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Simon Lester
Florida
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Thanks, Sandra. To clarify, what I'm saying is that all SPS regulations must be science-based, in accordance with several specific rules of the SPS Agreement, and subject to Article 5.7 (which, as Joel notes, reflects a version of the precautionary principle). This applies regardless of whether the precautionary principle is being invoked to justify a particular regulation. So, it is not that the precautionary principle must be science-based; rather, SPS regulations must be science-based. Thus, even if you think your regulations reflect the precautionary principle, these regulations still have to comply with the SPS Agreement.
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Thanks, Joel. Two points in response: -- The "normal" process of regulation is subject to lobbyist influence, and reflects all the usual drafting imperfections. That could mean, in many cases, that regulations are implemented in a flawed manner. -- If I were drafting these agreements, and I wanted to make sure my precautionary regulations were not in violation of trade agreements, I might re-think the existing SPS rules, and I'm not sure I'd go with a standard as broad and vague as "manifestly arbitrary."
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Marc, I don't know the answer for sure, but if I were to guess, I would say that the U.S. statute was drafted prior to the SCM Agreement, and in the SCM negotiations, the U.S. simply tried to ensure that the SCM Agreement language was vaguely consistent with the pre-existing statute. Any thoughts from others?
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Here's a question I have for anyone who wants to answer it: How important are government assurances/promises and resulting expectations in an FET claim? I know it's one factor to be looked at. But is it necessary, and how big a role does it play?
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Thanks, Arwel. I wonder if those exceptions apply to all obligations, or only to some?
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Mark, Thanks for the update. I don't know whether that particular facility will produce oil, at a profit or otherwise. But they did get approval. Not that it's the same agency doing the approving, but overall U.S. government policy seems inconsistent here.
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Your suggestion that asking for damages based on an unreasonable methodology makes the claim seem frivolous is interesting. My instinct is that people expect litigants to inflate their claims, in the hopes of getting something smaller but still very high. But I'm not completely sure how everyone sees this. In terms of the strength of the claim here, I can imagine a lot of strong arguments TransCanada will make, and I'm having a hard time seeing how the U.S. government will respond. But they will come up with something, and we'll see how convincing it is. I am curious, if you feel like commenting, how you would compare the strength of this claim to the recently successful one in Bilcon.
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Julian, I agree that the reliance damages vs fair market value expectations is a crucial point, although that seems more relevant for the amount of damages, not whether there is a violation. However, I'm not sure this point is what people have in mind when they talk about the case being frivolous. I don't have the sense they mean that 15 billion in damages is frivolous, but, say, 4 billion would be reasonable. I think they just can't understand how a claim could be made here. But I was curious what you meant by "for trade" at the beginning of your comment. For one thing, I think that viewing trade in general as about "winning or losing" is a huge mistake, albeit one that many people make. But more importantly, the NAFTA case isn't about trade for the most part. The case is mainly about protecting rights. International investment law takes administrative/constitutional law principles, and gives them to foreign investors. To a great extent, then, the case has nothing to do with trade. It's about rights, due process, etc. Obviously, whether we should provide such rights through international law is debatable (and I have criticized it!). But that's what we do, and that's what the case is about. The case does, of course, include, as one aspect, the idea that TransCanada was discriminated against because it was foreign. You could think of that as "trade" in a loose sense, but it's really more about investment.
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Here's the national interest determination: http://keystonepipeline-xl.state.gov/documents/organization/249450.pdf No doubt people will have a different take on its reasonableness. In terms of signalling climate leadership, I would raise the following points. First, denying the permit does not mean blocking imports of Canadian oilsands oil. Rather, it means transporting this oil through the U.S. via rail. Second, there is (or will soon be) oilsands production in the U.S. (by a Canadian company!): http://www.cato.org/blog/inconsistency-oil-sands It would have been interesting if the U.S. banned the import or domestic production/sale of all oil from oilsands. But that's not what happened. Instead, one method of transporting some of that oil from Canada was denied; everything else is permitted. Is that arbitrary? In terms of national treatment, see my earlier thoughts here: http://worldtradelaw.typepad.com/ielpblog/2015/08/how-strong-is-transcanadas-nafta-chapter-11-case.html I've said on occasion that if this were an American company applying for a pipeline permit, it almost certainly would have been approved. Everyone I've said this to has agreed this is true.
