It is Brazil vs. Mexico

It is official. It will be Brazil vs. Mexico for the WTO DG's position. The WTO website announced the last lap here.

"Therefore, we will begin the third and final round of consultations based on a revised slate of two candidates, again in the order in which their nominations were received, as follows: 

— Mr Herminio Blanco (Mexico)
— Mr Roberto Carvalho de Azevêdo (Brazil)"

One is tempted to compare the football record of the two countries - though that may not have any bearing on the result here.

Labour standards, tomato and trade

As a consumer would you prefer a product from another country made by adopting fair labour standards as compared to one made within the country with unfair labour means? While this is a question of individual conscience, this piece in the National Review raises a similar issue in the context of tomato grown in Mexico and the U.S. While I do not vouch for the veracity of the facts in the piece, it does make a point that international trade at times can be more equitable or justified in certain contexts. 

"Mexican tomato exports to the U.S. have grown rapidly, totaling about $2 billion a year and accounting for half the fresh tomatoes consumed during the winter months; the industry employs some 350,000 Mexicans in Mexico. The Florida farmers have seen their market share shrink and now want the U.S. government to limit the import of Mexican tomatoes.

But not the import of Mexicans. Mexican illegal aliens account for most of the workers in the Florida tomato industry, centered on the town of Immokalee. Worried that the government may get serious about ending illegal employment, the industry has been at the forefront of efforts to import unlimited numbers of foreign workers to slave away in their fields. And I don’t use “slave” to mean the captive form of labor represented by guest-worker programs. I mean actual slaves; there have been numerous slavery prosecutions of Florida tomato growers, whose exploitation of foreign workers is more brazen and appalling than any other industry in the United States."

On the condition of the workers this piece had more detail:

"I've seen estimates that nationally, 70 percent of the low-ranking farm workers are undocumented people from southern Mexico and Central America. These people arrive in this country — they're often shipped here from their home villages — and they arrive in a land where they certainly don't speak English. Many of them don't speak Spanish because they're indigenous so they're more comfortable in these indigenous languages." 

"They're stuck in the middle of the Everglades in some trailer camp. They don't know where they are. They're frightened to go to the police because they're here illegally and also because back home, the police are often thugs and you don't want to go to them anyway. So they're completely vulnerable. They don't want to make any noise — they just want to work, make a bit of money and that leaves them totally vulnerable."

However, there is flip side to this story.What if labour standards are used as a ground to restrict imports of goods? Labour conditions do differ vastly in different countries. Experts argue that the WTO is not the right forum to raise issues of labour standards. It could be used as protectionist tools n the hands of the developed world to restrict imports of products from countries that do not have the same standards as them. Thus while issues of labour conditions, minimum wages, working conditions are critical in the development discourse, linking it to trade may be detrimental to the very workers that it sees to protect.

Doesn't pay to be COOL - Will the U.S. comply with the decision?

The Country of Origin Labelling (COOL) decision is back. I had blogged about it here and here. In November 2011 the Panel of the WTO had found the country of origin labelling legislation in contravention of US' obligations under the TBT Agreement basedon a challenge by Canada and Mexico. The U.S. had appealed against the decision. The Appellate Body of the WTO on 29th June 2012 upheld the decision of the Panel and found that the COOL measure was not consistent with Article 2.1 of the TBT Agreement.

The decision itself is more than 200 pages. I am relying on the summary on the WTO website:

"The Appellate Body upheld, albeit for different reasons, the Panel's finding that the COOL measure violates Article 2.1 of the TBT Agreement by according less favourable treatment to imported Canadian cattle and hogs than to like domestic cattle and hogs.  The Appellate Body reversedthe Panel's finding that the COOL measure violates Article 2.2 of the TBT Agreement because it does not fulfil its legitimate objective of providing consumers with information on origin, and was unable to complete the legal analysis and determine whether the COOL measure is more trade restrictive than necessary to meet its objective. 

