WTO Adjudication Research Articles

TRADE COUNTERMEASURES FOR BREACHES OF INTERNATIONAL LAW OUTSIDE THE WTO

AbstractThis article challenges the widely held view that WTO Members are not permitted to impose trade restrictions on other WTO Members in the form of countermeasures for breaches of international law. It cautions that this generally held view has wider implications for international law and multilateralism because countermeasures are a significant means of enforcing and preserving the normative integrity of international obligations outside the WTO, including erga omnes and erga omnes partes obligations. Arguments supporting their ‘displacement’ must be based on clear evidence, which this article shows to be lacking. This article also attempts to allay the (understandable but perhaps exaggerated) concern that such countermeasures might undermine the predictability of the WTO system. Trade countermeasures for breaches of extra-WTO obligations are subject to stringent conditions under customary international law and to judicial scrutiny by means of WTO adjudication, both of which minimise the space for abuse and the risk of unpredictability.

Is It Possible to Use State-Owned Enterprises to Promote Industrial and Technological Development Under Article 17.4 of the CPTPP?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) establishes, in its Chapter 17, the most extensive ‘behind the border’ regulation of stateowned enterprises (SOEs) among the bilateral and multilateral treaties. Prima facie, its rationality can be explained by the original purpose of the United States (former drafter of the Trans-Pacific Partnership Agreement (TPP)) to discipline the state capitalism policies employed by some Asian signatories. Considering this context, this article examines the meaning of the key normative concepts contained in Article 17.4 of the treaty (i.e., ‘commercial activities’, ‘non-discrimination’ and especially ‘commercial considerations’) and discusses to what extent such concepts recognize or restrict the freedom of the Parties to create and manage SOEs committed to promote national industrial and technological development, using as benchmark for this assessment Article XVII of the GATT and the interpretations made by the WTO adjudicators. It concludes that the wording of Article 17.4 is compatible both with an interpretation that allows the existence of such types of entities and with an interpretation that does not. State-owned enterprises, non-discrimination, commercial considerations, differential treatment, industrial development, competition, trade, mission

WTO ADJUDICATION@ me.too: Are Global Public Goods like the World Trade Organization Owned by Governments or by Peoples and Citizens?

As the most frequent and most successful user of the dispute settlement system of the WTO, the US has welcomed judicial clarifications by WTO dispute settlement bodies whenever they confirmed legal claims of the US. Yet, the Trump administration increasingly rejects judicial findings against the US trade restrictions as violating the WTO prohibitions of “add(ing) to or diminish(ing) the rights and obligations provided in the covered agreements.” This contribution criticizes the illegal US ‘blocking’ of the WTO Appellate Body and the underlying, hegemonic nationalism and protectionist interest group politics. It suggests that reasonable and responsible citizens benefitting from the WTO trading, legal and dispute settlement systems must resist illegal power politics, for instance, by supporting a WTO Adjudication@me.too “enlightenment campaign” pressuring democratic institutions and governments to protect rule of law and judicial remedies in international trade as prescribed by parliaments when they approved the WTO Agreement.

A WTO Safe Harbour for the Dolphins: The Second Compliance Proceedings in the US–Tuna II (Mexico) case

AbstractSubsequent to the 2016 modifications concerning the strengthening of the administrative requirements on dolphin-safety outside the ETP fishery zone, the second WTO compliance proceedings have finally found the US Dolphin-Safe labelling scheme compatible with the multilateral trade system. We provide an overview of the long-running US–Mexico dispute and assess the final findings of the WTO adjudicators attempting to determine the effects of the multilateral litigation on the involved non-trade values and the real winners of the case. We find an improvement in dolphin protection, though more could be achieved through a qualification of the US measure under the principle of sustainable development also contemplated in the Preamble of the WTO Agreement, as well as an enhancement on consumer information, since declaration of dolphin-safety may now be better monitored and enforced through the new discipline for non-Eastern Tropical Pacific Ocean tuna products. However, we also observe that with no change to the appearance of the label or an informational campaign, the improved credibility of the label may hardly be passed-through to the average consumer. Furthermore, despite an increase in the stringency of the regulation for their competitors, Mexican producers do not gain greater access to the US and instead have been diversifying towards other markets. We then highlight that the Appellate Body missed an opportunity to reinforce the transparency of the system by supporting the first-ever decision to grant partially open panel meetings.

