International Economic Law and Policy Blog

First Movers in Trade Agreements

A reader emails with this question:

Are there any studies on the advantage of being a “first mover” in trade negotiations, and whether that makes a difference?  An example is the EU and GIs – does it benefit the EU to get out ahead and negotiate a series of free trade agreements that give broad protections to GIs (broader than what the TRIPS Agreement currently requires) before negotiating the issue with the United States?   

There is a procedural and a substantive element of the question:  procedurally, it is helpful for a government agency responsible for negotiating trade agreements to be able to establish the structure of a set of trade commitments, because when that agency presents the text for internal approval, the agency can always provide comfort that the language is the “standard” text that has been blessed in previous FTAs.  That comes in part from getting out in front on an issue and establishing the “standard” text.

But substantively, does it really matter?  If the US strongly objects to the EU position on GIs in a US-EU FTA negotiation, why would it matter if the EU had negotiated 10 FTAs previously that reflect the EU position?  

Any thoughts from readers on this?  I can see the point that establishing a particular provision as standard would help promote it, to some extent, in future agreements.  But at the same time, it's hard to imagine that doing so would convince a major trading country to change its policy.

Retaliation Against Antigua's Retaliation

So let's say Antigua goes ahead with retaliating against the U.S. in the Gambling case.  How might the U.S. respond?  Here's one suggestion:

A lawyer for a group on intellectual property rights warned on Monday that the tiny island nation of Antigua could face retaliation for ignoring U.S. copyrights.

"If Antigua moves forward, we will work to ensure that its eligibility to participate in any U.S. trade assistance or benefit is withdrawn," Michael Schlesinger, a lawyer for the International Intellectual Property Alliance, said in a phone interview.

I take that to mean the U.S. might, for example, withdraw tariff preferences currently given to Antigua under the Caribbean Basin Initiative.

But can they do that?  The tariff preferences themselves would normally violate GATT Article I:1, but they are permitted under a WTO waiver. (The waiver document is G/C/W/611 -- I'm not sure how to link to specific WTO documents under the new WTO docs online system.  If anyone knows how, feel free to mention it!).  In its Preamble, the waiver refers to the Enabling Clause, in the following way:

Bearing in mind also the 1979 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries ...;

The Enabling Clause was interpreted in the EC - Tariff Preferences case, and puts some limits on differential treatment of developing countries pursuant to tariff preference programs.  Does the reference here to the Enabling Clause mean that in implementing the Caribbean Basin Initiative pursuant to the waiver, the U.S. can't discriminate against particular countries?  More specifically, is the U.S. allowed to remove a country from the program due to IP violations?

Aircraft Subsidies and the Return of Japan-Bashing

As the U.S. and EU continue to battle over whether billions of dollars in aircraft subsidies violate WTO rules, the NY Times has a strange article that -- perhaps time travelling back to the 1980s -- seems to think it has identified the real culprit: Japan!  OK, that may be overstating the point of the article, but nevertheless, something seems a little off in the piece.

The basic claim seems to be that the Japanese government has conspired with Boeing, so that Boeing uses Japanese suppliers for parts such as batteries (which receive government subsidies) and, in compensation for Boeing favoring Japan, Japanese airlines buy mostly Boeing planes.

This may all be true.  Governments certainly do a lot of subsidizing and other intervention in the aircraft industry.  In addition to the U.S. and EU, Canada and Brazil have both been found guilty of this, and many people expect China to follow the same route.  It would not come as a shock if Japan were doing similar things in the aircraft parts business.

Nonetheless, some of the allegations against Japan seem a bit off.  According to the article, Richard L. Aboulafia, an aerospace and aviation analyst for the Teal Group, a consulting firm in Washington, says that Japan is "unique": “This is the way things used to be in the days before free trade,” he said. “Japan is the last unreconstructed believer in industrial policy writ large.”

I don't know.  Sounds a little exaggerated to me, given what other governments are doing.  Japan may be playing the same game as everyone else, but it's really nothing out of the ordinary in this industry.

Then there's the legal analysis.  The article says:

No one has claimed that GS Yuasa [the Japanese battery-maker] was chosen for the 787 on anything but merit. But Boeing has long been dogged by suspicions that in return for its awarding major contracts to Japanese companies, which also receive subsidies from Japan’s government, the country’s airlines buy Boeing aircraft almost exclusively.

Such arrangements are banned by the World Trade Organization Agreement on Trade in Civil Aircraft, signed by the United States and Japan, which requires that aircraft purchases be made solely on the basis of “commercial and technological” factors and that procurement contracts should be entered into only on the basis of “competitive price, quality and delivery.” The agreement is intended to ensure that purchase decisions are based “strictly on technical and commercial factors,” according to the United States trade representative.

I had to look up the Agreement on Trade in Civil Aircraft. It's not something that comes up very often.  Here are the relevant provisions:

Article 4

Government-Directed Procurement, Mandatory Sub-Contracts and Inducements

4.1 Purchasers of civil aircraft should be free to select suppliers on the basis of commercial and technological factors.

...

