Preferential trade agreements and power asymmetries: the case of technological protection measures in Australia

Since the 1980s states have sought to harmonise economic standards to aid the flow of goods, services and finance across borders. The founding agreements of the World Trade Organisation (WTO), for example, harmonised standards on services, intellectual property and investment. However, mutlilateral trade negotiations in the WTO have since stalled. In response, the United States (US) has engaged in forum shopping, using preferential trade agreements at the bilateral, regional and multinational level to harmonise international standards. This article argues that through forum shopping the US has been able to export standards that support the commercial interests of US-based industries more than they encourage economic exchange across borders. Furthermore, because power asymmetries are starker in preferential trade negotiations smaller and middle power states should not enter trade agreements, which include regulatory harmonisation. This is illustrated with the case of the US-Australia free trade agreement, looking specifically at a copyright standard known as technological protection measures (TPMs). It was clear before, during and after the agreement was signed that Australia’s existing standard on TPMs was more popular than the US-style standard. Nevertheless, a US-style standard is in effect domestically because of the trade agreement.     

Is the WTO Dispute Settlement System a Disaster for the U.S.? An Evaluation of U.S. – China WTO Disputes

Since China’s accession to the World Trade Organization (WTO), the WTO dispute settlement system (DSS) has resolved an impressive number of US–China trade disputes. Over the past few years, however, as tensions between the two have escalated over several trade issues, the WTO has been pushed toward irrelevance since the Trump administration. Alleging that the WTO is “a disaster” and its adjudication is very unfair to the US, former President Trump made no effort to hide his criticism of the WTO and its DSS in particular. Is Trump right about the WTO DSS? Based on an examination of US–China WTO disputes and the WTO adjudicators’ highly contentious interpretations of the concept of “public body” under the Agreement on Subsidies and Countervailing Measures (the SCM Agreement) as an example, this article shows that the WTO DSS is not particularly unfair to the US. While the WTO adjudicators sometimes did not fully follow the positions advocated by the US, they have adhered to generally accepted rules of treaty interpretation and exercised great caution to remain balanced and flexible in reaching their conclusions, especially on ambiguous issues. Though not perfect, the WTO DSS works as it is intended to. Engaging in the reform of the WTO and its DSS, instead of abandoning or marginalizing the WTO, should be a wiser and more practical choice for the Biden administration.

     

Foreign-Trade Agreements: A New Federal Partner?

The North American Free Trade Agreement (NAFTA) and the GeneralAgreement on Tariffs and Trade (GATT) shift power away fromstate and local government in the federal system. They imposenew rules on the exercise of state and local powers over procurementand the regulation of food, environmental, health, product andservice standards, investments, services, financial services,economic development, and land transportation. States will haveto comply with various reporting and registration requirements,and may be subject to stricter nondiscrimination obligationstoward imported goods and services than under the commerce clauseof the U.S. Constitution. State and local governments will bejudged by international panels, whose judgments the United Statesmust enforce or suffer trade sanctions from aggrieved tradingpartners. Yet, states have not strongly opposed NAFTA and GATT.The greatest state opposition has been to automatic preemption,which the Clinton administration promised to avoid as much aspossible. Nevertheless, increased power over federalism hasmoved to the executive branch, business, and trade-dispute panels,with less power for state and local governments.     

The EU as Promoter of Environmental Norms in the Doha Round

This article investigates the reasons why the EU tried to promote environmental norms in the Doha round. It argues that the EU's support of a ‘greener’ World Trade Organization stems from tensions between the rigidity of the domestic dynamics of positive integration in the EU and the increased bindingness of negative integration commitments undertaken under the WTO. Consensual decision-making procedures in the EU led societal groups to push for stringent food safety and environmental regulations in the EU, and made them very resistant to change. These dynamics of positive integration, however, produced rules that were inconsistent with negative integration commitments undertaken under the WTO, at a time when the creation of a quasi-judicial dispute settlement mechanism in the trade regime had greatly increased the bindingness of WTO rules. As a result of the twofold effect of domestic and international institutional constraints, EU decision-makers were subject to compelling incentives to try and strengthen legitimate exceptions from WTO rules and immunise European regulation against WTO legal challenges. Empirical evidence on how the EU shaped its trade-and-environment agenda in the run-up to the Doha Round in 2001, as well as how it negotiated in the subsequent period, lends support to the argument.     

