International Economic Law and Policy Blog

China Inc. in the WTO Dock: Tales from a System under Fire

Paul Blustein, the author of "Misadventures of the Most Favored Nations", comes back with another tale of "Misadventures of the Most Powerful Nations". It provides not only important insights on some of the most important systemic issues facing the WTO, but also a peek into the way China handled its disputes (by, for example, hiring foreign lawyers, something Greg and I discussed in detail in our recent paper). It also reveals the internal dynamics within the closed doors of Appellate Body Secretariat, especially how the deliberations and exchange of views process worked (or more appropriately did not work) in one case. A sobering read for all.

What Exactly Was Promised on the NME Methodology?

Thanks to Henry for pointing us to China's opening statement at the European Union – Measures Related to Price Comparison Methodologies (DS516) panel meeting. Following up on the discussion in the comments on Henry's post, China is clearly taking this dispute very seriously, and says the following early on in its statement: "as promised by the entire membership 15 years ago, the European Union, as well as some other Members, must now end their so-called “analogue country” dumping calculation methodology that has been applied to Chinese exports for decades."

In support of the idea that promises were made 15 years ago, China offers a number of statements that were made at the time, including these:

In a press conference on 15 November 1999, the day when the United States and China signed the bilateral Agreement on Market Access, then United States Trade Representative Charlene Barshefsky stated, “[w]e certainly agree with China at that time, that these provisions should not exist in perpetuity, but we believed that they did need to exist for a reasonable period of time. With respect to the application of the “special anti-dumping” methodology, that provision will exist for 15 years”.

...

USTR Barshefsky: “... Fourth, guarantees of our right to use a special non-market economy dumping methodology for fifteen years, to ensure fair trade from China ...”.

Representative Feinstein: “... also preserves safeguards against dumping and other unfair trade practices, specifically, the special safeguard rule to prevent import surges into the United States will remain in force for twelve years, and the special anti-dumping methodology will remain in effect for fifteen years...”.

Senator Graham: “The agreement includes a provision recognizing the United States may employ special methods designed for non-market economies to counteract dumping for fifteen years after China’s accession to the World Trade Organization”.

Along the same lines, this is from then-USTR Charlene Barshefsky's Congressional testimony on China's WTO accession:

Non-Market Economy Dumping Methodology - China's WTO entry will guarantee our right to continue using our current "non-market economy" methodology in anti-dumping cases for fifteen years after China's accession to the WTO.

I'm curious about how the people negotiating these provisions actually understood what had been promised, but the details of what they were thinking probably won't be made public. Instead, we are left with the words they used. Let's parse those a bit now -- just for fun, not because I think they have some great legal relevance. (I'm going to focus on Barshefsky's comments, which probably matter more than the others).

Looking at Barshefsky's Congressional testimony, I think some people interpret this statement to mean that after 15 years, the U.S. must stop treating China as a non-market economy. But it looks to me like the statement may have been carefully worded to mean something else: After 15 years, the U.S. no longer has the right to impose its current methodology, but perhaps the U.S. can, after that period ends, develop a new NME methodology. I'm not saying this is the right legal (under WTO rules) or policy outcome, and I have no idea what a WTO panel will think of her statement. Nevertheless, putting "our current" rather than "a" in front of "non-market economy" looks intentional to me. Maybe they always had in mind shifting to a different NME methodology later?

On the other hand, in another statement, Barshefsky refers to "a special non-market economy dumping methodology." Perhaps that covers any such methodology, and thus after the 15 years the surrogate value approach has to be abandoned entirely?

In another instance, she refers to "the 'special anti-dumping' methodology." But note the rest of the statement: "that provision will exist for 15 years." The reference here is to expiration of the provision, rather than the methodology.

So that's what some U.S. government folks were saying at the time. China raised this before the WTO panel, and it will be interesting to see how the U.S. responds with regard to the meaning and relevance of these statements.

Multiple Permissible Interpretations in the DS516 Case

This is from the EU's first written submission in the European Union — Measures Related to Price Comparison Methodologies (DS516) case (footnotes omitted):

8. STANDARD OF REVIEW: PERMISSIBLE INTERPRETATION

275. The European Union submits that the special standard of review in Article 17(6)(ii) of the Anti-Dumping Agreement applies in this case. That special standard of review refers to "the Agreement", meaning the Anti-Dumping Agreement. However, in this particular case the Panel is called upon to interpret the relevant provisions of Article VI of the GATT 1994, the Anti-Dumping Agreement and Section 15 of China's Accession Protocol in such a way that they "apply" and are "consistent". A pre-requisite for interpreting two applicable documents in a manner that renders them "consistent" with each other is that one is using the same tools and standards of interpretation: otherwise the requirement that the two interpretations be "consistent" would be meaningless.

276. The European Union is familiar with the case law concerning Article 17.6(ii) of the Anti-Dumping Agreement according to which one first applies the customary rules of interpretation of public international law, which in turn implies that normally there may be but one correct interpretation that ultimately prevails.

277. However, without entering into that particular debate, the European Union would like to point out that the DSU is without prejudice to the rights of Members to seek authoritative interpretation of provisions of a covered agreement through decision making under the WTO Agreement. In this particular case, through "decision making under the WTO Agreement", and specifically through a decision to conclude the Accession Protocol with China pursuant to Article XII:2 of the WTO Agreement, all of the Members have agreed to the interpretations of the relevant provisions of Article VI of the GATT 1994 and the Anti-Dumping Agreement reflected in China's Accession Protocol, both before and after 11 December 2016 (in addition to the China-specific rules contained therein). Those interpretations must certainly be considered to be authoritative, emanating as they do from the entire Membership, acting by consensus. They must therefore also be considered to be permissible within the meaning of Article 17(6)(ii) of the Anti-Dumping Agreement.

278. This observation is further confirmed by Article 31(3)(a) of the Vienna Convention, which provides that there shall be taken into account, together with the context, any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions.

279. The European Union concludes that it is permissible to interpret the relevant provisions of the Anti-Dumping Agreement as meaning that, in the event of a lack of comparability, including, for example, a market situation that is not normal, but rather particular, an investigating authority may reject affected prices and costs and use instead information from a third country, adjusted where necessary. As the final sentence of Article 17(6)(ii) of the Anti-Dumping Agreement provides, a panel must uphold a measure if it rests upon such a permissible interpretation.

