International Economic Law and Policy Blog

Does TTIP Need ISDS?

From the FT last week:

Mr De Gucht said the negotiations to create what would be the world’s biggest free trade zone would be at risk if an investor-state dispute settlement mechanism was not part of the proposed deal.

“I doubt it,” he responded when asked if the pact could be concluded without the investor-state dispute provision. “It could very well be that you wouldn’t have an agreement any more.”

Is that a real assessment of the politics of the TTIP, or is it just spin designed to push for ISDS in the TTIP?  Would big business drop support for the TTIP if it did not include ISDS-based investment rules?

My own assessment of the politics is very different.  In my view, the TTIP only has a chance if ISDS (and perhaps IP as well) are excluded.  With ISDS in there, the opponents are going to be so fired up that it will likely be rejected.  But maybe that's just my own spin!

The article also says:

On Thursday [Mr. De Gucht] launched special public consultations aimed at convincing the European public that the arbitration provision is needed.

Let me offer up some advice here.  As someone who is skeptical, and needs convincing, one of the big gaps I see in the case for international investment law in its current form is the lack of evidence of a widespread problem of bad treatment of foreign investments.  Sure, there are a few anecdotes here and there, and a handful of countries are a problem.  But by and large, the main problem I see with foreign investment is the lavish subsidies offered by governments to lure it in.  The treatment of foreign investors is, on balance, too good!  So, to convince people that investment rules, as they currently exist, are needed, I suggest the Commission put forward evidence of the problem it claims to be addressing.

Protectionism, Health, and the Purpose of Country of Origin Labelling

From a ruling last week on the U.S. COOL measure by the U.S. Court of Appeals for the DC Circuit:

What then are the government interests here? AMI argues that the rule merely satisfies consumers’ curiosity. But we can see non-frivolous values advanced by the information. Obviously it enables a consumer to apply patriotic or protectionist criteria in the choice of meat. And it enables one who believes that United States practices and regulation are better at assuring food safety than those of other countries, or indeed the reverse, to act on that premise. ... We cannot declare these goals so trivial or misguided as to fall below the threshold needed to justify the “minimal” intrusion on AMI’s First Amendment interests. 

 

 

What Are the "Cogent Reasons" that Could Justify Not Following AB Precedent?

From yesterday's DS449 WTO panel report:

7.317. ... In our view, bearing in mind the Appellate Body's particular function in the WTO dispute settlement system, reasons that could support but would not compel a different interpretative result to the one ultimately adopted by the Appellate Body would not rise to the level of "cogent" reasons. To our minds, "cogent" reasons, i.e. reasons that could in appropriate cases justify a panel in adopting a different interpretation, would encompass, inter alia: (i) a multilateral interpretation of a provision of the covered agreements under Article IX:2 of the WTO Agreement that departs from a prior Appellate Body interpretation; (ii) a demonstration that a prior Appellate Body interpretation proved to be unworkable in a particular set of circumstances falling within the scope of the relevant obligation at issue; (iii) a demonstration that the Appellate Body's prior interpretation leads to a conflict with another provision of a covered agreement that was not raised before the Appellate Body; or (iv) a demonstration that the Appellate Body's interpretation was based on a factually incorrect premise. 

Applying that reasoning to a number of issues in the case, the Panel did not find any "cogent reasons" here.

Legal Analysis of the Trade Facilitation Agreement

I still don't know much about the Trade Facilitation Agreement, but law prof Antonia Eliason does, and she has written an article about it.  Here's the abstract:

This article provides a first analysis of the new WTO Trade Facilitation Agreement, tracing it from its origins in pre-GATT conventions through its mandate in Articles V, VIII and X of the GATT to its present form. As the first such in-depth examination of the agreement, which was agreed at the December 2013 Bali Ministerial, the article shows how the Trade Facilitation Agreement has managed to balance the goals of economic efficiency, regulatory choice, and developing country support. I argue that the Trade Facilitation Agreement is a significant step forward for the international trading regime, representing a new hope for the relevance of the WTO, particularly in light of the previous failures of the Doha round and the increased regionalization of international trade.

Trade facilitation is designed to cut the red tape surrounding the actual movement of goods across real, physical borders. Among the key accomplishments of the Trade Facilitation Agreement is the inclusion of specific measures to help developing countries build capacity and implement the provisions of the agreement. The Trade Facilitation Agreement also takes into consideration regulatory concerns of WTO members, through the extension of the applicability of the general GATT exceptions to the new agreement. While the Trade Facilitation Agreement may appear narrow in scope, addressing procedural border measures, it is, the article argues, the broadest WTO Agreement besides the GATT, since all goods that cross national borders find themselves subject to trade facilitation measures. If the Trade Facilitation Agreement is properly interpreted, the combination of capacity-building measures, a focus on technological improvements and the judicious invocation of Article XX could result in a win-win situation wherein routine positive trade is streamlined, reducing time required to cross borders, while negative trade is more easily controlled and regulated at the border.

Despite certain regulatory questions concerning implementation, it is likely that the net effect of the Trade Facilitation Agreement will be to reduce the cost of trading across borders, while improving trade for developing countries and allowing WTO members to better control trade flows, through a combination of procedural streamlining and regulatory discretion.

Associate Editor Position

From the MJIEL:

ASSOCIATE EDITOR/S FOR THE MANCHESTER JOURNAL OF INTERNATIONAL ECONOMIC LAW

(MJIEL) The MJIEL is looking for Associate Editor/s with a proven and distinguished record in research in the field of International Economic Law to work with Professor Asif H Qureshi and Dr Xuan Gao and the Editorial Board of the MJIEL. The Associate Editor/s will be expected to actively engage in the work of the Journal, its promotion and review process.

This advertisement for additional editorial assistance is in recognition of the increased workload of the journal and the recognition and need to make editorial appointments in a transparent manner in the governance of journals.

The MJIEL was established in 2004 and is published by Electronicpublications.org Ltd. It is available both in electronic and printed forms and is published three times a year. The journal covers all aspects of international economic law including in particular world trade law, international investment law, international monetary and financial law, international taxation, international labour law, international corporate responsibility and international development law.

This is an on-going recruitment exercise and will continue until the right person/s is appointed.

Please note there is no financial remuneration attached to the post/s.

For enquiries and application please write to: [email protected]

Further details about the journal can be found at: https://www.electronicpublications.org/catalogue.php?id=48

Trade Constitution 2.0

Both Professor Howse and Simon raised an important issue in the China-Rare Earths panel report, whose full ramifications, I believe, would go beyond this particular dispute.  To me, the panel’s ostensibly nebulous position on GATT Article XX denotes hermeneutical birth pangs for the “Trade Constitution 2.0.”  What I mean by trade constitution is a certain legal-institutional mechanism that reconciles trade and societal (such as environmental) values, as most national or regional constitutions do. (Think of the ECJ’s Dassonville/Cassis de Dijon/Keck and the U.S. Supreme Court’s Dean Milk/Taylor etc.) 

Under the Trade Constitution 1.0, the GATT jurisprudence suffered from the so-called “pro-trade” bias derived structurally from the dichotomy (the textual separation of general obligations, such as GATT Article III, and exceptions, such as Article XX).  Thai Cigarettes is a case in point.  The WTO attempts to overcome this pro-trade bias and embrace the “(sovereign) right to regulate” in various ways, including the new teleology (“sustainable development” and “an integrated, more viable and durable multilateral trading system”), the new side agreements (such as TBT/SPS) that eliminated the GATT-style dichotomy and explicitly stipulate the right to regulate, and some innovative interpretation securing regulatory autonomy while still taking into account negative trade impacts (the chapeau test in Gasoline and Turtle).  So, there emerges the Trade Constitution 2.0.

Then, the birth pangs come from the residual influences from the old relics.  Even under the Trade Constitution 2.0, the WTO tribunals might not be completely free from the old interpretive habits.  In fact, many old languages in the GATT and GATT panel reports were copied and pasted in the new WTO agreements, such as the SPS/TBT.  Of course, the WTO tribunal may recycle the old interpretation on the same language to some extent.  The problem is that some interpretive confusion tends to inevitably arise in the course of the WTO’s attempts in rationalizing recycled interpretations (from the Trade Constitution 1.) within the new context of the Trade Constitution 2.0).  Hence, the interpretive birth pangs, as seen in the recent TBT jurisprudence as well as here in the China – Rare Earths panel report (as Simon aptly observed in his post.)  

The Appellate Body, more than panels, should take note of the structural difference between the Trade Constitution 1.0 and the Trade Constitution 2.0.  My own prediction is that the AB’s hermeneutics on the Trade Constitution 2.0 would crystalize into the “evenhandedness” test along the line of a series of recent TBT-related case law.  This is the same interpretive pathway that one could observe in the similar jurisprudence in the ECJ and the U.S. Supreme Court.  To that extent, we can say “convergence” of trade constitutions.

The Trade Constitution 2.0, i.e., the non-existence of dichotomy, sheds critical light on every nook and corner of the WTO system, including the TRIPS and the China Accession Protocol.  As future trade disputes concern more about non-tariff barriers of all sorts, the WTO tribunal will embrace the Trade Constitution 2.0 more often.  More interpretive energy will be spent on issue of “how” a measure was applied, rather than “what” the measure was all about.  In other words, it would become increasingly difficult for the WTO tribunal to second-guess the legitimacy of the measure in question, as the Thai Cigarettes panel did a long time ago.  Instead, the AB is likely to focus more on procedural aspects of the measure, such as consistency (evenhandedness) and due process etc. 

China - Rare Earths: Some Systemic Issues

The China - Rare Earths WTO panel report was circulated yesterday. What's jumping out at me in the report are some really interesting systemic issues.

