International Economic Law and Policy Blog

Call for Submissions: Trade, Law and Development

This is from the Managing Editor of Trade, Law and Development, a student-run journal at the National Law University, Jodhpur, India:

The Journal is now inviting unpublished manuscripts for publication its 12th Anniversary Special Issue (Vol. 12 No.1, Summer ’20 Issue) on the theme "Trade in Services: A Holistic Solution to New-Found Issues in Trade Law?’" Submissions are welcome in the form of Articles, Notes, Comments and Book Reviews.

The last date for submissions is March 15, 2020.

For complete details, please see the call for submissions here. 

India-Export-Related Measures

The Panel Report in India-Export-Related Measures (DS541) is a good example of WTO dispute settlement doing what it should, which is delivering the outcomes agreed by the Members, as reflected in the text of the WTO Agreement.

When the Subsidies Agreement refers to eight years "from the entry into force of the WTO Agreement", the Panel understands this to mean 2003, not some later date. And when the Subsidies Agreement says that inputs consumed in the production process are "inputs physically incorporated", the Panel excludes capital goods. The Report demonstrates a proper focus on the agreed text as reflective of the Members' intent.

This is a big win for the United States. It tells us that transitional S&D is just that, time-limited, and not a permanent carve-out. And it makes clear that a Member may not justify export-contingent grants by pretending they are duty and/or tax remissions.

Unfortunately for the United States, India has appealed the decision, and the appeal will certainly not be decided by 31 December of this year.  Thus, with the Appellate Body potentially ceasing to function as of the end of the year, and unless all existing Appellate Body Members remain in place under Rule 15 to decide pending disputes, the Report may never be adopted.  And even if an appeal is finally heard, with three functional AB Members, the process will presumably take years. 

WTO Dispute Settlement and the Appellate Body Crisis: Insider perceptions and Members’ revealed preferences

Bernard Hoekman sends along this summary of a newly released paper:

The Appellate Body crisis usually is presented as the U.S. against the world. Many WTO Members have made clear that they regard a dysfunctional AB as a serious problem for the trading system. One reason is that, depending on how WTO Members interpret the text of the Dispute Settlement Understanding, panel reports may no longer be adopted automatically if disputing parties appeal panel findings to an AB that is in limbo, thereby leaving the matter unresolved. The main fear is that without the AB, the WTO dispute settlement system will lose much of its predictability, and may eventually collapse.

Possible responses to the crisis have been the subject of much discussion. Most proposals presume the goal should be to maintain as much of system as possible. This is the case for the proposal to move forward expeditiously with new appointments to the AB that is supported by 88 WTO Members (counting the 28 EU member states as one). While this clearly illustrates that the majority wants to keep the AB in place, it leaves open the question how Members view the performance of the AB and the US argument that the AB has exceeded its mandate.

What do WTO Members think about the AB and the role it plays (should play) in resolving trade disputes? A recent paper, Fiorini et al. 2019, part of a Bertelsmann Stiftung-supported project on WTO reform, reports on the results of a recent survey of WTO Members’ perceptions of the AB. Responses reveal strong support for the basic design of the dispute settlement system but also that the United States is not alone in perceiving that the AB has gone beyond its mandate.  

Data on use of WTO dispute settlement resolution and engagement in WTO deliberations regarding the AB crisis suggest dispute settlement is primarily of significant interest to the major trade powers, more open (“globalized”) economies and richer countries. Notwithstanding the high profile nature of the AB dispute, a majority of WTO delegations (75%) did not respond to the survey, consistent with observed participation rates in WTO dispute settlement and deliberations on the AB.

Among those that did respond, there is strong support for the basic features and design of the WTO dispute settlement system. There is broad agreement that the two-stage process negotiated in the Uruguay Round is appropriate and desirable. At the same time, the survey responses show significant polarization in perceptions regarding the performance of the AB between government officials based in Geneva and those in capitals, and between respondents representing (or based in) developing countries and others. Overall, there are significant differences in views regarding the manner in which the adjudicating bodies have exercised discretion. Although no other WTO Member supports the approach of the United States in blocking new appointments to the AB, the survey suggests that the US is not alone in perceiving that the AB has gone beyond its mandate.

Fiorini, M, B. Hoekman, P C Mavroidis, M Saluste and R Wolfe (2019) “WTO Dispute Settlement and the Appellate Body Crisis: Insider perceptions and Members’ revealed preferences,” Bertelsmann Stiftung working paper at https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/MT_WTO_Dispute_Settlement_and_the_Appellate_Body_Crisis_Survey.pdf

Investment Arbitration Reporter Seeks New Contributors/Analysts

This is a great opportunity for young folks in the field of international investment law:

Investment Arbitration Reporter is looking for one or more persons to join our team of freelance contributors

IAReporter offers specialized reporting on developments in the field of international investment law. We read and digest legal pleadings and decisions, and we also engage in more traditional investigative reporting work to identify and uncover developments that are otherwise confidential.

We are currently seeking contributors with international law backgrounds who can review and write about legal and policy materials at a high level of technical accuracy, and in the existing style of IAReporter. (Prior familiarity with our publication and its reports is a necessity.)

Your work with IAReporter would be on a remote consultant basis (i.e. you would work from wherever you are legally resident and authorized to work.) You will be paid an hourly rate for your work as a contributor.

We value those contributors with flexible work-life schedules, as assignments may arise at any time. Ideally, you will be able to take on multiple assignments per month, and spend an average of 20-25 hours per month on IAReporter work.

Ideal candidates include persons who are engaged in long-term academic research (junior academics or doctoral students) or those who are taking leave from legal practice.

For conflict-of-interest purposes, we ask our contributors to not practice in the field of investor-state arbitration while they work with us. Thus, if you aim to be working with a law firm or clerking for an arbitrator within the next 2-3 years, we politely discourage you from applying.

(If you are currently working with a firm or arbitrator or in some full-time employment, please explain in your application letter whether and when you are leaving this employment.)

Desired qualities include:

• Fluency in English and preferably at least one other language.
• International work or study experience
• An academic background in international law, or a related field
• Demonstrated writing skills in English, preferably journalistic in nature.