The EU thinks it has come up with a narrow set of circumstances in which 17.6(ii) will have an impact: Where there is an authoritative interpretation by the Members. Will the panel accept, as a general matter, that authoritative interpretations can lead to an additional, "permissible" interpretation? And will it find that, in this case, there was an authoritative interpretation of this sort?

I haven't seen any discussions of this issue in the U.S. submissions that are available so far, but we are sure to hear from the U.S. on this.

ADDED: I don't know why you need Article 17.6(ii) for this argument. If you have an authoritative interpretation of some sort to support your position, why does 17.6(ii) matter? If authoritative interpretations apply outside the context of the AD Agreement (and presumably they do), where there is no 17.6(ii) equivalent, I'm not sure you need to rely on 17.6(ii) for this in an AD Agreement case.

Two Views of Science in the Trump Administration

This is from the Washington Post:

Policy analysts at the Centers for Disease Control and Prevention in Atlanta were told of the list of forbidden words at a meeting Thursday with senior CDC officials who oversee the budget, according to an analyst who took part in the 90-minute briefing. The forbidden words are “vulnerable,” “entitlement,” “diversity,” “transgender,” “fetus,” “evidence-based” and “science-based.”

In some instances, the analysts were given alternative phrases. Instead of “science-based” or ­“evidence-based,” the suggested phrase is “CDC bases its recommendations on science in consideration with community standards and wishes,” the person said. In other cases, no replacement words were immediately offered.

In contrast, this is from USTR's original NAFTA negotiating objectives:

Establish new and enforceable rules to ensure that science-based SPS measures are developed and implemented in a transparent, predictable, and non-discriminatory manner.

It's kind of funny to imagine whoever decided that the CDC should avoid these words going over to USTR and making the same pitch. I don't think it would be very well received.

Could WTO Members Challenge In the Dispute Settlement Process the Self-Election Status of a Developing Country?

There are no WTO definitions of “developed” and “developing” countries. Members announce for themselves (the so-called “self-election” principle) whether they are “developed” or “developing” countries. This is considered as a consequence of the  principle of sovereignty which includes the right of states to proclaim that they are developing countries and the ensuing obligation of the international community to respect such a unilateral declaration. 

However, the WTO website (which is not authoritative), adds surprisingly that :

There are no WTO definitions of “developed” and “developing” countries. Members announce for themselves whether they are “developed” or “developing” countries. However, other members can challenge the decision of a member to make use of provisions available to developing countries.

To our knowledge, such a challenge has never happened in WTO case-law. Moreover, it is doubtful that such a possibility exists. Apart from situations where a List is annexed to a WTO Agreement (e.g. Annex VII of the SCM which defines certain subsets of developing countries for specific purposes), there is no WTO provision which could provide a legal basis for such a challenge nor for a defense against such a challenge. Let us recall that Article 6 of the DSU requires a complainant to “provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly”.

In the Korea Beef case, following the Appellate Body’s report condemning Korea’s practices, the EU, during the discussions at the DSB, noted with surprise that Korea had been treated by the Panel as a developing country for the purposes of the Agreement on Agriculture. The EU underlined its disagreement with Korea’s self-characterization as a developing country. The EU, however, was not a complaining party to this dispute and WTO Panels do not have the legal capacity to decide motu proprio on an issue which the complaining party did not raise.

As we know, following the Buenos-Aires Ministerial Conference, this vexing issue will not magically disappear off the radar in the following years. Whatever one may think of this issue, one thing seems sure presently: The WTO Dispute Settlement Process is not able (on the basis of the present WTO texts) to provide an answer to this issue.

 

Chinese Ambassador's statement at the Oral Hearing in EU - Price Comparison Methodologies

In a rare move, China published part of the opening statement in a WTO dispute: the EU - Price Comparison Methodologies case. The statement refers extensively to the negotiating history of Section 15 of China's Accession Protocol, and even included video clips and statements by then-USTR Barshefsky, US lawmakers and the European Commission. What I found particularly interesting, however, is para. 10, which states:

"As a third party in this dispute, the United States contends that long before China acceded to the WTO there had been “longstanding rights in the GATT and WTO to reject prices or costs that are not determined under market economy conditions”. 7 I was dumbfounded by this proposition. Section 15 of China’s Accession Protocol was, for the most part, negotiated bilaterally between the United States and China, and it was one of the toughest and most contentious issues between the two sides. I myself participated in almost every round of those bilateral negotiations, including the final round in Beijing when the bilateral Agreement on Market Access was signed. The United States’ contention is beyond the imagination of those, including myself, who actually participated in the negotiations. "

If this really is what the US means and the Panel accepts such argument, then the NME methodology can potentially be used against ANY WTO Member. Geneva diplomats, esp. those from developing countries, really need to pay attention to this and the other US-MES case and watch out for the systemic implications. 

Is it legal for the WTO to team up with Alibaba and the World Economic Forum to "enable" E-Commerce? Probably not yet.

While a glum consensus has formed that nothing much happened at the WTO MC11 Ministerial Conference, a hardly-noticed announcement on the sidelines of the MC11 Ministerial Conference may have constitutional even transformative implications for the WTO.  Yesterday (Tuesday), together with Alibaba's Jack Ma, and the World Economic Forum, WTO Director-General Roberto Azevedo announced an initiative on enabling e-commerce. 

Azevedo said:

I am very pleased to welcome Jack and Rick. It's great to have you with us, and to have the opportunity to launch this joint initiative together here at the WTO's 11th Ministerial Conference.The internet and new technologies are revolutionizing our lives. If you have a phone, you are now connected to a global marketplace. This means entrepreneurs everywhere can leapfrog barriers such as physical distance, or lack of information, and leverage the opportunities that trade presents.This could be the greatest force for inclusion in the global economy that the world has ever seen.But inclusion is not automatic.Without the right approach, the big players could easily dominate this market at the expense of smaller businesses. Poorer countries could be left behind.If we want it to be inclusive, we have to work at it.We know that around 4 billion people do not yet have internet access. In least developed countries over 70% of people still cannot afford basic internet connection.This digital divide means that the benefits of digital trade continue to be unevenly distributed. But even with an internet connection in place, there are still many other barriers that can stop businesses from engaging in e-commerce.To take part you need to have the appropriate ICT infrastructure and services. You need to have functioning trade logistics. You need to have the legal and regulatory frameworks in place. You need to have access to finance. The list goes on.Getting this right is a challenge for all of us.WTO members are now discussing these issues – trying to deepen their understanding of the issues and look at how we can ensure that e-commerce is a tool for inclusion and development.So this collaboration on the Enabling E-commerce initiative comes at a perfect moment.Jack and I met in Hangzhou during the G20 last year. In April we welcomed him at the WTO in Geneva. We've been exploring how we might work together on these issues.And I have the great pleasure to say that we both share this vision of an internet for all; of e-commerce as a real opportunity for smaller players, entrepreneurs and regular citizens.So when the eWTP and the World Economic Forum approached us a few months ago with the idea of joining forces on a high-level, public-private dialogue on e-commerce, I didn't think twice.It struck me as an ideal opportunity to enhance this vital debate.Our three organisations combined can provide a unique platform to achieve this. So I am looking forward to working together to ensure that we realize the potential of e-commerce to change people's lives around the world. We will start this work straight away, with a meeting at Davos in January.This will be followed up by other events, including a major one in Geneva later in the year. But this is not just about holding events. It will be a continued results-oriented dialogue, and an evolving partnership.So I'm excited to get started.Thank you.

