International Economic Law and Policy Blog

Tim Kaine on TPP

Democratic VP nominee Tim Kaine was interviewed on CNN about his position on the TPP:

Kaine also denied he had changed his stance on the Trans-Pacific Partnership, insisting that he has not "shifted my position on that."

Kaine voted to grant President Barack Obama fast-track authority to negotiate TPP and praised aspects of the deal, but said Friday morning that he was still concerned about an issue he raised initially with TPP: "The right of corporations to challenge unfair trade practices in private courts," without giving labor unions the same rights.

 

"It's been a year and nobody has given me a reason why we should embrace a trade deal," he said.

Watch the video at the link for the full picture, but the quotes above are pretty reflective of his answer, which is that it's not OK to let investors sue governments directly through ISDS without giving labor and environmental groups the same right.

 

So here's my question.  Would Kaine (and Clinton) only support the TPP if ISDS is taken out? Or would they only support TPP if labor and environmental groups had the right to sue governments directly as well?

Trump's Trade Bilateralism

I've mentioned this before, but I'm still baffled. This is from GOP VP nominee Mike Pence:

“With the TPP, it feels a little bit like Obamacare, you remember when Nancy Pelosi said, ‘we gotta pass this bill so we can find out what’s in it,’” Pence said Thursday on the Laura Ingraham Show, citing Carrier announcing it was moving 1,400 Indianapolis jobs to Mexico as proof trade deals needed to be reworked.

Earlier in the program, Pence explained why he no longer supported free trade agreements like NAFTA and TPP.

“I believe you can be convinced,” said Pence when asked if he could be trusted on trade. “You’re absolutely right, I think throughout my career I’ve strongly supported free trade in measures that have came before the Congress.”

“When I was asked to support free trade initiatives as governor of Indiana, I supported them,” he continued. “But frankly, we’re on the verge of electing one of the best negotiators in the world. As Donald and I sat down and talked earlier on, he talked to me about questioning the wisdom of these multi-country trade agreements that then, when they’re not working out, the way that clearly NAFTA is not any longer, it’s very difficult to unwind”

Pence said trade deals should be on a country-by-country basis.

More at the link, in a radio interview, about the focus on individual country deals.

Why are Trump and his supporters, who say they believe in free trade (but it's easy to have doubts), latching on to bilateralism as the answer? Do they really believe in something here, or is it just a way to criticize specific trade deals that are out there, while focusing on some vague alternative? Is the idea to focus on individual trade deals with other rich countries that won't lead to so much competition from low wage countries?

Hillary Clinton's Position on the TPP

This is from Politico:

Virginia Gov. Terry McAuliffe, longtime best friend to the Clintons, said Tuesday that he believes Hillary Clinton will support the TPP trade deal if elected president, with some tweaks.

“I worry that if we don’t do TPP, at some point China’s going to break the rules -- but Hillary understands this,” he said in an interview after his speech on the main stage at the Democratic National Convention. “Once the election’s over, and we sit down on trade, people understand a couple things we want to fix on it but going forward we got to build a global economy.”

Pressed on whether Clinton would turn around and support the trade deal she opposed during the heat of the primary fight against Bernie Sanders, McAuliffe said: “Yes. Listen, she was in support of it. There were specific things in it she wants fixed.” 

Later, McAuliffe’s spokesman sought to clarify the governor’s remarks after this story published, saying he was simply expressing what he wants Clinton to do if she is elected president. “While Governor McAuliffe is a supporter of the TPP, he has no expectation Secretary Clinton would change her position on the legislation and she has never told him anything to that effect.”

A top Clinton campaign official said the Democratic nominee never told McAuliffe she would be open to changing her position on TPP -- and campaign chairman John Podesta confirmed to POLITICO she never said anything like that to her longtime ally. “Love Gov. McAuliffe, but he got this one flat wrong,” Podesta tweeted. “Hillary opposes TPP BEFORE and AFTER the election. Period. Full stop.”

For what it's worth, here's my suggestion for Hillary Clinton. Explain exactly what you don't like about the TPP (I'm guessing it involves labor protections that are too weak, IP protections that are too strong, ISDS, and the lack of enforceable currency provisions), and how you would improve these aspects of the TPP (or what alternative trade initiatives you would undertake). That would put pressure on Trump to say something substantive on trade, instead of just ignoring questions about what changes he would make to trade agreements.

The counterargument I've heard is that any proposal she makes will be criticized, and everyone is better off politically by simply opposing existing trade deals and negotiations, rather than offering changes or alternatives. However, I don't think the trade debate is going very well for her, and I don't see it getting any better if she keeps doing what she is doing.

By the way, if you're looking for a free trade candidate, you'll have to turn to the Libertarians:

Former Massachusetts Gov. Bill Weld, the Libertarian Party’s vice presidential nominee, says for proponents of free trade, there’s only one game in town this year.

“We’re the only free trade ticket in the race,” Mr. Weld told The Washington Times on Wednesday near the site of the Democratic National Convention.

The UK's Trade Relationship with the EU

The FT explains how complicated this is:

Membership of the EU’s customs union — that is, having a common external tariff applied to imports from the rest of the world — is a separate issue to membership of its single market. Norway, for example, is a member of the single market but not of the customs union, enabling it to protect some of its producers with higher tariffs than allowed in the EU. If it wants, Norway can also sign trade deals with third-country governments permitting imports at lower tariffs.

However, in order to prevent countries such as Norway becoming a backdoor into the EU market, Oslo is obliged to apply complex “rules of origin” to its exports, ensuring that they have substantially been made in Norway rather than imported from, say, China and re-exported to the EU. This, plus the need to comply with customs paperwork from which EU countries are exempt, imposes considerable costs on Norwegian companies selling goods to the bloc.

For Norway, whose exports are dominated by primary products like crude oil, this may not pose too great a hardship. For the UK, whose goods exports are generally more complex and involve the use of imported inputs, they could prove a serious handicap. On the other hand, if the UK stays inside the EU customs union and is forced to apply the same tariffs as the EU, that will in effect preclude it signing any meaningful trade deals involving goods trade with any other economy.

The big question the UK needs to figure out is the following: Is it more interested in maintaining its current liberalized trade relationship with the EU, or exploring options for liberalizing trade with the rest of the world?

Two Brexit Questions

These Brexit questions are from Federico Ortino:

1) Assume 10 large WTO Members had formed an FTA in 1980, which provides 0 tariff for all industrial products traded within the FTA. Negotiations in the Uruguay round were done taking in to account such FTA. Say, a non-FTA WTO Member exporting car parts to the FTA knew that it would (indireclty) benefit from 0 tariff status among FTA members (car assembly in the UK was made it easier because there no tariffs is imposed on parts coming from other FTA members, and the final product could be sold tariff free in the entire FTA market). In 2016 the FTA is terminated. Can a WTO member bring a complaint (possibly a non-violation complaint) against any of the 10 former FTA members premised on the loss of the FTA-linked benefits?

2) Assume the same facts as above, but instead of an FTA, in 1980 the 10 countries had established a CU. Let's also assume that the common GATT tariff schedule only includes ad valorem tariff rates (no TQs or subsidies caps). As the CU dissolves in 2016, the 10 WTO (former CU) Members transpose their common tariff schedule in to 10 (identical) schedules. Does such transposition qualify as a 'change in the schedule' for purposes of the procedures for the modification and rectification of schedules? Even if the answer is negative, can a WTO member bring a complaint against any of the 10 former CU members premised on the loss of the CU-linked benefits?

 Please feel free to try to answer them in the comments! 

What Do Trump's Economic Advisers Think of Trade and the TPP?

As you can see from some of my recent posts, it's very difficult to get inside Donald Trump's head on trade. He says things, and it seems he can't possibly mean them because they are so outlandish, but maybe he does, and who knows what to think?

