Thursday, January 31, 2013

Antigua, gambling and a dispute

The US-Gambling case (DS 285) more popularly known as the Antigua case makes for an interesting case study of a WTO dispute settlement case.Yet another Caribbean country taking on the US, very similar to the rum cases that I had blogged about here. While I am not going into the legal aspects of the GATS violations in this blog post (it basically related to the interpretation of commitments that the US had undertaken under the GATS), the case brings to the fore many aspects of the nature of the dispute settlement process itself. For a brief summary of the dispute see this synopsis here.The AB essentially held that US measures of totally prohibiting online betting and gambling services of Antigua were inconsistent with the obligations it had undertaken under GATS.

Some observations about the dispute:

1. Long standing dispute - The request for consultations by Antigua was made in 2003. It is 2013 and the dispute has not reached a final conclusion to the satisfaction of the complainant even after the AB had ruled in its favor in 2007. This raises the issue of the efficacy of the dispute settlement system to provide efficacious remedies in a time-bound manner.

2. Evidence of a rule-based system - The case has been heralded by some as evidence that both smaller and large trading countries have equal rights in the system. As mentioned by Antigua's lawyer here:
"With Antigua, it’s $21 million. Maybe with China it’s going to be U.S. $21 billion. One of the messages we want to get across is that the WTO was sold to smaller countries as a level playing field and a way for them to expand the reach of commerce, subject to a set of rules that apply to everybody. I think more than anything else, this case is about fairness. The WTO is supposed to be fair.”
This goes back to the point that the dispute settlement mechanism, which is considered as as the crown jewel of the the WTO system, is based on rules and not on power politics. Countries irrespective of their trading and geo-political strength can challenge larger, more powerful trading partners at the dispute settlement. However, the inability of Antigua to meaningfully implement the WTO decision raises questions about the fairness of the system. Of what use is a rule-based system if the complainant cannot implement a decision or bear the fruits of it. Is the threat of other sanctions or the reality of trade much more overbearing that a judicial decision?

3. Landmark GATS case - This case is also considered as one of the few (there are only 23 cases that cite the GATS Agreement out of the over 400 WTO cases) cases where the commitments under the GATS were scrutinized by the dispute settlement mechanism. With services trade gaining in importance, this percentage is definitely going to grow.

4. Cross-Retaliation - The WTO has authorized Antigua to retaliate against the U.S. due to the latter's failure to comply with the decision. Antigua has threatened to retaliate in another sector - intellectual property - by ignoring copyrights of US holders by selling material on a website.This is an interesting strategy of retaliating in a sector not a subject matter of the dispute (the case was about GATS commitments, but the retaliation is proposed under copyrights) but which is a very strongly guarded right in the US. Will this strategy be used by other countries in their disputes? What implications does the suspension of obligations under TRIPS have for the legal framework that protects these rights? Shamnad Basheer has this detailed study of how a cross-retaliation model can be used by developing countries to ensure compliance in WTO cases. The USTR seemed concerned at the prospect of a suspension of obligations under TRIPS:
"The United States is concerned, however, that the Arbitrator agreed with Antigua’s request to suspend WTO concessions not just with respect to services, but also with respect to intellectual property rights (IPR).  Any authorization pursuant to the award would be strictly limited to Antigua; every other WTO Member remains obliged to protect U.S. IPR under WTO rules, including enforcement against any IPR-infringing goods.  Moreover, even with respect to Antigua, it would establish a harmful precedent for a WTO Member to affirmatively authorize what would otherwise be considered acts of piracy, counterfeiting, or other forms of IPR infringement.  Furthermore, to do so would undermine Antigua’s claimed intentions of becoming a leader in legitimate electronic commerce, and would severely discourage foreign investment in the Antiguan economy."
The Gambling case is an interesting case reflecting the many challenges that the dispute settlement mechanism faces. It also brings us back to the question as to what constitutes "compliance" in a case, which the US claims to be undertaking. We faced that in the long drawn Airbus-Boeing subsidies case too.

Shamnad Basheer has a great blogpost on the dispute on SpicyIP here.

For a different take, see Eyes on Trade blogpost which believes that this is yet another example of trampling of US domestic policy space by the WTO (after Tuna safe dolphins, COOL decision and Clove Cigarettes case) and it also sees "tiny" countries used as pawns by business interests to take on the major markets.
"The delicious and tsunami-scale irony is that now Antigua (population 88,000 and GDP $1 billion) is being "borrowed" by gambling interests to cross-retaliate against the United States - by removing intellectual property rights from U.S. products in the first use of such a sanction. Except, wait, didn't Ralph Nader warn against just this scenario of some commercial interest finding a tiny country to attack U.S. public interest policies back when the WTO was being debated?"
Another classic case study for the international trade law books?