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Thanks, Tania. Presumably, though, there must be some international oversight here. A government could not say, for instance, that a car emissions regulation is a tobacco control measure, and therefore the carveout applies. So if not the tribunal, who decides the question of whether a measure is a tobacco control measure?
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There's the environmental goods agreement ... not sure what its status is right now. I don't know, seems like we just need to find sectors that can create enthusiasm!
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Tom, I didn't mean to overstate the positives. Yes, there are still lots of problems! (The reluctance of the big countries to cut their agriculture subsidies being the main one). But regardless of whether the Doha Round is ever completed, I would say the WTO can still achieve lots of really good liberalization. If the ITA-II can work, let's move on to the next sector, and the next ...
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There's some disagreement on this, I think. But a simple answer would be: "Don't do business with this guy because he's abhorrent" could violate fair and equitable treatment obligation; "Don't do business with this guy because he's American" could violate national treatment obligation.
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I have no doubt that ultimately the argument would fail, but still, just for fun, maybe you can divide arbitrator decisions into two components: legal interpretations, and calculations of the level of nullification or impairment. For legal interpretations, appeal would be allowed; for pure calculations, it would not. Note that Article 17.6 talks about appeal of "legal interpretations developed by the panel." Here, we have the original panel (referred to as the arbitrator) developing legal interpretations. I know the text makes it difficult, but as you suggest, perhaps there are policy reasons for having the AB weigh in on these issues.
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If you pushed the envelope of the DSU text, do you think you could come up with a decent argument that Article 22.6 decisions by the arbitrator (which is actually the panel, of course) are currently subject to appeal?
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Just to clarify, I didn't mean to suggest that I had specific knowledge of Mexico blocking the NAFTA panel. The US requested a panel, and no panel was ever established as far as I know, so one possibility is that Mexico blocked it.
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So Australia and NZ don't think ISDS is necessary, but gave in to demands from all other TPP countries that they include ISDS for investment as between Australia/NZ and those countries? Maybe.
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If your question is, why does international law currently discriminate in favor of foreign investors, giving them rights that no others have, I don't have an answer other than, "power and influence." ;) Excluding tobacco companies from ISDS rights probably follows similar principles.
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Governments certainly have the power to exclude tobacco companies from ISDS rights. But giving the rights at issue only to some groups and not others seems to go against the core function of rights.
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But I don't think attracting investment has anything to do with the tobacco ISDS issue. The issue is that there's a fear that ISDS could undermine domestic regulation, including tobacco regulation. If that's the concern, why not fix ISDS more generally? Fixing it only for tobacco control measures ignores the main part of the problem. But now I'm just repeating my original post!
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Strangely, it seems like there are a number of situations in trade and investment law where many people believe more stringent measure are allowed, while a less strict measure is not (e.g., banning all cigarettes is OK, but plain packaging requirements might not be). That might be a flaw in the drafting of the legal texts, but that seems to be the conventional wisdom.
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Hi Perry, Honestly, I have no idea what the purpose of ISDS is. I've heard people say that the purpose is to attract investment, or to promote development, but I don't think there is evidence that it does either of those things. What would you say the purpose of ISDS is? With regard to tobacco, the two ISDS cases that exist don't involve any (or at least much) actual investment, do they? A government could certainly decide it didn't want investment in tobacco. But if that was the policy choice, it should just ban investment (domestic or foreign) in tobacco. Excluding tobacco from ISDS seems almost completely irrelevant to that policy. (Also, ISDS is absent from many state-state economic relationships, and it's hard to imagine this has any impact on investment flows.) Simon
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Michael, I appreciate the kinds words. Flattery will get you everywhere. ;) The FT always rejects the opinion pieces I send them, but I'll keep trying!
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