International Economic Law and Policy Blog

Incorporating (Some) Unilateral Free Trade into the Trading System

That's the title of a short essay of mine in the Virginia Journal of International Law's online edition.  Here's the main proposal:

... I thus propose an approach that I call "unilateral reciprocal binding trade liberalization." The basic idea is that unilateral liberalization by one member would lead to reciprocal liberalization from other members. The initial liberalization is undertaken unilaterally, and would then be part of the country's binding free trade promises. Other countries would then be required to reciprocate with new free trade commitments of their own. In other words, WTO Members would agree to cut their tariffs and other designated trade restrictions whenever another Member makes unilateral cuts.

I will briefly sketch out the contours of this approach here, but clearly further development is required if this proposal were to be put into practice. In order to administer this system, a neutral review mechanism, along the lines of the WTO's Trade Policy Review Mechanism, would be set up to evaluate the extent of the unilateral cuts and quantify the matching cuts that would be required in response. This mechanism would review existing protection and government support, in order to determine the corresponding liberalization to be offered in response to the initial liberalization. The mechanism would be overseen by a group of outside (i.e., non-governmental) experts.

In terms of the specific responding cuts to be made, only those who benefit from the unilateral cuts would be required to make their own cuts. When a government makes its initial unilateral cuts, it could request which cuts it would like other governments to make in response. Ultimately, however, the corresponding liberalization is each government’s choice. Its decision would be made in conjunction with the neutral oversight mechanism.

"Unilateral reciprocal binding trade liberalization" is an unwieldy term, I know.  Feel free to suggest alternatives!

More generally, I don't expect governments to adopt this approach any time soon, or ever for that matter.  But the current "bargaining for concessions" approach bothers me, and I'd love to find some way to change that mindset.  I thought this might help.

Reading up on Feed-In Tariffs

There have been a number of news reports about the WTO panel report in the Ontario feed-in tariffs case, brought by Japan and the EU.  The report has been issued to the parties, and may be circulated to the public some time in the next month or so.  If you want to read up on the issues in the case, some of the EU submissions are here: http://trade.ec.europa.eu/wtodispute/show.cfm?id=530&code=1#_eu-submissions  In addition, blogger -- and frequent commenter here -- M.S. Srikar has a long paper on renewable energy programs, available here: http://wtocentre.iift.ac.in/workingpaper/Renewable%20Energy%20Programmes_WTO%20Compatibility.pdf

"Impediments to Attainment of Objectives" Complaints

GATT Article XXIII:1 sets out the following types of complaints:

If any contracting party should consider that any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of 

  (a) the failure of another contracting party to carry out its obligations under this Agreement, or

  (b) the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or

  (c) the existence of any other situation,

We all know about the "nullified or impaired" language.  But what about the "attainment of any objective of the Agreement is being impeded" language?  Is that ever going to be used in a WTO complaint? What would such a complaint look like?  The terms are pretty vague, which could give rise to some creative legal arguments, such as this one by Alexia Herwig:

 I argue that the WTO’s non-violation and situation complaints for impediments to the attainment of treaty objectives (hereafter collectively referred to as impediments-to-attainment-of-objectives complaint or IAOC) require members to account for extraterritorial impacts on standards of living created through trade in goods. 

...

As the objective of the WTO and GATT is to improve access to food, clothing, shelter and possibly other relevant items through means of trade, a situation where trade in goods durably worsens standards of living of any individual, is one in which the attainment of the objective of the GATT is impeded because it is in direct opposition to the goal stipulated in the preamble. The ICESCR [International Covenant on Economic, Social and Cultural Rights] could also be used as context to interpret the IAOC to encompass situations where trade results in individuals falling below an adequate standard of living. We could consider WTO law to be an effort at cooperation aimed at respecting, protecting and fulfilling the right to an adequate standard of living as in Article 11.1 ICESCR, so that its interpretation should be maximally compliant with the ICESCR. The Maastricht Principles also affirm that there is an obligation of states to elaborate, apply and interpret international trade agreements consistently with their human rights obligations.

More details at the link.

To be clear, I'm not saying I think the provision should be used this way; just highlighting a creative argument.  More generally, it's worth emphasizing that the provision in question is just sitting out there, waiting to be invoked some day.  What are the circumstances under which this might happen?

Border Carbon Adjustments

I don't hear much talk in the U.S. (or around the world for that matter) these days about climate change in general, much less taking any action to deal with it.  But some day the world economy might pick up, and perhaps then we will get back into issues related to how government measures in this area can be taken consistently with international trade rules.  If and when that happens, here is a helpful new publication entitled "A Guide for the Concerned: Guidance on the elaboration and implementation of border carbon adjustment." An excerpt:

BCA AND WTO LAW

There are two key aspects of WTO law that are most relevant to border carbon adjustment: non-discrimination under the General Agreement on Tariffs and Trade (GATT) and subsidy law under the Agreement on Subsidies and Countervailing Measures (SCM). 

The former dictates that imported goods must be treated no worse than “like” domestic goods (national treatment: Article III:2), and that there should be no discrimination among “like” goods on the basis of country of origin (MFN: Article I:1). GATT also contains a carve out from these requirements in Article XX (General Exceptions), which allows discrimination for a number of agreed purposes, including one that is particularly relevant for climate change protection: the conservation of exhaustible natural resources. However, Article XX also includes (in its chapeau) some general requirements for policy that must be met regardless of the validity of the exemptions, including the requirement that a measure does not represent “arbitrary or unjustifiable discrimination between countries where the same conditions prevail” or a “disguised restriction on international trade.” The chapeau tries to ensure that Article XX is available for legitimate environmental measures, but not for protection against competitiveness impacts. 

With respect to import adjustment, the implications are that BCA cannot discriminate on the basis of country of origin; it cannot have, for example, exemptions based on national policies or practice. And it cannot discriminate between foreign and domestic goods that are “like,” with carbon-intense and low-carbon goods almost certainly being considered “like.” Any permutation of BCA will fail the latter test, so the legal questions would then centre on whether the regime passed the strictures of Article XX. The details of the scheme in question would be key, and while definitive guidance is impossible, case law gives us some strong indications: 

• The regime would have to focus only on preventing leakage (i.e., an environmental goal), and not on preserving competitiveness.

• It would very likely have to be preceded by bona fide attempts at negotiating a multilateral solution.

