EU Seal product case and a day to day account!

The EU Seal Product case is being fought at the WTO panel and the proceedings are on. I have blogged about the issue earlier here, here and here.

For a running commentary on the proceedings it is interesting to see Rob Howse's account of the proceedings detailed out on the IELP blog here, here, here and here! It gives a sense of the legal analysis being undertaken, the nuances as well as the excitement of courtroom drama that is associated with legal disputes.It is the window to the otherwise closed world of dispute settlement.

Would be interesting to see blogs dedicated to unravelling the debates of dispute settlement proceedings  on a day to day account! Too much to ask?

Seal trade ban - Some issues

I have earlier blogged about the Seal dispute here. Canada and Norway requested for consultations in 2009 regarding EU regulations that ban the importation and marketing of seal products into the EU. The dispute panel in these cases has still not been set up. News of Canada agreeing to the appointment of panelists in these cases is trickling in now. 

This piece highlights the different stakeholders and interests that surround this dispute. The importation and marketing of seal products are banned. Communities and industries related to seal hunting are naturally impacted. Their economies and livelihood are at stake. 

My thoughts on the quagmire of interests, issues and impact this dispute has:

1. Trading communities involved in seal trade are impacted by this ban.

2. The "animal welfare" concerns of people in the EU translated into EU legislation by expression of democratic will is an exercise of domestic, regulatory policy space. Moral choice has been exercised by the EU.

3. The EU measure undoubtedly impacts seal trade. Whether it is discriminatory or unreasonably restrictive of international trade is another issue. Does the exercise of EU's domestic regulatory space have a discriminatory impact on Canada?

4. Does the opinion of the Canadian people regarding seal trade have any bearing not he dispute? Should Canada's position in the WTO reflect the interest of those adversely effected by seal trade or public opinion in Canada which may be against seal trade? What is Canada's "national interest" in this case?

5. It is reported that the value of seal trade is minimal compared to the benefits that Canada will gain by a trade agreements with the EU. Should there be a trade off and Canada drop this dispute to gain in trade with the EU?

6. It is often said that there are winners and losers in the globalization game. In this case, "trade barriers" are impacting livelihoods of certain people in Canada. Is the answer fixing alternative employment avenues and compensatory packages for them rather than challenging EU's domestic policy space? Can this analogy of providing compensation packages extended to other "losers" in the globalization arena. Industries and sectors often lose out to international competition. Should national strategies increasingly look at cushioning such losses? Is it feasible at all or should market forces be allowed to take its course.

7. It is "animal welfare" today. Can it be extended to labour rights, democratic values, social norms and environmental standards tomorrow? Can domestic regulatory policy space be a weapon of protectionism?

And finally on the delay in the dispute being proceeding at the WTO. The request for consultation was made in 2009. It is 2012 and the panelist have still not been chosen. Does not augur well for the dispute settlement mechanism of the WTO as commented by Robert Howse here. The only consolation perhaps is that the complainant, Canada, is itself the cause for the delay in the establishment of the panel. Trying times for the dispute settlement system.

Pluralism, domestic policy and trade rules - Where is the Middle Path?

The issue of domestic policy space within the WTO rules has been a common and controversial theme running in this blog. How much policy space does a country have to enact measures that can be justified under the WTO legal system? Do the multilateral rules permit or deny "pluralism" in policy choice? Is there a hegemonic, universal set of norms that all countries need to follow or is their sufficient policy space for countries to manouevre?

These questions repeatedly come up when measures are undertaken by WTO members and challenged by others effected. While they are justified as being in conformity with the General Exceptions that GATT provides, they are challenged as being "discriminatory", an "unnecessary obstacle to trade" as well as a disguise for a "protectionist" measure. What principles are to be followed to determine if a measure is permissible in exercise of legitimate policy space? What constitutes discrimination and what is a protectionist measure are persisting questions that scholars of international trade law grapple with when dealing with measures that are alleged to violate WTO rules.

The ban on seal trade by the EU is a classic issue where this theme plays out. Do the principles of animal welfare and notions of member countries towards animal welfare permit it to impose restrictions on trade of animal products (including a ban)? I had blogged about this issue sometime back here.

Robert Howse and Joanna Langille have addressed this issue in their brilliant piece here. they essentially argue that member states have policy space to undertake measures in the interests of their notion of animal welfare and this can be justified under the General Exceptions under Article XX of GATT. Permitting pluralism in trade regulation based on notions of morals and welfare of individual member states is what they argue for.

