Int env law and int trade law

As global trade has been liberalized, several issues:

A. Extra-territorial trade impact of domestic environmental law

B. Interaction MEAs with int trade law

C. Effect of general principles/customary int env law on int trade law D. int trade law to protect own environment, int trade law to protect other states envs B&B p714-727

International trade law

• Previously, trade was based on state sovereignty: a state was free to trade or not to trade, free to choose with whom to trade, terms and conditions

• Increasing (no choice) acceptance of free market system globally

• Breakdown of Soviet system• Decreasing resistance (no choice)

to free market by developing states• Freedom of states to trade as they

like is vastly restricted: traditional int law based on state sovereignty, nationalisation and compensation, diplomatic protection exists only to a small extent, more imp are global trade laws, trade treaties

Int trade law

A mixture of public int law treaties (WTO, UNCISG) , national trade laws (collision of laws rules, rules of comity), international monetary system, Lex mercatoria (1000’s of treaties and rules developed for commerce between merchants, between trade leagues, over 800 yrs)

Today, WTO has max impact on states as far as trade

WTO law• Based on 1947 Havana Charter, esp to

reduce customs tariffs worldwide, never in force

• 1948 GATT negotiated, signed by 23 states. By 1990’s over 100 MSs

• GATT developed into a de facto int org, established permanent organs, expanded scope through multilateral rounds of talks, fought protectionism, aimed for global reduction of duties (GATT Codexes)

• Too successful, countries feared such openness/faced too much competition/loss of jobs etc

• Other legal arrangements emerged• Erosion of GATT• New issues: trade in services, intellectual

property, investment issues• 1986-1994 Uruguay Round ended with

est of WTO treaty to administer GATT plus TRIPS, GATS

WTO law

• single undertaking: must sign all:

• Umbrella treaty est WTO• And

– GATT (goods) 1947/1994 + multilateral agreements (13)

• Agreement on technical barriers to trade (TBT)

• Agreement of sanitary and phytosanitary measures (SPS)

– GATS (services)– TRIPS (int prop)

• plurilateral agreements are optional

WTO law

WTO structure

General councilsecretariat

DSB- chooses panel, AB

TPRB

Goods council Services council Intellectual prop.council

Working parties and committees

Ministerial conference (2 yrs)

WTO dispute settlement DSU ---DSB/AB

Trade conflict –bilateral talks—fail

Apply to DSB for panel (3)

Panel report to DSB60 days

DSB acceptsDSB rejects by consensus

Party appeals to DSB

DSB sends tostanding AB (7)

DSB rejectsDSB accepts

Legally binding AB decision

If not impl., ‘victim’ mayrequest DSB

for countermeasures(cross retaliations)

WTO env relevant rules

• Preambular sections

– Aim for sust dev

– Protection of env

…while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development…

WTO env relevant rules

• Non discrimination principles:

– Most favored nation treatment (MFN) (art 1 GATT, art 17 GATS, art 3 TRIPS):

All trade concessions for a goodgiven by one state to another MUST be given to all WTO MSs

– National treatment (Art III GATT):

Equal treatment for equivalentgoods

WTO env rel rules

• eliminate quantitative restrictions (Art XI GATT)

• Aim to avoid subsidies (art XI), countervailing measures unless allowed under WTO

• Antidumping measures (Art VI) allowed only when goods are sold at “less than the normal value of the product” in country of manufacture AND lead to material damage in an est. industry in the importing state

WTO env rel rules

• General exceptions to non-discrimination, quantitative restrictions

– Art XX: no arbitrary, unjustifiable discrimination.. then nothing…shall be construed to prevent a MS adopting measures

(b) necessary to protect human,

animal or plant life or health

(g) relating to the conservation of exhaustible natural resources on domestic production or consumption

WTO env rel rules

• Other exceptions– Art XXIV…preferential trading

agreements with trade blocks– Art XXI….essential security

interest– Art XXV….waiver clause in

favour of developing states, need 2/3 majority acceptance

– Art XIX….escape clause, temporary, to justify threat of significant damage

WTO env rel rules/insts.

• Committee on trade and env (CTE)

• Most imp DSB/AB decisions

Int env law and int trade law

As global trade has been liberalized, several issues:

A. Extra-territorial int trade impact of domestic environmental law

B. Interaction MEAs with int trade law

C. Effect of general principles/customary int env law on int trade law D. Int trade law prevents states being protective of their environment

BACKGROUND: bases of statejurisdiction (legislative, executive,judicial) under international law?