Wednesday, January 30, 2013

Live webcast of WTO DG candidates

Live webcasting of the press conferences of candidates for the WTO DGs post will be made available on the WTO website here on 29th, 30th and 31st of January 2013.

This is the first time all the candidates will be present at the same forum to espouse their candidature.

Tuesday, January 29, 2013

Will Bali be able to deliver what Doha could not?

The Doha Development Agenda or Doha round has been written off by many as not being capable of producing any exults in the coming years, already having lingered on for more than a decade. Will the 9th Ministerial Conference in Bali (I have blogged about it here and here) break the impasse, at least partially?

Pascal Lamy alluded to the possibility of a basket of credible results in Bali in December 2013 here. Referring to the way forward on these negotiations:
"To ensure that the process runs as smoothly as possible and to avoid any surprises, we need to stick to a few simple guidelines.  
First, we need to work towards what is reasonably doable.  Members should be realistic in their demands, take into account other Members’ red lines and stay clear of what are known to be unattainable objectives.  
Second, when advancing a proposal, it is the proponents’ responsibility to build consensus around it.  Make sure that you are working towards convincing the other Members, not yourselves.
Third, avoid being confrontational.  Any proposal should not be framed as a kind of take-it-or-leave-it position.  The negotiating process entails a trade-off between concessions and demands.  Be flexible and work together with other Members and around their sensitivities to achieve a common understanding. 
Certainly, none of these points are new.  They have guided the last couple of MC preparatory processes.  They are mainly dictated by common sense, but they are fundamental if we want to act responsibly and with collective determination in the run-up to Bali. 
Without setting new and unworkable deadlines, MC9 provides us with an opportunity to show that WTO Members can advance the negotiating front of the WTO agenda.  Of course, we should be under no illusion about the breadth of what we can achieve in the short timeframe between now and MC9.  Nor should we create unrealistic expectations. The main stumbling blocks of the DDA are still standing and many of the toughest nuts will likely not be cracked by the time Ministers meet in Bali. 
But although we must manage expectations and keep ambitions in check for Bali, we cannot fall short of delivering on a credible basket of issues that would signal your confidence that the rest of the Doha agenda can be addressed in due course."
Will Bali be the golden opportunity to bring negotiations back on track with some 'credible results"? T.S.Vishwanath feels Bali can perhaps provide a breakthrough:

"To a great extent, Bali can resurrect WTO and help member countries look at the organization to resolve some of the emerging issues in global trade. The next six months would be critical in developing an agenda that can be resolved by the end of the ministerial"
Trade Facilitation, may be? WIll there be an acknowledgement to move away from the single undertaking principle? A lot of expectations on Bali - Let the preparations begin! Indications of it were probably found in the Davos meet about which was alluded to here.

Monday, January 28, 2013

Dispute settlement and developing countries - How does one engage?

WTO disputes have been a recurring theme of this blog. The dispute settlement mechanism is considered as the crown jewel of the WTO system bringing credibility, predictability and certainty to the system with focus on a rule-based resolution of disputes rather the a power-based system.

A dispute in the WTO can only be brought forth by a member government. The State is the only party before a dispute resolution process even though the interests of private businesses are impacted. For example, in the case of the Airbus and Boeing case at the WTO though the affected parties are large, private aircraft manufacturers, the parties to the dispute are the European Union and the U.S.

