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Simon Lester
Florida
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Note also the following passage from the Nicaragua Embargo case: "4.9 The United States recognized that a measure not conflicting with obligations under the General Agreement could be found to cause nullification and impairment and that an invocation of Article XXI did not prevent recourse to the procedure of Article XXIII. ..." http://www.worldtradelaw.net/reports/gattpanels/nicembargo.pdf
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Nicolas, The Japan - Film panel said the following: "10.76 As suggested by the 1961 report, in order for expectations of a benefit to be legitimate, the challenged measures must not have been reasonably anticipated at the time the tariff concession was negotiated. If the measures were anticipated, a Member could not have had a legitimate expectation of improved market access to the extent of the impairment caused by these measures. 10.77 Thus, under Article XXIII:1(b), the United States may only claim impairment of benefits related to improved market access conditions flowing from relevant tariff concessions by Japan to the extent that the United States could not have reasonably anticipated that such benefits would be offset by the subsequent application of a measure by the Government of Japan. ... " http://worldtradelaw.net/reports/wtopanels/japan-film(panel).pdf Given that Section 232 has been in place since 1962, what do you think of a US defense that the Section 232 measures should have been anticipated at the time of the relevant tariff concessions?
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Appendix 3 refers to allegations of "breach of an obligation under this Chapter in proceedings before a court or administrative tribunal of Mexico." Is this the key narrowing language? How often do complainants allege violation of the FTA investment chapter, rather than of domestic law, before the domestic tribunal?
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Peter, Canada has been talking about an FTA with China, but it seems that Canada wants a "progressive" agreement with certain elements in it, and China does not want those elements in it. That struck me as challenging, even without the recent US push to isolate China. But I would be happy to be proven wrong!
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Perhaps I wasn't clear enough in my explanation, but one thing I had in mind was that rebalancing might still be a good idea even if a panel accepted a defense under XXI.
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Thanks, Tania! I'm glad I can always count on you and Andrew to join me in exploring the most obscure issues!
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If they meet the criteria, it is zero. This discussion is about the tariff if they don't meet the criteria.
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Steve, Article 4.1(a) of the Safeguards Agreement defines "serious injury" as: "a significant overall impairment in the position of a domestic industry." Section 232 does not apply this standard (although it does apply a similar one). In your view, how can the Section 232 measures be a safeguard measure if they do not consider serious injury as defined by the Safeguards Agreement?
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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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