4.3 Signatories agree that the purchase of products covered by this Agreement should be made only on a competitive price, quality and delivery basis.  ...

I'm having flash-backs to the long ago Film case.  What exactly is the role of the Japanese government in all of this?  Is there some evidence of the alleged governmental actions?  Are purchasers of civil aircraft really "not free" to select suppliers?  Is the purchase of products not made on a competitive basis?  It will be hard to make a WTO claim without some good evidence on these issues.

Also, the role of this Agreement may be somewhat limited.  Here is Article 8.8:

Signatories agree that, with respect to any dispute related to a matter covered by this Agreement, but not covered by other instruments multilaterally negotiated under the auspices of the GATT, the provisions of Articles XXII and XXIII of the General Agreement and the provisions of the Understanding related to Notification, Consultation, Dispute Settlement and Surveillance shall be applied,  mutatis mutandis, by the Signatories and the Committee for the purposes of seeking settlement of such dispute.  These procedures shall also be applied for the settlement of any dispute related to a matter covered by this Agreement and by another instrument multilaterally negotiated under the auspices of the GATT, should the parties to the dispute so agree.

I read this to say, you can bring a dispute under this Agreement if the matter is not covered by any other WTO rules; or if it is covered by other rules, you can bring a dispute only if the parties agree.  That sounds pretty limiting in terms of the enforceability of the Agreement.

All in all, it is possible that the Japanese government has taken actions that violate WTO rules.  But I feel like there's a lot more that I need to know about the situation first.

IEL MOOCs - Update

A little while back, I asked who would do the first international economic law MOOC (massive open online course).  If you interpret IEL broadly enough, we have a winner: The Law of the European Union, offered through Coursera, by a Leiden University professor.

But there are still many opportunities for courses: WTO law, international investment law, trade remedies, international IP law ... 

Antigua's Proposed Retaliation

In the comments on an older post, Brett Williams points to some news about Antigua's proposed retaliation in the Gambling case: http://torrentfreak.com/antigua-government-set-to-launch-pirate-website-to-punish-united-states-130124/  He then asks:

Can anyone provide any information about the outcome of the GATS Article XXI renegotiation initiated by the US. I could not find anything on the WTO website or the USTR website.

Isn't it the case that if Antigua refused to participate in the negotiation, then the US could proceed with deleting this commitment from its schedule and antigua would not have any right to retaliate under Article XXI?

Once the schedule is changed and the obligation ceased to exist then the US would no longer be in breach of the ruling so, Antigua would not be able to obtain any further authorisations to retaliate under DSU Article 22.

My recollection is that Antigua participated in the negotiation, but the U.S. and Antigua could not reach agreement.  Any other details anyone wants to add?

AB Member Tom Graham at Hofstra

Appellate Body Member Tom Graham will be giving a talk at Hofstra on Feb. 6 entitled “It Sure Looks Different From the Inside: Deciding International Trade Disputes at the WTO”. The title sounds promising, and from what I understand he will talk a bit about the use of the Vienna Convention by the AB in its decision-making.  He is not likely to be as forthcoming as, say, Justice Scalia, but he may say some interesting things nonetheless.

A Great Paper Title

The title is:  "I just read 296 trade agreements".  (Thanks to Hosuk Lee-Makiyama for the tip!)

The substance is interesting, too:

... the first question that arises is: "Why do countries sign EIAs?" …

The second question is: "What are they signing?" Empirical studies extensively show that there is considerable variation in the degree to which individual EIAs affect However, EIAs may differ by design and, in turn, have different outcomes on trade. Paraphrasing George Orwell, "all EIAs are equal, but some are more equal than others." As such, the central aim of this study is to assess differences between EIAs in terms of the provisions that they contain. This information can then be used to construct a quantifiable measure of EIA's comprehensiveness. In doing so, I explore the value-added of explicitly accounting for EIA heterogeneity in empirical studies of international trade. It will be shown, for example, that identifying what countries agree to in their EIAs may also explain why they sign them.

The contributions and organization of this paper are as follows.

The first contribution is data coverage. In seminal work, Horn et al. (2010) study the contents of 31 EIAs involving either the European Community (EC) or United States. In contrast, the present study extends the sample to contain no less than 296 trade agreements that have been enforced all over the world during the period 1948-2011 among WTO members and non-members alike, making it the most exhaustive survey to date. Section 2 takes stock of the provisions contained in these EIAs and identifies the policy domains contributing to the most prominent similarities and differences among the agreements. In doing so, it addresses the question what nations are signing.

The second contribution is quantification. Section 3 uses the information on the EIAs' provisions to quantify the extent to which the agreements' contents are comprehensive. This measure, called the EIA comprehensiveness index, is subsequently used to shed light on the question as to why nations sign EIAs. Strikingly, WTO membership will be shown to be of significant importance.

The final contribution is that it explores whether the EIA dummy can successfully be replaced by the "smarter" EIA index in a typical setting of the gravity equation. This is done in section 4 to determine how an EIA's comprehensiveness is associated with its estimated effect on international trade. Remarkably, not all provisions contained in EIAs are trade-promoting. Provisions that are in line with WTO regulations are found to be trade-promoting, while measures that go beyond the WTO's mandate actually decrease trade. Section 5 discusses these outcomes and concludes.

