International Trade Law: Chile - Case Study Example

Table of Contents 1.0.Introduction 1 2.0.World Trade Organisation Disputes in Chile-Case Studies 2 2.1.Chile and the EC---the Swordfish Dispute 2 2.2.Chile and Argentina – Price Band System Dispute 4 2.3.Chile and EC — Definitive Safeguard Measure on Salmon Dispute 6 2.4.Chile and the EC---Alcoholic Beverages Dispute 7 3.0.Conclusion 8 1.0. Introduction Critical analysis of World Trade Organisation (WTO) dispute in Chile (as the identified jurisdiction) is pegged on the premise that the aspect of Dualist System should be given due consideration (Permanent Delegation of European Communities 2000). This is to mean that case studies or disputes that are going to be considered as examples of disputes within the parameter of international law will be assessed based on the fact that Chile did not apply the relevant international law instead, there was succinct translation of such laws into national legislation for national courts---especially when the dispute had to be heard and determined within its borders. In addition the cases that will be given consideration will embrace the Chile’s adopted UNCITRAL Model Law that has been applied for international arbitration. 2.0. World Trade Organisation Disputes in Chile-Case Studies 2.1. Chile and the EC---the Swordfish Dispute The relationship between the law of the sea and international trade law that was in dispute between European Community and Chile over Chile’s decision to close ports for Spanish vessels fishing for swordfish on the high seas forms the first case where WTO will be linked to international law within this jurisdiction.1 Just like Nordstrom (2001) once argued, this case presents a situation where international law intersects in more places just to find remedy for a dispute. This dispute is related to WTO rules of origin and success of the quaintly dubbed ‘Friends of Fish’ that was launched at the WTO’s 4th Ministerial Conference in Doha in November 2001.2 Back to the dispute, on 19th April 200, European Community began a dispute with Chile in accordance with article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)3 as well as in pursuance to article XXIII of GATT (Submissions of the States of Iceland 1999). An interesting this that was seen in this case was that there were two parallel dispute resolution mechanisms that were invoked. In agreement with the WTO that was started by EC, Chile, as measure to counter the move, started compulsory dispute proceeding in accordance with part XV of UNCLOS because EC had earlier failed to go down that route. The reason for this is that EC had contravened UNCLOS by challenging her (Chile’s) sovereign rights and duty as a coastal State and as so, take measures within its jurisdiction to conserve its swordfish. One critical issue that has to be highlighted in this report is that had this dispute not suspend in between the sessions, there would have been a situation where both the WTO Panel and Special Chamber of ITLOS and concurrently mandated to rule, by effect/implication if not directly, on the intersection or relationship between GATT and UNCLOS. This report stresses and wants to make it clear that based on this dispute, this was and still is not basically a problem of concurrent jurisdiction. Neither does it become a conflict between the dispute settlement provisions of UNCLOS on the one hand and Marrakesh Agreement on the other. But again, Article 64 of UNCLOS, having the heading ‘Highly migratory species’ ought to have been central to this argument though the resolution process did not give it due consideration. In conclusion, while European Community case against Chile as enshrined under article XI of GATT is less than convincing, the same may not be true of article V. 2.2. Chile and Argentina – Price Band System Dispute Similar to the dispute raised above, on 5th October 2000, Argentina made a request to consult with Chile regarding to critical issues: The price band system that was in establishment pursuant to Law 18.525 (this law was amended Law 19.546 and Law 18.591) The provisional safeguard guidelines that were adopted on 19th November 1999 pursuant to Decree number 339 of Ministry of Economy as well as definitive safeguard measures that were imposed on 20th January 2000 pursuant to Decree No. 9 of the same Ministry. Based on Understanding on Rules and Procedures Governing the Settlement of Disputes (1994), the point of departure for Argentina was that such measures were contrary to the obligation of Chile under a number of provisions. From the point of view of Argentina, such provisions (these provisions relate to the said price band system) were contrary to the guidelines