International Economic Law and Policy Blog

IEL at the Supreme Court

Via Jonathan Dingel, I see that the Supreme Court will be taking up an anti-dumping issue:

The Supreme Court said Monday it will rule on a case that could make it harder for U.S. companies to obtain protective tariffs on low-priced foreign goods.

The dispute centers on whether uranium that U.S. utilities send to France for enrichment and then import for use in nuclear power plants qualifies as a 'good' or 'service.'

...

In the case accepted by the court, a French uranium enrichment company, Eurodif SA, and a group of U.S. utilities argue that only the service of uranium enrichment is being imported, because the raw uranium was provided by the utilities. As a result, the enriched uranium shouldn't be subject to antidumping duties, they say.

The Commerce Department, however, decided in 2002 that enriching uranium is a 'manufacturing process' and not a service, and imposed a 20 percent antidumping duty on imports from Eurodif.

But the U.S. Court of Appeals for the Federal Circuit overruled Commerce in September 2007. That prompted the Bush administration and USEC Inc. (NYSE:USU) , a Bethesda, Md.-based company that is the sole U.S. uranium enricher, to appeal to the Supreme Court.

The Justice Department's Solicitor General, the administration's lawyer, said the appeals court's ruling 'has opened a potentially gaping loophole in the nation's trade laws' by encouraging U.S. importers and foreign companies 'to structure their transactions as contracts for 'services'' rather than for goods in order to avoid punitive duties.

Oral argument will be scheduled for the court's next term, which begins in October. The dispute consists of two cases, U.S. v. Eurodif, 07-1059, and USEC v. Eurodif and the Ad Hoc Utilities Group, 07-1078.

I heard about this case a number of years ago, but never really thought through the issues.  My gut reaction is that WTO rules would permit anti-dumping duties to be imposed in this situation.  While there is a service involved here, ultimately there is a good being imported, and thus anti-dumping duties are pemissible.  However, I'm not sure what U.S. law says about it or what the Supreme Court will think of it.  I'll try to follow the case as it develops next year.

ADDED: Here's the cert petition, with many related documents attached.  I may have to re-think my views on how WTO rules would apply.  I'm not sure I understand the facts completely at this point.

MORE:  That was the government's cert petition linked to above.  More documents are at the bottom of this page: http://www.scotusblog.com/wp/petitions-to-watch-conference-of-41808/

Here's my question:  Was the uranium in question subject to normal tariff duties when it was entered into the United States after enrichment?  I skimmed through some of the documents related to the case, but did not see the answer at first glance.  (That's not to say it's not in there; there was a lot to read through, and I could have missed it).

AND YET MORE:  Here's a summary of the appeal from Sidley Austin. 

Medellin and WTO Decisions

The international law experts at Opinio Juris will have more insightful things to say about today's Medellin decision than I could ever think of, but one issue jumped out at me when I skimmed through it.  At page 8, the Court says:

No one disputes that the [ICJ's] Avena decision—a decision that flows from the treaties through which the United States submitted to ICJ jurisdiction with respect to Vienna Convention disputes—constitutes an international law obligation on the part of the United States.

What I wonder is, can we now assume that WTO decisions (e.g., adopted panel and Appellate Body reports) constitute "international law obligations" of the United States?  (Not "domestic law obligations," of course, which is another matter entirely.)  The reason I ask this question is that U.S. appellate court decisions addressing WTO decisions in U.S. law seem to imply that they are not.  For example, in the 2005 Corus Staal decision, after noting that the Charming Betsy doctrine of claim construction states that "courts should interpret U.S. law, whenever possible, in a manner consistent with international obligations," the CAFC had this to say:  "WTO decisions are 'not binding on the United States, much less this court.'”  I took the CAFC's statements in that case to mean that while the Anti-Dumping Agreement is an "international obligation" of the United States, WTO decisions interpreting that agreement are not.