Rethinking Intellectual Property Rights, to Get Trade Negotiations Moving

Susan Aaronson has a short piece proposing some rethinking of intellectual property rights. She starts out with this:

Rules governing intellectual property rights set the terms of access for users of knowledge, but the current system (which includes rigorous application of patent and copyright laws) can limit the supply of innovation by restricting access to information. Individuals around the world are increasingly critical of that system as inflexible, out of date, and inequitable.

She also notes:

Some analysts believe the system is inappropriate for software and other rapidly changing technologies, may lead to information oligopolies, and could facilitate rent seeking at the national level. ...  The system of protecting copyrights has not caught up to the reality of human behavior online. People want to share information, news, music, movies, and more, but under current international (and many national laws) such sharing is often considered piracy. Around the world, individuals and companies are coordinating education and strategies to alter laws that disallow limited online sharing.

In terms of concrete reform proposals, she says:

With the late law professor John H. Barton, [economist Keith] Maskus has called for a global agreement on science and technology to facilitate open reciprocal access to scientific findings. This basic agreement on science and technology would be housed in the World Trade Organization, and would allow governments to leave out (reserve) sensitive areas of technology (such as cybersecurity) and to designate different levels of commitment to open access. In so doing, policymakers could commit the bulk of publicly funded basic research to the public domain, thus encouraging knowledge transfers and innovation.

Most people would agree that some intellectual property protection is important, to provide an incentive for innovation.  But there has been surprisingly little public debate as to how much protection there should be.  Should patents be for 1 year? 10 years? 20 years? Forever?  These kinds of policy decisions seem to be based more on lobbying than on a rigorous policy discussion.

Within the U.S., I'm hearing a lot of calls for IP reform these days, from both sides of the political spectrum. They are up against powerful forces, so I don't know how much success they will have, but I don't think it would be too shocking if IP protections were pulled back in some areas.

Taking this all back to trade policy, Aaronson argues that something along these lines could be good for trade negotiations:

One way the United States (the world’s largest economy, source of much of the world’s innovation, and adamant defender of the current approach [to IP]) could thwart further trade protectionism is to offer a grand bargain. If they agree to maintain their WTO commitments and continue the Doha Round slog, the United States will work with other governments to reform the global system of protecting intellectual property rights.

A Multilateral Investment Agreement

Anders Aslund of the Peterson Institute proposes a Mutilateral Investment Agreement (MIA) (not to be confused with the failed 1990s Multilateral Agreement on Investment (MAI)).  I found his proposal intriguing because, as I read it, he may be making subtle suggestions about how to approach international investment issues in a way that addresses some current controversies.

First off, and this part isn't so subtle, he is proposing a multilateral approach, which -- it will probably not surprise anyone to learn -- I like a lot better than a bilateral or regional one.

Second, and here is where the subtelty comes in, he talks about what the MIA should contain.  In doing so, he starts by referring back to past precedents:  "The content of an MIA is relatively easy to outline because of the many existing treaties with investment protection. One source is the numerous, rather similar BITs. Another source is the investment chapters in FTAs, notably the North American Free Trade Agreement (NAFTA). A third source is the lengthy draft MIA negotiated by the OECD (1998)."

So this would be just like all the previous investment agreements, right?  Well, maybe not.  His next sentence, referring to the OECD's MAI, seems to focus on a few provisions as more important than others:  "It contains 12 chapters, most of which are formal, but three are essential."  Here are the 3 "essential" provisions he points to:

- Treatment of investors and investments. Specifications on national treatment and MFN, two similar principles, are pretty straightforward. In its new model BIT, the United States demands national treatment also of prior investment, which some countries find that controversial.

- Investment protection.  The essence is simple: compensation at full market value in the case of expropriation. Although most investment is commonly recognized, intellectual property rights raise a question. The United States considers them investment, while China and India are reluctant to agree.

- Dispute settlement. It falls into two categories, state-state procedures and investor-state procedures, and is the most complicated and controversial issue. There is no commonly agreed system for dispute resolution but multiple alternatives exist. Two-thirds is handled by ICSID or its additional facility. Other arbitration alternatives are the United Nations Commission on International Trade Law (UNCITRAL), the Stockholm Chamber of Commerce, the Permanent Court of Arbitration in The Hague, the International Chamber of Commerce, or ad hoc resolution (UNCTAD 2010).

If these 3 are essential, does that mean some of the others are non-essential?  For example, would minimum standard of treatment, a key provision in most investment agreements, be taken out?  How about  provisions on capital controls?

He then goes on to talk about dispute settlement a bit: 

In the last few years, the number of arbitration cases has increased sharply. Venezuela has taken the lead, and it has notified that it wants to withdraw from the ICSID Convention, which Bolivia and Ecuador have already done. These and other countries complain arbitration is biased, exceedingly expensive, and nontransparent. The penalties are also increasing sharply (UNCTAD 2012, 86–88). Other countries, such as Australia, refute foreign arbitration in principle. Thus, the dispute settlement mechanism has not become easier but more complex, and it is likely to be the most difficult question to settle in a negotiation on an MIA. However, there are many options to reach a solution, and the MIA should leave several of them open.

