Agriculture and the WTO: towards a new theory of international agricultural

Agriculture and the WTO

ELGAR INTERNATIONAL ECONOMIC LAW Series Editors: Alan O. Sykes, Frank and Bernice J. Greenberg Professor of Law, University of Chicago Law School, US, and Mary E. Footer, Professor of International Economic Law, University of Nottingham, UK This new monograph series is intended to provide a point of convergence for high quality, original work on various aspects of international economic and WTO law, ranging from established subject matter, such as international agricultural trade or the application of core trade disciplines such as MFN, to cross-cutting issues involving the interaction of international standards in the fields of investment, tax, competition, food safety and consumer protection with international trade law or the relationship of horizontal exceptions such as the general exception to domestic regulatory barriers. Theoretically rigorous, these books will take an analytical and discursive approach to the field, wherever possible drawing on insights from disciplines other than law, such as economics and politics, in an attempt to arrive at a genuinely inter-disciplinary perspective. Proposals are encouraged that primarily engage with new and previously under-developed themes in the field, or alternatively offer an innovative analysis of areas of uncertainty in the existing law. Bringing together work from both established authors – academics and practitioners alike – and from a new generation of scholars, the Elgar International Economic Law Series aims to play an important role in the development of thinking in the field. International Economic Law and the Digital Divide A New Silk Road? Rohan Kariyawasam The Law and Economics of Contingent Protection in the WTO Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters International Trade and Health Protection A Critical Assessment of the WTO’s SPS Agreement Tracey Epps Agriculture and the WTO Towards a New Theory of International Agricultural Trade Regulation Fiona Smith

Agriculture and the WTO Towards a New Theory of International Agricultural Trade Regulation

Fiona Smith Lecturer in Laws, University College London, UK

ELGAR INTERNATIONAL ECONOMIC LAW

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Fiona Smith 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2009928594

ISBN 978 1 84542 490 9 Typeset by Cambrian Typesetters, Camberley, Surrey Printed and bound by MPG Books Group, UK

Dedication

For David

Contents Preface 1

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International agricultural trade regulation: charting the landscape International agricultural trade regulation as a composite problem The ‘strands’ of the problem of international agricultural trade regulation How is the ‘web’ of ‘strands’ constructed? What is ‘trade?’ Trade as ‘trade in products’ Trade as function/mechanism What is ‘agriculture’? ‘Agriculture’ as the growth of a product for food ‘Agriculture’ as the growth of food products, but in specific ways, and as a promoter of broader goals Conclusions Current perceptions of the problem Introduction Current perceptions of the problem of international agricultural trade regulation Reduction in trade barriers: fiscal cuts Special and differential treatment Trade and non-trade concerns Moving beyond traditional conceptions of the problem How do we understand a ‘subject’? The role of constructional rationalism ‘Understanding’ international agricultural trade Constructing the ‘subject’: the role of ‘knowledge’ Technical experience coupled with practical experience: a homogeneous outcome? Combining human activity into a ‘subject’: the role of ‘coherence’ Exploring ‘coherence’ in the context of trade and non-trade concerns vii

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The relationship between the ‘subject’ and the ‘problem’ Conclusions

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Two models of disagreement Introduction Cultural divergence Market access Market access from a product-centric perspective Market access based on an understanding of the nature of the product Market access as function How do different understandings of ‘trade’ and ‘agriculture’ impact on the relationship between market access and cultural divergence? Conclusions

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Polycentrism and the issue of market access Introduction Elements of the problem Market access understood through the lens of the existing rules in the Agreement on Agriculture Tensions in market access What is market access in the WTO? Market access as a polycentric problem Chile–Price Band: a study of polycentricity Conclusions

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Cultural divergence, polycentricity and subsidies Introduction Traditional conceptions of the problem International agricultural trade regulation as a polycentric problem The strands of the polycentric problem Linking the strands: how do we know a ‘problem’ with international agricultural regulation exists? Linking the strands: placing the last piece of the jigsaw Conclusions Towards the future Introduction Panel and Appellate Body interpretation of the Agreement on Agriculture

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81 83 87 97 102 110 111 111 112 115 116 126 131 142 145 145 149

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Truncated definitions Agreements not to agree Implications for the July 2008 Draft Modalities Index

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Preface Successful regulation of international agricultural trade is a constant battle. Despite continued attempts in the Doha Round of multilateral trade talks to reach agreement on how the text of the WTO Agreement on Agriculture should be amended, the final point remains elusive. How to resolve the problem of international agricultural trade regulation and move beyond the current impasse is taxing the minds of trade negotiators, civil society representatives as well as scholars expert in the field. Traditionally, the debate is framed in the following terms: there are many distortions to market access for agricultural products. Markets therefore need to be fully liberalized, but in ways which consider non-trade concerns, like development, environment or human rights for example. It is only by achieving an effective balance between trade and non-trade objectives that global welfare will be achieved. (The outcome of this balancing exercise is sometimes that non-trade concerns should not be part of the trading regime at all; or that non-trade concerns cannot be realized through exceptions to the trade regime, but only through fully liberalized markets.) The literature therefore tends to concentrate on various aspects around this axis of debate. This book challenges this orthodoxy and argues we should re-visit our understanding of the problem. It is only when we fully understand the problem of international agricultural trade that we can hope to move beyond the difficulties we are currently encountering. The book argues that the problem of international agricultural trade is not a series of interconnected problems, but rather one single multifaceted problem with several interlocking strands. These strands are connected together in a multitude of varied ways so the final picture resembles a spider’s web. The various strands cover many issues including what a legitimate trade measure should be; how development should be regarded; what role, if any, should preservation of the environment play; what degree of autonomy should be given to WTO members in shaping their domestic agricultural policies and other governance issues. When we each engage with the problem we combine these strands together in our own way, which is in turn driven by the way we think the problem should be understood. This understanding is shaped by cultural factors like our notion of what food is, for example. As a consequence, whilst superficially it might look like we are agreeing to the version of the problem someone else has put forward, this might only be in relation to the way that some, but not x

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all, of the strands fit together. Consequently, beneath this superficial level of agreement, each person’s views of what the problem is may be diametrically opposed. When different people operate from different starting points, they can collide in their judgements, or converge in judgement for very different reasons. Where there is collision, typically, the result is a third outcome; but where there is convergence without genuine agreement on the meaning, the effect is that the parties are talking past each other, so no specific resolution is achieved. Consequently, the problem remains unresolved and therefore may suddenly re-emerge in any context to frustrate the parties’ aims. Much of the frustration felt in multilateral trade negotiations results from the parties’ belief that they are tantalizingly close to agreement, when in fact, this book will suggest, the level of agreement is much lower than it appears. The true nature of the problem of international agricultural trade means it is always evolving and subtly changing as the assorted strands are connected in various new ways as the trading environment and the way we think the problem should be seen also evolve and change. This means that any regulatory solution imposed on top of the problem fixes, at a single point in time, one way in which the problem should be understood (i.e., how all the various strands should be connected). All the other ways in which the various strands can be connected do not miraculously disappear, but remain attached underneath the solution, reappearing at various times to thwart the aims of the parties. This reappearance is often in the form of dispute settlement proceedings, or the collapse of the latest trade talks. Ultimately, a multifaceted (or polycentric) problem like international agricultural trade cannot be resolved, but only managed. It is our hope that we can resolve completely the complex web of interlocking tensions that leave us frustrated at our perceived lack of success. We should instead see this process of regulation as something which is ongoing, with small changes to the regulatory structure, rather than large multilateral packages following years of talks. This is a book of ideas. Its aim is to challenge our existing assumptions about the nature of the problem of international agricultural trade. It is not a comprehensive treatment of the regulation of international agricultural trade; there are many excellent books which already address this subject. Rather it draws on some of the provisions of the WTO Agreement on Agriculture to illustrate its basic thesis. It is not an introductory book as such therefore, but is rather aimed at those who are already familiar with the literature in the field. As such, at times the reader might be frustrated that it does not pursue every aspect of every idea through the complexities of the rules, the intricate economic models or the comprehensive literature addressing other aspects of agricultural trade on governance, negotiation or the political environment. The aim of the book is much less ambitious and only seeks to put forward a new way in which the problem can be understood; as such it does not presume to

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prescribe precisely how that understanding might translate for every person engaging with the problem of international agricultural trade. It is the author’s hope that others more expert in these areas of scholarship will use the ideas expressed here as a basis for further research. This book has been many years in the creation and I am very grateful to the editors of this series and to many colleagues who have contributed to the development of my ideas during this time. I would add the usual proviso that any errors remain my own. I would particularly like to thank Dr Sean Coyle for his substantial input on the jurisprudence and for reading the entire manuscript, as well as Professor Michael Cardwell and Professor Alison Clarke for their thoughts on agriculture and property law respectively. Thanks also to the editorial team at Edward Elgar for their support and understanding regarding the impact of the latest round of Doha talks on the delay in completing this manuscript. Thanks finally to my long-suffering friends and family, Ian Fussey, John and Pauline Cross and David. Fiona Smith September 2008

1. International agricultural trade regulation: charting the landscape This book explores the nature of international agricultural trade regulation; in particular, why successful regulation remains so elusive despite many attempts through multilateral trade negotiations and suggestions for reform made by academic commentators and civil society. These ideas are explored against the background of the three regulatory pillars of the WTO Agreement on Agriculture and implications for future regulatory design are considered. Consequently, this book is not a detailed exposition of the rules governing international agricultural trade in the Agreement on Agriculture and other linked and associated agreements. There are many excellent books in this area already which address these issues in a clear and detailed way.1 Instead, this book analyses the rules to the extent that they are indicative of, or reveal, what the problem of international agricultural trade regulation is and how it is understood. This book should not be regarded as an introductory text in the sense that its coverage is comprehensive therefore. Whilst it tries to be accessible to the novice reader, it is really designed to start where the other commentaries end, so it assumes a level of familiarity with the rules. History shows that agriculture plays a pivotal role in international trade discussions and has on many occasions been the reason for the collapse of several rounds of multilateral trade talks.2 Despite this, discussion of its difficulties both

1 Anderson, K and Josling, T (eds) (2005), The WTO and Agriculture, Cheltenham, UK: Edward Elgar. Desta, MG (2002), The Law of International Trade in Agricultural Products: From GATT 1947 to the WTO Agreement on Agriculture, The Netherlands: Kluwer, for a legal perspective; O’Connor, B (ed) (2005), Agriculture in WTO Law, London, UK: Cameron May, also Ingco, MD and Nash, JD (eds) (2004), Agriculture and the WTO: Creating a Trading System for Development, Washington, USA: World Bank and Oxford, UK: Oxford University Press, for an ‘economics’ perspective focusing on developing countries. 2 Uruguay Round 1982–1993: Stewart, TP (1993), The GATT Uruguay Round: A Negotiating History (1986–1992), The Netherlands: Kluwer, 131–255; Seattle Ministerial Meeting 1999, Cancun 2003 and Hong Kong 2005; Gowland, R, ‘Chemical Warfare in Seattle’, http://www.cpa.org.au/garchve2/993cult.html. 22 March 2000 The Guardian, ‘Conference Ends without Consensus’.

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in trade and regulatory terms has been largely avoided by mainstream World Trade Organization (WTO) scholarship. Instead, it has been left to specialists in the field of international agricultural trade. Whilst this approach has generated excellent scholarship particularly in the development of economic modelling of regulatory ‘solutions’,3 there has also been a tendency to define the problem in one way. That is, the current rules on international agricultural trade found in the WTO Agreement on Agriculture and related agreements are inadequate because they do not force members to fully liberalize access to their domestic agricultural markets by lowering and eventually eliminating trade measures that restrict market access and distort the market for agricultural products. The ‘problem’ is therefore the failure to fully liberalize international agricultural trade (i.e. realize ‘free trade’) and the ‘solution’ lies in constructing rules that facilitate market liberalization defined in economic terms. This emphasis on complex economics means that international agricultural trade regulation can appear a closed world to a broader range of scholars. This is not to say that economics is not crucial to an understanding of how markets work and how WTO members have attempted to manipulate their domestic http://www.wto.org/english/thewto_e/minist_e/min03_e/min03_14sept_e.htm. 14 September 2003 WTO: ‘Agriculture Questions Swiftly Examined, but Information Backlog Worsens’. http://www.wto.org/english/news_e/news07_e/ag_com_26sept07_ e.htm. 26 September 2007. 3 The GTAP model (Global Trade Analysis Project) and corresponding database is the most frequently used. Current version 6.2 November 2003. Hertel, T (1997), Global Trade Analysis: Modelling and Implication, Cambridge, UK: Cambridge University Press and subsequent revisions: https://www.gtap.agecon.purdue.edu/ default.asp. The model is based on a general equilibrium model in economics: there are a number of markets, domestic, international, etc. and all these interact with each other, in a way which shows each is dependent on the other. Demand for one product, for example, affects demand for another; demand is also affected by income, income is dependent on wages, which are dependent on production, which is then determined by demand for the product. For a fuller version see Hertel, T, et al. (2006), ‘Distributional Effects of WTO Agriculture Reforms in Rich and Poor Countries’, World Bank Policy Research Working Paper No. 4060, 5. Subject-specific models have also been developed in the OECD: i.e., the PEM model (Policy Evaluation Matrix) evaluates the market for grain and oilseeds for OECD countries: de Gorter, H. et al. (2004), ‘The Distributional Effects of Agricultural Policy Reforms’, in Ingco, MD, and Nash, JD, above n 1, 149. Also the UNCTAD model, the ATPSM (Agricultural Trade Policy Simulation Model) developed to evaluate proposed specific effects of reforms to the international agricultural trade rules. This model is a static, partial equilibrium model which estimates the economic effects of changes in various trade measures (quotas, subsidies, etc.), together with producer and consumer surplus and general welfare: see Peters, R. and Vanzetti, D. (2004) Shifting Sands: Searching for a Compromise in the WTO Negotiations on Agriculture, Policy Issues in International Trade and Commodities Study Series No. 23 UNCTAD, 17.

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agricultural markets for protectionist reasons. It may be proven that seeing the problem through this economic lens is the right way in which the problem should be understood. However, domination of an area of scholarship by one line of thought may stifle debate. This book aims to reopen that debate and evaluate the problem of international agricultural trade regulation by looking at it in a different way.4 In one sense therefore, this is a book about international agricultural trade regulation because it considers the rules, the economics and the underlying theoretical assumptions of the WTO regulatory scheme. To the extent that the book addresses these issues, it is intended to take its place in the current sphere of international agricultural trade scholarship. The book also has a broader purpose. International agricultural trade acts as a microcosm which shows in sharp relief how problems of regulatory complexity, the role of dispute settlement, the intricate political interaction between members and the role of economics all come together in complex and different ways in every area covered by the WTO rules. Rather than seeing international agricultural trade as an area best left to one area of scholarship, this book aims to show that ways in which the problem of international agricultural trade regulation can be understood have resonance for every area of WTO scholarship.5

INTERNATIONAL AGRICULTURAL TRADE REGULATION AS A COMPOSITE PROBLEM Between 1990 and 2001, world exports of agricultural products increased from US$274 billion to US$394 billion (1.4 times their previous level), yet in comparison, world exports of manufacturing products increased by more than 1.8 times their previous 1990 level. By the end of the 1990s, trade in agricultural products only accounted for 10 per cent of the total value of world merchandise trade, falling from its previous level of 17 per cent in 1980.6 During the same period, the domestic agricultural sectors of developed nations

4 Kolakowski argues that it is in fact the role of the academic or ‘intellectual’ to force open previously ‘settled’ areas of debate, even if it is just for their nuisance value! Kolakowski, L (1990), ‘The Intellectuals’, in Kolakowski, L, Modernity on Endless Trial, Chicago, USA: University of Chicago Press, 32, 38. 5 Note that the European Union’s Common Agricultural Policy also plays a similar role: see generally Cardwell, MN (2004), The European Model of Agriculture, Oxford, UK: Oxford University Press. 6 Ingco, MD, and Nash, JD, above n 1, 7.

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only accounted for 4 per cent of global GDP and only represented 6 per cent of their share of world trade.7 If agricultural trade forms a declining proportion of world trade and plays such a limited role in developed nations’ GDP, why does it continue to dominate the agenda of multilateral trade negotiations in the WTO? Also, why is it apparently so resistant to international regulatory control? The traditional response to these questions is that comprehensive regulation is relatively new to international agricultural trade.8 These ‘new’ rules in the WTO Agreement on Agriculture were designed as only a first step in the long road to liberalization of the sector and so it is not surprising they do not adequately reduce restrictive barriers to trade, do not fully address developing countries’ concerns sufficiently, or do not truly accommodate non-trade issues like human rights and the environment. In essence, the rules are the problem: the difficulties of international agricultural trade are self-evident, but we have not yet discovered how to modify the rules to accommodate all the complicated and controversial issues. Academic commentators, civil society representatives and negotiators therefore concentrate firmly on finding the ‘right’ solution based on this apparently shared understanding of what the problem is.9 This book does not follow this path. Rather than focusing on how to regulate international agricultural trade, it concentrates more on what the problem is and why agreement on the composition of the rules is so elusive. The book challenges the conventional orthodoxy that the problem is self-evident and it is only the solution which is difficult. It therefore takes a step back from the position occupied by the current debate in the hope that deeper consideration of why international agricultural trade regulation is problematic will facilitate greater understanding of how we can go forward and regulate it successfully. The book’s central argument is that the problem underlying international agricultural trade regulation is not a linear notion, but is instead made up of a series of interlocking complex elements, or ‘strands’; each one inextricably connected to the other. It is useful to compare this structure to a spider’s web: each ‘strand’ of the international agricultural trade regulation problem corresponds with one strand of the spider’s web. Like the web, these main strands have smaller strands coming off them connecting the main strand with the 7 If the contribution of the agri-food sector is measured taking into account the entire food chain, then in the UK at least, agriculture contributed approximately 6.9 per cent to the total economy in 2006: DEFRA (2007), Agriculture in the UK, London, UK, 59–60. 8 The Uruguay Round concluded in 1993, the Marrakesh Agreements appeared in 1994 and the rules took effect on 1 January 1995. Stewart, TP (1993), above n 2, 131–255. 9 Desta, MG (2002), above n 1, for a legal perspective, also Ingco, MD, and Nash, JD, above n 1, for an ‘economics’ perspective focusing on developing countries.

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other strands of the web, sometimes at only one point, sometimes at many. The final structure which emerges resembles the spider’s web we are all familiar with.10 This book will show that understanding the problem of international agricultural trade regulation as a complex web-like structure in this way sheds light in two areas: first, on how we each understand what the problem is.11 Second, why effective regulation has proven so elusive so far.

THE ‘STRANDS’ OF THE PROBLEM OF INTERNATIONAL AGRICULTURAL TRADE REGULATION International agricultural trade’s resemblance to a ‘spider’s web’ is returned to in more detail later in the book. However, in this chapter, the discussion introduces the different ‘strands’ of the problem of international agricultural trade and how we might start to put these strands together to create the spider’s web of linked ideas. The first strand can be described as those issues surrounding the trade measures members use as part of their national agricultural policies to support their domestic production, insulate their agricultural sectors from imports and enable their domestic producers to compete more effectively in the global market for cheap agricultural products. This first strand is itself composed of a smaller set of strands: in particular, what measures should be allowed in a members’ domestic agricultural trade policy;12 the form those measures should take; the reason some are permissible and others excluded; the grounds on which interference with members’ domestic policies is permissible; the specific sectors singled out for special treatment (if any) and how that is achieved; the relevance of private actors’ activities including multinational corporations or state-trading enterprises when assessing the content of the trade measure; how ‘success’ in the construction of those trade measures is defined – in other words, why those measures are necessary and how they fulfil the goal they are trying to achieve when they use them.

10 This is a polycentric problem described by Fuller as a ‘spider’s web’. This is an idea which will be returned to in more detail further in the book: Fuller, LS (1978–79), ‘The Forms and Limits of Adjudication’, 92 Harvard Law Review 353, 395. 11 The book will explore these ideas more fully in each chapter, but Chapter 4 discusses the notion of polycentricity in greater detail and applies these ideas to market access in agricultural trade. Chapters 3, 4 and 5 indicate a new and innovative way in which the problem of international agricultural trade can be understood. 12 For a detailed exposition of the Agreement on Agriculture, see McMahon, JA (2007), The WTO Agreement on Agriculture: A Commentary, Oxford, UK: Oxford University Press.

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The second strand is developing countries and development issues generally. Like the first ‘trade measures’ strand, this second strand is also a composite of several smaller strands. In this second strand, key concerns centre on how developing countries are treated under a trade regime; how developed country protectionism is addressed; whether a diverse regime exists aimed at the differing needs of a range of developing countries, or if a ‘one size fits all’ approach is preferable; whether a homogeneous approach to least-developed countries is used, or whether groupings of countries exist which are accommodated through specially tailored treatment; the extent to which the weaker negotiating position of developing countries is recognized at all in multilateral trade negotiations and if so, if the negotiating process is changed to address these difficulties; whether the vulnerability of developing and least-developed nations is recognized generally and how it is brought into the trading regime, if at all; if difficulties of poverty and specifically food security are addressed and if so, how that is achieved.13 The third strand is the environment.14 In common with the first and second strands, it too is composed of many disparate strands including: what place do environmental concerns occupy in international agricultural trade; which environmental issues are more prevalent in agriculture than others and why that is the case; the relationship between the furtherance of trade and environmental goals; what balance do the existing rules strike between trade and environmental goals and whether this is successful; whether the preservation of rural communities is seen as an environmental consideration, or whether it relates to another ‘strand’ of the agriculture problem, for example, human rights generally; whether animal health and welfare considerations fit into the notion of sustainable rural environment, or whether they are a distinct issue;15 the place biofuels occupy within the regulatory scheme, if any, in particular 13 Anderson, K and Martin, M (2006), ‘Scenarios for Global Trade Reform’, in Hertel, TW, and Winters, LA (eds), Poverty and the WTO: Impacts of the Doha Development Agenda, Washington, USA: World Bank and UK: Palgrave, 31. Seventeen per cent of the populations of developing countries are undernourished: FAO (2006), The State of Food Insecurity in the World: Taking Stock Ten Years after the World Food Summit, 4. 14 WTO (1999), Chemical Intensive Agriculture, in Geneva, Switzerland, Special Studies Series: Trade and the Environment, 14; Working Group FABRE Technology Platform (2006), ‘Sustainable Farm Animal Breeding and Reproduction – A Vision for 2025’ http://www.fabretp.org/content/view/21/43/; DEFRA (2002) Farming and Food: A Sustainable Future; Grossman, MR (2003), ‘Multifunctionality and Non-Trade Concerns’, in Cardwell, MN, et al. (eds), Agriculture and International Trade: Law, Policy and the WTO, Oxford, UK: CABI, 85; Trachtman, J (2002), ‘Institutional Linkage: ‘Transcending “Trade and …” ’, 96 American Journal of International Law 77. 15 FABRE paper, ibid.

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whether such products are agricultural products at all, and whether they fall within the agriculture/environment nexus or whether they are in fact manufactured products that are regulated by the general rules on trade in goods.16 A fourth strand, which again raises its own difficulties, is human rights. In this case, difficult issues arise whether human rights generally conceived play any role in trade agreements at all; if they do, how do they fit into international agricultural trade? Is there an explicit human rights discourse that automatically informs the interpretation of the international agricultural trade regulatory framework, but which is currently misunderstood, or neglected? Have stakeholders in international agricultural trade distorted that discourse, and if so, how?17 In some respects, these first four strands have strong subject-specific characteristics in the sense that each one contains subject matter which is particularly ‘agricultural’. These characteristics include, for example, trade measures designed to impact explicitly on agricultural products; developing and leastdeveloped countries expressing concerns about food security, export of primary products and, as a corollary, denouncing developed countries’ protectionism and those countries’ support for their domestic agricultural markets; likewise, environmental considerations that centre on food production methods, preservation of rural landscape and communities, whilst within the human rights discourse the emphasis lies on a right to food. In addition to these ‘subject-specific’ strands, a final strand can be identified to the problem of ‘international agricultural trade’. Here the connection to agriculture exists, but we might regard this final strand as containing broader issues that focus on governance and the theoretical underpinnings of the WTO rules. Such issues have implications for both the structure of the international agricultural trade rules and the WTO regulatory framework as a whole.18 Such 16 That is, under the General Agreement on Tariffs and Trade (GATT) found in Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization (the Marrakesh Agreement). 17 Breining-Kaufmann, C (2005), ‘The Right to Food and Trade in Agriculture’, in Cottier, T, et al. (eds), Human Rights and International Trade, Oxford, UK: Oxford University Press, 341. Petersmann argues that the ‘right to trade’ might even be viewed as a form of human rights: ‘Human Rights and International Trade Law: Defining and Connecting the Two Fields’, 29, 36; for a very interesting critique of Petersmann’s approach see Alston, P (2002), ‘Resisting the Acquisition of Human Rights by Trade Law: A Reply to Petersmann’, 13 E J.INT’L L. 815; also Peers, S (2001), ‘Fundamental Rights and Political Whims? WTO Law and the ECJ’, in De Bùrca, G, and Scott, J (eds), The European Union and the WTO: Legal and Constitutional Issues, Oxford, UK: Hart; also Cass, DZ (2005), The Constitutionalization of the WTO, Cambridge, UK: Cambridge University Press. 18 Esty, D (2007), ‘Good Governance and the WTO: Building a Foundation for Administrative Law’, 10(3) Journal of International Economic Law 509, and Steger, D

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ideas of governance include: how international agricultural trade should be regulated; should the primary focus lie on formal rules in the Agreement on Agriculture supplemented by interpretations of the panels and Appellate Body in dispute settlement proceedings, or should there be greater recognition of the role of conciliation and diplomatic settlement; in the wider context of the WTO itself, what role should an international actor like the WTO play in the global regulatory environment; what function should other treaties have in the WTO structure, if any; what should the connection be between the WTO and other international actors like the World Bank and the International Monetary Fund (IMF) for example;19 what function or autonomy should be accorded to the state; should private actors like non-governmental organizations (NGOs) or multinational corporations, for example, play a role within the formal framework of the rules, if so, what should that be; what role is played by ‘soft’ regulatory mechanisms operating within the WTO system, for example, the committee structure relying on WTO members’ full participation and cooperation in a non-adversarial setting maximizes a member’s ability to modify a measure, or compensate for its application away from the glare of publicity so prevalent in formal dispute settlement proceedings.20 Finally, what are the implications for international agricultural trade of all these WTO-centred issues? It is evident that each of these five strands presents a variety of multifaceted issues, each of which must be addressed in any regulatory scheme covering international agricultural trade in some way. In one sense, a description of the strands and their content is helpful because it indicates where potential difficulties for any regulatory structure might arise. However, such an analysis does not of itself indicate that these strands might fit together, nor why exploring this interconnection is important. How those strands are connected is a critical element in understanding the problem of international agricultural trade regulation. (2007), ‘The Culture of the WTO: Why It Needs to Change’, 10(3) Journal of International Economic Law 483. On the theoretical underpinnings of the WTO see Tarullo, D (1985), ‘Logic, Myth and the International Economic Order’, 26 Harvard International Law Journal 533, and Lang, A (2006), ‘Reconstructing Embedded Liberalism: John Gerard Ruggie and Constructivist Approaches to the Study of the International Trade Regime’, 9 Journal of International Economic Law 81. 19 This is a largely settled point within the WTO now, but the nature of these connections raises some interesting issues which this book will refer to again later in Chapter 1 and later in Chapters 3 and 5. Over 140 organizations have observer status at the WTO: WTO (1996), Rules and Procedures for Sessions of the Ministerial Conference, Geneva, Switzerland, WT/L/161, 25 July. Annex 3 for observer status of international organizations. The WTO also acts as observer at other international organizations: http://www.wto.org/english/thewto_e/coher_e/wto_observership_e.htm. 20 Scott discusses the important role played by the SPS Committee in Scott, J (2007), The WTO Agreement on Sanitary and Phytosanitary Measures: A Commentary, Oxford, UK: Oxford University Press, 45.

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HOW IS THE ‘WEB’ OF ‘STRANDS’ CONSTRUCTED? Each ‘strand’ is presented in the previous discussion as a complex, but autonomous whole. The discussion is constructed in this way at this stage largely for the sake of expediency, rather than as a fixed taxonomy of how the issues actually occur. In reality, disparate issues from each strand attach to one, many, or all of the other four remaining strands. For example, the right to food is in the ‘human rights’ strand in this discussion. The right to food also connects to the ‘development’ strand as it informs our understanding of food security and what goal we are trying to achieve when we talk about achieving food security for developing nations. In addition, human rights and the right to food broadly defined also connect to the ‘trade measures’ strand: trade measures might either impact on human rights in a way which impinges on the right to food, for example, or trade measures might enhance human rights generally defined in the sense that they are designed to alleviate poverty. There may also be a connection with the fifth strand, which addressed issues relating to governance and the theoretical underpinnings of the WTO regulatory scheme: here, it might be considered that a right to be heard in multilateral trade negotiations for all nations is a form of human rights.21 In this latter example, human rights encompassing both the right to food and human rights more generally defined cross the development, governance and the trade measures strands simultaneously. Likewise, preservation of rural communities is located in the ‘environment’ strand. However, it connects to trade measures if such measures are to be employed to protect rural communities. Again, such communities may be located in developing or least-developed nations, raising questions about how environmental and developmental concerns fit together and how trade measures should be designed to accommodate these problems. As a final illustration, for many trade scholars it is perhaps axiomatic to raise the question of the trade/non-trade concerns clash where issues located in the trade measures, environment, development, governance and theoretical underpinnings of the WTO regulatory scheme strands all coalesce.22 21 The right to be heard is critical for the procedural or ‘input’ legitimacy of the institution: see Krajewski, M (2001), ‘Democratic Legitimacy and Constitutional Perspectives of WTO Law’, 35 JWT 167, 169. 22 For a comprehensive and incisive discussion of the ‘trade and . . .’ debate see Dunoff, J (1998), ‘Rethinking International Trade’, 19 University of Pennsylvania Journal of International Economic Law 347; Leebron, D (2002), ‘Linkages’, 96 American Journal of International Law 5; Trachtman, J (2002), above n 16, and other discussions in Alvarez, J (2002), ‘Foreword: Symposium: The Boundaries of the WTO’, 96 American Journal of International Law 1–159; ‘Linkage as a Phenomenon: Linking the Trade Linkage Debate’, (1998) University of Pennsylvania Journal of

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The critical point is that the issues raised in the five ‘strands’ all come together in diverse and complicated ways to form an intricate and multifaceted picture, or spider’s web, which is ‘international agricultural trade regulation’. This web evolves and changes over time as each strand evolves, and as new strands are added as a response to the changing nature of international agricultural trade regulation and to how the WTO’s rules generally should be understood.23 The strands’ infinitely diverse connectivity through the spider’s web structure means it is not possible to state with certainty which explanation of how the strands fit together is correct. This is because there are no overall external criteria against which one explanation’s validity is correct and the other incorrect, as each way of explaining the problem is itself a product of the combination of the disparate issues arising from the strands.24 These ideas are best understood by way of an example: the problem of international agricultural trade can be described as the existing rules’ inability to curb members’ use of trade measures for protectionist purposes, with the consequence that global welfare is undermined. This explanation is based on a combination of the current content and structure of the trade measure; the measure’s function; the role of the state vis-à-vis the WTO and the theoretical underpinnings of the WTO regime, in other words, how the rules should be interpreted to achieve a particular goal. In this example, reaching the conclusion that the measures are inadequate is based first on an interpretation of what the rules mean, coupled with a specific theoretical understanding of what the WTO rules are designed to do and finally with a recognition that the WTO is able to interfere with state autonomy in this situation. Equally, the problem of international agricultural trade can be described as the trade rules’ lack of recognition of the critical relationship between trade, agriculture and the environment.25 Like the previous example, this description of the problem combines understandings of the rules’ existing scope, particularly, whether trade measures are capable of affecting environmental goals adequately; the rules’ function; how those rules should be understood and the International Economic Law and ‘Institutional Conundrums of an Expanded Trade Regime’ (2001) 7 Widener Law Symposium Journal. 23 There is a suggestion amongst WTO scholars that WTO jurisprudence is moving towards a system of global administrative law: Esty, D (2007), above n 18, 509. 24 Fuller describes these complex problems as ‘polycentric problems’. Fuller confined his exposition of polycentric problems to issues of adjudication, whereas the ideas expressed in this book are expanded to issues of regulation generally. See Chapter 3 below for further discussion: Fuller, above n 10, 394. 25 The same ideas can be traced by suggesting as an example that the problem of international agricultural trade is its failure to fully recognize the problems of developing nations.

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validity of the WTO’s impact on the state’s domestic agricultural policies. In both these examples, all the issues and the way they should be understood are drawn from the strands within the complex problem of international agricultural trade regulation. The difference between each scenario is the way each individual chooses to describe the problem.26 How each commentator/negotiator chooses to describe the problem is not neutral, but is instead based on their own understanding of what ‘trade’ is and how ‘international agricultural trade’ fits within it. This understanding is itself shaped by each person’s cultural values, or ‘morality’ broadly defined.27 These ideas should not be seen as fixed, but as changing over time as existing cultural norms are rejected in favour of new ones. How an individual explains the problem inevitably shapes how they see the solution; in other words, how they think international agricultural trade’s rules should be modified (if at all) to accommodate their view of what the problem is. Such diversity means that even though each person appears to be discussing the same issues, in fact they are discussing a complex web of issues which overlap and impact on each other. Misunderstanding therefore results because it is easy to slide seamlessly between the issues without realizing it.28 When embarking on an exploration of a problem which is so complex and interconnected that it resembles a spider’s web, there is a sense that whichever point you choose to start at, you are really starting in the middle of another point: a structure where every strand is connected to every other has neither beginning nor end. Seen in this way, selecting the starting point can seem

26 Simmonds makes a similar point in relation to establishing how to decide whether a legal issue falls within the broad categories of ‘contract’ or ‘tort’ law: Simmonds, N (1982), ‘The Changing Face of Private Law: Doctrinal Categories and the Regulatory State’, 2 Legal Studies 257, 258. 27 The influence that different cultural understandings have on our understanding of the problem of international agricultural trade is discussed more fully in Chapters 3 and 5. An interesting parallel to these ideas is that Blackstone was faced with a similar apparently dissolute collection of ‘laws’ which he brought together in coherent whole for his ‘Commentaries’. Bringing together each element was not based on a scientifically objective process which was ‘correct’, but was instead based on Blackstone’s own understanding of what the law was and how each disparate strand should be brought together: Milsom, SFC (1981), ‘The Nature of Blackstone’s Achievement’, 1 OJLS 1. 28 Cultural differences between negotiators and those commenting on international agricultural trade also shape their approaches. See Chapter 1, below. Also note the implications of the impact of culture on how we see market access in Chapter 3 and Chapter 5 below. See generally: Smith, F (2008), ‘The Limitations of a Legal Approach to the Regulation of Cultural Diversity in the WTO: The Problem of International Agricultural Trade’, 3(1) Asian Journal of the WTO and International Health Law and Policy 51.

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rather arbitrary. Despite this disadvantage, an argument can be made that for cohesive discussion we must start as near to the outer edge of the web as possible.29 An appropriate place to start therefore might be to investigate what influences an individual (whether they are a trade negotiator, company director, academic commentator or NGO representative) to explain the problem in one way, rather than another. In the context of international agricultural trade regulation, an individual discussing the difficulties must always have an understanding of what ‘trade’, specifically international trade, is and what ‘agriculture’ is.30

WHAT IS ‘TRADE?’ Trade as ‘Trade in Products’ How an individual understands ‘trade’ feeds directly into the way they will explain the problem of international agricultural trade regulation. The question ‘what is trade?’ can be interpreted therefore as ‘what is trade for the purposes of the WTO rules, specifically the rules on international agricultural trade?’ The individual’s answer to this question feeds into their judgement of whether the agriculture rules are in fact fulfilling their objective or not. Article 3:2 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (the DSU) makes it clear that all the WTO rules can be interpreted ‘in accordance with customary rules of public international law’. The Appellate Body has interpreted this statement to include the treaty interpretation tools in the Vienna Convention on the Law of Treaties (the Vienna Convention). Article 31(1) of the Vienna Convention states that: ‘A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.’ This approach places the emphasis firmly on two aspects: first the ‘ordinary meaning’ of the language used and second, the ‘context’ in

29

It should be noted that the nature of the problem as a polycentric problem means that although I have identified these issues as the outer edge of the problem of international agricultural trade, they could be another commentator/negotiator’s core issue. 30 The views now put forward aim to unbundle the traditional idea that the problem of international agricultural trade is a single idea. For an outline of this idea, see the beginning of Chapter 1 above. These ideas are returned to in the context of market access in Chapters 3 and 4 and then fully developed in relation to domestic support and export subsidies in Chapter 5.

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which the language is used.31 The Appellate Body32 has interpreted these obligations to require an investigation into both the natural language construction of the wording and then the purpose which the rules are designed to fulfil. This approach provides a useful starting point to explore how we each might understand ‘trade’. The ‘ordinary’ meaning of ‘trade’ focuses on the product.33 Specifically, it describes a situation where products are bought and sold for financial gain by individuals, companies, states or a combination of these actors. Cars, refrigerators, computer software, films, satellite broadcasting packages, rights to play music, or rights to manufacture an invention all form the subject matter of a trade transaction: each one can be readily transferred from one party to the other and each product possesses an intrinsic value which enables it to be the subject matter of a commercial transaction.34 On this understanding, the emphasis lies on the transfer of the product and its commercial value, or price. ‘Trade’ is expansive in the sense that most of the products we encounter in our everyday lives fall easily within it. It seems safe to assume that the products falling within the definition are self-evident because they are only those that can be traded and are capable of being valued in monetary terms. This definition is not immune to multiple understandings however. From the previous discussion, it is apparent that products incapable of transfer from one party to another are excluded from the ordinary meaning of ‘trade’. This statement can be understood in many ways. In one sense, implicit in the idea of ‘trade’ as ‘trade in products’ is the ability to benefit financially from the transaction. Such financial benefits only accrue if the individual from whom the product is being transferred can exclude others from gaining any benefit from it, as why else would anyone offer money for a product they can enjoy in any event? Seeing ‘trade’ as only those products which can be isolated from general consumption by the individual leads to two interrelated interpretations of the nature of ‘trade’: first, ‘trade’ only takes place in products whose inherent nature enables them to be transferred from one to another; and second, ‘trade’ only takes place in products over which 31 32

Article 31(2) Vienna Convention. The Appellate Body noted in United States–Standards for Reformulated and Conventional Gasoline,WT/DS2/AB/R, 24 April 1996, 17, that the WTO rules should not be interpreted in isolation from public international law. 33 Defining the ‘ordinary meaning’ of a term is endorsed by Article 31(1) Vienna Convention on the Law of Treaties, done at Vienna 23 May 1969, 1155 UNTS 331, 8 ILM 679 (1969); this approach is endorsed by the WTO Appellate Body in United States–Standards for Reformulated and Conventional Gasoline, ibid. 17. 34 Smith, F, and Woods, LM (2005), ‘A Distinction Without a Difference: Exploring the Boundary between Goods and Services in the World Trade Organisation and the European Union’, 24 Yearbook of European Law 463.

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the individual exercises exclusive rights, that is, those products in which she has ‘property’ or ownership. Dependent on how these two ideas are interpreted, a product may fall outside ‘trade’ because its very nature means it cannot be sufficiently constrained for its physical delivery to be made to another – because domestic legislation prohibits the ownership of the product due to its dangerous nature for example, or because the relevant law governing ownership attaches to physical characteristics of the product, thereby preventing ownership of it if the product lacks corporeal existence. Whilst these ideas appear distinct, so that once we know the product and the relevant laws on delivery and ownership in a jurisdiction, a universally agreed conclusion on which products can be ‘traded’ follows, this is not the case however. In fact, our view of a product’s ‘tradability’ changes dependent on whether we emphasize the physical character of the product, or the transfer of ownership in it, or the role of the state. Our understanding of whether a product is capable of forming the subject matter of a trade transaction or not can be informed by the literature. This may lead us to conclude that products which are enjoyed by each person without either excluding others from their consumption at the same time, or without reducing each person’s ability to have the benefit of that product to their full capacity, are products which fall outside the definition of trade. These products are defined as ‘public goods’.35 The classic example given is fresh air, or to the extent they cannot be restricted within national boundaries, national defence policies. Pure public goods are incapable of forming the subject matter of a trade transaction because their lack of physical substance, or incorporeality, means each individual enjoys the product automatically without the need for it to be specifically transferred to them and because no one person has the right to exclude another’s access to it. Whilst some products may readily fall outside ‘trade’ when the emphasis is on the product’s inherent physical character, this conclusion is not inevitable. In this second instance, the focus remains on the product’s physical nature, but the way in which that nature is understood is different. Here, despite the product’s perceived lack of corporeal existence, general consumption can be prevented and specific transfer from one party to another is possible: the prod-

35 Samuelson, PA (1954), ‘The Pure Theory of Public Expenditure’ 36(4) Review of Economics and Statistics 387–9. Note that it is important to distinguish between ‘pure’ public goods which have two characteristics: non-excludability and non-rivalry. Consumption of the product cannot be restricted due to its nature and also consumption of the product does not diminish another’s consumption of it: see OECD (2001), Multifunctionality: Towards an Analytical Framework, Paris, 76. See also later work on multifunctionality by the OECD at: http://www.oecd.org/document/34/0,3343, en_2649_33773_40789602_1_1_1_1,00.html.

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uct on this understanding is then a private, not public, product and as such can be traded. For instance, from the earlier example, fresh air is a public good, or product.36 If we understand fresh air as a pure public good, it cannot form part of a ‘trade’ transaction because its nature automatically means enjoyment of it cannot be restricted sufficiently so that other individuals have to pay for access. However, fresh air is a private product if it is viewed through the lens of the concept of ownership, or property. In one sense, it is tempting to reject an analysis which suggests that focusing on ownership rights might be an alternative to using economics, the Harmonized System, etc. However, a product can only be traded if an individual or other entity has the right to transfer it to another, sufficient that that other acquires rights to the product vis-à-vis any other individual or entity.37 This also feeds into how the person to whom the product is transferred views what they are acquiring: is it the product alone, or is it the right associated with the product?38 In English law, the maxim cuius est solum, eius est usque ad coelum et ad inferos governed the notion of ownership: that is, the person who owns the soil in essence owns everything from the ground upwards to the heavens.39 Despite this traditionally broad conception, it is inconceivable that ownership or property in land remains so expansive, but it has only been constrained to the extent that the lower airspace sufficient to enable the landowner to enjoy her land at ground level still remains the property of the landowner. The higher level airspace now falls outside the right, but interestingly, it is still possible to constrain the free availability of the upper airspace to the right of ‘innocent passage’ for aircraft, which clearly constrains the free availability of space: someone has the right to restrict the use of that space in albeit limited circumstances and as a result may have a consequential right to charge for its use.40 In relation to the lower portion of airspace, however, it is evident that individuals can enjoy significant dominion over it both in terms of exclusive use by them and by the right to exclude others from it: in English law, this right would

36 ‘Product’ is used in this discussion as a generic term to cover both goods and services. This is important as a clear distinction is made in the WTO between the regulation of goods and services. This discussion applies to both. 37 Cohen, F (1954), ‘Dialogue on Private Property’, 9 Rutgers Law Review 357. 38 An interesting corollary to this is that in some circumstances the physical product might not be delivered to the buyer at all: it might only be items representing the product sufficient to allow ownership in it to pass from one party to the contract to another. International sale contracts on CIF (cost insurance freight) terms in English law operate on this model: Bridge, MG (2007), International Sale of Goods, 2nd edn, Oxford, UK: Oxford University Press. 39 Gray, K (1991), ‘Property in Thin Air’, 50(1) Cambridge Law Journal 252, 253. 40 This is problematic however, see Gray, ibid., 256.