Disputes at the WTO require sufficient preparation, competence and thorough groundwork before it is launched. An ICTSD paper titled "Where do WTO cases come from?" highlights the importance of preparation and assessment of cases in the context of the complexity and sensitivity of the issue involved.
"In short, undertaking a WTO dispute requires a significant commitment of nearly full time personnel, which can be a real challenge for WTO Member governments. Some governments, such as the US and EU participate in so many disputes that they can rationally hire a very large staff of in-house WTO litigators, but even these two countries struggle when local industry does not contribute legal support for a case. A comprehensive and detailed assessment of a case done early on in the process somewhat alleviates the work during the very busy litigation proceedings."
The paper notes that loss or impact on market access is one of the primary reasons for WTO litigation by member countries, usually on behalf of their private business interests. WTO litigation is all about preparation and competence involved of experts preparing the case.Many countries engage outside counsel for their cases. Private industry is also expected to contribute to the expenses of the case. Brazil, amongst developing countries, has been at the forefront of engaging with the dispute settlement system to further its national agenda.
"An example of a mechanism in a developing country that is in part similar to USTR’s cooperation with outside counsel but very different with respect to the funding and accessibility of WTO litigation is Brazil. A small office of highly sophisticated WTO experts in the Foreign Ministry, many with experience in Brazil’s mission to the WTO in Geneva, manages the cases. However, cases are usually brought only if the local industry agrees to pay for outside counsel to help.The outside counsel may provide research and submission drafting support but the office in Itamaraty remains in charge. The difference between both models of litigation management became clearly visible in the Brazilian Cotton Case, where unlike the Brazilian counterpart, the US cotton industry did not pay for a large legal support effort. Consequently, USTR was outnumbered by the Brazilian officials as well as US lawyers and US academics all working on the side of Brazil.The US might have lost the case even with more resources, the example underlines the ability of some developing countries to use the WTO dispute settlement process on an equal (or better) footing with larger WTO Members."
The paper discusses the considerations involved in a legal and economic assessment of WTO disputes before they are initiated. It gives a detailed account of the need for expertise, assessment and recommends how disputes must be handled by member countries, especially developing countries, at the dispute settlement process at the WTO. It stresses on pre-litigation legal, economic and strategic assessment of disputes before initiation of a trade dispute at the WTO. The importance of creating in-house WTO expertise is often cited as a pre-requisite to a succesful engagement with the multilateral trading system. The paper, inter alia recommends:
"Create in-house WTO expertise. Most, although not all, developing countries have a mission in Geneva with people assigned to the WTO. Monitoring the daily functioning of the WTO, with its numerous committee meetings, as well as observing litigation as a third party, should be part of the mission’s responsibility. And equally important, delegates who have served in those roles in Geneva should remain involved with WTO issues when they are posted back home. Often, there are bureaucratic obstacles – such as if the mission is part of the foreign ministry – to keeping people on WTO assignments, but a conscious attempt should be made to track people who have served in the mission to the WTO and recapture them from time to time in their career so the expertise is not lost. In addition, many developing countries have students in programs such as the World Trade Institute at the University of Berne or at universities such as Georgetown University Law Center, Columbia Law, National University of Singapore, Cambridge and Geneva and many others. Many of those students would be very valuable as interns in a country’s mission to the WTO in Geneva, or working in related offices in the capitols. Efforts could be made to seek those people out, or at least welcome them when they apply."
How many developing and underdeveloped countries can undertake this exercise of competency building? While facing WTO disputes against developed countries one is confronted with highly qualified legal experts from law firms with years of experience. How does a developing country counter this? Countries increasingly rely on the same set of international law firms to fight their cases. This is one of the dealings with the issue. Another way is to systematically develop internal expertise, engage legal academics within the country and ensure that a local talent pool is nurtured and developed with sufficient expertise to assist the government in WTO cases.This would require long term strategic planning and involvement of a large number of stakeholders. It is, perhaps, the only way to engage with the multilateral legal system.

Sunday, January 27, 2013

Currency undervaluation - 2013's big trade dispute?

I had recently blogged about a possible currency dispute at the WTO. Does currency undervaluation merit a trade remedy? Is it disguised protectionism? Does it unfairly benefit the exports of the country devaluing it's currency? While many have argued that currency undervaluation does not fall under the domain of the multilateral trade regime (the IMF being the right forum), there is considerable literature emerging that a possible WTO action cannot be totally ruled out. Recent moves by Brazil to raise the issue at the Committees of the WTO also underlies the criticality that members view the issue to be.Nevertheless, others argue that there may not be any credible link between undervalued currency and trade flows at all.

This Bloomberg report highlights the growing disquiet within the EU and Russia on the policy of Japan in managing its currency at a low rate. The murmurs are slowly getting louder. While the Chinese renminbi has been the target of undervaluation normally, this time it is the Japanese yen facing the brunt. The Economist and Voxeu had these comments in recent times.