This leads me to the following question:  Does the Supreme Court's statement in Medellin undercut this at all?  Looking at the DSU rules in relation to the ability to enforce ICJ judgements, WTO decisions seem like fairly strong "international law obligations" to me.  If ICJ judgements are "international law obligations," shouldn't WTO decisions be as well?

I'm not quite sure what the implications of this would be.  Given the reluctance of U.S. courts to find that international decisions (or even international agreements) create domestic law obligations, it may not have much of a practical impact.  But it would be nice to have it acknowledged anyway.

More of the WTO Gambling Dispute in Domestic Law

The Gambling dispute has been great for opportunities to raise WTO law in domestic law.  Here's another example, from the Imega vs. Gonzalez decision, issued this past week by the U.S. District Court for the District of New Jersey, which involved a complaint against the Unlawful Internet Gambling Enforcement Act of 2006:

C. WTO Claims (Counts IV, V)

The plaintiff alleges that UIGEA is void because it is ultra vires of, and otherwise inconsistent with, the foreign trade obligations of the United States. But prudential standing considerations bar judicial review here. Although some treaty obligations may create a private cause of action, see Sanchez-Llamas v. Oregon, 126 S.Ct. 2669, 2680 (2006) (assuming, but not deciding, truth of proposition), that is not the case as to the Uruguay Round Agreements at issue here.  Indeed, the statute pertaining to the Uruguay Round Agreements precludes private actions: only the United States "may challenge ... [an] action or inaction by [a] department, agency, or other instrumentality of the United States ... on the ground that such action or inaction is inconsistent with [the Uruguay Round Agreements.]" 19 U.S.C. § 3512(c)(1)(B). The economic rights of private individuals are thus not within the "zone of interests intended to be protected by" the Uruguay Round Agreements. Oxford Assoc., 271 F.3d at 146. The plaintiff, as it has no cause of action under the WTO, cannot satisfy prudential standing as to its WTO claims.

Even if the Court were to consider the merits of the WTO claims, UIGEA "which was enacted in 2006" would trump any obligations arising under the 1994 Uruguay Round Agreements. See 19 U.S.C. § 3512(a)(1) ("[n]o provision of any of the Uruguay Round Agreements ... that is inconsistent with any law of the United States shall have effect"); see, e.g., Tag v. Rogers, 267 F.2d 664, 667 (D.C. Cir. 1959) ("has long been established that treaties and statutes are on the same level and, accordingly, that the latest action expresses the controlling law"). Also, WTO decisions are "not binding on the United States, much less this court." Corus Staal BV v. Dep't of Commerce, 395 F.3d 1343, 1348 (Fed. Cir. 2005) (quotes and cite omitted). The plaintiff's WTO claims would thus fail as a matter of law.

This decision doesn't seem to break any new ground, but rather just repeats various reasons why the court doesn't want to accept a defense based on WTO obligations.  Also, since this claim dealt with the UIEGA, it was more difficult to raise WTO obligations then some other cases, as the UIEGA was not part of the WTO claim.

Can Individuals Be Prosecuted Under WTO-Inconsistent Laws? You Can Bet on It

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.

More on the Gary Kaplan Prosecution and his WTO Defense

Following-up on my earlier post, first, as of a couple weeks ago Gary Kaplan was still in jail, with bail having been denied.

Second, how long before they make a Law and Order episode about this case?

Third, here is a brief overview of some of the arguments he makes related to the WTO Gambling ruling:

