International Economic Law and Policy Blog

More on OPEC from Sen. Lautenberg

From his debate with an opponent for his Senate seat:

Lautenberg said he hoped to win passage of a bill that says, “If you are part of a monopoly like OPEC you cannot belong to the World Trade Organization, which offers all kinds of commercial benefits.” If the bill is enacted, the senator said, he would move to oust Saudi Arabia and Venezuela from the WTO.

I'm curious to see the exact wording of the bill, because my impression of his previous bills on the subject was that he would simply call for a WTO complaint against OPEC.  It is hard to imagine how a U.S. law declaring that OPEC members cannot belong to the WTO would be very effective.

McCain or Obama?

I'm curious to see which Presidential candidate this blog's readers support (I suspect that many readers are not U.S. citizens, so here's your chance to vote!).  The candidates are listed alphabetically -- that seemed like the fairest approach.

Which U.S. Presidential candidate do you support?
	McCain
	Obama
pollcode.com free polls

That first question is about general support.  Here's one more, relating specifically to trade:

Which U.S. Presidential candidate do you prefer on trade policy issues?
	McCain
	Obama
pollcode.com free polls

I'll keep this post at the top for a few days to give people a chance to vote.

THE RESULTS (10 p.m. EST, Friday, Oct 31):

I think we have a big enough sample now to report some results.  On the first question, it was an Obama landslide: 99-13 (88% for Obama).  On the trade policy question, it was dead even: 45-45.  Interesting, although not too surprising.

On the trade question, I confess to being a bit torn.  On some issues, subsidies in particular, I think McCain is very good (unless you favor subsidies, in which case you won't like him much!).  Generally speaking, it seems to me that McCain would continue the current administration's trade policies pretty much as is.  So if you like those policies, you will probably like McCain on trade.

What Obama's trade policy will look like is less clear.  There are a few things we know, such as:  he favors the use of subsidies in a number of areas; he wants to incorporate strong labor and environmental protections into trade agreements; and he has talked explicitly about taking tax breaks away from companies that "ship jobs overseas" and giving tax breaks to companies "that create jobs in the U.S."  He has made clear, though, that he believes in free trade in principle.  One thing I'm uncertain about is how hard he will push forward with trade negotiations.  For example, he could use his skepticism of some bilateral FTAs to stop doing anything on trade (sort of like Hillary Clinton's proposed "time-out").  On the other hand, he could turn away from bilaterals and focus on the WTO, by trying to come up with a new multilateral proposal that gets the Doha round moving. 

He is going to have a lot on his agenda, though, and it's not clear how prominent a role trade agreements will play.

Follow-up on the Asbestos Case

The WTO asbestos dispute seems long over (thank goodness, many people would say), but some issues related to exporting asbestos are still out there.  The Economist reports:

FOR more than a decade, workers in hazmat suits have been boring into the walls and ceilings of Canada’s parliament buildings to remove tonnes of asbestos insulation. This tedious and expensive work is to protect the health of lawmakers and their staff: even limited exposure to asbestos can cause lung cancer or mesothelioma, a deadlier cancer. These risks have prompted most rich countries, and many poor ones, to ban all forms of asbestos.

But they have not stopped Canada from exporting large quantities of the mineral to developing countries, especially in Asia, nor discouraged the government from paying to promote its use abroad. This is “corporate welfare for corporate serial killers”, says Pat Martin, a former asbestos miner who is one of the few members of parliament to denounce the hypocrisy.

Campaigners hope that it will end at a meeting in Rome, starting on October 27th, of the Rotterdam Convention, a registry compiled by the United Nations of hazardous substances which require “prior informed consent” before they can be exported from one country to another. Canada has lobbied vigorously to prevent chrysotile, or “white” asbestos—the only kind still mined—from being included.

The article mentions India, Iran, Kyrgyzstan, Peru and Ukraine as other countries opposing the listing of asbestos in the UN registry.  Thus, even if Canada bans asbestos mining, which the article suggests it might do, there are still other countries who will be trading it, and possibly raising trade disputes over it in the future.

Tuna III?

I haven't seen much detail about this, but there are two reports of a new WTO complaint by Mexico against U.S. tuna restrictions:

The Mexican government says it has formally requested World Trade Organization consultations on U.S. labeling restrictions that it says effectively exclude Mexican tuna from the U.S. market.

Mexico claims its tuna complies with international standards on reducing the accidental capture of dolphins. But U.S. rules prohibit Mexico from using the "dolphin-safe" label needed to sell the product in the United States.

Mexico's Economy Department said Friday in a statement that the restrictions have shut down a third of the Mexican tuna fleet.

I'll update this post if I hear more.

UPDATE:  Here's the consultations request.  Some of the key language:

The US measures have the effect of prohibiting the labelling of Mexican tuna and tuna products as "dolphin-safe", even when the tuna has been harvested by means that comply with the multilaterally agreed "dolphin-safe" standard established by the Inter-American Tropical Tuna Commission, while tuna products from most other countries, including the United States, are allowed to be labelled as "dolphin-safe".

In this respect, it appears that:

1. Mexican products are accorded treatment less favourable than like products of national origin and like products originating in any other country;

2. Mexican products are not accorded immediately and unconditionally any advantage, favour, privilege or immunity granted to like products of any other Member;

3. the measures have the effect of creating unnecessary obstacles to trade;

4. the measures do not use as their basis an existing international standard; and

5. the procedures for assessing conformity with the "dolphin-safe" technical regulation (i) do not grant access for suppliers of Mexican products under conditions no less favourable than those accorded to like products of national origin or originating in any other country, in a comparable situation, and (ii) create unnecessary obstacles to international trade.

Why Do We Have SPS Agreement Article 5.1?

Every time I think about SPS Agreement Article 5.1, as we have been in relation to the Hormones II AB report, the following question occurs to me:  Why is there an international trade rule requiring SPS measures to be based on a risk assessment?  Put another way, what is the purpose of this provision?

I suppose one way to answer these questions is that certain U.S. industry folks wanted the provision as a way to pry open the European beef market.  That may not be the whole story, but I'm pretty sure I've heard this mentioned at some point as part of the explanation.

But aside from that political explanation, what is the best way to characterize the provision's purpose based on its terms?  I see two possibilities (there may be others):

-- Article 5.1 is about promoting efficient, effective regulation ("good governance").  SPS measures with no scientific basis are not efficient, so we prohibit them.

-- Article 5.1 is a proxy for rooting out disguised protectionism.  National Treatment rules can be ineffective in some situations, and therefore we have come up with a way to uncover hidden protection, as sham SPS measures with no scientific basis are sometimes used to protect domestic products.

Is it one of these?  Something else entirely?  I'm curious to hear people's thoughts on this.

