The Appellate Body's Interpretation of the WTO Trade Remedy Agreements: Exploring the ...

278 Pages·2013·6.14 MB·English

THE APPELLATE BODY’S INTERPRETATION OF THE WTO TRADE REMEDY
AGREEMENTS: EXPLORING THE RELTIONSHIP BETWEEN JUDICIAL
ACTIVISM AND POWER ASYMMETRIES
By Delroy Samuel Beckford
A Dissertation submitted to the Graduate School-Newark
Rutgers, The State University of New Jersey
In partial fulfillment of requirements for the degree of
Doctor of Philosophy
Graduate Program in Global Affairs
Written under the direction of
Professor Yale Ferguson
And approved by,
<~\ Professor PhilfpTCei
fotyl
ProfessorAnna Gelpem
Newark, New Jersey
May 2007.
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UMI Number: 3280379
Copyright 2007 by
Beckford, Delroy Samuel
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2007
Delroy Samuel Beckford
ALL RIGHTS RESERVED
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ABSTRACT OF THESIS
The Appellate Body’s Interpretation of the Trade Remedy Agreements:
Exploring
the Relationship between Judicial Activism and Power Asymmetries
By Delroy S. Beckford
Thesis Director: Professor Yale Ferguson
The emergence of the World Trade Organization (WTO) has prompted claims of its
superiority over the dispute settlement system of the General Agreement on Tariffs
and Trade 1947(GATT), specifically that it represents the triumph of law over
politics.
This study bridges a gap in the literature by focusing on the issue of judicial activism
and whether, to the extent this is observed, these instances reflect power asymmetries
within the WTO.
Using the case methodology, the research examines the instances of judicial activism
by the Appellate Body in trade remedy disputes involving the WTO Antidumping
Agreement (ADA), the WTO Subsidies Agreement (SCM) and the WTO Safeguards
Agreement (SGA). While judicial activism is a contested concept, the study uses, as a
benchmark for assessing the Appellate Body’s rulings in particular decisions, the
Vienna Convention on the Law of Treaties 1969 (VCLT) not only because the
Appellate Body is enjoined to have recourse to such rules in conducting its
interpretive function, but also because these rules of interpretation are part of the
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negotiated bargain of WTO contracting parties on the assumption that they provide
adequate guidance on how such agreements are to be interpreted.
As a proxy for power in the WTO, data relating to market size (GNP per capita) is
employed to determine the relative power balance of participants in disputes in order
to gauge whether instances of activism are attributable to the power configuration in
particular disputes.
The results indicate that the Appellate Body has by and large delivered correct rulings
on disputes arising under the covered trade remedy agreements, but several instances
of judicial activism have been observed that have implications for the institutional
balance between the judicial and political organs of the WTO.
The findings also suggest no definitive pattern of instances of activism being
attributable to power asymmetries in the WTO. This suggests that there may be other
factors at work explaining these outcomes, in particular, but not exclusively, the
bureaucratization ethos of organizational independence.
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ACKNOWLEDEMENTS
The completion of this dissertation would not have been possible without the
contribution of several individuals and institutions. First, my tenure as Senior Legal
Counsel at the Antidumping and Subsidies Commission in Jamaica, and my
continued interaction with the staff on technical issues, provided invaluable guidance
on the contours of research for a deeper understanding of the role of trade remedy
disputes within the context of the World Trade Organization (WTO) dispute
settlement system.
At the Division of Global Affairs, I am especially grateful for the intellectual
guidance of Professor Alexander Motyl who always emphasized the importance of
questioning everything in the quest for academic rigour. I also thank my dissertation
committee members, Professors Philp Cemy, Anna Gelpem, and Yale Ferguson, who
provided unflinching support and encouragement on my intellectual development.
Their directions, contributions, and suggestions were invaluable to the completion of
the final product.
