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Reconciling Regulatory Space with External Accountability through WTO Adjudication – Trade, Environment and Development

Published online by Cambridge University Press:  18 July 2017

Abstract

This article argues in favour of broadening the trade and environment debate in the World Trade Organization (WTO) to include a developmental perspective. WTO litigation involving environmental regulation touches upon the issue of global justice and the power asymmetries structurally embedded in the global economy. The recognition of the WTO as a legitimate global institution, therefore, depends on its ability to reconcile the respect for the right to regulate with the need to give due regard to the interests and concerns of foreign constituencies affected by domestic regulation. By imposing other-regarding obligations, WTO law can act as a mechanism of external accountability of powerful states vis-à-vis affected foreigners, especially where asymmetric relations and different stages of economic development are involved. The article applies this framework to analyze the legal reasoning of the Appellate Body in the US-Tuna II dispute between the US and Mexico – a dispute illustrating the complex intertwinement between economic, environmental and developmental issues. It concludes that the use of the concepts of ‘even-handedness’ and ‘calibration’ under Article 2.1 of the Technical Barriers to Trade Agreement and Article XX of the General Agreement on Tariffs and Trade did not enable the Appellate Body to strike an adequate balance between the right to regulate and external accountability. While in the original report the Appellate Body used ‘even-handedness’ to impose only a minimal level of external accountability on the US, in the compliance report, the Appellate Body has gone too far by failing to defer to the US risk assessment amidst scientific controversy and uncertainty.

Type
INTERNATIONAL LAW AND PRACTICE
Copyright
Copyright © Foundation of the Leiden Journal of International Law 2017 

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References

1 Appellate Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, adopted 16 May 2012, AB-2012-2, WT/DS381/AB/R (AB US-Tuna II).

2 Appellate Report United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, Recourse to Article 21.5 of the DSU by Mexico, adopted 20 November 2015, WT/DS381/AB/RW at paras. 7.231–7.360 (AB Compliance Report).

3 Both parties continue the dispute through new proceedings on remedies and compliance initiated in 2016, see www.wto.org/english/tratop_e/dispu_e/cases_e/ds381_e.htm.

4 See GATT Panel Report, United States – Restrictions on Imports of Tuna, 3 September 1991, not adopted, BISD 39S/155.

5 J.H. Jackson, World Trade and the Law of GATT (1969), at 788, according to whom the puzzle is ‘to give measured scope of legitimate national policy goals while preventing the use of these goals to promote particular interests at the expense of the greater common welfare’.

6 See Shaffer, G., ‘The World Trade Organization Under Challenge: Democracy and the Law and Politics of the WTO's Treatment of Trade and Environment Matters,’ (2001) 25 Harvard Environmental Law Review 1 Google Scholar; Sykes, A.O., ‘Domestic Regulation, Sovereignty and Scientific Evidence Requirements: A Pessimistic View’, in Bermann, G.A. and Mavroidis, P.C. (eds.), Trade and Human Health and Safety (2006), 257 CrossRefGoogle Scholar.

7 L. Gruszczynski, Regulating Health and Environmental Risks Under WTO Law: A Critical Analysis of the SPS Agreement (2010).

8 According to Shaffer, ‘WTO jurisprudence has recursively evolved over time in light of state and civil society responses, and has been less restrictive and deferential than pre-1995 GATT panels’, Shaffer, G., ‘How the World Trade Organization Shapes Regulatory Governance’, (2015) 9 (1) Regulation & Governance 1 CrossRefGoogle Scholar; see also I. Venzke, How Interpretation Makes International Law: On Semantic Change and Normative Twists (2012), 167–95; Howse, R., ‘The World Trade Organization 20 Years On: Global Governance by Judiciary’, (2016) 27 (1) EJIL 9 Google Scholar; DiMascio, N.A. and Pauwelyn, J., ‘Non-Discrimination in Trade and Investment Treaties: Worlds Apart or Two Sides of the Same Coin?’, (2008) 48 AJIL 102 Google Scholar, who argue that since 2000 in particular the WTO has shifted towards more favourable treatment of domestic regulators over foreign importers.