• It would probably have to allow individual foreign producers to produce their own actual data, to challenge any benchmarks imposed.

• And it might have to allow exemptions to countries that had taken climate action comparable in effectiveness to domestic action.

Subsidy law in the WTO outright prohibits certain types of subsidies (e.g., those that are linked to export promotion) and allows challenges to other subsidies, focused on determining whether they cause harm to foreign producers. Border carbon adjustment applied to exports would be a prohibited export subsidy if the rebate were in excess of the costs borne by goods destined for domestic consumption. But there is no legal consensus (or even strong opinion one way or the other) on whether all export adjustment would constitute prohibited subsidies under SCM rules; it depends on whether the domestic scheme (whether a tax, a cap and trade or some other regulations) is considered legally an indirect tax. Such taxes, of which VAT is an example, can be legally adjusted for at the point of export, but direct taxes (such as payroll taxes) cannot, and carbon taxes fall into a legal grey zone in between.

The State of Canada-EU Trade Negotiations

Canadian journalist Paul Wells provides a link to a leaked memo written by the European Commission, and offers some commentary here.

Seal Products: Russia a Third Party and other Developments

Russia's participation as a third party in the seal products dispute between Canada and the EU will be an early opportunity to see how it approaches WTO litigation.  As I have noted in previous posts, Russia has banned imports of seal fur and its market is understood to be of much greater importance to the Canadian industry than that of the EU.  

In other developments, the parties have (apparently) agreed to public hearings--my guess is that the first  sometime from late Jan to late Feb. Canada is said to have filed its first submission, but true to its inability to kick the cloak and dagger habit has not made the submission public and perhaps will not do so until after the first hearing.   The EU submission is due around Christmas-they are supposed to make it public when filed-we'll see.

In the last few months, new scientific research has come out that strongly supports the EU position that a humane seal hunt in Canada is not a realistic possibility.

It is perhaps time to start thinking about amicus briefs.  I am definitely in and very open to working with others.

 

 

Counsel Position at the ACWL

From the ACWL:

The Advisory Centre on WTO Law (ACWL) is a public international organisation, independent of the WTO, which was established in 2001 to provide legal advice on WTO law, support in WTO dispute settlement proceedings and training in WTO law to developing countries and least developed countries.

The ACWL is seeking to fill a vacancy for one of its positions of Counsel.

Under the supervision of the Executive Director and the Deputy Directors, the Counsel provides legal opinions on WTO matters, prepares submissions and presents the positions of parties in dispute settlement proceedings before panels and the Appellate Body, delivers lectures to participants in the ACWL's training programmes and performs other functions assigned by the Executive Director.

Applicants should have an advanced university degree in law; practical experience in WTO law (ideally two to six years), a good understanding of the economic issues underlying WTO law; excellent drafting, communication and presentation skills; ability to manage, organise, plan and deliver work assignments in a timely manner and the ability to work independently and cooperate with others in a diverse international setting. Applicants should also have a commitment to international public service and an interest in the advancement of developing countries. Applicants must be fluent in English. Experience in representing parties in international dispute settlement proceedings and the ability to work in French or Spanish would be distinct advantages.

An internationally competitive salary and benefits package will be offered commensurate with the successful candidate's experience and qualifications and in accordance with the ACWL's staff regulations, which are similar to those of the WTO.

All candidates are requested to provide a detailed CV and to complete a personal history form.  The form can be downloaded at the link below. If you have problems downloading it, you may request it by contacting [email protected].

The final date for the submission of applications is 14 December 2012.

India and the World Economic Order: Call for Submissions

From the Trade, Law and Development editors:

Founded in 2009, the philosophy of Trade, Law and Development has been to generate and sustain constructive and democratic debate on emergent issues in International Economic Law and to serve as a forum for the discussion and distribution of ideas – with a specific focus on the development perspective of International Economic Law. In keeping with these ideals and to commemorate the fifth year of the Journal, the Board of Editors is pleased to announce the theme for its next Special Issue (Vol. V, No. 1, Summer 2013): India and the World Economic Order. 

More than two decades ago, India abandoned its quasi-isolationist position and began implementing radical policy changes in order to fully integrate itself into the world trading system. Through the years India has attempted to strike a balance between its welfare agenda and the compliance necessitated by the prevalent international legal order, by shifting from a quasi-isolationist position in the world economic system, to achieving a considerable amount of trade and investment activity.

Inspired by the role of India in the continuing evolution of the world economic system, the Board of Editors invites original, unpublished submissions for the Special Issue on India and the World Economic Order for publication as ‘Articles’, ‘Notes’, ‘Comments’ and/or ‘Book Reviews’. Submissions can deal with any aspect of India’s role or policies in the world economic system. Manuscripts may be submitted via email, ExpressO, or the TL&D website. For further information and submission guidelines, please visit the journal website at www.tradelawdevelopment.com

For further queries, contact the editors at: editors[at]tradelawdevelopment.com

LAST DATE FOR SUBMISSIONS: FEBRUARY 15, 2013

The Media's Take on Whether WTO DS Reports are Binding

There is some famous scholarly debate on whether WTO dispute settlement rulings are binding.  Here's a media take on it, from the CBC news (in the context of the Ontario feed-in-tariff case):

The World Trade Organization appears to have upheld a complaint against the Province of Ontario’s green energy program.

The complaint was made by the EU and Japan, which claim the province's "feed-in tariff" program for its energy grid discriminates against foreign component manufacturers by declaring a minimum percentage of renewable energy goods and services be provided by Ontario-based companies.

...

Although the WTO has yet to acknowledge any decision publicly, reports Monday suggest the affected parties have been notified of the organization's decision to side with the complainants.

...

The WTO ruling is non-binding, meaning Ontario could simply ignore it and not face any monetary punishment. But such a move would likely be met with the implementation of tariffs against any Ontario-made goods in Japan and the EU.

So, as they put it, a WTO ruling is "non-binding," but tariffs could be imposed as part of the enforcement.

I tend to think that the word "binding" does not tell us that much in this context. Rather, the key question is how effective the enforcement mechanism is.

The TLD Symposium

Let me just wrap up the TLD Symposium by saying thanks to everyone who participated, and hopefully readers enjoyed it.  We've never done one of those before, and I was glad the TLD folks proposed it, set it all up, and did much of the work. I think I learned a bit from the process, and I'd be happy to do it again if there is an appropriate law journal issue at some point!

