Journal of International Economic Law - recent issues

Introduction to Volume 11, 2008

The Editors — 2008-02-20

Introduction to Sir Francis G. Jacobs' Essay

Jackson, J. H. — 2008-02-20

The State of International Economic Law: Re-Thinking Sovereignty in Europe

Jacobs, F. G. — 2008-02-20

The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole

Diebold, N. F. — 2008-02-20

On 10 April 2007, the United States requested consultations with China regarding trading rights for publications and audiovisual products. Following US—Gambling, this case is likely to provoke the next clash between free trade and public morals. This article takes an abstract approach to the scope and content of the public morals and public order exceptions in the GATS and the GATT and, given the absence of a public order exception under the GATT, analyzes how these two concepts interrelate with one another. In this regard, the finding in US—Gambling that Members should individually define the scope of Article XIV(a) GATS is critically examined, but the article suggests that it deserves support based on an interpretation in accordance with general principles of the law of treaties. Following the identification of instruments that limit the risk for abuse of the morals and order exceptions, the article will turn to the scope-related aspect regarding the justifiability of ‘extraterritorial’ measures.

Banking on China's WTO Commitments: 'Same Bed, Different Dreams' in China's Financial Services Sector

Crosby, D. C. — 2008-02-20

Foreign banks and the Chinese Government have different dreams about the business opportunities and obligations that arise under China's World Trade Organization (WTO) commitments on financial services. This article provides an overview of China's banking sector reforms and its gradual opening to foreign participation in the context of General Agreement on Trade in Services (GATS) rules governing international trade in financial services and the obligations that apply since China's WTO accession in December 2001. The article highlights the contradictory interpretations that China and other Members have issued regarding China's GATS commitments and provides a framework for assessing the WTO consistency of China's banking measures. An analysis is conducted under this framework to evaluate whether China has fully implemented its GATS commitments on (i) the acquisition of Chinese banks by foreign financial institutions, (ii) legitimate ‘prudential regulation’ in the banking sector, and (iii) full market access for credit card and electronic payment services. Notwithstanding the apparent complexity of GATS rules, the article concludes that the WTO legal framework supports the case for increased access to China's financial services market consistent with its GATS commitments, and fully consistent with China's plans for continuing domestic growth and its medium-term financial services export interests.

Foe or Friend of GATT Article XXIV: Diversity in Trade Remedy Rules

Ahn, D. — 2008-02-20

While the WTO Member countries continue to increase their FTA arrangements with divergent frameworks, they have begun to adopt modified WTO trade remedy systems in FTAs. Although the content and degree of these modified systems may not be significant yet, they still set very important precedents, or ‘seeds’, for ‘rule diversification’ in the world trading system. Such modification typically aims to further liberalize mutual trade between FTA parties and thereby contribute to a freer world trading system. However, such rule diversification appears to be inconsistent with the mandate of Article XXIV of GATT by worsening economically inferior trade diversion. The reinterpretation of the legal obligations in Article XXIV commensurate with economically more reasonable structures implies that trade remedy rules in FTAs should be applied on a non-discriminatory basis. Moreover, an FTA safeguard measure must precede a WTO safeguard measure to ensure optimal competitive conditions among trading partners. In sum, the right channel for improving the current WTO trade remedy systems is not the FTA forums but the WTO negotiation.

Conceptualizing Security Exceptions: Legal Doctrine or Political Excuse?

Emmerson, A. — 2008-02-20

The dominant world political theory for international engagement has long been Realism, where state power and state interests are viewed as determining the limits on state relations. Increasingly, however, new theories have emerged to assist our understanding of how and why states interact in a global setting dominated by international institutions and their antecedent agreements. This is no more apparent than in the field of international economic relations under the control of the World Trade Organization. Using political and legal theories, this essay explores whether WTO security exceptions are legal doctrines or political excuses and how this informs our present, and possibly future, understanding of international state interaction.

