Here's their press release:
Here's their press release:
Two interesting proposals have recently emerged in an attempt to save thousands of lives in poor countries who are suffering from fatal diseases such as HIV/AIDS and malaria. First, U.N. Secretary-General Kofi Annan and representatives from 95 countries gathered in Paris today to study France's "once-ridiculed" proposal to tax international air tickets to raise money for anti-retroviral drugs. http://www.chinapost.com.tw/i_latestdetail.asp?id=35921
Another initiative came from the U.S., along with Switzerland and Singapore, proposing to eliminate tariffs on essential medicines under the current Doha trade talks. U.S. ambassador to the WTO Peter Allgeier said that "It is ironic that many of the countries that are in urgent need of cheap medicines also have a significant tax added to the drugs and the medical devices they import." http://www.alertnet.org/thenews/newsdesk/N27373628.htm
These two proposals, although serving the same purpose, tend to contrast each other. One is basically a redistribution mechanism in the global dimension. Perhaps, this would be the first global tax in its true form. Some might entertain a wild imagination of "World Government." On the other hand, the U.S. proposal seems to be premised on a more liberal (or liberitarian) ground. Certainly, trade liberalization can play a role here, but what about the loss of tariff avenues by poor countries which is a critical source of hard currencies to them? Will rich countries compensate such loss?
An article in today's Wall Street Journal suggests that the excitement over the proposed takeover of P&O by Dubai Ports World has its origins in a private contract dispute. The article suggests that a Florida stevedoring firm locked in litigation with P & O has sought to delay the takeover as a way of putting pressure on P & O. One dimension of the plaintiff's strategy involved skillful if alarming lobbying of Congress. The article requires a subscription, but the WSJ's blog description of the article is available at http://blogs.wsj.com/law/?mod=blogs.
A technical issue in this dispute is whether the "mandatory investigation" rule of 50 U.S.C. app. sec. 2170(b), a 1992 amendment to the original Exon-Florio statute, applies. It requires a 45 day inquiry whenever the acquisition of an enterprise engaged in US commerce by an entity controlled by a foreign government "could affect the National Security of the United States." The question is what "could" means. The critics of the transaction argue in effect that it means "conceivable". The administration apparently believes a more substantial standard applies.
It looks like France is finding itself on the "other" side of an SPS case. Today's FT reports that 20 countries have determined to block poultry imports from France.
Franz-Josef Feiter, secretary general of Copa-Cogeca, the European farmers’ lobby, said the bans were not justified, because Europe was culling any birds at risk and inspecting others before export. However, there appeared to be no legal recourse through the World Trade Organisation.
The two statements attributed to Feiter seem at odds with one another. An "unjustified" ban would be likely to violate Article 2.2 of the SPS Agreement.
In the Dubai ports case, we have the U.S. rejecting foreign investment due to concerns about national security. In Mittal/Arcelor, France has concerns about foreign domination of its economy. These concerns about foreign investment have, in the past, been voiced more frequently (but not exclusively) by developing countries. In the bird flu case, 20 other countries are concerned about health risks posed by French goods. In the past, France has been on the other side of SPS cases. These are good examples of stochastic symmetry and role reversability. The point is that when a particular legal rule is negotiated it is less clear than a realist might expect what side of a dispute the negotiating states might eventually be on. Harsanyi’s classic article on this topic, “Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility,” was published in the 1955 Journal of Political Economy. Harsanyi’s concept of stochastic symmetry refers to the idea that parties may enter into an agreement where they are unsure—under a veil of uncertainty—as to precisely how the agreement will affect their particular interests. They can see that the agreement is an overall improvement, and are assumed to be willing to take a chance as to how that welfare improvement is distributed. This uncertainty allows states to accept legal rules where they might otherwise be in a distributive standoff.
A "bio-piracy" case to watch:
http://www.nytimes.com/2006/02/21/international/africa/21lake.html?_r=1 (free registration required).
Some earlier reports ( http://www.grain.org/bio-ipr/?id=409 ) mention that Public Interest Intellectual Property Advisors, Inc. (http://www.piipa.org/) have been retained to pursue the case. What would the legal basis of such a claim be, given the US status in the CBD? Maybe a different jurisdiction would be more amenable?
And even if the legal case is hopeless, might it be a "flagship" rather than a "landmark" case, aimed at mobilizing public opinion towards changes in TRIPS?
It's an unheard of, 8-month old case from a negligible jurisdiction in global terms, but potentially interesting to bloggers and bloggees nevertheless: HCJ 2587/04 Bukhris et al. v. Hedera Tax Assessor, 23.6.05, a petition brought before the Israeli Supreme Court sitting as High Court of Justice ("HCJ"), the ruling written by President Aharon Barak. If the names ring a bell, they're the same judiciary and judge associated with much of Israel's contribution to the trans-national jurisprudence on international humanitarian law in domestic legal responses to belligerent occupation. It's really a footnote of a case, just a desperate (and quite creative) effort by an aggressive commercial litigator. But I think it raises (or accentuates) some interesting questions about the regulation of trade and migration, especially about GATS Mode 4. The case is available only in Hebrew, so I will provide a brief summary.
