Trade v. Health; on Tobacco, Caffeine, and Turkey Tails

Governments around the world often struggle to find an appropriate policy balance between removing barriers to trade while simultaneously ensuring that they enact laws which protect the health of their citizenry. The tension between these two policy goals can often be averted; clarity as to policy objectives will enable a better determination of appropriate legal mechanisms to achieving a government’s goals. A few recent trade law developments highlight the challenges of regulation aimed at promoting health concerns in light of the World Trade Organization (WTO) obligations.

In Australia, the Tobacco Plain Packaging Act 2011 is an innovative piece of legislation which aims at discouraging the use of tobacco products by requiring uniform plainness in packaging.[1] The act would require cigarettes to be sold in packaging which would not allow tobacco companies to use their own labels, and consequentially constrain their ability to market their brand image. The government’s stated goal is to reduce tobacco consumption, particularly among young individuals.

Members of the WTO’s Technical Barriers to Trade (TBT) Committee discussed this piece of legislation at a meeting earlier this month, with over a dozen members voicing formal objections to the act.[2] The objecting states argue that Australia’s evidence of the effectiveness of the proposed act is suspect, and thus unnecessarily restricts trade.[3] It is important to note that many of the objecting states do not export tobacco to Australia, and…

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U.S. Senate Passes Counter-Productive Countervailing Duties Bill

Last month, the U.S. Senate passed Bill S. 1619, the Currency Exchange Rate Oversight Reform Act of 2011 (“the Act”), which is aimed at penalizing foreign producers in favour of their U.S. domestic counterparts.¹ The Act has been introduced but has not yet passed through the House of Representatives. Section 4 of the Act outlines the method by which the Secretary of the Treasury will determine if a foreign currency is “fundamentally misaligned”, and if it makes that determination, sections 10 and 11 provide the mechanism by which the government would be able to impose countervailing duties (CVDs). In general terms, CVDs are a tool, permissible in international trade law, whereby a government is able to impose a duty on imported goods when the exporting country’s government has provided the exporter a subsidy.

China is the obvious target of the Act. Populist politicians in the U.S. in recent years have relied on criticizing China in the hopes of appealing to citizens who believe that the primary cause of high unemployment rates in the U.S. is the migration of manufacturing jobs overseas.² The problem with the Act, however, is that it fails to comply with the U.S.’s WTO obligations, and will most likely be successfully challenged by China if it ever becomes law. The Act attempts to classify an undervalued currency as a “subsidy” to exporters. The Agreement on Subsidies…

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On tuna, dolphins and all sorts of barriers

Trade lawyers’ interest in tuna and dolphins began in the early 1990s, when Mexico threw the first punch in what later became the long saga (going on 20 years now) known today as the tuna-dolphin disputes. The battleground was (and still is) the waters of the Eastern Tropical Pacific (“ETP”) Ocean, extending from California in the north to Chile in the south and Hawaii in the west. These waters are known for their abundance of sea-life, including numerous types of fish, dolphins, sharks, whales and sea turtles. Where fish are plentiful usually fisheries arise, and economic interests enter the game. This short note is written following the latest of a line of trade disputes between the United States and other states (most notably Mexico) concerning fisheries, morals and influence.

The tuna-dolphin disputes revolve around unilateral measures taken by the United States in order to combat the use of purse-seine fishing nets. Purse-seine fishing nets are used for commercial fishing. When used for tuna harvesting, not only tuna but also dolphins (and other species as well) are often trapped, injured, and even killed. It was argued by the United States that due to the use of these nets, the population of dolphins at the ETP was dramatically reduced.

Luckily for the dolphins, two types of U.S. pressure groups did not intend to let them disappear from the waters of the ETP.…

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African Countries and the WTO Dispute Settlement System: strangers in an alien land?