• Territorial principle: crimes committed or alleged on state territory (incl ts, flag ships/airplanes) comes before national courts –but not absolute (Lotus case 1927 PCIJ)

• Nationality principle: determines rights and obligations of persons, genuine link required. • Nationality of corp = place of

registration, not shareholders (Barcelona Traction case, ICJ 1970)

• Nationality of ship = flag state• Nationality of airplane=

registration State

Bases of state jurisdiction

• Passive personality principle: state claims jurisdiction to try aliens for offences committed abroad against its citizens (Lotus 1928, US v Yunis 1988, treaties)

• Protective principle: state jur. over aliens for offences committed abroad affecting state security/vital interests (eg aliens on high seas associated with illegal immigration)

Bases of state jurisdiction

• Universality principle: each state has the right to try certain particularly offensive crimes eg piracy, slavery, war crimes, genocide – now by treaty

• Extra-territorial principle esp for economic/civil issues: state has jur if another’s (person, company) acts outside its borders cause “effects” within state – effects doctrine-

A. Extra territorial principleGeneral presumption against rule • Am Banana Co v United Fruit 1909

– US statutes apply only territoriallyBUT:

• Sherman Antitrust Act 1890 – no trade monopolies, incl with foreign nations

• US v Al Co of America 1945– any state may impose liabilities..for

conduct outside its borders that has consequences within….

• Timberlane Lumber Co v B of A 1976– But consider other states’ interests and

relationship with US/balancing approach

• Third Restatement of foreign relations– Effects must be substantial and jur.

reasonable– Effects must be intended, direct

• US Cuban Assets Control Regs 1963, Helms-Burton Act 1996 introduced extra-territorial jur

→CONSISTENT OBJECTIONS BY UK, EU, OAS, Australia, Japan…

Extra-territorial principle

• Diplomatic protests• “..in this new guise it apparently comprehends the

exercise of jur. over agreements made abroad, by foreigners with foreigners, provided only that the agreement was intended to have repurcussions upon American imports or exports “ (RY Jennings, BYIL 1957, 147)

• “..wide investigating procedures under US antitrust regs against persons outside..who are not US citizens..are an extraterritorial infringement of the proper jurisdiction and sovereignty of the UK..” (Rio Tinto Zinc v Westinghouse 1978 (73 ILR)

• BUT Hartford Fire Ins v CA (1993), US Supreme Court affirmed effects principle and civil charges

• Nippon Paper Case 1996 : effects principle and criminal charges against J co. for activity fully outside US

• Blocking statutes by other states

• BUT ALSO cooperation/ voluntary assistance to put own citizens in court/jail in return for reduced charges

A. Extra territorial jurisdictionCan domestic env regs be used forenvironmental protection outsideown state? ie, can domestic env regs have extra-territorial effects?

– NO (Pacific Fur Seals arb.)

– BUT now, where there is a clash with WTO law, some different answers:

Tuna Dolphin cases I, II (1991, 1994)– no extra territorial appl. of domestic env

laws for env prot.– Trade rights have priority

Shrimp Turtle case (2001)– Domestic env laws could in principle be

used to justify Art XX– Then MAY have extra-territorial impact– But legal requirement to seek alternative

ways of env protection, not first through trade sanctions

A. Extra territorial applc. Tuna-Dolphin Dispute I (Mex/USA 1991)• US domestic reg banned tuna imports

caught by methods which did not protect dolphins (protected species)

• Mexican tuna exports and fishermen sig affected, US domestic law effect on Mexico

• Mexico: – not an Art III product measure, a embargo

was a quantitative restriction under Art XI, banned.

– Even if Art III product, no discrim. treatment

• USA:– Art III product measure but defense of Art

XX – env. and cons. measure

• Panel:– production method, not a good, ie Art XI– Even if a good, could not use Art III to

distinguish between products– Art XX only to protect env WITHIN state– No extra-territorial appl. of domestic env

law

A. Extra territorial impact

Tuna Dolphin II (EC/USA 1994)• US domestic measure banned import of

tuna from third countries which did not ban import of tuna caught in a certain way

• ie extra territorial impact of US law

• Panel:– Production method, not a good– fell under Art XI quantitative restrictions,

may be justified only by Art XX exceptions, no reason why not to apply extra territorially

– BUT extra territorial jur would mean forcing other states to change their policies, sig impact on other states sovereignty, affects principle of sovereignty over natural resources etc, therefore only apply to own nationals and vessels

– Distinguished between extra-terr and extra-jur

– Exceptions could not be used to protect domestic producers who had to conform to higher env standards

