Posts Tagged GATT
After leaks, the Panel’s ruling in EU Seals is finally out. As it was only released this afternoon, I have not as yet had time to read it thoroughly. However diagonal reading reveals that by and large the regime was found to qualify for the public morals exception under the GATT Agreement (and not to be more trade restrictive than necessary to protect same under the TBT Agreement) however the pro Inuit exceptions have proven to be the Regulation’s Achiless heel. As I have suggested in the past in other areas, this may well mean that the EU has no choice but to resort to stricter rules, leaving out the exceptions.
Further analysis and post later in the week hopefully.
Is something fishy in the State of Denmark? Faroe Islands WTO and UNCLOS litigation provides a honey pot to trade and EU lawyers
Yummie. That’s how Trade lawyers and EU lawyers receive news of the Danish request for consultations with the EU, over at the WTO, on behalf of the Faroe Islands. A separate action is underway with UNCLOS (although the docket there shows no sign as yet of the case). Disagreement over herring stock lies at the root of the offending EU Regulation, with sanctions imposed by the EU disallowing Faroese fishermen to land mackerel or herring in EU harbours or export such fish to the EU.
The EU justify their action on stock conservation grounds, thus bringing GATT Article XX into play. Action at the WTO is exciting both because it joins a growing list of actions related to domestic regulatory authority, and because it is unheard of for one EU Member to take another to the WTO (Faroe’s specific status under EU law explains this, however even in EU law this terrain is quite uncharted).
As sources at the WTO say: ‘it’s a really interesting case’: that quote must be in the running for understatement of the year. Sources at the EU suggest no one had expected Denmark’s WTO filing to actually materialise.
Argentina has requested consultations, the first step in the WTO’s dispute settlement procedure, with respect to the EU’s biofuels sustainability criteria, contained in RED, its renewable energy Directive. The development of biofuels criteria per se is full of pitfalls. For starters, the EU’s Directive has effectively skirted the issue of sustainability. As all students of environmental law and policy have been told ad nauseam, sustainable development has three pillars (ecological, economic, social), not just the one (ecological /environment) which the Directive has quantified. On social and economic impact of the EU’s regime, the European Commission is merely to report. Evidently, quantifying all three is not straightforward: witness also the demise of the Clean Development Mechanism, CDM, one of the flexible mechanisms under the Kyoto Protocol to the United Nations Framework Convention on Climate Change.
With respect to the environmental pillar, RED employs a standard value of CO2 emission reduction which for soybean biodiesel (the main export of Argentinian biofuel) is 31%. This falls short of the 35% required for renewable energy to count towards Member States’ renewable energy targets (and co-inciding fiscal and other incentives). In other words, fuel not meeting the standard can still be imported into the EU: but it will not be very popular (one can sense a de facto /de iure discrimination debate). One way of getting around the issue, is for individual shipments to show that they meet the 35% threshold with all the extra costs this implies (arguably imposing a measure equivalent to a quantitative restriction), or for the European Commission to recognise relevant voluntary schemes meeting the higher threshold through certification. An Argentinian scheme presented to the EC was not accepted by it.
The Argentinian request includes a long list of GATT and WTO obligations which it argues are infringed by the EU (and by relevant Member States implementing measures).
Having a Panel and Appellate Body express some rules of thumb for sustainability criteria (which Argentina explicitly says it does support in principle) would be very useful indeed.
Just before the Christmas break, a WTO Panel ruled at the request of Japan and the EU that Ontario’s feed-in tariff program is illegal under the GATT and TRIMs agreement. Feed-in tariff programs are a popular means to boost renewable energy. Typically, they imply that producers of renewable energy are nurtured through preferential, long-term and advantageous electricity purchase contracts (either through obliging private electricity distributors to enter into such contracts, such as in the infamous European PreussenElektra case, or such as in the case of Ontario’s law, through employment of a Government Agency which enters into these contracts). Governments are often tempted to throw ‘local content requirements’ into the mix: in the case of Ontario, domestic content requirements must be complied with in the design and construction of the relevant electricity generation facilities utilizing solar photovoltaic and wind power technology in order to qualify for guaranteed electricity prices offered under the FIT Program.
The Panel rejected the EU’s claim with respect to Subsidies, however it did accept that the regime infringed GATT Article III, as well as the Agreement on Trade-Related Investment Measures. The former to me was no great surprise. Infant industry arguments are often made with respect to renewable energy however these do not in my view carry much weight with respect to either solar, wind or hydropower. The finding on TRIMS is encouraging: it shows that the Agreement (I sometimes dub it a mini-MAI) does have some bite.
The EU has had internal issues with feed-in tariffs and the like (see e.g. my paper here on (di)similarities between EU and WTO law on the matter), and (update 5 May 2015) in the UK the Courts are considering the extent to which Article 1 of the first Protocol to the European Conention on Human rights (‘A1P1’), which protects property, shields investors in solar energy from changes in feed-in tariffs.