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Simon Lester
Florida
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The XXI/XIX relationship is kind of fascinating. I think the "Nothing in this Agreement shall be construed" language probably controls here, but this is a tricky one. But regardless, let me just reiterate that this is not a safeguard measure, so XIX does not apply.
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We should probably leave this for the night, but I just want to clarify one thing. I don't think there is any tension between 5.60 and 5.64. They are mutually supporting and reinforcing.
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I'm saying that, under a design, structure, operation analysis, 232 and 201 measures are different on both substance and procedure. You could, in theory, do an exact replica of a safeguards analysis under something other than your domestic safeguards law, and maybe the resulting measure would be deemed a safeguard measure. But that's not what happened here.
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But 11.1(c) only applies if XXI applies, and if XXI applies, it takes precedence over XIX. Now, obviously there is a question as to whether XXI applies here, but I'm just saying that if it does apply, the rebalancing won't be justified.
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To clarify, the last sentence of para. 5.64 sets out in very general terms what panels should do: "ascertain whether the suspension, withdrawal, or modification of a GATT obligation or concession entailed by the measure at issue is designed to prevent or remedy serious injury." The previous sentence of 5.64 makes that more concrete: "in order to determine whether a measure constitutes a safeguard measure within the meaning of Article 1 of the Agreement of Safeguards, a panel must objectively assess the design, structure, and expected operation of the measure as a whole, identify all the aspects of the measure that may have a bearing on its legal characterization, and recognize which aspects are the most central to the measure." The first two sentences of 5.60 mirror this language. The last two sentences of 5.60 then offer the most specific guidance, with a reference to the three factors. Put all of that together in a big holistic package, and the folks at USTR are celebrating tonight.
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Here is 5.64: "5.64. We recall that, in order to determine whether a measure constitutes a safeguard measure within the meaning of Article 1 of the Agreement of Safeguards, a panel must objectively assess the design, structure, and expected operation of the measure as a whole, identify all the aspects of the measure that may have a bearing on its legal characterization, and recognize which aspects are the most central to the measure. In the present case, the Panel was required to ascertain whether the suspension, withdrawal, or modification of a GATT obligation or concession entailed by the measure at issue is designed to prevent or remedy serious injury." The language of the first sentence here closely mirrors the language in 5.60 that precedes the sentence with the identified factors. So 5.60 and 5.64 together set out a holistic exercise, under which the "design, structure, and expected operation" are considered, with the factors identified by the AB in para. 5.60 playing a prominent role.
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But under 11.1(c), if a measure has been "sought, taken or maintained by a Member pursuant to" GATT Article XXI, would the Safeguards Agreement apply at all? The language seems to say no.
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Also, when you compare Section 201 and Section 232, there is a bit of overlap, but the procedure and substance differ (for example, there is no mention of "serious injury" in Section 232). Section 232 measures may be a "safeguard" in some general sense of the term, but it is hard to see how they would qualify as safeguard measures in a legal sense for the purposes of U.S. or WTO law. The Section 232 tariffs are certainly designed to protect U.S. industries, but tariffs do that by their very nature, so that alone doesn't make them safeguard measures. As for the Appellate Body statements above, the Appellate Body says to take into account all relevant factors, then identifies three particular factors (all of which are helpful to the U.S. position), and concludes by saying "no one such factor is, in and of itself, dispositive of the question." I suspect the U.S. is pretty happy with this reasoning, even though it was perhaps a bit "activist." Section 232: https://www.law.cornell.edu/uscode/text/19/1862 Section 201: https://legcounsel.house.gov/Comps/93-618.pdf
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Joel, On the relationship between safeguard measures and national security, keep in mind SA Article 11.1(c), which states: "This Agreement does not apply to measures sought, taken or maintained by a Member pursuant to provisions of GATT 1994 other than Article XIX, and Multilateral Trade Agreements in Annex 1A other than this Agreement, or pursuant to protocols and agreements or arrangements concluded within the framework of GATT 1994."
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Thanks, Tim. I promise, I wasn't trolling you with this blog post, although I did suspect you might show up in the comments. ;)
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I've always seen the main purpose -- there may be others -- of the WTO as providing mutually agreed constraints on protectionism. "Promotion" and "stabilization" may flow from that, but they are broader concepts.
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Thanks for this clarification, Rob. It seems to me that when you combine domestic subsidies, on the one hand, with tariffs to block subsidized goods, on the other hand, what you get is economic nationalism: Governments in both the developed and developing world will focus more on their own markets. That doesn't seem like a recipe for success. He may see historical examples of this approach working (I disagree), but the idea that it makes sense in today's interconnected world is quite a stretch.
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Very nice point, Henry!
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To clarify, my proposed amendment was not intended to give the AB more time to issue its reports. Rather, I wanted to recognize the reality that the AB is taking longer than the DSU provides for, and to set out a more reasonable time-frame that the AB could comply with (and which would be shorter than the time periods it is taking now).
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The Blog Post Understanding (BPU) does not contain any deadlines in this regard, so it's fine. ;-)
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These are good points. I think that if this standard is going to work, there needs to be more precision in the analysis of both the contribution and trade-restrictiveness elements.
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I didn't spell this out, but I think my point also applies to the comparative analysis involving alternative measures. You still need to know how trade-restrictive a challenged measure is, in order to compare it to the trade-restrictiveness of the alternative measures.
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In case the panel/AB accepts the US GATT Article XXI defense, this would give complainants a chance at winning something.
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Hi Pieter Jan, Just to clarify, my suggested strategy does not require taking Trump's statements seriously or relying on them. Simon
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Check your linked article again. He hasn't backed off at all. He has proposed an alternative that is more like a periodic review. A periodic review is fine, whereas automatic expiration is not.
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Thanks for all this great detail on the discussions, Anthea and Zeineb! To me, what's missing from the conversation is an examination of what the problem is that ISDS is supposed to address. How are foreign investors treated by host governments? Is nationality-based discrimination common? What kinds of bad but non-discriminatory treatment do they face? And is everyone OK with the good treatment (i.e., subsidies) they receive? From what I can tell, not much time is spent on these basic facts, which makes it difficult to think about what, if any, solutions would be appropriate. Instead, the system just adopts solutions developed decades ago for a very different world, and tweaks them slightly now and then.
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Do you mean aside from Trudeau's statement that "Canada could never accept a sunset clause in NAFTA"? ;)
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Thanks to both of you for the guidance on this!
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Brett, I don't mean to ridicule him. But he's a public figure making claims that are clearly wrong. In my view, the evidence shows what MFN and bound rates are not the constraints on negotiating liberalization -- at the WTO or outside of it -- that he seems to think. I just didn't want his claims to go unchallenged. You make some good points, but my sense is that his remarks are unrelated to what you are talking about. Simon
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Todd, There's no question that domestic law principles can also be vague. The issue is whether it makes sense to carry these principles over into international law, but only for foreign investors, who have a private right of action when virtually no one else does.
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