International Economic Law and Policy Blog

Planning for Life Without the Appellate Body

This is from the Agreed Procedures under Articles 21 and 22 of the Dispute Settlement Understanding between Indonesia and Viet Nam in the Indonesia – Safeguard on Certain Iron or Steel Products (DS496) dispute:

7. The parties agree that if, on the date of the circulation of the panel report under Article 21.5 of the DSU, the Appellate Body is composed of fewer than three Members available to serve on a division in an appeal in these proceedings, they will not appeal that report under Articles 16.4 and 17 of the DSU.

The parties agree that the panel report will be the final word in the case, which means the case cannot be sent into limbo if someone appeals to a non-existent Appellate Body.

This kind of agreement between parties to a dispute is one way that WTO dispute settlement can continue to function if the Appellate Body crisis is not resolved. It will be interesting to see how quickly the idea spreads.

Tobacco Etc. Carveout in the New Australia-Hong Kong Investment Agreement

Recall that the tobacco carveout originated in the TPP, but has now spread to new FTAs/IIAs involving Singapore. Interestingly, the tobacco carveout was not in the recent Australia-Indonesia FTA (there was a broader public health exclusion instead), but it does appear in the revised Australia-Hong Investment Agreement (their original investment agreement was the source of the plain packaging investment complaint):

Section C: Settlement of Disputes between an Investor and the Host Party ¹⁴

¹⁴ No claim may be brought under this Section in respect of a Party’s control measures of tobacco products (including products made or derived from tobacco), cigarettes, imitation smoking products, and other smoking products such as Electronic Nicotine Delivery Systems and Electronic Non Nicotine Delivery Systems including electronic cigarettes. A “control measure” of a Party includes measures with respect to production, consumption, importation, distribution, labelling, packaging, advertising, marketing, promotion, sale, purchase or use, as well as fiscal measures such as internal taxes and excise taxes, and enforcement measures, such as inspection, recordkeeping and reporting requirements. “Tobacco products” means products under Chapter 24 of the Harmonised System, including processed tobacco, or any product that contains tobacco, that is manufactured to be used for smoking, sucking, chewing or snuffing.

Notice that various non-tobacco products are covered: "imitation smoking products, and other smoking products such as Electronic Nicotine Delivery Systems and Electronic Non Nicotine Delivery Systems including electronic cigarettes." I'm not sure what the full range of "other smoking products" is, but it seems like it could be quite broad.

As a result, the following situation is possible (although I'm not saying it is likely). Imagine the local tobacco industry is tired of people shifting to alternative products such as e-cigarettes, which happen to be produced domestically by a foreign-owned competitor. The tobacco industry is powerful and successfully lobbies the government to ban the sale of the competing products. (This ban seems like it would constitute a "control measure” under the definition provided above.) A foreign-owned company that makes e-cigarettes wants to bring an investor-state claim, but cannot do so because of footnote 14.

That can't be what the drafters intended, and I'm not saying it is likely to occur. But it does suggest that there may be better approaches to establishing the proper balance between investment protection and regulation taken for a public purpose.

The CIT Opinion in the Section 232 Constitutionality Case

The opinion is here. The court rejected the plaintiffs' argument that Section 232 is unconstitutional. Here is a key part of the reasoning:

Most importantly for the challenge here, in Algonquin, the Supreme Court found that section 232 “easily” met the intelligible principle standard because

[i]t establishes clear preconditions to Presidential action[,] —[i]nter alia, a finding by the Secretary of the Treasury that an “article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” Moreover, the leeway that the statute gives the President in deciding what action to take in the event the preconditions are fulfilled is far from unbounded. The President can act only to the extent “he deems necessary to adjust the imports of such article and its derivatives so that such imports will not threaten to impair the national security.” And §232(c),4 [a]rticulates a series of specific factors to be considered by the President in exercising his authority under § 232(b). In light of these factors and our recognition that “(n)ecessity . . . fixes a point beyond which it is unreasonable and impracticable to compel Congress to prescribe detailed rules . . . ,” we see no looming problem of improper delegation.

Algonquin, 426 U.S. at 559–60 (citation and footnote omitted). This court is bound by Algonquin.

...

To be sure, section 232 regulation plainly unrelated to national security would be, in theory, reviewable as action in excess of the President’s section 232 authority. See, e.g., Indep. Gasoline Marketers Council, Inc. v. Duncan, 492 F. Supp. 614, 620 (D.D.C. 1980) (holding that the President’s imposition of a gasoline “conservation fee” pursuant to section 232(b) of the Trade Expansion Act was not authorized by the statute). However, identifying the line between regulation of trade in furtherance of national security and an impermissible encroachment into the role of Congress could be elusive in some cases because judicial review would allow neither an inquiry into the President’s motives nor a review of his fact-finding. See George S. Bush & Co., 310 U.S. at 379–80; Florsheim Shoe Co. v. U.S., 744 F.2d 787, 796–97 (Fed. Cir. 1984). One might argue that the statute allows for a gray area where the President could invoke the statute to act in a manner constitutionally reserved for Congress but not objectively outside the President’s statutory authority, and the scope of review would preclude the uncovering of such a truth. Nevertheless, such concerns are beyond this court’s power to address, given the Supreme Court’s decision in Algonquin, 426 U.S. at 558–60.

There was also this separate opinion:

Katzmann, Judge, dubitante.1

1 “[E]xpressing the epitome of the common law spirit, there is the opinion entered dubitante – the judge is unhappy about some aspect of the decision rendered, but cannot quite bring himself to record an open dissent.” Lon Fuller, Anatomy of the Law 147 (1968). See generally Jason
Czarnezki, The Dubitante Opinion, 39 Akron L. Rev. 1 (2006).

...

The question before us may be framed as follows: Does section 232, in violation of the separation of powers, transfer to the President, in his virtually unbridled discretion, the power to impose taxes and duties that is fundamentally reserved to Congress by the Constitution? My colleagues, relying largely on a 1976 Supreme Court decision, conclude that the statute passes constitutional muster. While acknowledging the binding force of that decision, with the benefit of the fullness of time and the clarifying understanding borne of recent actions, I have grave doubts. I write, respectfully, to set forth my concerns. 

...

In the one trade case before the Court since Hampton where it was contended that the statute at issue constituted an unconstitutional delegation of legislative power to the Executive, the statute in question was the one before us now -- section 232. See Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548 (1976). In that case -- after a determination that foreign petroleum was being imported into the United States in such quantities and at such low costs as to threaten to impair national security by inhibiting the development of domestic production and refinery capacity -- the President imposed license fees upon the exporters in an effort to control imports pursuant to section 232. The Attorney General of the Commonwealth of Massachusetts and others brought suit, primarily making the narrow statutory claim that while section 232 authorized the
President to adjust the imports of petroleum and petroleum products by imposing quotas, the remedy that the President sought, import licensing fees, was not authorized by the statute. Id. at 556. They also argued that unless this construction was adopted, the Court would have to reach the constitutional question of whether section 232 was an impermissible delegation of legislative power to the President. Id. at 558–59. The Supreme Court opinion, as my colleagues note, not only decided (in favor the Federal Energy Administration) the statutory question as to whether licenses were permissible, but also reached the constitutional question. Referencing the “intelligible principle,” the Court ruled that “[e]ven if § 232(b) is read to authorize the imposition of a license fee system, the standards that it provides the President in its implementation are clearly
sufficient to meet any delegation doctrine attack.” Id. at 559.

