The EU, the WTO and indirect land use change

Efforts to meet the European Union’s (EU) alternative energy targets have resulted in increased production of biofuels. This production has resulted in deforestation-related emissions through displacement of agricultural production, a problem known as indirect land-use change. The European Commission (EC) has proposed regulatory options to respond to this problem, but all risk not being in conformity with World Trade Organization (WTO) law.Trade law challenges result from the underlying methodological uncertainty, and the attempt to address a systemic problem on the level of individual producers.Yet, this does not necessarily indicate that the intent of these regulations is to protect EU markets.Thus, this is an instructive case study to examine the relationship between WTO law and complex, emerging environmental problems

Consumer preferences and the National Treatment Principle: emerging environmental regulations prompt a new look at an old problem

Should consumers’ preference for ‘green’ products help justify,from a WTO perspective, emerging regulations such as restrictions on trade in non-sustainable biofuels? Despite the role consumer preferences have played in WTO disputes, in association with the ‘ like ’ products concept, there has not been enough focused examination of their specific influence, particularly in disputes on ethical public policy issues, such as environmental or health regulations. To this end, this paper examines key GATT Article III disputes, pointing out that they included attempts both to measure, and also to interpret, consumer preferences. The latter approach becomes more tempting when consumer preferences are difficult to measure; import bans or restrictions associated with ethical public policy regulations can bring about such a situation. A hypothetical dispute about EC biofuels sustainability criteria demonstrates this problem. Options to make the concept of consumer preferences more coherent include limitations on how they can be invoked, and an increased commitment to capturing them through measurement

Do the same conditions ever prevail? Globalizing national regulation for international trade

Countries craft their regulations in a specific national context. When foreign exporters apply this regulation to achieve market access, it becomes subject to a global array of implementation conditions. Several WTO disputes have ruled that regulation failed to acknowledge the conditions of foreign exporters. The WTO Appellate Body has suggested that comparing conditions or ‘situations’ is part of not discriminating between foreign and domestic products, but the implications remain vague. In fact, pulling too hard on this thread could unravel the non-discrimination principle as it leads to its inherent contradiction: regulation will never treat all trade partners exactly the same precisely because of their diverse conditions. Further, suggesting that it should puts a huge undue burden on regulators: deep integration run amok. Key WTO environment and development controversies centre on how to acknowledge differences between countries’ situations and still achieve the formal equality that the system promises. The case law on situational discrimination feeds into these debates. This article proposes that the focus should be on how different situations influence the comparative effectiveness of a regulation in meeting its goal, an approach which delimits and clarifies

Triggering Article 50 TEU: a legal analysis

• Article 50 of the Treaty on European Union (TEU) will govern the UK’s withdrawal from the EU. • The use of Article 50 TEU is unprecedented and withdrawal will be governed by both legal and political processes within the UK, the EU and the World Trade Organization, making it a complex undertaking. • In this context, several aspects of the interpretation and application of Article 50 TEU pose particular challenges. These include domestic controversy regarding the constitutional requirements for triggering Article 50 TEU, the short time-span of negotiation, and the uncertain role for the UK in trade negotiations with the EU and the rest of the world during the withdrawal process. This paper outlines these issues, focusing in particular on the EU and international trade (rather than domestic constitutional) dimensions of withdrawal, in order to provide clarity and highlight potential pitfalls affecting both the EU and the UK. ISBN: 978191204470

Environmental standards and regulation

Both the United Kingdom (UK) and the European Union (EU) have called for non-regression of environmental standards and regulation in their future relationship. As environmental regulation imposes costs, there is an incentive for governments to give their industries a competitive advantage through deregulation. The EU has tried to prevent this problem in existing trade agreements by including a requirement for non-regression of environmental standards. The draft Withdrawal Agreement of November 2018 also includes requirements for non-regression of environmental standards that would apply, as part of the so-called backstop, if a future relationship agreement were not concluded by the end of the transition period. Even if (and when) the backstop is superseded by the future relationship, the UK and the EU have indicated that this relationship will build on these commitments. In this note I first describe why this ‘environmental backstop’ is an innovative hybrid between the full alignment with environmental legislation required in EU Association Agreements and the European Economic Area (EEA) Agreement, and the arm’s length non-regression requirements that the EU has negotiated in its trade agreements with countries such as Canada and South Korea. It also has some unique features. Notably, successful implementation would require substantial reform in UK environmental monitoring and enforcement. I thus examine how it might function in practice, focusing on challenges with enforcement. Finally, I analyse its applicability to different models for the future relationship. The Withdrawal Agreement links environmental non-regression to a specific UK-EU customs union. However, if the UK and EU go beyond this, pursuing deep regulatory alignment, it will also prove a source of fundamental disagreement. The UK’s current position is to push for non-regression to stand in for regulatory alignment, whilst the EU will likely reject such an approach