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be protected by an action for trespass following some intrusion, for example.41 Creating an ownership right in ‘fresh air’ for these purposes is linked to a definition of ‘land’ and how ownership rights to that land are perceived. Land is the physical ground on which a mine is situated, but equally, it is the substrata of the earth which allows extraction of the minerals: for example, the coal seam and the tunnel (including the fresh air in the tunnel) by which the seam is reached can all form the subject of a property transaction in ‘land’.42 Fresh air is then a non-excludable resource if the focus lies on the air’s incorporeality in the abstract; whereas if we focus on the right to own the air, then air is no longer a non-excludable product and can form the subject matter of a trade transaction. For the economist, the response to the property lawyer might be that fresh air is one product and the coal seam, or apartment, etc. is another product, therefore the analysis is not comparing the same product. In one sense, this is true if you focus only on the thing you are trading (in terms of its physical characteristics). However, if you focus instead on the property rights transferred with the product, it is the case that you do have ownership rights to the fresh air in a way rejected by the economist because the physical character of the product is only a part of the analysis and not the whole picture.43 The conclusion to this analysis is not that those who reach a conclusion about the tradability of fresh air through an economics lens are wrong, whereas those who reach the conclusion through a different lens like a domestic property system, for example, are right, or vice versa. Rather, the conclusion is that our understanding of whether a product can be traded or not changes dependent on whether we view it through the economics or through the property lens. Differentiating between the product’s corporeal existence and the proprietorial interest in it results in differing views on whether a product like fresh air is excluded from a trade transaction or not. Fundamentally, this is a question of whether the entire product falls within a trade regime at all, but it also has resonance for deciding what constitutes the product’s characteristics: that is, how can we describe the product we are trading in? If we interpret ‘trade’ as ‘trade in products’, then how we describe those products informs our opinion of what aspects form the subject of trade in that product and what do not. For example, chemicals are manufactured in factories that have deliberate clean air policies: they minimize their harmful fume emissions into the atmos-

41 For example, tree branches overhanging your garden fence: Lemmon v Webb [1895] AC 1. 42 Metropolitan Railway Co v Fowler [1893] AC 416. 43 On the difference between focus on the thing and focus on the right to the thing see Hohfeld, WS (1913), ‘Fundamental Legal Conceptions as Applied in Judicial Reasoning’, 23 Yale Law Journal 16.

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phere. Is it the product alone traded, or is the process by which it is manufactured relevant in some way?44 Whether ‘trade’ is trade in the chemicals, or trade in the chemicals including the process, can be described purely in the sense of its physical attributes: its definite chemical composition or that of its various components or elements, its distinct properties and its organic or synthetic character would be relevant to a determination of what is traded. Other issues that have relevance might be those which relate to its use: its usual end-use.45 In contrast, focusing on consumers’ tastes and habits on purchase shifts the balance towards a more subjective assessment of what is traded: here what the consumer thinks they are buying, or acquiring ownership to is relevant as the decision about what to buy is inextricably linked to why they are buying it. To consumers, the pro-environmental way in which the chemicals are manufactured might be crucial to their purchase decision. The question then remains whether they can, as a matter of law, acquire ownership rights or are entitled to the pro-environmental process element of the product which is crucial to them.46 What trade is can be defined in terms of whether a product is capable of transfer from one party to another. This involves complex ideas about the physical nature of the product, particularly whether it can be isolated in such a way as to enable another to enjoy exclusive control over it. Whilst these ideas are clear when the product’s transferability is viewed purely in physical terms; when the dialogue is translated into the language of the right to own the product rather than the product ‘as such’, then products which seem incapable of transfer due to their incorporeality, or their mixture of corporeal and noncorporeal attributes, become transferable. The transferability element of ‘trade’ as ‘trade in products’ has multiple meanings therefore: it is possible to move between these notions without appreciating that a shift in views has in fact occurred.

44 This classic product/process dilemma is the subject of detailed panel and Appellate Body decisions: Hudec notes that it is ‘settled’ as a matter of law in the WTO for many commentators, although he has doubts. This issue will not be addressed in detail in the book. Instead, the issue is not to critique the product/process problem, but rather to suggest that this difficulty can be resolved in a number of ways dependent on where an individual places the emphasis: Hudec, RE (2000), ‘The Product-Process Doctrine in GATT/WTO Jurisprudence’, in Bronckers, M, and Quick, R (eds), New Directions in International Economic Law: Essays in Honour of John H. Jackson, The Netherlands: Kluwer, 187, 189. 45 GATT (1970), Working Party on Border Tax Adjustments, Geneva, Switzerland, BISD 18S/97, para 18. 46 Calabresi, G, and Melamed, AD (1972) ‘Property Rules, Liability Rules and Inalienability’, 85 Harvard Law Review 1089.

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This discussion focused on transferability as a distinct theoretical basis to understanding ‘trade’ as ‘trade in products’. However, it is clear that not only must the product be capable of transfer, either physically or legally, it also must have a commercial value. Commercial value impacts on the transferability element in many ways: a product might be traded because it has a market value, or might be excluded from trade because the commercial value is so great that it ensures that the product can no longer be economically traded. A product’s commercial value can be defined in financial terms in the sense that we are looking for an extrinsic indication of the price the product is worth. This might be defined in terms of the product’s worth in exchange for other products in the form of barter for example, but usually it will be cost defined in money. Commercial value can be defined as the price obtained for the product on a freely competitive market. Market value in this sense then follows the idea of transferability closely: if a product can be isolated sufficiently to allow exclusive use by another, it has the requisite market value. Products falling outside this idea may be pure public goods which have a cost in financial terms – for example, national defence policies must be paid for by the government of a particular country – but they do not have a specific market value which enables them to be ‘traded’ in the sense of tradable market value.47 If a product contains public elements, these elements might change the nature of the ‘trade’ transaction in other ways. Specifically, they might impact on the market value. For example, the elements might serve to increase the price of the product because the manufacturing process is more expensive. This difference in price is sufficient to mark the product out as different to the one which does not contain the public element. Following the earlier example, the increase in costs of chemicals manufactured in a ‘clean air’ environment will mean that such chemicals will be more expensive to the ultimate consumer than those which are manufactured in a non-environmentally friendly way. The price is merely a reflection of the fact that the two products are in fact different. In this first case, the public element only leads to a difference in price and does not exclude the product from the ‘trade’ transaction completely. However, the ‘public’ element might serve to increase the price beyond that of its usual market value. In such a case, the value would far exceed the true costs of the product and as such make it commercially outside the trade transaction. For example, products which have a cultural element like audiovisual products, including films, have a value attributable to their contribution to preservation of the state’s culture, rather than a value which the market would bear.48 47 We might describe these as goods which display a combination of both public and private aspects: see OECD (2001), Multifunctionality: Towards an Analytical Framework, above n 35, 77. 48 Communication from the Commission to the Council and the European

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If trade is understood in terms of the thing that is transferred from one party to another, then issues relating to the characteristics of that product, its physical nature, its ability to be transferred from one party to another, its connectivity to abstract notions of labour rights and environmental protection and its commercial value all form part of the determination of what trade is. Multiple views of transferability and commercial value are possible so that multiple understandings of what trade is result. This multiplicity is also evident when trade is seen as a function or mechanism to achieve goals. It is important to note that although these notions of trade as trade in products and as function/mechanism are presented separately, this is for the sake of expediency and in fact our understanding of what trade is moves freely between them, drawing on both trade as products and trade as mechanism. Trade as Function/Mechanism Trade in this sense does not focus solely on the transfer of a product possessing a commercial value from one party to another. Instead, it concentrates on the transfer of a product as a means through which other ends are achieved. At the most basic level, trade’s primary function is to generate income for the individual, entity or person from whom the product is transferred. This notion is to some extent inherent in the emphasis on the commercial nature of the transfer: the product is transferred to generate a profit. The connection between trade as product and trade as function in this scenario is very close, but seeing trade as function places the emphasis on the fact that income is generated over and above the actual production costs, not merely that the product is transferred for any form of financial consideration.49 When trade is seen as function, only those products transferred for a profit will be part of ‘trade’. We might therefore also see trade in products synonymous with wealth generation for individuals, corporations or the state as the transfer of the product is not merely for a financial consideration which covers production costs, but also brings in extra money which can be invested by the individual in savings accounts, shares, etc. Such income might be invested by the corporation locally, or it may generate income for the state directly through taxation. An extension to this idea of trade as wealth generation is that trade acts to promote global wealth, because products are freely transferred around the world in return for income for the original producer/manufacturer or supplier. In this Parliament: Towards an International Instrument on Cultural Diversity, COM(2003)520 (27 August 2003) see S/CSS/W/74. See WTO (2001), Communication from Switzerland: GATS 2000: Audiovisual Services, Geneva, Switzerland S/CSS/W/74, para 6 (4 May 2001). 49 These ideas are drawn from what might be described as the ‘ordinary meaning’ of ‘trade’ from the Oxford English Dictionary.

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understanding of trade, the international nature of the transaction enables an individual or corporation in one state to acquire income from outside its territorial boundaries, thereby generating an income stream within the state in which the seller is located. We might then also see trade’s role as the originator of market activity because it is only by selling and buying products that a market is created. So far the analysis of trade as function considered factors which focus primarily on the inherent commercial nature of the trade transaction. However, trade can be viewed as a vehicle to achieve other positive goals including preservation of the environment, development and the promotion of human rights like labour rights for example. Trade might also be used in a negative way in the sense that trade is prohibited from achieving a specific result; for example, the use of trade sanctions to bring an authoritarian regime to an end, to prevent war or preserve a specific way of life. Recognizing a relationship between trade and non-trade values does not of itself lead to a homogeneous view of trade’s function in both cases; there are several options. First, an argument can be made that trade should be undertaken in a broadly ‘ethical’ way in the sense that those who take part in the trade transaction should behave in a virtuous, honourable way, or in such a way that is morally right or decent vis-à-vis all non-trade issues.50 Such ethical trading might still be concerned primarily with the transfer of products for a profit, but the transaction should not achieve a profit in a dishonourable way, or more specifically, the profit should be gained whilst taking into account notions of environment, development and human rights for example. Consideration of these factors should not be seen as highly prescriptive, but instead as a neutral reminder that these other factors occur alongside the trade transaction itself and may ultimately influence the shape of a state’s trade policy. Second, trade can be explicitly linked to non-trade values because the trade transaction must fulfil these values to comply with the rules of the international legal order. This explicit linkage occurs either because rules from other non-trade treaties are thought to impact on the trade transaction, thereby establishing a connective relationship between disparate issues from regimes which become dependent on each other through shared goals,51 or because non-trade objectives are thought to be linked together through the rules in the trade treaty. In this latter case, the question of linkage is decided by the treaty itself, meaning there is no need to seek further justification for an expansive reading of trade. 50 On trade and non-trade concerns see Smith, F (2007), ‘Thinking Outside the Green Box: Non-Trade Concerns in a Post-Doha Environment’, 9(2) Environmental Law Review 89. 51 Leebron, D (2002) ‘Linkages’, 96 American Journal of International Law 5, 6.

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Trade is not a neutral concept, but is instead capable of sustaining many meanings. Whilst these meanings appear discreet, in fact it is possible for discussants to move between meanings without conscious thought by that individual or the person to whom they are addressing their remarks.52 In addition to an understanding of ‘trade’, any person exploring the nature of international agricultural trade regulation will also ascribe a meaning to ‘agriculture’.

WHAT IS ‘AGRICULTURE’? If the meaning of ‘trade’ presents the possibility of multiple understandings, then so does the meaning of ‘agriculture’. It is possible for an individual to shift around between a number of different but sometimes related meanings, which consequently affect the way the problem of international agricultural trade regulation is seen. ‘Agriculture’ as the Growth of a Product for Food If agriculture is limited to ideas about food then this discussion brings in a number of ideas about the scope and nature of the definition of ‘food’. Madeleine Leininger identified nine uses of the word ‘food’ in her anthropological discussion of the nature of food, starting from the notion that food is sustenance, or ‘fuel’. In this manifestation, food is regarded only as necessary for bodily function and general survival, with different levels of consumption required dependent on the individual’s physical make-up, his activity levels and the general geographical conditions in which he or she is living.53 In contrast to those who see food only in its role as fuel, some commentators/negotiators’ interpretation of what ‘food’ is will be influenced by religious ideas. Religion and food are inextricably linked. Many types of food have special religious significance, for example ‘bread’ in Christianity is linked to ideas of sacrifice, salvation and the ceremony of the Last Supper, which is reenacted in Christian religious ceremonies every Sunday. Types of food in Hinduism are associated with the moral state of the individual and enable her to develop certain bodily or mental states connected with spiritual understanding.

52 Misunderstandings of this nature are in the event more complex when a trade negotiator is discussing issues with many parties: Wittgenstein, L (1953) Philosophical Investigations, London, UK: Blackwell, §1, p. 2e. 53 Leininger, M (1970), ‘Some Cross-Cultural, Universal and Non-Universal Functions, Beliefs and Practices of Food’, in Dupont, J (ed), Dimensions of Nutrition, Colorado: Colorado Associated University Press, 154.

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Different foods are also associated with the character of the individual: ‘Men who are pure like food which is pure; which gives health, mental power, strength and long life … Men of darkness eat food which is stale and tasteless, which is rotten and left over night, impure, unfit for holy offerings.’54 Such ideas raise the status of certain food types, so these become more important in an individual’s diet than others. Religious ideas about food also restrict the food groups that individuals who follow the doctrines are permitted to eat. Judaism and Islam both prohibit the consumption of certain food types. The Jewish religious writings in the Books of Leviticus and Deuteronomy specify that ‘Trefah’ foods are unfit for consumption, including certain types of bird, shellfish and other ‘fish without fins or scales’, and animals that do not chew the cud and pigs. All other foods are ‘kosher’ and therefore fit for consumption. In a similar way, Islam prohibits ‘carrion, blood and the flesh of swine’ and other foods expressly listed in the Islamic holy writings, the Koran. The critical issue here is that those heavily influenced by religious thinking will define ‘food’ in terms of foods that can be eaten according to religious understandings; foods outside this list will not be regarded as ‘food’ and as such might not be contained within that idea of what ‘agriculture’ is. In addition, ‘food’ can be understood in terms of its function as medicine and those who see ‘food’ as a critical constituent of the social and cultural framework of the society. In terms of medicine, the Chinese use of food in this capacity stretches back over many centuries: some foods are associated with certain human temperaments so that certain illness might be ascribed to a deficiency in certain foods. In addition, the consumption of certain foods, particularly Chinese tea, is thought to be very good for overall well-being.55 Also in Chinese Taoist philosophy, profound connections between earth and other elements fundamentally shape an entire world view.56

54 Krishna’s Dialogue On the Soul (1962), London: Penguin (J. Mascaro trans.), 40; see Echols, ME (2001), Food Safety and the WTO: The Interplay of Culture, Science and Technology, The Netherlands: Kluwer, 20. A more contemporary version of the Krishna Dialogue might be ‘You are what you eat!’, Brillat-Savarin, JA (1925), A Physiologie Du Gout (Physiology of Taste), France: Bibliotheque Nationale, 3. 55 Jingfeng (1998), ‘Traditional Chinese Medicine’s Outlook on Health Preservation through Diet and Tea Drinking and Its Importance to Health’, in Episodes in Traditional Chinese Medicine, China: Foreign Language Press, 154. 56 I Ching, The Classic of Changes, the first English translation of the newly discovered second-century BC Mawangdui texts by Edward L. Shaughnessy (1996), New York: Ballantine.

International agricultural trade regulation

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‘Agriculture’ as the Growth of Food Products, but in Specific Ways, and as a Promoter of Broader Goals ‘Agriculture’ can be defined in terms of what consumers will accept as ‘food’. For example, whether they will recognize vegetables grown using genetically modified seeds as ‘food’ in the same way as they would accept non-GMderived vegetables, or where products are grown in specific geographic areas where conditions are regarded as ‘perfect’ to create better-quality food.57 Like ‘trade’, ‘agriculture’ may also be seen in terms of what it is for. This links into the controversial idea of the multifunctionality of agriculture.58 There is no universally accepted definition, but the OECD characterizes multifunctionality as: the existence of multiple commodity and non-commodity outputs that are jointly produced by agriculture; and the fact that some of the non-commodity outputs exhibit characteristics of externalities or public goods, with the result that markets do not function correctly.59

On this definition, it is axiomatic that agricultural production generates food, but concurrently it directly affects the shape of the landscape and the environment more generally through the use of pesticides and crop production methods; in addition, increased production potentially brings income to rural communities and stops population shift to the cities. The idea is that agricultural production has a direct link to other non-trade issues including preservation of the environment, rural communities and agriculture as a ‘right to food’ in a human rights context.60 These ideas can be tied to specific products, but need not necessarily be so.

57 The French relationship with food is well documented: Broude, T (2005), ‘Taking “Trade and Culture” Seriously: Geographical Indications and Cultural Protection in WTO’, 26 U.Pa.J.Int’l.Econ.L. 623. 58 Grossman, MR, ‘Multifunctionality and Non-Trade Concerns’ in Cardwell et al. (eds), above n 14, 85; Peterson, J.M. et al. ‘Multifunctionality and Optimal Environmental Policies for Agriculture in an Open Economy’, in Agriculture and International Trade: Law, Policy and the WTO, ibid., 458, who argue that an alternative view may be taken of agriculture’s multifunctional character. 59 OECD (2001), Multifunctionality: Towards An Analytical Framework, above n 35, 7. 60 WTO (2000), Note on Non-Trade Concerns: Submission by Barbados, Burundi, Cyprus, Czech Republic, Estonia, the European Communities, Fiji, Iceland, Israel, Japan, Korea, Latvia, Liechtenstein, Malta, Mauritius, Mongolia, Norway, Poland, Romania, Saint Lucia, Slovak Republic, Slovenia, Switzerland & Trinidad and Tobago, G/AG/NG/W/36, Geneva, Switzerland, 22 September 2000.

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Irrespective of how agriculture is defined, it is clear that there are multiple ways in which it can be understood, many of which feed into profound cultural values of diverse societies. How trade and agriculture are combined as international agricultural trade will itself be a complex mix of notions of transfer of products for value, trade as a mechanism for specific goals, and agriculture as a crucial part of a state’s society. Given the diverse ways in which these understandings can be combined, the possible ways in which international agricultural trade can be defined are considerable.

CONCLUSIONS It is clear from the preceding discussion that there are many ways in which ‘trade’ and ‘agriculture’ can be understood; and many ways in which ‘trade’ and ‘agriculture’ can then be combined to form an idea of ‘international agricultural trade’. ‘International agricultural trade’ is not a fixed or static concept therefore, but instead is a reflection of the need to combine multiple understandings in such a way as to give the concept coherence: in the sense of showing how each element fulfils the same defined goals, and/or how they are based on the same fundamental principles.61 Such combination is not based on scientifically objective principles, but is instead shaped by our own cultural values and understandings of what international agricultural trade is and how the rules should be construed to fulfil those goals. The multiple ways in which the disparate elements of international agricultural trade can be combined means that the problem underlying international agricultural trade regulation can be explained in many ways, each of which reflects a particular opinion of ‘trade’, ‘agriculture’ and ‘international agricultural trade’. It also means that each way in which the problem is explained is correct. Explaining the problem in one way therefore is not the correct way, but is instead one option of many. Difficulties arise because whilst this single method is understood to be correct, strain is placed on the remaining elements of the problem: disagreement and conflict are inevitable. This book will explore how this occurs in each element of international agricultural trade regulation. In Chapter 2, the discussion explores how we decide what the problem of international agricultural trade regulation is.

61

Simmonds, N, above n 26, 258.

2. Current perceptions of the problem INTRODUCTION This chapter explores how commentators perceive the problem of international agricultural trade regulation. It will emerge from the discussion that the problem as represented in the existing literature is presented in a linear way which causes each person to see the problem in essentially the same way. This linearity consists in the assumption that one must begin with an interpretation of the rules, and then proceeds to criticize the rules as good or bad depending on their distinctive agenda. It will be argued that this model of understanding fails to comprehend the problem as dynamic and shifting, rather than as homogeneous and static. The difference might be explained as one between a problem where the disagreement concerns the correct solution of a problem whose structure and substance is universally agreed, and one where not only the solutions but also the nature of the problem itself are capable of generating endless variant interpretations. Moreover, just as the problem is constantly in motion, also the starting point from which each person addresses the problem is also in a perpetual state of flux. This is because any discussion of a problem vis-à-vis other disputants depends upon the identification of common ground, as a beginning place from which to argue. But where a problem is characterized by the presence of multiple disputants this common ground is not static across the numerous instances of argument that must take place. Rather, each instance of argument will have an influence over the conceptual starting point taken. This chapter begins with an overview of current ways of looking at the problem, and will then go on to introduce the idea of motion in the problem and the individual’s insight into it.

CURRENT PERCEPTIONS OF THE PROBLEM OF INTERNATIONAL AGRICULTURAL TRADE REGULATION The agriculture sector only accounts for a small percentage of the developed world’s GDP (approximately 1.8 per cent), but successfully regulating 25

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international agricultural trade is difficult.1 Numerous attempts have been made at various points in history, including a rather half-hearted system of rules in the General Agreement on Tariffs and Trade (GATT).2 This system was significantly supplemented by a comprehensive Agreement on Agriculture when the GATT was subsumed into the larger international trade treaty structure, the World Trade Organization (WTO) in 1995.3 The Agreement on Agriculture’s rules restrict the measures a WTO member can use to support their agriculture sector. Measures are divided into three types: first, those which restrict market access to imported products, for example, quotas and variable import levies;4 second, measures which offer financial incentives to farmers to produce specific products, or produce in specific ways, for example domestic support measures – commonly, the subsidy; and finally, those measures which enable agricultural producers to favourably export their products (measures contingent on export performance, usually export subsidies, but these could take other forms, including state-trading enterprises).5 Through a highly complex and technically difficult series of rules, the level of support for each of these measures is quantified and a financial limit set; members are then required to reduce the level of support in each of these

1

Anderson, K, and Martin, M (2005), ‘Agricultural Trade Reform and the Doha Development Agenda’, in Anderson, K, and Martin, M (eds), Agricultural Trade Reform and the Doha Development Agenda, Washington DC: World Bank, Basingstoke, UK: Palgrave, 1, 1 also http://siteresources.worldbank.org/ INTTRADERESEARCH/Resources/AgTradeBook.pdf. 2 Difficulties in international agricultural trade were highlighted as early as the 1950s in the Harberler Report (1958), Trends and Issues in International Trade: A Report by a Panel of Experts, Geneva, Switzerland: GATT. Of particular note is the US agricultural waiver: GATT, Waiver Granted to the United States in Connection with Import Restrictions imposed under Section 22 Agricultural Adjustment Act (of 1933) as amended, Geneva, Switzerland: BISD 3S/32 and subsequent GATT panel reports on it, for example GATT, Report of the Working Party on United States Import Restrictions on Agricultural Products 25th Report, Geneva, Switzerland: BISD 30S/221. There is a volume of literature on GATT and agriculture, but see Hathaway, DA (1987), Agriculture and the GATT: Rewriting the Rules, Policy Issues in International Economics No. 20, Washington DC: Institute for International Economics. 3 This book does not provide a detailed exposition on what the rules on international agricultural trade are. For a detailed discussion see Desta, MG (2002), The Law of International Trade in Agricultural Products: from GATT 1947 to the WTO Agreement on Agriculture, The Netherlands: Kluwer; also McMahon, JA (2007), The WTO Agreement on Agriculture: A Commentary, Oxford, UK: Oxford University Press. 4 Part III of the Agreement on Agriculture. 5 Part IV (Domestic support) and Part V (Export subsidies) of the Agreement on Agriculture.

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pillars over the implementation period.6 Variable implementation commitments are also put in place for developing countries, but least-developed nations do not have to make any reduction commitments.7 The degree to which these measures can be deemed to be successful is a matter of debate.8 Despite great hopes of significant erosion in barriers to international agricultural trade, successful regulation remains elusive. Members are currently attempting to restart the negotiations after the collapse yet again of the talks in July 2008. In fact, failure to reach agreement on agriculture has led to the collapse of the multilateral trade talks on all issues during the Uruguay Round of talks which established the WTO; during the third Ministerial Meeting in Seattle in 1999, where there were actually riots in the streets; again in Cancun in 2003, where a farmer committed suicide during protests; and also at the fifth Ministerial Meeting in Hong Kong in 2005. Resolving the problem of international agricultural trade is only possible if the problem is identified. If negotiators and academic commentators were asked what the problem was, they would identify a series of problems. These can be separated out as follows. Reduction in Trade Barriers: Fiscal Cuts Under the existing rules, members are only allowed to use specified trade measures within strictly defined limits measured both in terms of the measure’s inherent characteristics and also its usage.9 The most important limitations for many members are the numerical and monetary ceilings placed on their ability to use these measures in their agricultural policies, i.e. tariffs and domestic and export subsidies. These disagreements concern, amongst other things, what these fiscal ceilings should be now that the agreement has been in place for ten years? Should they be cut? If they should be cut, by how much should this be? Also, over

6 The first ten years of the Agreement: Article 1(f) Agreement on Agriculture. For a useful table of the reduction commitments see Burfisher, ME (2001), The Road Ahead: Agricultural Policy Reform in the WTO – Summary Report, Washington DC: Market and Trade Economics Division, Economic Research Service, United States Department of Agriculture, Agricultural Economic Report No. 797, 2. 7 Article 15 Agreement on Agriculture. Measure-specific commitments are also listed for developing countries in each relevant part of the Agreement on Agriculture. 8 Anderson, K, and Martin, W (eds), Agricultural Trade Reform and the Doha Development Agenda, above n 1, also Hertel, TW, et al. (2006), Distributional Effects on Rich and Poor Countries, World Bank Policy Research Working Paper 4060, Washington DC: World Bank. 9 For a detailed commentary on all the WTO commitments on all these measures see Desta, above n 3.

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what period should this cut be undertaken: gradually, either with an overall target to be achieved over a specified time limit with no restrictions beyond that, or with strictly defined cuts in each year beyond that specified time limit? Alternatively, should reductions in the fiscal ceiling be achieved immediately? Should there be differentiation between countries at different stages of development, or between countries with different internal political regimes, for example China? Inherent in this first disagreement is also the formula by which cuts should be made. The counter-argument to this idea of cutting fiscal limits is to permit retention of existing fiscal limits, either in all instances or only in some instances.10 Special and Differential Treatment The second problem which might be identified, both by members themselves and also by commentators, addresses the question of how to give effect to the ‘special and differential treatment’ obligation built in to the Agreement on Agriculture and the WTO rules generally. In other words, how, if at all, should the rules be modified to accommodate those countries at different stages of development? The existing rules recognize three groups into which members of the WTO fall: the developed country, the developing country and the leastdeveloped country.11 Different rules apply to each of these groups. The disagreement is should ‘one size fit all’ in terms of the rules that apply? In other words, do we need special rules for such countries, or can we just allow them variable implementation commitments? Alternatively should there be smaller reductions in the restrictive trade measures they use or should a longer time be allowed to reduce the measures?12 Another part to this disagreement, too, is whether the existing categorization of these countries is adequate. What about the so-called ‘newly industrialized countries’, like parts of Eastern Europe? Island states also have their own specific problems. Finally, is it possible to decide when a country is no longer ‘developing’? Main examples here include powerful developing 10 There are numerous documents submitted by members on the various reduction formulas that have been proposed; for the current state of play see WTO (2008), Revised Draft Modalities for Agriculture, Geneva, Switzerland: TN/AG/W/4, Rev.3, 10 July 2008. For members’ documentation see http://www.wto.org/english/tratop_e/ agric_e/negoti_e.htm. 11 Countries self-designate on accession: http://www.wto.org/english/tratop_e/ devel_e/d1who_e.htm. 12 FAO (2003), WTO Agreement on Agriculture: The Implementation Experience: Developing Country Case Studies, Rome, Italy: FAO; Clapp, J (2006), Developing Countries and the WTO and the Agriculture Negotiations, Working Paper No. 6, Ontario, Canada: Centre for International Government Innovation.

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nations like India, Brazil and China.13 Finally, the place that ‘food aid’ plays here, both in terms of agricultural policies and its relationship to anti-dumping for example,14 must be considered. Trade and Non-Trade Concerns A very contentious disagreement is how best to accommodate the multifaceted nature of members’ domestic agricultural policies within an international trade agreement. Members may combine environmental, rural redevelopment and general food security policies with their general agricultural policies with differential emphasis on each/all of these objectives. The most striking example would be the way in which a regulatory structure should accommodate a member who wishes to give the farmer a financial payment, i.e. subsidy, to produce maize using only organic techniques, thereby causing minimal harm to the environment.15 Currently, members are permitted to use trade measures to achieve nontrade objectives in their domestic agricultural policies. However, they can only do so if the measures they use have ‘no, or at most minimal, trade-distorting effects or effects on production’.16 In other words, currently, the aim of the Agreement on Agriculture is free trade in international agricultural products, and so any non-trade objectives must be achieved within the constraints of that ethos. This is highly controversial however,17 and the row is multifaceted. 13 On the growth of the Indian and Chinese economies see Irwin, D (2005), Free Trade for All, Princeton, NJ: Princeton University Press, 166. Brink, L (2003), ‘New Members of the WTO: Their Commitments in Agriculture and Provisions Proposed in the Doha Negotiations’, paper presented at ‘Agriculture Policy Reform: Where Are We Going?’, Capri, Italy, 23–26 June 2003, International Agriculture Research Consortium Annual Symposium: http://www.ecostat.unical.it/2003agtradeconf/ Default.htm. 14 Maxwell, DG, and Barrett, CB (2005), Food Aid After 50 years, UK: Routledge; OECD (2006), The Development Effectiveness of Food Aid: Does Tying Matter? Paris: OECD. 15 Smith, F (2007), ‘Thinking Outside the Green Box: Non-Trade Concerns in a Post-Doha Environment’, 9(2) Environmental Law Review 89. 16 Annex 2:1 Agreement on Agriculture. 17 For a comprehensive and incisive discussion of the ‘trade and . . .’ debate see Dunoff, JD (1998), ‘Rethinking International Trade’, 19 University of Pennsylvania Journal of International Economic Law 347; Leebron, D (2002), ‘Linkages’, 96 American Journal of International Law 5; Trachtman, J (2002), ‘Institutional Linkage: Transcending “Trade and …” ’, 96 American Journal of International Law 77 and other discussions in Alvarez, J (2002) ‘Foreword: Symposium: The Boundaries of the WTO’, 96(2) American Journal of International Law 1–159; ‘Linkage as a Phenomenon: Linking the Trade Linkage Debate’, University of Pennsylvania Journal of International Economic Law (1998) and ‘Institutional Conundrums of an Expanded Trade Regime’, 7 Widener Law Symposium Journal (2001).

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Some members argue that they should be permitted to employ the least trade restrictive measure, but only in the light of the non-trade concern, and therefore the free trade obligation is not absolute.18 Other members violently oppose this and say that free trade achieves welfare effects in any event, and thus trade restrictive measures are unnecessary.19 Some argue measures aimed at non-trade objectives are not trade measures at all and as such should be regulated by other agreements, for example the Cartagena Biosafety Protocol and the Convention on Biodiversity. Concerns have also been raised about the export of trade ideas into other international agreements. For example, if human rights generally are ‘added’ as a non-trade concern because a state wishes to introduce policies aimed at support for a general ‘right to food’, then what priority should be accorded to them, in particular, what should the relationship be between human rights ideas and the free trade goal?20 More complex questions then also arise: if human rights are included in the Agreement on Agriculture, should they then be extended into other areas of the WTO rules? If they are, what is the relationship between human rights obligations in other treaties and the WTO? What priority should interpretations from these treaties be accorded, if any? How might/should WTO regulation be ‘transformed’ by the human rights discourse and what implications will such ‘hijacking’ have for the interpretation of human rights in other human rights treaties?21 Or is the underlying free trade ethos completely inappropriate and actually the WTO is based on a different theoretical basis, on, some would argue, ideas like embedded liberalism, or even ‘global welfare’ or vaguer notions including ideas like ‘fairness’.22 18 Most notably the European Union and Japan hold this view, but see also WTO (2000), Note on Non-Trade Concerns, Geneva, Switzerland: G/AG/NG/W/36, 22 September 2000. 19 The Cairns’ Group supports this view. The Cairns’ Group is a group of 19 agricultural exporting countries: see Communiqué to the 31st Cairns’ Group Ministerial Meeting in Lahore, Pakistan, 16–18 April 2007. 20 Petersmann argues that the ‘right to trade’ might even be viewed as a form of human rights: Petersmann, EU (2005), ‘Human Rights and International Trade Law: Defining and Connecting the Two Fields’, in Cottier, T, et al. (eds), Human Rights and International Trade, Oxford, UK: Oxford University Press 29, 36. 21 For a very interesting critique of Petersmann’s approach see Alston, P (2002), ‘Resisting the Acquisition of Human Rights by Trade Law: A Reply to Petersmann’, 13 European Journal of International Law 815; also Peers, S, ‘Fundamental Rights and Political Whims?’, in De Bùrca, G, and Scott, J (eds) (2002), The European Union and the WTO: Legal and Constitutional Issues, Oxford, UK: Hart; also Cass, DZ (2005), The Constitutionalization of the WTO, Cambridge, UK: Cambridge University Press. 22 Ruggie, J (1982), ‘International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order’, 36 International Organization 379; Stiglitz, JE, and Charlton, A (2005), Fair Trade for All: How Trade Can Promote Development, Oxford, UK: Oxford University Press.

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This is the way that the problem is perceived now, but these disagreements are actually current manifestations of problems that have existed throughout the history of international trade regulation.

MOVING BEYOND TRADITIONAL CONCEPTIONS OF THE PROBLEM ‘The only way to swallow an elephant is to do it slice by slice.’23 In some respects, Crawford Falconer’s allusion to an ‘elephant’ suggests that the problem of ‘agriculture’ and its parameters are self-evident, based as they are on a shared understanding of the problem as a whole and the readily identifiable ‘slices’ for which solutions need to be found. On this view, it is these solutions which should always form the starting point for discussion as it is they, and not the problem, which are controversial. However, what is generally not appreciated is that the way the problem is conceptualized is not neutral, but depends on deeper ideas of how the individual understands the subject as a whole. In other words, when we articulate our ‘solution’ to the problem of international agricultural trade, our response is not a causal reaction based on a single horizontal connection between the problem and the solution.24 Instead, our response is shaped by a complex interplay between our understanding and knowledge of the overall subject (i.e. international agricultural trade) in conjunction with our idea of the way in which the subject’s disparate strands should be coupled to create coherence: that is, the way the strands contribute to particular policy goals and how they fit, or fight, with existing principles. Each individual perceives the terms ‘understanding’, ‘knowledge’ and ‘coherence’ in their own way. As a consequence, even slight changes in the nuances governing each element for the individual mean each person sees the ‘subject’ differently, which, in turn, inevitably impacts on their notion of what the ‘problem’ is and what the ‘solution’ must be. The multiple ways in which these three elements can combine means that a single homogeneous notion of ‘the problem of international agricultural trade’ is unlikely. Whilst we might follow pathways of thought in each individual that suggest aspects of commonality at the point where those thoughts cross in fact, these crossingpoints are an illusion and instead merely reflect thoughts cutting across one 23 Crawford Falconer, Chairman of the WTO Committee on Agriculture, special session. Bridges Weekly Trade News Digest (2006) 10(5), 15 February 2006; http:// www.ictsd.org/weekly/06-02-15/story1.htm. 24 Kymlicka, W (2001), Contemporary Political Philosophy: An Introduction, 2nd edn, Oxford, UK: Oxford University Press, 3.

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another travelling towards different final conclusions, rather than points where we can truly say ‘agreement’ on the problem’s scope has been established.25 These insights can be applied to the ‘problem’ of ‘international agricultural trade’. The starting point is the way the individual understands the subject. How Do We Understand a ‘Subject’? The role of constructional rationalism Hayek argued, in the context of the evaluation of effective constitutional institutions, that it is tempting to regard as successful only those institutions which are the consequence of deliberate human design.26 This view, he maintained, is based on our tendency to discern patterns in otherwise random activity and then use whatever pattern we have identified to interpret and understand existing behaviour. He labelled this tendency ‘constructional rationalism’. In essence, the individual considering any past behaviour argues that they are creating a ‘true’ account based on historic ‘fact’, whereas instead what they are actually engaged in is ascribing all cultural and moral elements to deliberate human invention and design, rather than to spontaneity based on present necessity. Several observations can be made if an institution’s effectiveness is evaluated on the basis of a constructional rationalism approach. An obvious point is that attributing all institutional design to human intervention neglects the anthropological dimension, particularly the role of culture in the evolution of the institution. In other words, we assume that at its creation, every aspect of the institution was deliberately crafted to fulfil a specific function which we ‘foresee’ will occur; whereas in fact, the creators might only be unconsciously responding to an existing event based on ‘rules’ or events that could not even be ‘known’ in the Cartesian sense.27 Constructional rationalism is often then used to support an interpretation which imbues the institution with current clearly defined objectives based on the pattern ‘found’ by the individual which the institution may or may not possess: for example, the institution is stated to be ‘designed to eliminate protectionism in manufactured products’ because the 25 Wittgenstein, L (1953), Philosophical Investigations, London, UK: Blackwell, §20. 26 Hayek, FA (1973), Law, Legislation and Liberty: Volume I Rules and Order, Chicago, IL: University of Chicago Press, ‘Reason and Evolution’, 8, 8. 27 René Descartes sought to establish the truth of propositions to an extent which allowed him to reject as untrue anything which could not be derived from explicit principles that were unambiguous and apparent, and so beyond any doubt. Any idea or rule which could not be substantiated in this way was invalid: Descartes, R, Laurence J Lafleur (trans) (1960), Discourse on the Method of Rightly Conducting the Reason and Searching for Truth in the Sciences, New York, NY: Liberal Arts Press, Part II.

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individual has ‘understood’ the institution’s history to reveal that purpose. This attribution of objectives subsequently may then be used as a way to predict, or interpret future behaviour of the organization in the light of the revealed purpose. The dangers for Hayek of this approach are twofold: first, the pattern identified ceases to appear to be an opinion of the development/objectives of the institution and instead takes on the appearance of a fact. This occurs because the individual puts forward their ideas as though they are facts which were previously ‘hidden’ by the mêleé of other irrelevant information, and/or because other people also approve the pattern revealed. Despite this agreement, the original pattern still remains one arising from the individual’s imagination and is not ‘fact’ in the Cartesian sense. Secondly, fixing current objectives on the basis of a pattern of previous behaviour is not a viable way of predicting actual future behaviour. This is because the institution will adapt and change in numerous unpredictable ways based on rules or norms outside the understanding or knowledge of the individual. In essence then, Hayek argues that defining an institution’s objectives on the basis of its history and determining its future goals from these objectives are not ‘truth’ which can be ‘discovered’ by any individual, but rather the individual’s opinion based on patterns which they discern from random typically unconnected behaviour. ‘Understanding’ international agricultural trade Hayek confined his observations to the development of institutions, with particular emphasis on the constitutional implications of a constructionally rationalist approach for such institutions’ development. However, we can extrapolate Hayek’s views to reach a deeper appreciation of how individuals ‘understand’ a ‘subject’ like international agricultural trade. Understanding certain human activity as a ‘subject’ is a constructive process. The individual considers a range of human activity and sees connections in a way which allows them to determine a clearly discernible pattern in otherwise random occurrences. This primitive anthropological need to see regularity in otherwise random behaviour allows the individual to make sense of the world around her. It is tempting to think that everyone who witnesses this range of behaviour will see the same pattern emerging. This is particularly the case where a number of independent observers have arrived at the same conclusion of what the pattern should be. As a consequence, the pattern of behaviour can start to resemble a ‘fact’ rather than merely a number of people agreeing that a certain pattern of behaviour exists. The critical point is that irrespective of the number of people who agree that a certain pattern emerges, this does not mean that the pattern will always remain the same, nor that we can make any predictions as to how future observers may perceive the pattern purely based on past observations.

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Activity which ‘fits’ the pattern becomes the ‘subject’: this ‘subject’ can then be used as the reference point from which other ideas or conclusions are drawn by the individual about similar activity either in the future or in the past. The connections from which the pattern is formed might flow fully from the individual’s imagination, or they might be suggested by external influences in some way. In the first case where the connections flow fully from the individual’s imagination, she might, for instance, focus on physical objects and look for a common characteristic; any product sharing this characteristic ‘connects’ with other products similarly constituted and forms part of the ‘subject’. For example, the individual focuses on physical products that are within the ‘subject’, ‘fruit’. For the individual in this example, the connective characteristic which makes the physical object ‘fruit’ is if the object constitutes the ‘seed and its covering from a tree or plant which is suitable for human consumption’. Physical objects which fulfil these characteristics, like apples and oranges, then fall within the subject, ‘fruit’. Although the allocation of a product into the ‘fruit’ category might seem self-evident, selecting a different connective characteristic produces a more broadly conceived ‘subject’. If the connective element for the example, ‘fruit’, is ‘vegetable products which are suitable for human consumption’ because the individual perceives ‘fruit’ in terms of ‘fruits of the earth’, then products like lettuce, watercress and spinach may also fall within ‘fruit’, as well as those, like oranges or apples, already included by the narrower idea of the edible seed and covering from the plant or tree.28 In the second case, the individual’s selection may be guided by apparently objective factors. Here, the connecting factor is not purely a product of the individual’s own imagination, but is instead one which appears to be an externally verifiable ‘fact’ and is presented as such. Such connective factors might be found in external documents like treaties including the Marrakesh Agreement Establishing the World Trade Organization (the Marrakesh Agreement) and its respective annexes incorporating the WTO rules on trade in goods, services and dispute settlement. For example, Desta’s comprehensive and insightful book on international agricultural trade law states it will provide an in-depth analysis of the rules and principles of the multilateral trading system as they relate to trade in agricultural products … The degree to which agricultural trade has been excluded from the operation of law governing international

28 This exercise indicates that without further guidance regarding the context in which the ‘subject’ is to be constructed, the individual is free to see ‘fruit’ in the narrow sense of edible products commonly eaten as a dessert, or in the broader sense as ‘fruit of the earth’. See Wittgenstein, Philosophical Investigations, above n 25, §5.

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trade in general, the real or apparent rationale behind it, and the reaction of the system in the course of its … existence and evolution …29

For Desta, the boundaries for his discussion of ‘the law of international agricultural trade’ are therefore self-evident: they are the rules and principles which relate to trade in agricultural products. Whilst he explicitly draws attention to the importance of the policy/political behaviour underlying the various rules, it is the rules themselves which provide the pivot around which his discussion moves. Specifically, it is the WTO Agreement on Agriculture’s rules which form the basis of his discussion. Following the previous analysis, the ‘subject’ for Desta is ‘the law of international agricultural trade’ and the connective factors which bring human activity within that subject are those rules stipulated by the Agreement on Agriculture. The Agreement on Agriculture stipulates two connective factors which draw human activity within the subject ‘international agricultural trade’. First, it focuses on the physical product to which the rules apply. Annex 1 of the Agreement states that physical products falling within the rules are those specified mainly in Chapters 1–24 of the International Convention on the Harmonized Commodity Description and Coding System or HS Code. This is a numerical classification system which allocates products into specific codes; once a product fits within an HS code it is classified as goods, and, if it falls within one of the listed codes in Annex 1, it is an ‘agricultural product’ for the purposes of the WTO agriculture scheme.30 This first type of agricultural product identified by the Agreement on Agriculture serves as an outer boundary for those products which are deemed to fall within the rules: that is, only those products displaying these connective characteristics form part of the subject ‘the law of international agricultural trade’, thereby allowing exclusion of any remaining products. Additional product types are also specified by the rules, including the ‘basic agricultural

29 30

Desta, above n 3, 10. There are an additional 13 coding categories which may bring a product within the Agreement on Agriculture: Annex 1: (ii). The Convention is currently in its third revision from 2007: World Customs Organization (2007), The Harmonized Commodity Description and Coding Service: The Language of International Trade, Brussels, Belgium: World Customs Organization, http://www.wcoomd.org/ie/En/en. html. For a general description of the HS Code see Smith, F, and Woods, LW (2005/6), ‘A Distinction Without a Difference: Exploring the Boundary between Goods and Services in the World Trade Organization and the European Union’, 12(1) Columbia Journal of European Law 1, 14; Spain–Tariff Treatment on Unroasted Coffee Report of the Panel, L/5135, 11 June 1981, GATT BISD 28S/102, 111; Japan–Restrictions on Certain Agricultural Products, Report of the Panel, L/6253, 22 March 1988, BISD 36S/331, para 5.1.3.2.