First, there is some good stuff about the role of precedent, and when a WTO panel might depart from prior Appellate Body reasoning (which some might call "precedent," but we have to be careful with that word in the WTO context).  (Paras. 7.53-61)

Then we've got a good discussion of the relationship of GATT Article XX and Paragraph 11.3 of China's Accesstion Protocol.  Can Article XX serve as a defense here?  There's a majority opinion (paras. 7.73-117) and a separate opinion by one panelist (paras. 7.118-138).

And then there's this:

7.664. It is well settled that discrimination can also be arbitrary or unjustifiable where alternative measures exist that would have avoided or at least diminished the discriminatory treatment. In the context of conducting an analysis under the chapeau of Article XX of a measure provisionally justified under subparagraph (g), the Appellate Body has examined whether a WTO-consistent or less trade-restrictive alternative would be available and would enable the regulating Member to achieve its legitimate policy goals with the same degree of efficiency and efficacy.990 The Panel will review first the arguments of the complainants in this respect and those of China, and will follow with our own analysis.

___________________________________

990 Appellate Body Reports, US – Gasoline, pp. 25-29, DSR 1996:I, 3, pp. 23-27, and US – Shrimp, para. 171 ("The Inter-American Convention thus provides convincing demonstration that an alternative course of action was reasonably open to the United States for securing the legitimate policy goal of its measure a course of action other than the unilateral and non-consensual procedures of the import prohibition under
Section 609".).

Looking at alternative measures under the chapeau can be confusing if you are also looking at them under the Article XX sub-paragraphs (not the case here, because it was Article XX(g)).  What exactly is the role of alternative measures under the chapeau?  If less discriminatory measures are available, is that conclusive proof of arbitrary or unjustifiable discrimination?  Or is it just one piece of evidence on the issue? 

Rare Earths:The Right to Regulate as a General Principle of WTO Law and a Canon of Interpretation

This won't be my last post on Rare Earths, but its the first. 

In China-Publications the Appellate Body addressed the possibility that the Article XX general exceptions might apply with respect to obligations under agreements other than the GATT, in that case China's Protocol of Accession.  Relying on text in the Protocol that appeared to subject the obligations at issue to the general right to regulate of WTO Members, the AB found that those particular obligations were subject to GATT Article XX.  In China-Raw Materials, China made the argument that its Protocol obligations with respect to eliminating export taxes should also be subject to Article XX.  The AB rejected the argument, not finding the textual basis that was present in the case of the obligations that were at issue in China-Publications.  The AB left rather open the question of when there would be a sufficient basis in another agreement (let's say SCM for instance) for making the oblligations in that Agreement subject to Article XX exceptions.  This is, obviously, an issue of systemic importance.

In China-Rare Earths, China essentially demanded that the panel not follow the AB's ruling in Raw Materials and decide that the Protocol obligations in question were indeed subject to Article XX exceptions.  The panel split 2-1 on this issue.  In this post, I am concerned with the majority opinion, which in its result followed the AB (the dissent raises important questions as to whether it is consistent with the understanding of the AB of stare decisis in the WTO system as articulatied in the Zeroing dispute, so I'll leave that for a separate post).

What is quite interesting in the majority opinion, is that the majority accepted China's argument that "an interpretation of the covered agreements that resulted in sovereign States being legally prevented from taking measures that are necessary to protect the environment or human, animal or plant life or health would likely be inconsistent with the object and purpose of the WTO Agreement.  In the panel's view, such as result could even rise to the level of being "manifestly absurd or unreasonable.""(Paragraph 7.111)

The panel then went on however to find that China had not shown that the policy instrument specifically disallowed by the provisions of the Protocol at issue were the only means of achieving its objective.  Thus the per se prohibition of this instrument was not as such in contradiction to the general principle of the right to regulate as agreed between the panel majority and China.  

The idea of a canon of interpretation of the kind articulated by the panel at China's invitation is an important one, which deserves considerable discussion.  Basically, it means that in the case of all the covered agreements, the operative provisions along with any limitations or exceptions, or balancing clauses, must be interpreted so as not to prevent Members to take measures that are indispensible for the protection of life, health and the environment.  Where such an interpretation is impossible then one must find that to be consistent with the purposes of the WTO Agreement, Article XX itself applies to the obligations in question.       How would such an approach affect TRIPs or SCM or SPS, to give examples of three agreements that definitely implicate the right to regulate?   And how does this canon of interpretation relate to the acquis of WTO Appellate Body jurisprudence? (In a way, it is not dissimilar at least in spirit from the AB's approach in Cloves that one should read the TBT Agreement as maintaining the same kind of balance between the right to regulate and trade liberalization as the GATT-is there any reason not to extend tthis notion of a GATT-type balance to other covered Agreements, such as SCM or TRIPs?)  I would be very interested in colleagues' views on these questions.  More soon on the dissent.

More on GSP Withdrawal to Enforce Arbitration Awards

Roger Alford is pushing forward with the debate on whether withdrawal of GSP benefits can be used to enforce investment arbitration awards, with another blog post on the issue. Let me push back a bit.

Roger says:

 the Enabling Clause requires GSP benefits to be conferred in a non-discriminatory manner among similarly-situated developing countries. This, according to EC-Tariff Preferences, requires that the relevant preference be made available to all beneficiaries that share that need. (EC-Tariff Preferences, para. 180). That requirement appears to be met. The U.S. obligation on compliance with arbitration awards is applied to all GSP beneficiaries alike. ...

It's certainly true that the U.S. obligation applies to everyone in the abstract.  The U.S. will withdraw benefits for any country that does not enforce arbitration awards.  As long as it applies this criterion consistently to all countries, one could argue that the measure is thus non-discriminatory.

On the other hand, the reality is that only certain countries will actually suffer the withdrawal of benefits.  In other words, in practice the measure will have a disparate impact.  And that's no accident; rather, it is by design.  The measure is intended to apply to some countries (those that don't enforce arbitration awards) and not others (those that do enforce them).  

I suppose the question here is, what do we mean by discrimination?  If there is a conditional GSP measure that leads to a disparate impact in practice, is that "discriminatory" in the sense of the Enabling Clause?  Not an easy question.  My instinct is yes, but that view depends a lot on context that would be too much to get into here.

He also argues:

Second, the GSP conditional benefit must be imposed to meet particular development, financial or trade needs. In other words, if you are granted benefits with strings attached, those strings must be for the benefit of the developing country. Simon Lester questions whether conditional tariff benefits can ever meet that requirement. I disagree. If you look at the various GSP schemes, the list of such needs are legion, addressing issues such as drug-trafficking, communism, terrorism, human rights, environmental protection, expropriation, contractual compliance, intellectual property protections, etc.

At one level one might view many of these concerns as primarily about protecting developed countries’ interests more than promoting the developing country needs. But, of course, these goals are mutually-beneficial. Goals such as promoting the rule of law, creating a safe and stable legal climate, encouraging foreign investment, good governance, reducing crime and corruption, guaranteeing human rights, and encouraging environmental sustainability are all legitimate objectives that developed countries legitimately can ask developing countries to pursue.

In the specific case of honor arbitration awards, developing countries that do not recognize and enforce investment awards are sending a signal to existing and future foreign investors that they are not predictable and reliable trading partners. ...

I want to make two points here.  First, it's one thing to give lower tariffs to countries who face specific problems (e.g. drug trafficking), to give them a financial benefit which helps them deal with the issue.  But it's another to penalize them with higher tariffs for not taking specific actions to address the problems.  I'm not sure that approach can ever be characterized as "responding positively" to "development, financial or trade needs."

Second, I see "development, financial or trade needs" as much narrower than Roger does.  Lack of food is definitely a development need; weak IP protection is definitely not.  It's worth talking about the appropriate level of IP protection in international fora.  But unilateral determinations that one country's IP protection is too weak, and thus GSP benefits should be withdrawn, are unlikely to be in the development interests of that country.  Same goes for enforcement of investment arbitration awards.  There's an argument that the investement arbitration system has benefits for developing countries. But there are also pretty strong arguments that, on balance, it doesn't.  At best, it's a pretty close call.  I would say that an international discussion of property rights, due process, etc., is in everyone's interest; however, unilateral determinations and penalties related to specific cases are probably not, and I'm skeptical that they relate to a country's "development, financial or trade needs".

Moving to Article XX(d), Roger says:

in the case of Argentina it appears that a variety of carrots and sticks were critical to encourage Argentina to honor the investment awards addressed in the federal legislation. Simon Lester questions whether the conditional GSP-benefit scheme satisifies the necessity test. I think it could, as part of a comprehensive policy seeking to secure compliance with arbitration awards. In the words of Brazil-Tyres, the GSP conditional benefit is necessary if it can be shown to have made “a material contribution to the achievement of that objective.” (Brazil-Tyres, para. 150). If the United States adopted a comprehensive policy that included a GSP conditional benefit, the total effect of complementary measures may have been enough to secure compliance. (Brazil-Tyres, para. 172). This would satisfy the necessity test.

 As I noted in the original post, I would look here at balancing the trade-restrictiveness of the measure (very high) with the degree of contribution of the measure to its goals and the importance of the interests pursued (low, in my view).  On that basis, I'm not so sure the measure satisfies the necessity test.

Also, as I said in the original post, I'm not convinced this measure "secures compliance" with the federal law at issue.  To me, this is the weakest part of a necessity defense here.

In the unlikely event there is a WTO dispute on these issues some day, someone will have to turn these short blog posts Roger and I have done into dueling 200 page WTO panel submissions.  I think I can speak for Roger when I say, I hope it's not us!

