International Economic Law and Policy Blog

Some comments on Seals

A few quick comments on the run about the Seals panel decision, focussing only on the non-discrimination claims for now:

 

-       As to the TBT 2.1 claim, and specifically the IC exception, it’s worth noting that, despite the result, the Europeans got most of what they argued for on this point. First, the Panel rightly confirmed that it is still possible to justify a regulatory distinction under 2.1 even where the purpose of that distinction has no rational connection to the underlying objective of the overall regulatory regime. Second, it also affirmed that IC hunts are sufficiently distinguishable from ‘commercial’ hunts to justify the distinction drawn between the two in the European measure – despite clearly being convinced by the Canadian argument that both were commercial to some degree. Third, it also seemed convinced that the criteria used in the European measure to determine eligibility for the IC exception were unobjectionable in themselves (para 7.308, though there are some contrary indications elsewhere). The ultimate decision of the panel was based on the application of the measure as a whole to the Greenland hunt, which in their view had ‘purposes’ which closely matched those of commercial hunts.  It is an understandable position on the facts, and one with limited consequences outside the seals context.

 

-       That said, there are two questions which arise. One is a standard of review question: if the EU’s criteria for inclusion in the IC exception were more or less fine, and the problem is the application of these criteria to the Greenland hunt, should the Panel be applying these criteria for itself de novo, or giving the EU some margin of appreciation? The other is a question as to precisely what was the basis of the Panel’s decision. If I am right that the Panel had no problem with the criteria themselves for the purposes of 2.1 (and I acknowledge that there is some ambiguity about that), and since they don’t say anywhere explicitly that the Greenland hunt did not fit these criteria, objectively applied, then precisely what was the problem? There is more than a hint here that the Panel thought that the IC exception was deliberately designed to single out the Greenland hunt for better treatment, but in a case in which the criteria are unobjectionable, well designed, and applied reasonably, then how is this relevant, unless the test for discrimination is one based on intent (and it is clear that it is not)?

 

-      Still on TBT 2.1, on the MRM exception, this is a little more difficult. At one point the Panel says that MRM hunts are not relevantly different from commercial hunts, in terms of their underlying purpose. These seems untenable as a general proposition, even if it might be true in relation to some MRM hunts in practice. In principle, it must be possible to design a measure which strikes a balance between the competing objectives of (a) stopping inhumane sealing as far as possible, while (b) still permitted seal hunts where they are necessary and desirable for marine resource management. In fact, I think that the decision of the Panel under the IC exception makes this general proposition clear. Then, almost immediately after, the Panel hedges its bets somewhat, saying ‘the difference that might be found between the commercial aspects of an MRM and a commercial hunt is, in our view, not sufficient to justify the lack of a rational connection between the distinction in question and the objective of addressing the EU public moral concerns on seal welfare’. This statement needs to be carefully scrutinised on appeal to determine its real meaning – for the obvious reason that it seems to raise again the spectre of substantive balancing, this time within the context of a TBT 2.1 claim.

 

-      Finally as regards the GATT III.4 claim: Simon has already noted the extremely limited reasoning and analysis on this point, which I think must also limit the decision's broader significance in this respect. The most obvious noteworthy point is the fact that it does not mention the DR-Cigarettes line of jurisprudence according to which the underlying cause/rationale of the detrimental impact is relevant to an analysis of less favourable treatment. This may be a continuation of the effort in fn172 of US-Clove (AB) to minimize that line of jurisprudence, and it will be interesting to see whether and how the AB handles it in this case. But it is worth remembering that the language in DR-Cigarettes was introduced for a reason: it had become clear that having a purely effects-based test of discrimination, leaving all the work of justification to be done by Article XX, can lead to serious problems, at least in the difficult cases (primarily because of the limitations of Article XX). DR-Cigarettes provided the AB with a very useful technique for dealing with these cases, and it would seem to me to be a shortsighted move to get rid of it altogether.

Dealing with Frivolous Investor State Claims

Here's more from that Commission document mentioned in the last post:

In order to discourage 'long shot' and frivolous claims by investors, the EU has agreed provisions to enable tribunals to dismiss such claims quickly and also to require that all litigation costs are borne by the losing party. Under the existing system, in some cases, even if the state wins the case, it still has to pay its litigation costs which can be very substantial. If the investor has to pay the litigation costs for all parties if he loses the case, it may act to discourage “long shot” cases.

As I said with the last post, I think we need some actual text on this issue to really evaluate it.  In particular, I wonder how they will define a "frivolous claim."

Can the European Commission Save Investor State from its Critics?

From a document just released by the European Commission, entitled "A new start for investment and investment protection":

4. What is the EU doing to improve investment protection rules?

The Commission’s aim is to bring improvements on two fronts (1) to clarify and improve investment protection rules and (2) to improve how the dispute settlement system operates. Such improvements will address the concerns raised that investment protection rules may negatively impact states’ right to regulate. They should, amongst other things, ensure that companies cannot successfully bring claims against states’ regulatory policies when these are taken for public policy reasons.