The WTO’s Dispute Settlement Body as a Voice Mechanism

Abstract This article focuses on the World Trade Organization’s (WTO) Dispute Settlement Body (DSB) – the diplomatic body, consisting of representatives of WTO members, that administers the dispute settlement system. Focusing on the WTO, the article provides one perspective on the relationship between international tribunals and the political bodies that oversee the governance of such tribunals. Specifically, I argue that the DSB operates as an important ‘voice’ mechanism, which enables members to provide regular feedback to WTO adjudicators, and helps sustain the internal legitimacy of WTO adjudication. However, the DSB can also be used in ways that undermine judicial independence. In short, the DSB is a key site where the tension plays out between WTO adjudicators’ independence from members, and control by, and accountability to, members. The episodes examined in detail to develop this argument are the crisis of a generation ago over amicus curiae briefs, and the ongoing crisis over Appellate Body appointments.

Dispute Settlement in the WTO (Mind Over Matter)

The WTO Dispute Settlement System aimed to curb unilateralism by establishing a multilateral process operating under the aegis of the WTO as the exclusive forum for WTO adjudication. Intuitively, one would expect that those negatively affected by the curtailing of their power to unilaterally do justice for themselves, would agree to multilateral resolution of disputes if the established regime could guarantee enforcement of obligations in comparable terms (to unilateral enforcement). In this perspective, respect and guarantee of reciprocal commitments is the key ingredient. Reciprocal commitments entered should not be unilaterally undone through the commission of illegalities. There are good reasons to doubt whether the WTO regime as it now stands guarantees reciprocity following the commitment of illegalities. It is probably more accurate to argue that the WTO regime serves ‘diffuse’ as opposed to ‘specific’ reciprocity. Still, WTO Members continue to routinely submit their disputes to the WTO adjudicating fora, lending support to the argument that the regime after all, was meant to curb punishment, and not to punish.

WTO Adjudication and the Security Exception: Something Old, Something New, Something Borrowed – Something Blue?

For twenty years, WTO Members managed to avoid invoking the security exception before WTO panels, leaving unresolved the tension between the self-judging element explicit in its text and the compulsory jurisdiction of WTO panels. Then, in 2017 and 2018, a dozen panels were established after the respondent declared that it deemed the challenged measures necessary to protect its essential security interests. The first panel report to examine the issue, in Russia – Traffic in Transit, was adopted in April 2019 without appeal. Its interpretation of GATT Article XXI significantly limits the scope of the self-judging element in the provision and devises a three-step legal test to be met by Members invoking the exception, with the declared objective of safeguarding ‘the object and purpose of the GATT 1994 and the WTO Agreement more generally’. This article examines and discusses this interpretation and its effects over the role of the WTO in international trade relations, viewing it as the latest episode in the long-standing tension between mechanisms providing for compulsory international adjudication and the view that, where states deem their essential interests to be involved, the submission of disputes to adjudication remains subject to their sovereign determination.

The Return of Voluntary Export Restraints? How WTO Law Regulates (And Doesn’t Regulate) Bilateral Trade-Restrictive Agreements

In recent trade negotiations, WTO Members have consented to limit rather than promote trade between the parties, bringing back the spectre of ‘voluntary export restraints’, a widespread practice of the 1980s that was outlawed in the Uruguay Round Agreements. This article discusses the ways in which WTO law regulates, and does not regulate, agreements between WTO Members to limit parties’ rights under WTO law (‘WTOminus’). While WTO-minus provisions in bilateral agreements are able to influence WTO law only under very specific circumstances, the design of WTO dispute settlement is such that measures based on WTO-minus arrangements may remain unopposed for long periods of time. If trade-restrictive measures are challenged, WTO-minus provisions are unlikely to serve as a defence before WTO adjudicators.

RULES AND VALUES IN INTERNATIONAL ADJUDICATION: THE CASE OF THE WTO APPELLATE BODY

AbstractCurrent political challenges facing the WTO Appellate Body raise fundamental questions about the relationship between rules and values in international adjudication. This article applies insights from legal philosophy to identify the role values should play in WTO adjudication. It argues that nothing about the specifics of WTO law would justify excluding values from adjudication; that the doctrinal, political and institutional context of WTO adjudication makes a positivist account of the role of values untenable; but an anti-positivist account requires complementing established economic accounts of WTO law's purpose with an account of fairness and justice in trade and trade regulation.