GSP Withdrawal to Enforce Investment Arbitration Awards

Roger Alford has an interesting post over at Opinio Juris (based on an article), in which he discusses the withdrawal of GSP benefits as a way to induce compliance with investment arbitration awards. To illustrate this situation, let's say a government has previously offered lower tariffs to a developing country as part of a GSP program, but then withdraws them as a penalty for the failure of the developing country to pay an arbitration award. He refers to this as a "trade remedy," and suggests an argument for why such action is consistent with WTO rules. In this post, I'm going to quickly work through how a WTO dispute on this issue might go. (This is going to be a little rough, not a detailed memo with footnotes!) I have doubts about whether such action is allowed under WTO obligations, but I admit there are some complicated issues in here.

First off, the obvious way to bring a complaint against withdrawal of GSP benefits is to allege a GATT Article I violation: The measure treats one country's goods worse than those of other countries, hence there is an MFN violation.

When GSP programs are at issue, the Enabling Clause operates as an exception to Article I, and is likely to be a main focus of the case.  Here, the emphasis would be on two issues: whether the measure is discriminatory, and whether it responds positively to developing countries' development, financial or trade needs.  (Another issue is whether the criteria for inclusion/exclusion from GSP are objective; I'm not to get into that one here).

In terms of non-discrimination, the withdrawal of benefits would likely also be found discriminatory under the Enabling Clause, although the analysis would be a little different than Article I (focusing on similarly-situated countries, rather than goods from different countries).

More interesting is the question of whether the measure responds positively to development, financial or trade needs. On this issue, I question whether a GSP penalty -- that is, withdrawing benefits for non-trade policy reasons -- can ever meet the standard. I can see how lowering tariffs might help with a specific problem (e.g. drug trafficking), by giving affected countries special benefits. But higher tariffs through withdrawing benefits as a penalty? I'm not so sure.

Furthermore, you have the issue of whether the measure addresses development, financial or trade needs at all. There may be an argument that enforcement of investment arbitration awards qualifies, but it's not hard to imagine some pretty strong counters.

Beyond the Enabling Clause, there is also Article XX(d) as a possible defense. Here, there are going to be several issues. Let's go in order of the text (not necessarily in order of importance -- just seemed simpler this way). First, we have the always controversial "necessary" test. How trade restrictive is the measure at issue? I would say that discriminatory, higher tariffs are pretty clearly very trade restrictive. Does it contribute to its objective? Maybe a little bit. How important are the interests here? That is not clear to me. Finally, is there a less trade restrictive alternative measure here? I think the answer is yes, as Roger mentioned two himself: "limiting access to World Bank and Inter-American Development Bank credit and loan facilities or refusing to support the restructuring of Argentina’s $7 billion Paris Club debt".

Next up, does the measure "secure compliance" with the federal law at issue, which says in part that "An award of an arbitral tribunal rendered pursuant to chapter IV of the convention shall create a right arising under a treaty of the United States". It's not clear to me that "securing compliance" with this domestic law is the best characterization of what the GSP withdrawal does; inducing compliance with an arbitration award seems more accurate.

Then we get into whether the federal law here is a law or regulation covered by Article XX(d). Note that Article XX(d) provides a non-exhaustive list of policies: "relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices."  The law here does not seem all that similar to the examples given. Is that enough to exclude it from Article XX(d)? I'm not sure.

And finally, we get into the chapeau, which says that the measure must not be "applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade." There's a complex relationship between these three elements, which I can't fully get into here.  For me, unjustifiable discrimination is the most obvious candidate here for the complainant to invoke. For all the reasons the measure violates Article I and does not satisfy the requirements of the Enabling Clause, it also constitutes unjustifiable discrimination, I would say.

All right, I glossed over a lot of points here. Feel free to raise them in the comments!

The Scope of the TBT Agreement: What is a Technical Regulation?

Having followed Rob's coverage of the Seal Products Appellate Body hearing, there is an issue that puzzles me: What is the scope of the "technical regulations" covered by the TBT Agreement?  I'm finding that I have no idea how to think about this question.  The drafters didn't give much guidance in the text (yes, Annex I says some things, but it doesn't say them very clearly), and it is a struggle to find help elsewhere.  I think much of the complexity results from the "product-process" distinction, but perhaps there is more to it.  

To begin, everyone seems to agree that, generally speaking, measures governing the physical makeup of products are covered.  So, if an EU measure said that seal oil pills must consist of at least 80% seal oil, that would be a technical regulation.  I think that's an easy one.

But what about measures that deal with the production process?  Such measures could regulate, inter alia, wages of workers who make the product; the carbon emissions of the relevant factory; or the process of killing the seals.  Are such measures "technical regulations"?  Annex I refers to "product characteristics or their related processes and production methods."  When do "processes and production methods" relate to "product characteristics"?  Are the wages of workers who make a product a characteristic of that product?

All of this, of course, is the infamous "product-process" distinction, which has vexed many people over the years.  I have little trouble dealing with it in the GATT context, because I think it can mostly be ignored. But in the context of the scope of "technical regulations," I'm not sure what to do with it.  Often you can look beyond the text for help; here, I'm not sure where to look.

In general terms, the TBT Agreement carves out a narrow category of measures and makes them subject to more detailed obligations.  But why?  What particular problem were the drafters trying to address?  What were the measures the drafters thought were in need of additional obligations?

Having read a bit of the TBT negotiating history, private standards were clearly one aspect of the problem.  But the TBT rules go beyond that, and deal with government regulations, too.  I looked at this history recently to get a sense of where TBT 2.1 and 2.2 came from; I think there may also be some useful information on the nature of technical regulations and standards, as seen by the drafters, but it's not an easy read and there is a lot to take in.  If someone wants to go through it, it could help with these issues.

The Appellate Body will have to come up with something, and I suspect it will make some people happy and others unhappy. I don't think I'll have a strong view on this issue -- it feels a bit arbitrary.  I'm just hoping for a clear ruling.

What would be helpful, though, is if the governments who write the trade rules would clarify what they have in mind.  What is this special category of TBT measures that needs additional obligations?  Is it any measure that relates to products?  Does it cover some or all parts of the production process, or just the final product in its physical form?  What about a simple product ban?  And finally, and perhaps crucially, what does "technical" mean here, anyway?

Regulating Cheap Newspapers

From the Jerusalem Post:

Israel Hayom may have to look for a new business model if a bill outlawing free daily newspapers passes into law.

The text of the bill, proposed by MKs Eitan Cabel (Labor), Robert Ilatov (Yisrael Beytenu), Ayelet Shaked (Bayit Yehudi), Elazar Stern (Hatnua), Ariel Attias (Shas) and Yoel Razbozov (Yesh Atid), says it seeks to “strengthen written journalism in Israel and ensure equal and fair conditions of competition between newspapers.”

“The result of free newspapers is that every wealthy person can influence public opinion in Israel,” Cabel said. “Free newspapers also hurt journalism as well as pluralism and democracy in Israel.”

The bill defines a free daily newspaper as one that is given out without payment six days a week and applies only to the four newspapers with the highest circulation in Israel, whatever they may be at a given time. The lowest-priced newspaper of the four cannot cost less than 70 percent of the second-lowest-priced paper, according to the bill.

As such, the legislation targets Israel Hayom, the pro-Prime Minister Binyamin Netanyahu paper owned by his major supporter and donor Sheldon Adelson, who also contributes to Republican candidates’ campaigns in the US.

If the U.S. and Israel had a BIT (which they don't), would Adelson have a good claim?

ASIL IEcLIG Call for Papers

 From the ASIL/IEcLIG:

CALL FOR PAPERS

American Society for International Law

International Economic Law Interest Group (IEcLIG)

in partnership with the University of Denver Sturm College of Law Sutton Colloquium

 2014 Biennial Research Conference:

REASSESSING INTERNATIONAL ECONOMIC LAW AND DEVELOPMENT:

NEW CHALLENGES FOR LAW AND POLICY

University of Denver Sturm College of Law

Denver, CO, USA

November 13-15, 2014 

I.                    Conference Theme

Amartya Sen’s call for understanding development not only in terms of gross national product but also “in terms of the substantive freedoms of people” marked an important reframing of the legal and policy discourse around economic development.[1]  The resulting Millennium Development Goals focused much academic research in this area towards a more comprehensive understanding of development, one that would recognize economic growth as intrinsically tied to such areas as: environmental sustainability; food security; the reduction of extreme poverty, hunger, and child mortality; access to health; and the promotion of education and gender equality.  International economic institutions like the World Trade Organization, the World Bank, and the International Monetary Fund have traditionally been at the center of promoting and managing economic growth; yet, these institutions also face challenges caused by recent financial crises, the need for food security and high energy demand, while preserving natural resources and the environment.   

With the approach of the fifteenth anniversary of the Millennium goals and given these new and ongoing challenges, it is time to reassess the role that international economic law (IEL) has played and continues to play in development. How effective is IEL at promoting development, broadly construed?  Under what conditions is it effective? In what ways should IEL norms and institutions be adjusted to accommodate growing concerns around climate change, energy demand, food security, and other issues? 

II.           Proposal Submission & Selection 

We encourage IEL scholars, practitioners, and advanced graduate students to submit proposals for paper presentations or panels.Proposals should be no more than one single-spaced page in length. For guaranteed consideration, proposals must be received no later than May 16, 2014. 

Paper proposals should include a working title of the paper and an abstract describing the paper’s main thesis, methods, and contribution. You should also include a one-page curriculum vitae (CV) as a separate document. 

Panel proposals should be organized around a theme and should include a brief description of the theme and a list of the proposed participants with their anticipated contributions, indicating whether the participants have expressed a willingness to participate in the conference should the proposal be accepted. 

Proposals should be submitted to [email protected]. Any time-sensitive questions should be addressed to [email protected] and [email protected]. The selection process will consist of blind review by the IEcLIG leadership and the 2014 IEcLIG Biennial Selection Committee. We anticipate communicating acceptance decisions by July 18, 2014. Authors of accepted proposals commit to preparing a draft paper on their proposed topic, and submitting the draft paper to the conference organizers by no later than November 1, 2014.