Is Government Provision of Public Goods a Financial Contribution?

SCM Agreement Article 1.1(a)(1)(iii) identifies the following as a "financial contribution":

a government provides goods or services other than general infrastructure, ...

I was helping out as a panelist in a WTO dispute settlement simulation in Amy Porges' WTO law class, and I came across an argument I had not thought of before:  Goverment provision of "public goods" is covered by this provision.  Now, as it turns out, this was not the argument being made, and I had misunderstood.  But regardless, it got me thinking, are public goods covered by this language?  I had always assumed that "goods" meant physical, tangible goods (although electronic goods are probably covered too).  But what about a public good like, say, national defense?  What does the text, context, object and purpose, etc. tell us about whether government provision of public goods is covered by this provision?

Congrats to the Honorable Claire Kelly!

Many readers probably know Claire Kelly, a trade law prof at Brooklyn Law School.  Well, she will now be moving from judging students to judging litigants at the Court of International Trade.  Here is yesterday's White House press release:

 Today, President Obama nominated Claire R. Kelly to serve on the United States Court of International Trade.

“I am honored to put forward this highly qualified candidate for the federal bench,” President Obama said.  “Ms. Kelly will be a distinguished public servant and valuable addition to the Court of International Trade.”

Congrats to Claire!

TLD Symposium: Author's Reply on "Considering Development in the Implementation of Panel and Appellate Body Reports"

Article:  Considering Development in the Implementation of Panel and Appellate Body Reports, 4(1) TRADE L. & DEV. 150 (2012) [available here]

Reply by Sonia E. Rolland

I will first take this opportunity to sincerely thank the Editors of Trade Law & Development and Simon Lester of the International Economic Law and Policy blog for presenting this symposium and supporting
this unique opportunity for a global exchange on dispute settlement at the WTO. I also wish to thank particularly Professor Yogesh Pai for his kind introduction and Ms. Cherise M. Valles for her insightful and thought-provoking comments. Her experience as a practitioner is precious to help inform the debate.

While my paper focuses on the narrow issue of development in implementation procedures, the issues must be viewed in the broader context of the debate regarding development considerations under the DSU and, ultimately, under the WTO agreements as a whole. As such, many of the critiques of Special and Differential Treatment (SDT), and some proposed alternatives are also relevant here. In particular, the debate on whether to treat development as a marginal consideration, typically through SDT, or to reconsider the rules and their interpretation to “mainstream” the interests of many WTO developing members comes into play at the implementation stage of dispute settlement. My paper examined the value and limitations of SDT as it currently exists under Articles 21 and 22 of the DSU, and offered some alternatives.

My analysis on Article 22 suggests that the requirement to take into consideration broader economic conditions may be creating such an opportunity for taking into account development constraints much like what some commentators and practitioners have called “mainstreaming”. Article 22.3(d) is facially neutral (it does not distinguish between developing, developed or LDC members) but allows the particular circumstances of members to influence the legal determination, presumably including development constraints of developing and LDC members. I must re-emphasize here that the analysis must be taken with great caution, as there is only a very limited record of arbitrations to examine.

As Ms. Valles rightly points out, a risk with SDT is to create tiered obligations between developed and developing countries. While some members advocate precisely that, others have withdrawn from their SDT demands. The WTO agreements and the DSU, in as much as they make special allowances for
developing and LDC members, do seem to create different rights and obligations for different members. Whether this differentiation is helpful or desirable is very much up for debate amongst members.

Where both Ms. Valles and I agree is that arbitrariness and lack of consistency in the interpretation of SDT and development arguments is a real problem. Arbitrations regarding the time-period for implementation and the suspension of concessions are not immune from critique on that point.

The issue then is to propose avenues for improving the consistency and predictability of arbitrators’ decisions when they face development arguments made under SDT provisions. As I discuss in the paper and more broadly in my book Development at the WTO (Oxford University Press, 2012), the lack of precision in many SDT provisions regarding the nature of the obligation and the type of obligor has made it all too easy to brush them aside as merely hortatory. I argue that obligations can take other forms than bright line prohibitions and mandates. Recent evolutions in international environmental law and human rights, for instance, have resulted in the interpretation, adjudication and implementation of treaty provisions previously seen as simply aspirational to now comprise a legal obligation of conduct or means.

Similarly, in the WTO context, consider provisions such as Article 21.7: “If the matter is one which has been raised by a developing country Member, the DSB shall consider what further action it might take which could be appropriate to the circumstances.” It is unclear as to exactly what the DSB should do in order to meet its burden: there is no guidance on what range of actions are to be considered, nor on what circumstances must be taken into account. Is that to say that the clause is devoid of any legal meaning and can be ignored as merely hortatory? The drafters certainly chose the language of legal obligation (“shall”) and not the softer “should” used in some SDT provisions. The clause also makes it clear that the DSB must consider the issues and the possible responses. I suggest that compliance could be evidenced by some discussion, in the DSB minutes, of any development considerations
raised by members involved in the dispute and possible responses to the particular problems brought to the DSB’s attention. The DSB does that in part, for instance, when it allows developing members a longer time for submitting their written arguments in proceedings, acknowledging their capacity constraints. I used the term “best efforts” to describe the type of obligation where the treaty provision does not mandate a particular result but appears to require a process for dealing with development issues. While Ms. Valles doubts that such a framing would be helpful to reinforce the value of SDT provisions, I suggest that it could be a step forward, by no means exclusive of other canons of interpretation or even stronger enforcement processes.

Greg Rushford on the TPP

He is skeptical of the benefits:

... much of what Washington has actually put on the negotiating table is a familiar litany of old-style protectionism aimed at pleasing Obama’s base in the anti-trade wing of his Democratic Party. It mainly comes down to special carve-outs to protect U.S. sugar quotas, subsidies for U.S. dairy farmers, legally binding rules on labor and the environment to satisfy U.S. labor unions, no liberalization of widely-resented U.S. anti-dumping rules, high tariffs on athletic footwear, and complex rules of origin aimed at preventing Vietnam from expanding its exports of garments to the United States. (Strident American demands for just the latter two alone could be deal killers.) Consequently, the once-promising TPP is beginning to look like just another ordinary trade-distorting scheme, and one that is not particularly economically important.

