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Simon Lester
Florida
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Life is never easy, but there is always some fun for lawyers! ;)
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Another point. It's interesting to note where international law steps in, and where it does not. In theory, it could step in for lots of different people, on a wide range of rights-type issues. In practice, though, it steps in -- in an effective way -- for foreign investors on expropriation/due process-type, but rarely steps in for anyone else on any other issue.
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Let's say that, due to the absence of effective remedies for expropriation in Canada, the province of Alberta is having trouble finding companies to invest in its oil sector. A comprehensive expropriation law reform would be the ideal solution to this problem, but the citizens of Alberta are skeptical. However, they do like oil investment, so Alberta is able to get support for a law that provides a remedy for expropriation for companies investing in the oil sector. Is that situation similar to what international investment law does for foreign investors?
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Julia, Just to be clear, I'm not convinced there's a problem here that needs to be dealt with. But if someone did think there was a problem, then yes, I was thinking of an amendment to the DSU (which, as you note, is not very realistic politically!). In theory, you could use the "authoritative interpretation" approach that you mention. I'm not sure what provision of the DSU you would be interpreting, though, and what the specific interpretation would say.
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Just to clarify, the Livemint article incorrectly cites me for this quote: “How exactly was the US able to figure out what Seung Wha Chang’s line of thinking was since appellate body rulings are authored by the division as a whole and not individual rulings on the issues? Was it inference? Or inside information?” In fact, it was an anonymous commenter who said this: http://worldtradelaw.typepad.com/ielpblog/2016/05/appellate-body-drama.html#comments
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Thanks, Chris. I get the argument in theory. However, I'd like to see some evidence in practice of how prices change in this way. Also, I'd want to see any such prices increases compare to price decreases for other products.
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Here's what some economists who looked at this issue found: "Over the past two decades, the European Commission has negotiated a number of Free Trade Agreements (FTAs) which contain both traditional elements of bilateral tariff reductions, as well as additional liberalisation measures like non-tariff barriers. According to economic theory, FTAs lower trade barriers on imported goods, leading to consumer welfare gains from increase in product variety, better quality products and lower prices for existing products. We estimate the variety, quality and price effects of EU FTAs, drawing on recent developments in the quality literature and using detailed import price and expenditure data. On average, trade agreements the EU has entered into over the past two decades increased the quality of UK imports from its FTA partners by 26 per cent and lowered the quality-adjusted price of imports by 19 percent. We find that consumer prices fell by 0.5 per cent for UK consumers as a result of FTAs with trade partners that are not members of the European Community. Price reductions for UK consumers are greater than those for EU12 consumers, whose prices fell by 0.3 per cent from non-EC FTAs. Using the set of nonEC FTA estimates to predict the effects of future FTAs, we find a projected decline in consumer prices for UK consumers of 0.4 per cent from an FTA with the United States (TTIP) and 0.2 per cent an FTA with Japan (EPA). For EU12 consumers, the TTIP and EPA are predicted to reduce consumer prices by 0.3 per cent and 0.1 per cent." http://cep.lse.ac.uk/pubs/download/dp1417.pdf
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Even assuming that is true, wouldn't that particular price effect likely be outweighed by other factors, such as tariff reductions on imported goods, so that overall prices would go down?
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Sounds good, but that means I'll have to cancel my plans to get a Trump-style hair weave.
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My sense is that very few people anywhere in the world would trust international (as opposed to national or regional) courts with such a broad constitutional function. But I don't have any data on this, and would love to see some polling. As for how many measures would survive, I think it depends on exactly what standard is being applied. The standards can vary a bit. There are some strict ones that are hard to meet, in my view. I have another post coming that compares two possible standards.
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Thanks for the detailed response! You may have been wondering where I was going with this. Here it is. If you gave your explanation of trade agreement obligations to a politician or to the public, do you think they would support trade agreements? I feel like if the explanation is "protectionism," many people will accept them; if it is what you just articulated, I'm not sure they will. What's your view of this? (As for my joke, I really would like to see some empirical analysis of what percentage of measures would survive such a test).