1. Clarifying and improving investment protection rules

All of the EU’s Free Trade agreements clearly confirm, as a standing principle, the Parties' right to regulate and to pursue legitimate public policy objectives such as social, environmental, security, public health and safety, and the promotion and protection of cultural diversity. This principle will apply to investment protection provisions included in EU agreements as well.

In addition, in EU trade agreements the key investment protection standards are drafted in a detailed and precise manner, in particular making clear that the States' right to regulate is preserved.

In this context clarifications to two key provisions are made:

- Firstly, 'indirect expropriation' is one of the most controversial provisions in the investment protection system. Indirect expropriation is when government measures, while not directly taking property away, have the effect of doing so (e.g. the removal of a license required to operate a factory). This provision has been used by some investors to challenge public authorities’ bans for health reasons of chemical products or the introduction of new stricter environmental legislation. Future EU agreements will provide a detailed set of provisions giving guidance to arbitrators on how to decide whether or not a government measure constitutes indirect expropriation, thus aiming at preventing abuse of the system.

In particular, when the state is protecting the public interest in a non-discriminatory way, the right of the state to regulate should prevail over the economic impact of those measures on the investor. These much needed clarifications will make sure that companies cannot be compensated just because their profits have been reduced through the effects of regulations enacted for a public policy objective. The Commission has negotiated provisions with Canada and Singapore which makes this clear, and the language will also be included in future agreements.

-Secondly, the standard of 'fair and equitable treatment' – very frequently invoked by investors – is not clearly defined in international law. As a result, tribunals have had significant leeway in interpreting this in a manner that has been seen as giving too many or too few rights to investors. In EU agreements, the standard will set out precisely which actions are not allowed. This will include issues such as manifest arbitrariness, abusive treatment (coercion, duress or harassment), or failure to respect the fundamental principles of due process. These elements of 'fair and equitable treatment' are precisely defined in the Canada and Singapore texts, and will also be defined in future EU treaties.  

Would such changes satisfy the critics, without offending the business interests who lobby for investor state?  Or will they be insufficient to resolve the critics' doubts, while also losing the support of the business groups?  That question may be easier to answer once we've seen some draft text.

Scapegoating India for the Impasse in WTO Talks (and Denying the Real Causes)

A story from Reuters http://reut.rs/1a0As7m has been circulating in the last hours that the blame for the collapse of the WTO talks is almost entirely India's. The theory is that the "electioneering" of the Indian government has led it to reject the peace clause on offer with respect to India's anti-hunger law, and obstinately hold out for more concessions.  I have said enough in recent posts here about why on the merits India is entirely right to reject the current version of what is on the table concerning food security.  That is not the point here. Nor is it the basic distortion about what has happened in the last days, in that the lack of agreement around trade facilitation involved more than India, to say the least. Of much greater concern than these journalistic distortions is the lengths that the WTO insider community will go to avoid any kind of self-diagnosis, effectively saying that years of troubled negotiations, impasse, and so forth were about to be magically solved when one country's government, for craven advantage at the ballot box, torpedoed the whole thing.    What a condemnation of democracy-probably as nasty as anything that fascist political theorist Carl Schmitt every wrote about the Weimar Republic.

Five years ago Susan Esserman (a top US trade negotiator in the Clinton Administration) and I warned of why the WTO talks were on a path to failure and of the necessity to go back to the drawing board and take a different path appropriate to the realities of the 21st century:

The WTO risks irrelevance to the issues of today and tomorrow. Food and energy security, climate change, human rights, terrorism, international crime and corruption are reshaping the global economy and affecting how governments steer trade. The WTO is not grappling with these issues.

Further:

The WTO should also move beyond the straitjacket of the “grand bargain” negotiating round, in which progress cannot be achieved unless all countries reach agreement on all subjects. Instead, certain negotiating subjects could proceed separately or in clusters, expediting agreement and making the WTO more responsive to rapid changes in the global economy.

(The whole article is here,http://onforb.es/1iShyYp on Forbes.com)

Instead of thinking big the response of Lamy and his lieutenants to the woes of the Round was to think smaller and smaller, on the theory that the less on the table, the easier to agree.  

So they ended up, and Azevedo alas followed their path, with a negotiation that, instead of being too big to fail, was too small to succeed--not enough at stake to get leaders to invest the political capital needed to make the final compromises, especially when they were putting lots of resources into dynamic bilateral and regional talks.   Apart from services, the leadership also never moved off the consensus bargaining model, which as Esserman and I argued, while okay for the post-war "club",was not a likely avenue to big progress when you have 150 plus countries of enormous diversity of all kinds, political, economic, social, cultural. 

Never for a moment has the WTO leadership (or the WTO insider community generally) stopped to think seriously about the course it is on, despite how the world has changed, and how multilateralism has changed.  Instead, they have consistently thought that enough sermons about the sky falling in with the failure of Doha, and enough old-fashioned arm-twisting in the bargaining rooms, would do the trick eventually.  