Opinio Juris has a fascinating debate on this issue with Tamara Perisin, Simon Lester and Isabel Feichtner responding to the principle of permitting pluralism. While all the respondents agree with the notion of there being a right for a member country to exercise policy space in this respect, they raise pertinent issues about the limits of the measure, role of rationality in the debate as well as underlying motivations for a measure to be construed as a legitimate, regulatory measure with its basis in pluralist thought as against those based on ulterior mercantilist or protectionist intentions.

Reading this fascinating debate raised some questions for me:

1.When does "permitting pluralism" become a slippery slope in terms of protectionist measures and discrimination? Does it impact the legitimacy of the trading system based on universal, non-discriminatory rules? To what extent should motivations, business interests as well as "rationality" of a policy choice have a role to play in lifting the veil of the justification of "animal welfare" or other moral justifications? Can the DSM foray into this territory of questioning underlying motivations and justifications? Does the jurisprudence of Article XX GATT allow this as against the jurisprudence of Article XXI GATT which is more restrictive in terms of judicial oversight?

2. While blatant discrimination can be questioned, can the underlying basis for the "welfare measure" be also subjected to a rationality test? If not, does it not condone measures that are based on "national morality" and notions of welfare, but militate against universal principles of human rights, gender equality, religious toleration, racial equality? Ofcourse, Robert Howse and Joanna Langille do make the point that while allowing this pluralism it is recognised that  that states are also bound by non-WTO norms, such as international human rights law, which also shape the limits of their prerogative to regulate morality. However, is it just human rights law or is there a longer list? Who decides what this list should be?

3. While animal welfare, public morals, religious morals may be underlying reasons for justifying a national measure, to what extent should there be an analysis of the business motivations behind the measure? Is the enactment of a national legislation in itself enough to show representative "national will" and intent or can extraneous circumstances like existence of export interest, domestic competition also play a part in the analysis? Further, can the rationality of a "moral measure" as being discriminatory or "irrational" be a valid ground to question a policy choice? Can an "inherently non-rational" measure be put to a "rationality" test?

4. What have been the underlying motivations for countries to use the Article XX general exception, especially public morals and animal welfare? Has it been the notion of protecting animal welfare in real? Has it been a protectionist tool?

5.what if countries impose bans and restrictions based on their "religious beliefs", notions of morality (culture and decency) and what if the notion of banning goods from certain countries is part of that public morality? Would that be justified as being not subjected to a rationality test? 

6. Public morals is a more slippery ground. Is it an ideal setting for trade restrictive practices justified on the principle that countries have the policy space to pursue their notions of morality? What lessons do we have from the actual use of this exception? Mark Wu has a brilliant analysis of the use of the Public Morals exception under Article XX in this piece here about which I had blogged here.

The debate is a classic theme in international trade law - the tension between national sovereignty and the right to decide one's course of action against multilateral trade rules that are based on non-discrimination and universality. The reaction of what should prevail often depends on the measure in question. While the issue of the need for policy space and pluralism is never in question, what are its contours, limits and extent is often a matter of extreme complication. International trade supporters would want it to the minimum while votaries for pluralism would tend to argue that universality beyond a point is counterproductive. Where that point lies is unclear. One needs to tread the middle path - where this middle path actually lies is still unclear.

WTO, pluralism and domestic policy space - some questions

I had blogged here sometime earlier about the ban on seal trade and the questions it raises in relation to international trade law and limits to domestic policy space. The EU and more recently Russia had taken steps to ban the trade in seal trade on the grounds of protection of animal welfare. Canada, which is one of the largest exporter of seal products had challenged this ban as violative of WTO obligations. Does a ban on trade pursuant to concerns on animal welfare violate the trade rules of the WTO? Is banning of trade in products on grounds of standards not primarily "trade-related" like animal welfare, labour standards, cultural values, public morals, environmental safety in consonance with the letter and spirit of WTO law? Is it a legitimate "barrier" that can be imposed or does it open a pandora's box of "barriers to free trade" ? Does it expose the multilateral system to "protectionist" tendencies of countries wanting to restrict products of other countries on grounds other than trade? Is it a technical barrier to trade which is unjustifiable?