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Lorand, let me ask you this: Under your approach, what kind of government behavior are you targeting? It is protectionism, or something broader? If broader, what exactly is it you are after?
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I think you are probably right (and I appreciate you going on record!). In the meantime, what I would find interesting is if someone uses the Article III:2, second sentence standard to try to convince the AB that it was wrong to focus Article III:4 on effects. I'm very curious to hear what the AB has to say about all this.
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So what do you think should/will happen in the next Chile - Alcohol-type case? Will the AB look at objective intent as part of Article III:2, second sentence? Or will/should it shift that analysis to Article XX?
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Ganging up on me, huh? Fine, I'll take you both on! ;) Let's go through a few of these points, starting with the text. Bryan, you say, "purpose should not be looked at in any non-discrimination obligations, except where the text explicitly directs such an interpretation." So what about TBT 2.1? You seem to think that GATT III:4 does not explicitly direct such an interpretation, so I assume you would say 2.1 does not do so either. So what do we do with 2.1? Not look at purpose at all? Apply the GATT XX exceptions to the TBT Agreement? As to the text itself, Bryan, you seem to accept that "so as to afford protect" indicates intent. Lorand disagrees. That leaves the breakdown like this: Bryan -- intent in III:2, second sentence, but not elsewhere in non-discrimination provisions Lorand -- intent in none of the non-discrimination provisions Me - intent in all of the non-discrimination provisions So what does the text tell us? To some extent, I agree with Lorand that all the non-discrimination provisions leave open whether to look at intent or effect. And maybe it is just my view of what the drafters had in mind, and what makes the most sense, that leads me to include intent. But can we all agree that the provisions are broad enough that they could allow a consideration of intent? Bryan, you seem to agree on III:2, second sentence, but are skeptical on III:4. Here's my argument for III:4. Article III itself is about national "treatment." And III:4 talks refers to "treatment" no less favourable. I keep putting "treatment" in quotes, so you can probably guess that I'm going to focus on "treatment"! I explained here http://worldtradelaw.typepad.com/ielpblog/2011/11/the-intent-of-a-measure-and-the-likeness-less-favorable-treatment-elements.html why I think treatment includes intent. As for the Article III-XX relationship, here's what I mean. The AB seems to be saying that GATT III:4 can't be about intent, because the exceptions exist, and that's where you look at intent. But if they also say that III:2, second sentence can be about intent, that undermines the logic of their argument about III:4. Now, Bryan, you are right that if the text dictates otherwise, you can justify a different result. But as I said above, I'm not convinced the textual differences are that great. Both provisions could be about intent. In addition, Bryan, you said, "in the Article III:2, second sentence, jurisprudence this aspect is an afterthought and not scrutinised with any meaningful degree of rigour, even in Chile-Alcohol." I strongly disagree here. Paras. 63-66 of the AB decision are very rigorous, and in my view are the key to the case. To me, this is the kind of analysis that should be done in all non-discrimination cases; this approach would make these decisions a lot more credible. And let me add that this analysis should be done regardless of where you look at intent -- obligations or exceptions. To me, design, structure and architecture is the key. Many of the recent non-discrimination cases get lost in lengthy analyses of what seems to be something else, and fail to look carefully at the measure. Lorand, you talk about doing the analysis in the exceptions. Obviously, you could do this, as a policy matter. But I'm not sure why that is preferable. You also say, "(including the exception, as it undoubtedly is, in art 2.1 tbt)." I'm not sure what you mean here. I can't see how Article 2.1 is an exception or includes an exception. Now, maybe you just mean something about burdens of proof here. Here's what I would say in response. If you find that there are violations of GATT III:4 whenever there is a disparate impact on or among foreign goods, a huge percentage of measures will violate that provision. To me, it seems dangerous to say that countries are in violation of the GATT if they adopt a measure that unintentionally has such an impact. A violation of international trade rules (or any rules) is a serious thing. And the GATT XX exceptions are limited. I think it's much safer to only declare violations after we have found both a disparate impact and a protectionist intent (or at least that the non-protectionist intent offered as a justification was a sham). Finally, Lorand, you also say this: "trade agreements are (or easily can be) as much about good regulation as non-protectionist regulation." I'll leave you with a bit of libertarian snark: If we use trade agreements to go after all bad regulation, what regulations would be left?