Interested candidates must complete a trial assignment: a summary of the Siemens v. Argentina arbitral award in the style of IAReporter. Your draft should offer a brief account of the essential facts, a description of key legal holdings and tribunal reasoning, and a small amount of analysis that puts the award in light of other developments in the field of investment treaty arbitration and Argentine cases at ICSID. (You do not need to read and summarize  the separate 2004 jurisdiction decision.)

The draft contribution should be less than 2500 words and take less than 10 hours to complete. The assignment, along with the your cv and short cover letter (less than 500 words please) can be submitted to [email protected].

The deadline for applications is December 20, 2019.

We will contact you in mid-January 2020 if your application has been shortlisted.

Trade in Last Night's Democratic Debate

Trade didn't come up too much in last night's Democratic debate, but here are a couple items:

MADDOW: ... American farmers are struggling under the effects of President Trump's trade war with China. The Trump administration's payments to farmers to offset those losses already have a price tag that is more than double what was spent on the Obama administration's auto bailout.

Mayor Buttigieg, would you continue those farm subsidies?

BUTTIGIEG: We shouldn't have to pay farmers to take the edge off of a trade war that shouldn't have been started in the first place. I will support farmers, but not long ago, I was in Boone, Iowa, a guy came up to me, he said I got my Trump bailout check, but I would have rather spent that money on conservation.

By the way, this isn't even making farmers whole. If you're in soybeans, for example, you're getting killed. And it's not just what this president has done with the trade war. In a lot of parts of the country, the worst thing is these so-called small refinery waivers, which are killing those who are involved in ethanol.

Look, I don't think this president cares one bit about farmers. He keeps asking them to take one for the team, but more and more I'm talking to people in rural America who see that they're not going to benefit from business as usual under this president.

I believe that so many of the solutions lie with American farmers, but we have to stand up for them, not just with direct subsidies and support, but with making sure we do something about the consolidation, the monopolies that leave farmers with fewer places to purchase supplies from and fewer places to sell their product to.

And American farming should be one of the key pillars of how we combat climate change. I believe that the quest for the carbon negative farm could be as big a symbol of dealing with climate change as the electric car in this country. And it's an important part of how we make sure that we get a message out around dealing with climate change that recruits everybody to be part of the solution, including conservative communities where a lot of people have been made to feel that admitting climate science would mean acknowledging they're part of the problem.

MADDOW: Mr. Mayor, I'm sorry to interrupt, but I need you to answer the question. Would you continue those subsidies or not?

BUTTIGIEG: Yes, but we won't need them because we're going to fix the trade war.

...

MADDOW: On the issue of China, Senator Booker, China is now using force against demonstrators in Hong Kong where millions have taken to the streets advocating for democratic reforms. Many of the demonstrators are asking the United States for help. If you were president, would the U.S. help their movement, and how?

BOOKER: Well, first of all, this is president who seems to want to go up against China in a trade war by pulling away from our allies and, in fact, attacking them, as well. We used a national security waiver to put tariffs on Canada. And so at the very time that China is breaking international rules, is practicing unfair practices, stealing technology, forcing technology transfer, and violating human rights, this nation is pulling away from critical allies we would need to show strength against China.

More on Economic Statecraft from the Left

A few months ago, I complained about some calls on the left for "economic statecraft." Now I see an argument from two Georgetown political science professors to the effect that progressives should leverage U.S. economic power to force other countries to adopt specific policies:

... A progressive administration could get started right away, using executive action, as well as reentering the Paris climate agreement and reinstating President Barack Obama-era tailpipe standards, which shape not only U.S. auto- manufacturers but also their global competitors, which want access to the U.S. market. The U.S. Treasury Department’s Office of Foreign Assets Control could bolster these efforts through what are known as green sanctions, targeting carbon-intensive sectors. Such sanctions would raise the cost of financing carbon-intensive sectors in the United States and, because of the central position of U.S. banks in the global economy, would raise these costs worldwide.

On the fiscal side, market power could be turned to end global tax evasion. Warren, for example, has proposed a country-by-country minimum tax, which would prevent firms from hiding their cash in countries with zero corporate tax. Instead, firms with U.S. sales would have to pay the difference between the foreign tax rate and that in the United States, guaranteeing that corporations pay their fair share. To avoid future regulatory whiplash, Congress could legislate stronger parameters for using standards to combat climate change, money laundering, offshoring, and other major challenges.

I'm having some trouble with all the ideological labels being thrown around these days. Who exactly are the neoliberals? Why are American politicians calling themselves socialists? And what does it mean to be a progressive on foreign policy issues? I would have thought progressives believed in cooperation with other countries and were skeptical of using economic power to boss other countries around. But these progressives seem to want to do exactly that. It's sort of like progressive imperialism. (To be clear, it looks like their plans do involve some cooperation. However, they are pretty quick to bring up sanctions as a possible tool.) 

This approach goes against all my instincts, but foreign policy isn't my field, so it's hard to come up with a sophisticated critique. I'm sure there is an extensive literature on "economic statecraft," and as soon as trade policy calms down, maybe I'll try to give it a read. But in the meantime, I would hope that people considering this policy ask themselves a few questions:

1. Will it be effective, in both the short- and the long-term? Countries don't always like being bossed around and may react badly. Keep in mind that the policies any particular economic power will be demanding from other countries will vary over time. One day it may be longer copyright terms; the next day it may be a carbon tax; then on to property rights; and then something about religious or reproductive freedom. After a while, people might get sick of the ever changing demands.

2. How sure are you that you know what is good? The basic idea here seems to be that we should use our economic power for good rather than bad. That distinction is fine for domestic policy, where we have to pick a policy of some sort. Whoever comes to power believes they know which policies are good, and believes they will support good policies instead of bad ones. But in terms of bossing other countries around, there is a third option: We don't actually have to make a policy choice at all. We could simply decide to let others choose for themselves, rather than deciding what we are going to tell them to do. For instance, rather than deciding whether to push for long copyright terms or more fair use rules, we could simply let others follow their own path. Of course, our market is big enough that our choices are always likely to have to some incidental impact on others, but that's different from a conscious effort to induce them to take specific actions.

