1 Sussex 30'09'06

1
Law, Economics and RTAs characterization
questions for deep integration

• Dr. James H. Mathis
• Department of International Law
• University of Amsterdam
• J.H.Mathis_at_uva.nl

2
Domestic Regulation in WTO - Goods

• (Border)

XI - Quotas
III National Treatment
II - Tariffs
TBT harmonization
SPS - harmonization
I - MFN
Actionable Subsidies
TRIPS domestic regime
3
Article XXIV Reference to ORRC

• Elimination of Duties and other restrictive
  regulations of commerce (ORRC) - Scope of ORRC
  determines what must be eliminated
• Must schedule and eliminate Quantitative
  restrictions
• Must schedule and eliminate internally
  discriminatory measures (i.e., provide for
  national treatment)
• Need not eliminate equally applied regulatory
  measures (i.e. deep integration schemes) that are
  not quotas (restrictions upon importation

4
Categorizing deep integration enactments (RTA
domestic regulation)

• By subject area
• IP
• Standards (products and food)
• Competition
• Investment
• Social policies and environment (and other
  process requirements, product related and
  non-product related)
• (are rules of origin content requirements under
  regulatory policy?)

5
For each subject category in a given RTA

• Substantive expression
• Harmonization (assuming similar substantive
  criteria)
• Recognition (apply the partners substantive
  criteria or process)
• Regional law (separate territory jurisdictional
  base and scope
• Institutional expression
• Binding or non-binding activity
• State or regional recourse or oversight
• Private recourse by administrative complaint or
  court
• Law and policy formulation (ongoing process - by
  what means)

6
Treatment of existing WTO regime

• Silence
• Active referencing (incorporation) parties
  affirm
• Same subject area, but modified substantive or
  institutional (WTO plus or minus)
• - expanding or reducing substantive rights and
  obligations
• - altering institutional procedures or right of
  redress
• Example non-international (nonconforming)
  standard

7
Where no existing WTO regime

• Does the RTA regime touch fiscal or regulatory
  measures in the meaning of Article III.2 or III.4
  
• IF so, is MFN raised as compared to other WTO
  members?
• Is RTA partner receiving better than or lesser
  than treatment in the sense of affecting
  internal sale
• Hierarchy for modifications? All treaties are
  created the same, but how are parties free to
  modify WTO rights?

8
Characterizing conditionality

• Social and environmental (safeguard) clauses
• Investment / competition provisions with
  retaliation
• Collective preferences in RTAs
• Focus on the resulting measure rather than the
  social clause. Is it an ORRC that affects SAT
  requirement?
• Does the measure nullify the agreement entirely?
• Does the measure call for a trade sanction?

9
Legal characterization does not consider

• The cost of the regulatory policy as compared to
  other foregone policies.
• Whether the regulation has a trade creating or
  diverting effect (are there bullet points for
  trade diversion?)
• Effects on competition for rules as between
  competing developed country regulatory systems
• Trade-offs between regulation and market access
• Conflict with international development
  objectives (sustainable development or millenium
  goals)
• Social or political value of the regulation (or
  the RTA) irrespective of its welfare cost or
  trade restrictive effects

10
Implications for research

• Current generation north / south agreements
• Lets be sceptical on deep integration on the
  existing RTAs
• New generation what is coming next?
• More variations from WTO regimes
• More dedicated RTA dispute settlement systems
• More interrelation between trade and investment
• More regulatory action on services and
  recognition
• Eventual conditionality for social clauses