Again, you could take this as suggesting that perhaps some parts of current investment agreements are non-essential, including investor-state. But he is a little vague on the details, and maybe I'm reading too much into this.

However, if I am reading this correctly, does this provide a compromise solution to move forward with a multilateral investment agreement?

The WTO DG Race and the Future of the WTO

The prospect of a new WTO Director-General seems to have a lot of people thinking about the future of the WTO.  In the past few days, I've seen articles in the Guardian and Reuters, and also an FT op-ed by economist Arvind Subramanian.

Subramanian thinks the problem with the WTO these days is too much democracy:

Over time the WTO has become an institution where smaller and poorer countries have acquired a stake and voice. This transformation may seem a welcome sign of legitimacy. But it has gone too far. For its future effectiveness, indeed survival, the WTO needs to be de-democratised, with the large countries reasserting themselves.

...

... the WTO has suffered from too much democracy and associated blocking powers. A few small countries can effectively exercise their veto if, say, cotton subsidies – an issue of legitimate concern to them but not necessarily of systemic importance – are not addressed.

This veto must be taken away or future negotiations could be stymied by any of the WTO’s 157 members. This outcome can be achieved by allowing the larger countries to negotiate among themselves while offering assurances to the smaller countries that they would receive the benefits of such negotiations and be spared any burdens.

He also says the focus is on the wrong areas:

As a result, it has become impossible to move to a more relevant agenda that can expand market opportunities for the private sector and deal with the current concerns of governments. An example is food, where a decade ago subsidies and barriers to imports were the important issue. Today, high prices and barriers on exports are more important.

Similarly, currency manipulation is now a pressing issue – but is not on the Doha agenda. ...

Over at Reuters, some well-known trade economists offer their thoughts:

Simon Evenett: "The big question is this: does the WTO retain its centrality in the trading system? It's down to the next WTO head."

Richard Baldwin: "The way I see it now the U.S. and China are happy to let the WTO languish - China has nothing to complain about that could be fixed by any conceivable version of Doha, and the U.S. sees no substantial gains from finishing Doha on the current terms"; and "[The TPP and mega-bilaterals] will threaten China, India and Brazil (and others) with exclusion, and at that point, we'll see the current stalemate destroyed. There will be room for discussions to bring the TPP-like disciplines to the multilateral level."

Jagdish Bhagwati: "Now we are really in danger. Let's hope it works out because this is our last chance to save the WTO."

And at the Guardian, they are concerned about development:  "Heiner Flassbeck, professor of economics at Hamburg University, and until recently chief economist at the UN's trade arm, Unctad, believes that even now, when few people expect Doha to be revived, the WTO remains stuck with an outdated mindset, in which "free trade" is just about domestic subsidies and taxes on exports.  "We don't have the conditions for free trade," he says. "What we have is terribly distorted trade, driven by terribly distorted currencies and financial markets. Yet people run around with the fiction that this is somehow efficient and if you ended protectionist measures it would somehow be even more efficient." He says that the WTO just "doesn't want to talk about" questions such as whether world exchange rates are fair; or whether globalisation delivers for the poor."

------------------------------------------

It's hard to know what to make of all this.  Everyone has opinions about what ails the WTO, and much has been written in recent years.  The naming of a new head of the WTO seems like a good occasion to talk about the issues again, I guess.

For what it's worth, here's the way I'm thinking about it.  I agree that all these bilateral and regional trade agreements might be a threat to the WTO.  But I'm not yet convinced that they have a better chance of success than negotiations at the WTO.  Yes, some smaller ones have been signed.  But once you start doing them on a larger scale -- the TPP and the US-EU FTA, for example -- they become very challenging.  Moreover, bilateral and regional deals add in many new and controversial issues, making the old WTO controversies seem kind of tame.

So, I want to see if these kinds of agreements are even plausible on a large scale before I worry too much that they will completely undermine the WTO.  It may turn out that these deals are no more doable than Doha, in which case perhaps people will turn back to the WTO.

If the TPP and these other deals can't be done, the question then becomes, why can't we do trade deals anymore?  On that point, let me offer the following:  There is no clear mission for trade agreements these days.  If you look at the points made in the various articles quoted above, you see a wide range of issues discussed:

• Subramanian is worried about currency manipulation and high food prices, and doesn't want to let cotton subsidies hold up a deal.
• In the Guardian piece, Ricardo Meléndez-Ortiz says Doha is asking the wrong questions, focusing too much on tit-for-tat bargaining over import taxes and quotas and too little on the wider context. "It's an agenda that was defined back in the 1980s."
• In the Reuters piece, Bhagwati says the TPP is untransparent and influenced by lobbyists, ensuring that it is full of side conditions, such as stipulations on labor and intellectual property, which make it impossible for developing countries to sign up to.  "The lobbyists have to be sidelined," he said.
• And Baldwin thinks the WTO needs to take on new issues:  "By analogy, the WTO needs a Bernanke or Draghi - a policy leader who can think out of the box and understand how the world has changed and how the policy must change with it - not a Greenspan or Trichet, who were simply implementing the old rules in a faithful, dogmatic style," he added.

