Do the newly negotiated EU rules on endocrine disruptors illustrate regulatory chill /the ‘freezing effect’ of international trade law?
The new European Commission proposals on endoctrine disruptors are, of course’ ‘science based’. It has been reported (EurActiv, 12 December 2016 and last consulted by me on 13 December) that publication of the proposals was followed by a closed door meeting (minutes of which were released only after a freedom of information request) between the EC and a select number of countries (US, Canada, Argentina, Brazil and Uruguay on 13 July this year). Discussion centered around the potential WTO incompatibility of parts of the EC proposal, particularly those surrounding the tolerance levels for endocrine disruptors present in imported substances (food and feed in particularly). The EC reportedly are prepared to replace “negligible exposure” with “negligible risk from exposure”. The EC defend the latter, arguing it might even ban more, rather than less imported substances: for even if there is only negligible exposure, that exposure may still be a risk. Opponents suggest that the insertion of a risk approach has sacrified precaution on the altar of science.
A few comments.
Firstly, the report (and potentially even the EC itself) repeats the misleading assertion that the debate concerns either science or precaution. Precaution is NOT unscientific. The very trigger of the precautionary approach is science.
Next, the case is reported at a time a lot of people are getting jittery about the regulatory co-operation mechanisms in free trade agreements such as CETA and TTIP. The meeting and the subsequent EC reaction to our trading partners’ comments, would then represent an example of the ‘freezing effect’ in international trade: with our trading partners flying the flag of WTO incompatibility, the EU would then have caved in to threats of litigation in Geneva. Yet in reality WTO input by fellow WTO Members is at least as old as the WTO itself, indeed it predates it. The 1978 Tokyo Standards Code already obliged the then GATT Contracting Parties to notify their draft standards to the GATT Secretariat. The very point of notification and transparency is that the issues raised are being discussed and may indeed lead to the draft standard being adopted. Changes made to REACH, to name but one example, reflected concerns of fellow WTO Members and REACH can hardly be said to pander to industry’s demands.
However there needs to be one core appreciation in this process: just as notification serves transparency (anyone can consult the TBT notification gateway to review draft measures that have been notified), so too should the process of review after reception of the comments, be conducted in a transparent manner. This clearly has not happened here. By conducting these meetings in private, and by refusing to release the minutes until prompted to do so, EC services have given the impression that there is more than meets the eye. In times where even CETA has not yet been ratified, that is most definitely the wrong approach.
Update 29 September 2016. The award was made public on 28 September 2016. It sides with Barbados. Look for my analysis in a separate blog piece.
Thank you for the team at Dechert to remind us of the potential that BITs may be used to pursue proactive, rather than just reactive environmental litigation. A word of explanation: Bilateral Investment Treaties, in particular their investor-state dispute settlement mechanisms, are currently under a lot of pressure following the public outcry over the TTIP negotiations. Allowing private investors to sue countries that roll out regulation, using vague principles of protection of property, is seen by many as a form of corporate bullying.
Dechert’s briefing however reminds us firstly, specifically vis-a-vis stubborn air pollution in the Indonesia area, that States may carry responsibility in line with Trail Smelter’s nec utere tuo principle. The possibility for individuals (as opposed to neighbouring States) suing on that basis, is of course complicated by the mechanism of (absence of) direct effect of huge chunks of international environmental law. That is where investor-state can come in handily. Such as in Allard v Barbados at the Permanent Court of Arbitration. Dechert’s summary of that case reads ‘the Canadian owner of an eco-tourist facility in Barbados is currently suing the Government of Barbados for an alleged breach of the full protection and security provision (among other provisions) in the Canada- Barbados bilateral investment treaty. Peter Allard argues in his claim that Barbados breached its treaty obligations by failing to enforce its domestic environmental laws, which he alleges led to the environment being spoilt and a loss of tourist revenues at his eco-resort’.
A timely reminder of the good BITs can do, just before I am to speak (again) tomorrow on TTIP and why EU citisens are so suspicious of it.
Consultancy Ecologic have released a report which they have prepared for the European Parliament. It reviews the impact which the Transatlantic Trade and Investment Partnership (TTIP) might have on the environmental ‘acquis’ of the European Union (the collected body of EU environmental law). A wide range of issues are discussed – best have a look at the report for all the details. Included are the risks associated with standing for private companies under classic BITs, which as I reported earlier, the EC have recently defended.
The report downplays the impact which the TTIP might have on ECJ case-law [‘The Court of Justice of the European Union (ECJ) has consistently held that international trade and investment agreements only have direct effect within the EU in very limited circumstances. Thus, in past ECJ cases, private companies have not normally been able to rely on e.g. WTO law for invalidating an EU action or claiming damages from the EU. This is likely to apply to TTIP as well.’] That I believe is a touch incautious. The ECJ might qualify its case-law, in particular given that the extent of integration of a trade agreement, is part of the reason for the ECJ to reject direct effect. If the TTIP eventually will include the type of deep(ish) integration forecast, the Court might well find it to have direct effect in certain circumstances.
The report suggests the EP keep a close eye on the provisions in the agreement with an impact on environmental law. This includes the type of regulatory co-operation which the TTIP might yield: a focus on process or on outcome, as neatly summarised by Simon Lester. It makes me wonder whether the Agreement might do with an Article 193 TFEU-type ‘environmental guarantee’.
The European Commission (EC) has just published its position papers on a number of key aspects of the TTIP negotiations (the Transatlantic Trade and Investment Partnership with the United States). The move is unprecedented: one does not normally get an insight into the EC’s point of view on core aspects of a crucial international trade negotiation, this early in the proceedings. One must not be naive, of course. Red lines are not given away in the documents. Nevertheless, the EC would seem to have learnt its lessons from the ACTA (Anti-Counterfeiting Trade Agreement) debacle, in which (unfounded, in my view) accusations of backroom deals and intransparency assisted the European Parliament in scuppering EU ratification of the Agreement.
The sectors covered in the current papers, are Cross-cutting & institutional provisions on regulatory issues; Technical barriers to trade; Sanitary and Phytosanitary measures (i.e. barriers to trade in food and agricultural products); Public Procurement; Raw materials and energy; and Trade and sustainable development.