Call for Papers

CALL FOR PAPERS

International Graduate Legal Research Conference 2013

The seventh annual

IGLRC will be held on 8-9 April 2013 at King’s College London, in the heart of London’s legal district. The conference provides early career researchers with an unparalleled opportunity to present their work and engage in academic debate. The committee welcomes abstracts considering all aspects of legal scholarship. The subject panels will be chaired by eminent scholars and practitioners in each subject-field. The topics covered by this year’s conference include (but are not limited to):

Commercial Law

Competition Law

Contract Law

Criminal Law Criminology & Criminal Justice

Environmental Law

European Union Law

Family Law

Human Rights

International Law

Legal Theory and Methodology

Public Law

Tort Law

Abstracts

Abstracts should be no longer than

300 words in length. Please note that submissions will only be accepted via our website: www.iglrc.com. Submissions sent by email will not be considered. Finally, please be aware that submissions from applicants without a valid university or institution email address will be rejected.

The closing date for receipt of abstracts is

Monday, 17th December 2012. Successful applicants will be informed by 4th February 2013. The authors of abstracts selected for presentation will be expected to submit completed papers (maximum length 6000 words) by 25th March 2013.

Further Information

Further information can also be found via our website

www.iglrc.com or by searching for IGLRC on facebook and Twitter. Please address enquiries to [email protected].

King’s Law Journal

Select papers presented at IGLRC 2013 may be considered for publication by the King’s Law Journal*.

Cross-Border Codes of Conduct

From the U.S. Federal Trade Commission:

The Federal Trade Commission announced the agenda for its November 29 forum exploring the use of enforceable industry codes of conduct to protect consumers in cross-border commerce. The forum will examine how government entities, businesses, consumer groups, and other organizations can develop and administer voluntary procedures that govern areas falling outside of traditional government oversight.  These systems are becoming increasingly important with the expansion of global commerce.

The forum will open with introductory remarks by FTC Commissioner Edith Ramirez, followed by a panel discussion on the rise of cross-border codes of conduct and a speech by former FTC Chairman William E. Kovacic on the antitrust implications of such codes.  The forum also will feature panel discussions on
two code-based systems, including one created earlier this year to give consumers in the Asia-Pacific region more consistent privacy protections when their information moves between countries with different privacy rules.  The subsequent panel will address how recent U.S. legislation on toy and food safety has incorporated elements of code-based systems, including third-party standards and independent conformity assessment.  The final panel will focus on best practices and metrics used to measure and compare code-based systems.

The FTC is presenting this forum in conjunction with the 2012 Biennial Meeting of the American Society of International Law International Economic Law Interest Group. Parties may submit relevant academic articles, papers, codes of conduct, studies, and related materials and request that they be posted on the FTC’s event web page by sending an email to the FTC’s Office of International Affairs.

The FTC forum is free and open to the public, and pre-registration is not required.  It will be held at the FTC’s satellite conference center at 601 New Jersey Ave., NW, Washington, DC.  Please arrive at the FTC 30 minutes before the event, and bring a valid government issued photo ID.  The security processing will include a metal detector and X-ray screening of all hand carried items.

New Edition of World Trade Law Textbook

A number of people have asked me about the new edition of the World Trade Law textbook I co-wrote with Bryan Mercurio and Arwel Davies.  I'm happy to announce that (1) it has been published, and (2) as per the announcement below, it can be ordered at a discounted price until the end of 2012:

 

World Trade Law

Text, Materials and Commentary

New 2^nd Edition 

 

Simon Lester, Bryan Mercurio and Arwel Davies 

 

This newly updated version of one of the leading textbooks on world trade law offers what is in a number of ways a unique perspective on this important subject. Combining the best aspects of both casebook and treatise, this comprehensive textbook provides both detailed explanations and analysis of the law to help understand the issues as well as case extracts to offer a flavour of the judicial reasoning of trade adjudicators. Moreover, the book is truly global in outlook, being equally useful for students of international trade law in the UK, Europe, the US, Asia and elsewhere in the world. This updated edition includes in-depth discussions of the most recent developments in international trade jurisprudence, setting out important precedents that help establish the boundaries between global trade rules and domestic national autonomy. The implications of these rulings will be of great interest to traders, investors, government negotiators and even critics of globalisation.

 

This newly updated version of one of the leading textbooks on world trade law offers a unique perspective on this important subject. Combining the best aspects of both casebook and treatise, this comprehensive textbook provides both detailed explanations and analysis of the law to help understand the issues as well as case extracts to offer a flavour of the judicial reasoning of trade adjudicators. Moreover, the book is truly global in outlook, being equally useful for students of international trade law in the UK, Europe, the US, Asia and elsewhere in the world. This updated edition includes in-depth discussions of the most recent developments in international trade jurisprudence, setting out important precedents that help establish the boundaries between global trade rules and domestic national autonomy. The implications of these rulings will be of great interest to traders, investors, government negotiators and even critics of globalisation.

 

To read the introduction and table of contents please click on the links below:

Introduction: http://www.hartpub.co.uk/pdf/samples/9781849462228sample.pdf

Contents: http://www.hartpub.co.uk/pdf/9781849462228.pdf

 ...

 

Oct 2012     950pp     Pbk     9781849462228     RSP: £35 / €45.50

DISCOUNT PRICE: £28 / €36

(Valid until the end of December 2012)

 

HOW TO ORDER

To order at the discount rate, please contact Hart Publishing and quote ref: ‘WTL12’ when placing your order. If you are ordering online please quote ref: ‘WTL12’ in the special instructions field to receive the 20% discount. Please note that the discount will not show up on your order confirmation but will be applied when your order is processed. If you have any queries, please contact Hart Publishing.

http://www.hartpub.co.uk/books/details.asp?isbn=9781849462228

 

Can France Tax Beer more than Wine?

From the AP:

France, the land of wine, is planning heavy taxes on beer, and that is not going down well with brewers - even in other nations.

President Francois Hollande is pushing through legislation to increase taxes on beer by 160 percent to help fund struggling social programs as France tries to contain a budget deficit hit hard by the economic crisis.

The tax would affect local brews and the 30 percent of imported beer the French drink.

...

Outside France, Belgium and Germany would be worst affected once the new legislation kicks in, said Pierre-Olivier Bergeron, head of the Brewers of Europe.

...

Still, the Brewers of Europe said in a statement that beer is `'being singled out" compared to wine.