In Bukhris, two Israeli petitioners – a flower grower employing only 5 Thai workers, and a "manpower company" employing 373 Chinese and 238 Romanian workers - challenged a statutory levy to be paid by employers of "foreign workers", at a rate of 8% of the salary paid to each worker during the fiscal year (the "Levy"). A "foreign worker" is defined as a worker who is neither an Israeli citizen nor an Israeli resident. The challenge was based entirely on international law, in three categories:
(a) Prevention of Double Taxation Treaties – the gist of this argument was that the Levy charged from employers of foreign workers would in practice be deducted from the workers' pay and hence would be a tax violating double taxation treaties. The tax treaties were explicitly incorporated into Israeli law (Israel has a dualist legal system). The Court found that because the statute establishing the Levy prohibited its deduction from foreign workers' pay, there was no fear of double taxation (I shall reserve comment; it would not be the first time that the HCJ placed such trust in the willingness and capacity of administrative authorities to enforce the letter of the law).
(b) ILO Migrant Workers' Convention – A non-discrimination issue. The argument: the Levy discriminates against foreign workers. Here we are getting close to the justification of this post (which is already too long). Remember who the petitioners were – employers, not workers. And they invoke ILO non-discrimination rules. At any rate the claim was rejected because the agreements were not incorporated into national law.
(c) GATS – The petitioners argued that the Levy violated national treatment under the GATS. Importantly (for Israelis and traders in Israel, at least), the HCJ did not throw this out on the basis of non-incorporation of the WTO/GATS into Israeli law, in contrast with the ILO convention claim. Rather, it cursorily stated that the workers in question were unlikely to be active in a relevant GATS services sector, and that the petitioners did not show that any of the workers were covered by Israel's Mode 4 obligations, which apply horizontally only to executives and experts.
The thread common to all three claims, is that the local employers were trying to improve their competitive position on the domestic market, arguing on the basis of their foreign employees' rights under international law: the right to avoid double taxation, the right to non-discrimination, and the right to national treatment under GATS. None of these were the employers' rights, and it is doubtful that workers would have benefited in any way from the indirect enforcement of their rights.
Setting aside the tax and labor law issues, and focusing on GATS, and even though the petition was denied, this is the kind of case that will give Mode 4 a bad name, emphasizing its propensity to commoditize labor rather than enhance welfare. That said, this kind of levy is certainly a barrier to temporary labor mobility, aimed at reducing the number of foreign workers, and hence foregoing the economic advantages.
For all we know, the GMO panel faulted the EC on two grounds. First, EC approval procedures have been subject to “undue delay” (Annex C.1(a)). Second, safeguard restrictions imposed by certain EC member states against GMOs that were approved at the EC level, are not based on a risk assessment (5.1), nor provisionally justified (5.7) and, consequently, not based on scientific principles and maintained without sufficient scientific evidence (2.2.).
Looked at purely from the power perspective of the EC Commission, one might be inclined to declare victory. First, the panel agreed with the EC that the moratorium ended in 2003 and, as a result, declined to make a recommendation in this respect. Second, as to the safeguards by Austria, France and others, all the panel did was call upon EC member states to step in line with … EC policy. What else could the EC Commission have wished for? Is Mandelson’s statement that this case is “largely of historical interest”, and the reaction by Greenpeace that the panel ruling is “irrelevant”, a prelude to the EC not appealing this case? After all, the risk of an Appellate Body confirming the panel (and thereby elevating its weight to de facto precedent) might well outweigh the on-the-ground benefits of an (unlikely) reversal on appeal. Was not a similar trade-off made in high profile cases such as Kodak-Fuji and Section 301?
That said, the pressure from EC member states is most likely to push the EC Commission to appeal anyhow. And, indeed, when it comes to the safeguards there is something distinctly fishy about the panel’s ruling.
What the panel is essentially saying is that since the EC was able to make a risk assessment, EC member states can no longer claim that there is insufficient scientific evidence. Hence, they cannot impose provisional measures under 5.7. As the EC and its member states do, after all, remain distinct sovereigns and distinct WTO members, this amounts to saying that because one WTO member (say, the US) was able to make a risk assessment, any other WTO member can no longer invoke 5.7. Imagine what this would mean for the EC or, even more so, for developing countries?
The panel’s ruling in this respect raises a crucial question on the relation between 2.2, 5.1 and 5.7. Is 5.7 really tied to 5.1 (in the sense that as soon as a risk assessment is feasible, provisional measures can no longer be enacted), or is the better view that 5.7 is tied to 2.2 (even if a risk assessment is possible for some, for others who have an extremely high level of protection, available scientific evidence may still be “insufficient” so that provisional measures can be in order)?