3. Are there alternatives? I would have thought a more progressive approach would be to set a good example, try to make persuasive arguments, and sign international agreements when it seems like that would help. It could be called progressive internationalism. As I said, I don't know what any of these labels mean anymore, but that seems like it could be a useful one.

Does China Comply with Its WTO Obligations?

Over on twitter and elsewhere, I often hear vague allegations along the lines of "China cheats on its WTO obligations." There are two aspects to the issue of China's compliance with its WTO obligations: (1) How does China respond to WTO complaints brought against it, and does China comply with WTO rulings against it? And (2) does China comply with its WTO obligations more generally?

Along with my Cato colleagues Jim Bacchus and Huan Zhu, I tried to answer the first question in this policy paper. Now law professor Weihuan Zhou has written an entire book on the subject. Our conclusions are similar I think: China may not be perfect, but it does a reasonably good job of responding positively to WTO complaints and complying with rulings against it (especially when you compare it to other Members).

The more difficult question is whether China complies with it WTO obligations generally. That's a hard question to answer without the development of facts and the  discussion of law that comes about as part of WTO litigation on a particular case.

If these issues interest you, I encourage you to come to our Cato book forum for Weihuan's book at noon on December 4, where I will be moderating and Jim will be offering comments. You can register here: https://www.cato.org/events/chinas-implementation-rulings-world-trade-organization As always, there is a free lunch.

IS THE UNITED STATES ACCUSING THE APPELLATE BODY OF "JUDICIAL ACTIVISM" WITHOUT ACTUALLY USING NOR DEFINING THIS EXPRESSION?

As underlined by Simon Lester in a previous post, the United States keeps raising the following question:

how have we come to this point where the Appellate Body, a body established by Members to serve the Members, is disregarding the clear rules that were set by those same Members.

The economist Joan Robinson once said that it is difficult to define an elephant but when you see one you recognize it!  In my view, there is no doubt that the United States is implicitly accusing the Appellate Body Judges of "behaving badly" or in other words of "judicial activism". 

The problem is that according to Professor Randy Barnett, the expression "judicial activism",  "while  clearly  pejorative, is  generally empty." In the same vein, during oral arguments for Republican Party of Minnesota v. Kelly, Judge Scalia claimed that calling oneself a strict constructionist while criticizing others for being judicial activists  "doesn't  mean anything. It  doesn't say  whether  you 're going  to adopt  the  incorporation  doctrine, whether you  believe in substantive due process. It's totally imprecise. It's just nothing but fluff."

So, those waiting for the United States to clarify it accusation are likely to be left hungry.

In this context, I notice that no scholarly article has attempted to clarify the expression "judicial activism" in the WTO context (In the US, one can find such a work in The Origin and Current Meanings of "Judicial Activism",  92 Calif. L. Rev. 1441 (2004) ) and to distinguish clearly  "bad" judicial activism from "useful" judicial activism.

I am however convinced that this distinction is relevant and is the key to unlock the present crisis. Is it too late for such a discussion?

Finally, I note that some commentators would like to evacuate completely the notion that there is such a thing as "bad" judicial activism and that Appellate Body Judges are simply doing their job of interpreting "unclear" WTO texts. Such a position is unhelpful because it evacuates the notion that sometimes there is a legitimate malaise when reading certain interpretations or indeterminate definitions out of the blue (e.g. definition of a "public body " in Article 1 of the SCM). Add to that the fact that the Appellate Body has decided implicitly that it never makes mistakes and therefore never reverses its jurisprudence. 

 

Questions (and Perhaps Some Answers) on the US-Japan Trade Agreement and GATT Article XXIV

I've heard it said informally that the U.S. - Japan trade agreement is an "interim agreement" under GATT Article XXIV:5. But I haven't seen either party make an official statement to that effect. It looks like members of Congress may be pressing USTR on this issue soon, which might give us some answers. Inside US Trade reports:

But lawmakers are questioning the legal authority the administration has claimed “and is planning to use to negotiate and enter into the aforementioned agreements, as well as the consultations the Administration has undertaken and plans to undertake with respect to those agreements,” according to a letter obtained by Inside U.S. Trade. The letter is being circulated among House Ways & Means Committee members by Reps. Bill Pascrell (D-NJ) and Dan Kildee (D-MI), who plan to send it to Lighthizer this month.

...

Analysts have questioned whether the limited agreement with Japan is consistent with World Trade Organization obligations, pointing to WTO rules that prevent the U.S. from giving Japan preferable tariff rates if an agreement does not cover substantially all trade -- a point the lawmakers also address in their letter.

“Please explain how the Administration will ensure that the U.S. Japan Free Trade Agreement is consistent with World Trade Organization (WTO) rules that prohibit narrow sectoral agreements and require that regional trade agreements eliminate duties and other restrictive regulations of commerce on ‘substantially all the trade’,” the letter states. “Has the Administration submitted a plan and schedule for a comprehensive free trade agreement to the WTO? If so, please share the plan and schedule in your response. If not, please explain?”

The House Ways & Means trade subcommittee will also hold a hearing on the agreement next week. The questions set out in the letter are pretty good ones, and I'm curious to see how the discussion of the Article XXIV issue goes.

Guest Post: The risks of the use of Artificial Intelligence in International Arbitration

This is a guest post from Gabriela Sánchez of the Universidad de los Andes, Bogotá

The International Arbitration system has been experiencing a growing and novel phenomenon that attempts to change the way we conceive it today: the use of Artificial Intelligence (AI). The use and impact of AI on the legal profession is slowly becoming a hot topic in legal, technology, and academic circles.[1] The benefits of AI are undeniable: it can enhance legal representation, boost human cognitive abilities and automate time-consuming labor. AI tools are already playing a significant role throughout the arbitration process and are being used by both the parties to the disputes and by arbitral tribunals. Indeed, AI-infused products and services are being used to draft legal documents, automate management and research tasks, quantify damages, assist in discovery activities, appoint arbitrators and even draft arbitral awards.[2] Definitely, AI has the potential to change the international arbitration system as we know it.

