The WTO

International constitutional law and democracyInger-Johanne Sand

22.10.07

The WTO – www.wto.org

• GATT – General Agreement on Tariffs and Trade • 1947 - Bretton Woods, • With IMF, the World Bank

• WTO – World Trade Organization, 1994, - Geneva, • - the Secratariat, • GATT 1994 • SPS – Agreement on Sanitary and Phyto-Sanitary meas.• TBT – Technical Barriers to Trade • DSU – Dispute Settlement Understanding • GATS – General Agreement on Trade in Services • TRIPS – Trade-Related Intellectual Property Rights

WTO – 1994

• - ”trade and economic endeavour”, • - raising standards of living, full employment,real income,

expanding the production of trade in goods and services, • - in accordance with sustainable development, • - protect and preserve the environment, • - consistent with respective needs and different levels of

economic development, • - art.II – common institutional framework for the conduct

of trade relations,• Ministerial Conference, • General Council, • The Secretariat

• Uruguay rounds – 1994

• Doha – 2001

• - agriculture,

• - more comprehensive agreements,

• - developped - developping countries,

GATT

• General Most-Favoured-Nation Treatment, art.I• - all nations to be treated as good as the most-

favoured, • National treatment, art.III, • - regulations must be neutral in relation to import • Anti-Dumping, art.VI, • Art.XI General Elimination of Quantitative

Restrictions, - no prohibitions or restrictions other than duties, taxes or other charges shall be instituted on imports, exports…..

• Art.XX General Exceptions• - necessary to protect public morals,• - necessary tp protect human, animal or plant life or health

• Technical Barriers to Trade

• - international standards and conformity assessment systems should follow UN and international standardization systems,

• Sanitary and Phytosanitary Measures• - only in so far as necessary to protect human etc health,• - use international standards, • - protection of human, animal and plant health must not

constitute a means of arbitrary and unjustifiable discrimination,

• - or be disguised restrictions on international trade, • - use risk assessments, - scientific evidence,

• GATS – international trade in services,• - most favoured-nation treatment, • - transparency,

• TRIPS • - promote and secure effective and adequate protection

of intellectual property rights, • - national treatment, • - most favoured-nation treatment,

• DSU • - consultation procedures• - ”good offices, conciliation and mediation” – if parties

agree, • - Dispute settlement : • - Panels, • - 9 panelists app. by the Secretariat from a list,• - written procedures, - Panel reports, • - Appellate Body (AB)• - 7 persons, - 3 serving at each case, • - judicial procedures, including hearings, • - AB reports, • Panel and AB recommendations • Compliance or economic sanctions

The Dispute Settlement Bodies :

• Weiler : - from diplomatic negotiations trying to find compromises, not overstepping vital national interests,

• - to a judicial dispute settlement system with independent panelists and judges, - where the words of the Treaties decide,

• - objective interpretation, • - primarily written procedures,

• DSU has been used as an argument in favour of seeing WTO as semi-constitutional,

The History of GATT / WTO

• The ideas of free trade, - Smith, Ricardo, • - liberalizing trade within one country, • 1945 – the interdependence of different national

economies, • - how to create an interdependent free trade area in order

to avoid protectionist ”race-to-the-bottom”,

• Bretton Woods 1947,

• - IMF – emergency liquid assistance, • - World Bank, - supervising exchange rates, • - GATT – free trade area,

Embedded Liberalism

• Combining : - creating economic growth by free trade, • - at the same time : stabilizing the nation-states and their

dynamics, • - allowing for national policies in order to create

welfare, education, social justice, full employment etc.,

• Dilemma : - sound regulatory means may also be disguised protectionism, - and it is almost impossible to distinguish clearly

• - non-discrimination as vital guideline for free trade, but recognizing that this is insufficient, to create free trade,

• - there is no ”natural or self-evident” baseline, • - sound regulations may also have discriminatory effects,

• Attempting solutions of finding the balance : • - creating global institutions, • - ”non-violation and impairment” clause – allowing for

compensation when a member state engages in undermining activities,

• - non-discrimination norm : - distinguishing acceptable from non-acceptable policies,

• - art.XX – exception clause, • - some measures are deemed to be illegitimate, such as

subsidies, dumping etc.,

• This was the complex and messy compromise of embedded liberalism,

• It was accepted as based on common norms and trust,

• Economic situation in post-war states :

• - post war building economies, • - steady economic growth,• - building welfare societies, • - shared values and trust, • - different regulatory solutions in different states were

accepted,

• The new trade policy elite : • - liberal economic specialists, • - embedded liberalism was recast as economics, • - and based on the ideology of free trade, • Kaldor-Hicks theoreme : • - removal of all trade restrictions will benefit

the economy and thus also the citizens and their welfare,

• - sectoral losses would be compensated for by the general gain,

• Social regulatory view (Howse) : • - neo-liberal ”level playing field” policy may cause too

much harm to certain sectors, • - blind to social distribution and political effects,• - no re-distributive effects, • - increasing gaps between rich and poor may be created

and may be harmful, • - liberal economic theories cannot explain whether the

”level playing field” economy creates the best social effects,

1970-ies

• - the gold standard collapses, • -the possibilities for structural macro-economic

adjustments fail, • - possibilities of stagflation, • - turn to micro-economic politics, • - mutual/fleeting exchange rates, • - interventionism questioned,

1970 – 80-ies :

• - German and Japanese economies growing, • - NICs, - newly industrialized countries,

• - the US : wants to protect its knowledgebased and financially strong economy :

• - international protection of intellectual property • rights, • - international protection of investments • abroad, • Result : Uruguay rounds, • WTO treaties and agreements 1994

