This is Simon Lester's Typepad Profile.
Join Typepad and start following Simon Lester's activity
Join Now!
Already a member? Sign In
Simon Lester
Florida
Recent Activity
To clarify, I didn't mean to suggest that China wouldn't care at all. When I asked "how much" it would care, I meant, would it care enough to liberalize its own investment regime. But why do you refer to the US-China BIT negotiations as "ongoing"? I was not aware of anything happening there.
1 reply
Just to clarify a bit, I didn't mean seek out the intent whatever it may be. Rather, I meant try to pin down whether there was a protectionist intent. I'm less concerned with where/when we do that kind of analysis and what we call it. I just want something like what was done in Chile - Alcohol, at some point in the process, as a way to identify whether there is a protectionist intent.
1 reply
Lorand, Thanks for this. Let me ask you a follow-up question. One thing that I see lacking in many reports is a thorough analysis of what precisely the purpose of the measure is, in an objective sense. As an example of what I have in mind, see paras. 63-66 of Chile - Alcohol. http://worldtradelaw.net/reports/wtoab/chile-alcohol(ab).pdf I think that some cases try to get at this issue, but then get so bogged down in the details of the measure that they lose sight of the big picture. What do you think of that Chile - Alcohol analysis, and how does it fit into your framework?
1 reply
Thanks for this comment, which provides a good elaboration of what I meant when I said, "I take the U.S. argument here to be that everyone is making too much of Section 15." In other words, many people seem to think that Section 15, on its own, means that China must now be granted market economy status, and surrogate values no longer used, whereas the U.S. disagrees and argues that other GATT/WTO provisions and practice are relevant to this issue. The larger issue here, in my view, is what actions can be taken to encourage China to make its economy more market-oriented. I don't get the sense that surrogate value calculations in anti-dumping cases were intended to do that, and clearly they have not had that effect. So what other actions could the U.S. try? There is plenty of potential for WTO complaints (e.g., on Chinese subsidies or forced technology transfer), and negotiations might work as well. It will be interesting to see if any WTO Members decide to pursue this. It would probably work better if they acted in concert.
1 reply
Thanks for the comment, Julia. I have a different view on this. To me, a least trade-restrictive alternative standard is vague and confusing, whereas the chapeau is pretty good (although I would change the wording a bit). But it's a complicated issue, and I'll make a note to come back and explain my view in more detail at some point!
1 reply
This blog is a safe space. No heckling. Feel free to express any view you would like. ;)
1 reply
It all depends on what exactly you do with the chapeau. I think we should be cautious about bringing the LRM analysis in there (maybe it could be a factor, but it should not be determinative). But yes, some people might overdo it and replicate the "necessary" test in the chapeau. This raises another important systemic point: What do we mean by non-discrimination? Let's save that one for a separate post!
1 reply
Thanks, Brett. What do you think of the US arguments on Article 2.2.1.1 on pp. 29-32?
1 reply
Ted, Thanks for your comment. Some quick responses below. It's true that there is not always a contractual relationship, but note that I say it would be "even better" to improve domestic legal protections. That's where I think the main focus of policy-making should be. But I do think companies who are worried about expropriation or bad treatment could insist on signing contracts that address those concerns. On the specific nature of state-state dispute settlement, I don't have strong feelings on this. I'd want to hear some arguments for both approaches. As to enforcement, this also sounds like an area where improvements to domestic legal systems would be useful. I would prefer to make that the focus, rather than creating a work-around that is only accessible to foreign investors.
1 reply
As a point of further clarification, my sense is that most people (including me) who criticize "ISDS" are criticizing both the procedure and the substance. I've come across some supporters who take criticism of "ISDS" to mean that only the procedures are at issue, but I think critics have both in mind, and use "ISDS" as shorthand for both.
1 reply
I'm not saying that ISDS critics are only interested in substance. I'm talking about a very narrow and specific disagreement between ISDS critics and supporters that I came across.
1 reply
With regard to maintaining the balance, couldn't the new appointee simply not start serving his/her term until the current Member finishes serving?
1 reply
I have watched with frustration as anti-dumping has expanded and intensified around the world. It wouldn't surprise me if some day we see a change of approach to Article 17.6(ii), as countries demand more flexibility in the application of their anti-dumping laws, and ask the Appellate Body to move closer to the U.S. view (or push for the U.S. view to be written into the AD Agreement more clearly). I'm not sure the debate about the meaning and role of 17.6(ii) is over.