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product’, ‘the scheduled product’ and the ‘non/un-scheduled product’.31 Unlike the Annex 1 products, which act as a catch-all category for the rules’ ultimate scope, the ‘basic agricultural product’ and ‘scheduled and unscheduled products’ act as internal boundaries within the agreement to narrow down classes of products for specific purposes: that is, they allow these product subclasses to be covered by different disciplines within the rules. For Desta’s thesis, however, these sub-classes do not serve to restrict the spread of his analysis, but instead form a necessary internal part of his discussion of the difficulties of his ‘subject’, ‘the law of international agricultural trade’. Whereas the first connective factor identified the product which falls within the subject ‘international agricultural trade’, the second connective factor which narrows down the range of relevant human activity focuses on the measures used in relation to those specified products. The Agreement on Agriculture covers three types of measure used by WTO members to manipulate markets in the trade of agricultural products. First, it covers measures which impact on market access, including tariffs, tariff quotas and special safeguard measures; second, domestic support measures, expressly domestic subsidies, and finally, payments contingent on export performance, or export subsidies as they are more commonly known.32 It is only when these measures are used on the agricultural products defined in Annex 1 Agreement on Agriculture that the subject ‘the law of international agricultural trade’ is truly known. For Desta therefore, the ‘subject’ around which he bases his discussion 31 Article 1(b) and Article 3 respectively of the Agreement on Agriculture. ‘Primary products’ are also mentioned in Article XVI:3 GATT, specifically the General Interpretative Note Ad 2 Article XVI, Section B. This relates to the ‘knowledge’ of the provisions and is discussed below. 32 The history and development of the Agreement on Agriculture are outside the scope of this chapter. See generally, Gardner, RE (1980), Sterling Dollar Diplomacy in Current Perspective, New York, NY: Columbia University Press; Jackson, JH (1969), World Trade and the Law of GATT, Indianapolis, IN: Bobbs Merrill; Taylor, HC and Taylor, AD (1943), World Trade in Agricultural Products, Basingstoke, UK: Macmillan, for a detailed historical perspective on the historic problems of international agricultural trade; Ingersent, KA, et al. (eds) (1998), The Reform of the Common Agricultural Policy, Basingstoke, UK: Macmillan, which develops a range of themes surrounding the European Union’s initial reform of the Common Agricultural Policy (CAP) and the impact of other regional policies including the United States’ farm programme and the WTO regime; on the history and scope of the Uruguay Round see Swinbank, A, and Tanner, C (1996), Farm Policy and Trade Conflict; The Uruguay Round and CAP Reform, Ann Arbor, MI: University of Michigan Press, and Stewart, TP (ed) (1993), The GATT Uruguay Round: A Negotiating History, The Netherlands: Kluwer. On recent WTO rules see Anderson and Martin (eds), above ibid., and Anderson, K, and Josling, T (eds) (2005), The WTO and Agriculture: Critical Perspectives on the Global Trading System, Cheltenham, UK and Northampton, MA: Edward Elgar.

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is confined to the range of human activity that occupies the conjunction of the Annex 1 products on the one side and the Agriculture Agreement’s measures on the other. This should be seen as a range of activity which fulfils this criteria and not merely a single point of conjunction. In one sense, Desta’s choice of material might be viewed as obvious, particularly as the Agreement on Agriculture specifically indicates in its Preamble that the Agreement’s aim is to introduce ‘rules and disciplines’ to facilitate the creation of a ‘fair and market-oriented agricultural trading system’.33 The idea that Desta is expressing an opinion on the notion of the ‘law of international agricultural trade’ seems incongruous in the light of the specific written text which illustrates both Desta’s notions of ‘law’ and ‘trade in agricultural products’. This interpretation supports the idea that Desta’s choice of subject matter is ‘fact’ not opinion, thus apparently undermining Hayek’s notions that collecting any human activity into a discernible pattern is the product of human design and not the revelation of fact we might like to see. It is premature, however, to dismiss the idea that selection is driven by opinion not fact. Desta discusses the impact of the Agreement on Subsidies and Countervailing Measures (Subsidies Agreement) on the Agreement on Agriculture, arguing that to fully appreciate the substance of this newly developed regime of agricultural export subsidies and to put it in its appropriate context, an assessment of the overall discipline of export subsidies … in the Agreement on Subsidies and Countervailing Measures appears to be a necessary pre-requisite.34

Whilst this extension of relevant connectors to measures covered by the general Subsidies Agreement seems logical in the light of the linkage made by the Agreement on Agriculture in Article 13 and the general ideas in paragraph 2 of its Preamble, the same argument could be put forward for the inclusion of the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement) specifically referred to in Article 14 Agreement on Agriculture and the Agreement on Technical Barriers to Trade (TBT Agreement) and other Annex 1A Agreements specifically provided for in Article 21 Agreement on Agriculture. Despite explicit references to these other agreements, Desta rejects their inclusion in his discussion. The connecting factors which drive Desta’s delineation of the subject ‘the law of agricultural trade’ are therefore not driven only by the specific wording

33 34

Para 2 Preamble to the Agreement on Agriculture. Desta, above n 3, 152. Such an approach is also shared by a number of authors, e.g. O’Connor, B (2003), ‘A Note on the Need for More Clarity in the World Trade Organisation’s Agreement on Agriculture’, 37(5) JWT 839.

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of the Agreement on Agriculture, but are instead filtered by Desta himself as he selects human activity which displays the connective characteristics based on his overall response to the language in the text.35 Even though Desta bases his selection on the Agreement on Agriculture, ultimately, he only uses its stated coverage as a guide, rather than as a definitive indicator of what ‘the law of agricultural trade’ is: that is, although he bases his selection of material on the Agreement on Agriculture’s rules rather than draw fully on his own imagination, ultimately, it is his own opinion which drives the selection of the connective factors to the ‘subject’. These observations are not presented to denigrate Desta’s excellent and comprehensive book, but rather to provide an illustration to enable us to understand how we are tempted into thinking we are observing ‘fact’ or ‘truth’, when in fact we are observing opinion. It is more difficult to observe opinion in a complex work like Desta’s, but a more straightforward example can be seen in articles on specific aspects of international agricultural trade. For example, Sturgess’s discussion of international agricultural trade liberalization focuses primarily on market access and export subsidies.36 For Sturgess, the ‘subject’ which forms the basis of his article is ‘freeing trade from import restraints and export subsidies’. The connecting element enabling relevant human activity to be captured within this subject is the more abstract notion of free trade in agricultural products, in the sense that this notion is not specifically derived from a written text and from the rules in the Agreement on Agriculture governing tariffs and export subsidies.37 Similar observations can also be made of other subject-specific discussions of international agricultural trade, for example Hertel et al.’s discussion of the impact of agricultural trade rules on developing countries.38 The previous discussion in some respects suggests an obvious point: that when academic commentators or negotiators discuss an issue they are inevitably selective in their choice of material. The choice may be driven by

35 Our response to language is also a complex and constructive process: see Allott, P (1971), ‘Language, Method and the Nature of International Law’, 45 British Yearbook of International Law 79. 36 Sturgess, I (2000), ‘The Liberalisation Process in International Agricultural Trade: Market Access and Export Subsidies’, in Bilal, S, and Pezaros, P (eds), Negotiating the Future of Agricultural Policies: Agricultural Trade and the Millennium WTO Round, The Netherlands: Kluwer, 185. 37 It can be argued that the statement in paragraph 2 of the Preamble to the Agreement on Agriculture indicates that the rules support the notion of free trade. However, this view is not uncontroversial: Smith, ‘Non-Trade Concerns in a Post-Doha Environment: Thinking Outside the Green Box’, above n 15. 38 Hertel TW, et al., ‘Distributional Effects of WTO Agricultural Reforms in Rich and Poor Countries’, above n 8.

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external forces perhaps because the authors have been asked to comment on a specific element such as ‘multifunctionality’ in agricultural trade.39 To expect an exhaustive exposition on every aspect of international agricultural trade, irrespective of any connection with ‘multifunctionality’, would be unrealistic in these circumstances where the confines of the material are made express. Alternatively, the choice of subject might be left entirely to the author or the drafter of the article/negotiating proposal. Even in this case, time limitations and/or word limit constraints again make such a selection of material expedient. However, the crucial point is that the selection of material is a matter of choice based on the individual’s opinion of how random human activity should be brought together. It remains an opinion even if the topic for discussion has been suggested by a third party. This is because the individual remains free, as in Desta’s case, to select behaviour that falls within the topic, as they see that topic. Even where every aspect of the topic is dictated to an individual in the sense that they almost transcribe the dictation of a third party, perhaps in the case of trade negotiations, it is still someone’s opinion of what the subject is which forms the starting point of the discussion. The first element of this process, ‘understanding’, explains that human activity is selected from what appears to be otherwise random activity in a way which allows a ‘subject’ to be formed. The second element focuses on what drives that selection. In other words, why does the individual select some human activity and not other activity? This second element focuses on the knowledge possessed by the individual. Constructing the ‘Subject’: the Role of ‘Knowledge’ On one level, many people ‘know’ about international agricultural trade in the sense that the individual words ‘international’, ‘agricultural’ and ‘trade’ have meaning to them at a very generic level.40 Each word conveys specific information that allows the words to be combined into a phrase; that phrase then has a different, narrower meaning to the individual. From this starting point, every individual can add in or exclude human activity from their ‘understanding’ of what ‘international agricultural trade’ is.

39 Grossman, MR (2003), ‘Multifunctionality and Non-Trade Concerns’, in Cardwell et al. (eds), Agriculture and International Trade: Law, Policy and the WTO, Oxford, UK: CABI, 85; WTO (2000), EC Comprehensive Negotiating Proposal, Geneva, Switzerland: WTO, G/AG/NG/W/34, 22 September 2000; WTO (2000), Note on Non-Trade Concerns, above n 18. 40 Interpretation of language in this way is based on the semantic tradition. See generally Koffa, JA (1991), The Semantic Tradition from Kant to Carnap to the Vienna Station, Cambridge, UK: Cambridge University Press.

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This process is private to each individual and occurs before they orally express any opinion on the chosen subject. In other words, the individual subconsciously takes a view of what ‘international agricultural trade’ is, and only when this has occurred can they express any further opinion on an aspect of it. The individual then uses this knowledge to enable them to decide which human activity falls within the ‘subject’ international agricultural trade. This personal process should be differentiated from the panels’ and Appellate Body’s task where they decide what the ‘ordinary meaning’ of words and phrases within the WTO rules’ text is in accordance with Article 31(1) of the Vienna Convention on the Law of Treaties (the Vienna Convention).41 Article 31(1) states that ‘[A] treaty shall be interpreted in good faith and in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of their object and purpose.’Article 31(1) places the emphasis on two aspects therefore: first, the ‘ordinary meaning’ of the language used and second, the ‘context’ in which the language is used. Both the panels and Appellate Body have interpreted these obligations to require an investigation into both the natural language construction of the wording and the purpose which the rules are designed to fulfil.42 For the panels and Appellate Body therefore, the task is to provide a single homogeneous interpretation of a specific WTO rule where there is disagreement amongst WTO members on the rule’s scope. Although this appears to be a purely objective exercise, in reality, the panels and Appellate Body are drawing on their own personal understandings of the rules; this leads them to select specific tools (for example, the dictionary) and particular parts of the WTO rules as context that enables them to reach a decision.43

41 Vienna Convention on the Law of Treaties, 23 May 1969 1155 UNTS 331 (1969) 8 ILM 679; United States–Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R (29 April 1996), 17. 42 Mexico–Measures Affecting Telecommunications Services, WT/DS204/R (2 April 2004) para 7.16 (panel report) and Appellate Body in United States–Standards for Reformulated and Conventional Gasoline, ibid., 17. 43 The Appellate Body is drawing back from its use of dictionaries, but they still form the starting point of their analysis: United States–Measures Affecting the CrossBorder Supply of Gambling and Betting Services, WT/DS285/AB/R (7 April 2005), para 373. The argument presented above is supported by the strong disagreement among commentators and members regarding the Appellate Body’s understanding of what the ‘ordinary meaning’ is and how they select relevant ‘context’, see Zang, D (2005–6), ‘Textualism in GATT/WTO Jurisprudence: Lessons for the Constitutionalization Debate’, 33 Syracuse Journal of International Law and Commerce 39; Ortino, F (2006), ‘Treaty Interpretation and the Appellate Body Report on US–Gambling – A Critique’, 9(1) Journal of International Economic Law 117; Horn, H, and Weiler, J, ‘European Communities–Trade Description of Sardines: Textualism and its Discontent’, in Horn, H, and Mavroidis, PC (eds) (2005), The WTO Case Law of 2002, Cambridge, UK: Cambridge University Press, 253.

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In contrast, the process described in this discussion of knowledge occurs prior to the expression of an opinion of what the rules mean and so influences the way in which the panel and Appellate Body members picture the rules, and therefore how they go on to interpret the scope of the text.44 Whilst words and sentences can have subconscious meaning for two individuals because they understand the specific words and phrases in a generic sense, the implications of those words and phrases can mean different things to each of them. Whether the individuals appreciate this difference is dependent on whether they each possess additional knowledge. Such additional knowledge affects how they understand the words/phrases’ meaning and shapes how that meaning will be changed. Specifically, the phrase will still have a meaning to both individuals, but one individual may have additional insight that subtly adds an extra layer of meaning, or enhanced knowledge that leads them to a different and/or deeper understanding of the phrase, which in turn colours their selection of human behaviour within the subject. Oakeshott describes this enhanced knowledge as ‘technical knowledge’. 45 Oakeshott argues that every discipline, art, science, or any range of human activity requires knowledge of some kind. Such knowledge focuses first on technique, or more specifically, the ‘technical knowledge’ required so that the individual can perform the actual activity. This technique can be reduced to a collation of specific rules that can then be learnt by participants, thereby enabling them to take part in that activity if it is a physical endeavour, or contribute ideas to it if it is a cerebral challenge. Oakeshott’s analysis is confined to exploring what ‘knowledge’ is in a given context.46 However, his valuable insights on the nature of knowledge shed light on the way an individual reacts to words or phrases if they possess this technical knowledge in addition to their basic knowledge of the language used, and how this feeds in to how they see a subject like ‘international agricultural trade’. For example, three people, A, a brain surgeon, B, an agricultural economist specializing in the WTO, and C, a specialist WTO lawyer, are shown the phrase ‘direct payments to producers’ from Annex 2:2 Agreement on Agriculture and asked what the subject ‘producer’ might consist of. A, B and C all ‘know’ that at a very basic level ‘producers’ are people who ‘bring forth’ 44 This linkage between language, thought and regulation is explored further later. Difficulties with treaty interpretation raise complex difficulties: see Zang, ibid., 39. 45 Oakeshott, M (1991), ‘Rationalism in Politics’, in Oakeshott, M, Rationalism in Politics and Other Essays, Indianapolis, IN: Liberty Press, 5, 12. 46 He was specifically interested in whether it was possible to disassociate the individual’s own opinions and ideas from a given subject so that a fully ‘objective’ or ‘rational’ observation could be reached. Oakeshott was particularly interested in the impact of such rationalist thought in politics: Oakeshott, ibid. 6.

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or ‘produce’ a product. However, it is only B and C, the specialist WTO economist and WTO lawyer, who ‘know’ that, in the light of meaning of Annex 2:2, Article 6 on domestic support commitments for which Annex 2 is an exception, and the context of the Agreement on Agriculture as a whole, this is a nonsensical interpretation, as it is evident from their knowledge of the entire Agreement on Agriculture that ‘producers’ includes only ‘agricultural producers’.47 B and C’s technical knowledge of the Agreement on Agriculture’s scope and purpose means they appreciate it is critical that the rules are not interpreted in a way which facilitates members’ use of trade-distorting measures, thereby undermining the attainment of a ‘fair and market-oriented agricultural trading system’.48 The subject ‘producer’ for B and C therefore must contain human activity which expressly relates to ‘agricultural producer’, as direct payments to agricultural producers to produce a specific product undermine the remaining provisions in the Agreement on Agriculture, particularly Article 6.49 So far the discussion suggests that a ‘subject’ is formed where an individual sees a pattern in otherwise random human activity: this pattern forms the ‘subject’. The individual’s choice of such activity might be driven by a number of factors, one of which is the individual’s knowledge. This knowledge might be basic or generic in character. Here, it is the individual’s comprehension of the words or phrase constituting what might be described as the subject’s label, which is important: for example, ‘international agricultural trade’ is the ‘label’ for the human activity comprised in the subject ‘international agricultural trade’. If an individual only has a basic level of knowledge, they may select only very basic activity like buying and selling foodstuffs to fall within the subject. However, if the individual possesses the more sophisticated, knowledge – technical knowledge – then their selection of activity within the subject may expand. For example, the scope of Desta’s and Sturgess’s work above illustrates this point. For Desta particularly, his detailed knowledge of the Agreement on Agriculture allowed him to set his discussion of the subject ‘international agricultural trade’ within the boundaries of the agreement’s rules and not merely draw on any general ideas of what agricultural products are. 47 There is no definition of agricultural producer in the definitions section in Article 1 Agreement on Agriculture either. See Appellate Body discussion in United States–Uplands Cotton report. See United States–Upland Cotton Appellate Body Report, WT/DS267/AB/R, 3 March 2005, paras 332 and 334. 48 Para 2 Preamble Agreement on Agriculture. 49 The importance of the definition of ‘producer’ is underlined by Michael Cardwell and Chris Rodgers in their discussion of domestic support in Cardwell, MN, and Rodgers, CP (2006), ‘Reforming the WTO Legal Order for Agricultural Trade: Issues for European Rural Policy in the Doha Round’, 55 International and Comparative Law Quarterly 805–38.

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‘Understanding’ describes how individuals see patterns in human activity. ‘Knowledge’ should not be seen as a second and distinct idea to ‘understanding’, but rather one that shapes the pattern the individual sees in the activity. However, ‘knowledge’ appears to have only two limiting ideas: individuals either have secondary or technical knowledge of the subject or they only possess the basic level of knowledge. This view suggests that in the selection of the pattern, those individuals who have secondary/technical knowledge of the subject will be predisposed to view human activity in one way, and those who do not have that knowledge will view it in another. Consequently, if two commentators on international agricultural trade select ‘domestic support measures and their exceptions’ as their subject if both possess the same level of technical knowledge, then both should reach the same conclusion on what the subject is and what the ‘problems’ within it are. Nevertheless, divergent opinions still exist despite apparently comparable levels of knowledge. This divergence is a consequence of a difference between technical knowledge of the subject and deeper insight arising from practical experience. Oakeshott’s discussion of knowledge is more complex than first suggested above. For him, technical knowledge was indeed that knowledge which could be reduced to a series of rules or norms, perhaps, though not inevitably, contained in written form. He then went on to argue that another form of knowledge exists which is not distinct from technical knowledge, but is in fact another facet of it.50 For Oakeshott, the second type of knowledge is ‘practical knowledge’. He termed it ‘practical’ knowledge as it can only be observed when in use and cannot be reduced to writing in the same way that technical knowledge can; we might describe this type of knowledge as the knowledge of experience, or how to comply with the technical rules. Oakeshott argues that whilst it is possible to ‘know’ how to bake a cake by following a recipe in a cook book, the more subtle art of the great cook is not something that is found in the book, but only something that comes from years of experience creating cakes. It is that combination of technical knowledge and skill which deepens the technical knowledge into something more profound. It is not in the description of what to do – but rather of how to do it that practical knowledge has its importance. In the context of international agricultural trade, Bernard O’Connor’s article on clarity in the Agreement on Agriculture provides an interesting illustration of the combination of technical and practical knowledge.51 O’Connor argues that the failure to involve lawyers in the negotiating stage of international agreements, particularly the Agreement on Agriculture,

50 51

Oakeshott, above n 45, 13. O’Connor, above n 34.

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results in ‘incoherent legal instruments, which are difficult to apply in practice’.52 Using this thesis as a starting point, O’Connor goes through the Agreement on Agriculture’s key provisions highlighting their deficiencies as a lawyer sees them. On the basis of Oakeshott’s ideas about knowledge, it is possible to see illustrations of both technical and practical knowledge in O’Connor’s discussion. On market access, O’Connor highlights problems surrounding the conversion of non-tariff barriers into tariffs through the process of tariffication in Article 4, Agreement on Agriculture, the uncertainty over the tariffication calculation methodology and the problems of ‘tariff peaks’, ‘tariff escalation’ and ‘dirty tariffication’.53 Further textual deficiencies are highlighted in the domestic support analysis, particularly the ‘box’ problem, and the numerous difficulties with the export subsidy rules. O’Connor’s exposition of what rules address which type of agricultural support measure, the additional documents which give effect to those rules, including members’ schedules of reduction commitments, and how those rules have been interpreted by the panels and Appellate Body all might be described as technical knowledge. This is because his article clearly describes what the law is and how it has been interpreted in a factual sense as at the date of publication of the article. In addition to ‘what the law is’, O’Connor also gives insight into a different element: the skills a lawyer requires to understand the Agreement on Agriculture and reach the conclusions that O’Connor does about it. This type of knowledge is practical knowledge. In O’Connor’s article, such knowledge includes how to read a legal agreement; how to understand how a document external to the written rules fits in with the Agreement on Agriculture; also, how to read an Appellate Body/panel report and discern the relevant analysis and then how to extrapolate their views to future cases involving similar subject matter. Although these ideas are not expressly made, his reference to the Appellate Body report in US–Foreign Sales Corporations and Chile–Price Band and the principles discussed therein, together with his reference to the Uruguay Round Modalities Paper, are guiding readers towards a specific way of seeing the rules and enabling them to learn from 52 53

Ibid. 839. ‘Dirty tariffication’ occurs where members artificially inflate the values of the non-tariff barrier on its conversion into a tariff. This means that required cuts in the tariff level will not have such a severe impact on domestic production: Schott, JJ (1994), The Uruguay Round: An Assessment, Washington DC: Institute of International Economics, 50; ‘tariff escalation’ is the placing of higher tariffs on processed products rather than non-processed ones, typically through the tariff quota: Lindland, J (1997), The Impact of the Uruguay Round on Tariff Escalation, ESCAP/No.3, Rome, Italy: FAO; also Ingersent, K, et al. (eds) (1994), Agricultural Liberalization in the Uruguay Round, New York, NY: St Martin’s Press; Burfisher, ME, above n 6.

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this way of thinking to discover their own meaning.54 The interesting point is that at no stage does O’Connor indicate how to ‘think like a lawyer’ in a way which will enable another non-lawyer to use this technique with other agreements; instead he records the results of what ‘thinking like a lawyer’ about the Agreement on Agriculture produces. How to do it is separate and is learnt through practice. Practical knowledge is something that is learnt by watching another expert in the field through a type of apprenticeship.55 The key to such knowledge is not necessarily something which is taught expressly, but rather knowledge that is acquired through the observation of a more senior practitioner in the field. This view appears to indicate that at some stage the senior practitioner will have imparted all she knows to the junior, so both will have the same technical and practical knowledge. Consequently, they should, on this interpretation, reach the same conclusions on what range of activity falls within a given subject. It is evident from legal and economic commentaries on international agricultural trade and international trade more generally that this is not the case. Technical experience coupled with practical experience: a homogeneous outcome? Joseph Stiglitz and Andrew Charlton’s controversial book, Fair Trade for All,56 concentrates on how trade policies should evolve to fully accommodate the needs of developing countries in the international trading system. Whilst trade is a very positive mechanism for achieving welfare benefits for such countries, Stiglitz and Charlton suggest the rate of liberalization should be managed and that free trade under all circumstances may not be the best way forward for such countries. Instead, the current Doha Development Round of multilateral trade talks in the WTO, particularly in the context of international agricultural trade, should balance the freeing up of markets against the consequent high cost of agricultural products to consumers and its potentially devastating impact on poor agricultural producers in developing countries.

54 United States–Tax Treatment for ‘Foreign Sales Corporations’, WT/DS108/ AB/R, 24 February 2000; Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, 23 September 2002; Modalities for the Establishment of Specific Binding Commitments under the Reform Programme MTN.GNG/MA/W/24, 20 December 1993. 55 For example, through a training contract at a law firm, where a young lawyer will learn how to use the law in a given case from observing her more experienced supervisor. 56 Stiglitz and Charlton: Fair Trade for All: How Trade can Promote Development, above n 22.

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According to Stiglitz and Charlton, the impact of liberalization is not uniform, but instead varies across developing countries dependent on the balance between their exports and imports of agricultural products. The best approach is then to free up trade in products which maximize benefits to producers, whilst ensuring this has the smallest effect on consumer prices. Elimination of key subsidies on products like cotton would increase the price to producers whilst having only a small effect on developing countries’ standards of living as there would only be a very small increase in the price of cloth. In addition, reduction in subsidies on products consumed almost entirely by the wealthy would have a small impact on poorer nations on the whole. The overall pace of liberalization should be gradual and at different rates according to the needs of the specific developing countries. Stiglitz and Charlton’s three-point plan for reform firstly focuses on differential liberalization of tariffs by developed countries, especially on imports from developing nations, particularly sugar and tropical products; second, domestic subsidies used by developed nations on products which are price sensitive in developing nations, like grains and oilseeds, should be the first to be reduced; and finally, any domestic support predominantly used by developed nations should move fully away from any system which takes the form of price support for agricultural products. Their suggestion is not just the elimination of express price-support mechanisms, but also measures which have the effect of price support, even though they may be currently covered in Annex 2 Agreement on Agriculture, the so-called ‘Green Box’. 57 Irwin’s review of Stiglitz and Charlton’s book draws on his own work on international trade which addresses agriculture as part of a broader thesis.58 However, Irwin’s work and review provides an interesting contrast to Stiglitz and Charlton’s. Irwin’s views of the Stiglitz and Charlton book are presented very strongly from the beginning of the review. He states that the book is ‘mistitled’ and ‘says a lot about how the authors think developing countries should approach trade negotiations in the World Trade Organization, but says very little about “how trade can promote development” ’. The key points of weakness for Irwin are that developing countries could set their own liberalization agenda, rather than waiting for the WTO negotiations to set the pace. More importantly, there appears to be a fundamental disagreement on the role that free trade plays. Irwin suggests that agreement exists between economists that developing countries would benefit from market liberalization, and that Stiglitz and Charlton apparently advocate the opposite view. He points to the 57 58

Stiglitz and Charlton ibid., 120–24. Irwin, D (2006), ‘ “Fair Trade for All: How Trade Can Promote Development” by J. Stiglitz and A. Charlton’, 5(3) World Trade Review 489. Irwin, above n 13, 88–93 and Chapter 6.

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success stories of China, Cambodia and Chile, which have seen clear benefits from trade liberalization, and argues that failure to discuss these in the context of the overall thesis is a weakness in the argument. These opposing views on what might be described as an economic interpretation of trade liberalization in the context of developing nations are not presented here as the only ideas on this subject, nor as a way to ask the reader to comment on whether one view is correct and the other not. Such an attempt would be very lengthy and is beyond the scope of this book. Instead, these opposing views are provided as examples of how individuals who possess both technical knowledge and extensive practical expertise in the field still reach different decisions about how specific types of human behaviour should be perceived. Looking at Stiglitz and Charlton’s and Irwin’s analyses in the context of Oakeshott’s taxonomy of knowledge, it is possible to see that their technical knowledge is certainly informed by the Agreement on Agriculture’s rules. Implicit reference is made, particularly by Stiglitz and Charlton, to the domestic support rules in Article 6 and the support reduction exemptions in Annex 2, the export subsidy provisions in Articles 8, 9 and 10 and finally the market access rules in Article 4. However, the technical knowledge in both Stiglitz and Charlton’s and Irwin’s work is slightly different to that seen in the O’Connor article discussed above, because in the former, the emphasis is on the impact of the various agriculture support measures on international agricultural markets. The rules are important to Stiglitz and Charlton and to Irwin, but they only provide the framework from which a more detailed analysis of how the rules work ‘in the real world’ on trade in the specific products, and how changes to levels of support on certain types of product and certain countries will result in overall positive welfare effects for those countries. For both Stiglitz and Charlton’s and Irwin’s work, the technical knowledge is that of the economist in general and the subject of discussion is international trade for developing nations in general.59 All are eminent economists with extensive technical and practical knowledge in the field. However, the way the subject is seen differs significantly: for example, as Irwin himself notes, Stiglitz and Charlton concentrate much more on a limited number of developing nations in the context of the liberalization of trade in the WTO to substantiate their thesis of problems of ‘fairness’ inherent in the structure of the existing process,60 whereas Irwin’s thesis is much broader and looks at a greater number of countries, including China 59 Stiglitz and Charlton’s work is broader than merely international agricultural trade. I selected the agriculture section as it provides an interesting comparison to O’Connor’s work and is a good illustration of the rest of the thesis. 60 Stiglitz and Charlton, above n 22, 5.

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and India, to substantiate his thesis of the general overall benefits that can accrue through the liberalization process when appropriate government policies are used in addition.61 In both cases, the experts have considered a range of human activity, and have discerned a pattern on the basis of their technical and practical knowledge in order to form a subject from which they identify issues, problems and solutions based on their view of what international trade for developing nations is. Why do experts disagree in this way? For Oakeshott, the possession of technical and practical knowledge does not of itself guarantee a homogeneous outcome amongst experts.62 This is because, whilst practical knowledge of the subject can be learnt through observation of ‘how to think like an economist’ for example, during that process, the individual who is learning their art from the master comes to a point where she feels she has acquired a deeper appreciation of the subject, which allows her to formulate her own opinions and ideas of what the subject is. This appreciation might be the same as the master’s, but it is more likely that she will add her own ideas and experience to what she has observed, which in turn will affect her perception of what the subject is. In other words, she is able to develop her own judgement of the ‘correct’ way to view the subject. Let us return to the earlier example where A, the brain surgeon, B, the agricultural economist specializing in the WTO, and C, the specialist WTO lawyer, are asked what they feel falls within the subject ‘producer’ from Annex 2:2 Agreement on Agriculture. Earlier it was argued that all have a basic level of knowledge which influences their choice of activity, but only B and C have the technical knowledge of the Agreement on Agriculture which further drives their choice. Even if the individuals possess this technical knowledge, their own personal views and values derived from their experience of the subject – practical knowledge – add an extra layer of complexity to the way they perceive the subject. Consequently B and C agree that the phrase ‘producer’ means ‘agriculture producer’, but they may disagree whether the ‘producer’ needs to actually produce anything in order to qualify as a producer for the purposes of Annex 2:2.63 In conclusion, the complex interrelationship between basic understanding of words and phrases, technical knowledge and experience of what the words mean in a specific context colour how individuals look at human activity. Consequently, when they look for patterns to form a subject, they draw on these understandings to enable them to add in or exclude material. This means 61 62 63

Irwin: Free Trade for All, above n 13, 168–84. Oakeshott, above n 45, 15–16. This dilemma was faced by the Appellate Body in United States–Upland Cotton, above n 46, paras 332 and 334.

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that there are various ways in which a subject will be perceived by individuals, irrespective of their technical knowledge and expertise in the field. Of itself, this does not mean that the way they see the subject is incorrect, but instead that there might be more than one way in which the subject could be viewed. So far the discussion has concentrated on the selection of material from random activity to produce a subject. The selection of that material is based on an individual’s knowledge. But what leads an individual to combine all the material into a subject? Why do they see the activity fitting together in one way and not in another, despite all their experience? Combining Human Activity into a ‘Subject’: the Role of ‘Coherence’ As Simmonds has shown, when academic writing is undertaken on traditional doctrinal categories or subjects like contract and tort, the tendency is to view these subjects’ content as evolving over time to meet the needs and convenience of existing generations of legal thinkers. As such, the subjects are typically treated as plastic devices whose content changes to accommodate our immediate needs and convenience.64 Thus legal writing is viewed as an activity of rearranging the contents of statutes and cases into those subjects in ways which reflect whatever we feel is most expedient at the time. Yet, the significance of legal commentary goes deeper than this. The patterns we discern to form these subjects in fact reflect assumptions of coherence: that is, the way that they jointly contribute to particular policy goals, and how they fit with/fight against existing principles. To do this, the writer necessarily must work within a specific legal theory, in the sense of a broad account of how goals and principles are implied from the structure and content of the legal order. Doctrinal categories are not ‘neutral boxes into which law can be slotted’ but are instead the product of particular interpretations of the law’s underlying coherence. The dispute is not then about how the ‘contract’ and ‘tort’ boxes should be constructed to best serve the needs of the individual teachers, it is instead about how the foundations of the legal order should be philosophically understood. It is then our view of the underlying legal order that drives how and what we place within the different legal categories. Our idea of the legal order should not be seen as something which is fixed, but instead something that evolves and changes over time, as circumstances external and internal to us shape our understanding and views of it.

64 Simmonds, N (1982), ‘The Changing Face of Private Law: Doctrinal Categories and the Regulatory State’, 2 Legal Studies 257.

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Simmonds sees this classification of rules as occurring within the doctrinal categories he identifies. However, we can extend his ideas to understand how a commentator sees the subject ‘international agricultural trade’ based on their understanding and knowledge of it. This insight is critical for our analysis of commentators’ views on the problems in international agricultural trade regulation in the WTO and their solutions to it. We can see the way this will work for the trade/non-trade concerns debate within the Agreement on Agriculture. Exploring ‘coherence’ in the context of trade and non-trade concerns Existing discussions examining ‘trade’ and ‘non-trade concerns’ in the wider context of the WTO focus on problems arising from the conflict, congruence, or disassociation of trade rules either in their manifestation as rules in their own right, within a discrete subject area, or as indicative representations of the trade regime’s jurisdiction.65 The debate’s focus is on how to interpret/ construe trade rules within the WTO regime, rather than a general philosophical debate about the nature of ‘trade’ dissociated from any regulatory system. These perceptive contributions offer important insights into where the ‘brightline’ between ‘trade’ and ‘non-trade concerns’ lies for the WTO. By formulating the subject’s outer limits, the contributions offer coherence to them by showing how issues in each one fulfil the same defined goals, and/or how they are based on the same fundamental principles.66 Notwithstanding their erudition, these taxonomic expositions are based on a specific theoretical approach taken by the authors, which is their conception of what the WTO’s underlying aims and objectives are.67 In this sense, the authors’ theoretical approach informs their choice of issues as ‘trade’ or ‘nontrade’, which enables them to conclude whether the issue falls within the trade rules/regime or not, thereby facilitating a coherent category’s construction. As a consequence, ‘trade’ and ‘non-trade concerns’ are not ‘neutral boxes in which law is slotted’, but instead are fluid constructions derived from an interpretation of the authors’ underlying theoretical approach.68 At the heart of the

65

For example, Grossman, MR (2003), ‘Multifunctionality and Non-Trade Concerns’, in Cardwell et al., above n 39, 85; Trachtman, above n 17, 77. 66 Simmonds, above n 64, 258. 67 Tarullo adopts a narrower view that the WTO is based on a specific theoretical assumption: Tarullo, D (1985), ‘Logic, Myth and the International Economic Order’, 26 Harvard International Law Journal 533, 535. 68 Simmonds, above n 64, 258, also Milsom, SFP (1981), ‘The Nature of Blackstone’s Achievement’, 1 Oxford Journal of Legal Studies 1, 7. Some authors do articulate this problem in terms of ideas underlying the rules without ascribing any goal to them, see Dunoff, JD (1999), ‘The Death of the Trade Regime’, 10 European Journal of International Law 733; Lang, A (2006), ‘Reconstructing Embedded

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‘trade’/‘non-trade concerns’ debate is therefore not how issues are classified to maximize the WTO’s regulatory regime’s effectiveness, but rather how its very foundations should be philosophically understood. For example, one author may believe the WTO is an economic organization whose rules are designed to maximize members’ opportunity to generate income from their ability to transfer goods and services across the world free from trade barriers: the trade rules on this view are then seen as a mechanism for forcing the reduction of those barriers to facilitate unimpeded market activity, which in turn achieves other ‘non-trade’ goals. This may be termed the ‘free market’ approach. Another author may see the WTO as an organization containing technical rules designed to fulfil various moral or social goals, including preservation of rights of indigenous communities, labour rights, development and environmental protection: trade rules here are designed to fulfil these moral objectives by reducing trade barriers. In this case, achieving the moral or societal objective is paramount and any liberalization of the market is only essential to the degree that it facilitates the attainment of the moral or societal goal: this may be termed the ‘moral or societal approach’. In both approaches, global welfare maximization may be the perceived goal, but to the author adopting the former ‘free market’ interpretation, there is a consequential relationship between the elimination of the trade barrier and the non-trade goal because it is only through the re-establishment of the pure market mechanism that the non-trade goal can be achieved. A measure only fulfils a ‘trade’ goal to the extent that it liberates the market from its ability to function unimpeded and a regime will only be part of/connected to the ‘trade’ regime to the extent that it too facilitates market liberalization. In contrast, for the latter author who favours the ‘moral or societal’ interpretation of the WTO’s function, global welfare may be measured by the achievement of the moral or societal goal, irrespective of whether all distortions to the market are removed. Even if it is not the most economically efficient in terms of market liberalization, a measure is therefore a ‘trade’ measure because it is the most effective way of achieving the moral/societal goal in the specific set of circumstances discussed by the author. Likewise, a regime could be part of, or connected to, the ‘trade’ regime if it too fulfils the moral and societal goals which the author perceives to be the fundamental aims/objectives of the WTO. The distinction between the two views may lead both authors to the same conclusion on any specific question, but the methodology by which they reach this conclusion lies at the core of their analysis and is not merely an incidental part of it.69

Liberalism: John Gerard Ruggie and Constructivist Approaches to the Study of the International Trade Regime’, 9 Journal of International Economic Law 81. 69 Simmonds, above n 64, 258.

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There is therefore no definitive answer to the question: ‘what is a “nontrade concern” in the context of the WTO?’ because the discussion is not the pursuit of a ‘truth’ where there is a single, value-neutral ‘bright line’ between ‘trade’ and other issues. Instead, it is a construct influenced by prevalent ideas about the theoretical foundations of the ‘trade’ regime. Any ‘trade’ box that is constructed on the basis of a theoretical approach should not be seen as fixed, but as a changing construct which evolves as existing approaches are rejected in favour of new ones.70 This notion of coherence can be added to earlier ideas of ‘knowledge’ and ‘understanding’ to produce a picture of the ‘subject’. Conclusions can then be drawn about how an individual sees a ‘problem’ in relation to a specific ‘subject’. The Relationship between the ‘Subject’ and the ‘Problem’ ‘Understanding’ is the first of three elements which combine to reveal how we discern patterns in human activity so that a ‘subject’ emerges: that subject then forms the basis of any discussion either of the whole subject, or of specific attributes of it. The preceding discussion describes the act of ‘understanding’ as the individual considering a range of activity and, influenced by their imagination or external factors, linking together otherwise disparate activity into a specific subject. The earlier discussion demonstrates that this connection is not based on revealing ‘facts’ or ‘truths’ which were otherwise hidden, but rather that the selection of material is driven by the individual themselves: it is their opinion which is crucial to selection. To say that everyone has a choice in their selection of material seems to make an obvious point because all individuals are autonomous and are free to make choices even if the individual has been asked to comment on a specific aspect.71 The critical point is that this choice is not a linear progression where there is a horizontal connection between the choice of material and the opinions expressed. Instead, the selection is based on a constructive process: that is, the choice of material is driven by the individual’s own knowledge of the 70 Howse, R (2002), ‘From Politics to Technocracy – and Back Again: The Fate of the Multilateral Trading System’, 96 American Journal of International Law 94, 96, adopts a different argument: he states that possible solutions are based on political ideas. Cf. this argument, which instead suggests many external influences change the notion of ‘trade’ including, but not restricted to, politics: e.g. United States–Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, 12 October 1998. 71 The scope of a subject might be dictated very strictly to negotiators, but even here, the individual’s own perception of the subject will be critical. This can be seen particularly in the context of the second and third criteria, ‘knowledge’ and ‘coherence’, see below.

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subject and their overall opinion on how the subject should fit together. In other words, the individual is disposed to see problems in a subject depending on how they see the subject as a whole. The combination of the selection of material, their knowledge of it and their idea of how that subject should be understood predisposes them to see a ‘correct’ way in which the subject should be conceived. Any activity which does not ‘fit’ within that conception means there is a ‘problem’ with the subject for that individual which may or may not be shared by others.

CONCLUSIONS International agricultural trade regulation has a long and complex history. Regulation has been problematic throughout the GATT period and there is little sign that such difficulties are eradicated by the Agreement on Agriculture. Traditionally, the ‘problem’ of international agricultural trade has been viewed in many ways: as a market access problem; a development problem; and/or as a clash between competing ideas in the guise of the trade/nontrade concerns debate. Each time the problem is revealed, a different solution is presented in a way which suggests the solution has at long last been found. Despite this optimism there is little end to the difficulties as can be seen with the latest round of multilateral trade talks. Why are there so many versions of the agriculture problem? This discussion above suggested that the way a ‘problem’ is identified is not neutral, but is instead based on the individual’s own ideas about the subject of ‘international agricultural trade’ and how it fits within the overall WTO regulatory scheme. The individual’s conceptualization of the subject is then critical, because anything which does not fit into their ideas of the true or right way to see a subject is a problem. Their solution to the problem is also not neutral, but is itself based on the individual’s ideas of how the subject should be seen. How does this insight help in the path towards solving the problem of international agricultural trade? Suggesting that each individual sees the problem in a different way means we should cease the search for a single understanding of what the problem is. Given the eminent negotiators and commentators who have already discussed this issue at length, the pursuit of a single solution seems to be the search for some ultimate arbiter who will somehow impose a single understanding of the subject and an idea therefore of what the problem is. Instead, individuals’ disparate views on the subject suggest that the problem itself may not be homogeneous, but multifaceted. Addressing one aspect of it merely places tensions on the other aspects as they strain under the weight of the imposed solution. Solutions imposed in this way ultimately strain the

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regulatory structure too much and eventually cause the structure to break. In a legal sense, this might be the abandonment of the rules by those subject to them, in favour of a more workable solution.72 Multifaceted or ‘polycentric’ problems require a different regulatory approach. The discussion will now go on to discuss a new way in which the problem of international agricultural trade can be understood. It will start first by considering in Chapter 3 how our different cultural understandings have an impact on how we perceive the problem of international agricultural trade. Chapter 4 will then reveal how international agricultural trade is a complex multifaceted, or ‘polycentric’, problem as opposed to one which can be resolved in a linear way. Finally in Chapter 5, the discussion will indicate how these two theoretical insights – culture and polycentricity – reveal a new way in which the problem of international agricultural trade can be understood.

72 This has been the case in the WTO where members have moved towards bilateral solutions in the light of problems with the WTO talks: Lamy, P, ‘Regional trade agreements: the “pepper” in the multilateral “curry” ’, speech in Bangalore, India, to ‘Multilateral or bilateral trade agreements: which way to go?’ Confederation of Indian Industries Partnership Summit 2007, 17 January 2007, Emergent India: New Roles and Responsibilities. Del’Acquila, C, et al. (1999), Regionalism and Trade in Agri-Food Products, International Agricultural Trade Research Consortium, Working Paper No. 99-5.

3. Two models of disagreement INTRODUCTION The preceding chapter sought to challenge the existing orthodoxy of how the problem of agricultural trade regulations should be seen. It also suggested that each person’s perception of the problem is based on three factors: first, their knowledge and experience of the rules;1 secondly, how the subject is seen as a whole, that is, how each person discerns patterns within otherwise random human behaviour;2 and thirdly, how they fit their knowledge and experience with the pattern discerned in order to identify what the problem is.3 The means of fitting the problem together therefore depends on the ability of each person to realize a coherent view of the whole, based on their understanding of concepts such as ‘trade’ and ‘agriculture’ in the light of the foregoing factors. Current understandings of the problem of agricultural trade identified in Chapter 2 might in this way be taken to imply a ‘model’ of what disagreement in this context is. In this chapter I suggest that there are two other ways in which the problem can profitably be understood. These two models should not be seen as alternative explanations of a single problem, but as dimensions of a more complex problem which merge and overlap at various points. For the purposes of exposition, however, the two models and their constituent parts can be artificially distinguished and explored separately. But it is important to keep in mind that this separation is artificial, and that both ‘models’ are at work within the pattern of disagreement at any one time. The purpose of this chapter is to put forward the first of these two models, ‘cultural divergence’; the second, ‘polycentric problems’, forms the subject of Chapter 4.