2008 Biennial ASIL IELIG Conference: The Politics of International Economic Law: The Next Four Years

2008 Biennial ASIL Interest Group Conference: The Politics of International Economic Law: The Next Four Years November 13, 2008 ~ November 15, 2008 George Washington University School of Law 2000 H Street, NW Washington DC 20052 USA

Only ten days after the U.S. presidential election, and in the midst of international economic uncertainty and financial crisis, the ASIL International Economic Law Interest Group will convene in Washington, DC, to discuss the politics of international economic law. After an election campaign that spotlighted the intensifying relationship between international and domestic economic issues – as seen in trade, financial interdependence, exchange rates, investment, immigration, energy, and regulation – our focus turns to the international agenda of the next four years, for the new administration, for global economic governance, and for the international community at large. In addition to more than 35 academic presentations, the conference will include commentators & distinguished speakers from practice, government, and academia, including: A keynote lunch speech by Daniel M. Price (Deputy National Security Advisor for International Economic Affairs and Assistant to the President for International Economic Affairs); An endnote discussion between John H. Jackson (professor at Georgetown University Law Center) and William Frenzel (Former Ranking Member, House Committee on Ways and Means; U.S. Congress, 1971-1991; Guest Scholar, Brookings Institution); A roundtable on the international financial crisis with Peter Bakstansky (former Senior Vice-President, New York Federal Reserve Bank; Michael Bradfield (Jones Day LLP; former General Counsel, Federal Reserve Board); and Edwin M Truman (Senior Fellow, Peterson Institute for International Economics; former Ass’t Sec. of Treasury for Int’l Affairs; former Director, Division of Int’l Finance, Federal Reserve Board); and Moderator: R. Michael Gadbaw, Distinguished Visiting Fellow, Georgetown University Law Center; former Vice-President and Senior Counsel, General Electric; and others to be confirmed. To view the draft program, please click here. To register, click here. For more information, please contact Tomer Broude at tomerbroude@gmail.com.

Adversarial discourse and the culture of science in Hormones II

I am struck by a difference in perspective between the panel and the appellate body with respect to the role of scientific expertise in advocacy. The panel seems to believe in the reliability and credibility of scientific expertise and thereby downplays the risk that science can be subverted to bolster policy choices resting on extrascientific considerations. It depends on the culture of the scientific community to validate and falsify claims, independent of the institutional interests of the particular actor. Hence the failure to regard the prior authorship of official international studies as a basis for a conflict of interest sufficient to require exclusion of the two experts. And also hence the the argument that once a critical mass of scientific opinion had coalesced around a particular position, only especially significant and persuasive new research can suffice to disrupt that consensus and create a new insufficiency of evidence under 5.7. The Appellate Body, by contrast, seems to understand the tendency of scientists to invest in their prior positions. commitment to the scientific method notwithstanding, and therefore to regard criticism as bad science. In this sense, the panel seems wedded to old-fashioned modernism, while the Appellate Body smacks of Kuhn.

What does this mean for the next step in the dispute? The next panel to consider the case will have to undertake an independent assessment of the validity of the scientific research on which the EC rests its judgment that no scientific consensus exists about the validity of a risk assessment relevant to its higher risk avoidance standard. In undertaking this task, it will not be sufficient to count noses and determine whether a sufficient number of credentialed scientists discount the views of the skeptics. Given that the panel comprises lawyers rather than scientists, however, I wonder what this independent assessment will look like. If the panel cannot do the science itself, on what kind of proxies can it rely to determine whether consensus has been disrupted or not?

More Online Gambling Tensions

Another front opens up in the gambling dispute:

A judge in Kentucky seized the Web addresses of more than 140 Internet-gambling sites last week, the latest example of how local governments can affect online businesses with physical operations beyond their jurisdictions.

...

In the Kentucky case, Circuit Court Judge Thomas Wingate concluded that gambling Web sites were “virtual keys” that provided access to places where one could play online versions of gambling devices such as slot machines and roulette tables, which are illegal in the state.

None of the online businesses—such as GoldenPalace.com, PokerStars.com and UltimateBet.com—are based in Kentucky or rely on technical equipment located in the state. Still, the sites readily accept bets placed by users in Kentucky and process payments from banks based there. That is what triggered Judge Wingate to seize control of the Web addresses.

...

The court said it will lift its seizure order for online casinos if they implement technology that would block Kentucky residents from accessing their sites.

...

In the Kentucky case, many of the registrars are based in the U.S. even if the Web sites aren’t, meaning that they have to comply with the court’s order, says Todd Greene, an attorney for Oversee.net, which has a subsidiary called Moniker Online Services that is the registrar for two of the gambling sites.

Here is the court decision.

Mavroidis on Hormones II

Petros asked me to post the following for him:

I had one big concern when I read the panel report: the manner in which the panel understood Art. 23.2 DSU. For the rest I appreciated the manner that they went about precaution reversing (implicitly so) prior case law which saw a firewall between 5.1 and 5.7 SPS. There should be no firewall.

The AB, in my view, did a decent job undoing a lot of the harm the panel had done. It simply does not suffice to say I complied for the burden of proof to shift, and how on earth could the EC ever be deemd to be in compliance when the same panel some pages later was holding that no substantive compliance had occurred. If the panel wanted to privilege a 21.5 panel, then it should be for the EC to request it and not for the US. It is the EC that claims now that the US is acting illegality and, playing by the panel's rules, in dubio mitius should favour the US this time.

There is another issue however that continues to be overlooked in case law: how could it ever be that a 21.5 panel is requested to address such an issue (instead of a new original panel, as I believe should be the case)? Indeed we have seen on occasion a number of times second recourse to 21.5 but I believe it is contra legem. The law says that a 21.5 panel is instituted to see if compliance occurred during the RPT. Since there is only one RPT available (21.3) there should be just one compliance panel, end of the story.

2 quick points on Hormones II

Two quick points in relation to the decision in Hormones II:

I’ve always found it quite difficult to understand the distinction between scientific uncertainty and insufficiency of evidence in relation to Article 5.7. Does the AB do a better job of explaining it here (para. 677)? For the AB there is merely uncertainty but not insufficiency when there are divergent views in the scientific community in relation to risk. Insufficiency might, however, arise there are deficiencies in the body of scientific evidence attesting (or not) to the existence of risk. The support of a single scientific voice, counting as a qualified and respected source, can suffice to substantiate the existence of deficiencies. Is the idea here that scientists can reasonably disagree about how to interpret the results of risk assessment, even when they recognise that the risk assessment is valid? This does not bring Article 5.7 in to play. Article 5.7 only comes in to play when the disagreement is not one of interpretation relating to results universally acknowledged as valid results, but is a disagreement about the validity of the results.  Doubts about validity would include doubts which relate to the adequacy or otherwise of the ‘scope and methods’ of risk assessment (685).

Though the AB seems to re-emphasise the importance of qualitative insufficiency, stressed rhetorically but not recognised in practice by the Panel in EC – Biotech, it should not be overlooked that the AB erects a high threshold for reliance on Article 5.7. ‘When determining whether such deficiencies exist, a Member must not exclude from consideration relevant scientific evidence from ANY qualified and respected source’. (677, emphasis added). Note also, the AB’s observation that provisional measures would be unwarranted ‘where there is no pertinent scientific information available indicating a risk’ (681). Am I wrong in thinking that by contrast to the Article 5.1 threshold, we don’t really know yet what this demands. What does seem clear is that Article 5.7 shouldn’t only be viewed as being about risk (despite the word ‘more’ in relation to assessment of risk), and that pertinent available information attesting to the existence of a hazard, absence any further information about exposure, should sometimes suffice for the adoption of provisional measures. 

