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The ASEAN Secretariat is looking to hire a "Legal Expert Under the Asian Development Bank (ADB) Project on 'Strengthening Capacity of the ASEAN Secretariat in Regional Economic Integration and Policy Dialogue.'" See here for more.
Chris Padilla, Under Secretary of Commerce for International Trade, says that using AD/CVD duties to fight currency manipulation is not a good idea:
The Chinese currency has received particular legislative attention. I will leave it to my colleagues at the Treasury to discuss currency policy. Instead, I will address the challenges of requiring the Commerce Department to include an assessment of China’s currency value in antidumping (AD) or countervailing (CVD) duty margins. This is problematic for at least four different reasons.
First, keep in mind that the central purpose of inserting currency judgments into trade remedy cases is to drive up the price of imports from China. China is the single-largest supplier of inexpensive products purchased by American consumers. In this time of economic uncertainty, as Congress and the Administration work together to stimulate growth, it would be very unwise to pass legislation that could inflate consumer prices.
Second, there are serious questions about how the Commerce Department would administer a trade-remedy regime that turns on currency valuation. The staff of Commerce’s Import Administration works hard to measure prices and subsidies in a transparent, objective manner. But I could pick up the phone today and call five economists who would give me five different opinions about the value of the renminbi. Some say it is undervalued by 40 percent. Others say twenty-five. Last July, The Economist’s famous Big Mac index found a 58 percent undervaluation of the RMB based on input prices for a hamburger. But even that tongue-incheek method of valuing currencies depends heavily on the prices of local inputs which are not easily arbitraged across borders.
There are other such operational problems. The bills require that the Commerce Department consider only how currency affects the final price of products assembled in China, discounting that a low currency simultaneously increases the price China pays to import components that go into those final products. And currency valuation is to be considered on a one-way basis – only when there is alleged foreign undervaluation, with no offsetting effect when the dollar is relatively weak compared to overseas currencies. I can only imagine what would happen the first time a petitioner appeals to the U.S. Court of International Trade, arguing that the currency valuation used in a trade remedy case was wrong. Do we really want judges to arbitrate the fair market value of the dollar against foreign currencies?
Third, inserting relative currency values into trade remedy cases could open a Pandora’s Box of never-ending trade retaliation. The United States is already the third-largest victim of antidumping cases in the world. If we insert our own judgments on the value of foreign currencies into trade remedy cases, we would have to expect that similarly subjective countermeasures would be directed against our exports. It is not hard to imagine foreign trade bureaucrats using the relative value of the dollar as an easy excuse to erect new trade barriers. This would be particularly worrisome at a time when surging exports have been an important counterweight to the downturn in our domestic housing market. And there is a risk of multilateral retaliation as well. As Secretaries Gutierrez, Paulson, and Ambassador Schwab pointed out in a letter to Congress last summer, certain provisions of the pending China bills appear to raise serious concerns under international trade rules and could invite multilateral, WTO-sanctioned retaliation against U.S. goods and services.
Finally, there is no evidence that the proposed bills would reduce the bilateral trade deficit. Consider just two simple facts: According to the Treasury Department, the RMB has appreciated approximately 15% against the dollar since the peg was abandoned in July 2005. Yet over the same period, the Commerce Department reports that the bilateral trade deficit with China has increased by approximately 30%. The deficit is driven by many complex factors, including relative growth and interest rates, relative savings rates, and many others. Passing currency legislation won’t make the trade deficit go away.
We've already discussed the DSU Article 22.6 Gambling arbitration. Now it looks like we are headed for a GATS Article XXI arbitration:
Antigua has asked the World Trade Organisation (WTO) to arbitrate in a dispute over gambling with the United States, its lawyer in the case said on Thursday.
Mark Mendel told Reuters that Antigua, which last month won a related case against the United States for being shut out of the U.S. online gambling market, was continuing to seek discussions with Washington.
...
The European Union has said it reached an agreement with the U.S. over access to postal and courier, research and development and storage and warehouse services in compensation.
Washington has reached similar deals with Japan and Canada.
But no agreement has been reached with four other countries seeking compensation -- Antigua, Macau, Costa Rica and India.
...
Mendel said Costa Rica had also filed for arbitration by the Jan. 28 deadline to do so.
Officials in the WTO missions of Costa Rica, Macao, India and the United States were not available for comment.
Watching the GATS Article XXI process unfold, for the first time ever, is going to very interesting. The Article XXI rules are here.
ADDED: Here is another article on the arbitration.