1

This conclusion draws on the work of Oakeshott, M (1991), ‘Rationalism in Politics’, in Oakeshott, M, Rationalism in Politics and Other Essays, Indianapolis, IN: Liberty Press, 5, 12. 2 This analysis draws on the work of Hayek, FA (1973), Law, Legislation and Liberty: Volume I Rules and Order, Chicago, IL: University of Chicago Press, ‘Reason and Evolution’, 8, 8. 3 This conclusion is based on the work of Simmonds, N (1982), ‘The Changing Face of Private Law: Doctrinal Categories and the Regulatory State’, 2 Legal Studies 257. 55

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CULTURAL DIVERGENCE The first perspective from which disagreement might be understood can be called ‘cultural divergence’. Chapter 1 argued that when each individual engages with the problem of international trade regulation they do so from an understanding of what ‘agriculture’ is and what ‘trade’ is. These views then colour their perception of the problem. It will be recalled from Chapter 1 that ‘trade’ and ‘agriculture’ can be understood in several ways which, although described separately in that chapter, in fact overlap in line with an individual’s knowledge and understanding of the subject as a whole. These arguments are explored fully in Chapter 1, but for the purposes of exposition it is useful to highlight them here. ‘Trade’ can be regarded as trade in the product (as a ‘thing’) so that the physical characteristics or attributes of the product are crucial to one’s understanding of the trading system. Here, the central focus can be defined by the physical movement of that product across the globe; or as the transfer of rights in the product; or again as a transfer of value. All of these are product-centred notions of trade, but have a profound influence on the understanding of trade. For example, certain products have no commercial value (such as fresh air), whereas others have a cultural value that puts them beyond the realm of commerce (or ‘trade’): the value of the clay is independent of the value of the terracotta warrior as an object of art.4 Or again, ‘trade’ can be understood not as product but as function. Trade, in other words, can be an objective to achieve other policy goals: for example, it may be a mechanism to promote environmental protection, animal welfare or the protection of human rights etc.5 With regard to ‘agriculture’, there may also be alternative understandings of product and function. For example, agriculture may mean the ‘fruits of the earth’, thereby encompassing every product which can be grown, irrespective of whether it is used for ‘food’ or not. ‘Agriculture’ may also be confined to ‘food’, but even here multiple understandings exist: whilst one individual may regard all products as ‘food’ because they are capable of sustaining human life, another may exclude a product from their understanding of ‘food’ on religious

4 The importance of the cultural heritage of a product will go directly to its value and change how it is perceived within a trade transaction: Communication from the European Commission to the Council and the European Parliament (2003), Towards an International Instrument on Cultural Diversity, COM(2003)520 (27 August 2003). See WTO (2001), Communication from Switzerland: GATS 2000: Audiovisual Services, S/CSS/W/74, para 6 (4 May 2001). 5 Leebron, D (2002) ‘Linkages’, 96 American Journal of International Law 5, 6.

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grounds.6 In addition to ‘agriculture’ as product, ‘agriculture’ may also be seen in a wider sense as, for example, the growth of food in specific ways which promote explicit goals.7 In this context, those who support this view of ‘agriculture’ will not see issues as distinct, but rather will see an extricable connection between the growth of food and the effect of that method of growth in terms of its climatic impact and its impact on rural ways of life, for example. In all these instances, it is not that an individual cannot intellectually distinguish between ‘trade’ in the thing as opposed to its function, or as ‘agriculture’ as product as opposed to ‘agriculture’ as function; it is more that even though they see these distinctions, they believe that one version is better than the others and should be promoted in the context of international agricultural trade regulation. It is this belief which causes the difficulties. These alternative understandings both for ‘trade’ and ‘agriculture’ might be understood as instances of cultural divergence which cause people to see the problem of international agricultural trade regulation in different ways. We can extrapolate this analysis to look at the individual aspects of agricultural trade regulation grouped around the three recognized ‘pillars’ of agricultural trade regulation. The first of these is market access.

MARKET ACCESS The rules on market access are contained in Part III of the Agreement on Agriculture, specifically Articles 4 and 5 together with Annex 5.8 In combination, the provisions specify the measures that members can use to limit access to their domestic markets for agricultural products; measures other than tariffs are now prohibited.9 In addition, the rules also make limited provision for

6 Leininger, M (1970), ‘Some Cross-Cultural, Universal and Non-Universal Functions, Beliefs and Practices of Food’, in Dupont, J (ed), Dimensions of Nutrition, Colorado: Colorado Associated University Press, 154. 7 For example, the multifunctionality of agriculture: OECD (2001), Multifunctionality: Towards an Analytical Framework, Paris, 7. See also later work on multifunctionality by the OECD at: http://www.oecd.org/document/34/0,3343,en_ 2649_33773_40789602_1_1_1_1,00.html. 8 Additional information of the tariffication process for the purposes of member’s scheduling commitment is contained in the Uruguay Round ‘Modalities Document’ specifically Annex 3: GATT (1993), Modalities for the Establishment of Specific Binding Commitments under the Reform Programme, Geneva, Switzerland: GATT, MTN.GNG/MA/W/24, 20 December 1993. 9 Article 4:2. On the tariffication process see Chile–Price Band System and Safeguard Measures Relating to Agricultural Products, WT/DS207/AB/R, 23 September 2002, paras 192–217.

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minimum access for designated agricultural products through tariff rate quotas in circumstances specified in the rules.10 A detailed exposition of the scope of these rules and how they represent the WTO’s ‘vision’ of ‘trade’ and ‘agriculture’ is beyond the extent of this book. Instead, the discussion will show how the issue of market access can be perceived in various different ways. How an individual understands market access in turn influences how they engage with the ‘problem’ of market access as an element of the wider problem of international agricultural trade regulation. These different meanings of market access draw upon people’s perceptions of the meaning of ‘agriculture’ and ‘trade’. This is not simply a question of definitions but also fundamentally a matter of emphasis and mode of combination. Thus even if disputants start from the same point (in terms of these meanings) they will not necessarily end at the same point. In this section I will pursue how meanings of market access are shaped by understandings of agriculture and trade as cultural ideas. Inevitably for the ease of exposition, these are presented in a linear fashion. However, it is clear that an individual can shift between the various ideas as each meaning of market access informs the others. It is important to note in this context that it is not that the individual is being inconsistent in their stance through their shift in meanings, nor that they are making a mistake as they move from one notion of what market access is to the next; instead, it is that the ideas are so inextricably linked, that an individual’s understanding can move seamlessly across the many meanings without their even being aware of its doing so. Market Access from a Product-Centric Perspective This understanding of market access places the emphasis on the movement of the product into a place where it can be bought or sold. From this perspective, the reason why the product is moving is not directly relevant to the rules. This is because this position assumes everyone accepts that movement in the product has positive welfare effects which can be demonstrated by various empirical means. There is therefore no need to reproduce this empirical justification in the rules as they are already drafted on the basis that this assumption is correct.11 The key to a successful outcome for the problem of market access on this understanding is to continue lowering barriers to the product’s entry

10 On tariff rate quotas generally see Canada–Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/AB/R and WT/DS113/AB/R, 13 October 1999. See generally McMahon, JA (2007), The WTO Agreement on Agriculture: A Commentary, Oxford, UK: Oxford University Press, ch 2. 11 Desta, MG (2002), The Law of International Trade in Agricultural Products: From GATT 1947 to the WTO Agreement on Agriculture, The Netherlands: Kluwer, 9.

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into the specified market at a rate which allows every WTO member to benefit equally from the liberalization of the market. The solution for those viewing the problem of international agricultural trade from this perspective is then not to subtly or radically change the emphasis within the rules in order to achieve any other outcome perhaps by allowing some countries to impose defensive barriers to market access, but rather to do ‘more of the same’ in terms of liberalizing access to markets.12 This approach can be seen in a number of studies and submissions to the Doha Development Round negotiations: an experts group established in 1983 by the then Director General of the GATT, Arthur Dunkel, to evaluate the problem of international agricultural trade, argued in its report (the ‘Leutwiler Report’)13 that there should be ‘no special treatment for particular countries to commodities. Efficient agricultural producers should be given the maximum opportunity to compete.’ The report went on to make it clear that all agricultural products should be allowed maximum access to every contracting party’s territory irrespective of their development status.14 According to the report, it was self-evident that open markets were ‘the key to sustained growth’. There was no need to accommodate special interests of individual countries, as it would be obvious that once barriers to trade were eliminated, those countries’ level of development would automatically improve. Likewise, a pre-Uruguay Round study indicated that the effects of the removal of all barriers in OECD

12 The existence of the special safeguard measure in Article 5 Agreement on Agriculture is controversial. Article 5(1) permits members to derogate from their general obligation not to impose tariffs in excess of those in their schedules of reduction commitments in limited circumstances. On the scope of Article 5 Agreement on Agriculture see European Communities–Measures Affecting the Importation of Certain Poultry Products WT/DS69/R, 12 March 1998. Despite the measure’s current limited availability, some developing countries advocate an extension of its provision to developing nations to be used for defensive purposes, rather than as an emergency measure: see WTO (2005), G-33 Proposal on Article […] Special Safeguard Mechanism for Developing Countries, Geneva, Switzerland: WTO, October 2005. For full details of the paper see Bridges (2005), ‘G-33 Outlines Special Safeguard Mechanism for Developing Countries’, 9(37), 2 November, http://www.ictsd.org/weekly/05-11-02/ story6.htm. 13 GATT (1985), Trade Policies for a Better Future: Proposals for Action (the Leutwiler Report), Geneva, Switzerland: GATT, 5 and 9. 14 Signatories to the GATT were contracting parties rather than members. This is due to GATT’s temporary status. Those states participating in trade liberalization under the auspices of GATT were referred to as ‘contracting parties’, rather than members reflecting GATT’s lack of independent legal personality and provisional status. Note that customs territories possessing or acquiring ‘full autonomy in the conduct of their external commercial relations and other matters provided for’ by the GATT could also claim the status of contracting party: see Article XXVI:5(c) GATT.

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countries, including those relating to market access, would result in an $8.5 billion increase in world trade with more positive welfare effects on leastdeveloped countries (36 per cent) as opposed to OECD countries.15 Later predictions in 2006 indicate that global gains from a successful outcome to the Doha Round would be as high as $290 billion.16 The only pertinent considerations for any rules predicated on a productcentric notion of market access are adequately defining the product which must move, the market into which it must gain entry, and what constitute barriers to its entry. The relevant product is defined in a comprehensive way. The reason for this focus is that it is important to ensure maximum access for the product irrespective of the fact it might have multiple uses as, say, food or fuel.17 For example, the World Bank pointed out in a 2008 study on rising food prices that high agricultural tariffs in developed nations cause negative spillover effects: the cost to developing nations is five times the 2008 level of overseas development assistance for agricultural products. Reductions in these disproportionately high tariffs are therefore essential to enable a reduction in domestic prices in developing nations and an equalization of the ‘playing field’ between developed and developing nations.18 A comprehensive definition of the relevant product has important implications for the definition of the relevant market into which the product gains access if this product-centric view of the problem of market access in international agricultural trade is adopted. The ordinary meaning of ‘market’ is a place where trade is conducted. This can be understood both in terms of the physical space in which trade occurs, and whether there is any demand for the product in a general sense unconnected to any physical location. For trade to occur there must therefore be both a relevant product market (i.e. demand for the product) and a relevant geographic market. If the focus lies on movement of the product alone, then the relevant product market is synonymous with any

15 Valdes, A, and Zietz, J (1980), Agricultural Protection in OECD Countries: Its Cost to Less-Developed Countries, Washington DC: Research Report 21, International Food Policy Research Institute, 9, 9–10 cited in Anderson, K, and Josling, T (eds) (2005), The WTO and Agriculture: Critical Perspectives on the Global Trading System, Cheltenham, UK and Northampton, MA: Edward Elgar, 287. 16 Anderson, K et al., ‘Global Impacts of the Doha Scenarios on Poverty’ in Hertel, TW, and Winters, LA (eds), Poverty and the WTO: Impacts of the Doha Development Agenda, Washington DC: World Bank and Basingstoke, UK: Palgrave, 497, 498. 17 Leutwiler Report, above n 13, 36. Also see GATT (1958), Trends in International Trade: A Report by a Panel of Experts (the Haberler Report), Geneva, Switzerland: GATT, para 256. 18 World Bank (2008), Rising Food Prices: Policy Options and World Bank Response, Washington DC: World Bank, 9. World Bank (2008), World Development Report 2008: Agriculture for Development, Washington DC: World Bank, chs 1 and 5.

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place where there is demand for the product. Variable degrees of access need not be addressed in the rules because the impact unrestricted access has into any particular geographic market is deemed positive, so there is no further need to take special action as such for countries at different stages of development. The only possible limitation is the relevant geographic market: here demand for the product is seen against the background of the specific geographic space in which that demand occurs. In terms of the WTO, the relevant product market is only constrained by the fact a state might not be a member so access of a product to that state would fall outside the consideration of the rules. This restriction would only act as an outer boundary for the geographic space in which the product could move. Inside that space (all the territory of the other WTO members), market access must be given to anywhere where there is demand for the product, irrespective of any state’s geographic boundary. Rules based on this conception of market access consequently focus on maximizing access for the product. Such rules will state that entry barriers into member’s territories must be reduced and exceptions to the rules eliminated: ideally border measures would be removed completely in the long term, but in the short term, transparency in the operation of the measure is the goal. A movement towards a tariff-only system is the preferred short-term option in this latter case. The tariff impedes access for imports in the same way as any other quantitative restriction or other non-tariff barrier if the rate at which the tariff is set is high enough. However, in contrast to the non-tariff barrier, the tariff is transparent in the sense that it is easy to quantify and its effect on the price of the imported product is immediately apparent.19 To the extent that broader considerations are accommodated within the rules, these tend to focus on longer time periods in which market access barriers can be reduced for countries at a lesser stage of development. The key is to reach parity in the levels of protection, so that some differential treatment might be permitted to the extent that this equalizes market access opportunities for all products irrespective of their origin.20 In essence, the product-centric vision of market access focuses on maximizing entry for the product. Rules which impede access either because some

19 20

Desta, above n 11, 18. The Cairns’ Group (not including Canada) supports this idea of market access and suggests the elimination of the special safeguard provision: WTO (2000), Cairns’ Group Negotiating Proposal Market Access, Geneva, Switzerland: WTO, G/AG/NG/W/54, 10 November 2000, special and differential treatment proposal. This is reiterated in later proposals: WTO (2007), Achieving Substantial Improvements in Market Access for Developed Countries: Communication from the Cairns’ Group, Geneva, Switzerland: WTO, JOB(07)123, 11 July 2007.

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products are excluded from the rules, or because some are given special treatment, or for the reason that some members are accorded special treatment in a form other than a variable implementation commitment over a longer time frame, will all be regarded as a problem. Special and differential treatment is important, but this goal is automatically achieved by liberalizing markets and facilitating competition, rather than building in complex preferential access or defensive provisions into the amended rules.21 This product-centric vision of market access focuses on allowing all agricultural products equal access. However, some approaches single out specific products for particular treatment. To the extent that the rules do not accommodate that treatment, they are regarded as problematic. Market Access Based on an Understanding of the Nature of the Product There is a significant overlap between the perception of market access as a product-centric idea and a perception which singles out a product or group of products for particular treatment. It is clear from the previous discussion that a product-centric view does recognize there may be more than one product which the rules must accommodate. However, in this latter case, the other products are seen as a sub-set of the main category ‘agricultural product’, so they are only singled out for the purposes of bringing their treatment into line with that of all the other agricultural products: the ability of members to impose emergency safeguard measures is recognized, for example, but only to the extent that it does not interfere significantly with the liberalization of trade in agricultural products. There must be a true emergency before a member can impose such a measure and the measure cannot be imposed for an indefinite period.22 In contrast, a perception of market access which focuses on the nature of the product will single that product out for some form of special treatment. Whilst that treatment may be a more rigorous tariff regime, it does not need to be and might instead focus on allowing better access, or restricted access dependent on exactly what the product is, what characteristics are special and why those characteristics are special. A product might be singled out for

21 A version of this approach is taken by some exporting nations, like those of the Cairns’ Group (2008), Cairns’ Group Statement on the Open-Ended Session of Agriculture Negotiations, 15 February 2008. http://www.cairnsgroup.org/statement_ agriculture2.html 22 Note the different views between the G-33 group of developing nations and the other developed countries like New Zealand. Bridges, ‘G-33 Proposes Specific Numbers for Special Safeguard Mechanism’, above n 12; G-33 (2007), Ministerial Communiqué Jakarta 2007, 21 March 2007, para 10.

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special treatment either because it has important intrinsic characteristics, as for example, food or medicine; or the product has important extrinsic characteristics, including its impact on particular aspects of a state’s economy. These ideas will be addressed in turn. A product might be chosen for special treatment because it contains some quality which allows it to be consumed, used as a medicine, or marked out with special religious significance. If a product is regarded as food, then a state may wish to restrict market access for cheap imports so that the domestic price of the product is not reduced to the extent that domestic industries cannot compete. For some countries with undernourished populations, cheap imported agricultural products certainly seem to be the answer. However, as a 2006 Food and Agriculture Organization (FAO) report pointed out, for undernourished rural populations no improvement can be achieved unless agricultural production is first stimulated. Agriculture is an important engine for growth in such countries as productivity-driven growth increases food supplies, thereby reducing food prices in rural markets, raising farm incomes and as a consequence boosting overall economic growth.23 In such a situation market access will be ultimately about maximizing exports once the country is in a position to export, but in the short term, market access will be about restricting access for specific food products.24 Market access for ‘food’ products might also be excluded or limited due to their lack of nutritional value. Or products might enjoy different treatment on the grounds of religious ideas. Judaism and Islam both prohibit the consumption of certain food types. The Jewish religious writings in the Books of Leviticus and Deuteronomy prohibit certain types of bird, shellfish and other ‘fish without fins or scales’, as well as animals that do not chew the cud and pigs. Other foods are ‘kosher’ and therefore fit to be eaten. Islam contains similar prohibitions: ‘carrion, blood and the flesh of swine’ and other foods expressly listed in the Islamic holy writings, the Koran, cannot be consumed. These products are selected for special treatment in terms of market access and may in fact be subject to a full import ban: for example, Israel has in the past banned imports of beef and Saudi Arabia has banned imports of pasteurized milk.25

23

FAO (2006), The State of Food Insecurity in the World 2006, Rome, Italy:

FAO, 6. 24 See the debate on ‘special products’ in the WTO which is discussed later in this chapter: WTO (2006), Chairman’s Reference Paper: Special Products, Geneva, Switzerland: WTO, 4 May 2006. 25 Echols, ME (2001) Food Safety and the WTO: The Interplay of Culture, Science and Technology, The Netherlands: Kluwer, 20–22.

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Products may also be identified for special treatment in terms of market access because they are politically sensitive for a country.26 Sensitive products in the context of the Doha Development Round are regarded as critical to the successful conclusion to the round.27 Following on from paragraph 7 of the Hong Kong Ministerial Declaration28 and paragraphs 31–4 of the July Framework Agreement,29 sensitive products are those which a country self-designates as ‘sensitive’ on political grounds. Under the current proposals, all countries can make less severe cuts in their tariff levels for these products than those required by the main tariff-reduction formula contained in the July 2008 Revised Draft Modalities document.30 The percentage designated as sensitive has changed significantly over the time of the negotiations and still varies, dependent on the development status of the country concerned, from 4 to 6 per cent of tariff lines for developed countries and one-third more for developing nations.31 In return for the reduced cut, members will be required to guarantee minimum access through tariff rate quotas based on the levels of domestic consumption of the product (mostly in its unprocessed form, although some members support the inclusion of processed products): consequently, the quota is either imposed if it previously did not exist, or is expanded if it does not meet the required levels.32 The size of the tariff quota 26 Earliest indicators that certain products should be treated as sensitive are found in Norway’s original proposal: WTO (2001), WTO Agriculture Negotiations: Proposal by Norway, Geneva, Switzerland: WTO, G/AG/NG/W/101, 16 January para 9. For the impact of tariffs on sensitive products see ESCAP (1996), Agricultural Policy Reform under the Uruguay Round: Implications for Developing Countries of the ESCAP Region, Asian and Pacific Developing Economies and the First WTO Ministerial Conference: Issues of Concern, United Nations. 27 WTO (2006), Chair’s Reference Paper: Sensitive Products, Geneva, Switzerland: WTO, 11 May. 28 WT/MIN(05)/DEC, 18 December 2005. 29 WT/L/579, 2 August 2004. 30 For the main provision, products are characterized by the height of the bound tariff; the degree of cut required depends on the height of the tariff; cuts vary from 66 to 73 per cent in the top tier to 50 per cent in the bottom layer. This is subject to an overall minimum average cut in developed country tariffs of 54 per cent. Different rules apply to developing and recently acceded members (RAMs) and least-developed nations, WTO (2008) ‘Revised Draft Modalities’, Geneva, Switzerland: WTO, TN/AG/W/4.Rev.3, 10 July 2008, paras 61–70. 31 Revised Modalities, July 2008, ibid., paras 71–2. There is a deviation if more than 30 per cent of the products fall into the top layer. It remains undecided whether it is possible to declare a tariff line sensitive if it was not already subject to a pre-Doha Round tariff quota: Revised Draft Modalities, July 2008, ibid., para 80. 32 April 2008 saw six members, Australia, Brazil, Canada, Japan, the EU and the US, put forward a compromise text on sensitive products requiring up to 90 per cent of domestic consumption to be counted for unprocessed or ‘core’ products, with processed products making up the remainder. For products at the eight-digit level of the HS Code,

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changes are dependent on the degree to which members have elected to deviate from the tariff-cut formula.33 Ultimately whatever consensus is achieved on the issue, the critical point is that supporters of special treatment for sensitive products see them as requiring differential treatment purely on the basis of the nature of the product, rather than on any external justification that the product is in fact politically sensitive.34 In some respects, this vision of market access is somewhat extreme and most interpretations focus on market access as a tool to achieve other goals. The difference between a product-centric vision and market access as ‘function’ is that for the latter the rules must establish the link between market access and the required goal more fully, or permit the use of the different strategies so that the goal can be fulfilled. It is important to stress at this stage that the discussion does not seek to show that those understanding the problem of market access for agricultural products through a product-centric lens are wrong, whereas those who understand the problem from a functionalist point of view are right. Rather, the point is that both these perspectives are equally valid and represent different ways in which the problem of market access can be understood.35 Market Access as Function Market access can also be seen in terms of its ability to promote specific goals within the international trading environment. Such goals might be broadly conceived like global welfare, or a fair trading system. For example, the rules on international agricultural trade might be seen a vehicle to promote development. Those supporting this view are likely to advocate asymmetric treatment for developing and least-developed countries in a way designed to redress the imbalance in the free operation of agricultural markets caused by developed countries’ protectionist policies. Such treatment might take the the agreement calculates the equivalent amount of primary products they contain: Bridges (2008), ‘WTO Members Reach Moment of Truth on Sensitive Farm Products’, 12(12) 11 April. This has been translated in Annex Ai of the July 2008 draft of the Revised Modalities with detailed rules for specific products including dairy, fruit and vegetables. 33 Revised Draft Modalities July 2008, above n 31, para 74. 34 There is disagreement on whether there should be some linkage to the sensitive nature of the product, see Bridges (2008), ‘WTO Members Reach Moment of Truth on Sensitive Farm Products’, above n 32. 35 How these different perspectives can be equally valid simultaneously is because of the nature of the problem of international agricultural trade: it is a polycentric, rather than a linear problem. These ideas are addressed more fully from the perspective of market access in Chapter 4 and from the perspective of domestic support and export subsidies in Chapter 5.

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form of lesser implementation commitments for some provisions, or specific rules tailored to such countries’ needs, like the ability to impose safeguard measures higher than the bound ceiling for tariffs following an unexpected import surge.36 In addition, a functionalist approach might focus on narrowly construed goals like animal welfare. For the European Communities, for example, there is an essential link between ensuring food quality (‘quality food specificity’) and market access as it is only through enhancing market access for quality foods that consumers could be said to have a truly free choice of food they wished to eat.37 There is an explicit link between the two so that it is both the ideas of enhancing market access opportunities for the products and the achievement of the objective (food quality) that are equally important. The suggestion is therefore that the need to maximize market access opportunities should not be to the detriment of the objective of achieving access for quality foods. Likewise the European Communities’ later proposal on animal welfare states that consumers have the right to make an informed choice regarding the welfare standards of their live animal and animal products.38 Market access rules should therefore not undermine domestic legislation which promotes differential standards based on welfare standards. Whilst the two examples discussed above focus on facilitating development goals or the preservation of animal health, a functionalist approach to market access would also regard policies aimed at broader non-trade goals, like preservation of the rural landscape and population, food security, the right to food, or even human rights more broadly conceived, as legitimate policy objectives. Consequently, the rules on market access must facilitate the legitimate pursuit of these goals, irrespective of whether this means a slight modification to an understanding of what ‘free trade in agricultural products’ means.39 36 The special safeguard for developing nations is highly controversial and led to the collapse of the multilateral trade discussions in July 2008. Bridges (2005), ‘G33 Outlines Special Safeguard Mechanism for Developing Countries’, 9(37), 2 November, Revised Draft Modalities, July 2008, above n 31, paras 135–6, and Beattie, A and Williams, F (2008), ‘Doha Trade Talks Collapse’, 29 July, Financial Times. 37 WTO (2000), European Communities Proposal: Food Quality, Improvement of Market Access Opportunities, Geneva, Switzerland: WTO, G/AG/NG/W/18, 28 June, 1. 38 WTO (2000), European Communities Proposal on Animal Welfare and Trade in Agriculture, Geneva, Switzerland: WTO, G/AG/NG/W/19, 28 June, 1. 39 This is not to say that trade liberalization would be rejected on this approach, but rather that free trade would be pursued in the light of the non-trade concern. This approach would therefore suggest some kind of balance between the competing objectives which may or may not prioritize the liberalization goal. See Smith, F (2007), ‘Thinking Outside the Green Box: Non-Trade Concerns in a Post-Doha Environment’, 9(2) Environmental Law Review 89.

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What is the implication of identifying these different ways in which the problem of market access for agricultural products can be understood? Whether market access is perceived as an issue of product movement, or as function or as an idea about a type of product, each notion cannot be isolated, but instead must be viewed as a crossover between the three categories. For example, support for special treatment for a product might only be about the strategic importance of the product within the domestic territory of the state, but equally it could also be coupled with the promotion of development as an objective. Equally, support for sensitive treatment could also be about protecting the growth of certain products in specific ways: a product might be sensitive because it is grown in certain areas of the country. For example, the French place great importance on the quality of their food.40 The importance of food quality and specific cultivation methods is evident in their domestic agricultural policies. Better-quality products, according to the French ethos, are achieved when a crop is produced in a specific geographic area where the combination of the physical environment, including the climate, the soil and the nature of the land all meet to create the ‘perfect’ product. Differentiating these products from other seemingly identical ones is a critical part of French domestic agricultural policy. Such a product might be designated as sensitive for these different reasons.41 In a discussion about how market access for sensitive products should be perceived, each member might appear to be arguing that ‘sensitive product’ has an objective meaning. In fact, members’ underlying ideas about what they think the market access rules are for and whether particular products should be treated differently on the basis of their characteristics will inevitably lead them to argue for greater or lesser cuts in the tariff levels on those products. The conclusion is that those who engage with the problem of market access do not do so from a very rigid perspective based on one of three notions: market access as product, market access as the nature of the product and market access as function. Rather, their views are shaped by the complex interplay between the three ideas.

40 See Broude, T (2005), ‘Taking “Trade and Culture” Seriously: Geographical Indications and Cultural Protection in WTO’, 26 University of Pennsylvania Journal of International Economic Law 623. 41 Equally, this issue might be regarded as an issue regarding a specific way of rural life, preservation of food quality, and/or a labelling issue: see European Communities–Protection of Trademarks and Geographical Indications for Agricultural Products, WT/DS174, 15 March 2005.

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HOW DO DIFFERENT UNDERSTANDINGS OF ‘TRADE’ AND ‘AGRICULTURE’ IMPACT ON THE RELATIONSHIP BETWEEN MARKET ACCESS AND CULTURAL DIVERGENCE? The discussion in the preceding sections established that market access can be understood from a number of different perspectives and the complex interplay between them. The perspective we take has a direct impact on how we think the rules on market access should be constructed and what the problem with the existing rules is. We should not regard these different perspectives and their interaction as the only possible level of disagreement among members however. These perspectives are themselves based on other various understandings of what ‘trade’ is and what ‘agriculture’ is.42 This added level of complexity means that whilst members or commentators seem to agree on a particular way that market access should be understood, in fact deeper disagreements on ‘trade’ and ‘agriculture’ mean there is only consensus at the most superficial level. Consequently, tensions still remain within the ‘agreed’ text which can arise as disputes between parties on the way that the rules should be understood. It is not possible, nor fruitful, to explore these ideas exhaustively.43 Instead, one example illustrates the point. This example focuses on an understanding of market access from a product-centric viewpoint and how different interpretations of ‘trade’ as ‘trade in products’ shift our understanding of what market access is and how the rules based on that understanding should be constructed. Market access can be seen in terms of a product’s right to penetrate and thereby participate in commercial activity within a given place (or market) where buying and selling of that product occurs. Such a place might be limited in a geographic sense by the territorial boundaries of a state, for example, or it might be delimited only in terms of the product itself: in this latter case, the activity occurs anywhere where there is demand for the product irrespective of geographic boundaries. The space to which the product must gain access might also be determined by a combination of both product and geographic factors. In terms of international trade, the space into which a product gains access will inevitably be shaped to a lesser or greater extent by the territorial 42 See Chapter 1 for a discussion of some of the different ways that ‘trade’ and ‘agriculture’ can be defined and how this is important to the general argument. These ideas will also be returned to in Chapter 5. 43 It should be reiterated also that what follows is only one way in which this way of thinking can be drawn. The nature of international agricultural trade as a polycentric problem means that there are many other, equally correct, ways in which the problem can be explained. See Chapter 4 for more detail on this.

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boundaries of the states who accede to the WTO Agreements.44 How we determine what rights of access any product has, and to where, is dependent on how we understand ‘trade’ and ‘agriculture’. We can use some of the understandings of ‘agriculture’ and ‘trade’ identified at the beginning of this chapter and fully explored in Chapter 1 to illustrate this point. There is no definitive starting point for this discussion, however from a very generic view ‘agriculture’ is the general husbandry of the earth and the consequent gathering in of crops and the rearing of livestock. ‘Agriculture’ in this sense is very broad, covering both the physical act of cultivating the land and the enjoyment of the products that are a consequence of the producer’s actions. Agricultural products are the rewards for that producer’s labours. To some extent, it appears from the Uruguay Round initial proposals on how international agricultural trade should be regulated that states did support such an inclusive definition of ‘agriculture’. The Ministerial Declaration of the Uruguay Round itself refers to ‘natural resource-based products’ in terms of those products that should fall within the trade talks.45 In addition, the United States advocated in its initial negotiating proposal in the Uruguay Round a broadly conceived illustrative list of products which could be defined as ‘agricultural’.46 This expansive definition can also be found in Annex 1 of the WTO Agreement on Agriculture itself, where all products listed from Chapters 1–24 of the Harmonized System of Customs Coding Nomenclature are coupled with a few additional headings and sub-headings all designating a product as ‘agricultural’. Subsequent negotiations also reveal the push by some agriculture exporting nations at least to support a liberal view of what ‘agriculture’ is for the purposes of the rules. Most notably, the Cairns’ Group continually supports the inclusion of all agricultural products within the WTO regulatory scheme.47 If ‘agriculture’ is understood in this way, then market

44 US Department of State (2000), Language of Trade Terms, 3rd edn, Washington DC, contains the USDA’s understanding of ‘market access’. See glossary. 45 GATT (1986), Ministerial Declaration on the Uruguay Round, Geneva, Switzerland: GATT, GATT/1396, 25 September, 6–7. 46 GATT (1989), Submission of the United States on Comprehensive Long-Term Agricultural Reform, Geneva, Switzerland: GATT, MTN.GNG/NG5/W/118 (25 October), proposal on safeguards and Annex 1. 47 WTO (2000), Negotiations on Agriculture, Cairns’ Group Negotiating Proposal, Market Access, above n 20; see later proposals WTO (2007), Achieving Substantial Improvements in Market Access in Developed Countries, Geneva, Switzerland: WTO, JOB(07)123, 11 July, 2. It is clear from this negotiating proposal that the Cairns’ Group is also responding to a number of issues which arise in relation to the treatment of different types of agricultural product. Different regulatory treatment regarding different products is addressed below. At this stage it is enough to state that the Cairns’ Group’s own consistent message is that the WTO regulatory scheme for

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access is the process by which all these fruits of the producer’s labours would penetrate other markets. This seems to be a really obvious point: agricultural products are clearly those grown or reared on the land, so market access must be about allowing access for these products. It is the purpose of trade rules to facilitate this understanding therefore. However, if we retain this fixed view of ‘agriculture’ but now add into the discussion divergent ideas of what ‘trade’ is (that is, what the definition of ‘trade’ is for the purposes of the WTO rules), we see that what we thought was obvious, about what market access is, subtly changes. If we start with the ‘ordinary meaning’ of ‘trade’,48 then all products which are capable of transfer from one party to another and which have a commercial value are products that can be ‘traded’ for the purposes of the WTO rules. ‘Trade’ viewed in this sense of ‘trade in the product’ does not seem to challenge our original assumption that all the products identified as ‘agricultural’ should be accorded market access under the trade rules. Carrots, potatoes and wheat, for example, are all capable of physical separation from the land and can sustain a financial price in a market. If trade is only about transferring control over the product as defined in terms of its physical characteristics, then the market access rules should facilitate that movement by removing as many impediments as possible so that the product can penetrate every geographic space equally where there is demand for that product. Such views are very commonly held among strong agricultural exporting nations like members of the Cairns’ Group.49 However, this conclusion is not inevitable. ‘Trade’ as ‘trade in product’ is based on two fundamental assumptions. First, the product must be capable of transfer either because its characteristics allow it to be physically moved, or because it is possible to acquire property rights in the product which allow ownership to be transferred. Second, the product must have a commercial value. Disagreement in our understanding of those assumptions’ scope results in different ideas of what ‘trade’ as ‘trade in the product’ means and consequently, what ‘market access’ is.

‘agricultural products’ should be as expansive as possible to ensure fully liberalized markets. 48 Defining the ‘ordinary meaning’ of a term is endorsed by Article 31(1) Vienna Convention on the Law of Treaties, done at Vienna 23 May 1969, 1155 UNTS 331, 8 ILM 679 (1969); this approach is supported by the WTO Appellate Body in United States–Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, 29 April 1996 (Appellate Body Report), 17. 49 WTO (2007), Achieving Substantial Improvements in Market Access in Developed Countries JOB(07)123, above n 20. There are currently 19 members of the Cairns’ Group including Australia, New Zealand, Brazil and Canada. For a full list of members see http://www.cairnsgroup.org/map/index.html.

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A product can be traded because its inherent characteristics mean that it can be physically segregated from other products sufficiently to allow a person to exclude others from the benefit of it unless they pay for the privilege. This separation may also mean that an individual can enjoy exclusive rights (or ‘property’) over the product and thereby charge subsequent persons for their enjoyment of it, either because ownership has been transferred outright, or because limited forms of ownership are granted, like a licence, for example. This view of ‘trade’ seems to assume that if a product cannot be excluded from others either through actual separation or through the transfer of ownership, then it cannot be ‘traded’. As a corollary to this, such products would not need to be given market access. A commonly cited example of such products would be ‘public goods’, like fresh air for example.50 Whilst it is true to say that some ‘public goods’ would not form the subject of a ‘trade’ transaction if they are defined in terms of their characteristics from a broadly conceived economic perspective, if we expand our understanding of what public goods are, then other products start to fall within the meaning of trade.51 If such products can be traded, then market access for those products must be considered. Some products might in fact become more important as a consequence of their ‘public’ elements, rather than less. The key point is that the definition of ‘agriculture’ has not changed from the expansive idea of all products grown or reared on the land, but the definition of ‘trade’ is not the same because the perception of what a tradable product is is modified. Disagreement occurs either because the need to make special provision for these products in terms of market access is not recognized, or some special provision may be regarded as necessary, but there is disagreement on the method by which that should occur. The starting point is to understand how a product might be said to contain ‘public’ elements. The idea is that there is something about the product (its characteristics) which make it important to the state in such a way that that state feels the product should be accorded special status for the purposes of market access. This special status might range from excluding imports of the product as it is deemed harmful, or toxic to the population as a whole, or the state might focus on specific products which are deemed particularly beneficial to the domestic

50 This conclusion is not inevitable however; see Chapter 1 for a detailed analysis on this point. 51 Geuss argues that the notions of ‘public’ and ‘private’ and ‘goods’ are malleable and should not be regarded as absolutes, but as descriptions of human interaction: see Geuss, R (2001), Public Goods, Private Goods, Princeton, NJ: Princeton University Press, 6–10. Following one of these alternative ways in which ‘public goods’ can be defined leads to another different way in which the meaning of ‘trade’ changes our perspective of how this example can be understood.

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economy and thereby exclude or restrict imported products: excessive imports of such products may be deemed harmful to that state’s general development, or to its GDP and, as a consequence, should be restricted to enable the state to enjoy the full benefit of the product. This characteristic of the product is then ‘public’ to the extent that the characteristic is enjoyed by the population (or the state) as a whole, either because the exclusion of the product benefits all the population from a health point of view, or because restricted market access benefits specific vulnerable sectors, and promotes growth in the country. This ‘public’ aspect of the product might be about understanding ‘trade’ as a mechanism to fulfil a specific goal: health or development for example (i.e. ‘trade as function’), rather than as ‘trade as product’. Whilst this is true on one level, the point here is that the focus remains on a specific product and its actual characteristics as a ‘public good’: that ‘public good’ aspect does have an intrinsic commercial value to the state as it may be willing to forgo other benefits which could accrue to it through the trading system as the ‘price’ of protecting that particular aspect of the product. More importantly, as the product already contains the public quality within its make-up, there is no need to prove a link between the product and an objective (food security, preservation of rural livelihoods, etc.) as might be the case if trade were regarded as fulfilling a function.52 If we then translate these ideas into the language of the market access rules: to the extent that the existing rules do not fully accommodate this notion of ‘public good’, it would be necessary to build in some special features into the rules to take account of products which contained this ‘public’ element. For those who support this view, the rules should restrict market access in a way which allows the population to benefit fully from the product’s ‘special’ characteristics. Because the product possesses the public quality already inherent in its make-up, the emphasis would be on showing the importance of that product to the particular domestic economy, rather than on proving whether growing those crops could in fact alleviate poverty/food security on an objective basis. This argument has resonance for many aspects of international agricultural trade regulation where a product can be said to contain a public element like environmental protection and the preservation of human health or

52 ‘Trade’ as function is the idea that trade can be used as a mechanism to achieve full employment or rises in income, to broader ideas of using trade to preserve the environment. This issue has been discussed more fully in Chapter 1. See generally Marrakesh Agreement Establishing the WTO, para 2 Preamble; also the debate on multifunctionality of agriculture where agricultural policies are inextricably linked to non-trade objectives: OECD, Multifunctionality: Towards An Analytical Framework, above n 7, 7.

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animal welfare. However, clear recognition of this idea can be found in the special products debate.53 Special products are already recognized to a limited extent in Annex 5 of the Agreement on Agriculture. Annex 5 exempts certain measures from the scope of Article 4(2) in two circumstances. First, under Annex 5A, if products are designated as such in the member’s tariff schedule by the nomenclature ‘ST-Annex-5’; if production is effectively limited and no export subsidies are applied to the product; finally if imports of the product are only equivalent to 3 per cent of domestic consumption during the base period (1986–88).54 Second, measures on primary agricultural products are exempt from conversion in accordance with Annex 5B if they form part of the traditional staple diet of a developing country member. Such products must also comply with the provisions of Annex 5A(a)–(d). Exemption under Annex 5A lapsed effectively after the end of the implementation period in 2000.55 For Annex 5B the exemption lapsed after the tenth year following the start of the implementation period (i.e. end 2004), although there is provision for renegotiation of both Annex 5A and B through multilateral trade talks.56 Paragraph 41 of the July Framework Agreement 2004 reflected a broad consensus among members that in principle developing country members would be permitted to designate certain products as ‘special’ in the amended Agreement on Agriculture. Such products would be entitled to ‘more flexible treatment’ in terms of tariff reduction under the amended market access rules than products which did not have that status. The degree of consensus in 2004

53 There is some resonance for the sensitive products debates too, see discussion above. On sensitive products, for example, the European Communities supported the inclusion of animal welfare as an intrinsic part of the agriculture negotiations. Whilst this was discussed in the context of non-trade concerns and the rules on domestic support, there was also a suggestion that the idea of animal welfare should not have a non-tariff barrier in violation of the market access rules, see WTO (2000), Animal Welfare and Trade in Agriculture: European Communities Proposal to the Committee on Agriculture, above n 38. 54 Annex 5A(1)(a)–(d). 55 Note Annex 5A(3) which allowed members to renegotiate an extension under the auspices of the renegotiation of the entire Agriculture Agreement. Note that the problem of sensitive products for developed country members is addressed in WTO (2008), Working Document No. 10 Market Access: Sensitive Products, Geneva, Switzerland: WTO, January 2008, see below. 56 Annex 5B(8). During the Doha negotiations it is proposed that developing country members shall have recourse to limitations from their market access commitments on the grounds that certain products are ‘special’, ‘super special’, and certain are ‘sensitive’: WTO (2008), Working Document No. 15 Market Access: Special Products, Geneva, Switzerland: WTO, January 2008; also WTO (2008), Working Document No. 10 Market Access: Sensitive Products, Geneva, Switzerland: WTO, January 2008.

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was that ‘special products’ would be so designated according to criteria based on food security, livelihood and rural development needs.57 It is possible to see ideas about the importance of the intrinsic ‘public’ character of the product in the illustrative list of criteria that designate a product as ‘special’ for the purposes of the amended rules on market access. Annex F of the July 2008 Revised Draft Modalities lists 12 criteria that are indicative of a product’s special status. There is no suggestion as yet whether all the criteria must be satisfied to achieve the status, but what is clear is that some of the criteria focus on the inherent nature of the product itself. For example, inter alia, the product must be a staple food or part of the ‘basic food basket’ of the particular country; a proportion of domestic consumption of the product is met by the domestic industry of the country concerned and a proportion of the producers of the product are ‘low income, resource poor, or subsistence farmers, including disadvantaged or vulnerable communities and women’.58 In each case, the quality of the product, either as a basic foodstuff, a contributor to the national income of the country, or as a facilitator for the alleviation of poverty, is all directly relevant to its status as ‘special’. It is tempting to think that the July 2008 Revised Modalities on Agriculture reflect agreement among members of a product’s public nature. Whilst it is true that the non-bracketed text is indicative of consensus in so far as the Revised Modalities document as a whole has been accepted by members, it is not necessarily the case that full agreement on every aspect has been established. ‘Agreement’ in this sense should not be seen as a linear notion where everyone accepts a series of concepts in principle, for example members accept that special tariff treatment should be accorded to certain categories of product, and then go on to accept that those cuts should be made at a certain level. Rather, ‘agreement’ is instead used in a vertical sense: on each issue, whilst a member might agree in principle that certain products should be accorded special treatment, how they place the emphasis on the way in which that should occur differs. This is because the disagreement concerns how the rules should be fundamentally understood. Therefore, instead of the Revised Modalities reflecting full agreement on the non-bracketed issues at every level, in fact the consensus achieved is only the appearance of agreement and more problems may exist beneath. For those who support the idea of ‘public goods’, then ‘trade’ is the transfer of the full value in the product to the population as a whole. The emphasis in a negotiating proposal that supported this view would be on retaining as far 57 WTO (2004), Doha Work Programme: Decision Adopted by the General Council 1 August 2004, Geneva, Switzerland: WTO, WT/L/579, above n 29, para 41 (the July Framework Agreement). 58 Revised Draft Modalities, July 2008, above n 31, Annex F paras 1, 2 and 6.