But perhaps it's possible to get inside the heads of some of the people advising Trump on economic issues. Maybe we could get more clarity from them.  Steve Moore of Heritage and Larry Kudlow of CNBC have been both described as Trump advisers, and they talked trade with Ben White of Politico at the GOP convention last week.  Here are some excerpts from the transcript: 

                        White:             I want to just stick with trade for one second.  I know you’ve said you disagree with the candidate on the issue and you’re trying to push him in a pro-free trade direction.  But when he talks about these terrible trade deals, specifically TPP is a terrible trade deal and he would do it differently, we rarely hear specifically what would be different, how he would do it differently.  Are there one or two things that could be changed in say TPP that would make it acceptable to Donald Trump the free trader?

00:28:57          Moore:            I think it really is going to come down to these Asian countries respecting our property rights and our patents.  And what we produce more and more of in the United States is intellectual property.  Silicon Valley is producing intellectual property, software.  And our drug companies, we’re creating world-class drugs and vaccines.  We produce them at some time, correct me if I'm wrong about this guys, you’re great economists.  We sometimes spend billions of investment dollars to produce these things.  They’re high-class.  We send them over to China. The first thing they do is figure out how to duplicate them and they produce them and they’re not paying us for it.

00:29:37                                              And how can we have our industries competitive if they’re stealing our technology?  So that’s one example of the kind of thing that has to stop.

Now, everyone in the trade field will recognize that IP is an issue that the U.S. pushes constantly, and while there may be slight differences between administrations and parties, the approach is not that different. Maybe Trump would be more Orrin Hatch than Barack Obama on IP?  If so, that's not much of a difference, in my view. So nothing radical here.

Here's more later, when Larry Kudlow joined the conversation: 

00:44:08          White:             No, no, no.  I want to take advantage of your being here just to let you talk a little bit about—I know you’ve been working with the Trump campaign on trade and on trying to move them, nudge them towards a freer trade positions, you know, while recognizing that they are legitimate things he would like to do differently.  Where are you in that process? 

                                                            And what I really want to get at is when he says that the TPP is a disaster and should be changed, he never says what specifically should be changed.  What is that thing?  What are the trade deals we’ve done terribly that need to be done differently?  And I know, I mean, you’re an ardent free trader. 

00:44:40          Kudlow:          I am.  So is Steve.  And, look, the TPP has a lot of things wrong with it.  Not only the reduction of foreign tariff rates and non-tariff barriers, which in many ways is highly inadequate, in my view.  But also there is decision-making processes by various commissions or whatever we call them, that will not be made by the United States. 

                        White:             Isn’t that true of every trade deal that we’ve ever signed?

                        Moore:            That’s a problem.  That’s a big problem.

                        White:             So we need to get rid of NAFTA?

                        Moore:            Well, more bilateral trade makes a lot more sense, in my opinion.  But I don’t know; what do you think?

There are a few things here.  First, Kudlow wants more reductions to foreign tariffs and non-tariff barriers. That should sound good to free traders, if it could be achieved (maybe in exchange for getting rid of additional U.S. trade barriers that were not covered by TPP).

There's also the issue of "decision-making processes by various commissions."  Here, there seems to be confusion about how trade governance works.  If people are afraid of global governance by a "TPP Commission," they just don't understand the system.  The TPP Commission is described in Chapter 27: "The Parties hereby establish a Trans-Pacific Partnership Commission (Commission), composed of government representatives of each Party at the level of Ministers or senior officials. Each Party shall be responsible for the composition of its delegation."  So, the U.S. will be on this Commission, and could block the 11 other countries from doing things it did not like, not that the other 11 would try anyway because that's not how these things work.  (Beyond this Commission, there are also dispute settlement panels, of course, but if you want to enforce the rules, on IP and other issues, you kind of need those.)  So here, some trade specialists probably just need to sit down with Kudlow and Moore and explain how trade governance, commissions, etc. work (or, often, do not work).

Finally, Moore says bilateral trade deals make more sense (Trump has been saying similar things).  But why is that?  11 separate trade deals between the U.S. and the TPP countries -- there are already bilateral deals with some of them -- make more sense than one overall deal covering everyone?  That one is kind of a mystery to me. I'm not sure what Moore means or what benefit he sees to bilateral deals.

Now more from Kudlow:

00:45:18          Kudlow:          I think Steve is right.  I mean, look, I had this conversation—I don’t know—a month ago on a radio interview and with Speaker Ryan about this, who is an ardent free trader.  And they had just completed, I believe, this new customs enforcement bill.  It hadn’t been—I believe with Senator Ron Wyden was—and, you know, in that bill, somewhat like current law but maybe better, the United States, under the aegis of WTO, nonetheless has the right to sit down with a trading partner and discuss broken rules.  All right?  And if the rules are broken and if promises are made and they’re broken again, which happens a lot in trade history, then the United States has the authority to enforce them, which might mean then, frankly, what the speaker said to me that day on the air, tiny targeted tariff penalties.

00:46:26                                              It’s not our first choice.  I think Mr. Trump does not want to see a wall of tariffs.  He’s kind of pushed that rhetoric aside in recent months.  But President Reagan did it; I was there.  I actually fought against it and lost.  President Clinton did it.  President George W. Bush did it.  President Obama did it.

00:46:51                                              So we have to stand up for the interests of this country.  And in many of these deals, those interests are ambiguous, they’re blurred, the decision-making process is ambiguous.  And I think what Mr. Trump is just trying to say is, the United States is a large, sovereign country who intends to make decisions on these matters in the interests of the U.S., the U.S. economy, and the U.S. workforce. 

00:47:23          Moore:            And this was what Brexit was all about.  Right?  People want sovereignty; they don’t want international people at the World Trade Center or, you know, whatever, WTO to make the decision for us.

                        White:             And this would—I also assume we’d have to rip up every trade deal we currently have. 

00:47:35          Moore:            No.  Look, I’m not—personally, the one thing I kind of disagree with Donald Trump on is on NAFTA.  I think NAFTA, for the most part, has been a—I don’t know if you agree or disagree, but I think NAFTA has been a very positive thing, especially for Mexico, and it’s really stabilized their economy, but. 

00:47:48          Kudlow:          I basically do too, by the way.  And I think—look, I can’t predict the future on any of this stuff.  Nobody sitting here can.  But my sense is there are gradations of problems higher and lower.  I mean, look, Ben, for Christ sakes, you look at what China does.  I mean, it’s outrageous.  Okay?  And intellectual property rights, counterfeiting of goods, cyber hacking into our—

                        White:             Although TPP is not a deal with China.

                        Holtz-Eakin:   Right.

00:48:17          Kudlow:          I understand.  But I’m just saying, unfortunately, that’s the model.  So you have to keep—look, I know a lot of free traders in Congress who are very unhappy with TPP, not in theory.  In theory it’s good.  And by the way, strategically it’s very good, in my opinion.  But in terms of the specifics, practices and so forth, look, these boards, these international board—God help us from international boards.  Okay?  God help us in that.  You know, I served—

00:48:48          Moore:            That goes with this ludicrous, you know, climate change deal too.  We should have—

                        White:             We’re not going to get down the rabbit hole of climate change.

                        Moore:            But that’s a big economic issue too. 

                        White:             Yeah.

                        Kudlow:          I’m just saying Mr. Trump, without getting specific, he just will argue for the sovereignty of the United States and the interests of its businesses and workforce.

In this last part, both Moore and Kudlow both seem pretty pro-NAFTA and pro-free trade.  The worry about "international boards" seems to parallel the earlier talk about "Commissions." Again, I think there is just some confusion here about how the system works.

So there you have it. Some high level Trump economic advisers have views on trade and trade agreements that seem mostly positive, with a couple areas where they could use guidance from trade specialists. But that doesn't help with the question of whether Trump will be listening to them.