In its analysis under Article 2.1 of the TBT Agreement, the Appellate Body agreed with the Panel that the COOL measure has a detrimental impact on imported livestock because its recordkeeping and verification requirements create an incentive for processors to use exclusively domestic livestock, and a disincentive against using like imported livestock.  The Appellate Body found, however, that the Panel's analysis was incomplete because the Panel did not go on to consider whether this de facto detrimental impact stems exclusively from a legitimate regulatory distinction, in which case it would not violate Article 2.1.  In its own analysis, the Appellate Body found that the COOL measure lacks even-handedness because its recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors of livestock as compared to the information conveyed to consumers through the mandatory labelling requirements for meat sold at the retail level.  That is, although a large amount of information must be tracked and transmitted by upstream producers for purposes of providing consumers with information on origin, only a small amount of this information is actually communicated to consumers in an understandable or accurate manner, including because a considerable proportion of meat sold in the United States is not subject to the COOL measure's labelling requirements at all.  Accordingly, the detrimental impact on imported livestock cannot be said to stem exclusively from a legitimate regulatory distinction, and instead reflects discrimination in violation of Article 2.1.  For these reasons, the Appellate Body upheld the Panel's finding under Article 2.1."

The Appellate Body explained the gist of "less favourable treatment" in para 269 of the decision:

"269. The Appellate Body recognized in US – Clove Cigarettes and US – Tuna II (Mexico) that relevant guidance for interpreting the term "treatment no less favourable" in Article 2.1 may be found in the jurisprudence relating to Article III:4 of the GATT 1994.As under Article III:4, the national treatment obligation of Article 2.1 prohibits both de jure and de facto less favourable treatment. That is, "a measure may be de facto inconsistent with Article 2.1 even when it is origin-neutral on its face." In such a case, the panel must take into consideration "the totality of facts and circumstances before it" and assess any "implications" for competitive conditions "discernible from the design, structure, and expected operation of the measure".  Such an examination must take account of all the relevant features of the market, which may include the particular characteristics of the industry at issue, the relative market shares in a given industry, consumer preferences, and historical trade patterns.That is, a panel must examine the operation of the particular technical regulation at issue in the particular market in which it is applied."

270.In the context of both Article III:4 of the GATT 1994 and Article 2.1 of the TBT Agreement, for a measure to be found to modify the conditions of competition in the relevant market to the detriment of imported products, there must be a "genuine relationship" between the measure at issue and the adverse impact on competitive opportunities for imported products. In each case, the relevant question is whether it is the governmental measure at issue that "affects the conditions under which like goods, domestic and imported, compete in the market within a Member's territory". While a measure may not require certain treatment of imports, it may nevertheless create incentives for market participants to behave in certain ways, and thereby treat imported products less favourably. However, changes in the competitive conditions in a marketplace that are "not imposed directly or indirectly by law or governmental regulation, but [are] rather solely the result of private entrepreneurs acting on their own calculations of comparative costs and benefits", cannot be the basis for a finding that a measure treats imported products less favourably than domestic like products.In every case, it is the effect of the measure on the competitive opportunities in the market that is relevant to an assessment of whether a challenged measure has a detrimental impact on imported products."

The de facto de jure distinction is important since measures that are not overtly discriminatory in terms of the country of origin can still be violative of Article 2.1 of the TBT Agreement if the competitive opportunities are detrimentally impacted by the measure.

How will the U.S. comply with the Appellate Body report. After the Cloves Cigarette case, Tuna decision the COOL measure is  another decision that has gone against the U.S. Will it comply or face a retaliation? Will it exercise it's "reasonable period" before it complies with the decision? Will it modify the requirements to ensure compliance with the decision? The Eyes on Trade blog predictably criticized the Appellate Body decision as infringing on US consumer interests and right to know.The IELP blog has an excellent analysis on the decision here.

The announcement on the USTR website titled "Appellate Body Affirms American Consumers Rights' to Information About Groceries" gave an indication that the U.S. had actually succeeded in the Appellate Body proceedings. It, however, concluded on a more realistic note:

"The United States Department of Agriculture (USDA) has worked closely with the Office of the United States Trade Representative on this case. We look forward to continuing to work with USDA to ensure that American consumers have relevant information to inform their food purchasing decisions. The next step in the process is for the WTO Dispute Settlement Body to adopt its recommendations and rulings. The United States will then have a reasonable period of time to comply."

