Regulatory Autonomy Research Articles

Регуляторная автономия Великобритании: проблемы и перспективы

Sovereignty does not imply regulatory autonomy. After Brexit, the UK should align its regulatory policy with European norms, if it is interested in close partnership with the EU. Compromises must be made by both sides in order to ensure stability of the partnership. The EU will have to acknowledge the UK’s right to diverge from European rules. Britain will have to partly accept the jurisdiction of the European Court of Justice. The structure of dispute settlement mechanism which will be created under the partnership agreement should be a product of a compromise. The present study shows that optimal structure of dispute settlement mechanism must include two different procedures: one for political issues and the other for commercial issues. The central role for the European Court of Justice must be envisaged as a part of politically oriented procedure. There must be no role for the European Court of Justice or any Union to set the pace of political communication. The latter reflects the interest of Great Britain to simplify economic relations, which means that, firstly, disputes are resolved by independent arbiters; secondly, the EU acknowledges the UK’s right to diverge from European regulations; and thirdly, the UK accepts the EU’s right to impose countervailing duties to compensate for adverse effects of divergence on competition. This article also examines the main problems of future British regulatory policy, especially in the field of state aid. Boris Johnson’s government has decided not to form a full-fledged regulatory regime in the area of state aid. Its stance is politically appropriate since Conservative party manifesto for the 2019 general election promised to support local industries without limitations. But that decision created a great deal of economic risk. Firstly, the absence of a domestic subsidy control regulator can cause chaos within regulation system because workable norms and rules can only be sustained by a tight enforcement mechanism. Secondly, the EU can cite lack of subsidy control as an obstacle for British business to have unrestricted access to the European market.

‘Necessary’ in Non-Precluded Measures Provisions in Bilateral Investment Treaties: The Indian Contribution

One of the controversial issues in international investment law disputes has been the interpretation of ‘necessary’ in the Non Precluded Measures (NPM) provision in bilateral investment treaties (BITs). Investor-State Dispute Settlement (ISDS) tribunals have employed different methodologies to interpret ‘necessary’ in the NPM provisions ranging from using the customary international law defence of necessity codified in Article 25 of the ILC Articles on State Responsibility to using the World Trade Organization (WTO)’s necessity analysis. However, a robust interpretative framework for ‘necessary’ in BIT’s NPM provisions remains elusive. In view of this, the new treaty practice of India to incorporate the least restrictive alternative measure (LRM) test in its newly signed BITs has regenerated the debate on interpretation of ‘necessary’ in NPM provisions. This paper argues that the incorporation of the LRM test in the BIT marks a rejection of the use of customary international law defence of necessity to interpret the treaty defence of necessity. The paper proposes a two-step analytical interpretative framework aimed at operationalizing the LRM test to interpret ‘necessary’. This framework is deferential to the host State’s regulatory autonomy and will also ensure that States fully comply with their treaty obligations towards foreign investors.

Brexit: What economic impacts does the literature anticipate?

The results of the June 2016 referendum in favour of the UK leaving the EU opened a period of huge economic and political uncertainty in the UK, and in the EU27. A large number of official and academic analyses have been published that address the economic impact of different modalities of Brexit. Section 1 analyses possible models for the future UK-EU relationship, from remaining in the single market and in the customs union, to a Free Trade Agreement (FTA) or world trade organization (WTO) rules. Section 1 also discusses the future of UK trade regulations (tariff and non-tariff barriers, trade agreements) and the various channels through which Brexit could have an impact on the UK economy (trade, foreign direct investment (FDI), migration, productivity, fiscal policy). The UK must make a trade-off between ensuring access to the EU market and increasing its regulatory autonomy. Section 2 surveys studies released on the impacts of Brexit, over short- and long-term horizons, under different scenarios, from a soft Brexit to a hard Brexit and a no deal scenario. These studies provide very different results depending on the methods they use and the assumptions they adopt on the future relationship between the UK and the EU27, mainly on how they view the effects of trade openness and regulations on productivity, in level as in growth rate. Studies using gravity models and computable general equilibrium models generally find negative but small effects on UK GDP. Some studies increase these effects by adding the negative impact of a less open UK economy on labour productivity growth, even if Brexiteers want to open the UK to non-EU economies. Others believe that a liberalisation shock could boost output growth, but the UK is already a very liberal economy. The impact of Brexit on the GDP of the EU27 countries is on average 4 to 5 times smaller than on UK GDP, although some countries (Ireland in particular) are more affected. In the shorter term, uncertainty about Brexit has a negative effect on investment and exports, which is partly offset by lower interest rates and exchange rates.JEL codes: F10

Federal Proportionality Review in EU Law: Whose Rights are they Anyway?

