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Lorand Bartels
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Why would the Europeans (btw EU MS VAT levels differ) have to justify what their VAT BTAs are spent on at all? Didn't you just say these are different from the US proposal? Did I miss something?
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I'm actually a fan of nonviolation complaints. They target conduct that undermines the factual conditions (or assumptions) on which obligations are based, even if that conduct does not violate those obligations themselves. Such conduct may is rare, but it can exist. (One could make an analogy with Arts 60(3)(a) (express and implied repudiation) and 62 (fundamental change of circumstance) VCLT.) Having said this, I think you might be a little over-extending the concept here, at least according to past GATT and WTO jurisprudence. In my view, WTO 'benefits' are not 'increased' trade; they are not even volumes of trade at all. I think these 'benefits' are access, on agreed terms, to a non-discriminatory market (usually in the importing country), unless an exception applies (on which point I think the AB in Asbestos had it in reverse). Accompanying losses, eg for downstream (COOL) or upstream (cf Bananas) product markets/trade do not count. Nor, in my view, does damage to investment in another country. But what about threats? In Colombia - Ports of Entry the Panel interpreted 'other [prohibited quantitative] measures' in Art XI:1 GATT to include measures that affected investment (I think this was wrong, as above) but also measures that made it difficult to predict the nature of an import regime. And we know that the 'security and predictability' of the trading regime has legal value in the WTO system. So I think it is possible, albeit, for me, on slightly narrower grounds, that a threat to withdraw reasonably expected market access could constitute a non-violation nullification or impairment of WTO benefits. In fact, one could perhaps make another analogy here: the prohibition on the threat of use of force in Art 2(4) UN Charter, particularly if the point of the threat is to influence the conduct of the affected state (and I am not saying that this is the case with your hypothetical).
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Simon, thanks for spotting this. The sin is not new, as you say. The AB cites its Report in Section 211 (WT/DS176/AB/R), which says this: 105. Our rulings in these previous appeals are clear: the municipal law of WTO Members may serve not only as evidence of facts, but also as evidence of compliance or non-compliance with international obligations. Under the DSU, a panel may examine the municipal law of a WTO Member for the purpose of determining whether that Member has complied with its obligations under the WTO Agreement. Such an assessment is a legal characterization by a panel. And, therefore, a panel's assessment of municipal law as to its consistency with WTO obligations is subject to appellate review under Article 17.6 of the DSU. This is complete and utter nonsense. How is an 'assessment' of the conduct of a WTO Member - which is to say, what it did - a legal characterisation? It would be harder to find a clearer example of a fact for the purposes of the law/fact distinction. And I say that as someone who is highly critical of the idea that municipal law is/should be always treated as fact by international tribunals (viz, when the question is not what a municipal law means in the abstract, but rather how it applies to a downstream fact (eg, was there 'property' or 'nationality'), then the legal operation undertaken by a tribunal is, properly seen, the application of that municipal law, as law, to that downstream fact, the conclusion of which then constitutes a fact for the purposes of the international rule. In short, the AB has it jurisprudentially incoherent and jurisdictionally incorrect, and this not for the first time. Of course, that does not mean that the AB can never review factual determinations. It can - but only under Art 11 DSU by considering whether a panel in making factual findings exceeded its jurisdiction. To your question: well, the best we can hope for is a sidestepping of this line of jurisprudence; and for once, given just how wrong this is, that might be the best course of action.
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Christian, I agree. And this is supported by the fact that the relevant caselaw prohibits negotiations not because they have something unspecified to do with an area of EU competence, but specficially because they undermine the exercise of that competence (Case C-266/03 Commission v Luxembourg [2005] ECR I-4805; Case C-433/03 Commission v Germany [2005] ECR I-6985). This is now specified in Art 4(3)(3) TEU, which states that '[t]he Member States shall ... refrain from any measure which could jeopardise the attainment of the Union's objectives.' So at the very least one needs to identify how UK trade negotiations pre-Brexit leading to the conclusion of an agreement post-Brexit might jeopardise the CCP. I cannot really see this, myself. Certainly, there is a conflict of interest problem in that Art 50 does not automatically exclude the UK, during the two year divorce period, from participating in EU decisions on matters that will affect it as a post-EU member (I think this earns Art 50 a fail grade on its own). But this goes beyond the CCP, and will have to be sorted out in a generic way. And a conflict of interest is in any case not the same as undermining an exercise of EU competence.
