

Foreign insurance companies would be allowed to establish branches nine years after Russia accedes.

Foreign banks would be allowed to establish subsidiaries. There would be no cap on foreign equity in individual banking institutions, but the overall foreign capital participation in the banking system of the Russian Federation would be limited to 50% (not including foreign capital invested in potentially privatized banks).

On transport services, the Russian Federation made commitments in maritime and road transport services, including the actual transportation of freight and passengers.

On distribution services, Russia would allow 100% foreign-owned companies to engage in wholesale, retail and franchise sectors upon accession to the WTO.

Export duties

Export duties would be bound for over 700 tariff lines, including certain products in the sectors of fish and crustaceans, mineral fuels and oils, raw hides and skins, wood, pulp and paper and base metals.

Trade in Tonight's GOP Debate

From CNBC:

HARWOOD:  ... under a Republican governor, the state of California hired a company in China to build major portions in the new San Francisco-Oakland Bay Bridge, creating thousands of jobs in China. And California did that because it was cheaper. Is that smart, purchasing by government in a global economy, or is there something wrong with that?

...

HARWOOD: Governor Romney, was it a mistake for Governor Schwarzenegger to hire the firm in China to build portions of that bridge?

ROMNEY: Well, that's a -- a long answer to that, because what China is doing is not playing fairly by the rules that exist in our -- in the WTO and the world. China is, on almost every dimension, cheating. And we've got to recognize that. It is good for America...

(APPLAUSE)

ROMNEY: It is good for America to have free trade. It is good for us to be able to send our goods and services around the word and vice versa.

HARWOOD: So a good decision to build the bridge over there?

ROMNEY: That is normally a good thing. But China is playing by different rules. One, they are stealing intellectual property. Number two, they're hacking into our computer systems, both government and corporate. And they are stealing, by virtue of that as well, from us.

And finally, they are manipulating their currency, and by doing so, holding down the price of Chinese goods, and making sure their products are artificially low-priced. It's predatory pricing, it's killing jobs in America.

If I'm president of the United States, I'm making it very clear, I love free trade. I want to open markets to free trade. But I will crack down on cheaters like China. They simply cannot continue to steal our jobs.

(APPLAUSE)

BARTIROMO: But how do you crack down? How do you crack down, Governor? Are you talking about new tariffs? How are you cracking down?

ROMNEY: I'm sorry, pardon?

BARTIROMO: How would you crack down on China?

ROMNEY: Well, number one, I would do something this president should have done a long time ago, which is to label China a currency manipulator. And then I would bring in action at the WTO level, charging them with being a currency manipulator.

Number three, where they have stolen intellectual property, where they have hacked into computers, and where their artificial pricing is causing their goods to have predatory levels of pricing, I would apply, if necessary, tariffs to make sure that they understand we are willing to play at a level playing field.

We want -- we have to have free trade. That's essential for the functioning of a strong economy. But we cannot allow one nation to continue to flaunt the rules and kill our jobs by allowing them continue as they have.

(APPLAUSE)

BARTIROMO: Speaker, in addition to that, so many companies -- multinational companies, want to try to get a foothold in China and sell to the billion-and-a-half people there. They can only do joint ventures. They're not getting a fair shake in terms of selling to that 1.5 billion person population. How would you move the needle?

GINGRICH: Well, there are two things here. And let me say in advance that I would yield in part to Governor Huntsman, because he speaks fluent Chinese, he has worked in China, and he's been the ambassador. And I'd be curious to get his reaction.

But there are two different parts here. The problem with building the bridge is simple. What -- what is it about American regulations, American taxation, American labor cost and attitudes that makes it cheaper to go to China than to go to the United States? Now, we...

(APPLAUSE)

... first of all, you've got to decide, how are we going to be more competitive and how are we going to be the lowest cost? And there's a new Boston consultant (ph) that says, by 2015, South Carolina and Alabama will be cheaper than the Chinese coastal provinces to manufacturing.

Second, in terms of dealing with China strategically, I think we're going to have to find ways to dramatically raise the pain level for the Chinese cheating, both in the hacking side, but also on the stealing and intellectual property side. And I don't think anybody today has a particularly good strategy for doing that.

BARTIROMO: Time. Thirty seconds. Jon Huntsman, you were the ambassador to China, 30 seconds to respond.

HUNTSMAN: Thirty seconds? For Heaven's sake. Let me just say that we've had a 40-year relationship with China. It's a -- it's a troublesome and problematic relationship, very, very complicated.

But the bottom line is, I mean, you can give applause lines and you can kind of pander here and there. You start a trade war if you start slapping tariffs randomly on Chinese products based upon currency manipulation. That's not a good idea.

But longer term, we're just going to have to keep doing business the way we've always done, is sit down, you find solutions to the problems, and you move forward. It isn't easy. It isn't glamorous. It's grinding it out the way we've done for 40 years. And for 40 more years, we're going to have to do it the same way.

HARWOOD: Are you saying Governor Romney's pandering?