and such contraventions were based on Article 4 of the Agreement on Agriculture and Article II of the GATT 1994. Further to this, Argentina held that the provisions that were inconsistent with the safeguard measures included Article XIX:1(a) (GATT 1994) and Safeguards Agreement (specific Articles being 2, 3, 4, 5, 6 and 12). Following such submissions, Argentina made a request for the convening of a panel in as much as the DSB postponed the establishment of such a panel. However, such was granted after Argentina’s second request and upon deliberating on the issue, the panel held that: PBS from Chile acted contrary to Article 4.2 (this Article is based on Agreement on Agriculture) such contravention was also true with Article II:1(b) (GATT 1994) Concerning her (Chilean) safeguard measures as controls about edible vegetable oils, wheat and wheat flour, the panel further found that Chile’s actions contravened Article 3.1 (this Article details the Agreement on Safeguards) such contravention was based on the fact that Chile did not avail the needed or relevant minutes concerning the sessions of the CDC which ought to have been done through a given medium so as to be regarded as a ‘published report’ The action taken by Chile was inconsistent with GATT’s Article XIX:1(a) since the CDC did not demonstrate the presence of unforeseen developments. Other contraventions that were realized in the dispute with regard to international law was that Chile acted inconsistently with article 2.1 and 4.2(a) as it failed to show the increase in imports of the products. Having been served with the above contraventions, Chile appealed to Appellate Body regarding a number of issues of the law and her (Chile’s) interpretation of the law regarding such contraventions. On the same, the Appellate Body found that the Panel contravened Article 11 of the DSU. In connection with Article 4.2 (this article is based on Agreement on Agriculture), the Appellate Body found that the price band system as argued by Chile was merely a border measure that was similar to minimum import prices and variable import levies (World Trade Organization 2006). It (Appellate Body) upheld Panel decision that Chile’s price band system contravened Article 4.2. In conclusion, Appellate Body argued that Chile should be requested by DSB to bring its prices and band system and at the meeting that was held on 23rd October 2002, DSB made an adoption to the reports by Panel and the Appellate Body. 2.3. Chile and EC — Definitive Safeguard Measure on Salmon Dispute This was a dispute between Chile and European Commission where the former wanted consultations on EC definitive safeguard measures that were made against imports of reared or farmed salmon that was imposed through EC Regulation (this Regulation has been coded as 206/2005). One of the measures of the Regulation was that a system of tariff was to be calculated based on previous imports of salmon. Another provision was that a minimum price that was applicable to such imports (within and beyond the tariffs). However, on 10th January 2005, EC made a notification to WTO regarding its findings of injury and its suggested safeguard measures regarding framed salmon.4 It was on this information that Chile brought its dispute by requesting for consultations. As a matter of urgency, it (Chile) made a prior consultation with EC which was in pursuant to article 12.3 (of the Agreement on Safeguards). In its request, Chile made some definitive arguments and one of such was that the so called ‘definitive safeguard measure imposed against the importation of farmed salmon contravened the EC’s obligations which were under the WTO agreements and as a consequence negatively impacted on Chilean exportations of salmon---an argument earlier discussed in the Doha Negotiating Mandate on Fisheries (2001). Another argument presented by Chile with regard to the dispute was that there were no ‘unforeseen developments’ as enshrined in article XIX (GATT 1994). On the other hand, Chile also felt that there was no increase in imports that were significant enough, sudden enough, recent enough, or sharp enough so as to threat or cause serious injury to the domestic injury in accordance with article 2.1 of the Agreement on Safeguards as well as XIX (GATT 1994). Chile also argued that the said ‘serious injury’ were prejudiced thoughts since such conclusions were made based on investigation conducted by domestic industry and on remote possibilities and conjectures. Scholars have argued that such investigations are not even admissible under international law (Bagwell & Staiger 2002; Holland et al. 2003). All these according to Chile, were contravening article 4.2(a) of the Agreement