Wednesday, 27 January 2010

New Article in the Hong Kong Economic Journal Monthly

I have published a paper on The Economic Crisis, Protectionism and China's New Trade Policy in the Hong Kong Economic Journal Monthly, one of the leading policy journals in Greater China. Below is the capsule summary of the article. Interested readers can get the journal from all major news-stands in HK or the Journal directly. 




Tuesday, 19 January 2010

Interview with Zhou Xiaoyan

Mdm Zhou Xiaoyan, Director General of the Bureau of Fair Trade, was recently featured in an online interview on MOFCOM's website. There are some some interesting info from her interview. The full interview is available here.

1. So far, 79 countries have recognized China's market economy status. Assuming almost all (apparently Russia is not) are WTO Members, this is more than half of the 153 Members of the WTO. This will build up the pressure on other WTO Members to recognize the MES of China.


2. Up to end of 2009, China has initiated 62 ADP investigations, 3 SCV investigation, and 1 safeguard investigations.


Thursday, 14 January 2010

First sermon in the new year from Pastor Lamy

Here are some more interesting thoughts from the "Dalai Lamy", sorry, should be Pascal Lamy. I'm sure some people will get excited if you have the patience to finish this long speech, but the trader lawyer inside me (as many other trade lawyers probably will) has already started asking: "Is that possible? Aren't the WTO DSB supposed to decide cases on the basis of 'covered agreements', which, no matter how desirable it might sound, do not include the UDHR, ICCPR or the ICESCR? Can you really use trade rules to strengthen human rights? Aren't the two regimes supposed to be parallel universes like Pandora and Earth, where human rights is respected on one but not the other?"

On a separate note, I bet 100 THB that, with speeches like this keep flowing during the rest of his DG term, Lamy has a pretty decent chance of getting nominated for the Nobel Peace Prize after his term. 

The full text of the latest "Lamon" is reproduced below, with emphases added by me, and my own comments in italicized font in brackets. 

"Towards Shared Responsibility and Greater Coherence: Human Rights, Trade and Macroeconomic Policy"
Colloquium on Human Rights in the Global Economy, Co-organized by the International Council on Human Rights and Realizing Rights, Geneva, 13 January 2010

The last time we discussed this issue was in the cathedral of Geneva with Desmond Tutu. Putting together the issues of trade and human rights may seem odd. For many, trade is the villain. It is a symbol of mercantilism, capitalism, the tool through which powerful multinational corporations impose their law over human beings, impairing their social, economic and cultural rights. The history of the relationship between trade and human rights is a history of suspicion, and to some extent of deliberate reciprocal ignorance. 

Yet, trade goes hand in hand with human rights. Trade presupposes human interaction, respect and understanding. If conducted with respect, "trade polishes and softens the most barbarous mores", to quote Montesquieu and his theory of "doux commerce".

One too often forgets that human rights and trade rules, including WTO rules, are based on the same values: individual freedom and responsibility, non-discrimination, rule of law, and welfare through peaceful cooperation among individuals. Not only are they based on the same fundamental values; they are also the result of common concerns. Both human rights and global trade rules were considered a key element of the post-World War II order, a rampart against totalitarianism. It is no coincidence that the seeds of the multilateral trading system were planted at the same time as the Universal Declaration on Human Rights was being drafted in the mid-1940s. Both were seen as indispensable to world peace. In spite of these common underpinnings, for decades the interaction between the trade and human rights communities seemed to be governed by distrust.

And yet, human rights and trade are mutually supportive. Human rights are essential to the good functioning of the multilateral trading system, and trade and WTO rules contribute to the realization of human rights.

What role do human rights play in trade? First, civil and political rights are a key ingredient of good governance, which in turn is essential to the proper conduct of trade relations. Freedom of expression, for example, brings transparency, one of the core principles of the world trading system. Secondly, social, economic and cultural rights, often seen as the main victims of globalization and of the opening of markets, are important ingredients for successful trade liberalization. I will come back to this point in a few minutes.

How can trade help promote human rights? I would start by noting that trade measures are the most commonly used instrument in developed countries to put pressure on states violating human rights. (Does this mean that the WTO sanctions such blatant violations of trade rules? Does this mean that trade rules have to be ignored or even breached so that human rights can be restored? Wouldn't this point to inherent conflict rather than complementarity between the two?

