International Economic Law and Policy Blog

There's a New Party in Town

For those of you despairing about your choices in the U.S. Presidential election, you are in luck, there's now a credible third party option: The Libertarians.

OK, you can stop laughing now, because this time they have a former two term governor as the Presidential nominee (Gary Johnson of New Mexico) and a former two term governor as the Vice Presidential nominee (Bill Weld of Massachusetts).

So what do these two think of trade and trade agreements? Well, you can't really be a libertarian without supporting free trade, but there are some nuances there, of course. In this video, Gary Johnson seemed to worry that trade agreements were too heavily influenced by corporate interests (see 23:35-25:00). By contrast, Bill Weld was the co-author of a CFR piece that was pro-North American integration. 

Given how big a campaign issue trade has been so far, I suspect they will develop these views a bit more fully in the coming months.

Why Prof. Chang II: A Few More Pieces of the Puzzle

While I continued digging for more clues to the Appellate Body Reappointment saga, I found a few more interesting bits:

1. When the blockage was first announced, the US cited only three cases, i.e, DS 437, DS 449 & DS 453. However, at the May 23 DSB meeting, the US added one more case, i.e, DS 430. In the first three cases, Amb. Bhatia also served along with Prof. Chang in the AB division. Amb. Bhatia’s first term ended on Dec 10 2015. By then,  the AB has completed their reports in the first two cases, and was in the process of reviewing the last case. However, when Amb. Bhatia’s reappointment was reviewed, the approaches taken by the AB in these cases were never questioned. Instead, the questions focus only on the procedural and administrative aspects, which were rather mundane and uninteresting:

(i) the Appellate Body member's interest in reappointment and the experiences and insights gained as an Appellate Body member;

(ii) the issue of workload of the Appellate Body and how to address it;

(iii) the issue of collegiality; and

(iv) what the Appellate Body could do itself to improve the efficiency of the Appellate Body process.

So why did the US add DS 430 in the last minute? Has the US had a sudden change of mind about the three cases in less than 6 months? Or was the last case just a red herring to hide the true motive?

2. The second clue is found in p.16 of the US Statement at the May 23 DSB meeting, where the US stated “[w]e do not see how holding a member accountable for the views they have endorsed and their actual service carries a risk for the trust WTO Members place in the independence and impartiality of the Appellate Body. ” Is the mismatch between “holding a member accountable” and “views they have endorsed” just a grammatical flaw, or is it a Freudian slip which reveals indeed that the US is trying to hold a member accountable for what they - the seven AB members - collectively have done?

3. The US has appealed the Panel Report in US — Washing Machines, where the Panel upheld the challenge by Korea against the US approaches in cases of targeted dumping and use of zeroing. The US appealed on Apr 19 and, according to the normal AB schedule, the exchange of views would most likely take place in the AB after June 1. By blocking Prof. Chang, the US has essentially excluded Mr. Chang from participating in the exchange of views.

Looks like we are one more step closer to the truth.

The U.S. Justification for its Appellate Body Reappointment Actions

The U.S. actions at the WTO in relation to the reappointment of Seung Wha Chang, discussed in various recent posts (and comments) on this blog, have been heavily criticized by everyone I've talked to about the issue. However, I have heard sympathy for the substance of some of the concerns raised by the U.S. In this post, I'm going to talk about one of these concerns (I may get to some of the others in the future). This is from the U.S. statement at the DSB meeting where reappointment was discussed, and is the first point the U.S. makes to defend its actions: 

First, in the recent DS453 appellate report in the financial services dispute between Panama and Argentina, more than two-thirds of the Appellate Body’s analysis – 46 pages – is in the nature of obiter dicta. The Appellate Body reversed the panel’s findings on likeness and said that this reversal rendered moot all the panel’s findings on all other issues, including treatment no less favorable, an affirmative defense, and the prudential exception under the GATS. Yet, the Appellate Body report then went on at great length to set out interpretations of various provisions of the GATS. These interpretations served no purpose in resolving the dispute – they were appeals of moot panel findings. Thus, more than two-thirds of the Appellate Body’s analysis is comprised simply of advisory opinions on legal issues.

The Appellate Body is not an academic body that may pursue issues simply because they are of interest to them or may be to certain Members in the abstract. Indeed, as the Appellate Body itself had said many years ago, it is not the role of panels or the Appellate Body to “make law” outside of the context of resolving a dispute – in effect, to use an appeal as an occasion to write a treatise on a WTO agreement.

But that is what the report did in this appeal 

Summarizing briefly, in Argentina - Financial Services, the Appellate Body reversed the panel's findings on likeness. After doing so, the Appellate Body noted that this rendered the panel's findings on other issues moot. Nevertheless, it went on to make findings on the appeals of these other issues. 

Here's how the Appellate Body explained its decision to make these other findings, despite the "likeness" reversal and the mootness of the other findings: 

6.84. ... we note that, for the most part, the claims of error raised by Panama regarding the Panel's findings on "treatment no less favourable", as well as the Panel's findings under Article XIV(c) and paragraph 2(a) of the Annex on Financial Services, concern "issues of law covered in the panel report and legal interpretations developed by the panel", and hence fall within the scope of appellate review under Article 17.6 of the DSU. Moreover, several of the issues raised in Panama's appeal have implications for the interpretation of provisions of the GATS. With these considerations in mind, we turn to address the issues raised in Panama's appeal.

Let's look at each of the two reasons the Appellate Body seems to be giving for its decision to examine the other issues.

First, the Appellate Body notes that these appeals were properly made under the DSU. Here's the question then: When a WTO Member has concerns about a specific panel finding, and brings an appeal related to that finding, should its appeal always be heard?  Members who file appeals may want the panel findings in question addressed by the Appellate Body, rather than just have them sitting out there as adopted findings, with the potential to influence later rulings even if they have been declared "moot."

For its part, the U.S. seems to want more use of judicial economy: When an issue can be avoided, the Appellate Body should avoid it, the U.S. seems to be saying. That's certainly a legitimate view of the role courts should play.  But is it a view the Appellate Body must follow? Is the decision on how to approach this issue one that is inherently at the discretion of a court?

If you did want to require the exercise of judicial economy, it is not clear to me what kind of legal provisions would accomplish this, even if everyone agreed on the principle.  I'd like to see what the U.S. has in mind in terms of imposing such constraints on the Appellate Body in the future. (I'm not aware of such provisions in domestic law, but maybe there are some examples out there.)

Second, the Appellate Body notes that several of these issues "have implications for the interpretation of provisions of the GATS." This kind of sounds like the Appellate Body wants to offer some systemic guidance to Members, and you can see how someone might object to this.

Hovering over all of this is the issue of remand authority, which the Appellate Body does not have. In domestic court appeals, an appellate court can reverse one issue, and send the case back to the lower court to re-do everything based on the new appellate reasoning on that issue. But WTO dispute settlement doesn't work that way. When the Appellate Body reverses on likeness, as it did here, it can't send the case back to the panel to apply the law to the facts under the legal standard (keep in mind, the Appellate Body did not decide whether the products at issue here were "like"). As a result, you can imagine that the Appellate Body might want to offer a bit more guidance on issues in the case that are not related to the reversed finding, in case a new complaint is brought and the panel has to address the claims again (which could be done in this case, although I have not heard that it will be). Otherwise, you could get into an endless cycle of reversals and refilings that means it could take a long time to resolve a particular case.

All in all, it seems to me that courts have a fair amount of inherent discretion in relation to what issues to address in a particular case, and in what way they will address them. I'm not sure this discretion is a problem, but if it is, there may be some solutions through modifications to the DSU that would provide objective criteria for how the Appellate Body should apply its discretion. Based on the experience of the last 20 years, WTO Members can weigh in on what the Appellate Body has been doing, and make specific proposals for changes if they think such changes are needed.

