WTO top post - battlelines drawn

With Korea, Indonesia, Mexico, Kenya putting up nominations for the post of Director General, WTO along with New Zealand, Jordan and Ghana the race for the multilateral trade body's top post is truly heating up.I have endlessly blogged about it here and here.

Reuters carried a piece not he potential candidates and the likely success stories here.BBC carried an interview about what the top post entails here.

While the developing country-developed country debate permeates the selection process, the multiplicity of candidates from the developing and LDCs is seen as a spoiler for developing countries to succeed. There is another view that the country of origin of the nominee should not matter in the selection process - only competence should. 

Whatever be the outcome of this race (the results would be out in May 2013), certain guidelines on the WTO website from the "Procedures for Appointment of the Director General" adopted by the General Council of the WTO in 2002 are pointers to the way things should move forward:

"1.The appointment process shall be guided by the best interests of the Organization, respect for the dignity of the candidates and the Members nominating them, and by full transparency and inclusiveness at all stages, building on the best practices established over the past years with regard to internal transparency and participation of all Members. 

2.              The overriding objective of Members in this process shall be to reach decisions by consensus."

What is more interesting in the guidelines is the reference to diversity of membership:

"13.  In order to ensure that the best possible candidate is selected to head the WTO at any given time, candidatures representing the diversity of Members across all regions shall be invited in the nominations process.  Where Members are faced in the final selection with equally meritorious candidates, they shall take into consideration as one of the factors the desirability of reflecting the diversity of the WTO's membership in successive appointments to the post of Director-General."

With the majority of Director General's in the past being from the developed world, would the mandate of recognizing diversity indicate that a preference this time should be given to a developing or Least developed country. The coming days of consultation, formation of a consensus and ultimate selection (probably by a vote) by the General Council will ultimately decide that. 

James WIlliamson in a comment on this blog to an earlier post summarized the chances of the candidates well:

"The DG post should be given to an African. There has been a tacit understanding among developing countries that the next DG should come from either Africa or Latin American. It is therefore surprising for Indonesia and Korea to nominate candidates for the post. In the case of Korea, they are being greedy considering that there is a Korean UN Secretary-General and a Korean-American World Bank President. Korea is also represented on the WTO Appellate Body. Countries need to be sensitive when nominating candidates. The same goes for Brazil and Mexico. For a start, Brazil's trade envoy is young and does not have any substantial managerial experience. He has not been a Minister and has not managed anything substantial. Being the head of mission hardly qualifies one to head the WTO. Moreover, as a big player in international trade circles, it is not good for the WTO Chief to come from such a country. Had Lamy come from a small developing country, he could have probably succeeded in bringing closure to the Doha Round. A Brazilian was recently named as the Head of the FAO and they also had someone who competed for the Director-General of WIPO. There is a Mexican currently heading the OECD, so it would be too much for another Mexican to head the WTO. The other candidates do not have impressive credeentials. The Kenyan candidate has never held any Ministerial position and has not distinguished herself in the trade field. She was unsuccessful in her did to become a member of the Appellate Body. The candidate from Jordan is a scientist and has not had much involvement with the WTO and the multilateral trading system. That leaves four serious candidates, Mari Pangestu of Indonesia, Tim Groser of New Zealand, Alan Kyerematen of Ghana and Anabel Gonzalez of Costa Rica. It may be difficult for Indonesia to get the support of other developing countries, for the simple reason that it had been agreed among developing countries that the next DG should come from Latin America or Africa, given that Dr Supachai is from Thailand. It may also be difficult for Tim Groser to be elected for the simple reason that he is from New Zealand, where Mike Moore comes from. Moreover, there is an understanding among developing countries that they will not accept a candidate from the developed World. Between Ghana's Alan Kyerematen and Costa Rica's Anabel Gonzalaz, the Ghanaian candidate has more impressive credentials. It is known that Anabel Gonzalez had a hard time managaing the Agriculture Division of the WTO, so managing the whole WTO would be a challenge which she cannot cope."