Seventh Annual WTO Conference: an Overview

Van Damme, I. — 2008-02-20

Trade and Employment: Challenges for Policy Research. A Joint Study of the International Labour Office and the Secretariat of the World Trade Organization

Charnovitz, S. — 2008-02-20

Human Rights and International Trade. Edited by THOMAS COTTIER, JOOST PAUWELYN AND ELISABETH BURGI

Baetens, F. — 2008-02-20

WTO Dispute Settlement 1995-2007 - A Statistical Analysis

Leitner, K., Lester, S. — 2008-02-20

The WTO Appellate Body's Activities in 2007

2008-02-20

Book Survey 2007

Raisch, M. J. — 2008-02-20

Website Survey 2007

Raisch, M. J. — 2008-02-20

Subject Index To Volumes 1-10 (1998-2007)

2008-02-20

Author Index To Volumes 1-10 (1998-2007)

2008-02-20

Editorial Structure

2008-02-20

Eleven Years of GATS Case Law: What Have We Learned?

Leroux, E. H. — 2007-12-05

The General Agreement on Trade in Services (GATS) negotiators faced a significant challenge when having to craft a comprehensive set of disciplines governing multilateral trade in services, and the result is somewhat complex. Some obligations, in particular the most favoured-nation treatment (MFN) obligation, apply across the board. Others, like the market access and national treatment obligations, apply only in respect of service sectors of a Member's choosing. There is overlap between the market access and national treatment obligations, and the relationship between these two disciplines and those on domestic regulation is not clearly established. Additional obligations have been adhered to on a voluntary basis, in particular in the areas of telecommunications and financial services. In general, the interpretation and understanding of Members’ Schedules of Specific Commitments proves to be a laborious exercise. This provides fertile ground for difficult and often sensitive interpretive issues to arise. Although Members have thus far not made extensive use of dispute settlement procedures to resolve them, existing World Trade Organization (WTO) decisions already show the reach of GATS disciplines and their potential impact on Members’ policies and regulations. The Gambling case has, in particular, sparked a debate as to what should be the right balance between trade constraints and the autonomy of Members’ service regulators. This article reviews the GATS case law with a view to offering a critical assessment of the main systemic issues that have been addressed by WTO adjudicatory bodies. These issues are, respectively, the scope of application of the GATS, the interpretation of specific commitments in Members’ Schedules, market access, non-discriminatory treatment, and general exceptions.

The Legal Basis for Using Principles in WTO Disputes

Mitchell, A. D. — 2007-12-05

This article argues that the use of principles in WTO dispute resolution is both necessary and desirable. However, Panels and the Appellate Body (WTO Tribunals) have often ignored principles or not clearly identified the legal basis for their use. This article establishes a framework for the use of principles (in particular principles of WTO law, principles of customary international law, and general principles of law) in WTO dispute settlement. Broadly, WTO Tribunals can use principles drawn from these categories to interpret WTO provisions, based on Article 3.2 of the DSU, and Articles 31 and 32 of the VCLT. This follows most directly from a teleological approach to interpretation, but principles also feature under subjective and textual approaches to interpretation. WTO Tribunals may also use certain principles in a non-interpretative manner. Indeed, this may be necessary, particularly to address procedural issues. Precisely how a principle may be used depends on its type, content and status.

No More Negotiated Deals?: Settlement of Trade and Investment Disputes in East Asia

Nakagawa, J. — 2007-12-05

Many argue that East Asian countries have come to adopt ‘aggressive legalism’ in trade and investment policy, in the sense that they have come to settle their trade and investment disputes through the dispute settlement mechanism (DSM) of the WTO and the other third-party procedures. Scrutiny of the dispute cases of these countries shows, however, that East Asian legalism is not so aggressive, that it varies country by country, and that there still exists room for negotiated deals in settling trade and investment disputes among them. On the other hand, the recent move toward regional integration through free trade agreements (FTAs), economic partnership agreements (EPAs), and bilateral investment treaties (BITs) in East Asia may lead to the adoption of a more aggressive legalism in the region, in particular in settling investment disputes, disputes relating to intellectual property rights, and trade remedies.