As mentioned a couple months ago, some countries had expressed concerns that China was placing restrictions on foreign providers of news-related financial information services. Things seem to be heating up. As reported by the AP:
The United States has told China to get serious about loosening restrictions on foreign news agencies, in what could be a last chance to talk before the U.S. files a complaint with the WTO over Chinese trade policy, the Associated Press learned Wednesday.
In a letter to Chinese trade officials, the office of the U.S. Trade Representative signaled it has run out of patience with China's refusal to change rules introduced two years ago that appeared to boost the official Xinhua News Agency at the expense of news and financial information companies such as Reuters Group PLC and Bloomberg LP.
As noted, this article was from the AP. I'll be curious to see how Reuters, Bloomberg and Xinhua cover the dispute.
ADDED: Here is a Reuters article. They don't seem to be taking the issue too personally.
AND here comes the EU as well.
Reader Perry Bechky points me to a NAFTA Chapter 11 ruling from a couple days ago, in which the Tribunal rejected an investment claim related to trade restrictions on certain live cattle coming from Canada into the U.S. The basic finding was that the Canadians had no investment in the U.S., so the Tribunal did not have jurisdiction.
(I'm going to leave it to the investment folks around here to say more about the decision, if they want to.)
AFP reports:
Japan launched a campaign Tuesday to certify authentic Japanese food overseas, but insisted it was only promoting its cuisine rather than setting up a "sushi police."
Promoters unveiled a logo that will identify "real" Japanese restaurants overseas -- a pair of chopsticks holding a cherry petal set in front of a red rising-sun flag.The effort is led by a non-governmental group of experts set up in July with the blessing of the agriculture ministry, although organisers said it will open offices in various countries to do local appraisals.
The body has so far opened bureaus in Bangkok, Shanghai and Taipei and plans to expand to Amsterdam, London, Los Angeles and Paris by the end of March.
...
To qualify for certification, applicants are required to use Japanese rice and seasoning along with traditional ingredients. Restaurants must also show knowledge of Japanese recipes and proper hygiene.
Restaurants must also clear at least two of five criteria such as originality, dish arrangement and customer service.
...
Japanese officials and tourists have voiced growing alarm at what they see as vile imitations of their cuisine overseas, fearing that Japanese food will go the way of Chinese cuisine in North America and Europe.
Simon and I are delighted to welcome Andrew Lang, of LSE, to our hardy band of bloggers.
In paragraph 123 of its Hormones decision, the Appellate Body made the following statement:
The precautionary principle is regarded by some as having crystallized into a general principle of customary international environmental law. Whether it has been widely accepted as a principle of general or customary international law appears less than clear.
What is the meaning of this statement of fragmentation?
Inconsistency between valuation for trade and tax purposes, and inconsistency in transfer pricing rules, has apparently risen to the top of the global agenda:
Tax Notes International, Forthcoming
Boston University School of Law Working Paper No. 07-29
RICHARD THOMPSON AINSWORTH, Boston University - School of Law
Email: vatprof@bu.edu
The World Customs Organization (WCO) and the Organization of Economic Cooperation and Development (OECD) have begun considering the harmonization of transfer pricing norms among income tax, customs and VAT regimes. Two conferences have been organized in May of 2006 and 2007.
These conferences have concluded so far: (a) that more analysis is needed; (b) that harmonization will require adjustments on all sides; and (c) that pilot projects (real world statutory and administrative efforts to harmonize) or case studies in harmonization (hypothetical fact patterns) are needed to facilitate consideration. This paper assesses the three basic paths being pursued at the present time: (1) homogenization; (2) validation; and (3) vertical harmonization, and asks (based on the current discussions) is there a blueprint for change?
The paper concludes that an affirmative answer is possible, if the current proposals are aligned as short-term, medium-term, and long-term solutions. Seen in this way, a path forward is visible.
There is some evidence (and agreement) that working with APAs is a good first step. APAs have functioned as incubators - places where new solutions to difficult problems have been born - in the past. Robust and persuasive APA solutions can become international norms.
Seen in this manner the way forward might be (a) to use IT-APAs (a taxpayer-specific vertical harmonization solutions) to develop the persuasive national solutions to the ordering, granularity and timing problems that stand in the way of (b) validation convergence, and then with this experience as background the international community might then see the way to devise (c) unitary transfer pricing regime - a single set of principles and mechanisms that would homogenize transfer pricing rules across income tax, customs and VAT. A new international standard could then arise.
From the AP:
Argentine midfielder Marcelo Gallardo signed with D.C. United on Monday, the biggest of five South American additions to the club within the past week.
