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Lorand Bartels
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Ok, but if the remedy is so soft as not even to have any chilling effect then why are we talking about it? Nicolas thought it would keep everyone happy (or at least less unhappy). Re concessions, an excellent point and one with which I tend to agree, although I have to admit also to liking this way of bringing in equity (limited to conduct) into the WTO system.
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@Simon: whether you have to ‘rebalance’ for justified policy measures is precisely the question. I say no for the reasons given. The regulating party cannot in my view bear the risk of asbestos turning out to be dangerous post concession. (And anyway, what’s a concession got to do with an Art III violation. Raising the question again whether NVNI should be restricted to concessions) In short, in my view, your approach is chilling and the text does not require it. @Brett: I’ve been teaching the same, using pretty much the same language.
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Then are you not restricted to the situation I posit: where a member expressly or by implication undertakes not to do something and then does that anyway? That’s equity: quite different from unforeseen events beyond the conduct of that party. And it means that the exceptions survive intact, subject only to these conduct based equity situations.
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I think this is taking ‘legitimate expectations’ too far. Let’s not forget that this is a case law invention designed to put a sensible limit on non violation claims as described in Art XXIII:1(b). The text of that provision is far too broad to be sensible, although not as bad as the never used ‘situatuon’ complaints. And this means that we can play around with each factor: the ‘benefits’ accruing directly or indirectly under the agreement (very broad, potentially, but could conceivably be narrowed to specific concessions or commitments if one wanted and not generic rules); how a measure might be not illegal and still covered (expressly described in a limited way, eg subsidies, expressly described in a ‘nothing shall prevent’ way, eg art xx and Art xxi) or measures permitted by negative residual presumption of legality because they are not described at all; and - accepting the equity inspired ‘legitimate expectations’ condition, what that might mean. It’s a free for all! And I speak as a positivist. My preference would be to treat this all as a legal and policy matter. Legal in the sense that we should look at international law for some answers on how to deal with these situations, and policy in the sense that we should decide whether trade interests should always override other policies (on this latter I say no). To be specific on the law, then, let’s take Simon’s hypothesis. I would say that an exception is presumed to be usable even for future now unforeseen situations (like asbestos being dangerous, for example!). But maybe not if there is an express undertaking not to act in such a manner. That, I think, would be equitable. Or let’s take Trump’s tariffs. Assume they can be justified under Art xxi. If so, end of story, I’d say, unless for some reason the US promised not to impose such tariffs anyway. Call this estoppel as sword. But Nicolas’s and Simon’s hypotheses that Non violation should preserve a balance of concessions in ordinary exceptions situations is, I think, wrong in policy and certainly unnecessary in law.
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Thanks, Nicolas. Is there not however a contradiction in saying that on the one hand an exception is very wide (which by the way I don’t think is an analytically useful factor: it’s as wide as it is wide; as is every exception) and on the other hand WTO members would not therefore have reasonably anticipated that it would be used (which additionally strikes me as an impossible test to apply)? For me the classic case for NVNI is a subsidies legal under Art III:8 GATT (which - importantly - is not a ‘nothing shall prevent’ exception) undermining a negotiated concession. More than this is tricky.
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Hi Nicolas. Let me see if I get this. You agree that NVNI should not be available for measures that fall squarely within art xx or xxi. Good - that’s my view too, although for different reasons (textual rather than legitimate expectations). But then you say NVNI should be available for measures not fulfilling those criteria but that live in a grey zone. What grey zone is that though? Call me simple (or Kelsenian) but in theory isn’t a measure either legal or illegal? You might say that the good thing about a NVNI complaint is that a panel can avoid pronouncing on this issue. A good point. But indirectly, if legitimate expectations are a proxy for illegality, the result is precisely the same, is it not, except for a dash of diplomacy. Which may be an important selling point, but it’s a political rather than a legal point. Do I have this right? Lorand
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Jennifer’s reference to the 1947 US delegation statement and its citation in recent submissions is pertinent. It is in line with the AB in Asbestos re NVNI for Art XX measures. But I would like to offer a different take. Could it not be said that ‘nothing shall prevent’ a national security measure in Art XXI is read broadly as a complete exception to GATT including NVNI claims? Nicolas and I have discussed this before (on Twitter), and I admire his even more detailed arguments here. There, Nicolas rightly noted that Art 26.1(c) DSU specifically preserves the right of a party to maintain the measure. My response was that the same provision states that a panel/AB should recommend that the member make a ‘mutually satisfactory adjustment’ and that this could de facto inhibit the taking of security measures and to this degree thus ‘prevent’ such measure being adopted. I think this response is obviously not a slam dunk. But it is a way to avoid chilling effects of requiring payment for legitimate measures (a la Hull formula for lawful expropriations) - even more important, perhaps, for Art XX measures than Art XXI measures.