More Trump on Trade

This is from an interview with Chuck Todd of NBC:

CHUCK TODD: You bring that up, I want to get into the meat of the speech. And I was going to do this later, but you just brought up the plants. You said there would be consequences for any company that tried to move a factory out. What-- DONALD TRUMP: Absolutely, those-- CHUCK TODD: --what is the consequence? Let's start with, you bring up Carrier a lot. DONALD TRUMP: It's so simple-- (OVERTALK) CHUCK TODD: Right, I understand that. But explain the consequences-- DONALD TRUMP: Okay, here's the consequence-- CHUCK TODD: What would it be? DONALD TRUMP: So Carrier comes in, they announce they're moving to Mexico, they fire all their people in Indiana, and they say, "Hi, well, here we are in Mexico, you know, enjoy your plant, enjoy the rest of your life," and you hire people from Mexico, okay? Now they make their product and they put it into the United States. Well, we will have a very strong border, by the way, but they put it into the United States and we don't charge them tax. There will be a tax to be paid. If they're going to fire all their people, move their plant to Mexico, build air conditioners, and think they're going to sell those air conditioners to the United States, there's going to be a tax. CHUCK TODD: What kind of tax are you thinking? DONALD TRUMP: It could be 25%. It could be 35%. It could be 15%. I haven't determined. And it could be different for different companies. We have been working on trying to stop this government, because we don't know what we're doing. And not only Obama, they've been trying to stop this from before Obama. But they don't know. You know, they've done, they've tried lower interest loans, they've tried zero interest loans, these guys-- CHUCK TODD: Well, some of these things aren't going to get through the World Trade Organization. There's-- DONALD TRUMP: Even better. Then we're going to renegotiate or we're going to pull out. These trade deals are a disaster, Chuck. You know, the World Trade Organization is a disaster. CHUCK TODD: You know the concern-- DONALD TRUMP: NAFTA is a disaster-- CHUCK TODD: --(UNINTEL) is that it would rattle the world economy. Look what Brexit did to the world economy. (UNINTEL PHRASE) DONALD TRUMP: We're going to do it. We're going to do it. CHUCK TODD: Now you-- DONALD TRUMP: The stock market's higher now than it was when it happened. And by the way, I'm the only one of all of these people at the higher level of the wonderful world of politics, I'm the only one that said, "Brexit's going to happen." Remember, I was asked the question. I said, "Yeah, I think they're going to approve it. I think they want independence. I don't think they want people pouring into their country." And I was-- CHUCK TODD: You're not worried about, you think a fractured Europe is good for America? DONALD TRUMP: No, no. But we're spending a lot of money in Europe. Don't forget, Europe got together, why, primarily did they get together? So that they could beat the United States when it comes to making money, in other words, foreign trade-- CHUCK TODD: Economic-- DONALD TRUMP: Okay? And now we talk about Europe like it's so wonderful. Hey, I love Europe, I have property in Europe. I'm just saying, the reason that it got together was like a consortium so that it could compete with the United States-- CHUCK TODD: So what you're saying is all this stuff is good for America, even though it's not good for Europe? DONALD TRUMP: Look, you take a look at Airbus. They make more planes now than Boeing, okay? They got together, all of these countries got together so that they could beat the United States. Okay, so we're in competition. So you know, we're in competition in one way, we're helping them in another way. It is so messed up. I'm only saying this: If a company moves and leaves Indiana or leaves Michigan, let's say Ford leaves Michigan and builds a massive plant, like my friend, he's going to build it-- CHUCK TODD: Any car that comes from that plant, you're going to tax it-- DONALD TRUMP: If they want to fire all their people in Michigan and they don't want to build in Michigan, what I'm going to do is I'm going to say, "Welcome to Mexico, enjoy your plant. But when you make a car and it comes back into the United States, we're going to charge you a tax." And you know what that's going to do? They're not going to leave Michigan.

With regard to the tax on the imports of companies who move their factories abroad, that sounds like, among other things, a GATT Article II:1(b), second sentence ("be exempt from all other duties or charges of any kind imposed on or in connection with the importation") violation, and probably a GATT Article X:3(a) ("shall administer in a uniform, impartial and reasonable manner") violation.  However, there are probably domestic remedies that would be quicker and more effective.

I still say Trump's non-trade policies are scarier than his trade policies, but the trade part is catching up.

I'm wondering if there are ISDS possibilities here as well. Let's say Ford restructured itself so that its Mexican operations were in control of its U.S. operations. Could it then bring a NAFTA Chapter 11 complaint alleging treatment of its U.S. factories that was not fair and equitable?

Trump's "Ideas" About Trade Are Bizarre

From the draft transcript of his speech tonight:

I have a different vision for our workers. It begins with a new, fair trade policy that protects our jobs and stands up to countries that cheat. It’s been a signature message of my campaign from day one, and it will be a signature feature of my presidency from the moment I take the oath of office.

I have made billions of dollars in business making deals – now I’m going to make our country rich again. I am going to turn our bad trade agreements into great ones. America has lost nearly-one third of its manufacturing jobs since 1997, following the enactment of disastrous trade deals supported by Bill and Hillary Clinton.

Remember, it was Bill Clinton who signed NAFTA, one of the worst economic deals ever made by our country.

Never again.

I am going to bring our jobs back to Ohio and to America – and I am not going to let companies move to other countries, firing their employees along the way, without consequences.

My opponent, on the other hand, has supported virtually every trade agreement that has been destroying our middle class. She supported NAFTA, and she supported China’s entrance into the World Trade Organization – another one of her husband’s colossal mistakes.

She supported the job killing trade deal with South Korea. She has supported the Trans-Pacific Partnership. The TPP will not only destroy our manufacturing, but it will make America subject to the rulings of foreign governments. I pledge to never sign any trade agreement that hurts our workers, or that diminishes our freedom and independence. Instead, I will make individual deals with individual countries.

No longer will we enter into these massive deals, with many countries, that are thousands of pages long – and which no one from our country even reads or understands. We are going to enforce all trade violations, including through the use of taxes and tariffs, against any country that cheats.

This includes stopping China’s outrageous theft of intellectual property, along with their illegal product dumping, and their devastating currency manipulation. Our horrible trade agreements with China and many others, will be totally renegotiated. That includes renegotiating NAFTA to get a much better deal for America – and we’ll walk away if we don’t get the deal that we want. We are going to start building and making things again.

So, "instead" of signing bad deals that hurt us, like the one with Korea, he will "make individual deals with individual countries."

If you're thinking, "but that doesn't make any sense," and neither does the rest of what he's saying ... you are right.

De Facto Non-Market Economy Status

From Politico:

Brussels has signaled that it will radically overhaul its anti-dumping practices worldwide in an attempt to lessen the effect of China winning so-called market economy status later this year.

...

European Commissioner for Trade Cecilia Malmström proposed an unexpectedly drastic compromise Wednesday. While Brussels will have to accept in December that Beijing deserves market economy status under World Trade Organization rules, she said that the Commission would compensate by rolling out an entirely new anti-dumping methodology to hold trade defenses at their current level.

“The college [of commissioners] has agreed to propose changes to the EU anti-dumping and anti-subsidy legislation with the introduction of a new anti-dumping methodology, to capture market distortions linked to state intervention,” Malmström said. “So this is a new method, it will be country-neutral and will be applied equally to all WTO countries. We are eliminating the existing list of non-market economy countries.”

A formal proposal is expected from September and would need approval from the member countries and the European Parliament.

“This new methodology would lead to approximately the same level of anti-dumping duties as we have today,” the commissioner continued. “[This] is a way to both safeguard our economic interest and protect European jobs.”

If I understand this correctly, and I'm not sure that I do, China and other countries would no longer be considered non-market economies. However, a new, generalized anti-dumping methodology would lead to anti-dumping calculations that result in China and these other countries being subject to anti-dumping duties in just about the same amounts that they currently are as non-market economies.

Will this solution make everyone happy?  Or will it lead to the same kind of litigation that would have occurred if the EU kept treating China as a non-market economy?

The GOP Platform on Trade

Not that anyone should take party platforms all that seriously, but here's what the GOP platform says on trade:

A Winning Trade Policy

International trade is crucial for all sectors of America’s economy. Massive trade deficits are not. We envision a worldwide multilateral agreement among nations committed to the principles of open markets, what has been called a “Reagan Economic Zone,” in which free trade will truly be fair trade for all concerned.

We need better negotiated trade agreements that put America first. When trade agreements have been carefully negotiated with friendly democracies, they have resulted in millions of new jobs here at home supported by our exports. When those agreements do not adequately protect U.S. interests, U.S. sovereignty, or when they are violated with impunity, they must be rejected. We cannot allow foreign governments to limit American access to their markets while stealing our designs, patents, brands, know-how, and technology.

