International trade law is a subset of public international law, and consists of the rules governing trade between nations. Historically this area of law was primarily concerned with trade in goods, but now includes trade in services (effectively the cross-border supply and consumption of services) and trade in intellectual property. International trade law has relevance to other fields of international economic law, including investment law. However, the focus of this chapter is on trade law as conducted under the auspices of the World Trade Organization (WTO), an organisation that commenced on 1 January 1995. The WTO administers many agreements, and not all are covered by this chapter. Of particular note, the Agreement on Agriculture and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are not covered: further reading on these Agreements is listed at the end of the chapter. To understand the laws that the WTO administers, it is necessary to understand both the economic theories of international trade, and the history of international trade law. This chapter introduces these concepts, and then explains the current structure of the WTO, including the dispute settlement processes. It then covers the core disciplines of the General Agreement on Tariffs and Trade 1994 (GATT) and the main exceptions to these disciplines, before turning to the safeguards, dumping and subsidies regimes. The chapter then introduces the two agreements that cover regulatory standards at the WTO, and finally provides an overview of the General Agreement on Trade in Services.
Economic theories of trade
For much of the 16th to 18th centuries, international trade operated in accordance with the theory of mercantilism – goods were exchanged for gold, and nations tried to amass as much gold for themselves as possible. Nations aimed to obtain raw goods (often from colonies), transform them and sell the final products to other nations for a profit. Thus the focus was primarily on exporting goods rather than importing goods. In the late 18th and early 19th centuries new theories of trade emerged – first with Adam Smith's theory of absolute advantage, followed by David Ricardo's theory of comparative advantage. Both theories rest on the idea of specialisation of production of goods, using labour as an input unit for production.
The international law of the sea has developed over many hundreds of years. Modern principles can be traced back to the 17th-century debates between scholars such as Grotius and Selden over whether or not nations had the right to control areas of the sea. At that time, nations were concerned over access to fishing grounds and trading routes; today's maritime interests have expanded to include the laying of submarine cables, mining of deep seabed resources, control of people smuggling and other transnational crimes, maintenance of national security, and conservation of high seas biodiversity, to name a few. Although many of the principles of customary international law in this area are well established, the law of the sea is today dominated by the 1982 United Nations Convention on the Law of the Sea (LOSC), a monumental agreement that provides the framework for international cooperation in maritime areas.
Freedom of the seas
The current framework of maritime zones, which define the relative rights and obligations of coastal and other States, has evolved against the background of a long-standing tension between States wishing to exercise control over parts of the high seas and those seeking to maintain free access. As O'Connell states:
The history of the law of the sea has been dominated by a central and persistent theme: the competition between the exercise of governmental authority over the sea and the idea of freedom of the seas. The tension between these has waxed and waned through the centuries, and has reflected the political, strategic and economic circumstances of each particular age.
The progression of this debate is dealt with by Shearer in the following extract.
SHEARER, STARKE'S INTERNATIONAL LAW, 11TH EDN, BUTTERWORTHS, LONDON, 1994
 Initially, navigation on the high seas was open to everybody as were also fisheries, but in the fifteenth and sixteenth  centuries – the periods of great maritime discovery by European navigators – claims were laid by the powerful maritime states to the exercise of sovereignty, indistinguishable from ownership, over specific portions of the open sea.
A central feature of the international legal system is that States are the predominant actors within the system and possess international legal personality. As a result, States are able to enter into legal relations with each other by way of treaties, possess certain international legal rights as bestowed under international law, and are capable of enforcing those legal rights in international litigation or of being the subject of a claim if they are derelict in meeting their international legal obligations. This raises two important issues. First, how are ‘States’ characterised and recognised under international law? Second, are States the only international actors that possess international legal personality?