Let the battle begin!

China's 2nd WTO decade

A report in a China news daily about the need for more market reforms to take advantage of the WTO caught my attention. China has known to have taken advantage of its membership since 2001 but experts claim that now that advantage is wearing off and more needs to be done.

"To overcome that tension, Erixon suggested both sides roll out market reforms, with China liberalizing more sectors, getting away from its high level of reliance on State-owned enterprises, and giving domestic companies greater access to capital markets."

Moving away from State owned enterprises, market reforms - will China herald the next big "capitalist" reform push? Will be interesting to see how China approaches its second decade in the WTO.Less subsidies and more market reform?

Pragmatism, ideology and the middle path

Tread the Middle Path has tended to tow a moderate line on issues - avoiding ideological extremities and positions. There is always a middle path on several contentious issues that one can find if one is willing to rise above ideological prejudices. This is not to imply that ideology is in itself not worth following - it must be tinged with the realities of the time.

This piece titled "Defending Ideology" in the context of free trade by Tibor Machan refers to the ideology of pragmatism - referring to a belief in something that works, is practical and feasible. However he also refers to the importance of an ideological position.

"It is very common among intellectuals in our time to demean ideology. Thus if one supports, say, free trade with foreign firms, one is belittled for doing so on grounds of one's conviction that free trade is generally better than trade that is regimented by government. A "free-market ideologue" is what one is snidely called in such circumstances.... 

Pragmatic justifications usually focus on whether a policy works, whether it is practical. But how is that ascertained? How do we know whether a policy works? Well, is there sufficient evidence that it achieves the goal or purpose for which it is proposed? 

In the case of international free trade that goal or purpose would be mutual wealth creation. If through such trade the parties gain more wealth than by some other means, like government planning – setting quotas, protectionism, etc. – then free trade will have been pragmatically justified or vindicated; it will have been found the practical, workable policy to follow.  

... 

Then, of course, pragmatism is itself an ideology or theory of action wherein what is workable, practical, is preferred as against what isn't. Why should people proceed only when their objectives are feasible? Pursuing the impossible dream could well be a good policy for purposes of gaining stamina, for honing one's tenacity and grit. 

There is really no hope in resting proper public or even private policies on nothing more than that they are practical. Human beings need also to be sure that their choices, including those pertaining to public or political policies, are worthy, have overall merit, square with a proper moral outlook. Belittling that goal by labeling it ideology is a cheap shot. The issue should be which ideology makes the best sense not whether something is ideological."

Ideological positions in matters of international trade are bound to exist. We see it especially int he context of domestic policy space independence. Is the international economic order a neo-imperialist design or is it a boon for the developing world? Does trade with reduced barriers help countries to grow or does it stunt growth? While ideological positions are important to provide a historical perspective, it is also necessary, I think, for countries to take pragmatic, practical steps in order to benefit from the international economic regime. Merely criticizing it and rejecting it would neither provide the benefits. Engaging in a manner that pursues one's national interest in the context of the overall limitation of international rules seems to an ideology in itself worth pursuing. 

Trade Compliance Center - National interest and businesses

I had earlier blogged about the Direct Line program of the US State Department which essentially assisted US businesses to keep in touch with government on issues that effect them internationally. The Trade Compliance Center (TCC) in the US Department of Commerce is another agency that assists US businesses to ensure that Trade Agreements are used to further their national interests.It is the focal point for monitoring foreign compliance with trade agreements to se that "US firms and workers" get the maximum benefits from these agreements.It is projected as the "one stop-shop" for getting US government assistance in resolving trade barriers or unfair situations businesses encounter in foreign markets.

Another example of how business interests are seen as national interest? Do developing countries have this kind of support mechanisms for their businesses?

Hat tip to R.V.Anuradha  for bringing this to my notice...

