Topic 4 Controversies and regulatory regimes

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Topic 4 Controversies and regulatory regimes

• Telecommunications
• Environment
• 3. Environment in the EU
• Essay 9 Global regulatory regimes

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Global regulatory regimes

• Readings
• Kahler, pp. 65-67, 72-77
• Esty, Daniel C. (2001), Bridging the
  Trade-Environment Divide, Journal of Economic
  Perspectives, 15(3), pp. 113-130.
• WTO (2003, 2005), Understanding the WTO, 3rd
  edition, pp. 69-75, 78-79.

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Global regulatory regimes

• Note
• WTO deals with ensuring market access.
  Negotiations progressively target domestic
  regulatory regimes in a number of sectors. These
  regimes are very different from country to
  country.
• Main question Are domestic regulations a form of
  protection against other countries goods and
  services, or are these sectors, being threatened
  by the liberalizing rules of the WTO/GATT?
  Friction between global and national interest is
  possible.

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Global regulatory regimes

• Note example of ambiguity
• US-Clean Air Act imported gasoline could not be
  more polluting than average US gasoline.
• WTO ruled that this violate trade agreements.
• Greens WTO is against a cleaner environment.
• Exporters the Act is an instrument of
  protection, since some US producers are not
  closed down for being more polluters than the
  average.

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1. Telecommunication services

• NOTE
• Telecommunications services can be divided into
  two categories
• Basic telecommunications, for example, simply the
  relay of voice or data from sender to receiver
  (Examples telephones, telex, facsimile, etc.. On
  local, long distance, international,.--- )
• Value-added services, for which suppliers add a
  value to the customer's information. (Examples
  e-mails, voice-mail, on-line data interchange,..)

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1. Telecommunication on products and services

• National monopolies dominate.
• International Telecommunications Union - ITU in
  the past served as a cartel of domestic
  monopolies.
• Tech innovation put pressure on national
  regulatory regimes and also to some international
  rules.
• Those pressures came from the biggest consumers
  USA, Japan and the UK.

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1. Telecommunication on products and services

• Kahler (p. 66) the US wanted market access to
  telecommunication products which meant
  liberalizing international services. They pressed
  for,
• Moving international negotiations on norms for
  liberalization (not regulating monopolies) to
  GATT. Thus, GATT and ITU jointly, are training
  national regulators, for instance.
• The US also pressed for international
  surveillance over domestic regulatory structures
  by the WTO.

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1. Telecommunications now belong to GATS

• Commitments in telecommunications services were
  first made during the Uruguay Round (1986-1994),
  mostly in value-added services.
• In extended negotiations thereafter (1994-1997),
  members negotiated on basic telecommunications
  services. Since then, new commitments have been
  made either by new members, upon accession, or
  unilaterally by an existing Member.
• Currently, telecommunications, like all services
  are included in the New Services Negotiations,
  which began January 2000, within the Doha Round.
  Several Members or groups of Members have
  submitted negotiating proposals in
  telecommunications services.

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1. Telecommunications

• Telecommunications in GATS, was able to cover
  access to and use of public telecommunications
  networks, an issue of prime importance to
  providers of services such as information and
  financial services.
• But.. no opening of basic telecommunications.
  Negotiations are still going on. They are mainly
  bilateral, between US and the EU. This prepares
  the ground for WTO, but threatens the
  non-discrimination principle of the WTO.

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2. Environment

• This is the main ground for the confront between,
• greens or environmentalists - plus national
  regulatory regimes, on one hand, and
• liberals in the WTO, on the other.

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2. Environment

• Concern 1 No global institution existed such as
  WTO or IMF for the environment
• Many environmentalists saw the international
  environmental regimes as weak, decentralized and
  lacking enforcement mechanisms, Kahler, p. 73.
• These regimes were dispersed. Examples are
  protection of the ozone layer, protection of
  endanger species, No global institutions
  existed.

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2. Environment link to trade

• Given the weakness of institutions, government
  resort to trade instruments.
• Trade instruments. Example treat to close
  markets to environmental violators (firms or even
  countries). These became increasingly
  incorporated in national legislation in an
  attempt to extend environmental regulations
  beyond national borders.