However, not all that glitters is gold, the implementation of AI also involves risks. Specifically, regarding its use by arbitral tribunals, I would like to highlight two features of AI that should be handled carefully. On the one and, the lack of explainability of some systems, known as black box systems. And on the other, the problem of the lack of neutrality or biases in AI. These two risks are especially important in International Arbitration since they have the potential of weakening the reasonableness, coherence and legitimacy of the system.

Lack of explainability

Firstly, the problem of lack of explainability in AI tools appears when the developers and implementers of these systems cannot explain how the program reaches a conclusion or a prediction. This is known as black box systems and occurs especially within Deep Learning programs. This is problematic since as AI-enabled systems are becoming critical to life, death, and personal wellness, thee need to trust these AI-based systems is paramount. In response to these concerns, regulations such as the Data Protection Directive and the General Regulation for Data Protection (GDPR) of the European Union establish a “right to explanation” to demand explanation and access to the logic behind the decisions made using AI.[3] Therefore, explainable AI pretends that developers and operators can answer hot questions like: Why did the AI system make a specific prediction or decision? Why didn’t the AI system do something else? When did the AI system succeed and when did it fail? When do AI systems give enough confidence in the decision that you can trust it, and how can the AI system correct errors that arise?[4]

Not being able to answer these questions can be especially problematic in judicial activity, where providing reasons and justifications is precisely one of its fundamental features. Indeed, in the International Arbitration, parties expect the arbitrators to reach duly explained and consistent decisions, which help legitimate the entire system. For this reason, the fact that AI programs might not able to provide explanations for their decisions in the same way humans do, supports the theory that AI will not be able to replace arbitrators in decision making in the near future.

Lack of neutrality

Secondly, AI may not be as "objective" and "neutral" as it is believed[5]. AI systems are trained, fed and operated with data sets. The problem arises when the data used for training are themselves biased, which may result in AI systems becoming a vehicle to reproduce human biases and prejudices.[6] Similarly, AI systems used to assist the decision-making of arbitral tribunals could reproduce the trends that inhabit the cases entered as training data. Critical questions would be: Which cases will be used for this purpose? Who will choose them? How will diversity be guaranteed taking into account that many cases are kept confidential[7]. In other words, a worldview or set of values that inadvertently inhabit previous cases and that are used to train the programs can influence how these systems behave and the decisions they make. For these reasons, the use of AI has the potential to affect the neutrality and equality between the parties, which are essential elements for maintaining the legitimacy of the International Arbitration regime.

In conclusion, the rapid technological development we are contemplating nowadays is a reality that cannot be ignored. AI has virtues that must be recognized and exploited in all fields: from science and healthcare to finance and law. However, its application in the International Arbitration should be handled with caution. Especially, the promises of efficiency and neutrality of these systems should be taken with kid gloves if one wants to maintain the legitimacy of the International Arbitration. It should not be forgotten that with the use of AI by arbitral tribunals, the lack of explainability and biases involved in some AI-infused tools can threaten the neutrality, reasonableness legitimacy of the entire International Arbitration system. Undoubtedly, AI must be handled with caution.

 

[1] Bento, L. (2018). International Arbitration and Artificial Intelligence: Time to Tango? Kluwer Arbitration Blog. Recovered from: http://arbitrationblog.kluwerarbitration.com/2018/02/23/international-arbitration-artificial-intelligence-time-tango/.

[2] Ibid.

[3] Watcher, S., Mittlestadt, B., Floridil, L. (2017). Transparent, Explainable, and Accountable AI for Robotics. Science Robotics, 2 (6). Recovered from: http://robotics.sciencemag.org/content/2/6/eaan6080.

[4]Schmelzer, R. (2019). Understanding Explainable AI. Forbes Magazine July 23, 2019. Recovered from:  https://www.forbes.com/sites/cognitiveworld/2019/07/23/understanding-explainable-ai/

[5] See, for example, the reference to AI as “neutral and bias-free” in Scherer, M. (2019). The Vienna Innovation Propositions, International Arbitration 3.0 – How Artificial Intelligence Will Change Dispute Resolution, Austrian Yearbook on International Arbitration, Volume 2019.

[6] See, for example, the controversy regarding Hewlett Packard computers with “racist” facial recognition systems at: https://www.wired.com/2009/12/hp-notebooks-racist/.

[7] Bento, L. (2018). International Arbitration and Artificial Intelligence: Time to Tango? Kluwer Arbitration Blog. Recovered from: http://arbitrationblog.kluwerarbitration.com/2018/02/23/international-arbitration-artificial-intelligence-time-tango/.

9th Conference of the Postgraduate and Early Professionals/Academics Network of the Society of International Economic Law (PEPA/SIEL) 2020 Jerusalem, 17-19 May 2020

The conference is organised by the Postgraduate and Early Professionals/Academics Network of the Society of International Economic Law (PEPA/SIEL) in collaboration with the International Law Forum and other sponsors at the Hebrew University of Jerusalem. 

SIEL’s Postgraduate and Early Professionals/Academics Network (PEPA/SIEL) is, among other things, interested in fostering collaboration and mentoring opportunities for emerging academics and professionals in International Economic Law (IEL). PEPA/SIEL fulfils these goals through various activities such as organising conferences at which emerging IEL academics and professionals can present and discuss their research in a supportive and welcoming environment. 

We are pleased to announce that the 9th PEPA/SIEL conference will take place on 17-19 May 2020 at the Hebrew University of Jerusalem Faculty of Law, in Jerusalem. 