Of course, as a lower court, it behooves us to follow the decision of the highest court. It can also be observed that new developments and the record of history may supplement and inform our understanding of law. ...

...

In the end, I conclude that, as my colleagues hold, we are bound by Algonquin, and thus I am constrained to join the judgment entered today denying the Plaintiffs’ motion and granting the Defendants’ motion. I respectfully suggest, however, that the fullness of time can inform understanding that may not have been available more than forty years ago. We deal now with real recent actions, not hypothetical ones. Certainly, those actions might provide an empirical basis to revisit assumptions. If the delegation permitted by section 232, as now revealed, does not constitute excessive delegation in violation of the Constitution, what would?

Summing up, it sounds like the Court was sympathetic to the plaintiffs' argument, but saw itself as bound by the Supreme Court decision in Algonquin. I haven't heard anything official, but I suspect we will see an appeal, and eventually the Supreme Court can weigh in all of this.

UPDATE: Looks like an appeal is coming.

New Book:"The WTO Law of Subsidies: A Comprehensive Approach"

Dear Blog Colleagues, 

I am pleased to announce the forthcoming publication (early May 2019) of my new book titled "The WTO Law of Subsidies: A Comprehensive Approach". It is published by Kluwer Law International. 

You can find all the necessary information about the book at the book website 

Thanks for your attention to this announcement. Best Regards. Marc Benitah

The Internal U.S. Government Debate over the GATT Security Exception

Mona Pinchis-Paulsen has a great new paper called "Trade Multilateralism and National Security: Antinomies in the History of the International Trade Organization". I highly recommend pp. 11-25, which describes the internal U.S. government debate on the power to interpret the security provisions. I don't think a summary will do it justice, so read the whole thing!

May the (Trade) Force Be With You

How will trade wars unfold?  Are we doomed?  History may scare us.  Before the dawn of the American Republic, it was the trade wars among thirteen Confederates that wreaked havoc on the fragile Articles of the Confederation.  Fast forward, the interwar trade wars, triggered by the ill-famed Smoot-Hawley Tariff Act of 1930, decimated three quarters of world trade and eventually contributed to the outbreak of the Second World War. 

History reproducing itself captures our imagination.  It finds its way even in our fictional intergalactic past.  Not many people know it was actually a “trade” dispute that precipitated the Star Wars “a long time ago in a galaxy far, far away.”  A quarrel over taxing trade routes between the Galactic Republic and the Trade Federation resulted in a blockade of shipping to a small planet of Naboo.  Two parties failed to settle the dispute, which brought light-saber wielding warriors. 

Perhaps the fact that wars, trade wars or other kinds, happen so often, in both the real and the imagined world, is related to the way in which our brain is wired.  Cognitive psychologists observe that our tribal instincts push us to favor in-group members and “infrahumanize” out-group ones.  We tend to believe that our people are honest and trustworthy, while they, such as foreigners, are unscrupulous and perfidious. 

For example, the United States might believe, rightly or wrongly, that China breaks all the rules and steals the U.S. technologies at the expense of American prosperity.  Likewise, China might believe, rightly or wrongly, that the United States unfairly suppresses Chinese efforts to develop and modernize its economy in an imperialistic manner. 

This cognitive bias leads to fear, which activates our reptile brain and readies us to fight.  As Yoda said, fear leads to anger, which in turn leads to suffering.  We are destined to suffer from trade wars.

The Founding Fathers of the American Constitution understood this fatal link.  The devastating experience under the Articles of the Confederation prompted them to invent the “Commerce Clause” in the new Constitution that invalidates state protectionism.  Likewise, the Allies understood the same link after the end of the Second World War.  They created the “General Agreements on Tariffs and Trade” (GATT), which later evolved into the “World Trade Organization” (WTO), to prevent another global trade war. 

Indeed, the trade dispute that caused the Star Wars could have been resolved under GATT Article V, which stipulates that “there shall be freedom of transit (…), via the routes most convenient for international transit (…).”  Intergalactic diplomats and lawyers could have obviated the need for Jedi knights.

Will the same flash of enlightenment emerge in the near future?  The current situation is by no means auspicious.  The WTO court has recently been mired by the flames of trade wars.  Now does not seem to be a time for trade diplomats and lawyers.  Trade warriors are likely to take over, or they may have already taken over.

So, buckle up, and may the force be with you!

"Imports" of Carbon Emissions

As a political stunt, I really like this:

U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), a member of the tax-writing House Ways and Means Committee and its Subcommittee on Trade, sent a letter to U.S. Commerce Secretary Wilbur Ross calling on him to initiate an investigation into the threat of carbon pollution. The letter was also signed by Reps. Jimmy Gomez (D-CA-34) and Judy Chu (D-CA-27), both members of the Ways and Means Committee.

“We write to request,” the members state, “an investigation into imports of carbon emissions and the threat they pose to U.S. national security. Climate change is an existential emergency that poses grave threats to our security, public health, and economic prosperity.”

The Pentagon has already concluded that climate change poses “immediate risks” to national security. Major peer-reviewed studies have predicted increasing losses to American infrastructure and property, impeding economic growth and GDP over the next century. These impacts are directly caused by carbon dioxide, mostly due to fossil fuels burned for energy. According to NOAA and the American Meteorological Society, global atmospheric carbon dioxide was 405 ppm in 2017, a new record high. Modes of trade and shipping, whether air, maritime, rail or auto transportation, cause carbon emissions that contribute to global warming.

“This threat to our national security must be taken seriously and mitigated using all tools available to us, including trade enforcement. The carbon footprint of trade and shipping of goods been studied in the past. It is conceivable that such carbon pollution could be countered through trade remedies,” the letter continues.

Rep. Pascrell’s letter invokes Section 232 of the Trade Expansion Act of 1962, which authorizes the Secretary of the Department of Commerce to conduct investigations “to determine the effects on [US] national security” of imports of an article. This law allows any “interested party” to request Commerce initiate such an investigation to ascertain the effect of specific imports on the national security of the United States.

“Clearly, carbon dioxide emissions are exacerbated by international trade and imports to the United States. This carbon pollution threatens agricultural markets and infrastructure, among other sectors of our economy, which Commerce should investigate with the urgency and gravity that this emergency warrants,” the letter concludes.

According to the law, once a Section 232 investigation is requested in writing, Commerce must “immediately initiate an appropriate investigation to determine the effects on the national security” of the subject imports. After consulting with the Secretary of Defense, other “appropriate officers of the United States,” and the public, if appropriate, Commerce has 270 days from the initiation date to prepare a report advising the President whether the targeted product is being imported “in certain quantities or under such circumstances” to impair U.S. national security, and to provide recommendations for action or inaction based on the findings.

Rep. Pascrell believes climate change is an existential threat to the world and is dedicated to mustering government attention and resources to countering the effects of climate change. He is a cosponsor of H.Res. 109, the Green New Deal, which sets forth an ambitious framework for combating climate change. The Ways and Means Committee’s Trade Subcommittee, on which Pascrell serves, has oversight of our nation’s trade laws, including the Trade Expansion Act of 1962 that governs Section 232 investigations.