A WTO Safe Harbour for the Dolphins: The Second Compliance Proceedings in the US – Tuna II (Mexico) Case

Subsequent to the 2016 modifications, concerning the strengthening of the administrative requirements on dolphin-safety outside the ETP fishery zone, the US Dolphin-Safe labelling scheme has finally been considered compatible with the multilateral trade system by the second WTO compliance proceedings. In the present work, we provide an overview of the long running US-Mexico dispute, and assess the final findings of the WTO adjudicators attempting to determine the effects of the multilateral litigation on the involved non-trade values and the real winners of the case. We find an improvement in dolphin protection, though more could be achieved through a qualification of the US measure under the principle of sustainable development also contemplated in the Preamble of the WTO Agreement, as well as an enhancement on consumer information, since declaration of dolphin-safety may now be better monitored and enforced through the new discipline for non-ETP tuna products. However, we also observe that with no change to the appearance of the label or an informational campaign, the improved credibility of the label may hardly be passed-through to the average consumer. Furthermore, it is underlined that, despite an increase in the stringency of the regulation for their competitors, Mexican producers do not gain greater access to the US and instead have been diversifying towards other markets. We then highlight that the Appellate Body missed an opportunity to reinforce the transparency of the system by supporting the first-ever decision to grant partially open panel meetings.

Human Rights, Constitutional Justice and International Economic Adjudication: Legal Methodology Problems

International economic law (IEL) developed since ancient times based on private and public, national and transnational regulation of economic transactions and related economic policies. International human rights law (HRL) emerged only in the 20th century based on different (e.g. deontological rather than utilitarian) rationalities; it continues to be developed by different international fora, but depends on economic law for generating economic goods and services necessary for protecting human rights. Section I discusses the increasing ‘constitutionalization’ of HRL and IEL at national and regional levels of governance and its implications for the settlement of trade and investment disputes. Section 2 discusses ‘constitutional justice principles’ as legal basis for impartial third-party adjudication requiring ‘judicial administration of justice’ and treaty interpretations ‘in conformity with the principles of justice’ and human rights accepted by all UN member states. Section 3 elaborates in more detail problems of ‘systemic interpretation’ and ‘constitutional interpretation’ in IEL. Section 4 gives an overview of procedural human rights dimensions in IEL adjudication, like the human right of access to justice and the emerging common law of transnational adjudication. Section 5 discusses procedural and substantive human rights problems in WTO and investment adjudication. Section 6 criticizes trade and investment adjudication for neglecting HRL and constitutional, distributive, corrective and commutative justice principles.

Crisis at the Appellate Body: Towards More or Less Consent in WTO Adjudication?

The WTO is facing difficult times as the renewal of the members of its Appellate Body seems to be in a deadlock. The opposition of some Members of the Organization to the process means the number of adjudicators is slowly dwindling. In this paper, we put this problem in context, by linking it to the greater concerns about consent in international adjudication. Consent amounts to the effective transfer of adjudicative power to a given tribunal. It is therefore argued that the non-renewal of AB members amounts to a withdrawal of consent by the parties concerned, be it legal or not. Should the problem persist, the WTO's dispute settlement system could be profoundly impacted, transforming it into a mere conciliatory body.

Talking Across the Boundaries: Engagement between the WTO and ISDS Adjudicators

Research in this paper focuses on three basic but imperative questions. The first question concerns in what pattern ISDS panels have been using the WTO acquis. Part I thus offers a recount of the circumstances in the case law where a number of arbitral panels have engaged with the WTO norms and adjudicatory decisions. To date, the ISDS tribunals have used WTO acquis mainly under three circumstances where it respectively serves as interpretative aid, source of authority/inspiration and adjudicatory parameters. Nevertheless, the impact the invoked WTO acquis has generated upon the pending proceedings varies. The second part investigates the reasons why ISDS tribunals have used the WTO acquis in the current pattern. This part puts forward and investigates four major reasons that explain the current module of engagement, namely, the change of model in international business, the achievement of WTO dispute settlement system, the complex inter-regime relationship between trade and investment and the shared ideology of jurists between the two regimes. The last question to be address also constitutes part of the conclusions of the paper: what are the implication and consequence of the ongoing engaging activities between trade and investment adjudicators? This part put forward two major arguments. First of all, the often suspected adjudicatory chaos, associated with the plurality and proliferation of international courts and tribunals, is more perceived than real. Discrete judicial decisions should be carefully analysed rather than being blindly redeemed as threat to system coherence. Second, cross-jurisdictional engagement among judicial actors has injected positive developments in pursuit of adjudicatory legitimacy and credibility, arguably serving as an agent of harmonization of international legal system, which consists of a number of specialised, co-existing, discrete but yet non-self-contained sub-regimes.