Irrespective of the desirability of managed exchange rates to further one's domestic macro-economic policy agenda, the criticality of currency undervaluation to trade related issues is here to stay. This may manifest itself in increased opposition at the WTO or at dispute settlement proceedings. 2013 may indeed see the initial impact of those murmurs. The implication this has on domestic policy space, monetary policy independence and interpretation of trade rules (in terms of interpreting what constitutes an actionable or prohibited subsidy - currency undervaluation most likely being labelled as a prohibited subsidy under the ASCM or a violation of other GATT/WTO provisions) are questions which have no easy answers.

Saturday, January 26, 2013

The Rushford Report on WTO elections

I found this interesting website by Greg Rushford called "The Rushford Report" which analyses the political underpinnings of many international economic law and policy developments. A great read!

The WTO DG's election is round the corner and many commentaries on the process and likely successor to Pascal Lamy have been written. I happened to find this piece (courtesy the IELP blog) titled "The WTO's "Dangerous" Election" (part 1 of a two-part series) on the WTO DG's election a storehouse of information written in an inimitable style (rarely found in literature related to international economic law and policy) on the candidates and the likely result of the DG election. Summarizing the nature of a WTO DG's election process well, it explains:
"Whatever they want, this WTO election sure is different than what many would consider a “normal” one. There won’t be public polls. No focus groups.  No campaign rallies. No television commercials. And there will never be a recorded vote. 
The candidates will present themselves to the WTO’s General Council in Geneva on Jan. 29, in public proceedings that will be broadcast on the Internet. They will take questions, drawn from a box at random. And then they will get on the road for the next couple months, making their cases to the usual suspects in various word capital cities: trade officials, political leaders, and — horrors, if the WTO’s pesky band of vociferous anti-trade activists gets wind of this! — even corporate lobbyists. Some of the latter, to be sure, will offer enlightened perspectives in the public interest of strengthening the WTO as an institution. Others will have parochial axes to grind. But all will know how to whisper in the ears of the mighty and good in world capital cities."
The next few months will see hectic "consensus" building over the future WTO chief. Considerations will range from qualifications to nationality of the candidates, including the political economy of trading relations. May the best candidate win.

Friday, January 25, 2013

An electronic repository of all dispute settlement cases at the WTO

The WTO website is one of the most informative sites I have come across. The ease of access and information content is truly appreciative. I have blogged about it earlier too. 

The WTO recently had a "Trade Data Day" event organized which interalia had a presentation by Valerie Hughes on the "Digital Dispute Settlement Registry Database" that would be available sometime in 2013. The presentation of the main features of the Registry is found here.

The main features of the Registry are that apart from being an electronic repository for all dispute settlement cases it would be a storehouse of information with latest "search" facilities. Sophisticated searches on claims addressed in panels and appeals, Agreements covered, key words, procedural rulings, panelists-specific date and multi-member queries would be possible. This use of technology to enhance transparency and availability of data in forms and structures of one's liking is immensely democratizing. One hopes that this facility would kick off soon so that access to valuable insights of the dispute resolution process is available to interested readers! Imagine being able to access information on the way panelists have decided on the chapeau test of Article XX in panels over the last 18 years. 

Some facts about the dispute settlement process I picked from the presentation referred to above:

 - 455 disputes in 18 years
 - 100 members have participated (63% from developing countries)
 - 250 different people have served as panelists from 50 countries
 - Amicus curiae briefs received in 35 disputes
 - Open hearings in 11 disputes

One would hope that the Registry is available soon to make access to dispute settlement cases more meaningful and enriching!

Thursday, January 24, 2013

Race for the WTO DG's position

The race for the post of the WTO's DG position is all set for a close finish with 9 candidates in the fray. I have blogged about it here and here. The IELP blog had this detailed post on the implications of the race for the future of the WTO here. The Washington Post has summarized the race as a "worldwide scramble" for the post here. Indonesia's candidate's potential was highlighted in this post.The China Daily had this view on the issue.The coming months will see increased statements and posturing by the candidates on the future of the WTO, multilateral trade and the fate of Doha. Some highlights of the agenda that the discourse is taking is here:

The Mexican candidate as per this report "has pledged to "fight protectionism" amid the global economic downturn and promised efforts in concrete terms and in every sense to protect the free flow of goods in international trade".

The Brazilian candidate focussed on the Doha round when he remarked that "The impasse in Doha Round negotiations has resulted in serious and concrete differences among the member states. “Therefore, it’s fundamental that the future director general be able to move easily among the different groups of countries, regardless of their level of development, without imposing views on anyone and trying to forge all possible consensuses.”

