International Economic Law and Policy Blog

A Suggestion to Negotiators on Fisheries Subsidies: Insert a Conflict Clause in Annex VIII.

In the new draft SCM, Annex VIII on fisheries Subsidies appears, as indicated by its name, as a simple Annex which is an integral part of the draft SCM by virtue of Article 32.8 of this draft.   

This is however a fiction since Annex VIII on fisheries subsidies is in fact a mini-treaty which is inserted in the SCM.

What is then the relationship between this mini-treaty and the rest of the SCM? The new draft SCM is silent on this point. There is a conflict clause between GATT 1994 and the SCM which gives precedence to the SCM to the extent of a particular conflict, and in my view, negotiators should include in Annex VIII a conflict clause giving precedence to Annex VIII in case of a particular conflict with the rest of the SCM.  This would avoid many headaches in the future to panel and AB members, who in the absence of a conflict clause, would have to resort to a tortuous reasoning invoking the  not very well established lex specialis doctrine in order to give precedence to Annex VIII in case of a limited conflict with the rest of the SCM and its case law.

In sum, it must be clear that, in case of a conflict,  the most recent rights and obligations relating to the discipline of fisheries subsidies are to be found in Annex VIII.

The Gambling Arbitration Ruling: Coming Soon (Maybe)

I feel like I am repeating myself here, but this is what is being reported:

"We feel pretty confident about our case, to be honest. We really feel like we have the upper hand here," Mark Mendel, a private attorney representing Antigua, told Reuters ahead of an expected ruling by a WTO arbitration panel on Friday.

I'm not sure if this means the confidential version given to the parties or the version circulated to the public.  I would guess the former.

Softwood Lumber Hearing Open to the Public

For those in New York, from USTR's web site:

The Office of the United States Trade Representative (“USTR”) wishes to inform the public of an opportunity to view a public hearing before the Tribunal considering the arbitration under the 2006 Softwood Lumber Agreement Between the Government of the United States of America and the Government of Canada, The United States of America v. Canada (LCIA Arbitration No. 7941).  The hearing is scheduled to begin at 9:00 a.m. on December 12, 2007, in New York City.  At this public hearing, parties will make their opening statement, the Tribunal will ask questions of the parties, the parties will each have an opportunity to make another presentation, and the Tribunal will ask final questions.   

The hearing will be held at the Millennium Broadway Hotel, 145 W 44th St, New York, NY 10036, and is open to the public on a first come, first served and space available basis.

USTR Susan Schwab's Views on Carbon Border Measures

From a speech in Indonesia:

There has been a great deal of media attention based on statements from those who propose restricting imports based on carbon intensity of production methods. This is the wrong action at wrong time. Restricting imports easily leads to covert protectionism, undermining both environment and economic objectives – and it is not a path towards sustainable development.

All countries need to act to address climate change but trade restrictions to seek to force action can backfire and lead to tit-for-tat trade restrictions that can negatively impact global economic growth while accomplishing nothing in advancing climate change objectives.

She is not a fan.

WTO Rules and Free Speech

This will be a fun case to watch if it goes anywhere:

The California First Amendment Coalition (CFAC), a free speech and government transparency group, has launched an initiative to use international trade laws to force the government of China to end its censorship of the Internet and to remove its barriers to U.S. companies supplying goods and services to the Chinese market via the Internet.

In a presentation to the Office of the U.S. Trade Representative (USTR) in Washington, D.C., CFAC and its lawyers petitioned for the filing of a complaint with the World Trade Organization (WTO), of which China became a member in 2001. The free speech group contends that China's censorship of the Internet--which has been described as the most sophisticated and effective system of censorship in the world-- violates China's obligations under agreements that it signed when it joined the WTO.

"China's censorship of the Internet, while fundamentally an issue of free speech and individual liberty, is also a significant barrier to U.S.-China commerce and, therefore, very much a trade issue," said CFAC executive director Peter Scheer. "In infringing the rights of its 1.2 billion citizens, China is also infringing the rights of American companies to sell goods and services to consumers in China, via the Internet," he said.

Among the agreements that China is alleged to have breached are the General Agreement on Tariffs and Trade (GATT), covering trade in goods, and the General Agreement on Trade in Services (GATS). The WTO has the authority to decide claims brought by member-nations alleging violations of the GATT and GATS agreements and to impose trade sanctions to enforce compliance. CFAC's initiative is, in effect, an effort to persuade USTR to file such a claim with the WTO, targeting China's censorship of the Internet and corresponding market access barriers.

