2013 0930 porges brewer b

POLICY SPACE: HOW TO GET THERE Amy Porges and Tom Brewer 30 September 2013

Options on the road to GATT/SCM “policy space�

1. Amendment 2. Waiver 3. Interpretive understanding 4. Litigation 5. DS moratorium 6. Plurilateral agreement 7. Defiance/unilateral action

Economic goals • Increase changeover to renewable energy

for climate change mitigation • Reduce cost and increase market share for RE inputs (equipment) and outputs (energy) • Reduce RE prices, out-compete fossil fuels • Not the same as promoting RE producer interests

Amending GATT or SCM Agreement (1) • Debate and consensus approval of

proposal in Council on Trade in Goods -> Ministerial Conference/General Council • Political process with thorough discussion engaging all interested Members • Amendment protocol opened; each Member then decides whether to accept

Amending GATT or SCM Agreement (2) • A Member that goes along with consensus can

still decide not to accept the amendment • Amendment EIF only after 2/3 of all Members accept (106) • Amendment binds only those who accept.

Members that do not accept can bring and win disputes under the un-amended WTO rules.

• Free rider problem, no certainty for those who want the amended rules

Waiver of GATT or SCM • Temporary waiver of rules, agreed by consensus

political process in CTG (can take time); MC/GC then approves by consensus • Request (and waiver text) describes intended measures, policy objectives pursued, reasons (exceptional circumstances) why rule-compliant action will not achieve objectives – admits that this action would otherwise be WTO-inconsistent • Can have conditions attached • Consensus decision legally binds all Members, cuts off any disputes on conduct within scope of the waiver, but does not change the rules

Waiver + amendment TRIPS and Health • Waiver, 2003: lasts until amendment replacing its provisions enters into effect for that Member • Amendment, 6 Dec 2005: 75 acceptances, EIF when ?? But waiver lasts for each Member until the amendment enters into force for it

Interpretive understanding (1) • Authoritative interpretation under WTO IX:2 by

three-fourths vote (120)? Everybody hates voting • Consensus decision interpreting or applying rules, reached in SCM Committee and/or CTG • Legal status: AB in Tuna II agreed a TBT

Committee Decision was “subsequent agreement” between treaty parties on treaty interpretation/ application because adopted by all Members by consensus, and relates to application of TBT • All participants in Tuna II actively supported this

Interpretive understanding (2) Practical issues: • Not a means of changing the rules • CTG and SCM decisions are by consensus only • SCM Committee = representatives of trade remedy authorities, not subsidy users; interpretation of “subsidy” connects to CVD • Generalized understanding would require discussion of implications for all sectors.

• Is energy special enough to require clarification of how the general rules apply to energy?

Litigation • No political process required, no consent

by governments, less legitimacy • Applies and interprets existing rules, does not change them • Risky; success through litigation requires an appealing set of facts

DS moratorium • Consensus decision to exercise “due

restraint” (AoA Art. 13 Peace Clause) or not to apply a DS provision (TRIPS 64.3) or not to initiate complaints under a DS provision (TRIPS 64.3) • Eliminates DS as factor in policymaking • Governments would agree to this through a political process; cost depends on the stakes

Plurilateral agreement/understanding • Agreement between some Members on WTO

rules interpretation/ application (e.g. subsidies rules); could also include litigation ceasefire between the parties.

• Can’t be blocked by one holdout • BUT not legally enforceable by WTO (unless all WTO Members agree by consensus) • Free rider problem if government measures subject to MFN (e.g. CVD rules/procedures) • Must include major players

Defiance/unilateral action • If other options don’t work, and climate

change still moving forward, is civil disobedience appropriate?

• Costly to trading system and to the party taking unilateral action • Effective only for large players

Options • All but three options for enlarging policy space

require serious engagement with all WTO Members to discuss nature, necessity, costs and benefits of trade measures to be adopted • Feasibility depends on what is asked for and its concrete impact on trade interests Exceptions: • WTO litigation; defiance/unilateralism • Plurilateral agreement outside WTO (unenforceable through WTO means)