We cannot allow China to continue its currency manipulation, exclusion of U.S. products from government purchases, and subsidization of Chinese companies to thwart American imports. The current Administration’s way of dealing with these violations of world trade standards has been a virtual surrender.

Republicans understand that you can succeed in a negotiation only if you are willing to walk away from it. A Republican president will insist on parity in trade and stand ready to implement countervailing duties if other countries refuse to cooperate.

At the same time, we look to broaden our trade agreements with countries which share our values and commitment to fairness, along with transparency in our commercial and business practices. In pursuing that objective, the American people demand transparency, full disclosure, protection of our national sovereignty, and tough negotiation on the part of those who are supposed to advance the interests of U.S. workers. Significant trade agreements should not be rushed or undertaken in a Lame Duck Congress. 

The TPP is not mentioned by name, but pretty obviously the TPP is the "significant trade agreement" that "should not be rushed or undertaken in a Lame Duck Congress."

For comparison, here is the 2012 version:

International Trade: More American Jobs, Higher Wages, and A Better Standard of Living

International trade is crucial for our economy. It means more American jobs, higher wages, and a better standard of living. Every $1 billion in additional U.S. exports means another 5,000 jobs here at home. The Free Trade Agreements negotiated with friendly democracies since President Reagan’s trailblazing pact with Israel in 1985 facilitated the creation of nearly ten million jobs supported by our exports. That record makes all the more deplorable the current Administration’s slowness in completing agreements begun by its predecessor and its failure to pursue any new trade agreements with friendly nations.

This worldwide explosion of trade has had a downside, however, as some governments have used a variety of unfair means to limit American access to their markets while stealing our designs, patents, brands, know-how, and technology-the “intellectual property” that drives innovation. The chief offender is China, which has built up its economy in part by piggybacking onto Western technological advances, manipulates its currency to the disadvantage of American exporters, excludes American products from government purchases, subsidizes Chinese companies to give them a commercial advantage, and invents regulations and standards designed to keep out foreign competition. The current Administration’s way of dealing with all these violations of world trade standards has been a virtual surrender.

Republicans understand that you can succeed in a negotiation only if you are willing to walk away from it. Thus, a Republican President will insist on full parity in trade with China and stand ready to impose countervailing duties if China fails to amend its currency policies. Commercial discrimination will be met in kind. Counterfeit goods will be aggressively kept out of the country. Victimized private firms will be encouraged to raise claims in both U.S. courts and at the World Trade Organization. Punitive measures will be imposed on foreign firms that misappropriate American technology and intellectual property. Until China abides by the WTO’s Government Procurement Agreement, the United States government will end procurement of Chinese goods and services.

Because American workers have shown that, on a truly level playing field, they can surpass the competition in international trade, we call for the restoration of presidential Trade Promotion Authority. It will ensure up or down votes in Congress on any new trade agreements, without meddling by special interests. A Republican President will complete negotiations for a Trans-Pacific Partnership to open rapidly developing Asian markets to U.S. products. Beyond that, we envision a worldwide multilateral agreement among nations committed to the principles of open markets, what has been called a “Reagan Economic Zone,” in which free trade will truly be fair trade for all concerned.

There is a good deal of overlap between the two.

Call for Papers on Cultural Heritage (and Trade and Investment)

From The Scientific Committee of the International Conference:

The Scientific Committee of the international Conference 'UNESCO World Heritage Between Education and Economy - A Legal Analysis' is calling for paper proposals on the following topics:

I) Cultural Heritage and its Meaning;
II) Cultural Heritage & Investment Law;
III) Cultural Heritage and World Trade Law;
IV) Education & Tourism.

The international Conference will be held in Ravenna, on October 27-28, 2016.

Please email abstracts and CV to:
[email protected] ; [email protected] ; [email protected] ; beatriz.barre[email protected] ; [email protected] before August 19, 2016.

For any further information please contact Maria Laura Marceddu: [email protected]

Elisa Baroncini, Marina Trunk-Fedorova, Peter-Tobias Stoll

More details here.

When Can the UK Negotiate Its Own Trade Agreements? Part II

A couple weeks ago, I blogged about the issue of when the UK can start negotiating its own trade agreements. There was some twitter discussion of this issue recently, which spilled over into several new comments on that blog post. I wanted to raise the issue again because I'm still not convinced by the argument that the UK cannot legally negotiate trade agreements until Brexit is completed.  

Once again, here is the EU treaty text: 

Article 3

1. The Union shall have exclusive competence in the following areas:

...

(e) common commercial policy.

Clearly, the EU has exclusive competence over the "common commercial policy."  What exactly is the "common commercial policy"?  I have included the relevant treaty text at the bottom of this post, but there doesn't seem to be a clear definition. My sense is that the "common commercial policy" is the commercial policy that the EU member states have decide to engage in together (that is, the one they are conducting in common with each other).  Thus, as part of this common policy, individual member states cannot negotiate with non-EU countries on commercial treaties that involve the EU as a whole.  So, for example, during the CETA negotiations, the UK could not have negotiated with Canada on its own.  All CETA negotiations had to go through the EU institutions, as the EU has "exclusive competence" here.

With Brexit, though, the UK has made a decision not to participate in the "common commercial policy" anymore.  At least as of today, it is clear that the UK will extricate itself from the "common" commercial policy, and begin developing its own commercial policy, over which the EU has no competence.  In these circumstances, I don't see anything in the text that prevents the UK from negotiating its own FTAs right now.  Negotiating FTAs in anticipation of Brexit being completed is not related to the common commercial policy, and therefore is not an issue over which the EU has competence.

I should note that many EU lawyers seem to disagree with me on this, and I look forward to more discussion, both in the comments here and on twitter.

I'm less convinced that the UK could sign and implement those FTAs before Brexit is complete, though.  It is still bound to apply the common commercial policy until then.  But I just don't see anything that prevents it from making preparations -- hiring its own trade negotiators, negotiating FTAs, etc. -- to abandon the common commercial policy.

 

**************************** 

TITLE II

COMMON COMMERCIAL POLICY

Article 206

(ex Article 131 TEC)

By establishing a customs union in accordance with Articles 28 to 32, the Union shall contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers.

Article 207

(ex Article 133 TEC)

1. The common commercial policy shall be based on uniform principles, particularly with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies. The common commercial policy shall be conducted in the context of the principles and objectives of the Union's external action.

2. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.

3. Where agreements with one or more third countries or international organisations need to be negotiated and concluded, Article 218 shall apply, subject to the special provisions of this Article.

The Commission shall make recommendations to the Council, which shall authorise it to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Union policies and rules.

The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee and to the European Parliament on the progress of negotiations.

4. For the negotiation and conclusion of the agreements referred to in paragraph 3, the Council shall act by a qualified majority.

For the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, as well as foreign direct investment, the Council shall act unanimously where such agreements include provisions for which unanimity is required for the adoption of internal rules.

The Council shall also act unanimously for the negotiation and conclusion of agreements:

(a) in the field of trade in cultural and audiovisual services, where these agreements risk prejudicing the Union's cultural and linguistic diversity;

(b) in the field of trade in social, education and health services, where these agreements risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them.

5. The negotiation and conclusion of international agreements in the field of transport shall be subject to Title VI of Part Three and to Article 218.

6. The exercise of the competences conferred by this Article in the field of the common commercial policy shall not affect the delimitation of competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of the Member States in so far as the Treaties exclude such harmonisation.

The Post-Brexit UK-EU Relationship

There has been a lot of hand-wringing about the post-Brexit UK-EU trading relationship as it relates to regulations. Here's an example:

Sigurd Braathen worked for a lifetime to build his family’s industrial company into a profitable venture with sales across Europe. Then an environmental diktat from Brussels threatened to outlaw half of his company’s energy-efficient water heaters, even in his home country of Norway.

To make his products compliant, Mr. Braathen had to revamp his factory at a cost of 5 million euros.