Second, in my book on the SPS Agreement (OUP, 2007, soon forthcoming in paperback, chapter 7), I take issue with the suggestion sometimes made that Article 3 SPS obliges Members to comply with international standards, giving them room for upwards movement but no room for movement downwards. I do so in part because the idea that such standards might be unequivocally binding on Members, as minimum harmonisation measures, regardless of their suitability for a particular country, seems inappropriate and wrong; not least because of concerns about the capacity of developing countries to participate effectively in the work of the standard setting bodies, and the suggestion that developing country data is sometimes overlooked in the promulgation of standards. I would still defend this view! That said, the AB does again and again stress that Article 3.3 permits Members to refrain from basing their measures on international standards when their measure results in a HIGHER level of protection than the international standard (for example, paras. 532 and 685). It could just be that in this case the contested measure is one pursuing a higher level of protection, or that the AB is just loosely abbreviating the first part of Article 3.3 without adding the nuance of the second part which talks about a different rather than higher level of protection, but read literally the AB doesn’t seem to have any doubt about its interpretation of Article 3 on this point, and it seems likely that it will be cited to this effect. Time will  no doubt tell.

Doha negotiation on Fisheries Subsidies

On 30 November 2007, Chairman of the WTO Negotiating Group on Rules issued Draft Consolidated Chair Texts of the AD and SCM Agreements (TN/RL/W/213), which contained Annex VIII to the SCM Agreement on Fisheries Subsidies. Annex VIII provides a wide range of prohibited fisheries subsidies that contribute to overcapacity and overfishing, including, inter alia, (1) subsidies conferred on the acquisition, construction, repair, renewal, renovation, modernization of fishing vessels, (2) subsidies conferred on operating costs of fishing including fuel, (3) subsidies in respect of port infrastructure, (4) income support to fishermen, and (5) price support for fisheries products (Art.I). On the other hand, it provides a limited number of exceptions, including (1) subsidies for improving fishing vessel and crew safety, (2) subsidies for the adoption of environmentally friendly technologies and equipments, (3) subsidies for early retirement of fishworkers as a result of government policies to reduce fishing capacity or effort (Art.II), on condition that any member maintaining such subsidies shall operate a fisheries management system within its jurisdiction based on internationally recognized best practices for fisheries management (Art.V).

The Annex thus introduces new disciplines on fisheries subsidies aiming at addressing overcapacity and overfishing, and connects them with internationally recognized fisheries management practices. This is totally different from the disciplines on subsidies under the SCM Agreement, whose aims at addressing trade-distorting subsidies. If adopted, the Annex will open a new page in the history of trade and environment under the GATT/WTO by introducing direct disciplines on overcapacity and overfishing. Also, it will require close cooperation with relevant international organizations such as FAO and regional fisheries organizations. This will provide both opportunities and challenges for the WTO. For instance, will WTO dispute settlement panels be able to decide on the adequacy of fisheries management system of a member country?   

It was announced that a follow-up negotiation on the Annex VIII would be held in early September this year. I'm not sure whether it was held, but am thiking of followin up the negotiation.

 

Nominating the Next WTO DG

On October 14, 2008, Ambassador Bruce Gosper, the chair of the WTO General Council, announced the procedures that would be used to select the Director-General after Pascal Lamy’s term expires.  Many observers think that Lamy will agree to serve again, and I hope that proves right as Lamy has done a good job in a difficult task.

Under the procedures, nominations by WTO member governments will be accepted during the month of December after which candidates will be invited to Geneva to meet with the selection committee.

In my view, the ability to nominate should not be limited to governments.  I am sure that the WTO’s 153 member governments would have some good ideas for who should lead the WTO, but I don’t think that governments have a monopoly on wisdom in that regard.  Moreover, there is a danger when nominations are vested exclusively in governments, that many qualified individuals will not be nominated because of nationalism.  Given that the real stakeholders at the WTO are economic and social actors, I would like to see groups like the International Chamber of Commerce, WWF, and CUTS be able to submit nominations too.

Another problem in allowing nominations only from sitting governments is that incoming governments do not get an opportunity to nominate.  In the United States, for instance, the Bush Administration’s mandate will expire on January 20, 2009 and yet that Administration will be the sole voice from the United States in making the nomination.  Isn’t it obvious that the WTO would make greater progress toward liberalizing trade if it recognized that the most vibrant and progressive ideas are likely to emerge from actors outside of governments?

Hard Cases (Can) Make Good Law

Hot on the heels of Joost's insightful summary and assessment of the Hormones II AB Report, and before more detailed discussion of the particular issues soon ensues, I would like to put forward a general assessment of this Report. A deliberately general assessment of the Report, as a judicial decision. While I have much to say about the Report's specifics, both in substance and procedure, I would like to first see the forest in spite of the trees.

To some extent this might be an (incomplete) turning point in WTO jurisprudence. While it is perhaps too early to write the annals of the AB, I will venture this: in the past we have seen AB decisions that were cautiously creative. Then we saw Reports that were confusedly cautious. In Hormones II, perhaps preceded by DS344, I believe we see an Appellate Body that is confidently consistent. This is an institutionally mature AB, capable of both coping with (if not settling!) a difficult case, and yet producing good law.

The Hormones II Panel failed on many fronts, but the worst of these related to legal, logical and political (in)consistency. The Panel Report was a non-Solomonic compromise in a dispute that crosses regulatory autonomy/health concerns with institutional compliance concerns with the Trans-Atlantic context. A hard case destined to make bad law. But the AB in this Report (not say that it has no faults) has stayed the course of consistency (also with respect to the burden of proof - but that would merit a new post), without compromise, and with great, non-authoritarian confidence.    

Setting aside specific criticisms, at first blush I see this case as a resounding consolidation of the institutional role of the AB. Where would the law be had we been left with the first instance? At the same time, however - as a reverse echo to Joost's question "who will still want to be a panelist in the future..."? - I see it as a confirmation of the need for a standing "Panel Body" that could reach decisions like this, leaving little cause for appeal.

T.

Is the bloodbath in Hormones justified?

As you may have heard, yesterday (Oct. 17), the Appellate Body released its long awaited report in the Hormones suspension case. Remember: In that case, the EC challenged US & Canadian continued sanctions as a violation of the DSU on the ground that (i) the EC had “removed” the illegal measure, so the sanctions had to end and the complainants had to initiate a 21.5 procedure, and (ii) continuation of the sanctions plus DSB statements implied “unilateral determinations” by the US/Canada in violation of DSU Art. 23.

This AB report is not only one of the longest ever (333 pages!). It is also one of the most critical reports ever issued v-a-v the earlier panel (including the experts it appointed!). It makes you wonder who will still want to be a panellist in the future … That said, on most issues the AB seems to be right, at least in my view:

1. OPEN HEARINGS: This is the first case where the AB held public hearings, notwithstanding the fact that DSU 17.10 unambiguously says “[t]he proceedings of the AB shall be confidential”. The AB finds that derogations to this rule are possible, as between the main parties, as long as this does not affect third participants (who were against). The AB speaks of “separate relationships” or what I would call “bundles of bilateral relations” where one can be altered for as long as the others are not affected. This may actually have repercussions also for the bigger debate on whether non-WTO treaties can derogate from the WTO treaty. (p. 320)

2. CONTINUED SANCTIONS AWAITING OUTCOME ARE OK : The AB reverses the panel’s finding that would have meant that whenever a defendant implements a new measure the sanctions must be suspended pending a multilateral decision on compliance. This would have put complainants in a really difficult situation as defendants could then practically avoid any sanctions by simply implementing new measures. (paras. 306, 308-9, 317)

3. POST-RETALIATION DISAGREEMENTS MUST BE BROUGHT TO 21.5: The AB makes 21.5 exclusive for post-retaliation disagreements (but parties can mutually agree on alternatives) (paras. 336, 340)

4. 21.5 CAN BE INITIATED ALSO BY DEFENDANTS; BOTH PARTIES HAVE OBLIGATION TO BRING 21.5: The big question of who should move (EC to confirm consistency of its new measure; or US to confirm continued violation) was split in two by the AB: both share the responsibility (para. 310, 355), with a newly (and somewhat strangely) defined rule on burden of proof on the implementing member in all such cases (para. 362 and, more questionably, paras. 580, 716).