Call for Papers 

The scope of the conference is broad, and we invite submissions on any IEL topic including, but not limited to: 

• Law and practice in international economic governance and international organisations and tribunals such as the World Trade Organization, regional trade agreements and investor-state dispute settlement;
• International trade, investment, development, competition, intellectual property, monetary and financial law, including dispute resolution; 
• The interaction of IEL branches with other branches of public policy and law relating to public health, gender, inequality, human rights, environment, sustainable development and food safety;
• Bilateral and regional economic integration and the multilateral trading system; 
• Comparative economic law, focusing on how international economic law interacts with laws, institutions and actors at the domestic level; 
• Interdisciplinary research incorporating economics, international political economy, history, philosophy, psychology or sociology, as well as empirical methods, both qualitative and quantitative; 
• International developments and economic law, which may inter alia, refer to current disputes, ongoing negotiations, ‘trade wars’, the Appellate Body crisis, ongoing reform of the international investment system, Brexit and the EU, and the Belt Road Initiative. 
• Digital trade, international financial regulation, cryptocurrencies, and monetary affairs. 
• IEL issues relevant especially to corporations including, but not limited, to supply chains, trade compliance programs, export controls and corruption 
• Educating and teaching IEL in turbulent times. 

Submission Guidelines

Submissions should include (1) a CV (no more than 2 pages); (2) an anonymized research abstract (no more than 400 words), to be sent no later than 31 January, 2020 as attachments to [email protected], in a single email, including the submitter’s surname in the message title. Papers will be selected based on a double-blind review conducted by members of the Conference Committee. Successful applicants will be notified by 1 March 2020, after which they are expected to submit a conference paper (no more than 4000 words) and an updated abstract, by 15 April 2020, to the same e-mail. Abstracts will be made available online, and papers will be made available to conference speakers and discussants. 

Should you have any questions regarding application or participation, please feel free to contact [email protected]. 

More information: 9th PEPA/SIEL Call for Papers.

Guest Post: Chinese Financial Contributions to Producers Abroad: A Subsidy? Looks, Quacks, But Probably Isn't

This is a guest post by Victor Crochet, an Associate at Van Bael & Bellis, Brussels, and Vineet Hegde, a PhD researcher in WTO Law at the Leuven Centre for Global Governance Studies

Professors Jennifer Hillman and Chad Bown are working on finding solutions to resolve the problem of Chinese subsidies. Among other things, they highlight the problem of identifying who the “giver” of the subsidy is. In this post, we intend to highlight another issue that might become increasingly common when looking at subsidies, that is where the “taker” of the subsidy is located.

In April 2019, the European Commission [Commission] received a complaint to initiate anti-subsidy investigation against import of glass fibre fabrics from China and Egypt. The interesting aspect of this investigation is that the summary of the complaint mentions subsidization to Egyptian producers from “financial contributions granted indirectly via Chinese government-owned or controlled banks or other Chinese state-owned or state-controlled entities [SoEs] (directly or via Egyptian entities) to foster foreign investment in the special economic zones by virtue of the agreements between the Chinese and the Egyptian governments”. In short, the complainants allege that Egyptian producers are being subsidized by the Chinese government.

Similarly, in October 2019, the Commission initiated another anti-subsidy investigation against hot rolled stainless steel sheets and coils from China and Indonesia. From the Notice of Initiation of this case, it seems that the complainant puts forth similar arguments as “the complainant alleges that some of the subsidies are directly granted by the Government of Indonesia, and some by the Government of China. According to the complaint, an Indonesian exporting producer, which is situated in an industrial park, is Chinese-owned. The complaint alleges the existence of loans transferred from Chinese State-owned or State-controlled entities to this Indonesian exporting producer.”

As China increasingly speaks of accelerating its “going global” objective through initiatives such as the Belt and Road Initiation, many Chinese companies are expanding and opening subsidiaries in foreign countries.

As Chinese industries expand abroad, complaints such as those described above are likely to become increasingly more common. However, such complaints lie on extremely shaky legal grounds and the fact that the Commission is even investigating them is worrying when considering that adherence to WTO rules has significantly decreased over the last few years.

Indeed, Article 1(a)(1) of the SCM Agreement states that a subsidy exists if “there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as "government")”. This seems to point that a transfer of funds by a government of a country which is not the exporting country is not a subsidy as demonstrated by the ordinary meaning of Article 1. EU law is even clearer than the SCM Agreement as Article 3 of the EU anti-subsidy regulation indicates that for there to be a subsidy there needs to be a financial contribution by “a government in the country of origin”.

A quick look at the context of Article 1 of the SCM Agreement also points towards the conclusion that the financial contribution must be granted by the government of the country of export:

• Article 2 states that for a subsidy to be specific, it needs to be granted to an enterprise/industry or a group of enterprises/industries “within the jurisdiction of the granting authority”;
• Also, Article 18 solely envisages the possibility that the “government of the exporting Member agrees to eliminate or limit the subsidy or take other measures concerning its effects”. By not giving such possibility to governments other than that of the exporting Member, the SCM Agreement acknowledges that a financial contribution only qualifies as a subsidy if it is granted by the government of the exporting Member;
• Finally, Article 25 of the SCM Agreement is clear that Members only have to notify to the WTO subsidies “within their territories”. By not requiring that governments notify subsidies granted to entities outside their territories, the SCM Agreement acknowledges that a financial contribution only qualifies as a subsidy if it is granted by a government to an entity within its territory.

The negotiating history of the SCM Agreement also seems to point in the same direction. The SCM Agreement’s predecessor – the GATT Tokyo Round Subsidies Code, did not contain any definition of “subsidy”. However, as recalled by Prof. Gary Horlick, the first draft of the SCM Agreement was negotiated by Canada, Japan, the European Communities and the US. At the time, 90% of all anti-subsidy cases had been initiated by the US and their practice served as the basis to draft Articles 1 and 2 of the SCM Agreement. He states that the phrase “within the territory” first came into US law because of cases filed in 1982 claiming that World Bank loans, Japanese war reparations to Korea, Marshall Plan aid to European Countries, or West German subsidies to West Berlin, should be treated as subsidies and, therefore, countervailable. These claims were all rejected. Based on this practice, Gary Horlick highlights that the countries at the negotiating table decided “not to treat as countervailable those subsidies given by a government outside of its territory”. Therefore, an analysis of the text, context, and the negotiating history, all indicate that the WTO members did not intend to include financial contributions by a government to a foreign producer outside its territory.

While it would appear from the start of our analysis, that countervailing financial contributions granted by a government to a producer in a different country would violate WTO law, the fact that such requests have been brought to the Commission twice in less than a year shows that this issue will become increasingly relevant.