For it's part Mr. Ma's Alibaba was also enthusiastic.  For the first time ever (to my knowledge-someone will surely correct me!) the WTO issued a joint press release with an NGO, outlining a common venture.   The NGO here, as mentioned, is the World Economic Forum, a pay-to-play association of many of the world's leading multinationals.    

A cabal between a multbillionaire in a BRICs country, a club of global mega-firms and the WTO to rule the cyber-world it-sounds like the plot of novel, or the paranoid conspiracy theory of some extreme anti-globalization group.  But sometimes truth is stranger than fiction...

None of the statements or press releases is too specific about the exact scope of the common "work" of the three partners-Mr. Azevedo refers to "bringing a range of stakeholders together to further explore these issues." That will start, no surprise, with the January Davos meeting, where (assuming it still works as in the past) you either pay the World Economic Forum's stiff admission fees or you are so powerful or famous that you go for free.  "Range" of stakeholders indeed. As for Mr. Ma, his organization refers to "The World Trade Organization and the World Economic Forum have joined with the Electronic World Trade Platform(eWTP) to launch a new initiative that aims to put e-commerce practice and policy front and center among governments, businesses and other stakeholders on a global level." That seems like an ambitious collaboration, which aims at promoting a certain policy direction, not just an open-ended stakeholder dialogue.

But is it legal? 

Let's start with the constitutional charter of the WTO-the Agreement establishing the organization, often referred to as the Marrekesh Agreement.  

Article V reads:

1.   The General Council shall make appropriate arrangements for effective cooperation with other intergovernmental organizations that have responsibilities related to those of the WTO.

2.   The General Council may make appropriate arrangements for consultation and cooperation with non-governmental organizations concerned with matters related to those of the WTO.

So the first question is this: will Mr. Azevedo be requesting forthwith the General Council to "make appropriate arrangements" for cooperation with  eWTP and the WEF?

In 1996, the General Council in a decision clarified what Members viewed as appropriate relations with NGOs.  This decision states, in relevant part: 

This interaction with NGOs should be developed through various means such as inter alia the organization on an ad hoc basis of symposia on specific WTO-related issues, informal arrangements to receive the information NGOs may wish to make available for consultation by interested delegations and the continuation of past practice of responding to requests for general information and briefings about the WTO.  

Though as mentioned details are scarce so far, it seems hard, given some of the language used by Mr. Ma, his organization, and even Mr. Azevedo along with the World Economic Forum, to see their joint venture as fitting within the notion of mere ad hoc symposia or informal arrangements. Much needs to be clarified.

 But the 1996 decision of the General Council also goes on to state: "there is currently a broadly held view that it would not be possible for NGOs to be directly involved in the work of the WTO...."  Thus, in 1998 when the General Council adopted the Work Programme in Electronic Commerce, Members clearly envisaged a quite circumscribed involvement of NGOs: "In undertaking their work, these[WTO]  bodies should take into account the work of other intergovernmental organizations. Consideration should be given to possible ways of obtaining information from relevant non-governmental organizations."   These and other elements of the 1998 Work Programme were re-affirmed by the General Council in 2015.   

Unless I am missing something, the common venture between the WTO, the World Economic Forum and the eWTP goes considerably beyond the kind of cooperation with NGOs envisaged so far by the General Council.  But of course the General Council, which has authority over relations with NGOs, can always change its mind.  I find exciting the possibility that NGOs could actually get involved in the work of the WTO in a more integrated way; the mantra that the WTO is a "member-driven" organization sounds a little tired in the 21st century.  But if we do go that route, shouldn't there be rules of the game on inclusiveness and ideological balance among organizations, disclosure of the interests represented, and the terms of membership in the organization?  Why couldn't for example a group like Open Markets be brought into this e-commerce venture, which has a perspective very different from Big Tech, an dis very concerned about the anti-competitive impact of Amazon's increasing dominance?     As a matter of legitimacy, as well as legality, for now all roads lead back to the General Council

 

  

 

 

UNCITRAL and ISDS Reform: Pluralism and the Plurilateral Investment Court

As described in a previous post, the UNCITRAL mandate on the possible reform of investor-state dispute settlement (ISDS) requires states to first identify and consider concerns regarding ISDS before going on to consider and develop any relevant reforms. Although states in the November 2017 session did not debate potential reforms, different solutions lurked in the room like elephants, often seeming to inform the positions taken by various delegations on whether particular issues (such as inconsistency) amounted to “problems.”

In particular, a division appeared to be evident between some states that seem inclined (at least presently) toward incremental, bilateral reforms (such as the US and Japan) and others that openly embrace systemic, multilateral reform (such as the EU and Canada). This positioning reflects broader dynamics about debates over ISDS reforms, in which the issue is often framed as a comparison of the relative merits of investor-state arbitration and a multilateral investment court with states staking out positions as loyalists or reformists respectively.

This dichotomy is false and unhelpful, however, because it presents ISDS reforms as requiring a binary choice. To start with, these are not the only choices. In addition to states that favour incremental and systemic reforms of the existing system, there are states that reject the need for international claims by investors at all. These revolutionaries include Brazil, which has embraced an Ombudsman model followed by state-to-state dispute settlement, and South Africa, which has opted primarily for protection via national legislation and courts.