on Safeguards. Though not mentioned, there have been argument that since article 4.2(a) was contravened, such contraventions also touched on article 4.2(b) of Agreement on Safeguards since there was no evidence of threat of injury connected to an increase in imports (World Trade Organization 2006; Lamy 2006; Axelrod 2014). Finally, Chile argued that the imposing of the safeguard measures (on the importation of salmon) stretched beyond the extent needed for the prevention or even remedy the ‘serious injury’ and to facilitate adjustment as contained in article 5 of Agreement on Safeguards. However, in unlikely move, on 12th May 2005, such requests as presented to EC was withdrawn by Chile and such a move also sought to put to an end to the matter. This dispute though to resolved, was terminated on 27th April 2005. 2.4. Chile and the EC---Alcoholic Beverages Dispute This was a dispute that sought to find a solution on Chile’s decision that imposed an excise tax at varied rates. Such variations depended on the brand name and type of product (among them were whisky and pilsco). In summary of the issue, the Appellate Body did not overrule the findings from Panel that new tax regime from Chile for alcoholic beverages was a violation of national treatment principle which is pegged under Article III: 2. The Panel earlier found that transitional and new tax regime from Chile were inconsistent with Article III: 2. Further to this decision, the Appellate Body argued that measure’s purpose, objectively shown in the architecture, design and structure of the measure, was certainly pertinent to the task assessing whether such measure was applied so that it afford the protection to domestic productions. The conclusion that was made was that members of WTO are not supped to be assumed, in any regard, to have continued previous discrimination or protection through the adoption of a new strategy or measure. Doing so was like as ‘presumption of bad faith.’ 3.0. Conclusion Since its adoption of WTO Agreement under the Supreme Decree No. 16 of the Ministry of Foreign Affairs, the country has battled with different disputes that have negatively affected its income and relationship with other trading partners because WTO Agreement has been taking precedence over domestic legislation especially when dispute resolution mechanisms have greater degree of specificity. Concluding from the case of the Swordfish Dispute the progressive advancement of international law would be to persuade Panels to reflect upon its investigations and findings rather than rely on dispute statements brought by either party. Additionally, though a number of cases have been reviewed, this particularly concerned with article XX which seemed to have applied only where the impugned measures especially from the case of fishing were found to be contravening some other related provisions of GATT. Basically, this argument makes previous reports sound as if Chile had nothing to lose, and perhaps more to gain from the cases especially by defending its measures on the basis that they did not contravene any other articles cited here but such done so argue against their plea.   References Axelrod, M 2014, ‘Clash of the treaties: responding to institutional interplay in European Community-Chile swordfish negotiations’, European Journal of International Relations, DOI: 10.1177/1354066113499386. Bagwell, K & Staiger, RW 2002, The economics of the world trading system, MIT Press: Cambridge MA. Holland, D, Figueroa, E, Alvarez, R, & Gilbert, J 2003, ‘On the removal of agricultural price bands in Chile a general equilibrium analysis’, Central Bank of Chile, Working Papers No. 244. Lamy, P 2006, ‘The place of the WTO and its law in the international legal order’, European Journal of International Relations, vol. 17, no. 5, pp. 969-984. Nordstrom, H 2001, ‘Do variable levies beggar thy neighbor?, European Journal of Political Economy 17, pp. 420-430. Permanent Delegation of European Communities 2000, Chile — Measures Affecting the Transit and Importation of Swordfish: Request for Consultations by the European Communities, WTO Doc WT/DS193/1 (26 April). Submissions of the States Iceland (1999) World Trade Organisation, Submission by Iceland: The Icelandic Fisheries Management System, WTO Doc WT/CTE/W/103 (25 January 1999). The Doha Negotiating Mandate on Fisheries (2001) Subsidies Was in WTO Doc WT/MIN(01)/DEC/W/1 (14 November 2001). Understanding on Rules and Procedures Governing the Settlement of Disputes (1994), Measures Affecting the Transit and Importation of 1869 UNTS 401, 33 ILM 1226 (1994). World Trade Organization 2006, WTO dispute settlement: one-page case summaries, WTO Publications: Geneva. Read More