No to "Amicus Curiae" briefs - Analysis of the Canadian FiT case: Part I

The Canadian FiT case (WT/DS412/426) in the WTO does bring to the fore many issues concerning local content in Feed-in tariff programmes. The WTO Panel essentially found that the domestic content requirement in Ontario's Feed-in tariff program was inconsistent with Canada's obligations under GATT and TRIMS and violated the national treatment principle by providing a less favorable treatment to imported goods as compared to local goods.It however declined to hold the measure as a subsidy since it felt that no "benefit" was conferred. I have blogged on the issue here, here and here.

The WTO panel decision was the first instance where the WTO dispute settlement mechanism decided on renewable energy programs compatibility with WTO law. While the case is a fertile ground for discussion on issues of violation of national treatment, TRIMs as well as the ASCM, it has major implications for FiT programs that are implemented across the world. The applicability of the defence of Article III:8(a) GATT to a GATT and TRIMs violation has been aluded to in detail. The concepts of "financial contribution" and "benefit" in the ASCM have been authoritatively explained.  I recently completed a paper on Renewable Energy Support programs which is available here and may have to revisit the conclusions in the light of the findings here.

While the decision is almost certainly to be appealed against and will be legally dissected by experts in the coming days, I will, through a number of posts in this blog in the coming days, touch upon important issues that the panel report addressed.

Here is part I of the series. For starters, I found this interesting about the Panel report:

1. The panel was chaired by Thomas Cottier who is considered an authority on WTO law and the intersection of trade and environment. he has also extensively written on energy and WTO law.

2. Regarding amicus curiae briefs, the panel seemed to be lukewarm to several "unsolicited" briefs. It held:

"D. AMICUS CURIAE BRIEFS 

1.12 On 14 May 2012, the Panel received an unsolicited amicus curiae brief relating to both disputes from the following organizations: Blue Green Canada; the Canadian Auto Workers (CAW); the Communications, Energy and Paperworkers Union of Canada (CEP); the Canadian Federation of Students (CFS); the Council of Canadians; the Canadian Union of Public Employees (CUPE); and the Ontario Public Service Employees Union (OPSEU). On 15 May 2012, the Panel in WT/DS412 received a second unsolicited amicus curiae brief from the following organizations: the International Institute for Sustainable Development (IISD); the Canadian Environmental Law Association (CELA); and Ecojustice Canada. 

1.13 During the second substantive meeting of the Panel with the parties, Japan, the European Union and Canada recalled that it is within the discretion of the Panel to accept or reject the unsolicited amicus curiae briefs. Subsequently, and consistent with the approach taken by previous panels, the Panel informed the parties that it would take the briefs into account only to the extent the parties decided to incorporate them into their own submissions. Canada informed the Panel that it had no comments to add on this issue beyond what Canada had already stated at the second substantive meeting with the Panel, namely that it is within the discretion of the Panel to accept or reject the unsolicited amicus curiae briefs. Japan and the European Union (the "complainants") informed the Panel that they did not consider it necessary to incorporate any of the observations made in the amicus curiae briefs. In the light of the parties' views, the Panel did not find it necessary to take the briefs into account in its analysis of the claims and arguments made in these disputes."

The Panel suggested that amicus curiae briefs would be taken into account "only to the extent the parties decided to incorporate them into their own submissions."What implications does this have on the jurisprudence of the reliance of amicus curiae briefs in WTO dispute settlement proceedings. Does it imply that "independent", "non-party" (non-State/government) briefs are not acceptable to the Panel? Is this a positive sign? While reliance on amicus curiae briefs for arriving at a decision may not be necessary, is the decision not to consider them at all a step in the right direction?is here a resistance of member countries to accept amicus curiae briefs? Are amicus curiae briefs non-representational and aimed at espousing vested interests all the time? Ofcourse, amicus curiae briefs may not represent the will of the member countries but can they be important sources of expert opinion, third party interests, jurisprudence and understanding? While the terms of admissibility may be debated, can the "incorporation" by the parties of the amicus curiae vireo be the only ground for acceptance. If that were the case, there would be no need for amicus curiae briefs itself. Some scholarly works on amicus curiae briefs and WTO are found here, here, here  and here. Am I missing something here?