HUNTSMAN: I'm saying that you can throw out applause lines and you can say that you're going to slap on tariffs. You know, that doesn't work...

(CROSSTALK)

HARWOOD: But you're suggesting it. He's standing right here. Would you say that he's pandering on this issue?

HUNTSMAN: Well, I've said it before. I think that -- that that policy is one of simply pandering, just throwing a tariff on for the sake of an artificially valued currency, which is, in fact, the case.

But here's what they do in response. They say, you have an artificially valued currency, too, with those quantitative easing programs. You, too, are manipulating you're -- and we're going to slap something on your products. And before long, you have a trade war.

But let me tell you longer...

(APPLAUSE)

HARWOOD: Governor Romney, are you pandering?

ROMNEY: Look, I've been in business all my life, 25 years. I consulted to businesses around the world. I've been in business where we competed around the world. I understand free trade; I like free trade. I know that America can compete with anyone in the world. Newt is right about -- about our capacity to manufacture and compete heads-on versus the Chinese.

But I've also seen predatory pricing. I've seen people price their goods at an artificial level for an extended period of time, such that they can drive other people out of business. And then when the other people are out of business, they can raise their prices. That's what China's doing, by holding down the value of their currency.

Let the currencies float. If the U.S. currency, for instance, is being inflated, let it float. Let us float. Let us have a market mechanism determine the value of our respective currencies, as opposed to the Chinese government continuing to put an advantage to their -- their producers. This -- this is no longer a time for us just to sit back and say we're going to let them steal our jobs.

Christmas Trees: Real vs. Artificial, Domestic vs. Imports

From a recent USDA Federal Register notice, here's a new regulation that attempts to promote the fresh cut Christmas tree industry:

This rule establishes an industry- funded promotion, research, and information program for fresh cut Christmas trees. The Christmas Tree Promotion, Research, and Information Order (Order), was submitted to the Department of Agriculture (Department) by the Christmas Tree Checkoff Task Force (Task Force), an industry wide group of producers and importers that support this program. Under the Order, producers and importers of fresh cut Christmas trees will pay an initial assessment of $0.15 cents per tree, which would be paid to the Christmas Tree Promotion Board (Board). This Board will be responsible for administration and operation of the Order. Producers and importers that produce or import less than 500 Christmas trees annually will be exempt from the assessment. ...

...

... The U.S. Christmas tree industry consists of over 12,000 farms producing over 17 million Christmas trees per year. The best selling Christmas trees are Scotch pine, Douglas fir, noble fir, Fraser fir, Virginia pine, balsam fir and white pine. Christmas trees are grown for retail sale in almost all U.S. states. Oregon, Michigan, Wisconsin, North Carolina and Pennsylvania together produce more than 75 percent of the trees produced each year. During 2007, 47 out of the 50 States contributed to the production of Christmas trees.

...

According to U.S. Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics, imports of Christmas trees from 2006 through 2008 averaged about 1.9 million trees. During those years, imports from Canada accounted for 99.72 percent of the total imports. Italy, Columbia and Mali comprised about .28 million trees or less than one percent. For the same period, these imports were valued at $27.427 million dollars.

Using industry funds to promote a product in this way is fairly common.  It raises a number of policy issues that I won't get into here.  What interests me, of course, is the trade aspect.  Why is there a sudden push to promote the fresh cut Christmas tree industry, including the not insignificant number of imports coming from Canada?  I think the answer is found here:

The fresh cut Christmas tree industry competes directly with the artificial Christmas tree industry. Artificial Christmas tree companies advertise heavily throughout the fall and Christmas seasons. According to data supplied by the proponents artificial tree purchases have increased from 9.8 million in 2003 to 17.4 million in 2007. 

... 

According to additional data supplied by the Task Force, the market share of fresh Christmas trees in the U.S. from 1965 to 2008 has declined by 6 percent. In comparison, the market share of artificial trees has increased 655 percent from 1965 to 2008.  

And where do artificial Christmas trees come from?  You guessed it:

The tree association argues that real trees offer fragrance, freshness and "the look and feel of the holidays," and are a recyclable, renewable resource. Artificial trees, mainly manufactured in China, are promoted as being convenient (no needles on the rug, and some come with lights already hung), reusable and better quality than the old stick-figure stereotypes. Backers note that some buildings bar live trees out of fire-safety concerns.  (emphasis added)

Yes, trade issues are all about China these days.

UPDATE:  The White House is rethinking this program:

White House spokesman Matt Lehrich told Fox News on Wednesday afternoon that the administration is putting a stop to the proposal. 

"I can tell you unequivocally that the Obama administration is not taxing Christmas trees. What's being talked about here is an industry group deciding to impose fees on itself to fund a promotional campaign, similar to how the dairy producers have created the 'Got Milk?' campaign," he said. "That said, USDA is going to delay implementation and revisit this action."

 

Tobacco Labelling Restrictions under Domestic Law

For those following the various aspects of the legality of domestic tobacco labelling restrictions under international economic law, this U.S. court decision (reported by the AP) may be of interest:

 A judge on Monday blocked a federal requirement that would have begun forcing tobacco companies next year to put graphic images including dead and diseased smokers on their cigarette packages.