Talking about the WTO, the Kenyan candidate, as per this report, has stated that “There is a need to protect it from the onslaught of protectionist measures that have and may be introduced and to take stock of what has happened with” the Doha Round of talks that seeks to cut farm aid and crack open markets."

Candidates seem to be espousing the virtues of free trade, less tree barriers, free flow of goods and the dangers of protectionism. The revival of the Doha round too seems to be on the agenda of a few. How critical is the Doha round to the future of the WTO itself? How critical is the choice of the next WTO chief critical to the institution of the WTO itself? A succinct analysis of the issues involved and the questions at stake is provided  from the Law offices of Stewart and Stewart which concluded:
"The direction of the WTO is only partially driven by the selection of the Director-General. Nonetheless, at the present time, it is fair to say that the choice of the Director-General can make a difference in the trajectory of change the organization will undergo over the next four years."
We will see more debate and discussion on the issues of protectionism, multilateral negotiations and the future role of the WTO in the submissions made by the various candidates canvassing for the top position. Some lessons for the future may be culled out from this discourse.

Wednesday, January 23, 2013

De-democratize the WTO - Is it the right step?

A lot has been written about the failure of the Doha round of multilateral negotiations. Reasons have been attributed and solutions have been offered including abandoning the single undertaking principle and concluding agreements that are low hanging fruit, including a Trade Facilitation Agreement.Developments of bilateralism and plurilateral agreements have also cast a shadow on the growth of the institution of multilateralism and the WTO.

What are the reasons for this decline of multilateral trade governance? Arvind Subramanian in this piece titled "De-democratising the WTO" in the Business Standard has argued that too much of democracy has been detrimental to the growth of the WTO. Small countries have an equal voice similar to large trading powers int he WTO. The norm is consensus and any small country can stall a big reform, even if it is in a minority. This, he feels, is undermining the effectiveness of the WTO and keeping the major trading powers (like the U.S., EU, Japan) less involved in the WTO. The lack of interest is epitomized by the growing regional trade agreements these countries are attempting to enter into as well as an absence of WTO DG contenders from these countries.
"Over time, the WTO has become an institution where smaller and poorer countries have acquired a stake. This transformation may seem a welcome sign of legitimacy. But it has gone too far. For it future effectiveness, indeed survival, the WTO needs to be de-democratized, with the large countries asserting themselves."
The solution offered is that the veto should be taken away and the consensus principle modified wherein large trading powers can negotiate themselves while "offering assurances to the smaller countries that they would receive the benefits of such negotiations and spared any undue burdens". Over the years, literature in relation to the WTO has been about how the WTO needs to be democratized and developing and least developed countries need to engage with the system more effectively. This piece reverses the debate by arguing that there is too much democracy in the WTO that is killing the institution. Should the WTO be less democratic and reflect the opinions, interests and negotiating priorities of the larger trading partners? Would it fade into oblivion if it did not? Do the realities of trading relations demand a more nuanced understanding of trade governance that recognizes inherent inequities in the system? Many developing countries argued that the conclusion of the Uruguay round of negotiations was done without their complete understanding and involvement. WIll de-democratization take us back to the "green rooms" of the WTO where mega deals were apparently struck and everyone was asked to follow? Will de-democratization lead to the beginning of the process of "de-legimization" of the WTO? On the other hand, how does one ensure that the multilateral, rule-based system is engaged with by both the major trading powers and smaller trading nations? The task is cut out for the next WTO chief to grapple with this conundrum.

Tuesday, January 22, 2013

Limiting global trade governance - what should the contours be?

I have often blogged about domestic policy space and international trade rules on this blog. The intrusion of trade rules into legitimate regulatory spaces is often a source of tension and opposition by governments.What should the limits of trade rules, embodied in multilateral, plurilateral and bilateral trade agreements, be? Who defines their limits?