But is there any real chance of success? Note that the Section 232 statute refers to "an appropriate investigation to determine the effects on the national security of imports of the article which is the subject of such request, application, or motion."

I haven't looked up the domestic or international case law, but I think of an “article” as a good or product, i.e., something physical that would be imported through normal customs procedures. Therefore, carbon emissions would not really qualify here, as they are not a physical product that is being imported. They are more like a by-product of production and international trade.

There is room for creative interpretations, but you would need a sympathetic administration to get what you wanted (and the courts would reject an interpretation that went too far). It's a little hard to imagine the Trump administration being creative in the direction of trying to lower carbon emissions.

Would Speeding up WTO Dispute Settlement Help With the Appellate Body Crisis?

Article 12 of the DSU specifies these time-frames for panels to issue reports:

8. In order to make the procedures more efficient, the period in which the panel shall conduct its examination, from the date that the composition and terms of reference of the panel have been agreed upon until the date the final report is issued to the parties to the dispute, shall, as a general rule, not exceed six months. In cases of urgency, including those relating to perishable goods, the panel shall aim to issue its report to the parties to the dispute within three months.

9. When the panel considers that it cannot issue its report within six months, or within three months in cases of urgency, it shall inform the DSB in writing of the reasons for the delay together with an estimate of the period within which it will issue its report. In no case should the period from the establishment of the panel to the circulation of the report to the Members
exceed nine months.

In practice, however, panels take much longer. And as the United States keeps pointing out, the Appellate Body has been taking longer than 90 days (and doing so without the consent of the Members).

With this in mind, I was struck by something former USTR Susan Schwab said at the annual Georgetown Law International Trade Update last week (I wasn't there, so I don't have the full context for the quote):

One potential remedy for the WTO’s dispute settlement system would be to hasten the process so a complaining member can see an issue resolved, receive compensation, or be authorized to retaliate sooner, Schwab said.

Is it possible that speeding up WTO disputes could be a way to achieve a set of reforms that satisfy the U.S. concerns about the Appellate Body? At the panel stage, for example, you could shorten the process by having only one panel meeting, or getting rid of the interim review, or by putting limits on the length of submissions. That would probably give you a shorter report, with fewer issues to appeal (although perhaps the reduced clarity would lead to more appealed issues?).  And then at the appellate stage, you could narrow the scope for appeals by setting a higher standard for DSU Article 11-type appeals; clarifying that examination of measures is a factual question; and restoring the 90 day period for circulating Appellate Body reports (page limits on submission length would help here as well). Perhaps by packaging all of this together, the chances for negotiating an end to the impasse in Appellate Body appointments would be increased.

Does USMCA Article 31.8 Fix the Roster Problem?

As we all know, many years ago there was a problem with the U.S. blocking the appointment of a panel under NAFTA Chapter 20 (one key issue in this regard was the establishment of a roster; full details here). When I looked at Chapter 31 of the USMCA, my sense was that the problem was not fixed. But in this Inside US Trade article, I see that a Canadian government official is arguing that it was:

The negotiators also addressed dispute settlement provisions in the deal, with [Colin] Bird touting fundamental improvements to address the state-to-state “roster problem.” Under NAFTA, all three countries must agree on a list of potential panelists from which to choose in dispute settlement cases. But due to a provision that allowed the roster of panelists to expire every three years, it would often remain empty or incomplete, Bird explained.

The roster issue, under Chapter 20 of NAFTA, has been a significant concern for Lighthizer, according to lawmakers who have met with him recently to discuss the USMCA’s enforcement mechanisms.

“There is already an option in the agreement and that is to form these dispute resolution panels,” Rep. Ron Kind (D-WI) told Inside U.S. Trade last month. “And yet [Lighthizer] claims that the other side might not fill those panels and resolve disputes.”

...

But Bird said that problem was fixed by ensuring all countries were committed to “establishing their rosters prior to entry into force.”

“Those rosters, unlike the case for the original NAFTA, don’t expire until there is a replacement in place. So that particular issue is a dramatic improvement actually from NAFTA 1 to NAFTA 2,” he said.

As outlined in Article 31.8 of USMCA, “The Parties shall establish by the date of entry into force of this Agreement and maintain a roster of up to 30 individuals who are willing to serve as panelists. The roster shall be appointed by consensus and remain in effect for a minimum of three years or until the Parties constitute a new roster.”

Such language, Bird continued, represented a “hard commitment” from all sides on the issue.

“The ‘shall establish’ is a hard commitment. The minimum term is three years. It will be longer if no replacement is named. The two provisions are consistent. It would only be inconsistent if the term was a maximum of three years,” he clarified in an email to Inside U.S. Trade.

Here is Article 31.8, para. 1 of the USMCA:

Article 31.8: Roster and Qualifications of Panelists

1. The Parties shall establish by the date of entry into force of this Agreement and maintain a roster of up to 30 individuals who are willing to serve as panelists. The roster shall be appointed by consensus and remain in effect for a minimum of three years or until the Parties constitute a new roster. Members of the roster may be reappointed.

The first point to make is that the "shall establish" language is great, but I'm not sure how it can be enforced. Note that NAFTA Article 2009 said "The Parties shall establish by January 1, 1994 and maintain a roster ... " I will be excited if the parties do establish a roster, but given this history, I am a little skeptical.

Second, what exactly does Article 31.8 mean for how long the rosters remain in effect (assuming the roster is established in the first place)? When I first read the provision, my impression was that it meant there are two independent time-frames to take into account here: The roster will be in effect for a defined term of at least three years; then as a separate matter, if the parties constitute a new roster before the term ends, this will put an end to the defined term currently in effect and replace it with a new term. For example, the parties might set the term at, say, 10 years, and some time before that 10 year period ends (but after 3 years have elapsed), they might decide to constitute a new roster.

But the Canadians seem to be interpreting the provision differently. Perhaps they mean that the roster will stay in effect for the longer of the two conditions that are mentioned in the provision. Thus, if the parties set a 10 year term, the roster stays in place for 10 years, but if after 10 years no new roster has been constituted, the existing roster stays in place until a new one is constituted. Eventually, people on the roster would no longer be active, and thus at some point the roster will no longer function, but it could last for quite a while. That would certainly be an improvement on the current state of affairs, but I'm having trouble reading the provision that way. I want to believe that's how it will work, but I'm just not sure.

Or perhaps the Canadians mean there will be no defined term periods at all, and the official documents related to the roster will just say that it will "remain in effect for a minimum of three years or until the Parties constitute a new roster." If that's the case, then I can see how the Canadian interpretation makes sense, although that phrasing still leaves some doubt in my mind.

I'm curious to hear how others interpret this provision. Given what happened with Chapter 20, I think we have to watch this carefully.