One glimmer of hope for political re-engagement with the WTO happened when President Obama talked about the need for liberalization of green trade as part of his overall climate strategy.  But did the WTO leadership seize the day, and make this a prominent and dynamic piece of the negotiating agenda, putting energy into reviving those discussions, based on the APEC breakthrough?  Not at all.  A select group of Members met on the sidelines, "friends" of green trade liberalization, basically having to deny that they and their gatherings even existed.  

Scapegoating India is terribly unfair to one of the world's greatest democracies.  But scapegoating someone is the almost inevitable consequence of being unable to examine or question oneself.  That, inability,as Socrates-citizen/critic of another great democracy-suggested,is the root of much of the error and mischief in the world. 

GATT Article III:4: Is Disparate Impact Enough?

Here is the entirety of the WTO Seal Products panel's GATT Article III:4 analysis:

7.4.3.2 Analysis by the Panel

7.604. Article III:4 of the GATT 1994 provides that:

The products of the territory of any Member imported into the territory of any other Member shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

7.605. There are three elements that must be examined to assess a measure's consistency with Article III:4 of the GATT 1994: (i) whether the measure is a law, regulation or requirement affecting the internal sale, offering for sale, purchase or use of goods; (ii) whether the products at issue are like; and (iii) whether imported products are accorded less favourable treatment than that accorded to like domestic products.937

7.606. With respect to the first element of Article III:4, we note that the EU Seal Regime is undoubtedly a "law" or "regulation" affecting the internal sale, offering for sale, purchase, distribution and use of seal products within the meaning of Article III:4.

7.607. As regards the second element of Article III:4, we found in the context of Canada's claims under Article 2.1 of the TBT Agreement that seal products are "like" irrespective of whether they conform or not to the requirements under the EU Seal Regime. We also recall that the parties do not dispute that conforming and non-conforming seal products are like.

7.608. With respect to the third element under Article III:4, the national treatment obligation contained therein requires that imported products from Canada and Norway receive a treatment no less favourable than that accorded to domestic seal products.938 Based on the evidence before the Panel, it appears that the vast majority of seal products from Canada and Norway are excluded from the EU market by the terms of the MRM exception.939 In contrast, evidence shows that virtually all domestic seal products are likely to qualify for placing on the market.940

7.609. In light of the above considerations, we conclude that the measure at issue grants Canadian and Norwegian seal products a treatment less favourable than that accorded to EU seal products within the meaning of Article III:4 of the GATT 1994.

That's 6 total paragraphs, only one of which addresses less favorable treatment.  And if I'm reading that paragraph, 7.608, correctly, it basically says that a disparate impact on imported goods is enough to find a violation.

To be fair, the panel fleshed out this part earlier in the context of the TBT 2.1 analysis and in a section on the relationship between the GATT and the TBT Agreement.  But nevertheless, this seems to be a fairly low hurdle for finding a violation of GATT Article III:4.

Is this the right approach?  What will the Appellate Body have to say about it?

The Seal Panel Report: TBT Article 2.1 v. Article 2.2

The panel report on the seal case is out. http://www.wto.org/english/news_e/news13_e/400_401r_e.htm  Obviously, there is a lot to digest there. Let me raise just one issue. 

The panel ruled that the EC Seal Regime was justifiable (necessary) under TBT Article 2.2 (para. 7.3.3.3.5). Nonetheless, the panel ruled that it was "not designed and applied in an even-handed manner" due to the distinction between commercial and IC hunts. (para. 7.319). Notice the "even-handed" language. Understandably, the panel appeared to follow the recent Appellate Body jurisprudence on the TBT cases. 

My question is: could these two rulings on Article 2.1 and 2.2 co-exist? Should we understand the Article 2.1 ruling eventually trump the Article 2.2 ruling? Here, Article 2.1 ruling smacks of the "chapeau" ruling under GATT Article XX. 

How to Bury the Peace Clause-and Resurrect Bali

I am inclined to the view that failure at Bali may be just what is needed to get the WTO to make a fresh start, creating an agenda that corresponds to the needs of this century not the last.  At the same time, I've been impressed by the good work and good will that so many delegations have put into this over the last weeks. So here are my thoughts-prior to the Indian cabinet meeting Monday where, if reports are correct, the government will come up with its alternative position, having rejected the peace clause. 

First to recap why India is right to reject the current temporary peace clause proposal (summarizing earlier posts):

1)If the Indian government is concerned with protecting the food security law in the short term, it does not need a peace clause-it can simply defend the law in dispute settlement, invoking, as some have argued, the inflation clause in the Agreement on Agriculture.  Given that any dispute would take at least 3 years in all probability to wend its way through the DS system-panel, AB, 21.5 panel and AB, then reasonable time to implement-India already has 3-4 years of flexibility. And the chance of winning in whole or in part, depending on how the inflation argument is received.