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as possible the full benefit of the product. The market access rules should then restrict the entry of products which would undermine the effects. Because the product automatically has positive effects, there would be no need to prove that the product did in fact promote growth or preserve the rural livelihood of the producer, etc., as such, and so the designation of the product as special could be left to the member to determine. For example, the G-33 proposal on market access for special products suggests that a developing country member should be able to designate up to 20 per cent of tariff lines as ‘special’.59 Whilst appearing a small percentage in itself, Crawford Falconer pointed out in a later Committee on Agriculture discussion document that this figure in some cases represented up to the value of between 94 per cent and 98.4 per cent of the value of the import trade for a specific country.60 In addition, for the G-33, the illustrative list is not cumulative, exhaustive or prescriptive and is only indicative of the types of benefit such products can confer on a country.61 This suggests that the focus would be on the product itself and its inherent benefits, rather than proving whether the product contributed to broadly conceived development objectives. In contrast, whilst the United States recognizes the category of ‘special product’, its proposal’s emphasis is different: the proposal suggests limiting the scope of the exclusion from the market access rules in a way which does not recognize the product’s intrinsic public characteristics. The United States instead proposes that only five tariff lines can be designated as ‘special’, thereby significantly reducing the number of products which would fall within the category to around 1 per cent of the total number of developing country tariff lines.62 Further restrictive ideas were put forward by Thailand: here the United States’ restrictive notions of product eligibility are expanded and the criteria by which eligibility is assessed must be fully proven.63 Both these approaches suggest a different understanding of trade as ‘trade in products only carrying a commercial value’; the ‘public’ element intrinsic in the product is not recognized as such in this approach. This different view then leads to the need to demonstrate why some products require different legal treatment when basically all have the

59 WTO (2005), G-33 Proposal on the Modalities for the Designation and Treatment of any Agricultural Product as a Special Product ‘SP’ by any Developing Country Member, Geneva, Switzerland: WTO, JOB(05)/304, 22 November, para 3.1. 60 WTO (2006), Chairman’s Reference Paper: Special Products, above n 24, para 8 based on information provided by the WTO Secretariat. 61 G-33 proposal, above n 59, para 3.1. 62 WTO (2006), United States’ Communication on Special Products, Geneva, Switzerland: WTO, JOB(06)/137, 3 May. 63 Third World Network (2006), ‘Major Differences Over Special Products, Special Safeguard’, 30 April 2006.

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same commercial value. These divergent views on the eligibility criteria are translated into the Revised Draft Modalities in terms of the number of products eligible for special market access treatment.64 In contrast, those who see trade as a mechanism to achieve other non-trade goals will perceive this issue of public goods differently. Agricultural products for which access must be granted can still be defined in an expansive way, covering all products deemed to be the ‘fruit’ of the land. However, the change in the understanding of trade means that the import of those products into a geographic territory can only be restricted if the member can show that that restriction has positive effects for the member concerned. Returning to the discussion on special products, those members who share this idea of ‘trade as function’ will be keen to include a causation requirement in the rules. This understanding again does not give a homogeneous outcome because it depends on what function each member thinks trade must fulfil: inevitably there are multiple functions and each may colour the other. For example, a member who thinks that trade is about achieving global welfare through the liberalization of trade will encourage the removal of all impediments to market access in so far as possible. Such a member might also believe that trade can achieve global welfare for developing nations, but this must be by removing barriers to trade wherever possible. Whereas a member who believes in trade as a mechanism to promote development might have a more expansive view of how that could be achieved, it may be more focused on protecting crucially important internal industries rather than relying on liberal market theories to support its policies.65 For example, returning to the availability of the market access exemption in the Revised Draft Modalities, in contrast to the G-33 who supported a very weak causation requirement, Thailand, supported by other exporting nations like New Zealand, Canada and Australia, pushed for a more rigorous requirement: it argued that a product would only acquire the special status if a ‘more certain’ percentage of domestic consumption of the product was met by domestic production and that the percentage of contribution of the product to national nutrition was more specific.66 In addition, although the special product exception does appear couched in the language of trade as a mechanism of achieving development, this is no real consensus over what this might mean. The illustrative list in Annex F of the Revised Draft Modalities gives an overview of the types of development goals that would be appropriate, but as it is not clear whether these criteria are cumu-

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Revised Draft Modalities July 2008, above n 31, paras 120–22. This is an approach Stiglitz found used by some developing countries during the Asian crisis. Stiglitz, JE, and Charlton, A (2005), Fair Trade for All: How Trade Can Promote Development (2005), Oxford, UK: Oxford University Press, 120–24. 66 Third World Network, above n 63.

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lative or not, there is a sense in which the ultimate goal for which ‘trade in the products’ would be a mechanism might itself shift around. For example, paragraph 1 of Annex F states that the product is special if it is, inter alia, ‘identified as a staple food or as a part of the basic food basket’ of the country.67 The food security goal is clearly an important goal of developing countries. However, for a member who understands ‘agriculture’ in the sense of ‘food’ and ‘trade’ as ‘trade as function’ (i.e., development promotion and/or preserving a ‘right to food’), paragraph 1 will be more important than any of the other criteria listed in Annex F. The member might then feel it is enough to show that the product is ‘a staple food or … a part of [its] basic food basket’ to gain the benefit of the exemption, rather than feel the necessity to go on and prove all the remaining criteria in Annex F.68 In the absence of any consensus of what ‘food’ is, difficulties of whether a product does in fact constitute a ‘food’ are likely.69

CONCLUSIONS This discussion is presented as a series of linear understandings of the nature of market access. These understandings are not confined to just seeing market access as product transfer or as a method for achieving global welfare, but are in fact multiple layered tensions based on different meanings of ‘trade’ and ‘agriculture’. In reality, these disagreements are not linear but, as members and commentators engage with various ideas about how market access should be regulated in the WTO, they subconsciously slide between the various understandings in an erratic pattern. The result is either complete disagreement on an issue or the appearance of agreement whilst the tensions remain underneath. This is not to say that consensus is not possible, but rather that we should not be surprised when problems remain after what appears to be a successful round of multilateral talks on agriculture. These insights into cultural divergence allow all who engage with the problem of international agricultural trade to be aware of shifting tensions and how their own views might be coloured by their ideas of what market access is. Market access should then not be seen as an objectively

67 68

Annex F Revised Draft Modalities, above n 31, para 1. This approach is to some degree accepted by the Illustrative List provided in the G-33 proposal on special products: G-33 proposal, above n 59 Annex paras (i)–(iii). 69 ‘Food’ can mean sustenance, but equally agricultural products might be excluded on religious grounds, or excluded because they have not been produced in a specific way: see Leininger, above n 6, 154 and see Echols, above n 25, 20. For a more detailed discussion on the notion of ‘agriculture’ as ‘food’ see Chapter 1 of this book.

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provable truth, but rather as a concept which is given life through our different perceptions of it. These insights are crucial as the analysis moves forward in Chapter 4 to consider the problem of market access in more detail: that is to engage with it as a polycentric problem.

4. Polycentrism and the issue of market access INTRODUCTION This book’s previous chapters put forward the proposition that the problem of international agricultural trade regulation is complex.1 Rather than being confined to the idea that barriers to international agricultural trade are too high and must be reduced, this book instead shows that this is only one way in which the problem of international agricultural trade can be conceived. Chapter 3 explored another dimension to the problem in the context of market access, that of cultural divergence; this chapter explores a second, albeit linked, dimension. The purpose of this chapter is to explore how access to domestic markets for agricultural products can be understood as a polycentric problem.2 In other words, it will consider what market access is and how different understandings of the idea lead to different interpretations. On one level, market access can mean many different things, but on another level, people appear to agree on a single meaning, but this may hide the fact that beneath this superficial level, their views may be diametrically opposed. When different people operate from different starting points, they can collide in their judgements, or converge in judgement for very different reasons. Where there is collision, typically, the result is a third outcome; but where there is convergence without genuine agreement on the meaning, the effect is that the parties are talking past each other, so no specific resolution is achieved.3 Consequently, the problem remains unresolved and therefore may suddenly re-emerge in any context to frustrate the parties’ aims. Much of the frustration felt in multilateral trade negotiations results from the parties’ belief that they are tantalizingly close to

1 See Chapter 1 for a review of the traditional way in which the problem is conceived. 2 Fuller (1978–79), ‘The Forms and Limits of Adjudication’, 92 Harvard Law Review 353, 395. See also Chapter 1 above. 3 Wittgenstein, L (1953), Philosophical Investigations, London, UK: Blackwell, §20.

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agreement, when in fact, this chapter will suggest, the level of agreement is much lower than it appears.4 Agreement occurs where everyone is moving in the same direction on every level. In contrast, disagreement is not a single idea but involves a multiplicity of directions. Disagreement then entails a much more complex pattern in which there is constant crossing and re-crossing of paths by parties whose ideas are structured by different starting points. Fuller famously used the analogy of a spider’s web to describe such situations where there is not one disagreement but many interrelated disagreements, so there is no final correct description of the problem. 5 In this image, the various argumentative trajectories represent the different strands of the spider’s web. As Fuller says, each point of convergence is a distinct centre for the distribution of tensions across the whole web. Hence, the description of the problem as many centred, or ‘polycentric’. Like a spider’s web, exerting pressure at any of these points is likely to stretch certain strands and break others, so that attempts to resolve any one of these centres of tension will merely increase the tension elsewhere in the web. This means in effect that if pressure is exerted on any one of these centres, the resulting tensions will be different each time. Arguments are not without consequences. Any attempt to press the argument again after it has been questioned or rejected will not simply duplicate the effects on the whole web, as previously, because later arguments will in fact have broken strands of the web along which the original argument travelled. Instead, pressing the original argument creates new patterns of tension across the web. This means the problem of market access is not capable of final resolution, but is instead a permanent problem within the WTO regulatory scheme. Thus, the appropriate strategy is one of management, rather than final resolution. It is the failure to recognize this which causes frustration. It is critical that we be on constant guard against approaching a polycentric problem with the lawyerly attitude that we should be able to find a final solution. There are two interlinked dangers if we pursue this path: we become disheartened by the complexity of the task when it is viewed in its correct light and, consequently, abandon the task in favour of superficially acceptable solutions which, though they are intended as final resolutions, can only ever be temporary and partial redistributions of the tensions within the web of ongoing disagreement.

4 WTO (2007), ‘Lamy says relatively small concessions needed for reaching Doha agreement’, The Doha Round at a Crossroads, Economic and Social Council 2007 High-Level Segment, High-Level Policy Dialogue on current developments in the world economy and international economic cooperation, Geneva, Switzerland: WTO, 2 July 2007. 5 Fuller, above n 2, 395.

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ELEMENTS OF THE PROBLEM There are various dimensions to the problem of market access. However, because market access is a polycentric problem, there is no unique starting point and so the selection and then description of its distinct elements (that is, the way in which we separate the problem into its distinct centres) is to a large extent arbitrary. To engage with the problem at all in fact simplifies it and places an artificial structure upon it. As a way of proceeding however, we may conceive of the problem as being composed of the following elements. Market Access Understood through the Lens of the Existing Rules in the Agreement on Agriculture To look at the problem in this way is to look at market access with a view to either constructing rules based on an idea of what market access is, or to criticize rules already in existence. In either case, working towards some sort of definition drives the way in which the problem is understood. In some respects, market access has a definition irrespective of the context in which it is used: it refers to the process in which goods and services enter a place where trade is conducted.6 To the extent that this definition of market access is accepted, it is largely passive and refers only to the product’s physical movement whereby it gains ‘access’ to the specific ‘markets’.7 The definition does not give any indication of whether we are interested in a type of market: specifically, whether it is the product or geographic market. For example, it does not indicate whether are we interested in access to the market for cherries, or the market for milk, or if we are concerned about the country to which we are exporting the products, or a combination of both the type of product and the location it is destined for.8 6 We might refer to this understanding as the ‘ordinary meaning’ of market access following Article 31(1) Vienna Convention on the Law of Treaties done at Vienna 23 May 1969, 1155 UNTS 331, 8 ILM 679 (1969). This approach is supported by the Appellate Body in United States–Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, 29 April 1996, 17. See generally J. Pauwelyn (2003), Conflicts of Norms in Public International Law – How WTO Law Relates to Other Rules of International Law, Cambridge, UK: Cambridge University Press. 7 The term ‘products’ is used to cover both goods and services in this context. The WTO uses this generic term to cover both goods and services, but contrast the approach in the European Union: see Smith, F, and Woods, LW (2005/6), ‘A Distinction Without a Difference: Exploring the Boundary between Goods and Services in the World Trade Organization and the European Union’, 12(1) Columbia Journal of European Law 1, section II. 8 Problems may also occur on the movement of the product out of a specific market and into another. Such difficulties may occur where restrictions are placed on the

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To the extent that the general definition refers to access for products into a specific geographic location, it does not give any indication of whether the product’s ability to cross the border is good or bad, nor how impediments to the importation of that product should be viewed. Likewise, the definition does not refer to the nature of the product itself; specifically whether the product’s intrinsic qualities have relevance to the market access process, and if they do, how those qualities are relevant. There is no reference to the entities participating in the process, particularly the capacity in which each entity is acting: that is, whether they are importing or exporting the product. In addition there is no mention of whether their capacity even makes a difference to the definition at all. Equally, if the existence of the entity is important, there is no indication of whether it is a state, a government, a government entity, a multinational corporation, a domestic corporation, or even an individual; nor is there any suggestion that the identity of the entity even plays a role. The conclusion which flows from this short discussion is that market access itself starts as a passive concept that describes the process by which products enter trade. Once we decide that market access involves a specific product market or location, whether allowing that market access is good, so certain impediments to a product’s importation are bad (or vice versa), or that only certain entities are capable of impeding importation, we are imposing our own definition on to an otherwise neutral notion. As a consequence, we give market access life: we define the nature of the market (product and/or geographic); the entities involved (states, corporations, etc.); what issues count as impediments to market access (if any) and why (or if) those impediments are bad.9 When we look at any definition of market access therefore, we can see that it is composed of these four elements: the market, the entities involved, the impediments to access and how those impediments are perceived. To these four elements is added a fifth, which is an understanding of how the first four elements fit together to form a coherent whole.10 Returning to the analogy of export of products out of one geographic market into another: for example, prohibition on export of defence equipment, for example, European Union Common Position adopted by the Council, 2005/792/CFSP, on prohibition of the export of certain items to Uzbekistan, 14 November 2005, 2005 (OJ) L299/72 (16 November 2005); see also EC Council Regulation 1859/2005 (2005 (OJ) L299/23 (16 November 2005). 9 This idea is not dissimilar to Milsom’s comments on the job of the lawyer which is to ‘arrange yesterday’s results in whatever way will be the most convenient for those working on today’s problem’. Milsom, SFP (1981), ‘The Nature of Blackstone’s Achievement’, 1 Oxford Journal of Legal Studies 1, 1. 10 This final element refers back to ideas discussed in Chapter 2 above about coherence: when we describe a problem, we do so in a way which makes it coherent. That is, we have an idea how all the disparate strands fit together: see Simmonds, N (1982), ‘The Changing Face of Private Law: Doctrinal Categories and the Regulatory State’, 2 Legal Studies 257.

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the spider’s web, each of these (now) five elements represents a centre of the problem, that is, a connection between the strands of the web: a decision on each one of the centres is necessary so that, when all are combined, a cohesive picture is revealed of what market access is. At each centre, a decision between a series of tensions is made, structured by the way we think the problem should be understood. Each decision at each centre is a decision to channel a set of tensions down a particular (regulatory) path. This does not mean that those tensions are dispersed, but rather that they are redistributed through the web of ideas, creating new and diverse tensions. This redistribution should not be translated into the language of systems theory. This is because it is not an argument about creating particular domains per se which define the limits of the relevant participants’ ability to act. Rather, it is an argument about choices: it does not matter what the product is, or who retains control over the choice of product, or who makes that decision about whether control is allocated or even how much is given. Ultimately, the decision made at each point where the tensions meet has repercussions for every other aspect of the analysis and may in fact mean that certain elements have to be redefined as a consequence. Consequently, the problem is not one which can be resolved, but is one which instead shifts onto a different axis as its polycentric elements move around between the various argumentary trajectories. What seems to be agreement on an issue (or centre) is only a point of convergence of views, rather than true agreement where each person agrees at every point on the meaning, scope and rationality behind each issue: convergence is then only a mask covering a continually moving and shifting series of tensions that move around on whichever axis they are currently fixed. In other words, where the domains are drawn is largely irrelevant; instead, it is the consequences of making the decisions for the remaining aspects of the problem which are critical to the problem’s management.11 Tensions in Market Access Starting from the premise that we are viewing the problem of market access through the lens of the WTO rules, we can identify the following tensions that influence the scope of the market access rules.12 These tensions are those

11 It is important to note that, as Fuller found, a polycentric problem cannot be finally resolved, but can only be managed: Fuller, above n 2, 398. 12 Approaches which focus on the benefits of market access in the international trading environment may make reference to the WTO rules, but their focus is more on the effect on specific markets (product or geographic): for example Ingco, MD and Nash, JD (eds) (2004), Agriculture and the WTO: Creating a Trading System for Development, Washington, DC: World Bank and Oxford, UK: Oxford University Press.

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generally identified in the first chapter of this book, but here they take on a market access ‘guise’, or slant. The first strand is trade measures. In the context of market access, this refers to the degree to which members can restrict or permit market access for agricultural products and if restrictions are permitted, what form those restrictions should take: should market access be accorded equally to every product, or can some products be excluded; how should the relationship between tariffs on processed agricultural products (e.g. corn) and their primary commodity counterparts (e.g. biofuels) be addressed? It is evident from a number of studies that higher tariffs on processed products compared to those on primary products have been particularly problematic for some developing nations; but how should this problem be addressed: is it even possible to calculate the actual level of protection? Even if you could, how much protection would be appropriate?13 In addition, who makes the decision to exclude the product: is it the member, or should the decision be accorded to a third public or private entity, like a multinational corporation for example. If decision-making is shared in some way, how is that division made and to what degree is member sovereignty allocated to the dispute settlement mechanism? In addition, this dimension considers the market to which the product is allowed access: whether it is defined in terms of the state’s territory measured in geographic terms, or territory beyond the state like a free trade area or customs union. Or, is the ‘market’ defined in terms of the consumer market for a defined product irrespective of location, or a combination of the geographic and product market. Again, who makes these decisions is relevant. Who is responsible for guaranteeing access in case of default is also important, as is how much of the product need enter the market. The second strand is the development dimension. This is made up of smaller strands, including whether special treatment should be accorded to developing nations perhaps for food security reasons.14 In addition, should export opportunities be enhanced for developing countries, perhaps by forcing developed countries to accept greater quantities of a specific product from developing nations. If special treatment is accorded, further questions arise whether this treatment is the same or different for countries at other stages of development, like least-developed countries or newly emerging economies,

13 This is the problem of tariff escalation: see Lindland’s early study post the conclusion of the Uruguay Round calculating both the rate of tariff escalation and how this feeds into the ‘effective rate of protection’ on the various products in the study: Lindland, J (1997), The Impact of the Uruguay Round on Tariff Escalation, ESCAP/No. 3, Rome, Italy: FAO, 1. 14 OECD (1998), World Food Security and Agricultural Trade, OECD Workshop on Emerging Trade Issues in Agriculture, Paris, France: OECD, COM/AGR/CA/TD/TC/WS(98)105.

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for example.15 Also, should market access obligations for imports into these developing and least-developed/newly emerging countries be less than those for developed members and again, should treatment differ dependent on the level of development at all?16 The third strand is the environment, particularly whether all products are equal irrespective of their environmental impact, and whether market access for some products can be excluded on the grounds that the imported products have an adverse environmental impact within the importing state.17 If some products can be excluded on this ground under other international conventions, how should findings made under these treaties, like the Convention on Biodiversity, be addressed (if at all)?18 This environmental strand also connects into the fourth strand, which is human rights. Here important questions arise about whether a human rights dimension should be considered in 15 For example, see early post-Uruguay Round studies: UNCTAD/WTO Joint Study (1997), The Post-Uruguay Round Tariff Environment for Developing Countries, Geneva, Switzerland: UNCTAD/WTO, TD/B/COM.1/14, 6 October. Also note July 2008 Draft Modalities which differentiate developing from developed countries in terms of market access barriers reduction, but introduce a further category of ‘small and vulnerable economy’ WTO (2008), Revised Draft Modalities on Agriculture, Geneva, Switzerland: WTO, TN/AG/W/4 Rev.3 10 July 2008 para 65. 16 Note that the literature evaluates the impact of the trading environment on developing nations both in terms of the impact on individual countries and on various product markets and on various products within specific geographic spaces. This presents a series of possible regulatory options for WTO members when considering how to address the ‘development’ problem in terms of market access: see essays on the effects of the Doha Development Round on developing nations generally, on specific countries like Mozambique and specific sectoral issues like cotton in essays in Hertel, TW and Winters, LA (eds), Poverty and the WTO: Impacts of the Doha Development Agenda, Washington, DC: World Bank and Basingstoke, UK: Palgrave. 17 This is the classic GMO (genetically modified organism) case, see Scott, J (2007), The WTO Agreement on Sanitary and Phytosanitary Measures: A Commentary, Oxford, UK: Oxford University Press, and Charnowitz, S (2007), ‘The WTO’s Environmental Progress’, 10 Journal of International Economic Law 685. 18 The WTO dispute settlement mechanism has discussed the relationship between other multilateral treaties and the WTO rules in several landmark cases, for example Brazil–Measures Affecting the Import of Retreaded Tyres, WT/DS322/AB/R, 3 December 2007, para 228, European Communities–Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291, 292 & 293/R, 29 September 2006, paras 7.76–7.89 (the GMO case). However, the point in this chapter is more that even though a ruling has been put forward some members may not agree with it: tensions result. Often arguments previously rejected by the panels/Appellate Body are represented in subsequent cases. This is indicative of the fact that whilst they may ‘agree’ to accept a particular panel report, there is disagreement at a more fundamental level: notably the EU’s arguments about the status of the precautionary principle in Hormones and later in the GMO case: GMO, ibid., paras 7.77–7.79. Hormones, WT/DS26 and 48/AB/R, 16 January 1998.

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the context of market access for agricultural products. In particular, this strand includes the rights of indigenous communities to continue to produce agricultural products in a specific way that is undermined by permitting cheap mass imports.19 In this case, the question is whether a member could place a quantitative limit on imports of that product to protect the specific rural community and their lifestyle.20 Finally, the last strand contains the broader systemic issues. These include ideas of governance: for example, the degree to which sovereignty is ceded to other entities like the World Customs Organization (WCO) in terms of the customs classification decision for products to facilitate the market access process. The issue is whether there should be a connection between other external actors like WCO and the WTO, how should that connection be managed and who bears the responsibility for its management. In addition, the role of non-state actors is included here: it is clear that multinational corporations play a strategically important role in the import of certain products, like bananas for example. The main multinational corporations involved in the banana market are Chiquita, Dole and Del Monte. They control approximately 70 per cent of the world market between them.21 Several issues thus arise: whether domination of the world banana market by three large players is regarded as a problem at all; whether it is a problem that should be regulated in the WTO and if it is, how should that regulation be effected. In the context of market access, the decision is whether market access is only about the actions of a state in controlling the flow of products in and out of its geographic territory, or whether the ability of dominant corporations to control 19 James, HS (2005), For Sustainable Agriculture, We Need More Adam Smith Not Less, Department of Agricultural Economics Working Paper, no. 2005-3, Columbia, MO: University of Missouri. 20 Although human rights per se are not recognized in the latest draft Modalities on the Agreement on Agriculture, developing countries will be permitted to single out specific products for ‘special tariff treatment’ if the products are produced by, inter alia, vulnerable members of the population: for example, Revised Draft Modalities July 2008, above n 15, para 120 and Annex F para 6:

A significant proportion of the producers of the product, in a particular region or at the national level, are low income, resource poor, or subsistence farmers, including disadvantaged or vulnerable communities and women or a significant proportion of the domestic production of the product is produced in disadvantaged regions and areas including, inter alia, drought-prone or hilly or mountainous regions. 21 FAO (2003), The World Banana Economy 1985–2002, Rome, Italy: FAO, ch 6: ‘Transnational Companies in the Bananas Economy’ para 6.3. See also the NGO Banana Link: http://www.bananalink.org.uk/index.php?option=com_content&task= view&id=61&Itemid=21.

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the flow of products through their business strategies should also be a consideration of the WTO. How we connect all these tensions together at each centre depends on what we think market access is and how it should be understood. Our understanding of market access is in turn influenced by what we think ‘trade’ is and what it is for and also what we think ‘agriculture’ is and what it is for. Chapter 1 discussed our different conceptions of ‘trade’ and ‘agriculture’, so that detailed exposition will not be repeated here.22 Instead the discussion proceeds by describing how these various aspects are brought together in the market access rules in the WTO. The discussion will then show that the reason the WTO failed to resolve the problems of market access is not because it did not get the balance right between the competing tensions, but rather that the nature of the problem is misconceived.

WHAT IS MARKET ACCESS IN THE WTO? Market access is not defined as such in the WTO rules on international agricultural trade. Rather the WTO’s approach is to specify what behaviour is acceptable, both in terms of what the member can do in its domestic legislation and also its responsibility for the activities of non-state actors. In a sense therefore, what market access is, for the purposes of the WTO, arises through the application, or use, of the rules.23 The picture which emerges is a highly technical series of rules motivated by an underlying desire to liberalize international agricultural trade. Each rule represents members’ consensus on the way in which the various tensions already identified in the discussion above should be brought together at the specific centres of the market access problem: the relevant product, and geographic market; the actors to which the rules apply; what the impediments are to market access and how those impediments should be perceived. It will be evident from the later discussion at the end of this chapter that this consensus is only the appearance of agreement and it in fact masks members’ deeper disagreement of the way the market access problem should be understood. What follows is a detailed exploration of the rules. This discussion provides both a familiar starting point and a firm foundation

22 See generally the debate between Stiglitz and Irwin on what trade is and what it is for, discussed in Chapter 3. Stiglitz, JE, and Charlton, A, (2005) Fair Trade for All: How Trade Can Promote Development (2005) Oxford, UK: Oxford University Press, and Irwin, D (2005), Free Trade for All, 2nd edn, Princeton, NJ: Princeton University Press. 23 It is a ‘definition through use’, that is, we cannot know the meaning of words, except through their use: see Wittgenstein, above n 3, §43.

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from which to pursue the various strands comprising market access as a polycentric problem.24 From the Preamble to the WTO Agreement on Agriculture, market access is understood in terms of the transfer of agricultural products into, not out of, a specific geographic market25 in order to raise standards of living, ensure full employment and generally increase income and expand domestic production, while taking into account the needs of developing nations and allowing for the ‘optimal use of the world’s resources in accordance with the objective of sustainable development’.26 In the sense that preambular statements are interpreted as regulatory provisions, the Preamble suggests that all the ‘centres’ of the WTO’s notion of market access should be brought together in a way which allows the rules to be interpreted in the light of a broadly conceived goal of achieving global welfare; that is, the liberalization of agricultural markets.27 The rules themselves are contained in Part III of the Agreement on Agriculture, specifically Articles 4 and 5 together with Annex 5: the focus is very heavily on how various measures restricting market access should be addressed. In addition, the rules also make limited provision for minimum access for designated agricultural products in circumstances specified in the rules. Article 4(1) states that market access concessions in terms of tariff bindings, tariff reductions and other market access commitments negotiated by members in the Uruguay Round are contained in the schedules annexed to the Agreement.28 Article 4(2) makes it clear that members cannot use any market access measures which the agreement requires to be converted into ordinary customs duties. This conversion process is called ‘tariffication’. In other words, members cannot retain any existing measures that come under this category, implement new ones, nor revert to any such measures they previously used in their domestic agricultural policies. Article 4(2) footnote 1 contains a list of those measures which must be converted to ‘ordinary customs duties’.29

24 25 26 27

See ‘Chile–Price Band: A Study in Polycentricity’, Chapter 4 below. Paras 2 and 3 Preamble to the Agreement on Agriculture. Para 1 Preamble to the Marrakesh Agreement Establishing the WTO. The Appellate Body recognizes the importance of statements in the Preamble to the Marrakesh Agreement Establishing the WTO when it interpreted the scope of Article XX(g) in the United States–Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, 12 October 1998. This, despite some commentators’ disquiet of their use in a regulatory way: Bhagwati, J (2004), In Defence of Globalization, Oxford, UK: Oxford University Press, 157. 28 The discussion of the scope of Article 4:1 has been addressed by the panel and Appellate Body in European Communities–Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, 9 September 1997. 29 The scope of footnote 1 is addressed in India–Quantitative Restrictions on

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Such measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints and ‘similar border measures other than ordinary customs duties’. Measures excluded are those maintained under general balance-of-payment exceptions contained in the provisions of the GATT or other rules in Annex 1A of the Marrakesh Agreement Establishing the WTO.30 Annex 5 also exempts certain measures from the scope of Article 4(2) in two circumstances. First, under Annex 5A, if products are designated as such in the member’s tariff schedule by the nomenclature ‘ST-Annex-5’; if production is effectively limited and no export subsidies are applied to the product; finally if imports of the product are only equivalent to 3 per cent of domestic consumption during the base period (1986–88).31 Second, measures on primary agricultural products are exempt from conversion in accordance with Annex 5B if they form part of the traditional staple diet of a developing country member. Such products must also comply with the provisions of Annex 5A(a)–(d). Exemption under Annex 5A lapsed effectively after the end of the implementation period in 2000.32 For Annex 5B the exemption lapsed after the tenth year following the start of the implementation period (i.e. end 2004), although there is provision for renegotiation of both Annex 5A and B through multilateral trade talks.33

the Import of Certain Agricultural, Textile and Industrial Products, WT/DS90/R, 6 April 1999; also Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, 23 September 2002, and Turkey– Measures Affecting the Importation of Rice, WT/DS334/R (panel) 21 September 2007. 30 The role of the Modalities Document is discussed in EC–Export Subsidies on Sugar, WT/DS65, 66 and 83/AB/R, 28 April 2005: GATT (1993), Modalities for the Establishment of the Specific Binding Commitments under the Reform Programme, Geneva, Switzerland: GATT, MTN.GNG/MA/W/24 (20 December 1993) (The Modalities Document). 31 Annex 5A(1)(a)–(d). 32 Note Annex 5A(3) which allowed members to renegotiate extension under the auspices of the renegotiation of the entire Agriculture Agreement. Note that the problem of sensitive products for developed country members is addressed in WTO (2008), Working Document No. 10 Market Access: Sensitive Products, Geneva, Switzerland: WTO, January 2008. 33 Annex 5B(8). During the Doha negotiations, it was proposed that developing country members should have recourse to limitations from their market access commitments on the grounds that certain products are ‘special’, ‘super special’ and that certain are ‘sensitive’, WTO (2008), Working Document No. 15 Market Access: Special Products, Geneva, Switzerland: WTO, January 2008; also WTO, Working Document No. 10 Market Access: Sensitive Products, above n 32.

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How measures subject to conversion in Article 4(2) should be ‘tariffied’ is not addressed in the Agreement on Agriculture as such.34 However, Annex 5 does contain limited information on how ‘designated’ products might be tariffied once they cease to enjoy ‘special treatment’ under the Annex; the process described in Annex 5 mirrors that for tariffication of all products in Annex 3 of the Modalities Document.35 When the special treatment lapses either through the action of the member or following the end of the implementation period, the non-tariff barrier must be converted into an ordinary customs duty (i.e. tariffied) in accordance with the ‘price gap’ methodology in the Attachment to Annex 5. Through this process, the ‘ordinary customs duty’ is established on the basis of the tariff equivalent for the product in question. The tariff equivalent is found by determining, in a transparent manner, the actual difference between the internal price and the external price of the product, using data from the period 1986–88.36 The internal price is generally a representative wholesale price in the domestic market. If this data is not available, the internal price is then an estimate of what that wholesale price would be.37 The external price is the actual average CIF (including cost, insurance and shipment/freight) price per unit value for the product in the importing country, expressed in terms of the domestic currency.38 If the actual CIF unit value is inappropriate, or not available for the product in question, then an appropriate alternative is used. Paragraph 2 of the Attachment makes it clear that the substitute external price can be either the appropriate average CIF unit value of a ‘near country’; or an estimated FOB (Free on Board) unit value of an ‘appropriate major exporter’, with costs added equivalent to the insurance and freight costs usual for the importing country concerned. In other words, the member calculating the appropriate external price can either use its own data regarding the import price of the product, that of a neighbouring state, or that of a major corporate entity, with shipment costs added to ensure the price equates to an equivalent import price. When generally calculating the internal and external price, it is

34 Detailed discussion on tariffication and tariff quotas is contained in the Modalities Document Annex 3 (above n 30). 35 This provision was inserted at the request of some members during the Uruguay Round negotiations in the light of their concerns about tariffication of some non-tariff barriers on particularly sensitive products on food security grounds: see GATT, Negotiating Group on Agriculture: Submission by Japan, Geneva, Switzerland: GATT, MTN.GNG/NG5/W/131 and GATT, Proposal for Negotiations on Agriculture Submitted by the Republic of Korea, Geneva, Switzerland: GATT, MTN.GNG/NG5/W/80. 36 Attachment to Annex 5 para 1. 37 Attachment to Annex 5 para 4. 38 Attachment to Annex 5 paras 2 and 3.

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important that the value is ‘appropriate’ irrespective of whether it is the actual value of the product or only an equivalent. What is deemed ‘appropriate’ in these circumstances is not defined in the Agreement on Agriculture as such.39 The tariff equivalent determined as a consequence of this process can either be expressed in specific or ad valorem terms and should be established at the four-digit level of the Harmonized Commodity Description and Customs Coding System (HS Code).40 However, it can be set at a six-digit or more detailed level if this is ‘appropriate’ in the circumstances. The initial tariff can then be adjusted if necessary to take into account quality and differentiation in the specific product. If such an adjustment is made, the onus is on the member to enter into consultations with a view to reaching a solution if they are requested to do so by other members. This is particularly important in circumstances where the tariffication process results in a negative tariff below the bound (i.e. agreed) rate in the member’s schedule. In those circumstances, the member can apply the current bound rate or national offer for the product in question.41 If the product is a processed, rather than primary product, the price gap methodology still applies, but in a slightly modified form. The idea is to ensure that the tariff equivalent is only attributable to the proportion of the primary product within the processed product. Here the new tariff is calculated by multiplying the specific tariff equivalent for the primary product by the proportion in value or in physical terms of the primary product in the processed product.42 Once special treatment of the product comes to an end and the ordinary customs duty is imposed, members are under an obligation to increase the minimum access requirements for the product concerned.43 In Annex 5A, minimum access is increased by 0.4 per cent to 8 per cent of domestic consumption of the product in the base year. Likewise under Annex 5B, minimum market access starts at 1 per cent of the base period consumption of the

39 This phrase is not defined, but the price gap methodology generally is further defined in Annex 3 of the Modalities Document and explored in EC–The ACP–EC Partnership Agreement – Recourse to Arbitration Pursuant to the Decision 14 November 2001, WT/L/616 (1 August 2005) (1st Arbitration Report) and EC–The ACP–EC Partnership Agreement – Second Recourse to Arbitration Pursuant to the Decision 14 November 2001, WT/L/625 (27 October 2005) (2nd Arbitration Report). 40 Attachment to Annex 5 paras 1(a) and (b). The HS Code’s last major revision was 2007. 41 Attachment to Annex 5A(5), (6) and (7). 42 Adjustments can be made to take into account ‘additional element currently protecting the industry’. Attachment to Annex 5A(1)(c). 43 The tariff equivalent is then adjusted and reduced in accordance with Annex 5(6).

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product (i.e., consumption from 1986–88), and rises to 4 per cent in the final year of the ten-year implementation period.44 Whilst the Attachment to Annex 5 provides detailed information on how to convert non-tariff barriers to ‘ordinary customs duties’, it only applies to those products which previously enjoyed special treatment in the sense defined in Annex 5. Members are further required to allow current and minimum access for products following the tariffication process.45 Regarding current access, Annex 3 of the Modalities Document makes it clear that where imports for specific products were higher than 5 per cent of domestic consumption in the base period for calculation (1986–88), then equivalent levels of access must be retained and expanded on an MFN (most favoured nation) basis.46 Where no ‘significant’ importation of the product occurred, then minimum access opportunities must be created, again on an MFN basis. This is equivalent to 3 per cent of domestic consumption for the base period (1986–88), rising to 5 per cent of the base year figure by the end of the implementation period.47 Article 5 contains the special safeguard provision which operates as a limited exception to Article 4. Article 5(1) permits members to derogate from their general obligation not to impose tariffs in excess of those in their schedules of reduction commitments.48 However, under Article 5, members are only permitted limited exemption from these obligations in narrowly defined circumstances: that is, if as a consequence of converting their market access measures into tariffs in accordance with Article 4(2), either the volume of imports exceeds the trigger level calculated in accordance with Article 5(4), or the import price of the product (measured in terms of the domestic currency of the importing state) falls below a specific trigger level calculated in accordance with Article 5(5).49 44 45

Annex 5B(7)(a)–(b). Annex 3 paras 11–13 (current access) and Annex 3 paras 14–15 (minimum access) Modalities Document MTN.GNG/MA/W/24, above n 30 and see generally McMahon, JA (2007) The WTO Agreement on Agriculture: A Commentary, Oxford, UK: Oxford University Press, 50–53. 46 Articles 5 and 6 in conjunction with Annex 3:11 Modalities Document, above n 30. 47 Article 5 in conjunction with Annex 3:11 Modalities Document, above n 30. The scope of tariff rate quota commitments is addressed in Turkey–Measures Affecting the Importation of Rice, WT/DS334/R, above n 29, paras 7.58 and 7.108-7.121. The issue for the panel was whether Turkey’s alleged denial, or failure to grant licences to import rice outside the tariff rate quota was inconsistent with Article 4.2 Agreement on Agriculture. 48 In accordance with Article II GATT. 49 The scope of the special safeguard is discussed in EC–Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, 13 July 1998, paras 137–71; Panel Report WT/DS69/R, 12 March 1998, paras 278–92.

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Article 5(4) defines the conditions where safeguard measures can be imposed in response to an import surge: that is, in response to a larger than expected increase in the volume of imports into a WTO member’s territory. The agricultural safeguard can only be used when the ‘trigger level’ is exceeded, so not every increase in imports on products covered by the tariffication provisions in Article 4 will activate the safeguard mechanism. Under Article 5(4) the trigger level is determined by monitoring ‘market access opportunities’ for the incoming product over a defined period. Specifically, the trigger level is set by assessing the number of imports of the product as a percentage of the actual level of domestic consumption of that product during the three previous years for which data is available. The higher the volume of imports as a percentage of domestic consumption, the lower the trigger level, so the easier it will be to impose the safeguard measure. Consequently, if market access opportunities are less than, or equal to 10 per cent (of domestic consumption) then the ‘base trigger level’ (trigger level) is equal to 125 per cent; if they are greater than 10 per cent but less than 30 per cent, then the trigger level is 110 per cent and if the market access opportunities are greater than 30 per cent, the trigger level is set at 105 per cent.50 On the basis of the language of Article 5(4) alone, if the percentage of imports vis-à-vis domestic consumption is only 10 per cent, then it must rise to at least 125 per cent before the safeguard measure can be imposed: this is a considerable jump in the volume. In contrast, for those products where the market access opportunities are greater than 30 per cent, then the percentage increase in imports need only rise by a smaller volume for the trigger level to be exceeded. The safeguard measure can only be imposed, or ‘maintained’, until the end of the year during which it was first imposed. Likewise, the measure cannot be set at a level which exceeds one-third of the ordinary customs duties imposed by the importing country in that year.51 Where perishable or seasonal products are at issue, the specific characteristics of those products must be taken into consideration when applying the safeguard measure. In the case of safeguards imposed as a consequence of an import surge, this means that shorter time periods can be used for the calculation of the surge’s effects on the import market under Article 5(1)(a) in reference to the corresponding periods in the base period calculated in accordance with Article 5(4)(a)–(c). In other words, the special safeguard takes the form of an additional duty which the member imposes on the imported product; the rate at which that duty is set cannot be higher than one-third of the other customs 50 51

Article 5(4): a, b and c respectively. Article 5(4). See Desta, MG (2002) The Law of International Trade in Agricultural Products: From GATT 1947 to the WTO Agreement on Agriculture, The Netherlands: Kluwer, 88.

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duties imposed in that year. In essence, the safeguard is an emergency measure and not a punitive sanction that completely prohibits imports of the product in question. Article 5(1) also provides for the imposition of safeguard measures in response to a decrease in price of the imported product. In contrast to Article 5(1)(a), which calculates the effect of the import surge over a year, Article 5(1)(b) measures the effect of a drop in price on a per-shipment basis. Safeguards can be imposed in accordance with Article 5(5) therefore if the CIF price of the product in domestic currency falls below the ‘trigger price’. That trigger price is defined as the average ‘reference price’ for the period 1986–88. The reference price itself is defined in footnote 2 to Article 5(1): it is generally the average CIF unit value of the product, or other appropriate price. Whether the unit price or other ‘appropriate price’ is used depends on the circumstances, including the quality of the product and the stage of processing it has reached. It is a general requirement that the reference price is made publicly available.52 The safeguard duty the member can then impose in response to a drop in import price is set by Article 5(5). In essence, the changes in the level of duty depend on the degree to which the import price differs from the trigger level price. This is a rising scale. If only a small difference (i.e., 10 per cent) exists, then no duty can be imposed; whereas if the difference exceeds 10 per cent but is less than or equal to 40 per cent of the trigger price, the safeguard duty is 30 per cent of the difference over 10 per cent. The level of duty increases up to a point where the difference between the import price and trigger price is 75 per cent. In this case, the safeguard duty can be imposed at the level of 90 per cent of the amount by which the difference exceeds 75 per cent. In addition, members are also able to add on to this amount duties calculated in accordance with Article 5(5)(b)–(d). Paragraphs (b) to (d) specify what duties can be imposed where the difference between the import price and trigger price is 40 per cent (paragraph (b)) up the point when that difference is greater than 60 per cent but below 75 per cent (paragraph (c)). As Josling, Tangermann and Warley note, this formula is pure economics and would take pride of place in a university class on the economics of price stabilization.53 Like safeguard duties imposed as a consequence of an import surge, different rules also apply in the case of a price drop for seasonal and perishable products. In this case, different reference prices and periods can be used which more fully reflect the nature of the product. 52 For a general explanation of the term CIF: see Bridge, MG (2007), The International Sale of Goods, 2nd edn, Oxford, UK: Oxford University Press, ch 4. 53 Josling, T, et al. (1996), Agriculture and the GATT, Basingstoke, UK: Macmillan, 181.

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Article 5(1) states that members cannot use safeguard measures triggered by import surges or price drops in relation to every product that has been subject to the tariffication process. Instead, members can only impose Article 5 safeguard measures on products that are specifically designated in members’ schedules with the label ‘SSG’.54 These products are often those regarded as particularly sensitive by the member concerned. For example, the European Union designated 28 tariff items broadly categorized in the Harmonized System of Customs Code Nomenclature as ‘sugar and confectionery’ as items capable of forming the basis of a safeguard action.55 Of those individual tariff items, the European Union notified action to the Committee on Agriculture in relation to none of them in 1995, with intermittent activity on sugar and confectionery till 2001.56 In addition to only applying safeguard measures in relation to designated scheduled products, Article 5(2) states that safeguard measures may only be applied in terms of the over-quota imports. Article 5(7) makes it clear that agricultural safeguards must be applied in a transparent manner and strict notification requirements following imposition are required. Likewise, members are not permitted to resort to other safeguard measures under Article XIX GATT or Article 8(2) WTO Agreement on Safeguards in addition to those imposed under Article 5.57 Whilst the main rules on market access are contained in Part III Agreement on Agriculture in conjunction with Annex 5, these rules are supplemented by additional rules which then inform the implementation of Part III. Article 1 Agreement on Agriculture contains general definitions for the purposes of the Agreement as a whole. Under Article 1(f) tariff reductions must be made over the implementation period. This period is defined as the six years following 1995; that is, the end point was 2001. References to ‘market access concessions’ in the Agriculture Agreement are also to be taken to include those market access commitments which members undertake pursuant to the Agreement.58 For the purposes of the Agreement, Article 2, in conjunction with Annex 1,

54 The panel and Appellate Body’s analysis of Article 5 in European Communities–Measures Affecting the Importation of Certain Poultry Products, WT/DS69/R, above n 49. 55 For the purposes of the HS Code itself, these items covered three main HS codes: WTO (2002), Special Agricultural Safeguard: Background Paper by the Secretariat Revision, Geneva, Switzerland: WTO, G/AG/NG/S/9 Rev.1, 19 February, Table 4, 8; no further safeguard action is recorded by the European Union in relation to sugar and confectionery products up to 2004: see WTO (2004), Special Agricultural Safeguard: Background Paper by the Secretariat, Geneva, Switzerland: WTO, TN/AG/S/12, 20 December 2004; also WTO (2003), Notification, Geneva, Switzerland: WTO, G/AG/N/EEC/43, 5 June 2003. 56 TN/AG/S/12, above n 55, Table 7. 57 Article 5(8) Agreement on Agriculture. 58 Article 1(g).