Guest Post: Taking Recourse to the DSU to Save Dispute Settlement at the WTO (Part B)

This is Part B of a guest post from Vinayak Panikkar*, Prakhar Bhardwaj+, Akhil Raina†

 

IV. Instituting a complaint for a violation of DSU Article 17.2.

While bringing the US tariff dispute to the WTO on January 29, 2019, China asserted that the US’s actions to block AB appointments are arguably “illegitimate” because DSU Article 17.2 requires that “[v]acancies shall be filled as they arise”. On a plain reading, DSU Article 17.2 read with DSU Article 2.4 would appear to indicate that the mandatory obligation to fill vacancies in the Appellate Body must be fulfilled by the DSB by consensus. However, no provision in the DSU prescribes norms relating to the political process of appointments to the AB or states that individual members are under an obligation to cooperate to arrive at a consensus.

a. The right to block appointments must be balanced with an obligation to reach consensus

How then do we proceed against an individual member, when the obligation is on the DSB as a whole? Admittedly, this is complex and an analysis relating to this question must begin by considering the possible arguments that the US may formulate against the institution of such a complaint.

The US may argue that the failure by the DSB to arrive at a consensus cannot be legally attributed to the acts of the US. Indeed, all Article 17.2, DSU states is that DSB must fill vacancies as they arise – neither does it prescribe norms relating to how the DSB arrives at a consensus to fulfil its duty nor does it state that individual members are under an obligation to cooperate to arrive at a consensus. Seen from a textual perspective, the US may argue that where the drafters intended that individual members exercise their rights in good faith, it explicitly provided for it in Articles 3.10 and 4.3, DSU. The duty to act in good faith, is then conspicuous by its absence in Article 2.4, DSU and an interpretation that reads in a duty of good faith in Article 17.2, DSU would render the relevant parts of Articles 3.10 and 4.3 of the DSU inutile.

These arguments may seem persuasive but a member’s right arising out the consensus-based decision-making system of the WTO to veto AB appointments has to be balanced with its obligation (as a part of the DSB) to fill vacancies. The DSB may be larger than the sum of all of its parts (the Members), but the multilateral system would crumble if members consistently block appointments. Consider an extreme counter-factual to illustrate this point. What if a Member consistently blocks the appointment of an AB member because its domestic government was undergoing a transition and it did not have available legal capacity or a government officer who could sign-off on the appointment? What if this unilateral blocking led to the strength of the AB falling below the minimum number required to hear an appeal from a Panel Report? An objective analysis of this question would make the following conclusion incontrovertible: a Member State’s exercise of rights during the consensus-building formation cannot be unfettered.

This is definitely an unorthodox interpretation because balancing veto powers against the obligation to fill vacancies might be seen to have systemic implications for the WTO membership. Along the same lines, one could argue that veto powers have been used politically by developing countries leading to the failure of many negotiating rounds – by doing so, they paid no heed to any systematic concern for the WTO as a whole - so why should the United States’ exercise of veto be limited?

The simple answer to this is that WTO members are not obligated, whether individually or as a collective, to arrive at a consensus relating to “further negotiations … concerning their multilateral trade relations”. Article III:2 of the Marrakesh agreement merely states that a function of the WTO is to provide a “forum for negotiations”. It does not characterise the result of such negotiations. Article 17.2, DSU is different. The mandatory obligation is to “fill vacancies as they arise” – the desired result that the contracting parties wanted to achieve is already prescribed. Therefore, the exercise of veto rights in the process of appointment – is to achieve a defined obligation/objective – and cannot be unfettered. The correct question then is: what reasonable restrictions can be placed on a WTO member that do not unduly curtail its freedom and still ensure that consensus can be achieved?

b. Evidence of bad faith as a factor in balancing rights and obligations relating to consensus-building

In the current context, the question before a panel constituted for this dispute would be whether the US’s use of its veto on appointments, to the point that the AB ceases to function, leads to an impairment of benefits under the DSU or an impediment in the objective of the DSU (and the Marrakesh Agreement).

A possible argument of abuse of rights or the failure to exercise the veto in good faith may be made. While there is no explicit obligation under the DSU to act in good faith while participating in the consensus-based decision-making system, the principles of good faith and abuse of rights as general principles of public international law may be borrowed, as the WTO covered agreement cannot “be read in clinical isolation from public international law” (Appellate Body Report, US-Gasoline, page 17). In US – Shrimp, the AB imported the general principles of international law of good faith and abus de droit (abuse of rights) in interpreting the Chapeau of GATT Article XX. The relevant extract from paragraph 158 is set out below:

“The chapeau of Article XX is, in fact, but one expression of the principle of good faith. This principle, at once a general principle of law and a general principle of international law, controls the exercise of rights by states... An abusive exercise by a Member of its own treaty right thus results in a breach of the treaty rights of the other Members and, as well, a violation of the treaty obligation of the Member so acting. Having said this, our task here is to interpret the language of the chapeau, seeking additional interpretative guidance, as appropriate, from the general principles of international law.”

It is likely that questions of good faith will figure in the Panel’s analysis regarding whether the US’s objections are in fact causing impairment of benefits under the DSU or creating an impediment to the attainment of its objectives – because one striking feature of the AB stalemate is the US’s continuous criticism of the Appellate Body and its members. Dennis Shea, US’s Deputy Trade Representative has expressed the US’s intention by saying that  the US would be “disruptive, where necessary” to reform the WTO. He has also said that the reasons for blocking appointments and reappointments reflects the US’s “principled concerns”. This shows that the US’s intention is to either dismantle the multilateral trading system (by bringing the AB to a grinding halt) and/or negotiate favourable reforms. In this regard, US Trade Representative, Robert Lighthizer, has openly declared his preference for the old GATT DSS (no method for appeal; and a report could be ‘blocked’ by any Member, including one that lost the case).

c. The US’s statements to the EU DSU Proposal as determinative evidence of bad faith

In addition to this political posturing, the absence of a comprehensive response to the EU DSU Proposal clearly demonstrates the US’s unwillingness to engage in consensus-building in good faith.  In contrast to the detailed and sophisticated statements made by the US here, the US statement on December 12 merely reiterates that the EU DSU Proposal does not address the issues highlighted by them. This statement is confusing because the proposals relating to the meaning of municipal law as an issue of fact and findings unnecessary for the resolution of the dispute squarely address the US’s concerns in this regard. The relevant excerpt from the US’s response to the EU DSU Proposal is as follows:

“Rather than seeking to make revisions to the text...to permit what is now prohibited, the United States believes it is necessary for (WTO) members to engage in a deeper discussion of the concerns raised, to consider why the Appellate Body has felt free to depart from what WTO members agreed, and to discuss how best to ensure that the system adheres to WTO rules as written.”

It is difficult to fathom what a reform proposal must contain other “revisions to the text” of the WTO DSU. The US must recognize that an amendment to the text of the DSU is the only legitimate means of addressing the US concerns and such amendments need active engagement from US. Further, the allegation that revisions are being made to “permit what is now prohibited” is a mischaracterisation of the EU DSU Proposal. In fact, the proposal relating to insertion of footnote 7bis to Article 17.6 and proposed amendments to Articles 17.12 and Article 17.2 are intended to prohibit what the US has demonstrated to be prevalent in the practice of the AB. To elaborate, the US considers that the AB regularly considers issues of fact, issues advisory opinions and has usurped the power of the DSB to re-appoint AB members – all of this is being sought to be prohibited by the amendments suggested by the DSU Reform Proposal. Therefore, rather than permitting “what is now prohibited”, the textual amendments set out in EU DSU Proposal prohibit certain prevalent practices of the AB.