From the CFAC web site:

This is to update CFAC supporters on our latest efforts to stir up trouble on behalf of First Amendment freedoms. I’m pleased to report that CFAC has managed to create a whole lot of trouble, both globally and locally, in the last 2 months.

First globally: CFAC has initiated a proceeding that will attempt to use international trade laws to force the government of China to end its censorship of the internet. In a submission and presentation to the Office of the US Trade Representative, CFAC has petitioned for the filing of a complaint with the World Trade Organization, of which China became a member in 2001.

Our (concededly novel) theory: that China’s censorship of the internet, the most pervasive and systematic system of censorship in the world, violates China’s obligations under treaties it signed (the GATT, covering free trade in goods, and the GATS, covering services) in order to join the WTO. We contend China must end its censorship or risk limitations on its access to US markets.

Think of this as the biggest access-to-information and free speech case in history. If the Trade Representative agrees with CFAC’s petition and files a complaint with the WTO, and if the WTO rules against China--big “ifs,” to be sure--some 1.2 billion Chinese citizens will, for the first time, have unfiltered access to information about the outside world, via the internet.

CFAC is represented by the national law firm of King & Spalding, whose Washington, DC office specializes in trade matters, including several successful cases against China. CFAC is supported in this initiative by a consortium of organizations, including the UC Berkeley Graduate School of Journalism, the Center for Internet and Society at Stanford Law School, the National Freedom of Information Coalition, and the China Internet Project at UC Berkeley, among others.

Stay tuned. You’ll be hearing a lot more about this matter.

ADDED: From a Reuters article.  Who is behind the case:

A California free speech group whose board of directors includes Google and Yahoo said on Monday it had asked U.S. trade officials to challenge China's Internet restrictions as a violation of global trade rules.

What are the chances it will go forward:

Scheer said he was encouraged by the interest the U.S. Trade Representative's office displayed in the coalition's case when he discussed it with them in late November.

"They asked the kind of questions that made it clear they were very engaged," Scheer said.

More Reaction to the Draft Rules Text

For those in DC:

THE AMBASSADOR'S DART BOARD:
Responses to the Doha "Rules" Paper Published by Chairman Guillermo Valles Galmés

Thursday, December 13, 2007
8:30 – 10:30 A.M.
(Registration opens at 8:00 a.m.)
The National Press Club
529 14th Street, NW, 13th Floor,
Washington, D.C.

On Friday, November 30, Uruguay’s Ambassador to the World Trade Organization, Guillermo Valles Galmés, published a paper on the way forward in the Doha Round Negotiations on Rules – antidumping, subsidies and countervailing duties, and regional trade agreements. He did so in his capacity as Chairman of the Negotiating Group on Rules.

On Thursday, December 13, the GBD colloquium will take a look at the major elements of Ambassador Valles’ paper, some of the reactions to it, and its significance for the future of the Doha Round. The experts who have agreed to help us with this are:

Speakers

Tim Reif
House Ways and Means Committee

Angela Ellard
House Ways and Means Committee

Linda Menghetti
ECAT
(Emergency Committee for American Trade)

Alan Wm. Wolff
Dewey & LeBoeuf

With Moderator

John Magnus
TRADEWINS LLC

International Tribunals Don't Like Zeroing

It's not just the WTO.  Last week, a NAFTA Chapter 19 tribunal that was considering a Department of Commerce AD ruling found zeroing to be impermissible:

In sum, on the issue of the permissibility of zeroing, the Panel remands the matter back to Commerce to re-calculate Mittal’s dumping margins without zeroing.

There were a lot of factors they went through to reach this conclusion, so it's a bit hard to summarize.  See pages 8-40.

There were also a couple dissents, one by two panelists (pages 69-80) and another separate one by one of the dissenting two (pages 80-85).

The Zeroing Negotiations: U.S. Industry Reaction

When I read Brazil's reaction to the draft rules on zeroing, and then I come across the following reaction from a U.S. industry group, I start to wonder how a deal will ever get done:

The Committee to Support U.S. Trade Laws ("CSUSTL") expressed grave concerns with the draft negotiating text issued as part of the Rules Negotiations in the Doha round of talks at the World Trade Organization, and urged the Administration to obtain stronger rules against unfair trade practices.

...