The WTO Legality of the EU's GSP+ Arrangement

Bartels, L. — 2007-12-05

In EC—Tariff Preferences, the Appellate Body held that the WTO Enabling Clause permitted developed countries to grant better tariff treatment to some developing countries than to others, subject to certain conditions. It held further that these conditions were not met by the EU's so-called ‘drugs arrangement’, a system of additional preferences (normally duty free treatment) for certain countries which the EU had determined were in need of special tariff preferences, thanks to their involvement in combating the production and trafficking of narcotics. In response to this ruling, when the EU renewed its GSP programme in 2005, it replaced its drugs arrangement and two similar, though less generous, labour and environment arrangements with a new arrangement popularly known as the ‘GSP+ arrangement’. Under this arrangement, additional tariff preferences (normally duty free treatment), were made available to developing countries committing to ratify and implement a list of human rights and good governance conventions. According to the EU, the GSP+ arrangement complies with the Appellate Body's interpretation of the Enabling Clause. This article argues that it does not. This is primarily because of the substantive criteria chosen by the EU to select GSP+ beneficiaries, which do not meet the Appellate Body's criteria for differential tariff treatment of developing countries. Second, it is because the EU's requirement that would-be beneficiaries must have applied by a certain date, replicates the problem of the ‘closed list’ of beneficiaries that was fatal to the earlier incarnation of the EU's GSP program. The article concludes with some suggestions for designing a GSP+ arrangement more likely to meet the Appellate Body's conditions than the EU's present arrangement.

Coverage of the WTO's Agreement on Government Procurement: Challenges of Integrating China and other Countries with a Large State Sector into the Global Trading System

Ping, W. — 2007-12-05

The WTO's plurilateral Agreement on Government Procurement (GPA) is a significant WTO instrument to develop disciplines regulating government procurement. A recent major review of the GPA has led to a revised text, likely to enter into force in 2007. In the meanwhile, China, a country with a large state sector, has promised to initiate GPA accession negotiations by the end of 2007.

The article provides a critical assessment of the extent to which the recent review of the coverage of the GPA has appreciated the characteristics of the government procurement regime of those countries with a large state sector. It is argued that the lack of a principled approach to entity coverage and the ambiguities surrounding the scope of covered procurement are likely to substantially hinder the negotiating process and prevent the optimal outcome of accession negotiations. It is suggested that a formula consisting of basic factors defining the coverage of government procurement disciplines, such as government control and competition, should be employed to address this issue.

The Doha Round's Public Health Legacy: Strategies for the Production and Diffusion of Patented Medicines under the Amended TRIPS Provisions

Abbott, F. M., Reichman, J. H. — 2007-12-05

The entry into force of the World Trade Organization (WTO) TRIPS Agreement in 1995 transformed the international intellectual property system. The harmonization of basic intellectual property standards has operated to protect investment in innovation, limiting risks from unjustified ‘free riding’. Yet these same harmonized IP standards sharply curtailed the traditional capacity of suppliers of public goods, such as health care and nutrition, to address priority needs of less affluent members of society, particularly in (but not limited to) developing countries. In the Doha Declaration, the Waiver Decision of 30 August 2003 and the Article 31bis Protocol of Amendment, stakeholders concerned with re-opening policy space for the supply of newer pharmaceutical products pushed back against restrictive elements of the TRIPS Agreement.

Governments around the world are in the process of deciding whether to ratify and accept the Article 31bis Amendment. Based on their Study for the International Trade Committee of the European Parliament, the authors argue that acceptance of the Amendment will provide a ‘net benefit’ for countries seeking to improve access to medicines. At the insistence of WTO delegations acting on behalf of the originator pharmaceutical industry lobby, Article 31bis regrettably is saddled with unnecessary administrative hurdles. Nonetheless, through skillful lawyering, political determination and coordinated planning, the system can be made to work. Among other options, expeditious back-to-back compulsory licensing linked with pooled procurement strategies may effectively achieve economies of scale in production and distribution of medicines.

The authors doubt that the international political environment would support renegotiation of an ‘improved’ solution. They express concern that failure to bring the Amendment into force will open the door to a campaign to undermine the Waiver Decision. Recent events in Brazil and Thailand illustrate both the opportunities and risks associated with implementing TRIPS exception mechanisms, and help to inform views on the negotiating environment. Specific proposals for regional cooperation in implementing the Amendment are laid out, and the authors emphasize the importance of pursuing concrete transfer of technology measures in support of developing country pharmaceutical manufacturing. Over-reliance on private market mechanisms for the supply of public health goods leaves the international community with an unresolved collective action problem on a large scale.