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The ECtHR upheld a French ban on wearing the burqa and niqab in public places in SAS v France in 2014 (summary here: http://hudoc.echr.coe.int/app/conversion/pdf/?library=ECHR&id=003-4809142-5861661&filename=003-4809142-5861661.pdf). The ban was justified because France was able to decide that in public people should be able to see each others' faces. Of course this rationale does not easily transpose to the burqini ban. But the level of scrutiny in the WTO on public morals is also relatively light. So I'm not sure the outcome would be so certain. In addition, the ban is justified by its mayors by referencing France being at war with Islamic terrorists. Does this mean it could be justified under the subjective test (which is not the same as 'self-judging') test in Article XXI?
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Thanks, Fernando. The problem with this approach is that, ordinarily, members of organisations are not responsible for the acts of those organisations. The ILC Commentary to Art 62 of the Articles on Responsibility of International Organisations states: 'It is clear that ... membership does not as such entail for member States international responsibility when the organization commits an internationally wrongful act’. One needs more for responsibility, like circumvention as set out in Art 61. That might be done, but there are all sorts of other aspects to consider, including perhaps good faith. Lorand
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David, you put the argument well, but in one sense, I think, the example you cite can be played from the other side of the court. If the EU can delegate its exclusive competence to negotiate and conclude treaties, does that not undermine the idea that there is something 'core' and untouchable about exclusive competences? To Art 50, it seems to me that it has two important consequences. First, as I said, the reference to 'taking account of the framework for [the UK's] future relationship with the union' implies that the trade relationship between the UK and EU need not be unknowable until divorce proceedings are concluded. True, this reference does not refer to UK-third country trade negotiations. But here the other consequence of Art 50 comes into play, in my view, which is that it changes the duty of loyal (or sincere or genuine) cooperation between the MS and the EU, which is at the basis of the (negative) jurisprudence on MS negotiations in areas of EU competence. Sure, the UK should not be able to undermine the EU's CCP while it is still a member. But that would only happen if it concluded an FTA, not merely because it negotiates one to take effect when it is no longer an EU member. One sticking point remains: in such an event, it seems odd that the UK would still have a seat at the EU table, the EU being a competitor to some degree. Perhaps the duty of loyal cooperation might lead to an 'empty chair' in this scenario. Certainly some creativity will be required to deal with this problem, which is much more general anyway. In sum, this comes down to two points: First, Art 50 expressly assumes that the 'relationship' between the UK and the EU is knowable, and this presumably means a trade relationship. Second, Art 50 can affect the interpretation of other provisions of the EU treaties, by implication, but also because an Art 50 notification affects the duty of loyal cooperation on which existing interpretations are based. Practically, I think this means that the EU can sulk if it wants, and refuse to negotiate a trade agreement with the UK, but the UK is free to negotiate (but not conclude) third country FTAs within the two year period.
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Malstrom's approach may make sense as a matter of political choice. But your interpretation makes that a legal necessity. What if the EU decided that actually it would quite like business as much as usual as possible? Should such a possibility be excluded? Should the TEU really force the EU to cut off its nose to spite its face? In this sense, far from undermining the core of the CCP, pre-exit negotiations in fact give the EU more, and in terms of disruption much better, options. One could see this as supporting the CCP rather than undermining it. You also haven't explained what the reference to the 'framework' might mean, if not that such a framework can exist, in some form, pre-exit.
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Art 50(2) states: 'In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. If that 'framework' includes trade relations, does this not imply that those trade relations can be known, which would then imply that there is no bar to negotiations within the two year withdrawal period. On this basis, I would - contrary to David - think that Art 50 does imply a carveout from the usual rule. This also makes political sense. Otherwise economic disruption is guaranteed - on both sides. The problem remains that the UK appears to be able to vote on EU matters during this period. This is an oversight, I would say. Perhaps it should be excluded from particularly sensitive matters, perhaps along the lines of Art 354 TEU applicable to suspensions of voting rights for violations of democratic principles etc.
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Why would a MS that wants mixity vote in favour of a pure EU agreement in Council? Is there something that I'm missing? Some gap between MS governments and parliaments?
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Holger, I'm not so sure that this is an objection to Simon's point. Obviously so long as EU law applies the UK has to apply the CCP as well. But what is to stop the UK negotiating a non-CCP agreement that takes effect when EU law (and the CCP) cease to apply? Negotiating is not applying. Actually, I see the problem the other way around: should the UK be able to vote on EU matters knowing that it will be on the other negotiating side (or a competitor) soon? This is obvious post Art 50 notification, but I think it is a problem even today. No wonder the UK's European Commissioner resigned.
