The American Society of International Law’s International Economic Law Interest Group (ASIL IEcLIG) is pleased to issue a Call for Proposals for its inaugural Junior Scholars Research Forum, to be held at the University of Pennsylvania’s Wharton School, in Philadelphia, on November 22, 2013. This one-day Research Forum will provide junior international economic law scholars with a supportive and constructive environment in which to present and receive feedback on their works-in-progress. Participation in the Forum is by invitation only. IEcLIG is inviting untenured international economic law scholars, including academics in tenure-track or non-tenure track positions, scholars with temporary academic appointments (e.g. VAPs, Fellows) and practitioners looking to enter legal academia in the near future to submit proposals for the Research Forum. Only authors of approved works-in-progress and a select group of established international law scholars will be invited to attend. Participants will present their work to a panel of other junior scholars and to a select group of established international law scholars, and will receive helpful and friendly suggestions on their work. Established scholars in international economic law will be assigned to each paper to provide helpful comments and suggestions. All topics concerning international economic law, (broadly defined to include areas related to but not limited to trade, investment, finance, international intellectual property) will be considered.

Lunch and dinner will be provided. A registration fee of $75.00 is required for ASIL non-members. Becoming an ASIL member is strongly encouraged if you plan to attend this event.

If you are a junior scholar working in the area of International Economic Law and are interested in participating in the Research Forum, please email a title and short abstract (no more than 500 words) detailing the subject of your intended paper, and a current CV to the Co-Chairs of ASIL-IEcLIG, Jason Yackee at jyackee@wisc.edu and Elizabeth Trujillo at etrujillo@suffolk.edu. The selection committee, made up of active scholars in international economic law, will review the submissions by blind review. Please do not include your name on the submission, but please do include an email so we can contact you. The deadline for receipt of proposals is June 25th, 2013. Invited participants must be committed to circulating a full draft paper to the Forum organizers at least three weeks prior to the Research Forum.

Unfortunately, the IEcLIG budget does not allow for any travel or other financial assistance for participants. The IEcLIG leadership will make its selection decisions by July 25th, 2013 and authors of selected proposals will be contacted by that date.

The measures referred to in this Part establish sustainability criteria with which biofuels13 and bioliquids must comply in order to be taken into account when measuring compliance with the targets of the EU Member States in the field of renewable energy and in order that these biofuels and bioliquids may benefit from the incentives for their use.

In order to be considered sustainable, biofuels and bioliquids must, among other criteria, result in the saving of at least 35% of greenhouse gas emissions with respect to fossil fuels.14

Argentina does not object either to the use of sustainability criteria or to a methodology by which greenhouse gas emissions savings are calculated. In fact, the biodiesel sector of Argentina stands out due to its environmental and social sustainability. The efficiency of its integrated production facilities, their proximity to areas where the feedstock is grown and to deepwater ports results in significant greenhouse gas savings. However, Argentina considers that the above-mentioned threshold of 35% is arbitrary, and appears neither to be scientifically justified nor to be based on a recognized international norm or standard.

The default value assigned by these measures to soybean biodiesel is 31%. This implies that soybean biodiesel produced in Argentina cannot comply with the criteria for the reduction of the greenhouse gas emissions to be considered sustainable on the basis of the default value.

And:

According to these measures, any petroleum company that releases fuels and/or diesel products for consumption also has to release for consumption certain amounts of sustainable biofuels. These measures establish that only biofuels produced in the EU can be considered as "sustainable biofuels". However, since biodiesel produced in Argentina is not considered as "sustainable biofuel", it can neither be considered for the purposes of the incorporation obligation laid down in these measures, nor can it benefit from the excise duty reduction provided for therein.

These measures also provide that a reduced excise duty rate is applied to diesel which contains a certain percentage of fatty acid methyl ester falling within CN code 3824 90 99 (FAME) produced in production units which have been approved by the customs and excise duty administration. According to these measures, only production units that are located in the territory of an EU Member State can receive such approval.

The European Commission decided today to ask the Member States for their agreement on a mandate to open negotiations on an investment agreement with China. This is the first ever proposal for a stand-alone investment agreement since foreign direct investment became the exclusive competence of the EU under the Lisbon Treaty.

The WTO’s Appellate Body ruled that the program’s requirement that meat producers gather a greater amount of information about meat origins than is ultimately conveyed to consumers downstream violated WTO requirements. To address this concern, USDA’s new rule will offer consumers more precise labels that specify the country in which each step in the meat production process occurred. The change will better fulfill COOL’s policy objective and consumers’ rising demand for greater transparency regarding the production of their food, ...

So, the upshot is, in Global Trade Watch's view, the WTO ruling has led to a better, more consumer-friendly domestic regulation.

Vietnam has issued a new law allowing domestically produced chemicals to be used in lethal injections, a change that should enable it to resume the currently stalled executions of more than 530 people on death row.

The holdup was a result of a European Union ban on its factories exporting chemicals used in lethal injections. The ban was issued because the EU regards capital punishment as a human rights violation. 

It has left Vietnam unable to execute a prisoner since November 2011, when the country decided to switch from firing squads to lethal injections on humanitarian grounds.

Vietnam's old law governing executions stipulated the names of the three chemicals produced in the EU that had to be used in lethal injection. The new law issued this week doesn't mention the chemicals by name, meaning local versions can be produced and used. The law will take effect on June 27.

In an interview earlier this year, European Union ambassador to Vietnam Franz Jessen said Vietnam might not have realised the practical implications of changing to lethal injections when it announced its plan to switch from the firing squad. He said the EU had hoped difficulties in sourcing the chemicals might have triggered a moratorium on the death penalty in the country.

Some trade law thoughts that occur to me:

-- If I understand the old law correctly, it seems that it might have constituted de facto discrimination in favor of EU products.  The new law has removed that discrimination.

-- Then there's the EU export ban, which would violate GATT Article XI, but almost certainly be justified under Article XX.

-- I wonder what the "local versions" will be.  If there are patents involved, will there be TRIPS objections raised?

What constitutes a competitive relationship between products may require consideration of inputs and processes of production used to produce the product.

Some EU member states are also concerned that a procedure included in the mandate to allow for resolving disputes between investors and states.

While such dispute mechanisms are increasingly common in free trade agreements, some EU diplomats say they are not necessary for two parties with strong legal systems already. EU countries have worried it could result in excessive lawsuits challenging national regulations.

The updated [EU draft negotiating mandate] includes language designed to calm such fears.

"Investor-to-state dispute settlement mechanism should contain safeguards against frivolous claims," the draft said.

"The inclusion of investment protection and investor-to-state dispute settlement will depend on whether a satisfactory solution meeting EU interests... is achieved."

I'm very curious to see what "safeguards" they come up with.  Will they find a way to limit the dangers?  Or will they simply exclude investor-state altogether?

The reason governments choose to support the development of renewables is not primarily because of concerns regarding the adequacy and affordability of supply. Rather it is because lower emissions sources of energy, such as renewables, confer a positive benefit to society that is not normally captured by market arrangements absent some specific form of government intervention. In such circumstances, economists speak of market failure as a result of externalities. One way to address this externality is by subsidising the production of energy from renewable sources. FIT schemes are one example of such subsidies. The benefit of the subsidy accrues to the producers of energy from renewable sources. In the absence of such a benefit there would be no incentive for them to invest. The public benefit to society from lower emissions is entirely predicated on there being a private benefit to the producers of energy from renewable sources. These private benefits take the form of fixed prices over a lengthy period of time representing a significant mitigation of investment risk – more so than would likely be available on commercial terms, and more than made available under contracts between government and private investors.

I'm eager to see what he has to say about the AB report.

With Simon's permission, I wanted to let you know about two calls for candidates we have in Geneva:

1. A 50% job, to help me run and supervise the Trade & Investment Law Clinic at the Graduate Institute, and to set up a new, related internet platform www.tradelab.org (Trade & Investment Legal Advisory Broker).

http://graduateinstitute.ch/ctei/projects/global_law.html (click on "call for candidates")

2. Funding for Phd students / junior researchers (less than 5 years of research, including Phd research time), to spend 3 months to 1.5 years in Geneva (anywhere between summer 2013 and spring 2015) as a paid www.dissettle.org fellow.  This allows you to work on, and receive training in, how to make better use of economics in international trade or investment disputes.   

http://graduateinstitute.ch/webdav/site/ctei/shared/CTEI/Projects/Dissettle/DISSETTLE_Recruitment_November2012.pdf

Thanks!