However, the problem of framing runs deeper. Even working within the reformist spectrum, the investor-state arbitration versus a multilateral investment court formulation is problematic. Instead of being a dichotomous choice, the international system is much more likely to end up with a plural solution in which both models, and possibly others, exist. Given this, it makes sense for states to think about how they can develop an effective suite of incremental and systemic reform options that they can pursue both bilaterally and multilaterally, in UNCITRAL and elsewhere.

Beyond a False Dichotomy

The dichotomy of investor-state arbitration versus a multilateral investment court is false for two reasons.

First, although multilateral in ambition and design, any international investment court would inevitably be far from universal in its membership. It would begin as something more like a “Plurilateral Investment Court” that would be characterised by a more limited number of treaty parties with the hope that its membership would grow over time. Of course, this is not uncommon for treaties. Many treaties, such as the New York and Washington Conventions, begin with relatively small numbers that grow over several decades. Other courts like the International Criminal Court also have limited membership. But some limping treaties start, and remain, small in terms of signatories, never really getting off the ground.

The membership of a Plurilateral Investment Court would likely begin with the EU along with states that are negotiating Free Trade Agreements (FTAs) with the EU that are persuaded to adopt a court model. Canada and Singapore accepted a court model in their EU FTAs, whereas Japan and the EU have been unable to reach agreement yet on whether to include a court or arbitration in their agreement. For many negotiating partners, accepting a court may make sense as part of a broader deal to secure an EU FTA and, if so, accepting a plurilateral court would be more cost-effective and efficient than establishing a bilateral one. The EU also wants to make the court applicable to the existing BITs of its Member States, which amount to a significant percentage of all current BITs, though jurisdiction over a particular treaty would depend on the consent of the other treaty partner. (For the EU’s negotiating directives with respect to a multilateral investment court, see here.)

How the numbers develop will depend on many things. One is whether some of the EU’s negotiating partners become converts, such as Canada which is now proposing the court model in other negotiations like NAFTA. Another is whether other states become early adopters, even without an EU FTA, because of a desire for systemic reform and/or due to bad experiences with investor-state arbitration. Given the growing domestic pushback against the legitimacy of ISDS in a number of states, a number of states could fall into this category. For states like Argentina that have suffered inconsistent awards, a systemic approach is likely to be attractive. Other states may hang back to see how such a Court develops, joining later if they become comfortable with its composition and rulings, and remaining on the side-lines if not.

Second, even if established, such a Court would be plural for another reason: it would be likely to exist alongside investor-state arbitration either indefinitely or for a long time to come. That is partly because some states are (at least currently) committed to the existing system, so they are unlikely to depart from it in their own practice. Japan and Chile are examples of this, both of which championed investor-state arbitration in TPP-11. The United States has long been a supporter of investor-state arbitration, though its current position in the new Trump era and in the NAFTA renegotiations is harder to discern. Yet even if the United States might one day walk away from fully supporting investor-state arbitration, it is hard to imagine it ever walking toward an investment court.

Other states may be less committed to investor-state arbitration, but are likely to continue to embrace it in at least some of their treaty practice given their position as rule-takers rather than rule-makers. Smaller states that either have existing agreements, or wish to enter into new agreements, with both reformists (like the EU) and loyalists (like the US and Japan) are likely to have to accept pluralism in their practice, with arbitration under some agreements and a court-model under others. It is conceivable (though perhaps less likely) that some states might provide for both a court and arbitration as options in a single treaty, giving investors the power of election. Arbitration will also remain the default choice under thousands of existing treaties, maintaining a reasonable level of strength through the power of inertia.

As a result, the investment treaty system is unlikely to face a choice between investor-state arbitration or a multilateral investment court. States will not all fly in one direction nor will they change course in unison. Instead, the system is likely to be marked by the co-existence of investor-state arbitration and an international investment court, leading to pluralism rather than a dichotomous either/or choice or a clear before-and-after moment.

Embracing Incremental and Systemic Reform

Given the diversity of views of ISDS reform, and the likely reality of pluralism for many decades to come, it makes sense for states and institutions like ICSID, the OECD, UNCTAD and UNCITRAL to be looking at identifying and developing a range of incremental and systemic ISDS reform options. Some of these reforms might be best pursued bilaterally and others multilaterally. Some might be more suited to the UNCITRAL process and others less so. States are yet to make those decisions, but framing the options through the lens of pluralism is helpful in identifying the spectrum of reform options and the range of fora that might be involved.

At one end of the spectrum, states could look at options for incremental reform of investor-state arbitration. Many newer treaties, like TPP-11, include reforms designed to improve investor-state arbitration, such as a code of conduct for arbitrators, an early dismissal procedure and mechanisms for joint interpretations. While these best practices may be helpful with respect to newer-style treaties, the question remains what to do with the thousands of existing older-style treaties that do not include such provisions. One question is whether it would be possible to adopt an opt-in multilateral treaty that applies retrospectively to existing treaties, as UNCITRAL did for the Mauritius Convention on Transparency. Other options are also being pursued. For instance, the IBA has adopted guidelines on conflicts of interest and ICSID is currently undertaking another round of reforming its rules.

At the other end of the spectrum, states could draft a treaty to establish an investment court with a built-in appellate review mechanism. This would be the most ambitious reform proposal, requiring the most work and the longest lead time. Given that some states might be open to appellate review without wanting to sign up to an investment court, it would be a good idea for such a model to delink the underlying court and the appellate review. This would allow for some states to accept the Investment Court plus an Appellate Body, while other states accept investor-state arbitration plus the Appellate Body. Such flexibility would increase the potential reach of such an institution, though it would also add to the system’s pluralism.

In between, states could pursue a variety of creative options that fall between the extremes of largely tweaking with the existing system and totally transforming it. These could include: (1) creating an Appellate Body, without creating an investment court, which would be superimposed on top of the existing system of investor-state arbitration; (2) creating an investment court without including appellate review; and (3) establishing rosters of arbitrators selected by states from which disputing parties could select their particular arbitrators. The court- and appellate-models, along with a number of other reform options like rosters, are canvassed in the excellent first and supplemental CIDS reports.

Examining a suite of incremental and systemic reforms makes sense not only because it suits the current political climate, but also because these options run on different time lines and may be pursued in different ways (eg bilaterally or multilaterally) and in different fora (eg ICSID, the OECD or UNCTAD). Incremental reforms could prove to be early wins while establishing systemic reforms like a court or appellate body will take more time. That is not to say that incremental reforms should be pursued first and systemic reforms should be pursued later as that would just play into the hands of those states that don’t want to see systemic reform. Rather it is simply a recognition that different reform options are likely to have different gestation periods even if conceived at the same time.