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defines the term ‘agricultural product’. Agricultural products are not defined in abstract terms, but rather identified according to their specific customs classification codes in the World Customs Organization’s Harmonized Commodity Description and Coding System (HS Code).59 Only those products designated with codes in HS Chapters 1–24 and a number of specific additional HS codes like HS2905.43 (mannitol) and HS3809.10 (finishing agents) are deemed to be agricultural products. Fish and fish products and all other products are specifically excluded. This list only applies for the purposes of the Agreement on Agriculture and specifically does not limit the products which might fall within the SPS Agreement.60 Articles 15 and 16 define the special and differential treatment obligation: that is, the treatment to be accorded to developing and least-developed nations. Special and differential treatment is seen as important and ‘an integral part of the negotiation’ on the liberalization of international agricultural trade. The obligation itself takes the form of a limited exemption from the rules on, inter alia, market access and allows developing nations a longer period (ten years) in which to implement their obligations and exempts least-developed members from their obligations completely. The exemption’s effects are evidenced in detail in members’ Schedules of reduction commitments.61 Although there are no further rules in the Agreement on Agriculture relating to developing countries, there are exhortations elsewhere in the WTO scheme, including the GATT, which reminds members they should take the needs of these countries into account when they deal with them.62 Special provision is also made in Article 16 for least-developed and net food-importing developing countries. Developed countries must undertake to comply with the general obligations in the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. The Decision recognizes that whilst the WTO Agreements as a whole generate further trade opportunities, certain countries heavily dependent on the imports of foodstuffs may experience particular difficulties accessing reasonably priced commodities.63 59 60 61 62

4th revised edition 2007: see http://www.wcoomd.org/home.htm. Annex 1:2 Agreement on Agriculture. Article 15(1). For example Part IV of the GATT (Articles XXXVI–XXXVIII): note Hudec’s dismissal of the effectiveness of this provision: Hudec, RE (1987), Developing Countries and the GATT, Aldershot, UK: Trade Policy Research Centre. Also Article 3(12) Understanding on Rules and Procedures Governing the Settlement of Disputes (the Dispute Settlement Understanding or DSU). 63 Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries, paras 1 and 2.

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Consequently, the Decision requires members to monitor the availability of food aid for these countries. Members must scrutinize the current availability of food aid and adopt guidelines to ensure that an increasing proportion of ‘basic foodstuffs’ is provided to the target countries, preferably in grant form, but if not, then on very favourable concessionary terms as specified in the Food Aid Convention.64 Article 14 identifies the existence of the Agreement on Sanitary and Phytosanitary Measures (the SPS Agreement) and exhorts members to ‘give effect’ to its provisions. The relationship of the Agreement on Agriculture with the SPS, other Annex 1A Agreements (i.e. the WTO agreements on trade in goods) and the GATT is addressed in Article 21. Article 21 accordingly provides that the GATT and all other Annex 1A Agreements, including the SPS Agreement apply ‘subject to’ the rules in the Agreement on Agriculture. On the wording of the rules alone, this obligation seems to create a lex specialis regime for international trade in agricultural products.65 Article 20 addresses the continuing nature of international agricultural trade reform started by the Agreement on Agriculture. Negotiations on change must focus on the experience under the rules to date, particularly the effect of reduction commitments, non-trade concerns, special and differential treatment and the general overriding objective to ‘establish a fair and market-oriented agricultural trading system’.

MARKET ACCESS AS A POLYCENTRIC PROBLEM In essence, the WTO scheme represents members’ consensus on how market access should be understood for the purposes of the WTO. It is evident from the previous discussion that the rules are expansive and have been rigorously applied by the panels and Appellate Body. Why do difficulties still arise? The traditional response to this question is that the rules were only designed as a first step in the long-term objective to liberalize international agricultural

64 65

Ibid., paras 3(i)–(iii). The scope of Article 21 is discussed by the Appellate Body in EC–Bananas III, WT/DS27/AB/R, above n 28, para 7.122. The relationship between the Agreement on Agriculture and other rules is discussed in a variety of panel and Appellate Body reports. This footnote is not meant to be exhaustive of that treatment, but see for example in the context of market access, the relationship between the Agreement on Agriculture and Article XI:1 GATT in Turkey–Measures Affecting the Importation of Rice, WT/DS334/R, above n 29, paras 7.55-7.57. Also the relationship between Article 4.2 Agreement on Agriculture and Article II:1(b) GATT is discussed at each stage of the Chile–Price Band dispute, but most recently in Chile–Price Band – Recourse to Article 21.5 DSU, WT/DS207/AB/RW, 7 May 2007, paras 163–72.

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trade.66 They could not therefore hope to address every aspect of the problem; instead difficulties would be ironed out through the continued reform process envisaged both in the Preamble and in Article 20. This response suggests that resolving the problem of international agricultural trade is only a question of adding further tariff reduction commitments supplemented by refined ideas about how developing and least-developed countries’ needs/environmental considerations/human rights and governance problems can be accommodated within the regulatory scheme to the existing rules. There is therefore a sense that only a further tinkering with the current regime is required until the balance between all the competing interests is correctly achieved. We can imagine this process as linear in the way described in Figure 4.1. Figure 4.1 does not represent the true nature of the problem however. Earlier, it was suggested that market access was a largely neutral concept which had various constituent elements; for each element there was a series of choices between a complex set of tensions. For example, central to the notion of market access is that certain products must be allowed access to specific markets. The first decision is therefore whether one regime is to be created for all products, or whether a separate regime should exist? Once a decision is made to create a separate regime for agricultural products, then further decisions arise regarding how those products are defined: should it be in terms of end-use, or is the production method important; or is the place where the product is produced relevant; and/or is the designation of the product as ‘food’ relevant? To an extent, negotiators have a free choice between the various possibilities, but in some cases the decision is shaped by the negotiators’ previous choices: the decision to differentiate between agricultural and nonagricultural products, for example, automatically gives rise to a decision about how that distinction is realized. The critical point is that although decisions are made and consensus is reached on how market access for agricultural products should be regulated in the WTO, this does not mean that all the tensions and other understandings of market access are eliminated as a consequence. Instead they remain festering beneath the rules as permanent reminders of other possible ways in which the same problem could have been resolved.67 In other words, the problem is not

66 67

Para 2 Preamble Agreement on Agriculture. WTO (2008), ‘Lamy: We are Getting to the Moment of Truth’, Speech to OECD Ministerial Council Meeting, Paris, 5 June 2008: ‘Just a few months ago, one of you around this table offered me a video of a movie called “Groundhog Day”. In this film the main character is forced to relive the day over and over again until he learns to give up his selfishness and become a better person. Reading my notes of last year’s OECD Ministerial Conference I thought little had changed and the Doha Round was becoming like a Groundhog Day!’

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Original Agreement

↓ Problems and Disagreements emerge

↓ Multilateral Negotiations

↓ Amended Agreement (1)

↓ Problems and Disagreements emerge

↓ Multilateral Negotiations

↓ Amended Agreement (2)

↓ Figure 4.1 Traditional understanding of the problem’s nature and its resolution linear, but polycentric: the rules representing the consensus view among members are in fact only one way in which the problem can be solved; all the other ways are equally correct, and more importantly, they remain equally correct even though a particular way of seeing the problem has been chosen. The reason that market access remains difficult for the WTO despite the complex rules is because there is a mismatch between what we think the rules are for and the reality. A conventional understanding of rules is that they

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impose structure and order on members’ behaviour from above: they tell us whether a specific measure is or is not a permitted barrier to the importation of a specific product, for example. Of course this assertion is true, but in addition to this ‘top down’ notion, a certain amount of adjustment occurs between the various members which results in an accommodation between their diverse and competing interests. This horizontal process feeds into the creation of the rules at the first instance, and then further adjustments are made through the adjudicative process as disputes between the competing interests are brought before the WTO panels and Appellate Body. This means that rules have both a vertical character in that they impose order from above onto WTO members, but the rules also have a contractual character because they control the relationships between the members at the same time.68 To say that the WTO rules are contractual is not to say they are some form of multilateral contract law which we might recognize as an amalgamation of various domestic jurisdictions; rather, the rules are a form of social ordering which try and facilitate the complex interactions between members. The problems in market access arise for two interconnected reasons therefore. First, market access for agricultural products is a polycentric problem; there are many ways in which the problem itself can be explained, all of which are correct. How the problem is explained depends on your perspective and how you think the various tensions should be brought together to form a coherent whole. As is evident from both the Uruguay Round negotiations establishing the WTO and the subsequent Doha Round, there are multiple ways in which the various competing interests can be brought together. Second, the rules’ task is both to impose order on those competing visions of the problem in a vertical sense, and, at the same time somehow manage the reciprocal adjustments of the members’ respective interests.69 Consequently, it is impossible to finally resolve this problem because all the rules can do is forever balance and rebalance the various understandings of the problem and the competing understandings and interests of the WTO members. There cannot be a final resolution because every time an adjustment is made, either through the legislative process or through adjudication, this gives rise to different understandings or interpretations of the problem and an adjustment between the interests of the members. Rather than resemble Figure 4.1, the negotiation and amendment process more closely resembles Figure 4.2.

68 These ideas are drawn from Fuller’s analysis of the role of contract as a vehicle for social ordering: Fuller, LL (2001), ‘The Role of Contract in the Ordering Processes of Society Generally’, in Winston, KI (ed), The Principles of Social Order–Selected Essays of Lon L Fuller, Oxford, UK: Hart, 187, 190–93. 69 See Fuller, ‘The Role of Contract in the Ordering Processes of Society’, ibid., 190–91.

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LEGISLATION Controls

WTO

2

MEMBERS (States = S)

INTERPRETATIONS S2

S4

S1 S3

S6

S7

S5 S8

S14

Shared and divergent views

S10 S12 S11

S13

INFORMS:

3

Figure 4.2

S9

LEGISLATION

True nature of the problem and its resolution

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Some members may ally themselves with others in their shared interpretation of the problem at one point, but then subsequently shift their alliance to another member at a different time. As a consequence, there is a shift in understandings of the problem itself which might be illustrated in members’ interpretation of the rules through their submissions to the dispute settlement proceedings; but also shifts can occur in the political dynamics as members constantly align and realign themselves both in terms of whose interpretation of the rules they concur with at a given time and also whose opinion/approach they share in multilateral negotiations. For example, the proliferation of multilateral negotiating groupings in the Doha Round gives rise to different approaches to the text of the Draft Modalities regarding market access. Even when members start within specific groupings, as the text evolves they shift their allegiances to other groups on some issues but not on others, or they may seek to establish another group which they believe more fully represents their view. In the early stages of the Doha Development Round, Bulgaria was originally allied with the G10 group, but subsequently left to join the European East Asian Grouping; Chinese Taipei remained a member of G10, but was simultaneously a member of the European East Asian Grouping, and also the Recently Acceded Members (RAM) Grouping; it is now Recent New Members’ Co-ordinator and member of G10 in the 36–37 representative members’ negotiation meetings (also known as ‘Room E’ meetings).70 These ideas will be explored below, but it is helpful at this time to see them represented in diagrammatic form. The polycentric/contractual model that I have discussed in this section of the chapter is in marked contrast to the more traditional linear notion illustrated above in Figure 4.1.

CHILE–PRICE BAND: A STUDY OF POLYCENTRICITY The ideas presented in this chapter have been largely pursued at a high level of abstraction. Rather than a very detailed explanation of every aspect of the problem of market access, international agricultural trade regulations, policy and economic theory have been used instead as illustrations of the basic argument. It is possible to explore all these arguments at length, considering every aspect of the problem and every possible perspective from which it can be understood. This is an extensive exercise which is impossible to do effectively in a book of this length. Instead, this final section will use the Chile–Price Band dispute as a study to illustrate the basic argument. 70 WTO (2008), Chair Reports Incremental Progress as Farm Talks Continue, Geneva, Switzerland: WTO, 3 June, http://www.wto.org/english/news_e/news08_e/ agric_3june08_e.htm.

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The dispute concerns the question whether Chile’s price band system violated the WTO agreements, particularly their obligation under Article 4.2 Agreement on Agriculture not to ‘maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties’. An illustrative list of measures required to be so converted is included in footnote 1; the relevant ones from footnote 1 at issue in the dispute are the variable import levy and the minimum import price. Chile’s price band system is a border measure that enabled the calculation of the appropriate import tariff for a range of products including wheat, edible vegetable oils and sugar.71 The system was intended to guarantee a reasonable fluctuation between the domestic price for certain goods and their corresponding international price.72 Bands were put into place which allowed for this fluctuation, calculated on an objective basis. The duty imposed on the products subject to the bands is composed of two elements: first the applied ad valorem MFN rate contained in Chile’s schedule of concessions (at the time of the Appellate Body report this was set at 31.5 per cent); the second element of the duty was calculated in accordance with the band: that is, it was the difference between the reference price and the upper and lower thresholds of the band.73 The reference price was determined on a weekly basis for product categories irrespective of origin. As a consequence, if the reference price fell between the upper and lower band then no additional duty was payable beyond that at the applied MFN rate; whereas if the weekly reference price was higher than the upper threshold price, a rebate was payable (which equalled the difference between the reference price and upper threshold price); if the reference price fell below the lower band, then an additional duty to the applied MFN rate was levied that was equal to the difference between the reference price and the lower threshold.74 The Chile–Price Band dispute is an interesting case study for a number of reasons: a very strong theme throughout international agricultural trade scholarship and negotiating practice is the need to move towards fully liberalized agricultural markets. Restricting market access for agricultural products is therefore bad, and those countries who seek to do so are seen as consciously protecting uncompetitive sectors of their economy. Chile, the ‘defendant’ in the price band dispute, by contrast has a pro-free trade stance in its agricultural policies that suggests it is not a ‘rogue’ member of the WTO, but rather at the

71 Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products, Report of the Appellate Body, WT/DS207/AB/R, above n 29, para 11. 72 Ibid. 73 WT/DS207/AB/R, above n 29, paras 13–30. 74 Ibid., para 29.

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forefront of the liberalization agenda: it ‘agrees’ with the WTO rules and agenda. Chile is a member of the Cairns’ Group of net agricultural exporters who support a strongly expressed free trade agenda in international trade negotiations.75 In addition, Chile has moved towards liberalizing its domestic agricultural policy. As Irwin points out, Chile opened its markets to competition by removing quantitative restrictions and exchange controls in the 1970s and as a consequence, industries exposed to competition grew by between 3–10 per cent.76 This trend towards liberalization continued despite a banking crisis in the mid-1980s. As Chile’s Trade Policy Review pointed out in 2002, Chile is one of the world’s largest exporters of, inter alia, fruits and forestry products, and the general trend in their agricultural policies is towards a reduction in tariff protection overall.77 Although it is difficult to say with any certainty what the rationale behind the retention of the price band system is, what is clear is that Chile’s stated understanding of the problem of market access and the scope of the solution contained in the Agreement on Agriculture is different to the opinion of some other WTO members. A further point that makes Chile–Price Band interesting is the disagreement between two members of the Cairns’ Group: Chile and Argentina.78 In their first submissions on agriculture in the Uruguay Round, both Argentina and Chile were named as ‘agreeing’ to the fundamental ideas of the Cairns’ Group. In the 1989 ‘Comprehensive Proposal for the Long Term Reform of Agricultural Trade’ the Group strongly supported the move toward liberalization of agricultural trade and in particular stated that ‘a competitive, efficient and market responsive world agricultural system would serve the common long-term interest of developed and developing countries alike’.79 This specifically included a prohibition on the continued use and further introduction of all measures prohibited by GATT, including variable import levies and equivalent measures, and an aggressive policy towards cuts in ‘tariffied’ measures.80 By 2000, in its request for consultations on Chile’s price band system post the conclusion of the Agreement on Agriculture, Argentina is suggesting that the price band not only impedes predictability and certainty 75 76 77

http://www.cairnsgroup.org/. Irwin, Free Trade for All, above n 22, 44. WTO (2003), Trade Policy Review – Chile: Report by Secretariat, Geneva, Switzerland: WTO, WT/TPR/S/124, 4 November, 59. 78 WTO (2000), Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Request for Consultations by Argentina, Geneva, Switzerland: WTO, WT/DS207/1, G/L/396, G/SG/D11/1, G/AG/GEN/44, 12 October. 79 GATT (1989), Comprehensive Proposal for the Long-Term Reform of Agricultural Trade, Geneva, Switzerland: GATT, MTN.GNG/NG5/W/128, 27 November, para 5. 80 MTN.GNG/NG5/W/128, ibid., paras 11–12 and 15.

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in relation to imports of market access into Chile, it is also in violation of Chile’s tariff binding commitments in its schedule; particularly that it was a measure which was required to be converted into an ordinary customs duty as it was, inter alia, ‘equivalent to a variable import levy’.81 In the dispute, Chile argued that the price band system was not a measure which was required to be converted in accordance with Article 4.2, but was rather a ‘system for determining the level of ordinary customs duties that will be applied up to the bound rate’.82 According to Chile the ‘drafters of the Agreement on Agriculture’ agreed that whilst a variable import levy is a measure which was required to be converted under Article 4.2 Agreement on Agriculture, it was possible to introduce a ‘high cap’ in the changing tariff rate provided that did not exceed the bound tariff commitments. Whilst transparency and predictability are clearly important factors in agricultural trade liberalization generally, they do not, for Chile, specifically act as criteria for the determination of whether a measure violates Article 4.2 or not.83 Agreement between Argentina and Chile in 1989 seems to have changed to disagreement in 2000. When we look at these first stages of Chile–Price Band, it is perhaps tempting to argue that all we have here is disagreement about interpretation of the agreement’s scope. This is of course true, but this argument sees disagreement as a single idea where everyone disagrees on the same things for the same reasons. If the various argumentary trajectories are traced, it is possible that the nature of disagreement is more complex and involves a range of ideas which encompass broader themes than just the compatibility of the price band system with the Agreement on Agriculture.84 In its original request for consultations, Argentina presented a number of arguments based on three WTO Agreements. It argued that the price band system violated Article II GATT and Article 4 Agreement on Agriculture; it further argued that Chile’s safeguard action violated Article XIX:1(a) GATT and Articles 2, 3, 4, 5, 6 and 12 of the Agreement on Safeguards.85 For the purposes of the argument, this analysis explores the nature of the disagreement following from the Article 4 Agreement on Agriculture claims. Argentina’s 81 82 83 84

WT/DS207/1 et al., above n 78, paras 2 and 3. WT/DS207/AB/R, above n 29, para 38. WT/DS207/AB/R, ibid., paras 40–41. It should be stressed that the analysis only illustrates the various argumentary trajectories and how these reveal connections to the tensions in the problem of market access for agricultural products. A comprehensive analysis of the first stages of Chile–Price Band can be found elsewhere, see Bagwell, K, and Sykes, AO (2004), ‘Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products’, 3 World Trade Review 507. 85 WT/DS207/1 et al., above n 28.

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claim under Article 4.2 is that Chile’s price band system’s overall structure and design impedes access to markets because it lacks transparency and predictability; it is also in express violation of Article 4 footnote 1 as a measure which was required to be tariffied and placed in the member’s schedule.86 Argentina stresses the all-encompassing nature of Article 4.2 and its clear prohibition of all non-tariff measures; even though Chile’s measure may not in fact be a variable import levy as such, the fact that it so closely resembles one, means that, in the light of the prohibitive nature of Article 4.2, Chile’s measure must be in violation.87 In response, Chile categorically rejects the Argentinian argument that their price band system is a variable import levy that violates Article 4.2 on the grounds that this understanding does not correspond to members’ negotiating practice, nor to Argentina’s own practice.88 For Chile, the only way such an argument would be sustainable would be if Argentina went through a systematic process of proving both that Chile’s measure is a variable import levy or similar measure and that Article 4.2 prohibits those measures. Such an analysis would follow the Vienna Convention on the Law of Treaties and consider the context of Article 4 together with its object and purpose, which would also take into account the negotiating process and the expectation of members.89 Chile went on to argue that the price band system was not a measure formally recognized to be incorporated into the footnote to Article 4.2 and, as such, cannot be regarded as a prohibited measure per se. Instead, Chile only need show that the price band system did not lead to an excess in its tariff reduction commitments, as to do otherwise would be against the general object and purpose of the Agreement on Agriculture contained in its Preamble: for Chile, removal of the fluctuating price band, which could result in a lower tariff is more likely to liberalize international agricultural trade than the Argentinian interpretation. Argentina’s approach, in contrast, would mean that the potentially lower tariff rate would be permanently replaced by a higher ceiling (fixed) tariff rate as a result of the negotiations.90 Where it did violate its tariff commitments, Chile argued it went through the appropriate channels by seeking a waiver and, when this was successful, imposed a safeguard measure in response to an unexpected import surge.91 Chile argued that it was ‘driven’ to pursue this line of action because of ‘massive subsidization from some other prominent countries’.92 86 87 88 89 90 91 92

Chile–Price Band panel report WT/DS207/R, 3 May 2002, para 4.27. WT/DS207/R, ibid., paras 4.28–4.30. Ibid., para 4.101. Ibid., paras 4.30–4.32. Ibid., para 4.39. Ibid., paras 4.34–4.36. Ibid., para 4.18.

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Translating this first wave of arguments into the language of polycentricity reveals an interesting picture. The Chile–Price Band dispute exposes the true nature of disagreement as complex, multifaceted and diverse, rather than as merely a linear notion of a disparity of views on how the market access rules should be understood. On the surface this is still an argument about the interpretation and scope of Article 4.2, but it also reveals deeper disagreements. The disagreement about scope is not only about the way the obligation should be interpreted, it is also about what should be characterized as a barrier to market access. A conclusion on this point then feeds into a decision on whether such a barrier is good or bad for the purposes of the agreement: Chile’s argument is both that this is not a barrier to trade and that even if it were, it has positive welfare effects. Both countries’ continued membership of the Cairns’ Group, coupled with their arguments before the panel, indicate that they each agree that the obligations under the Agreement on Agriculture should be understood in the light of the need to fully liberalize agricultural markets. This view is also clear from the fact that each is offering an argument that suggests their interpretation of the Chilean measure is more liberalizing than the other’s interpretation. The divergence on Article 4.2’s scope concerns a number of interlocking arguments: should negotiating documents be admitted within the dispute settlement process? This argument concerns not only Article 4.2, but affects the entire Agreement on Agriculture and has clear effects for the remaining WTO rules. It has further significance for the dispute settlement process, as it concerns exactly what interpretative ‘tools’ panels can use to come to a decision. The argument about the members’ perception of Article 4.2 from the negotiations is also about members’ expectations: in particular, what are they, and how can members’ expectations be managed? The argument also has resonance for ideas of member autonomy. Chile argues that when the scope of Article 4.2 was being debated amongst members in the Uruguay Round, price band systems were not included in the prohibited list, nor was it asked to convert its system following the conclusion of the Round; this then allowed it to retain the measure, albeit within the new constraints placed on it by Article 4. This is a view which allows greater independence for members; again an argument which has importance beyond the Agreement on Agriculture.93 In addition to this argument, Chile also refers to Article 24 of the Chile–Mercosur Economic Complimentarity Agreement No. 35 and maintains that its price band system was acknowledged and that Argentina did not raise objections to its existence despite the fact that the Agreement was entered into after the

93

Ibid., para 4.43.

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conclusion of the Uruguay Round.94 This argument is certainly about the use of non-WTO agreements as interpretative tools in WTO dispute settlement proceedings, but it also masks how members’ membership of other trading agreements should be addressed in the WTO, particularly when they seem to offer less trade restrictive obligations than those in the WTO in a controversial area like agriculture. Although Chile’s argument regarding its need to impose an emergency safeguard relates to the GATT and the Agreement on Safeguards, there are clearly disagreements among members about whether they are in fact living up to the commitments they ‘agreed’ to, and there are also suggestions about how developing countries should be treated generally. Behind the argument about the safeguard is an argument about development that encompasses not only the scope of varying implementation commitments, but also whether their difficult economic status should enable them to be treated more leniently in the WTO scheme. From these initial opening arguments, it is clear that the arguments presented are certainly about what the ‘top down’ nature of the rules should be: that is, what the scope of the obligation should be. However, in addition, there is a clear mismatch between the (horizontal) expectations of both Argentina and Chile in relation to each other. Both undoubtedly support free trade, but their visions differ significantly on scope. The dispute settlement ‘solution’ must therefore manage these expectations as well as resolve the scope of Article 4.2. That outcome will inevitably impact on each country’s relationship in both the Cairns’ Group and Mercosur, as well as within the WTO. The key point about polycentric problems is that they can only be managed rather than resolved. Once a ‘solution’ is reached, all that happens is that the problem moves round on its axis closing old pathways and creating new ones through the spider’s web of interconnected ideas. We can see this happening in the later stages of the Chile–Price Band dispute. Before the Appellate Body, the problems which brought Chile and Argentina to the dispute settlement process have not miraculously disappeared, but instead are couched slightly differently, forced as they are down different pathways of the web of ideas following the closing of the old pathways by the findings of the panel report. Chile’s point is still that Argentina’s complaint about the continued existence of its price band system does not accord with Chile’s own understanding and expectations from the negotiating process and the degree of autonomy they expected following the Uruguay Round. This time however, the argument is framed in terms of whether the panel was able to consult pre-Uruguay Round

94

Ibid., para 4.94.

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documents, or whether it should restrict itself to the tariff schedules and the text of the Agreement on Agriculture.95 According to Chile, if the panel had in fact considered the text and tariff schedules only in conjunction with the actual negotiating documents rather than GATT committee reports, they would conclude that the price band measure was not one which was prohibited.96 This perspective still masks disagreement about what is a barrier to trade and how such barriers should be construed. It is still about how the Agreement on Agriculture should be understood and also what the power of the dispute settlement panels should be. These arguments shift around again onto another axis as Chile’s amended price band system comes before the panel and Appellate Body under an Article 21.5 DSU reference.97 This time, the argument focuses on the panel’s failure to consider the scope of Article 4.2 footnote 1 when it evaluated the amended price band scheme, and its automatic assumption of its scope, as well as on its failure to carry out an empirical assessment of the measure’s effect.98 Although these are clearly ‘variations on a theme’ of the scope of Article 4.2, there remains an argument about what is an appropriate barrier to international trade and the scope of the Agreement on Agriculture’s rules on market access. Chile–Price Band is to some extent an argument between two states regarding the scope of their obligations under Article 4.2 Agreement on Agriculture. It can be seen as a sustained attempt by Chile to retain a measure that repeated panel and Appellate Body reports found to be in violation. However, when viewed as one part of a complex and multifaceted (polycentric) problem, it is clear that the tensions revealed in that dispute do not disappear, but only change their nature and reappear in a later form, to the likely frustration of both parties to the dispute. The disagreements about autonomy and expectations were moved into the later panel and Appellate Body proceedings, albeit in a different guise, but in some respects, the problem about how developing countries should be treated when other countries around them are protecting their agricultural markets is manifest in the Doha Development Round negotiations. The G-33 proposal on the special safeguard is not in direct response to the Chile–Price Band dispute, but it is evident from that proposal that the difficulties encountered by Chile are exactly those which the special safeguard is

95 96 97

Ibid., paras 38–40. WT/DS207/AB/R, above n 29, para 42. Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/RW, above n 65 (panel) and WT/DS207/AB/RW, 7 May 2007. 98 WT/DS207/AB/RW, ibid., para 24.

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aimed at.99 Likewise, there are differential tariff cuts according to the tiered formula from the July 2008 Draft Modalities on the Agreement on Agriculture, with specific two-thirds’ cuts required for developing countries and an overall minimum level of 36 per cent reduction in tariff barriers.100 Special treatment for commodities and ‘special products’ is also illustrative of a debate in the talks about the nature of ‘special treatment’ for developing nations in terms of market access.101

CONCLUSIONS Understanding market access as a polycentric problem therefore explains why tensions which are seemingly resolved through comprehensive treaty drafting and exhaustive dispute settlement proceedings reappear as if nothing had ever been accomplished. A polycentric problem is one made up of many interconnected strands. Consequently, there are many ways in which the problem of market access can be understood. This understanding flows from how each individual looking at the problem thinks the various strands of the problem should be connected together to form a coherent picture. As a result, whilst it might appear that two people considering the issue are in agreement, this agreement is only superficial and in fact masks disagreement on which strands should be connected and how that connection should be made. Seeing market access as a polycentric problem is not the only way in which the problem can be understood, but is the second ‘model’ by which the tensions and difficulties of successfully regulating market access in international agricultural trade can be interpreted. Armed with both models, cultural divergence and polycentricity, Chapter 5 considers how these models can be combined to reveal a new way in which the problem of international agricultural trade can be understood. Chapter 5 pursues this argument using examples from domestic support and export subsidies.

99 Bridges (2005), ‘Busy Agriculture Week Focuses on Market Access’, 9(20) 8 June, also WTO (2005), G-33 Proposal on the Modalities for the Designation and Treatment of any Agricultural Product as a Special Product ‘SP’ by any Developing Country Member, Geneva, Switzerland: WTO, JOB(05)/304, 22 November. This is now in the Draft Modalities, above n 15, paras 117–19. 100 Draft Modalities, July 2008, above n 15, paras 63–4. 101 Ibid., Commodities, paras 88–99.

5. Cultural divergence, polycentricity and subsidies INTRODUCTION The aim of this book has been to explore how we look at the problem of international agricultural trade regulation. As such it has not delved into every aspect of the WTO Agreement on Agriculture, the related Agreement on Sanitary and Phytosanitary Measures (SPS Agreement) or the GATT; nor has it engaged in detailed analysis of the interpretation of the rules by the panel and Appellate Body. It is a book of ideas rather than a book concerned with doctrinal analysis in the ordinary sense. The primary aim of the book is to challenge the orthodox belief that there is only one way in which the problem of international trade regulation can be understood. I have argued that we are so embedded in the way we see the problem that there is a tendency to conceive of the orthodox understanding as akin to scientific and unchallengeable fact. This leaves little space for new solutions based on different conceptual understandings of the problem itself. The previous two chapters aimed, first, to present two new conceptual models for the understanding of the problem of international trade, and second, to relate these models to the rules on market access in detail so that the full extent of the implications of those models can be fully comprehended. Despite the level of detail involved in the discussion of market access, the discussion was not intended to serve as a comprehensive exposition of the rules; indeed, Chapter 4 only brushes the surface of this issue and examines only one of a number of aspects to it. It should be remembered, therefore, that the preceding account should be seen in terms of an analysis of the rules illustrating a body of ideas, rather than an analysis of the provisions for their own sake. In keeping with this overall aim, the present chapter moves the discussion in a different direction to that of Chapters 3 and 4. As previously mentioned, those chapters explored the two models of ‘cultural divergence’ and ‘polycentrism’ by showing how our conceptions of the rules on market access are altered when looked at through the lens of these ideas. This chapter takes a different approach. Rather than undertake a similar analysis of the remaining two pillars of the Agreement (i.e., domestic support and export subsidies), here 111

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we shall approach the problem of agricultural trade at a higher level of abstraction. There is a solid motive for changing the direction of the analysis in this way. My hope is that the reader will see in this book a series of ideas that can be taken away and further explored and developed in numerous different ways. Because the problem of agricultural trade is a polycentric problem, there is no single correct way in which it should be seen. The detailed analysis offered in the preceding chapters is thus itself a reflection of one possible way among many in which these ideas might be undertaken. The reader is therefore encouraged not to view that analysis as a definitive explanation of how these ideas should be given effect, but to use it merely as a springboard for further, even alternative, reflection. No additional purpose would be served by undertaking similar analyses in the present chapter, as this would only provide further illustration of the same ideas seen in Chapters 3 and 4. Instead this chapter indicates how the two theoretical models explored in those chapters might be related to one another in the context of the rules on domestic support and export subsidies. In order to orientate the reader, the following is a short description of the structure of this chapter. Throughout this chapter I shall be offering not exhaustive analyses or comprehensive perspectives, but rather small and limited examples drawn from the rules on subsidies to anchor the ideas to more familiar territory. As stated, the purpose of this chapter is to indicate the way in which the two models of cultural divergence and polycentrism link together. In terms of the book as a whole therefore this chapter ties up the various strands of conceptual analysis undertaken in the earlier chapters. Chapter 1 began by suggesting that an alternative method of conceiving the problem of international trade is needed, and briefly described this method. Chapters 2, 3 and 4 then pulled the different strands of the problem apart in an attempt to explore the significance of each in more detail. As stated at the time, this way of proceeding may bring clarity, but pulling the various dimensions of the problem apart in this way produces to some extent an artificial view. This chapter therefore reunites all these strands again whilst also deepening the discussion using examples from the rules on domestic support and export subsidies to illustrate the basic argument. The resulting picture can be no more than a gesture in the direction of what this more complex scenario would look like.

TRADITIONAL CONCEPTIONS OF THE PROBLEM It is clear from the numerous scholarly commentaries and multilateral negotiating documents that there are many ways in which the problem of international agricultural trade regulation can be understood. In the context of

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domestic subsidies, some commentators point to gaps in the rules coupled with unclear drafting which allowed WTO members to resort to policies that protect their domestic agricultural sectors.1 Others suggest that the liberalization targets in the Agreement on Agriculture did not cut deeply enough into developed members’ domestic support systems so that developing and least- developed nations’ agricultural products were unable to penetrate developed countries’ markets.2 Further suggestions relate to the instruments members are permitted to use in their agricultural policies: export subsidies are generally perceived as ‘bad’,3 whereas there is more divergence on the subject of domestic support despite general developing country disquiet about the level of developed countries’ use of domestic subsidies. Notably, an article in the Wall Street Journal in 2002 commented on the inextricable link between the substantial domestic payments given to US cotton farmers (approximately US$800 000 per household on USDA figures) and the growth of support for radical Islamist views in formerly moderate countries like Mali in West Africa.4 In Mali, the price received by a cotton producer fell by 10 per cent between 2001 and 2002, leaving many families with less than US$2000 a year to live on. Given the rising costs of fertilizer and other production costs, it became impossible for many families to increase their livestock holdings or even educate their children. This consequence is ironic especially as the US aid programme for Mali focuses very much on the provision of education. Ultimately, the disparity between the prosperity of US cotton farmers’ households and that of the Malian farmers means many have turned to radical Islam to find a way to prevent what they perceive as the US desire to ‘dominate the world economically and militarily’. It is difficult to move towards the privatization of the 1 See Desta, MG (2002) The Law of International Trade in Agricultural Products: from GATT 1947 to the WTO Agreement on Agriculture, The Netherlands: Kluwer; also McMahon, JA (2007), The WTO Agreement on Agriculture: A Commentary, Oxford, UK: Oxford University Press. 2 This remains a concern despite the apparent movement towards success in the Doha Round agricultural trade talks on 27 July 2008: see statement by Shri Kamal Nath, India’s Trade and Commerce Minister, on behalf of the Indian Delegation: http://www.wto.org/english/news_e/news_e.htm#bkmk765. 3 The Hong Kong Ministerial Declaration reflects a general consensus among WTO members that export subsidies should be eliminated as soon as possible, at the latest by 2013: WTO (2005), Ministerial Declaration, Geneva, Switzerland: WTO, WT/MIN(05)/DEC, 22 December, para 6. This is reflected in the July 2008 Revised Draft Modalities, WTO: ‘Revised Draft Modalities on Agriculture’, TN/AG/W/4/Rev.3, 10 July, paras 150–52. 4 Thurow, R, and Kilman, S (2002), ‘US Subsidies Create Cotton Glut that Hurts Foreign Cotton Farmers’, 26 June, Wall Street Journal. http://econ161.berkeley. edu/movable_type/archives/000272.html.

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Malian state trading system in agriculture if substantial support programmes elsewhere in the developing world distort the global market. Commentators and negotiators also suggest that the critical link between trade and non-trade concerns is not fully accommodated in the agriculture rules: in the context of domestic subsidy programmes non-trade concerns are addressed through the so-called Green Box exemption for domestic subsidies contained in Annex 2 Agreement on Agriculture. There is disagreement, however, on the extent to which the rules adequately address the environment, human rights, food security, food aid, and broader development goals.5 These latter problems are also closely linked to deeper systemic issues, principally how should the WTO link in with other non-trade agreements on the environment or human rights for example; to what extent is the legitimacy of the organization affected if the panel or Appellate Body draws on these non-trade agreements to give life to the WTO rules?6 For example, there have been divergent views regarding how the legitimacy of the WTO is affected by alleged judicial ‘radicalism’ in relation to the interpretation of the WTO obligations. The introduction of a Trade Enforcement Bill in 2008 by the Chairman of the US House Ways and Means Committee, Charles B. Rangel, and the subcommittee Chairman, Sander L. Levin, indicates that some members of the US Congress are questioning the degree to which the WTO Appellate Body has reinforced the precedent effect of the panel and Appellate Body’s previous rulings, particularly following adverse rulings in the US–Cotton decision which found that certain payments to domestic producers and its export credit guarantee programme were in violation of its export subsidies commitments in the Agreement on Agriculture and the SCM Agreement.7 In Sec. 205 of the

5 Some commentators have questioned whether the proposed changes to the Doha Round will address any of the difficulties with food aid in particular: see Cardwell, R (2008), ‘Food Aid and the WTO: Can the New Rules be Effective?’, 9(1) Estey Journal of International Law & Trade Policy 74. Note also concerns regarding the compatibility of the European Communities’ farm policy with the Green Box: see Swinbank, A, and Tranter, R (2005), ‘Decoupling EU Farm Support: Does the New Single Payment Scheme Fit within the Green Box?’, 6(1) Estey Journal of International Law and Trade Policy 47. 6 See House Committee on Ways and Means: ‘Chairmen Rangel and Levin Introduce Trade Enforcement Bill H.R. 6530 would help to ensure that trading partners play by the rules’, 17 July 2008, see Sec. 205: the Role of the WTO Appellate Body, particularly the denial of the role of precedent in Sec. 205(4). 7 United States–Subsidies on Upland Cotton, WT/DS267/R, Report of the Panel, 8 September 2004; Report of the Appellate Body, WT/DS267/AB/R, 3 March 2005 and United States–Subsidies on Upland Cotton – Recourse to Article 21.5 DSU by Brazil, WT/DS267/RW, 18 December 2007, Part VIII. The original view of the ‘precedent effect’ of the WTO panel and Appellate Body rulings is found in Japan–Alcoholic Beverages, WT/DS10/AB/R, 4 October 1996, Section E.

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Draft Trade Enforcement Bill there is a clear statement that only the WTO Agreements represent binding commitments on WTO members and that previous panel and Appellate Body rulings only give rise to ‘legitimate expectations’ for members, but do not of themselves have a precedent effect. The Bill requires Congress to state ‘unequivocally’ that the role of the panels and the Appellate Body is only to interpret the covered agreements and not to expand members’ obligations; and further, that there is no place for binding precedent in WTO jurisprudence.8 There is a sense throughout the literature on international agricultural trade regulation that many problems exist, both specifically and tangentially, each with its own solution. The literature also suggests that all these problems and solutions have to be somehow accommodated within a single trade regime. It is not surprising, on this view, that compromises must be made in both members’ demands and the text itself. Ultimately, the literature implies the reason problems remain is that we have not quite achieved the best compromise in the rules between eliminating protectionism on one side and balancing all the other competing issues on the other. On this linear perspective, there is a ‘right’ balance which can be achieved – we just have to keep moving forward till we find it.

INTERNATIONAL AGRICULTURAL TRADE REGULATION AS A POLYCENTRIC PROBLEM This book argues for an alternative way in which the problem and its solution should be understood. Rather than seeing many problems in international agricultural trade regulation, this book identified a single problem with many interconnected strands: that is, international agricultural trade regulation is a multifaceted or ‘polycentric’ problem. The basic scope of this polycentric problem was sketched in Chapter 1, but it is useful to reiterate the basic proposition drawn from Fuller’s work. Fuller used the analogy of a spider’s web to describe a polycentric problem: like the spider’s web, the polycentric problem is composed of many threads

8 Sec. 205(4)(b)(1) and (2) ibid. This debate seems largely sparked by adverse rulings against the US, including the cotton dispute. However, the Bill is also motivated by the recent rejection of the practice of ‘zeroing’ in the calculation of the dumping margin: Bum Kin, J (2002), ‘Fair Price Competition in the WTO Anti-Dumping Agreement – Recent WTO Panel Decisions against the “Zeroing” Method’, 36(1) Journal of World Trade 39. See United States–Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R (Appellate Body Report), 30 April 2008, paras 154–62.

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(or strands), each intersecting or crossing over the others. Sometimes the strands meet to form a junction in the web (i.e. point of agreement) and at other times, the strands pass over each other and only appear to intersect when the web is viewed from quite a distance away (i.e. the appearance of agreement). Because there are so many possible pathways which trace the interconnecting and crossing strands through the web, there is no single way in which a polycentric problem can be described. This is because every explanation can only ever map one pathway through the strands of the web; each way the problem can be described is only ever a partial explanation of its full extent therefore, meaning there is no uniquely correct way in which the problem can be described, nor any uniquely correct solution. It is this failure to understand the true nature of the problem of international agricultural trade which results in the continuing difficulties of effective regulation.

THE STRANDS OF THE POLYCENTRIC PROBLEM The following discussion retraces the various strands of the (polycentric) problem of international agricultural trade already introduced at a high level of abstraction in Chapter 1; but this time the analysis focuses on explicit examples from the difficulties surrounding the successful regulation of domestic support measures and export subsidies. These are in turn related to the general problem of international agricultural trade so a more meaningful picture is revealed. Chapter 1 identified at least five major strands of the (spider’s) web. Each of these has many smaller connected strands which connect with the main strands in many diverse ways dependent on how the individual perceiving all the various strands thinks they should fit together to form a coherent picture of what the problem is.9 The first strand is trade measures: that is, those trade measures which a member is permitted to use in their domestic agricultural policies. The degree to which the member can be held responsible for private parties’ actions, specific agricultural sectoral treatment and when a member is deemed to have successfully complied with its implementation commitments are all smaller strands of this main ‘trade measures’ strand. How an individual thinks the trade measure strand should be understood has profound implications for how they will connect the other strands discussed below to this one, thereby revealing their perception of what the problem of international agricultural trade is.

9 This idea is discussed first in Chapter 2 of this book, but will be analysed in more detail here in Chapter 5 below.

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In the context of the rules on subsidies for example, issues under this strand include whether the rules on domestic support contained in Part IV of the Agreement and Annexes 2, 3 and 4, and those on export subsidies in Part V coupled with those obligations in GATT and the Agreement on Subsidies and Countervailing Measures (the SCM Agreement),10 are able to control the use of subsidies more effectively than the GATT. If, as Josling and Tangermann point out, the agricultural sector is the ‘epitome of a protected and subsidized sector’,11 such studies would assess the extent to which the rules alleviated the significant incidence of the notorious trade wars of the GATT period like those over pasta, sugar, oilseeds and canned fruit.12 Evaluation here might focus on whether there had been a reduction in the frequency and successful outcomes to these disputes. In addition, this strand also encompasses an assessment of the degree to which domestic farm policies, like the high incidence of the use of export subsidies by developed nations, contribute to the distortions in international trade for agricultural products, and how this is facilitated rather than restrained

10 Article 21 Agreement on Agriculture specifies that GATT and the rules in the agreements contained in Annex 1A to the Agreement Establishing the WTO apply to agricultural trade subject to the provisions of the Agreement on Agriculture. See European Communities–Regime for the Importation, Sale and Distribution of Bananas, Panel Report, WT/DS27/R/USA, 22 May 1997, para 7.122, recognizing the importance of Article 21.1; the Brazil–Desiccated Coconut WT/DS22/AB/R (Appellate Body Report), 21 February 1997, 13, stated that the combination of the Agreement on Agriculture and the SCM Agreement represented members’ latest pronouncement on the regulation of subsidies in agricultural trade. See also Canada–Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/R and WT/DS113/R, 17 May 1999, para 7.126, where the SCM Agreement was used as context to interpret the Agreement on Agriculture. 11 Josling, T, and Tangermann, S (2003), ‘Production and Export Subsidies in Agriculture: Lessons from GATT and WTO Disputes Involving the EU and the EC’, in Petersmann, EU, and Pollack, MA (eds), Transatlantic Economic Disputes: The EU and the US and the WTO, Oxford, UK: Oxford University Press, ch 6, 208. 12 GATT Panel Report, European Economic Community–Subsidies on Export of Pasta Products, SCM/43, 19 May 1983 (unadopted); GATT Panel Report, European Communities–Refunds on Exports of Sugar – Complaint by Brazil, L/5011, adopted 10 November 1980, BISD 27S/69; GATT Panel Report, European Economic Community –Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, L/6627, adopted 25 January 1990, BISD 37S/86 (Oilseeds I); GATT Panel Report, European Economic Community–Follow-Up on the Panel Report ‘Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins’, DS28/R, 31 March 1992, BISD 39S/91 (Oilseeds II); GATT Panel Report, European Economic Community–Production Aids Granted on Canned Peaches, Canned Pears, Canned Fruit Cocktail and Dried Grapes, L/5778, 20 February 1985 (unadopted).