Abstract The principle of proportionality has always operated as a means of protecting individuals from excessive uses of public power. When situated alongside the principles of conferral and subsidiarity, proportionality also possesses a federal dimension. In this guise, the principle limits the intensity of EU intervention in order to protect national regulatory autonomy. This federal element of proportionality has featured in recent Court of Justice of the European Union (cjeu) cases. For example, Member States have challenged European Union (EU) legislation for imposing disproportionate social and economic costs in their particular States. This article considers whether individuals can similarly challenge EU legislation for disproportionately interfering with the regulatory autonomy of the Member States? Having considered this question from the perspective of US federalism, it is argued that individuals are actually articulating “Member States’ rights” in such cases. In so doing, attention is drawn to the question of whose rights and interests are really being articulated and balanced in these disputes.

Submission to the Review of Australia’s Bilateral Investment Treaties

Our submission is focussed on how Australia’s BITs can be modernised to ensure that the promotion and protection of investments is balanced against the need to safeguard policy space for legitimate public-welfare measures or ‘regulatory autonomy’. This discussion responds primarily to Question 4 of the questions for consideration outlined in the DFAT Discussion Paper, by providing our views on clauses that should be included in any renegotiated BITs or other investment agreements negotiated by Australia in the future.

Rule maker or rule taker? Brexit, finance and UK regulatory autonomy

Given the integration of the City of London into the single market for financial services in the European Union (EU), theories of transnational governance would expect the United Kingdom (UK) to favour close regulatory alignment with the EU27 post-Brexit to maximise market access and financial stability. Surprisingly, however, the UK has consistently demanded regulatory flexibility in financial services and has accepted reduced market access. We argue that the explanation is twofold. First, UK preferences reflect the need to balance the competing demands of elected officials, the financial industry and financial regulators. Second, drawing on a bureaucratic politics perspective, we suggest that UK preferences have been strongly shaped by the importance to UK regulators of retaining autonomy over high-status policy competences. This article contributes to the broader literature on the politics of financial regulation by highlighting the added value of incorporating a bureaucratic politics perspective when explaining financial regulatory preferences.

The Public Interest Safeguards in Arbitration in Ghana

Investor-state dispute settlement (ISDS) claims mostly challenge public interest regulatory measures. This has led to efforts to reform international investment agreements (IIAs), with some states terminating them. Orthodox capital protection-centred scholarship maintains support for IIAs, claiming they are necessary to attract investment for development. Policy space-centred critical scholarship rejects or is critical of IIAs saying their limitations on regulatory autonomy are unjustifiable because private capital alone cannot lead to development. An assessment of public interest safeguards in public-private arbitration in national constitutions and statutes is missing in this scholarship. Accordingly, I analyse the constitutional foundations of public-private arbitration in Ghana and show that in conformity with the constitutional role of public institutions, arbitration legislation safeguards the public interest. Therefore for Ghana and similarly placed African states to retain their right to regulate, arbitral tribunals must respect and uphold the protections accorded the public interest constitutionally and in arbitration legislation.

When two worlds collide: a comprehensive approach to the intellectual property and investment law interface