Why Prof. Chang?

As the Appellate Body reappointment controversy continues to brew, the US has been flooded with criticisms not only from WTO Members, but also from the Appellate Body Members and academics around the world.

In its statement at the May 23 DSB Meeting, the US defended its position by stating that the decision was made after “reviewe[ing] carefully the member’s service on the divisions for the various appeals and conducted significant research and deliberation. Based on this careful review, we have concluded that his performance does not reflect the role assigned to the Appellate Body by Members in the DSU.” 

As anyone who’s familiar with the functioning of the WTO DSM would know, this couldn't be further from the truth. As the six AB Members stated in their May 18 letter to the DSB Chairman, “no case is the result of a decision by one Appellate Body Member, nor should interpretations or outcomes be attributed to a single Member. Appeals are heard and decided by three Members who are chosen randomly to constitute the Division for each particular case. During a Division’s consideration of a case, there is always a formal, intensive exchange of views, in person in Geneva, between the three Division Members and the Appellate Body Members who are not on the Division. Our reports are reports of the Appellate Body.” Thus, it couldn't have been possible for the US to attach particular decisions, or parts of such decisions, to an AB member alone. 

I find it hard to believe that the US, as one of the most frequent litigants in the WTO and before the AB, could have been ignorant of such basic fact. The only way the US could have obtained the info about Prof. Chang’s involvement, as suggested by Simon, is either by inference, which would be extremely difficult, or by inside info, which would illegal and unethical.

Instead of pondering on these difficult questions, I think there’s an easy way to explain the seemingly odd behaviour of the US by asking instead, “why Prof. Chang?”

The answer: Prof. Chang is the most convenient target.

To understand why the US choose to single out Prof. Chang, we have to look at the other alternatives the US might have had. The answer is: none.

The US listed four cases that they are unhappy with Prof. Chang, i.e., DS453, DS430, DS437 and DS449. The three members serving on these cases are as follows:

449: Bhatia, Chang, Zhang

437: Van den Bossche, Bhatia, Chang

430 Zhang, Chang, Servansing

453 Chang, Bhatia, Zhang

So there are a total of five members who have served in the four cases.

Now who would you choose if you were the US?

First, the US would not want to pick fight with a member with a long remaining term, as this certainly wouldn’t do them any favour in future disputes before the AB. Instead, the US would want to choose one with a soon-expiring term. Among the five, Van den Bossche, Servansing and Bhatia each have 1.5, 2.5, and 3.5 years respectively left, so we should stay away from them. Chang and Zhang, on the other hand, are good candidates as their terms are expiring at the end of the month.

Second, for obvious reasons, the US also would not want to target the members with deep government connections. Academics seems to be safer as sometimes even their own governments might want to rid of them. This would leave us with Van den Bossche and Chang.

Third, as there’s nothing we can do to a member who’s in his/her second term, the US would want to pick the ones who are in their first term, as they will need to be reappointed. This time around, the only two members who fit the bill are Servansing and Chang.  

Now guess who has emerged from three rounds of elimination? Prof. Chang.

To sum up, the reason the US has chosen to target Prof. Chang is not because of his jurisprudence, but because he is the most convenient candidate: a non-governmental scholar in his first term, which is expiring in an election year.

As we can see from my attempt to reverse-engineer the US decision-making process, the US attack was not meant specifically just for Prof. Chang, it could have been any of the other six members who might fit the three criteria above. In other words, the US attack was targeted at the whole AB, including all of its present, past and prospective members.

Reforming Appellate Body Appointments

Over at EJIL:Talk!, Arman Sarvarian and Fontanelli Filippo respond to the Appellate Body reappointment controversy with some reform suggestions:

A Single-Term System?

The chair of the DSB noted that further consultations were necessary to exit the deadlock. Recourse to diplomacy reveals the structural limits of the applicable procedural rules; the immediate standoff at the Dispute Settlement Body can only be resolved by one side or the other lifting their veto. Regardless of the immediate outcome concerning Mr Chang, we suggest that the negotiators could usefully consider two systemic reforms that would help to preclude such scenarios recurring while also promoting judicial independence: 1) a switch to a single-term system (e.g. of six years’ duration) as already proposed by Brazil; and 2) an extension of the ban on nationals sitting on cases affecting their State to the Appellate Body.

Read the whole thing here.

THE MYTH OF AN APPELLATE BODY THAT NEVER “RESTRICTS THE RIGHTS OR EXPANDS THE OBLIGATIONS OF WTO MEMBERS”

As we now know, the United States has informed the chairman of the WTO Dispute Settlement Body that it cannot support the reappointment of South Korean national Seung Wha Chang to the Appellate Body. The United States justifies its position by the fact that it “ will not support any individual with a record of restricting trade agreement rights or expanding trade agreement obligations”.

The myth at issue here is based on the mistaken view that such rights and obligations are written in a crystal clear way in the WTO Agreements. Therefore, the role of Appellate Body Members is just to read them and apply them to the facts of the case. Nothing could be further from the truth.

In my area of research (i.e., WTO law of subsidies), I could point to many instances where  WTO texts are not only far from being  crystal clear but verge on being incoherent. For example, attaching to the SCM Agreement an Illustrative List of Export Subsidies predating the SCM and whose items do not  necessarily conform to the general definition of a subsidy contained in the SCM. Another example concerns the issue of whether the SCM Agreement applies to an agricultural export subsidy as a whole, or whether it applies only to the extent that the subsidy exceeds a member’s commitment levels as specified in its schedule. One the funniest example is found in footnote 9 of the SCM relating to the expression “appropriate countermeasures”. This footnote reads: “ This expression is not meant to allow countermeasures that are disproportionate in light of the fact that the subsidies dealt with under these provisions are prohibited ”. As underlined by Lawrence, “The first reaction of most people who read this footnote is «huh?». It is as clear as mud”. This confused and badly drafted footnote is at the source of a lot of subsequent problems. I am not versed in the subtleties of the “zeroing” issues which are at the origin of the United Sates position. I can however bet that many provisions at issue are “as clear as mud”.

In such a context, what is the likely consequence of the United States’ attitude? It will exacerbate one the most regrettable tendencies of the Appellate Body, namely using the pretext of “judicial economy” in order to avoid tackling hard interpretive issues. Put yourself in the position of Appellate Body Members and it is not difficult to guess that they will invoke more and more “judicial economy” to avoid being accused of creative ruling. So, one could expect to see in the rulings more and more phrases like “We need not decide, in this case…”.

My point is that the United States justification is a pretext since the US Administration knows very well that in hard issues there is no reading of the texts that could attain the mythical goal of “not restricting trade agreement rights or expanding trade agreement obligations”. Does this mean that Appellate Body Members are hands free in their rulings? Certainly not! Without imposing on AB Members a mythical goal, it is the role of the WTO legal community to act as a counter power in order to check that AB rulings are legally coherent.

ADDENDUM: 

I have just read the Statement of the United States at the May 23 DSB meeting  on the reappointment of  Mr  Chang. It is interesting to note that  the theme of  "restricting trade agreement rights or expanding trade agreement obligations" is mentioned in a general way ( through quoting Article 3.2  and 19.2 of the DSU) without  any concrete example. The main criticisms seem to be that the AB looses its time on issues that have not been raised on appeal and that AB rulings have become a pretext for writing "academic" treaties beyond the resolution of the case at issue. However, since these alleged developments (that I have not detected in AB rulings on subsidies) are by definition obiter dicta, they cannot be said to  have normative value in order to restrict rights or expand obligations. It seems therefore that the United States is not itself sure of how to criticize Mr Chang. First, we hear through declarations by officials  the "restricting rights and expanding obligations" version. Second, we hear now in this Statement a second NEW version which is not really coherent with the first one:  

The Appellate Body is not an academic body that may pursue issues simply because they are of interest to them or may be to certain Members in the abstract. Indeed, as the Appellate Body itself had said many years ago, it is not the role of panels or the Appellate Body to “make law” outside of the context of resolving a dispute– in effect, to use an appeal as an occasion to write a treatise on a WTO agreement.