 ...

III.          Possible Topics for Papers and Panels

We have provided an illustrative list of possible paper and panel topics below. 

We construe IEL and development broadly, and we are open to a variety of scholarly approaches. We welcome proposals adopting historical, empirical, comparative, theoretical, critical, or normative frameworks.  We also encourage submissions that do not necessarily address the conference theme.

Possible theme-related topics 

• Development strategies: domestic policies supporting industrialization/structural change; the need for policy space
• Managing financial crises and income policies for employment creation
• Reforms for global economic governance in the context of development: e.g. multilateral, bilateral, regional, plurilateral trade; international monetary and financial system; management of debt crisis
• Implications of mega-regionals for developing countries.
• The role of political institutions for development
• The role of economic institutions such as WTO, IMF, World Bank, the G-8/G-20; international standards organizations, for development
• The WTO's new trade facilitation agreement and development
• Role of public/private partnerships in development
• Climate change and its impact on economic development
• Food security and climate change; sustainable agriculture
• Sustainable development issues such as natural resource extraction and energy
• The interaction of domestic law and politics to development
• The role of hard and soft law in international economic and sustainable development reforms
• Role of technology in transformation of agriculture
• Access to technology for sustainable development
• Micro-finance and development
• Renewable energy and trade and investment
• The labor and development nexus in a global supply chain
• Evaluating trade and development policies: e.g. NAFTA at 20; EU at 20; the WTO at 20; UNCTAD at 50
• Methodological approaches international economic law and development;
• Interpretive approaches to international economic law and development: theory vs. practice;
• The rise of BRICs and implications for development
• The rise of Africa and international economic law
• The proliferation of trade and investment agreements and their implications for development

The full details are here.

Seals Hearings:"Consistency" (from Jo Langille)

Today at the Seal Products Appellate Body hearing, the discussion focused on Canada’s claim that there is a philosophical consistency test included in the law of the WTO. Canada’s argument is that under the law of the WTO, the EU should not be able to regulate to protect seals because this legislation is philosophically inconsistent with the way in which the EU has acted to protect other animals, such as deer.

Howse, Sykes, and I responded to this argument at length in our amicus brief filed in the Seal Products dispute. We argued Canada’s consistency claim is incompatible with the text of the GATT, the nature of legislation in democratic societies, and the function and institutional legitimacy of the WTO.

Our amicus reads in relevant part:

 The Appellate Body should reject Canada’s argument that Article XX of the GATT should contain a novel “consistency” requirement: that a Member’s regulation must be philosophically consistent with all other regulations adopted by that Member.

Canada argues that the Panel erred in not taking into account other regulatory measures, in entirely distinct economic sectors, taken by the EU that are allegedly not philosophical consistent with the Seal Regime.[1] Canada’s claim is that because the EU permits some forms of animal suffering under its internal regulation, the EU should not be permitted to stand up for the welfare of seals. In other words, according to Canada, because the EU has not perfectly protected all species of animals from inhumane suffering, under WTO law it has no right to regulate to protect one species.

 In short, Canada is arguing that the WTO should apply a strict consistency requirement in its analysis of all regulation developed by Member states, regardless of whether discrimination in trade is the consequence of any inconsistency.

 There are several problems with Canada’s claim, which should cause the Appellate Body to reject this argument, and to refuse to read this novel and absurd consistency element into GATT Article XX.

 First, it is well established under GATT and TBT jurisprudence that the regulating Member may choose its level of protection against a given risk. The “right to regulate” is a fundamental component of WTO law. As recognized in EC – Asbestos and Brazil – Tyres,[2] Members have the right to set the level of risk protection they desire under the law of the WTO.

 Canada in its Appellant’s submission invites the Appellate Body to deviate from this longstanding jurisprudence, and to find that as part of the determination of whether a Member’s measures are consistent with GATT Article XX the Panel must compare the level of protection chosen against the risk to which the Member’s scheme is directed, with other risks which are related to the same legitimate objective.

 Canada’s submissions seek to erode WTO Members’ right to regulate, by requiring that any regulation made by any WTO Member be philosophically consistent with all other such regulations. A consistency requirement would not allow Members to set the level of risk that they desire in the context of a particular policy matter, because the Member would be required to ensure that the level of risk was not inconsistent with any other regulation it adopted where another kind of risk was asserted to be somehow comparable or analogous. This is a severe encroachment on a Member’s right to regulate that the Appellate Body should reject.

 Second, it is unclear how such a consistency requirement could be inferred from the text, context, object, and purpose of GATT Article XX. It would therefore be entirely out of keeping with the interpretation of the covered agreements “in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose” that is required by the Vienna Convention on the Law of Treaties and the principles of customary international law regarding treaty interpretation codified therein, and the approach to treaty interpretation that has consistently been embraced in WTO case law. Indeed, such a consistency requirement has been found to be absent from the relevant texts in prior WTO jurisprudence.

 For example, in EC – Asbestos, Canada made a similar argument: that the EC level of protection against risks arising from substitute products should be taken into account in determining whether its ban on asbestos was necessary for the protection of public health. The Appellate Body rejected this suggestion.[3] Unlike Article 5.5 of the Agreement on Sanitary and Phytosanitary Measures (the SPS Agreement), which imposes a limited obligation of consistency in respect of levels of protection, GATT Article XX contains no textual guidance as to what risks are to be compared, what would be acceptable explanations for different levels of protection, and on the other hand in what situations differences in levels of protection would affect the conformity of the Member’s measure with the GATT. Under Article 5.5 of the SPS Agreement, WTO Members commit to “avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on trade.” There is no such commitment to treat different situations consistently under GATT.

 It stretches the legitimacy and institutional resources of the Dispute Settlement Body to cut these kinds of criteria from whole cloth and to read them into GATT Article XX. Indeed, it is significant that the architects of the Uruguay Round reserved the imposition of an obligation of this nature (albeit a limited one) for a context – sanitary and phytosanitary measures – where there was a limited range of risks covered by the relevant agreement, where extensive international standards exist, and where there is agreement among WTO Members about which international organizations may provide guidance concerning the risks in question and appropriate regulatory approaches.

Thus, in Korea – Beef, the Appellate Body explicitly held that examining regulatory instruments associated with addressing other risks does not imply a requirement that a Member’s level of protection be similar or consistent across risks:

 Examining enforcement measures applicable to the same illegal behavior relating to like, or at least similar, products does not necessarily imply the introduction of a “consistency” requirement into the “necessary” concept of Article XX(d). Examining such enforcement measures may provide useful input in the course of determining whether an alternative measure which could “reasonably be expected” to be utilized, is available or not.[4]

 Along these lines, it was not inappropriate for the Seal Products Panel to consider the measures used by humans to slaughter animals other than seals in its analysis of what alternative might have been reasonably available; however, given the Panel’s factual findings about the unique conditions under which the seal hunt occurs and the difficulties in ensuring humane methods in those unique conditions, it is not surprising that the Panel found the comparisons to other hunts of little assistance.[5]

 Third, we note that the Appellants in Seal Products identified the relevant universe of like products as seal products. They did not seek to argue that other products, for which it is alleged that the EU has a lower level of protection, or higher acceptable level of risk in regard to animal suffering, are “like” seal products. Thus it is difficult to understand how they can conclude that these other industries are in any way relevant to the analysis.

 Fourth, reading a “consistency” test into GATT Article XX would overstep the WTO’s institutional remit, which is to regulate international trade in order to counter protectionism, whether explicit or de facto. The WTO cannot assume the role of attempting to rationalize or harmonize the way in which different peoples in different WTO Members prioritize different kinds of risks, as well as take into account the relative costs of responding to different risks. Even in the one instance where as noted there is a consistency requirement in a covered agreement, the Appellate Body, in EC – Hormones, emphasized the many human considerations or factors that might make risks that seem abstractly similar or comparable not really comparable at all from the perspective of a particular society or its responsible and representative government.[6]

 Finally, such a consistency requirement would be entirely unworkable in a democratic society, since a Member state would be prohibited from altering its legislation on an incremental basis. Incremental legislation is the standard approach in a democratic society, in which legislation must be changed slowly over time, through the democratic process. Democratic societies almost never address all risks they are concerned about at the same time or at the same speed. Under Canada’s approach, advancing the regulation of animal suffering one step at a time would be impossible, because any state seeking to do so would be forced to treat all animals in all contexts equally humanely (however that would be measured). This approach is unworkable, both for the ability of democracies to legislate and for the WTO’s capacity to regulate international trade.

 Howse and I also predicted that this argument would be made in the Seal Products dispute when we wrote our YJIL article on the subject. Our article states, in relevant part:

 The importance of sincerity, and of assuring that the measure is not a pretext for protectionist, discriminatory treatment of imports, is sometimes confused with the notion that invocation of the public morals exception requires moral purity. In the US – Gambling case, for example, Antigua unsuccessfully questioned the legitimacy of the United States’ objective, given that the United States did not ban all gambling but only Internet gambling. In the context of animal welfare, critics of the European Union may point to practices permitted with respect to treatment of animals other than seals that seem prima facie to be as cruel and inhumane as the treatment of seals that is the concern of the EU regulation. Yet, properly interpreted from a pluralist point of view, this reality does not undermine the sincere or bona fide character of the seals regulation as an animal welfare measure. A number of observations to support this contention are in order. First, moral or spiritual beliefs about animals and the acceptability or unacceptability of certain practices in the treatment of them may well result in different animals being viewed as having different kinds of relationships to human beings, just as the purpose of the infliction of suffering, as well as its level or intensity, may well matter … Accusing Hindus of hypocrisy, for example, because they view cows as sacred but not chickens, is simply not taking pluralism seriously.