9 E.g., US-Gasoline, US-Shrimp, US-Tuna, EC-Biotech, EC-Seals.

10 See D. Prévost, Balancing Trade and Health in the SPS Agreement: The Development Dimension (2011).

11 For a critical discussion of the ‘trade and’ debate, see Lang, A., ‘Reflecting on “Linkage”: Cognitive and Institutional Change in The International Trading System’, (2007) 70 (4) The Modern Law Review 523 CrossRefGoogle Scholar.

12 Stewart, R.B., ‘Remedying Disregard in Global Regulatory Governance: Accountability, Participation, and Responsiveness’, (2014) 108 (2) AJIL 211 Google Scholar; Benvenisti, E., ‘Sovereigns as Trustees of Humanity: On the Accountability of States to Foreign Stakeholders’, (2013) 107 (2) AJIL 295 Google Scholar; Keohane, R.O., ‘Global Governance and Democratic Accountability’, in Held, D. and Koenig-Archibugi, M. (eds.), Taming Globalization: Frontiers of Governance (2003), 130 Google Scholar; Shaffer, supra note 8; De Búrca, G., Keohane, R.O., and Sabel, C., ‘Global Experimentalist Governance’, (2014) 44 (3) British Journal of Political Science 477 CrossRefGoogle Scholar.

13 It is acknowledged that the notion ‘developing country’ is in flux and that there is wide variety of levels of economic and political development among less developed countries. Asymmetric relations can therefore occur in different contexts involving different stages of economic development, and potentially also other types of power asymmetries (e.g., resource dependency).

14 See Shaffer, G., ‘The New Legal Realist Approach to International Law’, (2015) 28 LJIL 189 Google Scholar.

15 The International Monetary Fund categorized Mexico as an emerging market developing economy in 2016. See www.imf.org/external/pubs/ft/weo/2016/01/pdf/statapp.pdf.

16 See Benvenisti; Stewart; Keohane; De Búrca, Keohane, and Sabel all supra note 12; Benvenisti, E. and Downs, G., ‘The Empire's New Clothes: Political Economy and the Fragmentation of International Law’, (2007) 60 (2) Stanford Law Review 595 Google Scholar; T. Halliday and G. Shaffer, Transnational Legal Orders (2015); Trachtman, J., ‘International Legal Control of Domestic Administrative Action’, (2014) 17 (4) Journal of International Economic Law 753 CrossRefGoogle Scholar.

17 Stewart, supra note 12, at 211.

18 See Benvenisti and Downs, supra note 16, at 626.

19 See G. Shaffer and R. Meléndez-Ortiz, Dispute Settlement at the WTO: The Developing Country Experience (2010); Mayeda, G., ‘The TBT Agreement and Developing Countries’, in Epps, T. and Trebilcock, M. (eds.), Research Handbook on the WTO and Technical Barriers to Trade (2013), 358 Google Scholar.

20 See Steinberg, R., ‘In the Shadow of Law or Power? Consensus-Based Bargaining and Outcomes in the GATT/WTO’, (2002) 56 (2) International Organization 339 CrossRefGoogle Scholar; Steinberg, R., ‘Judicial Lawmaking at the WTO: Discursive, Constitutional, and Political Constraints’ (2004) 98 AJIL 247 Google Scholar; On the reasons why developing countries agreed to accept the WTO bargain see Howse, supra note 8.

21 See Benvenisti and Downs, supra note 16, at 627.

22 See Howse, supra note 8; Closely linked is also the tendency of the AB to accept domestic legislative choices while censuring only their implementation – an approach that has by some been criticized as confirming a bias against developing countries, see Mayeda, supra note 19.

