Standards for Reformulated and Convention Gasoline - Essay Example

Case commentary: Reformulated Gasoline Case– Standards for Reformulated and Convention Gasoline, WT/DS2/AB/R, 29 April 1996 Professor: Date: Introduction On 20th May, 1996, the newly formed World Trade Organization (WTO) Appellate body presided over its first case in which the Brazilian and Venezuelan governments had presented a case against environmental regulations presented by the American government, and more specifically the US Clean Air Act that dealt with the formulation of conventional gasoline. The Clean Air Act established the standards for gasoline sold in the US on the basis of the national pollution figures recorded in 1990. The act made provisions for the establishment of baselines for gasoline importers, blenders and refiners as part of the compliance assessment. The bone of contention was that while domestic companies were allowed to set their own individual baselines, the foreign companies were not allowed to set their own baselines and had to comply with those established by the Act.12 The US government argued that while it was possible to evaluate the small number of domestic companies compliance with the Act based on their baselines, using the same approach for foreign companies that were more in number would place an unjustified quantitative pressure on the Environment Protection Agency (EPA). The statutory baselines for the foreign companies were, therefore, necessary to allow EPA function. They further argued that the Act was absolutely necessary and in compliance with Article XX for human health protection, clean air and conservation of exhaustible natural resources. This case was unique in that while it pursued the greater environmentalist goals, it was based on trade disputes thus its arbitration by the WTO appellate body was justified.34 Description On 24th January 1995, Venezuela requested a WTO address while Brazil did the same on 10th April 1995. The two countries alleged that the US Clean Air Act discriminated against their rights and violated the General Agreement on Tariffs and Trade (GATT) Articles 1 and 3, and Technical Barriers to Trade (TBT) Article 2. On 10th April 1995, a panel was set up to review the complaints and evidence presented by Venezuela. The panel was finally formulated on 26th April 1995. Upon a request from Brazil, a third panel was set up on 19th June 1995 to specifically review Brazilian complaints and evidence. On 31st may 1995 it was decided that the two panels reviewing Venezuelan and Brazilian evidences and complaints be coalesced into a single panel. The decision to coalesce the two panels was reached in accordance with Article 9 of the Dispute Settlement Understanding (DSU).56 The panel concluded its review and reported its findings to Members of the WTO Appellate body on 29th January 1996. The report found the US Clean Air Act to be in violation of GATT Article 3 and not to gain from Article XX exceptions. Article XX exceptions are the general exceptions on exhaustible natural resource. These findings as presented by the panel were in favour of both Venezuela and Brazil, and found the US in contravention of the mentioned Articles.78 On 21st February 1996, the US appealed the panel’s findings that found them in violation of international trade agreements. The panel reviewed its report and modified it to reflect that certain aspects of Article XX were not applicable to the case. The later of the report still remained the same and the US was still found to have grossly violated the quoted international trade agreements. On 20th May 1996 the panel and appeal report were adopted by the WTO dispute settlement body. On 19th August 1997, the US announced that it was implementing the recommendations WTO dispute settlement body.910 Case Analysis On 21stFebruary 1996, the US appealed specific decisions on aspects of regulations and legal clarifications in the panel’s report pursuant to Article 16 of the DSU and concurrently filed an appeal, pursuant to Rule 20 of the appeal procedures. Afterwards, on 4thMarch 1996, the US presented its appeal submissions. Venezuela, Brazil and third party participants both filed their submissions on 18th March 1996. The third party participants included Norway and the European Communities. The oral submissions were made on 27th and 28th March 1996 and governed by Rule 27 of the appeal procedures. The appellant, defendants, and third parties were all allowed to make their submissions in the two days. The appeals body exercised their right to ask questions for clarification of issues. Most of the questions raised were answered in the oral submissions though the issues that needed more clarification were answered in written statements and supporting documents. All the parties involved also provided written statements of their position in the argument.11 Submissions by the US In its Appeal notice, conducted on 21stFebruary 1996, and its appellants submissions, conducted on 4thMarch of the same year, the US asserted that the panel blundered in interpreting the law. To start with, the panel justified the baseline establishment rules of the gasoline rule under Article XX, and secondly in interpreting Article XX. More precisely, the US designated as faulty the panel’s findings that establishing the baseline rules did not constitute an attempt at conserving clean air as stipulated in Article XX. Subsequently, it was the US opinion that the panel blundered in being unable to advance beyond its understanding and application of Article XX, and in not ruling that establishing the baseline rules fulfilled Article XX requirements.121314 The submissions made US were limited in their only challenging two aspects of the panel’s findings. In its interpretation of the baseline establishment rules, the panel failed to be consistent in interpreting the baseline rules establishment link to; Article I section 1, Article III section 1, Article III section 4 and Article XXIII section 1; and Article XX. Logically, the US did not petition the panels finding that clean air is an exhaustible natural resource within the parameters set by Article XX. Addressing these points would have enables the US successfully appeal the panel’s ruling.151617 Submissions by Venezuela, Brazil and third parties The defendants, Venezuela, Brazil and third party participants, submitted that the WTO Appeals Body should have dismissed the US petition and upheld the panels decisions and their interpretation of Article XX. Specifically, the defendants supported the panels verdict that the issue being addressed was not conservation of clean air as an exhaustible natural resources designated under Article XX, but rather trade. They further argued that an issue could only be termed as a measure of conservation if it: had an affirmative conservation consequence; and was principally projected to attain a conservation objective. Venezuela contended that, as the US had not changed on its liability with respect to the requirements of Article XX in its appeal submissions, the WTO Appellate Body would have no other option than to uphold the panel’s decision, and there was no need to address the issues raised by the US in the appeal when it had failed the first test.181920 If the WTO Appellate Body reversed the panels discoveries on the issue at hand was economic in nature and not environmental protection, then they would proceed to examine the other aspects of Article XX and ensure that the US demonstrated that they were met. The burden of proof lay with the US as the appellant. They contended that the measure in issue is not "made effective in conjunction with restrictions on domestic production or consumption" as the restrictions are not imposed as direct limits on the production or consumption of clean air, but rather upon the consumption of certain kinds of gasoline. They further submit that clean air does not qualify as an exhaustible natural resource within the parameters set by Article XX.212223 The third party participants, who included Norway and the European Communities, sanctioned the panel’s finding and their interpretation of Article XX. They particularly tool issue with the fact that the US contended that the issue was validated by the restrictions made on domestic enterprises arguing that the issue did not place bounds on clean air. The fact that the domestic enterprises were allowed to set their own baselines did not have a bearing on the whole issue. With regard to the Article XX, the third party participants submitted that the measure applied in the issue at hand was unjustifiable to countries that had the same set of parameters, and would be interpreted as a restriction on trade between countries.242526 Conclusion It is clear from this case summary that while the US could have mounted a better appeal, both the WTO panel and Appeal Body were objective in their rulings. The impact of the decision reached by the WTO Appeal Body is the US must now apply the same standard for both domestic companies and international companies in applying the Clean Air Act. Bibliography Princen K, EU Regulation and Transatlantic Trade (Kluwer Law International 2002) Sands P and Peel J, Principles of International Environmental Law (Cambridge University Press, 2012) Venzke I, How Interpretation Makes International Law: On Semantic Change and Normative Twists (Oxford University Press 2012) Voon T, Cultural Products and the World Trade Organization (Cambridge University Press 2010) World Trade Organization, ‘Dispute Settlement: Dispute DS2, United States — Standards for Reformulated and Conventional Gasoline’ accessed 21 May 2014 Read More