Trade, transboundary impacts and the implementation of SDG 12

The 2015 Sustainable Development Goals (SDGs) were developed to ‘transform our world.’ Yet critics argue that the concept of sustainable development serves to maintain an unsustainable status quo, or provide a positive gloss on a terminal conflict between its ‘pillars’: environmental protection, economic growth and social welfare. In this article, we examine this tension with respect to the implementation of SDG 12 in the European Union. SDG 12 calls for responsible consumption and production, which necessitates reconciling, or ‘decoupling’, economic growth and environmental degradation: the core of sustainable development. Initial examination reveals that the largest implementation gap is among high-consuming countries, including those of the EU, the focus of our article, who are failing to account for transboundary impacts of products consumed domestically. This shortcoming, facilitated by the flexibility of the SDG ‘global target, national action’ approach, undermines the achievement of other environmental SDGs relating to biodiversity and climate, among others. Yet, as compared to other EU approaches to addressing transboundary environmental harm from trade in existing Free Trade Agreements (FTAs) and Multilateral Environmental Agreements (MEAs), which we examine, the global focus and breadth of SDG 12 offers transformative potential. Ultimately, even if the three pillars of sustainable development are not ‘rebalanced’ toward environmental conservation, they can provide a construct for examining interactions and trade-offs between goals. Simply taking account of transboundary consumption, as SDG 12 indicators call for, would encourage more effective cooperation to help producing countries address environmental problems that result from production for export through impact assessment and enforcement

Is it rational and consistent? the WTO’s surprising role in shaping domestic public policy

What makes regulation rational? And why is rationality important to an international tribunal? In the World Trade Organization (WTO) context, these questions have had significant implications for the public policy of its Member countries. The WTO Appellate Body’s emerging emphasis on means–ends rationality testing is based on the questionable premise that consistent regulation is non-discriminatory. It has led regulators, such as the EU, to defend—and probably even construct—complex regulation in a way that emphasizes conformity to one overarching policy objective. More surprisingly, the Appellate Body has re-cast itself as public policy watchdog, pointing out when governments do not appear to be committed to their cause. In response, governments have strengthened disputed regulation, rather than making it less trade-restrictive. This retreat to rationality can be seen as a result of a difficult challenge facing the Appellate Body: how to review national regulation without passing judgment on it. More specifically, the rationality test pays the price of the Appellate Body’s retreat from proportionality

Deep and not comprehensive? What the WTO rules permit for a UK-EU FTA

WTO rules prohibit Free Trade Areas (FTAs) that provide tariff-free access or services liberalization in only one or a few sectors. In this sense, a narrow, sectoral approach to concluding an FTA between the EU and the UK would contravene WTO law. However, assuming the EU and the UK were able to agree a substantially broad tariff-free FTA, WTO rules would not prevent them from moving further to maintain the bulk of the benefits of the Customs Union and the Single Market in a few key sectors. They could establish customs union-like conditions by coordinating external tariffs in some sectors and agreeing on relaxed Rules of Origin (RoOs) administered lightly and Single Market-like access could be approximated through sectoral Mutual Recognition Agreements. Such an approach would enable continued deep integration, whose desirability has been signalled on both sides. It would fall short of current market access levels even in the selected sectors, and, in the case of tariff coordination, re-create some of the limits to an independent trade policy that Brexit aimed to remove. If the trade-off were deemed desirable, however, the approach could be reconciled with WTO rules including the ‘Most Favoured Nation’ requirement that equal treatment be awarded to all WTO Member States

Brexit food safety legislation and potential implications for UK trade: the devil in the details

The Government’s approach, as set out in the EU Withdrawal Act (2018), is to transfer EU law into UK law and address any ‘deficiencies’ in that law (such as references to EU institutions) by secondary legislation. • This has resulted in a large body of new food safety legislation that replaces EU legislative processes and institutions with those of the UK. • Detaching UK food safety regulation from EU bodies, while maintaining agricultural and food systems that are no less harmful to the environment and public health, is a challenging task. This is because the UK must develop capacities, competencies and procedures that have not been required or available domestically for many years.• It is thus implausible to suggest, as the Government argues, that new UK food safety laws constitute minor technical changes and avoid ‘new legal frameworks’.• Further, this new legislation gives ministers powers to change retained EU law without any primary legislation in the future. Only primary legislation provides Parliament with adequate time and opportunity to scrutinise and amend proposals; it also allows for wider consultation and public participation.• There is tension between the regulatory divergence that these Statutory Instruments (SIs) permit and the imperative to maintain open borders within the UK. Empowering devolved nations to change food safety legislation could complicate trade in agricultural and food products within the UK.• Devolved food safety standards could also undermine the UK’s ability to take a unified approach to external trade negotiations.• Powers for ministers to change retained EU law further weaken Parliament’s already tenuous ability to oversee external trade agreements

Integrating sustainable development objectives into UK trade policy

Leaving the EU Customs Union will necessitate the UK having an independent trade policy. As part of the process of governing its external trade, the UK must consider how it will integrate its sustainable development objectives into this policy. In this briefing paper, we conceive such objectives broadly, including transparency, political participation and access and consultation, as well as obligations within FTAs to uphold labour standards and environmental protections. Here we consider potential approaches to (1) integrating sustainable development objectives into the negotiating process; and (2) reflecting these objectives through UK trade strategy