2)If the government, on the other hand, is mainly concerned with the long term, the peace clause as currently formulated could be worse than nothing, because to invoke it a Member basically has to make an admission that it is at risk of violation of WTO rules, thus making a defeat in dispute settlement all but certain once the peace clause expires in a few years.

3)By abandoing the goal of supporting a broader effort to address food security in the WTO out of panic about its own legal situation, India would be abdicating a leadership role in the WTO for groups of countries like the G33 and presenting itself as incapable of acting as a major power in today's multipolar world.

4)Worse still, India-a venerable civilization, a great modern democracy, an emerging economic powerhouse-would have shown itself to have been outwitted by low-level Machiavellic intrigue and devilry.  That intrigue began when DG Azevedo claimed to India that its food security law violated WTO rules, thus seeking to drive a wedge between India's own national interest in the food security negotiations and the broader common interest of the G33.  Figuring that the government's only pressing concern would be in a solution that would get it through the next year's elections, the WTO leadership was pretty sure that India would accept a band-aid peace clause that would serve for political optics: the government could say to the public that the food security law had been "protected". The WTO leadership thought it could even get away with a "trojan horse" in the peace clause, as mentioned, that to use it you admit essentially to violating so the day after it expires you can be hit with largely undefendable dispute claim.

Now where do we go from here?

I propose a solution along the following lines:

1) India should be provided with a waiver for its food security law.  A waiver is a familiar oft-used mechanism to protect domestic policy space in a particular set of circumstances.  The waiver could say that any other state in similar circumstances would also be eligible to apply for a waiver.  The waiver would expire upon the coming into force of a permanent legal instrument on food security.

2)There should be a declaration or understanding at Bali on the negotiation in the coming 2-3 years of such a permanent legal instrument, what it would have to deal with in terms of coverage, how it would relate to the existing WTO Agremments, and also relate to the work of the FAO on food security.  The instrument might even be envisaged as a joint WTO/FAO convention. A broad set of issues, including export restrictions, to be addressed by such an instrument would take the  debate away from the context of a zero-sum type conflict between developing countries seeking certain specific flexibilities and developed country negotiators, tied to the usual agribusiness lobbies.

3)Finally there shoudl be a meaningful deliverable on trade facilitation at Bali.It could be in the form of a framework agreement that includes: the steps required to achieve meaningful legal commitments on trade facilitation, including specified improvements in customs, infrastructure etc; who is responsible-the WCO, the WTO, development banks, donor countries, developing countries-for taking these steps and providing the needed financial support and technical assistance, and an indicative timeframe.  Taking into account the existing still heavily bracketed negotiating text, the framework agreement would include a set of principles that would inform precise legal commitments that would be entered into once enough of the specified steps have occured within the indicative time frame.

If one blends imaginatively hard law and soft law methods with some traditional WTO governance mechanisms, e.g. waivers, this can all be done within a week, I'm confident.        

The Peace Clause a Trojan Horse

Among the reaons, and there are many, why India is among the world's great democracies, is the quality and political responsibility of its journalists.

An article just published in an Indian newspaper explores brilliantly how the peace clause to which India seems to have acquiesced-but already apparently with buyer's remorse, according to some reports-is an insideous trap. The article notes "Countries invoking the peace clause will have to notify if they are at the risk of exceeding the cut-off limit for subsidies." bit.ly/17wiuNg In other words, to use the four year peace clause you have to admit basically you are violating the Agreement on Agriculture.

So consider the scenarios for India if it re-affirms support for the peace clause rather than walks away from it:

If India re-affirms:

1) it will have betrayed the cause of principle of the G33, and shown it cannot be trusted as a leader of a developing country coalition at the WTO

2) it will have lost its leverage on trade facilitation, because it will have already conceeded on food security

3) if it invokes the clause, then in four years time its effective admission that it has violated the A of A will make India a sitting target for a complaint in dispute settlement-that's the Trojan horse part.

If India gets back its backbone and walks away:

1) it will prove that it has the strength of will to be a leader in the WTO.

2) it can hold to its own values and interests, and those of developing countries more generally with respect to trade facilitation, because it won't be depending on a a deal going through to address food security.

3) if attacked in dispute settlement in the next months it will have full latitude to defend its law and, worse case, come about four years from now,India may-if it loses on both facts and law at every stage in dispute settlement-have to pay compensation or change its law.  Or it may have enough leverage in four years to demand a waiver.

Isn't the case pretty clear that the sounder judgment call is to say no thanks to the Trojan horse?

 

Law and Politics at the WTO:India turns the tables on food security opponents

The saga of the G33 food security proposal in the WTO negotiations is a fascinating tale of law and politics. India has been a leader of this proposal, which would be a good start in bringing WTO norms more fully into alignment with the right to food in international law. Not surprisingly the proposal has been adamantly opposed by the usual agribusiness interests, which seem to have completely captured that level of US officials to whom the WTO file (which Obama obviously doesn't view as top priortity) has been given over.