Lastly, the request that members consider “why the Appellate Body has felt free to depart from what WTO members agreed” is esoteric. Interviewing past AB members for these alleged flaws in the reports authored by them is not feasible. If the point being made here is that the AB members are being forced to engage in judicial creativity because the WTO membership has failed to formulate rules which would effectively govern issues not currently governed by the text of the covered agreements – such an argument has not been formulated by the United States in its statements at DSB meetings in the recent past. Even if one were to agree, the failure of the General Council to reach consensus for new treaties cannot form a justification to bring a functioning dispute settlement mechanism to a halt. Therefore, the US’s response to the comprehensive EU DSU Proposal, coupled with the fact that no reform proposal has been forthcoming till now, is determinative evidence of bad faith on the part of the US.

Conclusion

This two-part post sought to explore the interpretative possibilities of recourse to the DSU to solve the current stalemate regarding appointments to the AB. Even if these arguments are successful before a Panel, such a Panel Report may not make a monumental impact on the status quo. What it would provide, however, is an objective voice that matters. The judicialization of this political dispute may force the US to constructively engage in resolving the stalemate. The authors intend to explore the implications of this possibility in a subsequent work. While the prospect of exploring these implications is exciting, we hope that such an analysis is not required due to a timely resolution of the stalemate.

 

* Vinayak Panikkar, currently enrolled in Geneva LL.M. in International Dispute Settlement (MIDS) programme, is an Indian-qualified lawyer (New Delhi, 2015) who has acted as junior counsel and tribunal secretary in several ad hoc and institutional arbitrations (under the rules of the ICC, the SIAC, the LCIA and the UNCITRAL) seated in Singapore, London and India.

+ Prakhar Bhardwaj is a Senior Research Fellow at the Centre for Trade & Investment Law, Ministry of Commerce & Industry, Government of India where he advises the Government of India on aspects of WTO law and international economic law.

† Akhil Raina is Marie Curie Fellow and PhD candidate at the Leuven Centre for Global Governance Studies.

Guest Post: Taking Recourse to the DSU to Save Dispute Settlement at the WTO (Part A)

This is Part A of a guest post from Vinayak Panikkar*, Prakhar Bhardwaj+, Akhil Raina†

 

I. Introduction

The joint communication from the European Union and 11 other nations tabled in the General Council meeting held on 12-13 December 2018 (“EU DSU Proposal”) was the last comprehensive set of publicly available suggestions to break the impasse over the appointment of new Appellate Body (“AB”) Members of the World Trade Organization (“WTO”). It proposes amendments to the Dispute Settlement Understanding (“DSU”) as a way to address concerns raised by the United States (“US”). It also states that: “(i)f the amendment of the DSU prove[s] to be impracticable to achieve this objective swiftly, we will consider other legal instruments appropriate for that purpose”.  The US’s  response to the EU DSU Proposal suggest a lack of constructive engagement with the EU proposal. This post aims to start a dialogue on possible and novel interpretations of the DSU that can be adopted to explore the possibility and ramifications of instituting a complaint against the US for interfering, in bad faith, with the operation of one of the core objectives of the WTO – dispute settlement. Part A of this post will explore the legal basis of such a complaint and the ramifications for a complaint premised on the creation of impediments for attainment of objectives. Part B will explore a complaint premised on a violation of Article 17.2 of the DSU and the role that an allegation of “bad faith” would play in the matter.

II. Finding a legal basis to proceed against the United States 

a. Filing a complaint on the basis of DSU Articles 1(1) and 23(1)

Article 1.1, DSU provides that the DSU applies to disputes brought pursuant to the consultations and dispute settlement provisions of the agreements listed in Appendix 1, which includes the DSU itself. It further provides that its provisions apply to settlement of disputes concerning their rights and obligations under the provisions of the WTO Agreement and of the DSU in taken in isolation.

The WTO regime, specifically DSU Article 23(1), obliges Members to follow the provisions of the DSU in case they seek redress of an impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements. It can be argued that disputes arising under the DSU have to be resolved according to its own provisions (See Simon Lester, Bryan Mercurio, Arwel Davies, World Trade Law: Text, Materials and Commentary (2012), p. 177).

Interpreting Article 23(1) DSU as a “dispute settlement provision” is not without problems. For starters, Article 23(1) has primarily been interpreted to impose an obligation on the Members to have recourse to the DSU “to the exclusion of any other system, in particular a system of unilateral enforcements of WTO rights and obligations” (Panel Report, United States – Section 301 Trade Act, para 7.43). Further, the fact that Article 23(1) only provides grounds of a complaint and not the types of complaints (like Article XXIII:1 of the GATT 1994 and Article XXIII, GATS) may itself be an indication of the drafters intent that DSU Article 23(1) was never meant to be an independent ground for instituting a complaint.

These arguments are not determinative of the question at hand. First, interpreting Article 23(1) DSU as an obligation to exclusively resort to the DSU in case of disputes does not preclude the more expansive interpretation of Article 23(1) suggested here. Even a complaint that relies on DSU Article 23(1) to secure a positive solution to a dispute relating to the DSU would “strengthen the multilateral system” because there is recourse to the DSU (rather than unilateral determination). Secondly, taking an a contrario interpretation - if the intention was that DSU Article 23(1) can never serve as a grounds for a dispute, the DSU would not be a “covered agreement” under DSU Appendix 1. This is because there is no other method to seek a recourse for the violation of provisions of the DSU. Article 23(1), DSU is therefore the sole basis for filing a dispute arising out of the DSU. To state otherwise, would be to deny the possibility that a dispute can be instituted for the sole claim that the DSU is violated – however, such an argument would have no textual basis.

b. No limitations on types of complaints under DSU Article 23(1)

Unlike the GATT, the DSU does not prescribe the type of complaints that can be instituted. While Article XXIII, GATT permits filing of complaints for impairment of benefits or an impediment to the attainment of any objective arising out of: violations (of the GATT), non-violations (measures which may not conflict with the provisions of the GATT), or the existence of any other situation, the DSU does not set out these categories specifically or limit the kind of complaints that can be brought under Article 23, DSU.

Given that the DSU neither prescribes nor proscribes any specific types of complaints that may be instituted for disputes arising out of the DSU – so long as a Member can establish that there is an impairment of benefits under the DSU or an impediment to the attainment of any objective of the DSU – it does not matter whether such an impairment or impediment arises out of a violation of the DSU or a situation under the DSU.

c. DSU Article 23(1) vis-à-vis other grounds for a dispute in covered agreements

An apprehension against such an expansive interpretation of Article 23(1), DSU could be that it would permit situation or non-violation complaints to be filed for all covered agreements – as all of these agreements are set out in Appendix 1, DSU. For example, an apprehension may be raised that even though situation complaints are not envisaged under Article 23, GATS, Article 23(1), DSU could be relied to institute a “situation complaint” under GATS Article 23 read with Article 23(1), DSU.

Such an apprehension would be ill-founded. Our interpretation of Article 23(1), DSU does not in any manner expand the scope of the types of complaints that are permitted under other covered agreements. This is because the special and different dispute settlement mechanism under covered agreements prevails over the general dispute settlement provisions of the DSU in case of any differences (Appellate Body Report, Guatemala—Cement, para 65). Therefore, the scope under the special and different dispute settlement provisions of the other covered agreement are not overridden by the DSU.