Although the provision in the draft that would permit "zeroing" in some circumstances has been identified as a benefit to domestic industries, CSUSTL noted that the proposal is weaker than U.S. law and practice had been before it was overturned by the WTO Appellate Body.  The zeroing proposal essentially "splits the baby" by prohibiting zeroing in average-to-average comparisons in original investigations but permitting zeroing in administrative reviews.  Previously, the U.S. Department of Commerce applied the zeroing methodology in both investigations and administrative reviews. 

To be clear, zeroing wasn't the only concern about the draft texts -- there were many others.  Still, reaching a compromise here will not be easy.

Postscript on the Appellate Body Appointments

What Chinese Appellate Body appointee Zhang Yuejiao had to say:

"I will do my best with unwavering impartiality," Zhang said Thursday. She will take her seat in June in the seven-member Appellate Body, which issues final rulings in trade disputes.

"You can rest assured that I will do justice to the post," she said.

More Gambling 22.6 Arbitration Documents

The Antigua legal team's gambling dispute web site has a few recently added documents related to the Article 22.6 arbitration.  I don't have time to go through them right now -- I'm still trying to sort through the recent AB reports -- to see if there's anything noteworthy in there, but I thought I would point them out to others who may be interested:

Antigua's Methodology Paper	31 August 2007
Antigua's Exhibits to its Methodology Paper	31 August 2007
Antigua's Answers to the Article 22.6 Arbitration Panel's Questions	2 November 2007
United States' Answers to the Article 22.6 Arbitration Panel's Questions	2 November 2007
Figures Attached to United States Answers	2 November 2007
Antigua's Comments to the United States's Answers	13 November 2007
United States' Comments to Antigua's Answers	13 November 2007

Is There A Chinese Ban On American Films?

Variety reports:

In its most drastic measure ever against Hollywood, Chinese authorities have banned the release of American pics for at least three months.

Ban began Saturday and will continue until the end of February at least, but Chinese sources say it could continue until May.

Central-government order came from echelons higher up than the State Administration for Film Radio and Television or the Film Bureau, which normally handle movie industry policy and application. Ruling likely emanated within the Propaganda Ministry.

Part of the explanation offered was that:

... the film ban is seen in some quarters as retaliation against the Motion Picture Assn.'s studio members for persuading the Office of the U.S. Trade Representative to take action against China through the World Trade Organization over intellectual property protection and market access (Daily Variety, April, 11).

While the IP and piracy case came as little surprise, China was outraged that film import quotas, blackout periods (when only local films show) and other restrictions might be picked over by the WTO.

But China says there is no ban:

Chinese film industry officials denied on Thursday a news report that China is banning Hollywood movies for three months to protect local films.

...

... Zhang Pimin, deputy director-general of China's Film Bureau, and Xiao Ping, vice president of import and export business at state-run China Film Group, both denied the report in phone interviews.

"We haven't received instructions like that and we haven't set policies like that," Zhang said.

"We're continually going through Hollywood movies. We haven't stopped," Xiao said.

It seems like there should be a way to sort through the facts here, to determine if there really is a ban.

The Zeroing Negotiations: Brazil's Reaction to the Draft Texts

Brazil is not happy with the draft text on zeroing:

[Brazilian Foreign Ministry trade chief Roberto Azevedo] also slammed a new proposal released last week by the WTO's leading rules negotiator, Guillermo Valles Galmez of Uruguay. He said his silence until Tuesday was "one of the symptoms of shock."

A number of officials have privately expressed surprise that the proposal allows Washington to continue with a controversial method for calculating fees to penalize other countries for "dumping" imports into the U.S.

The WTO has chided the U.S. in disputes with the 27-nation EU, Canada, Japan and others for the process known in trade jargon as "zeroing," which panels have consistently ruled leads to artificial and inflated margins of dumping, and thus higher duties.

"It is a major step backwards for world trade," Azevedo said.

I'm not sure if there's room for compromise on this issue, but clearly a suggestion to prohibit zeroing for only one type of comparison in only one type of anti-dumping proceeding, and permit it in all the rest, is rubbing some Members the wrong way.

AB in Tyres and the Chapeau Jurisprudence

The AB report in Tyres reversed the Panel’s interpretation of “arbitrary or unjustifiable” discrimination under the chapeau of Article XX with respect to the Mercosur exception and the Panel’s interpretation of “arbitrary” discrimination with respect to the used tyres exemption. Upon a preliminary reading of the report, I have several observations and comments. [More thoughts are added at the end of the post after considering good comments from others.]