The authors of this blog post will further inquire into solutions and reform proposals regarding where the “taker” of a subsidy is located and will keep you updated. 

Guest Post: Is the Blocking of Appointments to the WTO Appellate Body by the United States Legally Justified?

This is a guest post from law professor Jens Lehne:

As readers of this blog are well aware, since 2017 the US has blocked all appointments to the WTO Appellate Body, which will lead to the incapacitation of the Appellate Body in December of this year, when the terms of two of the remaining three Appellate Body members end. The US justifies its blockage with accusations of judicial overreach, claiming that "the Appellate Body had been acting contrary to the unambiguous text of the [Dispute Settlement Understanding (DSU)]",[1] or, put differently, that the Appellate Body "had breached and continued to breach the clear rules of the DSU".[2]

The focus of the US has been on six distinct issues of procedure and interpretive approach, namely (1) the continued service of Appellate Body members after the expiration of their term (the Rule 15 issue), (2) the 90-day deadline for circulating Appellate Body reports, (3) appellate review of facts, (4) appellate review of municipal law, (5) advisory opinions, and (6) precedential effect of Appellate Body reports. To back up its allegations, the US has presented extensive legal arguments before the Dispute Settlement Body (DSB) between February and December 2018, running to more than 40 pages in the minutes of the DSB meetings.

In a new book published at the end of last month under the title "Crisis at the WTO: Is the Blocking of Appointments to the WTO Appellate Body by the United States Legally Justified?", an open access publication freely available for download at http://www.carlgrossmann.com/?p=11930 and https://oapen.org/search?identifier=1005793, I analyze in detail the allegations and arguments of the US with regard to these six issues of procedure and interpretative approach.

When answering the question posed in the book's title, one has to bear in mind that under Art. 17.2 of the DSU member states have a legal obligation to fill vacancies on the Appellate Body as they arise, an obligation the US violates by blocking the appointment process. In view of the obviousness of the breach of Art. 17.2 of the DSU by the US and the severity of its consequences, only clear and serious breaches on the part of the Appellate Body, and not just debatable interpretations, could possible justify the obstruction by the US.

The book finds that only with regard to one of the six issues, the 90-day deadline, the Appellate Body has undisputedly disregarded the wording of the DSU (namely Art. 17.5 of the DSU), but that it was forced to do so for reasons mainly beyond its control, a fact repeatedly acknowledged by the membership, including, at least until the start of the current appointment crisis, the US. As far as the other five issues are concerned, the text of the DSU is simply not as unambiguous as the US asserts. Regarding four of these (Rule 15, advisory opinions, appellate review of facts, precedential effect), the book concludes that no case can be made for a clear breach of the DSU or other WTO agreements, and, indeed, that the legal arguments of the Appellate Body on all of these issues are more convincing than those of the US. Only with regard to one of these issues (appellate review of municipal law), the Appellate Body has arguably gone beyond what is permissible under the DSU (more precisely, under Art. 17.6 of the DSU), but that misinterpretation of the DSU does not reach the level of a clear breach. In sum, from a legal point of view these six issues, whether viewed individually or as a whole, do not even come close to justifying the US blockage of all appointments to the Appellate Body.

In addition to the analysis of the allegations and arguments of the US, forming the central part of the book (Chapter IV), the publication provides, as a basis for the analysis, a brief overview of previous appointment crises (Chapter II) and a detailed chronological account of the current crisis, from the beginning of 2017 until the summer of 2019 (Chapter III). The final part of the book (Chapter V) goes beyond narrow legal arguments and asks about possible motives of the US for the blockage. It argues that the US actions can be explained to a large part by the fact that the WTO dispute settlement system and the Appellate Body have developed differently than expected by the US at the close of the Uruguay Round in 1995. More specifically, first, the Appellate Body has played a more important role than expected both in terms of quantity (number of appeals) and quality (acting more like a court than a mere dispute settler), second, the US has been sued more often and lost more often than anticipated, and, third, the legislative branch of the WTO (treaty-making by the member states) has failed to produce significant results, leaving the WTO's judicial branch (the dispute settlement system) unchecked.

Furthermore, the book contends that, on the one hand, the Trump administration's criticism of the Appellate Body is a continuation of the policies of past US administrations, but, on the other, its blocking of all appointments is still a sign of a major policy shift. Most notably, the Trump administration prefers power-based over rule-based international trade relations, and, consequently, is not interested in legally binding dispute settlement. In light of these preferences, it seems unlikely that the Trump administration will unblock the appointment process in any foreseeable future, and it would be very surprising if it would give up the politically convenient argument that the Appellate Body has "broken [the rules] with impunity",[3] regardless of the legal merits of this claim, because the incapacitation of the Appellate Body furthers its presumed objective of undermining legally binding dispute settlement.

[1] Minutes of the General Council meeting of 7 May 2019 (WT/GC/M/177), para. 4.154.

[2] Minutes of the General Council meeting of 23-24 July 2019 (WT/GC/M/179), para. 5.137.

[3] Minutes of the General Council meeting of 7 May 2019 (WT/GC/M/177), statement of the US, para. 4.154.

12th GNLU International Moot Court Competition, 2020

This is from the Gujarat National Law University, Gandhinagar (GNLU):

The 12th edition of GIMC is scheduled to be held from February 12-16, 2020 in Gandhinagar, Gujarat, India.

The GNLU International Moot Court Competition (GIMC) has, over the past decade, served as a unique platform for law students from around the world to explore nuances of international trade law and hone their research and advocacy skills.

The competition boasts of successful past collaborations with the World Trade Institute (WTI), University of Bern; IELPO LL.M. Programme, University of Barcelona; Lakshmikumaran & Sridharan Attorneys; Centre for Trade and Investment Law and Centre for WTO Studies, Indian Institute of Foreign Trade; Borden Ladner Gervais LLP; Food and Agriculture Organization of the United Nations; EBC-SCCOnline; Westlaw; Thomson Reuters India, and TradeLawGuide and aims to further build on these relations. Previous editions of the competition saw the WTI provide the winners an opportunity to attend their Summer Academy on Trade Regulation and Global Governance. L&S has also offered internship opportunities to the winners of previous editions of the competition.