But more importantly, trade is a means to an end; and the end is raising the standards and conditions of living of all. The objective of sustainable development features prominently as one of the objectives of the WTO. Trade negotiators chose to include it in the preamble of the WTO Agreement (yes the preamble rather than the main text, which means it is not enforceable). How is this goal achieved? The opening of markets creates efficiency, stimulates growth and helps spur development, thereby contributing to the implementation of the fundamental human rights that are social and economic rights. One could almost claim that trade is human rights in practice! 

The reduction of trade barriers in agriculture, enhanced market access for agricultural products and the gradual decrease in subsidies provided by rich countries to their farmers, for example, all contribute to the same objective: the implementation of the right to food for all.

But let me immediately discard a misconception that is unfortunately too widely spread. The primary vocation of the WTO is to regulate, not to deregulate trade as is often thought. By putting in place rules to regulate trade flows and remove trade distortions, the WTO aims to create a global level playing field, where fairness is the rule and where the rights of individual members are safeguarded.

I would note, in this regard, that the case law of the WTO dispute settlement mechanism acknowledged that international trade law could not be interpreted "in clinical isolation" from international law in general. And, incidentally, how could the WTO &mdash created in 1994 by an international legal instrument — be immune to the rules of the general international law from which it derives its mission and its very existence?

Of course, trade rules are not perfect. They may, in some cases, have unintended consequences on human rights. Some claimed so, for example, with respect to intellectual property rights. I sense, however, a growing awareness among trade experts of the importance of human rights and of the role trade can play in promoting and anchoring such rights. The concerns sparked by certain provisions of the TRIPS [Trade-related Intellectual Property Rights] Agreement led trade negotiators to agree, in 2005, to amend the TRIPS Agreement to facilitate access of developing countries deprived of domestic pharmaceutical production capability to affordable medicines. Similarly, discussions are underway about the possible protection of folklore and traditional knowledge.

But let me go back to the question of trade, development, and human rights. While trade can promote development and contribute to the reinforcement of human rights, it is not a panacea. Trade liberalization can entail social costs. To be successful, the opening of markets requires solid social policies to redistribute wealth or provide safeguards to the men and women whose living conditions have been disrupted by evolving trade rules and trade patterns.

This is what I have called the "Geneva consensus", under which the opening of markets is necessary to our collective well-being, but does not suffice in itself.

It does not suffice unless strong safety nets help correct the imbalances between winners and losers at the national level. It does not suffice unless the countries which do not enjoy sufficient human, technical, and financial resources to build the necessary infrastructure or to put in place such safety nets domestically are assisted by the international community. Hence the importance of the WTO mandate of Aid for Trade.

For trade to act as a positive vector for the reinforcement of human rights, a coordinated international effort is needed. A coherent approach, which integrates trade and human rights policy goals, should be developed. Progress can no longer be achieved by acting in an isolated manner. Coherence should become our guiding principle in fostering development and human rights: coherence between the local and the global, between the world of trade and the world of human rights, between the WTO as an institution and the various organizations active in the field of human rights.

Today's world may be flat, to paraphrase Thomas Friedman, but it is not united. It is, on the contrary, more fragmented than ever. The wind of globalization, which has been blowing during the past few decades, has dispersed our energies. We now need to bring them together and act in a coordinated way.

This responsibility lies with all of us. It is the responsibility of the members of the WTO, which are practically all party to either the International Covenant on Civil and Political Rights or the International Covenant on Economic, Social and Cultural Rights, to uphold their human rights obligations together with the obligations to which they have subscribed within the WTO Agreement. But it is also the responsibility of the WTO, of the Office of the High Commissioner for Human Rights — which is the custodian of human rights treaties — and of organizations such as the International Council on Human Rights and Realizing Rights to work to institutionalize the relations between the trade and human rights communities. It is our responsibility to coordinate our actions in a meaningful and efficient manner to ensure that trade does not impair human rights, but rather strengthens them. I am aware of the challenge this represents, of the change in mindset this requires.