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Not sure you can have more than 180 days to amend your views, Simon!
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The AB does not like to change its mind. Not openly at least.
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Simon, as someone with a longstanding interest in matters of applicable law, I would agree with you. The AB got it wrong. For the purposes of applying international law, a conclusion derived from the application of domestic law to a fact is a fact. So also, for more obvious reasons, is an act of a state by means of its domestic law. That does not mean that the AB cannot look at a panel’s determination of domestic law, but it is not because a panel’s determination is a legal finding. It is that a panel’s determination might constitute a failure to determine the facts objectively, which requires a different and much higher standard.
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I like Andrew’s refinement of Steve’s argument: both the purpose of a measure (to remedy serious injury due to imports) and, as per the panel, its form (suspension of concessions or other obligations) defines it as a safeguard. This would be the same approach as used to define an SPS measure. The other procedural and substantive conditions for adopting a safeguard (thus defined) then go to its legality. Purpose could be determined by reference to domestic legislation (cf Simon) but also, if the form is a presidential proclamation, a presidential tweet. And dual purposes should be permitted: protecting a critically important industry might well also be essential for a Member’s national security. If this is right, then on the facts I think we have an illegal safeguard not justified on national security grounds permitting immediate rebalancing action.
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Ah, ok, well I think that question is for the Chapeau, in the event of an exception otherwise applying. The key question is what to do about measures with multiple purposes, one of which is protectionist. Does that nullify the legitimate purpose? It’s important for eg climate change measures that are also designed to help domestic industry. A necessity test might knock these out, but under xx(g) such dual purpose measures would probably survive that stage of the analysis.
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Simon, I basically agree with you, with some minor variation. I think structurally one the order of analysis for any purpose-based rule is this (and this applies, eg, to the subparas of Art XX, justification in the chapeau of Art XX, the policy exception in Art 2.1 TBT and Art 2.2 TBT): - is the purpose legitimate? (applies to all) - is the measure minimally effective? (the standard varies; does not apply to precautionary principle; causation test varies) - does the measure go too far? ie is there is a reasonably available less harmful measure that achieves the same objective to the same degree as the measure at issue (ie necessity; also 'even handedness' under the TBT agreement).'Reasonable availability' depends inter alia on cost, other international obligations, administrative complexity; also, causation test varies (sometimes treated under the odd terminology of 'design, revealing structure, architecture etc). Does not apply to all rules, eg not applicable to Art XX(g). - even if a measure is necessary, is it worth it, on a cost benefit analysis (strict proportionality)? In WTO nlaw, only used in Art 2.2 TBT for 'gravity' (and maybe once in Korea - Beef). I see no role for 'weighing and balancing' in this scheme, except for at the stage of strict proportionality, where it is not used. I wish the AB would drop this useless concept. It would, for example, avoid the need to say that every conceivable state interest is 'vital'. It adds nothing, and comes too early in any proper analysis. Because these tests are so good at dealing with intention, I see no need (other than burden of proof) for dealing with intention at the stage of the obligation, so I'm perfectly happy with obligations being purely effects-based.
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Yes, but both are essentially PPMs rather than product standards, no? Lorand
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It is, as far as I know, only ever harmonisation (sometimes with the domestic rules of the more powerful partner) in practice. Has there ever been a case of equivalence in reality? I don't know of an example, outside the EU (albeit there is some with SPS PPMs, which is conceptually more akin to ex ante conformity assessment than a substantive standard, in my view). Sometimes equivalence is pretended, but it turns out not to be equivalence at all (e.g. EU-Israel association agreement). I'd be grateful to be pointed to a counter-example.