What I take from all this is that there are conflicting views on what trade agreements should cover.  That's true for the commentators noted above, but also for governments.  Despite this fundamental flaw, the current approach seems to be to plunge ahead with trade negotiations, and see if a deal can be struck despite the conflicting visions.  As long as that results in trade agreements being completed, I can see why governments do it this way.  I'm not sure it always makes sense in terms of the policies being promoted, but I understand the importance of demonstrating accomplishments, and a completed trade agreement is an accomplishment.

Nevertheless, the idealist in me wonders if perhaps all the major players would be better of reflecting a bit on what trade agreements should be about.  Instead of jumping right into negotiations, spend some time thinking about the different visions of free trade and economic integration.  There are a lot of competing ideas out there.  If we are not aware of which ones we ourselves are pushing, and how that differs from what others have in mind, the whole enterprise might be doomed from the start.

IEL Symposium 1 March 2013 in Melbourne

The Institute for International Law and the Humanities (IILAH) is holding an Annual Symposium of the International Economic Law Interest Group (IELIG) of the Australian and New Zealand Society of International Law (ANZSIL) on Friday, 1 March 2013 at Melbourne Law School, The University of Melbourne. This symposium is part of the Global Trade program of IILAH and is being coordinated by IELIG Co-Chairs Tania Voon and Lisa Toohey and Vice-Chairs Ravi Kewalram and Oliver Toohey. The draft program is available here.

To attend the Symposium please register here. Upon registration you will need to visit the payment page by clicking the relevant link below.

ANZSIL Members: $88.00

Full-Time Students: $66.00

Others: $132.00

The symposium will be followed by an optional dinner, subject to an additional fee payable at the following link: Dinner: $110.00

 

IS IT POSSIBLE FOR A PANEL TO REJECT AN ARGUMENT BY SAYING SOLELY THAT "IT IS NOT CONVINCED"?

In the recent  panel reports relating to “ CANADA – CERTAIN MEASURES AFFECTING THE  RENEWABLE ENERGY GENERATION SECTOR” and “CANADA – MEASURES RELATING TO THE FEED-IN TARIFF PROGRAM” ,  the complainants ( namely,  the EU and Japan)  have asked the Panel not to limit its analysis to rejecting the benchmarks proposed by the parties,  and invited  the Panel to "find the appropriate benchmark to make a finding on the existence or absence of benefit"  and "identify the proper benchmark to complete the benefit analysis" .  Indeed, according to the European Union, the Panel  was  under an obligation to do so and the EU  referred for this purpose  to Appellate Body Report, Japan – DRAMs, para. 174; and Panel Report, Canada - Aircraft, para. 9.312.

On this crucial point, one  would have legitimately expected a reasoned explanation by the panel explaining why the  previous passages were not relevant. Unfortunately, the only thing we obtain from the panel  is the following tirade, without any legal analysis to justify its position:

We are not convinced that the passages the European Union has referred to from the Appellate Body report in Japan – DRAMS and the panel report in Canada – Aircraft , stand for the proposition that the Panel majority in these disputes cannot limit its analysis to rejecting the complainants' benefit arguments. 

In my view, this is an unacceptable attitude. A panel must offer a reasoned legal explanation on such an important point, clarifying why the passages invoked by the EU are not relevant. Claiming simply no to be convinced by an argument is certainly not an acceptable alternative to a reasoned legal explantion of why the panel is not convinced. Unfortunately, since the EU and Japan would probably not appeal the panel ruling, we will never know why the panel was not convinced by the passages invoked by the EU.

 

 

 

The Increase in WTO Disputes

Back in July, I blogged about how many WTO disputes there had been so far in 2012.  At this pace, I said, we will see 24 complaints in 2012.  As it turns out, I was pretty close, but actually underestimated the total.  The final tally is now in: 27 complaints in 2012.

That's a pretty significant increase over recent years, even if you count things by informal "matters" (i.e. similar cases grouped together).  Here's the annual number of complaints since the beginning of the WTO: 

Year Number of DSU Complaints, by year 2012 27 2011 8 2010 17 2009 14 2008 19 2007 13 2006 20 2005 12 2004 19 2003 26 2002 37 2001 23 2000 34 1999 30 1998 41 1997 50 1996 39 1995 25

Year Number of DSU Matters, by year 2012 20 2011 7 2010 12 2009 9 2008 13 2007 7 2006 17 2005 10 2004 18 2003 20 2002 23 2001 20 2000 28 1999 22 1998 34 1997 31 1996 27 1995 16

 So 2012 had the most complaints and most matters since 2002.