A Proposal for a Framework Convention on Global Health

Gostin, L. O. — 2007-12-05

This article searches for solutions to the most perplexing problems in global health—problems so important that they affect the fate of millions of people, with economic, political, and security ramifications for the world's population. No State, acting alone, can insulate itself from major health hazards. It is for this reason that safeguarding the world's population requires cooperation and global governance. What is truly needed, and what richer countries instinctively do for their own citizens, is to meet what I call ‘basic survival needs.’ By focusing on the major determinants of health, the international community could dramatically improve prospects for good health. A vehicle such as a Framework Convention on Global Health (FCGH) could powerfully improve global health governance. Such a Framework Convention would commit States to a set of targets, both economic and logistic, and dismantle barriers to constructive engagement by the private and charitable sectors. It would stimulate creative public/private partnerships and actively engage civil society stakeholders. A FCGH could set achievable goals for global health spending; define areas of cost effective investment to meet basic survival needs; build sustainable health systems; and create incentives for scientific innovation for affordable vaccines and essential medicines.

The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good. By WILLIAM EASTERLY

Broude, T. — 2007-12-05

The Future of International Economic Law

Davey, W. J. — 2007-08-27

Reforming the International Monetary Fund Why its Legitimacy is at Stake

Torres, H. R. — 2007-08-27

The International Monetary Fund was designed to promote international monetary cooperation and foreign exchange stability, so as to facilitate international trade, high levels of employment and real income, and the development of the productive resources of all its members. However, the Fund's capacity to influence its key members’ policies through its advice, and to give confidence to potential borrowers by offering opportune and meaningful financial assistance in case of trouble, has been seriously put into question. Its governance structure is inconsistent with its multilateral nature and is dysfunctional to its purposes. There is also an ideological bias in its policy advice that prevents the Fund from being responsive to citizens' concerns and challenges posed by globalization. The ongoing reform process is tinkering on the margins and if not redressed will fail to bring additional credibility and effectiveness to the Fund.

Global Justice and the Bretton Woods Institutions

Garcia, F. J. — 2007-08-27

Together with the WTO, the Bretton Woods Institutions are the preeminent international institutions devoted to managing international economic relations. This mandate puts them squarely in the center of the debate concerning development, inequality and global justice. This essay explores how justice criteria might apply to the ideology and operations of the World Bank and the International Monetary Fund. Using the Rawlsian model of egalitarian justice adapted to international institutions by the author in connection with the WTO, this essay asks what difference it would make for the Bank and Fund if an explicit justice framework informed their international lending activities.

The Culture of the WTO: Why it Needs to Change

Steger, D. P. — 2007-08-27

The WTO is an international organization with its own distinctive culture, which is derived from the practice and experience of the GATT. The WTO, however, is not the old GATT. The multilateral trading system was transformed into an international organization in 1995, and today, the WTO also administers a host of agreements that contain detailed rules regulating international economic activity. The membership of the WTO has grown to 150, the vast majority of which are developing countries. Most importantly, the trading system, which was once bi-polar, driven by the United States and the European Union, has changed dramatically to become multi-polar, with the large emerging economies, such as China, India and Brazil, becoming major economic powers in their own right. The WTO needs major surgery in order to respond effectively to the new political realities in the international economic system. The current impasse in the Doha Round is in large part due to the great transformation in geopolitical power relationships taking place in the world today. If the Round fails, it will not be the end of the WTO. On the contrary, it might provide a useful ‘time out’ for the multilateral system to find its new stride. A related problem is that the mandate of the WTO is no longer clear. This article suggests that WTO Members work together to define the new purpose and mandate of the WTO to make it relevant to governments, companies and people in the 21st century. Institutional reform of the WTO is needed to provide it with the architecture and decision making machinery that will allow it to become a vibrant, responsive and accountable organization.

Preparing for Structural Reform in the WTO

Cottier, T. — 2007-08-27

The structure and operation of the WTO have not been at the forefront of attention of negotiations ever since the General Agreement on Tariffs and Trade was introduced in 1947. The modus operandi of negotiations has essentially remained unchanged despite the turn towards non-tariff barriers in complex operations of treaty-making ever since the Kennedy Round. The note argues that the evolution and introduction of the two-tier system of dispute settlement in 1995 marks the most profound structural change, but is not able on its own to deal with all of the challenges of tackling non-tariff barriers in the WTO. Today, the Organization forms part of a complex system of multilayered governance, both horizontally and vertically. It calls for more appropriate structure–substance pairings. The note addresses the need to review negotiating processes in the field of non-tariff barriers. It suggests establishing a proper balance with dispute settlement and case law, and rendering the function and role of the Secretariat of the WTO more transparent. The creation of a two-tier system is suggested, with a Consultative Committee and a Standing Committee on Legal Affairs within the WTO in order to support and initiate a long overdue structural debate in the WTO.