By having invited me to this event today, a first step has been crossed, and I thank you for having taken this initiative. My hope, as Sir Winston Churchill said, is that "this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

Thank you for your attention.

Wednesday, 6 January 2010

Shaffer and Pollack, When Cooperation Fails: The International Law and Politics of Genetically Modified Foods

Opinio Juris has hosted a discussion on the interesting new book by Gregory Shaffer and Mark Pollack, When Cooperation Fails: The International Law and Politics of Genetically Modified Foods (Oxford, 2009). Joining in with guest commentaries are Sungjoon Cho and Rebecca Bratspies. While the book focuses mainly on the GMO dispute between the US and EU, I find many of the key points explored in the book (see below) well worthy of further exploring. These include topics such as regulatory conflicts between different jurisdictions, interactions between interest groups and policy makers, roles of international regimes in handling such conflicts.

One thing that immediately came to my mind was the tainted milk scandal in China in 2008. The way the Chinese government handled the case is in marked contrast to the approach taken by either the US or the EU on the GMO issue. Among the three, the Chinese approach is probably the least desirable approach. That is why I have arguedthat, at least for a case of such magnitude, international intervention is justified. 

On the GMO issue itself, I feel that it has not received the attention it deserves in China. With billions of Chinese eating something that is grown on a technology of which the full implications are far from clear, I think the average Chinese must at least be given the right to get more information, even if they might not have the right to more choices. 

Below are the detailed summary by Shaffer and Pollack on their new book, with emphases added by me:

The Interaction of International and Domestic Law: Lessons from the Conflict over Genetically Modified Foods

by Greg Shaffer and Mark Pollack

As its title suggests, When Cooperation Fails has two distinct aims. The specific empirical aim is to provide a definitive and theoretically informed account of one of the most bitter and politically charged international disputes of the past two decades, between the United States and the European Union over the regulation of genetically modified foods and crops. Our theoretical aim, however, goes far beyond the specifics of the GMO case: indeed, we seek to contribute to literatures in international law and international relations that identify the sources of international regulatory and trade disputes, the obstacles to successful cooperation, the interaction of hard- and soft-law international regimes, and the role of WTO dispute settlement in managing conflict.

Our approach is interdisciplinary, drawing from international law and political science, and multi-level, examining the recursive interaction of domestic and international law and politics over time. We start by inquiring why the US and EU systems for risk regulation are so different in this area, then examine failed efforts to bridge these differences through transgovernmental networks and various multilateral regimes, and finally investigate how international law developments in these fragmented regimes have fed back into domestic legal systems in the US and EU as well as in emerging economies such as China, India and Brazil, affecting the future of genetically modified crops and foods. Our central arguments can be boiled down to five key points.

First, on the domestic law front, we apply theories of comparative law and politics that attribute differences in domestic risk regulation to differences in organized interests, political institutions, culture and ideas, and contingent events. We find that the best explanation for the differences lies not in "essentialist" forms of culture or regulatory approaches (such as US and European attitudes toward food, risk, technology or the precautionary principle), nor in institutions alone (such as US specialized agencies compared to European political processes), but in the ability of interest groups to capitalize on pre-existing cultural and institutional differences, with an important role played by contingent events such as the European food-safety scandals of the 1990s. We contend that the stark differences in the US and EU regulatory systems were not preordained by interest-group, institutional or cultural configurations of the two sides, but were the result of multiple and, to some extent, contingent causes. Nonetheless, we show that the differences have become entrenched over time and are now strongly path-dependent and resistant to change.

Second, turning to the international level, we draw upon a growing body of international relations and international legal scholarship that focuses on the promise of regulation through transnational networks, with a particular emphasis on the prospect of "deliberation" as a form of decision-making in which governmental and non-governmental actors put aside fixed positions and negotiating tactics in favor of a collective search for better understanding and better policy. We find, however, that the record of transatlantic deliberation on genetically modified organisms (GMOs) has largely been one of failure. Deliberation, we argue, is a hothouse flower that flourishes only under restrictive conditions. The sharp disagreements, intense politicization, and distributive conflicts that characterize agricultural biotechnology have all prevented US and EU policymakers from engaging in a joint deliberative search for the best policy in this area.