5. TWO EXPERTS WERE FOUND TO BE CONFLICTED: Because they were also on the committee that had made the international standards from which the EC wants to deviate (very though decision for both the WTO/JECFA Secretariats and Drs. Boisseau and Boobis!) (para. 481)

6. PANEL WAS FOUND TO HAVE DONE ITS OWN RISK ASSESSMENT, rather than having reviewed the EC’s risk assessment (grave error in standard of review, para. 590, 598)

7. LEVEL OF PROTECTION DOES MATTER both in how a risk assessment should look like (para. 542), and in deciding on when evidence is “insufficient” (this is a reversal not only of the panel in this case, but also of the Biotech panel) (para. 685)

8. A VALID RISK ASSESSMENT DOES NOT BY DEFINITION PRECLUDE “INSUFFICIENT EVIDENCE”: Even if there is an international standard, evidence may be (or have become) insufficient (and thus allow for provisional measures under 5.7), depending e.g. on your level of protection (para. 694). The panel’s test of “a critical mass” of new evidence to overturn an earlier risk assessment is too strict. New evidence that “casts doubts” can suffice to trigger 5.7 rights (para. 703).

In sum, none of the panel’s findings of violation remain. Instead, the AB makes its own finding of violation (under 22.8) in respect of ALL parties (not just the defendants) and "recommends" that the DSB (!!) "request" the US, Canada and the EC (the complainant!) to initiate 21.5 proceedings (since by not invoking 21.5 until now they basically violated 22.8).

This is an amazing win for the EC and those who think that the SPS agreement was having too much bite. Many things the AB found objectionably in this case had become kind of standard in earlier SPS cases.

The AB could not complete the analysis. What the US/Canada did win is that they can keep the sanctions in place until the 21.5 ends. The entire case must now be re-done with new panelists (actually, original panelists of 1996), new experts and plenty of new legal standards for the panel to apply. Another 2 or 3 years ahead of us … Good luck to all involved !

Implementing REACH: the New EU Chemicals Regime

Things are hotting up in relation to the EU's controversial chemicals regime. The Commission is poised to adopt a decision identifying the first substances of very high concern to be included in a so-called candidate list. If these substances are included on the 'final list for authorisation' in due course (and it seems very probable that they will) they will require authorisation before being being used in the EU, including when they are used in consumer products. While the criteria for identifying substances of very high concern is 'hazard-based', the conditions for authorisation bring risk assessment and socio-economic balancing into play. For substances of very high concern, including those on the candidate list, consumers will be able to request producers and importers in the EU to tell them, upon request, which such substances are included in consumer articles. Also interesting is the fact that the REACH framework for identifying substances of very high concern have been used by the International Chemical Secretariat to prepare a longer list of nearly 300 substances which meet the REACH criteria (the so called SIN List I). Already, in the United States, the Environmental Defense Fund has issued a detailed report identifying which US companies produce or import any one of these substances, also disaggregating the information state by state. The aim of the report is to ‘serve as an early warning to companies making and using these dangerous chemicals that they will be at a competitive disadvantage unless they proactively seek to eliminate exposures and develop safer alternatives’.

Trade in Last Night's Debate

From the transcript (nothing really new here, but I'll post it anyway):

McCain: ...

By the way, when Sen. Obama said he would unilaterally renegotiate the North American Free Trade Agreement, the Canadians said, "Yes, and we'll sell our oil to China."

You don't tell countries you're going to unilaterally renegotiate agreements with them.

Obama: ...

Now I just want to make one last point because Sen. McCain mentioned NAFTA and the issue of trade and that actually bears on this issue. I believe in free trade. But I also believe that for far too long, certainly during the course of the Bush administration with the support of Sen. McCain, the attitude has been that any trade agreement is a good trade agreement. And NAFTA doesn't have -- did not have enforceable labor agreements and environmental agreements.

And what I said was we should include those and make them enforceable. In the same way that we should enforce rules against China manipulating its currency to make our exports more expensive and their exports to us cheaper.

And when it comes to South Korea, we've got a trade agreement up right now, they are sending hundreds of thousands of South Korean cars into the United States. That's all good. We can only get 4,000 to 5,000 into South Korea. That is not free trade. We've got to have a president who is going to be advocating on behalf of American businesses and American workers and I make no apology for that.

Schieffer: Senator?

McCain: ...

Now, on the subject of free trade agreements. I am a free trader. And I need -- we need to have education and training programs for displaced workers that work, going to our community colleges.

But let me give you another example of a free trade agreement that Sen. Obama opposes. Right now, because of previous agreements, some made by President Clinton, the goods and products that we send to Colombia, which is our largest agricultural importer of our products, is -- there's a billion dollars that we -- our businesses have paid so far in order to get our goods in there.

Because of previous agreements, their goods and products come into our country for free. So Sen. Obama, who has never traveled south of our border, opposes the Colombia Free Trade Agreement. The same country that's helping us try to stop the flow of drugs into our country that's killing young Americans.

And also the country that just freed three Americans that will help us create jobs in America because they will be a market for our goods and products without having to pay -- without us having to pay the billions of dollars -- the billion dollars and more that we've already paid.

Free trade with Colombia is something that's a no-brainer. But maybe you ought to travel down there and visit them and maybe you could understand it a lot better.

Obama: Let me respond. Actually, I understand it pretty well. The history in Colombia right now is that labor leaders have been targeted for assassination on a fairly consistent basis and there have not been prosecutions.

And what I have said, because the free trade -- the trade agreement itself does have labor and environmental protections, but we have to stand for human rights and we have to make sure that violence isn't being perpetrated against workers who are just trying to organize for their rights, which is why, for example, I supported the Peruvian Free Trade Agreement which was a well-structured agreement.

But I think that the important point is we've got to have a president who understands the benefits of free trade but also is going to enforce unfair trade agreements and is going to stand up to other countries.

...

McCain: Well, let me just said that that this is -- he -- Sen. Obama doesn't want a free trade agreement with our best ally in the region but wants to sit down across the table without precondition to -- with Hugo Chavez, the guy who has been helping FARC, the terrorist organization.

Free trade between ourselves and Colombia, I just recited to you the benefits of concluding that agreement, a billion dollars of American dollars that could have gone to creating jobs and businesses in the United States, opening up those markets.

So I don't -- I don't think there's any doubt that Sen. Obama wants to restrict trade and he wants to raise taxes. And the last president of the United States that tried that was Herbert Hoover, and we went from a deep recession into a depression.

I admire McCain's determination to support free trade, although I do wonder whether he thinks this is a good way to pick up votes.  Free trade is not really very popular these days.

I'm also curious to hear what McCain thinks of the provisions in FTAs that do not deal with tariffs (e.g., investment and IP).  I've never heard him mention those.

Thomas Walde

As many of you may know, one of our most distinguished colleagues, Thomas Walde, sadly passed away on October 13 at his vacation residence in France .