Crisis at the Appellate Body: Towards More or Less Consent in WTO Adjudication?

The WTO is facing difficult times as the renewal of the members of its Appellate Body seems to be in a deadlock. The opposition of some Members of the Organization to the process means the number of adjudicators is slowly dwindling. In this paper, we put this problem in context, by linking it to the greater concerns about consent in international adjudication. Consent amounts to the effective transfer of adjudicative power to a given tribunal. It is therefore argued that the non-renewal of AB members amounts to a withdrawal of consent by the parties concerned, be it legal or not. Should the problem persist, the WTO's dispute settlement system could be profoundly impacted, transforming it into a mere conciliatory body.

Why Is There So Little Litigation under Free Trade Agreements? Retaliation and Adjudication in International Dispute Settlement

Over the past decade, the WTO dispute settlement system has continued to be used extensively, contrasting with the very few disputes taken to inter-state adjudication under free trade agreements (FTAs). This article examines disputes brought to the WTO in 2007-2016 by Members that are also parties to FTAs. Besides specific procedural difficulties in some FTAs, a broader, systemic factor may explain the little resort to FTA dispute settlement: the absence of the collective dynamic that the DSU creates in WTO dispute settlement. Contrary to what is sometimes assumed, retaliation is disciplined and limited, rather than enabled, by trade agreements. Even when formally prohibited, the option to retaliate not only remains alive but is widely reported as having been used in a number of cases. The article argues that, while the WTO remedy of retaliation may be useful as a last resort, the primary utility of adjudication for a complainant lies elsewhere. Adjudication operates as an alternative to retaliation: its added value is provided by the reputational damage, and collective pressure for compliance, that a condemnatory WTO ruling generates. Thus, Members resort to adjudication not in order to retaliate, but to avoid resort to mutually harmful retaliation. An assessment of the practice of WTO dispute settlement between DS1 and DS386 (US – COOL), the last dispute to have reached the retaliation stage, demonstrates that Members settle the vast majority of disputes far before lawful retaliation becomes a concrete threat, and prefer adjudication to retaliation even after the latter is authorized. If this assessment is correct, the little use of FTA adjudication may be explained in part by the fact that, in this absence of collective pressure, an aggrieved party may favor over FTA adjudication not only WTO adjudication but also unilateral retaliation.

The Return of Voluntary Export Restraints? How WTO Law Regulates (and Doesn't Regulate) Bilateral Trade-Restrictive Agreements

As part of the renegotiation of its Free Trade Agreement with the United States, South Korea has agreed to cut by 30% it steel exports to the US. In NAFTA negotiations, it is reported that Mexico has also agreed to a quota on auto exports, after which Mexican autos would be subject to more-than-MFN tariffs. Other WTO Members have accepted the application by the US of quotas on their steel an aluminium exports, avoiding additional tariffs on their products. These agreed limitations on exports bring back the spectre of ‘voluntary export restraints’, a widespread practice of the 1980s that was outlawed in the Uruguay Round Agreements. This article discusses the ways in which WTO law regulates, and does not regulate, agreements between WTO Members to limit parties’ rights under WTO law (‘WTO-minus’). While WTO-minus provisions in bilateral agreements are able to influence WTO law only under very specific circumstances, the design of WTO dispute settlement is such that measures based on WTO-minus arrangements may remain unopposed for long periods of time. At the same time, if trade-restrictive measures are challenged, WTO-minus provisions are unlikely to serve as a defense before WTO adjudicators, even where the Member that gave its consent to the WTO-inconsistent measure is the one challenging it.