“The worst part was, Norway had no influence over the matter, because we aren’t a member of the E.U.,” said Mr. Braathen. “But Norway still must do whatever Brussels decrees.”

A similarly conflicted future appears to await Britain.

...

From his perch in Hokksund, a bucolic industrial town nestled among emerald forests and dark fjords west of Oslo, Mr. Braathen has seen the consequences. Founded by his grandfather in 1932, his company benefited greatly from being able to sell products throughout Europe with little interference.

But three years ago, he learned that a draft directive on energy efficiency would threaten half his product range. The European Union had introduced rules that favor gas water heaters over electric ones, as a way to encourage countries that rely on coal-powered electricity to shift from dirty fuel. Yet Norway’s electricity, generated from hydroelectric power plants, was already among the cleanest in the world.

Mr. Braathen reckoned he would have to invest millions in a new plant to meet the standards. If he did not, he would be barred from selling his products even in Norway, because European Union rules apply to his own country even though it is not a member.

By chance, his company, Oso, won a partial reprieve. France and Finland, bloc members whose interests align with Norway’s because they produce nuclear energy, lobbied to get the final rule watered down. That narrowed the number of products that Oso would no longer be able to sell.

“But that was pure luck,” said Mr. Braathen, who still had to refurbish many of his machines to meet other aspects of the directive. “And if it hadn’t happened, there was nothing we could have done,” he said.

From the UK perspective, there are two aspects to this issue. First, should EU rules continue to apply to products sold in the UK?  It may be a little hard to interpret the Brexit result in some respects, but I think it's safe to say the answer to this question is no. So, the UK would not take the Norway approach, under which Norway must apply EU rules.

Second, what should the UK do about EU regulations that force UK producers to make costly production changes in order to sell in the EU market?  One answer, of course, is to rely on the WTO. GATT Article III and the TBT Agreement can be useful here.  Another answer is to pursue mutual recognition agreements, of some sort.  But if I were the UK, I would first try to evaluate the nature and scope of the problem.  Which EU regulations are going to be a problem for UK producers?  And how extensive will that problem be?

Why No Appellate Review in Trade Dispute Settlement Anymore?

From Inside US Trade:

In advance of the negotiating round for a Trade In Services Agreement that kicked off today (July 8), the European Union proposed a text on dispute settlement that does not reflect the EU's previous demand for a dispute settlement system with an appeals process, according to informed sources.

The EU decided to forgo including the appeals process in its non-paper on dispute settlement because it wanted to avoid the extended discussion it would have likely generated. This could have delayed the negotiations, and thereby made it harder to reach a TISA deal this year, sources said.

Appellate review in trade dispute settlement seems to be on the way out. It is not, as far as I know, part of any of the major trade negotiations going on right now.

If we continue the current trend of having virtually no trade disputes under FTAs, this is probably not a big deal. But if FTA dispute settlement takes off, people may re-discover the problems that led them to create an appellate process at the WTO in the first place.

Subsidies and TTIP Compilations

Two good (and free) edited collections are available. Here's one on subsidies, edited by Luca Rubini and Jennifer Hawkins: 

What shapes the law? : reflections on the history, law, politics and economics of international and European subsidy disciplines

 

This book puts together several contributions that, from various time, system and disciplinary perspectives, address the same questions – what has shaped subsidy laws? Which actors mould subsidy and State aid law and what forces are at work? The book includes reports from former or current negotiators, officials, practitioners and scholars, that focus on various attempts to regulate subsidies at the national, European and international levels. Prominence is given to the actual practice, and to the account given by the key actors, operating in the field since the 1970s. Various disciplines are interrogated – from history to law, from political science to economics. What comes out is a fascinating account that provides a goldmine of insights and leads for further enquiry in a topical and under-researched area. 

And here's one on TTIP, with Alberto Alemanno and others:

What the TTIPLeaks Mean for the On-Going Negotiations and Future Agreement?

 

While the TTIP leaks are not the first (nor the last) leak since the inception of the negotiation in 2013, they revealed for the first time the US negotiating position regarding certain chapters of the TTIP draft agreement. As such, the TTIP leaks provide an unprecedented opportunity not only to analyse the contrasting positions of the EU and US on several issues in the on-going negotiations, but also to test the veracity of the competing narratives devised by opponents and proponents of the agreement. To what extent do their respective storylines find support in the actual texts? What do the TTIP leaks mean for the on-going negotiations and future agreement?

At a time in which the ongoing negotiations enter a maker-breaker moment, this symposium of the European Journal of Risk Regulation provides a timely analysis of most of the documents released and contextualises them within the broader, on-going negotiations. It contains 10 research-based opinion pieces by leading academics and practitioners who have been closely following the negotiations in their respective areas of expertise, such as international regulatory cooperation, pharmaceuticals, food safety, agriculture and geographical indications, financial regulations as well as sustainable development.

Non-Legal Adjudicators in National and International Disputes

From TDM: 

We are pleased to announce a forthcoming Transnational Dispute Management (TDM, ISSN 1875-4120) special issue on "Non-Legal Adjudicators in National and International Disputes". This special issue will analyse the current scenario, as well as new trends, developments, and challenges that non-legal adjudicators face when resolving national and international disputes. It will consider litigation; national arbitration and diverse forms of alternative dispute resolution (ADR); international commercial arbitration; investment arbitration; inter-State arbitration and the dispute settlement system of the World Trade Organization (WTO).

This special issue will be edited by Katia Fach Gómez (University of Zaragoza-Spain) and Weiwei Zhang(Graduate Institute of International and Development Studies - Switzerland).

National courts and arbitration tribunals very often need to address scientific and/or technical aspects of a dispute. Arbitrators may rely on external competences - e.g., party-appointed experts or ex curiaexperts. However, nowadays there are also various areas of conflict resolution in which non-legal experts are part of the adjudicatory body, and internally provide with the required non-legal competences. In the national judicial context, there are examples of specialized national courts -e.g., in the environmental dispute sector- where non-legal experts guarantee the non-legal expertise of judicial courts. In the international arbitral context, a compelling example of the appointment a scientific-technical expert as full arbitrator is provided by the Permanent Court of Arbitration in the inter-State Indus Waters Kishenganga case. Non-legal neutrals are likewise relevant in commercial arbitration and in the broader field of ADR. In specialized areas such as disputes regarding construction, energy, engineering, financial services, technology and applied science cases, resorting to non-lawyers to resolve these type of disputes is a widely-used practice. It is also very remarkable that in the WTO dispute settlement system, by end of 2014, 44% of the panellists appointed have no legal background and 3 out of the 25 Appellate Body members appointed so far have no law degree.

More details here.

Is There A Right To Use Trademarks?

This is from last week's Philip Morris v. Uruguay investment arbitration award:

266 The Claimants also argue that a trademark is a property right under Uruguayan law which thus accords a right to use. Again, nothing in their argument supports the conclusion that a trademark grants an inalienable right to use the mark. As the Respondent rightly points out, the scope of the property right is determined by Uruguayan IP laws, such that, in order to work out the legal scope of the property right, it is necessary to refer back to the sui generis industrial property regime in Uruguay. Professor Fischer, one of the Claimants’ experts, confirms in a paper prepared not for the purposes of this dispute that a trademark confers on its owner only “the right to prevent others from using a trademark or trademarks that may be confused with their own.”

267 In the Tribunal’s view, both Parties have focused on a dichotomy between a right to use and a right to protect. However, it may be more fruitful to view the case as a question of an absolute versus exclusive right to use. Ownership of a trademark does, in certain circumstances, grant a right to use it. It is a right of use that exists vis-à-vis other persons, n exclusive right, but a relative one. It is not an absolute right to use that can be asserted against the State qua regulator.

268 As explained by Professor Barrios with reference to Professor Bugallo’s work on Intellectual Property, it is the “right to exclude third parties from the market (called the negative facet) [that] renders the exclusive use of the registered trademark in the marketplace possible.” Nothing in any of the legal sources cited by the Claimants supports the conclusion that a trademark amounts to an absolute, inalienable right to use that is somehow protected or guaranteed against any regulation that might limit or restrict its use. Moreover, as the Respondent has pointed out, this is not the first time that the tobacco industry has been regulated in such a way as to impinge on the use of trademarks.