What's going on here?  A surge in protectionism, and an increasing number of WTO complaints as a response?  More WTO Members, so more countries to complain about? Let's look at the list of 2012 complaints to see if there are any obvious explanations: 

Dispute Name	DS Number	Complainant(s)	Respondent	Request Date	Agreements
China - Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan	454	Japan	China	Dec 20, 2012	AD, GATT
Argentina - Measures Relating to Trade in Goods and Services	453	Panama	Argentina	Dec 12, 2012	GATS, GATT
European Union and Certain Member States - Certain Measures Affecting the Renewable Energy Generation Sector	452	China	European Union	Nov 05, 2012	GATT, SCM, TRIMs
China - Measures Relating to the Production and Exportation of Apparel and Textile Products	451	Mexico	China	Oct 15, 2012	Agriculture, GATT, SCM, Protocol
China - Certain Measures Affecting the Automobile and Automobile Parts Industries	450	United States	China	Sep 17, 2012	GATT, SCM, Protocol
United States - Countervailing and Anti-Dumping Measures on Certain Products from China	449	China	United States	Sep 17, 2012	AD, GATT, SCM
United States - Measures Affecting the Importation of Fresh Lemons	448	Argentina	United States	Sep 03, 2012	GATT, SPS, WTO
United States - Measures Affecting the Importation of Animals, Meat and Other Animal Products from Argentina	447	Argentina	United States	Aug 30, 2012	GATT, SPS, WTO
Argentina - Measures Affecting the Importation of Goods	446	Mexico	Argentina	Aug 24, 2012	Agriculture, GATT, Licensing, Safeguards, TBT, TRIMs
Argentina - Measures Affecting the Importation of Goods	445	Japan	Argentina	Aug 21, 2012	GATT, Licensing, Safeguards, TRIMs
Argentina - Measures Affecting the Importation of Goods	444	United States	Argentina	Aug 21, 2012	GATT, Licensing, Safeguards, TRIMs
European Union and a Member State - Certain Measures Concerning the Importation of Biodiesels	443	Argentina	European Union	Aug 17, 2012	GATT, TRIMs, WTO
European Union - Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia	442	Indonesia	European Union	Jul 27, 2012	AD, GATT
Australia - Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging	441	Dominican Republic	Australia	Jul 18, 2012	GATT, TBT, TRIPS
China - Anti-Dumping and Countervailing Duties on Certain Automobiles from the United States	440	United States	China	Jul 05, 2012	AD, GATT, SCM
South Africa - Anti-Dumping Duties on Frozen Meat of Fowls from Brazil	439	Brazil	South Africa	Jun 21, 2012	AD
Argentina - Measures Affecting the Importation of Goods	438	European Union	Argentina	May 25, 2012	Agriculture, GATT, Licensing, Safeguards, TRIMs
United States - Countervailing Duty Measures on Certain Products from China	437	China	United States	May 25, 2012	GATT, Protocol, SCM
United States - Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India	436	India	United States	Apr 12, 2012	GATT, SCM
Australia - Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging	435	Honduras	Australia	Apr 04, 2012	GATT, TBT, TRIPS
Australia - Certain Measures Concerning Trademarks and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging	434	Ukraine	Australia	Mar 13, 2012	GATT, TBT, TRIPS
China - Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum	433	Japan	China	Mar 13, 2012	GATT, Protocol of Accession
China - Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum	432	European Union	China	Mar 13, 2012	GATT, Protocol of Accession
China - Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum	431	United States	China	Mar 13, 2012	GATT, Protocol of Accession
India - Measures Concerning the Importation of Certain Agricultural Products	430	United States	India	Mar 06, 2012	GATT, SPS
United States - Anti-Dumping Measures on Certain Shrimp from Viet Nam	429	Viet Nam	United States	Feb 22, 2012	AD, DSU, GATT, Protocol of Accession, WTO
Turkey - Safeguard Measures on Imports of Cotton Yarn (Other than Sewing Thread)	428	India	Turkey	Feb 13, 2012	GATT, Safeguards

 Based on this list, I'm not sure whether 2012 tells us much about the trend.  One thing that jumps out is all the complaints involving Argentina: 8 of them.  That seems unlikely to become a regular occurrence.  Without that Argentina surge, the year looks a lot more normal.

In addition, there are 10 disputes involving China.  That might be slightly more than usual, but it's a little less out of the norm than what happened with Argentina.

I also see more activity from developing country Members and from Japan and the U.S. than there has been in recent years.

And there are a couple recently acceded Members -- Ukraine and Viet Nam -- bringing cases.

I'm going to wait another year before I conclude that there has been any long-term change here. 

ADDED: I've been double-checking this data, and upon further reflection, I changed the number of "matters" in 2012 from 21 to 20.

Do BITs Reflect Laissez-Faire Liberalism?

From a recent Columbia FDI Perspectives paper by Catharine Titi:

... it is time to start thinking about a new balance in a move away from investment treaties’ traditional laissez-faire liberalism toward WTO law’s embedded liberalism,[2] a model whereby liberalization is embedded within a wider framework that enables public regulation in the interest of domestic stability.[3]

Investment agreements -- most particularly European bilateral investment treaties (BITs) --contain some of the last vestiges of international economic law’s laissez-faire liberalism. In contrast with trade agreements, European investment treaties tend to be short documents, single-mindedly focused on investment protection and displaying stubborn laconism where the public interest is concerned. ...