This may come through WTO subsidy disputes, of course.  But perhaps the developments will also come through CVD cases?  There are more CVD cases than WTO subsidy cases.  Will respondents and their governments try to come up with creative arguments in CVD proceedings to the effect that the financial contributions at issue do not result in a "benefit" under the AB's Renewable Energy reasoning, and thus do not constitute a subsidy?  It seems like it's worth a shot.  Perhaps this will provide the first opportunity to explore the AB's reasoning.

The Sandra Day O'Connor College of Law seeks a dynamic, proactive, and highly-motivated individual for the position of Director of the Center for Law and Global Affairs. The Director will report to the Dean of the College and will work daily under the direction of the Faculty Director(s) of the Center.  The successful candidate will be responsible for advancing the vision of the Center as established by the Center faculty and the Faculty Director(s) and ensuring that vision fits within the larger vision of the College of Law.  The Director will be responsible for managing the Center's budget and fund-raising efforts as well as coordinating Center events, conferences, and speakers.  The Director will also be responsible for coordinating student participation in the Center and facilitating student engagement in international and transnational legal work.

More details here:

https://www.asu.edu/go/employment/?auth=guest&jobid=30593&SiteId=1&PostingSeq=1 

A depressing rule of international institutions is that whatever their founding intentions they inevitably evolve to serve themselves or their worst members more than their original cause. The latest example is the World Trade Organization, which began as a rule-making body to promote free trade and has drifted toward protectionism when it isn't useless.

The WTO has drifted towards protectionism?  That seems like it was written by someone who is unfamiliar with the WTO.

There is no sure way to catch tuna without harming other marine life. Dolphins, as well as sharks, turtles and other animals, are unintentionally killed as bycatch in the quest for tuna.

The central question facing governments, corporations, environmentalists and consumers is how much is too much, and whether using a huge net to catch tuna in one part of the ocean is any worse than using them to catch it in other parts.

Investment Arbitration Reporter is currently expanding our small team of specialized journalists and analysts.

Our contributors are located in different geographic locations, and are self-motivated individuals with strong English language writing skills. Experience in journalistic writing/blogging, or in the preparation of legal case summaries, is particularly valued.

We are looking for contributors with flexible schedules, and an ability to balance longer-term research assignments while also taking on a certain number of short-term breaking-news tasks. Thus, contributors should notbe engaged in other full-time employment or intensive one-year degree programs (LLMs, etc.). However, those enrolled in Phd progrems or engaged in post-doctoral research may be ideal candidates.

Typical contributor assignments include: 

• Reporting on new arbitration claims that come to IAReporter's attention (this may involve interviewing of sources and review of publicly-available records);
• Review and summary of procedural orders and decisions rendered in arbitration cases;
• Investigation of unreported claims against countries of interest
• Assisting IAReporter's Editor on longer-term thematic research (e.g. trends in arbitration)

Ideally, contributors will have an average of 8 hours per week to dedicate to assignments. However, if you're looking for fuller employment, talented candidates may be able to work themselves into such a position.

We pay fees that are generous by journalism standards, but modest by the standards of “Big Law” firms. 

Interested candidates can send their cv’s and a short (500 word or less) cover note. Your cover note should clearly indicate any employment and programs-of-study in which you are currently engaged. Please send these materials to vivian@iareporter.com and include the words “Freelance contributor” in the subject header of your email message.

Luke knows everything that's going on in the investment arbitration world, and this seems like a great opportunity to get paid to learn more about the field.

In a second round of cases in Luxembourg, a number of seal hunters failed (yet again) to convince the General Court to annul the EU-wide ban on trade in seal products. In a nutshell, the seal hunters argued that the EU acted ultra vires by adopting the ban on the basis of article 114 TFEU (harmonization of rules for the establishment and functioning of the internal market). Moreover, the applicants argued that the ban violated their fundamental rights and the principles of subsidiarity and proportionality. According to the applicants, the EU-wide ban was not aimed at improving the functioning of the internal market, but rather at safeguarding the welfare of animals, an objective for which no legal basis exists within the EU Treaties.

In dismissing the arguments put forward by the seal hunters, the General Court made a number of interesting statements regarding the EU’s ability to severely restrict trade of an ‘exotic import’ (a product not made within the EU) within the EU’s internal market on grounds of protecting the welfare of animals living outside the EU. In this post I will focus on the competence issue by discussing the particularities of EU constitutional law and the (modest) challenge a ban on the sale of exotic imports such as seal products poses for EU legislative competence.

5.174. In the present disputes, supply-side factors suggest that windpower and solar PV producers of electricity cannot compete with other electricity producers because of differences in cost structures and operating costs and characteristics. Windpower and solar PV technologies have very high capital costs (as compared to other generation technologies), very low operating costs, and fewer, if any, economies of scale. ...

...

5.178. In our view, not only should the Panel have defined the relevant market at the outset of its benefit analysis, but, in its analysis of the relevant market, it should also have considered that in Ontario the government definition of the energy supply-mix for electricity shapes the markets in which generators of electricity through different technologies compete. We recall that Canada had argued before the Panel that the relevant market for the purpose of the benchmark analysis should be the market for electricity produced from windpower or solar PV technology. Had the Panel more thoroughly scrutinized supply-side factors, it would have come to the conclusion that, even if demand-side factors weigh in favour of defining the relevant market as a single market for electricity generated from all sources of energy, supply-side factors suggest that important differences in cost structures and operating costs and characteristics among generating technologies prevent the very existence of windpower and solar PV generation, absent government definition of the energy supply-mix of electricity generation technologies. This, in turn, would have lead the Panel to conclude that the benefit comparison under Article 1.1(b) should not be conducted within the competitive wholesale electricity market as a whole, but within competitive markets for wind- and solar PV-generated electricity, which are created by the government definition of the energy supply-mix.

I take the AB to be saying that because the costs of solar- and wind-produced electricity are higher than for other forms of electricity, solar and wind electricity must be considered a separate market from wholesale electricity more broadly.

But is that right?  Are solar and wind a separate market, or are they simply uncompetitive products in the electricity market?

I can imagine that supply-side factors would sometimes be relevant for market definition in the antitrust/competition policy context, but I'm not sure how well this approach translates to the SCM "benefit" context.  It may be that the role of market definition is different in each.  In the SCM context, the issue is the terms on which a financial contribution was provided, rather than a determination of all the players in the industry for antitrust analysis purposes.  (I'd be curious to hear the views of any antitrust/competition policy experts out there).

Macau Cultural Centre

8^th – 18^th July 2013

Objectives:

The Academy of International Investment and Trade Law, based in Macau and organized by the Institute of European Studies of Macau since, aims at providing education and training at the highest international standard on the law of international trade, the WTO and selected issues of regional integration regimes such as the NAFTA, EU, Mercosur and ASEAN. The course takes place during two weeks in July and follows a model similar to the Academy of European Law, in Florence, and to the Academy of International Law, in The Hague. Its teachers are invited from the leading experts in the world. The Academy fills a gap in international legal education and, although especially devised for governmental staff, particularly in Asian countries, it also provides a unique opportunity of high-level training in the law of international trade and investment to young scholars and lawyers at large. 

Among the best guides to Azevedo's views is the ICTSD e-book collection of questions and answers of  DG candidates. One of Azevedo's responses there on climate change will be of interest to WTO lawyers.  Azevedo suggests that evolutionary interpretation of WTO law may well be able to address the climate challenge, citing the Shrimp/Turtle case.  Compare this to the atavistic approach of Pascal Lamy in a 2008 speech on climate and trade, where he lectured the audience that well, after all, Shrimp/Turtle is only about shrimps and turtles! (and he went on to misread the case anyhow, suggesting that it stood for a self-standing requirement to negotiate as a precondition to unilateral measures, which the AB made clear in its 21.5 ruling was not the case, and even clearer in US-Gambling, when interpreting the GATS equivalent of Article XX).

To link up with Simon's last post, one might ask whether the approach by the AB to "benefit" in the Canada-Renewable Energy case is the kind of evolutionary interpretation that Azevedo had in mind when talking to ICTSD about climate.

I'm not sure that's exactly right, but it may be something along those lines.

Part of the reason this case is so difficult to follow is that electricity markets are absurdly complicated.  I thought it might help to put forward two examples of similar issues using more familiar products.