Good Governance at the World Trade Organization: Building a Foundation of Administrative Law

Esty, D. C. — 2007-08-27

Good governance lies at the heart of both the effectiveness and legitimacy of collective decision-making. In this essay, Professor Esty argues that, if the World Trade Organization (WTO) is to be successful in its designated role of promoting trade liberalization and helping to manage international economic interdependence, it needs a deeper commitment to good governance, advanced through a more refined structure of administrative rules and procedures. He identifies 14 core elements of good governance and traces how administrative law might promote each one in the WTO context. While acknowledging the difficulty of bringing administrative law to the supranational level, Esty concludes that there exists an emerging consensus around many of the underpinnings of good governance—and therefore places value in trying to build these elements in to the WTO policy-making process.

Multilevel Judicial Governance of International Trade Requires a Common Conception of Rule of Law and Justice

Petersmann, E.-U. — 2007-08-27

Since the establishment of the Permanent Court of International Justice in 1922, governments have consented to, and actively used, an ever larger number of international and transnational courts, quasi-judicial dispute settlement bodies and ad hoc arbitral tribunals for the settlement of disputes over the interpretation and application of rules of international law. Such judicial clarification of disputed interpretations of incomplete, intergovernmental agreements reduces not only the negotiation costs of governments by delegating the clarification of contested facts and legal claims to independent third-party adjudication. Judicial decision-making at intergovernmental, transnational, national and private levels also supplements rule-making and offers citizens judicial remedies for defending their rights and interests. Modern international economic law increasingly complements intergovernmental, legislative, and administrative governance by multilevel ‘judicial governance’ so as to protect rule of law more effectively for the benefit of citizens (Section I). This contribution criticizes the one-sidedly power-oriented perceptions of WTO law as ‘international law among states’ (Section II) and the related perceptions of international judges as dependent agents of states (Section III). Civil society, parliaments and democratic governments should encourage national and international judges to cooperate in their legal task of interpreting citizen-oriented international economic law ‘in conformity with principles of justice and international law’, as explicitly prescribed in the Vienna Convention on the Law of Treaties (VCLT). The legal coherence of multilevel judicial governance depends on protecting principles of procedural as well as substantive justice and a common conception of ‘rule of law’ not only in intergovernmental relations among states, but also vis-à-vis their citizens engaged in, and benefiting from, international trade (Sections IV–VIII).

WTO for Trade and Development Post-Doha

Chang, S. W. — 2007-08-27

The WTO Members’ negotiations under the Doha mandate on special and differential treatment (‘SDT’) and development issues have made little progress. The gap between developed countries and developing countries in this regard seems too wide to be bridged. This gap originates from a fundamental difference in their basic stances on cross-cutting issues. In principle, without prejudice to currently available SDT under individual WTO Agreements, developing countries should be given flexibilities in implementing WTO rules, which may result in the rebalancing of rights and obligations of WTO Members but only when policy measures at issue can contribute to particular developing countries’ development needs and no alternative less-trade restrictive measures are reasonably available. After reviewing WTO Members’ discussions since the adoption of the Doha Ministerial Declaration, this article suggests a ‘measure-specific ex ante approach’ for a workable solution to bridging the gap between developed countries and developing countries on SDT and development issues.

A New Dominant Trade Species Emerges: Is Bilateralism a Threat?

Abbott, F. M. — 2007-08-27

Over the past decade, government trade and finance ministries have increasingly turned toward negotiating bilateral and regional trading arrangements, and away from negotiations in multilateral forums like the WTO. There are several reasons for this shift, including changes in the global political environment and negotiating obstacles encountered by the multinational business community at the multilateral level. This shift appears to be an embedded phenomenon. Positive and negative aspects of preferential trading arrangements (PTAs) are in evidence. Trade creation-trade diversion economic analysis suggests the results may be net global welfare enhancing, although such analysis does not readily assess distributional effects. The global economy is enjoying a period of sustained—and widely distributed—economic growth, suggesting that the PTA phenomenon is not an immediate economic threat. On the negative side, the PTAs lead to administrative complexity, and may be somewhat destabilizing as businesses are encouraged to relocate. Some countries may suffer if left out, but this risk is ameliorated by the wide availability of potential negotiating partners. The PTA negotiating environment strongly favors powerful economic actors like the United States and European Union, which are largely dictating terms to developing (and developed) countries. Developing countries, particularly the less economically powerful, are losing autonomous decision-making authority. The consequences of this are difficult to quantify, and may raise questions better attuned to moral philosophers than economists. The WTO continues on its way, relegated to a less central status. A return to the WTO might reinvigorate the role of less powerful actors, but such return does not appear an immediate prospect. The PTA phenomenon, on balance, does not appear aggressively threatening. We may, however, be underestimating the positive role of multilateralism.

