Journal of International Economic Law - current issue

The WTO Appellate Body's Decision-Making Process: A Perfect Model For International Adjudication?

Alvarez-Jimenez, A. — 2009-06-05

The functioning of the Appellate Body (AB) is virtually perfect in terms of collegial decision-making. During its first 12 years, it has produced more than 70 reports dealing with controversial trade and non-trade issues with results that are astonishing. First of all, the AB has usually met the strict 90-day deadline to render its decisions, established by the Dispute Settlement Understanding (DSU). Second, despite the fact that the AB has dealt with issues of paramount domestic and international relevance, which could lead to internal divisions among AB Members, the collegial decision-making process of the AB has managed to decide all cases so far with only three separate opinions. And third, even though the AB decides by Divisions, its case law has been coherent through all of them. How has the AB's; collegial decision-making process been able to achieve these results? Former AB Members have provided some descriptions of the AB's; decision-making process. However, they face limitations on the scope of the disclosure of how the AB decides appeals and therefore can provide partial explanations for the success of the institution. This article seeks to fill in this gap using theoretical and comparative analyses to reveal the formal features and informal practices of the AB that allow it to achieve the aforementioned outcomes.

Regulatory Convergence, Security and Global Administrative Law in Canada-United States Trade

Irish, M. — 2009-06-05

The North American Free Trade Agreement (NAFTA) contains provisions that encourage regulatory convergence among member countries. Convergence within regional trade agreements raises several issues, including questions of political accountability and the potential application of most favoured nation (MFN) rights to any mutual recognition agreements (MRAs) that are negotiated. The author suggests an interpretation of MFN obligations that is compatible with closed MRAs. As well, she addresses the contribution of global administrative law to procedures for accountability. This article argues that border security concerns should not over-ride other public policies on levels of convergence and economic integration. Even between contiguous countries, there is no reason to presume that regional trade agreements ought to adopt common security perimeters.

MFN Exemptions Under the General Agreement on Trade in Services: Grandfathers Striving for Immortality?

Adlung, R., Carzaniga, A. — 2009-06-05

WTO Members have more leeway under the General Agreement on Trade in Services (GATS) to elude the WTO's basic most favoured nation (MFN) obligation than in merchandise trade under the General Agreement on Tariffs and Trade. In particular, under the Annex on Article II Exemptions, each Member had the one-off opportunity—at the GATS’ entry into force in 1995 or, if later, the date of WTO accession—to seek cover for the retention of whatever departures from MFN treatment. Such MFN exemptions are subject to relatively soft disciplines only. The relevant Annex provides that their duration should not exceed 10 years in principle, and that they be subject to negotiation in any subsequent trade round. In addition, the GATS allows for departures from MFN treatment, which are not subject to time constraints, including for Economic Integration Agreements and recognition measures related to standards, certificates and the like. Over 90 WTO Members (counting EC12 as one) have listed MFN exemptions for close to 500 measures in total. This article discusses their role within the structure of the GATS as well as governments’ underlying policy intentions: grandfathering clause or active/offensive policy tool? It further traces the sectoral and modal patterns of current exemptions, their use by different groups of Members and the—limited—changes offered in the services negotiations to date. The authors submit that the non-availability of new exemptions, including for measures that had escaped Members’ attention at the relevant point in time, could have added to the popularity of potential substitutes (including in the context of Economic Integration Agreements), promoted an excessively broad interpretation of existing exemptions and discouraged governments from rescinding those that had served their initial purpose. A more flexible approach might thus be warranted; possible options are being discussed.

The WTO Appellate Body's Exercise of Judicial Economy

Alvarez-Jimenez, A. — 2009-06-05

The concept of judicial economy is well accepted in World Trade Organization (WTO) litigation, and it stands for the proposition that WTO panels do not need to rule on every single claim made by complaining parties, only on those required to settle the dispute in question. However, little has been discussed about the possibility of the Appellate Body's; exercising judicial economy itself. Article 17.12 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) seems to prevent the existence of judicial economy at the appeal level by providing that ‘the Appellate Body shall address each of the issues raised in accordance with paragraph 6 during appellate proceeding’. However, despite this understanding of the scope of Article 17.12, held by some of the original members, the Appellate Body began freeing itself from a strict reading of this provision, and in its report in United States – Subsidies on Upland Cotton, without any these members on the bench, made a clear statement in this regard. The article illustrates the types of judicial economy the Appellate Body is exerting, highlights its exceptional character and shows its implications for parties and for the adjudication of WTO disputes.

The DSU Interim Review--Need for its Elimination or Extension to the Appellate Body Stage?