The team also added Peruvian goalkeeper Jose Carvallo and Argentine defender Gonzalo Peralta on Monday as the team held its first preseason practice.
...
Gallardo recently left French club Paris Saint Germain, where he was unhappy with his playing time.
The 21-year-old Carvallo was playing with Universitario de Deportes in Peru's first division, while the 27-year-old Peralta was with Club Almirante Brown in Argentina's second division.
Carvallo has a U.S. green card so he will not count as an international player. Peralta is awaiting a work visa.
Last week, United signed signing Colombian defender Gonzalo Martinez and obtained Argentine forward Franco Niell on a one-year loan from the Argentinos Junior club.
You can't tell the players without a world map.
Over at Eyes on Trade, Todd Tucker had this to say in reaction to the Brazil - Tyres decision:
No one would say that Brazil's enviro policy was the perfect solution to the problem. But many, many environmental policies are that imperfect. Perhaps due to other influences in the legislature or elsewhere, you can't get a full ban on all kinds of tires from all countries. Perhaps an environmental measure won't solve the environmental problem, but it can make a contribution to solving the problem, or serve as an initial step towards mobilizing a constituency for systematic reform.
Here's my concern with this view. If you allow "other influences" to put discrimination among countries into domestic laws, you open the door for domestic industry to turn a wide range of domestic laws across many policy areas into vehicles for protectionism.
From the NY Times, a report on U.S. men going to Mexico for a controversial medical treatment:
PUERTO VALLARTA, Mexico — Some weekends, more than a dozen American men wait at beachfront hotels, anxious for their turns in the treatment room at a small private hospital here.
They are medical tourists with prostate cancer. And they are queued up for the latest therapy — one advertised with pictures of couples strolling on the beach and pitched as a way to treat the patients’ disease while preserving their sex lives.
We have a new contributor: Meredith Lewis of Victoria University of Wellington Law Faculty in New Zealand. A big welcome to Meredith!
The U.S. Presidential campaign is getting somewhat heated on the Democratic side, and the acrimony seems to have spilled into trade policy:
On trade [Barack Obama] also criticized her for saying one thing and taking another position when she decided to run for the presidency. “Because only in Washington could Senator Clinton say that NAFTA led to economic improvement up until she started running for President,” he said. “Now she says we need a time-out on trade. No one knows when this time-out will end. Maybe after the election.”
I don't mean to take sides here, but I think he makes a somewhat valid point. Why call for a "time-out" on trade? If there's a problem with trade and trade agreements, why not try to come up with a solution? No one is calling for a "time-out" on health care or other issues.
In fairness to her, though, her actual quote is: "And as President, in my first months in office, I will take a time out from new trade deals to assess their impact before going forward." So, I don't think it's quite right to suggest the time-out will end "after the election."
The Republican candidates were debating in Florida last night. In response to a question about tax cutting, Governor Huckabee said the following:
But let me speak to the really heart of what I think a lot of Americans are concerned about with the economy. And frankly, in talking about the stimulus package, one of the concerns that I have is that we'll probably end up borrowing this $150 billion from the Chinese. And when we get those rebate checks, most people are going to go out and buy stuff that's been imported from China. I have to wonder whose economy is going to be stimulated the most by the package.
It seemed like a bit of a non-sequitur to me, trying to tie concerns with the stimulus to China trade. Later, the candidates had a chance to ask each other questions, and Mitt Romney came back to the issue with this question for Rudy Giuliani:
MR. ROMNEY: I think Governor Huckabee raised a good question when he spoke about China and the impact of China. I think what you're seeing in the world is that as the emergence of Asia occurs, that the demand for more oil around the world is driving prices very high. The Chinese are supplying to us today toys and Christmas tree ornaments and dog food, but they're going to want to make jumbo jets and patents for various medicines and software. They're going to be a much tougher competition, China is, competitor, than we have seen from Europe in a long time.
And the question that I have is, how are we going to make sure that as we compete with China, and I'm going to address this to Mayor Giuliani, as we compete with China, how do we make sure that trade is done in a way that levels the playing field? How do we make sure that China stabilizes the world economically, but that we protect American industry and American jobs, and do not cause a departure of jobs from this country? What kind of relations do we need to have with China economically?
I know our military issues but economically, Mayor, what kinds of things do you think we can do to make sure that the trade is done at a level playing field, and where American industries are strengthened and not put in jeopardy by virtue of the growth of this great part of the world?
MR. GIULIANI:
...
The reality is that China is a great opportunity for America and a great caution for America, both. It's a great opportunity for us to engage, to engage in trade, and the more America engages in trade, the more we get to know a country, the less likely we are to have military hostilities.