During the hearing, the Appellate Body devoted considerable time to an issue that the parties and the third parties agreed had not been raised on appeal, involving an item that was not on the record, that had not been raised by either party in its arguments, and had not been examined by the panel and was not the subject of any panel findings.

It is also important to consider whether these types of actions have contributed to the complexity of the disputes and thereby exacerbated the workload problems facing the Appellate Body that have made it difficult for Members to get their trade disputes resolved in a timely manner.

 

The Appellate Body Reappointment at the DSB

In the last post, I said I would report the details of the DSB discussion of the Appellate Body reappointment controversy when they are available. Well, Inside US Trade has them here. They probably don't want me reposting the whole article, but here's a snippet:

The United States received universal criticism at a May 23 meeting of the World Trade Organization's Dispute Settlement Body for blocking the reappointment of Korea's Seung Wha Chang to the Appellate Body, but WTO members generally agreed that the scope of the Appellate Body's authority should be a topic of discussion, Geneva sources said.

Korea at the meeting stated its intention to continue to seek the reappointment of Chang, a move that some Geneva sources said could create an intractable impasse over how the DSB should move forward if the U.S. continues to block his reappointment. Procedures for filling the seat on the Appellate Body must be adopted by consensus of the DSB, and as long as Korea continues to push for Chang's reappointment, WTO members are unlikely to agree on a path forward, sources said.

They also have a link to a letter from the rest of the Appellate Body Members criticizing the U.S. move.

Greg Shaffer on the Appellate Body Reappointment Controversy

Here is what Greg wrote about the Appellate Body reappointment controversy, in the Huffington Post:

Following the Berlin Wall’s fall, the United States drove the creation of the World Trade Organization and its tribunal, the Appellate Body. The tribunal rose quickly to prominence for its clarification of WTO rules and its resolution of trade disputes. It became heralded for legitimizing the WTO rules-based system to a broader global community by showing deference to national public policy, including through integrating public international law regarding the environment, public health, and human and animal rights. But now the US is threatening to undermine its independence and effectiveness, raising consternation in Geneva and the international trade community.

The initiative began when the Office of the United States Trade Representative publicly lambasted and refused to support the reappointment of US member of the Appellate Body Jennifer Hillman, supposedly for failing to defend US perspectives. Hillman was a former Commissioner of the US International Trade Commission, former General Counsel of the USTR, and now teaches at Georgetown. The USTR continued when it blocked consensus for the selection of James Gathii to the Appellate Body. Gathii, a chaired professor at Loyola University Law School in Chicago, would have been the first and only black, sub-Saharan African member of the Appellate Body during its twenty-year history.

Now, the USTR has taken its most extreme step to date by proclaiming that it will block the reappointment of the South Korean judge Seung Wha Chang. (Appellate Body members are elected for a four-year term, renewable once). The reason given is not because Mr. Chang demonstrated a lack of judicial competence or independence. On the contrary, Mr. Chang is a former national judge who has a doctorate from Harvard Law School and is the endowed Nomura Visiting Professor of International Financial Systems there. Rather, the USTR opposes judge Wha Chang because he participated in decisions against the United States. Now South Korea plans to retaliate by threatening to block the replacement candidate for another Appellate Body member. The Appellate Body would then be reduced to five from seven, catalyzing a legitimacy crisis.

What incensed the USTR will sound, to most, unbelievably technical and mundane — the Appellate Body’s findings regarding the practice of “zeroing” in antidumping calculations, in which only low home-state prices (but not high ones) are set at zero. This averaging methodology biases the calculation so that dumping is found where there is none, or antidumping duties become higher than they otherwise would be. The Appellate Body found that it is not a “fair comparison;” the USTR charges the Appellate Body with overreaching.

I agree with the Appellate Body interpretation, but even if I didn’t, one sometimes wins and sometimes loses before a tribunal. The US, in fact, has brought far more cases than any other WTO member, and it has won far more than it has lost. The US actively uses the WTO dispute settlement system to enforce rules on others, but that will become implausible if the US destroys the system’s credibility.

The USTR opposition to Mr. Chang’s reappointment aims to compromise the tribunal’s judicial independence. But that is central to the rule of law. The words “independent” and “independence” appear seven times in the Code of Conduct for WTO dispute settlement officials, and the Code’s “Governing Principle” begins: “Each person covered by these Rules shall be independent and impartial.” Other countries, including China, are taking note.

USTR’s hubris could be explained if this were Putin’s Russia. Or perhaps Trump’s America. But the Obama administration? Has this fallen outside the President’s radar?

It is a high-risk strategy for an administration that professes to be internationalist. The core reason for building a global trade regime is to create a third party institution that helps manage conflicts that could ultimately endanger international welfare, peace, and security. The WTO was successful in helping countries manage the Great Recession of 2008 by curtailing beggar-thy-neighbor, trade protectionist responses that could spiral out of control, as they did during the 1930s. It was the experience of the 1930s that led US leaders like Cordell Hull to call for the creation of a rules-based multilateral trade institution which came into being after WWII.

The United States has a history of building and undermining international institutions. Following the horrors of WWI, an isolationist US Senate refused to ratify the Versailles Treaty, which drastically impaired the new Permanent Court of International Justice. Then, after the horrors of WWII, the Roosevelt administration spurred the creation of the United Nations and the International Court of Justice. Later, in the 1980s, the Reagan administration withdrew from recognizing the ICJ’s administration when the ICJ decided against it in the Nicaragua case, undermining that body.

It takes decades to create international institutions, often built out of tragedy. They can be undone overnight. With the Transpacific Partnership uncertain, will President Obama’s legacy on trade be destroying the WTO?

Today was the day this issue was discussed in the DSB. I haven't heard the details yet, but will report them when they are made public.

The ITC's TPP Report

The U.S. International Trade Commission issued its report on the TPP last week. This is from the ITC press release:

The Commission used a dynamic computable general equilibrium model to determine the impact of TPP relative to a baseline projection that does not include TPP.  The model estimated that TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy. By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23 percent) higher than the baseline projections, real GDP would be $42.7 billion (0.15 percent) higher, and employment would be 0.07 percent higher (128,000 full-time equivalents). U.S. exports and U.S. imports would be $27.2 billion (1.0 percent) and $48.9 billion (1.1 percent) higher, respectively, relative to baseline projections. U.S. exports to new FTA partners would grow by $34.6 billion (18.7 percent); U.S. imports from those countries would grow by $23.4 billion (10.4 percent).

My Cato colleague Dan Ikenson was not impressed:

... the model doesn’t take into account things like: supply shocks (such as another fracking-type boom) or demand shocks (such as mass adoption of hand-held devices); transitions from human labor to robots; changes in institutions; the policy reactions of other countries to the TPP; accessions to the agreement by other countries; the impact on the multilateral trading system, and so on.  All of these factors matter at least as much as the terms of the TPP itself. 

So the question is: Why even bother performing these studies?  The real outcomes are determined primarily by information that is unknown and difficult to estimate with reasonable accuracy when the models are run. The results are politicized and misused by advocates and proponents of trade agreements alike.