23 See D. Rodrik, The Globalization Paradox: Democracy and the Future of the World Economy (2011).

24 See M. Ioannidis, ‘Beyond the Standard of Review. Deference Criteria in WTO Law and the Case for a Procedural Approach’ and Henckels, C., ‘The Role of the Standard of Review and the Importance of Deference in Investor-State Arbitration’, both in Gruszczynski, L. and Werner, W. (eds.), Deference in International Courts and Tribunals. Standard of Review and Margin of Appreciation (2014), 91 Google Scholar and 113 respectively.

25 See Bradford, A., ‘The Brussels Effect’, (2012) 107 (1) Northwesten University Law Review 1 Google Scholar; Weimer, M. and Vos, E., ‘The Role of the EU in Transnational Regulation of Food Safety: Extending Experimentalist Governance?’, in Zeitlin, J. (ed.), Extending Experimentalist Governance? The EU and Transnational Regulation (2013), 51 Google Scholar.

26 The extension of stringent regulatory standards to third countries helps avoid a comparative disadvantage, which would otherwise arise for domestic companies bound by strict health and environmental standards when they compete with foreign companies, see Z. Laïdi, The Normative Empire: the Unintended Consequences of European Power (2008), available at hal.archives-ouvertes.fr/hal-00972756/document.

27 Shaffer, supra note 8.

28 Following Stewart, supra note 12, at 212, interests are seen ‘as grounded in the material conditions of human welfare, including sustenance, health, security, housing, and education, that can be more or less objectively determined. Concerns have a more subjective character, reflecting values like individual dignity, justice and equity, integrity of institutions and community, and cultural, religious, social, and ecological ideals’.

29 See Stewart, supra note 12; Bovens, M., ‘Analysing and Assessing Accountability: A Conceptual Framework’, (2007) 13 (4) European Law Journal 447 CrossRefGoogle Scholar.

30 See Sabel, C. and Zeitlin, J., ‘Experimentalist Governance’, in Levi-Faur, D. (ed.), Oxford Handbook of Governance (2012), 169 Google Scholar.

31 Benvenisti, supra note 12, employs the notion of sovereigns as trustees of their people, on the one hand, and of humanity as a whole, on the other hand; Keohane, supra note 12, at 133 states that ‘for the United States to be held accountable, internal accountability will have to supplement external accountability rather than substituting for it’; see also Joerges, C., Kjaer, P., and Ralli, T., ‘A New Type of Conflicts Law as Constitutional Form in the Postnational Constellation’, (2011) 2 (2) Transnational Legal Theory 153 CrossRefGoogle Scholar.

32 On the normative foundations of this objective see Benvenisti, supra note 12.

33 See Benvenisti, supra note 12; See Joerges, Kjaer, and Ralli, supra note 31.

34 This is reinforced by arguments relating to developmental justice and the right to development. See United Nations Declaration on the Right to Development, GA Res A/RES/41/128, annex 41 UN GAOR Supplement. No. 53, 186, UN Doc. A/41/53 (1986) at 186; See also World Conference on Human Rights, Vienna Declaration and Programme of Action, UN Doc. A/CONF.157/23 (1993), para. 10; and the Preamble of the WTO which recognizes ‘that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development’, 1994 Marrakesh Agreement Establishing the World Trade Organization, 1867 UNTS 154.

35 See Joseph, J., ‘The Tuna Dolphin Controversy in the Eastern Pacific Ocean: Biological, Economic, and Political Impacts’, (1994) 25 Ocean Development and International Law 1 CrossRefGoogle Scholar.

36 Southwest Fisheries Science Center of the National Oceanic and Atmospheric Administration, United States Department of Commerce, ‘The Tuna Dolphin Issue’, available at swfsc.noaa.gov/textblock.aspx?Division=PRD&ParentMenuId=228&id=1408.

37 See Joseph, supra note 35.

38 Parker, R., ‘The Use and Abuse of Trade Leverage to Protect the Global Commons: What We Can Learn from the Tuna-Dolphin Conflict’, (1999–2000) 12 Georgetown International Environmental Law Review 1 Google Scholar.