1. The AB has clarified for the first time that the policy objective of the measure at issue should be considered in the chapeau analysis:

The assessment of whether discrimination is arbitrary or unjustifiable should be made in the light of the objective of the measure. (Para. 227)

This is an important development. In my view, the chapeau jurisprudence prior to Tyres was largely devoiced from the policy objective of the measure challenged. Just compare the above statement to the following statement of the AB in Shrimp:

The policy goal of a measure at issue cannot provide its rational or justification under the standards of the chapeau of Article XX. The legitimacy of the declared policy objective of the measures, and the relationship of that objective with the measure itself and its general design and structure, are examined under Article XX(g). (Shrimp, para. 149)

In fact, I believe that it is the Tyres Panel that first grounded the chapeau analysis on the policy objective of the measure. See my earlier post. The Panel’s reasoning regarding “unjustifiable” discrimination was based entirely on whether the import ban was applied in a manner that “significantly undermines the objective” of the ban. (It is true that the Panel did not link “arbitrary” discrimination to the objective of the ban, which the AB reversed. More on this later.)

2. The AB has held that it is the rationale, rather than the effect, of the discrimination that should determine the chapeau analysis. It criticized the Panel’s approach (paras. 229-230):

[T]he Panel's interpretation of the term "unjustifiable" does not depend on the cause or rationale of the discrimination but, rather, is focused exclusively on the assessment of the effects of the discrimination. The Panel's approach has no support in the text of Article XX and appears to us inconsistent with the manner the Appellate Body has interpreted and applied the concept of "arbitrary or unjustifiable discrimination" in previous cases. (In a footnote to this sentence, the AB observed that the Panel's approach was based on a logic that is different in nature from that followed by the AB under GATT Article III, i.e., Article III protects competitive conditions rather than trade effects.)

Having said that, we recognize that in certain cases the effects of the discrimination may be a relevant factor, among others, for determining whether the cause or rationale of the discrimination is acceptable or defensible and, ultimately, whether the discrimination is justifiable. The effects of discrimination might be relevant, depending on the circumstances of the case, ...

While it seems reasonable to focus on the rationale, rather than the effect, of discrimination to determine whether the discrimination is justifiable, the AB’s approach risks turning the chapeau analysis into a separate inquiry on whether a measure in violation of Article XI also violates MFN or NT and whether the resulting discrimination is otherwise justifiable on the policy grounds of XX. (See Point 3 below) The footnote reference to the Article III logic also indicates this potential confusion between the chapeau and NT analysis.

Moreover, the AB’s criticism of the Panel struck me as neither fair nor convincing. As pointed out above, the Panel’s entire analysis of “unjustifiable” was based on whether the ban was implemented in a manner that has significantly undermined the “policy objective” of the ban. It may well be that the Panel’s approach has no support in the text of Article XX, but where is the textual support for the AB’s approach?

ADD: It is one thing to say that the Panel's approach has no support in the text, and it is another to judge whether that approach is permissible under the text. See below ADD for further explanation.

3. The AB’s interpretation leaves “arbitrary” or “unjustifiable” discrimination undefined, confusing the chapeau standards with the primary discrimination standards under Article I or III. In this case, Article XX was invoked to justify an Article XI violation, and the Panel skipped the examination of Articles I and III claims on the ground of judicial economy. Under the AB’s approach, the chapeau examination of “arbitrary” and “unjustifiable” discrimination effectively provides a second chance to examine I and III claims.

Think what would have happened if the Panel had not exercised judicial economy on EC’s Mercosur claim under Article I (the AB has criticized the Panel for not having done so). The Panel would likely have found that Brazil’s ban violated MFN and the violation was not justified by XXIV. Then the Panel would need to examine whether the MFN violation was nonetheless justified under XX. Assuming the measure was found “necessary” under (d) or (b), the Panel would still have had to examine whether the measure also met the chapeau requirement of not constituting “arbitrary or unjustifiable” discrimination. Under the AB’s approach, what could the Panel have said about the chapeau standards that would not be merely repeating the Article I claim?

In other words, the AB’s approach may effectively turn the chapeau interpretation into an examination of whether a measure violating MFN or NT can be justified by the policy objectives recognized by XX. This, however, is inconsistent with what the AB held in Gasoline that the chapeau standard of arbitrary or unjustifiable discrimination should be different from that of NT under Article III.