It is also worth recognising the potentially dynamic interaction among different reform options. For instance, many proponents of the existing system of investor-state arbitration are not keen to see change. However, if they believe that the investment court option is gaining steam or that states are at real risk of revolting against ISDS, they will have additional incentives to invest in incremental reforms to see if those changes would be sufficient to head off criticisms of the system. On the flipside, if incremental reforms turn out to do little if anything to appease underlying legitimacy concerns about the system, the case for systemic reform or revolution will only increase.

One of the questions that states in the UNCITRAL process will need to face is which of the many potential reform options are best pursued bilaterally or outside UNCITRAL (for instance, through the ICSID reform process or through UNCTAD’s current work on reforming existing BITs) and which lend themselves to multilateral reform and the UNCITRAL process. Part of the issue here is one of bandwidth: states will only have a certain amount of time and energy available to focus on multilateral reforms (and, indeed, reforms more generally), so they will need to choose how to spend their UNCITRAL time wisely. It is premature to seek to answer these questions, but recognising the system’s pluralism is the first step toward thinking about how to tackle the difficult and politically charged issue of ISDS reform, both inside and outside of UNCITRAL.

Lighthizer's Opening Plenary Statement at the WTO Ministerial Conference

The full text is here. I'll quote some key portions and offer comments.

Lighthizer starts with this:

First, the WTO is obviously an important institution.  It does an enormous amount of good, and provides a helpful negotiating forum for Contracting Parties. 

That sounds like a pretty basic point, but it's very good to hear him say this. (Although why does he say "Contracting Parties"? Why not "WTO Members"? I can see how someone might speculate that this is part of his longing for the GATT.)

But, in our opinion, serious challenges exist.

I agree with this as well, although I may have different challenges in mind than he does. The biggest one I see is the proliferation of bilateral and regional trade agreements, which constitute preferential trading arrangements and undermine multilateral trade liberalization that is truly free.

He then turns to negotiation vs. litigation:

Second, many are concerned that the WTO is losing its essential focus on negotiation and becoming a litigation-centered organization.  Too often members seem to believe they can gain concessions through lawsuits that they could never get at the negotiating table.  We have to ask ourselves whether this is good for the institution and whether the current litigation structure makes sense.

The biggest problem with WTO negotiations, in my view, is that most governments are reluctant to liberalize in areas that are sensitive for them. I'll come back to this later.

In terms of litigation, there are lots of rules, and sometimes governments don't follow them. Thus, I wouldn't call the WTO "litigation-centered." It's just that governments violate the rules sometimes, and that leads to complaints.

As for gaining concessions through lawsuits, I'd want to see exactly what cases he has in mind, but certainly you could argue that the U.S. has done this sort of thing as well.

Does the "current litigation structure" make sense? In my view, it's the best international litigation system there is, but some tweaks may be in order.

Next up is development:

Third, we need to clarify our understanding of development within the WTO.  We cannot sustain a situation in which new rules can only apply to the few, and that others will be given a pass in the name of self-proclaimed development status.  There is something wrong, in our view, when five of the six richest countries in the world presently claim developing country status.  Indeed, we should all be troubled that so many Members appear to believe that they would be better off with exemptions to the rules.  If in the opinion of a vast majority of Members playing by current WTO rules makes it harder to achieve economic growth, then clearly serious reflection is needed.

5 of the 6 richest countries in the world claim developing country status? That can't be right! Oh, wait, maybe it is. But it's not quite what you think, because those 5 are small, oil rich states plus Singapore. (One point I'd like clarified, though, is in what context exactly these particular countries have claimed developing country status. It's hard to find that kind of information.)

But I do think there needs to be a reconsideration of the classification of certain countries as developing, and also of the extent of the obligations that some of these countries have taken on. In my view, taking on more obligations in core areas such as tariff reductions would be beneficial for economic growth and development.

Finally, the last two points relate to negotiations on the substance of WTO rules:

Fourth, it is impossible to negotiate new rules when many of the current ones are not being followed.  This is why the United States is leading a discussion on the need to correct the sad performance of many Members in notifications and transparency.  Some Members are intentionally circumventing these obligations, and addressing these lapses will remain a top U.S. priority.

Fifth, the United States believes that much can and should be done at the WTO to help make markets more efficient.  We are interested in revitalizing the standing bodies to ensure they are focused on new challenges, such as chronic overcapacity and the influence of state-owned enterprises.  Further, we are working closely with many Members in committee and elsewhere to address real-world problems such as SPS barriers.

This takes me back to my earlier point. Governments want to negotiate about things that others are doing wrong, but not about what they are doing wrong. With that attitude, nothing much is ever going to get done at the WTO. It's great that the U.S. is pushing on notifications and transparency, SOEs, and SPS barriers. But if it is not willing to negotiate on farm subsidies and trade remedies, and if it insists on pushing anti-free market policies on intellectual property, I don't see WTO negotiations going very far.

UNCITRAL and ISDS Reforms: Not Business as Usual

In late November 2017, states from around the world convened in Working Group III at UNCITRAL in Vienna to begin debates about the possible reform of investor-state dispute settlement (ISDS). In accordance with the UNCITRAL mandate (see  Annotated Provisional Agenda) that was given in July 2017:

The Working Group would proceed to: (i) first, identify and consider concerns regarding ISDS; (ii) second, consider whether reform was desirable in light of any identified concerns; and (iii) third, if the Working Group were to conclude that reform was desirable, develop any relevant solutions to be recommended to the Commission.

I attended the Working Group III meetings as an independent legal expert on the Australian delegation, though anything I write is attributable to me personally not Australia. Given the potential importance of these reform efforts, and the public interest in them, this post marks the first in a series that seeks to explain and contextualise the UNCITRAL ISDS reform process. These posts are consistent with the mandate’s call for the process to be “fully transparent” (see  Annotated Provisional Agenda). Recordings of the session are also available online.

The UNCITRAL debates on ISDS reforms are highly political. On an international level, states have split on whether to embrace ISDS and, if so, whether international claims by investors would be better heard by ad hoc arbitral bodies or a permanent investment court. On a domestic level, ISDS has proved highly controversial in a number of states, resulting in strong pushback. Dealing with such a highly charged issue is certainly not “business as usual” for UNCITRAL. This was evident in the November meetings in two key ways.