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Aaron, you raise an interesting point. If there is (as almost certainly) discrimination this would need separate justification under the Chapeau. And at present the test for such justification is necessity. The question is whether this should be relaxed according to the test for the purpose of the measure. I'd say there is a good contextual argument to say it should. But this leaves open the question what the test should be where there is no analogue in the subparas, as in EC - Seal Products (indigenous rights, essentially, albeit a bit fudged).
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Simon, good points. It is in my view infelicitous to describe a right to adopt measures in the form of the descriptive assertion 'nothing prevents' for the reasons you mention. It would be better drafted as 'nothing shall prevent' to make it clear that the provision establishes a right. On the other hand, it is also in my view infelicitous to use the 'shall be contrued' language of Art XX GATT, becuase technically speaking that means that Art XX is an interpretive provision (as construe means interpret). Fortunately, in my view, nobody has read Art XX that way, but it does give succour to those who like to read exceptions into GATT obligations.
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Why would the Europeans (btw EU MS VAT levels differ) have to justify what their VAT BTAs are spent on at all? Didn't you just say these are different from the US proposal? Did I miss something?
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I'm actually a fan of nonviolation complaints. They target conduct that undermines the factual conditions (or assumptions) on which obligations are based, even if that conduct does not violate those obligations themselves. Such conduct may is rare, but it can exist. (One could make an analogy with Arts 60(3)(a) (express and implied repudiation) and 62 (fundamental change of circumstance) VCLT.) Having said this, I think you might be a little over-extending the concept here, at least according to past GATT and WTO jurisprudence. In my view, WTO 'benefits' are not 'increased' trade; they are not even volumes of trade at all. I think these 'benefits' are access, on agreed terms, to a non-discriminatory market (usually in the importing country), unless an exception applies (on which point I think the AB in Asbestos had it in reverse). Accompanying losses, eg for downstream (COOL) or upstream (cf Bananas) product markets/trade do not count. Nor, in my view, does damage to investment in another country. But what about threats? In Colombia - Ports of Entry the Panel interpreted 'other [prohibited quantitative] measures' in Art XI:1 GATT to include measures that affected investment (I think this was wrong, as above) but also measures that made it difficult to predict the nature of an import regime. And we know that the 'security and predictability' of the trading regime has legal value in the WTO system. So I think it is possible, albeit, for me, on slightly narrower grounds, that a threat to withdraw reasonably expected market access could constitute a non-violation nullification or impairment of WTO benefits. In fact, one could perhaps make another analogy here: the prohibition on the threat of use of force in Art 2(4) UN Charter, particularly if the point of the threat is to influence the conduct of the affected state (and I am not saying that this is the case with your hypothetical).
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Simon, thanks for spotting this. The sin is not new, as you say. The AB cites its Report in Section 211 (WT/DS176/AB/R), which says this: 105. Our rulings in these previous appeals are clear: the municipal law of WTO Members may serve not only as evidence of facts, but also as evidence of compliance or non-compliance with international obligations. Under the DSU, a panel may examine the municipal law of a WTO Member for the purpose of determining whether that Member has complied with its obligations under the WTO Agreement. Such an assessment is a legal characterization by a panel. And, therefore, a panel's assessment of municipal law as to its consistency with WTO obligations is subject to appellate review under Article 17.6 of the DSU. This is complete and utter nonsense. How is an 'assessment' of the conduct of a WTO Member - which is to say, what it did - a legal characterisation? It would be harder to find a clearer example of a fact for the purposes of the law/fact distinction. And I say that as someone who is highly critical of the idea that municipal law is/should be always treated as fact by international tribunals (viz, when the question is not what a municipal law means in the abstract, but rather how it applies to a downstream fact (eg, was there 'property' or 'nationality'), then the legal operation undertaken by a tribunal is, properly seen, the application of that municipal law, as law, to that downstream fact, the conclusion of which then constitutes a fact for the purposes of the international rule. In short, the AB has it jurisprudentially incoherent and jurisdictionally incorrect, and this not for the first time. Of course, that does not mean that the AB can never review factual determinations. It can - but only under Art 11 DSU by considering whether a panel in making factual findings exceeded its jurisdiction. To your question: well, the best we can hope for is a sidestepping of this line of jurisprudence; and for once, given just how wrong this is, that might be the best course of action.