Compliance time, yet again, for the United States? Or can compliance be a matter of interpretation? Robert Howse commenting on the IELP blog here opines:

"One general comment: my sense is that the US basically won this case even if a violation was found (a bit like Shrimp/Turtle I), because the only violation of TBT was that the documentation and tracking requirements for upstream suppliers/producers had a detrimental effect on imports and were unnecessarily burdensome in that a lot of the information was not strictly speaking needed to ensure the accuracy of the kind of labeling that COOL required. This is a violation that it appears can be completely cured by the US tweaking the paperwork requirements and streamlining them."

This suggests that "compliance" for the U.S. does not necessarily mean doing away with the labelling requirement all together. Rather, if the U.S. reworks the procedural aspects of the labelling rules which would not impact the competitive conditions for meat from Canada and Mexico, it could bring its regulation in conformity with Article 2.1 of the TBT Agreement. Is this going to lead to another long winding round of disputes as to what constitutes "compliance"? In both the Cloves Cigarettes case as well as COOL, can the U.S. continue with it's existing measures but still in fact claim to be "complying"?

Tuna report, compliance and jurisdiction - Some questions

The Appellate Body of the WTO had recently delivered the Tuna Report about which I have blogged here and here. The Report was adopted by the Dispute Settlement Body. One would assume, in the context of dispute settlement proceedings, that an Appellate Body decision brings to closure issues raised in the dispute and the next stage of compliance would be the focus. However, increasingly in WTO disputes (whether it is the Airbus  Boeing dispute, Cloves Cigarette dispute and now the Tuna dispute), the Appellate Body decision is not resulting in a finality to the proceedings. Parties to the dispute continue to canvas their their original positions and do not perceive the need to change their domestic policy in consonance with the Appellate Body decision. Complex issues of what would constitute compliance to the decision or whether the measures undertaken are in fact "compliance" have taken centre stage.

The recent contentions of Mexico and the U.S. at the adoption of the Tuna Report that reflected similar sentiments of "non-finality" was interesting:

Mexico maintained, inter alia:

"In Mexico’s opinion, the reports had also correctly considered that the “dolphin safe” labelling was a technical regulation as per the TBT Agreement.  With regard to non-discrimination, Mexico welcomed the Appellate Body’s reversal of the panel’s finding that the US measures were not inconsistent with Article 2.1 of the TBT Agreement.  The Appellate Body found that the US measures were inconsistent with Article 2.1 as they granted Mexican tuna products less favourable treatment to that granted to like products originating in the US and other countries.  With regard to Article 2.2 of the TBT Agreement, Mexico was disappointed with the Appellate Body’s reversal of the panel’s finding that the US dolphin safe labelling provisions were more trade restrictive than necessary to fulfil the US legitimate objectives. ... 

 Mexico hoped that the US would implement the DSB’s recommendations."

The U.S. response in the DSB was:

"With regard to Article 2.1, the US agreed that to determine whether imported products were accorded less favourable treatment would require an analysis of whether the measure at issue modified the conditions of competition to the detriment of imported products.  However, the US was of the view that the Appellate Body had misapplied this concept and had ignored the fact that the Mexican and US tuna product producers were in the same situation and the adverse effects resulted from the private choices made by the individual producers.  The US was also concerned about the Appellate Body’s finding that WTO committee decisions can be subsequent agreements that must be read into the covered agreements."

Hence, would this also be a protracted "compliance" issue that looks likely in the Cloves Cigarettes case or will the U.S. comply with the modification of their prohibition. Another contentious issues in the context of Mexico's claim in the WTO was whether it was right in doing so in the context of the avenues available under NAFTA. Did the NAFTA preclude Mexico from pursuing a WTO remedy?


Robert Howse commenting on this blog earlier with reference to the dispute and the NAFTA rule said:

"Dear Srikar, on the NAFTA issue take a look at Article 2005, paragraphs 1 and 4. It makes clear that any dispute " (a) concerning a measure adopted or maintained by a Party to protect its human, animal or plant life or health, or to protect its environment, and (b) that raises factual issues concerning the environment, health, safety or conservation, including directly related scientific matters," must be taken to NAFTA not the WTO, where it arises under both Agreements, at the request of the responding party (and the US so requested).