I think we should be working with China to try to push down some of these barriers; protection for intellectual property; rule of law; an ability to sue in China, so that you can be protected if you're doing business there. We've got to be very careful about what we import from China, from the point of view of safety and security, not as much from the point of view of our economy.
And then I think we have to look at the rise of China as a wonderful opportunity. I see 20 (million) or 30 million people coming out of poverty in China every year. To me, that's 20 (million) or 30 million more customers for the United States. That's 20 (million) or 30 million more people we can be selling things to.
We should be thinking like aggressive entrepreneurial Americans. What can we sell to China? We can sell them energy independence. They need it more than we do. We can sell them health processes. We can sell them information processes. They are at a level of development that's here. We're at a higher level of development. They need to buy what we have.
...
I couldn't tell if this was a softball question by Romney or if he really shares Huckabee's concerns.
Over at Eyes on Trade, Holly Shulman has a great post about a conference in which several of the Presidential candidates' economic advisers talked about their views on economic issues. She "loosely transcribed" what they said on trade. Here are some snippets (there is more at her full post):
I just happened on a very nice compilation of the U.S. Trade Promotion Authority law and background materials. It is at http://finance.senate.gov/TradePromotionAuthority.pdf
"WTO Law and Practice: The State of the Discipline
February 15, 2008
Chicago, IL
The American Society of International Law and the Loyola University Chicago School of Law present the International Law Review 2008 Symposium; a one-day conference and workshop that will focus on recent developments in World Trade Organization Law, including the Doha Round appraisal and implications, WTO law in a world of fragmented international law, WTO law and developing countries, and the impact of WTO law in domestic legal orders. The day will feature cutting edge scholars presenting their papers and ideas about WTO-related progresses. This program has been approved by the Illinois MCLE Board for 4.75 hours of credit".
For the full conference program, see http://www.luc.edu/law/activities/publications/ilrsymposium/2008sym/wto_brochure.pdf .
A large and sophisticated literature examines the normative desirability of granting "direct effect" to WTO law in domestic courts. However, much of this scholarship focuses on civil litigation. A related, but largely unexplored, question relates to the impact, if any, of WTO law on criminal prosecutions. In particular, can individuals be criminally prosecuted for violation of domestic laws found to be WTO-inconsistent?
A U.S. district court recently addressed this issue. The case involved a criminal prosecution for, inter alia, violations of the Wire Act. The defendants argued that the Wire Act charges should be dismissed "because (1) the Charming Betsy canon of construction and the principle of international comity dictate that the Court interpret the Wire Act . . . so as not to violate [WTO] violations; and (2) the WTO's Appellate Body decision in the Antigua gambling case is self-executing and therefore binding upon this Court."
In U.S. v. Lombardo, the federal district court for the District of Utah had little difficulty dismissing these arguments. First, the court held that the Charming Betsy argument was unavailing because this canon of construction comes into play only when federal statutes are ambiguous. However, the court held that the unambiguous terms of the Wire Act clearly apply to online gambling. The court then held that defendants could not rely upon the AB report in the Gambling dispute because U.S. courtrs are not bound by AB reports, and because the implementing legislation expressly forecloses "any cause of action or defense under any of the Uruguay Round Agreements" to parties other than the federal government.
As Simon has noted, a similar motion to dismiss on the basis of the Gambling report is pending in the criminal prosecution of Gary Kaplan and Betonsports in the Eastern District of Missouri. The Lombardo decision is broadly consistent with other federal court decisions refusing to give effect to panel or AB reports in civil litigation. See, e.g., Corus Staal v. U.S.
Are others aware of any other jurisdictions that have considered the "direct effect" question in the criminal context? Are there legal or policy reasons to have a different rule on "direct effect" when it comes to criminal prosecutions?
Jeff Dunoff
P.S. Thanks to Simon Lester for tracking down a copy of the Lombardo decision, which can be accessed here.
For those in Chicago, the Loyola University Chicago International Law Review will be hosting a conference on February 15 on: WTO Law and Practice: The State of the Discipline. Many of the folks on the left side of this page will be there, along with quite a few others. More details here.
Argentina is limiting its beef exports:
Taming inflation was [former President Nestor] Kirchner's goal when he banned most [Argentine] beef exports last year. This year, exports were capped at 480,000 metric tons, down from nearly 700,000 tons in 2005.