• Under Charming Betsy, if possible, federal laws, including criminal statutes, must be read so as not to conflict with the international obligation, and the Wire Act can be so construed.  First, the Wire Act may be read so as not to have an extraterritorial application.  In this regard, there is a strong presumption that statutes, including criminal statutes, do not operate extraterritorially.  Second, under Charming Betsy, the Wire Act may and must be construed so as not to apply to internet gambling: "The internet did not even exist in the early 1960s when the Wire Act was enacted; it surely was not what Congress intended to address."
• The Charming Betsy doctrine may be thought of as an expression of a broader principle of international comity, which itself mandates dismissal of the Wire Act charges. Under that principle: "U.S. courts should strive to the fullest extent possible in the application of domestic law to show due respect for the fundamental interests of other nations in matters of legitimate concern to them.45 By virtue of international comity, U.S. courts avoid interpretations or applications of domestic law that do unnecessary violence to foreign countries’ important interests. ... International comity strongly counsels a showing of respect by U.S. courts for rulings of the WTO Appellate Body when construing national legislation, particularly where that legislation has been clearly and authoritatively condemned, at least as applied to situations governed by WTO law. Such is precisely our case."
• "[G]iven the completion of the dispute resolution proceedings, the WTO Dispute Settlement rulings in the gambling case are self-executing, and Kaplan may rely upon them. ... The principal reason why the substantive provisions of the WTO Agreement are not self-executing and do not give a direct cause of action to individuals before domestic courts is the existence of the elaborate WTO Dispute Settlement procedures. When a State is alleged to have violated its international legal obligations under the WTO is made, that State may contest both the facts and the interpretation and application of WTO law. It may take its case before a Panel. It may appeal an adverse position of the Panel to the Appellate Body. It may seek to persuade other members of the Dispute Settlement Body not to adopt the ruling of the Panel and Appellate Body. It may be given time to implement the adverse ruling. It may contest any challenge to its attempted implementation before a Compliance Panel and appeal any decision of such Panel to the Appellate Body. It would be wrong for a domestic court to apply directly a substantive provision of the Agreement if in doing so such court would short-circuit the dispute settlement procedures with all the protections they give a member of the WTO. But here those procedures have been completed and all those protections have been enjoyed"

The conclusion:

"The government’s attempted use of these statutes to prosecute Kaplan – and to send a signal to others engaged in the provision of internet gambling services from nations that are members of the WTO – represents a violation of obligations the United States has assumed under WTO/GATS. The prosecution violates U.S. treaty obligations, international principles of comity, and domestic law. The indictment in its entirety must be dismissed."

A WTO Decision as a Defense in a Domestic Criminal Proceeding

Now this is interesting.  I haven't had a chance to digest it fully, but I thought it worth noting for everyone now.  I may come back to it once I've had a chance to think about it more.

A few months ago, the FBI arrested BETonSPORTS.com founder Gary Kaplan on charges of racketeering, conspiracy and fraud, in relation to the company's web site gambling operations.  Kaplan now argues that the WTO panel/AB rulings in the Gambling case should get him off:

Defendant Gary Stephen Kaplan moves, pursuant to Rule 12(b) of the Federal Rules of Criminal Procedure,1 to dismiss the charges against him based upon treaty obligations and related principles of domestic and international law. The treaty obligations are those the United States has assumed under the General Agreement on Trade in Services (“GATS”) and the Dispute Settlement Understanding (“DSU”) which applies to the GATS. These obligations, recognized by both the authoritative dispute resolution bodies of the World Trade Organization (“WTO”) and by U.S. law, foreclose this prosecution, requiring dismissal not only of the Wire Act charges, but of every count that seeks to penalize Kaplan for activities related to the provision of cross-border remote gambling services, that is to say, all of the charges in the Superceding Indictment.

There is talk about Chaming Betsy, international comity, and the self-executing nature of WTO rulings, among other things.

WTO Law in Domestic Law: The Novartis Case

The status of WTO law in domestic law varies a bit from country to country, and is sometimes not very clear.  The recent Indian court decision in the Novartis case was interesting, as the court basically said that any consideration of consistency of Indian law with the TRIPS Agreement should be done in WTO dispute settlement, not in Indian courts. Here's a link to the decision: http://judis.nic.in/chennai/qrydisp.asp?tfnm=11121  The key portion seems to be this part:

the Constitutional validity of section 3(d) alone is in challenge, both on the ground  that it violates  not only Article 14 of the Constitution of India but also on the ground that it is not in compliance  to "TRIPS".