U.S. District Judge Richard Leon ruled that it's likely the cigarette makers will succeed in a lawsuit to block the requirement. He stopped the requirement until the lawsuit is resolved, which could take years.

Leon found the nine graphic images approved by the Food and Drug Administration in June go beyond conveying the facts about thehealth risks of smoking or go beyond that into advocacy — a critical distinction in a case over free speech.

The packaging would have included color images of a man exhaling cigarette smoke through a tracheotomy hole in his throat; a plume of cigarette smoke enveloping an infant receiving a mother's kiss; a pair of diseased lungs next to a pair of healthy lungs; a diseased mouth afflicted with what appears to be cancerous lesions; a man breathing into an oxygen mask; a cadaver on a table with post-autopsy chest staples; a woman weeping; a premature baby in an incubator; and a man wearing a T-shirt that features a "No Smoking" symbol and the words "I Quit"

"It is abundantly clear from viewing these images that the emotional response they were crafted to induce is calculated to provoke the viewer to quit, or never to start smoking — an objective wholly apart from disseminating purely factual and uncontroversial information," Leon wrote in his 29-page opinion. He pointed out that at least some were altered photographs to evoke emotion.

The judge also pointed out the size of the labels suggests they are unconstitutional — the FDA requirement said the labels were to cover the entire top half of cigarette packs, front and back and include a number for a stop-smoking hotline. The labels were to constitute 20 percent of cigarette advertising, and marketers were to rotate use of the images. Leon said the labels would amount to a "mini-billboard" for the agency's "obvious anti-smoking agenda."

The Justice Department argued that the images, coupled with written warnings, were designed to communicate the dangers to youngsters and adults. The FDA declined to comment on the judge's ruling.

...

Congress instructed the FDA to require the labels, following the lead of the Canadian regulations that require similarly graphic images on cigarette packs. The cigarette makers say their products have had Surgeon General warnings for more than 45 years, but that they never filed a legal challenge against them until these images were approved.

The Intent of a Measure and the "Likeness" / "Less Favorable Treatment" Elements

There are many people who think that intent (or aim or motive or purpose or policy justification, or whatever you want to call it) should not be part of the National Treatment obligation.  For these people, such issues are better left to exception provisions, such as GATT Article XX.

But there are some (including me) who do want to look at intent as part of National Treatment, in one way or another.  Within this group, there seems to be a divide between those who want it in the "likeness" element and those who want it somewhere else, such as "less favorable treatment" for Article III:4 cases.  (There was some discussion of this issue in the comments on these two posts).  In this post, I'm going to try to briefly make my case for why it should be in "less favorable treatment," not "likeness."  I got into this issue a bit here.  Let me try to flesh things out a bit more now.

I'm not sure exactly how to characterize my reasons, but I think they are mainly "textual."  Based on the words themselves, it seems to me that intent flows naturally from the phrase "less favorable treatment," but does not fit logically with "likeness."  Let's look at the words.

Here are some definitions of "treatment":

The Free Dictionary: Treatment - The act, manner, or method of handling or dealing with someone or something

Cambridge Dictionaries Online: Treat - to behave toward (someone) or deal with (something) in a particular way

These may not be the best definitions, but they are online and easy to link to, and I think they are probably representative.  Granted, neither definition talks explicitly about the intent of the actor.  Nonetheless, I see in both of them the idea that the motives of the actor are relevant.  The references to the "manner" or "method" of "handling or dealing with," and "behave toward" or "deal with" in "a particular way," all suggest to me that the thinking of the actor is part of the concept of "treatment."  The "treatment" is about how the actor behaves (and also about the impact of the action, which is a separate issue).

So, it seems to me that the notion of intent flows naturally from the word "treatment."  That applies to "less favorable treatment", of course, but also more generally to the "treatment" in National Treatment.  As a result, when we talk about the intent behind a measure, it fits well into the idea of "treatment."

By contrast, likeness means:

The Free Dictionary:  Like - Possessing the characteristics of; resembling closely; similar to.

Cambridge Dictionaries Online: Like - similar to; in the same way or manner as 

Based on these definitions, it just doesn't make sense to me to say that because there is a legitimate policy justification for a measure, the products are not "like."  There is nothing in "like" that reflects the intent of the actor.  Rather, "like," in the trade context, means similarities between the products or services.

Of course, it's true that the policy justification might reflect differences in the product.  One product may be banned because of a health risk, whereas another product which does not have the health risk may not be banned.  But in that situation, it's not really the policy justification that makes the products different (and not "like").  It's the difference in health risks.

To me, the best way to address whether products are like is to focus on the competitiveness of the products.  This will take into account all relevant factors, including health risks.  For example, if one product has a health risk but the other does not, this will affect whether consumers consider them to be substitutable.

So that's my brief argument for why intent should be part of "treatment", not "likeness."  I know some people disagree, so have at it in the comments if you'd like!