Simon Lester has this piece in Voxeu on the extent of global trade governance arguing that it should be minimilistic with a focus on combating protectionism rather than be a over-prescriptive regulatory regime.
"Global trade rules that focus on protectionist trade barriers are limited and targeted, addressing a specific problem: protectionism. In doing so, they maintain a balance between international oversight of domestic policies on the one hand, and domestic regulatory autonomy on the other. Countries are free to take whatever actions they want, as long as they are not being protectionist."
Countering Richard Baldwin's contention that global supply chains need more intervention by the WTO (about which I have blogged here and here) to remain relevant (in other words to be regulating many areas within the regulatory space of sovereign countries), he argues that the WTO should stick to addressing the issues of protectionism while the other issues of intellectual property rights must be left to national governments to regulate.
"But let me suggest an alternative interpretation. These bilateral and regional agreements have developed because that's where business groups want the rules to go. The rules in these new areas are in their interest and they would like to see them spread. Unfortunately, business demands do not necessarily lead to a sustainable vision of global trade governance. What business wants is not necessarily in the broader interests of society, although in some cases it may be. The push-back against these new rules has been very strong and it is not clear that the current regional trade agreements and bilateral investment treaties model can really work in the long run. It may be that the WTO as it stands now actually gets the balance between global trade governance and domestic regulatory autonomy about right. 
Under this interpretation, the WTO does not need to catch up. Rather, the WTO should focus on what it does best: that is, reducing protectionist trade barriers. Broader issues, such as intellectual property and regulatory expropriation, should be left to governments to deal with on their own. Those who handle these issues well will be the winners in the new world of supply-chain trade."
It is all about getting the balance right - a balance between national autonomy and global trade governance. Where does one draw a line in an area where definitions, perceptions and priorities are varied and often conflicting. It is easy to seek a middle path - to achieve it is an extremely demanding proposition.

Monday, January 21, 2013

Keeping the WTO busy

A not so recent but interesting piece by Patrick A Messerlin on why the Doha round is not moving forward and what the WTO should do in the meantime.

Titled "Keeping the WTO busy while the Doha round is stuck" it argues that while efforts to move on the Doha agenda must go on, the WTO can be at the forefront as a "think-tank" on negotiating techniques and as a key host for thinking on multilateral governance.
"Despite all its shortcomings, the WTO legal framework is by far the most advanced piece of multilateral governance. The world trade regime is not the only multilateral regime in danger. The whole idea of ‘global governance’ is in deep troubles, and the trade regime is only one casualty among others. Very little progress has been achieved in climate change issues, and this is not due to doubts on climate change in the officialdom. And there is very little progress on water (farm production) despite droughts, and on oceans (fisheries) despite risks of depletion of some species. 
Trade negotiators should thus take the initiative to invite members of the climate, water, ocean communities to discuss jointly these common issues. The current centrality of the WTO forum makes it a natural place to initiate discussions on what means a “multilateral governance” beyond the narrow trade issues, when large countries are paralysed by domestic politics and when emerging countries are not ready to pay for leadership. 
Indeed, there is a demand from the ‘climate community’, which realises that a major source of its failures comes from its too weak institutional framework. There is a demand from the “ocean communities” which followed the Doha Round negotiations on fisheries subsidies. The demand from the ‘water community’ is less audible simply because, at this stage, the worldwide aspect of what is often seen as a local public good problem (but which is a worldwide public good problem because of trade in agriculture) is hard to see. 
The WTO is the only institution that has the capacity (from logistics to substance) to develop a series of worldwide, totally open-minded conferences on all these related themes, hence to reveal the deep similarities and the converging interests among all these world communities struggling for a functioning multilateral governance. It is puzzling that such initiatives have not yet become a routine component of the WTO work programme."
Over-optimistic, one would say? 

Sunday, January 20, 2013

Global trade pie, new disputes and the WTO

Chinese container ship bringing goods to Port of Long Beach
(Courtesy: LA Times)

Los Angeles Times has this interesting piece on the possible reason for increasing trade disputes in the context of growing pressure on the global trade pie.The currency undervaluation issue is slowly gaining prominence in the international trade arena - are we going to see a dispute soon? While Brazil is taking it up at the WTO Committees, voices from the EU against the Chinese currency marks a move towards growing unease with currency misalignment as a trade policy tool. WIll undervalued currencies be challenged as being WTO incompatible? While the sustainability of a legal claim on this issue is an entirely debatable matter (and requires a separate post or posts!), the possibility of a legal dispute being initiated cannot be ruled out. Is the WTO the right forum for it?

Saturday, January 19, 2013

The Economist's take of 2013

The Economist has this wonderful depiction of major events, as perceived by it, unfolding in 2013.