I would just add that for the substantive obligations related to issues such as IP and labor, the report discusses the TPP text, and notes the differing views that were submitted to it, but doesn't try to quantify the benefits. As the report notes, the quantitative assessment is limited to the following:

The quantitative assessment in this report estimates the economic effects of TPP provisions related to tariffs and tariff-rate quotas; selected nontariff measures affecting trade in goods and cross-border trade in services; and restrictions affecting foreign investment, compared to a baseline estimate of economic growth in the absence of the TPP Agreement.

Not that I could quantify the impact of IP, labor and similar issues in the TPP myself, but shouldn't someone try to do this?

Donald Trump on MFN

Donald Trump has a sophisticated and nuanced take on the MFN principle as applied in trade negotiations.  Ha ha, just kidding. Here's what he said a couple weeks ago:

"I want one-on-one: If somebody treats us well, we make a trade agreement, and I'll have the best negotiators in the world make a fair agreement. Okay?" Trump said. "I don't want to be tied up: If 'Country A' does this and if 'Country C' does that, then 'Country D' will be able to come to -- nobody knows what the hell is going on. And the bad countries, countries that haven't treated us well, benefit because they get the benefit of what the good countries are getting. So everybody is taking advantage. It's a disaster."

I suppose there is a case for bilateral rather than multilateral trade negotiations, although I don't think it's a very good case, and nobody who supported it would want Trump making it for them.

ASIL IEcLIG Biennial Conference

The American Society of International Law International Economic Interest Group is now accepting papers for its Biennial Conference, which will take place September 30, 2016 - October 1, 2016 at Georgetown University Law Center.  This is from the call for papers: 

I. Overall Concept and Themes Overall theme:

Making International Economic Law Work: Integrating Disciplines and Broadening Policy Choices

We welcome paper proposals relating to the conference theme, or aspects thereof. One objective of this conference is to transcend the traditional trade, investment, finance and private ordering silos. We accordingly seek proposals that focus on cross-cutting issues.

From a research agenda perspective, we hope to foster a reflection on what international economic law as a discipline might look like when research focuses on the reality of blurred boundaries between the traditional fields of trade, investment, finance and monetary law.

From a policy perspective, we hope to explore the implications of legal imports from one field into another, how legal and policy options might be expanded in the face of converging trade, investment and financial law, as well as through emerging private and public-private sorts of ordering. Because the blurring boundaries have created challenges as well as opportunities, we also look forward to proposals identifying chasms and tensions that need to be addressed.

We encourage submissions on all aspects of international economic law, including those that do not focus on cross-cutting issues. The themes listed below are illustrative only and non-exhaustive. If your paper fits within one or more of these themes, please make a note of it in your proposal.

Illustrative Themes:

• Cross-fertilization opportunities between trade, tax, monetary and finance law: How does monetary law impact trade and finance, and vice-versa?
• Soft law in international economic law: Are there lessons to be drawn from financial regulation for trade and investment?
• How does regionalism shape and challenge international economic law?
• Dispute resolution in the face of trade and investment treaty convergence: What are the opportunities and challenges raised by recent innovations? Is a unified system possible or desirable?
• International economic law and systemic risk
• Public-private partnerships in international economic law

II. Paper and Panel Proposal Submission

Papers:

The deadline for paper proposal submissions is June 24, 2016.

Please submit an abstract of no more than 500 words and please indicate when you anticipate completion of the paper and whether the paper has been accepted for publication or has been published. If applicable, please indicate place of (anticipated) publication and date.

Please also provide a CV or resume, your current affiliation and whether you are a member of the IEcLIG.

Abstracts will be peer-reviewed and decisions will be issued on August 1, 2016.

Panels:

We also invite panel proposals, particularly relating to the illustrative themes above.

Please indicate, in no more than 500 words, the approach, anticipated content and format of the panel, proposed speakers with their affiliation and their field of expertise.

The deadline for panel proposal submissions is June 24, 2016.

Please note that panel proposals may be combined or amended by the conference organizers to take into account the range of submissions. Invitations will be issued on August 1, 2016. Papers will be due on September 4, 2016 for dissemination to other panelists, moderators and conference participants in advance of the event.

Materials should be sent to [email protected]

What Will TTIP Do To Consumer Prices?

This is from the Draft Interim Technical Report, Trade Sustainability Impact Assessment on the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the USA, prepared by the consultancy Ecorys for the European Commission:

14. Main expected social impacts from TTIP: long-term wages and prices rise, short-term and sectoral adjustment

...

Consumer prices are expected to go up marginally in the EU (+0.3 percent) and to have no effect in the US (0.0 percent). This is because higher demand from the US market for European goods and services could lead to slightly higher consumer prices in the EU in the long run. However, for most household groups this is more than offset by higher wages. The increase in consumer prices could also, however, be overestimated as a result of not modelling a reduction in NTMs in processed foods. Since trade costs are not modelled to decrease in this sector, producers can no longer transfer the benefits of free trade to the consumer;

That's on pages 20-21. There's more detail on pages 115-116:

The impact of TTIP on consumer prices is calculated in the CGE model. Before going further it is important to note that changes to prices coming from this modelling set up also reflect closely the assumptions made regarding the labour market closure. The fixed labour market closure means that any increase in demand for labour will be met by wage increases, which will in turn push up firms' costs, and will be eventually be passed on to consumers as higher prices. In fact, the fixed labour supply closure can be said to lead to more pronounced price effects.

...

The first category contains non-tradable goods and services such as haircuts. The theoretical effect of TTIP on their prices in the EU can, without any loss of generality, be assumed to be marginal (and only due to general equilibrium effects). However, the CGE results show that a number of non-tradable goods and services do see an increase in prices. Higher income for the average EU citizen will push demand for personal services to a higher level. This leads to an increase in their respective price level.

The second category refers to tradable goods and services produced in sectors for which a large share of the production is exported. In other words these are sectors for which the EU economy has a competitive advantage. Given the size of the US market, the reduction of trade barriers may lead in these sectors to a significant increase in demand. If labour demand increases in those sectors to accommodate the higher demand for EU goods and services, this is likely to lead to price increases (notably due to the fixed labour supply assumption).

The third category consists of domestic producers of tradable goods, but which will have to face stronger (price) competition from the US in case of a concluded TTIP agreement. Finally the fourth category represents goods that the EU only imports, which will now more freely enter the market (if barriers vis-a-vis the US were previously in place). For the latter two categories, the effect of TTIP on the consumer prices is similar; more competition leads to a downward pressure on domestic prices. The aggregated effect on consumer prices is the end result of the interplay between both opposing forces and of the composition of the consumption basket for the average EU consumer.

In the modest scenario, consumer prices will, on average, increase by 0.2 percent in the EU, and decrease by 0.1 percent in the US. In case of an ambitious agreement, however, consumer prices are not expected to change in the US while they are expected to increase in the EU (by 0.3 percent).129 This reflects the price dynamics discussed above and the composition of consumption baskets for the average EU and US citizen. One factor that plays a role is the fact that in the updated CEPR (2013) results, the NTMs in the processed food sector are not reduced. This means that the reduction in import prices of processed foods products would be more limited than if the liberalisation were more ambitious. Finally the price effects in the EU also reflect the higher estimated GDP effects. It is important to note that these larger impacts on prices for European consumers should be seen in combination with the larger overall GDP impact and larger wage increases for European workers, compared to the impact on the US consumers. 

I'm a little skeptical of the idea that liberalized trade will lead to higher prices, but I don't know enough about these CGE models to figure out how they reached this conclusion. Any economists or political scientists out there want to weigh in on this?