Ensuring that Regional Trade Agreements Complement the WTO System: US Unilateralism a Supplement to WTO Initiatives?

Schaefer, M. — 2007-08-27

In the mid-1990s, the policy debate within the WTO focused on whether regional trade agreements (RTAs) were building blocks or stumbling blocks for the WTO system, essentially questioning whether regionalism was appropriate at all from an economic policy perspective. Given the proliferation of RTAs since that time and the inability to roll back the clock, that policy debate has been replaced by a search for strengthened constraints on RTA activity that might ensure it complements the WTO system. Three major controversies within many existing RTAs are the exclusion of agriculture from coverage, complex and restrictive rules of origin, and varied treatment of the application of trade remedies. Despite some competing policy considerations, it is likely, on balance, that the WTO system would benefit if agriculture was required to be included in RTA coverage, if RTA rules of origin were simplified and liberalized, and if the controversy surrounding RTA treatment of trade remedies was cleared up. However, the search for constraints within the WTO system to achieve these results, either through the Doha negotiations or the dispute settlement system seems unlikely to succeed in the near future. Accordingly, enhanced and extended efforts by the US, either unilaterally or in conjunction with its RTA partners utilizing its negotiating leverage, may be a necessary supplement to efforts within the WTO in ensuring a more harmonious relationship between RTAs and the WTO system.

Services Trade: Past Liberalization and Future Challenges

Hufbauer, G., Stephenson, S. — 2007-08-27

Services trade has truly become an engine of world growth. Over the past two decades, international trade in services has grown faster than world merchandize trade, which in turn has grown faster than world output. A combination of policy liberalization and technological progress has facilitated trade in many previously untradable services. However, very little progress has been made towards new policy liberalization in the ongoing Doha Development Round. This article discusses trade in services in five sections. Following a short introduction, Section I presents data on the past growth of services trade flows and makes rough projections of future expansion. The second and third sections summarize the achievements of the WTO in the service field, both as a negotiating forum and a dispute settlement system. The third section also emphasizes how FTAs are now playing the leading role in services liberalization. The fourth section critiques the absence of progress in the Doha Round and the fifth section examines the hot issue of services outsourcing. The concluding section offers policy recommendations for containing a possible protectionist backlash and promoting new liberalization.

Regulatory Jurisdiction and the WTO

Trachtman, J. P. — 2007-08-27

The WTO is not explicitly concerned with the problem of regulatory jurisdiction in connection with prudential regulation (as opposed to industrial policy regulation). However, as the WTO has addressed increasingly complex regulatory barriers to trade, it has developed several devices that have the implicit effect of allocating regulatory jurisdiction among states.This article reviews a few illustrative cases in WTO law, including Helms–Burton, Shrimp, and Gambling. This review suggests how these cases may be understood as dealing with allocation of regulatory jurisdiction. Negative integration rules such as national treatment or proportionality may serve as devices applied by tribunals for allocation of regulatory authority. The WTO has very limited rules of positive integration—whereby states either harmonize regulation or agree on more specific allocations of regulatory authority, such as mutual recognition. However, it has developed a modest degree of capacity to engage in positive regulation, or to refer to positive integration rules developed in other contexts, such as Codex Alimentarius. Finally, this article examines theoretical bases for allocating and reallocating regulatory jurisdiction in order to establish a framework by which to analyse the role of the WTO in this context.

Enforcing WTO Obligations: What Can We Learn from Export Subsidies?