We only argue that in order to bring a complaint against the US – under the DSU for a dispute arising out the DSU – what needs to be established is that the US has either created an impediment to the attainment of any objective of the DSU [Part III below] or violated certain provisions of the DSU [Part IV below].

III. Instituting a complaint for creating impediments for the attainment of an objective of the DSU

The Dispute Settlement System (“DSS”) of the WTO is a central element in providing security and predictability to the multilateral trading system (Article 3.2, DSU). The WTO’s DSS is one of the reasons the organization exists (Articles III:1 and III:3 of the Marrakesh Agreement). The objectives of the DSU can be deciphered from its text. DSU Articles 3.2 and 3.3 evince that the dispute settlement system: (i) is a central element in providing security and predictability to the multilateral trading system; (ii) serves to protect the rights and obligations of Members under the covered agreements; (iii) which facilitates the prompt settlement of disputes under the covered agreements is essential to the effective functioning of the WTO.

This is not just a legal declaration, but a fact: the resolution of trade disputes under the WTO removes barriers to international commerce and creates real costs (beyond reputational costs) for establishing WTO-inconsistent trade measures. Thus, the DSS is important not just for WTO disputants, but for the trading world in general. Further, the prompt settlement of disputes is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members (Article 3.3, DSU). Therefore, dispute settlement is an objective of the DSU and arguably of the WTO itself (Article 3(3), Marrakesh Agreement). For these reasons, the dispute settlement system has been called the “jewel in the crown” of the WTO. The panel report in United States—Import Measures on Certain Products from the European Communities, makes this point clear by noting that:

“Providing security and predictability to the multilateral trading system is another central object and purpose of the system which could be instrumental to achieving the broad objectives of the Preamble. Of all WTO disciplines, the DSU is one of the most important instruments to protect the security and predictability of the multilateral trading system and through it that of the market-place and its different operators. DSU provisions must, thus, be interpreted in the light of this object and purpose and in a manner which would most effectively enhance it.”

The question that arises then is whether the US’s continuous blocking of the AB appointments causes an impediment to the attainment of any of the objectives set out above. The AB is a fundamental element of the WTO DSS. DSU Article 17.1 states that an AB “shall be established”, thereby giving Members the reasonable expectation that the whole DSS, including the AB appeal mechanism, will be available to them. This expectation has been fulfilled as the DSS and the AB have been vigorously used – and continue to be used (by the US, no less) even during this epochal stalemate. Since the Appellate Body sits in three-person divisions, if the US continues to block AB appointments, it will cease to function by December 2019.

In the absence of the AB, a losing party could put the implementation of the adverse ruling into suspended animation simply by filing a request for appeal, making the Panel Report un-“adopt”able due to DSU Article 16.4. If panel reports become un-adopt-able, then WTO Members would have theoretical impunity – leading to a clear impediment to the objectives identified above. If rights an obligation of Members under the covered agreements cannot be promptly settled in a final and binding manner, they cease to be protected. This leads to a credible threat to the security and predictability of the multilateral trading system as we know it today.

We therefore argue that the effective functioning of the AB is an objective of the DSU and arguably of the Marrakesh Agreement – because without the AB, the DSS cannot function in the way it was envisioned. The US’s blocking of appointments to the AB is creating an impediment to the attainment of the objective of the DSU and this on its own may suffice to institute a complaint under the WTO DSU.

 

* Vinayak Panikkar, currently enrolled in Geneva LL.M. in International Dispute Settlement (MIDS) programme, is an Indian-qualified lawyer (New Delhi, 2015) who has acted as junior counsel and tribunal secretary in several ad hoc and institutional arbitrations (under the rules of the ICC, the SIAC, the LCIA and the UNCITRAL) seated in Singapore, London and India.

+ Prakhar Bhardwaj is a Senior Research Fellow at the Centre for Trade & Investment Law, Ministry of Commerce & Industry, Government of India where he advises the Government of India on aspects of WTO law and international economic law.

† Akhil Raina is Marie Curie Fellow and PhD candidate at the Leuven Centre for Global Governance Studies.

Call for Papers: Public Health and Global Governance of Alcohol

A conference on Public Health and Global Governance of Alcohol will be held 30 September – 3 October 2019 in Melbourne, Australia. Abstracts for papers proposed for presentation at the conference must be submitted to the website by 1 April, 2019. This meeting seeks to examine how global and regional governance currently - and could contribute more in the future - to the control of alcohol for public health purposes. A particular focus of the conference will be on the effect of international economic law on alcohol control. Contributions relevant to these topics are sought from those involved in legal, social, political science and policy research.

https://law.unimelb.edu.au/alcohol-globalgov-2019

https://law.unimelb.edu.au/alcohol-globalgov-2019#call-for-papers

Enquiries to [email protected]

 

Guest Post: Background and Impact of US’s intention to “terminate” GSP benefits to India

This is a guest post by Vineet Hegde, a PhD researcher in International Law at the Leuven Centre for Global Governance Studies at KU Leuven, Belgium.

In the previous post by Simon Lester, he wrote about USTR’s decision to “terminate” GSP preferences to India. This is a second post on US’s intention to “terminate” GSP benefit to India to provide a background for such an action from the US side. Before I continue, I must add that India has argued Simon’s line of possible arguments (in the previous post) in its written submissions to the USTR. It has claimed the violation of the enabling clause and has precisely stated EC – Tariff Preferences dispute to back its claim.

Why has the US decided to “terminate”? The reason I emphasize the word “terminate” is because the word does not exist in this context (GSP designation and termination) under the Trade Act of 1974, but the USTR used it in their official press release. The words used in the legal texts are “withdraw” or “suspend” under Section 502(d) of the Trade Act that grants this authority to the President. One may argue the equivalence of the meaning, but would the procedure differ if the same country (that has been withdrawn or suspended) is to be reinstated as a GSP country? We will have to wait and see, also along with the official language of the presidential proclamation that is yet to be signed.

The reason for withdrawal/suspension is because of the efforts by two lobby groups that were the sole driving force behind this decision: medical devices and dairy industries. US’s top priorities for market access in India have been medical devices and dairy industries, which was also indicated by the US Deputy Assistant Secretary of State for South and Central Asia Alice G. Wells in a Congressional hearing held on 26 July 2018. These two groups have been petitioning for withdrawal of GSP benefits to India due to lack of “equitable and reasonable market access” criteria under the Section 502(c) of the Trade Act in the annual GSP reviews time and again. Barring aside all the aggressive unilateral approach that the US is taking, is it justified in revoking GSP benefits? Probably so, and here is why: 

• Medical devices: The Indian National Pharmaceutical Pricing Authority, the authority that regulates prices on medical devices, has imposed price caps on coronary stents and knee implants, as well as market-withdrawal restrictions. The US industry, including lobbying associations like AdvaMed, has been concerned on this front as they claim that the US medical device industry operates at a loss in India and are not allowed to withdraw their products from the market due to government restrictions. India justifies that such measures are necessary to prevent unnatural profiteering on behalf of private hospitals and also to provide affordable healthcare to citizens. Is this protectionism? Is there a least trade restrictive alternative? Probably so. But it cannot go unnoticed that the medical devices companies may have now been performing at a loss in India, without being able to leave the market.