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Thanks, Joost, for this superb set of questions. I would divide the issues as follows: A. AB jurisdiction 1. The AB has decided that applying the law to the facts is a legal question within its jurisdiction (Simon wrote nicely about this in 4(1) TRADE L. & DEV. 125 (2012)). 2. Whether the facts have been established is a question that can only be determined by a panel (absent AB consideration of Art 11). This means: 2.1. when the AB states that the facts were not established, it must simply be recording such a determination by a panel. 2.2 The AB can only refer to such a determination in the context of determining whether it can apply the law to facts. If the facts are missing, then the AB cannot exercise its jurisdiction. (Moreover, an appeal limited to such a question would be beyond the AB's jurisdiction). This should lead to a determination that the AB cannot 'complete the analysis'. 3. It follows that the AB determination in Colombia - Textiles that the facts were not established, without also concluding that it could not complete the analysis, was infra petita (or equivalent). (I think it is similar under Art 36(2)(c) of the ICJ Statute, and also that the ICJ should decline jurisdiction under Art 38 in such cases, which would avoid Nuclear Weapons and, to some extent, Kosovo results; the CJEU, faced with the identical of missing facts, would do this). B. Relationship between claims and defences 1. You make the interesting assumption that a finding of a violation is only provisional until it is determined whether a defence applies. I would agree, provided that the defence is raised by the (following US - Gambling), or, as other tribunals would think, as a result of jura novit curia. 2. If the facts supporting a claim are not established, the AB cannot exercise its jurisdiction. As you say, the respondent wins by default. 3. Your question raises the possibility that the same should be true of a defence. I think yes: if the law (in toto: see 1. above) cannot be applied to the facts, the appeal should fail for want of jurisdiction. It follows that the AB acted beyond jurisdiction in Colombia - Textiles. 4. But now we have a problem. What if the respondent raises a defence and offers few or no facts in support? Does this mean there can never be a successful appeal? I think it probably does. But this would be for want of jurisdiction (on this point, at least). And, importantly, it can be presumed that the claimant won before the panel. So one outcome could be that this result is the adopted result: i.e. the complainant wins overall, which is as it should be in this situation on the merits. One might object that this view of the situation shoehorns merits issues into a jurisdictional framework, but maybe that is simply how it has to be.
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Fascinating. Given the fact that EU/EEA law takes a restrictions approach, can Swexit be far behind?
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No, quite the opposite. It is obviously discriminatory. But not justified.
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Well, on my reading of the cases at least, we can just wait and see, because that's what we've got.
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But why would the public dislike a rule - wherever administered - that keeps government on its toes? And you say this from the US where even CBA (and time spent filling in forms) is mandated! As for the empirical study, just look at 60 years of EU jurisprudence. It happens a lot. (I don't have the stats but I read the cases).
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Hi Simon, for me it is broader. I think the GATT, taken as a whole, prohibits measures that (a) discriminate (in terms of economic effects) when (b) this discriminatory effect is not justified (ie necessary to achieve a legitimate objective) and (c) when any trade restrictive (but not necessarily discriminatory) effects are not justified (ie necessary to achieve a (potentially different) legitimate objective). For me, in GATT (a) is set out in the discrimination obligations, (b) in the Chapeau to Art XX and (c) in the subparagraphs of Art XX. [see (2015) 109 AJIL 95 for details] For me, in the TBT agreement Art 2.1 comprises essentially the same test for (a) and (post-TBT 'trilogy') (b) as well (except there is no 'conditions prevailing' requirement). Art 2.2 is equivalent to (c) except for the requirement that the measures discriminate (ie no need for (a)), with an open ended list of legitimate objective and, apparently, with a justification test that appears to go beyond necessity to strict proportionality (ie cost benefit analysis), but how this is compatible with a right to set a level to which a legitimate objective can be attained remains to be explained. And there is a burden of proof difference, of course, although in practice I doubt this means much (happy to be corrected on this by my practitioner colleagues though). I don't think going beyond protectionism goes beyond the objectives of the system, either pre- or post-1995. From the point of view of an economic operator, it does not matter whether the discriminatory and/or trade restrictive effects of a measure are simply unnecessary (or disproportionate) or actually protectionist. From the point of view of the regulator, it does. But why should harmful but unnecessary (at least; disproportionate being a more difficult case) measures survive? I do not understand why this is so important. You joke that there would be few measures that would survive such a test; but really, I do not see why.
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EU law works with economic obligations (the debate here, at least for regulatory measures, is whether the obligations are about discrimination or market access) and policy exceptions (sometimes invented by necessity as with Art 2.1 TBT).
