The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS 

Ignacio Garcia Bercero and Paolo Garzotti: Dsu Reform—Why Have Negotiation to Improve Wto Dispute Settlement Failed so far and What Are the Underlying Issue?

The article provides an overview of ongoing negotiations to improve the Wto dispute settlement understanding.  It first summarizes the main developments in the negotiations and discusses the reasons why it has not been possible to find so far the necessary consensuses to conclude them.  A more detailed discussion is presented of proposals that have been presented to enhance the transparency of Wto dispute settlement procedures, introduce a roster of experienced panelists, strengthen the remedies in case of no compliance with Wto rulings and enhance developing country participation in the system.  These proposals are analyzed in terms of their potential contribution to reinforce the legitimacy and effectiveness of Wto dispute settlement.  The article concludes by presenting some ideas about a “reform package” which would be both politically balanced and technically feasible and should be concluded no later than the end of the Doha negotiations.

The authors are with the Directorate General of Trade at the European Commission in Brussels, Belgium

George S. Akpan: The Investment Provisions of the United States–Singapore Free Trade Agreement and the Nafta—Old Wine in a New Skin or Something Else?

Free Trade Agreements (Ftas) are gaining popularity with many countries. A common feature of modern Ftas is the incorporation of an international investment regime into their provisions. The United States–Singapore Free Trade Agreement (US-Sfta) is one such example. This agreement is a significant piece of history as it is the first Fta between the United States and any Asian country. As it comes about a decade after a similar investment regime in the North American Free Trade Agreement (Nafta), which has sustained criticisms by commentators, it becomes necessary to examine whether the new agreement learned any lessons  from the operation of the Nafta investment regime and whether those lessons, if any, have been incorporated into the new agreement. The article critically analyzes the investment regime in the US-Sfta and compares it with that of Nafta. The article further explores the possibility of the US-Sfta investment regime serving as a precedent for future investment agreements and explores the weaknesses of the of the agreement and makes recommendations on how to make future investment agreements improve on the US-Sfta framework by making them more sustainable development oriented.

George S. Akpan,  LL.B, LL.M, is a Postdoctoral Fellow at the United Nations University Institute of Advanced Studies, Japan.

Todd Weiler: Methanex Corp. v. U.S.A.—Turning the Page on Nafta Chapter Eleven?

While the result in Methanex v. U.S.A. was widely expected, the Final Award nonetheless contained some surprises.  Chief among these surprises was the Tribunal’s obiter dicta on three substantive Nafta obligations: national treatment; the minimum standard of treatment; and compensation for expropriation.  Focusing on this substantive analysis, the author concludes that these will likely be diminished both by their status as obiter and because of the theory of proximate cause upon which they have been based.  In its earlier, Partial Award on Jurisdiction and Admissibility, the Tribunal effectively concluded that claims under the Nafta were subject, on a jurisdictional basis, to a theory of proximate cause.   The measures,  which effectively banned the use of a fuel additive in California, needed to directly affect Methanex’s business in California.  The case survived dismissal on jurisdiction because Methanex alleged that it was a victim of intentional discrimination on the basis of nationality.  Even though it concluded that these allegations had not been proved, and apparently for good reason, the Tribunal went on to comment upon the substantive obligations claimed by Methanex.  In so doing, the Tribunal appeared to allow this theory of intentional discrimination to pervade its analysis of the national treatment obligation.  It also engaged in analyses of both the international law minimum standard of treatment and the expropriation obligation that were simply not in line with evolving doctrine.  Nonetheless, the author concludes that the Final Award is essential reading, at least because of its significant costs award and the fascinating procedural antics that appeared to provide the Tribunal with a reason for making it.

Todd Weiler is a Calgary-based lawyer who serves as an Adjunct Professor at the Washington College of Law.  Professor Weiler has been involved as counsel or expert counsel in a number of Nafta investor–State arbitrations involving all three Nafta countries.  He is also the author of two previous articles which appeared in The Journal of World Investment:  Metalclad v. Mexico—A Play in Three Parts, Vol. 2, No. 4, December 2001; and Dodging Bullets—A First Look at the Final Award in The Loewen Group and Raymond Loewen v. U.S.A, Vol. 4, No. 4, August 2003.