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by the rules.13 For example, Josling and Tangermann’s research, drawing on the seminal Hudec studies on GATT disputes,14 focuses on the degree to which a spillover from disagreements over domestic farm policies leads to multilateral trade wars. Also, in the pre-WTO period, Thomas Schoenbaum, commenting on the major agricultural trade wars, stressed that the European Communities’ use of export subsidies enabled the sale of its huge commodity surpluses in milk, cereals, beef and butter generated by the Common Agricultural Policy (CAP) in a way which clearly distorted agricultural markets, increased prices for domestic consumers and made it difficult for developing nations to compete. The rules did little to constrain this behaviour, especially as key panel reports were not adopted.15 Consideration of this ‘trade measures’ strand also concentrates on the precise quantitative way that export subsidies distort agricultural markets and why specific measures should be subject to stricter disciplines within the rules. Whilst the trade measure remains the focus of the study, the emphasis shifts slightly onto the inherent nature of the measure and why specific forms of export or domestic subsidy are bad for trade flows. As such, these studies act more as an impetus for legal regulation, rather than an exploration of the rules’ scope per se.16 Even though the issues falling under the ‘trade measures’ strand appear distinct, it is possible to see how an individual’s understanding of ‘trade measures’ inextricably links in with the other strands of the problem. This link will be demonstrated as we progress through the discussion to the remaining strands of the problem of international agricultural trade, as seen through the lens of export subsidies and domestic support.

13 This has clear implications for the development strand and also the way in which all the strands will be connected. On the general scope of the development strand, see Chapter 1 and on the notion of coherence, see Chapter 2; the connection between the strands and coherence is discussed in Chapter 5 below. 14 Hudec, RE (1993), Enforcing International Trade Law: The Evolution of the Modern GATT Legal System, Butterworth Legal Publishers, and the earlier study, Hudec, RE (1990), The GATT Legal System and World Trade Diplomacy, Butterworth Legal Publishers. 15 Schoenbaum, T (1991–3), ‘Agricultural Trade Wars: A Threat to the GATT and Global Free Trade’, 24 St Mary’s Law Journal 1165, 1182, 1188–9. See also Swinbank, A, and Tanner, C (1996), Farm Policy and Trade Conflict: The Uruguay Round and CAP Reform, Ann Arbor, MI: University of Michigan Press. For a comprehensive assessment of the evolution of the CAP see Cardwell, MN (2004), The European Model of Agriculture, Oxford, UK: Oxford University Press. 16 For example, Sturgess, I (2000), ‘The Liberalization Process in International Agricultural Trade: Market Access and Export Subsidies’, in Bilal, S, and Pezaros, P (eds), Negotiating the Future of Agricultural Policies: Agricultural Trade and the Millennium WTO Round, The Netherlands: Kluwer, 135, 142.

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The second strand is development. Like the first ‘trade measures’ strand, the development strand is also made up of many smaller strands. These smaller strands encompass, inter alia, how developing and least-developing nations’ needs are accommodated within the WTO rules on agriculture and whether the rules are adequate for this task. For example, a study by de Gorter, Ruiz and Ingco concentrates on the adverse impact of export competition policies on developing nations.17 As well as identifying the deficiencies in the rules relating to the use of an unrepresentative base period for the calculation of the permitted level of export subsidy, the study’s orientation is noticeably towards the adverse impact on development in general.18 In one sense, this study is certainly about the nature of development, specifically how countries enjoying lower levels of economic growth might move beyond that stage. However, this study also takes a particular stance on what an appropriate trade measure is and how that measure should be perceived: there is a clear indication that export subsidies are inappropriate as they distort international trade in agricultural products and, as such, should not form a legitimate part of a member’s domestic agricultural policies at all. It is therefore impossible for this study to take a view on how development issues should be addressed without also taking a view on how the trade measures strand should be understood as well.19 Looking forward into the current Doha negotiations and beyond, other smaller strands within the main development strand concern how developing country ‘protectionism’ should be regulated. Is it protectionism at all, or is it a developmental need? Stiglitz and Charlton’s study, Fair Trade for All, epitomizes the ideas which would come in this smaller strand. They concentrate on how development needs might be fully accommodated by the trading system

17 de Gorter, H, et al. (2004), ‘Export Competition Policies’, in Ingco, MD, and Nash, JD (eds) (2004), Agriculture and the WTO: Creating a Trading System for Development, Washington, DC: World Bank, and Oxford, UK: Oxford University Press, 43. 18 For a detailed assessment of the problems in the WTO rules on export subsidies see Desta, above n 1, ch 6. The Uruguay Round Modalities document specifies that export subsidies should be restricted in terms both of budget outlays and quantity reduction commitments. These reductions are measured from a 1986–90 base, but members can take advantage of a base period of 1991–92 if this is higher than the 1986–90 levels. This is the so-called ‘front loading’ option: GATT (1993), Modalities for the Establishment of Specific Binding Commitments under the Reform Programme, Geneva, Switzerland: GATT, MTN.GNG/MA/W/24, 20 December, paras 11–12 and Annex 8. 19 There are also clear issues of governance here too: that is, the degree of autonomy that each member should be permitted when crafting its domestic agricultural policy. This is the final strand and is outlined in Chapter 1 and discussed in Chapter 5 below.

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through phased reduction of developed country subsidies on specific products like cotton. For them, asymmetric trade liberalization where developing countries retain some form of protection which exceeds the current notions of phased reduction in barriers to trade is clearly acceptable and even necessary.20 Again in this context, the assessment that certain aspects of a member’s domestic support system are ‘protectionist’ is to take a view of what an appropriate trade measure is: the impact of a ‘bad’ domestic support measure on development can only be determined if an assessment has first been made on what an appropriate trade measure is and how that impact can or should be measured on countries who experience lower rates of economic growth.21 Linked with the notion of whether developing countries should be permitted to protect their agricultural sectors is the degree to which developing nations, particularly Brazil, India and China, should be treated differently in the agriculture regime, and how this might be achieved.22 Vulnerability in developing country negotiating positions comes within this strand,23 as do questions of vulnerable product and labour sectors in developing and leastdeveloped country society like tropical products and women respectively. For example, the African Steering Group looking into how the United Nations Millennium Goals can be implemented in sub-Saharan Africa noted that predominantly all (80 per cent) of Africa’s smallholding farmers are women and measures that should be taken to ensure that food aid is not a disguised export subsidy from developed nations, but rather that it takes the form of better access to seeds and fertilizer, land improvements and water management, as well as access to financial services.24 Making a determination about 20 Stiglitz, JE, and Charlton, A (2005), Fair Trade for All: How Trade Can Promote Development (2005), Oxford, UK: Oxford University Press, 120–24. Their views are in marked contrast to those of Douglas Irwin: Irwin, D (2006), ‘‘‘Fair Trade for All: How Trade Can Promote Development: by J. Stiglitz and A. Charlton’, 5(3) World Trade Review 489. Irwin, D (2005), Free Trade for All, 2nd edn, Princeton, NJ: Princeton University Press, 88–93 and Chapter 6. Their conflicting ideas are discussed in greater detail in Chapter 2 of this book. 21 This also links into the ‘governance’/systemic issues strand as it also implies a view on what a member can legitimately do once it is a member of the WTO. This is not to take a ‘legal’ view on the scope of a member’s obligations as such, but rather the individual would express an opinion on what behaviour should be acceptable. See Chapter 5 below. 22 Anderson, K, and Martin, W (2006), ‘Scenarios for Global Trade Reform’ in Hertel, TW, and Winters, LA (eds), Poverty and the WTO: Impacts of the Doha Development Agenda, Washington, DC: World Bank, and UK: Palgrave, 31. 23 See the comprehensive study by Odell on issues: Odell, JS (ed) (2006), Negotiating Trade: Developing Countries in the WTO and NAFTA, Cambridge, UK: Cambridge University Press. 24 Africa Steering Group (2008), ‘Achieving the Millennium Development Goals In Africa’ (June 2008) Geneva, Switzerland: United Nations, 5.

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how these issues should be understood is once again predicated on seeing other strands of the problem of international agricultural trade in a specific way. It is clear that how the role of women should be addressed in terms of development presupposes a view on the scope of the trade measures strand, including how the impact of trade measures should be assessed and also whether it is even possible to calculate the impact of such measures on these issues. A determination that land management and water conservation are important goals for domestic agricultural policies in developing nations also presupposes a view not only on the proper scope of the trade measures, but also on how the rural environment should be understood in terms of development and international agricultural trade: is it only that element which directly relates to the tillage of the land to yield crops etc., or should it also relate to the method by which that land is tended to preserve a specific rural landscape? Such issues create an important link between the trade measures and development strands, but also link into the third strand. The third strand is the environment.25 Like the previous two strands, this strand is also made up of smaller strands. Specifically, important issues arise regarding the place environmental preservation occupies within international agricultural trade: is there a link between trade and the environment; if there is, how should that link be made manifest in the rules on agricultural trade, if at all? For example, the European Communities’ support for the critical link between domestic agricultural policies and environmental considerations is well known.26 In its 2005 Lisbon Strategy, the European Union made it clear that reform of the Common Agricultural Policy (CAP) towards trade liberalization went ‘hand in hand’ with rural development policy and the preservation of the environment.27 Financial support for domestic producers is now clearly linked to environmental considerations through the idea of ‘cross compliance’. Whilst the European Communities have strongly supported this ‘multifunctional’ character of agriculture in multilateral negotiations, their view has been strongly opposed by members of the Cairns’ Group on the grounds that it is merely 25 26

See Chapter 1 above for an overview of the scope of this strand. WTO (2000), Note on Non-Trade Concerns, Geneva, Switzerland: WTO, G/AG/NG/W/36, 22 September 2000. 27 EC (2008), ‘Putting Rural Development to Work for Jobs and Growth’, Special Edition Newsletter, DG Agriculture and Rural Development. The European Communities retains its support for the crucial link between agricultural policy and non-trade concerns: European Commission (2008), CAP ‘Health Check’, Brussels, Belgium: European Commission, COM(2008)306, 20 May 2008; the European Commission notes the strategic impact the CAP still retains on the environment and also on rural development, 3–4 and ch 4.

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a disguised form of protectionism.28 The issue for this strand is therefore which view should take priority in the multilateral negotiations, or if some compromise should be reached. It is very clear from the European strategy that they express the view that not only should environment play a crucial role in international agricultural trade regulation, but also that trade measures aimed at environmental considerations are legitimate. There are links also to ideas of state autonomy in terms of what control a member retains over their domestic policies once they accede to the WTO rules: specifically that they are able to pursue a trade agenda which simultaneously supports a non-trade agenda. To the extent that such a view separates trade measures from environmental considerations on the grounds that the environment is a ‘non-trade’ issue, this approach is also based on a specific vision of what comes within the notion of ‘trade’.29 Further smaller strands within the main environment strand also include whether there should be a link between the WTO rules on agricultural products and other international agreements? Here, an important debate would be, for example, what the relationship should be between the Cartagena Biosafety Protocol and the linked Convention on Biodiversity.30 Particularly, are the measures within the Biosafety Protocol trade measures or do they relate purely to the environment? In other words, when will a domestic agricultural subsidy granted to preserve the environment be a trade measure rather than an environmental measure?31 Again, to take a positive (negative) view of the link between trade and nontrade agreement is based on a view of what a trade measure is and what it can legitimately achieve. A view on the true nature of state autonomy and what is the lawful scope of the WTO’s legal competence is also necessary here, thereby linking the trade measures, environment and governance/systemic 28 Cairns’ Group (2002), Specific Proposal on Domestic Support, 27 September, http://www.cairnsgroup.org/proposals/7623.html. Note the OECD’s work on the multifunctional character of agriculture. See OECD (2008), Multifunctionality in Agriculture: Evaluating the Degree of Jointness: Policy Implications, Paris: OECD, Part III and the ‘jointness’ of environmental externalities and agricultural policy. 29 For a discussion of the scope of ‘trade’ see Chapter 1 and also Chapter 3 in the context of market access above. 30 The Convention on Biological Diversity was adopted in June 1992; http://www.cbd.int/convention/convention.shtml; Cartagena Protocol on Biosafety to the Convention on Biological Diversity adopted 29 January 2000: http://www.cbd.int/doc/legal/cartagena-protocol-en.pdf. This link was discussed in the GMO case (see above n 18 on p. 85). Whether this is the end of the matter remains to be seen: European Communities–Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R, 10 October 2006, para 7.95. 31 See Bhagwati, J (2002), Free Trade Today, Princeton, NJ and Oxford, UK: Princeton University Press.

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issues strands together. To the extent that the relationship between environmental and trade treaties relates to all the members of the WTO any discussion on the impact of environmental considerations on the trading relationships of developing nations inevitably connects the trade measures, development, governance and environmental strands together. Importantly, under this environment strand the difficult regulation of subsidies on biofuels must be assessed. To what extent are biofuels agricultural products, rather than manufactured products and how should subsidies designed to promote the production of biofuels be evaluated within the WTO rules, if at all?32 The main connections between the strands may start to become obvious here, but an interesting question which a view on the legitimacy of domestic support policies for biofuels presupposes is the degree to which biofuels are in fact an agricultural product; such a view would be predicated on what the commentator/member felt was the proper scope of a domestic support measure. The fourth strand identified by this book is human rights.33 Many issues, or smaller strands, arise here. First, whether human rights should be seen as an independent strand in its own right, or whether it is actually a more comprehensive term for issues that arise in the development strand and in the environment strand. For example, in the discussion of the development strand above, the impact of agricultural policies and reforms on women’s rights took centre stage in the recommendations of the Africa Steering Committee in relation to the implementation of the UN Millennium Goals.34 Is there anything to add therefore by considering it to be a strand in its own right? This point will be returned to below, but at this stage in the analysis the important question is whether human rights should be part of the international trading regime or not. If human rights are accepted, what form should they take? For example, if a state wishes to introduce policies aimed at support for a general ‘right to food’, then what priority should be accorded to them, in particular, what should the relationship be between human rights ideas and the free trade goal?35 Would a subsidy justified on the grounds of a ‘right to food’ be appropriate therefore? More complex questions then also arise: if human rights are included in the 32 International Food and Agricultural Trade Policy Council (IFATPC) (2006), WTO Disciplines and Biofuels: Opportunities and Constraints in the Creation of a Global Marketplace, Washington DC: IPC. 33 See Chapter 1 for a broad sketch of this issue. 34 Africa Steering Group (2008), Achieving the Millennium Development Goals in Africa, Geneva, Switzerland: United Nations, 5. 35 Petersmann argues that the ‘right to trade’ might even be viewed as a form of human rights: ‘Human Rights and International Trade Law: Defining and Connecting the Two Fields’, in Cottier, T, et al. (eds), Human Rights and International Trade, Oxford, UK: Oxford University Press, 29, 36.

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Agreement on Agriculture, should they then be extended into other areas of the WTO rules? If they are, what is the relationship between human rights obligations in other treaties and the WTO? What priority should interpretations from these treaties be accorded, if any? How might, or should, WTO regulation be ‘transformed’ by the human rights discourse and what implications will such ‘hijacking’ have for the interpretation of human rights in other human rights treaties?36 Does this then mean that the WTO’s underlying free trade ethos is completely inappropriate and the WTO is actually based on a different theoretical basis: some would argue in favour of ideas like embedded liberalism, or even ‘global welfare’ or vaguer notions including ideas like ‘fairness’.37 To the extent that the human rights discourse involves these fundamental questions about the legitimacy of the WTO as a whole, it can be considered a horizontal or cross-cutting issue. A view on the place of human rights in international agricultural trade is affected/influenced by an understanding of what is the ‘proper’ scope of the strands of trade measures, development and the environment, as well as the broader systemic issues strand which this discussion returns to below. At this stage in the analysis, it is sufficient to say that a view on one strand influences and shapes the view on every one of the others.38 How those opinions are shaped is addressed below following the final major strand, systemic issues. These questions lead into the final, more systemic strand. Unlike the previous strands which were clearly tied to agricultural production in some form, whether it was because they were linked to the measure used to support production, or because the measure impacted in some way on the members’ GDP, this strand is more tangentially linked to agricultural trade. This final strand focuses on notions of governance: how should international agricultural trade be regulated? What should the balance be between trade and non-trade objectives and how should this be achieved? Is it still possible to retain a free trade agenda whilst pursuing developmental, human rights and environmental objectives? What should the continued role of the dispute settlement body be? 36 For a very interesting critique of Petersmann’s approach see Alston, P (2002), ‘Resisting the Acquisition of Human Rights by Trade Law: A Reply to Petersmann’, 13 European Journal of International Law 815. 37 Ruggie, J (1982), ‘International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order’, 36 International Organization 379; Stiglitz and Charlton, above n 20. 38 It is important to note that although I have identified five strands for this discussion, there may in fact be more, dependent on whether my ‘sub-strands’ are regarded as being major strands in their own right. If other strands are found, this only strengthens my theory about the nature of international agricultural trade being a multifaceted or polycentric problem.

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Should we be moving towards greater reliance on conciliation and mediation given the increasing disquiet, particularly from some elements within the United States for example, about the status of panel and Appellate Body rulings?39 In the broader context, this strand also considers the relationship of the WTO with other international organizations and with other multilateral trading rules. It is clear from the discussion above that questions arise in the environment and human rights strands regarding the relationship between the WTO rules and human rights and environment treaties. Given the critical place of these issues in the agricultural sector, difficulties surrounding this complex relationship clearly arise. Important questions remain regarding the role of ‘soft regulatory’ mechanisms within the WTO structure, like the committee structure. Does the non-adversarial setting maximize a member’s ability to modify a measure, or compensate for its application away from the glare of publicity so prevalent in formal dispute settlement proceedings, or is it merely an illustration of a lack of transparency?40 To summarize: the problem of international agricultural trade regulation is not a series of problems, but rather a single, multifaceted or ‘polycentric’ problem composed of a series of complex strands. The discussion above on the different strands is to some extent artificial as it separates out the various strands into their component parts. This was for the sake of exposition rather than any idea that these strands are in fact distinct in some way. It is probably readily apparent that even in the notional separation there is considerable overlap between the various strands: the discussion on the relationship between the WTO rules on agricultural subsidies and environmental treaties also fits in to the systemic, governance strand, as well as the human rights strand to the extent that a right to a clean environment is accepted as a human right. The trade/environment treaty nexus also fits within the trade measures strand to the extent that the measures used to fulfil environmental goals could be domestic subsidies.41 Environmental considerations also clearly impact on

39

See discussion above on House Committee on Ways and Means, ‘Chairmen Rangel and Levin Introduce Trade Enforcement Bill H.R. 6530 would help to ensure that trading partners play by the rules’, 17 July 2008, above n 6, see Sec. 205: the role of the WTO Appellate Body, particularly the denial of the role of precedent in Sec. 205(4). 40 Scott discusses the important role played by the SPS Committee in Scott, J (2007), The WTO Agreement on Sanitary and Phytosanitary Measures: A Commentary, Oxford, UK: Oxford University Press, 45. 41 For example, the link between domestic subsidies and the environment is clearly made in the European Communities’ domestic agricultural policy: see above n 27.

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the development strand both in terms of agricultural husbandry, and also, to the extent that environment is ‘rural environment’, on the preservation of indigenous communities.42

LINKING THE STRANDS: HOW DO WE KNOW A ‘PROBLEM’ WITH INTERNATIONAL AGRICULTURAL REGULATION EXISTS? Where does the discovery that there are many disparate interconnected strands of the problem of international agricultural trade leave us? The recognition of the strands is not the end of the re-evaluation of the problem. If it were, then all this book has really done is exchange many familiar problems of international agricultural trade regulation for one larger one. This book suggests something more interesting is occurring however. The difficulties surrounding international agricultural trade are so well known that it is tempting to think that they have been raised to the level of a type of ‘fact’. In other words, we know the lack of a pro-free trade agenda in some countries is important; we also know that developing countries must liberalize their agricultural sectors if they are ever to truly raise their GDP. We also know that trade and the environment are linked and that development/human rights issues are important.43 On this view, it appears that we all identify the same issues (or even the same strands of the problem); the difficulty is only that we cannot agree on the correct solution. I would suggest that this does not represent the true nature of events. Instead, it only appears that we are all discussing the same issues and establishing the same links between the strands. We are in fact discussing slightly different versions of these issues, which are structured by the way we think the problem should be understood.44 When we each identify what the problem of international agricultural trade is, a complex process of thought has occurred which enables us to reach our conclusions, which we may (or more likely may not) be fully conscious of. This process starts with a determination of what the relevant subject is. We can

42 Ni (2007), ‘International Law-Making’s Impact on Traditional Knowledge’, paper prepared for ‘Cultural Diversity under International Trade Regimes: Policy and Practices’, 28–29 June 2007, hosted by the Asian Center for WTO & International Health Law and Policy, College of Law, National Taiwan University, Taipei and the Council of Cultural Affairs, Executive Yuan, Taiwan (on file with author). 43 Of course the converse assertion that all these issues are not true is equally valid for the following discussion. 44 See Chapter 2 for a detailed exposition of this thought process.

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only decide whether a problem exists if we have taken a view of the scope of the subject: for example, it is only possible to decide if the Canada–Dairy decision is correct (i.e. whether there is a ‘problem’ with it – if the export subsidy rules were inadequate to prevent the Canadian action, for example) if we have a sense of the context in which we are going to assess the veracity of the decision. Are we confining our analysis only to the WTO rules on export subsidies?45 Or will we try to consider the cultural background in which Canada’s dairy programme operated? The nature of the ‘problem’ is very different dependent on how we structure our subject. Likewise, when we consider the validity of the United States–FSC case, are we looking only at the WTO rules, or are we considering the legislative intent of the US government in the light of those rules, or even as a reason to justify the US government actions?46 The first stage is therefore to establish how we determine the parameters of the subject. We start by considering a range of human activity and seeing connections in a way which allows us to determine a clearly discernible pattern in otherwise random occurrences. This primitive anthropological need to see regularity in otherwise random behaviour allows us to make sense of the world around us.47 Activity which ‘fits’ this pattern becomes the ‘subject’. It is tempting to think that everyone observing this behaviour will see the same pattern emerging, so that somehow this resembles a ‘fact’. For example, it is tempting to think that the combination of the rules and the panel/Appellate rulings suggests that the WTO’s primary concern is the liberalization of international 45 Canada–Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103 and 113/R, Report of the Panel, 17 May 1999, Report of the Appellate Body, WT/DS103 and 113/AB/R, 13 October 1999, First Recourse to Article 21.5 DSU, Report of the Panel, WT/DS103 and 113/RW, 11 July 2001, First Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS103 and 113/AB/RW, 3 December 2001, Second Recourse to Article 21.5 DSU, Report of the Panel, WT/DS103 and 113/RW2, 26 July 2002, Second Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS103 and 113/AB/RW2, 20 December 2002. 46 United States–Tax Treatment for ‘Foreign Sales Corporations’, Report of the Panel, WT/DS108/R, 8 October 1999; Report of the Appellate Body, WT/DS108/AB/R, 24 February 2000; First Recourse to Article 21.5 DSU, Report of the Panel, WT/DS108/RW, 20 August 2001; First Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS108/AB/RW, 14 January 2002; Recourse to Article 22.6 DSU, WT/DS108/ARB, 30 August 2002; Second Recourse to Article 21.5 DSU, Report of the Panel, WT/DS108/RW2, 30 September 2005; Second Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS108/AB/RW2, 13 February 2006. 47 This process is based on ideas of constructional rationalism developed by Hayek in his analysis of the evolution of institutions: see Hayek, FA (1973), Law, Legislation and Liberty: Volume I Rules and Order, Chicago, IL: University of Chicago Press, ‘Reason and Evolution’, 8, 8. This point is addressed in detail in Chapter 2.

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agricultural markets. We discern this pattern because we consider the wording in the rules, we evaluate statements in the Appellate Body and panel reports and we also assess the various member proposals which apparently substantiate this view. The more people who support the pattern we have identified, the more it resembles fact. However, it is possible to consider precisely the same material and come to a different conclusion. For example, John Ruggie’s work on embedded liberalism, Jeffery Dunoff’s analysis of trade and non-trade concerns and Tarullo’s analysis of the objectives of the international trading system would suggest that the conclusion ‘the WTO is about trade liberalization’ is not the only one which can be drawn.48 It is important to stress at this point that we are not engaging in a ‘right’ or ‘wrong’ analysis here. It does not matter that Ruggie might be wrong or Bhagwati49 might be right, or vice versa. Instead the critical issue is that every person, whether they are a commentator, NGO representative or negotiator, who considers this is coming to a conclusion based on the patterns that they discern in otherwise random behaviour. In other words, the way they view the subject and, consequently the problem, is different. Establishing that we are looking for patterns in an otherwise random series of events is only the first stage of establishing the parameters of the subject. The pattern we see is driven by two further factors: our knowledge of the subject and the way we think the subject should be understood. Looking at the notion of knowledge: every individual who looks at a range of behaviour will see a pattern emerging. The precise nature of the pattern changes dependent on whether we have specialist knowledge of a subject. For example, it is likely that many people will have an understanding of the word ‘subsidy’. They will know that it is some form of financial aid granted often by the state.50 However, some individuals have an additional level of insight which subtly adds an extra layer of meaning, or enhanced knowledge, which leads them to a different and/or deeper understanding of the phrase which in turn colours their selection of human behaviour to form the subject. Oakeshott describes this enhanced knowledge as ‘technical knowledge’.51

48 Ruggie, above n 37, 379; Dunoff, JD (1998), ‘Rethinking International Trade’, 19 University of Pennsylvania Journal of International Economic Law 347; Tarullo, D (1985), ‘Logic, Myth and the International Economic Order’, 26 Harvard International Law Journal 533. 49 Bhagwati, Free Trade Today, above n 31. 50 This might be referred to as the ‘ordinary meaning’ of ‘subsidy’. See Oxford English Dictionary. 51 Oakeshott, M (1991), ‘Rationalism in Politics’, in Oakeshott, M, Rationalism in Politics and Other Essays, Indianapolis, IN: Liberty Press, 5, 12.

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Returning to our example of the word ‘subsidy’, those individuals who have studied international agricultural trade law will know that the word ‘subsidy’ is not defined as such in the WTO Agreement on Agriculture, but that the Appellate Body in the Canada–Dairy decision52 interpreted the word to mean a ‘transfer of economic resources from the grantor to the recipient for less than full consideration’, relying heavily on its previous jurisprudence in the Canada–Aircraft decision and Article 1 of the SCM Agreement as context to truly understand the scope of the word.53 As a later compliance panel stated, the Agreement on Agriculture and the SCM Agreement are related very closely and are ‘part of a logical continuum’,54 meaning that reasoning based on the interpretation of the obligations on export subsidies contained in Article 10.1 of the Agreement on Agriculture is equally relevant for an analysis of violation of Articles 1.1 (definition of a subsidy) and 3.1 (definition of a ‘prohibited subsidy’) of the SCM Agreement.55 For the purposes of our discussion, those who studied international agricultural trade will know that when considering whether a specific transfer of economic resources is a ‘subsidy’ in the context of the Agreement on Agriculture, the scope of the notion of ‘subsidy’ in the SCM Agreement is critical. In other words, their technical knowledge allows them to appreciate the deeper nuances of the word ‘subsidy’. For these specialists therefore, the scope of the subject ‘subsidy’ is informed by their technical knowledge. Technical knowledge is not only confined to ‘legal’ knowledge. Technical knowledge of what a subsidy is also encompasses how a politician would understand the concept and also how pressure groups, economists, NGOs and anyone else involved in the field of international agricultural trade would understand the parameters of the word ‘subsidy’. This idea is not further developed here, but it does mean that interdisciplinary research becomes even more crucial to an awareness that the full scope of an individual’s technical knowledge may differ and how that might impact on their understanding of the problem of international agricultural trade.

52 The panel based their determination that the export subsidy provisions in the Agreement on Agriculture could be informed by the SCM Agreement on the wording of Article 21.1 Agreement on Agriculture. Canada–Measures Affecting the Importation of Milk and the Exportation of Dairy Products (Canada–Dairy), Report of the Panel, above n 45. 53 Canada–Dairy, Report of the Appellate Body, WT/DS103/AB/R, WT/DS113/AB/R, above n 45, para 87. Canada–Measures Affecting the Export of Civilian Aircraft (Canada–Aircraft), WT/DS70/AB/R, 14 April 1999, paras 156–7. 54 Canada–Dairy (Recourse to Article 21.5 DSU by New Zealand and the United States–I), Report of the Panel, WT/DS103/RW and WT/DS113/RW, above n 45, para 6.92. 55 Canada–Dairy – Recourse to Article 21.5 DSU, ibid., para 6.92.

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If our thought processes were informed by our technical knowledge alone, then every international agricultural trade specialist would ‘portray’ the subject ‘international agricultural trade’ or, more specifically in the context of the previous example, ‘subsidy’, in the same way and always arrive at the same interpretation as each other. It is clear from the abundant and diverse commentaries and submissions on the regulation of agricultural subsidies that this is not the case and divergent opinions between experts exist. The reason for this divergence of opinion is because technical knowledge is not the only element of knowledge which is shaping our opinion of what the subject should be, and, as a consequence, what the specific problem is. In addition to this, technical knowledge is what Oakeshott described as ‘practical knowledge’.56 This is not distinct from technical knowledge, but in fact is another facet of it. Oakeshott used the analogy of baking a cake: it is relatively straightforward to acquire the technical knowledge of how to bake a cake. However the art of the great cook and the truly superb cake is not acquired through technical acquisition, but rather through experience of baking: it is not the learning what to do, but rather how to do it. In essence, practical knowledge is that level of knowledge that comes from attaining expertise in the field: it describes the process whereby we learn how to understand the rules on agricultural subsidies for example. This is something that we can only learn through observation, thereby developing our own expertise on the technical subject matter, the Agreement on Agriculture and the SCM Agreement. This enables each commentator to not only understand the very basic elements of the technical discipline, it goes further and allows us to discern through our experience of working with the two agreements whether we think the panel and/or Appellate Body is correct in its determination. Inevitably, differing views result on whether particular activity comes within the scope of a rule or not. For example, one of the issues in European Communities–Export Subsidies on Sugar (EC–Sugar)57 concerned the scope of the term ‘on the export’ from Article 9.1(c) Agreement on Agriculture. Article 9.1(c) states that payments ‘on the export’ of a product which is financed ‘by virtue of governmental action’ must be reduced according to the member’s reduction commitments listed in its schedule.58 The European Communities understood this term to

56 57 58

Oakeshott, above n 51, 13. WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, 28 April 2005. Article 9.1(c) in full states: ‘Payments on the export of an agricultural product that are financed by virtue of governmental action, whether or not a charge on the public account is involved, including payments that are financed from the proceeds of a levy imposed on the agricultural product concerned or on an agricultural product from which the exported product is derived.’

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mean that any payment made must be ‘contingent on export’ and not merely made ‘in connection with’ or ‘to the advantage of’ exports generally.59 For the European Communities therefore, the breadth of their export subsidy reduction commitments in Article 9.1(c) was limited only to payments which were very strongly linked to the export of the product. Translating this back into the language of the subject/problem discussion: for the EU, the subject ‘export subsidy’ denotes a transfer of economic value strongly linked to the export of the product. This understanding is clearly derived from both the technical expertise of the European Communities’ advisers, but also those advisers’ practical knowledge of the ‘right’ way in which the export subsidy obligations should be understood. Consequently, an interpretation by the panel that does not accord with this understanding is a problem.60 Although both technical and practical knowledge will shape how we put a subject together, the precise pattern the various strands take is driven by the way we think the subject should be understood. When we combine together the strands identified earlier in this chapter we do so in a way which makes the subject we discern coherent. To do this, the commentator or negotiator must work within a specific theory. ‘Theory’ here does not denote some highly abstract jurisprudential notion, but is instead a broad description of how goals and principles are implied from the structure and content of the legal order.61 That is, it is how the underlying legal order (or even economic foundation) of the subject should be understood. This ‘theory’ then enables us to discard or add various aspects within the strands of the problem of international agricultural trade to form a coherent picture of the subject we are evaluating. Our determination of this theory should not be seen as fixed, but instead as something that changes and evolves over time as our views, or even the multilateral trading system itself, evolve and change.

LINKING THE STRANDS: PLACING THE LAST PIECE OF THE JIGSAW The discussion so far reveals that although it may appear that those engaging

59 60

EC–Sugar Appellate Body Report, above n 57, para 31. The European Communities’ ideas can be contrasted with those of Australia: EC–Sugar Appellate Body Report, ibid., para 49. Australia agreed with the panel’s looser connection between the payment and the export of the product as the definition of ‘on the export’ for the purposes of Article 9.1(c). 61 Simmonds, N (1982), ‘The Changing Face of Private Law: Doctrinal Categories and the Regulatory State’, 2 Legal Studies 257, 257. See Chapter 2 for a more detailed exposition of these ideas.

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with the problem of effective subsidy regulation within the broader context of international agricultural trade regulation are all considering the same information in the same way, this is not the case. Instead, when each person perceives the problem, they make that assessment based on how they think the subject they are assessing should be understood. The determination of the subject is predicated on the collection of random behaviour into a coherent form based on both the knowledge of the person undertaking the study and the way they think the material should fit together. This collation is in turn ultimately driven by what each person thinks ‘trade’ is, and in the case of international agricultural trade regulation, also what ‘agriculture’ is. This final section will show how the ideas explored in the previous chapters of this book drive our understanding of what the problem with domestic support and export subsidies actually is; and from that point how we might imagine the true nature of the problem of international agricultural trade. It should be noted that while I will weave all the various strands into one web of interconnected ideas, this can only ever be one way in which the strands could be connected. Imagine there are two seamstresses, each given four different coloured skeins of thread and told to weave a picture of the land and sky on a canvas. It is unlikely that both seamstresses will create precisely the same picture, although both will start with the same materials and work towards the same goal. It is the same with connecting the strands of the polycentric problem of international agricultural trade. With that in mind, I present one way in which this web of ideas can be understood. There are many ways in which ‘trade’ can be understood. Trade can be said to be the physical movement of a product from one individual to another: that is, ‘trade’ is in the product or thing transferred. International trade then is the cross-border transfer of the product. Not all products will be subject to the trade transaction however; those which are termed ‘public goods’ because they can be enjoyed freely without restriction are excluded from this notion of trade as only those which can be exchanged for commercial value fall within this traditional idea of trade.62 For an advocate of such a notion of ‘trade’ the pathway through the polycentric problem of interconnected ideas may take the following route: subsidies designed to promote clean air like those associated with climate change, for example, would not fall within the WTO at all as fresh air is not a tradable commodity. Any measure taken to support product creation in ways which preserved clean air consequently would be fully exempt from the trade regime.63 To the extent that such a programme 62 Samuelson, PA (1954), ‘The Pure Theory of Public Expenditure’, 36(4) Review of Economics and Statistics 387–9. 63 Similar ideas about the relationship between trade measures and non-trade measures in terms of the differential treatment between domestic producers and

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adversely affected developing countries’ interests because international agricultural markets became distorted, such an advocate of this notion of ‘trade’ might support the pro-environmental goal, but may suggest alternative methods of support for developing nations to enable them also to produce products in that way (some form of aid for example) or would seek to move the dispute to an alternative forum where environmental measures (rightly in the view of this advocate) took precedence over trade issues. A proposed solution might also be negotiated between the developed and developing country members bilaterally. Returning to how these ideas flow through the web of interconnected ideas: the advocate of this idea of ‘trade’ as products excluding ‘public goods’ has taken a view of what trade measures are, how that view connects to issues of development and what the connections to other systemic issues of WTO scope, governance, and maybe soft law alternatives to enforcement through trade dispute proceedings are; and what the relationship between trade and environment should be. To the extent that the impact on the developing nation may affect that country’s agricultural producers, the advocate has also even taken a view on how human rights fit in with this picture. When considering the adverse consequences on the developing nations the advocate may also feel development issues generally should be addressed in other multilateral organizations like UNCTAD, or they may advocate the removal of other protectionist barriers to trade which may allow developing nations to fully develop. In either case, this advocate believes that there is a conflict between the pro-environment stance and the pro-development stance, so a compromise negotiated somewhere other than the WTO is the appropriate way forward. Some products might fall within the idea of ‘trade’ if the emphasis is on the transfer of the rights in the product, rather than its physical transfer. Fresh air can be traded if it is necessary for the enjoyment of the product as a whole: for example, the tunnel in a gold mine is hollow and contains fresh air. Rights in the fresh air in the tunnel will equally form part of the ownership of the mine and so if the mine were sold, the ‘fresh air’ component (specifically, the tunnel) would also be sold together with the mine.64 These ideas tie strongly into what consumers think they are buying when they purchase the product: is it just the physical thing, or is it the way the product is manufactured. In either case, the rights in the product and the way the product is manufactured are a crucial part of the product and would not be regarded as distinct from it.65 A importers are addressed in United States–Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, 29 April 1996 (Appellate Body Report). 64 Gray, K (1991), ‘Property in Thin Air’, 50(1) Cambridge Law Journal 252, 253. 65 Calabresi, G, and Melamed, AD (1972) ‘Property Rules, Liability Rules and Inalienability’, 85 Harvard Law Review 1089.

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belief in this notion of ‘trade’ may lead to the following pathway through the web: for this advocate, the trade measure must reflect the item traded, that is the physical product together with the rights in it and/or the process by which it is manufactured. For this advocate the product and the rights/process act as a form of continuum: one is not available without the other. In this case therefore, the product is defined in a different way to that envisaged in the above example where the nature of the product raised it out of the trade transaction completely. Here, the whole of the product (including the associated rights) would be subject to the trade measure. An exemption from the permitted subsidy rules would not be necessary for the way the product is manufactured, as the manufacturing process is not distinct from the product; rather these aspects would be automatically included.66 For this advocate, either the product manufactured in a way which prohibited the use of child labour would be different to the product produced in a way involving child labour; or the only product which could be traded would be the one where child labour was not exploited. It is not relevant in either case for this advocate that the pro-human rights product might be more expensive than the one not using child labour. To the extent that this understanding of trade impacted adversely on developing nations, the connection to the development strand might take several forms: first, if there is a belief that only those products not exploiting child labour for example can be traded then it is likely that such an advocate might support phased transition for the implementation of such conditions in developing countries, but full exemption would not be an option as what is traded is not the product itself but a broader understanding of what the product is: to allow exemption therefore would be to say that some products are different to others and both can be traded under the WTO rules. For this first advocate, only those products which are produced in a way which does not use child labour are products which can be traded; those which exploit child labour cannot.67 An alternative connection into the development strand might be that the advocate sees products produced by child labour as different to those not produced in that way. Such an advocate may again support phased implementation of those commitments by developing/least-developed nations, but this

66 For example, subsidies which tied the production of agricultural products in a way which did not use child labour would be covered by this idea. Human Rights Watch estimates that of 218 million children involved in child labour, over 69 per cent (150 million) are involved in agricultural production: http://www.hrw.org/children/ labor.htm. See Human Rights Watch (2004), ‘El Salvador: Turning a Blind Eye – Hazardous Child Labour in El Salvador’s Sugar Cane Cultivation’, 16(2) Human Rights Watch. 67 This would be the stance supported by Human Rights Watch, for example.

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might be accompanied by support for a limited exemption from the trade rules perhaps if severe consequences on the rural population of the country concerned can be shown. This advocate feels that both products (product produced by child labour versus the one that is not produced in that way) are capable of forming the subject of a trade transaction, but one product is preferable to another. Both advocates in this case would probably support some form of aid to allow developing/least-developed countries to move towards production that does not involve child labour in this way. The interesting point from the perspective of the polycentric problem discussion is that both advocates agree that aid for developing countries to move towards the elimination of child labour is an important element of trade policy. However, agreement does not mean agreement on every issue: one advocate believes that trade in products using child labour does not form part of the trade transaction and so cannot be traded at all, whereas the other advocate believes that the product can be traded, but that there should be a move towards elimination where possible. For the first advocate, the purpose of the aid is to allow affected countries to trade in otherwise prohibited products; whereas for the other advocate, the purpose is to move towards a position where trade in such products is phased out. Agreement is therefore only ever on the surface between these two advocates and therefore disagreement on fundamental aspects may remain which could resurface at a later time. Translating these ideas back into the language of the connecting strands the notion of the product the trade measure would impact on is the same for both advocates; but the connection to the development strand and the human rights strands slightly differs. Likewise the implications for the scope of the WTO’s competence and its relationship with other multilateral obligations in other agreements like the International Labour Organization (ILO) Conventions differ for these advocates.68 Likewise, products which have a commercial value exceeding that of the price of their physical elements might be excluded from ‘trade’ as trade in products, perhaps on cultural grounds. For example, the Mona Lisa’s value far exceeds the value of the paint and the canvas on which it is painted. Again, many pathways may be constructed through the polycentric problem of interconnected ideas. One pathway may exclude cultural products from the trade transaction completely so that subsidies on those products would be permissible under the WTO as it would not have competence to adjudicate on such products at all.69 This might shift the emphasis for regulation beyond the WTO 68

International Covenant on Civil and Political Rights adopted 16 December

1966. 69 This approach was suggested earlier in the Doha Round for audiovisual products: Communication from the Commission to the Council and the European

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and into other multilateral organizations, connecting the trade measure strand to the governance/systemic issue strand. To the extent there may be disagreements about measures imposed to protect cultural goods, these disputes would not be addressed by the WTO, but would rather be adjudicated in other fora. Adverse trading effects for developing/least-developed nations would also be addressed outside the WTO, meaning that any compensation might be negotiated bilaterally or in the alternative forum. A divergence in views arises between those who see trade as trade in the rights in the product and those who focus on trade as the transfer of the thing in terms of its commercial value. Returning to the earlier example of products produced by child labour, the position of the supporter of trade as transfer of the thing with its associated rights has already been made clear. The supporter of trade as trade in the value of the product, however, sees a product created without child labour as different to one produced with child labour because the costs of producing the product are different: the one produced with child labour is inevitably cheaper. For this advocate, the connections between the various strands might follow a slightly different pattern to that discussed earlier. Here, the scope of the permitted trade measure might be different. Because the distinction between the products is all about cost of production, the key will be to ensure that the product created using child labour is more expensive than the alternatives. As a consequence, either subsidies will be permitted to reduce the cost of the child-friendly alternative, or tariffs will be increased at the border on products created with child labour. There is inevitably a large overlap between the ways that the advocates of these two different notions of ‘trade’ will map the pathway through the polycentric problem. The crucial point could be that for those understanding trade in terms of the value of the product getting the appropriate level of the subsidy or the tariff right to offset the use of the non-child-friendly product will be all about the cost of the product, rather than demand for it per se: subsidies and tariffs will be set only at the difference between the costs of the two products for example. The person who understands trade as trade in the product and its

Parliament: Towards an International Instrument on Cultural Diversity, COM(2003)520, Brussels, Belgium: European Commission (27 August 2003). See WTO (2001), Communication from Switzerland: GATS 2000: Audiovisual Services, Geneva: Switzerland: WTO, S/CSS/W/74, para 6 (4 May 2001). Note that the cultural importance of certain agricultural products is to some extent recognized in the August Draft Modalities: members can exempt certain products from their tariff reduction commitments on the grounds that they are sensitive politically. So far there has been no definition of what makes a product ‘sensitive’, but the cultural aspect of the product might affect its status, as with rice in China: Miami Herald (2008), ‘WTO Talks Risk Collapse as US Battles China, India’, 29 July 2008 http://www.miamiherald.com/news/ world/AP/story/620332.html.