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You really want me to answer that? Well, OK, and with all due respect to those involved, I think the AB will stick with what it has done ('objective intent'). What is unlikely to happen, given past practice, is the AB openly changing its test. At most it will do the old 'just because we said it is black doesn't mean that it cannot also be white' trick that we are increasingly seeing in these situations (eg 'rational connection' under the chapeau).
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Hi Simon All points well expressed. I would say the following. 1. Yes, textually one can read the obligations as intent or effect. I think it should be effect. And I also agree that this depends on whether one thinks the obligations are about protectionism or simply unjustified (ie unnecessary) restrictions on trade. For what it's worth, the AB is pretty clearly settling for the latter, as has the CJEU. I don't really see any problem with this. And this is why I prefer to deal with policy in the exceptions (it also makes more sense from a burden of proof perspective). 2. I do not see any danger in reading the obligations together with exceptions, either in terms of result or in terms of ideology. As to result, for the GATT where are the limitation problems? There hasn't been one yet. And TBT is wide open. As to the ideology, there is no violation if an exception applies. One could even start with the exceptions, from a textual and also theoretical perspective (cf Oil Platforms) although it would only be smart to do this if one obviously applied (cd contra Oil Platforms). 3. 2.1 TBT to me functions pretty clearly as an effects based obligation with an exception in the clumsily expressed LRD test, which is essentially a policy-necessity test (as this must be, 'even-handedness' being an entirely empty concept: what is being balanced on these even hands? Absolutely nothing, I would say). Sure, the burden of proof is a bit messy, more so now thanks to Tuna II (Art 21.5), but that is a minor detail.
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I'm with Bryan and would add that 'so as to afford' in Art III:1 (the hook for III:2 second sentence to include purpose) is textually blank in terms of purpose vs effect. It could be entirely read as effect. And that is a preferable option in my view. To ask for evidence of a protectionist purpose is to chase the white whale. There will almost never be real evidence (ie 'subjective') and 'objective' evidence is methodologically unsound, relying essentially on truth by revelation. Much better in my view to ignore this question entirely and instead ask the regulating member to explain why its measure is for a legitimate purpose, this being done in the exceptions (including the exception, as it undoubtedly is, in art 2.1 tbt). If that fails, there may be protectionist purpose (as more or less said in China - Raw Materials) or not - it does not really matter. Nor on a policy basis: in my view trade agreements are (or easily can be) as much about good regulation as non-protectionist regulation. And if there should be a real subjective protectionist purpose, that can be dealt with via 'disguised restriction on international trade' in the Chapeau.
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On a related issue, it may be of interest to note that the reference to 'manifest errors in the appreciation of the facts, including the appreciation of relevant domestic law' is intended to persuade the CJEU that this Court will not interfere with the CJEU's exclusive power to interpret (and in some cases to apply) EU law. This was one of the problems with the EU-ECHR accession agreement in Opinion 2/13. Whether this technique of deeming domestic law to be a mere 'fact' will prove convincing is a most interesting question. That Opinion also raises questions about the role of other international tribunals that have to make determinations about EU law, including WTO panels/AB. Cf Chicken Cuts (Art 21.3) for a nice example.
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Correct link: https://www.kluwerlawonline.com/abstract.php?area=Journals&id=TRAD2016003
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If so, that caution about 'agreement' might have been misplaced. As you say, a subsequent agreement cannot modify WTO law outside of Art X. But it can interpret WTO law. In terms of legal theory, the difference between the two is not clear, as you imply (interpretation changes, by fixing, the possible facts to which a rule can apply, and attempts to separate the two by saying that one covers all cases, and the latter only for the future or for some parties are ex post facto and unconvincing rationalisations; nor is there any a prior limit on interpretation, in the sense that one can always say, if one really wants, that 'dog' includes 'cat'). But formally, in the VCLT, there is a difference, and an agreement to interpret is unproblematic, so it not clear why the negotiators were worried about this, if they really were.
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It seems to me that the AB is now recasting its rather awkward LRD language as a standard necessity test, incorporating a legitimate objective (depending on the reason for discrimination, not the reason for the measure, even though these may coincide), a minimum degree of effectiveness and a 'no less discriminatory measures' test (or necessity strictly speaking), which is what I think 'even-handedness' must be about - certainly it cannot be yet another discrimination test, which is what this language indicates. Whether the reference to 'disproportionate' means a further strict proportionality test (ie a cost benefit analysis that necessarily undermines the sacred status of the legitimate objective), I am not sure. It would be an important shift, and bad for the regulating member. I also share Simon's concern that 'exclusively' leaves no room for discrimination that is partly justified and partly not (eg green protectionism). That may well have to involve balancing between these different reasons, as he suggests. On the whole, though, I think the evolution of this jurisprudence is positive.
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