 

[Furthermore], there is nothing in the text of Article XX(a) that requires, for the invocation of the public morals exception, that the moral beliefs or values at issue be of such a priority that they trump all other moral beliefs, values, or social interests. This would render regulatory schemes that balance or harmonize some beliefs or values with other beliefs or values indefensible in light of their supposed objective to protect public morals. But sincerity does not imply fanaticism. Recognizing pluralism, the recent WTO panel report in the COOL case notes: “it is not inconceivable that parliaments and governments pursue more than one objective through a certain measure. Different constituencies and legislators may have different objectives, which nonetheless lead to the adoption of a particular measure.” Indeed, it would be odd if Article XX operated only to protect absolutist moral positions, thereby opposing elements of value pluralism in WTO member societies. As [in relation to the IC exception], concern for the existence and way of life of certain human communities may need to be balanced against the moral concern of animal welfare – but this does not make the latter any less of a genuine reflection of the prevailing beliefs or values of the society in question.

 

Third, as we have already noted, the beliefs and values that are relevant for purposes of Article XX(a) are those prevailing today. The process of changing laws, regulations and practices to reflect today’s values … is not an instantaneous one. Only a despotic regime could change at once or in a short period of time hundreds if not thousands of laws and regulations to conform in such a diverse federal community as the European Union. Thus, it is totally unreasonable, indeed absurd, to expect the European Union to have already reflected the prevailing values and beliefs behind the EU regulation on seals with respect to every other context of treatment of animals.[7]

 

---

[1] Canada’s appellant submission, paras. 278-290.

[2] Panel Report, EC – Asbestos, para. 291; Appellate Body Report, Brazil – Retreaded Tyres, para. 57.

[3] Appellate Body Report, EC – Asbestos, para. 168.

[4] Appellate Body Report, Korea – Beef, para. 170. It should be noted that the Appellate Body did not suggest that examining measures related to other products was a legal requirement of Article XX, but rather than it was a permissible consideration that the Panel might, in making an objective assessment, take into account.

[5] Panel Report, EC – Seal Products, para. 7.187.

[6] See, e.g., Appellate Body, EC – Hormones, para. 217.

[7] Howse and Langille (Exhibit 1), pp. 418-419 (citations excluded).

The Seals Hearings:Thoughts on TBT 2.2 and Tuna II

Canada and Norway have been attacking the EU anti-cruelty ban by focusing, at this stage exclusively, on its exceptions.  Of what relevance are these to TBT 2.2 (as opposed to 2.1)? I think the answer lies largely in the US-Tuna II case.  Recall that the AB in reversing the panel, found that it was no problem for the US to pursue its tuna and consumer protection goals with respect to ETP tuna, but not tuna outside the ETP.  The panel, the AB said, should have evaluated the relationship between the objective and the measure, focusing on the ETP.  Could one not apply the same reasoning here with respect to commercial hunts on the one hand and indigenous and marine management hunts, on the other?  Similarly, as I have mentioned in previous posts, Ibelieve, the AB also held that it is fine for a measure to be one that is capable of achieving a Member's goal only partially.   Thus the implicit exclusion of transit and inward processing from the EU seal ban should in any way point toward a finding that its measure is not necessary for the protection of public morals.

But as far as the task of the Appellate Body goes, I should mention an interesting line of questioning from Division Member Chang yesterday afternoon.  This goes to burden of proof and the difference between TBT Article 2.2 and GATT Article XX. Chang raised the possibility that the analytic under 2.2 might be more straightforward since, after all, one is not concerned with the justification of some measure that has been found, already, to provisionally violate a covered agreement.  Thus, unless under 2.2 the complainant makes a convincing prima facie case that there are other reasonably available measures less trade-restrictive than can make an equivalent contribution to the Member's objective, a 2.2 claim simply doesn't get off the ground, and there is no need for a relational analysis of the kind that is done under Article XX (weighing and balancing, etc.).   It seems to me that this approach is one that is worthy of serious consideration.  It certainly makes the task of the Appellate Body easier in the present case, since whatever the complainants' arcane arguments in appellate submissions about weighing and balancing, and multiple versus single objectives, the facts found by the panel are enough to establish that the complainants never made a convincing prima facie case that there was a reasonably available less trade restrictive alternative.      

A Reflection on this Afternoon at the Seals Hearing: Democratic Pluralism and the Structure of WTO Law

This afternoon( left just before the coffee break) saw the panel struggling with how within the text of TBT 2.2 to frame or imagine the EU measure, which is animated by moral concerns about seal welfare and about complicity with excessive  suffering of seals, but balanced by other concerns.  In contemplating this complexity, the AB Division came back several times to one particular dimension of the trade-offs. Indigenous sealing methods, dictated by a combination of climate and geographical conditions, and the need to seal throughout the year, often uncontestably involve considerable suffering for seals and poor animal welfare outcomes, which, at least at one very basic level,  the EU measure is animated by the aspiration to prevent.  How is it that another concern, protecting a traditional indigenous way of life, all of a sudden trumps the animating concern, when there needs to be a trade-off?  Is this moral incoherence, hidden protectionism, or something else?  Answer: the real world of democratic pluralism, as Langille and I explain in our Yale article, a world  where we don’t have almost-divine philosopher kings or queens a la Plato who can harmonize all concerns without some need for sacrifice of some highly worthy concerns to others in particular circumstances. 

For the EU, as it explained repeatedly, a certain kind of value pluralism is built into the moral beliefs about animal welfare themselves-thus it is morally acceptable that animals suffer for important human purposes while not otherwise to the same degree.  Protection of indigenous traditions is one of those purposes.  That seems logical to me but the EU has felt the need to keep repeating it in answers to the Division’s questions.  Could a more fine-tuned trade-off be made?  Possibly.  The EU could have training courses for indigenous sealers aimed at trying to reduce seal suffering even in the difficult conditions of the hunts-at the margin, fewer seals would suffer.  It could try and provide adjustment programs so that younger indigenous people who are sealing not because of a connection to tradition but just to earn a living (I’m sure some of those exist) can be moved to other professions.   I am in favor of doing all of this, and it would make it easier to swallow that the EU is overriding seal welfare to protect indigenous ways of life in a way that respects the idea that all animal suffering that is not prevented should be justifiable.

But for the AB the question is surely this:  where does WTO law require this more fine-tuned, more perfect less rough trade-off between seal welfare and it sacrifice for other ends?  It certainly isn’t a requirement of non-discrimination either between products or between countries. You might say under Article 2.2 or GATT Article XX if the trade-off is so great that it means that the measure makes no material contribution to the legitimate objective, then there is an insuperable problem of justification.  But then you would have to consider that the facts in this dispute are otherwise-even the panel, which seemed troubled with the trade-off in question, found as a fact that it didn’t prevent there being a material contribution to public morals.  And, as just discussed, you would have to take into account that the moral beliefs in question, concerning unjustified suffering of seals, in this case internalize to some extent the trade-off to the moral standard itself, thus making  questionable the extent that there is any trade-off purely in public morals terms.  But, thirdly, even where there is one, can’t we just accept that there is simply a lower level of protection with respect to the animal welfare objective given the other concerns?  In this sense a Member’s sovereign right to set its level of protection, and defend the material contribution in light of that level, allows it pursue multiple concerns that involve trade-offs without creating tensions within the Member’s WTO obligations.   But perhaps it is about sincerity-maybe the thought is that the animal welfare activists are silly people who have been co-opted into supporting a protectionist scheme for Greenland, which merely substitutes the suffering of Canadian seals for that of Greenland seals.  This cynicism about idealistic and highly competent and responsible people, this condescension, so present among the Canadian industry and its political protectors-at times I wonder how far it is from the corner of Norway’s lips (and it was not far at all in the panel hearings)?  Woe betide an Appellate Body that bought any of that.   Fortunately, the evidence is clear, even from Greenland’s own industry, as we cite in our amicus, that the ultimate effect of the EU ban has been to devastate Greenland’s own exports not prop up its sealing industry; the ban is working because it has become effective in and given support to the evolution of a world where this kinds of cruelty is simply less acceptable.     

If the WTO doesn’t pay attention to the real world of regulatory democracy where worthy objectives are often moved ahead by messy imperfect compromises and trade-offs, then the real world of regulatory democracy will not give much credence to the WTO. A morally and intellectually perfect philosopher ruler in a utopia would want to leave no stone unturned to reduce to an absolute minimum the extent of sacrifice of animal welfare to protection of indigenous peoples’ traditional ways of life-but if WTO law required that, it would be totally unsuited to making the real world a better place one step at a time.

 

Now boarding to Buenos Aires.  Have to post. Apologies for typos etc.

 

  

     

Seals Hearings:The Implicit Transit and Inward Processing Exceptions

AB Division Member Chang has raised the issue that there is one estimate in the Cowie Report that suggests largest amount of seal products that entered the EU at the time the EU measure was imposed were for processing and transit, which are permitted under the scheme.  He is pressing on the issue of whether a public morals basis for the EU measure is coherent, if it is permissive of EU nationals handling seal products for transit and processing purposes.  In other words, if the moral standard relates to unjustified suffering of seals and the objection to EU nationals becoming compllicit in that, then why isn't the same morally objectional complicity involved in handling for transit or processing as opposed to consumption?  The EU is responding to Chang by focusing on statistics.  But he is raising not just the question of the relative importance of say processing to other imports but why it wouldn't processing be as morally objectionable as consuming on EU territory? 