Do BITs really reflect laissez-faire liberalism?  I suppose the argument is something like this: Because investment treaties can make it harder to regulate, they promote a vision of domestic governing that has only minimial regulation, and thus is "laissez-faire."

On the other hand, you could also argue that the restrictions on regulation that are contained in BITs reflect standard constitutional and administrative law principles.  Thus, they are about good governance and respecting rights more than they are about laissez-faire liberalism.

And finally, you could also point out that rich country governments pushing other governments to sign treaties that allow big corporations to sue these other governments doesn't feel much like laissez-faire.  It feels like activist government doing special favors for big business, which is not very laissez-faire.

But regardless of how to characterize these issues, it will be interesting to see if she is right about the following:  "to all intents and purposes, a new European treaty model appears to be taking root -- a model that, for the first time in Europe, will address the state parties’ regulatory concerns, as well as incorporate investment protection at the pre-establishment stage."

Reforming Trade Remedies

Law prof Wentong Zheng wants to replace anti-dumping and countervailing duties with a country-specific safeguard.  Here's the abstract of his paper:

This article aims to restart the debate on trade remedies by offering new perspectives on the fundamental defects of the current trade remedy regime and by proposing a bold yet feasible roadmap for reforms. This article focuses on antidumping, the linchpin of trade remedies. While antidumping is being justified as a safety valve for protectionist pressures, I argue in this article that antidumping is a faulty safety valve in that it provides arbitrary levels of protection for petitioners, results in undue uncertainties for respondents, and has too low a threshold for activation. I further demonstrate that antidumping exacerbates democracy deficit in trade policy, as the mechanical formulas used for calculating antidumping duties deprive the trade remedy process of the democratic participation that is essential for seeking consensus and compromises on trade protectionism. I propose to replace antidumping with a new country-specific safeguard that has a heightened injury standard and a mandatory public interest clause. I argue that this country-specific safeguard comports with the policy objectives of trade remedies and is politically feasible. The global safeguard currently in use, by contrast, cannot provide the kind of trade protection demanded by users of antidumping. Finally, I argue that once the country-specific safeguard is adopted, countervailing duties should be subsumed under the country-specific safeguard as well.

 Here are two key parts to his proposal:

To make antidumping a better safety valve in terms of being able to identify industries that truly deserve trade protection, I propose a higher injury standard for the new safeguard that will replace antidumping. The injury standard under the proposed safeguard has two components. First, it requires petitioners to suffer at least a significant amount of injury or threat of injury before they can invoke the safeguard. The amount of injury or threat of injury can no longer be just “inconsequential, immaterial, or unimportant” as under current U.S. antidumping law.167 Second, the injury standard under the proposed safeguard requires that imports be at least a substantial cause of the injury or threat of injury to petitioners. Merely showing that imports are a cause of the injury, as permitted under current antidumping laws,168 will no longer be deemed sufficient. Consistent with the basic goal of the new safeguard, these two injury requirements would prevent unnecessary protection of industries that do not suffer significant injuries caused by imports.

 ...

 

The country-specific safeguard proposed in this Article will have a mandatory public interest clause. Specifically, investigating authorities will be required to provide adequate opportunities for all parties affected by the country-specific safeguard to submit their views and evidence on the proposed safeguard and will be required to take into account such views and evidence in deciding whether the imposition of the safeguard would be in the public interest.

How Trade Restrictive is a Product Ban?

From the EU first written submission in Seal Products:

357. It is beyond question that the EU Seals Regime restricts trade to the extent that the General Ban provides for a prohibition, as a general rule, on the placing on the EU market of all seal products, whether domestic or imported. Indeed, the General Ban aims at being very trade-restrictive, consistently with the high level of fulfilment of the EU Seal Regime's policy objective that was sought by the EU Seal Regime.

Since the necessity test that is at issue here involves weighing and balancing of various factors, the precise degree of trade-restrictiveness can be important.  Here's my question:  How trade-restrictive is a product ban?  The EU agrees that the general ban is "very trade-restrictive" (although they point out in the next paragraph that the exceptions make it less so).  But is it more trade-restrictive than a discriminatory measure?  A discriminatory measure not only restricts overall trade, it also favors certain products over others based on nationality.  Is it therefore particularly pernicious, and thus more trade-restrictive, in nature if not quantity, than a total product ban?

ADDED:

In response to this post, Hosuk Lee-Makiyama tweets:

"If the EU falls in the forest, and no one is around to hear it ..."

 Point taken!  But still, I'm curious about the issue.

Does the TBT Agreement Apply to the Seal Products Measure?

The TBT Agreement only applies to certain kinds of measures, including "technical regulations."  Is the Seal Products measure a technical regulation?  Here's the definition of technical regulation:

Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory.  It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.

Back in the EC - Asbestos case, the Appellate Body said:

72.  Although this prohibition against products containing asbestos applies to a large number of products, and although it is, indeed, true that the products to which this prohibition applies cannot be determined from the terms of the measure itself, it seems to us that the products covered by the measure are  identifiable:  all products must be asbestos free;  any products containing asbestos are prohibited.