Kirchner's wife, the newly elected President Cristina Fernandez, has promised to maintain a high export tax that makes outbound beef too costly for many foreign buyers. So ranchers must keep selling 80 percent of their meat to swamped local markets where profits as well as prices are low.
As an occasional beef consumer, I don't like the higher beef prices I pay as a result of this. The problem, of course, is that foreign producers are happy with the diminished competition, so they are never going to complain. Isn't there some country that consumes a lot of beef, but does not produce much, that might challenge this under WTO rules? Could the Argentine beef industry pay some other WTO Member to bring a complaint?
(And yes, I admit I did this post mainly because the post title was too perfect to pass up.)
Speaking of NAFTA, as we were yesterday, the Acting U.S. Secretary of Agriculture says that it could be "unraveling," as the U.S. and Mexico want to attach a sugar "side agreement" to the new U.S. farm bill, limiting Mexican exports of sugar to the U.S. The Secretary says this could result in "Mexico demanding restrictions on U.S. exports of pork, poultry and other commodities." Here is more.
If they start excluding too many products, they'll have to worry about meeting GATT Article XXIV's "substantially all trade" requirement.
According to Barack Obama, in tonight's Presidential debate, it was:
... on trade, John [Edwards] is exactly right that you travel around South Carolina and you see the textile mills that John's father worked in closed, all over the region. And it is absolutely true that NAFTA was a mistake.
I know that Hillary on occasion has said -- just last year said this was a boon to the economy. I think it has been devastating, because our trade agreements did not have labor standards and environmental standards that would assure that workers in the U.S. were getting a square deal.
But, he says, the U.S.-Peru FTA, which he voted for, is good, in part because of the new environment/labor standards:
But the only thing I want to differ on John is this whole notion of Peru. The Peru trade deal had labor and environmental agreements in it. Peru is an economy the size of New Hampshire. Over 90 percent of the goods coming from Peru already come in under various free trade agreements.
Interestingly, he also mentions the size of Peru and the fact that many of its goods already came in duty-free. It's not clear to me whether these are general factors he would consider in determining whether to support a particular trade agreement, or if it was just an off-hand remark. These debates are difficult, and some of what is said may not have been thought out precisely.
Speaking of job losses from trade, as we were the other day, here's a story from Germany:
Anti-Nokia anger in Germany for closing a factory is growing with politicians publicly ditching the firm's phones and joining calls for a national boycott in Europe's largest economy.
The Finnish mobile phone giant said on Tuesday it plans to close the factory in Bochum in the Ruhr industrial heartland and shift production to Romania where labour costs are lower. The closure will result in 2,300 job losses.
Finance Minister Peer Steinbrueck, from the left wing party in Chancellor Angela Merkel's governing coalition, attacked what he called Nokia's "caravan capitalism."
What I found most interesting about the story was the following:
The anger at Nokia is partly fuelled by the fact that the German government and the state of North-Rhine Westphalia, where Bochum lies, have provided the company with some 80 million euros (117 million dollars) in aid.
EU Industry Commissioner Guenter Verheugen, a German, told Welt am Sonntag newspaper the case should prompt a rethink of subsidies. "There is no point in the state paying subsidies to attract companies," he said.
This reinforces my belief that governments, both local and national, are making a mistake by engaging in competition for business through tax breaks/subsidies. Over the long run, any benefits may not be worth the money spent. Economic welfare would be improved if governments would agree among themselves not to provide these kinds of subsidies.
From the Korea Times:
Foreign envoys whose countries adopt English as an official language criticize what they call Korea's discriminative visa regulations against foreign English teachers. Korea allows English teaching or E-2 visas to only native-English speakers from the United States, Canada, United Kingdom, Australia, New Zealand, South Africa and Ireland.
The envoys said the "narrow-minded'' visa policy prevents Koreans from developing English proficiency in a more efficient and cheaper way. They also argue it is against international norm of equal treatment for all.Last week, Pakistani Ambassador Murad Ali sent a letter to Justice Minister Chung Soung-jin, urging the Seoul government to allow qualified Pakistanis the English teaching visa.
Should English teachers have to be from designated English-speaking countries? Clearly, they have to speak English. But just as clearly, there are many people from countries other than those listed in the article who speak excellent English (some better than mine, no doubt). Is the distinction Korea makes a reasonable one? I haven't looked at Korea's GATS commitments to see what they say about this issue, but there were some allegations that the rules have been violated:
[Ambassador Ali] also said that the regulation violates the World Trade Organization (WTO) rules (Article II of GATS), which mandate most-favored-nation (MFN) treatment to all WTO members.