A number of factors have increased the significance of this area of international law. To begin, States, and the notion of ‘statehood’, have undergone significant evolution in recent centuries, and contemporary international law has had to keep abreast of these developments. While international law recognises that there are essential attributes to what comprises a ‘State’ for the purposes of the international legal system, there remain important political processes at play with respect to the recognition of States. During the United Nations (UN) era this question has assumed particular importance due to a number of factors. The first is that since 1945 the international community has witnessed an unparalleled growth in the number of States. This is simply evidenced by the growth in the membership of the UN, which has expanded from the original 51 members in 1945 to 193 members in 2017. This growth in the number of States within the international system can be attributed to a number of factors, of which the process of decolonisation has been one of the most significant. Another contributing factor in the past 30 years has been the break-up of former federated States such as Yugoslavia, and the emergence of new republics in Eastern Europe following the end of the Cold War. Consequently, the law that governs the emergence and recognition of new States, including their membership of international organisations such as the UN or NATO (North Atlantic Treaty Organization), has since 2000 attained particular contemporary significance.
The second factor that has made this area of the law relevant during the UN era has been the emergence of an ever increasing number of international organisations that claim to possess international personality.
Since the second edition of this book was published in 2014 there have been continual developments in international law through State practice, new treaties and an expanding international jurisprudence developed by a growing array of international courts and tribunals. For example, in 2016 an international tribunal handed down a much anticipated Award in the South China Sea Case between the Philippines and China, which provided clarity to certain aspects of the law of the sea, and to some dimensions of the law relating to international dispute resolution. Likewise, in 2018 a Conciliation Commission will deliver a report arising from a dispute between Australia and Timor-Leste over a maritime boundary in the Timor Sea. In 2015 the international community was finally able to achieve consensus on a successor to the Kyoto Protocol to the United Nations Framework Convention on Climate Change in the form of the 2015 Paris Agreement. Throughout 2017 the United Nations Security Council was also responding to the threats posed to international peace and security by North Korea's nuclear program and new Resolutions were adopted to ensure the maintenance of international peace and security. These developments have resulted in a continual thickening of international law, with the consequence that some gaps in the law have been covered, understanding of the law has been enhanced, and adjudication and enforcement of international law have added to a better appreciation and understanding of its capacity.
This third edition takes stock of some of these and other important recent developments in international law. Challenges such as climate change, crimes against humanity, human rights abuses, nuclear proliferation, resource management, self-determination of peoples, and transnational crimes such as people smuggling are considered. These challenges have caused States, international organisations and the international community more generally to reconsider some of the foundational concepts and principles of international law, and whether new approaches to these and other emerging challenges to the international order are required.
This work seeks to assess these issues from a traditional international lawyer's perspective, but also one that considers appropriate Australian State practice. While international law is a truly global discipline, we believe there is much to be gained from examining, where appropriate, Australian viewpoints and practice in international law and that tradition has been continued in this edition.
Introduction: trends in international law-making for the environment
International environmental law provides a useful example of a rapidly developing field of international law, and demonstrates some of the difficulties involved in resolving modern global problems within the traditional legal framework.
International environmental law is a relatively recent development. The environment did not feature in the Charter of the United Nations (UN Charter) and none of the constituent bodies of the United Nations (UN) was expressly given an environmental mandate. Since the 1960s, however, we can trace a steady growth in international law concerned with environmental problems. This growth of law at the international level is mirrored by Australia's domestic environmental law experience. Both reflect the growing public awareness of environmental issues and the demand for a legal response.
Various trends in the development of international environmental law may be recognised. Historically, this area of law developed as a reaction to particular instances of harm, resulting in international agreements that deal with a single issue: for example, prevention of one type of pollution or protection of a particular species of wildlife. As truly global problems became apparent – for example, depletion of the ozone layer, and global warming – the response of the international community has been to develop agreements that are broader and more strategic in their approach.
The principle of territorial sovereignty, which holds that nations have the right to use their own territory and resources as they please, presents a particular challenge for international laws seeking to protect the environment. Full support for traditional notions of sovereignty cannot be maintained if global environmental issues are to be effectively dealt with. This tension is clearly reflected in the debates, both national and international, over appropriate responses to issues such as climate change.