By contrast, the Panel seemed to be aware of this pitfall and hence tried hard to make some sense out of the “arbitrary or unjustifiable” standards. Thus, it interpreted “arbitrary” as capricious, and “unjustifiable” as the existence of other measures that significantly undermine the policy objective of the measure at issue (i.e., inconsistent with the policy objective of the ban). Unfortunately, the AB rejected the Panel’s interpretation without providing a better alternative.

In sum, while the AB has clarified that the policy objective of the measure at issue should be considered in the chapeau analysis, it has left the standards of “arbitrary or unjustifiable” discrimination as vague and confusing as ever. One way to get out of this conceptual confusion, in my view, is to focus on the concept of the “same conditions prevailing”, because this concept defines “arbitrary or unjustifiable discrimination” and can be readily distinguished from the concept of “like product” that defines MFN and NT discrimination under Articles I and III. For further discussion, see my article.

ADD: Upon further consideration, I am now more convinced that the Panel's approach of using an effect test to interpret "unjustifiable" should be permissible under the chapeau. The text of the chapeau does not prohibit all discrimination between similarly-situated countries resulting from the measure at issue. Rather, it prohibits only the kind of discrimination that has reached a certain level or degree of seriousness, characterized as "arbitrary or unjustifiable". Conceptually, any discrimination, regardless of the kind or degree, is to be identified by reference to the purpose of the comparison between treatment of two or more objects. It is for this reason that the policy objective must be considered in determining whether the measure provisionally justifiable under XX results in (any kind of) discrimination between similarly-situated countries. Once such discrimination is found, however, it is necessary to further determine whether it has reached the level or degree of "arbitrary or unjustifiable". One way to gauge the seriousness of the discrimination is to apply an effect test.

In other words, the text of the chapeau warrants a two-part inquiry. First, whether the application of the measure that is otherwise justifiable by the policy objective under XX has resulted in any discrimination between similarly situated countries. (In Tyres, the answer is probably "yes" because the Mercosur exemption and the used tyres exemption both discriminate between Members by design, unless it can be demonstrated that different conditions prevail in them.) Second, whether such discrimination has reached a certain requisite level of seriousness that can be called "arbitrary or unjustifiable". Here, an effect test is a natural and logical way to gauge the serious level of the discrimination. (In Tyres, the Panel found the discrimination resulting from the Mercosur exemption had not reached such degree of seriousness, whereas the discrimination resulting from the used tyre exemption had.)

In short, the word "unjustifiable" in the chapeau context should be understood as referring to the serious nature of the discrimination, and not merely as a general inquiry of whether any discrimination resulting from the application of the measure is justifiable by the policy objective. The AB in Tyres interpreted "unjustifiable" as such a general inquiry, thus confusing the chapeau standards with the MFN and NT standards.

It is interesting to note that the AB in Gasoline and Shrimp did distinguish any discrimination from arbitrary or unjustifiable discrimination, but failed to grasp the role of policy objective in determining the existence of any discrimination. The AB in Tyres corrected that failure, but at the same time threw away the two-part analysis.

Mitt Romney on the WTO

Mitt Romney on the WTO:

I realize that with the [World Trade Organization] there are many features that are not advantageous to us. It doesn't deal with manipulation of currencies as it should. It doesn't deal with protection of intellectual property as it should. We're treated unfairly relative to people with a Value Added Tax. And so we are going to have to establish either better rules at the WTO or launch what I call a Reagan Zone of Economic Freedom, invite other countries to trade with us, but they are going to have to abide by high standards and enforcement.

I understand the currency issue.  And I understand the VAT issue.  These are issues that have been raised a number of times by a number of people.

But I'm not sure I undersand his concern with intellectual property.  Most criticisms of WTO IP rules suggest that they protect too much.  I suppose that could be his concern, but somehow I think that's unlikely.  The only thing I can figure is that he thinks the current rules are not effective enough in protecting U.S. IP abroad.  Trying to strengthen WTO IP rules at this point in time could be a tough sell, though, I would think.

The Real World Impact of WTO Rulings: Chiquita

Reuters reports:

Shares of banana importer Chiquita Brands International Inc jumped over 9 percent on Tuesday on reports a World Trade Organization panel has ruled in favor of Ecuador in a challenge to the EU's banana tariff policy.

Oppenheimer analyst Barry Sine said in a note to clients early on Tuesday that he expected Chiquita shares to benefit as the panel's final report is issued around Dec. 10.