More on the issues of the compatibility of the Ontario FiT programme with TRIMs, GATT and the interpretation of a subsidy under the ASCM (financial contribution and benefit)in the coming days here.

40K hits now!

The greatest pleasure for a blogger is the viewership increasing. Feels satisfying to note that hits on my blog have reached the 40k figure! I have always marked the 10k, 20k and 30k occasions with a blogpost to celebrate. Nothing better than to be read! 

Thank you all for the support. Here's to more blogging!

Jordan's WTO candidate?

With the top post for the WTO falling vacant in September 2013, the race is heating up. I have earlier followed this story and blogged about it here and here. Arabianbusiness.com carried a piece of an unlikely candidate for the post - from Jordan - Ahmad Thougan Al Hindawi, a former minister of industry and trade of Jordan. 

"Jordan will put forward a former government minister for the top job at the World Trade Organisation (WTO) when the term of French Director General Pascal Lami expires at the end of August 2013, theJordan Times reported, citing an unidentified senior government official. 

The kingdom's government decided December 9 to nominate Ahmad Thougan Al Hindawi, a former minister of industry and trade for the top WTO post, marking the first time the country has contested the role."

Will he be a front runner for the post or a dark horse from the developing countries perspective? The battle lines are not yet drawn on this issue and all the cards are not out in the open. The EU Trade Commissioner opined recently that the next WTO chief would not be from Europe. 

2013 will be interesting times for political watchers of the WTO.

Rethink on subsidies required?

The Airbus-Boeing dispute is one of the longest trade disputes that has dominated the WTO dispute settlement mechanism for years now. I have blogged about the issue here, here and here. Both the aircraft manufacturing giants allege, through their respective governments, that the other is a recipient of illegal subsidies that need to be scrapped. The WTO Appellate Body in both the cases has come to the conclusion that there have been illegal subsidies in both the cases. The dispute has reached the final stages of compliance and counter measures.

A recent piece in the Chicago Tribune tracing the history of the dispute called for a stop to the "launch aid" given by Europe to Airbus.

"In a surprising move that puts a welcome spotlight on launch aid, Germany reportedly held back the final 600 million euros of loans that it had promised. Alas, the decision has nothing to do with restoring fair trade practices. Germany is withholding its contribution to ensure that it gets a fair share of the jobs from the aircraft manufacturing it subsidizes.

 Nevertheless, even an internal European dispute over launch aid is a step in the right direction.Launch aid has got to go. The trade dispute between the world's leading markers of commercial aircraft has gone on too long. It must be resolved before it erupts into an all-out trade war — which could happen in relatively short order, by WTO standards."

While launch aid remains on the Airbus side, large subsidies on the Boeing side too needs to be addressed against which the WTO Appellate panel has found incompatible with WTO law. While China is normally in the dock for "subsidizing" its industry, the Airbus-Boeing dispute highlights the "all-pervasive" nature of subsidies in both the developed and developing worlds. Renewable energy is the next big area where the battle over subsidies is going to be fought. What should the international legal framework be in the context of renewable energy subsidies? Should it be different from aircraft subsidies as suggested by Gulzar here? Should we move towards a new phase of differentiation between different types of subsidies? Does the ASCM allow such a distinction? Do we need a rethink obout subsidies under WTO law?

After Australia, it is EU now - Tobacco packaging regulation goes global

After Australia, it is the EU now which is going ahead with a tobacco packaging regulation that has health warnings as well as a ban on flavored cigarettes. Reuters and IELP blog reported about it. After the Cloves Cigarettes and Australian Tobacco Plain Packaging case, will this be the next biggest battleground (once the EU regulations are enacted) for the tobacco industry to agitate?

