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Simon Lester
Florida
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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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To me, the key is not whether a particular international law provision is "binding," which people seem to agree just about all international law is. Rather, we should focus on whether it is "enforceable." If not, it probably won't have much impact.
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Thanks, Sandra. To clarify, what I'm saying is that all SPS regulations must be science-based, in accordance with several specific rules of the SPS Agreement, and subject to Article 5.7 (which, as Joel notes, reflects a version of the precautionary principle). This applies regardless of whether the precautionary principle is being invoked to justify a particular regulation. So, it is not that the precautionary principle must be science-based; rather, SPS regulations must be science-based. Thus, even if you think your regulations reflect the precautionary principle, these regulations still have to comply with the SPS Agreement.
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Thanks, Joel. Two points in response: -- The "normal" process of regulation is subject to lobbyist influence, and reflects all the usual drafting imperfections. That could mean, in many cases, that regulations are implemented in a flawed manner. -- If I were drafting these agreements, and I wanted to make sure my precautionary regulations were not in violation of trade agreements, I might re-think the existing SPS rules, and I'm not sure I'd go with a standard as broad and vague as "manifestly arbitrary."
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Marc, I don't know the answer for sure, but if I were to guess, I would say that the U.S. statute was drafted prior to the SCM Agreement, and in the SCM negotiations, the U.S. simply tried to ensure that the SCM Agreement language was vaguely consistent with the pre-existing statute. Any thoughts from others?
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Here's a question I have for anyone who wants to answer it: How important are government assurances/promises and resulting expectations in an FET claim? I know it's one factor to be looked at. But is it necessary, and how big a role does it play?
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Thanks, Arwel. I wonder if those exceptions apply to all obligations, or only to some?
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Mark, Thanks for the update. I don't know whether that particular facility will produce oil, at a profit or otherwise. But they did get approval. Not that it's the same agency doing the approving, but overall U.S. government policy seems inconsistent here.
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Your suggestion that asking for damages based on an unreasonable methodology makes the claim seem frivolous is interesting. My instinct is that people expect litigants to inflate their claims, in the hopes of getting something smaller but still very high. But I'm not completely sure how everyone sees this. In terms of the strength of the claim here, I can imagine a lot of strong arguments TransCanada will make, and I'm having a hard time seeing how the U.S. government will respond. But they will come up with something, and we'll see how convincing it is. I am curious, if you feel like commenting, how you would compare the strength of this claim to the recently successful one in Bilcon.
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Julian, I agree that the reliance damages vs fair market value expectations is a crucial point, although that seems more relevant for the amount of damages, not whether there is a violation. However, I'm not sure this point is what people have in mind when they talk about the case being frivolous. I don't have the sense they mean that 15 billion in damages is frivolous, but, say, 4 billion would be reasonable. I think they just can't understand how a claim could be made here. But I was curious what you meant by "for trade" at the beginning of your comment. For one thing, I think that viewing trade in general as about "winning or losing" is a huge mistake, albeit one that many people make. But more importantly, the NAFTA case isn't about trade for the most part. The case is mainly about protecting rights. International investment law takes administrative/constitutional law principles, and gives them to foreign investors. To a great extent, then, the case has nothing to do with trade. It's about rights, due process, etc. Obviously, whether we should provide such rights through international law is debatable (and I have criticized it!). But that's what we do, and that's what the case is about. The case does, of course, include, as one aspect, the idea that TransCanada was discriminated against because it was foreign. You could think of that as "trade" in a loose sense, but it's really more about investment.
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