If it hasn't been done already, somebody should do a study of the link between WTO rulings and share prices of the affected companies.  This is the second time in a week that I've come across something like this.

Tyres Out

Some very quick, and preliminary, thoughts on the Appellate Body decision in Brazil-Tyres.  The AB reversed the panel on the question, under the chapeau of Article XX, of whether Brazil’s exception of MERCOSUR imports of retreads is arbitrary or unjustifiable.  Interestingly, the AB suggested that in order to avoid being arbitrary or unjustifiable, the discrimination must/should have a rationale rooted in the policy goal that formed the basis for provisional justification under Article XX(b).  While I agree that this exception seems unjustifiable, especially as Brazil did not even argue a health exception in the MERCOSUR arbitration, I'm not sure I see the basis for the requirement that the AB proposes, but will think about it.  The AB also said that the Panel improperly exercised judicial economy in avoiding responding to the EC claims that the MERCOSUR exception violated Articles I:1 and XIII:1 of GATT.  Of course, in order to do so, the panel would have been required to address whether MERCOSUR complies with Article XXIV of GATT, and whether the MERCOSUR exception is “necessary” (under the Turkey-Textiles decision) to the formation/maintenance of that customs union. 

The part of the decision that I found more puzzling is the earlier part about “necessity” under Article XX(b).  Preliminarily, I was glad to see the AB say (para 145) that the panel’s methodological discretion is not “boundless.”  I would have liked to see more of that discipline in U.S.-Cotton.  First, there seemed to be some confusion (at least on my part) about what precisely the panel and AB were defining as Brazil’s objective.  The AB seemed to accept a goal of reducing the amount of waste tires (see paras. 147, 161), rather than reducing adverse effects on health—the latter would seem to be what is required under Article XX(b).  However, the AB seemed to center on reduction of exposure to health risks by virtue of waste tires.  Second, seemed to me that the AB was extremely imprecise in the way that it dealt with necessity and alternatives.  That is, if the goal is to reduce health risks, why not look at the degree to which increased disposal requirements, or enforcement of disposal requirements, or other alternatives, reduce the risks.  The risks never get to zero, anyway, so some comparison seems reasonable, and the increased costs should be balanced against the trade restrictiveness.  So, this seems to me to be a retread(t) from the kind of balancing announced in Korea-Beef.  See the weak statement at paragraph 174 that so-called “non-generation” of waste tires (they are generated in some quantities) is more apt to achieve the goal, while waste management only acts after accumulation.  Yet there is a continuing flow of waste tires, and management may reduce the absolute amount just as well as non-generation. 

Hillary Clinton Talks Trade with the FT

Hillary Clinton did an interview with the FT on trade and economic issues.  I'll probably come back to this later, but one thing she said jumped out at me and I wanted to mention it here:

And I agree with Paul Samuelson, the very famous economist, who has recently spoken and written about how comparative advantage as it is classically understood may not be descriptive of the 21st century economy in which we find ourselves.

Did Samuelson really say something along those lines?  I'm curious if anyone knows what exactly she was referring to it.  I did a quick web search and did not see anything.

ADDED:  There seems to be a good deal of discussion of this point.  An FT editorial says:

Mr Samuelson did not even say what Mrs Clinton thinks he said. In the article she apparently has in mind, and in subsequent remarks, the great man did attack the pieties of the pro-trade lobby, pointing out that not everybody gains and that even nations as a whole can lose from free trade under certain restrictive circumstances.

Though this point was delightedly greeted by the political and pundit classes as a shattering new discovery, in fact Mr Samuelson was restating a decades-old understanding. What Mr Samuelson said was true not just of the 21st century, but also of the 20th – and it is just as irrelevant to the intelligent formulation of trade policy today as it was after 1950, when the liberal trading order was built. If Mr Samuelson, who has never (so far as we know) recommended protectionism, is not scandalised to be quoted in support of a “time-out” on Doha, he should be.

In response, Dani Rodrik says:

And this whole thing about what Paul Samuelson said and meant and whose position it provides support for is such a red-herring.  Hillary should not have brought up Samuelson, but I wish her critics would stick to the issues instead of chiding her for using his name in support.

In addition, Clive Crook says:

I wonder what Samuelson makes of being cited as an intellectual authority for Democratic Party disenchantment with liberal trade. It is one thing to say that it's all very complicated, and that economists should guard against simplistic accounts of the trade issue. It is quite another if, while pondering the complexities, the US turns its back on the liberal trading order. That too would be, as it were, a simplistic outcome--and an extraordinarily damaging one for the US and (more especially) for the developing countries. 