"Manufactures have increasingly looked to developing Asian and African markets to compensate for falling European sales where rising incomes have led to a big increase in sales of cigarette brands such as Marlboro in recent years, making those markets a major source of revenue growth for tobacco firms. 

Due be published on Wednesday, the proposals must be jointly approved by EU governments and the European Parliament before they can become law, a process that could take up to two years. 

"There's going to be a long way to go once these proposals are published," said Simon Evans, a spokesman for Imperial Tobacco. "We are confident looking many years into the future that the EU will be an area where we can sustainably grow and develop our business."

The WTO dispute settlement mechanism and tobacco seem to be going along rather too often...

Tajikistan, Azerbaijan and Afghanistan - inch towards WTO membership

For those following accession to the WTO (I know not many would be ardent followers now that more than 150 countries are members), Russia's accession is closely being followed by the accession process of Tajikistan, Azerbaijan and Afghanistan. I had blogged about Afghanistan's accession earlier here.

The WTO website reported Tajikistan's accession progress which is in its final stages (after 11 years of negotiation) thus:

“Once Tajikistan completes its domestic ratification procedures, it will become the 159th member of the WTO family. For Tajikistan, a small and landlocked country, WTO accession is a road leading to the world economy. For the WTO, it is another step towards universality and a sign of confidence in the values and benefits of the multilateral trading system,” said Director-General Pascal Lamy."

Afghanistan and Azerbaijan have still some way to go. Continuing accession to the WTO signifies the importance countries accord to the multilateral process and being part of the global body on international trade. It also signifies the importance of multilateral rules and governance structure inspite of the growing bilateral agreements. Is it a triumph of multilateralism? It also shows the extremely arduous and time consuming process of getting into the WTO!

Anyway, more the merrier...

Dominican Republic, a tobacco dispute and some observations

(courtesy - alum.mit.edu)

The debate on Tobacco Plain Packaging has reached the doorstep of the WTO dispute settlement. Australia's Plain Packaging legislation has been challenged by the Dominican republic, Honduras and Ukraine. I have blogged about it earlier here and here. A request for consultation was made in the dispute (DS441) and reports that the consultations failed have come in. So what next? Establishment of a panel.

While Dominican republic's request for consultation is found here which lays down the legal challenge to the measure, Reuters reported the statement of the Dominican Republic's Ambassador to the WTO which captured a number of issues:

"4.The plain packaging measures represent a dramatic regulatory intrusion into the appearance of products that may be sold lawfully in Australia, literally wiping design features off tobacco packaging and individual cigarettes and cigars. These design features include trademarks and geographical indications that Members have agreed to protect under the TRIPS Agreement, and which serve the valuable purpose for both producers and consumers of differentiating products that compete lawfully on the market in Australia.  

5.     Turning to the TBT Agreement, these plain packaging measures restrict international trade by eliminating competitive opportunities for tobacco products that are forced to appear in the marketplace in virtually identical retail packaging. 

6.     The WTO system ensures that measures restricting core intellectual property rights and international trade are permissible solely insofar they are effective in serving a legitimate objective. Australia's plain packaging measures do not meet this standard: they eviscerate the very function of trademarks and geographical indications and destroy competitive opportunities for tobacco products, with no credible evidence that they will reduce tobacco prevalence. Indeed, the evidence shows that the plain packaging measures will undermine Australia's goal to reduce tobacco prevalence. By commoditizing the market for tobacco products, the measures will inflict price competition, resulting in lower prices and higher consumption. Further, requiring products to be sold in similar plain packaging will facilitate illicit trade. 

7.     The Dominican Republic has requested that, rather than introduce these plain packaging measures, Australia employ tobacco control measures that would be truly effective in reducing tobacco consumption and also consistent with its WTO obligations.  Unfortunately, Australia has proceeded to introduce its plain packaging measures." 