• Dairy products: India has mandated that dairy products be derived from animals which have never consumed any feeds containing internal organs, blood meal, or tissues of ruminant origin. Although, the US has proposed alternative labeling solutions that allow for consumer choice between dairy products derived from animals that have or have not consumed feeds with ruminant protein, the discussion has not mustered confidence. Lobbying groups like US Dairy Export Council and National Milk Producers Federation have also alleged that India does not comply with its WTO obligations for dairy exports. With strong industry voices against market access for US products in India, the US government is likely to move quickly and address these issues. India justifies this mandate on religious and cultural grounds. India has the highest number of vegetarians in the world and this is quintessential to their dairy consumption that dairy is derived from animals that have not consumed any feeds mentioned above. But, is there protectionism? One could say so, because of US’s claim on India’s reluctance to come to a mutually agreeable solution on this matter.

Now, the question of whether the US can withdraw/suspend GSP benefits to India is an important question. Simple answer is, “yes”. This is because is it a discretionary criterion under the Trade Act. Can the GSP benefits be reinstated? Yes. This is also left to the discretion of the President. Therefore, this flexibility becomes an important factor for the US to pressure GSP beneficiary countries (developing and least-developed) to modify their framework based on US regulations.

With a clearer understanding of the background for US’s decision, what will the actual impact of this decision be? In 2017, India exported goods worth $5.6 billion, out of the total of $18.6 billion, through the GSP program. Total Indian exports to the US were $48.6 billion, making the GSP up to 11.5% of total Indian exports to India. Although this may seem significant, once actual losses are calculated, it might not seem so. If tariff rates for all the GSP products that India enjoys benefits to are applied, the actual loss suffered is to the tune of $190 million. Does this matter in the grand scheme of things? India does not think so. Therefore, it might not contest this action of the US at the WTO. Moreover, it must be noted that the products that receive duty-free treatment under the GSP program are raw materials and unfinished goods that aid the US manufacturing sector with resources to further their needs. The actual loss may reflect on the US importers. But as the numbers indicate, it may be miniscule in the grand scheme of things.

As a reaction, India also officially stated that it was willing to consider a suitable trade margin approach for the medical devices; as well as simplified dairy certification requirements regarding feed sources. The ministry statement said that "India was agreeable to a very meaningful mutually acceptable package on the above lines to be agreed to at this time, while keeping remaining issues under discussion in the future". This shows US’s disregard to even use negotiating tactics when countries are willing to engage with US interests. India, being the 9^th largest trading partner of the US, is also not a rising threat to the US at the time being, like China. India is also generally accommodating on negotiations and resolution of disputes through diplomatic channels without letting it escalate to litigation. And if India was willing to trade-off GSP benefits, that made more news than might cause actual losses, what will it try to seek in return? India and the US have been engaging in an annual Trade Policy Forum and it is interesting to see what pans out in the further negotiating platform and what it will mean for the India-US trade relations.

U.S. Terminates GSP Benefits for India and Turkey

This is from USTR:

At the direction of President Donald J. Trump, U.S. Trade Representative Robert Lighthizer announced today that the United States intends to terminate India’s and Turkey’s designations as beneficiary developing countries under the Generalized System of Preferences (GSP) program because they no longer comply with the statutory eligibility criteria. 

India’s termination from GSP follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.  Turkey’s termination from GSP follows a finding that it is sufficiently economically developed and should no longer benefit from preferential market access to the United States market.

By statute, these changes may not take effect until at least 60 days after the notifications to Congress and the governments of India and Turkey, and will be enacted by a Presidential Proclamation.

I haven't seen reactions from India and Turkey yet, but it is possible that this could lead to two very interesting WTO complaints. With just a quick look at the case law, here are some possibilities.

As the AB said in para. 154 of EC - Tariff Preferences, "[i]t is clear from the ordinary meanings of 'nondiscriminatory', however, that preference-granting countries must make available identical tariff preferences to all similarly-situated beneficiaries." Both India and Turkey could argue that the decision to terminate their designation as beneficiary developing countries is discriminatory, because it treats similarly situated countries differently. In the case of Turkey, the question of whether it is "sufficiently economically developed" could be really interesting for the debate over the classification of countries as "developing" at the WTO.

In addition, India could refer to paragraph 3(c) of the Enabling Clause, which specifies that "differential and more favourable treatment" "... shall in the case of such treatment accorded by developed contracting parties to developing countries be designed and, if necessary, modified, to respond positively to the development, financial and trade needs of developing countries." It could then cite the AB's statement in para. 164 of EC - Tariff Preferences that: "the response of a preference-granting country must be taken with a view to improving the development, financial or trade situation of a beneficiary country, based on the particular need at issue." Here, India could argue, the U.S. criteria, and its decision under those criteria, are not designed to "to improve the development, financial or trade situation" of India.

Call for papers: International law’s invisible frames – Social cognition and knowledge production in international legal processes

This is from the Hebrew University of Jerusalem, Law Faculty:

Call for papers: International law’s invisible frames – Social cognition and knowledge production in international legal processes (4-5 December 2019)

The workshop will address two closely related strands of analysis in recent international legal theory: social cognition and knowledge production. Applicants may employ theoretical tools borrowed from other disciplines (including philosophy, sociology, social psychology, political science etc.). They are particularly encouraged to analyse when and how socio-cognitive and knowledge production processes are relevant to law-making, interpretation, and implementation of international law. The workshop will take place on 4-5 December 2019 at the International Law Forum, Hebrew University of Jerusalem Law Faculty (Mount Scopus Campus). Abstracts of no more than 500 words should be sent by 15 May 2019. Decisions regarding inclusion in the workshop program will be sent by 15 June 2019. For more information about the workshop's theme and call for papers, please see the full call for papers here.

Expressions of Interest for the CPTPP Roster (Canada)

This is from the Government of Canada:

Seeking Expression of Interest:

At this time, the Government of Canada is seeking applicants for appointment to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Chapter 28 (General State to State) roster – This roster will be established pursuant to Article 28.11 of the CPTPP and will be used to appoint panel chairs to determine disputes covered by Chapter 28 of the Agreement. Chapter 28 applies to disputes regarding the interpretation or application of the Agreement except as otherwise provided. The Chapter provides for the establishment of a roster of panel chairs of at least 15 individuals. Each CPTPP Party may nominate up to two individuals for this roster and the roster may include only one national of each CPTPP Party. The roster will be established by the CPTPP Parties by consensus and will remain in effect for a minimum of 3 years or until the Parties constitute a new roster. The Government of Canada is seeking 2 appointees to this roster, including an appointee who is not a citizen or permanent resident of a CPTPP Party.

How to Apply

Candidates must apply online by 11:59 p.m. Eastern Time on March 7, 2019 via the Governor in Council Appointments website. Your cover letter should be addressed to the Deputy Director of Selection Processes, Senior Personnel Secretariat, Privy Council Office, and should be sent only through the online application.

You must also submit a completed application form and a curriculum vitae. You may submit other supporting documents, such as letters of recommendation or lists of publications through the online system if you wish.