International environmental law has responded to this challenge by developing new principles to guide decision-making and resolve disputes, including the precautionary principle, intergenerational equity, common but differentiated responsibility, and the common concern of humankind. New methods of law-making have emerged, in particular the use of ‘soft law’ for the development of environmental law. There is a growing use of ‘guiding principles’ and economic incentives, rather than strict legal ‘rules’, to encourage changes in behaviour.
International environmental law must address the different viewpoints of developing and developed nations.
International law establishes its own distinctive framework dealing with both the sources of international law and how that law deals with the relations between States. Accordingly, treaties regulate certain relations between States at either a multilateral or bilateral level and the obligations created under these treaties create certain levels of State responsibility by the treaty parties to act in good faith. While the international law frameworks regulating the relations between States are relatively well developed, the role of international law at a municipal level is equally important. This can be illustrated in various ways.
Human rights conventions recognise certain rights for citizens of a State. In some instances these rights may also reflect constitutionally entrenched rights of citizens. Often, however, these rights are both distinctive and universal in nature and may not be reflected in municipal legal systems. The issue that then arises is how to translate the international human rights obligation contained in the convention into municipal law. Likewise, under environmental conventions State parties may have obligations to preserve and protect certain designated wilderness areas. To properly give effect to these obligations it may become necessary to designate a protected area or park under municipal law. One consequence of this may be that future development of the area will be constrained as a result of municipal law seeking to give effect to the terms of an international convention. Further, the United Nations (UN) and its various organs may create obligations for member States through Security Council resolutions that impact at both the international and the national levels, thereby raising issues as to how these obligations are to be given effect domestically so as to ensure that the State remains in compliance with its international obligations.
The challenge then for both international law and municipal legal systems is how the international law obligation becomes recognised at the municipal level so that both rights and obligations are created not only for the State and its institutions, but also for citizens and business entities. Occasionally the constitution of a State may indicate precisely what status international law has within that municipal legal system.
What would the world be like without international law? We cannot really answer this question but we do know that the world relies on this body of law to deal with important and difficult issues. International law helps develop our aspirations for the international community and facilitates problem solving around such issues as terrorism, the increasing spread of diseases, and the need to reduce carbon emissions and mitigate against the effects of climate change. It contributes to creating order in the world and also to the deployment of political ambitions, which in turn can sometimes create additional problems for the international community, such as States claiming new territory or resources that are disputed. Importantly, it also enables a world without a central government to generate solutions for emerging and complex issues and problems, such as cyber-security and warfare.
Not all international issues and problems are, however, easily identifiable as being within the purview of international law. An example of a complex international issue is the rise of globally significant cyber-attacks that do not appear to be State-sponsored or have State institutions as their main targets. However, given the significance of such attacks to the international community, many have assumed that international law and its institutions would have a central role in dealing with them. International law and its institutions, however, have limited powers and State institutions usually have to coordinate enforcement activities against foreign hackers. Domestic problems or issues, on the other hand, sometimes raise significant international law issues despite appearing as relevant only to the State concerned. For example, increasing taxes in Australia on domestically consumed movies, rather than on the income of nationally registered companies, acts as an import tariff on corporations that do not have Australian operations. Whether Australia can impose taxes on domestic consumption of goods and services has to be assessed in terms of implications for its international trade obligations. International law can, therefore, address and deal with very specific local issues and problems.
International law is commonly defined as the rules governing the legal relationship between States. International law provides a framework for understanding what rights and duties States have in relation to each other, and other international actors such as the United Nations (UN).
One of the challenges of the international legal system is that of enforcement. While the municipal legal system has developed mechanisms for law enforcement, including the police forces, the courts and prison systems, there is no equivalent in international law. That international law does not possess the same enforcement mechanisms as exist in municipal law is highlighted as a major point of distinction between the two legal systems. It is often said that in the absence of an ‘international policeman’ it is not possible to effectively enforce international law.