First, in terms of representation, this Working Group was not “business as usual” because it was much more government-led than is typical of UNCITRAL Working Groups.

The Working Group’s mandate took pains to specify that the process would be “government-led with high-level input from all governments.” This language was intended to send a message to states that they should send government officials to participate in the Working Group. This call was important because UNCITRAL Working Group II, which deals with arbitration, often covers relatively apolitical, technical issues, like developing model rules, so many states have been content to delegate their representation in whole or in part to arbitration practitioners.

One of the concerns about these debates going forward at UNCITRAL was that having states represented by arbitration practitioners was inappropriate when dealing with a mandate about ISDS reforms. The worry was that arbitration practitioners would attempt to stall, thwart or water down any reform attempts on the basis that they have a vested financial interest in maintaining the status quo. From this perspective, putting UNCITRAL in charge of ISDS reform was likened by some to putting the fox in charge of the henhouse.

But some careful manoeuvring and clear messaging seems to have avoided that concern, at least for now. In terms of manoeuvring, the mandate was given to Working Group III, which was just finishing work on online dispute resolution, rather than Working Group II, which typically deals with arbitration issues. This meant that, instead of having to oust arbitration practitioners from existing representations, states typically enjoyed a clean slate when deciding who should represent them in this particular Working Group.

Responding to the messaging, it was clear that many states not only sent government representatives, but a significant number sent government lawyers with particular expertise in investment law and policy issues rather than representatives from their embassies in Vienna. The composition of Working Group II working on transparency and the Mauritius Convention already differed to some extent from the normal Working Group II crowd, but this Working Group III session took this trend one step further toward a “government as usual” model.

Second, in terms of how the meeting proceeded, this Working Group was definitely not “business as usual” because it started out with a vote instead of conforming to UNCITRAL’s typical approach of working by consensus. In the whole history of UNCITRAL, only one issue had ever been put to the vote and that was the decision on whether to move the headquarters of UNCITRAL to Vienna. The premium placed on consensus meant that voting enjoyed somewhat of a mystical taboo. That was, at least, until this meeting when the spell was broken for a second time.

In this case, the Working Group did not start its substantive deliberations for a day and a half because states had not informally agreed upon a Chair prior to the meeting beginning. Normally, one would expect an UNCITRAL Working Group Chair to have been agreed upon ahead of the meeting, such that someone would have been elected by consensus on the first morning. However, the reform efforts are such a highly charged political issue that this question had to be left for resolution at the meeting after discussion during plenary sessions and multiple consultation breaks.

There are no formal criteria for the position of Chair, which left different delegations to formulate different criteria in order to suit their preferred candidate. For a good discussion of the issue, see IAReporter. In the end, there was no way to bridge the divide and a vote was called, resulting in the election of Shane Spelliscy from Canada. Spelliscy has excellent and well-rounded ISDS experience having worked for many years in both government and private practice, and he conducted the meeting very effectively. However, the fact that the issue had to be put to the vote is a sign of how contentious these reform processes are likely to be.

In this way, these debates are different to both most UNCITRAL Working Groups and other fora currently dealing with investment treaty issues. UNCTAD and the OECD also deal with investment treaty issues, but they are currently places in which states come to learn and exchange views/experiences. These UNCITRAL debates are different because there is the potential for them to lead to some sort of multilateral statement about problems with ISDS and recommendations for reform. This raises the stakes for states significantly, particularly when coupled with transparency, which helps to explain the level of politicking and posturing.

However, the fact that a vote happened is probably a good sign for the process going forward. Given the divisions involved in ISDS reforms, it would be surprising if an issue like this could proceed to any meaningful outcome on a fully consensus-based model. Voting is common practice in other UN bodies, like the General Assembly. Current developments at the WTOshow the dangers of entrenching a consensus-based approach. Having broken the no-voting spell, the Working Group can now get on with forging a consensus where possible, safe in the knowledge that they can vote where that is not possible.

This Working Group may not have proceeded on a “business as usual” basis, but that is because it is considering whether the “business as usual” approach to ISDS should be reformed. This is an important issue and one that states and observers should make it their business to follow closely.

First published on EJIL: Talk!

 

 

Exceptions in Investment Agreements / The Meaning of "Necessary"

Bryan Mercurio and I have a new IIEL Issue Brief in which we argue against using industry (e.g. tobacco) carveouts as a way to ensure policy space in investment agreements. Instead of carveouts, we think that well drafted general exceptions clauses are more useful (well drafted obligations are also important, of course, but we focus here on the exceptions).

There's plenty to argue about on that issue alone, but I want to raise something more specific and see if it generates any discussion here. In the paper, we make the following points:

The wording of exception clauses is still a work in progress, and more precision may be needed. For example, there is no need to slavishly conform to existing WTO language. Instead, the scope of the list of permissible objectives, and the use of “relating to” rather than “necessary,” could dramatically change the usefulness of the provision. In this regard, governments could shift the textual language so that the exception applies to measures “relating to” (as opposed to the stricter “necessary”) policies such as the protection of human, animal or plant life or health. Such language would greatly assist in assuring governments that non-discriminatory regulatory measures would not be affected by the agreement.

Governments could also establish a flexible and comprehensive list of potential policies to be covered, perhaps even relying on a non-exhaustive list. ...

Let me go a little deeper on the first point, which is the distinction between "relating to" and "necessary." The reason -- speaking for myself here, not Bryan -- for pushing "relating to" over "necessary" is that, as applied by panels and the Appellate Body, the former appears to be easier to satisfy. In this regard, in Korea - Beef, the Appellate Body said the following about the meaning of "necessary" in the context of GATT Article XX(d):

160. The word "necessary" normally denotes something "that cannot be dispensed with or done without, requisite, essential, needful". 102 We note, however, that a standard law dictionary cautions that:

[t]his word must be considered in the connection in which it is used, as it is a word susceptible of various meanings. It may import absolute physical necessity or inevitability, or it may import that which is only convenient, useful, appropriate, suitable, proper, or conducive to the end sought. It is an adjective expressing degrees, and may express mere convenience or that which is indispensable or an absolute physical necessity". 103