From the Palm Beach Post:
Globalization. With more than 35 percent of [National Hockey League] players from Europe, there's a keen interest in taking more games overseas and even establishing teams there.
"Growing the revenues of the sport is a huge issue," Kelly said. "Should we be bringing our games to Europe, where we have a natural fan base? European players certainly favor that. Many North American players favor it."
I've always thought that, of the major sports, hockey had the chance to go furthest with an international professional sports league. More countries play soccer, of course, but that's what would make an international soccer league difficult to manage: too many competitors. With hockey, on the other hand, you are, to a great extent, limited to northern Europe and North America. What you could do is have two conferences, one in Europe and one in North America. The teams would play mostly within their conference during the year (with maybe one trip to the other continent) and then the championship would be between the European and North American conference winners.
A poll on Lou Dobbs' web site:
Do you believe people who use words like "protectionism" are offering a false choice between "free" trade and no trade, to distract from the fact that they are shipping jobs out of this country?
Yes 95% 8600 No 5% 408 Total Votes: 9008 This is not a scientific poll
What I found interesting about this poll was the suggestion that "protectionism" is somehow an unfair way to characterize somebody's views. The question indicates that people who use this word might be offering a "false choice." To me, though, "protectionism" is one of the clearest words in the trade vocabulary. At its core, I take it to mean a policy to favor domestic producers over foreign producers. Now, there might be a variety of reasons to support "protectionism" (e.g., infant industry arguments, as a response to the protectionist policies of other countries, etc.) But regardless of why you support it, the policy itself is fairly clear. This is in contrast to many other terms, even those like "free trade" and "trade liberalization," where I'm not always sure what people have in mind.
To go even further, I think that support for or opposition to "protectionism" is really the best gauge of someone's views on trade issues, as trade agreements themselves are often a mixture of many different policies. The question I always want to ask people is, do you support protectionism, and, if so, in what circumstances? That, to me, is the fundamental trade question that needs answering.
UPDATE: The Dobbs web site seems to have replaced this poll with another one, but I swear that poll was there yesterday!
No, it's not a headline from The Onion. It actually happened:
Sen. Charles Schumer said Sunday that rising demand for the corn-based fuel additive ethanol is contributing to a spike in milk prices and called for lifting the 54-cent-per-gallon tariff on ethanol imports.
Schumer, D-N.Y., said rising milk prices have been caused by, among other factors, a nationwide increase in demand for ethanol. The same corn used for ethanol is used in animal feed.
He called for the immediate lifting of the tariff on foreign ethanol imports to increase the supply of the federally mandated fuel additive, reduce pressure on the corn market, and bring down milk prices.
You don't see that everyday. (Maybe he wants cheap fuel so he can drive one of these.) No doubt there will be a good deal of resistance to the idea, though. I wonder what the Presidential candidates will say. Now that the Iowa caucuses are over, they might not feel the need to be quite so pro-ethanol subsidies.
The following two "WTO Scholars' Forum" events may be of interest to this blog's readers:
1. WTO Scholars' Forum Seminar:
"Normative Integration as Authority Allocation: Two Models and their Application in the WTO"
Dr Tomer Broude, The Hebrew University of Jerusalem
28th January 2008 at 1pm at the LSE
To register free of charge please contact Forum administrator, Ann Tucker, ann.tucker@ucl.ac.uk
For more about the WTO Scholars' Forum see the website: http://www.ucl.ac.uk/laws/wto-forum/index.shtml or contact Dr Fiona Smith (fiona.m.smith@ucl.ac.uk) or Dr Isabelle Van Damme, (iv218@cam.ac.uk).
About the seminar:
This seminar compares and contrasts two models of normative integration in international law, focusing on their explicit and implied application in World Trade Organization (WTO) jurisprudence. 'Normative integration' in this context refers to a deliberate processes of countering normative fragmentation by blending and merging formally disparate substantive rules through interpretation, concurrent application, inter-rule 'comity' and other methods. One quite celebrated model of normative integration is offered by Article 31(3)(c) of the Vienna Convention on the Law of Treaties (VCLT), whereby in the interpretation of a treaty, any relevant rules of international law applicable "in the relations between the parties" shall "be taken into account". A less well-known model of normative integration, applicable in the international law of sustainable development, can be found in the Principle of Integration in Paragraph 4 of the 1992 United
Nations (UN) Rio Declaration on Environment and Development, whereby ‘[i]n order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it’. The discussion will first explain how models of normative integration – usually considered as methods of reconciling conflicts in applicable law - also serve as principles of authority allocation among different generators of international norms. It will then review the application and/or implementation of both Article 31(3)(c) VCLT and the Rio Principle of Integration in WTO jurisprudence. The benefits and limits of each model will then be analyzed, and in conclusion, the viability of a general rule of integration as a principle of authority allocation in international law will be discussed, highlighting the VCLT model's tendency to focus on technical hierarchies, on one hand, and the Rio Model's abstractness and circularity, on the other.