First, let's say that governments are worried about the polluting effects of coal, and they hope to develop natural gas as an alternative.  They also want to ensure a long-term supply of energy.  They recognize that there is lots of shale gas out there, which would help with these goals, but unfortunately it's hard to get to it.  It's too expensive and thus there is no market for it.  So, a government subsidizes research on techniques to extract it.  The research pays off, and now there's a booming market for shale gas.  Would it be said that the government created this market?  In that situation, how would the AB's test be applied to determine whether a benefit has been conferred?  What is the benchmark?  If other governments have offered subsidies, do you compare this government's subsidies to other governments' subsidies?  If no other government has offered subsidies, what is the benchmark for comparison? 

For the second example, let's say a government wants to end reliance of fossil fuels, so it decides to promote battery-powered cars.  But there's no market for them; they are too expensive.  So the government offers tax credits to consumers who purchase these cars, thus creating a market.  How would the AB's test apply here?  What is the benchmark?  Do you compare this government's tax credits to those of other governments?  What if no other government offered tax credits?

I have no answers at this point -- only questions.

5.188. Nevertheless, a distinction should be drawn between, on the one hand, government interventions that create markets that would otherwise not exist and, on the other hand, other types of government interventions in support of certain players in markets that already exist, or to correct market distortions therein. Where a government creates a market, it cannot be said that the government intervention distorts the market, as there would not be a market if the government had not created it. While the creation of markets by a government does not in and of itself give rise to subsidies within the meaning of the SCM Agreement, government interventions in existing markets may amount to subsidies when they take the form of a financial contribution, or income or price support, and confer a benefit to specific enterprises or industries.

5.189. We further note that a comparison between renewable energy electricity generators and conventional energy electricity generators requires consideration of the full costs associated with the generation of electricity. In this respect, if, on the one hand, higher prices for renewable electricity have certain positive externalities, such as guaranteeing long-term supply and addressing environmental concerns, on the other hand, lower prices for non-renewable electricity generation have certain negative externalities, such as the adverse impact on human health and the environment of fossil fuel energy emissions and nuclear waste disposal. Considerations related to these externalities will often underlie a government definition of the energy supply-mix and thus be the reason why governments intervene to create markets for renewable electricity generation. On this point, we agree with the Panel's statement that, where government intervention that internalizes social costs and benefits is limited to defining the broad parameters of the market, "significant scope will remain for private actors to operate within those parameters on the basis of commercial considerations".

5.190. In the light of the above, and in particular in view of the fact that the government's definition of the energy supply-mix for electricity generation does not in and of itself constitute a subsidy, we believe that benefit benchmarks for wind- and solar PV-generated electricity should be found in the markets for wind- and solar PV-generated electricity that result from the supply-mix definition. Thus, where the government has defined an energy supply-mix that includes windpower and solar PV electricity generation technologies, as in the present disputes, a benchmark comparison for purposes of a benefit analysis for windpower and solar PV electricity generation should be with the terms and conditions that would be available under market-based conditions for each of these technologies, taking the supply-mix as a given.

How big will this government creating a market "exception" be?  Will governments look for opportunities to use it to make financial contributions in a way that does not confer a benefit?  What other goods that might not exist in a market could governments act to create?

Along the lines of some of the issues in Seal Products, this is from a WTO report by a panel of experts convened by Pascal Lamy, on "Defining the Future of Trade":

Principles are the foundation of the system

We focus on three areas where principles defining the system are crucial. These relate to non-discrimination, transparency and the relationship between flexibility and reciprocity. ...

....

Non-discrimination: managing non-tariff measures

As mentioned in Chapter 2, the topography of trade barriers is changing. With the reduction in tariffs, NTMs naturally attract more attention. While we urge vigilance as to the manner in which they are designed and used from a trade perspective, we also recognize that NTMs are here to stay. Where they serve public policy objectives, the issue is not elimination. Rather, we must manage them appropriately in relation to their effects on trade.

Regulations in key areas of the economy, such as health, safety, environmental quality and labour rights are not set in the WTO. What this means is that the WTO must consider how to articulate the relationship between trade opening and the existence of measures outside its remit that are nevertheless relevant to the conditions under which trade takes place. While a convergence of public policy design would facilitate matters from a purely trade perspective, we recognise that respect for differing social preferences is paramount. We must work towards a shared understanding of what constitutes a level playing field. As a matter of principle, we argue that the discriminatory application of NTMs must be avoided where possible and that members should not restrict trade where this is not essential to the pursuit of public policy objectives. Capacity-building and technical assistance should also be available to help developing countries in this area of policy.

There are two parts to this that intrigue me.

First, my sense is that particular words become sensitive over time.  Just like "aim and effect" became very controversial a while back, and people came up with new words to reflect similar ideas, there is a lot of nervousness about the word "necessary."  So here we have a substitute word, "essential": "members should not restrict trade where this is not essential to the pursuit of public policy objectives."  The specific word choices dealing with the connection between measures and their goals are important.  Does a measure need to be "related to," "necessary for", "essential to"?  At some point, I would love to see one of these expert panels that come around every few years get into the weeds and discuss the nuances of the different options.

Second, there's the issue of how non-discrimination as a principle relates to these concepts.  Here, the panel starts off by saying the principle it is discussing is "non-discrimination."  Then it elaborates, "the discriminatory application of NTMs must be avoided where possible."  So that's all clear.  Discrimination is not allowed.

But that's not the end of the sentence.  The panel then adds the part mentioned earlier: "members should not restrict trade where this is not essential to the pursuit of public policy objectives."  Does the panel think this is another way to state the non-discrimination principle?  After all, this is all being said under the general heading of non-discrimination.  Or is this an additional principle, going beyond non-discrimination?

People tend to gloss over these issues, but one of my goals is to highlight them and get people to talk about them.  So, feel free to talk about this in the comments!

Cuba notified the WTO Secretariat, on 3 May 2013, of a request for consultations with Australia on the Australian Tobacco Plain Packaging Act of 2011 that regulates the appearance and form of retail packaging used in connection with sales of cigars, cigarettes and other tobacco products.

From what I can see (and somebody please correct me if I'm wrong), this is the first Cuban GATT/WTO complaint since this one back in 1982.

Some of the panelists had difficulty understanding how permitting for-profit or fully commercial sealing under the indigenous or marine management exceptions would undermine the public morals or animal welfare objectives of the EU.  I find this baffling:  it is very easy to see why people would be more outraged or upset at the suffering of animals when it would not occur but for the profit motivations of private industry, as opposed to for some necessary or legitimate public purpose.  The EU already restricts animal tested cosmetics but is no so restrictive of testing on animals when it comes to developing life-saving medications.  That corresponds to very widespread moral intutitions that commercial exploitation of animal suffering is different from suffering which occurs for other important human purposes, even though it can lead to profit taking (such as the profitable sale of an animal-tested wonder drug).  The panel also seemed to find it hard to grasp why if for-profit or commercial activity were permitted under the exceptions, there would be incentives to circumvent the ban, for example simply choosing ethnically indigenous people to run a commercial hunt (whereas the idea of the exception is to preserve a traditional way of life, not an open-ended affirmative action program for any person of indigenous ancestry).  Finally the panel did not seem to grasp the meaning of the footage that was shown to it at the beginning of the day; commercial hunters unlike non-commercial indigenous and marine management hunters, depend for a living on immobilizing as many seals as possible as quickly as possible-there need for seals is not intrinsically limited by these other purposes (like meat for their own table, and their dogs) but rather every extra seal means extra profit.    It is the economics of the commercial seal industry that are incompatible with methods that involve monitoring each seal from the first striking of the seal until one is sure that it is quickly, and as painlessly as possible, dead.  This is the tragic conflict between commercial sealing and what in an ideal world would be best practices in terms of humane killing. (Of course, aboriginal hunters use methods that are humane, because of the necessities they are under; but the other side of the coin is that they don't have the incentive to take as many seals as possible within a very short period of time, which is an important limit on their inhumaneness).

Now from tragedy to comedy.  The most hilarious red herring was introduced by the Chair of the panel who said he had heard a report that seal hunting was occuring on or in the waters of the French overseas territories of St Pierre and Miquelon.  Now evidence was one of my lowest grades in law school, but am I wrong that there is something questionable about a judge introducing evidence of his own in a proceding on the last day, without it being in the record?  Whatever report it was, didn't even seem to be distributed to the parties. Nor in any of the publically available or leaked pleadings that I have seen were there any facts related to St. Pierre and Miquelon.  But merely by introducing this as some kind of shocker or smoking gun, the chair of the panel appeared to have misunderstood the EU measure as a ban on hunting not the placement of seal products on the EU market-it is really very difficult to see how the existence of hunting in St. Pierre and Miquelon could possibly be relevant to the actual measure before the panel (unless seals products made from St. Pierre and Miquelon seals were being exempted from the EU general ban, which nobody was suggesting).  Eventually, the panel was informed that St. Pierre and Miquelon were among those French overseas territories to which the European Union treaties don't apply (if I understood correctly).  But this was not the only case where the chair appeared to misunderstand the EU measure as a regulation on hunting rather than the placement of products ultimately derive from hunting on the EU market.   