The International Institute for Conflict Prevention and Resolution (Russ Bleemer, Editor, Alternatives) posted the obituary below:

An International ADR Legend Has Died (Oct. 14).

Tributes poured out today worldwide to mark the sudden passing of an ADR legend.

Thomas W. Walde, a professor at the University of Dundee < http://www.dundee.ac.uk <http://www.dundee.ac.uk/>  > in Dundee, Scotland, and an expert in energy law conflict resolution processes, died after falling at his home in Southern France on Sunday.

Walde was born and educated in Germany , and received an LL.M. from Harvard Law.  He moved on to the United Nations, working on a wide variety of projects but eventually focusing on energy-related issues.

Best known as an educator, and an arbitrator and expert witness in international arbitration cases, Walde also mediated.  He was the neutral in a $500 million dispute at the Falcondo mine in the Dominican Republic .  He also successfully mediated cases between private oil companies under a joint operating agreement, and a high-value dispute between the Swedish and Polish energy companies.

You can see his full CV on the Dundee University site here < http://www.dundee.ac.uk/cepmlp/staff/twalde.pdf <http://www.dundee.ac.uk/cepmlp/staff/twalde.pdf>  > .  Links to many of his articles are available, with subscription, at this profile < http://www.transnational-dispute-management.com/authors/author.asp?key=6 > .  Walde was a founder and executive director for more than a decade of the Centre for Energy, Petroleum and Mineral Law and Policy < http://www.dundee.ac.uk/cepmlp/ >  at Dundee .

In recent years, Walde spread the word on using dispute resolution via a website  and accompanying journals he edited, Transnational Dispute Management < http://www.transnational-dispute-management.com/ > , and as moderator and owner of "OGEMID < http://www.transnational-dispute-management.com/ogemid/ > ," a list serve available through the TDM site whose name is an acronym for "oil-gas-energy-mining-investment disputes."

That list serve buzzed today with condolences and remembrances.  Several posters credited Walde with expanding the international use of ADR processes, and vowed to continue his work.

[See http://www.cpradr.org/tabid/325/articleType/ArticleView/articleId/408/An-International-ADR-Legend-Has-Died-Oct-14.aspx ]

A New Era of Strategic Trade Policy?

In the Guardian, Kevin Gallagher has a short article (based on a longer study here) in which he suggests a possible comback for strategic trade policy:

Change is in the air. As we know in the aftermath of the financial crisis, the US has justified – like never before – a strong role for government in economic affairs. And, of the two presidential candidates, Obama has expressed concern over the direction of US trade policy and has pledged to rethink it. Perhaps these events will make strategic trade and industrial policy rise again.

That's not to say strategic trade policy ever completely disappeared, but rather that it may be gaining respectability and could become more widely used.  (At least, that's how I take his point.)

There are some interesting bits in the article about the degree of policy space provided for in trade agreements (WTO vs. U.S. bilaterals vs. EU bilaterals) which I may come back to.  But for now, I wanted to focus on the merits of strategic trade policy, mostly just raising a few basic questions that occur to me.

The first question is the following.  Is the argument for strategic trade policy that the specific nations who use strategic trade policy will be better off?  Or is that the world as a whole will be better off?

I can see that there is a chance that a specific nation could make itself better off through strategic trade policy.  Even if one believes governments often get things wrong, they do sometimes get things right.  So, a government might select an appropriate industry for development, use the right policy tools, and thereby create a company that becomes a global competitor.  In that way, the nation in question could end up better off.

But I'm not sure I see how the world as a whole would be better off.  If one country uses strategic trade policy, others are sure to follow, so it is likely to be used by all or most rather than just one.  If everyone did so, governments would spend a lot of money and other resources on their industrial policy goals, but wouldn't the result be that all countries would end up in the same relative position?  (Or possibly, some countries would be better off and some worse off, depending on how good their plans were).

Taking this point a step further, the example he gives in the article is Embraer:

... the textbook example of strategic trade theory is the choice by the Brazilian government to subsidise and develop the aircraft company Embraer.

The free-trade theories espoused by the Washington consensus would warn Brazil of the high cost of subsidisation. To free traders, Brazil should focus on its advantage in agricultural products and forget about climbing the manufacturing ladder. Strategic trade theory helps explain why Brazil was willing to gamble in the short term to become one of the finest aircraft manufactures over the long term. They squeezed foreign firms out of the market and carved out a global niche for themselves.

From what I know about Embraer, it is true that Embraer has received government subsidies and it is true that Embraer has become a succesful player in the aircraft industry.  But here are some of the questions I would ask about these subsidies:

-- Could all that subsidy money have been better used for something else, such as education or public health?

--  Would it have been possible to encourage an existing foreign aircraft maker to produce in Brazil, at a lesser cost to the government?  This argument may not work as well in the context of aircraft, where there are very few producers, as compared to other industries.  But if you take an industry such as steel-making, in which there has also been a lot of state intervention, it seems to me that it might be more effective to let an established foreign producer who already knows how to make steel set up shop in your country.

-- Isn't competition among countries (e.g., five countries all use subsidies to create an aircraft industry), and therefore many failed industries, very likely?  Again, steel may be a better example to illustrate this.

Blustein Reimagines Global Trade, without Bilateralism

Brookings just issued a report entitled "Top 10 Global Economic Challenges Facing America's 44th President."  The introduction and one of the chapters were written by Lael Brainard (who has been mentioned as a possible U.S. Trade Rep. in an Obama administration).  One of the chapters in the report is by Paul Blustein, and is called "Reimagining Global Trade."  I was struck by some of the prescriptions he sets out there:

The new U.S. administration should make it clear from the outset that its trade policy will be multilateral in focus; this can—and should—be coupled with a shift away from bilateralism:

>> Shoring up support for trade: Perhaps most important of all, the new president must shore up support for trade, both in Congress and in the public at large; otherwise, no new trade agreements of any kind may be possible. This will entail bridging gaps on Capitol Hill over the key issue of whether trade agreements must contain enforceable standards for workers’ rights and environmental protection. But much stronger steps will also be required on the domestic front, to expand the social safety net and health care. Mitigating Americans’ legitimate worries about the disastrous impact of job losses is essential to turn the debate away from NAFTA’s revision and toward enhancing the system that has underpinned the expansion of global trade for the past 60 years.

>> Breathing new life into the Doha Round: The new president will have a historic opportunity to breathe new life into the Doha Round by proposing to broaden the negotiating agenda to include issues such as the food crisis and climate change. It is conceivable, of course, that such an approach will encounter such stiff opposition from other nations that it will prove impractical; if so, the administration should not turn to bilaterals and regional deals as an alternative but instead should pursue agreements in particular sectors (such as services) under WTO auspices with countries that are willing to liberalize.

>> Proposing a moratorium on bilateral trade agreements: In addition, the president could propose a moratorium on bilateral trade agreements, a step that would be welcomed by many poor countries, which fear being marginalized in an increasingly splintered world of trade.

Bhagwati aside, it's rare that I see such a strong condemnation of bilateralism.  These statements seem particularly significant given Lael Brainard's association with the report and her role as an Obama adviser.  Would an Obama administration put the brakes on bilateral trade agreements?

Trade Policy: Obama vs. McCain

WITA had a recent event on the trade policy differences between an Obama and a McCain administration.  Lael Brainard represented the Obama campaign and Phil Levy represented the McCain campaign.  The event was not available online as far as I could tell, but a couple news organizations covered it.  Here's what I was able to piece together from their reports:

-- Obama would put pressure on China and other countries that violate trade rules and put less emphasis on cutting new trade deals ... "We have to see a material shift in resources within USTR (the U.S. Trade Representative's office)" toward more trade enforcement, said Brainard.