Guest Post: ECJ upholds validity of EU directive regulating tobacco products – Part II

This is a guest from trade lawyer Adarsh Ramanujan

Continuing from my earlier post on the recent ECJ judgements relating to the EU Directive on tobacco products, one part of the dispute involved Poland’s challenge that the EU-wide ban on cigarettes with characteristic flavouring, including menthol, was not permissible. Although the legal basis of the claim raised by Poland has no relationship with WTO law in any sense, I found some of the observations of the ECJ worth sharing. This is particularly because the underlying factual issues that govern the regulation of tobacco products or even the outright ban on tobacco products, always appear to be disputed (is scientific consensus really possible?). The ECJ’s way of handling this was interesting to me.

Right off the bat, the ECJ judgment observes this:

52. Next, even if the claim that menthol is not as attractive to young people as other flavourings were true, which the defendants moreover deny, that claim is not conclusive as such. It is sufficient to point out that the attractiveness of the products at issue cannot be assessed in the light solely of the tastes and habits of a single group of consumers disregarding the others.

53. Lastly, as regards the claim that the qualities of mentholated tobacco products in terms of taste are different from those of the other tobacco products having a charactering flavour in that the former, unlike the latter, do not completely eliminate the taste and smell of tobacco, it must be held that that claim is not sufficiently substantiated. Although it cannot be excluded that certain flavourings alter to varying degrees the taste or smell of tobacco, the fact remains that all flavourings, including menthol, mask or reduce tobacco smoke’s harshness and contribute to promoting and sustaining tobacco use, as has been noted in paragraph 44 above.

Second, Poland argued that the ban breaches the  principle of ‘proportionality’ - acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not exceed the limits of what is necessary in order to achieve those objectives; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (paragraph 78 of the ECJ judgment). Sounds familiar?

When dealing with this question, the ECJ broke down its analysis into three parts – (i) whether it is appropriate for the objective pursed, (ii) whether it is necessary, and (iii) whether this is the least onerous mechanism. 

On the question of whether it is appropriate for the objective pursued, the standard applied by the ECJ is more in a negative sense – unless the measure is manifestly inappropriate, the EU has a sufficiently wide margin of discretion. Here is what the ECJ had to say on this point:

82. Secondly, that prohibition is also appropriate for ensuring a high level of protection of human health, especially for young people. It is not disputed that certain flavourings are particularly attractive to them and that they facilitate initiation of tobacco consumption.

83. In addition, the argument that the prohibition on the placing on the market of menthol-containing tobacco products does not contribute to the reduction in the number of smokers, even if proved, cannot succeed either, since it disregards the preventive function of that prohibition, which is to reduce the initiation of tobacco consumption.

84. As regards, lastly, the argument that the prohibition of characterising flavours will lead to the rapid growth in the illicit sale of flavoured tobacco products, it must be found that that argument does not take sufficient account of the mechanisms introduced by Directive 2014/40, in particular Articles 15 and 16 thereof, in order to deal with that risk.

85. Accordingly, the prohibition in question cannot be regarded as manifestly inappropriate for achieving the objective of facilitating the smooth functioning of the internal market for tobacco and related products, taking as a base a high level of protection of human health, especially for young people.

On the question of whether the measure is ‘necessary’ and the least onerous of the available options, the following analyses caught my eye:

90     With regard, in the second place, to whether that prohibition is necessary, it should be borne in mind, first, that, as has already been stated in paragraph 44 above, the Partial Guidelines for Implementation of Articles 9 and 10 of the [World Health Organisation Framework Convention on Tobacco Control or] FCTC recommend that the Parties to the FCTC, inter alia, prohibit ingredients, such as menthol, that may be used to increase palatability in tobacco products. In addition, in accordance with section 1.1 of those partial guidelines, the Parties to that framework convention are encouraged to implement measures beyond those recommended by the guidelines.

91      It was thus lawful for the EU legislature — taking account of those recommendations and in the exercise of its broad discretion — to impose a prohibition on all characterising flavours.

92      Secondly, as regards the less restrictive measures advocated by the Republic of Poland, they do not appear to be equally suitable for achieving the objective pursued.

93      Raising — solely in respect of tobacco products with a characterising flavour — the age limit from which their consumption is permitted is unlikely to reduce the attractiveness of those products and thus prevent persons above that age from starting smoking. In addition, any prohibition on sale resulting from an increase in that age limit can, in any event, be easily circumvented when the products concerned are marketed.

94      The possibility of prohibiting the cross-border sale of tobacco products is in itself already provided for in Article 18 of Directive 2014/40. As is apparent from recital 33 of that directive, such a prohibition seeks, in particular, to prevent circumvention of the compliance rules for tobacco products laid down by that directive. However, that prohibition is not as such appropriate for ensuring a high level of health protection, since, in the absence of a prohibition on the placing on the market of tobacco products with a characterising flavour, those products would continue to attract consumers.

95      As regards affixing a health warning on the labelling stating that tobacco products with a characterising flavour are as harmful to health as other tobacco products, this does not appear to be as appropriate for protecting consumer health as the prohibition on the placing on the market of tobacco products with such a flavouring, since the presence of that flavouring is, by its nature, likely to promote and sustain tobacco use, as is apparent from paragraph 44 above.

96      Consequently, it must be found that the prohibition on the placing on the market of tobacco products with a characterising flavour does not go manifestly beyond what is necessary in order to attain the objective sought.

97      As regards, in the third place, the allegedly disproportionate effects of the prohibition on the use of menthol as a characterising flavour, on account of the negative economic and social consequences to which that prohibition would give rise, it must be noted that, even though it has, in the present case, a broad legislative power, the EU legislature must base its choice on objective criteria and examine whether aims pursued by the measure chosen are such as to justify even substantial negative economic consequences for certain operators (see, to that effect, judgment in Luxembourg v Parliament and Council, C‑176/09, EU:C:2011:290, paragraph 63 and the case-law cited).

Again, I won’t venture into the question how far these standards are the same or different from those employed under various provisions of the WTO. Still, the similarity in some of these standards is quite interesting to observe.

Guest Post: ECJ upholds validity of EU directive regulating tobacco products – Part I

This is a guest from trade lawyer Adarsh Ramanujan

Last week, the European Court of Justice, issued its judgment (here, here, and here) has dismissed the action initiated by Poland against the EU’s Directive 2014/40/EU concerning tobacco products, and upheld the validity of said Directive.

I don’t intend to get into EU law, the basis on the litigation and so forth. On the face of it, the measure at issue before the ECJ and those at issue in the WTO do not appear to be the same, though there is clearly some overlap. One of the questions posed before the ECJ was the validity of Article 13 of the EU Directive which prohibited the inclusion of certain elements / features on the labelling / packaging etc., even if they were factually accurate and even if such element or feature is part of a trademark.

This Article 13 provision was questioned as being in violation of the freedom of expression, including the freedom to express commercial information through labelling, advertising etc. Such a measure could be justified only if it is in compliance with the principle of proportionality, is permissible only if it is necessary and actually meets objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others (paragraph 149 of ECJ judgment). While it is not my intent to state that these standards are identical to what is employed at the WTO level, the similarity cannot be ignored for sure.

When applying this standard to Article 13 of the EU Directive, the ECJ judgment records the following:

152    …Given that it is undisputed that tobacco consumption and exposure to tobacco smoke are causes of death, disease and disability, the prohibition laid down in Article 13(1) of Directive 2014/40 contributes to the achievement of that objective in that it is intended to prevent the promotion of tobacco products and incitements to use them.

156    It must, however, be stated that human health protection — in an area characterised by the proven harmfulness of tobacco consumption, by the addictive effects of tobacco and by the incidence of serious diseases caused by the compounds those products contain that are pharmacologically active, toxic, mutagenic and carcinogenic — outweighs the interests put forward by the claimants in the main proceedings.