…

75. Viewing the measure as an integrated whole, we see that it lays down "characteristics" for all products that might contain asbestos, …

The Appellate Body thus concluded that the measure was a technical regulation subject to the TBT Agreement.  In essence, the measure regulates all products that might contain asbestos, by prohibiting them from containing asbestos.

Now in Seal Products, we also have a measure that bans an input product that is used in various other products.  That is, it regulates final products that might be produced using seals, requiring that they cannot contain seals.

In asbestos, the use of asbestos in other products led to the asbestos ban being deemed a technical regulation of those products.  Will the use of seals in other products lead to the measure at issue being deemed a technical regulation in regard to those products?

There is one important difference: In Seal Products, there are exceptions to the ban, so the use of seals is not completely prohibited.  They can be used to a limited extent.  Here's the EU argument on this point:

215. Concerning such  products containing seal  (and other ingredients), Canada and Norway primarily argue that the EU seals regime lays down intrinsic product characteristics in negative form by providing that all products may not contain seal. In doing so, they attempt to establish parallels between the EU seals regime and the measure at issue in EC – Asbestos. In the latter case, the Appellate Body found that the relevant measure included the regulation of products  containing asbestos fibres which effectively prescribes or imposes certain objective features, qualities or "characteristics" on  all  products.  That is, in effect, the measure provides that all products must not contain asbestos fibres.

216. The complainants' argument ignores that the EU seals regime is not limited to prohibiting the placing on the market of products containing seal (Article 3 of the Basic Regulation), but that it also provides (in the same provision of the Basic Regulation) for three exceptions under  which products containing seal may be placed on the EU market. These permissive elements supplement the aforementioned prohibition and, thus, together with the prohibition determine the situations in which seal products  can be placed on the EU market. The determination of whether the EU seals regime lays down product characteristics must, therefore, take into account the three exceptions.

217. This follows from  EC – Asbestos in which the Appellate Body held that "the proper legal character of the measure at issue cannot be determined unless the measure is examined … as an integrated whole, taking into account, as appropriate, the prohibitive and the permissive elements". In that case, the Appellate Body explicitly stated that "the scope and generality of those prohibitions can only be understood in the light of the exceptions to it".

…

219. Therefore, the EU seals regime must be examined as an integrated whole taking into account the three exceptions. The prohibition that products containing seal must not be placed on the EU market must be understood in the light of the three exceptions which provide that products  containing seal can be put on the EU market under certain conditions. What is decisive for the characterization of the EU seals regime is that none of the three exceptions lays down product characteristics within the meaning of Annex 1.1 of the TBT Agreement.

 Thus, here, final products may contain seals, although this possibility is limited in practical terms because only a small amount of seals are likely to be available on the market.

So with all that in mind, here's the question:  Is the EU measure a "technical regulation" in relation to those products that might contain seals?

(Note that there were some exceptions to the asbestos ban -- the EU addresses this in para. 224.)

De Facto National Treatment Discrimination in Seal Products

From the first EU written submission in the Seal Products dispute:

322. Canada argues that 90-95% of its seal  products, which derive from large-scale commercial hunts, cannot be placed on the EU market whereas seal products of certain EU Member States may potentially be placed on the market because they fall within the scope of the MRM exception. In view of this, Canada submits that the EU Seal Regime provides for less favourable treatment to imported products in comparison to domestic like products.

Here is the EU response on the point:

324. When the treatment granted to the group of Canadian seal products (including both seal products derived from Inuit and large-scale commercial hunts) is compared to the treatment granted to the group of like products from domestic/other origin covered by the EU Seal Regime (including seal products derived from Inuit and small-scale/non-profit hunts), the result is that no discrimination arises.  

The measure at issue here differs from the one mentioned in the last post.  Here, it is the general ban on placing seal products on the market in the EU, in combination with an exception for seal products that result from "hunts conducted for the sole purpose of the sustainable management of marine resources" (the "MRM exception").  The products must be place on the market on a "non-profit basis" and in a "non-systematic way."

My question here is:  Does the degree of disparate impact matter?  The above excerpts are in the context of TBT 2.1.  Here's a bit from GATT III:4:

519. Further, the European Union notes that, as a matter of fact, and as a very recent development, only seal products originating in Sweden and accompanied by the relevant document in accordance with Article 5.2 of the Implementing Regulation can be placed on the market under the MRM exception. The products of any other EU Member State, such as Finland or the United Kingdom (Scotland), are not allowed to be placed on the EU market. In fact, no public entity in any of those countries, allegedly targeted by the MRM exception, have even requested the necessary authorisation to the European Commission to have recognised bodies which could issue attesting documents. Thus, Canada's allegation about the purpose of the MRM exception (as seeking only to benefit EU products) is pure speculation.

 So let's stipulate that Canadian products cannot take advantage of this exception. What if, on the EU side of the equation, only Swedish products can use it?  That would seem to constitute a disparate impact, but perhaps a fairly small one.  Should the size of the impact play a role in the less favorable treatment analysis?