International Trade Law - Assignment Example

? International Business Law In the Official Journal of the European Union published in October 2009, the European Union (EU) declared a ban on trading in products made from commercial hunting practices of the marine animal, the seal. This regulation threatened to adversely affect the trade of Canada and Norway, two of the world’s leading countries in the commercial seal hunting practice. Expectedly, Canada and Norway lodged vehement protests against the ban. In November 2009, Canada requested to sit for a consultation with the European Union regarding the issue. Within three days, Norway also followed with a similar request. This paper attempts to trace the major points of the Dispute relating it to the laws of the World Trade Organization (WTO) where necessary. It also presents a prediction on the likely outcome of the dispute. Importance of Seal Hunting in Canada The hunting of seals in Canada in the adjoining waters of the Arctic Ocean is believed to have begun in the 16th century. Seal hunting for commercial purposes grew into an important trade in the 1980s decade in Canada. This mainly includes the Inuit group of people, the residents of Atlantic Canada and also North Canada. The United Nations in its Declaration on the “Rights of Indigenous Peoples” has recognized this seal hunting practice as a means of livelihood for the Canadian residents. According to an estimate in 2005, about 329,829 harp seals were killed by the indigenous people of Atlantic Canada and Quebec. They also produced $ 15.43 million worth of “exports of identifiable seal products”. The extent and importance of the seal hunting trade in Canada renders it very difficult for the Canadian authorities to pronounce an end to this practice.1 The European Union bans Seal Products Canada was supposed to attend a summit meeting with the European Union to discuss further prospects of trade between the two countries and open up new markets. On 16 September 2009, the European Parliament and the European Communities declared a Regulation (EC) No. 1007/2009 stating a prohibition in the import and sale of all seal products manufactured from the commercial hunting of seals. Once the Regulation was implemented, it would allow only those seal products that were made from seal hunts carried out in a traditional practice by the Inuits and other indigenous communities and byproducts from similar regulated hunts, would be allowed to trade in the European Union.2 The Canadian Government expressed its disappointment on the development and vowed to take the issue to the World Trade Organization (WTO).3 Canada was of the opinion that in the case the EU imposed a restriction on seal products made out of commercial hunting, the country should be exempted from it since Canada followed strict guidelines to ensure that the seal hunting methods in the country were humane and were sustainable in the long run. The Effects of Such a Regulation According to the European Commission, the trade exchanges between Canada and the European Union are worth around EUR 70 billion or $ 93 billion in a single year. If the Canada and the European Union agreed to expand their bilateral trade, this could generate an additional trade exchange worth EUR 20 billion. However, the EU Regulation regarding the prohibition of the import and sale of seal related products from commercial hunting, in the EU markets could have serious implications for the bilateral trade between the two countries. Once the Regulation (EC) No. 1007/2009 comes into effect, the value of seal products imported by the EU from Canada will decrease drastically, as then only the seal products made out of legitimate hunting methods will only be permissible to enter the EU market. Therefore, Canada will be compelled to turn to other countries of the world for the export of its seal products, following the decline of the EU as one of its important importers in this trade 4 Canada’s Arguments On 2 November, 2009, Canada expressed its desire to engage in a consultation with the European Communities regarding the implications of the Regulation and related matters. The said regulation forbade the import and sale of all seal products made from commercial hunting practices, in the market of the European Community countries. Canada claimed that the Regulation (EC) No. 1007/2009 contradicted the obligations of the European Communities under Articles I:1 , III:4 and XI:1 of the General Agreement on Tariffs and Trade (GATT); Article 2.1 and 2.2 of the TBT Agreement; and Article 4.2 of the Agriculture Agreement.5 The United Nations’ conference on Trade and Employment formulated The General Agreement on Tariffs and Trade (GATT) which existed during 1947-1993. After this it was substituted with the WTO in 1995. The GATT was modified in 1994. Article I: the General Most Favoured Nation Treatment, Part 1 of the GATT declares that any advantage or privilege granted by any contracting party to any commodity made in or destined for any other country will be immediately accorded to similar products originating in or destined for the territories of all other contracting parties. This is stated with respect to the custom duties and any sort of charges imposed in relation to exports and imports.6 Canada believed that the Regulation (EC) No. 1007/2009 as formulated by the EU violated this clause of the GATT. In the opinion of the Canadian Government, if the EU wanted to abide by the GATT even after placing a ban on seal products made out of commercial hunting practices, it should also have to impose a ban on all similar animal products produced out of similar hunting methods in all countries. Only then, the Regulation would be in conformation with the GATT. Article III: National Treatment on Internal Taxation and Regulation, Part 4 of the GATT states “the products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.”7 The Canadian Authorities believed that by prohibiting the import and sale of seal products made out of commercial hunting practices, the European Union had accorded a less favourable treatment to Canada’s seal related products compared to similar animal products produced in the EU market itself. Canada declared that in this way, the Regulation (EC) No. 1007/2009 does not abide by the Article III:4 of the GATT. Article XI: General Elimination of Quantitative Restrictions Part 1 states, “no prohibitions or restrictions other than duties, taxes and other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destines for the territory of any other contracting party.”8 According to Canada, the EU’s Regulation (EC) No.1007/2009 institutes a prohibition on the imports and sale of seal products manufactured out of commercial hunting practices which are exported from Canada into the European market. Therefore, the Canadian Authorities felt that EU’s Regulation does not abide by the basic clause of Article XI:1 of the GATT. The Agreement on Technical Barriers to Trade (TBT Agreement) was an international treaty monitored by the WTO. It came into effect in the present form with the founding of the WTO at the commencement of 1995. Article 2: Preparation, Adoption and Application of Technical Regulations by Central Government Bodies, Part 1 of the TBT Agreement states, “With respect to their central government bodies, the Members shall ensure that in respect of technical regulations, products imported from the territory of any member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.” 