157    Indeed, as is apparent from the second sentence of Article 35 of the Charter and Articles 9 TFEU, 114(3) TFEU and 168(1) TFEU, a high level of human health protection must be ensured in the definition and implementation of all the European Union’s policies and activities.

158    The Court finds, in the light of the foregoing, (i) that the prohibition laid down in Article 13(1) of Directive 2014/40 is such as to protect consumers against the risks associated with tobacco use, as follows from paragraph 152 of this judgment, and (ii) that that prohibition does not go beyond what is necessary in order to achieve the objective pursued.

159    On this point, the Court cannot accept the argument that the prohibition concerned is not necessary because consumer protection is already adequately ensured by the mandatory health warnings mentioning the risks associated with tobacco use. In fact, awareness of those risks may, on the contrary, be diminished by information that might suggest that the product concerned is less harmful or is beneficial in some respects.

160    Nor can the Court accept the argument that the objective pursued could be achieved by other, less restrictive measures, such as regulating the use of the elements and features referred to in Article 13 of Directive 2014/40, instead of prohibiting them, or adding certain supplementary health warnings. Such measures would not be as effective for ensuring the protection of consumers’ health, since the elements and features referred to in Article 13 are, by their very nature, likely to encourage smoking (see, to that effect, judgment in British American Tobacco (Investments) and Imperial Tobacco, C‑491/01, EU:C:2002:741, paragraph 140). It cannot be accepted that those elements and features may be included for the purpose of giving consumers clear and precise information, inasmuch as they are intended more to exploit the vulnerability of consumers of tobacco products who, because of their nicotine dependence, are particularly receptive to any element suggesting there may be some kind of benefit linked to tobacco consumption, in order to vindicate or reduce the risks associated with their habits.

161    In those circumstances, it must be held that, in prohibiting the placing, on the labelling of unit packets and on the outside packaging, as well as on the tobacco product itself, of the elements and features referred to in Article 13(1) of Directive 2014/40, even when they include factually accurate information, the EU legislature did not fail to strike a fair balance between the requirements of the protection of the freedom of expression and information and those of human health protection.

Firstly, my reading of this judgment is that given, (a) the relatively high importance given to health considerations, and (b) the otherwise proven harmfulness of tobacco products, the fact that Article 13 was “intended” to prevent the promotion of tobacco products and incitements to use them, was sufficient enough for the provision to be necessary and proportional.

Secondly, my reading of the judgment is also that while there may be other measures that contribute to the same objective as well, Article 13 of the EU Directive is designed to complement them. The ECJ appears to be take note of the fact that the effectiveness of even large health warnings may get diluted by information printed on the labelling / packaging etc., especially in the case of existing users who are nicotine dependant. The statements in paragraph 160, extracted above, clearly expresses the sentiments of the ECJ.

Appellate Body Drama

From Politico:

And now for some drama in Geneva, the United States has informed the chairman of the World Trade Organization's Dispute Settlement Body that it cannot support the reappointment of South Korean national Seung Wha Chang to the Appellate Body.

The U.S. is concerned that some of the Appellate Body's rulings during Chang's tenure have gone beyond the seven-member panel's legal scope under the WTO's Dispute Settlement Understanding, Deputy U.S. Trade Representative Michael Punke and USTR General Counsel Tim Reif said in a joint statement to POLITICO on Wednesday.

“The integrity of the WTO depends on the stability of a healthy, well-functioning dispute settlement system that fairly applies the international trade rules as they are in-fact written — and that does not attempt to rewrite the rules or write new rules that are inconsistent with the trade obligations that were carefully negotiated by the United States and other WTO members,” Punke and Reif said.

Inside US Trade has more:

... Deputy U.S. Trade Representative Michael Punke and USTR General Counsel Tim Reif made their stance clear in a joint May 12 statement. “The United States is strongly opposed to Appellate Body members deviating from their appropriate role by restricting the rights or expanding the obligations of WTO members under the WTO agreements,” they said.

 “The United States will not support any individual with a record of restricting trade agreement rights or expanding trade agreement obligations,” Punke and Reif said.

What impact, if any, will this U.S. action have on future Appellate Body decisions involving the U.S., in particular trade remedy laws and decisions?  I can see how people might think the Appellate Body would give in to the U.S. pressure, or perhaps push back against the U.S. pressure. But based on my experience, they will simply keep doing what they have been doing, which is trying their best to come up with the correct interpretation and application of the law in each case (with the knowledge that many people out there will disagree with them in particular cases).

CETA as a Mixed Agreement

This is from Politico:

COUNCIL TO AMEND CETA AS ‘MIXED AGREEMENT:’ Coming as no big surprise to frequent Morning Trade readers, Friday’s Trade Council will see the EU ministers changing the Comprehensive Economic and Trade Agreement (CETA) with Canada into a ‘mixed agreement,’ meaning that not only the Council and Parliament, but also the Parliaments of all 28 EU countries, will need to approve. That’s what several diplomats from different countries confirmed to Morning Trade. “It is very clear that our national parliaments want to have a say on this as well, so we won’t deny that,” one of the diplomats said.

While this is understandable, the question remains whether the Council is not opening a Pandora’s box: In Belgium, for example, all three parliaments — the Wallonian, the Flemish and the Brussels regions’ — would have a say, and the Wallonian chamber has just lately approved a resolution in which it rejects the deal. In the Netherlands, under the new referendum law, Euro- and trade-skeptic initiatives could call in a public vote once the Parliament approved CETA. In a similar case on the EU-Ukraine trade agreement, we just saw how this can end — with a public rejection of the deal.

Legal fuzz: The Commission sent another trade deal, the EU-Singapore agreement, to the Court of Justice to clarify whether such deals actually touch on national competences, thus whether this approval of national parliaments is actually a necessary duty. But a ruling is not expected before September, and the Council is certainly not going to wait that long.

The really exciting question: Which parts of the treaty will be defined as EU competence (entering into force after the approval of the Council and the European Parliament) and which ones will be national competence (only applicable after the green light from all national parliaments, and thus in only in two to three years). What we hear: One nugget the national parliaments most certainly want to keep in their court is the new investor court system (ICS), which replaces the much disputed and less transparent investor-state dispute settlement (ISDS). Independent of which parts fall into their competence, both sides — the Council and the European Parliament on one side and the national parliaments on the other — will always vote on the whole package.

So how (and when) will national parliaments vote on CETA and the new investment system?

ADDED: Some EU experts on twitter tell me this is still in the discussion stage. Nothing final yet.

The WTO Tuna-Dolphin Dispute: Some Novel Procedural Developments

For a while, the Mexico-U.S. WTO dispute over U.S. measures related to dolphin-safe labels on tuna was pretty conventional. Mexico brought a complaint; the U.S. lost. The U.S. revised its regulations, and Mexico challenged the new regulations in an Article 21.5 proceeding. The U.S. lost again. Mexico then requested authorization to suspend concessions. The U.S. objected to the level of suspension proposed, and, just recently, the matter was referred to an arbitrator under Article 22.6 to determine the appropriate level. We've seen all this before.

But now we are in uncharted territory. After having its revised regulations found not to be in compliance in the Article 21.5 proceeding, the U.S. then revised its regulations again. And it has now requested that another Article 21.5 panel be set up, to get itself declared to be in compliance on the basis of the second revision to the regulations. For its part, Mexico will apparently request its own Article 21.5 panel, to argue that the second revision to the regulations is not, in fact, in compliance. (Presumably, Mexico did not want to be constrained by the terms of reference that might have existed based on the U.S. panel request).

So if you are keeping score at home, that will be up to three panels/arbitrators -- presumably made up of the same people -- weighing in on these issues in the coming months. How should they sort all this out?