I don't see why some group of states can't agree among themselves to choose a particular method to solve a dispute, which is different from that specified in a multilateral treaty to which they are parties, provided that they do not affect the rights of third states under the multilateral treaty, who are not privy to this special arrangement."

The US seems to have reiterated this position in the proceedings:

" The US regretted Mexico’s decision to continue with the WTO dispute settlement given that NAFTA parties had agreed that certain disputes involving both the WTO Agreement and the standards-related provisions of NAFTA would be heard solely under NAFTA’s dispute settlement procedures.  With respect to procedure, the US noted and expressed its disappointment that the Appellate Body had issued its report outside the 90-day period as stipulated in Article 17.5 of the DSU. The US reiterated its commitment to fulfilling the legitimate objectives of the Dolphin Protection Consumer Information Act."

What was interesting was Mexico's response to the NAFTA bar:

"In response to the US statement regarding NAFTA’s dispute settlement procedures, Mexico said that the US had refused to have panellists sit in disputes and this was a technically complex dispute requiring a detailed analysis.  Mexico noted that the US itself had brought a previous dispute (Mexico-Corn Syrup) to the WTO and thus found the US behaviour contradictory. "

Do two wrongs make a right? Is a particular act of a country (in this case the US step of going to the WTO) sufficient precedent even if it was not permitted? Can Mexico justify its act of approaching the WTO because the U.S. had done so in an earlier case? Or does the U.S. have the right to question Mexico's step to approach the WTO when it has itself done so earlier? Were the circumstances different then? Which forum decides this? Could the Panel or Appellate Body of the WTO have gone into the issue of their jurisdiction and have not maintained Mexico's complaint? What does the Vienna Convention on the Law of Treaties have to say about this? This would be a discussion for another day.

Protectionism - Fact or Fiction?

In yesterday's post I had depicted the level of protectionist measures in G 20 countries. The focus of the G-20 Summit which recently concluded in Mexico was on a plethora of pressing issues  concerning the global economy I found the declarations on trade, protectionism and WTO, not entirely surprising, but interesting.

The Los Cabos Growth and Jobs Action Plan reaffirmed its resolve against protectionism in a brief reference:

We reaffirm our commitment to resist protectionism in all forms and promote open trade, and will take active measures to reduce the number of WTO inconsistent trade restrictive measures and resist financial protectionism.

The more detailed analysis of the issue of trade, protectionism and multilateral trade was found in G 20 Leaders Declaration after the Summit:

"Trade

26. We are firmly committed to open trade and investment, expanding markets and resisting protectionism in all its forms, which are necessary conditions for sustained global economic recovery, jobs and development. We underline the importance of an open, predictable, rules based, transparent multilateral trading system and are committed to ensure the centrality of the World Trade Organization (WTO).

...

28. We are deeply concerned about rising instances of protectionism around the world. Following up our commitment made in Cannes, we reaffirm our standstill commitment until the end of  2014 with regard to measures affecting trade and investment, and our pledge to roll back any new protectionist measure that may have arisen, including new export restrictions and WTO inconsistent measures to stimulate exports. We also undertake to notify in a timely manner trade and investment restrictive measures....

...

30. In line with the Cannes Communiqué, we stand by the Doha Development Agenda mandate and reaffirm our commitment to pursue fresh, credible approaches to furthering trade negotiations across the board. We will continue to work towards concluding the Doha Round negotiations, including outcomes in specific areas where progress is possible, such as trade facilitation, and other issues of concern for least developed countries. We urge progress  in streamlining WTO accession procedures for the world’s poorest countries.

31. We support strengthening the WTO through improving the way it conducts its regular business, and its dispute settlement system. We also direct our representatives to further discussions on challenges and opportunities for the multilateral trading system in a globalized economy."

The many "positives" from this Declaration:

1. The recognition that rising protectionism is an issue and it needs to be tackled within the multilateral trading system.