Enforcement mechanisms that have been developed since the creation of the United Nations (UN) in 1945 have transformed the international legal system from the one that pre-dated the outbreak of World War II. Principal among these has been the establishment of the International Court of Justice (ICJ) as the judicial organ of the UN – it has the capacity to resolve international legal disputes and deliver judgments that are binding upon those parties to the case, and that may ultimately be subject to Security Council recommendations if a party ‘fails to perform the obligations incumbent upon it’. In addition, the Security Council has significant powers under Chapter VII of the UN Charter to seek to ‘maintain and restore international peace and security’ and as part of that mandate the Council regularly adopts resolutions that are binding upon member States of the organisation and enforceable by way of various mechanisms, including economic sanctions. However, the capacity of the Security Council to sometimes act decisively in these matters has historically been hampered by the use of the veto by one of the Permanent Members (China, France, Russian Federation, United Kingdom, United States of America). This was particularly an issue during the Cold War, and while the veto is now not used as frequently it can have an impact on how the Security Council can respond to an international crisis involving violations of international law, as occurred with the Council's response to the events in Syria from 2011 onwards.
In addition to the UN Charter, since 1945 multilateral treaties have developed increasingly sophisticated mechanisms for enforcement.
Obligation to settle disputes peacefully
The peaceful settlement of international disputes is a fundamental principle of international law, and a direct corollary of the prohibition on the threat or use of force. Both principles feature prominently in the 1945 Charter of the United Nations (UN Charter). They have been repeated on many occasions, including the UN General Assembly's 1970 Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States in Accordance with the Charter of the United Nations and the 1982 Manila Declaration on the Peaceful Settlement of Disputes between States.
Prior to the 20th century there were many circumstances in which it was considered legitimate for States to use armed force to settle their international disputes. Gradually, however, as the power and efficiency of weaponry increased, public opinion began to shift and formal attempts began to limit the legitimacy of warfare as a tool for dispute resolution. Even prior to World War I, in 1899 and 1907, conventions were concluded at The Hague restricting the right to wage war and seeking to establish peaceful dispute resolution mechanisms. The Permanent Court of Arbitration was established through these treaties, providing a neutral forum in which States could settle their differences. The creation in 1919 of the League of Nations as a forum for international discussion and cooperation, and the Permanent Court of International Justice (PCIJ) as the first permanent judicial body to hear disputes between States, laid the foundation for a system of measures designed to ensure peaceful settlement of international disputes. However, the League of Nations was unable to prevent World War II, and following the war, the victorious States set about redesigning the system to overcome its major weaknesses. With the preservation of world peace as its foundation, the United Nations (UN) was formed.
Although UN member States are obliged to settle their disputes peacefully (UN Charter, art 2(3)), there is no specific requirement as to how a particular dispute must be settled. The UN Charter refers to a variety of mechanisms (art 33, below) and establishes the International Court of Justice (ICJ) as a forum for judicial settlement of international disputes. However, no particular method is mandated, and all depend upon the consent of the parties. In practice, a range of dispute resolution mechanisms are employed, from informal negotiations or diplomacy through to formal judicial proceedings.
In the 19th century international law did not concern itself with protecting the gamut of political, civil, economic, social and group interests and rights considered important in the 20th and early 21st centuries. States were required to protect individuals in a limited number of areas such as piracy, slavery, treatment of sick and wounded soldiers, and prisoners of war. The dominance of the concept of sovereignty precluded any State or institution from using international law to intervene in the domestic affairs and jurisdiction of a State. In 1905, when Lassa Oppenheim published his first edition of International Law, considered to be one of the most significant English-language treatises on the subject, he stated that the rights of human beings were not a part of international law.
The end of World War I started an important shift towards the idea that groups of individuals had to be protected, although the language of human rights was not used widely. The League of Nations in 1919 focused on groups and minorities in particular. Article 22 of the 1919 Covenant of the League of Nations established rudimentary provisions for the self-determination of people who, because of war, had stopped being governed by their own State. It included an obligation on the part of the Mandatory Powers acting on behalf of the League to guarantee the freedom of conscience and religion. The Treaty of Versailles, signed at the end of World War I, established the foundations of the International Labour Organization (ILO) to support the rights of individuals to associate and promote better standards of working conditions.