The Singapore panelist asked the parties whether they thought TBT applied to PPM characteristics of a product that were not embedded in the product physically.  Was this question just intended as a test of how well the attorneys knew the Tuna/Dolphin case, where she was a panelist (and where majority decided that TBT did apply to the US measure, despite dolphin friendliness being a non-physically embedded characteristic)? Or is it a giveaway sign that she was indeed the dissenting panelist who didn't have to get to that question, because she (rightly in my view) found that the US measure did not mandate any product characteristics as such?  In any case, the AB has upheld the decision of the panel  in Tuna/Dolphin that TBT is applicable to the US measure, and this means it had to uphold the finidng that that product-related PPMs within the meaning of TBT include PPMs based on characteristics that do not affect the physical nature of the traded product.

Norway quickly gave an answer that was glib, which was that there is no need to decide the question because the EU ban simply mandates of products that they not have the obviously physical characteristic of containing seal.  Not so fast.  Because Norway itself has emphasized obsessively the exceptions to the ban, and these exceptions are based on non-physically embedded characteristics of the seal product, such as whether the product is derived from certain kinds of indigenous or marine management hunts.  In any case, as noted, the AB has already determined the issue.  So why use up precious time talking about it in the last hours of the hearing?

Finally, it became clear under questioning that Canada didn't have much of a detailed notion of the less-trade restrictive alternative it was proposing that the EU could adopt to achieve the same level of protection or higher.  This appears to be some kind of negotiated certification and labeling scheme  that would allow into the EU seal products where certified as coming from seals hunted in a manner that meets humane standards.  It was insisted there were other real world examples examples where the specific hunt where one could trace the hunt from which a particular product is actually derived. But, as many experts have insisted, the geographic and climatic conditions under which the Canadian commercial hunt is conducted would make monitoring and verification of the hunting practices on an ongoing basis difficult if not impossibly dangerous and insecure.  That's a different problem than tracking.  Not surprising that the OIE (the international animal health organization) didn't go down the road of humane hunting standards once it received an expert report detailing the extreme obstacles to effective monitoring and enforcement.  

Still I promised a blow-by-blow of the second day, and here it is (without repeating all of what was in the last two posts). 

The day began with the Chair of the panel pushing hard on the comparison between the indigenous Greenland hunt and the non-indigenous Canadian and Norweigian hunts.  The EU explained that the main purpose of the Greenland hunt is the pursuit of a traditional way of life, where seal products are part of the diet, and even the food for the sled dogs inseparable from that way of life.  The Chair kept coming back to the apparent lack of evidence about animal welfare outcomes in Greenland, as if assumptions about a lack of animal welfare concerns were the reason why the EU had not banned products from that hunt.  The EU had to explain, again as it did repeatedly in the hearing, that the reason that the Greenland hunt was permitted was that it was a traditional indigenous hunt, and that the EU had decided that to the extent that some of the hunting practices the indigenous people there had to use were not consistent with animal welfare, that indigenous rights must prevail.   Here the exchanges kept circling back to the apparent incapacity of the Chair to understand that one can have two objectives and make a decision to sacrifice some of the fulfilment of the one in other to advance the other objective.  If THAT is contrary to WTO law, then so is most legislation in most liberal democracies to the extent that it affects trade.

The Chair went on to summarize his thinking on the case, saying very kind things about the Canadian and Norweigian hunts, as integrating animal welfare and natural resource preservation, while all the while moving toward a more humane hunt.   Before all the oral pleadings on facts and law had been made, he was essentially telling the EU they had lost their case.  It was like a judge saying:  ok, I'm going to find you guilty, is there anything you can say on your behalf before I pronounce the sentence. (I wonder if there could be a DSU 13 11 objective assessment challenge here on appeal).

There then followed a question from the Australian panelist, which ultimately provoked one of the most shocking moments in the hearings about which I've already blogged.   She questioned whether Canada and Norway had correctly identified the measure in its Request for a Panel, since when she looked at the EU scheme she couldn't find an import ban as such.  Norway responded that as far as its request went, there was no due process issue because, in referring to a prohibition with exceptions, Norway's description was adequate to identify  the measure being complained of.  I actually think that the Australian panelist was driving at a different issue than the adequacy of the Panel Request under DSU 6.2. But Norway's (mis-) interpretation of her concern, led to the outlandishly ignorant mistake I've already blogged, the Chair claiming that once the DSU has established a panel, any defects in the Panel Requests are of purely academic interest.

But, as I say, I suspect the Australian panelist was concerned with other matters, in particular with how one could claim a violation of Article XI if the measure itself is not a prohibition or restriction on imports. Perhaps also with whether and to what aspects of the measure the TBT Agreement applies.   The EU gave a very clear explanation:  the EU measure prohibits, with certain exceptions, the placing on the EU market of seal products (whether imports or internal), while this prohibition is enforced at the border in the case of imports.  In other words, this is exactly the kind of measure that, pursuant to the Note Ad Article III, is to be considered under Article III National Treatment not Article XI Quantitative Restrictions (as the panel made clear in EC-Asbestos in a finding that was adopted).  

The Australian judge then kept hammering away on underinclusiveness concerns.  Why was transit through the EU consistent with public morals, but not consumption by EU consumers of seal products?  The basic confusion here is really one sown by Norway's attorney:  only a fanatical moral rule qualifies as a "public moral"-so, for example, the prohibition on taking of human life isn't really a moral rule if the criminal law permits a necessity or legitimate self-defense excuse or justification, or euthanasia, or abortion, or capital punishment.

But WTO law allows a Member to determine not only an objective but its level of protection in relation to that objective, and as well, only requires Article XX that a measure make a material contribution to the objective or TBT 2.2 some contribution.  The moral beliefs of Europeans could be such that they find facilitating the consumption by non-Europeans of seal products itself to be unacceptable complicity with animal cruelty.  But even it that were the case, they might be more concerned with the consumption of seal products by their own fellow-citizens.  The contributon to the public morals objective might thus be calibrated with other legitimate concerns, like comity, extraterritoriality, and limited monitoring and enforcement resources.   This is why, wisely, WTO law does not put in issue a Member's objective just because, in part due to other objectives (or other considerations that may fall within the same object, such as public morals), a Member decides to take a measure that only fulfills that objective to a limited extent.  And the extent is really a sovereign choice.  The Australian judge's concern with consistency would logically suggest that the EU could only act on pubic morals concerning cruelty to seals through trade-related measures, if it were to ban all trade  with all countries where seal meat is produced or consumed. This relates to another reality from which the panel seems utterly removed:  obviously in a given society there can be genuine fundamental moral beliefs but the degree of intensity of those beliefs, and what is adequate in the way of responding them through government regulation, will differ from citizen to citizen.  I'm sure that you can find a few people in the EU who would like it if there were drone attacks on Canadian sealing vessels, and of course there are some at the other end of the spectrum who probably even think that Canada goes far enough in preventing cruelty and that nothing be done.  The kind of approach to which the panel is inclined with respect to public morals, or at least Norway is urging them towards, would allow a non-democratic regime to stipulate a moral objective as that of an entire society (like China was able to do in the Publications case) but it would make it impossible or next to impossible for a liberal democracy to regulate based on a consensus that reflects a compromise between citizens with varying intensities of moral belief.  Truly perverse.  The remarkable degree of consensus in the European Parliament, between elected representatives of som any diverse societies, reflects the ability of liberal democracies to vindicate public morality while respecting pluralism in the extent or intensity of moral belief through compromise and calibration of the regulations in question.  This what Norway perjoratively characterized throughout the two days as "cherrypicking" or "inconsistency" or complete incoherence.