2. The reaffirmation of the principles of multilateralism and a rule based, open transparent system which promotes growth and jobs. The fear of reversion to "trade wars" and "tariff wars" seem to be allayed if the declaration is any indication. The severe economic crisis being faced by the major economies has not led to a formal recognition to raise protectionist walls and this was reflected in the tenor of this declaration.

3. A glimmer of hope for the Doha Round and an indication that the "single undertaking" approach may be replaced by a more pragmatic, outcome based approach in areas where progress is possible. The views on the WTO website of Joost Pauwelyn on a five point formula to revive multilateralism which included reconsidering the "single package rule" echoes similar views.

4. Recognition of the importance of transparency and notifications in the WTO. This would enhance the detection of WTO inconsistent measures considerably. Today, there are countries that are extremely transparent in depicting their laws, rules and notification even in terms of access on the internet while others are not so open. A standard of transparency that enhances compliance has to be brought in.

5. The resolve of strengthening of the WTO in the midst of protectionism is encouraging. The G 20 does not see the WTO as a threat to domestic, sovereign decision making even in the face of increasing pressures to turn protectionist. They see the WTO as an ally in an open, multilateral system.The mandate here seems to be to find ways to strengthen the  WTO including the way it would meet challenges of a globalised economy.

However, there are a few concerns in this context. Are these declarations translated into action? We heard similar proclamations after the 8th Ministerial Conference of the WTO but protectionist tendencies did not subside thereafter. Is it easier to proclaim one's allegiance to free trade, reduction of barriers and multilateralism but in actuality practice protectionism? Is it just "politically" correct to stand by multilateral trade rules, reduction in barriers and transparency but extremely difficult to implement? This is compounded by the fact that the interpretation of what constitutes protectionism is highly contested. Countries justify their measures as being non-protectionist and in conformity with WTO rules. It enters into the quagmire of complex judicial interpretation of the labyrinth of WTO rules and dispute settlement. This is often time consuming and ineffective. As disputes proceed, countries continue to have these measures in force. Then, there is the issue of compliance and what constitutes compliance to a decision of the Appellate Body which has decided against a measure. Hence, at times, countries do get away with protectionist measures which are antithetical to WTO obligations.

One would have to wait to see if the spirit of this Declaration translates into credible action.

Aid, trade and WTO disputes

I had recently blogged about the issue of linking aid and trade disputes in the context of Mexico's challenge of the dolphin safe tuna labelling of the US here. I had felt:

"Is the suggestion of reconsidering economic assistance if Mexico persist with its WTO action indicating the political economy of trade? While the WTO rule based dispute settlement open to all member countries for disputes concerning alleged violation of obligations under the WTO agreements, is the political economy of aid stronger? Would it be right for a country receiving aid from another country to initiate a WTO dispute against it? If it is not right, then many countries in the developing world cannot initiate WTO disputes against their aid donors. Should the two issues be linked at all? While the WTO dispute settlement mechanism is a rule based system based on rights and obligations and not "power based" relations, in reality, is there a larger political economy of trading power, aid, foreign relations, economic influence that determine compliance and non-compliance of WTO disputes."

CATO Institute in a blog piece titled "Protectionist Denial and Bribery" seemed to have a somewhat similar view on the issue:

"The most revealing part of the letter, however, is in the last paragraph when the representatives ask the President to bribe the Mexican government to go away.

"If the Mexican government continues to pursue WTO action in this case, we ask that your administration reconsider the level of economic assistance Mexico receives from U.S. taxpayers."

This doesn’t seem very respectful of a dispute settlement process the U.S. has used on numerous occasions to challenge WTO-inconsistent measures like Europe’s aircraft subsidies, Korea’s beef restrictions, India’s chicken restrictions, China’s export quotas, China’s duties on chicken parts, China’s duties on steel, and China’s green energy subsidies, to name a few recent examples.  Criticizing the WTO judicial process as overreaching because it revealed the inadequacies of a favored piece of protectionist legislation and then threatening to abuse the process through petty sanctions does nothing to enable consumers to protect dolphins and makes it more difficult for the United States to mount effective challenges to foreign protectionism."

Some food for thought on issues relating to aid, trade and WTO disputes? 