A. Extra territorial impactShrimp turtle case (1998 Panel,

2001 AB. India, Malaysia, Pakistan, Thailand/USA)

• US Endangered Species Act requires domestic shrimpers to use protective technology to exclude turtles when shrimping. 1989 ban imports of shrimp caught otherwise. Special agreement with Carribean countries, assisting to achieve conservation over 3 yrs

• 4 months given to Asian states to comply with US law

• Extra territorial effect of US domestic law

• 1998 Panel: quantitative restriction, exceptions under Art XX possible

• AB 2001: BUT domestic measure with extra territorial effect must be justified

A. Extra-territorial impact -Shrimp turtle case• Probably US measure was to protect

species and not competition measure

BUT• US discriminated against Asian

countries by giving only four months to comply while Caribbean Basin nations had three years.

• obligation to comply with all requirements of Art XX – no arbitrary, unjustifiable discrimination, no disguised restrictions on international trade, also general int law principle of seeking to negotiate in good faith before bringing conflict, take into account econ/tech state of countries, also is measure necessary, proportionality

US revised guidelines on shrimp imports, evaluates how well foreign shrimpers are doing at protecting sea turtles, State Department started negotiations on agreement on sea-turtle protection in the Indian Ocean.

• Malaysia tried to sue later, lost.

Int env law and int trade law

As global trade has been liberalized, several issues:

A. Extra-territorial trade impact of domestic environmental law

B. Interaction MEAs with int trade law

C. Effect of general principles/customary int env law on int trade law D. int trade law to protect own environment, int trade law to protect other states envs B&B p714-727

B. MEAs and int trade law• Complex, unresolved• Again, some answers from WTO/DSB

– Tuna dolphin case II (1994)• Used only rules of treaty interpretation

(VCLT)• int env law treaties not relevant to

GATT

B. MEAs and int trade law

Post WTO, preamble ref to env prot, sust dev

– Reformulated Gasoline case 1996…the General Agreement is not to be

interpreted in clinical isolation from public international law….

– Shrimp Turtle case (2001)• UNCLOS 1982, Agenda 21,

CITES, Migratory species Conv considered

• All required conservation of natural resources

• BUT not all states are parties to MEAs

• WTO has sust dev/env prot in preamble

• Therefore use int env law as interpretive tool, guide for GATT rules

• Presumption of consistency with int env law

B. MEAs and WTOSome MEAs may clash directlywith WTO eg TRIPS – CBD

TRIPS/WTO rules for patents implement national European/US/Australian patent laws:

-individual rights based on “inventiveness” and novelty-20 yr protection-no benefit sharing, license fee-no prior informed consent of original plant export

CBD rules:-states have sovereign rights over genetic resources-prior informed consent for export-protect traditional indigenous knowledge

-benefit sharing, available to all

B. MEAs and int trade law

Example TRIPS-CBD conflict:Maca root Peru• Ancient food, aphrodisiac, medicinal• Since 1994 R&D by Peru• 1998 US scientist took dry sample

from museum in Lima• R&D USA, trials on mice, confirmed

properties, method of extraction• US patent granted, applcs for int

patents (EU, Australia)• June 2002 Peru learned of patent• Launched gov/ngo invest.• Was US patent granted on basis of

novelty? NO was it a novel and inventive applcn? NO

• Peru disputes patent validity at WIPO for int patents

• Est National Committee on Biopiracy

B. MEAs and int trade law

Example maca root Peru

• Under CBD/Cartagena Protocol:– Prior Informed Consent to export

root from Peru– Fair and equitable sharing of profits– Protect indigenous knowledge

• If approved internationally under WTO/TRIPS, Peru must pay to use, ie Peru would infringe TRIPS obligations

C. Effect of general principles/customary int env law

on int trade lawAgain, some ans. through WTO case law:Hormones in beef cases (1989-1999)

• Previous ECJ view: decisions not based on scientific evidence but on what its people want, ie socio/political view

• US/Canada said trade restriction, violates WTO/SPS by not basing restriction on scientific risk assessment

• EC defended on the basis of precautionary principle

• DSB/AB said WTO is already precautionary, art 5.7 allows temporary derogations while scientific evidence is being sought, SPS requires applc of precaution to be backed by scientific evidence

• Precautionary prin not a general obligation under WTO, also not erga omnes

• Trade rules based on scientific assessment overrides env/health concerns not based on scientific assessment

Int env law and int trade law

As global trade has been liberalized, several issues:

A. Extra-territorial trade impact of domestic environmental law

B. Interaction MEAs with int trade law

C. Effect of general principles/customary int env law on int trade law D. int trade law to protect own environment, int trade law to protect other states envs B&B p714-727