Investment law and intellectual property (IP) law have largely developed unaffected by each other and, so far, any discussion on their interaction has been largely theoretical. That is until recently, when a small number of high-profile investment disputes has drawn attention to the interaction between national IP regimes and the international investment system. Christophe Geiger brought together experts from the worlds of IP and trade and investment law to explore the many questions that the interplay between these two conceptually very different systems raise. The Research Handbook on Intellectual Property and Investment Law addresses this evolving relationship in two parts. First of all, it analyses the systemic interaction between investment law and IP law in its national and international dimensions. Within the first part, one section addresses the protection of IP in trade and investment treaties, and another discusses the impact of investment protection on policy and regulatory autonomy. The section part begins with Henning Grosse Ruse-Khan, the author of an authoritative monograph on IP protection in international law, who sets the scene by outlining the elements of IP protection in trade and investment agreements. He notes opposing trends in international IP treaties and international investment agreements. Whereas the former limit the scope of national regulatory powers, the latter seem to grant Member States greater policy space. These opposing trends are further analysed by Susy Frankel who contrasts the object and purpose of IP and investment protection in treaties that protect both. The fundamental question of whether IP is protected as an investment and therefore falls within the scope of protection of investment law in the first place is addressed by Ruth Okediji and Carlos Correa. Both discuss the conditions for protection and how the scope of protection should be defined in order to retain policy space for states and to avoid abusive investor claims. The other chapters discuss the fundamental protection standards of international investment agreements (national treatment, most favoured nation and fair and equitable treatment) as applied to IP. Three chapters in the second section return to the question of national autonomy. They address issues raised by recent investment cases that involved IP claims. While Cynthia Ho argues that investor–state arbitration might have negative aspects on TRIPS flexibilities, Simon Klopschinski and Daniel Gervais focus on the notion of public policy in an investment context and how investment tribunals should approach this notion.

What states want: Estimating ideal points from international investment treaty content

When negotiating investment treaties, states balance two goals: providing strong protections for investors (investor protection), which is thought to attract foreign direct investment, and maintaining the ability to regulate their economies (regulatory autonomy). In this article we argue that treaty content can tell us about the latent preferences that states have over the level of investor protection enshrined in BITs. We use an item response theory (IRT) model and a dataset of 1,144 treaties to estimate latent preferences on this scale for signatory countries. Our measure is of use to scholars interested in studying bilateral investment treaties, international law, and foreign direct investment, and our model is of use to anyone aiming to estimate latent preferences from jointly produced manifestations.

Governance choices and policy outcomes in the Latin American and caribbean electricity sector

The paper first provides, for Latin America and the Caribbean, country-specific synthetic quantitative measures of the degree of adoption of governance reforms in the electricity sector, focusing on four key dimensions (market structure, private sector participation (PSP), regulatory autonomy and operational organization). These measures are then correlated with standard policy performance outcomes measures. The findings suggest that, the reforms, considered jointly, were statistically significantly associated with higher technical and process quality but not with social or service improvements. Considered individually, increased regulatory autonomy enjoyed the highest positive correlation with desirable outcomes, but PSP has no significant correlation with any of the outcomes. In sum, as of 2018, governance reforms, considered jointly, had still not delivered on some promised payoffs, notably in addressing energy poverty, although the sensitivity analysis suggests that, for some indicators, the relationships are stronger for larger than for smaller countries.

Harnessing trade and investment agreements to promote public health.

There is an underlying tension between the goals of trade liberalisation and a nation's sovereign right to regulate on matters of public health. In terms of trade in goods, Article XX(b) of the General Agreement on Tariffs and Trade (GATT) allows for measures necessary to protect human health, as one of the general exceptions. The increasing proliferation of comprehensive Free Trade Agreements (FTA) also contains general exception clauses to protect human health. International Investment Agreements contain provisions carving out an exception for tobacco products, from the scope of Investor State Dispute Settlement (ISDS) claims against the host State. The aim of this article is to examine if the public health exceptions in FTAs differ from those under the GATT, and whether they can be used as an avenue for effective regulation. In the context of investment, the article examines if a 'carve-out' from ISDS is a feasible option. The article concludes by observing that it may be difficult for FTAs to provide for broader regulatory autonomy to States, given the resort to the World Trade Organization (WTO) jurisprudence in FTA dispute settlement. Effectively, measures to regulate alcohol for the protection of public health may have to be designed and structured in a WTO compatible manner. In terms of ISDS, a 'carve-out' from dispute settlement may provide increased regulatory space but would depend on whether consensus can be achieved in this regard. States should approach the regulation of alcohol in a comprehensive manner addressing potential challenges under the trade and investment regimes.

Constitutionality of the Colombia-France Bilateral Investment Treaty

In a judgment issued on June 6, 2019 (Judgment), the Colombian Constitutional Court (Court) examined the constitutionality of the Agreement for the Reciprocal Promotion and Protection of Investments between Colombia and France (Agreement). The Court upheld the constitutionality of the Agreement on the condition that the government adopt a joint interpretative statement with France to clarify some of its provisions and prevent interpretations contrary to the Colombian constitutional order. In doing so, the Court articulated a standard of review that takes into account the benefits and costs of international investment agreements (IIAs), the application of which entailed an insightful examination of the Agreement in light of the decisions of investment tribunals. The judgment raises significant issues of public international law, including the practical implications of conditioning ratification of the Agreement on adoption of a joint interpretative statement and the role of such statements in the interpretation of IIAs. Furthermore, the judgment makes important contributions to the ongoing process of reform of the investment treaty regime and the strategies adopted by states to counter the adverse impacts of IIAs on regulatory autonomy.