39 See Baird, I. and Quastel, N., ‘Dolphin-Safe Tuna from California to Thailand: Localisms in Environmental Certification of Global Commodity Networks’, (2011) 101 (2) Annals of the Association of American Geographers 338 CrossRefGoogle Scholar; also, personal interview with an official of the Inter-American Tropical Tuna Commission (IATTC) on 24 October 2014; and personal interview with a member of the EII International Marine Mammal Project on 21 October 2014.

40 Belize, Colombia, Costa Rica, Ecuador, El Salvador, European Union, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, United States, Vanuatu, Venezuela.

41 See www.iattc.org/DolphinSafeENG.htm. In 2005, the AIDCP was awarded the Margarita Lizzaraga award by the Food and Agriculture Organization of the United Nations in recognition of its ‘comprehensive, sustainable, and catalytic initiatives’ in support of the Code of Conduct for Responsible Fisheries.

42 Brower v. Daley, 93 F. Supp. 2d 1071 (N.D.Cal., 2000); Brower v. Evans, 257 F.3d 1058 (9th Cir 2001); Earth Island Institute v. Hogarth, 484 F.3d 1123 (9th Cir. 2007). These rulings became part of the challenged measure in the WTO dispute.

43 For a discussion of both approaches see Parker, supra note 38.

44 The US label should be distinguished from the private EII dolphin-safe label. However, as explained above, it currently reflects the EII definition of ‘dolphin-safe’, which is due to EII campaigning of Congress and legal actions before the US courts.

45 Baird and Quastel, supra note 39.

46 For the ETP see Parker, supra note 38.

47 Miller, A. and Bush, S., ‘Authority without Credibility? Competition and Conflict between Ecolabels in Tuna Fisheries’, (2015) 107 (10) Journal of Cleaner Production 137 CrossRefGoogle Scholar.

48 See Section 4.

49 The panel did not address Mexico's claims under the GATT referring to reasons of ‘judicial economy’. While the AB criticized this approach as a ‘false’ use of judicial economy, it did not ‘complete the analysis’, AB US-Tuna II, supra note 1, paras. 405–6.

50 But see also the assessment of Art. 2.1 in ibid., paras. 244 and 291.

51 Ibid., para. 302; the US measure also pursued a second objective, namely to protect consumers from misleading information on tuna labels.

52 See Mayeda, supra note 19.

53 AB US-Tuna II, supra note 1, para. 316.

54 See Venzke, supra note 8, at 180–95.

55 AB US-Tuna II, supra note 1, para. 322.

56 There is thus no proportionality test carried out under Art. 2.2 of the TBT Agreement. For reasons against such test see Venzke, supra note 8.

57 I am grateful to an anonymous reviewer for this point.

58 See supra Section 2.

59 AB US-Tuna II, supra note 1, para. 330 (emphasis added).

60 Ibid., para. 231.

61 Ibid., para. 239 (emphasis added).

62 See Feichtner, I., ‘Power and Purpose of Ecolabelling: An Examination Based on the WTO Disputes Tuna II and COOL’, (2014) 57 German Yearbook of International Law 255 Google Scholar.

63 Appellate Report United States - Measures Affecting the Production and Sale of Glove Cigarettes, adopted 4 April 2012, AB 2012-1, WT/DS406/AB/R (AB US-Gloves).

64 Ibid., para. 100.

65 That balance, according to the AB, is not different than the one expressed in the GATT 1994, ‘where obligations such as national treatment in Article III are qualified by the general exceptions provision of Article XX’, ibid., para. 96.