Some observations:

1. Dominican republic's claim is that the regulatory objective of public health could be achieved by Australia even without Plain Packaging.
2. The Intellectual property rights of a developing country's products are impacted by a measure by a developed world. TRIPS being used to further developing countries interests?
3. Employment opportunities and the centrality of the tobacco industry in the economy of the Republic is being used as a point to highlight the dramatic impact the measure could have on lives and jobs.
4. This could be extended to other products like liquor and food products on the same principle and hence can be detrimental to international trade and intellectual property rights.

The statement concludes thus:

"10.     In recent years, we have witnessed a considerable development success story in our tobacco sector. Through significant investments by our producers, we have transformed our industry from being an exporter of tobacco leaf to being one of the world's premium producers of processed tobacco products, in particular cigars. Indeed, today, the Dominican Republic is the world's largest exporter of cigars. 

11.     We are proud of these achievements, and conscious also of the value of such development to the employment and income of our population. We are concerned that plain packaging will eradicate this cornerstone of our economy, whilst failing to achieve Australia's health objectives."

Trade, employment, intellectual property rights, public health objectives, interests of developing countries, domestic policy space and a dispute - this is what WTO disputes are all about!

Canada FiT Panel report is finally out!

The Canada FiT panel report of the WTO is out. It can be accessed here. More on the implications on this blog soon!

Happy year end reading!

Africa's WTO Chief?

I have followed the race for the next WTO chief in this blog regularly here and here based on press reports. While the race is heating up, unexpected runners are coming into the fray. The WTO website announced that Ghana, on 17 December 2012, nominated Mr Alan John Kwadwo Kyerematen for the post of WTO Director-General.Jordan had also planned to put up its candidate.

Reflecting on the concerns of less developed countries interests at the WTO, Ghana's candidate got support from some press reports here:

"From the mission, functions and principles of WTO highlighted above, it is clear in theory that the WTO is committed to serving the collective interests of all member states. In practice however, the role of WTO as a conduit for improved and democratic international trade has been very controversial as it seems to serve the interests of predominantly the major nations and multinational enterprises. It continuously remains governed by world superpowers to the detriment of the voiceless economies. Can we expect a more responsive, representative and sensitive global trade governance with the election of yet another illustrious son of Africa – Mr. Alan Kwadwo Kyerematen - as the Director General of the World Trade Organization? 

In order that, the World Trade Organization (WTO) remains focused on its guiding principles, the need to reduce the influence of superpowers is paramount. There should be a redefined commitment to encourage sustained economic development and transparency. Not until this is done, there is little the developing world can do to compete favorably with the advanced world. Consequently, the effectiveness of WTO would be scarcely felt. In the events where the WTO does not give a listening ear to the concerns of the less-privileged nations, the dream and desire to bridge the inequality gap between the north and the south will everlastingly be a hallucination. Taking constructive actions to respect the views of the marginalized in the trade policy-making process is the surest way to address the anti-democratic and non-transparent negotiating procedures characterized by the World Trade Organization (WTO)."

Some questions:

1. Will a Director General (DG) from a developing country or least developed world have a bearing on the interests of these countries at the WTO? Is it a matter of representation only or more substantive efforts can be made to make the WTO more concerned about developing country interests?

2. Will dispute settlement mechanism processes and outcomes be impacted by the nationality of the DG? In a rule-based system, how much impact does a DG from a developing world have on charting the course of disputes?

3. Will the focus of negotiation change because of the concerns of a DG from the south? If the WTO is a member driven organization then to what extent can the Secretariat and DG influence the course the WTO takes?

4. Does the WTO actually favor the interests of the developed economies? Is it as simple as that?



The previous DGs were from UK (Eric Wyndham White), Switzerland (Olivier Long and Arthur Dunkel), ireland (Peter Sutherland), Italy (Renato Ruggiero), New Zealand (Mike Moore), Thailand (Supachai Panitchpakdi) and France (Pascal Lamy).

Jordan, Ghana, New Zealand or another surprise .. whose next?

Update: Costa Rica, on 19 December 2012, nominated Minister Anabel González for the post of WTO Director-General