1 reply
This for this post, Rob. I had been wondering about this, and your post gives me an opportunity to see what others think about something. Here's my question. I looked at NAFTA Chapter 11, and I didn't see any equivalent language on investment authorization and investment agreements: http://www.worldtradelaw.net/nafta/CHAP-11.PDF (By contrast, it does appear in the US Model BIT: https://www.state.gov/documents/organization/188371.pdf ) So what does the absence of these provisions mean for investment authorization and investment agreements under NAFTA Chapter 11? Are they not covered? Or are they covered on the basis of some more general provisions in that chapter? I would have thought that individuals or companies who were trying to get investment authorization or who signed an investment agreement were covered as foreign investors under NAFTA Chapter 11, but maybe I'm wrong. And what does the NAFTA Chapter 11 situation tell us about what should happen under the TPP? In the case of TPP, we are all now aware of the negotiating history and one party's intent in removing these provisions. Clearly, New Zealand wanted investment authorization and investment agreements excluded. But how will arbitrators see this, assuming other agreements without these provisions do cover these situations?
1 reply
What part of that are they likely to object to? And is there something they can be offered in exchange?
1 reply
Some responses: -- I am not claiming that removing ISDS/investor protections will increase investment flows. I'm just saying that having ISDS/investor protections creates controversy, without good evidence that it helps investment flows. -- As to why not give others the protections as well, the answer is because it is politically impossible, so the reality is that these protections will only go a small group of wealthy investors. That looks bad. The obvious solution to all of this is to improve protections offered under domestic law. This will be challenging, but I don't think impossible. I have trouble understanding why there is so little support for this approach. Is it just because it does not involve international law? We could create a treaty that encourages domestic law improvement, if that helps. -- On narrowing MST, I have not seen any efforts that result in narrowing it much, or reducing the vagueness. People have tried to promote broad interpretations of national treatment, but we must fight back! -- The EU now looks like it is splitting trade and investment protection, at least for some countries. I think this is a great idea, and should be applied everywhere. -- US investors have been fine with the risk when they invest in the many countries which don't have investment protection through an international agreement.
1 reply
Hi Jens, I think the biggest issues missing from the broader debate are the following. First, there is incomplete evidence of any economic benefits from ISDS/investor protections. What impact does the system have on investment flows? The evidence is mixed at best. And what are the kinds of harms that investors actually suffer? How often do they suffer these harms? We really have no idea. Second, why does international law grant these protections to (usually) wealthy foreign investors, but not to others? My sense is that wealthy foreign investors are treated better, on average, than their poorer local counterparts, and yet the wealthy foreigners get the protections. Third, what exactly do people mean by FET/MST or indirect expropriation? No one seems to be able to spell this out, and it's so broad as to cover just about anything. The EU "reforms" don't solve this problem, probably because it really can't be solved when the basic treaty terms are so flexible. As to alternatives, the existing ISDS system is already extremely un-level (small companies can't afford the system), so I'm not sure that, on balance, the alternatives would be worse. Simon
1 reply
Thanks, Adrian. Would you recommend that Mexico adopt the bi-national panel system in its other trade agreements, so that others have access to it as well?
1 reply
Rob, I hadn't thought of it that way, but perhaps you are right. There is not much detail in this early reporting, and what you describe didn't occur to me. Will be interesting to see if it goes in the direction you suggest! Simon
1 reply
Thanks, Mona. It will be interesting to see how the Trump administration takes into account the demands of the business groups you mentioned. Those groups wanted the TPP, rather than a NAFTA renegotiation. And yet here we are!
1 reply
Thanks, Henry! Do you have a link?
1 reply
Perhaps it does not relate to "approval for … investment"? The facts of all this are very unclear to me.
1 reply
Julia, Thanks, this is very helpful! It does seem strange that there has been no claim.
1 reply
Joel, I'm not sure exactly what the practice is, so I'd want to know all the details first. But it seems to me that, in some general sense at least, a requirement/incentive to transfer technology to domestic companies could be seen as "partial" under GATT X:3(a).
1 reply