In Hormones (para. 124), the AB linked sufficiency of evidence to one’s level of protection and precaution (thereby implicitly linking 2.2 to 5.7). In Agricultural Products (para. 80), as well, the AB stated that 5.7 is a “qualified exemption” from 2.2 (not 5.1). However, in Apples (para. 179) the AB did link 5.7 to 5.1, finding -- as the GMO panel did here -- that once a risk assessment is possible, provisional measures under 5.7 become unavailable. In that case, the AB explicitly rejected Japan’s reference – much like that by EC member states in GMOs -- to remaining “scientific uncertainty”. Relatedly, in Salmon (para. 138), the AB did link risk assessment to sufficiency of evidence by finding that a violation of 5.1 necessarily implies a violation also of 2.2.
There is, in other words, a clear tension between Hormones and Agricultural Products, on the one hand, and Apples and Salmon, on the other. Yet, I see three possible ways to distinguish GMOs from Apples.
First, in Apples we were talking about one WTO member (Japan); in GMOs, we have the EC and its member states (a risk assessment by the former may, therefore, not necessarily preclude provisional measures by the latter; the ongoing panel on EC – Customs may shed more light on the relation between the EC and its member states). Second, the importance of the alleged risks is different: Apples was ‘only’ about preventing fire blight in fruit; GMOs is, according to the EC, about a more vital question of human life (hence, scientific uncertainty under 5.7, even with a risk assessment available, may play a greater role in GMOs than in Apples, see Hormones, para. 124). Third, in Apples, the only concern was plant life or health (a concern fully covered in Japan’s studies); in GMOs, in contrast, there are also environmental and moral concerns at play which may not be fully covered in the EC risk assessment. These additional concerns fall arguably even outside the SPS agreement altogether, raising the separate question of whether, for example, GATT Art. XX(a) on public morals (as indirectly interpreted in Gambling) might justify the safeguards. SPS does, of course, prevail over GATT in the event of conflict (Ad Note), but if one is really talking about entirely distinct justifications for a certain conduct, can there still be conflict, or are we then talking about two distinct measures so that one valid justification (under GATT) could save the safeguard even if another justification (under SPS) cannot?
I would, therefore, consider it wise for the EC to appeal the panel ruling on GMOs, a ruling which is – from the perspective of EC member states – far from “purely historical” or “irrelevant”.
A number of recent panels have dealt with scheduling issues. In GATS especially, there seems to be dissatisfaction across Members with the manne rin which the Mexico - Telecoms and the US - Gambling reports came out. The former clearly states in a rather lengthy footnote that moving away from what was probably agreed is not such a big deal, since technology moves us anyway to the brave new world where the panel first entered. Now scheduling related disputes are not new: recall that one of the arguments by the EC in EC - Bananas III was that its framework agreement was part of its concessions and that the fact that all WTO Members signed and certified the WTO package with the framework agreement in it, must mean something in terms of contractual arrangement across the WTO Membership. Recently, the EC - Chicken Cuts report took the bold (for WTO standards) view that the HS - treaty (and hopefully its interpretative rules as well) are context of the WTO and must be taken into account when schedules are at the centre of a dispute. This is a welcome change. The problem however, is that it might help resolve issues only with respect to classifications in the goods-context and up to the 6 digit level. We have limted tools to address the legitimacy of national (unilateral) classifications beyond the 6 digit level, except for references to the VCLT (which, I doubt whether it is in its entirety the appropriate instrument to use in such cases). And of course this report does not help us much when it comes to GATS disputes (where, I should add, the Scheduling Guidelines are not considered context but supplementary means, hence, of rather limited value). In short, I see such disputes multiplying over the recent years and no coherent analytical framework offered by WTO adjudicating bodies as to how to treat this issue. I have some thoughts on this score, but before I move there, I would first like to check whether you share the diagnosis.
There is an interesting review of Sunstein's controversial book - The Laws of Fear - and a reply by Cass Sunstein in the Feb. issue of the Harvard Law Review. The review is by Paul Slovic among others and takes issue with Sunstein for ignoring cultural perceptions on risk. The reviewers suggest that Sunstein's position cannot be reconciled, as Sunstein would like to think, with any notion of deliberative democracy. The review is better as a critique than as a prescription for institution building. As to the latter, the suggestions remain rather vague, though they are backed up by copious useful, often non-legal, references speaking to practical experience in deliberative decision making.