66 Ibid., paras. 174 and 181.

67 AB US Tuna-II, supra note 1, para. 225.

68 Ibid., para. 232.

69 Ibid., para. 251.

70 Ibid., para. 292.

71 Ibid., para. 297.

72 Ibid., paras. 349–80.

73 See Howse, R., ‘A New Device for Creating International Legal Normativity: The WTO Technical Barriers to Trade Agreement and “international Standards”’, in Joerges, C. and Petersmann, U. (eds.), Constitutionalism, Multilevel Trade Governance and Social Regulation (2006), 383 Google Scholar.

74 AB US-Tuna II, supra note 1, para. 369.

75 Ibid., paras. 373–5.

76 Decision on ‘Principles for the Development of International Standards, Guides, and Recommendations with Relation to Articles 2, 5, and Annex 3 of the Agreement’ G/TBT/1/Rev.10 (2011). The decision was adopted by the TBT Committee in the context of the Second Triennial Review of the Operation and Implementation of the TBT Agreement in 2000. The TBT Committee comprises all WTO members, and it adopted the TBT Committee decision by consensus.

77 AB US-Tuna II, supra note 1, para. 379.

78 Mexico's appellee's submission, in ibid., para. 208.

79 Ibid., paras. 398–9.

80 Panel Report United States - Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, adopted 15 September 2011, WT/DS381/R US-Tuna II, para. 4.27 (Panel US-Tuna II).

81 Ibid., para. 4.28. According to an IATTC official in the last 15–20 years Mexico has been trying to become a serious international player in international fisheries, perceiving itself as a very responsible fishing nation that has done a lot of progress, for which it wants to be recognized, personal interview on 24 October 2014.

82 See supra Section 2.

83 See G. Shaffer, ‘The WTO Shrimp-Turtle Case (United States - Import Prohibition of Certain Shrimp and Shrimp Products)’, (1999) 93 AJIL 507.

84 Appellate Report United States – Import Prohibition of Certain Shrimp and Shrimp Products, adopted 12 October 1998, WT/DS58/AB/R (AB US-Shrimp).

85 The US required commercial shrimp trawlers to use turtle excluder devices (TEDs) in waters where endangered sea turtles were present.

86 See for a more detailed analysis Howse, R., ‘The Appellate Body Rulings in the Shrimp/Turtle Case: A New Legal Baseline for the Trade and Environment Debate’, (2002) 27 (2) Columbia Journal of Environmental Law 489; Shaffer, supra note 83Google Scholar.

87 See Stewart, R. and Badin, M. Sanchez, ‘The World Trade Organization: Multiple Dimensions of Global Administrative Law’, (2011) 9 International Journal of Constitutional Law 556, at 571CrossRefGoogle Scholar.

88 AB US-Shrimp, supra note 84, para. 164.

89 Ibid., para. 162.

90 Ibid., para. 166.

91 Ibid., para. 171.

92 See Parker, supra note 38.

93 Moreover, in the later compliance report (see infra) the AB also undertook an analysis directly under the GATT without essentially changing its reasoning.

94 In that it followed the reasoning of AB US-Gloves emphasizing the similar language and the overlap in the scope of application between Art. 2.1 of the TBT Agreement and Art. III:4 of the GATT and confirming that ‘Article III:4 of the GATT 1994 is relevant context for the interpretation of the national treatment obligation of Article 2.1 of the TBT Agreement. We consider that, in interpreting Article 2.1 of the TBT Agreement, a panel should focus on the text of Article 2.1, read in the context of the TBT Agreement, including its preamble, and also consider other contextual elements, such as Article III:4 of the GATT 1994’, supra note 63, para. 100.

95 AB US-Tuna II, supra note 1, para. 214.

96 AB US-Shrimp, supra note 84, para. 159.

97 For a discussion of this approach see Ioannidis, supra note 24, at 108–11 with further references.

98 McGinnis, J. and Movsesian, M., ‘The World Trade Constitution’, (2000) 114 Harvard Law Review 511, at 580CrossRefGoogle Scholar.