Bergeron said he believes that's because of the French government's reluctance to raise the tax on the country's favorite alcoholic beverage.

What does everyone think?  Is this discrimination?  Are the products directly competitive or substitutable?

TLD Symposium: Cherise Valles Comment on "Considering Development in the Implementation of Panel and Appellate Body Reports"

Article:  Considering Development in the Implementation of Panel and Appellate Body Reports, 4(1) TRADE L. & DEV. 150 (2012) [available here]

Article Author: Sonia E. Rolland

Comment by Cherise M. Valles

The issue of “special and differential treatment” for developing countries has long been one of the most difficult systemic issues faced in the WTO.  The “S & D” pro visions were extensively negotiated – and heavily qualified – during the Uruguay Round, to the continuing frustration of many developing countries that have sought to give substantive meaning to such text.  

Professor Sonia Rolland’s article focuses on one aspect of this debate, i.e., the application of S & D provisions in the context of implementation of panel and Appellate Body rulings. She examines the extent to which developmental considerations have or could play a role in specific aspects of Articles 21 and 22 of the WTO Dispute Settlement Understanding (DSU). Her article discusses in particular three key stages of the implementation process: (i) the determination of the “reasonable period of time” (RPT) for compliance under DSU Article 21.3(c); (ii) the compliance panel process under DSU Article 21.5; and (iii) retaliation proceedings under DSU Article 22. She supplements her analysis by examining both the Uruguay Round negotiating history and the current proposals related to Articles 21 and 22 under the DSU Review process. 

Professor Rolland’s article is carefully-reasoned and thoughtful. While I agree with her analysis under Article 21.3, I find her conclusions on Article 21.5 and Article 22.6 to be too far-reaching.

Professor Rolland provides a useful review of which countries can rely on Article 21.2 in Article 21.3(c) proceedings, in particular whether a developed country can request more time for implementation where the beneficiaries of its WTO-inconsistent measures are developing countries. To date, arbitrators have found that the requesting parties had not provided sufficient evidence to substantiate this request. In my view, it would be difficult to justify taking into account the interests of non-party developing countries especially where the complainants are themselves developing countries.

Professor Rolland notes that the RPT for implementation has come to mean the shortest period of time in which implementation can be achieved. In the light of this standard, she notes that the fact that the opposing party is a developing country that has invoked Article 21.2 will be of “no import”. However, the shortest period of time standard is based on the Member using its ordinary procedures to implement. It must be read in the light of the other factors arbitrators have taken into consideration as “particular circumstances” in determining the RPT. Arbitrators have noted that recourse to “extraordinary” means of compliance is not required. In a case involving a developing country seeking implementation by a developed country, the developing country could submit that the developed country should employ “extraordinary” means to implement.

Professor Rolland is correct to point out the difficulties that arise when both the complaining and implementing parties are developing countries. In the cases to date, the arbitrators have held that is such cases the interests of the parties offset each other and it would be necessary for a party to succeed “in demonstrating that it was more affected by the problems related to its developing country status than the other party”. In practical terms, it may be difficult to adduce such evidence and therefore, it is likely that Article 21.2 will continue not to be applied in cases where both the complainant and respondent are developing countries.

In addition, I would note that in the few cases where Article 21.2 has been applied, it is hard to escape the conclusion that it has introduced unpredictability into the process. In Indonesia – Autos (Article 21.3(c)), the Arbitrator found that:

Indonesia is not only a developing country; it is a developing country that is currently in a dire economic and financial situation. Indonesia itself states that its economy is "near collapse". In these very particular circumstances, I consider it appropriate to give full weight to matters affecting the interests of Indonesia as a developing country pursuant to the provisions of Article 21.2 of the DSU. I, therefore, conclude that an additional period of six months over and above the six-month period required for the completion of Indonesia's domestic rule-making process constitutes a reasonable period of time for implementation of the recommendations and rulings of the DSB in this case.

No reasoning is given as to why a developing country in a “dire economic and financial situation” and “near collapse” should be given an additional six months, as opposed to any other time period – this number seems to have been chosen rather arbitrarily.

I cannot share Professor Rolland’s view that “[w]hile Article 21.5 itself does not mention development or SDT for developing members, it may be argued that other SDT provisions of Article 21 could, or possibly must, infuse Article 21.5 proceedings” and that therefore Article 21.2 “could apply to Article 21.5 proceedings”. One cannot read into the DSU a cross-reference between DSU Article 21.2 and 21.5 where none exists. Moreover, the function of an Article 21.5 panel is to determine whether a measure taken to comply is in compliance with a Member’s obligations. To suggest that SDT provisions should apply to Article 21.5 proceedings is tantamount to saying that they should apply to panel and Appellate Body proceedings as well, which would have the unfortunate effect of creating a two-tier system of obligations between developing and developed countries.    

Professor Rolland suggests that in Article 22.6 arbitrations, “arbitrators have been relatively open to developmental concerns in their interpretation of the terms of Article 22.3(d), despite the lack of an express SDT mandate”. In my view, it is not that arbitrators have been open to developmental concerns as such, but that Article 22.3(d) mandates arbitrators to take into consideration a number of trade and economic considerations, which would of course take into account the development status of a country in considering the sectors, agreements and level of retaliation. It is not clear that the decisions of the arbitrators mean that developmental considerations have been “mainstreamed” into DSU Article 22.3.

I do not agree that recasting the S & D provisions as “best efforts obligations”, as asserted in this paper, would render them much more meaningful compared to the current hortatory language.

The section on the drafting history of DSU Article 21 and 22 in comparison with the DSU Review proposals contains some interesting insights. One noteworthy point is that many of the proposals tabled in DSU Review are similar to proposals tabled (but not implemented) in the Uruguay Round, including that of collective retaliation.

Professor Rolland’s useful paper highlights the exceptional difficulties that have been faced by developing countries in seeking to operationalize the weak, hortatory language that emerged from the Uruguay Round negotiations.