The proposed legislation to ban foreign-government-owned firms from managing US ports has been defended by some as a national security measure. At some level of generality, of course, GATT law regards national security claims as self judging and therefore unreviewable (I have a discussion of this issue in my forthcoming book, The Limits of Leviathan: Contract Theory and the Enforcement of International Law, with Robert Scott, Cambridge University Press 2006, plug, plug). But let's put aside the question of whether the US would prevail in a WTO dispute settlement proceeding, were this legislation enacted. One might still ask whether it is productive to discuss this issue as one involving national security. Port security, of course, is a grave issue, and everything I know leads me to believe that the governments of the United States and its allies have addressed it insufficiently. But does a categorical rule excluding state-owned firms advance national security? We trust other state-owned firms (the Army, the Navy, the Air Force, the Coast Guard, the police) with protecting us from danger. Is it the problem rather the foreignness of the owning state? We rely on allied arm forces in almost every aspect of our national security, and foreign personnel are serving alongside US forces around the globe, in combat as well as elsewhere. Is it the UAE? Its subjects were involved in the 911 attack, but U.S. citizens served with the Taliban in Afghanistan, and Mr. Padilla is accused (perhaps unjustly) of some terrible things.
My larger point is that protectionism is a national security issue. I want port management to be the best it can be, with maintenance of security being one of the principal criteria [here I use the word correctly] for determining the quality of performance. Restricting competition for these services disserves the goal of getting the highest quality performance. It is one thing to isolate particular service providers (say, those owned by Syria, Iran, North Korea or Cuba) for national security reasons. But all foreigners? All Islamic foreigners?
I wish to state that I have no way of knowing whether the US government has made an adequate inquiry into this matter, or whether Dubai Ports World would be a desirable successor to Peninsular and Oriental. I have no dog in that fight. But the proposed legislation goes way beyond the current tempest, and raises problems similar to the those generated by the Exon-Florio legislation of the 1980s. Indeed, in some ways the proposed legislation is worse, because, if press reports are accurate, it will not provide for an administrative override.
Well, I woke up early this morning, checked my e-mail and saw a notification from the WTO that the chat was about to begin. I thought to myself "I'm late, so I will never get admitted--the limit is 500 chatters." I suppose I got lucky, because I was able to join the chat. But not so lucky, because I had not prepared very interesting questions. There were some asked by others. See the transcript.
There is a certain breathlessness about the forum, and there is definitely a problem of continuity. I think there is also a kind of coordination problem among the chatters which, combined with slight asynchronicity, makes for a fragmented conversation. You cannot really ask follow-ups easily, and so there is not much real exchange.
Having said that, it wasn't a bad exercise. Lamy said it was intended to help address the WTO public relations problem. He didn't say it was intended to help him to form policy, and he of course conceded that he only has marginal influence on policy in a member organization.
So, this process is a lot different in style and purpose (at least from Lamy's standpoint) from the consultative committee report. I also think the consultative committee report was able to produce a coherent line of researched reasoning, so if I had to choose between the two processes for deliberative democracy, I would probably go with the committee process, flawed as it is. I think a combination could be a significant improvement on either alone. A consultative committee that has electronic hearings, with a requirement to respond, would be an improvement.
When asked about NGOs, Lamy made clear that in his view the principal role for NGOs is lobbying at the state or multilateral level, without any special rights of input. The trick seems to be to trigger deliberation using their special perspective or expertise, without giving them greater rights than others.
Senator Clinton apparently has introduced legislation that would bar firms owned by foreign states from managing US ports. The bill is aimed at the takeover of P & O, a company that currently manages six US ports, by Dubai Ports World, which belongs to the United Arab Emirates. The purported policy motivating this legislation is the risk to national security posed by foreign ownership.
Several questions arise. Can this legislation be squared with US obligations under the General Agreement on Trade in Services? More to the point, is public ownership a valid criteria for barring firms from market sectors? What is more likely to endanger US security interests, giving an oil emirate a stake in a critical sector of the US economy or isolating it?
My own crudely political take: Roughly a year ago, my friend and former colleague Bill Stuntz proposed an alliance of political progressives and evangelical Christians across a number of fronts. One aspect of his rather Swiftian proposal was a commitment by the left to free trade as the best means to alleviate global poverty. It dismays me that a leading contender for the Democratic Party's presidential nomination feels the need to shore up her credentials as a protectionist.
The U.S. Treasury is considering whether to label China a "currency manipulator." Apparently, this designation would have certain effects under 22 U.S.C. 5304, 5305 and 286y . A 2005 Treasury report states that
Title 22 U.S.C. 5304 requires, inter alia, that the Secretary of the Treasury analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustment or gaining unfair competitive advantage in international trade. Section 5304 further requires that: "If the Secretary considers that such manipulation is occurring with respect to countries that (1) have material global current account surpluses; and (2) have significant bilateral trade surpluses with the United States, the Secretary of the Treasury shall take action to initiate negotiations with such foreign countries on an expedited basis, in the International Monetary Fund or bilaterally, for the purpose of ensuring that such countries regularly and promptly adjust the rate of exchange between their currencies and the United States dollar to permit effective balance of payment adjustments and to eliminate the unfair advantage."