Regulating public procurement in Brazil,India, and China: Toward the regulatory-developmental state

Since the 1990s, emerging economies such as Brazil, India, and China have adopted transparency-enhancing public procurement regulations in line with international norms. Yet they have hesitated to join the World Trade Organization's legally binding Government Procurement Agreement (GPA). Based on the Special Issue framework, this article scrutinizes the underlying domestic and international determinants, and how they influence emerging countries’ positions in two overlapping international procurement regimes. In particular, reform-oriented state actors, societal pressure, and lesson-drawing from international templates have induced a strengthening of domestic procurement institutions and turned emerging countries into “promoters” of the international transparency regime. Conversely, the rising powers have remained, to varying degrees, reluctant “spoilers” of the GPA-based market access regime in order to keep policy space and use procurement for domestic development objectives. The article suggests that this regulatory-developmental layering of rule-based governance and interventionist ambitions characterizes the variegated regulatory state in emerging countries.     

The harmonization of automobile environmental standards between Japan,the United States and Europe: the ‘depoliticizing strategy’ by industry and the dynamics between firms and governments in a transnational context

Abstract

When initial automobile environmental standards were introduced during the 1970s and 1980s there was a large difference in the level and timing of the introduction of these initial emission standards in the United States, Japan and Europe. Trade in automobiles was the target of fierce trade disputes in the 1980s between, for example, the United States and Japan. The governments of Japan, the United States and Europe were involved in trade negotiations as agents of the automobile industry of each country, often focusing on environmental standards as sources of non-tariff barriers. But since the mid-1990s, because of the globalization of the automobile industry, automobile firms have had common interests in collaborating in relation to voluntary harmonized standards. They also have common interests in relation to other sectors such as the petroleum industry in that the burden for emission reductions needs to be shared equitably among sectors. In that sense, it can be said that a ‘depoliticizing strategy’ has been used, which is the strategy used by the automobile industry not to rely on government intervention and trade conflicts at an intergovernmental level to deal with the difference in standards. There is a tendency for high-level convergence concerning environmental emission standards for NO_x etc. in Japan, the United States and Europe and related sulfur content standards for complying with them. In addition, the automobile industry has been consciously seeking international harmonization through the Trans Atlantic Business Dialogue (TABD) and the TrilateralWorking Group. Harmonization has also been attempted at the intergovernmental level to gain legitimacy at the arena of the United Nations Economic Commission for Europe (UNECE) through the signing of the 1995 Agreement (the revision of 1958 Agreement) and the establishment of the 1998 Global Agreement. In the process, governments have been requested by automobile firms to adopt harmonized standards; but governments also have their own incentives to set up an intergovernmental mechanism to establish harmonized standards.     

Enabling global principle‐based regulation: The case of risk analysis in the Codex Alimentarius

This paper deals with the creation of global principle‐based standards. For such standards to be accepted and effective, particular conditions must be fulfilled. One such condition, little explored, is that standard‐makers and ‐takers share knowledge about the meaning of the principles, as well as the practices through which they are likely to be applied. The paper shows that this condition is fulfilled when transnational cultural systems exist, by means of which both types of actors engage in the explication and representation of their practices so that a common, standard understanding emerges of how principles may be interpreted on the ground and informs the negotiations. A transnational cultural system is a crucial governance infrastructure to set global standards, as shown by the long history of creating a risk analysis guideline by the Codex Alimentarius, the inter‐governmental body for food standards.     