Some highlights from the possible happenings:
"JANUARY - Ireland takes over the presidency of the European Union, Britain that of the G8 club of industrial powers. 
FEBRUARY - South Africa hosts football’s 29th African Cup of Nations; New Orleans stages the 47th Super Bowl; Hollywood lays out the red carpet for the 85th Academy Awards.
MARCH - China’s parliament holds its annual session, and formally appoints the country’s new president and prime minister.
Kenya is due to hold presidential and parliamentary elections.
APRIL - Ecuadoreans vote in the presidential run-off.
MAY- Finland and Sweden host the 77th World Ice Hockey Championships.The Indian film industry marks its centenary: the first full-length Indian feature film, “Raja Harishchandra”, was released in 1913.
JUNE - Iran holds a presidential election.  
JULY - Croatia becomes the 28th member of the European Union; Lithuania takes over the EU’s presidency.
AUGUST - Arts-lovers, meanwhile, go to Edinburgh for its annual festival.
SEPTEMBER - Germans, Austrians and Norwegians vote.
OCTOBER - Azerbaijan holds a presidential election.  
NOVEMBER - Commonwealth heads of government gather in Sri Lanka for their biennial summit.
DECEMBER - The crossword puzzle is 100 years old."
May we add the conclusion of the Doha round of trade negotiations (too optimistic?) and the selection of the new Director General of the WTO (definitive) in 2013?

Friday, January 18, 2013

Trade, Labour and some concerns

The linkage between trade and labour has been a contentious one. Should there be more discussion on labour standards and migration in trade negotiations involving trade liberalization? I have blogged about this issue here and here.

Anuradha R.V. and Nimisha Singh Dutta have provided this excellent analysis of the relationship between trade and labour standards in this study titled "Trade and Labour under the WTO and FTAs" in a study for the Centre for WTO Studies. Making detailed study of the labour provisions in various PTA's across the world, they have provided a set of recommendations which essentially concludes that any linkage of labour and trade must be resisted by developing countries.
" 1.Maintain opposition to the Trade and Labour linkage: While all countries (including the countries which have not ratified the CLS) should take steps towards promoting labour welfare, there are no reasons why developing countries should agree to linkage of labour issues in trade agreements. There is sufficient literature and evidence to show that increased labour will not result in decline in labour conditions; on the contrary greater economic development through expanding trade opportunities would actually result in better conditions for labour as well..."
While improving labour standards has to be a national policy concern, linking it to trade is problematic due to the protectionist overtones it has.Could countries use it for protecting their products from increased competition. Is it happening already? Do we have evidence of protectionist measures based on labour standards? Is the public morals clause unde Article XX GATT capable of being used to advance labour standards? Is the TBT Agreement the new arena where labour standards will be played out? There is an other issue of stakeholders here - the government, tree associations, the business owners, labour unions as well as the individual labour. Do all of them have the same interest in this debate? What constitutes national interest - increased labour standards or increased competitive pricing of the product or an international labour standard?

Thursday, January 17, 2013

Decline of the nation in a globalized world?

An interesting piece on the boundaries globalization is breaking down for the global players and technological players is "The decline of nations" by Francisco Dao. He states that global players, especially multinational corporations, are not affected by national boundaries and state of the economies as much as local actors are since they can move from one jurisdiction to the other. The same is with the technology world that gets its services from across the globe.
"As global players disassociate themselves from individual countries, it results in a bifurcated global economy made up of a global class that is able to leverage international labor and markets, and national classes who are more reliant on the well being of their respective nation. Countries are left to compete for relevance in an economic world that has no respect for national borders. In this scenario, nations have two choices both of which lead to their eventual ruin. 
The first option is to hold the line on taxes and regulations and watch their global players depart (or obfuscate profits) for countries offering a more favorable environment. The second option is to offer incentives to keep global players within their tax base. However, this ultimately produces a race to the bottom, as nations bend over backwards to the demands of global players who have no reason to be loyal to any individual country. Either way, nations are faced with eventual decline."
Dani Rodrik, on the other hand, reiterates the dominance of the nation state even in an increasingly globalized world about which I had blogged about here. He states the myth of the fall of the nation state needs to be resisted.

 Are there extremities in this debate?While globalization is gradually impacting various sectors, the action and focal point is still very much local and national. Countries respond to globalization in myriad ways in varying situations from outright protectionism to open arms free trade. Even today large populations are outside the circle of benefitting from globalization. Nevertheless, the world has been impacted by globalization and reduction of barriers. While no one can predict the way the global economy will take, this constant tension between national imperatives with global pressures is a constant definitive.

An interesting debate in the context of domestic policy space and growing international trade.