Promoting Coherence Between PTAs and the WTO Through Systemic Integration

The proliferation of preferential trade agreements (PTAs) has resulted in a heterogeneous regime of trade rules applicable among WTO Members. The interplay between PTA and WTO rules has several implications, including risks of legal tensions and incoherence between both regimes, as well as between overlapping networks of PTAs. Consequently, adjudicative bodies both under regional PTAs and global WTO dispute settlement mechanisms are increasingly confronted with taking account of alien legal sources for the purpose of interpretation. Coherence between PTA and WTO rules thus depends on the degree to which adjudication at both levels—PTA and WTO—allows integration of alien legal sources. This article explores the role of systemic integration as a method of interpretation under public international law allowing adjudicating bodies to deal with possible tensions and promote coherence within international trade law. It traces the various approaches to systemic integration pertaining to international trade rules as employed under both WTO and PTA adjudication. While systemic integration offers a public international law tool for reducing fragmentation of substantial law, there is heterogeneity in adjudicative practice regarding the readiness to employ systemic integration for the purpose of interpretation. The article identifies possible avenues through which future dispute settlement can exploit the potential for coherence through systemic integration, as well as elements which could be taken into consideration when integrating multilateral and preferential rules. It also provides insight on how PTAs could facilitate the application of systemic integration by adjudicating bodies at both levels.

Promoting Coherence between PTAs and the WTO through Systemic Integration

The proliferation of preferential trade agreements (PTAs) has resulted in a heterogeneous re-gime of trade rules applicable among WTO Members. The interplay between PTA and WTO rules has several implications, including risks of legal tensions and incoherence between both regimes, as well as between overlapping networks of PTAs. Consequently, adjudicative bod-ies both under regional PTAs and global WTO dispute settlement mechanisms are increasingly confronted with taking account of alien legal sources for the purpose of interpretation. Co-herence between PTA and WTO rules thus depends on the degree to which adjudication at both levels – PTA and WTO – allows integration of alien legal sources. This paper explores the role of systemic integration as a method of interpretation under public international law allowing adjudicating bodies to deal with possible tensions and promote coherence within international trade law. It traces the various approaches to systemic integration pertaining to international trade rules as employed under both WTO and PTA adjudication. While systemic integration offers a public international law tool for reducing fragmentation of substantial law, there is heterogeneity in adjudicative practice regarding the readiness to employ systemic in-tegration for the purpose of interpretation. The article identifies possible avenues through which future dispute settlement could exploit the potential for coherence through systemic integration, as well as elements which could be taken into consideration when integrating multilateral and preferential rules. It also provides insight on how PTAs could facilitate the application of systemic integration by adjudicating bodies at both levels.

Promoting Coherence between PTAs and the WTO Through Systemic Integration

The proliferation of preferential trade agreements (PTAs) has resulted in a heterogeneous regime of trade rules applicable among WTO Members. The interplay between PTA and WTO rules has several implications, including risks of legal tensions and incoherence between both regimes, as well as between overlapping networks of PTAs. Consequently, adjudicative bodies both under regional PTAs and global WTO dispute settlement mechanisms are increasingly confronted with taking account of alien legal sources for the purpose of interpretation. Coherence between PTA and WTO rules thus depends on the degree to which adjudication at both levels – PTA and WTO – allows integration of alien legal sources. This paper explores the role of systemic integration as a method of interpretation under public international law allowing adjudicating bodies to deal with possible tensions and promote coherence within international trade law. It traces the various approaches to systemic integration pertaining to international trade rules as employed under both WTO and PTA adjudication. While systemic integration offers a public international law tool for reducing fragmentation of substantial law, there is heterogeneity in adjudicative practice regarding the readiness to employ systemic integration for the purpose of interpretation. The article identifies possible avenues through which future dispute settlement could exploit the potential for coherence through systemic integration, as well as elements which could be taken into consideration when integrating multilateral and preferential rules. It also provides insight on how PTAs could facilitate the application of systemic integration by adjudicating bodies at both levels.

International Adjudication as a Mode of EU External Governance? The WTO Seal Case

AbstractThe literature on EU external governance has greatly advanced our understanding of rule transfers beyond Europe's borders. Contributions highlight different modes of such EU external governance. This contribution proposes to add international adjudication as another form of EU external governance. Acknowledging the important role of judicial decision‐making in shaping the international order, this article uses the example of WTO adjudication to add to existing conceptualizations of EU external governance. In our view, WTO dispute settlement offers possibilities for the EU to transfer EU norms to the international level and beyond its own borders. As we illustrate through an exploratory case study of the recent WTO seal dispute, the EU's internal setup matters greatly for its success.