If I had to sort it out myself, I would say the Article 22.6 arbitrator should focus on the issue of the level of nullification or impairment, and should do so based solely on the impact of the first revision to the regulations. And then, separately, the two Article 21.5 panels requested by the U.S. and Mexico should be merged into one panel, to jointly consider all of the issues related to the consistency of the second revision to the regulations with WTO obligations.

It might be useful to have DSU rules to deal with this kind of situation. On the other hand, I can see how a practice would develop to handle these issues when they arise.

ADDED: In response to a reader question, so what happens when these new cases are decided? Well, obviously, as soon as the Article 22.6 decision comes out, Mexico can get authorization to suspend concessions. Given the later start, I'm guessing the Article 21.5 report(s) will come out after the Article 22.6 decision. If the 21.5 report(s) find no violation, then the U.S. could demand that Mexico stop whatever trade retaliation it is imposing. On the other hand, if the current U.S. regulation is found to be in violation, it gets more complicated, as the level of nullification or impairment might have changed in relation to the Arbitrator's assessment of the previous regulation. Would the U.S. then file a new objection to Mexico's suspension level, to have the arbitrator reevaluate the appropriate level? We are now getting further into uncharted territory, and I don't really know.

Trade Bloggers on TV

With all of the trade talk in the U.S. presidential election, there has been some demand for commentary, to make sense of it all. Personally, I can't make sense of much in this election, but nevertheless here's Joel on Fox News talking about the Democratic candidates' trade policies:

And here's me on CBC talking about Trump's trade policies: 

 

Job Opening: Director of Legal Affairs at the WTO

Here are some of the details:

The Secretariat of the WTO is seeking to fill the position of Director in the Legal Affairs Division.

General Functions Reporting to a Deputy Director-General (DDG), the incumbent will lead the Legal Affairs Division, which is primarily responsible for assisting dispute settlement panels and arbitrators in resolving trade disputes between WTO Members. The Division is also responsible for providing legal advice on WTO agreements and other issues of international law and the law of international institutions as they may arise to the Director-General (DG) and the WTO Secretariat, to the Dispute Settlement Body (DSB) and other WTO bodies and, as appropriate, to WTO Members. The Division also serves as Secretary to the DSB in Special Session, prepares reference material on WTO law, and carries out technical assistance and outreach activities. Specific responsibilities of the incumbent will include: 1. Provide legal advice to the DG, WTO Divisions, the DSB and other bodies, and, as appropriate, WTO Members. 2. Oversee the work of the Division generally. Plan and organize the work of the Division by assigning dispute settelement lawyers and others (e.g. paralegals, Dispute Settlement (DS) Registrar, Legal Editor, secretaries) to: (i) assist and support dispute settlement panels and arbitrators, the DSB in Special Session, and, as appropriate committees and negotiating groups; (ii) prepare legal opinions for and in support of the DG, DDGs, WTO Divisions, the Dispute Settlement Body (DSB) and other bodies as appropriate; (iii) assist the DG in carrying out his/her depository functions with respect to instruments negotiated by Members; (iv) carry out functions of the Dispute Settlement Registry, the Digital Dispute Settlement Registry, and the WTO Depository Assistant; (v) design programs for and carry out technical assistance; (vi) prepare and update reference materials on WTO law and practice; and (vii) carry out outreach activities. 3. Lead the Division and motivate the staff, providing legal and other guidance to staff in carrying out their duties, setting objectives required, reviewing output (e.g. legal and other work) and performance of the staff, supporting the development of the knowledge and skills of staff, and ensuring appropriate staff training plans are in place and executed. 4. Build relationships with adjudicators and the Members in order to serve the WTO as appropriate, be it in dispute settlement, committee work, negotiations, or otherwise, while maintaining neutrality and observing the rules of conduct. 5. Oversee the participation of the Division in the organization's extensive technical assistance and training programmes, with a particular focus on WTO dispute settlement; such oversight extends to the preparation of teaching and training materials to this end, including for e-training, and to the preparation of reference materials on WTO law and practice. 6. Collaborate with other legal division Directors as appropriate to ensure that high quality legal advice and support are provided to the DG and WTO divisions, panels and arbitrators, WTO Members, WTO bodies, committees and negotiating groups, and to ensure that effective dispute settlement is provided to Members. 7. Assist the WTO Membership in drafting and giving legal effect to instruments and agreements they may negotiate and conclude within the legal framework of the WTO. 8. Represent the DG and the WTO Secretariat in various public and academic functions in Geneva and abroad that address WTO dispute settlement matters and legal issues of relevance to the WTO. 9. Undertake other tasks that may be assigned by the DG, including sitting on Secretariat committees and bodies.

More details here.

This type of job doesn't open up very often. Here's your chance!

If you do get it, you would join this very impressive list of past directors:

• Valerie Hughes
• Bruce Wilson
• Pieter Jan Kuijper
• Bill Davey
• Frieder Roessler
• Ake Linden 

Trump's Trade Delusions

Donald Trump talked about trade today:

Greeted by supporters chanting "build the wall" as well as protesters, Donald Trump rallied thousands in Nebraska.

Trump spoke for about 35 minutes, highlighting issues like trade and immigration.

He made a point of saying he tailored his message for Nebraska, talking about agriculture.

"Who the hell else likes ethanol but Trump," he said.

He also talked about Japan's high tariff on beef, a major export product for Nebraska. He said he would get rid of those.

Let's see, what would be a good way to reduce Japan's beef tariffs? Oh, right, the TPP (which Trump opposes). This is from USDA:

Japan is the United States' top export market for beef and beef products, with sales totaling $1.6 billion in 2014. The TPP agreement will dramatically reduce tariffs on U.S. beef. Japan will eliminate duties on 74 percent of its beef and beef product imports within 16 years, with substantial cuts to the remaining tariffs.

Japan will reduce its tariff on fresh, chilled, and frozen beef cuts from the current applied tariff of 38.5 percent – which can be as high as 50 percent under WTO rules – to 9 percent in 16 years. Tariffs on beef offal (including livers and tongue), which are currently as high as 21.3 percent, will be eliminated in six to 16 years, in some cases with an immediate 50-percent cut in the tariff rate. Tariffs on processed beef products (including beef jerky and meat extracts), currently as high as 50 percent, will be eliminated in six to 16 years.

Hopefully it won't come to this, but I would really love to be there when someone explains to a President Trump how trade negotiations and trade deals work, and what's in the current ones.

Hillary Clinton on the TPP

From the Washington Post:

Clinton, the Democratic pres­idential front-runner, responded in writing to a question on the lame-duck session from a coalition of Oregon labor unions and environmental groups by stating: “I oppose the TPP agreement — and that means before and after the election.”

...

On the Oregon questionnaire, in response to questions about provisions in the TPP addressing human rights and labor conditions, Clinton said: “I’m not interested in tinkering around the margins of our trade policy. I think we need a fundamental rethink of how we approach trade deals going forward.”

Generally speaking, I'm in favor of "fundamental rethinks" of how we approach things. But what could she mean here? I can't find the questionnaire itself, but the article makes it sound like she would be going further on human rights and labor issues. But further in what way? I hope someone in the media asks her.

ADDED: Inside U.S. Trade has the full questionnaire response here. It doesn't look to me like she has in mind any kind of fundamental rethink. She just repeats a few of her past criticisms, and suggests various things that I would characterize as "tinkering around the margins."

