December 9, 2013

Dangerous New WTO Ruling

Filed under: World Trade, WTO — drderrick @ 1:34 pm

As Ministers and officials were gathering in Bali for the recent WTO Ministerial conference that agreed the historic accord described by the EU Trade Commissioner as “saving the WTO”, a WTO Dispute Settlement ruling had just been published that could undermine the entire multilateral trading system.
That ruling looked into complaints about the EU import restrictions on seal products – the EU Seal Regime – and has received comparatively little public attention.

The ruling concluded that EU restrictions on the import of seal products do not violate WTO rules because they “contributed to a certain extent to [the] objective of addressing the EU public moral concerns on seal welfare”. The lack of attention given this historic ruling by the European media is a measure of the priority this “moral concern” is for Europeans.

Moreover, the dispute panel concluded, “the alternative measure proposed by the complainants was not reasonably available to the European Union given inter alia the animal welfare risks,” even though “the European Union never submitted in this dispute that the protection of seal welfare as such was the objective of the EU Seal Regime”.

Aside from such logical inconsistencies – and there are many points in this ruling that are unconvincing, illogical, and/or incomplete – there is a much bigger issue at stake here. This ruling undermines one of the key tenets of the rules-based multilateral WTO system.

One of the key benefits of the multilateral trading system – a reason why states of all persuasions have lined up to join the WTO – is the predictable, unbiased application of the rule of law. As with domestic law, it may not be perfect, but fair and unbiased adjudication based on common rules is seen as better than “rule by the biggest and strongest”.

Unless this dangerous ruling is overturned at appeal, henceforth countries will be able to cite the precedent of the EU Seal Regime whenever they want to impose trade restrictions – they need only refer to some “public moral concerns” for justification. The implications for trade in agricultural and natural resource based products are obvious and frightening.  More generally, this would mean that any and all specious restrictions could be justified on the grounds of “addressing public moral concerns”. It would effectively mean the end of a predictable “rules based trading system”.

The agreement in Bali was one step forward, but the ruling on the EU Seal Regime is two steps back.


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