Robert Howse and Joanna Langille in "Permitting Pluralism: The Seal Products Dispute and Why the WTO Should Permit Trade Restrictions Justified by Non-Instrumental Moral Values" in their forthcoming article in the Yale Journal of International Law essentially answer these questions. Justifying the stand that WTO rules permit countries to take measures on  pluralistic notions of values, it states,

"We now turn to consider the WTO from a political and theoretical perspective, to argue that if the WTO fails to recognize moral concerns such as animal welfare as legitimate reasons for restricting trade, the WTO will be acting outside of its institutional object and purpose. By failing to recognize moral justifications for regulation, the WTO will be, in effect, imposing secular rationalism on its member states. This is outside of the scope of its mandate. Instead, the WTO must be open to noninstrumental values as a basis for justification of domestic policies.

         ...

 But equally central to the ethics or the fundamental values of the WTO is the acceptance of great moral, religious, and cultural diversity in the grounds on which WTO Members may legitimately regulate(again subject to certain limits, either imposed by the ethics of the WTO itself or accepted by virtue of the WTO’s participation in the general system of international law, even if not enforced as such by the WTO)" 

The position articulated here is that countries should have the domestic policy space to legislate based on "their" notions of values and this would not be considered a barrier to trade as per the WTO.  Reflecting on the role of the WTO the article continues,

"The WTO is not, no more than the GATT was, a comprehensive governance regime. It is not like a domestic government, which can weigh all relevant, competing factors when determining a policy outcome. The WTO has a narrow swath of issues with which it is concerned: regulating international trade to ensure that there are not unnecessary or discriminatory barriers to trading. But eliminating moral regulation is not part of this mandate. While the WTO has had to assess whether rationales for legislation are legitimate, in the sense that they are not merely pretextual reasons which are false barriers to trade, it is not designed to pass judgment on the substance of those legislative rationales. If moral motivations are excluded from the trade policy lexicon, the WTO will, in effect, conclude that only instrumental, material concerns (such as health and security) are legitimate policy goals. This is not the Organization’s object and purpose."

Does this allow excessive domestic policy space on issues unrelated to trade? Is it capable of being used as an unfair measure to restrict free trade? Are their "universal" moral values that can be safely assumed to be within the ambit of WTO rules? If not, does this not open the floodgates for countries to use "moral cultural values" to further trade interests?

Crafting a vision of the WTO as not being a supranational constitutional government the piece concludes, 

"This analysis suggests a vision of the WTO’s institutional role, and its relationship to the regulatory autonomy of its member states which is deeply compatible with the embedded liberalism that characterized the perspective of the founders of the original GATT; it is a vision at odds with the expansive constitutionalist vision of the WTO as a global economic regulator, assessing the rationality of all governmental policies from a right to trade perspective. ...

 There is no “right to trade” in the WTO system, only a set of specific obligations to avoid certain kinds of defined trade restricting measures, in the case of domestic policies largely ones that are either discriminatory or gratuitously trade-restrictive. But, as the AB has held, there is a “right to regulate” that is foundational. This notion of “the right to regulate” is perhaps where the AB comes closest to expressing the pluralist perspective offered in this article. According to the AB, the WTO legal system, does not itself grant to WTO Members the right to regulate subject to certain justifications, unlike – one should add – a domestic constitution. Instead, it only confines or restrict the inherent right to regulate by certain very limited textually defined disciplines, some of which, like Article XX, are aimed at clearly preserving important elements of the right to regulate even within the specific disciplines provided in the WTO Agreements. 

 ... 

Legitimate, well-founded, long-standing political justifications such as animal welfare should not be banned from the political lexicon, or treated in a narrow or skeptical fashion. The WTO should stick with what it knows best, and leave moral regulation to domestic administrations, operating within the normative bounds that are today most obviously expressed in the positive law of international human rights and related regimes"

Would this interpretation of the extent of domestic policy space be the safety valve that countries need to exercise their domestic value policy choices in the context of international trade rules? Does this have the potential to derail international trade standardisation? Does it provide a "backdoor' for protectionism? Can it be used as a tool by the developed world, with its notions of "morality" and "human rights/labour rights" to unfairly restrict imports from the developing or least developed world? Though the article argues that the WTO by taking this stand is not getting into the domains of issues other than trade, is it not by implication endorsing subjective non-trade issues to override objective trade rules?