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Thanks, Tim. I guess what I had in mind is an agreement to take action to eliminate the programs that do exist (and, as you note, already violate WTO rules). Maybe they could start with an effort to identify all of the DCR measures that exist around the world.
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Rob, Thanks for this long post. There's a lot in there, and I may come back to other points, but let me just mention a couple things quickly. First, in a couple places, you seem to equate intellectual property rules in trade agreements with neoliberalism. I can't speak for all neoliberals, but as a card-carrying neoliberal myself, let me just note that in my view, the excessive intellectual property protections in modern trade agreements are the furthest thing from neoliberal. In fact, they are better described as statist interventionism/corporate welfare than neoliberalism. Second, turning to Bernie Sanders, it can be hard to really know what's going on inside a politician's head. But when I listen to him talk about trade, it sounds to me like he often tries to stoke fear of foreigners, especially Mexicans. Now, it's true that he doesn't refer to Mexicans as rapists, as Trump has done, so that makes him better than Trump, obviously. But he still talks about competition with Mexicans in a way that seems designed to strike fear in the heart of Americans (there are a couple examples in here: http://www.nytimes.com/2016/03/07/us/politics/transcript-democratic-presidential-debate.html). He may very well not be xenophobic at all, and may care deeply about the plight of poor Mexicans. But as a U.S. politician, it seems to me that he is happy to say things that will get him votes from xenophobic Americans. Finally, having read quickly through the Sanders web page on trade, it's really unclear to me what kind of trade policy he would pursue. There aren't many specifics. Overall, though, it has the feel of a trade policy that would have higher tariffs than we currently do.
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Thanks, Armand. Here is something I said recently about the protection of property rights in Canada: "Canada is famous for having weak protections against expropriation. The solution to this problem, however, is not to grant protections to foreign investors through investment and trade agreements. Rather, it is to give such protections to all investors through changes in Canadian law." http://object.cato.org/sites/cato.org/files/articles/lester-5-6-2015.pdf
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Any legal proceedings on these issues will be interrupted by frequent snack breaks.
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Thanks for the comment, Greg! Let me just throw in two other values that might be underlying the idea of trade: liberty and economic well-being.
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Very interesting! Text is here: http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154210.pdf See Chapter II, Section 3, Sub-section 1, Article 12, para. 18 and and Article 13, para. 18
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Brett, I completely agree, especially on the modelling of non-tariff measures. I appreciate people's efforts to try to come up with good numbers, but the results I've seen so far seem flawed.
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Hi Geert, The problem may be with "properly applied," because I'm not sure people agree on what this means, and how to incorporate it in a legal text.
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Thanks, Tim. I think we will have to agree to disagree, or at least wait for further evidence, on whether domestic content requirements are always bad. I'd be curious to see some economists evaluate the effectiveness of domestic content requirements in practice. But are they really that easy to spot? Clearly, if a national government includes them in a prominent domestic law, in a major industry, they will be spotted, and probably challenged at the WTO. But what about all the sub-national measures out there? And what about sectors that are more obscure? I'm not sure how easy it is to detect all of them. More generally, let me say that I agree that economic nationalism can get you domestic political support (pretty obvious from politics these days). The problem is, I don't see any way to put boundaries on it. Once it starts, how do you stop it from spiralling out of control? You may think you are using narrow and targeted discrimination for a valid purpose, but your trading partners may see it differently.
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Thanks for these insights and clarifications, Mona! The precise relationship of "fair and equitable treatment" and the "minimum standard of treatment" confuses me. In my post, I was treating FET as, in effect, a sub-category of MST, but maybe that's exactly right. Regardless, it appears that we could all use some guidance on how the new guidance guides the interpretation of the old guidance. ;)
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