So, this provision is slightly similar to Section 301 of the Trade Act of 1974, and Super 301 and Special 301, and other U.S. domestic statutory provisions authorizing agencies to "operate" certain U.S. rights or to respond to other circumstances. Apparently, the designation of "currency manipulator" simply triggers negotiations to stop the manipulation.
Mittal is playing the WTO card on the French steel investment issue, courtesy of Kamal Nath, Indian trade minister (see Reuters report). From the sidelines, and without any prejudice to the merits of the Indian claims themselves, there is something poetically just about this development. See how Nath almost gleefully employs the WTO jargon so often used against developing countries: 'single undertaking', linking investment with agriculture, 'market opportunities', national treatment etc..
One can but imagine the "Yes Minister" kind of conversations in certain bureaus in Paris and Brussels: "The trade minister of Buranda is quite cross with us, Minister"; "But what is he talking about, Humphrey?"; "Well, Minister, there is this thing called 'national treatment'"; "I know that, Humphrey, but that's a trade thing"; "Yes Sir, but there's also this thing called 'TRIMS'"; "Yes?"; "It makes sure that national treatment applies to "investment measures related to trade in goods"; "But, Humphrey, that was supposed to protect our investors in their markets"; "Yes, Minister, but I don't think we ever made sure that it won't work both ways".
On February 14, 2006 the USTR released a comprehensive review of the U.S.-China trade relation in a report titled “U.S.-China Trade Relations: Entering a New Phase of Greater Accountability and Enforcement.” (http://www.ustr.gov/assets/Document_Library/Reports_Publications/2006/asset_upload_file921_8938.pdf) This report was also sent to the Congress, i.e., the Senate Finance and House Ways and Means Committees, which hold a jurisdiction in trade matters.
In a cover letter to the Congress, USTR Rob Portman concluded that the U.S. recent bilateral trade relationship has been inequitable and imbalanced, and that China should do more in opening its market and enforcing intellectual property rights to “live up to its responsibilities.” In order to better monitor and ensure China’s compliance with trade obligations, Portman announced the establishment of a “China Enforcement Task Force” within USTR. (http://www.ustr.gov/Document_Library/Press_Releases/2006/February/USTR_to_Strengthen_Enforcement_in_Readjustment_of_US-China_Trade_Policy.html)
The release of this unprecedented, in its inclusivity and audacity, report generates many observations. First, the Bush Administration seems to respond to the rising anti-China campaign in the Congress, especially under the U.S.-China Economic and Security Review Commission. Second, the U.S. may be signaling that it is now about to change the gear in addressing China’s alleged violations from a negotiation mode to a WTO adjudication mode. The China Enforcement Task Force will “focus on the preparation and handling of potential WTO cases with China.” Third, the U.S. reaffirmed its wish list vis-à-vis China, i.e., more market opening in such areas as telecommunications, financial services and healthcare. Fourth, the U.S. will also strengthen the traditional pressure through various bilateral dialogue fora with China, such as the U.S.-China Joint Commission on Commerce and Trade (JCCT).
Yet, this initiative also raises many questions. First, would the U.S. employ its unilateral trade remedies, such as Section 301, Super 301, and Special 301, to change China’s behaviors to the direction which it favors? Second, would the U.S. have strong cases against China under the WTO dispute settlement system over some of the issues it raises, such as labor and environmental protection, transparency, and even rule of law? How much would the China’s accession protocol be helpful for the U.S. to win cases against China, considering its vague languages? Third, wouldn’t China retaliate against such move by filing its own complaints against the U.S.? Wouldn’t that be undesirable for the WTO’s institutional stability? These two giants may break the back of the WTO dispute settlement system. Lastly, but not least, wouldn’t trade restriction on Chinese imports in the name of readjustment eventually hurt the U.S. economy? One might take some lessons from the recent bra war between the EU and China. Also, consider the following facts. The U.S. bilateral trade deficit with China constitutes only a small portion in its overall trade deficit which basically stems from the U.S. domestic economic factors, such as a low saving rate. Also, many “made-in-China” products sold in the U.S. are brand name products by American firms. Large portions of those profits go to American firms, not to China. Moreover, most of made-in-Chinas are not being made in the U.S. (If you make a sneaker in the U.S. solely with American labor, it will be quite expensive.) Even if the U.S. successfully blocks Chinese imports, it will then embrace more made-in-Vietnam or made-in-Cambodia instead.
Ineresting story in yesterday's NEW YORK TIMES (p. A6). Bristol-Myers is to allow the newest and most powerful AIDS drug (atanazavir - a second line treatment for those who have developed resistance to their first anti-viral cocktails) to be licensed to generic drug makers in India and South Africa without charge. The generic companies will set the pricing for the drug in Africa and India. The drug was introduced only last year in many 'wealthy countries'. One problem seems to be the need for a heat-stable version of ritonavir, the booster drug with which this new drug is administered. This booster drug is manufactured by Abbott Laboratories.
