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?

David Trubek, BRICS economies and domestic policy space

The issue of domestic policy space in the context of international economic law and policy has been a constant theme of this blog. See posts here, here and here for an overview of thoughts. Does WTO law restrict democratic, regulatory autonomy unreasonably? Is the national development paradigm unduly affected by international trade rules? Are countries sovereignty affected? Is there domestic policy space to implement policies as per a national developmental agenda? 

While many scholars have attempted to address this issue and offer contrary opinions, I found David Trubek's piece in the context of the growth of the BRICS economies particularly contextual and interesting. Titled "Reversal of Fortune? International Economic Governance, Alternative Development Strategies, and the Rise of the BRICS" he asserts that there is space within international trade rules that developing economies can use to further their developmental agendas. Taking note of the ascendancy of developing economies in interpreting WTO law especially the TRIPS Agreement, China's proactive role of State -led development within the WTO system and Brazil's innovative use of TRIPS flexibilities, Trubek avers that there is scope for a "development-friendly" interpretation of WTO law:

"All these developments suggest that Faundez’s assessment of international economic law and policy may be overly pessimistic. The emerging economies are no longer so much under the sway of the IFIs and are beginning to have some say on the rules of the game. The BRICS are finding ways to shape WTO law to fit alternative strategies. BITs have become more reciprocal and more tolerant of industrial policy. Trade bureaucrats and investment arbitrators may still come disproportionately from developed countries and/or accept neo-­‐liberal ideas. But this may be changing. And as the role of the G-­‐20 expands the BRICS should have more of a chance to influence global policy."

However, there are many questions:

1. What really constitutes a development friendly paradigm of domestic policy? Are the State and market two exclusive domains or extremities? Can we see a convergence? Do State led development paradigms always have the answers? Can they be more oppressive, at times, than market led growth? and vice versa?

2.Trade is essentially guided by national interest. In this sense, the national interest of many developing countries conflict with each other as they vie for market access for their products or protect their domestic industry from products from outside. Is BRICS co-operation possible in this difficult situation of national self-interest? Is it too optimistic to implement? Brazil is seeking inclusion of currency misalignment as an area where WTO must intervene. the country to be largely affected by this is another BRIC country - China. What implication does this have  for BRICs co-operation in re-interpreting international economic law?

3. While BRICS co-operation and overall strategy to re-interpret international trade rules to advance their national priorities may be a positive step, to expect a bonhomie may be over-optimistic. After all, national trade interests would play a crucial role in how countries would react.

Trubek himself highlights some of the limiting factors to BRICS so-operation, including this:

"The BRICS share some general approaches to development and have common interests in making some changes in international economic law. But they may not always be in agreement: for example, Papa notes that China and India have taken different stances towards the scope of BITS and appropriate processes for dispute settlement. And there may be real conflicts between these countries: thus many in Brazil have been very critical of China’s trade and currency policy."

Interesting times for a creative re-interpretation of multilateral trade rules to advance genuine, national priorities. While we may not agree with what actually constitutes "genuine, national priorities", the possibility of a creative interpretation is in itself re-assuring.

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.