...

(a) Assuming that the amended section is in clear breach of Article 27 of "TRIPS" and thereby  suffers the wise of irrationality and arbitrariness violating Article 14 of the Constitution of India, could the courts in India have jurisdiction to test the validity of the amended section in the back drop of such alleged violation of "TRIPS"? 
     OR
Even if the amended section cannot be struck down by this court for the reasons stated  above, cannot this court grant a declaratory relief  that the  amended  section  is  not  in  compliance  of Article 27 of "TRIPS"?.

    
   (b)  If it is held that courts in India have jurisdiction  to  go into the  above  referred  to issue, then, is the amended section compatible  or non-compatible to Article 27 of "TRIPS"?

...

  8.  Even otherwise, we are of the considered view that in  whichever manner one may name it namely,  International Covenant, International Treaty, International Agreement  and so  on and so forth, yet, such documents are essentially  in the  nature of a contract.  In Head Money cases namely,  the judgment of the Supreme Court of the United States reported in 112 U.S. 580, it is held as follows:

"A  treaty  is primarily a compact  between independent Nations, and depends for   the enforcement  of its provisions on the  honor  and  the interest of the governments which are parties to it."

Therefore there cannot be any difficulty at all in examining such treaties on principles applied in examining  contracts.  Under  these circumstances, when a dispute is brought before a   court  arising  out of an International  Treaty,  courts would  not  be  committing any error in deciding   the  said dispute  on principles applicable to  contracts.   In  other words,  the  court  has  to  analyse   the  terms  of   such International  Treaty; the enforceability of  the  same;  by whom and against whom; and if there is violation, is there a mechanism for solving that dispute under the treaty  itself? Based  on  such  construction of  the  International  Treaty namely,  "TRIPS",  it  is  argued very  strenuously  by  the learned  counsels appearing for the contesting parties  that there is a settlement mechanism under the Treaty itself  and therefore   even   assuming  without  conceding   that   the petitioner  has the right to enforce the terms of  the  said Treaty,  yet, he must go only before the Dispute  Settlement Body  provided  under the "TRIPS" itself.    Article  64  of "TRIPS" is pressed into service to sustain this point.    It is  contended  by Mr.Anand Grover learned counsel  that  the settlement mechanism provided under Article 64 of "TRIPS" is governed  by the procedure as understood by the World  Trade Organisation.   Mr.Anand  Grover  learned  counsel  took  us through the said Dispute Settlement Understanding.   Article 1  of  the  Dispute Settlement Understanding,  defines   the areas covered under that Rule.  Article 1 declares that  the agreements  listed in Appendix 1 to the said Rule  would  be covered  by the procedure.  "TRIPS" is mentioned as  one  of the  agreements in Appendix 1 (B) - Annexure 1C.    We  have been   taken  through  the  above  referred  to  Rules   and Procedures governing the settlement of disputes and we  find that it contains comprehensive provisions for resolving  the disputes  arising  out  of  any  agreements  enumerated   in Appendix  1  to  that Rules.  Under the  Rules  there  is  a Dispute Settlement Body.  The manner of it's constitution is also  provided  therein.  Various  steps  to  sort  out  the problem  arising  out of an agreement are provided  therein. Article  17  of  the  Rules referred to  above  provides  an appellate  review  against the order passed  by  the  panel. Therefore  we have no difficulty at all that Article  64  of "TRIPS"  read  with World Trade Organisation's understanding on Rules and Procedures governing the settlement of disputes provides a comprehensive settlement mechanism of any dispute arising  under  the  agreement.   Article  3  of  the  Rules declares  that the dispute settlement system  of  the  World Trade Organisation is to provide security and predictability to   the   multilateral  trading  system.    When   such   a comprehensive  dispute settlement mechanism is  provided  as indicated  above and when it cannot be disputed that  it  is binding on the member States, we see no reason at all as  to why  the  petitioner, which itself is a part of that  member State,  should not be directed to have the dispute  resolved under  the  dispute settlement mechanism referred to  above.  Several nations in the world are parties to "TRIPS" as  well as  the  "WTO"  agreement.   The agreements  are  discussed, finalised  and  entered  into at the  higher  level  of  the nations  participating  in such meeting.   Therefore  it  is binding  on  them.  When such participating nations,  having regard  to  the  terms  of  the agreement  and  the  complex problems that may arise out of the agreement between  nation to nation, decide that every participating nation shall have a  Common Dispute Settlement Mechanism, we see no reason  at all as to why we must disregard it.  As we began saying that any International Agreement possesses the basic nature of an ordinary  contract  and when courts respect  the  choice  of jurisdiction fixed under such ordinary contract, we  see  no compelling  reasons to deviate from such  judicial  approach when  we  consider  the  choice  of  forum  arrived  at   in International Treaties.  Since we have held that this  court has  no  jurisdiction to decide the validity of the  amended section, being in violation of Article 27 of "TRIPS", we are not  going  into  the  question whether  any  individual  is conferred  with an enforceable right under "TRIPS"  or  not. For  the  same reason, we also hold that we are not deciding issue  No.(b)  namely,   whether  the   amended  section  is compatible  to Article 27 of "TRIPS" or not.