Martin Roy: Audiovisual Services in the Doha Round—“Dialogue de Sourds, The Sequel”?

The purpose of this article is to highlight some key issues in the ongoing negotiations on audiovisual services in the context of the Doha Round of multilateral trade negotiations.  It reviews the treatment of audiovisual issues prior to the launch of the Round, analyses current market access commitments in the Gats, and discusses key issues in the negotiations in the light of technological developments.  The Gats negotiations offer an opportunity to deepen international rules reflecting both the commercial and cultural importance of the sector.  This article argues that such opportunities might best be seized if the flexibility of the Gats, especially in terms of the scheduling of commitments, is fully taken advantage of.  Existing commitments of Members suggest that such flexibility has not been extensively used so far.  Ensuring greater use of such flexibility necessarily involves, in the course of negotiations, the assessment of the relative trade-harmfulness of the various policy tools used to achieve non-trade objectives of governments in the sector.

Martin Roy, Ph.D. (Johns Hopkins University (Sais)) is an Economist in the Trade in Services Division, World Trade Organization Secretariat. He is also the author of  Implications for the Gats of Negotiations on a Multilateral Investment Framework—Potential Synergies and Pitfalls, which appeared in The Journal of World Investment, Vol. 4, No. 6, December 2003.

Philippe De Lombaerde and Luis Jorge Garay: Preferential Rules of Origin—EU and Nafta Regulatory Models and the Wto

The proliferation of regional trade agreements (Rtas)since the 1990s has been accompanied by the design and implementation of less transparent, more restrictive and often divergent rules of origin, leading to higher transaction costs and lower trade-expanding effect of preferential agreements. The aims of this article are: (i) to discuss the rules of origin provisions for trade in goods in recent Rtas; (ii) to analyze the role of the two dominant rule-makers (the European Union and the United States); (iii) to identify the characteristics of the two dominant regulatory models; (iv) to elucidate the influence of these two models on third regions; and (v) to discuss the interaction between the regional and the multilateral levels of rulemaking, where slow progress has been registered with respect to the harmonisation of non-preferential rules.  The authors conclude that there is a clear need for multilateral regulation of preferential rules of origin. The de facto proximity (similarity) of the U.S. and Nafta models provides opportunities for harmonization initiatives. De jure harmonization of preferential rules will not be reached in the short run, however. This depends on (i) how the harmonization process of non-preferential rules evolves, (ii) how the origin concept will be treated in other areas of multilateral rulemaking such as trademarks, origin marking, anti-dumping, sanitary and phytosanitary standards, etc., and (iii) protectionist pressures in specific sectors.

Philippe De Lombaerde is a Research Fellow at the United Nations University–Comparative Regional Integration Studies (Unu-Cris) in Bruges, Belgium.

Luis Jorge Garay is an Associate Research Fellow, United Nations University–Comparative Regional Integration Studies (Unu-Cris) in Bruges, Belgium.

Kálmán Kalotay: The Central European Research and Development Platform for Investors

Since the late 1990s, the Czech Republic, Hungary and Poland have emerged as a relatively important European research and development platform for foreign investors. Investors started targeting Hungary first, followed by Poland and the Czech Republic soon after. Firms operating in the automotive and electronics industries, in their majority originating from Europe, have the highest tendency to locate research and development in these three countries. With accession to the European Union, specialization of the Czech Republic, Hungary and Poland on research and development is expected to be strengthened. The expansion of laboratories, however, may face demographical limits. Compared to China and India, the population of these countries is small and is no longer growing. That may determine the size of projects they can attract in the future.

Kálmán Kalotay is Economic Affairs Officer at the United Nations Conference on Trade and Development in Geneva, Switzerland. He is also the author of several earlier articles published in The Journal of World Investment and The Journal of World Investment & Trade, the most recent of which was The Rise of Foreign Direct Investment in the Telecommunications Services of Developing Countries, which appeared in The Journal of World Investment, Vol. 5, No. 5, October 2004.