This confirms my initial impression that Samuelson didn't say what she implied.  It's interesting that even Rodrik, who agrees with her broader point, says "Hillary should not have brought up Samuelson."

More later on her suggestion of a "time out" and whether this should be considered "protectionist."

Fisheries Subsidies in the New Draft SCM: At Last a Recognition of the Concept of Environmentally Harmful Subsidies (EHS)?

I have just had a look at the new draft Annex VIII of the SCM on fisheries subsidies.  There is a lot to say on this Annex but there was a point that I impatiently wanted to check, namely the recognition or not for the first time of the concept of Environmentally Harmful Subsidies.

Until now, all the philosophy of the SCM was based on trade related adverse effects (contingency on export performance, lost market shares, price undercutting, etc.).  We find however in the new draft text some expressions that seem really to add something to this traditional philosophy, something  resembling what one may call "environmentally adverse effects". For example,  “any subsidy....the benefits of which are conferred on any fishing vessel or fishing activity affecting fish stocks that are in an unequivocally overfished condition shall be prohibited”.Let us note, by the way, that in order to determine when a stock is "unequivocally overfished", panelists and the AB would have to cross the famous "green line" and rule with the help of experts and NGOs as amicus curiae on ecological issues in which they have no particular expertise.  Moreover, “No Member shall cause, through the use of any subsidy ...depletion of or harm to, or creation of overcapacity...” in respect of certain fishing stocks.

Although this may not be apparent to everyone, it seems to me that we see here in its infancy, thanks to the wonderful job on this issue of many NGOs such as the World Wildlife Fund (WWF) and institutions such as the OECD, the emergence of a new legal regime for subsidies based on a new philosophy, namely the concept of Environmentally Harmful Subsidies (EHS). Could it be an inspiration in the future for other fields beyond fisheries? Of course, the most obvious field would be another common pool resource, no less important than fish in the oceans: the atmosphere of our planet.

One More Question from the Republican Debate

One more trade related question from the CNN/YouTube Republican debate:

YouTube question: Good evening, candidates. This is (inaudible) from Arlington, Texas, and this question is for Ron Paul.

I've met a lot of your supporters online, but I've noticed that a good number of them seem to buy into this conspiracy theory regarding the Council of Foreign Relations, and some plan to make a North American union by merging the United States with Canada and Mexico.

These supporters of yours seem to think that you also believe in this theory. So my question to you is: Do you really believe in all this, or are people just putting words in your mouth?

Cooper: Congressman Paul, 90 seconds.

Paul: Well, it all depends on what you mean by "all of this." the CFR exists, the Trilateral Commission exists. And it's a, quote, "conspiracy of ideas." This is an ideological battle. Some people believe in globalism. Others of us believe in national sovereignty.

And there is a move on toward a North American union, just like early on there was a move on for a European Union, and it eventually ended up.

And there is a move on toward a North American Union, just like early on there was a move on for a European Union, and eventually ended up. So we had NAFTA and moving toward a NAFTA highway. These are real things. It's not somebody made these up. It's not a conspiracy. They don't talk about it, and they might not admit about it, but there's been money spent on it. There was legislation passed in the Texas legislature unanimously to put a halt on it. They're planning on millions of acres taken by eminent domain for an international highway from Mexico to Canada, which is going to make the immigration problem that much worse.

So it's not so much a secretive conspiracy, it's a contest between ideologies, whether we believe in our institutions here, our national sovereignty, our Constitution, or are we going to further move into the direction of international government, more U.N.

You know, this country goes to war under U.N. resolutions. I don't like big government in Washington, so I don't like this trend toward international government. We have a WTO that wants to control our drug industry, our nutritional products. So, I'm against all that.

But it's not so much as a sinister conspiracy. It's just knowledge is out there. If we look for it, you'll realize that our national sovereignty is under threat.

I think there are some real issues here, so it's a shame to see them discussed in this way, with references to "a move on toward a North American Union" and "a WTO that wants to control our drug industry, our nutritional products."  What I would like to hear is the candidates' views on how much power should be given to international institutions, in what policy areas, and how these institutions should be run.  I know it's a bit out of the mainstream U.S. public policy debate, but it seems to have resonance with at least some people (e.g., Ron Paul supporters), so it would be great to hear the other candidates' views on this.