Contemporary human rights discourse, however, is predominantly founded upon developments that began with the end of World War II. A declaration on 1 January 1942, referred to as the Declaration by United Nations, committed 26 States, including Australia, to preserving ‘human rights and justice in their own lands as well as in other lands’. This Declaration was later followed by the Charter of the United Nations (UN Charter), which in art 1(3) identified the promotion and encouragement of respect for human rights as one of the central purposes for establishing the United Nations (UN). An important postwar development in the human rights discourse was the adoption by the UN General Assembly in 1948 of the Universal Declaration of Human Rights (UDHR).
States as international legal actors enjoy international legal personality, which includes the right to seek redress for an international wrong and also to be held accountable for an internationally wrongful act. Clearly a State can only commit an internationally wrongful act in international law through individuals or entities acting on its behalf, or through being responsible for such conduct. Two elements are therefore essential for invoking State responsibility:
The consequences that follow a finding of State responsibility for an internationally wrongful act are significant and fundamental to international law. As observed by the Permanent Court of International Justice (PCIJ) in the Chorzów Factory Case: ‘it is a principle of international law, and even a general conception of law, that any breach of an engagement involves an obligation to make reparation’.
The content of the international law rules on State responsibility gradually evolved throughout the 20th century. In 1969 the International Law Commission (ILC) began working on the topic of State responsibility, during which time ‘Draft Articles’ were prepared in the expectation that a Convention would eventually be negotiated. The ILC's work proceeded through a number of drafts, a name change, and significant debate within both the ILC and the international legal community on the legal rules that were proposed. Eventually on 9 August 2001 the ILC adopted the Articles on Responsibility of States for Internationally Wrongful Acts. While often referred to as the ‘Draft Articles’, reflecting the lengthy process of ILC deliberation over various drafts across nearly three decades, following the noting of the ILC's work by the UN General Assembly in December 2001 the term ‘Draft Articles’ is no longer widely used. Nevertheless, the Articles on Responsibility of States for Internationally Wrongful Acts (ILC Articles), while having the appearance of a treaty, are unlikely to ever become fully endorsed as part of a convention on State responsibility primarily due to a lack of impetus for such a development among States.
The rapid development of international law in the post–World War II period from 1945 onwards also coincided with greater reliance upon treaties as a source of international law. Treaties had always been recognised as a source of international law, and their status was confirmed in art 38 of the Statute of the International Court of Justice (ICJ Statute). However, it was the development of the United Nations (UN), with its emphasis upon international law and focus upon treaty-making as a means of not only peaceful resolution of disputes but also multilateral agreement between States on matters of common concern, that was the catalyst for a greater reliance upon treaties in the conduct of international relations.
This chapter begins by briefly examining the growth of treaty-making, before considering what a treaty is, including the nature of ‘instruments of less than treaty status’. It then covers treaty negotiation, creation and entry into force; reservations, objections and declarations to treaties; and legal obligations arising once a treaty has entered into force. The chapter then turns to treaty interpretation, and then examines how treaties are voided or ended through invalidity, suspension or termination. Finally, the chapter concludes with a discussion of amendment and modification of treaties.
Growth of treaty-making
The UN has actively promoted reliance upon treaties as a means of developing international law, with the International Law Commission (ILC) tasked in its early years with the responsibility of drafting a number of treaties, which were then presented for negotiation and consideration at a multilateral conference of UN member States. Through this process, international law rapidly developed in the postwar period of the late 1940s to 1960s in areas such as international humanitarian law, the law of the sea, and human rights. While these developments were occurring at the multilateral level under the sponsorship of either the UN or other developing international organisations, there was also a growth in bilateral treaty–making as States began developing their postwar economies and rebuilding their international relations across many different fields of interest. This phenomenon in international treaty-making was also gradually duplicated at the regional level as groups of States with shared interests came together to reach settlement upon matters of common interest.
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