How then for DG Azevedo and his group of insiders to bring about an agreement for Bali, with Members at loggerheads over food security?  India was quickly perceived as the key.  Playing judge, jury and executioner, Azevedo tells the Indians that their food security bill is in violation of the Agreement on Agriculture. Never mind compromising the independence of the judicial branch of the WTO (I've previously blogged on that aspect of this). 

You would think that this would make India even more determined to get flexibilities in a food security deal. But think harder.  Now India was being told that if it didn't get a deal that protected its law, it was likely to be targeted in dispute settlement.  And that meant that India could basically be forced to take a deal that didn't really address the issues of principle that were uniting the G33, as long as it looked like it kept the Indian anti-hunger law out of the DSB.  One could thus divide the G33, hoisting India on its own petard, as it were.

And that's just about what happened a couple of days ago. India showed signs of caving on food security, accepting a deal that offers little more than a 4 year peace clause, and maybe not even that.The developed countries would have shown themselves as capable of gaming the south as in the bad old Green Room days.

After all, what is four years?  Take the time involved in sheperding a case against India's law through the DS system, including panel, AB, 21.5 panel plus AB review of that, then reasonable period of time to comply-aren't we pretty well up to 4 years?  In other words, India  would be given exactly nothing!

But an article in the Business Standard today suggests that India may have cottoned on to this game.bit.ly/1dktcLC  India is looking more closely at the existing flexibilities in the Agreement on Agriculture as a means of defending its law.  In other words taking its chances with the DS system, knowing that the worst case outcome is that it will end up in four years time at exactly the same place as if it accepted a peace clause.  And of course India may win, particularly if it effectively argues that WTO law must be interpreted in light of the right to food in the Covenant on Economic, Social and Cultural Rights and related provisions in other international human rights instruments. 

Now India should feel free to walk away from a phoney deal on food security, and put its foot down with its concerns about the gap between commitments and capacities in trade facilitation.

 

 

 

 f

Fire-Resistant Furniture and the TBT Agreement

The Peter Van den Bossche/Werner Zdouc WTO law textbook says this:

A requirement that imported furniture is fire-resistant, while no such requirement exists for domestically produced furniture, would constitute a violation of the national treatment obligation set out in Article 2.1 of the TBT Agreement.

 That's no doubt true, but there is a more complicated issue here.  The Chicago Tribune did a great series of articles on fire-resistant furniture a little while back.  As a I recall it, the basic story was this.  Many years ago, furniture was catching fire when people were careless with their cigarettes.  In response, chemical companies worked with cigarette companies to lobby for laws that required fire-resistant furniture.  The only way to meet the requirements was to douse the furniture with chemicals.  The result has been that our furniture is safe from cigarettes, which fewer and fewer people smoke, but we soak ourselves in harmful chemicals whenever we sit on our furniture.

Here's my question:  Are laws that require the use of chemicals to make furniture fire-resistant more trade-restrictive than necessary under TBT Article 2.2?  More specifically:

-- do these laws restrict trade?

-- is their objective legitimate?

-- to what degree do they contribute to their objective?

-- what is the nature of the risks, and the consquences of not fulfilling the objective?  (That is to say, the consequences of not requiring that furniture be doused with chemicals. This might be a crucial question).

-- is there a less trade restrictive alternative measure?

The Tea Party and Trade

Some recent news headlines about the tea party and trade:

"Hill tea party’s next target: Barack Obama’s trade agenda"

"Tea Party Joins Liberals in Push Against Fast-Tracked Trade"

An excerpt:

Tea party Republicans insist they’re in favor of free trade. They just don’t want to place a key trade negotiating power in President Barack Obama’s hands.

The deep suspicion of giving the president authority to fast-track trade pacts through Congress without amendments — which Republicans have traditionally supported — is just the latest rift between the Big Business-aligned mainstream GOP and the party’s more populist tea party wing, which dislikes the legislative mechanisms that make trade deals work and is loath to hand Obama another victory.

...

GOP Reps. Michele Bachmann of Minnesota and Walter Jones of North Carolina released a letter signed by 22 House Republicans on Tuesday condemning fast-track authority as a measure that allows Obama to “unilaterally write legislation making the pacts’ terms U.S. federal law.”

So does this mean the tea party will try to "shut down" the big trade negotiations going on right now?

One of the things the Cato trade people have done over the years is track the trade votes of all members of Congress, and categorize them as "free traders", "internationalists," "isolationists," or "interventionists."  My Cato colleague Bill Watson looked at the votes of the Republicans involved, and he has doubts about the media narrative:

 No one is surprised that 151 liberal Democrats in the House don’t support granting the president fast track authority to negotiate trade agreements.  But two groups of Republicans have now signed letters to the President this week joining those Democrats in their opposition.  The news media have reported the story as evidence that the tea party opposes President Obama’s trade agenda.