• Another problem : • - increased urgency about environmental

protection, • - but also difficult to distinguish between

legitimate protection and hidden protectionism,

• Tuna / dolphin case : • - Tuna fisheries threatening Dolphins, • - US embargo on tunas fished in manners killing

Dolphins in large numbers, • - general, not discriminatory regulations, • - conservation of exhaustible resources, • - However : - the manner in which it was applied

seemed discriminatory, • - unadopted panel report,

• Shrimp/ turtle : • - nets used to catch shrimps were killing turtles

threatned by extinction, • - US embargo, • - non-discriminatory, • - exhaustible resources, • - but applied in discriminatory manners – due

to the fact that some small Carribean countries did not receive warning signals and time to change their methods of fishing – whereas other countries were,

• Article XI*: General Elimination of Quantitative Restrictions back to top

• 1.         No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

• 2.         The provisions of paragraph 1 of this Article shall not extend to the following:

• (a)        Export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party;

• Article XX: General Exceptions back to top•             Subject to the requirement that such measures are not

applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

• (a)        necessary to protect public morals; • (b)        necessary to protect human, animal or plant life or health; • (c)        relating to the importations or exportations of gold or silver; • (d)        necessary to secure compliance with laws or regulations

which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;

• (e)        relating to the products of prison labour; • (f)        imposed for the protection of national treasures of artistic,

historic or archaeological value; • (g)        relating to the conservation of exhaustible natural resources

if such measures are made effective in conjunction with restrictions on domestic production or consumption;

Uruguay rounds problems and results :

• - pressure for increased neo-liberal ”level-playing-field” rules, - Kaldor-Hicks,

• - including intellectual property rights, • - and including the dilemmas of environmental and health

protection, • - developed and developing countries, • - agriculture, • - hidden subsidies in developed countries, •

• Simultaneous challenges :

• - neo-liberal economics, • - new regulatory problems : - environmental and

climate regulation, - exhaustible resources, • - complex issues such as genetically modified

organisms/food, • - consequences of IPR harmonization,

• Kaldor-Hicks cannot explain the choices on these issues,

• From free trade as an economic ideology • To free trade as embedded in a broader liberal

economic ideology,

• The new embedded economic ideology: • - liberal trade, • - non-discrimination, • - accepting some forms of regulation, • - there is no single mapping of the right balance

between acceptable and non-acceptable regulations,

• Meat-hormones case , AB 97/1 : • - EU embargo on US and Canadian meat

produced with growth hormones, • -AB : - there is no scientific evidence of harm on

human health by using the meat as foodstuff, • - SPS agreement, art.5, • - risk assessments, • - broad definition of scientific proof,

• Article 5• Assessment of Risk and Determination of the Appropriate Level • of Sanitary or Phytosanitary Protection• 1. Members shall ensure that their sanitary or phytosanitary measures

are based on an assessment, as appropriate to the circumstances, of the risks to human, animal or plant life or health, taking into account risk assessment techniques developed by the relevant international organizations.

• 2. In the assessment of risks, Members shall take into account available scientific evidence; relevant processes and production methods; relevant inspection, sampling and testing methods; prevalence of specific diseases or pests; existence of pest- or disease-free areas; relevant ecological and environmental conditions; and quarantine or other treatment.

• 3. In assessing the risk to animal or plant life or health and determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection from such risk, Members shall take into account as relevant economic factors: the potential damage in terms of loss of production or sales in the event of the entry, establishment or spread of a pest or disease; the costs of control or eradication in the territory of the importing Member; and the relative cost-effectiveness of alternative approaches to limiting risks.

• Asbestos case :

• - asbestos used by Canada,

• - EU embargo,

• - EU wins the case as there is considered to be scientific proof of hazard to human health,

• EC- biotech case – Panel report oct.-06 : • - EC embargo of US and Canadian food based on

genetically modified organisms, • - october -06 Panel report : • - no scientific proof of hazard to human health,

• - (1) SPS treaty considered applicable, • - annex A – definitions : - what are GMOs ? • - pests, toxins, additives, disease-carrying organisms etc? • - (2) The EC decision-making process : • - - the role of the 1998-2001 informal moratorium on • GMO decision-making,

• Annex A DEFINITIONS[1]• 1. Sanitary or phytosanitary measure - Any measure applied:• (a) to protect animal or plant life or health within the territory of

the Member from risks arising from the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms;

• (b) to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs;

• (c) to protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants or products thereof, or from the entry, establishment or spread of pests; or

• (d) to prevent or limit other damage within the territory of the Member from the entry, establishment or spread of pests.

•[1] For the purpose of these definitions, "animal" includes fish and wild fauna; "plant" includes forests and wild flora; "pests" include weeds; and "contaminants" include pesticide and veterinary drug residues and extraneous matter.

• What has the WTO treaties become ? • - a constitutional liberal free trade system? • - constitutional as economic,

• - constitutional as legal,

• - there are inevitably regulations to be made, • - the balance has to be struck, - no economic

theory can explain that balance, • - non-discrimination,

• - art.XX – when there is scientific proof of hazard, • - production processes included,• - no ethical base-line ? • - significant unclear elements in art.XX,

Patent Protection for medicines / WTO :

• TRIPS – Trade-related intellectual property rights, • - national treatment, most-favoured-nation treatment, • Transnational medical corporations, • Patents on medicines, to pay for investment, • Problem : - economic differences rich/poor countries, • - HIV/Aids situation, • - South-Africa, Brazil etc. • Members may grant compulsory licences, - particularlly in

cases of national emergency – understood as public health crisis,

• Exceptions were made : - Brazilian companies were allowed to produce copy-medicine,

• TRIPS

• Doha-declaration

• - ”state of emergency”,

• - compulsory licensing,

• - broader agreement on medicines,