9 Canada declared that the Regulation (EC) No. 1007/2009 did not comply with the European Communities’ obligations as stated in this article of the TBT. The country opined that by banning all seal-related products, the European Community was exhibiting a less favourable treatment to the Canadian commercial seal products as compared to seal products from their own countries as well as other countries. Article 2.2 of the TBT Agreement declares “With respect to their central government bodies Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade restrictive than necessary to fulfill a legitimate objective, taking account of the risks non-fulfillment would create. Such legitimate objectives are inter-alia: national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment. In assessing such risks, relevant elements of consideration are inter alia: available scientific and technical information related processing technology or intended end-uses of products.”10 The Canadian Government thought that the restriction to the import and sale of seal products imposed by the EU with respect to the latter’s markets, created an unnecessary barrier to international trade contacts between Canada and the EU member countries. Perhaps the EU was legitimate in desiring to protect the population of the seals as the protection of animal life and health was considered a legitimate objective, to fulfill which, suitable regulations could be formulated. But the Canadian Government declared that the country already followed strict animal welfare principles with regards to the practices for hunting seals. Therefore, the country should be exempted from such a trade prohibition as imposed by the Regulation (EC) 1007/2009. The European Union’s Defense The EU declared that it had passed such a Regulation imposing a restriction on the trade of seal products, as it wanted to ban the methods which caused pain and suffering to the seals while killing them. According to the European politicians, there had been enough evidence unearthed in the past that some of the seals were skinned while they were still conscious, which caused immense suffering to these animals. This practice was one of the cruelest animal hunting methods in the world, as claimed by Caroline Lucas, a member of the European Parliament. Thus products made following such hunting methods were banned by the E.U. The E.U wanted to propagate a high standard of animal welfare by imposing such a restriction.11 Article XX: General Exceptions states: “Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction of international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting parties of measures Part (b) necessary to protect human, animal or plant life or health Part (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption”12. The EU stated that the Regulation (EC) No.1007/2009 does not apply an arbitrary or indefensible favoritism between Canada and any other country exporting seal related products to the European Union. The Regulation prohibits the import and sale of such products in the EU market indiscriminately. The Regulation is stated clearly and it does not possess any hidden restriction to international trade. By banning the trading of seal products made out of cruel seal killing practices, the Regulation aims at restricting such methods of animal slaughter. Every year, when about 200,000-300,000 seals are killed for commercial purposes along the Canadian Atlantic coastline, such a Regulation is required to protect the lives of these animals. Thus the EU declares that there is nothing in the GATT which prevents it from adopting or enforcing the Regulation (EC) No.1007/2009. The Dispute Continues On 16, November 2009, Iceland made a proposal to join the consultations. Following this, a round of consultations was held on 15 December 2009. On 17 August 2010, the European Commission published the Commission Regulation (EU) No. 737/2010 which laid down the implementation measures for that of Regulation (EC) No.1007/2009 of the European Parliament and the European Council. In October 2010, Canada requested for another round of consultation with the European Union regarding the latest regulation. Canada stated that it also wished to engage in further consultation on issues related to the earlier regulation which had been discussed once and also on matters which have risen out of those discussions. On 29 October, 2010 Norway declared that it wanted to join these supplementary consultations. On 11 February, 2011 Canada proposed the establishment of a panel which would monitor the dispute. As such, the resolution of this dispute does not appear anywhere in sight.13 The Likely Outcome of the Dispute It will be difficult to propose a solution to such a dispute matter where both parties involved have some credibility in their arguments. In all probability, the Panel would allow the European Union to maintain its prohibition on the trading of seal products produced from commercial hunting practices. As a matter of fact, the Regulation passed by the EU allows the import and sale of seal products made out of traditional hunting methods such as those followed by the Inuit residents of Canada and also allows the trade of byproducts made from such regulated hunting practices. In this case, the Panel might request the Canadian Government to follow a discriminatory policy towards the practices of seal hunting. The Government could be advised to prohibit the commercial seal hunting methods and allow only the traditional practices of hunting. This would cause less suffering to the marine animal. Canada has always argued that, the country already has in effect stringent guidelines to ensure that the seal hunting methods are humane and are sustainable in the long run. On being requested by the Panel, Canada will reiterate this fact. As Canada’s seal products exports to the EU will decline considerably following the Regulation, the country will be compelled to search for new export destinations for its seal products. Therefore, the European Union may well be successful in bringing some relief to animal life, by prohibiting commercial seal hunting practices. 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European Communities – Measures Prohibiting the Importation and Marketing of Seal Products. retrieved on August 24, 2011 from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds400_e.htm Ville F d (2010) Explaining the Genesis of a Trade Dispute: The EU’s Trade in Seal Products Regulation retrieved on August 24, 2011 from http://www.jhubc.it/ecpr-porto/virtualpaperroom/099.pdf Read More