The signatories of the letters are an odd combination of young, party-line Republicans and old-guard isolationists who oppose free trade.  Neither group has anything to do with the tea party and both seem confused about how fast track works.

...

So why have 27 Republicans come out against fast track?  Cato’s online trade votes database can help us answer the question.

About half the Republicans who signed the letters are old-guard isolationists who have opposed trade for decades.  Indeed, if you were looking for a list of anti-trade Republicans, you need look no further than these signatories.  Some of them have been in Congress for over 20 years voting consistently for higher tariffs.  ...

Most of the other Republicans expressing opposition to fast track haven’t been in Congress very long and have voted in lock-step the Republican leadership on trade issues.  They have voted in favor of lowering barriers but only in reciprocal trade agreements and they support corporate welfare subsidies like the Export­–Import Bank.  I don’t know why they’ve decided to take a stand against fast track, which Republicn leadership strongly favors.  Perhaps they really think it’s unconstitutional or perhaps their motives are largely partisan.  Significantly adding to the confusion is the fact that of the five freshman who have taken a position against fast track, four of those signed a letter in June emphasizing their support for the policy.

Oddly, there is little doubt that this second group of moderate Republicans will vote in favor of any free trade agreement submitted to Congress even if the President gets “unconstitutional” fast track authority.  That’s not at all true of the Democrats who have voiced their opposition—they can be counted on to oppose trade agreements at every step of the way.  Ultimately these Republicans seem to be quite confused about what they want and how they should go about getting it.  I recommend that they stop listening to their party’s lingering protectionist minority about fast track, or anything else for that matter.

The Secret TPP IP Chapter Is No Longer Secret

Thanks to WikiLeaks:  http://wikileaks.org/tpp/  (Also thanks to whoever gave it to WikiLeaks.)

So what's in it?  Way too much to discuss quickly, especially since I just returned last night from a conference over in Prague.  But any of you IP experts out there should feel free to weigh in.

How about the politics of it?  Here's Tim Lee of the Washington Post:

It wouldn't be unprecedented for concerns about patent and trademark issues to derail the larger TPP treaty. Last year, in the wake of a populist backlash against the Stop Online Piracy Act in the United States, European activists stopped ratification of the Anti-Counterfeiting Trade Agreement in the European parliament.

Will release of the text help supporters of stronger IP protection make their case for why all these provisions are necessary?  Or will it stir up the opposition and undermine the agreement?

THE ABSENCE OF SUSPENSIVE MEASURES IN THE WTO AND WHY THE FAROE ISLANDS TAKES ITS CASE ALSO TO UNCLOS

Intrigued by the Faroe Islands  simultaneous WTO and UNCLOS complaints, I think I finally understand that the Faroe Islands hopes to benefits from  a feature of UNCOS that is completely absent in the WTO dispute settlement process.

The fact is that the International Tribunal for the Law of the SEA (ITLOS) may be asked to prescribe suspensive provisional measures. Article 290 of UNCLOS specifies that “If a dispute has been duly submitted to a court or tribunal which considers that prima facie it has jurisdiction... the court or tribunal may prescribe any provisional measures which it considers appropriate under the circumstances to preserve the respective rights of the parties to the dispute or to prevent serious harm to the marine environment, pending the final decision.”. These provisional measures are also possible “pending the constitution of an arbitral tribunal”, an unusual feature in the context of international Tribunals.            

 In contrast, at a 13 November 2002  meeting of the special session of the WTO’s Dispute Settlement Body (DSB), Mexico presented a proposal to  address what Mexico said is the "fundamental problem" of the WTO dispute settlement system, namely the "period of time which a WTO- inconsistent measure can be in place without the slightest consequences" to the offending party. It is interesting to note that we have not heard recently  a single word about this proposal. 

I am wondering: Does a WTO panel has the competence to prescribe provisional measures suspending the contested  measure during the panel process, in order to protect the complaining country?

The Faroe Islands Herring Dispute

Marc mentioned it on this blog the other day.  The consultations request is here.  Some key parts:

- The Facts

6. The Atlanto Scandian herring is shared between the respective exclusive zones of five coastal States, namely the Faroe Islands, Iceland, Norway, the Russian Federation, and, to some extent, the European Union. Proper management, therefore, requires, consistent with the relevant provisions of UNCLOS, joint management and mutual efforts on the part of the relevant coastal States in order to seek to agree upon the measures necessary to coordinate and ensure the conservation and development of this shared stock.

7. The Faroe Islands has a strong record for managing the Atlanto Scandian herring in accordance with the requirements of the UNCLOS, ensuring, through proper conservation and management measures, that the maintenance of the stock is not endangered by over exploitation.

8. To that end, each year, the Faroe Islands and the other four coastal States undertake negotiations with a view to agreeing an allocation key for dividing the Total Allowable Catch ("TAC") recommended in advice from the International Council for the Exploration of the Sea ("ICES"), based on a fish mortality rate set pursuant to a long term management plan agreed between the five coastal States.