Blowback: Investor–State Dispute Mechanisms in International Trade Agreements

The North American Free Trade Agreement (NAFTA) gave unprecedented rights to private investors. These provisions quickly became entrenched in policy and practice, appearing in most multilateral and bilateral trade agreements in the 1990s as American investors began to bring Canada and Mexico to arbitration. However, the Australia–U.S. Free Trade Agreement (AUSFTA) of 2004 contained no such provisions. The purpose of this article is to explain why enthusiasm for NAFTA‐style protections waned so dramatically after a decade of entrenched practice. We argue that the reason lies in the “blowback,” the unintended and negative consequences created by NAFTA’s Chapter 11, and conclude that the abandonment of NAFTA‐style protections in the AUSFTA sets important precedents for the future of international free trade agreements.     

Negotiating North–South dynamics and the Philippine experience in the WTO

This paper elucidates how domestic and external factors have shaped the negotiating policy of the Philippines in bringing about incremental gains not only for its benefit but also for other developing countries during the World Trade Organization (WTO) Agreement on Agriculture Doha Development Round (DDR). The internal factors include the following: (1) executive monopoly of the WTO negotiations; (2) issue-based fragmentation and dispersal of authority; (3) the autonomy and flexibility of the Philippine WTO negotiator; (4) the involvement of civil society in the WTO negotiations, and (4) the central role of the Department of Agriculture as the lead agency in the WTO negotiations. A major reason for this is attributed to an external factor which is the centrality of agriculture as a major WTO issue among developing countries. Other external factors, on the other hand, include the following: (1) the strong solidarity among developing countries and (2) the confinement to particular issues with regards to coalition-building. These factors helped to strengthen the bargaining leverage of the Philippines, a seemingly ‘weak’ country, vis-à-vis the developed countries in the WTO.     

American agriculture and trade policymaking: Two-level bargaining in the North American Free Trade Agreement

This paper has employed Putnam's two-level bargaining framework to analyze the negotiations leading to the North American Free Trade Agreement. The particular focus has been on agricultural aspects of the negotiations between the U.S. and Mexico, identifying the distribution of coalitions and preferences across the U.S. polity that influenced the drafting and ultimate ratification of the agreement. Special emphasis has been given to how the negotiations were influenced by the intersecting of agricultural interests and strategies at both domestic and international levels.     

International court curbing in Geneva: Lessons from the paralysis of the WTO Appellate Body

The 21st century has witnessed a backlash against many international courts (ICs). Studies of IC backlash have generally taken an optimistic tack, noting that most courts have survived backlash intact or—in the case of the paralyzed Appellate Body (AB) of the World Trade Organization (WTO)—are likely to do so after a temporary period of slumber. In this context, this paper analyzes the United States' successful effort to paralyze the AB, deriving lessons from this deviant case of backlash against one of the world's most active and independent ICs. Undertaken in the context of the “Reversing Delegation” research project, this account is organized in five parts. First, I demonstrate that the creation of the AB was a classic instance of delegation of dispute-settlement power, and that the AB quickly emerged as an active agent of trade liberalization. Second, I explore the roots of politicization, noting that dissatisfaction with AB jurisprudence preceded the Trump administration, although Trump's delegitimation of the AB was more far-reaching than that of his predecessors. Third, I examine the administration's use of the veto power to paralyze the AB, an act of de facto de-delegation. Fourth, I assess the pushback from the many other WTO members that sought to defend the AB, showing how they failed to blunt the US campaign. Fifth, I analyze the remarkably successful outcome of the US attack, and draw lessons for judicial independence and the rule of law in international politics.     