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2. Environment link to trade

• 2nd Concern increasing economic integration
  between nations would permit regulatory arbitrage
  through environment dumping.
• Low regulatory standards would benefit countries
  and firms against greener states and undermine
  trade agreements.
• Norms for trade liberalization would forbid
  discriminations against polluters because it
  could be protection.
• Ex. 1991, American ban on imports from Mexico of
  tuna, under the Marine Mammal Protection Act.

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2. Environment link to trade

• Divide
• Economists and politicians concern with
  competitiveness trade and environment issues and
  policies must be divided because of differences
  in knowledge and ambiguity of link between
  environment and trade.
• Greens and others concern trade policy is the
  main instrument to force raising environment
  standards.

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2. Environment in Uruguay Round

• 1991 GATT reactivated a Group on Environment
  Measures and International Trade.
• Main trade provisions attempted to enforce
  multilateral environmental agreements (MEA).
• More difficult is is the application of trade
  measures to discourage free riding by non-members
  of an environmental agreement.

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2. Environment in Uruguay Round

• 1994 WTO has no specific agreement on
  environment but includes provisions dealing with
  environment concerns.
• Creation of the Trade and Environment Committee
  (TEC) with broad responsibility (focus on 10
  areas).
• No global environmental standards were set up, no
  enforcement is possible.
• If the TEC identifies problems, its solutions
  must continue to uphold the principles of the WTO
  trading system.

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2. Environment in the Uruguay Round
Source WTO, p. 69.
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2. Environment in the Uruguay Round

• The combined result of the WTOs trade and
  environmental agreements suggest when there is a
  conflict between 2 countries
• First, cooperate
• The complaining country can act (e.g. on imports)
  to protect its own domestic environment but can
  not discriminate
• If the other country has also signed an
  environment agreement, then what ever action the
  complaining country takes is probably not the
  WTOs concern.
• What if the other country has not signed? Here
  the situation is unclear and the subject of
  debate.
• When the issue is not covered by an environmental
  agreement, WTO rules apply.

Source WTO, p. 70.
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2. Environment in the Doha Round

• New negotiations 2003 (in Mexico), negotiations
  deadline - originally by 1 January 2005, now
  unofficially end of 2006.
• Multilateral environmental agreements.     
  Ministers agreed to launch negotiations on the
  relationship between existing WTO rules and
  specific trade obligations set out in
  multilateral environmental agreements. The
  negotiations will address how WTO rules are to
  apply to WTO members that are parties to
  environmental agreements, in particular to
  clarify the relationship between trade measures
  taken under the environmental agreements and WTO
  rules.
• Minor agreements were achieved.

Source WTO, p. 91.
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3. Recent environment policy in the EU

• Source FT, March 7, 2007
• In the 1990s, present German Chancellor Merkel,
  negotiated the UN- Kyoto agreement. Now she is
  preparing the EU (Germany presides the EU until
  June) and the meeting of the G8 in June for a new
  round of proposals. In December a new round of UN
  climate change conference is prepared.
• On March 8-9 EU leaders set to agree binding
  target to cut CO2 emissions by 20 of their 1990
  level by 2020.
• She also proposed,
• A successor agreement to Kyoto should ideally
  set up regional schemes that would eventually
  force the worlds biggest polluters to put a
  single price on carbon emissions.
• Personally I think tradable emission
  certificates are the most sensible instrument to
  reduce CO2 emissions and a very market.friendly
  one.

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3. Green crime laws in the EU?

• FT, Feb 7, 2007, Titles, p. 3. On the sequence of
  a ECJ ruling, the Commission proposed tightening
  regulations.
• Commission proposes criminal sanctions, Prison
  and fines for polluters
• Criminal code raises fear over EU powers
  (Potential conflict between ECJ and national
  courts ruling?)
• Nine categories of offence.
• Examples discharge, emission which causes or
  is likely to cause death or serious injury to any
  person or substantial damage to air, soil, water,
  animals or plants, trade in or use of
  ozone-depleting substances, damage to a
  protected habitat