Third, we contend that the record of multilateral cooperation (undertaken within overlapping regimes such as the WTO, the Convention on Biodiversity, the OECD, and the Codex Alimentarius Commission), has been similarly limited, characterized largely by strategic maneuvering by both sides to "export" their own standards and their own principles for risk regulation, and to "forum shop" among the regimes most likely to produce each side's favored outcomes, imposing most of the costs of adapting to new global norms on others. We argue that cooperation has been frustrated in practice by the existence of severe distributive conflict between the two sides, which has given rise to overlapping and (sometimes purposefully) inconsistent regimes for trade, the environment, and food safety. Furthermore, while a growing amount of scholarship has addressed the roles of "soft" law (which is formally non-binding) and "hard" law (which is formally binding and enforceable) as complementary and mutually reinforcing means for international problem-solving, we find that hard and soft law regimes can interact antagonistically. More specifically, we argue, the interaction of overlapping regimes can serve to "harden" soft-law regimes like the Codex Alimentarius (which become intensely politicized rather than deliberative and technocratic), as well as "softening" hard-law regimes like the WTO and its dispute settlement mechanism (where judicial interpretation is potentially complicated by links to neighboring regimes). The interaction of hard- and soft-law regimes, rather than progressively moving toward a new consensus, may instead perpetuate substantive deadlock over regulatory approaches, especially where conflicts involve powerful states.

Fourth, we suggest that, despite considerable risks, the United States' complaint before the WTO Dispute Settlement Body has offered the prospect of some clarification and mutual accommodation that had hitherto eluded the two sides in other bilateral and multilateral fora. More specifically, we apply a comparative institutional analytic framework to examine the radically different institutional implications of the interpretive choices that the WTO judicial panel faced in the EU-Biotech case. We demonstrate how interpretive choices by a WTO judicial body can attempt to allocate decision-making to different institutional processes in which constituencies of different countries, with varying priorities, perceptions, and abilities to be heard, participate to varying and always imperfect degrees. We find that the WTO panel largely took a procedural approach in its decision, refusing to articulate a single substantive standard on GMO regulation, but instead insisting on certain procedural requirements that all states must observe in adopting their own domestic regulations. In the process, we contend, the WTO has empowered domestic political actors (such as the European Commission) with an interest in complying with WTO law, and, as a result, has encouraged regulators on both sides of the Atlantic to operate more transparently, taking into greater account the effects of their actions on third parties.

Fifth and finally, we return to the domestic level to assess whether several decades of discussion, negotiation, and litigation have resulted in significant reform and/or convergence of the two regulatory systems. We demonstrate that, despite some domestic changes on each side, the US and EU regulatory systems for agricultural biotechnology show few signs of real convergence toward a common regulatory model. There has, nonetheless, been some domestic change on both sides of the Atlantic, due at least in part to external pressures from international markets and international regimes. In the EU, the Commission and biotech companies have been somewhat empowered by international developments to resume approvals of new GM varieties after a long moratorium and to challenge member state bans against those already formally approved. On the US side, meanwhile, regulators have increased requirements for trials before the commercial release of many GM seeds so that these varieties, in fact, are treated distinctly from more conventional ones, despite official US proclamations to the contrary. Even in the absence of tightened regulation, moreover, US farmers have demonstrated a reluctance to adopt new GM foods and crops which they fear will be rejected in the EU and other large export markets. The overall picture, we argue, is one in which the two regulatory systems for GM foods and crops remain essentially polarized, but where key actors on both sides struggle to minimize the economic impacts and political tensions of persistent regulatory differences.

In sum, the story of the transatlantic GMO conflict is largely one of failed attempts at bilateral and multilateral cooperation. Yet our story is not a counsel of despair, for in addition to examining how and why cooperation fails, we address ways in which states and regimes can facilitate the ongoing management of regulatory conflict, and, over time, together with transnational market forces, influence national regulatory and commercial practices in a (somewhat) more accommodating manner. System friction between two entrenched regulatory systems is unlikely to be decisively settled in the near future, but the dispute can be managed, with key roles for international law and international institutions.

Monday, 4 January 2010

What happened in Copenhagen: The Chinese version


新华社记者赵承 田帆 人民日报记者韦冬泽