====

L’Accord de Partenariat transpacifique global et progressiste - Liste du chapitre 28 du PTPGP (Recours général d’un État contre un État) – Cette liste sera établie en application de l’article 28.11 du PTPGP et sera utilisée pour nommer les présidents des groupes spéciaux qui règlent les différends relevant du chapitre 28 de l’accord. Le chapitre 28 s’applique aux différends concernant l’interprétation ou l’application de l’accord, à moins qu’il n’en soit prévu autrement. Le chapitre prévoit l’établissement d’une liste pour la présidence d’un groupe spécial comptant au moins 15 individus. Chacune des Parties au PTPGP peut nommer jusqu’à deux individus pour cette liste et la liste peut inclure seulement un ressortissant de chacune des Parties au PTPGP. La liste sera établie par les Parties au PTPGP par consensus et demeurera en vigueur au moins 3 ans ou jusqu’à que les Parties établissent une nouvelle liste. Le Gouvernement du Canada cherche à nommer deux personnes pour cette liste, y compris une personne qui n’est pas un citoyen ou un résident permanent d’une Partie au PTPGP.

 

Comment postuler

Les candidats doivent soumettre leur demande en ligne d’ici 23 h 59 heure de l'est le 7 mars 2019 sur le site Web des nominations par le gouverneur en conseil. Les candidats doivent indiquer sur leur demande la province ou le territoire qu’ils souhaitent représenter. Votre lettre d’accompagnement devrait être adressée à la Directrice adjointe des processus de sélection, Secrétariat du personnel supérieur, Bureau du Conseil privé, et devrait être envoyée par l’entremise de l’application en ligne seulement.

Vous devez aussi soumettre un formulaire de candidature complété et un CV. Vous pouviez soumettre en ligne les autres documents justificatifs, tel que les lettres de recommandation ou une liste de publications. 

How To Draft a Panel Appointment Provision

This is from the newly signed Australia - Indonesia CEPA:

Article 20.8: Establishment and Reconvening of Panels

...

3. Within five days of the date of the receipt of a request under Article 20.7, the Parties shall enter into consultations with a view to reaching agreement on the procedures for composing the panel, taking into account the factual, technical and legal circumstances of the dispute.  Any procedures for composing the panel which are agreed under this paragraph shall be used for the composition of the panel and shall also be used for the purposes of paragraphs 12 and 13.

4. If the Parties are unable to reach agreement on the procedures for composing the panel within 15 days of the date of the receipt of the request referred to in paragraph 3, either Party may, at any time thereafter, notify the other Party that it wishes to use the procedures set forth in paragraphs 5 through 7.  Where such a notification is made, the panel shall be composed in accordance with paragraphs 5 through 7.

5. The Complaining Party shall appoint one panellist within 10 days of the date of the receipt of the notification referred to in paragraph 4. The Responding Party shall appoint one panellist within 20 days of the date of the receipt of the notification referred to in paragraph 4.

6. Following the appointment of the panellists in accordance with paragraph 5, the Parties shall agree on the appointment of the third panellist who shall serve as the chair of the panel.  To assist in reaching this agreement, a Party may provide to the other Party a list of up to three nominees for appointment as the chair of the panel.

7. If any of the three panellists have not been appointed within 45 days of the date of the receipt of the notification referred to in paragraph 4, either Party may request the Director-General of the WTO to make the remaining appointments within a further period of 15 days.  Any lists of nominees which were provided under paragraph 6 shall also be provided to the Director-General of the WTO and may be used in making the required appointments.  In the event that the Director-General of the WTO is a natural person of a Party, the Deputy Director-General or the officer next in seniority who is not a natural person of a Party shall be requested to make the required appointments.

There are a number of possible variations on this approach, but in my view this is the basic model everyone should use in FTAs going forward.

"Forced" technology transfer

Technology transfer has been one of the major issues in the US-China trade frictions and perhaps a general concern of developed economies. The main complaint has centred on China's "forcing" technology transfer from foreign companies to their Chinese local partners as part of China's FDI policy and laws - so that China has been “stealing” foreign advanced technology. However, we know that China has been paying tons of money for foreign technology. In 2017, for example, the licensing fees and royalties that China paid for the use of foreign technology reached almost $30 billion. It is therefore at least debatable whether any acquisition of technology has been undertaken by private negotiations with fair compensation.

Under the WTO, the question is whether there are any Chinese measures that do mandate technology transfer in a way that violates WTO rules, and if so, whether a WTO dispute may change the situation. Recently, the US and the EU sued China on this matter respectively in DS542 (US) and DS549 (EU), both focusing on various provisions of the existing Chinese laws on foreign investment. Now, the most interesting part of these disputes may no longer be the legality of the challenged Chinese measures, as China is in the process of revamping its foreign investment law. 

The draft new foreign investment law contains two relevant provisions:

• Clause 22: Technology cooperation between foreign and Chinese entities shall be undertaken voluntarily based on commercial rules. The terms and conditions for such cooperation shall be negotiated by the entities themselves. All levels of government and their officials are prohibited from forcing technology transfer through administrative means.
• Clause 39: From the effective date of the law, the existing foreign investment laws are abolished.

If everything progresses smoothly, it is expected that the new law will be adopted in 2019 and take effect shortly after the adoption. Given the time that the WTO adjudication process may take, it is very likely that China will have already removed the WTO-inconsistencies challenged by the US and the EU before panel decisions. However, if, as many believe, the core of the technology transfer problem lies in practice rather than in law, it remains to be seen to what extent the new law may provide a solution to these disputes. 

The Development Debate in the WTO

"Development" has become another hotly-debated topic in the WTO these days. On Jan 15, the US tabled its communication "An undifferentiated WTO: self-declared development status risks institutional irrelevance", which Simon blogged about earlier. A month later, China, along with several other countries, tabled its own paper titled “The Continued Relevance of Special and Differential Treatment in Favor of Developing Members to Promote Development and Ensure Inclusiveness” to rebut the US arguments.

At the General Council meeting yesterday, development again became a hot issue, with the US and China engaged in heated debate. In his statements, Chinese Ambassador Dr. Zhang Xiangchen quoted in agreement the statement by Indian Ambassador J.S. Deepak and stated that

"the only indicator employed in the WTO agreements to measure the level of development is a concept of “per capita”, i.e. ASCM 8.2(b) and Annex 7."

The two ambassadors are absolutely right by pointing to the two provisions as proof that the measurement of development status shall be based on per capita figures, but interestingly, the same Agreement also explicitly recognize the possibility for some developing countries to assume more obligations when they achieve higher levels of overall development. For example, while ASCM Article 27.4 gives developing countries 8 years to phase out their export subsidies, Article 27.5 reduce the period to 2 years for a developing country Member which has reached "export competitiveness in any given product", a concept that is defined in Article 27.6 as "a developing country Member's exports of that product have reached a share of at least 3.25 per cent in world trade of that product for two consecutive calendar years."

In other words, I would summarize the current rules on development in the existing WTO agreements as follows:

1. The determination of development status is mostly based on per capita levels;
2. However, when a member's overall development crosses certain thresholds, it might have to assume more obligations. 

Of course, the fact that the current rules are designed in such a way does not necessarily mean that future rules also have to be crafted likewise, but it is important to understand the status quo before we move on into further discussions.