161. We believe that, as used in the context of Article XX(d), the reach of the word "necessary" is not limited to that which is "indispensable" or "of absolute necessity" or "inevitable". Measures which are indispensable or of absolute necessity or inevitable to secure compliance certainly fulfil the requirements of Article XX(d). But other measures, too, may fall within the ambit of this exception. As used in Article XX(d), the term "necessary" refers, in our view, to a range of degrees of necessity. At one end of this continuum lies "necessary" understood as "indispensable"; at the other end, is "necessary" taken to mean as "making a contribution to." We consider that a "necessary" measure is, in this continuum, located significantly closer to the pole of "indispensable" than to the opposite pole of simply "making a contribution to". 104

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

102 The New Shorter Oxford English Dictionary, (Clarendon Press, 1993), Vol. II, p. 1895.

103 Black’s Law Dictionary, (West Publishing, 1995), p. 1029.

104 We recall that we have twice interpreted Article XX(g), which requires a measure "relating to the conservation of exhaustible natural resources". (emphasis added). This requirement is more flexible textually than the "necessity" requirement found in Article XX(d). We note that, under the more flexible "relating to" standard of Article XX(g), we accepted in United States – Gasoline a measure because it presented a "substantial relationship", (emphasis added) i.e., a close and genuine relationship of ends and means, with the conservation of clean air. Supra, footnote 98, p.19. In United States – Shrimp we accepted a measure because it was "reasonably related" to the protection and conservation of sea turtles. Supra, footnote 98, at para. 141.

So there were two steps to this analysis.  Step 1: Necessary has a range of meanings.  Step 2: The meaning of necessary in Article XX(d) is closer to "indispensable" than to "making a contribution to."  In footnote 104, the Appellate Body points out the "more flexible textually" language of Article XX(g), which uses "relating to" rather than "necessary."

At the risk of committing trade law heresy, let me ask this:  Are we sure this is the correct choice for the meaning of "necessary" in Article XX?  Looked at in context, why shouldn't "necessary" in Article XX mean pretty much the same thing as "relating to" in Article XX?

One argument for different meanings is that the different word choice must lead to a different meaning.  If the drafters had wanted the meaning of "relating to" in Article XX(d) and other sub-provisions, they clearly knew how to get it, because they used it in other provisions.  By deciding not to use "relating to" in Article XX(a), (b), and (d), they rejected the "more flexible" standard.

On the other hand, if you look at the various Article XX sub-provisions, you see that "necessary" is used whenever the infinitive verb form follows: "to protect" or "to secure."  By contrast, "relating to" is used with nouns ("the products" or "the conservation").  (A couple other variations are thrown in as well). So maybe "necessary" was used simply for stylistic purposes, with no change in meaning presumed. "Necessary to conserve exhaustible natural resources" just didn't sound as good to the drafters as "relating to the conservation of exhaustible natural resources."

In support of this view, consider the following. Everyone agrees that "relating to" is easier to satisfy than "necessary," as they are currently interpreted, and thus it is easier to justify a measure taken for "the conservation of exhaustible natural resources" under Article XX(g) than one taken "to protect human life" under Article XX(b).  But is there any reason the drafters would have intended this result?  I can't think of one.  Even if the drafters were working on these issues today, it would be hard to think of a reason, and it's even harder to imagine they would reach that conclusion back in 1947.  Is there any policy reason for favoring conservation of exhaustible natural resources over protecting human life?  It seems like a stretch to think there is. (Of course, you might be able to think of an example here or there where the environment is more important than a human life. But saying that, as a general matter, the conservation of exhaustible natural resources is more important than protecting human life, well, that just doesn't seem credible.)

With all that as background, let me return to the drafting of exceptions clauses in investment agreements. Should we stick with the current use of both "necessary" and "relating to" (plus a couple others) as a way to define the required connection between measures and their policy goals? There's an opportunity here to rethink all this, if anyone wants to take it. Maybe some people prefer "necessary" for certain policies. But we should at least think about the implications of the different levels of connection that are possible between the measure and the policy goal. If people are concerned with balancing economic objectives and other policy concerns, and the prevailing interpretation of "necessary" does not change, "relating to" may be the better choice.

Saving the Trading System

A lot of people are worried about the trading system these days, and are looking for ways to save it. My friends Frank Garcia and Tim Meyer are trying to save it from the left (drawing in part on Frank's forthcoming book Trade and Consent: Trading Freely in a Global Market (CUP 2018)). Here is the abstract of their new paper "Restoring Trade's Social Contract":

 As we write, the United States, Canada, and Mexico are meeting in Washington, D.C. to renegotiate the North American Free Trade Agreement (NAFTA). These talks—and their possible failure—represent the biggest shift in U.S. economic policy in a generation. Since NAFTA came into force in 1994, it has transformed the North American economy. NAFTA has made possible continent-wide supply chains, in industries like the auto sector, that have reduced costs and allowed American automakers to remain competitive; it has opened markets for American agriculture; it has greatly increased the standard of living in Mexico; and it has reduced consumer prices across the continent. Despite these gains, President Trump has repeatedly threatened to pull the United States out of NAFTA if he cannot get a deal that is “fair” for American workers. These repeated threats, coupled with aggressive U.S. government proposals to roll back liberalization in NAFTA 2.0, have sent the Canadian and Mexican governments and the U.S. business community searching for new policy ideas to save free trade.

Restoring Trade’s Social Contract answers this call by proposing a financial transaction tax (FTT) in NAFTA and future trade agreements. The tax, no more than .1% of the value of securities or currency sales within the free trade area, would raise revenue to fund an expansion of adjustment assistance for workers who are displaced due to trade liberalization. An Economic Development Chapter in NAFTA and future trade agreements would mandate that this revenue be spent on expanded domestic trade adjustment assistance programs, such retraining, relocation assistance, and infrastructure investment.

Our proposed tax would thus directly harness the wealth-creating potential of trade agreements and explicitly tie funding for adjustment assistance to major financial institutions, the parties benefitting the most from trade agreements. In so doing, it would restore what we term the social contract of trade—a bargain whereby trade liberalization occurs in a way that ensures that the least well off among us are, at a minimum, not harmed. Despite its huge contributions to poverty reduction and increased human welfare since World War II, trade liberalization has contributed to significant job losses, leading to economic calamity and social disruption in industrial heartlands from the mid-Western United States to Manchester, England and Wallonia, Belgium. These economic losses, in turn, have spurred the political backlash that now threatens the international economic order. Securing the long-term benefits of trade liberalization for ourselves and our fellow citizens—making free trade politically sustainable—thus requires including in trade law itself measures to address these significant costs. With NAFTA talks ongoing and the United States debating tax reform, the time is right for an FTT dedicated to expanded adjustment assistance.