TLD Symposium: Introduction to "Considering Development in the Implementation of Panel and Appellate Body Reports"

Article:  Considering Development in the Implementation of Panel and Appellate Body Reports, 4(1) TRADE L. & DEV. 150 (2012) [available here]

Article Author: Sonia E. Rolland

Reviewer: Cherise M. Valles

Introduction to Article by (Moderator): Yogesh A. Pai

The dialectics of development policy debate at the WTO has thus far largely focused on special and differential treatment (SDT). The WTO dispute settlement mechanism as an ‘institution’ has come a long way to accommodate the needs and aspirations of developing countries by adhering to the norms and standards of SDT enshrined in the DSU. Nevertheless, the way and extent to which SDT has been practiced within WTO dispute settlement may reveal certain gaps. Prof. Rolland’s article is very timely in as much as it focuses on an important area of dispute settlement, i.e. implementation and compliance (Articles 21 and 22). By way of brief introduction, Prof. Sonia Rolland is an Associate Professor at Northeastern University School of Law. Her scholarly work has focused on the framework of development in international trade law, and she recently published a book titled Development at the WTO (OUP 2012). The reviewer for this leg of the symposium is Ms. Cherise M. Valles, a Deputy Director and attorney at the Advisory Centre on WTO Law. Ms. Valles, with her vast experience in representing and advising developing- and least developed-countries at the WTO, provides an excellent and informed perspective in her comment. In fact, my task as a moderator has been made much easier since Ms. Valles’ elaborate comment also includes a brief narrative of the article. I thank her for accepting this invitation at short notice.

As the Faculty Advisor of TL&D, let me also take this opportunity to thank Simon Lester for collaborating with us and hosting this symposium. As I look back, I think we’ve had a productive exchange over the past few weeks, informed by a variety of perspectives. I hope the readers have found the symposium as useful and enjoyable as the discussants.

Coming to the focus of our present discussion, Prof. Rolland’s article draws a very interesting parallel between SDT obligations in Articles 21 and 22 of the DSU. Broadly, her claim is that despite a clear mandate of SDT in Article 21.2, the current understanding of reasonable period of time for implementation being the “shortest possible period of time in which implementation can be achieved within the legal and administrative system of the implementing country” leaves much to be desired by way of considering development in implementation. Prof. Rolland draws an interesting contrast that although Article 22 does not include a clear SDT provision, the arbitrators in 22.6 proceedings have in some instances taken into account development considerations in determining appropriate sectors and agreements for retaliation by developing countries. So, does it provide some useful basis to mainstream development considerations when clear SDT provisions are not available or applicable? Prof. Rolland answer is a cautious “yes”, suggesting further that one can draw valuable lessons for mainstreaming development-oriented reading of WTO law provisions without recourse to any formal amendment or renegotiation.

I would not pre-empt Ms. Valles by discussing her comment here, but would only like to note the main disagreement. While she agrees with Prof. Rolland’s characterization of the unpredictable and arbitrary application of Article 21.2 with respect to Article 21.3 (c) arbitration proceedings, she does not agree with the conclusions drawn by Prof. Rolland in relation to 21.5 and 22.6 proceedings.

Readers should note that Prof. Rolland’s article captures different aspects of the provision and use of SDT in the implementation and compliance stages. Therefore, an analysis of how SDT has been invoked in disputes involving developed-developed and developing-developing countries (as complainants and respondents) is also thoroughly examined on an issue by issue basis, which need not be elaborated at this juncture. Rather unsurprisingly, Prof. Rolland does not place very high hopes on the Doha outcome on proposals involving implementation and compliance remedies. However, Prof. Rolland does suggest that there are equally effective alternatives available to WTO member countries to mainstream development even without resorting to any formal textual reform. This includes the emergence of new standards of interpretation based on existing practice and positions adopted by the arbitrators, panels and the AB to give effect to the broader textual language. She concludes that lack of stare decisis in dispute settlement can be both advantageous and disadvantageous in achieving consistency involving different decisions that allow mainstreaming development in Articles 21 and 22. In sum, let me only note that as the negotiation machinery at the WTO has slowed down, this perspective tries to shift the focus of change to the judicial process. It is a fact that the DSM has been a “crown jewel” of the WTO, which may explain the immediate faith in the abilities of the WTO adjudicatory process. I would only caution, however, that this faith should not lead to a reorganization of spaces at the WTO which leads to a disproportionate burden on one particular organ as an agent of change and evolution, for it is in these circumstances that we see the strongest criticisms of judicial processes in any systems of governance.

Jurisprudence as a Positive Externality of Trade Disputes

The WTO announced today that the European Union and 10 Latin American countries signed an agreement settling the longest-running series of disputes in the history of the multilateral trading system.  DSB chairman Shahid Bashir noted:

One positive feature of the disputes is that they have provided a “rich source of jurisprudence” on WTO law ...

[Note -- in the original post, I attributed the quote to Pascal Lamy, but in the comments Dylan Geraets pointed out the error.]

Re-Conceptualizing International Economic Law: Bridging the Public/Private Divide

Hope to see some of you blog readers at the following ASIL event:

Re-Conceptualizing International Economic Law: Bridging the Public/Private Divide November 29, 2012 ~ December 01, 2012 George Washington University School of Law Stockton Hall, Room 305, 720 20th Street, NW Washington DC 20431 USA

The ASIL International Economic Law Interest Group in co-sponsorship in partnership with the George Washington University School of Law and the Federal Trade Commission will hold its next biennial conference to address an array of issues in international economic law, including the role and development of the multilateral trading system, the World Trade Organization, foreign investment, bilateral and regional trade and investment agreements, international development law, and international financial regulation. The research papers generated by this conference will be published in prestigious venues and are widely cited in international economic law scholarship.---- ACCOMODATIONS The following hotels are offering special discounts on a first-come, first-serve basis using the provided group ID codes. You may only receive the discount group rates by making a phone reservation. Online reservations will not accept the group ID code.  One Washington Circle Hotel,  One Washington Circle, NW, Washington, DC 20037,T: 202-872-1680    www.TheCircleHotel.com  (GROUP ID CODE #903960) George Washington University Inn, 824 New Hampshire Street, NW, Washington, DC  20037, T: 202-337-6620 www.GWUInn.com  (GROUP ID CODE #386701) FULL SCHEDULE Please click here. REGISTRATION ASIL Members = $75.00 Non-ASIL Members = $100.00 All Students = Free with Special Discount Code "APCOMP" George Washington University Staff/Faculty = Free with Special Discount Code "APCOMP" For difficulties with registration or assistance with becoming an ASIL member, please contact the Society’s Member Service Center at [email protected] or +1-202-939-6001.

Who Will Create the First International Economic Law MOOC?

