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
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
Thanks, Krzysztof. Just to clarify, my own view is that all anti-dumping measures are protectionist, because as defined in domestic laws and WTO obligations, dumping is not a problem that needs to be addressed. Thus, anti-dumping tariffs do nothing to promote free markets, and their only effect is a protectionist one. Subsidies are more complicated. In theory, countervailing duties could help reduce the use of subsidies, which would be good and could provide a non-protectionist justification. In practice, I suspect we get duties but no reduction in subsidies. I think it might be better to use SCM Agreement adverse effects complaints to address subsidies. In terms of a political safety valve, I'd like to see safeguards be the exclusive outlet for this.
1 reply
No, I've never heard of a clause like that. Would be interesting to see it in action!
1 reply
I plead ignorance on the nuances of the Calvo Doctrine. But this language doesn't seem much different than what came before. This is from the famous May 10 Agreement: "This preamble provision would recognize that foreign investors in the United States will not be accorded greater substantive rights with respect to investment protections than United States investors in the United States. We have long recognized this principle as a principal negotiating objective of our FTA negotiations. In particular, the Trade Act of 2002 describes this objective as “ensuring that foreign investors in the United States are not accorded greater substantive rights with respect to investment protections than United States investors in the United States.”" May 10 Agreement As a result, I'm not sure they mean anything by this, that is, it may be just a continuation of previous U.S. policy. But we shall see!
1 reply
Hi Rob, I understood "ensuring that NAFTA country investors in the United States are not accorded greater substantive rights than domestic investors" somewhat differently. My sense was that they just meant that the substantive protections in a NAFTA investment protection chapter can't be stronger than what domestic investors get under domestic law. For example, the regulatory expropriation provisions of NAFTA can't be stronger than those under the Takings Clause. Simon
1 reply
I assume they mean this situation, described in the US - Wheat Gluten WTO panel report: "8.157 The United States contends that, in its investigation, the USITC found that the serious injury sustained by the domestic wheat gluten industry was attributable to a surge in imports from the EU in 1996 and 1997, accompanied by sustained underselling from EU producers. In a second step, the USITC examined Canadian imports alone and determined that they were not a significant cause of serious injury. This separate causation analysis of NAFTA imports was conducted pursuant to US law, as required by Article 802 of the NAFTA. ... ... 8.160 We see the issue before us as whether, in this case, the United States, after including imports from all sources in its investigation of "increased imports" of wheat gluten into its territory and the consequent effects of such imports on its domestic wheat gluten industry, was justified in excluding imports from Canada from the application of the safeguard measure following a separate and subsequent inquiry concerning whether imports from Canada accounted for a "substantial share" of total imports and whether they "contributed importantly" to the serious injury caused by imports." http://www.worldtradelaw.net/reports/wtopanels/us-wheatgluten(panel).pdf Here's Article 802: http://www.worldtradelaw.net/nafta/CHAP-08.PDF
1 reply
Emily, I like the idea of having TPP disputes heard by WTO panels and the AB, but I don't think the change you suggest to Article 28.4 would be sufficient. You would need explicit language to this effect in both the TPP and the WTO Agreement.
1 reply
Anthea, I'm wondering if it would help with the debate over a Multilateral Investment Court to do empirical studies on how different kinds of judicial bodies have handled similar claims. For example, we could focus on expropriation claims, and look at they have been decided by various bodies: Domestic courts, the ECHR, Iran-US Claims Tribunal, and investment arbitrators. It's not going to be a perfect comparison, of course, because the claims will not be exactly the same in each. But still, it might help inform the debate about likely judicial outcomes under arbitration vs. a permanent court in the context of ISDS.
1 reply
I'm not sure what the current state of things is, in relation to Mexico's earlier complaint. If anyone else reading this knows, feel free to enlighten us!
1 reply
In theory, yes, but I'm not sure how it would work in practice. If the U.S. did this in your case, Mexico might do the same in Sugar, which the U.S. would not like.
1 reply
With regard to a Chapter 20 case against them, though, they don't have to argue it -- they can just block the panel in the same way.
1 reply
I wonder if Mexico just assumed it was pointless -- that you can't get a NAFTA Chapter 20 panel anymore. This would also have implications for the possible Chapter 20 case against Mexico that you suggest. The problems with Chapter 20 are something that definitely need to be dealt with in the NAFTA renegotiation.
1 reply
Rob, Is it possible that Mexico did not use NAFTA Chapter 20 for the tuna dispute because of its experience with the earlier Sugar dispute, where (Mexico claims) the U.S. blocked the panel from being composed?
1 reply