-- Levy questioned whether the number of WTO cases filed each year was the best way to measure enforcement.

-- McCain's top trade priorities would be to conclude the long-running round of world talks, win approval of free trade agreements with Colombia, South Korea and Panama and work in a bipartisan fashion to restore support for trade in Congress and the American public.

-- Brainard criticized the Bush administration for repeatedly failing to label China as a currency manipulator.

-- Levy agreed that China's currency is undervalued and a long-term problem for the United States. But given the global financial crisis it is "a bit of an odd time time to be punishing the Chinese for sending capital our way," he said.  "I think there's room for negotiation there. I think what Sen. McCain would do is try to take action that would be effective for the American people. Starting a trade war with China probably doesn't meet that bill," Levy said.

--  Obama is against scheduling a congressional vote after next month's election on a free-trade agreement with Colombia.

-- a McCain administration would back continuing negotiations in the Doha Round of the World Trade Organization and bilateral trade deals.  As part of a WTO deal, ''we need a president willing to push changes to expensive agricultural subsidies, subsidies we can't afford.'

-- McCain also would seek to expand aid to workers who lose their jobs because of overseas competition, and move to subsidize the salaries of older workers forced to take lower-paying replacement jobs.

-- Brainard said that Obama would ''update'' the North American Free Trade Agreement to include tougher labor and environment provisions.

-- The Bush administration began negotiations this year for separate treaties with India and China that would govern how foreign investors are treated. While those efforts garnered strong support from U.S. businesses, both Brainard and Levy said a new administration would re-evaluate them.  Brainard said Obama is skeptical of initiatives by the Bush administration to negotiate investment treaties with China and India.

After writing this, I saw that Ben Muse did a post of his own on this.  He also linked to this article about possible U.S. Trade Representatives in an Obama or McCain administration: http://news.yahoo.com/s/cq/20081005/pl_cq_politics/politics2971172_5  Muse's summary:

McCain might keep Susan Schwab, or turn to Grant Aldonas or Jim Kolbe.

Obama might turn to Cal Dooley, Daniel Tarullo, or Lael Brainard.

WTO Scholars' Forum: WTO and Fisheries Subsidies

A new WTO Scholars' Forum event:

WTO Scholars' Forum: Preempting International Law's Fragmentation through Regime Interaction: the WTO and Fisheries Subsidies

Monday 13^th October 2008 5 -6.30pm

Location

Moot Court, Faculty of Law, University College London (UCL), Bentham House, Endsleigh Gardens, WC1H OEG

Speaker

Margaret Young. Pembroke College, Lauterpacht Centre for International Law, University
of Cambridge

---

To register free of charge please contact Forum administrator, Ann Tucker, ann.tucker@ucl.ac.uk

About Dr Margaret Young 

Margaret Young is the William Charnley Research Fellow in Public International Law at Pembroke College and the Lauterpacht Centre for International Law, University of Cambridge. She is currently working on a book on 'Trade Related Aspects of Fisheries: Fragmentation and Regime Interaction in International Law'. Margaret lectures in the LLM course on WTO Law at the University of Cambridge and is the assistant editor of the British Year Book of International Law. Her research interests include international economic law, international environmental law, global administrative law and international institutional law.

About the Scholars’ Forum and it’s events:

The WTO Scholars’ Forum was set up in September 2006 by Dr Fiona Smith (UCL) as a new initiative designed to bring together experts from both academia and legal practice to discuss current aspects of the law and practice of the World Trade Organization (WTO). In 2007, Dr Isabelle Van Damme (University of Cambridge) joined the forum as Co-Director.

Currently there are many academics and practitioners who have an interest in WTO law and several events organised under the auspices of individual London colleges, Chatham House, as well as the British Institute for International and Comparative Law, as well as exciting initiatives organised outside London. However, there is little year-long sustained activity which capitalises on all the interest and knowledge. The WTO Scholars’ Forum draws together all this expertise by holding a series of activities. The Forum is also open to PhD students and it encourages them attend the activities and give papers as part of the seminar series.

For more about the WTO Scholars’ Forum see the website: http://www.ucl.ac.uk/laws/wto-forum or contact Dr Fiona Smith (fiona.m.smith@ucl.ac.uk) or Dr Isabelle Van Damme (iv218@cam.ac.uk).

Here's the link: http://www.ucl.ac.uk/laws/wto-forum/index.shtml?events_new

Tainted Milk and Trade Rules

I often hear trade critics say that WTO rules prevent countries from taking action to ensure food safety, but do they really?  In response to the terrible Chinese tainted milk scare, some countries are taking action against imports.  For example:

the European Union will require testing of all imported products containing more than 15 percent milk powder, beginning this week, the European Commission announced.

And:

Suriname has become the first Caribbean country to ban Chinese milk and dairy products on the heels of a tainted milk scandal.

Now China has raised trade concerns about this at a WTO meeting (I assume it was an SPS Committee meeting, although the article did not say):

[China] urged the WTO's 153 members to base import restrictions on scientific risk assessments, and to make use of the global trade body's official notification mechanism if they impose any ban.

It seems clear that some action to restrict Chinese imports in this situation would be justified under WTO rules.  China probably knows this, and just wants to make sure no abuse takes place.  But it is a fine line, and could lead to controversy.

Barfield on Export Restrictions

Claude Barfield has some interesting and insightful things to say about export restrictions here.  Here's a brief excerpt where he talks about the prospects for WTO disputes in this area:

While these policies should be countered through negotiations, I would argue (without getting into the dense WTO legalese) that there are two major problems with attacking through the Dispute Settlement System. First, given that one-third of WTO members impose some form of export restrictions (and most of these are developing countries), a wholesale attack through means of alleged violations of existing rules would deepen the already wide divide between the North and the South in the WTO. Further, while such a defense is still over the horizon, claims by developing countries that the export restrictions have an environmental purpose will further complicate and muddle this trade policy area.

Second, as noted above the GATT/WTO rules system does not really adequately cover--and the rules did not foresee--conflicts relating to restrictions on exports. Thus, attempts to expand or twist the definitions of subsidies are based upon weak or dubious interpretations of the SCM agreement. There is already division and conflict on these issues within the WTO. In 2006, the WTO Secretariat, in the Trade Policy Review for China, directly criticized China's use of export tax rebates as an industrial policy tool, arguing that this was an implicit subsidy.

Another Trade Preferences for Fighting Drugs Case?

USTR announces:

U.S. Trade Representative Susan C. Schwab announced that President Bush has directed her to publish in the Federal Register a notice of his proposed action to suspend Bolivia’s designation as a beneficiary country under the Andean Trade Preference Act (ATPA) and the Andean Trade Promotion and Drug Eradication Act (ATPDEA). Bolivia’s demonstrable failure to cooperate in counternarcotics efforts over the past 12 months indicates that Bolivia is not meeting important criteria for benefits under the ATPA and ATPDEA tariff preference programs. “These tariff preferences are unilateral benefits provided by the United States to partner nations in the Andean region,” said Ambassador Schwab. “The Morales Administration’s recent actions related to narcotics cooperation are not those of a partner and are not consistent with the rules of these programs. We regret that the proposed suspension that is prompted by the Bolivian government’s actions could affect hard-working Bolivians,” she said. “Once imposed, the suspension could be lifted as soon as the Bolivian government improves its performance under the ATPA and ATPDEA criteria.”