Wednesday, January 16, 2013

It is Argentina's turn now

Argentina had requested for consultations with the EU and US in 3 cases regarding importation of lemons, beef and biodiesel. I have blogged about the rising tensions between Argentina and its trading partners here. Now it seems that the consultations have not borne fruit and reports of Argentina deciding to file a WTO complaint in this regard. The three disputes where the request for consultation were made are DS 443DS 447 and DS 448. News reports of Argentina going ahead with the complaints are found here and here.

Argentina has been criticized for putting up protectionist measures about which I have blogged here.Panama recently filed a dispute (DS 453/1) against Argentina at the dispute settlement  body. These cases seem to be in retaliation to those allegations.I have done a detailed piece about the possible WTO violations in the case of biodiesel here.

We again see the WTO dispute settlement mechanism playing out as a forum for resolution of disputes without being seen as causing a "trade war" or "imbroglio". Argentina has been active in the WTO dispute settlement process being a complainant in 20 cases beginning in 1996. 

Things are heating up at the dispute settlement forum with more countries seeking trade remedies and taking on their trading partners. News of EU contemplating a WTO complaint against the new member Russia is the topic of my next post. Good news for a rule based resolution of disputes?

Tuesday, January 15, 2013

Trade and the fostering of peace

Does international trade reduce the risk of war amongst trading countries? Are they less likely to get involved in a political or military conflict than if they were not strong trading partners? Pavel Yakovlev seems to think so. 

Watch this video for a viewpoint that trade promote peace. 

Similarly, does protectionism amongst trading partners provoke a possibility of military conflict or political tension? 

Monday, January 14, 2013

Renewable energy support programs - Need for a new law?

Came across this recent paper titled "Governing Clean Energy Subsidies: What, Why, and How Legal?" on renewable energy programs and WTO law which was very similar to the analysis I had made in my paper.Tracing the various forms of support renewable energy programs get across the world and the rising tensions it causes in trade relations especially related to compatibility with WTO law, the authors have recommended some steps to address the issue:    

"Recommendation 1: International institutions with rules governing trade, energy flows and climate change need greater coordination.
A new framework for trade rules on clean energy subsidies could consider not only the adverse and non-adverse impacts on other countries, but also the purpose of the measure: energy access, boosting clean energy generation capacity, building a domestic manufacturing base, or expanding export potential. If subsidies were used, for instance, for extending grid connections to RE sources (whether project developers are domestic or foreign firms), they should not be challenged. Again, if subsidies were offered to acquire intellectual property for emerging clean energy technologies, no adverse impact is caused even as a country is able to expand its clean energy generation capacity. Currently, however, such exceptions are not explicitly permitted under WTO rules, and until these issues are resolved, such policies might continue to attract trade disputes. Therefore, there might be a case for clarifying rules for sustainable energy under future trade-related initiatives for sustainable energy, including possibly a separate agreement – a Sustainable Energy Trade Agreement (SETA) – that could set out key principles for what would be permissible subsidies, especially if they are for non-mercantilist purposes like increasing clean energy generation capacity or offering energy access.
Recommendation 2: Common metrics to count subsidies can help to increase transparency.
Unless clean energy subsidies are measured in a transparent manner, there could be greater danger of misinterpretation and potentially more trade disputes arising. Use governmental, intergovernmental (United Nations Sustainable Energy for All initiative) and non-governmental sources of information on clean energy subsidies but standardise them to enable inter-country comparisons.
Recommendation 3: The relationship between rationalising fossil-fuel subsidy programmes and the use of subsidies to promote clean energy sources should be further investigated.
The G-20 could be an ideal forum to undertake analysis and discuss this relationship.
Recommendation 4: Establish the purpose of government support.
Currently, no forum exists where governments can discuss their reasoning for clean energy support programmes.
Recommendation 5: Meanwhile, independent assessments of alleged adverse impacts of subsidy policies could reduce the threat of unilateral trade sanctions or other penalties.
These assessments could occur through WTO Trade Policy Reviews, at the Committee on Regional Trade Agreements, or the United Nations Industrial Development Organization. Such assessments could also examine the impact of subsidies in promoting clean energy research, development, deployment and commercialization." 
Experts have called for a new international legal framework for renewable energy within the WTO. WIll the rise in trade disputes in the renewable energy sector, the decision in the Canada Feed-in tariff case and growing importance of renewable energy in the energy mix of several countries force members to the negotiating table? Or with the Doha round faltering, is this too much to ask?

Hat tip to R.V.Anuradha for alerting me on this one!