Trade and Environment in the European Court
Over the last couple of years the ECJ has issued some interesting judgments on trade and environment. The most recent - Case C-320/03 of 25th November 2005 Commission v. Austria - concerns an Austrian measure to prohibit lorries of more than 7.5 tonnes carrying certain goods from crossing certain sections of the Tyrol, this being one of the main routes of land communciation between Southern Germany and Northern Italy. The goods included waste, cereals, timber, cork, minerals, stone, soil, rubble, motor vehicles and steel. The aim of the measure was to limit nitrogen dioxide pollution for reasons of the protection of human health. The European Court found that the measure was contrary to Articles 28 and 29 of the EC treaty which prohibits quantitative restrictions on imports and exports and measures with equivalent effect. It also found that though the measure was, in principle, capable of being justified on grounds of environmental protection, it could not be thus saved in this case. The measure was found to breach the principle of proportionality. The key here according to the European court was that Austria had failed in its obligation, before adopting a measure as radical as a traffic ban, to examine carefully the possibility of using mesures which would be less restrictive of trade, and to discount these measures only if their inadequacy was clearly established. Austria (bearing the burden of proof in invoking an exception) had not conclusively established that pollution reduction could not be achieved by other, less trade restrictive. Also, given the declared objective of inducing a shift from road to rail, Austria was required to ensure that there was sufficient and appropriate rail capacity to allow such a transfer. It had not in fact established that there was a realistic alternative to road transport in this case. The Court also condemened the two month transition period for the introduction of the ban as too short to allow operators to adapt to the new circumstances. The case seems consistent with a more general 'proceduralisation' approach in European case law. Here it was the failure to properly consider alternatives which was the primary reason for the measure being condemned.
WTO Director General Pascal Lamy is doing an on-line chat with the global public on February 21. It's easy to be cyncial about such gestures--the "digital divide," the limits of the medium for serious deliberation, the self-selectivity of participants, etc., but let's hand it to Lamy: at a minimum, this represents a gesture towards the view that the Director General is and should be accountable not just to the "Members" of the WTO but to global public opinion. Further, the transcript of the chat session is to be made available on line. I suspect that the ideas and views in that transcript will be of much greater value and interest than the previous DG's wisemens' report, produced in a vacuum where consultation and deliberation of a public nature were entirely absent. I hope the blog links to the transcript when it is available. I'll probably do a post, summarizing the nature of the conversation, the main viewpoints in play, and any innovative and challenging ideas for the reform of the WTO.
If anyone is interested in participating, here is the URL: http://www.wto.org/english/forums_e/chat_e/dg_chat_e.htm
Joel, our leader, has indicated that it is okay to use the blog for self-promotion (well, those weren't exactly his words) but anyhow I thought I would mention that a new edition of my treatise with Michael Trebilcock, The Regulation of International Trade, was published in the fall, again by Routledge. W'eve included all the case law up to about the time the Gambling ruling came down, as well as the state of play in the Doha negotiations up to about last spring. Dealing with the case law accumulated over 6 years meant expanding the book, which is now over 700 pages, but we managed to keep the paperback price to about $50US so that it is an affordable text for students or at least more affordable than most others. We continue in the style of our previous editions, providing perspective and opinion as well as analysis and synthesis--so in this new edition, you'll find our take on such current issues as the Chinese exchange rate, the role of investor-state dispute settlement, capital controls in trade agreements, TRIPs-plus, DSU reform, and much else . . . I wish that I had enough authors' copies to provide one to all the contributors of this blog but Routledge is not that generous.
Finally, there is a marvelous cover image, from a painting by Denyse Goulet (my wife).
Our own Petros Mavroidis, with Henrik Horn, has created data (well, not really created, so much as gathered). It is available from the World Bank, which sponsored the research, at www.worldbank.org/trade/wtodisputes. The manual describes the data as follows
"[A] data set covering various aspects of the World Trade Organization (WTO) Dispute Settlement (DS) system that has been compiled in project financed by the World Bank. The data set covers all 311 WTO disputes initiated through the official filing of a Request for Consultations at the WTO, from 1 January 1995 until July 31, 2004, and for these disputes it includes events occurring until February 28, 2005.1 2For these disputes, the data set covers exhaustively all stages of dispute settlement proceedings, from the moment when consultations are being requested to the eventual implementation of the rulings. The data set contains several hundred variables, providing information on various aspects of the legal procedure. The total number of entries is approximately 17 000. The data set has been compiled on the basis of approximately 3 000 official WTO documents available at the WTO web site (www.wto.org).
I am very glad to welcome Bill Davey to the group of contributors. I'll have to slow down additions, or switch to chronological order--otherwise my name may slip down below visibility on the first screen.
This from today's Wall St. Journal "Washington Wire"
Russia has been trying to get into the [WTO] for more than a decade, but the U.S. won't give its approval unless Moscow allows foreign banks, insurers and other financial institutions to open branches. Right now foreigners have to go through the more-onerous process of setting up local subsidiaries, with their own capitalization. The free-marketeers at the U.S. Treasury Department see financial services as the grease that would speed growth of the Russian economy. The Russians are worried that their regulators won't be able to adequately supervise branches and that domestic banks won't be able to compete with international institutions.