In 1995, the World Trade Organization (WTO) came into existence, introducing some key reforms to the long-standing General Agreement on Tariffs and Trade (GATT) system. The most important reform was the setup of the Dispute Settlement System (DSS). There was now a greater clarity of rules and regulations, binding decisions and an Appellant Body. One would imagine that the highly juridical and legalized system based on equality and strict rules would be somewhat advantageous to African countries (the largest group in the WTO). This has not been the case. In fact, African countries’ involvement in the WTO dispute settlement system in the first decade has been minimal at best. In the first decade (1995-2005) of the DSS, no African country was ever a complainant in a dispute and in only six cases was an African country a respondent. In addition, Egypt is the only African country to have shown initiative and request the establishment of a panel, in the Egypt-Definitive Anti-dumping Measures on Steel Rebar from Turkey case. The one comparatively active area for African states in the DSS is their participation in disputes as third parties. Zimbabwe, Nigeria, Senegal, Cameroon and Cote-d’Ivoire have all participated in this capacity.

The most common reasons propagated for this trend include the low volume of global trade emanating from and to Africa, African countries’ inability to navigate the complicated and expensive DSS, and a lack of expert…

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Environmental Law and the Curse of Competency

Have you ever been in an organization full of incompetents, where one competent person has to do everyone else’s work even though it has nothing to do with their own job? I certainly have – and identifying that individual really took the pressure off me and my fellow rubes. “Tibor,” we’d say, “we can’t get this project done on time even though your project depends on it. Can you help us out?” Sure enough, Tibor would come through for us, and we’d all learn something about teamwork. Something depressing.

“What does this have to do with law?” you may ask (other than its relevance to my ongoing unjust dismissal hearing). Simple: by passing the environmental buck on to financial regulatory agencies such as the Ontario Securities Commission (OSC), we would be treating them just like poor old Tibor.

In the land of the incompetent, the semi-competent man is king. Similarly, in the ham-fisted world of inefficient and ineffective governmental organisations, a body which generally satisfies its mandate, such as the OSC, is a paragon. Of course, the OSC (or the rest of Canada’s financial market regulators) isn’t beyond criticism. Many complain that Canada is more lax towards fraud and white-collar crime than other countries. Nevertheless, the OSC has fared much better in meeting its dual mandate – protecting investors while promoting fair and efficient markets – than equivalent organizations…

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Multinational Corporations, International Trade and Morality. “Do No Evil”?

The activity of multinational corporations in the international arena is an important engine of development. It is within the ability of multinational corporations to create jobs, to invest in expensive research, to transfer knowledge and technology around the world and to promote progress in many fields. Indeed the international community support such activities through the regulation of both international trade and investment. These rules are mostly designed to facilitate international economic activity by ensuring easy access to foreign markets and warranting fair treatment to aliens by host states.

The opening of borders to international activity has also brought about certain illnesses, some of which are not easy to confront. On the environmental front for example, it seems as if fears of losing economic competitiveness inhibit countries like the United States from passing a significant climate change bill. With regard to labour standards, competition for foreign investment may encourage countries to relax their labour laws and to use lower standards as an enticement for foreign economic actors. International economic activity is a complex, multilayered issue, one that touches (and often clashes with) a multitude of global issues.

A somewhat complicated relationship exists between international economic activity of multinational corporations and morality. The different concepts of moral behaviour, the notion of companies as entities that should act according to guidelines of morality (rather than just acting according to laws) and the role…

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Problems with the patchwork quilt? Examining inconsistency in investor-state arbitration

International investment arbitration has evolved dramatically throughout the last two decades.[1] In this time, we have witnessed the birth of investor-state arbitration and the “import[ation] of the commercial arbitration model into the realm of treaty-based investment disputes”.[2] In other words, investors can now bring claims directly against host states through treaty mechanisms such as Chapter 11 of the North American Free Trade Agreement (NAFTA).