(emphasis added)

More on Sanchez-LLamas and Hamdan

I don't have much to add to Rosa's analysis of Sanchez-Llamas and Hamdan, but as an interested party (author of an amicus brief in Sanchez-Llamas) l will elaborate a bit on the general approach to the relationship between international and domestic law that these two decisions represent. First, there are four Justices on the Court that seem skeptical of efforts to incorporate international law into domestic law absent a clear statement of incorporation by Congress. There are four votes on the Court for generous interpretations of legislation to incorporate international law, and perhaps to apply international law in other cases where a statute does not clearly forbid doing so. Justice Kennedy has not made his position clear. In Sanchez-Llamas, all nine Justices described the relationship of the SCOTUS and the ICJ as one of respect but not authority; that is to say, SCOTUS will listen to interpretations of international law adumbrated by the ICJ but feels free to reject those with which they disagree. For five justices, this stance was consistent with rejecting the (in my opinion poorly reasoned) decisions of the ICJ in LaGrand and Avena regarding procedural default. For three justices, this stance led to a (in my opinion heroic) interpretation of LaGrand and Avena that allowed room for a remand to the lower courts to determine whether state procedural rules "gave effect" to treaty obligations without any expectation of a different result. The majority in Sanchez-Llamas also referred to the deference that the judiciary owes to the Executive's interpretation of a treaty to which the US is a party, and the outcome reached was consistent with the Executive's position. The Court did not, however, allow that deference to substitute for its own independent analyis of the treaty in question.

Hamdan, and especially Justice Kennedy's crucial fifth-vote opinion, emphasizes the role of statutory incorporation of the laws of war; the decision does not support the claim that the Geneva Conventions would provide a rule of decision applicable in domestic litigation absent the incorporation that existing statutes mandate, although one can guess that at least four of the Justices would find that outcome congenial.

Lastly, nothing in the opinions suggests any direct limitation on the power of Congress to enact legislation that may be inconsistent with US obligations under international law. Again, four Justices seem strongly inclined to interpret statutory enactments in a manner that would minimize conflicts with international law; four recognize the principle but do not seem to regard it as having a high priority; and Justice Kennedy is enigmatic.

Hamdan (and Sanchez-Llamas)

In case you were wondering how the Hamdan decision might relate to international economic law, and how the Supreme Court came to apply the Geneva Conventions, there is a nice post by Rosa Brooks at the Georgetown faculty blog explaining how Hamdan approaches international law.  Basically, the relevant portions of the Geneva Conventions (common article 3) are specifically incorporated by reference in U.S. domestic law, and become judicially applicable (at least) to that extent.