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TABLE OF CONTENTS
Signature Page i
Abstract ii
Acknowledgements iv
Table of Contents v
Chapter 1: Introduction, Research Problem and Methodology 1
1.1 Introduction 1
1.2 Why a focus on judicial activism 2
1.3 Justification for focus on Appellate Body and trade remedy agreements 3
1.4 Research Question and Scope 7
1.5 Methodology 10
1.6 Structure of the Study 15
1.7 Findings 17
Chapter 2: Conceptual Framework and Literature Review 19
2.1 Overview 19
2.2 Ambiguity in the applicable law 21
2.3 Exploring the concept of judicial activism 24
2.4 Literature review of judicial activism and trade remedy agreements 28
2.5 Conclusion 34
Chapter 3: Negotiated Bargain of WTO Contracting Parties
for Interpretation of the WTO Agreement 37
3.1 Separation of judicial and political organs as a key principle of negotiated bargain 43
3.2 The nature of the interpretive function of the Appellate Body 48
3.3 The WTO Agreement as an incomplete contract 50
3.4 The Vienna Convention on the Law of Treaties as part of the incomplete contract 52
3.5 Conclusion 54
Chapter 4: The Appellate Body’s Interpretation of the WTO Antidumping
Agreement 55
4.1 Calculation of dumping margins under the ADA 61
4.2 Procedural obligations of investigating authorities 67
4.2.1Panel’s obligations under Article 17.6 of the ADA 67
4.3 Standard of review cases 69
4.4 Sales not in the ordinary course of trade 74
4.5 Causation and non-attribution 79
4.6 Material injury and threat of material injury 81
4.7 Facial challenge of domestic antidumping legislation 91
4.8 Conclusion 100
Chapter 5: The Appellate Body’s Interpretation of the WTO Subsidies
v
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Agreement 102
5.1 Article VI of GATT 1994 and pre-WTO countervailing duty investigations 104
5.2 Standard of review 107
5.3 Prohibited Subsidies: export and domestic subsidies 124
5.4 Domestic subsidies 128
5.5 Export subsidies: exempting export transactions from taxation 132
5.6 Interest rate equalization subsidies 138
5.7 Debt financing export subsidies 142
5.8 Conclusion 153
Chapter 6: The Appellate Body’s Interpretation of the WTO
Agreement on Safeguards 155
6.1 Application of Safeguards within CU and FTAs 163
6.2 Increase in Imports 167
6.3 Domestic Industry 175
6.4 Serious Injury and threat of serious injury 180
6.5 Causation 188
6.6 Article 5 and the application of safeguard measures 196
6.7 Conclusion 202
Chapter 7: Assessing the relationship between power asymmetries
and judicial activism 204
7.1 Judicial activism and power asymmetries in ADA disputes 215
7.2 Judicial activism and power asymmetries in SCM disputes 220
7.3 Judicial activism and power asymmetries in SGA disputes 231
7.4 Concluding observations 252
Chapter 8: Concluding remarks 255
APPENDIX I 261
APPENDIX II 262
Bibliography 263
Vita
270
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CHAPTER ONE
INTRODUCTION. RESEARCH SCOPE AD METHODOLOGY
1.1 INTRODUCTION
The creation of the World Trade Organization (“the WTO”) as a supranational legal
authority governing primarily trade issues has prompted acclaim for its rule oriented
focus juxtaposed against criticisms that the organization engages injudicial activism and
that it has not totally divested itself of the influence of power politics. This supranational
legal authority is reflected in the more legalistic approach to dispute settlement and
enforcement of decisions from the judicial organs of the WTO.
Procedurally, the WTO is regarded as the preserve of state interests but excluding the
participation of non-state actors. Substantively, the WTO is seen as primarily, if not
exclusively, the concern of trade issues to the exclusion of so-called non-trade issues such
as human rights, and issues relating to the environment. With regard to the effects
approach, the WTO is seen as maintaining, if not enhancing, a system of capitalist
exploitation by the rich of the poor within and between countries.
This examines, as another aspect of the substantive approach, the issue of judicial
activism within the WTO from the perspective of the functioning of the dispute
settlement system to determine whether the Appellate Body’s interpretation of the
1
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2
covered agreements is consistent with the separation of powers approach imported
within the WTO.
The agreements to be examined are those relating to trade remedies such as WTO
Anti-dumping Agreement, the WTO Agreement on Subsidies and Countervailing
Duties, and the WTO Agreement on Safeguards.
1.2 WHY A FOCUS ON JUDICIAL ACTIVISM?
Judicial activism in the WTO is seen as objectionable because, unlike domestic
systems where perceived judicial activism is susceptible to prompt correction by
legislative action, such a mechanism though existent within the WTO is less
operational and likely to be less effective because the legislative body, the Ministerial
Conference or the General Council of the WTO, is rarely able to muster a quarter of
its membership on important meetings,1 let alone the three-quarters of the overall
WTO Membership required to enact interpretations of the WTO’s provisions.2
Differences between developed and developing countries over trade issues would also
militate against any uniform or coherent position on how to correct a perceived
instance of judicial activism. Indeed there might be differences of opinion as to
whether a given ruling merits that characterisation.
The apparent global reach of a broad coalition of anti-globalization protestors
targeting WTO Ministerial Meetings also adds to the difficulty WTO Members face
1 John H. Jackson, The World Trade Organization: Constitution and Jurisprudence (Kluwer, 1999) p.
47.
2 Marrakesh Agreement Establishing the World Trade Organisation, Article IX (2).
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