The plain packaging of tobacco products and its recognition by the WTO as a legitimate policy measure for the protection of public health

Introduction: the adoption by the WTO DSB of the Panel Reports that resolved the disputes against the Australian tobacco plain packaging scheme unveil important aspects of international health law intertwined with international trade law. Objectives: this paper aims at understanding the concept of plain packaging and the scope of the WTO decision for countries envisaging the adoption of similar measures in policymaking. The research questions are descriptive and encompass how the position expressed by the WTO DSB affects the WHO FCTC and what legal reasoning the referred decision used. Methodology: a historical method is employed to identify the origins of plain packaging and the main concerns and challenges surrounding it, whilst a discursive analysis of the Panel Reports allows an interpretation of its basic principles and possible implications for public health policies. Results and discussion: from a microeconomic policy analysis, the standardization of tobacco packets is a reasonable regulatory approach at a government’s disposal for addressing welfare losses due to externalities and internalities. Although there is no consensus on the empirical evidence supporting plain packaging, its assessment by the WTO Panel played a vital role in the decision rendered, notably with respect to Article 2.2 of the TBT Agreement and Article 20 of the TRIPS Agreement. Conclusion: Honduras and Dominican Republic have appealed and consequently a final ruling is still pending. Nonetheless, the decision is so far a recognition under WTO law of a State’s regulatory autonomy to implement the necessary measures on behalf of public health.

The Implications of the Recent Jurisprudence of the Court of Justice of the European Union for the Protection of the Fundamental Rights of Athletes and the Regulatory Autonomy of Sporting Federations

Fundamental rights of the EU are in principle applicable in relations of vertical nature, in which individuals are confronted with the state. However, in relations of horizontal nature, in which both parties are individuals and on equal terms, applicability of the Charter of Fundamental Rights of the EU has been long disputed among scholars. Only recently, in rulings Egenberger and Bauer, the Court of Justice of the European Union has directly addressed this issue. This paper elaborates on the consequences of the Court’s decision for the European sports model, presents reasons for justification of horizontal applicability of fundamental rights of the EU towards sports and proposes a method of applying the framework developed by the Court to conducting sports activity in the EU. Main argument of the Author is that the rules regulating sporting activity, if this activity falls within the scope of the law of the EU, may be subject to assessment of conformity with fundamental rights of the EU thanks to direct horizontal applicability of the Charter, which explicitly results from the recent Court’s rulings.

Competing Climate Change Responses: Reflections on EU Unilateral Regulation of International Transport Emissions in Light of Multilateral Developments

In 2016, the International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO) made important strides towards the regulation of emissions from international aviation and maritime transport. This was partially catalysed by the ‘ultimatum strategy’ of the European Union (EU), where the Union persistently threatened to take unilateral steps in the absence of multilateral action. As this article analyses, it appears that the Union is reluctant to relinquish its unilateral approach and align fully with both the ICAO Carbon Offsetting and Reduction Scheme and the IMO Global Data Collection Scheme. This raises questions under public international law as to the relationships between these competing measures. Amidst rising political pressures, this article considers the extent to which the unfolding multilateral policies of the ICAO and IMO may limit the regulatory competence of the EU. While the EU is an independent legal entity, it has been conferred far-reaching competences by its Member States who are themselves members of these other international organisations. Given the lack of clarity on clear hierarchical rules, an important role remains for the customary law of state jurisdiction in governing regulatory competence more generally. The final part of this article engages with recent discussions on the existence of an obligation to exercise jurisdictional self-restraint. It reflects on the tensions arising between respect for states’ regulatory autonomy and the prevention of ‘dangerous’ anthropogenic climate change.