Unlike the World Trade Organization’s (WTO) dispute settlement system, however, the substantive and procedural law applicable to investment disputes is not formalized in a manner analogous to the WTO Dispute Settlement Understanding (DSU).  Instead, international investment arbitration is a mixed system; one that is fragmented and that “sits uneasily between public international law jurisdictions and domestic judicial systems”.[3]

Perhaps this uncomfortable mélange is a necessary characteristic that ensures the dispute resolution process is “neutral and effective”.[4] The existence of such a “broad network of interrelated rights”, however, creates a “patchwork”.[5] As Susan D. Franck notes:

“[…] decisions about issues with economic and political consequences are resolved in private before different sets of individuals who can and do come to conflicting decisions on the same points of law”.[6]

This patchwork creates uncertainty about the meaning of investment treaty rights in public international law,[7] which is evidenced by inconsistencies in investor-state arbitral jurisprudence[8] – and…

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Regional trade agreements, neither building blocks nor stumbling blocks: dismantling a tired dichotomy

The proliferation of regional trade agreements (RTAs) has continued unabated since the early 1990s.[1] In December 2008, the World Trade Organization (WTO) had been notified of 421 RTAs.[2] “There is a serious and long-lived tension between seeking freer trade in a non-discriminatory manner through the [General Agreement on Tariffs and Trade] 1994 and the other WTO Agreements, and by way of regional trade agreements,” observes Professor John H. Jackson.[3]

In the eyes of many, regionalism and multilateralism stand stubbornly pitted against one another, despite implicit recognition of the “desirability” of RTAs in Art. XXIV:4 of the 1947 version of the General Agreement on Tariffs and Trade (GATT).[4]

Since the establishment of the Committee on Regional Trade Agreements (CRTA) in 1996, the WTO has scrambled to find ways to effectively control the impact of RTAs. This futile mission to tighten RTA regulation has been driven by a persistent fear of trade diversion, as well as by the assumption that regionalism—and the agreements springing from it—is subordinate to the multilateral regime.

WTO regulation of RTAs has evolved since 1947, notably with the introduction of the 1994 Understanding on the Interpretation of Article XXIV of the GATT 1994 and the creation of the Transparency Mechanism for RTAs in 2006. These regulations remain however, narrow and ambiguous. Article XXIV thus continues its long history of…

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Fear and Loathing of E-Vegas

There’s no such thing as problem gambling. I should know – during the Winter Olympics alone I won over $7,000 by gambling, and that’s not even including my wagers on Olympic sports. Of course I spent $22,000, but you have to understand that winning comes in cycles, and I think I’m heading back into a hot streak now. It’s complicated – the point is people who enjoy gambling have things under control.

Why, therefore, do we need laws regulating or banning gambling? The fact that problem gambling is a myth takes care of a Hartian positivist/utilitarian justification. This leaves only Fuller and his “natural law”, which in this case amounts to antiquated Victorian morality. With such a foundation, I’d bet that today’s gambling laws are little different in substance from those of a hundred years ago.[1]

Such questions are all the more relevant today because of the rise of online gambling. Anyone who has watched movies on Megavideo knows that there are two rules: 1) there’s a 72-minute limit, and 2) popup ads for a certain gambling website – let’s call it “MartyMoker.com” – are ubiquitous. But are these kinds of betting sites legal? The truth is that in Canada today the answer is not entirely clear.

The situation is complex because online gambling by its nature involves cross-border transactions. It is clear that running an unregulated online…

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Power, Politics, and the Adoption of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS)

Intellectual Property Watch (IP Watch) recently reported that discussions of the World Intellectual Property Organization’s (WIPO) Standing Committee on the Law of Patents (SCP) broke down due to disagreement between developed and developing countries.[i] This is but a current example of the ongoing conflict between developed and developing countries over international patent law. The recent origins of this conflict stem from adoption of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) of the World Trade Organization (WTO) in 1994. Under TRIPs, the approximately 150 member states of the WTO committed to adopt, inter alia, global minimum standards for intellectual property (IP) laws.

TRIPS has been controversial from the start. Developing countries and advocates for the ‘intellectual commons’ are of the view that TRIPS jeopardizes developing country access to knowledge and essential medicines that are critical to their well-being and growth.[ii] In contrast, some developed countries, in particular the US, are of the view that TRIPS did not go far or fast enough in establishing a global IP regime: the US is pushing developing countries to accept standards that go further than TRIPS in the bilateral and regional free trade agreements that have flourished as WTO negotiations have stalled.[iii]

The developing countries have legitimate concerns. They are net technology importers and must thus establish and maintain IP systems which will be of little benefit to them…

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