Protectionism

Regular readers know how much I like to obsess over the meaning of "protectionism" and the purpose of trade agreements. Sweden's National Board of Trade has a great new report that delves into these questions. Here's an excerpt:

As mentioned, the approaches to protectionism vary widely between different institutions. (See table 1 for an overview). However, the two core features of protectionism that most of the surveyed institutions highlight are (1) discrimination and (2) trade-restrictiveness. To a large degree, these two approaches overlap. Tariffs both discriminate against foreign economic operators and restrict trade. There are, however, instances in which the two approaches differ. Export subsidies discriminate against foreign operators but do not restrict imports. Conversely, there are a range of TBT and SPS measures that restrict trade without necessarily discriminating between foreign and domestic economic operators. ...

Another important dimension of protectionism that several (but not all) of the surveyed institutions highlight, is the extent to which public measures distort markets.

Ultimately, the Board regards a discrimination approach as the most suitable to frame issues related to protectionism. Of all the approaches (1-6), a discrimination approach offers the best combination of normative legitimacy (non-discrimination is a central WTO legal concept) and practical application (it does not require advanced quantitative analysis). In addition, there is a clear element of implied intent whenever foreign economic operators receive a less favourable treatment than domestic operators. Non-discrimination requirements also infringe less on countries’ sovereignty or “policy space”, since they insist only that laws and regulations be applied equally to foreign and domestic economic operators. Consequently, this approach also has a strong ethical foundation that many can embrace both inside and outside the trade community.

Another distinction has to do with whether an approach is “narrow” (is restricted to one type of trade flow) or “broad” (includes all/several types of trade flows). This dichotomy corresponds to the discussion in section 2.1 of the need for an updated conception of trade. In line with our comprehensive perspective on trade, the Board advocates a broad approach to protectionism.

Obama on the TPP

This is from President Obama in an op-ed pushing for the TPP:

... China is negotiating a trade deal that would carve up some of the fastest-growing markets in the world at our expense, putting American jobs, businesses and goods at risk.

...

Fortunately, America has a plan of our own that meets each of these goals. As a Pacific power, the United States has pushed to develop a high-standard Trans- Pacific Partnership, a trade deal that puts American workers first and makes sure we write the rules of the road for trade in the 21st century.

... America should write the rules. America should call the shots. Other countries should play by the rules that America and our partners set, and not the other way around.

... The world has changed. The rules are changing with it. The United States, not countries like China, should write them. Let’s seize this opportunity, pass the Trans-Pacific Partnership and make sure America isn’t holding the bag, but holding the pen.

I thought about writing something in response, but I'll just quote Deborah Elms instead:

First, 12 member countries wrote the TPP agreement—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.  The United States, by virtue of its overwhelming economic size and strength within this grouping, had an outsized influence in the negotiations, but it should not forget that the other 11 members also played key roles. 

Many of these partners stepped up to the plate and agreed to take on significantly harder, deeper and more substantial domestic reforms than anything the Americans have agreed to do in the TPP.  The most challenging elements of the agreement for many TPP members came about because the United States insisted on including these provisions.

A negotiation, after all, is a compromise and no country ever gets everything that it wants in an agreement.  The US got most of what it asked for, but not all.

 

...

Second, and perhaps more important, bringing China into the equation as the “bad guy” is going to do substantial long-term harm.  This is damaging to the United States, to China, to the TPP and to the global economy. 

The long-term objective is to connect China and the United States together in a trade agreement that meets the high standards that Obama discusses in his article.   Such an outcome will never be met if China is painted from the outset as somehow “outside” the bounds of such behavior. 

Will TTIP be "Light"?

This is from Inside US Trade:

U.S. Secretary of Commerce Penny Pritzker and German Economic Minister Sigmar Gabriel on Monday (April 25) each blamed the other side for holding up progress in the Transatlantic Trade and Investment Partnership negotiations, with Gabriel charging the U.S. with intransigence on government procurement and investor-state dispute settlement.

In contrast, Pritzker more generally hinted that the European Union is not as committed to the TTIP negotiations as the Obama administration, which wants to conclude the agreement by the end of this year. “Both sides need to work with urgency,” she said. “We would like to see the negotiations finish this year, but ... it takes two to make a deal.”

Pritzker stressed that there is “a cost to waiting” to get this deal done, but that this does not mean the U.S. is interested in a limited deal on tariffs only. “Cutting a deal that will only lower tariffs is not going to be of interest,” Pritzker said. “TTIP light is not something that either the Europeans or the U.S. is interested in.”

...

Gabriel also made clear he does not support a scaled-back TTIP. “I am not a fan of [TTIP light],” he said in an April 24 interview with the German newspaper Handelsblatt. A transcript of the entire interview is posted on his ministry's website. “I am looking to get a good deal, not a deal at all costs.”

So nobody wants a TTIP-light. Got it.

But what about this:

European Trade Commissioner Cecilia Malmstrom has said the EU will seek to protect its most sensitive agricultural products, such as certain dairy products and poultry, from complete tariff liberalization under the Transatlantic Trade and Investment Partnership (TTIP).

"When it comes to very sensitive sectors in the agriculture [industry], milk is one of these, poultry could be another, they would be exempted from the complete tariff liberalization," Malmstrom said at a civil society event on Feb. 3. "We are not there yet to define these."

Malmstrom, speaking at a civil society event on Feb. 3, also said member states are developing lists of products that will be exempt from full tariff elimination. Milk is on this list, she said, but added that she could not identify other items because the negotiations have not yet reached that stage.

Fluid milk is not heavily traded internationally, although milk powders are. Malmstrom's reference to milk was likely a reference to the dairy sector more broadly.

At the 11th TTIP round in October 2015 in Miami, the U.S. and EU exchanged tariff offers that covered 97 percent of their tariff lines. Of the tariff lines covered in the EU's latest offer, 1 percent are agriculture products that would be subject to phaseout periods of longer than seven years.

The remaining 3 percent of the EU's tariffs are also comprised mostly of agricultural products. The U.S. has maintained that all tariffs should be eliminated under TTIP, although many of its free trade deals -- including the Trans-Pacific Partnership -- have not lived up to that ambition.

Or this:

A senior U.S. official said March 31 that the U.S. has no intention of submitting a revised government procurement offer to the European Union this summer in the Transatlantic Trade and Investment Partnership negotiations, despite a request by EU Trade Commissioner Cecilia Malmstrom that it do so.

The U.S. official said that negotiators just exchanged offers, a reference to Feb. 29, and need to work on that basis. He made clear that he considers the U.S. offer to have met the agreed upon TTIP objective of increasing market access, and signaled the U.S. does not have to offer as much procurement access in TTIP as the EU since the U.S. market is twice as open.

He said the "narrative" of EU officials that the EU market is more open than the U.S. is false. In criticizing the U.S. procurement offer, EU officials in early March made that argument.

The EU is faulting the U.S. procurement offer for not offering new market access to railway and urban transit projects and aviation safety contracts, which are its priorities. The U.S. offer did not cover procurement undertaken by the Federal Aviation Administration (FAA), which could be construction project or equipment used in airtraffic control, sources said.

Can Trade Agreements Change Domestic Laws?

This is from EU Trade Commissioner Cecilia Malmström:

It begs to be said, again and again: No EU trade agreement will ever lower our level of protection of consumers, or food safety, or of the environment. Trade agreements will not change our laws on GMOs, or how to produce safe beef, or how to protect the environment.

This statement really gets us to the core of the regulatory autonomy debate. There can be little doubt that trade agreements allow challenges to domestic laws such as the ones she identifies. Whether they will result in a change to those laws is a harder question. Perhaps a change is unlikely for the policy areas she identifies, because they are so sensitive politically. But when such laws violate trade agreements, they can lead to trade sanctions, or in the case of investment agreements compensation. And in several cases, governments have, in fact, changed their laws in response to a trade agreement dispute ruling (recent examples include Seal Products, COOL and Tuna).