All of you academics out there are probably familiar with MOOCs by now -- Massive Open Online Courses.  Both the NY Times and Washington Post had articles on them this past week-end, if you need some background.

I'm excited about the concept, and I'm in the process of writing about them for Cato.  I'll post about it here when the paper is ready.

In the meantime, though, I've been wondering which enterprising IEL scholar will create the first MOOC in our field.  Here's an incentive for you, from the Times article:

Dr. Stavens sees a day when MOOCs will disrupt how faculty are attracted, trained and paid, with the most popular “compensated like a TV actor or a movie actor.” He adds that “students will want to learn from whoever is the best teacher.”

Who will be the star teachers of IEL?  No doubt there will be a first mover advantage.  The time to start is now!

TLD Symposium: Author's Reply on "Epistemic Contests and Legitimacy of the World Trade Organization: The Brazil – USA Cotton Dispute and Incremental Balancing of Global Interests"

Article: Epistemic Contests and Legitimacy of the World Trade Organization: The Brazil – USA Cotton Dispute and Incremental Balancing of Global Interests, 4(1) Trade, L. & Dev. 200 (2012) [available here]

Reply by Arthur Daemmrich

“I say that the just is nothing other than the advantage of the stronger.” Thrasymachus (Plato, The Republic)

I begin with thanks to the introducer (Simon Lester) and reviewer (Joost Pauwelyn) and a warning to those looking for an online dispute about WTO disputes that this reply largely builds on the commentary rather than taking issue with it.

My article drew upon a specific case study of the Brazil – USA cotton dispute to consider the broader emergent phenomenon of epistemic disputes in the international arena. Broadly, the WTO is a fascinating subject for analysis as the world’s premier body grappling with a question fundamental to our current era of globalization:  In the absence of global sovereign, how shall we govern? As the WTO dispute settlement body grows in significance, it confronts challenges on a number of fronts, but especially when adjudicating disputes for which claimants develop alternative models, test methods, and even espouse fundamentally divergent theories of risk (or precaution) or economic behavior. I want to highlight 3 points for possible further discussion from other forum participants.

First: Power and Justice. Do we wish for a future of organized and sequential globalization, or for its unfolding in an ad hoc manner? In dialogue with Socrates, Thrasymachus suggests that each ruling group sets its own laws; what is just can vary by society but is determined domestically by the powerful. While legal systems worldwide have moved far beyond Thrasymachus, in the international system, might often means right. Developing countries seeking access to the economic prosperity promised by international trade long argued that joining the WTO meant they had to follow rules that the United States and European countries could flaunt. Yet, as I show in my article, WTO dispute settlement has achieved historically significant parity in recent years. Some developing countries (e.g., Brazil) have invested in the legal and technical expertise it takes to pursue a dispute to resolution. In so doing – and by pushing the WTO to expand the common law governing international trade that is built by dispute rulings – they have advanced international justice. When the reviewer notes the alternative to a technical turn in disputes is not “democratic nirvana” but rather “gunboat diplomacy,” we are in agreement that such an outcome would be a reversal.

So disputes and the dispute settlement process are good for the cause of international justice (for trade), but they also take significant resources to sustain. For example, Brazil could build the legal, technical, and even econometric expertise for the cotton dispute and others, but poorer West African cotton growing countries cannot. As the technical turn in WTO disputes intensifies, where will countries with more modest resources get the human experts and scientific or econometric expertise necessary to sustain the move away from justice by the strong?

Second: Legitimacy. I agree with the reviewer that a “bi-directional interaction of politics and law,” as he puts it, is critical to sustaining and visibly demonstrating the WTO’s legitimacy in the absence of another democratic foundation (e.g., public voting or other forms of representation and decision making). In my article, I sought to draw on the political science literature concerning legitimacy and involvement of organized interests. While some process of ‘voting’ by official parties or the general public would likely undermine the goals, purpose, and even legitimacy of the dispute process, if it remains closed to organized interests, the dispute process runs the risk of failing to demonstrate flexibility. The DSB needs to build legitimacy over time. Open it to all comers and chaos would ensue. Close disputes to any but the country parties and a small number of certified experts and legitimacy is weakened. There is no easy answer to this conundrum, but accepting third-party amicus briefs and similar approaches are a good first step. These will help reduce the power asymmetries that can arise in relation to econometric and scientific studies that both the reviewer and I have identified. Answering my seemingly rhetorical question concerning poorer countries’ access to expertise, the WTO could take a next step by actively inviting studies from scientific associations and others prepared to carry out independent research. In this manner, power asymmetries in the mobilization of scientific or econometric expertise would be reduced, though not eliminated.

Third: Science, Modeling, and Adjudicator training. Courts worldwide struggle with the use of scientific, technical, and economic data and methods, not to mention the human experts called to testify. A significant body of scholarship has developed over the past 20 years regarding science in court, with contributions from academics in law, Science and Technology Studies (STS), and other fields. Three findings relevant to this forum stand out from this work: (1) the specific case in front of the court (or the WTO dispute panel) may not fit with the present orientation of academic science; (2) judges often call for a more definitive answer than scientists are prepared or even qualified to give; (3) legal disputes can open to scrutiny assumptions otherwise unstated due to their commonality within a scientific field or sub discipline. Using the Brazil – USA cotton dispute as an example, there were few academic agricultural economists working on issues relevant to the case and certainly nobody had an off-the-shelf answer concerning either the general market distortions caused by the particular mix of subsidies given by the U.S. government in a particular set of years (especially since the subsidies themselves were contingent on the cotton market’s performance in those years). Science (and by extension, economics) is not an input-output machine ready to provide unambiguous answers. Rather, it embodies theories and practices undergoing constant change, at a pace that can be evolutionary, or sometimes even revolutionary. As the STS scholar Sheila Jasanoff noted 20 years ago in a Jurimetrics article (v. 32, p. 345+): “What is at issue in most legal proceedings is precisely the social dimension of science: the matrix of social practices, conventions, institutions, and interests that sustains scientific progress and gives legitimacy to particular scientific facts.” Along these lines, the reviewer correctly cautions that nihilism is no solution; confronted with contradictory studies, adjudicators should not assume they cancel one another out. He calls for additional training in econometric modeling, which I would endorse with the further recommendation of training in the sociology of science and the sociology of knowledge. Perhaps a short course in econometrics, modeling, and STS for dispute panelists would be a pragmatic next step. May I suggest a week-long summer academy in Switzerland?