2. WTO Scholars' Forum: Roundtable Discussion: The Brazil/Tyres Dispute
Iain McVay, Steptoe & Co.
Lothar Ehring, Directorate-General for Trade, European Commission
Dr. Andrew Lang, London School of Economics
5th February 6-8pm, Moot Court, UCL
To register free of charge please contact Forum administrator, Ann Tucker, ann.tucker@ucl.ac.uk
For more about the WTO Scholars' Forum see the website: http://www.ucl.ac.uk/laws/wto-forum/index.shtml or contact the Directors, Dr Fiona Smith (fiona.m.smith@ucl.ac.uk) or Dr Isabelle Van Damme, (iv218@cam.ac.uk).
About the discussion:
“The decision of the World Trade Organization’s Panel in the Brazil – Tyres case has the potential to become a milestone in WTO jurisprudence on trade and the environment. At issue was Brazil’s ban on imports of retreaded tyres. The European Communities (EC) challenged the ban as a violation of WTO rules, whereas Brazil defended the measure as necessary to protect health and the environment. The Panel held that, although the ban was necessary to protect health and the environment, it was applied in a WTO-inconsistent manner because Brazil failed to enforce a similar ban on used tyre imports. Thus, the Panel decision effectively directed Brazil to impose further trade restrictions so as to advance its environmental objective. Previous WTO decisions have not gone this far in safeguarding environmental values. “ (2007) 11(23) ASIL Insights. The recent Appellate Body decision, only adds further interest. Our distinguished speakers will evaluate aspects of the dispute from both the EU's perspective, and an industry perspective to act as a starting point for further discussion.
Via Dani Rodrik, Mitt Romney said the following while campaigning in Michigan:
“Here in Michigan, the skies are cloudy all day, the trees are all the right height, people talk without an accent and most of the cars on the road are American made — as they ought to be,” he said.
Somehow I don't think he meant the Toyota models mentioned here.
Economist Steven Landsburg argues:
Bullying and protectionism have a lot in common. They both use force (either directly or through the power of the law) to enrich someone else at your involuntary expense. If you’re forced to pay $20 an hour to an American for goods you could have bought from a Mexican for $5 an hour, you’re being extorted.
This is in the context of a provocative article suggesting that we should not compensate those who lose from free trade. As he puts it:
Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?
The NY Times reports:
In a sign of growing concern about the impact of supposedly “green” policies, European Union officials will propose a ban on imports of certain biofuels, according to a draft law to be unveiled next week.
If approved by European governments, the law would prohibit the importation of fuels derived from crops grown on certain kinds of land — including forests, wetlands or grasslands — into the 27-nation bloc.
...
Not only is native vegetation, including tropical rain forests, being chopped down in places to plant the crops, but fossil fuels, like diesel for tractors, are often used to farm the crops. They also demand nitrogen fertilizer made largely with natural gas and consume huge amounts of water.
Already, the draining and deforesting of peatlands in Southeast Asia — mainly to make way for palm plantations — accounts for up to 8 percent of global annual carbon dioxide emissions, said Adrian Bebb of Friends of the Earth, an environmental group.
In Indonesia, he said, more than 18 million hectares of forest, or 44 million acres, have already been cleared for palm oil developments. Environmental groups say the developments are endangering wildlife like the orangutan and the Sumatran tiger, and putting pressure on indigenous peoples who depend on the forests.
This all calls to mind the paper by Stephanie Switzer mentioned here. There are certainly some possible trade implications, depending on the specific terms of the law. As the Times article points out:
... in answer to a reporter’s question, an organization representing major growers of crops for biofuels in Malaysia said the E.U. should be cautious before imposing new rules. It said that farmers in the region were adopting more sustainable practices, and warned that restrictions on imports could cause trade tensions.
“The Malaysian government is very concerned about the E.U. scheme for sustainability of biofuels,” said Zainuddin Hassan, the manager in Europe for the Malaysian Palm Oil Council in Brussels. The measures “should not be a trade barrier to the palm oil industry and it should comply with the W.T.O. rules as well,” he said, referring to the World Trade Organization.
For those interested in the methodology of law and economics as applied to international law, it might be worth checking the latest issue of the Illinois Law Review, for a series of papers using and commenting on this method.