An adequate answer to this question has several dimensions.  First, as the EU concedes, including procesing does reduce somewhat the contribution of the measure to upholding the stated moral standards.  The interest in the name of which that reduction is concerned is comity, namely recognizing that people elsewhere may be legitimately permitted by their own governments to consume seal products, because those societies have a different evaluation of public morals.  Thus, by permitting inward processing and transit there is a balance between asserting the EU's moral standards for its own consumers and deferring to other societies' moral standards with respect to their own consumers.  It seems to me that this doesn't at all undermine the coherence or consistency of the EU's moral standards for EU consumers.  If there were no comity concern, then it would be fair to ask why there is no moral concern  about the inherent complicity with unjustified suffering of seals that occurs in the handling for transit and processing.   In sum it is not the EU moral standard itself that is variable but rather its application to different kinds of complicitly with unjustified seal suffering-but this variability is not incoherent or contradictory, when one takes into account the other relevant concern, namely comity.  Secondly, there is significant evidence that the EU measure has in fact contributed to the reduction in demands for seal products outside the EU, through the contagion effect of moral expression.   Thus, even with the transit and inward processing implicit exceptions, the overall effect of the EU measure is greater global consciousness-raising about the moral unacceptability of unjustified suffering of seals.   Third, much animal welfare legislation that deals with moral concerns is, as Langille and I point out in our article, inherently incrementtal given the transitional effects on other interests and concerns in moving to a regulatory approach that fully reflects the evolving moral standards of the community.  Beginning with a focus on the complicity of consumers but not immediately addressing complicity in handling for transit and processing, is quite consistent with a step-by-step or incremental approach, as long as the overall effect is a clear move toward reflecting the moral standards in question.  And the EU measure has been perceived both in the EU and globally as such a clear move.      

 

Seals Hearings Day One Part Two

So if the Appellate Body were to complete the analysis and do its own assessment of the EU measure under TBT, what might its concerns be?

Some hints come from a few questions from the Division yesterday afternoon.

One concern seemed to be whether the EU measure is being effectively enforced where seal is merely one input into a product rather than the product itself.  The EU sensibly replied that enforcing a regulation on a controlled substance is always more difficult where you are dealing with the substance being embedded in complex finished products.  You may have to rely on customs declarations with penalties for fraud, and a certain amount of random inspection.  That members of the European public may have some inadvertent truck or trade with seal in finished products due to customs fraud or inherent enforcement difficulties hardly seems, though, to undermine the rational relationship of the measure to the moral concerns of the EU.  In Tuna II the AB made it clear that a measure can inherently fall short of fulfilling the objective while still making a material contribution and thus having a rational relationship to that objective.

A second question related to the MRM exception.  The use of that exception requires that there be a recognized body and it also entails a role for competent authorities in ensuring the integrity of the use of the exception.  It was pointed out by the AB Division that it seems that especially regarding competent authorities there might be some differences in the administration of the MRM exception where the seal products are coming from non-EU countries, i.e. some de jure different treatment.  However as we know from  US 337 on, different treatment may not necessarily be less favourable.   It seems that the complainants’ industries have not attempted so far to use the MRM exception, so it would seem unripe to come to a conclusion that any differences in its functioning in the case of non-EU seal products actually create less favourable treatment for those products.

A third question implicates important issues about the normative foundations of the IC exception.  It concerned whether the IC exception places any limits on the total amount or percentage of products from an IC hunt that are commercially marketed as opposed to being used for the subsistence of the indigenous community in question.  The EU responded that there is no such limit defined in the measure.  Now this leads to further question (not asked by the AB division yet):does this somehow undermine the justification for treating the IC hunts differently, i.e. protecting indigenous communities whose subsistence depended traditionally on the consumption of seal products? 

At a very basic level, no.  The EU was regulating based on the available evidence that traditionally significant amounts of the harvest from IC hunts have been used for subsistence in the community-there might then not be an obvious  reason to fix a percentage as a legal requirement in order to ensure that the IC hunt serves the subsistence objective with respect to indigenous peoples.  At a deeper level, the issue is whether there is a legitimate concern with the social and economic interests of indigenous peoples that would lead to a separate justification for permitting seal products that are hunted as part of a traditional indigenous way of life (i.e. of the sealers) but not consumed to a significant degree as part of a traditional way of life.   But then one can imagine that Canada would come back and say that precisely the commercial hunt in Canada supports a traditional way of life of sealing.    So if we are talking about preserving not just subsistence but protection of employment in sealing, what is the justification for singling out indigenous employment in sealing?  The answer is very clear-the treatment of indigenous peoples historically and the terrible social and economic consequences that flow from it, means that it is entirely reasonable,  as a matter of restorative justice, for example, to give them special protection for traditional ways of making a living such as sealing even if the products are no longer used for subsistence in their own communities to as great an extent as in the past, but rather where the sealing allows the indigenous sealers to make a living through selling the products into channels of trade.  The WTO adjudicator shouldn’t micromanage the mix of moral or justice concerns in protecting aboriginal peoples and different aspects of their traditional ways of life (sealing and/or consumption of seal products for subsistence), as long as these concerns are applied both to domestic and imported products in a neutral and impartial way.

   

The Seals Hearings, Day I (Part I)

In our YJIL article on the Seals dispute "Permitting Pluralism", Jo Langille and I argued that the TBT Agreement is not designed to apply to measures dealing with intrinsic moral principles of right and wrong; many of its provisions seem to address instrumental risk regulation, and the ordinary meaning of the word "technical" itself seems in tension with laws based significantly on ethical imperatives or commandments, and not just seeking some welfare goal.  To take an obvious example, who would describe the prohibition of murder as "technical"? In our amicus Langille, Sykes and I didn't repeat that argument-though we did file the article as an exhibit. (Anyhow, Langille and I we also see instrumentalist aspects in the EU scheme, so our view doesn’t lead to complete non-applicability of TBT).

It turns out the issue of whether and in what aspects the EU seals scheme is a technical regulation has been very much on the mind of the Appellate Body.  Of course the obvious reason is not our analysis but a more formal argument of the EU that may seem at times similar to the unsuccessful argument it made in Asbestos that a ban can’t be a technical regulation because it doesn’t describe any characteristic the product has to have in order to be allowed but rather it just keeps the identified product out altogether.  However, the EU and the related US Third Participant argument is in fact considerably more subtle, though not always presented so nimbly by all of the  EU’s attorneys.  It is this: Asbestos can be distinguished because in Asbestos both the ban and the exceptions really focused on the harm that derives from the physical characteristics of asbestos and avoiding that harm.  In Seals by contrast, what determines whether an identifiable product, i.e. anything containing seal, is permitted on the EU market, is not any characteristic of seal as a product, but the purpose and manner of the hunt (indigenous or marine management). Canada and Norway don't have a great response-they simply say that any measure that determines the access to the market of an identifiable product describes product characteristics.   But if that were so then why mention PPMs separately at all in Annex I:1, much less distinguish product-related PPMs, since any measure that merely applies to an identifiable product would be describing product characteristics?  Canada’s and Norway’s view is basically circular-it is a product characteristic of a seal product that it is seal.

AB Division Member Chang seems to be leading the charge in probing more deeply here, first of all echoing (of course entirely inadvertently and coincidentally) the Howse/Langille point that you may need to consider context and circumstances in deciding whether a measure in a technical regulation, not just reading formally and in a vacuum the language in Annex 1 of TBT. For example the major role for international standards in TBT, which seems at odds with it covering regulations dealing with the moral standards of individual societies: harmonizing morality globally doesn't seem like something that TBT should as such aim at-sounds like Anne Peters global constitutionalism gone amok-though in some areas like labor standards this might be a tempting progressive use of TBT.   But Norway and Canada are really oblivious to the big issues in Prof Chang's mind-they don't see the normative stakes here and go back to parsing a couple of paragraphs from Asbestos

If, as it would seem, product characteristic and identifiable product have to mean different things, and the conditions for the entry of the identifiable product (seal) on the EU market, i.e. the purpose and manner of the hunt, are not product characteristics, then what are these conditions in TBT terms: product-related PPMs or non-product related PPMs or something else that TBT doesn’t really deal with at all?

AB Division Member Chang mooted the possibility that the AB could conceivably reverse the panel's finding on the applicability of TBT to the measure as a whole but complete the analysis through considering the conditions stated in the exceptions as product-related PPMs.  At first Norway jumped on this possibility.  But then in response to further questions they seemed to answer that in order to be a product-related PPM, a market access condition would have to relate to a product characteristic.  Canada seemed more or less to agree. This is fatal to completing the analysis because the purpose and manner of the hunt are not characteristics of seal as a product in the narrow sense.

On the other hand, if as I have argued in numerous publications, product-related means just that the PPM must specify the market access conditions of an identifiable  product (as opposed to something like physical product characteristics) then the AB might well be able to characterize the conditions stated in the IC and MRM exceptions as product-related PPMs. My point has been that the reason TBT is limited to PPMs that are product-related in the sense of related to an identifiable traded product is that because TBT applies to trade in goods, the product-related language is needed to exclude PPMs not directly concerning trade in goods, i.e. PPMs that are services-a consulting engineer’s design for an assembly line or IP such as a process patent.  These need to be dealt with under other covered agreements to the extent that the trade issue is not market access to goods.

Before Norway looked the gift horse in the mouth, as it were, the EU-understanding better than
Norway what the AB might have up its sleeve-strenuously objected to the AB completing the analysis by means of considering the conditions in the exceptions as product-related PPMs.  The EU had, in reality, two arguments.  

 

The first was that such a characterization would require findings of fact about the measure that were never made by the panel (because the issue of product-related versus non product-related PPMs was never really vetted or briefed before it).