Green, A., Trebilcock, M. — 2007-08-27

Export subsidies provide a good example for discussing some interesting questions underlying the debate over reforming the current system of remedies for violations of World Trade Organization (WTO) obligations. If the purpose of trade agreements is to maximize economic welfare, discussion of violations of WTO obligations will need to take account of the form of both the requirement and the remedy. The requirement could take the form of a standard or a rule and may be more or less complex. The remedy could take the form of a property rule or a liability rule. Further, both the level and the form of the remedy will be important. Each type of violation needs to be examined separately to determine whether flexibility to adapt to new circumstances should come through the requirement or the remedy. In the case of export subsidies, the current simple rule prohibiting export subsidies is likely optimal but the remedies which support this rule need to be reformed. They are currently both over-inclusive and under-inclusive and do not provide sufficient flexibility or incentive for efficient adjustment. This article considers some alternative remedies for export subsidies and discusses the general lessons for the debate on remedies for violations of WTO obligations.

The WTO's Environmental Progress

Charnovitz, S. — 2007-08-27

The linkage between trade and the environment stands out as an important challenge in global economic governance. Over the past decade, the WTO devoted considerable attention to this issue and included it on the agenda of the Doha Round. In parallel, the jurisprudence on trade and the environment has experienced significant advances. This study provides an overview of the main institutional changes at the WTO and of the developments in the jurisprudence most relevant to the interaction between the environment and trade. Specifically, this study focuses on General Agreement on Tariffs and Trade (GATT) Article XX and takes note of many positive (and a few negative) features of the key Appellate Body decisions.

Competition Law and the WTO: Rethinking the Relationship

Gerber, D. J. — 2007-08-27

This essay identifies obstacles to the inclusion of a competition law regime in the WTO and suggests changes that are likely to be necessary if competition law is to become an effective part of the WTO. Two obstacles have impeded inclusion of competition law in the WTO's legal regime and are likely to continue to do so. They are (i) a lack of confidence that the norms, practices and procedures of the WTO rest on a robust conception of community and (ii) uncertainty and concern about what form of competition law might be included and what its role in the WTO would be. In order to reduce the first of these obstacles, the institutions and members of the WTO will need to develop a conception of community that engenders widespread confidence in the WTO's basic modes of operation. Eliminating the second obstacle would require clarification of the kind of competition law that would be acceptable within the WTO, and this, in turn, is likely to require development of a form of competition law that is specifically designed for the WTO and that can elicit the long-term support of all categories of members. The essay suggests that the competition law issue is intricately interwoven with the future of the WTO. The changes that would be necessary to introduce and successfully implement competition law in the WTO are to a large extent the same as those that the institution will need to make if it is to enrich its role as an institution.

The Present and Future of The Investor-State Dispute Settlement Paradigm

Choi, W.-M. — 2007-08-27

While the World Trade Organization (WTO) system remains faithful to the long-standing traditional paradigm of state-to-state dispute resolution, dispute resolution mechanisms in the area of international investment are undergoing a radical change. Traditionally, the paradigm of ‘diplomatic protection’ has served as a basis for the settlement of investment disputes among states. In earlier commercial agreements, including the Friendship, Commerce, and Navigation Treaties (FCNs) concluded from 1940s to 1960s, the resolution of international investment disputes took the form of state-to-state dispute resolution. This paradigm shifted in the 1970s when direct investor claims, modelled on treaties that European countries had been putting forward since 1959, were allowed under a series of bilateral investment treaties initiated by the United States. This shift has been reflected in subsequent efforts to reach a multilateral agreement on investment (MAI) and in many free trade agreements (FTAs). Also, in the area of international human rights law, it is an increasing trend to allow an individual to have direct recourse to international human rights protection bodies, such as the Human Rights Committee established under the International Covenant on Civil and Political Rights, after the exhaustion of domestic remedies. The allowance of direct claims has helped to make up for the typical shortcomings of the diplomatic protection mechanism where, the espousing state has frequently exercised excessive discretion in deciding whether to advance claims due to considerations of a political nature, unrelated to the particular case, so that this mechanism can increase international friction. On the other hand, the strong point of diplomatic protection has been its capacity to screen out frivolous or dishonest claims by individuals. The question whether various international dispute settlement mechanisms may eventually converge into an effective system based on a direct claim procedure is a vexing one. It is uncertain whether the model of investor-state dispute settlement (ISDS) can play a pioneering role in this ongoing process. Any pertinent answers to such questions require a thorough comparison of the benefits and drawbacks of such a development. Lessons from the experiences under the ISDS system and its modification efforts should be fully taken into account so the newly emerging dispute resolution system will not lead to tension between nations in an area where precedent is scant, but the need is great.