...

271 The Tribunal concludes that under Uruguayan law or international conventions to which Uruguay is a party the trademark holder does not enjoy an absolute right of use, free of regulation, but only an exclusive right to exclude third parties from the market so that only the trademark holder has the possibility to use the trademark in commerce, subject to the State’s regulatory power.

The WTO panel on plain packaging will be considering similar issues. It will be interesting to see if the Philip Morris v. Uruguay reasoning is raised by the parties to the WTO proceeding, and how the panel takes the reasoning into account.

Anti-Smoking Regulation in China

From the Economist:

The state-owned China National Tobacco Corporation controls the production and sale of all tobacco in China. That the government profits from puffing perhaps explains why it has taken so few anti-smoking measures since China signed the WHO’s Framework Convention on Tobacco Control in 2003. Packets carry only tiny written health warnings (with no graphic pictures), and taxes remain low. The company’s arguments echo those of tobacco firms elsewhere. It warns that cutting smoking will harm the economy, since tobacco taxes account for 7.5% of fiscal revenue at all levels of government (in Yunnan they account for about half the provincial tax take). Unlike elsewhere, China’s monopoly has a ministerial seat, which means it can shape legislation.

Until the state divorces itself from the tobacco industry it will be hard to campaign seriously against smoking. ...

Would public health campaigners support privatization and trade liberalization in the Chinese tobacco industry, in order to get tougher anti-smoking regulations enacted in China?

Is the "China Sea" scenario legally or empirically impossible in the WTO context?

As we now know, a unanimous Award has just been issued by the Tribunal constituted under Annex VII to the United Nations Convention on the Law of the Sea in the arbitration instituted by the Philippines against China.

China has repeatedly stated that “it will neither accept nor participate in the arbitration unilaterally initiated by the Philippines.” Annex VII, however, provides that the “[a]bsence of a party or failure of a party to defend its case shall not constitute a bar to the proceedings.” Annex VII also provides that, in the event that a party does not participate in the proceedings, a tribunal “must satisfy itself not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law.”

I notice that WTO negotiators “forgot” to include such a clause in the WTO Agreement and the DSU. Does this mean that that they considered that the “China Sea” scenario is legally or empirically impossible in the WTO context ?

The Born Dissent

Gary Born's separate opinion in the Philip Morris v. Uruguay award (see Annex B) is referred to as a "concurring and dissenting opinion," but I'm going to focus on the dissent part. Read his whole opinion, of course, but a good summary comes early on (Investment Arbitration Reporter subscribers can read Jarrod Hepburn's summary here):

4. First, this Opinion is directed towards a highly unusual aspect of the Uruguayan legal system, which produced a result in this case that has never previously occurred under Uruguayan law. As discussed below, two of the country’s highest civil courts reached directly contradictory interpretations of precisely the same statutory provision, in closely-related proceedings involving claims by the same party against the government, with these contradictory interpretations then being applied, in each case, to deny that party relief. Moreover, that same party was then left with no judicial forum in which to assert otherwise available constitutional challenges to the relevant statutory provision, as it had been authoritatively interpreted and applied to that party. In my view, that unprecedented result plainly constituted a denial of justice under Article 3(2) of the BIT and basic principles of international law.

5. Second, this Opinion is directed towards an equally unusual aspect of Uruguay’s regulatory regime for tobacco – namely, a “single presentation requirement” that permits only a single presentation of any trademark used in marketing tobacco products. It is undisputed that no other country in the world has adopted such a requirement, which is also neither required nor contemplated by the comprehensive international regulatory regime for tobacco products. In my view, given the factual background against which it was adopted and the evidentiary record in these proceedings, this unprecedented requirement is manifestly arbitrary and disproportionate and, as a consequence, constituted a denial of fair and equitable treatment under Article 3(2) of the BIT and international law.

One thing that struck me about his reasoning is that, as far as I could tell, the same result could have been reached under various reformed FET language that has been put out there in recent years. Take, for example, the FET provision proposed by the EU in the TTIP (also in CETA):

Article 3
Treatment of Investors and of covered investments

1. Each Party shall accord in its territory to covered investments of the other Party and investors with respect to their covered investments fair and equitable treatment and full protection and security in accordance with paragraphs 2 to 5.

2. A Party breaches the obligation of fair and equitable treatment referenced in paragraph 1 where a measure or a series of measures constitutes:

(a) denial of justice in criminal, civil or administrative proceedings; or

(b) fundamental breach of due process, including a fundamental breach of transparency and obstacles to effective access to justice, in judicial and administrative proceedings; or

(c) manifest arbitrariness; or

(d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; or

(e) harassment, coercion, abuse of power or similar bad faith conduct; or

(f) a breach of any further elements of the fair and equitable treatment obligation adopted by the Parties in accordance with paragraph 3 of this Article.

Many government officials talk about the need to reform the substance of international investment law to ensure domestic "policy space," "regulatory autonomy," "sovereignty," etc. I can imagine that some of them are heartened by the result in the Philip Morris v. Uruguay award, taking it to mean that domestic regulation is now safe.  But there is a question of how much certainty you need on this.  Some people may take this award to mean that the system is fine as is.  However, based on the dissent, I think you could also conclude that there is a widely held view that tribunals should hold governments to a pretty strict standard with regard to their domestic policy-making, one that governments often do not meet.

Uruguay Wins the ISDS Complaint Brought Against Its Tobacco Regulations

From the FT:

Uruguay has won a landmark lawsuit against Philip Morris International, which was suing the South American country for its strict regulations on smoking in what was seen as a test case for the tobacco industry.

The full decision can be found here. A good summary of the outcome by Foley Hoag (Uruguay's lawyers) is here and explains the following:

4. What were the specific legal findings?

A. Uruguay did not violate any of its obligations under the Switzerland/Uruguay Bilateral Investment Treaty, or deny Philip Morris any of the protections provided by that Treaty. Specifically:

• Uruguay’s regulatory measures did not “expropriate” Philip Morris’s property. They were bona fide exercises of Uruguay’s sovereign police power to protect public health, developed by highly trained tobacco control experts and physicians in the Ministry of Public Health with the support of experts from civil society.

• The measures did not deny Philip Morris “fair and equitable treatment” because they were not arbitrary; instead, they were reasonable measures strongly supported by the scientific literature, and had received broad support from the global tobacco control community.

• The measures did not “unreasonably and discriminatorily” deny Philip Morris the use and enjoyment of its trademark rights, because they were enacted in the interests of legitimate policy concerns and were not motivated by an intention to deprive Philip Morris of the value of its investment.

• Uruguay’s courts did not “deny justice” to Philip Morris. Instead, the Tribunal found that Philip Morris received due process and fair treatment from the Uruguayan courts.

I was less convinced by this statement:

E. The decision is also significant because it erects a barrier to the cynical use of international arbitration by Philip Morris and other tobacco companies to stop States from taking reasonable measures to protect public health. Not only have Philip Morris’ claims against Uruguay been rejected, but the company has been ordered to pay Uruguay’s legal fees. Its strategy of misusing the arbitration process to dissuade States from adopting meaningful regulation of tobacco marketing has failed. States need no longer fear the risks or costs of such a challenge to their sovereign rights.

Let me push back a bit against the argument that Philip Morris' use of ISDS here was "cynical." Note that there is a dissent in which one arbitrator found violations, so 33.3% (one out of three) arbitrators believed Philip Morris had a good claim. And my sense has always been that Philip Morris genuinely believed its rights have been violated. Finally, there are not that many expropriations of foreign investment these days (4 or so per year, based on the latest data I've seen).  So what are companies supposed to challenge with ISDS under the thousands of investment treaties/FTA chapters? I think the practical answer is that it will often be measures kind of like this one, where a government believes it is acting in the public interest but a company thinks it has been treated badly.

Will the TPP SPS Consultations Mechanism Speed Things Up or Slow Things Down?