Further details:

On September 15, 2008, President Bush designated Bolivia as a country that has failed demonstrably over the past 12 months to adhere to its obligations under international counternarcotics agreements and to take the measures set forth in the Foreign Assistance Act of 1961. The ATPA and ATPDEA are programs that provide duty-free treatment for imports of most products from Colombia, Peru, Ecuador, and Bolivia. These programs are designed to promote economic development and reduce illegal crop production in the Andean region.

The recent expulsion of U.S. Agency for International Development personnel and the removal of U.S. Drug Enforcement Administration officials from the main areas of Bolivia's illegal coca production, a marked increase in cocaine production, the government’s failure to close illegal coca markets, and publicly stated policies that increase government-sanctioned coca cultivation, have placed in doubt the Bolivian government’s commitment to cooperate in the fight against drug trafficking.

Recalling the EC - Tariff Preferences case, there is a good argument that the U.S. criteria are "objective."  On the other hand, there is still the question of whether tariff preferences for fighting drug trafficking relate to "development, financial and trade needs."

The Bolivia situation provides an interesting comparison to the Tariff Preferences case.  In Tariff Preferences, a country not receiving the benefits (India) brought a challenge on the basis of the inclusion of a specific other country (Pakistan).  Here, by contrast, Bolivia would be challenging its own exclusion (if it were to bring a complaint, which it probably will not).

Bailout Bill Pork

Taxpayers for Common Sense provides details on the pork included in the bailout bill in order to secure its passage, including the following:

8. Sec 502. Provisions related to film and television productions

In an effort to keep film and television productions in the U.S, they would be eligible for a tax incentive program. Under this program, the cost of production of qualifying films would be permitted to be immediately expensed -- that is, fully deducted from income for tax purposes -- in the year the expenditures occur. This provision also makes permanent other favorable tax treatments for production. Historically Rep. Diane Watson (D-CA) has been a supporter (dating from its creation in the 2004 corporate tax bill). The cost is estimated at $478 million over 10 years.

I suppose this is a response to similar Canadian subsidies.  The absence of explicit subsidies rules on services makes this a hard case for WTO rules to deal with, but there could eventually be trade disputes related to this issue.

Obama's Latest Trade Comments

In a Q & A with the Detroit Free Press, Obama explains that he is for free trade, but he wants the U.S. to do a better job negotiating and he wants labor and environment standards included in trade agreements:

Q: You’ve been accused of flip-flopping on the issue of free trade. Some key advisers of yours — Bob Rubin, Jason Furman — have some strong pro-NAFTA, pro-free trade histories, yet you’ve said some pretty harsh anti-NAFTA things in the primaries and made what you said was a protest vote on CAFTA. … What specifically can and should the country do to distribute what you call the costs and benefits of globalization more equitably?

A: That last point you made is exactly where I stand about free trade. I am a free trade proponent. I strongly believe in it. But I also believe that my job as president is to promote free trade as a tool of American prosperity, and not simply assume that every free trade deal is a good deal for America. It’s not.

If South Korea is sending 400,000-500,000 cars into the United States and we are selling 4,000 (there), that’s not because South Korean cars are so superior to U.S. cars; it has to do with the fact that they are blocking access to their markets. China has consistently stolen our intellectual property. It has not abided by basic copyright protections. … Their manipulations of the currency have made a difference in terms of our trade deficit. So I want trade with China, but I don’t want us to be taken to the cleaners. …

I have a twofold complaint about our trade agreements.

No. 1 is that we just aren’t very good bargainers. I think it partly has to do with we still think this is the 1960s, and we’re such a mammoth market all of these countries out there are sort of vassal states and they are just sending stuff into our country, and it isn’t going to be that big of a deal.

Well, China, Brazil, India and South Korea, these are major competitors, and our trade negotiators have to be tough enough to say there is going to be reciprocity. If you guys want to sell here, then we’ve got to be able to sell there. And, we are going to enforce those trade deals.

Point No. 2, I do believe that our trade agreements should embody labor agreements and environmental standards. Not because I expect that wages in Malaysia are suddenly going to be identical to wages here, but because it sends a message that we are going to try to raise living standards, that we are going to try to expand the scope of environmental protections so that our workers aren’t undermined. But also so other people’s workers are finding themselves with a better quality of life and, over time, become better markets for our goods and services.

The last point I would make about trade. … It is very hard for us to make an argument for free trade if all the benefits go to Silicon Valley or Wall Street or some distant places, and you have the entire heartland being hollowed out. And nobody is really spending time thinking about what is happening to those communities.

Everybody will say, well, we’re going to retrain them. But the truth is, we’ve never been as serious as we need to be about retraining. We’ve never been as serious as we need to be about planning ahead. … What are the new jobs of the future? Where can we start directing our community colleges and our resources so that we are starting to prepare people for these new lines of work?

What kinds of research and development would allow us to take advantage of new areas like nanotechnology or energy? We don’t to that. We haven’t. … As Americans, we have an obligation to think about the losers in trade as much as the winners. They are not disposable. The communities aren’t disposable. These workers aren’t disposable. And that is how they have been treated for too many years. And I intend to stop that.

With regard to the point about getting better deals, is there any basis for this or is it just campaign rhetoric?  Has anyone tried to quantify which countries get the best trade deals, and examined whether the U.S. is doing poorly in this regard?  I have not heard about it if they have.

On the labor and environment point, here's my question for Obama (which I don't really expect him to answer): if these two are in, and intellectual property is in as well (Obama mentioned it in his answer), what else should be in?  What are the boundaries for the subjects that should be included in trade agreements?

Slightly Off-Topic: The Economic Structure of International Law

It's not about international economic law per se, but it is about the economic structure of international law.  Does that count?  Decide for yourself at http://www.hup.harvard.edu/catalog/TRAECS.html 

Bananas, Healthy Kids and Trade

EU policies related to bananas have a long history in trade disputes.  Is this the next chapter:

EU agriculture ministers gave broad political support on Tuesday to a scheme offering millions of schoolchildren free fresh fruit and vegetables from next year as a way to promote healthy eating and tackle child obesity.

...

Another topic of debate was whether the school fruit and vegetables should primarily be locally grown or imported. Most countries' ministers said they preferred to use EU produce although this point will remain open for next month's debate.

"There was general consensus that this should be sourced from EU production," another official said. "In the north of Europe, fruit and vegetable production is seasonal so there would probably be a preference for southern European products."

Fischer Boel, stressing that the scheme had to comply with World Trade Organisation rules, said there seemed to be no WTO obstacle to limiting the choice to EU produce.

"However, I can see no reason why we should not allow, for example, our children to eat bananas from ACP (African, Caribbean and Pacific) countries if this choice is justifiable for health and educational reasons," she told the ministers.

I wonder why they are so confident that there is no WTO concern here.  Is it because this is government procurement, and therefore GATT Article III:8(a) would trump any national treatment violation?  I can see that might be right if it is just a question of buying EU versus non-EU products, but favoring ACP bananas seems like it might lead to (yet) another WTO dispute.

ADDED:  Maybe only ACP bananas from ACP countries that have signed EPAs with the EU will be covered?