U.S. Treasury Secretary John Snow made no headway at a meeting in Moscow this morning with his Russian counterpart, Alexei Kudrin, in advance of tomorrow's gathering of Group of Eight finance ministers. The U.S. side has proposed a transitional period during which Russia would open its financial system to more foreign competition.
The U.S. has also been concerned about its ability to supervise branches of foreign banks, and does not permit branches of foreign banks to apply for U.S. deposit insurance.
It is of course unwise to say very much about the Biotech ruling without having the reasons. In fact, it is probably even misleading to say that the EC "lost" or the US "won." The reasons of the panel may overall be of more assistance to the opponents of GM foods etc. than those pushing them. We don't know. As has already been suggested the practical consequences for the current EC regulatory framework may be nil. While trying to cope with the suspense, we can at least think about what questions we as scholars of WTO law might want to bear in mind when we actually do get to see the ruling. Here are some suggestions:
1) The panel treated the EC "measures" as SPS measures; such a characterization was largely inevitable given the the emphasis of EC officials and processes on health and safety considerations. Does the panel ruling have anything to say about how a ban of GMs on ethical or cultural or religious grounds would be considered in WTO law?
2) In the case of the member state "safeuguards" it would have hardly been possible for the panel to conclude that these were based on a risk assessment and indeed sufficient scientific evidence, given the EC's own risk assessments came to a conclusion that the products were "safe." But does the panel nevertheless give any indication of how broadly or narrowly it understands the idea of "risk assessment"? Or how close the connection needs to be between the assessment and the measures?
3) For me, perhaps the most important question: how does the ruling affect the capacity of developing countries to make their own sovereign choices on GMOs? Could a ban be justified in the case of a developing country that takes an overall approach of precaution but does not have the capacity to undertake rigorous pre-approval risk assessment or to verify independently information supplied by producers of GMs?
4) A followup: is there a case for an amendment of SPS to allow a greater degree of special and differential treatment for developing countries, given differences in regulatory and scientific capacity?
(I wonder if SPS has already been raised in the S & D negotiations.)
5) In his previous job, Pascal Lamy floated the idea of "collective preferences" clause, which would allow a WTO Member to continue a measure found in violation by the dispute settlement organs, where the measure, for instance, has large support in pubic opinion, if the Member pays some kind of compensation? There may be cases where science and democracy simply can't be reconciled through sensitive, deferential interpretation of SPS. Is it time to give thought to this idea, how it could be implemented equitably (so both rich and poor countries can afford) to compensate, and the meaning of "compensation"?
6) Was the panel really neutral in the battle over the science itself? Did the at least mplicit credence it gave to the possibility that GMs are or could be risky, represent a defeat for the industry position that concerns about GMs are pure superstition?
The following quick and dirty summary is based on the panel's conclusions and recommendations in the interim report from the Trade Observatory website (focusing on the U.S. complaint). It summarizes the summary, and is perforce wholly ignorant of the panel's legal reasoning and detailed assessment of facts. Paragraph numbers are in parentheses.
The panel carefully stated that it did not examine (i) the safety of biotech products, (ii) the likeness of biotech and conventional products, (iii) the right of the EC to require pre-marketing approval, (iv) whether the EC procedures providing for product by product assessment are consistent with WTO law, or (v) the conclusions of the EC scientific committees regarding safety evaluation of specific products. (8.3)
The panel found that the EC approval procedures for GMOs are “SPS measures,” subject to evaluation under the SPS Agreement. (8.4)
No one questioned the right of the EC to consider the risks arising from identified concerns. (8.5)
The panel found factually that the EC applied a general de facto moratorium on approvals of biotech products through the date of establishment of the panel. While the moratorium was not itself an SPS measure, it affected the operation of the approval procedures, which are SPS measures. Factually, the moratorium resulted in failure to complete approval procedures without undue delay, in violation of Article 8 and Annex C of the SPS Agreement. (8.6) In 24 of 27 specific products, the moratorium resulted in undue delay in approval procedures, also in violation of the Article 8 and Annex C. (8.8)
Austria, Belgium, France, Germany, Italy and Luxembourg all took individual measures prohibiting certain biotech products that had been formally approved for use within the EC. Given the opinions of the EC scientific committee, the panel considered that there was sufficient scientific evidence to make a risk assessment, and thus no permission for recourse to a provisional measure under Article 5.7 of the SPS Agreement. (8.9) None of the member states conducted risk assessments meeting the requirements of the SPS Agreement, and the EC risk assessments did not provide reasonable support for the member state prohibitions. (8.10) Therefore, the panel concluded that these measures violated the requirement of a risk assessment contained in Article 5.1 of the SPS Agreement, and by implication also violated the second and third requirements of Article 2.2 of the SPS Agreement (that the measure be based on scientific principles and not maintained without sufficient scientific evidence).