This is from the USTR summary of the TPP SPS chapter:

Cooperative Technical Consultations (CTC)

To help encourage the early and expeditious resolution of SPS matters, the SPS chapter establishes a consultative mechanism under which relevant agencies will work to find science-based solutions to SPS issues that emerge between TPP countries.

And here's the full text of that mechanism:

Article 7.17: Cooperative Technical Consultations

1. If a Party has concerns regarding any matter arising under this Chapter with another Party, it shall endeavour to resolve the matter by using the administrative procedures that the other Party’s competent authority has available. If the relevant Parties have bilateral or other mechanisms available to address the matter, the Party raising the matter shall endeavour to resolve the matter through those mechanisms, if it considers that it is appropriate to do so. A Party may have recourse to the Cooperative Technical Consultations (CTC) set out in paragraph 2 at any time it considers that the continued use of the administrative procedures or bilateral or other mechanisms would not resolve the matter.

2. One or more Parties (requesting Party) may initiate CTC with another Party (responding Party) to discuss any matter arising under this Chapter that the requesting Party considers may adversely affect its trade by delivering a request to the primary representative of the responding Party. The request shall be in writing and identify the reason for the request, including a description of the requesting Party’s concerns about the matter, and set out the provisions of this Chapter that relate to the matter.

3. Unless the requesting Party and the responding Party (the consulting Parties) agree otherwise, the responding Party shall acknowledge the request in writing within seven days of the date of its receipt.

4. Unless the consulting Parties agree otherwise, the consulting Parties shall meet within 30 days of the responding Party’s acknowledgement of the request to discuss the matter identified in the request, with the aim of resolving the matter within 180 days of the request if possible. The meeting shall be in person or by electronic means.

5. The consulting Parties shall ensure the appropriate involvement of relevant trade and regulatory agencies in meetings held pursuant to this Article.

6. All communications between the consulting Parties in the course of CTC, as well as all documents generated for CTC, shall be kept confidential unless the consulting Parties agree otherwise and without prejudice to the rights and obligations of any Party under this Agreement, the WTO Agreement or any other international agreement to which it is a party 

7. The requesting Party may cease CTC proceedings under this Article and have recourse to dispute settlement under Chapter 28 (Dispute Settlement) if:

(a) the meeting referred to in paragraph 4 does not take place within 37 days of the date of the request, or such other timeframe as the consulting Parties may agree under paragraphs 3 and 4; or

(b) the meeting referred to in paragraph 4 has been held.

8. No Party shall have recourse to dispute settlement under Chapter 28 (Dispute Settlement) for a matter arising under this Chapter without first seeking to resolve the matter through CTC in accordance with this Article.

Note that under paragraph 8, this consultations mechanism must be used before a formal complaint is brought. But of course, there is also a consultations requirement under the dispute chapter. So, unless I've missed something, for SPS measures you must consult twice: First under Article 7.17, then under the consultations mechanism of the dispute chapter. So what will the practical impact of Article 7.17 be? Will it resolve disputes more quickly by avoiding litigation, or will it extend the time it takes litigation to resolve the issue?

World Trade Forum at EUI

This year's EUI/WTI/CEPR World Trade Forum is 23 - 24 September in Florence, focusing on behind-the-border policies and global trade:

This year’s World Trade Forum – an annual event that is organised by the World Trade Institute (Bern), the Robert Schuman Centre for Advanced Studies (European University Institute, Florence) and the CEPR Trade Policy Research Network – will focus on the measurement and impacts of nontariff measures and domestic regulation on international trade and investment and how such ‘behind-the-border’ policies are being/can be addressed in preferential trade agreements and the WTO. The World Trade Forum brings together leading academic scholars from around the world, trade policy practitioners and senior officials from governments and international organisations, as well as representatives of the business community and civil society, to discuss international trade and investment policy developments, medium-term trends, and recent and ongoing policy research project activities and results. It offers a unique platform for deliberation between trade practitioners and analysts.

The full program is here. You can register here.

Job Opening: Assistant United States Trade Representative for Monitoring and Enforcement

This is the kind of job that doesn't open up very often, so if you are at all interested, take advantage of the opportunity:

Assistant United States Trade Representative for Monitoring and Enforcement

Duties

Manages and coordinates USTR legal and interagency legal resources in connection with U.S. representation in international trade disputes at the World Trade Organization (WTO) and under U.S. bilateral and regional free trade agreements (FTAs).  Advises and trains staff attorneys on all aspects of WTO dispute settlement, including substantive legal issues, procedural matters, presentational style and litigation tactics. Develops and refines legal arguments and strategies, ensuring that attorneys properly consider cross-cutting issues.  Reviews and clears legal briefs and other submissions. Develops strategies for successful removal of international trade barriers and resolution of disputes.

Coordinates interagency consultation on recommendations to pursue international trade litigation and interagency development of U.S. policy relating to international dispute settlement, including U.S. negotiating positions on amending WTO dispute settlement rules and drafting of FTA dispute settlement provisions. Chairs Trade Policy Staff Committee Compliance Task Force, which serves as a forum for interagency information-exchange on current and potential international trade disputes.  Works closely with the staffs of relevant Congressional committees on litigation priorities and legislative implementation of dispute settlement results.  Works closely with USTR and interagency colleagues to ensure effective enforcement of international trade obligations, both domestically and internationally, including through implementation actions consistent with U.S. policies.

More details at the link.

CETA Approval Update

From the FT:

Jean-Claude Juncker, the European Commission president, is preparing to ditch contentious plans to fast-track approval of a trade deal with Canada, in an eleventh-hour political retreat that followed staunch criticism from some European capitals.

To the dismay of Germany and France, Mr Juncker had tried to speed up the formal adoption of the EU-Canada deal by having it approved by trade ministers and MEPs, without the need for 38 national parliaments, some of them regional, to sign it off. 

But in a nod to critics in Berlin, the commission is now planning to switch approach and declare the Canada deal a so-called "mixed agreement" at a meeting of EU commissioners on Tuesday, said officials familiar with the discussions. 

...

A lively debate is expected among commissioners on Tuesday, with some still pressing for the commission to drive through a so-called EU-only deal as its legal advice has suggested. The commission may recommend provisionally applying the EU-parts of the Canada deal while full ratification is pending. 

The EU process for approving trade agreements is beginning to match the US process in terms of complexity and contentiousness.

ADDED: Here's more from the Commission:

... To allow for a swift signature and provisional application, so that the expected benefits are reaped without unnecessary delay, the Commission has decided to propose CETA as 'mixed' agreement. This is without prejudice to its legal view, as expressed in a case currently being examined by the European Court of Justice concerning the trade deal reached between the EU and Singapore. With this step, the Commission makes its contribution for the deal to be signed during the next EU-Canada Summit, in October.

...

Following a decision by the Council, it will be possible to provisionally apply CETA. Its full entering into force will be subject to the conclusion by the EU, through a Council decision with the consent of the European Parliament, and by all Member States through the relevant national ratification procedures.

MORE:

This is from Swedish MEP Christofer Fjellner:

Irresponsible and legally wrong by Commission and @MalmstromEU to propose #CETA mixed. Single most destructive decision in EU trade policy!

And:

Are you joking?!!! By proposing it mixed you at best postpone the agreement with years. At worse you just killed it!

The NHS Abroad

In the TTIP negotiations, some critics have gotten worked up about the potential impact on Britain's NHS (“We know that TTIP poses a real and serious threat to the NHS. The only way to neutralise that threat is for David Cameron to give a cast iron guarantee that he will exclude the NHS from the trade agreement”). In addition to this "defensive" interest, though, I was intrigued to discover that the NHS may also be an "offensive" interest for the UK. This is from the Economist: 

WALK down Whitehall and it is not hard to imagine its imperial heyday. Stern, grey-stone ministries loom over the buses and taxis. The most majestic is the Foreign Office, completed in 1868 and designed as “a kind of national palace”. From this building one-fifth of the planet and one-quarter of its population was once governed.

Those days are long gone, but today Britain is establishing a new, looser, more mercurial sort of global administrative network. As new economic powers join the rich world, they want to have rich-world states: responsive, efficient, well-run Leviathans that care for people when they get ill, educate them and keep them safe. In building these machines, such countries are looking disproportionately to Britain.