In a nutshell, they propose a financial transaction tax that will be used to fund domestic trade adjustment assistance that is legally required as part of trade agreements.

While I am also trying to save the trading system (from the sensible center, or the radical fringe, depending on your perspective!), I have some disagreements with their approach. Just so we're clear, I talked to Frank about this beforehand, so I'm not blindsiding them with criticism, but rather engaging with their arguments to promote dialogue on these issues! Here are some of my disjointed thoughts, broken down into a number of key points.

Political realities

In any other U.S. administration, I would have said this proposal has absolutely no chance of being adopted. With the Trump administration, I would say the chances are even less. Trump is looking to lower taxes and deregulate (for the most part), as opposed to doing the opposite.

That doesn't mean Frank and Tim shouldn't make this proposal. I support many policies that will never be adopted! But instead of saying things like, "Politically, such an initiative could garner bipartisan support in the United States and perhaps other jurisdictions as well," if I were them I would acknowledge what an uphill battle this will be, and think about what would be necessary to give it a chance. 

Who benefits from trade agreements 

They say, "Our proposed tax would thus directly harness the wealth-creating potential of trade agreements and explicitly tie funding for adjustment assistance to major financial institutions, the parties benefitting the most from trade agreements." Financial institutions benefit the most from trade agreements? I'm skeptical that's true, and I'd want to hear more from them about all the parties who benefit, and why financial institutions are at the top of their list. But if it is true, then we are doing trade liberalization wrong. What we need to do is liberalize trade in financial services, forcing these companies to compete more, thereby benefitting consumers.

Free trade vs. protectionism 

They say, "In so doing, it would restore what we term the social contract of trade—a bargain whereby trade liberalization occurs in a way that ensures that the least well off among us are, at a minimum, not harmed. Despite its huge contributions to poverty reduction and increased human welfare since World War II, trade liberalization has contributed to significant job losses, leading to economic calamity and social disruption in industrial heartlands from the mid-Western United States to Manchester, England and Wallonia, Belgium." 

Why do people worry about how trade liberalization affects the least well off, but not how protectionism affects the least well off? When you look at how trade policy would affect the least well off, I don't think there's any doubt that protectionism is vastly worse for the poorest people in society than trade liberalization is. And yet I don't hear many concerns from the left about how existing protectionism harms the poor, or how new trade remedy measures will harm the poor, and how trade adjustment assistance is needed to address that. Concerns about how trade policies affect the poor are certainly valid, but this selective application seems odd to me. As the authors acknowledge, trade liberalization has made "huge contributions to poverty reduction and increased human welfare." That implies that protectionism does the opposite (poverty expansion and reduced human welfare!), and yet nobody seems to propose doing anything to address the harms of protectionism.

The politics of trade 

They say: "Despite their radical departure from conventional U.S. policy, the Administration’s actions enjoy strong support in the states that voted for President Trump, as well as from labor interests such as the AFL-CIO that traditionally align with the Democratic Party. This unprecedented political reconfiguration reminds us that today many Americans, regardless of party affiliation, feel betrayed by our current trade policies. They believe that free trade is imposed on them, at their cost and for others’ benefit."

The idea that "many Americans ... feel betrayed" by U.S. trade policies seems like an exaggeration to me. Yes, you can go to a Trump or Sanders campaign rally and hear people booing NAFTA. But how many of those booing know what NAFTA is? I'm not convinced that many people object to NAFTA itself, as opposed to just objecting to Mexico in some general sense. There is a rising anti-foreigner sentiment out there these days, but I'm not sure how much of a concern there is with trade liberalization or how much "economic anxiety" exists. My sense is that most people are pretty happy with the benefits of trade liberalization, as they demonstrate through their purchasing habits.

Dealing with disruption 

I don't think most of the criticism of trade liberalization has anything to do with trade specifically. It's more about disruption of the status quo. The authors say: "Reducing trade barriers for manufactured goods has contributed to significant job losses, leading to economic calamity and social disruption in industrial heartlands from the mid-Western United States to Manchester, England and Wallonia, Belgium. Moreover, jobs of similar quality have not, as promised, emerged in these regions to replace those lost." This is all true, but misses the bigger picture. Any change in existing policy is going to have this impact. Withdrawing fossil fuel subsidies would have this impact. The question is, what, if anything, should we do about these disruptions?

Whatever the answer is, I think it has to go beyond trade. Offering up assistance specific to trade has the effect of demonizing trade as some nefarious thing that merits skepticism and concern. The reality is that trade is less disruptive than many other things going on right now (e.g., technological change or normal job churn in the economy). So, we can have adjustment policies, and we should talk about specific issues like encouraging relocation. But whatever policies we adopt, they shouldn't be trade specific.

Polling 

But what about the polls? The authors say: 

During the 2016 U.S. presidential campaign, a number of polls indicated that opposition to free trade enjoyed significant support in both parties. For instance, a July 2016 poll found that, while most Americans do not feel strongly either way about trade agreements, those that do feel strongly tended to be against free trade by about a 3 to 1 margin, regardless of party affiliation.22 Similarly, a March 2016 Bloomberg poll asked voters about their views on a number of protectionist policies.23 Twothirds of respondents said that they would prefer an American-owned factory in the United States that created only one thousand jobs to a Chinese-owned factory that created two thousand jobs.24 Fully 82% of respondents said they would be willing to pay more for American-produced goods.25 And 44% of respondents said NAFTA had been bad for the American economy, against only 29% who viewed the agreement as a positive.

 Polls are tricky things. The answer can depend on how you ask the question. Scott Lincicome gathered a bunch of recent polls here. I liked this one:

 

I don't see much backlash in there.

But there has been a shift, as the authors note:

Similarly, an August 2017 poll found that only 34% of Republicans thought NAFTA was good for the United States, while 65% of Republicans thought Mexico engaged in unfair trade practices.

OK, but as Scott's slides show, the decline in Republican support was countered with a rise in Democratic support:

 

What should trade agreements cover 

One of the reasons some people object to trade agreements is that they intrude too much into domestic policy-making. Well, a legally binding obligation to provide trade adjustment assistance intrudes greatly into domestic policy-making!  I'm not sure this is the way to generate more support for trade agreements.