In connection with the U.S. complaint, the panel seems to have found that the EC moratorium did not violate the transparency obligations of Article 7 and Annex B(1) of the SPS Agreement, and did not violate Article 5.1 (requiring a risk assessment) or Article 5.5 (prohibiting arbitrary distinctions in the selected “appropriate level of protection”). Nor did the U.S. establish that the EC moratorium violated Article 2.2 (requirement of necessity) or 2.3 (prohibition of discrimination) of the SPS Agreement. (8.14)
The panel declined to make recommendations in light of its findings regarding the moratorium, pursuant to Article 19.1 of the DSU, as the EC moratorium ended subsequent to the establishment of the panel.
These findings applied in different ways to EC measures relating to different products. As certain product-specific measures found to violate Article 8 and Annex C of the SPS Agreement were not terminated after the establishment of the panel, the panel recommended that the DSB request the EC to bring these measures into conformity.
As noted in an earlier post, the interim panel report in the GMOs case was issued to the parties yesterday. Despite the confidentiality requirement that applies to interim reports, there has been some discussion of the case in the press. It is unclear at this point how accurate this discussion is, and it is also fairly brief. Nonetheless, in the hopes of gaining some insights into the substance of the decision, I have gathered a few excerpts from these press reports for the benefit of our bloggers and blog readers. If I have missed a particularly informative article, please feel free to e-mail me about it.
In addition, the Conclusions and Recommendations section of the report has been made available by some NGOs:
Not sure how they got it, or how long it will be up, but it was there last I checked.
-- The panel found that the EU operated a de facto moratorium on considering new GMO imports between June 1999 and Aug. 29, 2003. This moratorium resulted in a failure to complete "approval procedures without undue delay" and so violated WTO rules.
-- But as the moratorium has since been lifted, the panel made no recommendations for action.
-- Separately, it also found that undue delay existed in 24 of the 27 individual product applications on which the three complainants had sought a ruling.
-- It asked the WTO's dispute settlement body to request the EU to bring the measures into line with the rules. But according to trade sources, virtually all of these products have either since been approved or their applications withdrawn.
-- The judges also found that bans imposed by six EU states -- France, Germany, Luxembourg, Austria, Italy and Belgium -- on products already approved by the EU violated trade rules and need to be revised.
-- The individual states had failed to provide adequate scientific evidence of the risks to human health or the environment.
-- But the panel made no overall assessment of whether biotech products are generally safe or not.
The trade organization panel appears not to have challenged Europe's regulatory process for biotech crops. Rather, it said Europe failed to follow its own procedures, resulting in undue delay of decisions.
The panel ruled in favor of the United States regarding the bans by the six countries. It also ruled in favor of the United States on 23 of 27 specific crops, according to L. Val Giddings, a biotechnology industry consultant who said he had been briefed on the ruling.
E-Commerce Times (from AP reports) (http://www.ecommercetimes.com/story/e1gPq71Mq2WSlx/US-WTO-Ruling-Against-EU-Should-Benefit-Farmers.xhtml)
"The panel found that there were delays in approving the products, which might be said to constitute a de facto moratorium during that period," said an EU official, who spoke on condition of anonymity because it was a confidential report.
"We dispute that a moratorium existed and we contest the claim that delays in the past were excessive. The panel clearly said that no moratorium currently exists," the official added.
Business Week (from AP) (http://www.businessweek.com/ap/financialnews/D8FL2Q380.htm?campaign_id=apn_home_down&chan=db)
The report concluded that the EU had breached its commitments with respect to 21 products, including types of oilseed rape, maize and cotton. But it also rejected several other U.S. contentions that Brussels' effective moratorium had broken trade rules on several other products, including potatoes and soybeans.
It also found that the individual member state bans were against trade rules.
The panel stressed that it had not examined whether biotech products were safe or not.
ABB is cooperating with the U.S. Justice Department regarding suspect payments that it made in at least one middle eastern country. The question that may come to mind is why the U.S. Foreign Corrupt Practices Act would seem to apply to actions by a Swedish/Swiss corporation in the middle east. The answer is that, by registering under the Securities Exchange Act of 1934 in order to list on the New York Stock Exchange, ABB subjected itself to the FCPA. There is still an interesting question, which no doubt ABB lawyers are considering, whether non-U.S. ABB subsidiaries are subject to the FCPA.
The application of the FCPA to companies that list on a U.S. exchange has not been the subject (as far as I have heard) of substantial criticism as "extraterritorial." And, of course, with the recent advent of the OECD convention on bribery, other wealthy states are to have similar rules.
I am extremely pleased to welcome Jeff Dunoff of Temple Law School and Joanne Scott of University College London (visiting this year at Harvard) to the blog. I look forward very much to their contributions.