Canadian Socialised Medicine and the NAFTA Boogeyman

It was with great interest that I heard about a new "case" against the Government of Canada under the NAFTA, concerning the provision of health care services.  Granted, I had learned of the matter through a very small handful of press articles; NGO warnings; and personal messages from individuals asking for information from me about it.  I have learned to be skeptical of such news, given that Canada has already had highly dubious "cases" filed against it under the NAFTA that never went anywhere (at least three of which I am aware).  That is the down side of a general policy of publishing all "notices of intent" received, however without merit and/or frivolous they might be.  In this particular case, there was still no "notice of intent" posted by the government; just the rumours.  I immediately inquired as to the existence of such a document with a friend in the appropriate Canadian department, and a couple of weeks later this friend's colleagues had dutifully posted it online.

Sadly, the document, which is available at naftaclaims.com, is really not worth anybody's time.  It is written by someone who apparently does not have the benefit of experienced counsel (or any counsel, for that matter).  It is very short and it does not appear to allege any sort of valid claim.  The verb "expropriated" appears but no corresponding reference to NAFTA Article 1110 accompanies it.  Neither do any allegations of fact appear, upon which an indirect, de facto expropriation could be based.  There are some stray allegations that seem to suggest that the author believes that certain actions of community activists opposed to the prospect of his planned business venture may have somehow attracted State Responsibility, but there is no rational explanation of how that might be so (which, to be clear, may be possible in a given case ... it's just that there is no hint of how the actions of community activists would be relevant in these circumstances).

Worse, the would-be claimant appears to be basing his primary case on the existence of alleged inconsistencies between provincial regimes concerning the delivery of healthcare services.  Under Canada's constitution, the provision of healthcare falls primarily under provincial government jurisdiction.  The federal government has asserted a role for itself through the power of the federal purse (using concomitant transfers of wealth from the richest provinces to the less wealthy in order to - theoretically - maintain a uniform, nation-wide system of socialised medicine).  Federal legislation accordingly exists to facilitate the transfer of funds to provincial governments (using the national tax base), as well as the imposition of largely symbolic universal 'standards' that must be observed by each provincial government in order to qualify for funding offered (which also purports to apply to the provinces whose citizens are actually underwriting the services provided to their confreres in less wealthy provinces).  Legislation and regulation at the provincial level - however- is where one finds the true loci of power, at least in terms of maintaining 'Canada's system' of socialised medicine.

The crux of the would-be claimant's would-be case appears to be that he believes better treatment is being provided to other medical service providers by other provinces (namely: Quebec and Alberta).  He seeks to receive no less favourable treatment from the Government of British Columbia.  Even if it were true that valid comparators existed and that better treatment was demonstrably on offer to them in these other provinces, a simple reading of NAFTA Articles 1102 through 1104 makes it crystal clear that one cannot seek better treatment under these obligations in one jurisdiction (BC) by alleging that it is being offered in another (Quebec).  The basis of comparison is at the level of jurisdictional responsibility; if the measure at issue is a provincial or state measure, the comparators must be found within the same province or state.  Only if the measure at issue is imposed at the federal level (or, for the sake of argument, by a group of lower-level governments attempting to impose national or quasi-national regime of their own accord, i.e. without federal government sanction or participation) could the investor seek to receive the most favourable treatment being provided nationally.

It thus appears manifest that the fellow who filed the document that caused all of this fuss, one Mr. Howard, does not have a valid claim to make.  Given that there is no evidence, at least in the notice of intent, that he has consulted a qualified lawyer about the matter, it may well be that Mr. Howard has come to his own conclusion that he has been treated unfairly and expects to receive a tidy settlement from a frightened government (federal or provincial) in exchange for leaving them be.  People are entitled to mislead themselves in whatever way they see fit.  My concern is with the headlines that the actions of such folk generate.  Canadians display a unique attachment to their 'system' (or more accurately, their systems) of socialised medicine.  Indeed, it is almost regularly demonstrated in polls that Canadians see 'Medicare' as the most important part of our national identity (perhaps because we have always tended to define ourselves and our collective identity negatively, primarily by looking to our neighbours to the south and proclaiming how we are not 'like them').  Accordingly, opponents of the NAFTA have long attempted to scare the populace into the belief that Canada's entry into trade and investment treaties threatens our ability to provide ourselves with socialised medicine (i.e. that participating in international economic agreements threatens, on a powerfully symbolic level, our very existence as a people).

In other words, for those inclined to see the sky as falling; for the reporter seeking good placement for her story in the local newscast or broadsheet; and for those with vested interests in the status quo to protect, even the most frivolous of threatened treaty claims is to be devoured as manna from the heavens.  That there is no merit in the allegations and that there will never be an arbitration is of no deterrence (see, e.g., the countless times that the so-called "Sunbelt v. Canada NAFTA case" has been cited over the years by anti-globalisation and 'fair trade' polemicists as a cause celebre). 

As someone who favours much-needed reforms to provincial health care regimes (that maintain a single-payer insurance scheme but welcome much more private investment in the business of providing medical services), and as someone who knows a thing or two about the NAFTA, it can be quite frustrating to see headlines such as the ones linked below:

Protection of Canada's not-for-profit health care is a critical part of supporting families says CUPE 
NAFTA-based suit threatens Canada's medicare
U.S. Investor Threatens First Ever Health Care Suit
Canada faces a potential lawsuit as a US investor complains of expropriation of investments in health-care facilities

Such stories don't just provide some modicum of credibility for manifestly incredulous legal claims; they reinforce commonly-held beliefs about the sacred quality of a method of socialised medicine that verge upon some sort of political existentialism.  It would be okay if these provincial health care systems were serving us well, rather than being on the verge of collapse given their unsustainable use by a population of ageing 'boomers' (who have utterly failed to embrace healthy living, preferring to count upon the availability of top-quality urgent care to treat chronic conditions ignored until they have reached the crisis stage).  But in a country with an oddly fragile political psyche that has perversely come to be based upon access to socialised medicine (given just how much we Canadians have to be proud about ourselves and our country, and the fact that the provision of universal health care is hardly novel among OECD countries), the willingness of NGOs and members of the media to treat any alleged "NAFTA claim" as being valid on its face is simply not productive.

PS - Just to be clear, I make no statement about the quality, accuracy or motivations behind the aforementioned stories linked above.  Interested and well-informed readers can judge for themselves.  These were were merely the links available at my fingertips, provided in order to illustrate the more general point.

COOL is Here

Country of Original Labeling (COOL) for food is finally here:

After years of wrangling, so-called “country of origin labeling” is expected to take effect at the end of the month, requiring most food retailers to disclose where many types of meat, produce and other food products come from. The new rules aim to make it easier for regular consumers to know whether their food was imported or not, much like they can find out whether the toys they buy for their children were made domestically or overseas.

I'm very interested to see how this works in practice.  There appear to be some strange exemptions.  For example:

the regulations exclude a variety of foods that fall under the labeling requirement but are considered to be processed, including roasted peanuts, breaded chicken and bacon. The exemption for processed food also means that certain foods that are mixed together don’t have to be labeled, such as a bag of lettuce that includes both Romaine and iceberg, or a package of frozen peas and carrots.   

If you mix foods together, no label is required?  Are we now going to see a trend towards mixing?

I'm also curious to see if there is any impact on import sales.  Will there be a significant shift to domestic products now that people can see where foods come from?  I assume some economists will study this issue and report back.

And finally, I wonder whether any U.S. trading partners will find things they don't like in the regulations and raise concerns at the WTO.