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Christian, I agree. And this is supported by the fact that the relevant caselaw prohibits negotiations not because they have something unspecified to do with an area of EU competence, but specficially because they undermine the exercise of that competence (Case C-266/03 Commission v Luxembourg [2005] ECR I-4805; Case C-433/03 Commission v Germany [2005] ECR I-6985). This is now specified in Art 4(3)(3) TEU, which states that '[t]he Member States shall ... refrain from any measure which could jeopardise the attainment of the Union's objectives.' So at the very least one needs to identify how UK trade negotiations pre-Brexit leading to the conclusion of an agreement post-Brexit might jeopardise the CCP. I cannot really see this, myself. Certainly, there is a conflict of interest problem in that Art 50 does not automatically exclude the UK, during the two year divorce period, from participating in EU decisions on matters that will affect it as a post-EU member (I think this earns Art 50 a fail grade on its own). But this goes beyond the CCP, and will have to be sorted out in a generic way. And a conflict of interest is in any case not the same as undermining an exercise of EU competence.
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The ECtHR upheld a French ban on wearing the burqa and niqab in public places in SAS v France in 2014 (summary here: http://hudoc.echr.coe.int/app/conversion/pdf/?library=ECHR&id=003-4809142-5861661&filename=003-4809142-5861661.pdf). The ban was justified because France was able to decide that in public people should be able to see each others' faces. Of course this rationale does not easily transpose to the burqini ban. But the level of scrutiny in the WTO on public morals is also relatively light. So I'm not sure the outcome would be so certain. In addition, the ban is justified by its mayors by referencing France being at war with Islamic terrorists. Does this mean it could be justified under the subjective test (which is not the same as 'self-judging') test in Article XXI?
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Thanks, Fernando. The problem with this approach is that, ordinarily, members of organisations are not responsible for the acts of those organisations. The ILC Commentary to Art 62 of the Articles on Responsibility of International Organisations states: 'It is clear that ... membership does not as such entail for member States international responsibility when the organization commits an internationally wrongful act’. One needs more for responsibility, like circumvention as set out in Art 61. That might be done, but there are all sorts of other aspects to consider, including perhaps good faith. Lorand
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David, you put the argument well, but in one sense, I think, the example you cite can be played from the other side of the court. If the EU can delegate its exclusive competence to negotiate and conclude treaties, does that not undermine the idea that there is something 'core' and untouchable about exclusive competences? To Art 50, it seems to me that it has two important consequences. First, as I said, the reference to 'taking account of the framework for [the UK's] future relationship with the union' implies that the trade relationship between the UK and EU need not be unknowable until divorce proceedings are concluded. True, this reference does not refer to UK-third country trade negotiations. But here the other consequence of Art 50 comes into play, in my view, which is that it changes the duty of loyal (or sincere or genuine) cooperation between the MS and the EU, which is at the basis of the (negative) jurisprudence on MS negotiations in areas of EU competence. Sure, the UK should not be able to undermine the EU's CCP while it is still a member. But that would only happen if it concluded an FTA, not merely because it negotiates one to take effect when it is no longer an EU member. One sticking point remains: in such an event, it seems odd that the UK would still have a seat at the EU table, the EU being a competitor to some degree. Perhaps the duty of loyal cooperation might lead to an 'empty chair' in this scenario. Certainly some creativity will be required to deal with this problem, which is much more general anyway. In sum, this comes down to two points: First, Art 50 expressly assumes that the 'relationship' between the UK and the EU is knowable, and this presumably means a trade relationship. Second, Art 50 can affect the interpretation of other provisions of the EU treaties, by implication, but also because an Art 50 notification affects the duty of loyal cooperation on which existing interpretations are based. Practically, I think this means that the EU can sulk if it wants, and refuse to negotiate a trade agreement with the UK, but the UK is free to negotiate (but not conclude) third country FTAs within the two year period.
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Malstrom's approach may make sense as a matter of political choice. But your interpretation makes that a legal necessity. What if the EU decided that actually it would quite like business as much as usual as possible? Should such a possibility be excluded? Should the TEU really force the EU to cut off its nose to spite its face? In this sense, far from undermining the core of the CCP, pre-exit negotiations in fact give the EU more, and in terms of disruption much better, options. One could see this as supporting the CCP rather than undermining it. You also haven't explained what the reference to the 'framework' might mean, if not that such a framework can exist, in some form, pre-exit.
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