Aid and Trade - Mexico, U.S. and dolphin-safe Tuna labeling case

The dolphin safe Tuna labeling case decided by the Appellate Body of the WTO held the US measure in violation of Article 2.1 of the TBT Agreement since it accorded less favourable treatment to tuna from Mexico. I have blogged about the issue here. While what steps constitute compliance is a subject matter of an interesting debate in the IELP blog here, my attention was drawn to a letter by some members of the US House of Representatives to the U.S. President regarding the need for complying with the WTO decision. I am not going into the merits of the reasoning provided here as to why the US should not comply with the decision. Rather, my attention was drawn to the last para of the letter which said:

"We urge your administration to make clear that the U.S. will not water down or eliminate the very successful dolphin-safe labeling regime. Any hardship that the Mexican government claims to be experiencing from its inability to comply with perfectly reasonable dolphin-safe requirements is clearly offset by the $33 million in development assistance Mexico is receiving from the U.S. in FY 2012, and dwarfed by the nearly $200 million it has received since 1999. If the Mexican government continues to pursue WTO action in this case, we ask that your administration reconsider the level of economic assistance Mexico receives from U.S.taxpayers.Moreover, we urge you to advocate for a means of clarifying that WTO rules are not meant to allow this type of dispute settlement case related to non-discriminatory voluntary labeling regimes" 

Is the suggestion of reconsidering economic assistance if Mexico persist with its WTO action indicating the political economy of trade? While the WTO rule based dispute settlement open to all member countries for disputes concerning alleged violation of obligations under the WTO agreements, is the political economy of aid stronger? Would it be right for a country receiving aid from another country to initiate a WTO dispute against it? If it is not right, then many countries in the developing world cannot initiate WTO disputes against their aid donors. Should the two issues be linked at all? While the WTO dispute settlement mechanism is a rule based system based on rights and obligations and not "power based" relations, in reality, is there a larger political economy of trading power, aid, foreign relations, economic influence that determine compliance and non-compliance of WTO disputes?

Alvaro Santos, Robert Howse and Andrew Lang on Domestic Policy space and WTO - Brilliant exchange

I was delighted to see an Online symposium in Opinio Juris on Alvaro Santos' article on domestic policy space and the WTO. The discussion on the article by two leading international trade law luminaries Robert Howse and Andrew Lang was extremely enriching and very engaging. I had written about the article in a blog piece here. In this blog I will reflect on this interesting exchange as well as my thoughts on the issues involved.

In his original article titled "Carving Out Policy Autonomy for Developing Countries in the World Trade organisation : The Examples of Brazil and Mexico" Alvaro essentially argues that there is sufficient policy space within the WTO Agreements for developing countries to pursue their developmental agenda provided they are legally equipped and capacity to engage with the multilateral system is strengthened. Providing a synopsis of this stand Alvaro in the Opinio Juris piece states:

"In “Carving Out Policy Autonomy for Developing Countries in the World Trade Organization: The Experience of Brazil and Mexico”, I argue against the commonly held assumption that WTO legal obligations overly restrict countries’ regulatory autonomy. Despite the presence of restrictions, I claim that there is still flexibility in the system for countries to carve out regulatory space for themselves. That countries can expand their policy autonomy means that governments of developing countries have more agency and responsibility than development scholars typically admit. At the same time, however, the asymmetry of power and resources between countries does affect their experience in the system and thus influences the outcomes to a greater extent than liberal trade scholars usually acknowledge.

         ...

However, to show that countries subjected to similar international obligations can pursue divergent trade and development policies is to make clear that there is policy space and that this space can be put to different uses with divergent outcomes. Developing countries’ governments should bear responsibility — and their citizens should hold them accountable — for the kind of developing strategy they pursue, or refrain from pursuing, within the international trade regime."

The basic thrust of this piece is that, subject to certain limitations, WTO rules do afford sufficient domestic policy space for developing countries to pursue their developmental agendas and as part of the strategic lawyering that is proposed, it is suggested that it should be part of this overall developmental discourse.