Regulatory Autonomy after EU Membership - Alignment, Divergence and the Discipline of Law

The United Kingdom withdrew from the European Union on 31 January 2020 and immediately entered into a period of ‘transition’. With the EU acquis continuing to apply to the UK during this period, regulatory alignment with the EU is maintained until transition ends. However, this ‘shadow membership’ is not an intimation of the desire of the UK to maintain alignment following transition. Indeed, the UK has stipulated that continuing alignment is incompatible with its direction of travel out of the EU. Rather, in its desire to protect and enhance its ‘regulatory autonomy’, the UK is set to ditch the discipline on its autonomy experienced during membership – a ‘free movement’ discipline – in favour of a looser ‘free trade’ discipline. In response the EU has asserted the need to protect its own autonomy by demanding that the UK commit to ‘level playing field’ requirements aimed at preventing the EU’s balance of market liberalism and regulation and regulatory competition and neutrality from being eroded. The aim of this article is to evaluate whether the ambition to agree a comprehensive economic partnership is compatible with EU and UK attempts to protect their regulatory autonomy.

Regulatory Autonomy after EU Membership: Alignment, Divergence and the Discipline of Law

The United Kingdom withdrew from the European Union on 31 January 2020 and immediately entered into a period of “transition”. With the EU acquis continuing to apply to the UK during this period, regulatory alignment with the EU is maintained until transition ends. However, this “shadow membership” is not an intimation of the desire of the UK to maintain alignment following transition. Indeed, the UK has stipulated that continuing alignment is incompatible with its direction of travel out of the EU. Rather, in its desire to protect and enhance its “regulatory autonomy”, the UK is set to ditch the discipline on its autonomy experienced during membership—a “free movement” discipline—in favour of a looser “free trade” discipline. In response, the EU has asserted the need to protect its own autonomy by demanding that the UK commit to “level playing-field” requirements aimed at preventing the EU’s balance of market liberalism and regulation and regulatory competition and neutrality from being eroded. The aim of this article is to evaluate whether the ambition to agree a comprehensive economic partnership is compatible with EU and UK attempts to protect their regulatory autonomy.

The 2017 Fidenato case and the 2015 Directive: The curious case of GMOs in Europe

The 2017 Fidenato case is the first legal dispute on the cultivation of genetically modified organisms (GMOs) decided by the Court of Justice of the European Union after the adoption of Directive 2015/412. The Directive allows for the exclusion of genetically modified cultivation from a national territory on grounds unrelated to scientific uncertainty. As in the 2007 Austrian case, in Fidenato the Court of Justice rejected the precautionary request from Italy to ban the cultivation of GMOs. The ruling centres on the argument of a ban being scientifically unfounded. This article discusses how the lack of harmonization between the European jurisprudence on the cultivation of GMOs and recent normative amendments introduced through the 2015 Directive affects the regulatory autonomy of Member States in adopting measures that ensure the protection of human health and the environment (i.e. biosafety) from the potential harmful effects posed by GMOs.

Disciplining Data Localisation Measure: Approach through ASEAN Agreement on E-Commerce

Digital trade depends on the accessibility of data through the internet, at the same time, several states have also introduced measures to govern the use of and access to data through the Internet. This measure includes data localisation measure. To enhance the digital business environment, ASEAN Member States in 2019 signed the ASEAN Agreement on E-Commerce (AAoE) containing a commitment to e-commerce liberalisation in the region. This research will analyse data localisation measure-related provisions found in AAoE. It addresses the following central question, whether data localisation measure-related provisions in ASEAN Agreement on E-Commerce can achieve balance between e-commerce liberalisation and the protection of societal interest in the ASEAN region. This research concludes that protection of important societal interests is attained by the AAoE. However, the structure of the AAoE in general is not in balance between the liberalisation and protection of important interest as such, but more to leaning towards the preservation of the state’s regulatory autonomy on data flow.

Explaining regulatory autonomy in EU network sectors: Varieties of utility regulation?

AbstractThis article explains variation in the autonomy in the range of activities that European regulators perform. By focusing on 102 regulators of four network sectors (electricity, gas, telecom, and railways), we test for functional and institutional explanations. The findings indicate that the inclusion of institutional factors matters for our understanding of recent changes in the governance of European network sectors. Reforms toward the independent agency form of governance and the range of competencies granted to sector regulators seem to be shaped not only by international functional pressures but also by domestic institutional factors. Beyond the credibility hypothesis, we find that national governments grant less regulatory autonomy to utility regulators the more coordinated an economy is and the more veto players are present. On the contrary, common law countries are associated with higher levels of regulatory autonomy.