9. Unfortunately, the five coastal States were unable to agree on an allocation key for the TAC for Atlanto Scandian herring for 2013. On 26 March 2013, based on available scientific evidence, the Faroe Islands set a catch limit of 105 230 tonnes for the stock. The catch limit is determined as 17 per cent of the TAC recommended by ICES.

10. The Faroe Islands understands the position of the European Union to be that the Faroe Islands should restrict the exercise of its sovereign rights by setting its catch limit at 5.16 per cent of the TAC for Atlanto Scandian herring, which represents approximately 31 000 tonnes for 2013.

In a nutshell, the Faroe Islands, the EU and others couldn't agree on the proper Faroe Islands catch limit for herring. Therefore the Faroe Islands went ahead and set its own limit.

- The Measures

Here's how the EU responded to the Faroe Islands' decision to raise the catch limit:

11. In response to the Faroe Islands' decision to set a catch limit of 105 230 tonnes for Atlanto Scandian herring, the European Union has adopted coercive economic measures against the Faroe Islands. It has prohibited the introduction into the territory of the Union of certain products of Atlanto Scandian herring and Northeast Atlantic mackerel (Scomber scombrus) caught under the control of the Faroe Islands; and it has prohibited from EU ports any vessels flying the flag of the Faroe Islands that fish for Atlanto Scandian herring or mackerel and any vessels transporting fish or fish products stemming from Atlanto Scandian herring or mackerel that have been caught either by vessels flying the flag of the Faroe Islands or by other vessels authorized by the Faroe Islands while flying the flag of a third country.

The EU Regulation, with its own explanation of the situation, is here: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:223:0001:0007:EN:PDF

- Claims

And here are the WTO obligations under which the Faroe Islands brought legal claim:

(a) Article I:1 of the GATT 1994, because ... the European Union fails to accord immediately and unconditionally to like products originating in the Faroe Islands relevant advantages, favours, privileges or immunities that are granted by the European Union to Atlanto Scandian herring and Northeast Atlantic mackerel products originating in other countries;

(b) Article V:2 of the GATT 1994, because ... the European Union denies freedom of transit through the territory of the European Union, and each of its Member States, via the routes most convenient for international transit, for traffic in transit to or from the territory of other WTO Members, and makes distinctions based on the flag of vessels, the place of origin, departure, entry, exit or destination or on circumstances relating to the ownership of goods, of vessels or of other means of transport; and,

(c) Article XI:1 of the GATT 1994, because ... the European Union institutes or maintains prohibitions or restrictions, other than duties, taxes or other charges, on the importation of certain products of the territory of the Faroe Islands.

It seems inevitable that we will end up in Article XX(g) and the chapeau, doesn't it?  The key question would seem to be whether the EU actions constitute "arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade."  This issue may revolve around the methodology for each side's determination of the appropriate catch level.

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

And finally, there is this:

2. The Faroe Islands is a self governing territory of the Kingdom of Denmark that falls within the territorial scope of the latter's acceptance of the Marrakesh Agreement Establishing the World Trade Organization ("WTO").

3. The Faroe Islands does not fall within the territorial scope of the European Union.

4. This request for consultations ("Request") is made by the Kingdom of Denmark in respect of the Faroe Islands.

What, if anything, does EU law have to say about an EU member country challenging the EU itself at the WTO?

Has Canada violated its NAFTA transparency obligations by keeping the CETA text secret?

It almost goes without saying that it is an egregious violation of the principles of liberal democratic governance that Canada-and the EU, apparently-are keeping the agreed, final text of the CETA a secret.  I can only hope that NGOs somewhere are seeking it through access to information proceedings in both Canada and the EU.But in Canada's case its withholding of the text may violate its obligations to the United States and Mexico under NAFTA.  While Article X of the GATT requires that only trade agreements in force be made public, Article 1802 goes considerably further.  It requires that when possible a Party shall publish in advance any measure that it proposes to adopt "respecting any matter covered by this Agreement"  and provide interested persons and Parties a reasonable opportunity to comment on such proposed measures. 

There is no doubt that at this point in time the Harper government "proposes to adopt" the CETA and therefore the trigger for the obligation to publish in 1802 has now been met.  Thereis also no doubt that the CETA text concerns matters covered by NAFTA-in fact there is enormous overlap in coverage.  There is also no doubt that it is now "possible" to provide the text, since a final text for adoption exists in the phenomenological world.

That Canada is legally bound under the NAFTA to release the CETA text should strengthen the case under the internal access to information laws of Canada and theEU.

Seals:the exceptions and the question of nullification and impairment

Having now spoken to several people who have seen the leaked Seals panel report-I still haven't-what appears to be the case is that the panel has upheld the general measure but found some of the exceptions to be violations.  To my mind, this raises a vexing issue concerning nullification and impairment.  Would Canada or Norway receive any commercial benefit by the complete removal of the exceptions in question-the most legally certain "cure" for the violations?  How could doing so, which would make the ban a total ban, possibly open up competitive opportunities for these complainants in seal products?  If so, then failure to remove the exceptions could hardly trigger an entitlement to suspension of concessions under 22.6, right?  Of course, the actual reasoning of the panel is still being hidden from the public, so there is something tentative about these questions.  And if, as it should do, the AB reverses the panel's findings of violations, then they would also be moot.    