The Jan 10 FT explains that the chair of the large toy company, Hasbro, is calling for global regulatory standards for toys:
The US, EU and other jurisdictions enforce unique safety regimes that can force toy companies and their suppliers, most of whom are based in China, to adopt different testing and even manufacturing procedures for each destination market. Standards can vary between states within the US.
“Why can’t we have one mandatory global safety standard for toys?” Alan Hassenfeld, chairman of the US-based Hasbro toy company, said on Thursday in an interview with the Financial Times. “If we had one standard for the entire world everyone would cheer because we’re so confused [by the competing standards] and it’s a huge cost.”
While this seems utterly reasonable, one wonders whether global standards would give Hasbro a competitive advantage over more local toymakers. Also, presumably larger companies from wealthier countries would dominate the standard-setting process, and might set standards that benefit their positions.
Nevertheless, it is hard to argue for a right to regulate less in this field, and presumably the global standard would be a minimum, not a maximum.
The recent arbitration of the SCOO available for Antigua to use against the United States in the Gambling case featured some important developments (WT/DS285/ARB, 12/21/07).
Perhaps the most interesting is the new standard employed by the arbitrator to determine the counterfactual that would be used to model the level of the SCOO. In this new test, the counterfactual selected has to be “reasonable” and “plausible” given the policy objectives of the government that has been found to violate WTO law (see paras. 3.45, 3.51, 3.56). I do not recall the arbitrator in the Hormones or FSC case taking into account policy objectives of the EC and the US respectively.
Another interesting feature was the willingness of the arbitrator to use a counterfactual that might not itself constitute compliance. The arbitrator implies that its counterfactual is WTO-consistent (see para. 3.49), but the arbitrator does not analyze the point. Indeed the arbitrator claims that it is not considering the WTO-legality of the counterfactual offered by the US and accepted by the arbitrator as a substitute for the counterfactual offered by Antigua and rejected by the arbitrator as being unreasonable. I don’t recall this happening in a previous arbitration.
A third feature was Antigua’s decision to reject the U.S. proposal for transparency in the arbitration process (see para. 2.29). Antigua does not explain why it opposed the open hearing and one wonders why they would have rejected the opportunity to get more public scrutiny of what the United States was saying in the arbitration and the questions that the arbitrator was asking.
One possible answer is that Antigua’s counsel pursued its self-interest on this point and did not want public scrutiny because they were so obviously out-lawyered by the U.S. government attorneys with greater experience. Antigua made a number of embarrassing mistakes in the arbitration (see for example, paras. 4.46 and 4.47).
A fourth feature was the arbitrator’s authorization for Antigua to use a SCOO in intellectual property. It will be interesting to see if Antigua does so.
The Economist reports:
IN 2005 two American senators introduced a bill into Congress that threatened to slap a tariff of 27.5% on all Chinese imports unless the yuan was revalued by the same amount (their estimate of how much the currency was undervalued). That legislation was dropped, but several other China-bashing bills are still working their way through Congress and accusations about “unfair” Chinese competition will surely play a big role in this year's presidential election. Many American politicians and economists talk as if the yuan was still fixed against the dollar. Yet on current trends, by the time the next president enters the White House the yuan could be within spitting distance of the magic figure demanded in 2005.
Since the beginning of October the yuan has climbed at an annual rate of 13% against the dollar—its fastest pace since China stopped pegging to the dollar in July 2005 .... Since 2005 it has appreciated by a total of 14%. The offshore forward market is pricing in another 8% increase over the next 12 months; several economists are betting on a rise of 10% or more.
So does this mean the U.S.-China currency dispute is close to being over? Probably not, they say:
The yuan's rise is unlikely to silence flag-waving American Congressmen or economists. The slide in the dollar since 2005 means the yuan has risen by only 5% in trade-weighted terms, according to the Bank for International Settlements. China's current-account surplus has risen from 4% of GDP in 2004 to 11% last year, so any gauge that defines the equilibrium exchange rate as the rate that would eliminate the surplus would suggest the yuan is now even more undervalued. In 2005 Morris Goldstein and Nicholas Lardy at the Peterson Institute for International Economics estimated the yuan was 20-25% undervalued. By late 2007 they thought it was at least 30-40% undervalued despite its gain over the previous two years.
More at the link.
From Dani Rodrik (via the Center for Global Development):
Seventy-five percent of Mozambican physicians practice abroad, mostly in Portugal. The corresponding numbers for Ghana and Cameroon are 56% and 46% respectively.
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