The division pressed:  What facts?  Isn't it enough to look at the measure on the record to decide on whether the right legal characterization of the conditions for market access of the identifiable product (seal) is product-related PPMs or not?   Though I am rooting for the EU in this case-that's obvious-I have to say I don't think they are on the most firm arguing that the AB should not complete the analysis because the factual record doesn’t allow it. In US-Tuna II the AB already more or less implicitly accepted that product-related need not relate to physical characteristics.  Some people think that in Tuna II, the AB simply relied on the second sentence of the definitional paragraph of Annex I, which appears to read so as to suggest that PPMs concerning labeling requirements do not need to be related to products in order to be covered by TBT.  But in fact the AB never invoked that second sentence in this way.  And the reason is that it didn’t have to, since the US measure in Tuna II was a product-related PPM within the meaning of the first sentence, i.e. the PPM-“dolphin-safe”-applied to an identifiable traded product, tuna.  Contrary to what is often presented as the conventional wisdom, the PPM didn’t have to relate to the physical or directed connected characteristics of tuna as a product to count as a product-related PPM according to the AB.

This brings me to the EU's other point-due process, the fact that the question was not argued or briefed seriously, is an important one and raises systemic, institutional issues.  The debate over PPMs and their meaning has been one of the most divisive in the history of the WTO.  Deciding explicitly that product-related means not related to physical or directly connected characteristics of a product is intellectually the right answer.  But deciding it explicitly in a case where the issue and all its normative and systemic implications have not been briefed at the panel stage, or even by Participants and Third Participants in their appellate submissions, is questionable.  Wouldn't a lot more countries-India comes to mind, perhaps-have been Third Participants in this appeal if they thought the AB was going to make the jurisprudence on whether a PPM has to concern or relate to physical characteristics of a product in order to be product-related?  But I am on the fence about this. If you have an AB that is a real high court, and a Division here that seems to have the intellect and judgment you would expect of a high court, then why should it be disconcerting that they have the confidence to make jurisprudence in this rather constitutionalist fashion, i.e. based on what the judges see as the right answer in principle, even if not thoroughly litigated by the parties?  

 Well there is a way to avoid this mega-institutional issue. Canada and Norway don’t want to accept that the relevant aspects of the EU scheme are product-related PPMs (because they see product-related as having to do with product characteristics), they thus have basically told the AB that they don't want it to complete the analysis in this way, and the EU for its own reasons doesn't want the AB to complete the analysis here.  So the AB could simply say that since completing the analysis is discretionary and no party wants it based on the product-related PPMs theory, we can feel free simply to reverse the panel finding concerning the applicability of TBT.  This would turn the case into a GATT case exclusively, and thus present the AB with a much more manageable set of issues:  for example how you view public morals under TBT would not need to be decided. In sum, the parties ought to be thinking hard over the next 2 says about what it would mean if the AB were to decide that the panel was wrong that TBT applies.    One issue is that a number of crucial factual findings including those that relate closely to legal issues, were simply transposed by the panel from its TBT analysis to the GATT part of the claim.  The panel really seemed to think it had done the heavy lifting on even-handedness for instance under 2.1 and the GATT analysis under I:1 and III:4 seems cursory at best (it doesn’t in some respects even meet the objective assessment threshold-see our amicus).   So what happens now, when it turns out that the primary findings on even-handedness were based on the part of the judgment that derived from a mischaracterization of the measure as a technical regulation?  I think here the complaining parties may have hoisted themselves by their own petard-by attacking so many of the factual findings of the panel as failing the objective assessment test, they could not really have a grievance if the AB were to throw out the findings of GATT violation as unable to stand on their own two feet, once the panel’s TBT findings have been reversed or found to be on no legal effect, because it was wrong that TBT applied in the first place. 

 

But what if the AB were to complete the analysis on TBT by finding the conditions of market access (that the seal product come from an indigenous or marine management hunt) to be product-related PPMs?  From some of the questions of the Division yesterday it seems like they might well focus on certain aspects of the administration or enforcement or application of these PPMs-conformity assessment-related matters.  That’s the subject of my next post on yesterday’s session, coming very soon.  There I'll also deal with some of the opening statements that were read in the morning yesterday.

The First Day of the Seals Hearings-Stay Tuned!

Some readers have noticed my tweets during the AB hearing today on Seals.  I wanted to mention that I'll be blogging my blow-by-blow and analysis of the day in a few hours right here-after some needed sleep  The whole afternoon was focused on the issue of whether the EU measure is a technical regulation, which the EU and the US (Third Participant) say it isn't.  The AB Division itself clearly has some doubts and wants some very precise and principled answers.  But did they get those answers from the Participants or Third Participants?  What will happen if the AB reverses the panel's finding concerning the existence of a technical regulation?   Also very much in the minds of the Division Members are issues about enforcement and how the exceptions are administered, especially but not exclusively the MRM (marine management) exception. 

This and more around dawn, Geneva time.... (also a plug for the Howse/Langille/Sykes amicus curiae posted on the main site associated with this blog-we don't address TBT coverage but its argued in the Howse/Langiille Yale article, an exhibit to our amicus)

Investment Position at the OECD

From the OECD:

Due to the retirement of the incumbent, the OECD seek an individual  for the role of Head, Investment Division within the Directorate of Financial & Administrative Affairs (DAF) reporting to the Director and Deputy Directors and leading a team of 40 lawyers and economists.  In the first instance, interested individuals should send their resumes to me at [email protected] no later than Friday 28th March, 2014. 

Operational Context: The Investment Division supports the OECD’s Investment Committee across four ‘pillars’ of work; investment policy, development, responsible business conduct, and international investment statistics and analysis. Together, these pillars reflect the balance needed for international investment to support sustainable development. The Head of the Investment Division will contribute to advancing the strategic objectives of the Secretary-General in the area of international investment, advance the impact of policy recommendations across the OECD Investment Committee’s four pillars of work, and ensure effective engagement with stakeholders and partners both inside and outside the Organisation. Core Reqirements: · An advanced university degree in law or economics, ideally specialised in international investment. · At least ten to fifteen years’ senior level experience working on international investment and related policy issues, in a national administration or international organisation. · Familiarity with and an understanding of how intergovernmental dialogue and processes operate at the international level. · Knowledge of substantive, procedural and institutional issues that arise in international investment law and policy, including OECD legal instruments. Knowledge of the investment regimes of OECD member countries and major emerging economies would be an advantage. Excellent knowledge of one of the official languages of the Organisation (English and French) and a working knowledge of, or willingness to learn, the other language. Monthly base salary starting from 9,048 EUR exempt of French income tax, plus allowances based on eligibility.

The California Egg Law: What is the Measure?

I'm intrigued by the measure at issue in the California Dormant Commerce Clause case I mentioned the other day.

If I understand it correctly, based on the complaint, here's how thing went.  First, the California voters passed a referendum requiring that egg producers in California use larger cages for their hens.  Then, perhaps in response to the perceived negative effect on the in-state industry, which would face higher costs, the California legislature passed a separate measure that imposed a similar requirement on eggs sold in California by out-of-state producers.

The plaintiffs focus their claim on the legislature's measure. The way they tell the story, this measure was designed to protect California producers from the harm of competition with out-of-state producers (who would have had a cost advantage due to the referendum, which imposed requirements only on domestic producers).

I haven't seen the defendants' arguments, but I can imagine they would argue that the referendum and the statute should be seen as part of a single non-discriminatory government measure.

I'm not sure how U.S. law will deal with this issue. How would WTO law deal with it?  My instinct is that the two components of the measure would be considered together.  But does it matter that they were passed at different times, by different bodies, with perhaps different rationales?  If this turns out to be a crucial distinction, could California start again with a single measure?

Also, in theory at least, we could see a WTO case here.  Does Canada or another U.S. trading partner sell eggs in California?

Geographical Indications: When Is There a Trade Barrier?

From a letter written by a group of U.S. Senators:

Dear Secretary Vilsack and U.S. Trade Representative Froman:

We commend your past work to fight the growing geographical indication (GI) restrictions promoted by the European Union (EU). This trade barrier is of great concern to dairy and other food manufacturers in our states. On their behalf, we urge you to continue to push back against the EU's efforts to restrict our cheese exports, particularly to nations with which we already have free trade agreements. In addition, we urge you to make clear to your EU counterparts that the U.S. will reject any proposal in the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations now underway that would restrict in any way the ability of US producers to use common cheese names.

And from the Danish Ministry of Foreign Affairs:

Trade barriers are measures that governments or public authorities introduce that prevent or restrict overseas trade and investment. ...

Trade barriers may take the form of, for example:

...

Insufficient protection of intellectual property rights - both with respect to the scope of protection and with respect to the possibilities of legal protection. This includes, for instance, protection of patents, copyrights, trademarks and geographical indications of origin

So one side says that protections for GIs constitute a trade barrier; the other side says that insufficent protection is a trade barrier. 

Does this mean that "trade barrier," like "market access," is not that useful a term?

PPMs in U.S. Courts

From the Washington Post:

Americans rely on cheap chicken and eggs, the products of super-sizing livestock operations while squeezing costs. Farmers pack animals into tiny, crowded and dank pens, leaving hens with scarce room to extend their wings, let alone move around. There is a balance to be struck between keeping food prices low and mitigating the miserable conditions that humans impose on livestock. California’s voters tried in 2008 to push their state closer to achieving that balance, opting to require egg growers to provide hens at least enough room to extend their wings and turn around. The rule takes effect next year.

But there was a problem: The voters didn’t appreciate that other states weren’t going to follow along, and California imports about 4 billion eggs a year. States such as Missouri and Iowa, which between them account for nearly half of California’s egg imports, haven’t imposed similar cage-size requirements, so they might enjoy a cost advantage over California producers. To right that imbalance, the Golden State’s leaders approved a law requiring all eggs sold in California to come from farms that comply with its cage-size standards, no matter where they are located.

