General Issue
Vol. XII, No. 2 (Winter ’20)

-

The Sustainable Development Goals (SDGs) establish a framework for a broad-based and ambitious approach to multilateral cooperation for development. Even to approach fulfilment of these goals will require innovation and the effective application of the fruits of innovation in many areas of technology — notably energy, health and agriculture. Equally, the SDGs foresee an open trading system as integral to sustainable development. Linking trade and innovation with sustainable development represents, thus, a pressing priority for international cooperation, and raises direct practical questions about the effective use of the intellectual property (IP) system that is expected to serve at once as an element of a socially beneficial trading system, and as an element of an effective innovation system. Therefore, fulfilling the SDGs foresees an effective three-way linkage between trade policy, the innovation ecosystem, and the IP system. Innovation opens up new and more accessible avenues for international trade by, for instance, enabling some Small and Medium Enterprises (SMEs) to reach out to global markets for the first time. Equally, international trade can contribute to the development of innovative capacity, for instance, through knowledge spill overs and access to inputs for innovation. Additionally, IP systems can contribute to a positive interaction between trade and innovation in support of economic and social development. These linkages are complex, in constant evolution, and show great diversity across different sectors and economies, while also requiring extensive collaborative networks across national jurisdictions. Given that the SDGs are established as a framework for multilateral cooperation, meeting them will not only require technological innovation and effective access to the fruits of innovation, but also continuing innovation in multilateral cooperation and governance. The COVID-19) pandemic has thrown into sharp relief the critical role of innovation systems for fundamental public welfare, and has highlighted the diversity of policy measures countries have deployed to ensure both innovation and effective access to the fruits of innovation.

A transformative, integrated, and holistic approach to sustainability is necessary to reach a prosperous future for all. With growing inequality in the world, demographic changes, rapid technological development, and 40% of the world’s population with no access to digital technology, access to digital technology for all and, ultimately, having a prosperous future is a must today. Doing so will give a voice to the voiceless. For that, governments, companies, and transnational institutions should invest as much as possible to make it happen and provide solutions that are rules-based, inclusive, innovative, disruptive, and simple. We, the citizens, should push for this human right to materialise. That way, everyone will benefit and no one will fall behind. We argue that access to energy, mitigating climate change, and benefiting from international trade and investment, all can be achieved thanks to technological advancement. These global challenges are complex, interconnected, multidimensional, interdependent, and multi-causal.

Preventing trade wars is a key function of the World Trade Organization (WTO) rule-based system. But as the United States (US) and China waged the largest trade war in history, the WTO sat on the side-lines, unable to do anything to stop the fight. Why has the system failed so spectacularly? In a search for answers, this article examines the context of the US-China conflict and makes a number of findings. First, under WTO law, the burden of avoiding this trade war was placed on China, the victim of US aggressive unilateral tariffs; and contrary to China’s claim, its retaliatory tariffs cannot be justified by general principles of international law. Second, the WTO rule prohibiting unilateral retaliation was born out of a grand political bargain, but it embodies the wisdom of Adam Smith and achieves the goal of the Havana Charter to turn retaliation into an instrument of international order. Third, the WTO’s inability to prevent China’s resort to unilateral retaliation reveals a deficiency in its existing legal design, but that deficiency can be fixed procedurally as proposed herein. Given the importance of preventing large-scale trade wars in the future, improving multilateral control over unilateral retaliation should be a top priority in WTO reform.

Since the 1990s, regional and international institutions have made it their mission to tackle corruption by adopting treaties to that effect. Of the many conventions, the United Nations Convention against Corruption (UNCAC) is the most widely known due to its adoption by 164 State parties. One of the key features of this Convention is the promotion of preventive measures. As part of prevention, the Convention promotes integrity in the public sector driven by the principal-agent-client (PAC) model. According to this model, corruption occurs when there is a lack of (or near lack of) accountability when an agent (A) to whom the principal (P) has entrusted to carry out the services to a client (C), has an element of discretion in administering the services. This paper questions whether the preventive mechanisms promoted by the UNCAC can introduce the level of integrity required to combat corruption. Using a hypothetical illustration, the paper exhibits how the integrity of an official can be compromised by equally worthwhile competing demands, each with integrity at its core, eventually leading the official to making a moral choice. The concluding section of the paper offers a few suggestions for guiding moral choices.

The way the World Trade Organization (WTO) dispute settlement system balances WTO Members’ obligation to avoid unnecessary obstacles to international trade with their right to enact measures in pursuit of legitimate public policy objectives has drawn much criticism. The contours of this balance are about to be stretched in a forthcoming dispute in which Indonesia will challenge the European Union’s recast Renewable Energy Directive. For Indonesia, this measure discriminates against palm oil used in biofuel production; for the European Union (EU), the measure serves a legitimate objective, as it addresses the greenhouse gas emissions caused by “indirect land-use change” (ILUC), in which carbon-rich land is cultivated for palm oil production (or food production displaced to accommodate palm plantations). This dispute will take WTO dispute settlement into several new directions, as the panel will, in novel ways, be required to assess how measures can address such a legitimate objective in the face of a mismatch between future and historical risks, as well as whether WTO Members can address climate-related risks occurring within other WTO Members. In this article, we step through several of the key claims raised by Indonesia in the early stages of this dispute and assess what a WTO panel’s assessment of those claims, and the EU’s likely invocation of exceptions, might look like. In our view, the EU’s measures are inconsistent with its WTO obligations and cannot be justified under any available exceptions. Perhaps more importantly, it is not clear to us how ILUC can be addressed through trade measures.

This article takes issue with the conventional story about ‘trade and development’ according to which their nexus emerged in the immediate post-war period when the international community came to realise the wisdom of trade liberalisation and translated it into law. It argues that the trade-development nexus has a much older history, one in which continuities and (dis)continuities with the colonial period need to be taken into account to appreciate how, despite the seven decades long efforts of the international trade community, ‘development’ remains to be achieved and its promise continues to hold such normative force. This force reverberates within current development-related trade prescriptions, such as those that encourage developing countries to insert their firms into Global Value Chains and technologically ‘upgrade’ in order to develop. The article shows that once the continuities and (dis)continuities with the colonial period are made apparent, multilateral trade law can be seen as elevating a particular understanding of economic life (i.e., trade for growth) to a universal standing whilst at the same time enabling selective commercial interests to be pursued, thereby contradicting the free trade assumption about universal beneficial gains.

Regulatory purpose has featured prominently in the interpretation of World Trade Organization (WTO) provisions to demarcate appropriately the zone between multilateral adjudication and regulatory autonomy. This is no less so in respect of the interpretation of Article III of GATT 1994. 

An extreme view is that regulatory purpose has been shelved under the abandonment of the ‘aims and effects’ test and that there is now little room for any margin of appreciation for measures that would otherwise be permissible, whereby a WTO Member invokes a non-protectionist intent for a measure that may nonetheless result in protection of domestic industry. We argue that regulatory purpose has not been abandoned in the interpretation of Article III of GATT 1994, by examining the Appellate Body’s interpretation of the provision with respect to fiscal measures under Article III:2, first and second sentence, and non-fiscal measures under Article III:4. We conclude that although the interpretation of Article III: 2, first sentence, measures suggest that a strict liability approach is endorsed by the Appellate Body, the interpretation of Article III:2, second sentence, and Article III:4, provide a greater margin of appreciation for WTO Members.