Steinbach, A. — 2009-06-05

One innovation submitted for the review of the Dispute Settlement Understanding (DSU) has been to extend the interim review to the appeal procedure before the Appellate Body. The proposal seeks to enhance Members control over the outcome of the dispute settlement proceeding. In contrast, numerous commentators have argued for the elimination of the interim review from the DSU by questioning its utility and giving preference to time savings for the proceedings. The merits of both proposals, elimination or extension, should be evaluated on the basis of the interim review's contribution to the effective resolution of disputes between parties. Based on past experience, this article evaluates the interim review's role to reach a mutually agreed solution (MAS) and to provide parties the opportunity to introduce new evidence, raise new legal arguments or request clarifications and corrections. To that effect, it examines the scope of the interim review as interpreted by the adjudicative bodies of the World Trade Organization (WTO) and identifies the limitations on the scope of Member's control during the interim review. The article concludes that an extension to the appeal stage would be of limited utility and potentially even incompatible with essential prerequisites of a legalistic procedure. As regards the panel stage, parties’ rights would not be prejudiced by the removal of the interim review from the proceedings.

Foreign Professionals in the United States: Regulatory Impediments to Trade

Mattoo, A., Mishra, D. — 2009-06-05

Changes in demographics and patterns of investment in human capital are creating increased scope for international trade in professional services. India, one of the largest exporters of skilled services, and the United States, one of the largest importers of skilled services, are two countries that mirror these broader global trends. The scope for mutually beneficial trade is today inhibited not only by quotas and discriminatory taxation, but also by a number of domestic regulatory requirements—including qualification and licensing requirements. To illustrate the nature and implications of these regulatory impediments, this article focuses on the regulatory requirements that Indian professionals face in the US market. It explores the consequences of regulatory discrimination and the economic cost of regulations, and presents some illustrative estimates. The article concludes by examining how the trade-inhibiting impact of regulatory requirements could be addressed through bilateral and multilateral negotiations.

China-US BIT Negotiations and the Future of Investment Treaty Regime: A Grand Bilateral Bargain with Multilateral Implications

Congyan, C. — 2009-06-05

China and the United States declared to launch the Bilateral Investment Treaty (BIT) negotiations at the conclusion of the fourth China–US Strategic Economic Dialogue (SED) on June 18, 2008. This BIT negotiation revives a failed BIT program of 20 years ago. It can be expected that China–US BIT negotiations will be concluded successfully because China's approach to investment treaties has recently been Americanized to large degree and because China–US SED can also provide institutional support. Nevertheless, China should seriously evaluate what it will benefit from and will lose from this BIT program from multiple angles, not limited to investment regime only. What is more important, at the historical moment when structural deficiencies have made the investment treaty regime at a crossroad, China and the United States as great powers have a mandate to enhance to reconstruct and make it more balanced, responsive, and accountable through their BIT program. For this purpose, three fundamental dimensions of Special and Differentiated (S&D) treatment, conduct of investors, and sustainable development should be deliberately addressed.

International Investment Law Between Commitment and Flexibility: A Contract Theory Analysis

van Aaken, A. — 2009-06-05

This article analyzes international investment protection law by using tools of economic contract theory. Contract theory has been applied to international trade law, but investment law has not yet been analyzed under this methodology. International Investment Agreements may be interpreted as a mechanism for overcoming commitment problems between investor and host state in order to generate mutual benefits. States trade credibility for sovereignty as international investment law restricts the regulatory conduct of states to an unusual extent, subject to control through compulsory international adjudication. A well-known problem in contract theory is how to deal with uncertainty. Changing conditions are a prevalent characteristic in investment law. Contract theory finds that too strict and inflexible contracts may impair the joint surplus of the contracting parties. Thus, a trade-off arises between ex ante commitment on the one hand and flexibility ex post in order to uphold the efficiency of the contract on the other. Those problems become virulent in unforeseen crises, such as financial or economic ones. This article analyzes commitment and flexibility mechanisms in international investment protection law and proposes to use similar mechanisms as in WTO law to design more optimal contracts.

Revitalizing the US Trade Agenda in Latin America: Building on the FTA Platform

Gonzalez, A. — 2009-06-05

The United States has invested heavily in the negotiation, approval and implementation of Free Trade Agreements (FTAs) with 12 countries in the Americas. This existing FTA platform should be the starting point to build a more enduring economic engagement with the region, one that would enhance the market-based opportunities that have allowed for the creation of a middle class in Latin America. This group is essential not only to reduction in poverty and inequality but also to political stability and support for democracy. The FTA platform can and should be improved and revitalized through a new trade policy aimed at (i) extending the current platform by finalizing pending FTAs and providing for its potential expansion in the future, (ii) making the FTA platform fully operational, (iii) integrating all of the pieces of the FTA platform into a unified whole, (iv) expanding the universe of those who benefit from the FTA platform while minimizing transitional costs and (v) strengthening the foundations on which the FTA platform is based. Trade is a key component of the relationship with these countries. The Obama Administration must seize the opportunity to lead the revitalization of the US partnership with the region.

International Trade in Services and Domestic Regulations: Necessity, Transparency and Regulatory Diversity. By PANAGIOTIS DELIMATSIS

Honeck, D. — 2009-06-05

The World Trade Organization: A Legal and Institutional Analysis. By JAN WOUTERS and BART DE MEESTER

Bradford, A. — 2009-06-05