The Australian and the Singaporean judtge pressed on with the line that the EU seemed to be completely sacrificing animal welfare in the case of the indigenous hunt exception.  Could the EU not impose minimal animal welfare standards as a condition for allowing indigenous hunt seal products?  The EU pointed out that there are large exceptions to Canada's own animal welfare laws for the indigenous hunt and that general animal welfare laws of the Member states would still likely apply to such hunts.  The EU also rightly repeated the hard reality that the traditional way of life of the indigenous peoples in question basically makes a supervised humane hunt impossible.  And I would simply add that there is nothing in WTO Law that prevents a Member from limiting its contribution to its objective (public morals, animal welfare here) in order to achieve another objective (indigenous rights).  There is no case law that says that a Member has to have a measure that contributes to the maximum extent possible to goals A and B, such that when it pursues C, it must minimize the extent to which pursuing C limits or reduces its contribution to achieving A and B.     This is especially true with the Seals measure, where A, the public morality of the European Union's citizens includes, or overlaps with, both B and C. 

When it came to the sustainable marine management exception, ironically, the panel looked with suspicion on the limitation of the exception to "small scale" hunting.  Ironically, because as the EU explained, besides anti-circumvention (trying to use a cull as a pretext or cover for the kind of commercial sealing that the EU's public morality cannot countenance), the limitation of the marine management hunts to a small scale reduces the number of seals killed even while contributing to the marine management.  Here the EU has struck a different balance than with the indigenous hunts:  the contribution to the marine management objective is limited by the concern to protect the contribution to the public morals and animal welfare objections.  Again, there is nothing in WTO law that goes against such balancing.

Amazingly, the panel didn't really understand the point so there was a follow up question as to whether the EU considered that the quanity of seals killed mattered to public morals apart whether they were killed cruelly or not.  With infinite patience, the EU explained the painful arithmitic:  since inevitably a significant percentage of seals killed in any hunt will be killed inhumanely, there will be a lot more suffering from inhumane killing if a group of 1000 rather than 100 seals are killed.  The kind of moral obtuseness shown in this hearing just boggles the mind.  Don't the basic moral sensitivies of human beings display particular horror and indignation at humanly-inflicted suffering on a relatively large scale?

In questioning the non-profit dimension of the sustainable marine management exception, the Australian panelist returned to the moral absolutist or moral fanaticism line.  She rightly noted that when seals are killed for marine management purposes, they are killed because they interfere with profit-making fisheries.  So why is indirect profit from the suffering of seals okay, but not direct?  Of course, that just goes to the intensity of authentic moral beliefs.   Since the seal hunt cross-subsidizes in Canada other fisheries (by providing some of the income that allows the fishers to remain in operation and not move to Toronto, etc), one could ban other fish products from Canada, in the sense that these other fishers profit from the seal hunt  (and indeed some activists have called for boycotts of restaurants that serve such products along these lines).  But why can't the equilibrium point of intensity of moral beliefs across Europe, as determined by its representative institution, the European Parliament, be set at finding indirect profit acceptable and direct profit not acceptable?   What case law of the Appellate Body could be pointed to, what text of any relevant WTO Agreement, to suggest that WTO Members surrender their right through legitimate public institutions, to determine the equilbrium point of intensity to which moral beliefs are reflected in regulatory action?  More soon, have to prepare for class. 

But as a teacher and a scholar, i have a duty to my students and my colleagues, and to my own ideal of the life of the mind, to try and take some distance and put what happened today in a broader perspective.  Before I post tomorrow the blow-by-blow of today's debacle, I would like reflect in such a broader view.

I remember the late 1990s.  The panel report in Shrimp/Turtle had come out and it had taken the completely anti-evnironmentalist line (like Tuna/Dolphin I) that, in essence, you could not under WTO law restrict trade to deal with an environmental problem that was not purely domestic.  I had an article to be published in the Journal of World Trade about the panel, "Another Environmental Disaster in Geneva."  I happened to be teaching that summer in the Academy of European Law at EUI, and so was Claus Ehlermann, at the time an Appellate Body Member.  We had a lunch at Carpe Diem, between San Domenico and Fiesole.  By the time the espresso came, my view of the trade and environmental issue at the WTO had changed.  Claus and I avoided completely the diiscussion of the case, as he was under a strict duty as a judge not to comment on such a matter.  But an hour and a half in the presence of this humane and wise being convinced me that the panel report in Shrimp/Turtle would be overturned-because I saw what kind of man Claus Ehlermann was (and is) and I  knew he would never sign a judgment that would make the WTO stand for the right to destroy endangered species.   After that I made the confident prediction that the AB would follow a different route on trade and environment, which led to good-natured skeptical laughter from friends like Arthur  Appleton. Ultimately, though, my intuitions after that lunch would prove to be right.

Fast forwarding to today, despite all the bluster and anti-animal welfare rhetoric by Canada in particular, it is remarkable that no one questioned the right of the EU to exclude from its markets, products from seals killed in an inhumane manner.  Norway even conceded that the EU could have standards that excluded products from seals killed with methods permitted in Norway.  In light of the history of the trade and environment debate this is not a trivial common ground.  

The second big picture observation, related to the first, is that the greatest bulk of the argument time of Canada and Norway focused on the exceptions in the EU ban-indigenous, marine management, personal, use, transit  (the latter two or even three utterly trivial in economic impact).  What is the story here?

The perspective we have to bear in mind is the recently-decided TBT trilogy, US-Cloves, US-COOL, and US-Tuna/Dolphin.  One of the common features of the AB rulings in all three cases is that the AB reversed all findings of violations of the panel other than those that could be characterized as "underinclusiveness".  In US-Cloves, clove cigarettes were banned, but not menthol, which on the basis of deference to bad fact finding by the panel, the AB considered to pose the same problems in terms of the public health objective, but not different public health challenges in implementing a ban (wrong, but the panel is the culprit).  In US-COOL, the AB held that the only violation of TBT was that the paperwork burden  on operators was not needed to insure the integrity of the information actually required to be placed on the label.  In US-Tuna/Dolphin II, the AB held that there was underinclusvieness, because the US government scheme for verifying the integrity of the label did nothing to adress the risk of dolphin-unsafe fishing outside the eastern tropical pacific.  In all these cases, the AB gave the respondent the opportunity to comply by extending its regulation, to cure the underinclusiveness.   And in two of the three cases (COOL and Tuna/Dolphin) the US has proposed just that.  

There is always a risk that a state will not achieve the political consensus to extend, and thus would be put in the position of retracting.-or simply being subject to suspension of concessions (which would be not large in the case of Seal Products).  But, in fact,, how hard would it be for Europe, if it had to, to eliminate the marine management exception to the ban of seal products?  There are only a small number of seals involved-nuisance seals-and those products could easily be used for products that could be destined for non-EU markets.  At least one panel member, the Australian, seemed to think the indigenous exception had a "persuasive basis." So eliminating the marine management exception (and the personal use exception ) would largely solve the concern with exceptions, at least one of the panelist's concerns.  And hard to imagine that it would in any way detract from seal welfare.  Of course, doing so won't give Canada or Norway any additional competitive opportunities, but that just shows why the effects, rather than the rhetoric, of the challenge to the expections is not really anti-seal.  Indeed,a panel ruling faulting the EU measure for underinclusiveness (i.e. impugning the sustainable marine management and personal use exceptions) would give animal welfare activists valuable support in trying to resist what might be regarded as loopholes or gaps in proposed bans on seal products that may be on the horizon in other WTO Members. 

A similar observation could be made about what seemed to be the obsession of the Chair but even more so the Australian panelist about the fact that the EU had not acted to impose animal welfare standards even where the product was permitted under an exception.  Playing philosopher-kings and philosopher-queens these panelists appeared to be thinking that a perfectly rational public-morals based measure would require that animal welfare be addressed even within the exceptions.  The EU made a common-sense, real-world response: there is a tension between the conditions of the traditional aboriginal hunt and an effective scheme to protect animal welfare, so in practice there is a trade-off between protecting socio-cultural practices and protecting seals.  But I suppose, in an ideal world, one would indeed say that the EU ought to try and make indigenous peoples make some compromises with what they see as tradition for the sake of animal welfare.  I think it is utterly misguided to believe that one imposes that through a legal regime like the WTO with any real legitimacy (the pluralism point that Langille and I make in our Yale piece). And I don't know any provison as interpreted by the AB under either GATT or TBT that could justify imposing that.  But from the animal welfare point of view, it isn't a terrible idea. I'm sure there are some forms of training or sensitization that could be undertaken by the EU (without even having to go back to the Parliament), which would exhibit that they have not entirely abandoned the public-morals animal welfare objective even while pursuing the equally public-morals based objective of vindicating indigenous rights.  Of course,this might be viewed as condescension since indigenous peoples may have other ways ofthinking about mediating their connection to nature, and it will do nothing to increase the access of Canadian or Norweigian imports to the EU market,  since Canada actually exempts indigneous peoples from the main animal welfare requirements, and Norway's hunt is not indigenous to any extent.  But, on the other hand, it is possible  to meet the panel's apparent obsession with perfect rationality without sacrificing seals (and maybe even saving a few more).  And again though without providing any economic benefits to Canada nor Norway.