Robert Howse while giving the example of compulsory licensing in the TRIPS Agreement as an example of policy autonomy broadly agrees with the view that the WTO rules offer sufficient policy space. He comments on the lack of expertise of WTO law in many countries which perhaps hinder the serious engagement of many countries in the dispute settlement system as well as postulates the need for taking forward the learnings of Brazil and mexico to other countries.

"In some countries, there is no independent expertise about WTO law. The government and the people only hear the views of officials who have been more or less inducted into the global trade policy elite, or those of the WTO Secretariat, or those of interests who are using the notion of WTO illegality to block a policy they oppose for other reasons. Today, however, NGOs are playing an increasingly useful role in entering policy debates and contesting interpretations that are particularly restrictive of policy space (ICTSD’s work on TRIPs is a good example). To be able to do this NGOs had to reposition themselves at least partly from being anti-globalization advocates trying to oppose and delegitimate the system to knowledgeable and shrewd lawyers who see the tensions, flexibilities, and balances in the existing norms that can be a basis for contestation within the legal framework as it stands. I am still struck by how journalists (many, though not all), who can be important in transmitting the meaning of WTO law in a domestic policy debate, will go to the same experts-mostly trade officials, lobbyists, or retired officials, and a few professors who are also consultants or closely connected to the WTO Secretariat-and take their views as the correct ones concerning the meaning of WTO law."

Andrew Lang while agreeing with the broad principle the existence of policy autonomy within the WTO also highlights the need for analysing the receptivity of the dispute settlement mechanism to respond to the development strategies of the developing world. In other words, he states that "the power to shape the interpretation of the law in WTO dispute settlement, in other words, is not just a function of the legal capacities of the parties to a dispute, but also about the structural conditions which make certain legal arguments appear more convincing, persuasive, institutionally appropriate, textually grounded, and so on to legal interpreters." He makes the important point that in the coming decade the importance of the dispute settlement bodies is going to become very crucial and central to global trading and will need to respond to the growing strategic lawyering that Alvaro's article talks about.

"A related thought has to do with the pressures that this project will place on the WTO dispute settlement system. Alvaro, and other writing in this area, are right to say that struggles over the interpretation of WTO law are likely to become an even more central aspect of global trade politics over the next decades, partly as a result of more and more Members building their legal capacity in precisely the way Alvaro describes. Is the dispute settlement system equipped at present to respond to the challenges that this will pose? Does it currently possess a sufficient set of juridical tools and techniques to carve out both a legitimate and effective role for itself as it finds itself ever closer to the centre of trade politics? One of the tasks for the next decade or so it to try to craft a way of ‘doing law’ in international economic governance which bears the weight that strategies such as those described in this article will necessarily place on it."

Andrew Lang ends with a different idea in terms of the absence of the notion of Autonomy itself in a globalised world wherein national policy choices are determined by a host of international factors, WTO law being only one of them. Proposing a radical shift in perception, he proposes that positive experimental domestic autonomy and institutional pluralism should be advocated rather than the "negative" restraint on autonomy by the WTO rules. What this would entail, I assume, is that the international economic order will be based on pluralism of national economic policies rather than an exception of autonomy to globalised rules at present. I am not very sure how that translates into multilateral trade rules, non-discrimination and lack of protectionism? 

"A related thought has to do with the pressures that this project will place on the WTO dispute settlement system. Alvaro, and other writing in this area, are right to say that struggles over the interpretation of WTO law are likely to become an even more central aspect of global trade politics over the next decades, partly as a result of more and more Members building their legal capacity in precisely the way Alvaro describes. Is the dispute settlement system equipped at present to respond to the challenges that this will pose? Does it currently possess a sufficient set of juridical tools and techniques to carve out both a legitimate and effective role for itself as it finds itself ever closer to the centre of trade politics? One of the tasks for the next decade or so it to try to craft a way of ‘doing law’ in international economic governance which bears the weight that strategies such as those described in this article will necessarily place on it."

Finally Alvaro has brilliantly responded to the two responses. Reiterating his stand that developing countries should use the existing legal frameworks to pursue policy autonomy, he states:

" Finally, a word on the character of policy autonomy. Lang calls policy autonomy an illusion because international law –or multiple layers of transnational legal regimes- to some extent already structures countries’ economic policy choices when it comes to trade-related regulations. We can imagine procedural rules about sovereignty, state responsibility, jurisdiction and treaty-making, or overlapping substantive regimes of investment and finance, to name a few. So, a country is never entirely free from constrains. I think that diagnosis is right although once made visible, a country might also be able to influence those background legal regimes that affect its choices on trade measures.