The Faroe Islands Simultaneous Complaints under UNCLOS and the WTO: The Fragmentation of International Law is Well Alive .

I have noticed  that The Faroe Islands have recently referred the use of threats of coercive economic measures by the European Union, in relation to the Atlanto-Scandian herring, to an arbitral tribunal under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS). 

At the same time, the Faroe islands launched a trade dispute at the World Trade Organization on Monday to challenge a European Union ban on imports of Faroese herring and mackerel and restrictions on Faroese vessels entering EU ports

It is interesting to note here that, stricly speaking, this is not a case of forum shopping where a party brings its case only before the most favorable tribunal ( in its view). What we have here, is a case where two international tribunals share overlapping jurisdiction in a non-hierarchical manner, because of two simultaneous complaints.

This Overlap of jurisdiction in international trade law increases the risk of  conflicting decisions being delivered and hence of fragmentation of international law. Therefore, it will be interesting to see if the WTO tribunal would take account of the  broader context of this  dispute and then decline jurisdiction or suspend the proceedings pending the outcome before the UNCLOS Tribunal. The answer is "most probably not". 

Long Live "Aim and Effect"!

The exchanges in the comments on this recent post on national treatment in investment law got me thinking about a more general national treatment point. It's easy to get bogged down in the technicalities of the national treatment obligation, so, if I may, I'd like to cut through all the detailed treaty provisions and jurisprudence in order to make a sweeping assertion about national treatment provisions in trade and investment law: There is, and always will be, some sort of "aim and effect" test when considering national treatment obligations and their exceptions. (Practically speaking, the exceptions work together with the national treatment obligation -- it doesn't make sense to think of them as completely separate ). They may not say it explicitly, or they may use less clear words to express these concepts -- goodbye "aim and effect", hello "detrimental impact stemming exclusively from a legitimate regulatory distinction"! -- but that's what (almost) all adjudicators are actually doing when they evaluate these claims. The question isn't whether you look at "aim and effect." It is where, when, and how you look at it:  In "likeness"?  In "so as to afford protection"?  In "treatment"?  In the exceptions?

The one exception I can see is that there is a view in trade/investment law that doesn't seem to look at effect at all. It just looks at whether one foreign product/investment/investor is treated worse than one like domestic product/investment/investor. But that isn't an effect standard, as far as I can see. Without looking at the whole group, pulling out two individual products/investments/investors for a comparison isn't really evidence of anything.

In trade law, I think this view is on its way out, although it still seems to pop up from time to time. In investment law, the battle is still being fought, but I don't follow investment law as closely as trade law, so I can't give a very good assessment on where things stand.

This is somewhat controversial and contested, I know, and I haven't given any cites, just assertions. If people are in the mood to go into it further we can discuss it in the comments.

WTO Chairs Programme - Call for Applications

It's my pleasure to bring to your attention the call for application for the WTO Chairs Program. Established in 2010, it is the flagship program by the WTO to promote WTO-related teaching, research and outreach activities in leading universities in the developing world. As a member of the Advisory Board, I was glad to witness the many achievements the program has made over the past 4 years. It would be great to have more excellent institutions joining us for the next edition of the program.

You can find out more about the call for application and the program in general here. The application is due by Dec 1st. 

CETA and GIs

This is from Canada's "technical summary" of CETA:

• Limited GI rights provided to EU on: Asiago, feta, fontina, Gorgonzola and Munster
  • won’t affect ability of current users of these names in Canada to continue use
  • future users will be able to use the names only when accompanied by expressions such as “kind,” “type,” style,” “imitation” or the like

I'm no GI expert, but I was recently talking to two friends/colleagues about this issue, and here are some questions that occur to me as a result of those conversations.

In CETA, as quoted above, Canada has promised to give some GI protection to particular EU cheeses.  But how exactly does that promise affect American or other non-EU producers?  

Note that the CETA summary refers to "users of these names in Canada."  I take it that means the new rules would apply to all producers, regardless of where they make the product.  The key is "use" in the Canadian market, not place of production.

So, just to spell this all out, let's say an American company who does not currently export Munster cheese to Canada decides it would like to do so.  That would make it a "future user", I think, under the language quoted above, and thus it could only use the word Munster on its product if it uses "kind", etc. to qualify it.  (I think that's what the rules will require, but I confess that I'm not completely sure about this.)

And finally, if it is the case that future Amercan Munster cheese exporters come along and are affected by this restriction on their ability to sell in the Canadian market, will the U.S. complain about this under some other trade agreement?  Would they file a NAFTA or WTO complaint?  How would CETA and NAFTA/WTO rules interact on this point?