Over‐commitment and backsliding in international trade

‘International commitments pay’ could be the mantra of the current literature on international organisations: tying their hands at the international level is a means for governments to push through politically costly, but ultimately welfare‐enhancing reforms. It is argued in this article that this logic has a limit, which can be empirically observed. Past a given point, further depth of integration increases odds of backsliding. This belief is tested in the context of accession to an institution whose rules have been heavily scrutinised: the World Trade Organization (WTO). Countries with low rule of law are imposed a risk premium in the form of demands for deeper concessions, making ‘over‐committing’ possible. This relationship is used to assess the extent to which deeper commitments lead to backsliding. Industry‐level analysis supports these beliefs: deep commitments lead to increased odds of backtracking through a range of legal and extra‐legal mechanisms. Ambitious international commitments can backfire.     

Trade, Harmonization, and Domestic Autonomy in Environmental Policy

This article evaluates the environmental criticisms of free trade that have been such an important part of the critique of globalization. The first section briefly surveys the range of criticisms environmentalists have brought against the new economic order. The second section examines the available literature on the race to the bottom, one of the key concerns. The third section analyzes the World Trade Organization trade rules and how they have been interpreted by dispute resolution panels involving environmental issues. The fourth section turns to the specific rules of the North American Free Trade Agreement and examines several case studies of environmental issues in that region. The final section provides a summary evaluation of the environmental criticisms. The article argues that the environmental criticisms are exaggerated. Trade agreements leave far more room for domestic environmental measures than is frequently argued. The political globalization of the environmental movement has helped counter the threat to environmental policy created by the economic and trade aspects of globalization. Environmentalists do need to be careful about how they advance this critique of globalization, however, because their arguments risk becoming a self-fulfilling prophecy.     

Of Butchery and Bicycles: The WTO and the ‘Death’ of the Doha Development Agenda

The World Trade Organization's (WTO) Doha round is in trouble; but so is the way we talk about the institution and the negotiations. Economists, international lawyers, political scientists, practitioners and pundits alike have locked themselves into a deeply constraining and quite unhelpful way of talking and thinking about the WTO that has little to offer either the round or the Organization. Indeed, the way commentators have chosen to talk about the problems of the round, as well as the options for moving forward, may actually be compounding matters, reinforcing the likelihood that Doha will produce little, that future negotiations will continue to be dramatic and hard to conclude, and that inequitable outcomes will persist. My aim here is to shine a light on the bounded nature of the current debate with a view to agitating for a less constrained and more fruitful conversation about Doha, the WTO and beyond.     

The creation of the World Trade Organization and the establishment of an advocacy regime

Interest group research is a nascent domain in the literature on the World Trade Organization (WTO). This article seeks to explore the development and the current status of the WTO's advocacy regime. It reviews the role of interest groups in the history of the multilateral trading regime and explores the mechanisms of interest representation at the WTO. The paper shows that the design of the WTO's advocacy regime goes back to international efforts for a new governance of global economy after World War II. It is presented that the system is not static but subject to frequent changes, and it is contended that the recently implemented access badges mechanism is one important step toward a conventional lobbying regime as known from the nation states. Copyright © 2013 John Wiley & Sons, Ltd.     

APEC and the WTO: Collision or co‐operation?

Abstract

The creation of an integration scheme of the dimensions of the Asia‐Pacific Economic Co‐operation forum (APEC) is causing concern for the future of the world trading system. APEC will either turn into an economic bloc or it will become a forum of limited relevance. If APEC decided to form a classic free trade area and provided its trade concessions only on the basis of reciprocity, there would be little need for the World Trade Organization (WTO) in the future. Considering its size, APEC could then easily develop into a competing system for the liberalization of trade. If, however, APEC continues its policy of ‘coordinated unilateral liberalization’, the motivation for APEC will have to be questioned: if trade liberalization following the General Agreement on Tariffs and Trade (GATT) logic, i.e. on a non‐discriminatory basis following the most‐favoured nation principle, is desired, should not this aim be pursued in the appropriate forum, i.e. in the World Trade Organization (WTO)?     