Then there is less restrictive alternative.  I won't repeat what I've already posted.  Bottom line: both Canada and Norway appear to propose or at least countenace a scheme that would allow seals hunted inhumanely-at least according to Norway, based on the EU's own standards for what is inhumane-t be excluded from the EU.  By accepting this as a less trade restrictive alternative, they are atorning to the idea that were the EU to properly implement such a scheme as an alternative to the current ban, it could do so consistent with WTO law.  How could an alternative that itself violates WTO be reasonably available, to say nothing of whether it could be regarded as less restrctive in a meaningful sense.  Thus, by saying that the EU can operate an alternative scheme, banning seal products where the individual seal from  which the product is derived has not been convincingly established to be killed humanely according to the EU's own standards, Canada and Norway are basically admitting that much of their argumentation is irrelevant bluster,e.g.. the claims about the existing Canadian hunt being "humane" , about Norway's permissiveness of gaffing being okay etc.  The EU attorney responded in an honest, common-sense way to the proposed less-trade-restrictive alternative-because of the climatic and geographic conditions, the monitoring problems, etc. in reality under such alternative scheme very few seal products from Canada and Norway would ever get into the EU.  But if the panel sticks to its apparent obsession to have a Platonic ideal of a measure, well, it wouldn't make any difference from an animal welfare perspective, and maybe not from the overarching public morals perspective that encompasses animal welfare as well as other things.  The EU would simply impose a strict burden of proof to show that any given product coming in contained only matter from those seals that had been demostrably justified to have been hunted humanely.

Let me be clear.  I think the ban as is would be perfectly justifiable under WTO law. But like we see with the implementation of COOL and Tuna/Dolphin, there may be a window of opportunity to use what appears to be a negative (and legally wrong) decision to advance progressive values, making the meaure stricter and tighter. 

But what is really lost in the path that the panel appears to be going down, individual panelists to difffering degrees or at differing speeds, is the value of parliamentary democracy.  No normative weight is accorded to the real world result of compromise in a democratic process, the equilibrium of principle and interest, where multiple objectives are reflected in a law, but balanced in a different way than would be done by a perfectly rational philosopher-king or queen, because the balance is struck not on Mt. Olympus but through passionate argument, shrewd lobbying, and often rough and imprecise negotiated trade-offs.  There was no evidence here, despite the smoke and mirrors, of any discrimination, any lack of due process, any targeting of foreign economic interests, any corruption of democracy.  Just hard trade-offs, Well,

Well, Norway's lawyer, and the Chair of the panel apparently agrees, thinks that the least inconsistency, any element of tension between or imperfect integration fo different aspects of public morality, of multiple objectives, is fatal-intolerable contradiction, scandalous hypocrisy.

Yet this very messiness is what many of us call instead representative democracy, and we think it remains the best hope for humanity of decent self-governance (even if some could argue a la Churchill that it is the best in being the least worst.)

Anyone can get the law wrong on a specific complex point, and we have appellate review:  but I still find it incredible that the Chair (!) of a panel would not know the fundamental requirement and duty that the panel establish that the basis for its jurisdiction is adequate.  This goes to the fundamental legality and legitimacy of the panel's very existence.  Not being aware of the basic requirements for the panel's jurisdiction brings in serious question whether the Chair has any credibility left to run the panel procedings and be responsible for its proper operation.   I would appreciate the reaction of readers of this blog (and especially anyone else who witnessed the episode this morning)-is it going too far to suggest that he should withdraw and be replaced in order to protect the credibility and integrity of the panel.

Norway's strategem here was to portray the core distinction in the EU scheme as between permitted "non-commercial" hunting and impermissible "commercial" hunting, and suggest that this distinction was framed in a suspciously inconsistent way so as to protect Greenland's hunt while blocking products from Canada's.

There was a certain cleverness in Norway's rewriting of the EU seals regime.  Of course, the fundamental distinction is not commercial vs. non-commercial but between hunts that serve specific legitimate purposes that justify allowing some risk of seals being killed in a manner harmful to animal welfare (indigenous rights including to a traditional way of life and sustainable marine management) and hunts like the East Coast Canadian hunt that are based upon normal commercial activity and do not have these purposes.  Rightly, the EU scheme limits the extent to which the former, permissible hunts can result in commercial trading of seal products (the subsistence and own-use requirements in the case of the indigenous exception and the not-for-profit requirement for the sustainable marine management exception), to prevent abuse of the exceptions where hunts are conducted ostensibly for the purposes in question but are really a way of getting around the general ban and its morally-based animal welfare goals.  Because the fundamental distinction is not commercial vs. non-commercial but whether the hunt supports certain specific legitimate policy purposes or not, the EU scheme limits the extent to which the permissible hunts can be commercial, so that there is less incentive to try and abuse the exceptions to circumvent the main measure.  But in so doing it doesn't, and doesn't need to, eliminate all commercial activity flowing from the hunts for the permissible policy purposes; indeed eliminating all such activity would result in waste of products and thus be offensive to public morals since resources that could serve human needs would be thrown away. 

But rewriting the EU scheme as based on the commercial/non-commercial distinction served Norway's and Canada's purposes well.  Based on this distorting gimmick, wouldn't the fishers in Canada's East Coast hunt also be viewed as eaking a subsistence living out of sealing just as much as Greenland's indigenous peoples?  As the EU lead attorney reminded the panel, the all-important difference is that Greenland's hunt is indigenous and under international law, and indeed even under Canada's own constitution indigenous people are entitled to special treatment  when traditional activities like hunting and fishing are involved.

As someone whose origins are in the East Coast of Canada, I would add that the supposed "subsistence" nature of the non-indigenous East Coast hunt derives from a policy decision of Canadian governments to deal with economic decline on the East Coast of Canada not through worker adjustment or other pro-active industrial policies but through a mix of aids to prop up uneconomic fishing actvities and the seal hunt, as well as welfare-type payments to see the these individuals through in really tough times.  In other words, while seal hunting of indigenous peoples as a way of survival is an ancient cultural practice, resorting to seal hunting as a way of earning one's keep on the East Coast of Canada today is the result of a pathology of failed industrial and adjustment policies, as documented in numerous Royal Commission-type exercises, studies, reports and taskforces on economic underdevelopment in Atlantic Canada and what to do about it.

The other fallout from Norway's tactic of focusing the comparison on Greenland vs. the "commercial" hunts of Norway and the East Coast of Canada, was again being able (very repeititvely) to revert back to the attack on the idea of a measure with multiple objectives where to some extent the achievement of one involves accepting a lesser degree of fulfilment of another.  Thus, Norway and Canada would have it that the Greenland indigenous hunt  is as "cruel" (and they suggested, even more so) than the Canada East Coast non-indigenous hunt.  Yes, of course, regrettably, because the suffering of seals is being given less significance than respecting indigenous rights in this particular case.  But, it was asked by the chair of the panel in effect,, could not something still be done to minimize the suffering occuring during indigenous (or indeed marine management) hunts? The EU answered very honestly that there are real limits to that in the case of indigenous hunts, given the way in which traditional indigenous hunting is done and the EU also pointed out that Canada itself exempts indigenous hunting from its own animal welfare requirements.  Canada hemmed and hawed, said some things about the complexity of the exceptions, but in the end admitted it.  As for the marine management hunts, I would add that we musn't forget that such hunts are required to be conducted in a manner that doesn't undermine the main purposes of the EU measure.  Thus, arguably, animal welfare concerns cannot simply be ignored when this exception is invoked, even if, to some extent, they are being relativized to the sustainable marine management purpose.

At one level, these indignation-provoking images were a dramatic reminder of the power and authenticity of the moral sentiments that underpin the EU ban. 

But the videos disclosed much else about this case. The images refuted Canada's claim about a humane 3-step method, because they showed that the sealers can't afford or don't afford the attention to what's happening with a still-conscious seal.  They don't adminster the further steps in time to avoid unbearable suffering (and that is the whole hypothesis that that the 3-step method is humane). 

The images also are a graphic display of why aboriginal and marine management hunts are different from the non-aboriginal Canadian hunt-the commercial pressures of the latter mean that the sealers have little choice but to try and immobilize as many seals as possible at the same time, and thus cannot tend to what is needed to put individual still-conscious seals out of their misery quickly.  No aboriginal hunt involves this pattern.  