In continuation of our legacy and with an aim to set higher standards to test the legal acumen, research and oratory skills of the participating teams, Gujarat National Law University, Gandhinagar cordially invites you to the 12th edition GIMC, scheduled to be held from February 12 – 16, 2020. This edition’s moot problem highlights contemporary legal challenges and focuses on procedural aspects of WTO litigation, primarily focusing on the General Agreement on Tariffs and Trade and General Agreement on Trade in Services.

Eligibility

The Competition is open to all students, enrolled bona-fide on a regular basis in an undergraduate/postgraduate law course or its equivalent conducted by any recognized College/ Institution/ University.

Team Composition

Each Team shall comprise of a minimum of two members and a maximum of three members.

Venue

Gujarat National Law University, Gandhinagar, Gujarat, India.

Registration Procedure and Fees

• The registration fee is INR 5,000 per Team.
• Indian teams may make payment by Demand Draft or Online Transfer using the link here.
• Foreign teams may make payment by Bank Transfer according to the procedure provided in the Rules of the Competition.

Prizes

• Winning Team: Trophy + INR 50,000 (cash prize)
• Runner-Up Team: Trophy + INR 25,000 (cash prize)
• Best Written Submissions: Trophy + INR 10,000 (cash prize)
• 2nd Best Written Submissions: Trophy
• Best Orator in the Preliminary Rounds: Trophy + INR 5,000 (cash prize)
• 2nd Best Orator in the Preliminary Rounds: Trophy
• Best Orator in the Final Round: Trophy + INR 5,000 (cash prize)
• Best Researcher: Trophy + INR 5,000 (cash prize)
• 2nd Best Researcher: Trophy

Important Dates

• Last day for provisional registration: November 25, 2019
• Last day for registration and completion of all formalities: January 10, 2020
• Last day to apply for clarifications regarding the Moot Problem: November 15, 2019
• Clarifications, if any, to be published: December 2, 2019
• Last day for submitting the soft copy of the Written Submission: January 19, 2020
• Last day for submitting the hard copy of the Written Submission: January 23, 2020

Contact

• Girish R., Faculty Convenor at [email protected], +91-81286 50806.
• Rohan Merchant, Student Convenor at [email protected], +91-98241 51770;
• M​ Yashi Saraswat, Student Convenor at [email protected], +91-98982 38740;
• Anushka Sinha, Student Co-Convenor at [email protected], +91-81412 07125;
• Devarsh Kotak, Student Coordinator (Logistics) at [email protected], +91-97392 20275
• Shubhangi Singh, Student Coordinator (Communications) at [email protected], +91-99048 98812.

Links

The Official Schedule of the Competition is available here.

The Registration Form for the moot is available here.

The Moot Problem is available here.

The Rules of the Competition are available here.

For more information, please visit our official website.

Call for Entries: RMLNLU-CTIL Conference on International Trade Law

This is from the Dr. Ram Manohar Lohiya National Law University, Lucknow:

The Journal Committee at Dr. Ram Manohar Lohiya National University, Lucknow, in collaboration with Centre for Trade and Investment Law, Indian Institute of Foreign Trade is organising RMLNLU- CTIL Conference on International Trade Law (7th RMLNLU International Legal Essay Writing Competition)on February 2, 2020.

ELIGIBILITY

Authors must be pursuing their 5-year integrated LL.B. (Hons.) course / 3-year LL.B. course / LL.M. from any recognised university in India and equivalent undergraduate law degree, abroad for the academic year of 2019-2020, to be eligible to participate in the Competition.

STRUCTURE

All entries will be judged and ranked by the Centre for Trade and Investment Law and Journal Committee. A maximum of five entrieswill be selected after an intense review procedure for presenting their essays in the conference. The participants may adopt any suitable means for presenting the papers including audio-visual aids, such as PowerPoint presentation.

The selected entries shall be published in the RMLNLU Law Review Blog. The top three essays will be conferred with rewards.

 

Write us at [email protected]or[email protected] in case of queries.

View the call for submissions here, the conference poster here, and the brochure here.

 

Guest Post: Dani Rodrik and the Hawks: A field guide to the China-US Trade War

This is a guest post from law professor David Trubek:

The media are full of announcements of a “truce” in the China-US trade war. The deal that is being finalized may halt further escalation for a time, but it does nothing to resolve the deeper issues that lie behind the struggle.

As Simon Lester noted in a recent post, some people are trying to do just that. In  US China Trade Relations-A Way Forward , the ad hoc US-China Trade Policy Working Group calls for a new approach. The group is led by Dani Rodrik of Harvard, Jeff Lehman of NYU Shanghai, and Yang Yao of Peking University and includes many distinguished lawyers and economists. Others including several Nobel laurates and leading trade law scholars have joined their call.

The group fears that the debate has become polarized around two stark options: either China abandons state led growth or the two economies must be decoupled. They seek instead for a way to maintain an economic coexistence in which China can retain an economic model that has served it well and the two economies are not rent asunder to everyone’s loss.

These experts believe that the current US approach, which deals with trade friction by pressuring China to change its fundamental approach to development, is wrong. They propose a framework:

“… intended to respect each country’s ability to design and implement its own domestic policies, to promote productive negotiations about how to share the benefits and minimize the harms that attend bilateral trade, and to facilitate fair competition in the multilateral sphere of international trade.”

The key to the approach is to base trade relations on negotiations about the relative costs and benefits of policies that affect trading partners. The Statement sets out a system for identifying costs and benefits of specific policies and resolving them through a combination of negotiation and countervailing measures. The proposals are complex and it will require detailed analyses to fully understand their significance and assess whether the Statement could serve as a starting point for a new approach to the tensions underlying the current trade war.