Take health care. The National Health Service (NHS) has a strong international brand. Already Moorfields Eye Hospital in London has a branch in Dubai; Great Ormond Street, a children’s hospital, provides training in the United Arab Emirates. At a trade fair in Dubai in 2013 the British government launched Healthcare UK, a new body to help other NHS entities (and private firms) sell services overseas. Since then the value to Britain of foreign health-care contracts has risen from £556m ($816m) in 2013-14 to £3.6 billion in 2015-16.

And if the NHS is an "offensive" interest for the UK, it might a "defensive" interest for others. Concerns about competing with state owned enterprises are often directed at countries such as China or Viet Nam. Will these rules also be used to keep the NHS from "unfairly" competing in foreign markets?

More Gary Johnson on the TPP

Here is Libertarian Party Presidential candidate Gary Johnson on CNN yesterday, talking with Brianna Keilar:

KEILAR: He -- Donald Trump gave a major speech this week on international trade. He issued a challenge to Hillary Clinton. This is what he said.

(BEGIN VIDEO CLIP)

TRUMP: Ask Hillary if she is willing to withdraw from the TPP her first day in office and unconditionally rule out its passage in any form.

(END VIDEO CLIP)

[09:35:11]

KEILAR: I want to put that question to you. Would you withdraw from the TPP on your first day in office and unconditionally rule out its passage in any form?

JOHNSON: I am a real skeptic when it comes to these trade agreements that, in fact, these trade agreements can be laden with crony capitalism. But based on people that have been advising me that I hold in very high esteem, I am being told that the Trans-Pacific Partnership would, in fact, advance free trade, and so I would support that document.

The devil is in the details, though, and for the most part legislation that passes really promotes crony capitalism, promotes those that have money as opposed to a level playing field for everybody. So I am a skeptic, but based on what I know, I would sign TPP.

The Protocols of the Children of Google: Ross Douthat’s Revival of an Old Myth of Anti-Globalism

Whenever discontent with globalization erupts, so does the myth of a world-dominating tribe that dare not say its name: the tribe sees itself as “elect” and deserving of world mastery, with a mission that is  universal and thus not bound by the normal (territorial) rules of tribalism. In the past, Jews and Marxists took the hit-the Protocols of the Elders of Zion is a key text.  Currently, it can be some combination of Goldman Sachs, George Soros, Henry Kissinger, the Clinton Foundation, Google and Bill Gates.  But in his attack on cosmopolitanism in today’s New York Times http://nyti.ms/29fH0sn, Ross Douthat targets people like myself-a supposed multicultural caste of lawyers, journalists, publicists, and intellectuals that operates in global cities like London, New York, and Paris, supports cosmopolitanism and cultural openness, and is somehow in the pay of “multinational corporations.”

Douthat’s version of the global conspiracy differs from earlier iterations because instead of attacking cosmopolitanism as such he employs a distinction between “genuine” cosmopolitanism, which he claims to admire, and the supposed superficial or wimpy cosmopolitanism of the globalist tribe that thinks “it alone deserves to rule the world” but which it comfortable with cultural difference only at the most shallow and unthreatening level.  Douthat tries to shame or expose the globalist tribe as being un-serious in their cosmopolitanism. The true cosmopolitan is a much rarer breed.

Although Douthat doesn’t acknowledge it, the notion of genuine versus superficial cosmopolitanism derives from a speech that the German-Jewish émigré philosopher Leo Strauss gave in the 1950s at the New School in New York eulogizing his late friend and former colleague Kurt Rizler.  Rizler had been a German nationalist but one politically insightful enough to get off the bus when nationalism degenerated into fascism.  Rizler the former high-ranking German official and Strauss the former researcher at Berlin’s Jewish Studies Institute both ended up as émigré philosophy teachers at the New School. (I address Strauss’s own relationship to nationalism, and internationalism, in my book Leo Strauss Man of Peace).  

 Strauss said of the young Rizler, “he was not [simply] a nationalist…He distinguished genuine cosmopolitanism from spurious or superficial cosmopolitanism, and discerned the root of the former in the depth of the individual.”  As Strauss explained, the superficial cosmopolitans of Rizler’s youth tended to the view that one could dispense with the state in favor of a world state or world government.  The superficial cosmopolitans took a noble individual human aspiration—to connect with others across the divides of culture, religion etc.—as the basis for a political project fraught with unseen or unacknowledged dangers and obstacles.

Strauss’s framing of the distinction between genuine and spurious cosmopolitanism helps in grasping the fallacy behind Douthat’s deployment of this dichotomy.  For Douthat, genuine cosmopolitanism is not about affinities between individuals across cultures but the ability to enter deeply into someone else’s tribal experience- “disappear[ing] into someone else’s culture.”  Douthat’s notion seems to be that there are pure or closed cultures, untouched or uncompromised by confrontation with the outside, and that a genuine cosmopolitan would have to be someone capable of reckoning with them.  But of course this is itself is a myth, one of exoticism, the search for a pure collective reality unsullied by modernity or larger forces.  The claim to parachute effortlessly, Zelig-like, into multiple tribal identities is hardly the core of today’s cosmopolitanism-rather it is a conception of the human, i.e. that there is something of worth, and perhaps of ultimate worth, in human beings that is not derivative from bounded tribal identities, and which can be experienced and shared by people across national and other boundaries.   At the same time, a significant if not predominant group among today’s cosmopolitans recognizes that human security—physical, social and economic—can’t be guaranteed by any global structure.  It requires a strong, legitimate state.  The human orientation of cosmopolitanism is entirely compatible with criticizing those aspects of economic globalization that lead to weak and failed states, the destruction of social protection, and extreme economic inequality.  True, there are serious scholars like Oxford’s David Miller, who argue that some strong form of tribalism may be needed to produce the social solidarity for redistributive institutions.  In my country of origin, Canada, it is the ideology of conservative political elites (now thrown out of power) not multiculturalism that has threatened the commitment to social justice.             

Is it so that the cosmopolitans Douthat despises merely retreat into comfortable and familiar neighborhoods in global cities?  And isn’t the role of New York Times culture critic, feeding off what Saul Bellow called “the canned sauerkraut of Weimar intellectuals”, a pretty comfortable one? Compare that with working in a combat zone with Medicins sans frontiers; or persisting as a foreign correspondent in a country where journalists’ lives are threatened; or setting up a truth commission to heal wounds in a conflict-ridden nation; or soldiering as a social entrepreneur to empower women’s small business in an African village; or confronting traditional community leaders about female genital mutilation.   These are all quintessentially cosmopolitan roles, which involve real risks, real sacrifice, and often wrenching encounters with otherness.         

EU Approval of CETA

This is from Reuters:

The European Commission will propose next week a simple approval procedure for a planned EU-Canada trade deal in a bid to speed up the adoption of an agreement seen as a controversial in many EU capitals.

Commission President Jean-Claude Juncker told EU leaders meeting on Tuesday that the Commission would make its proposal on July 5 that the Comprehensive Economic and Trade Agreement (CETA) would be an "EU-only" agreement, an EU official said.

This would mean it would be adopted if backed by representatives of member states and by the European Parliament.

...

Most European Union members have said they viewed the deal as a "mixed" agreement, meaning each country would have to push the deal through their parliaments, a move that would likely delay approval.

I'm confused by this. Recall that a while back, the Commission asked the ECJ for an opinion on this question: "Does the Union have the requisite competence to sign and conclude alone the Free Trade Agreement with Singapore?"  I had heard that the ECJ was likely to issue a decision in the near future.

So why is the Commission taking a different approach with CETA? It sounds like, for CETA, the Commission is making its own judgement on its competence, without going to the ECJ, but perhaps there is something I've misunderstood here.

The WTO Plain Packaging Case: More Waiting

The WTO panels in the plain packaging case have delayed the reports again. This is from the panel communication in the DS435 case:

The Panel wishes to advise that it now expects to issue its final report to the parties not before the end of 2016, in light of the complexity of the legal and factual issues that arise in this dispute.