99 See Ioannidis, supra note 24, at 106.

100 See Joerges, C. and Neyer, J., ‘Politics, Risk Management, World Trade Organization Governance and the Limits of Legalisation’, (2003) 30 Science and Public Policy 219, at 221CrossRefGoogle Scholar.

101 Such as in anti-dumping or safeguard cases, see for the discussion of different legal techniques Ioannidis, supra note 24, at 110.

102 See Stewart and Sanchez Badin, supra note 87, at 571.

103 See, e.g., Scott, J. and Sturm, S., ‘Courts as Catalysts: Rethinking the Judicial Role in New Governance’ (2007) 13 (3) Columbia Journal of European Law 565 Google Scholar.

104 It is acknowledged that scientific benchmarks can also be controversial; see Gruszczynski, L. and Vadi, V., ‘Standard of Review and Scientific Evidence in WTO Law and International Investment Arbitration’, in Gruszczynski, L. and Werner, W. (eds.), Deference in International Courts and Tribunals. Standard of Review and Margin of Appreciation (2014), 152 CrossRefGoogle Scholar; it is therefore important that domestic risk assessment is not substituted by WTO review.

105 The so-called 2013 Final Rule, see Panel Report United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, Recourse to Article 21.5 of the DSU by Mexico, adopted 14 April 2015, WT/DS381/RW, paras. 3.32–3.52 (Panel Compliance Report).

106 AB Compliance Report, supra note 2, paras. 7.231–7.360.

107 Ibid., para. 7.239.

108 AB US-Tuna II, supra note 1, para. 251 and AB Compliance Report, supra note 2, paras. 7.258–7.264.

109 Miller and Bush, supra note 47.

110 On the notions of normative and empirical deference see Henckels, supra note 24.

111 AB Compliance Report, supra note 2, para. 7.251.

112 Ibid., para. 7.250.

113 AB US-Tuna II, supra note 1, para. 251.

114 Under Art. 2.1 of the TBT Agreement and under Arts. I:1, III:4 and XX of the GATT 1994, see AB Compliance Report, supra note 2, paras. 7.242, 7.348, because it contributed to addressing ‘adverse effects on dolphins resulting from the use of fishing methods predominantly employed by fishing fleets supplying the US’ and other countries’ tuna producers outside the ETP large purse-seine fishery’.

115 Ibid., para. 7.251.

116 Ibid., paras. 7.243–7.248.

117 Ibid., para. 7.248.

118 Ibid., para. 7.254.

119 Ibid., para. 7.266.

120 The measure was found to be provisionally justified under Art. XX(g). Under the chapeau, the AB assessed whether the distinction ‘drawn in the measure between different fishing methods in different areas of the oceans’ is arbitrary or unjustifiable and ‘whether the requirements of the amended tuna measure are calibrated to any differences in risks to dolphins inside and outside the ETP large purse-seine fishery’. It did not complete the analysis with respect to all features of the measure, but only with regard to the determination provisions. See ibid., paras. 7.342–7.344, 7.359.

121 This was acknowledged by the AB in ibid., para. 7.252.

122 See Henckels, supra note 24; Gruszczynski and Vadi, supra note 104.

123 See AB Compliance Report, supra note 2, para. 7.256, which shows that a finding on the determination provisions depended on the question whether or not risk conditions in other fisheries approximated those in the ETP; and paras. 7.258–7.264 where the AB refers to factual findings made by the Panel.

124 Ibid., paras. 7.256–7.266.

125 As found in certain other WTO provisions, for example Art. 5.1 of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement); See Sykes, supra note 6; However, Howse, supra note 8, treats regulatory rationality as part of the non-discrimination review.

126 Appellate Report European Communities - EC Measures Concerning Meat and Meat Products (Hormones), adopted 16 January 1998, WT/DS26//AB/R, WT/DS48/AB/R, paras. 245–6. The finding in question was under Art. 5.5 of the SPS Agreement, which seen together with Art. 2.3 of the SPS Agreement contains a language similar to the chapeau of Art. XX of the GATT.

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