At any rate, it might be that Lang’s understanding of policy autonomy and mine are not so far apart. I see policy autonomy not as some limitless or pre-regulatory status that developing countries should strive to inhabit but as a quest for empowerment within the existing international regulatory regimes that could yield better consequences for them. The call is not for disengagement but for a different kind of engagement. If there were a rallying cry it would not be “leave me alone” but “let me experiment and thrive in the system”."

This interesting exchange throws open many issues in the context of the engagement of developing countries in the WTO? What are the limits to domestic policy choice within the WTO. While it is recognised that WTO rules do provide for domestic autonomy, what are the contours and limits of it? Are there certain fundamental principles that even domestic policy choice cannot question? Can we generalise on these limits or do they depend on the facts of each case that are brought to the dispute settlement body? WTO law and interpretation are becoming increasingly complex quagmire of legalese and requirement of legal expertise is a sine qua non for effectively engaging with the trading system. Engaging and using domestic policy autonomy would perforce require a thorough understanding of the law as well as its nuanced interpretation. How many developing countries are capable of this journey? Is the domestic, political regime prepared for such an engagement? 

Another issue of recognising domestic policy autonomy within the WTO regime is to understand that the developed world too would be using this same policy space for protecting their interests. In today's globalised world as much as developing countries are markets for the developed world, developing countries are increasingly exploring markets in the developed world.  Further, using domestic policy space by another country has serious impact on an exporting countries exports. There will be essential trade offs a country will have to make. While using its domestic policy space in a particular context will serve its domestic developmental agenda, the use by another country will affect its trade interests which also may be part of its developmental agenda. How does one reconcile these interests? While countries want to protect domestic industry within WTO rules and it is a legitimate claim, they want reduced barriers and access to markets when their exports are affected. How does one balance the two policy choices of a developmental agenda and market access? In other words, where should the line between domestic policy space, protectionism and innovative interpretation of WTO rules be drawn? Can there be a legitimate domestic policy choice on the grounds of protecting one's domestic industry as part of a country's developmental agenda? Would it be permissible even if it is discriminatory vis a vis foreign competitors? Is there a danger of increased protectionism by the developed world (or even the developing world) by innovative policy autonomy interpretation that the developing world may not be able to use because of a lack of legal capacity? 

Is the assumption that reduced barriers to trade is not in the interests of developing countries? Is the assumption that international trade is not an ally of a country's developmental agenda? Isn't it possible that domestic policy autonomy is hijacked by "hegemonic" national business interests which may not always be co-terminus with national interests? At times domestic policy choice is not guided by developmental agendas but by vested interests to keep international competition at bay. Is this also a permissible domestic policy choice that a developing country should adopt? Does domestic business interest always constitute national interest?

One of the extremely positive outcomes I see from this exchange is the possibility of Law Schools providing independent, "development friendly" advice to developing countries to engage with the WTO. As Alvaro stated:

"Moreover, beyond the role of developing country governments and NGOs, Howse makes clear that there is also a role for legal scholars to play. I am enthusiastic about his idea of using law school clinics to provide independent and development-friendly legal advice to countries in need of counsel for WTO litigation and to other groups, like NGOs, for domestic policy debates about the meaning of WTO obligations. I am on board and hope that this exchange could be the beginning of a project of that sort."

I would be excited to study the journey of India and other developing countries in their use of the Dispute Settlement mechanism to further developmental agendas.It would be worthwhile to study a few developing countries engagement with the DSM in relation to their developmental paradigms like Alvaro did for Mexico and Brazil. One will have to go into the specific examples of measures taken and whether the domestic measure was part of the larger developmental agenda or a purely "protectionist" measure. I would indeed watch very keenly the progress of this project as it seeks to bring international law from its "rarified" confines as many see it to "grassroot" domestic policy making and the rigours of democratic political compulsions.