And the images show why Canada's and Norway's fantasy of a world of regulated humane killing is just that-for even without the commercial pressure, the risks created by climate and geographic conditions often create a tragic choice between the safety of the sealers and what is needed to attend to the wounded seals and insure there suffering is merely instantaneous. The EU was careful not to attribute callousness to the individual sealers, indicating that the cruelty is ultimately systematic, a product of the combined commercial pressures and natural realities.  This is why a humane hunt under entirely commercial motives is a delusion--even if an individual seal can be killed sometimes humanely and an individual hunter can be a humane human being.

Norway's opening statement mostly focused on responses to the EU legal arguments, based on various misreadings of WTO jurisprudence (I'll expand on that in a more doctrinally-focused post later). Norway suggested that the EU was required under Article XX to undertake negotiations prior to imposing a unilateral measure.  A common misreading of the chapeau analysis of Shrimp/Turtle. 

First, Norway (and as it turns out Canada) do not grasp the AB's fundamental holding that the chapeau goes to application of the measure, not the design features of the scheme itself (this is an innocent misunderstanding, as was demonstrated this afternoon, when neither Canada nor Norway could understand EU question to them about what elements go to application under the chapeau and which on the other hand relate to the design features or structure of the scheme itself, which would be the focus of analysis for example under Article III (see Chile-Alcohol etc). 

Second, as the AB clarified in its 21.5 ruling, there is no general duty to negotiate under the chapeau but rather non-discrimination in the chapeau requires providing negotiating opportunities that are comparable from one forum to another. The chapeau does not require negotiation in the abstract, because it would be impossible to determine an abstact standard for serious negotiating effort, i.e.without a benchmark comparing the effort already invested with some particular other group of countries.   If there were any doubt, the AB removed it in US-Gambling, where it categorically rejected the idea that the invocation of the GATS equivelent of Article XX could be conditioned on prior talks with a view to a negotiated settlement, regulatory cooperation (Para. 317).

The second big legal conjuring act by Norway was about the relation of 2.1 of TBT as interpreted by the AB in Cloves, Tuna/Dolphin, Cloves and Article I and III of the GATT.  Norway's non-sequitur:  the AB  says scope of I and III in GATT and 2.1 in TBT are not always identical;therefore the particular AB holding about permissible detriminal impact from legitimate regulatory distinctions cannot apply to GAT I and III.  This is the equivalent logical error to saying that a Rottweiler and a Spaniel are different; therefore, in no respect can laws about dogs be applied to both. 

Of course there are some differences between GATT I and III and TBT 2.1, but this is not dispositive of what differences might influence legimatelythe interpretation of the provisions in question.  What Norway cannot point to is any statement by the AB in the case law that says that because the text of GATT I and III are different from 2.1 the analysis about legitimate regulatory distinction in particular is inapplicable to I and III.  True, the AB says that the absence of Article XX exceptions is a factor to be considered in understanding the overall relationship between GATT and TBT.   But this goes to the determination of the AB that there is a need to preserve a similar balance between the right to regulate and trade liberalization both under TBT and GATT.  Such a general observation about a balance is consistent with the proposition that under GATT itself there are important reasons why one needs to take account of regulatory purposes in considering treatment no less favourable, not just under Article XX, for reasons that that the EU lead attorney explained today (e.g.list of regulatory objectives under GATT X XX is closed).  Anyhow, as I will likely elaboate, the language of the AB in EC-Asbestos para .100 on permissible regulatory distinctions between like products is so close as to be essentially identical to the language of the AB in EC-Cloves para. 169 that 2.1 should not be read so as to mean that "any distinction, in particular those based exclusvielyon particular product characteristics or their related processing or producting methods, would per se accord less favourable treatment...."     And then you would need to expain Dominican Republic-Cigarettes where there was a disparate impact and no discrimination-the AB held that it was crucial to consider whether factors unrelated to national origin of the products procued the impact, in which case there was no basis for a finding of treatment less favourable. And on Article I, we have Canada-Autos, Columbia-Ports of Entry and the Poultry case for the proposition that non-national origin based distinctions or condition are compatible in principle with treatment no less favourable under I:I..

The third legal canard (besides the one diiscussed in my earlier post on the abuse of the ECJ by Norway in particular) of Norway and to some extent Canada is really the notion that a measure is incoherent if it serves multiple policy objectives  in such a way as that the fulfillment of some of the objectives is limited by virtue of the need to address other objectives.  Norway in particular resorted to a crude rhetorical trick.  It suggested that on the one hand the limits on the marine management exceptiion-the size of the cull-could not be jusstified under marine management purposes, while the margine management exception seemed to belie the animal welfare/public morals concerns behind the ban as a whole.  But this is just a game.  In fact, all of this is explained by the basic observation of the AB in EC-Hormones that multiple objectives are normal in representative democracies. 

The scale of hunt and non-profit limitations in the SMS exception as well as the subsistance/use within the community  conditions in the indigenous exception reflect  the concern that these exceptions not be abused or circumvented to undermine the main purposes of the general ban.  thus,when one considers multiple purposes, one has to consider how a measure can prevent the pretextual invocation of one kind of purpose to undermine another.  Each element of an exception has to be considered not simply in terms of the objective of the main measure taken as a whole or other objectives taken individually but the balance between them.  The sleight of hand of Norway and Canda is to portray the EU scheme as incoherent, by judging certain elements solely in terms of one of the multiple purposes and others in light of another of the multiple purposes.  The idea is to show incoherences by saying that elements that relate to one purpose cannot have deviations from that purpose that are required by  other purposes that could be entirely justified by these other purposes.  This technique totally undermines the basic proposition in EC-Hormones that meaures normally serve multiple purposes.

The big Canadian red herring was about dear hunting.  Obviously, Canada and Norway never argued that deer products are like seal products.  Now Canada contends that animal welfare regulation of deer hunting is nevertheless relevant.to whether the EU seal products ban is WTO-consistent.  The idea here is that in order to be able to stop cruetly against seals the E uhas to prove that it has taken measures to stop cruelty against every other animal.  This is what Jo Langille and I refer to in our Yale article as basically the fanatical or totalistic view of public morals, which suggests that the only bona fide form of governemtal regulation of morals is one thaat encompasses every possible moral concern of the same generic kind.  Why this is bad philosohy is, I hope, well explained by Langille and I;in fact as we point out it would lead to an advantage under WTO law to totalitarianism and fanaticism over democratic pluralism and gradualism-totally perverse.  But forget us-the AB clearly ruled in Tuna/Dolphin II that a Member can have a different level of protection for different animals, indeed under TBT 2.2 even a different level for ETP and non-ETP tuna.

One of the intense moments in the hearing occured where the EU asked Norway what its evidence was that  hooking or gaffing the seal without afterwards checking if it is suffering i.e. conscious was an "exceptional" i.e. rare practice.  Norway couldn't answer, bought for time, and never did answer, instead suggesting that the EU didn't understand the difference between pick-hunting and hooking-sort of like justifying the Spanish Inquisition by saying that its opponents didn't appreciate the nuances of the different torture procedures. 

There were some important admissions by Canada and/or Norway.  The EU had argued that what Canada labeled detrimental impact based on the total numbers of Canadian non-indigenous non-marine management seal products could be attributed to the decision of Canada to artificially increase the quantity of non-indigenous, non-marine management seal products through subsidies.  Thus, the relative of quanitty of such products could not be attributed to anything the EU does to affect equal competitive opporutnities. 

Canada's answer was that equality of competitive opportunities shoud be determined based on the situation that prevailed before the measure was introduced. Canada argued that the hunt was not subsidized at the time which the EU  ban was introduced.  In sum, Canada accepted that if the quantity of non-indigenous, non-marine management seal products could have been affected by subsidies at the time the measure was introduced, the EU would have a case that there is no disparate impact because the relative quanitty of Canaadian seal products qualifying for entry to the EU, i.e. competitive opportunities, is determined by factors related to Canadian policies not EU ones..  Well, now is the time for the panel to ask the parties about subsidies-direct and indirect aids-to the industry and to sealers that existed at the time.  Canada says none, but I am deeply skeptical--one would need to cast the net wide and look at subsidies to the fisheries generally since these underwrite seal hunting by fishers.  Of course, there is an additional docrinal issue as to whether the benchmark is the time at which the measure was introduced or the subsequent evolution of the competitive environment.