Missouri sued last month, arguing that the Constitution gives Congress the exclusive right to regulate commerce that crosses state lines. Last week, five other states, including Iowa, joined in. Though California’s law treats all businesses — in-state and otherwise — the same, the state has to show that its effects on commerce outside the state are small relative to the local concerns it addresses. That is, rightly, a tough standard : Without strong and exclusive federal regulation of interstate commerce, states could enact all sorts of nice-sounding laws in an effort to benefit local producers.

The complaint is here: http://ago.mo.gov/newsreleases/MOvsHarris-AmendedComplaint.pdf

I mentioned this issue a while back.

Seal Products and the Scope of GATT Article III:4

This is from the U.S. third party submission in EC - Seal Products:

7. ... Article 2.1 of the TBT Agreement requires a two-step analysis: (1) whether the challenged technical regulation creates a detrimental impact on imports of like products; and (2) whether the detrimental impact stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the group of imported products.

8. Despite the identical wording of the provisions, the Panel found that the legal standard under Article 2.1 of the TBT Agreement did not “equally appl[y]” to GATT 1994 Article III:4. Instead, the Panel found that while “treatment no less favourable” in Article 2.1 requires the two-step inquiry the Appellate Body set forth in US – Clove Cigarettes and US – Tuna II (Mexico), the same phrase in Article III:4 of the GATT 1994 requires only a finding of detrimental impact on imports of like products to support a finding of inconsistency. Thus, under the Panel’s interpretation, the same phrase, used in two related national treatment provisions, sets forth significantly different legal standards.

According to the U.S., the Panel's interpretation is in error, and the "the two provisions should be interpreted in the same way."

We are all eagerly awaiting guidance from the AB on how GATT Article III:4 and TBT Article 2.1 relate, and what the proper scope of GATT Article III:4 is.  Two options are: (1) GATT Article III:4 looks only at detrimental impact; or (2) GATT Article III:4 is identical to TBT Article 2.1.

But let me suggest a third option: GATT Article III:4 goes beyond simple detrimental impact, but does not go quite as far as the TBT Article 2.1 second element, "stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination."  Instead, there could be a second element to Article III:4 that would be a little easier for a complainant to prove, perhaps along the lines of "design, structure, and architecture."

The point of this approach is to avoid an exclusive detrimental impact test for Article III:4, under which we would suddenly find ourselves with thousands more violations than we knew existed, while still maintaining some distinction between Article III:4 and Article 2.1.

GATT Article XXI and the Ukraine Conflict

This is from Jeff Schott of the Peterson Institute:

Consideration should be given to invoking GATT Article XXI, which provides exceptions for national security reasons from rights and obligations under the World Trade Organization (WTO), for example. Invoking this WTO exception would allow across-the-board actions against Russia without prior notification or even justification. The national security exception of Article XXI is that broad. In brief, the United States and the European Union could remove in one step all the WTO benefits they accorded Russia when it acceded to the WTO in August 2012. Doing so would disrupt bilateral trade and investment, possibly kicking tariffs back up to Smoot-Hawley levels of the 1930s.

I am not advocating such drastic action at this point, but note that it is easy to do and compatible with international law. Sending a signal that both US and EU leaders are seriously considering such measures under dire contingencies could deter possible escalation of Russian military engagement in Ukraine. As such, it would complement current diplomatic efforts to resolve the crisis.

GATS Article XIV bis may be more important here than GATT Article XXI, but beyond that, let me ask the following:  Would this be easy to do?  Or would Russia bring legal challenges and make it difficult?

Trade in Everything: Soap Operas and Porn

From the Washington Post:

There is no shortage of problems facing China these days: a terrorist attack that recently left 33 people dead and 143 injured, corruption in government, a worrisome slowdown in economic growth.

So when the country’s two highest governing bodies met in Beijing this week, what was the burning issue on the delegates’ lips? A South Korean soap opera that has taken the country by storm.

...

Well aware of the craze the drama has created in China, one committee of China’s political advisory body (called the CPPCC) spent a whole morning bemoaning why China can’t make a show as good and as big of a hit.

At a meeting of delegates from the culture and entertainment industry, some blamed it partly on China’s censorship, euphemistically referred to as the “examination and approval system” at the meeting by Feng Xiaogang, a famous director and a CPPCC member. ...

And from Canada's National Post:

For failing to broadcast sufficient levels of Canadian-made pornography — and failing to close-caption said pornography properly — a trio of Toronto-based erotica channels has earned a reprimand from the Canadian Radio-television & Telecommunications Commission.

Wednesday, the CRTC issued a broadcast notice saying AOV Adult Movie Channel, XXX Action Clips and the gay-oriented Maleflixxx were all failing to reach the required 35% threshold for Canadian content.

Based on a 24-hour broadcast schedule, that translates to about 8.5 hours of Canadian erotica a day.

...

The channels’ parent company, Toronto-based Channel Zero, did not respond to National Post requests for comment.

In previous filings to the CRTC, however, the company has claimed its deficit of Canadian erotica was simply a clerical error.

In a 2012 note to regulators, Jennifer Chen, a Channel Zero vice-president, wrote, “The non-compliance is a result of an error, on our part.”

Admittedly, Channel Zero had only been missing the CanCon threshold by minutes of erotica a day.

Over on Twitter, I made a joke about this story, but here on this family-oriented blog I will have no comment.  Feel free to make your own jokes, of which I believe there are many.

Swiss Neutrality in WTO Disputes

While I was hanging out at the ELSA WTO Moot Court All-American regional round at AU law school yesterday, a DC trade lawyer said something interesting: Switzerland almost never participates in WTO disputes, even as a third party.  That sounded familiar, but I thought I'd look up the numbers.

Taking into account all circulated WTO panel reports, Switzerland has been a third party in just two disputes: US - Copyright, and Canada - Pharmaceuticals.  (Notably, both are IP disputes).

By comparison, Norway has been a third party in 27 disputes; New Zealand in 22; Chile in 22; and Hong Kong in 11.

Also, with regard to WTO complaints, Switzerland has brought a total of 4 (none since 2002), and no one has brought a complaint against it.

On the other hand, there are plenty of Swiss panelists.  Switzerland has 42 total WTO panelist positions (again, based on circulated panel reports), which is third highest.

An Investment Framework Agreement

Gary Hufbauer and Sherry Stephenson propose the following mutilateral investment agreement:

... Following its achievements at the 9^th Ministerial Conference in Bali, Indonesia, the World Trade Organization (WTO) should launch negotiations to draft a 21^st century Investment Framework Agreement (IFA). 

...

The IFA should start life as a plurilateral agreement. While the WTO has 159 member countries and customs territories (think of Hong Kong), only willing nations would be signatories of the agreement. Initially, only IFA members would be entitled to IFA rights—in other words, the most-favored-nation (MFN) principle would not apply to WTO members that are not signatories. Over time, the great majority of WTO members might join the IFA and, at some point, all IFA rights might be extended on an unconditional basis to all WTO members, including the holdouts.  

The IFA would not supersede bilateral investment treaties (BITs) or investment chapters in free trade agreements (FTAs)—they would coexist. In disputes, complainants could seek remedies under whichever agreement was most favorable. Quite often, as between pairs of countries, their BIT or FTA rights would be more extensive than their IFA rights. But complainants should not be allowed to “forum shop,” for example, by bringing a case first under the IFA, and then under an FTA.

Like BITs and most FTAs, the IFA should provide for state-to-state dispute settlement. In addition, as a voluntary sub-chapter, willing signatories to the IFA could agree to investor-state arbitration. All arbitration and dispute-settlement decisions should be published, adding to the body of customary international law in the FDI realm. 

...

 ... , we believe that the IFA should include the following substantive provisions:

·         Both investors and covered investments should be afforded national treatment and MFN treatment in all phases of the investment cycle: establishment or acquisition, management, operation, expansion, and disposition.

·         Justifiable reasons for expropriation should be limited, and “prompt, adequate and effective compensation” should be paid when expropriation occurs.

·         Investment-related funds should be transferable across borders, without delay and using a market rate of exchange.

·         Performance requirements should be prohibited or restricted. However, the least developed countries might be allowed a reasonable period of time (such as a decade) to phase out their performance requirements. 

·         Foreign firms should be guaranteed the right to employ top managerial personnel, regardless of their nationality.

·         Proposed laws and regulations that affect investment should be published in advance, with firms given an opportunity to comment.

Some key substantive takeaways: investor-state would be optional, and there is no "fair and equitable treatment" obligation.

BP's Treatment in U.S. Court

From the Washington Post:

After a blowout at its Macondo exploration well killed 11 workers, set fire to the Deepwater Horizon oil rig and triggered a massive oil spill in the Gulf of Mexico, a contrite BP vowed to “make things right” and set aside $42.5 billion to do so.

But nearly four years later, BP knows just how hard things can get in the Big Easy.

The London-based oil giant is mired in litigation in federal courts in New Orleans. No longer apologetic, BP has stiffened its spine. It has filed new motions and countersuits, taken out a slew of full-page ads in newspapers (including The Washington Post) and enlisted the British ambassador to express concerns to the Obama administration over how aggrieved the company feels.

 

One issue pending before U.S. District Judge Carl Barbier is how much BP will have to pay the government in Clean Water Act fines, a figure that could range from less than BP’s $3.5 billion estimate to the maximum allowable $18 billion.

 

But the source of much of BP’s ire lies with a legal donnybrook over a settlement designed to compensate individuals and businesses for economic harm caused by the spill. BP alleges that many of the 256,478 claims filed — by a parade of fishermen, hotels, surf shops, law firms, nursing homes, strip clubs and others — are unjustified or even fraudulent.

If BP does not like the outcome in U.S. court, and the TTIP is completed, is there an investment claim in here somewhere?