I thank Joost Pauwelyn for his insightful comments and the editors of Trade, Law & Development for tackling issues at the forefront of the WTO’s role in global governance as well as academic thinking about expertise and the law.

Ukraine's GATT Article XXVIII Tariff Renegotiation

Inside U.S. Trade reports here on concerns related to Ukraine's invocation of GATT Article XXVIII to renegotiate many of its tariffs.  The consensus on this issue seems to be that Ukraine is not violating GATT rules (not yet, anyway), and thus a complaint won't help.

But what about a non-violation complaint?  Are any benefits being nullified or impaired?  Any thoughts from readers?

Jim Bacchus: We Need a WTO Exemption for Green Energy

This is former AB Member Jim Bacchus, writing in the International Business Times:

Ordinarily, for all the reasons [Adam] Smith gave us, subsidies should be avoided, and the matter of sorting out our sources of energy should be left to free trade and to free competition in the marketplace. But far more is at stake here than on other market issues where price alone is the principal consideration. And, given the price gap between renewable and fossil fuels, if we rely on market forces alone, the inevitable age of renewables may be indefinitely postponed to the detriment of mankind.

Far better than governmental subsidies would be some form of a carbon tax that would provide significant economic incentives for energy consumers to switch away from fossil fuels and toward renewable sources of energy. Unfortunately, in almost every part of the world, politicians lack the political will to exercise the visionary leadership needed to impose a carbon tax.

So, in the near term, the only practical alternative for producing renewable energy that can hope to compete with carbon on price seems to be to have government subsidize it. Grants, tax incentives, and other governmental subsidies can begin to help us diminish our dependency on carbon and thus combat climate change by narrowing the considerable price differential between renewable and fossil fuels. But such subsidies cannot succeed so long as WTO rules make them illegal under international law.

In the absence of any real prospect for carbon taxes, it makes sense to support subsidies that ease the necessary transition to low-carbon economies. Thus it makes sense to change WTO rules to permit such green subsidies. An exemption for green subsidies that further the fight against climate change should be created by the members of the WTO.

...

Forcing companies to buy equipment from local manufacturers as a condition of the price breaks they get through “feed-in tariffs” is certainly bad policy. As Adam Smith would doubtless tell us, too, such domestic content requirements are out-and-out protectionism.

...

But we also need some new rules.

What of the many other complicated questions about the interrelationship between trade and green energy? Not all of them can be answered fully in legal proceedings in WTO dispute settlement, where WTO judges are rightly confined by the boundaries of the existing WTO rules. And not all of the existing rules necessarily draw all of the right lines in all of the right ways.

If not domestic content requirements, then what forms of trade discrimination, if any, should be allowed by the WTO for the sake of fighting climate change? Is it possible to support renewable energy without distorting trade? Can we minimize trade distortions while maximizing climate returns? Can we craft new WTO rules in ways that will encourage climate-friendly subsidies and other climate-friendly governmental measures without permitting them to become pretexts for protectionism?

All of this should be negotiated by the members of the WTO. And yet few current governmental decision-makers are even asking, much less answering, these critical questions. Changing the rules to create an exemption for green energy is not yet on the WTO negotiating agenda. It should be.

Here's what I said on the issue a while back in a law journal article: 

As a final point, for those who are concerned about international restrictions on the use of subsidies, and worry that the art XX exception will not provide sufficient flexibility, it should be recalled that subsidies regulation still excludes one category of subsidies almost entirely. Regardless of how producer subsidies are treated, subsidies to consumers are likely to be consistent with the rules (unless they result in de facto discrimination against foreign producers, or have discriminatory conditions attached). To illustrate this, compare the SCM Agreement’s treatment of a subsidy to the domestic producers of electric cars with the treatment of a subsidy to consumers who purchase electric cars of any origin, referred to above. The latter is much more likely to be found consistent. Thus, if it turns out that an enhanced focus under WTO rules on rooting out protectionist subsidies proves too intrusive into domestic affairs, even with the art XX exceptions being applied, a switch to subsidizing consumption might provide an effective way to achieve non-protectionist goals without violating WTO rules.

Does that help the matter?  Are subsidies to producers the main problem, and would subsidies to consumers be an effective and WTO-consistent way of promoting green energy?

UN Arms Trade Treaty

Has anyone been following the UN negotiations over a new Arms Trade Treaty? 

Colleagues of mine from the Graduate Institute in Geneva actually attended the July 2-27, 2012 negotiations in New York and wrote this interesting report about the conference’s failure (apparently: US and Russia to blame) as well as the current draft text.

I was struck by two things:

(1) The absence of any reference at all to trade agreements, the WTO or principles of trade law.

Of course, we have the exception in GATT Art. XXI for “any action which [a WTO member] considers necessary for the protection of its essential security interests … relating to the traffic in arms, ammunition and implements of war”.  But does that carve-out absolutely all “arms trade” from WTO disciplines? Does it exempt all trade restrictions, on the import or export side, that WTO members may impose on purely private, commercial arms trade, that is cross-border sales between or destined for private operators (not e.g. armed forces or law enforcement authorities where the “essential security interests” are clearer)?  Plus, if it does, could an Arms Trade Treaty, which seems to both liberalize some arms trade (e.g. for legitimate self-defence and peacekeeping operations) and (mainly) impose trade restrictions on other arms trade (e.g. to facilitate genocide or crimes against humanity), not benefit somewhat from trade law insights? (Art. 4.3 does refer to non-discrimination in export authorization assessments and so does Art. 5 for the general implementation of the treaty). 

For the Kimberley Scheme on Conflict Diamonds, the WTO enacted a waiver for trade restrictions on non-participants (of which I have always been skeptical).  Would we need a WTO waiver also for this Arms Trade Treaty?

(2) This is yet another failure to conclude a traditional, legally binding treaty exclusively between states in the context of a traditional international organization, the UN (the meeting is reconvened for March 2013, so an agreement might still be reached but it would require consensus of all participants).  There is already the 1996 Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (41 participants), but that is an example of “informal international lawmaking”.  Is the collapse of the UN Arms Trade Treaty negotiations further proof that the traditional way of making international law (formal treaty – in formal IO – exclusively between formal state representatives) is failing and outdated?