Despite all the bluster about proving public morals, Norway basically admiteed that the EU could protect seals under WTO law as long as it adopted the least trade restrictive measure.  This was revealing.  Their case boils down to the fantasy that there is a humane certification scheme out there that will achieve the EU's sought level of protection to the same extent as the current measure.  Remember the AB judgment than even a "risk" that an alternative will fall short of the aspired level of protection will mean that the Member can justify its existing measure.  Consider the facts, and remember that the measure must be "reasonably available" and that it is up to the complainant not the responding party to prove its existing and reeasonable avalabilty.  First, several dozen countries have moved to address morally-based animal welfare concerns about seal hunts but not one of these countries-differing in levels of development, what region they are located, in culture, etc.--has considered that such a certification cheme is possible much less moved to implement it.  Consider that the international organization for animal health has in a report of experts indicated that geographic and climatic conditions of the hunt in locations like Eastern Canada would make effective monitoring and enforcement of international humane hunting  standards essentially imossible. Consider that neither  the Canadian government  nor the industry, despite the dramatically declining consumer market for seal products due to animal cruelty concerns, have ever tried to design, much less implement, a humane certification scheme, or even so much as produced  a consultant's report as to how the various challenges could be overcome or met so that it is a reasonably available alternative.  Consider all of this and it is evident that the certification scheme in question is a chimera, or to use the preferred expression of Norway's attorney,"illusory".  More soon.

 Norway invoked today the ECJ decision on the seal ban as a kind of "admission" by the EU that the objective of the ban was not public morals.  The moral dimension of the European public's concern with the treatment of seals was not dealt with by the Court of Justice.  This was for the reason that, as pointed out by the EU’s lead attorney, under the allocation of competences in the EU “constitution”, public morals simply does not arise as an issue. 

Norway’s move trades on a confusion between the classification or characterization of a measure for the purpose of determining under what level of competence it falls in a federal system, and the characterization of its objective for purposes of WTO provisions such as TBT 2.2 and GATT XX. 

 Different federal systems divide competences over subject matter or policy purposes in complex ways that correspond to the written "constitutional" texts at issue, but also the twists and turns of case law over decades, if not centuries-a jurisprudential acquis where categories and semantic articulation of objectives is influenced by history, political culture, and shifting coalitions of judges on high courts.

 Canada itself is a great example.  For a period of time the Canadian Supreme Court found the basis for federal regulation of certain health-related products standards in the criminal law competence in the Constitution.  But had Canada been involved in a GATT dispute it would legitimately have claimed under Article XX that the purpose, from a GATT point of view, was health.  How a 19th century constitutional text and the words it uses to classify different areas of competence and the ways in which the courts have attempted to adapt those classifications to shifting social, technological, economic realities could not logically determine how a policy purpose is articulated under the exceptions in WTO treaties, an objective process deeply related to the object and context of the WTO Agreements in question, as the Appellate Body has indicated.  The Canadian Supreme Court, in R v. Crown Zellerbach, sustained regulationof the marine environment under the "Peace, Order and Good Government" power in the Canadian constitution-that sounds like "public morals" in WTO law term (or public order in GATS).  But, given their specific aims and the case law on the meaning of XX(g), measures in question clearly fall within XX(g) of the GATT not XX(a), based on a reading of those provisions that follows Vienna Convention Article 31.  Just as it would be unacceptable for Canada to invoke "public morals" in the GATT because of the rubric in Canada's original 19th century constitutional provision refers to something that sounds like public morals, it would be unreasonable to insist that having justified the measure in those terms under municipal law, due to Canada's distinctive constitutional history, it would be barred from invoking XX(g) of the GATT, even though the design, structure and object of the scheme from a WTO law and jurisprudence perspective, would clearly sound in the conservation of exhaustible natural resources.

 The US should also pay attention to Norway's sleight of hand here:  the US courts have often sustained federal action under the commerce power where the motivation of Congress was for example the protection of civil rights or the environment-the courts nevertheless held that preventing barriers to commerce between the states was a legal basis for the measures, because they contributed to that objective.  The expression "public morals" does not appear in the US Constitution; the justification for the regulation of many matters that relate to public morals in the US would have to be found in competences defined in other terms in the US Constitution and the relevant case law.  Take for example internet gambling.  In a series of cases before the US courts, federal regulation of gambling including internet gambling was justified under the US Constitution as aimed toward the regulation of commerce under the Commerce Clause.  (United States v. Lee, 173 F.3d 809, 810-11 (11th Cir. 1999); United States v. Zizzo, 120 F.3d 1338, 1350 (7th Cir. 1997); United States v. Wall, 92 F.3d 1444, 1449 (6th Cir. 1996); United States v. Riddle, 249 F.3d 529, 537 (6th Cir. 2001); United States v. Boyd, 149 F.3d 1062, 1065-66 (10th Cir. 1998). Thanks to WikiLaw!)  Perhaps because Antigua and its attorneys were not as tendentious as Norway in the Seals dispute, they did not even bother to argue that the regulation of commerce basis for the US measures under the US Constitution precluded a “public morals” purpose under the very different scheme of the WTO I n any case, in US-Gambling the panel and the Appellate Body did not feel they even needed to consider how US courts had characterized the measure in under the constitutional allocation of competences:  they could have asked the US about the characterization in domestic constitutional litigation but, rightly, it was simply a non-issue.

 Understandably so.  It would be anomalous and contrary to the security and generality of the right to regulate contemplated in Article XX of the GATT and related TBT provisions, were a Member’s ability to make a defense of its regulations under the WTO provisions to depend on how closely the purposes it could invoke under its particular constitutional law (differing substantially from Member to Member) was calibrated with the purposes of regulation as they are classified and divided in the WTO treaties and case law.  This simply denies the basic proposition of the separation of the international and internal constitutional legal orders.

 It seems to me that the AB has at least acknowledged what I might call the general spirit of my remarks here in the Hormones ruling   In para. 244 of its ruling, the AB pointed out that legislation in representative governments normally-I repeat for the sake of Norway’s attorney, normally-reflects multiple objectives, and the AB went on the say that the existence of such objections should not be taken as an indicator of protectionism-the objective of harmonization of regulation within the EU was fundamentally compatible with the objective of protecting the lives and health of EU citizens, and the design features resulting from combining the two in no way provided even a prima facie basis for suspecting that the measure was incoherent in a manner that pointed to protectionism.

On border adjustment, they are simply confused about the law. They assert with respect to Article III:2  GATT: "Even if border tax adjustment is permitted on inputs that are consumed but not incorporated in the final  product, it is not clear whether it should be based on the carbon content of domestic production
or foreign production."  While they admit there is no WTO jurisprudence on this point, they mention the GATT Superfund case.  But the mere fact that the GATT Superfund case was about a situation where the inputs were incorporated into the final product, it is simply a non-sequitur to suggest that the case can stand for the idea that border adjustment is only permitted in that situation.  There is certainly no language in the decision to support such a limitation.  The panel obviously addressed the input as incorporated in the product because in that particular situation it was!  What is really important in Superfund for purposes of carbon border adjustment is the following statement of the panel, which implies opposite to what Mattoo and Subramanian suggest, that there are no intrinsic limits to the use of border adjustment for the policy purpose of addressing carbon externalities that occur in the production of the product:  “the tax adjustment rules of the General Agreement distinguish between taxes on products and taxes not directly levied on products they do not distinguish between taxes with different policy purposes. Whether a sales tax is levied on a product for general revenue purposes or to encourage the rational use of environmental resources, is therefore not relevant for the determination of the eligibility of a tax for border tax adjustment."  In sum, what matters is the purpose of the tax, internalizing carbon externalities, and it is irrelevant to that purpose whether the externalities are associated with the production of some input in the production process that stays in the product, or whether the burned fuel in the production process is itself considered as the basis for the tax. It is sometimes suggested that the emissions are on output rather than an input, and that taxes on outputs can't be border adjusted, but as I explain in a recent paper presented at a Yale conference on climate policy  (I'm now revising it), this is just semantics.  In all cases a border tax will in fact be on or applied to products, but addressed to the carbon externalities of the product, as noted, an entirely permissible purpose of a border tax adjustment under WTO law.

Finally for state-of-the-art economics that shows the very signficant carbon mitigation gains from doing border adjustment, see the article Joshua Elliott, Ian Foster, Sam Kortum, Todd Munson, Fernando Perez Cervantes, David Weisbach, “Trade and Carbon Taxes” American Economic Review 100 (2010).