That is --as Simon suggested-- just what the IEL community should be doing. But the question is: will this effort be heard in the US above the screeching of the trade hawks? In "Despite Trade Truce, U.S.-China Cold War Edges Closer" WSJ 10/16/19  journalist Greg Ip lays out the “ornithology”  of the trade war debate:

"From China’s 2001 entry into the World Trade Organization until 2017, the U.S. and China moved toward greater integration and engagement. Skeptics of that process fell into three camps: economic hawks unhappy with China’s treatment of foreign firms, national-security hawks suspicious of its geopolitical designs, and human-rights hawks exercised by its intolerance of democracy and dissent. Historically, these three camps have been separate and only intermittently influential . . .Events in the last year have changed that. Business disenchantment with the China market and Mr. Trump’s trade war empowered economic hawks. They joined forces with national-security hawks who see China’s economic and military rivalry as inseparable. Separately, China’s treatment of its Muslim minority in Xinjiang and wayward western businesses like the National Basketball Association, and the Hong Kong protests gave human-rights hawks a voice."

​Actually, there is another species of hawk: the jobs hawks, who tell US workers “the Chinese stole your jobs" and seek in vain to bring all lost manufacturing back to the US. All these hawks are noisy and they are shaping the debate.  Hostility to China brings together the right (business and national security) with the left (unions and human rights advocates).  

Of course, the Hawks do not agree on everything -- except their condemnation of China. But they do line up along the very convergence vs. decoupling dichotomy that the ad hoc Group is trying to dismantle. The national security and jobs hawks favor decoupling; the economic hawks want access to China’s markets and press for convergence. The human rights hawks probably don’t care which route is taken as long as pushing for either would affect China’s treatment of Uighurs, dissident lawyers, or Hong Kong. All these screeching voices make it hard to find a win-win solution to the trade war.

 US China Trade Relations A Way Forward looks like a progressive effort to bring reason into the debate. But it is a complex argument while the Hawks are all telling simpler stories. Can this welcome intervention be rescued from the avian cacophony so we can have a sane discussion and outline some kind of economic coexistence with China? I hope so.

Is One Panel Meeting Enough?

This is from last week's India - Export Related Measures panel report:

1.3.2 Single substantive meeting of the Panel with the parties

1.9. On 3 August 2018, the Chairperson of the Panel, on behalf of the Panel, held a meeting with the parties to obtain their views in preparation of the Panel's draft Working Procedures and timetable. He stressed the need to reconcile different considerations, namely, the provision for accelerated procedures in Article 4 of the SCM Agreement, the obligation to provide special and differential treatment to developing country Members, and resource constraints in the Secretariat. At that meeting, the United States proposed that the Panel hold a single meeting with the parties in this case, a proposal which India opposed.

1.10. As a means to balance the competing obligations and constraints in the particular circumstances of this case, in its draft Working Procedures and timetable sent to the parties on 8 August 2018, the Panel proposed holding a single meeting with the parties, after the filing of both parties' first and second written submissions, and reserved the right to schedule further meetings with the parties as required. On 22 August 2018, the Panel adopted its draft Working Procedures and timetable. In response to communications from India to the Chairperson, on 9 and 19 October 2018 the Panel confirmed that it would proceed with the adopted Working Procedures and timetable, while reserving the right to schedule additional meetings as necessary. On 19 October 2018, the Panel indicated that it would communicate the reasons supporting its decision in due course.

1.11. India objected to the Panel's approach in its comments on the draft Working Procedures and timetable, comments on the United States' comments, first written submission, and in communications dated 5 October and 16 October 2018, and sought a preliminary ruling from the Panel that an additional substantive meeting with the parties should be held before the filing of the second written submissions.

1.12. In its own communications, the United States took the view that the Panel could hold a single substantive meeting with the parties, or even decide the case entirely on the basis of the parties' written submissions, without holding any substantive meeting with the parties. The United States set out its arguments on the matter in its comments on the draft Working Procedures and timetable, comments on India's comments, and second written submission.

1.13. Brazil commented on this matter in its third-party submission. In Brazil's view, a panel's decision to deviate from the working procedures set out in Appendix 3 to the DSU and hold a single substantive meeting with the parties should only happen with the agreement of both parties to the dispute.

1.14. On 22 January 2019, the Panel, as it had anticipated, communicated the reasons for its earlier decision to proceed with the adopted Working Procedures and timetable, while reserving the right to schedule additional meetings, as necessary (see Annex D-1).

1.15. During the substantive meeting with the parties and subsequently in writing, the Panel asked the parties whether they considered a second substantive meeting necessary. On both occasions, it also asked India whether and how concretely the fact of holding a single substantive meeting affected India's ability to defend itself. The parties responded to these questions on 4 March 2019 and commented on each other's responses on 18 March 2019. Having studied the parties' responses and comments, and in light of the proceedings thus far, the Panel did not consider that there was a need to depart from the structure of the proceedings as originally envisaged in this dispute by adding a second substantive meeting with the parties; the Panel communicated its decision to the parties on 16 April 2019.

(footnotes omitted)

I was excited to read this because it happens that I just wrote something along these lines in a forthcoming Cato paper with Jim Bacchus, in which we offer suggestions for speeding up WTO disputes. Here is what we said on the issue of single panel meetings:

Turning to the litigation stage in dispute settlement proceedings, there is only so much shortening that can occur. Litigation requires the presentation of arguments and evidence, which means written submissions and hearings. But there are some areas where change is possible. For example, instead of always having two panel meetings, one panel meeting could be the norm, and the second meeting could be held on an exceptional basis (as is the case in Article 21.5 compliance proceedings); panel meetings could be held over secure video call rather than in person in Geneva; and there could be page limits for parties' written submissions.

...

One panel meeting may be enough: The DSU provides for two meetings of the panel with the parties. In a world where communication was difficult, these meetings had a particular value. In the 1970s, if a GATT panel had follow-up questions for the parties after the first meeting, organizing the effort to compile written questions and convey them to the parties was a major task. Today, by contrast, coordinating such questions and getting answers from the parties is fairly easy. For that reason, we think the second panel meeting could be eliminated.

In a particular case, it may be difficult to convince the responding party to agree to a single panel meeting, because responding parties always have an incentive to delay. But as a general principle that applies to future disputes, I think the case for a single panel meeting as the default rule is strong, and it's possible WTO Members could agree to this change.