Institutional Change in the International Governance of Agriculture: A Revised Account

This article traces the evolution of the international governance of agriculture as a sequential process, in which the negotiation of new trading and enforcement rules interacts with legal disputes over the interpretation of existing rules. The interaction between negotiation and litigation has produced a governance trajectory from vague to precise commitments and a strengthened dispute settlement process. We contest standard histories, which identify the Uruguay Round Agreement on Agriculture as the singular event that established agriculture for the first time under the auspices of the World Trade Organization and which claim this represents the legalization of the agricultural trade regime. The case of agriculture contains important lessons for broader debates on international governance by articulating: (1) dynamic feedback processes, challenging the view that bargaining and enforcement aspects of international agreements are concluded simultaneously, and (2) key mechanisms underlying the greater precision of institutional commitments that tend to emerge over time.     

The WTO's Appellate Body: Legal Formalism as a Legitimation of Global Governance

The creation of the Appellate Body (AB) of the World Trade Organization (WTO) entails an unprecedented delegation of power to an international adjudicator, because the WTO requires states to ensure compliance of their domestic regulations with the sweeping obligations in WTO agreements. This is legitimized in some academic analyses and much political rhetoric in terms of the rule of law, suggesting that the role of the adjudicator is merely to apply the precise words of the texts agreed by states, according to their natural meaning. The AB has supported this by adopting a formalist approach that combines an objectivist view of meaning with a legalistic style of judgment. However, both the general structure and many of the specific provisions of the WTO agreements are indeterminate and raise issues of interpretation that were known to be highly contestable. Although the delegation of adjudication in its early phase was considered to be of a narrow technical function, in the current phase interpretation is more clearly seen to involve a flexible application of principles to cases in light of the policies involved. The AB's role would be better legitimized by adopting a more open epistemology and reasoning that could be accessible to a wider constituency. However, it is constrained by fear of usurping the political legitimacy of the governments to which it is primarily accountable, and governments, in turn, are motivated by a reluctance to admit to their domestic constituencies how much power has been transferred to supranational instances such as the AB.     

Making sense of the legal and judicial architectures of regional trade agreements worldwide

Regional trade agreements (RTAs) constitute one of the most important elements of the international economic order. Researchers have accordingly embarked on comparative analyses of their design. Yet one fundamental question remains unanswered: how have officials in different RTAs responded to the challenge of regulatory misalignments among the member states? In this article, I turn to 10 of the most established RTAs in the world and document three types of responses. Some RTAs rely on the principle of mutual recognition or references to existing international standards; the same agreements also rely on technical dispute resolution mechanisms. Other RTAs, by contrast, make use of extensive harmonization and permanent courts charged with interpreting law. Yet a third group exhibits a hybrid design. This heterogeneity in legislative and judicial design invites explanation. I show that there is a remarkable correspondence between the legal traditions of the member states (common vs. civil law) and the design of RTAs. This correspondence undermines the claims of world polity theorists about the nature of the international order, but is consistent with other strands of sociological institutionalism and certain elements of rationalist and neoliberal institutionalism. I conclude by reflecting on the implications of different RTA designs for the regulation of everyday life in the member states, the World Trade Organization as an international regulatory body, and national sovereignty and democracy.     

The GATT and Environmental Policy: An Analysis of Potential Conflicts and Policy Reforms

The emergence of a worldwide environmental movement in the early 1960s accompanied an international expansion of economic activity and applied technology. The principal medium through which this expansion progressed was trade. In 1947, following World War II, a series of international agreements were negotiated to regularize international relations in finance, monetary policies, and trade. The General Agreement on Tariffs and Trade (GATT) was negotiated without anticipation of an international environmental movement and new policies at the national level that did not reflect, and might be inconsistent with, economic values. Conflict between policies for freedom of trade and environmental protection did not immediately emerge. With the adoption of numerous environmental protection measures in the United States and many other countries after 1969, the incompatibility of some trade and environmental policies became political issues. Trade policies are not confined to economic changes. Policy issues developing around the agreement and environmental protection are complex, and frequently involve technological issues, as in the Mexican tuna controversy discussed in this paper.