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associated rights/production methodology may focus on the associated costs of the two products in forming their solutions, but this does not necessarily have to be the case. They may instead wish to see very high subsidies or tariffs on products created by child labour to reinforce the prohibitive effect of trade in that product.70 Again, the appearance of agreement may in fact be a subtle form of disagreement on the different views on what a permitted trade measure is, how developing/least-developed countries’ needs should be addressed, how environment/human rights issues should be accommodated within the WTO and what the implications for broader systemic and governance issues are for the WTO. This product-centric notion of trade can be contrasted with ideas of trade based on its function, that is, that trade is aimed at achieving other goals such as preservation of the environment, or the promotion of development.71 In this case, our understanding of what trade is is based on what it can be used for. For example, members may wish to pursue non-trade objectives through their domestic subsidy programmes, justifying their otherwise prohibited behaviour on the basis of a broader interpretation of Annex 2 Agreement on Agriculture (the Green Box): that is, that their subsidy programmes had no or at most minimal effect on international agricultural trade when their behaviour is understood in the light of the non-trade concern.72 In this case, the pathway through the linked ideas is dependent on the notion that trade measures can, or should, be constructed so that the non-trade objective can be achieved: even here divergent ideas exist that lead to subtle disagreements between those engaging with the problem. For domestic support, for example, a permitted trade measure might be one that allowed for full exemption from a member’s reduction commitments for policy instruments focused fully on the non-trade objective. Where divergence (or disagreement) starts is where the pathway through the web goes next: full exemption may be permitted irrespective of the potential impact on trade flows because the positive effect on the non-trade concern is more important than the adverse effect on trade flows. This conclusion may arise because the way the individual understands what a trade measure is is based on their understanding of what the trade regime is for: in other words, the way that the trade regime should be understood.73 Those who think that the trade regime is

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Human Rights Watch, above n 66. Leebron, D (2002), ‘Linkages’, 96 American Journal of International Law 5,

6. 72 See generally Smith, F (2008), ‘Language, Law and Legitimacy in the WTO: the WTO Agreement on Agriculture’, 1 Indian Journal of International Economic Law 34. 73 These ideas relate back to the notion of how we understand a subject, particularly the discussion of ‘coherence’. See Chapter 5 below and Chapter 2.

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about promoting global welfare through the elimination of protectionist barriers to trade will understand trade measures to be constrained by this vision of the trading system, that is, that any measure designed to promote development concerns must also not unnecessarily distort trade flows. Whereas, those who support a more ‘moral’ or ‘social’ view of trade will see the purpose of the trading regime as, for example, maximizing global welfare by raising standards of living in developing countries. In this latter case, the moral/social goal is more important, so this advocate may be willing to support full exemption for a subsidy which promotes development, at the risk that this might adversely affect trade flows.74 There may be some level of agreement on the way global welfare should be achieved, but further disagreement might arise over how development issues are assisted through the use of trade measures. For example, divergence also arises for those who support differential treatment for specific developing/least-developed countries. Support for differential treatment may be based on historic preferential trading arrangements, thereby critically linking into the governance/systemic issues strand of the problem. This is because such asymmetric support is based on a specific understanding of how the WTO should deal with historic pre-WTO trading commitments and the degree of autonomy which members should be permitted in their domestic agricultural policies; and also how the multilateral negotiating process should feed in to the post-WTO agreements, even to the extent that these understandings should form part of the dispute settlement process.75 Although in a dispute like EC–Sugar connections between the strands in the polycentric problem in the trade measures, development, and systemic strands are clearer, there are also implicit connections to human rights issues, in terms of both the impact on agricultural communities in developing nations and the degree to which a right to development can be conceived of as a human right. In relation to the notion of ‘agriculture’, similar divergent understandings exist which drive our understanding of the problem of international agricultural trade in the same ways as the notion of ‘trade’ does.76 How ‘trade’ shapes our thoughts has been addressed in depth in the previous section, so the same 74 This moral or social view of trade can be found in the enhanced pro-development exemptions from members’ domestic support reduction commitments in the Green Box (amended Annex 2 Agreement on Agriculture): see Revised Draft Modalities, July 2008, above n 3, e.g. Annex 2:2 (h). 75 See the European Communities’ argument in EC–Sugar which related to the interpretation of a footnote to its schedule of reduction commitments. It argued that the footnote clearly indicated that its export subsidy commitments did not extend to its Lomé Convention commitments with the African, Caribbean and Pacific (ACP) states, above n 57, para 18. 76 The basic outline of the nature of ‘agriculture’ is discussed above in Chapter 1.

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level of detail will not be undertaken here. Instead, a brief account will be given of the different ways in which ‘agriculture’ might be understood and how this might lead to divergence in the approach to international agricultural trade regulation beyond that in the subsidies field. This final discussion will focus particularly on which issues are perceived as problems and which are not. Agriculture can be defined in terms of the physical product. This might be defined as any primary product encompassing any product from ‘farm, forest or fishery’.77 Likewise it could be seen only as agricultural products for food, although what we each perceive to be ‘food’ can differ widely: food could be any product which a human being is able to consume, thus seeing ‘food as fuel’.78 Those negotiators/commentators on international agricultural trade regulation who associate ‘agriculture’ with ‘food’ in its fuel function only, will focus on the availability of nutritionally rich primary products designed to maximize human activity for the population inhabiting the relevant geographic area. ‘Problems’ for such commentators occur when primary products cannot be produced in sufficient quantities to sustain the population. Regulatory ‘problems’ arise for such individuals if the legal system does not allow the pursuit of policies which facilitate long-term food security, or it prevents the use of emergency measures employed for this purpose. Supporters of this view may argue that the ‘solution’ to the problem of international agricultural trade regulation is that any activity lying outside their narrow ‘food as sustenance’ definition should be regulated in other areas of the international trade rules, or even fall outside the WTO scheme completely. Alternatively, food may be limited only to those products which an individual is permitted to eat on religious grounds, or which she chooses not to eat on health grounds. Such ideas raise the status of certain food types, so these become more important in an individual’s diet than others. This priority of the food type then might lead to members prioritizing the production of these products through their domestic agricultural policies, perhaps even in terms of food security if the foods are consumed in preference to others. This may also lead members to impose specific prohibitions on the production or importation of certain foods: for example, Israel has in the past banned imports of beef and Saudi Arabia has banned imports of pasteurized milk.79 For the purposes of this discussion, those influenced by religious proscriptions on the notion of what ‘food’ is, will expect the regulatory framework to sustain these views

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Interpretative Note Ad 2 Section B on Export Subsidies to Article XVI GATT. Leininger, M (1970), ‘Some Cross-Cultural, Universal and Non-Universal Functions, Beliefs and Practices of Food’, in Dupont, J (ed), Dimensions of Nutrition, Colorado: Colorado Associated University Press. 79 Echols, ME (2001) Food Safety and the WTO: The Interplay of Culture, Science and Technology, The Netherlands: Kluwer, 20–22.

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either in terms of the ability to produce certain types of food, or in terms of permissible import prohibitions; failure to do so is a ‘problem’. Some may even feel that religious understandings of what ‘food’ is, and therefore what ‘agriculture’ is, cannot be defined by individuals, as the religious writings have a higher authority on such issues. The role of international agricultural trade regulation is therefore merely to acknowledge these definitions and accommodate them within the regulatory framework. Similar constraints and prohibitions on the production and importation of food types also stem from those who understand ‘food’ in terms of its function as medicine and those who see ‘food’ as a critical constituent of the social and cultural framework of the society. In medicine, for the Chinese some foods are associated with certain human temperaments so that certain illnesses might be ascribed to a deficiency in certain foods. In addition, the consumption of certain foods, particularly Chinese tea, is thought to be very good for overall well-being.80 Those understanding ‘food’ in this way will clearly expect to see regulation accommodating the production and consumption of such foods. They also expect maximum market access for the export of such products based on their perceived health benefits. These ideas would therefore push notions of ‘agriculture’ beyond the production of primary products and into food safety if some states prohibit the importation of products on the grounds that they are ‘unsafe’ because they do not accord with accepted Western medical scientific methods.81 For supporters of the idea of ‘food as medicine’, the scope of the food safety regulatory scheme is critical, particularly if other states can prohibit the importation of such ‘medicinal’ foods. Stringent limitations based on proven Western scientific techniques will be problematic for states that recognize ‘food’ as synonymous with medicine.82 For those who regard ‘food’ as embodying the fundamental social structure of a society, there may be a drive to protect certain foods and their methods of cultivation. If an international regulatory system does not accommodate this possibility, this will be a ‘problem’. For example, the French emphasize the

80 Jingfeng (1998), ‘Traditional Chinese Medicine’s Outlook on Health Preservation through Diet and Tea Drinking and Its Importance to Health’, in Episodes in Traditional Chinese Medicine, China: Foreign Language Press, 154. 81 For example, the controversy on the effectiveness of homeopathic medicine: Bankier, A (2007), ‘Different Strokes’, Haaretz, 17 July 2007, http://www.haaretz.com/ hasen/spages/884015.html. 82 The definition of ‘food’ in the Agreement on Sanitary and Phytosanitary Measures is expansive and could easily cover foods designed for a specific nutritional purpose: European Communities–Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291, 292 and 293/R, above n 30, para 7.292.

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importance of good quality food.83 The significance of food and specific cultivation methods is evident in their domestic agricultural policies. Betterquality products, according to the French ethos, are achieved when a crop is produced in a specific geographic area where the components of the physical environment, including the climate, the soil and the nature of the land all come together to create the ‘perfect’ product. Differentiating these products from other seemingly identical ones is a critical part of French domestic agricultural policy. Such delineation is achieved through the use of a mark clearly indicating the product’s geographic origin: a geographical indication or GI.84 The French system has already been discussed in the WTO dispute settlement system, but for those who support the idea that certain products are imbued with special ‘cultural’ significance, the preservation of GIs becomes crucial to their stance on how agriculture should be regulated in general. Like the food and medicine debate, the crossover into other regulatory schemes, in this case intellectual property regulation, is crucial. Failure to recognize any link into the intellectual property regime at all or the imposition of significant impediments on the use of GIs in the domestic agriculture sphere will be regarded as problematic. Like the notion of ‘trade’, agriculture can also be understood in terms of its function. The European Communities’ emphasis on the critical link between agriculture and the environment means domestic support programmes are firmly linked to the need to preserve the environment. In this context, those who support this view of ‘agriculture’ will not see issues as distinct, but rather will see an inextricable connection between the growth of food and the effect of that method of growth in terms of its climatic impact, for example. We can conclude from the discussion of ‘trade and ‘agriculture’ that our understanding of ‘trade’ and ‘agriculture’ drives how we connect the elements of the polycentric problem together, how and when we identify problems and the solutions we identify for them. This process is inextricably linked to the way we construct subjects in order to comment on individual aspects of the trading system, which is in turn based on how we think the whole trading regime should be understood. The discussion above does not present a definitive account of how these connections may occur, but instead presents possible ways in which our thoughts may be informed. There are many other possible pathways, which may in fact contradict the pathways, problems and solutions that I have 83 See Broude, T (2005), ‘Taking “Trade and Culture” Seriously: Geographical Indications and Cultural Protection in WTO’, 26 University of Pennsylvania Journal of International Economic Law 623. 84 European Communities–Protection of Trademarks and Geographical Indications for Agricultural Products, WT/DS174, 15 March 2005.

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suggested here. The greater complexity anyone engaging with the discourse in this book sees, the more the point of this book is reinforced: the problem of international agricultural trade is a highly intricate problem with many disparate interconnected strands, which evolves and changes over time as the trading environment evolves and our priorities within it change.85 To engage with the problem at all always requires simplification down to the connections that we each identify. So where does this leave us?

CONCLUSIONS The discussion in this chapter highlighted the full nature of the problem of international agricultural trade using difficulties surrounding domestic support and export subsidies as illustrations of the wider idea. It has taken the ideas presented throughout the earlier chapters of this book and shown how these drive our understanding of the problem. The connections between the various strands made here in the context of domestic support and export subsidies indicate one way in which the various polycentric strands of the problem of international agricultural trade might be brought together. The nature of the problem as polycentric means that the way I presented these connections is not uniquely correct, and in fact others reading this account may see other strands, or other connections. Ultimately, this is a book of ideas about how we might reconceive the problem of international agricultural trade. Seeing the way we identify problems in international agricultural trade regulation as a constructive process allows us to understand the problem of international agricultural trade in a different way. When we engage with a polycentric problem, we weave a path through the otherwise random collection of strands on the basis of what our knowledge is and how we think all the strands should fit together, that is, the way we think trade and agriculture should be understood. Our idea of what trade is and what agriculture is may not remain fixed, but can move around, so at one time we are supporting trade liberalization, but at other times, we might champion developing countries; we might support a broadly conceived notion of ‘agriculture’ and then seek a more restrictive notion when faced with the possibility of importing products we do not regard as food. It is important to stress here that it is not that we are being inconsistent in our thoughts (although of course, this may be the consequence), but rather that the emphasis we place on 85 Notably the shift in the goals of agricultural policy following the food crisis: Chakrabortty, A (2008), ‘Secret Report: Biofuel Caused Food Crisis’, The Guardian, 4 July 2008: http://www.guardian.co.uk/environment/2008/jul/03/biofuels.renewable energy.

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various aspects and the connections we make between the various centres of the problem evolve as we address the problem from different angles.86 Although we may shift between different paths through the interconnected web of ideas, those pathways do not cease to exist. Rather, they remain attached to the main problem and can suddenly reappear to cause difficulties in unexpected and diverse ways. In addition, even when agreement is reached between members, this only ever represents one possible way in which the pathways through the web can be mapped; the other pathways remain open so that disagreement is inevitable as different understandings of how the various strands fit together come to the fore, seemingly identifying new difficulties requiring different solutions. All this means that when agreement is reached in multilateral negotiations, we only fix one view of the problem at the point of the agreement; the problem itself is not eliminated. Instead, it merely shifts around on its axis and the same difficulties merely come to prominence in a slightly modified form.87 We can observe this occurring when we see that the same issues that drove the Contracting Parties of the GATT to create the Agriculture Agreement in the WTO are still apparent in the current Doha Round of negotiations. Some issues may arise during these negotiations in a slightly modified form, like the debate on biofuels for example. However, this only reflects changes in the international trading environment and does not in fact impact on the deeper strands of the problem which remain: that is, should we be permitted to use trade measures to achieve non-trade goals in the environment or development? What level of protection is permitted in international agricultural trade? How should development concerns be addressed and how far should the WTO be permitted to interfere with the domestic agricultural policies of its members? Rather than looking for an ultimate resolution of the problem, we should be more concerned about its management. That is, we should certainly regard the task of international agricultural trade regulation as imposing some form of

86

The obvious challenge to this point I make here is that, when we write or discuss the problem, we will of course check we are not being inconsistent in our analysis. My point is a different one: this shifting between ideas is very subtle and is not about inconsistency in our own understanding, but rather that we are travelling along pathways across the complex and multifaceted web of ideas in a way which we feel is coherent (or consistent if you like). 87 This point was explored fully in Chapter 4 looking into polycentric problems and the Chile–Price Band dispute, Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products, Report of the Panel, WT/DS207/R, 3 May 2002, Report of the Appellate Body, WT/DS207/AB/R, 23 September 2002; Recourse to Arbitration Article 21.3 DSU, WT/DS207/13, 17 March 2003, First Recourse to Article 21.5, Report of the Panel, WT/DS207/RW, 8 December 2006, First Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS207/AB/RW, 7 May 2007.

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vertical control on the worst protectionist excesses witnessed in pre-WTO agricultural policies; but we should also see the multilateral agreement as a process of balancing members’ competing versions of the problem of international agricultural trade and the interests of the WTO members.88 A polycentric problem cannot be resolved. By changing our expectations to one of management and horizontal ordering, we might relieve some of the pressure members experience in negotiations to achieve a ‘full and lasting settlement’ that solves the problem of international agricultural trade once and for all. A less ambitious programme of small adjustments in members’ commitments over shorter periods of time, taking into account the everchanging trading environment, will be more successful than large multilateral rounds of trade talks. These seemingly never-ending rounds only store up disappointment when they do not achieve that elusive monumental breakthrough in cracking the problem of international agricultural trade regulation.

88 These ideas are drawn from Fuller’s analysis of the role of contract as a vehicle for social ordering: Fuller, LL (2001), ‘The Role of Contract in the Ordering Processes of Society Generally’, in Winston, KI (ed), The Principles of Social Order – Selected Essays of Lon L Fuller, Oxford, UK: Hart, 187, 190–93. See Chapter 4.

6. Towards the future INTRODUCTION The main body of this book has been concerned with understanding the complexities inherent in the problem of agricultural trade. It has suggested that problems of this kind are not capable of resolution but must rather be ‘managed’. A great deal of clarity might nevertheless be brought to the area (it is hoped) by a sharpened awareness of the problem. This chapter has a different aim. It offers a few programmatic thoughts on possible strategies for ‘managing’ the problem of agricultural trade in the specific context of treaty construction and interpretation. I briefly look at the nature of language and meaning and suggest that appreciation of the quality of language-use aids understanding of potential problems and pitfalls of the treaty drafting process. My discussion intends to address aspects of the drafting process distinct from those raised by questions of interpretation in the Vienna Convention on the Law of Treaties.1 This area has already been thoroughly explored elsewhere and it is not my intention to revisit this literature here.2 Instead, my approach does not replace that of the Vienna Convention, but rather suggests that the act of interpretation by the panel and Appellate Body (using the Convention’s rules) is a multilayered process. My approach accepts that the act of interpretation shows how the wording in specific rules might be understood in the future, but it argues that in addition to this, the act 1 I have elsewhere discussed my view that the Vienna Convention, whilst of course relevant to the process, does not get to the heart of the problem: see Smith, F (2008), ‘Meaning and Interpretation: The Role of Semantics in International Agricultural Trade Regulation in the WTO’, following presentation of a paper to the Society of International Economic Laws (SIEL) Inaugural Conference: New Horizons in International Economic Law 15–17 July 2008, Graduate Institute of International and Development Studies, Geneva, Switzerland. For a detailed review of this area see Lennard (2002), ‘Navigating by the Stars: Interpreting the WTO Agreements’, 5 Journal of International Economic Law 17; also Zang, D (2005–6), ‘Textualism in GATT/WTO Jurisprudence: Lessons for the Constitutionalization Debate’, 33 Syracuse Journal of International Law and Commerce 393. 2 Pauwelyn, J (2003), Conflicts of Norms in Public International Law – How WTO Law Relates to Other Rules of International Law, Cambridge, UK: Cambridge University Press.

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of interpretation also operates more generally to reveal how specific combinations of words/phrases might be understood in the future. This is not an argument about precedential effect of the jurisprudence per se, but rather that we should be on our guard about relying on very generally worded phrases to overcome the impasse in the agriculture negotiations.3 I hope to show the utility of my alternative approach, at least in outline, as a vehicle of analysis. This brief sketch will also serve to indicate the future direction of my work, which moves into an investigation of how the fundamental nature of language impacts on the efficient operation of the WTO rules.4 The WTO multilateral talks on international agricultural trade regulation collapsed again in July 2008; this time over the availability and scope of the special safeguard mechanism for developing nations.5 Despite this, Crawford Falconer signalled some room for optimism, stating that there is a ‘credible basis for conclusion on very many … issues’ and that the forward momentum to a successful conclusion to the talks generated by the July 2008 meetings should be maintained.6 As Falconer indicates, if talks resume again soon the text from the July 2008 Draft Modalities will form the basis of further negotiations and perhaps even the basis of a concluded agreement. This text therefore allows us to see what shape a new Agreement on Agriculture might take.7 Whilst negotiators contemplate how to take the amended texts forward, there is another equally important aspect of the Draft Modalities which has not received as much prominence. It is not that this is overlooked as such, but rather that the negotiators may not be fully conscious of its existence. This

3 Zang, above n 1. Note the controversy regarding the precedential effect of the WTO dispute settlement reports: WTO (2005), Negotiations on Improvements and Clarifications of the Dispute Settlement Understanding: Further Contribution of the United States on Improving Flexibility and Member Control in WTO Dispute Settlement: Communication from the United States, Geneva, Switzerland: WTO, TN/DS/W/82, 24 October 2005, Part I and TN/DS/W/82 Add. 1, 25 October 2005. 4 This is an argument about the importance of semantics (philosophy of language) in an understanding of the WTO rules. See Bix, B (1995), Law, Language and Legal Determinacy, Oxford, UK: Clarendon, Oxford University Press. 5 WTO (2008), ‘Day 10: Capture Progress and Continue Work Members Say’, DDA July Package 30 July 2008, http://www.wto.org/english/news_e/news08_e/ meet08_summary_30july_e.htm. 6 WTO (2008), Report to the Trade Negotiations Committee by the Chairman of the Special Session of the Agreement on Agriculture, Ambassador Crawford Falconer, Geneva, Switzerland: WTO, JOB(08)95, 11 August 2008, paras 2 and 32. 7 WTO (2008), Revised Draft Modalities for Agriculture (The July 2008 Draft), Geneva, Switzerland: WTO, TN/AG/W/4Rev.3, 10 July 2008. WTO (2008), ‘Day 7–8: Revised Texts on the Way’, WTO News DDA July 2008 Package Summary 27–28 July 2008, http://www.wto.org/english/news_e/news08_e/meet08_summary_28july_e.htm. See also JOB(08)95, above n 6, para 5.

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oversight could in fact undermine the efficacy of any amended Draft Modalities and the final agreement that is imposed as a consequence of them. This issue is, what implications do the findings of the various dispute settlement reports on the scope of the Agreement on Agriculture have on the actual language used in the Draft Modalities? As will be argued below, this is not to say that negotiators have no information on the implications of the dispute settlement reports per se: this would be clearly untrue. Instead, the point is that there are other aspects to the dispute settlement reports which may not form such a conscious part of the advice given on the implications of the reports for the Draft text. Each member’s negotiators have lawyers advising him or her on the scope of the various draft texts circulated by the Chair of the Committee on Agriculture and other members.8 When lawyers look at these proposals, typically they consider how much flexibility there is in the language: this process includes checking how the words might be stretched to accommodate a particular meaning. To consider how the meaning of words can be stretched to accommodate a range of meaning is not the same as considering what the ‘ordinary meaning’ of the text might be, nor how the context of the specific phrase or negotiating documents might lead a dispute settlement panel or the Appellate Body to interpret them.9 Instead, the task is a process of discovering the full range of possible meanings of the text, rather than seeking the single, ultimate meaning. This ‘discovery’ process might be important for determining whether an aspect of a member’s domestic agricultural policy is compliant with the proposed text in the context of, for example, the degree of flexibility in domestic support reduction commitments to accommodate the member’s rural development policies.10 Lawyers generally also check the

8 Many members’ early proposals are fully listed on the WTO website: WTO, ‘Agricultural Backgrounder’, http://www.wto.org/english/tratop_e/agric_e/negs_ bkgrnd00_contents_e.htm. 9 It is crucial to point out here that the act of ‘discovering meaning’ is distinct from interpretation. ‘Interpretation’, for this author, goes more to the panels’ or Appellate Body’s task of finding the ultimate meaning or ‘definition’ of the words in a dispute for the purposes of the (for example) Agreement on Agriculture. Discovering meaning by contrast looks to the range of possible meanings and seeing whether the text is acceptable in the light of this range of meaning. It is arguable that whilst a lawyer might have an opinion of what the panel/Appellate Body might ultimately find, this can only ever be an opinion at the point at which the agreements are being negotiated: the Vienna Convention approach is an example of the molecular view of language. This view is taken from Carnap: see Friedman, M (2007), ‘Carnap’s Revolution in Philosophy’, in Friedman, M, and Creath, R (eds), The Cambridge Companion to Carnap, Cambridge, UK: Cambridge University Press, 1. 10 This is a concern for the European Communities as the Common Agricultural

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dispute settlement reports to see how such an obligation has been interpreted before. This entire process is intuitive and an opinion is often given on whether the negotiator should agree or not to a specific form of wording. It should be noted however, that there are certain language constructions which are problematic when the full range of meaning of the text is assessed. These constructions appear to be very flexible and look as if they will be perfect for the inevitable political compromise which will bring controversial negotiations, like those on international agricultural trade, to an end. However, these constructions are flexible, but they are not fluid. Despite their seemingly expansive nature, they in fact have relatively fixed meanings imposed on them by the findings in the dispute settlement reports: that is, the words in the abstract look as if they have a flexible and extensive meaning, but in reality they do not. It is not that the advisers are missing the impact of those reports on the wording, but more that it is important to be particularly conscious of these constructions and to guard against a natural inclination to see them as flexible in order to accommodate the meaning we want to put on them. The best way to see the difference between flexibility and fluidity is by analogy. We can think about flexibility in terms of bending a ruler: we can bend it both ways to a significant degree, and then if we bend it too far, it snaps. It is the same with flexible wording: there are any number of ways in which the words can be interpreted, but there comes a point where we think a particular interpretation is one step too far; it is at this point that the word ‘ruler’ snaps. Within these extremes though, we are able to use whatever interpretation of the words we like. In contrast, fluidity is more like a lava flow. When we look at lava, we see the top fiery layer moving very quickly down the mountain side. There seems to be a lot of free movement in it, so it appears to move in any direction it wishes to. However, what we do not see is the layer of cooler lava rock directly underneath the very hot layer. This cooler layer is moving more slowly but is sticking to the top layer, so the range of movement for the lava as a whole is more constrained than it first appears. It is the same with fluid wording: at first glance a linguistic construction might appear to admit of several possible interpretations. However, when we look further into it, there are already one or two interpretations of it which constrain the range of interpretation we would like to put on it. As much as the words look as if they can sustain the interpretation we would like to put on them, the reality is that our range of

Policy (CAP) makes a very strong link between domestic agricultural production and rural development: European Commission (2008), CAP ‘Health Check’, Brussels, Belgium: European Commission, COM(2008)306, 20 May 2008, the European Commission notes the strategic impact the CAP still retains on the environment and also on rural development, 3–4 and ch 4.

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interpretation is more limited. This might create tension between what we would like to say the words mean and what they mean as a practical matter.11 It is important to be fully conscious of the existence of these fluid language constructions, especially at this current time when members are reviewing how to take the July 2008 Draft Modalities forward (if at all). A conscious check for these phrases allows a fuller picture of the scope of the Draft Modalities to emerge. There are several devices which appear in the Agreement on Agriculture that have been interpreted narrowly by the panels and the Appellate Body. Two will be explored here: the truncated definition and the agreement to ‘do something later’. The discussion then considers the implications this approach might have for the July 2008 Draft Modalities. In particular, this final part will evaluate the value of linguistic compromises that might be used in the text to cover the current impasse in the negotiations.

PANEL AND APPELLATE BODY INTERPRETATION OF THE AGREEMENT ON AGRICULTURE Truncated Definitions Several terms are defined in detail in the Agreement on Agriculture. Article 1 contains a general definition section and includes, inter alia, definitions of the important new terms like ‘aggregate measurement of support’12 for the purposes of calculating the monetary equivalent of members’ domestic 11 This is very much a matter of appreciating that the meaning of language changes depending on the situation in which it is used: this is not only the physical placement of the words in a specific way (i.e., the ‘context’ for the Vienna Convention) but also in every political situation, every utterance/use of the words. In terms of looking at this area through the lens of the philosophy of language: every use of language is a different ‘language game’. On language games see Wittgenstein, L (1958), The Blue and Brown Books: Preliminary Studies for the ‘Philosophical Investigations’, London, UK: Blackwell (trans. Rush Rees), 17. 12 Article 1(a): The AMS is based on various equivalents used in the OECD, including the Producer and Consumer Subsidy Equivalent (PSE). The AMS calculation differs from the PSE because the AMS used a fixed base from which to calculate the levels of support (i.e., 1986–88) whereas the PSE uses prevailing prices in the world market in the year in which the calculation is made: see Cahill, C, and Legg, W (1989–90), ‘Estimation of Agricultural Assistance using Producer and Consumer Subsidy Equivalents: Theory and Practice’, 13 OECD Economic Studies Special Issue: Modelling the Effects of Agricultural Trade Policies 13; also Blandford, D (2005), ‘Disciplines on Domestic Support in the Doha Round’, International Agricultural Trade Research Consortium Trade Policy Issue Paper No. 1, 7.

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support measures (on a sector-wide basis) for both agricultural producers of the basic agricultural product and non-specific support awarded to agricultural producers in general, subject to the politically expedient exemptions from reduction commitments in the ‘Blue Box’, 13 and in Annex 2, the so-called ‘Green Box’, which excludes domestic support measures from the calculation of the Aggregate Measurement of Support (AMS) which have ‘no, or at most, minimal trade-distorting effects or effects on production’.14 Annex 1 also contains the list of products which are covered by the agreement.15 These products are both ‘food’ and ‘non-food’, but are identified by their individual customs classification coding from the Harmonized Customs Classification Coding System (HS Code).16 Products included range from those carrying the customs classification from Chapters 1–24, HS Code to 2905.43 mannitol, HS Headings 52.01–52.03 including raw cotton and waste and cotton carded or combed. Finally, Article 1(b) defines ‘basic agricultural product’ for the purposes of members’ domestic support reduction commitments as the product as close as practicable to the point of first sale as defined in the member’s schedule.17 Despite this seemingly comprehensive approach, several other concepts are not defined as fully; we might say that they have truncated definitions. The panels and Appellate Body have reduced the fluidity in these definitions to hold members fully to their liberalization commitments. The following is an example of this idea. Market Access commitments Article 4(2) Members shall not maintain, resort to, or revert to any measures of the kind which

13 The Blue Box is a consequence of European Union and United States’ fears that their domestic agricultural policies might not be exempt under Annex 2 Agreement on Agriculture; a specific exclusion was included in the rules during the ‘Blair House’ talks. Article 6:5 Agreement on Agriculture. Note that exemption is from the current total AMS which is the amount subject to reduction commitments. However, Desta notes many members included both Blue and Green Box measures in their base AMS figure which forms the basis of the reduction commitment. Desta, MG (2002), The Law of International Trade in Agricultural Products: From GATT 1947 to WTO Agreement on Agriculture, The Netherlands: Kluwer. 14 Para 1 Annex 2. 15 Article 2 states that the Agreement on Agriculture’s rules only apply to those products listed in Annex 1. 16 See http://www.wcoomd.org/home_online_services_hs_online.htm. 17 For a full discussion on the scope and rules of the Agreement on Agriculture see McMahon, JA (2007), The WTO Agreement on Agriculture: A Commentary, Oxford, UK: Oxford University Press.

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have been required to be converted into ordinary customs duties1, except as otherwise provided for in Article 5 and Annex 5. Fn1: These measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints, and similar border measures other than ordinary customs duties, whether or not the measures are maintained under country-specific derogations from the provisions of GATT 1947, but not measures maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement.

Under Article 4(2) members are required to convert all their non-tariff barriers into ‘ordinary customs duties’, and then reduce them in accordance with their reduction commitments in their schedules.18 Article 4(2) makes it clear that members cannot use any market access measures which the agreement requires to be converted into ordinary customs duties.19 Members cannot therefore retain any existing measures that come under this category, implement new ones, nor revert to any such measures they previously used in their domestic agricultural policies. Article 4(2) footnote 1 contains a list of those measures which must be converted to ‘ordinary customs duties’. Such measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints and ‘similar border measures other than ordinary customs duties’. Measures excluded are those maintained under general balance-of-payment exceptions contained in the provisions of the GATT or other rules in Annex 1A of the Marrakesh Agreement Establishing the WTO.20 Article 4(2) is an example of a ‘truncated definition’. According to the wording of Article 4(2) members cannot ‘maintain, resort to, or revert to’ any measures of the kind which have been required to be converted into ordinary customs duties. The only guidance we have here on what is included is a statement of the measure that would be prohibited and an indication that measures which are ‘of the kind’ of those measures will also be prohibited. There is

18 European Communities–Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R and WT/DS68/AB/R, 5 June 1998, Report of the Appellate Body, para 84: schedules are an integral part of a member’s commitments under the WTO Agreements. 19 I.e., the tariffication process. 20 For the specific reduction commitments see Chapter 4 and GATT (1993), Modalities for the Establishment of the Specific Binding Commitments under the Reform Programme, Geneva, Switzerland: GATT, MTN.GNG/MA/W/24 (20 December 1993) (The Modalities Document).

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therefore not a lot to go on. The breadth of what could be a prohibited measure for the purposes of Article 4(2) was discussed in Chile–Price Band and21 later in two Article 21.5 Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) references to first the panel and then the Appellate Body.22 A detailed exposition of Chile–Price Band can be found above in Chapter 4, but in essence, the dispute concerns Chile’s mechanism for calculating the appropriate tariff duty to be imposed on imports.23 The system was intended to guarantee a reasonable fluctuation between the domestic price for certain goods and their corresponding international price.24 The duty charged on the imported product was calculated on the basis of the ad valorem duty, which was a combination of Chile’s applied MFN tariff rate and the specific price band duty calculated by comparing the reference price with the upper and lower rates on the price band.25 The price band was calculated by comparing the domestic price of certain goods, including wheat, edible vegetable oils and sugar, with their international price.26 The price band was not a variable price levy as such, so the question was, is it ‘of the same kind’ as the variable import levy. In other words, for the purposes of this discussion, how much fluidity did the panel and Appellate Body find in the phrase ‘is of the kind’? If we consider Chile’s argument before the Appellate Body, it is very contextual, pointing first to the fact that other members still retain their price band mechanism subject to an upper ceiling complying with the bound tariff. In terms of the scope of the meaning of the term ‘of the kind’, again Chile’s argument focuses very much on the fact that these measures are only those

21 Chile–Price Band, dispute Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products, Report of the Panel, WT/DS207/R, 3 May 2002, Report of the Appellate Body, WT/DS207/AB/R, 23 September 2002; Recourse to Arbitration Article 21.3 DSU, WT/DS207/13, 17 March 2003, First Recourse to Article 21.5, Report of the Panel, WT/DS207/RW, 8 December 2006, First Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS207/AB/RW, 7 May 2007. 22 Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 DSU, Report of the Panel, WT/DS207/RW, 8 December 2006; Chile–Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS207/AB/RW, 7 May 2007. 23 WT/DS207/AB/R, ibid., para 11. 24 Ibid., fn 15. 25 WT/DS207/AB/R, ibid., paras 13–30. 26 The upper threshold is the upper ceiling price and the lower threshold is the floor price. WT/DS207/AB/R, ibid., para 11. In the dispute, Chile argued that the price band system was not a measure which was required to be converted in accordance with Article 4(2), but was rather a ‘system for determining the level of ordinary customs duties that will be applied up to the bound rate’. WT/DS207/AB/R, ibid., para 38.

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which were required to be converted into tariffs under Article 4(2). Chile argues instead that members did not, as a matter of fact, require at the conclusion of the Uruguay Round that Chile convert its measure and therefore, that it must be compatible with the Agreement on Agriculture.27 Chile’s argument therefore relies heavily on the wider context of the wording of Article 4(2) and the practical experience of the negotiations to drive the interpretation of the clause.28 If we look at the Appellate Body report, supported by the two Article 21.5 decisions in 2007, the focus is not so much on the general context of the rules, but much more on the true meaning of the phrase ‘measure of the kind’. First the Appellate Body starts with the Preamble to the Agreement on Agriculture, which it argues drives how the entire agreement should be understood. This means the emphasis is immediately shifting away from what each individual member wanted and onto the general obligation to eliminate protectionism.29 The Appellate Body then moves to the traditional Vienna Convention approach focusing on the ordinary meaning and context of the term ‘variable import levy’.30 In terms of the particular phrase: the starting point is certainly the form the measure takes, but the mere fact it imposes a duty does not in and of itself mean that it is therefore an ordinary customs duty. The test is broader than the former therefore. For the Appellate Body, similarity, for the purposes of understanding what ‘of the kind’ means, is an assessment based on a consideration of the ‘resemblance’, ‘similar nature or kind’ or ‘having common characteristics’.31 This is not a consideration of the fundamental aspects of the measure: instead ‘sameness’ is assessed on an empirical basis.32 The Appellate Body then lists the characteristics it feels all the prohibited measures share: the more the measure at issue shares these characteristics, the more likely it will be of the same kind as the prohibited measures.33 Ultimately, ‘similarity’ is assessed against a series of fixed criteria which include transparency, predictability and most importantly, the ability of the measure to distort trade. To conclude on this point: the phrase, ‘of the kind’, contains an empirical test which requires checking the measure at issue against a series of criteria identified by the Appellate Body and the ultimate objective of the liberalization 27 28

WT/DS207/AB/R, ibid., paras 40–41. These ideas as pathways through the polycentric problems of ideas about the nature of the problem of international agricultural trade regulation are explored fully in Chapter 4. 29 WT/DS207/AB/R, above n 21, paras 196–7 30 Contrary to Chile’s own assertion of the role of the Vienna Convention in the earlier panel report: WTDS207/R, above n 21, paras 4.30–4.32. 31 WT/DS207/AB/R, above n 21, para 226. 32 Ibid., para 226. 33 Ibid., paras 227–42.

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of trade. On this view, extrinsic factors are not relevant, and the focus is heavily on Article 31 Vienna Convention (the ordinary meaning and the context of the wording, rather than the recourse to the supplementary documentation notions in Article 32). To the extent that truncated definitions suggest that the Agreement on Agriculture’s rules will impact on measures which are ‘like’ other measures, the panel and Appellate Body rulings in Chile–Price Band suggest that this is an empirical consideration of ‘likeness’, rather than an expansive notion based on the general expectations of members during the negotiating process. Agreements Not to Agree The second example is a classic mechanism where members highlight problematic areas but very much signal that negotiations will be undertaken on specific rules at a later date. This is a mechanism that is very useful in contentious areas where members cannot agree at all, but feel that something should be said in the text to indicate that the issue has importance. The classic example of this type of construction in the Agreement on Agriculture is Article 10.2 on disciplines on Export Credits: Article 10 1. Export subsidies not listed in paragraph 1 of Article 9 shall not be applied in a manner which results in, or which threatens to lead to, circumvention of export subsidy commitments; nor shall non-commercial transactions be used to circumvent such commitments. 2. Members undertake to work toward the development of internationally agreed disciplines to govern the provision of export credits, export credit guarantees or insurance programmes and, after agreement on such disciplines, to provide export credits, export credit guarantees or insurance programmes only in conformity therewith.

This type of construction was considered in US–Cotton.34 In the original report, the panel found that certain export guarantee programmes for exports of upland cotton, other unscheduled products and rice (a product in the United States’ schedule) were in violation of the rules controlling the use of export subsidies contained in Article 8 and Article 10.1 Agreement on Agriculture, together with Article 3.1(a) and 3.2 Agreement on Subsidies and

34 United States–Subsidies on Upland Cotton Report of the Panel, WT/DS267/R, 8 September 2004; Report of the Appellate Body, WT/DS267/AB/R, 3 March 2005; Recourse to Article 21.5 DSU, Report of the Panel, WT/DS267/RW, 18 December 2007 and Recourse to Article 21.5 DSU, Report of the Appellate Body, WT/DS267/AB/RW, 2 June 2008.

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Countervailing Measures (SCM Agreement).35 The panel went on to find that three other export credit guarantee programmes, the GSM 102,36 GSM 10337 and the SCGP programmes,38 were neither in violation of Article 10.1 nor of Article 8.39 The argument of interest in this context however is that of the United States regarding the proper scope of Article 10.2 Agreement on Agriculture, that is, the ‘agreement not to agree’ regarding the inclusion of disciplines on export credit guarantee programmes for agricultural products. The United States argued that export credits were not within the remit of the Agreement on Agriculture because Article 10.2 reflected ‘the deferral of disciplines on export credit guarantee programmes contemplated by WTO members’.40 For the original panel, it was clear that export credit guarantee 35 These programmes were undertaken by the United States, whereby exporters of specific agricultural products could obtain a guarantee of payment by the respective purchaser of their products through the United States’ Department of Agriculture’s (USDA) Commodity Credit Corporation (CCC) under the certain terms US–Cotton Report of the Panel, above n 34, paras 7.875, 7.881 and 8.1(d)(i). 36 General Sales Manager 102 programme: under this scheme the Commodity Credit Corporation (CCC) under the auspices of the United States’ Department of Agriculture (USDA) guarantees repayment of credit provided for export sales of agricultural products, covering approximately 98 per cent of the main sum borrowed and a proportion of the interest. The system works by guaranteeing the payment from the foreign bank, rather than making payments directly per se. Guarantees are only available for certain products selected by the CCC: US–Cotton – Recourse to Article 21.5 DSU, Report of the Panel, above n 34, para 3.14. 37 The General Sales Manager 103 programme works on a similar basis to GSM 192, but this time, payment is made for an intermediate term of between three to ten years: US–Cotton – Recourse to Article 21.5 DSU Report of the Panel above n 34, para 3.14. 38 The Supplier Credit Guarantee Programme guarantees the repayment of credit provided by a United States’ exporter to an entity which buys United States’ agricultural products in a foreign country. Again, there is no provision of financing, but instead payment by the foreign importer is guaranteed. The supplier must negotiate the export sale first before they can apply for the credit guarantee. Further time limits and limitations on the availability of the loans are specified. US–Cotton – Recourse to Article 21.5 DSU, Report of the Panel, above n 34, para 3.14. 39 The original argument before the panel and Appellate Body was that such violation would mean they were then not protected by the scope of the ‘Peace Clause’ in Article 13.(c)(ii) Agreement on Agriculture. This clause has now expired as it only applied for the implementation period defined as the nine-year period from 1995 (Article 1(f) Agreement on Agriculture). As such, it is not relevant to this discussion. 40 US–Cotton Report of the Appellate Body, above n 34, para 591. The United States went on to argue that even if export credit guarantees fell within the remit of the Agreement on Agriculture, they still did not violate Article 3.1 SCM Agreement as they do not fall within Item (J) of the Illustrative List of Export Subsidies in Annex 1 SCM Agreement. This aspect of the argument falls outside the scope of this discussion. Article 3.1 SCM Agreement states that a subsidy shall be prohibited if it constitutes ‘subsidies, in law or in fact, whether solely or as one of several conditions, upon export

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programmes were not specifically mentioned in Article 9.1 (which lists those export subsidies subject to reduction commitments) and Article 10 of the Agreement on Agriculture (the general anti-circumvention provision for both scheduled and unscheduled products). However, the panel went on to argue that because Article 10.1 covered ‘any subsidy contingent on export performance not listed in Article 9’,41 and that (other than the list) Article 9 did not say what a ‘subsidy contingent on export performance’ was, the panel could have recourse to the WTO Agreement on Subsidies and Countervailing Measures (the SCM Agreement) as context to understand how export credit guarantee programmes could be regulated.42 As Item J of the Illustrative List of Prohibited Export Subsidies in the SCM Agreement (the Illustrative List) specifically referred to export credit guarantee programmes, the panel argued it could rely on that provision to adjudicate on the conformity of the United States’ programme, especially as both parties did not disagree that once an export credit guarantee programme met the criteria in Item J, it was an export subsidy per se.43 Using this methodology, the panel went on to find that the United States’ export credit guarantee programme fell within Item J of the Illustrative List in Annex 1 SCM Agreement.44 For the panel, therefore, Article 10.2’s function was not to suggest that export credit guarantee programmes were outside the scope of the Agreement on Agriculture’s rules on export subsidies completely, but rather to indicate that fuller rules would be negotiated later; accordingly, in the meantime the provisions of the Agreement on Agriculture would apply. The panel concluded that such programmes would come within the scope of Article 10.1 to the extent that they constituted export subsidies and were applied in a manner which would lead, or threatened to lead to circumvention of the export subsidy reduction commitments. For the panel, this view was clearly supported by the context and purpose of Article 10.2, mainly that Article 10.2 was a sub-paragraph to Article 10.1 and as such it should be read in the light of the general obligation in Article performance, including those illustrated in Annex 1’. Annex 1(j) states: ‘The provision by governments (or special institutions controlled by governments) of export credit guarantee or insurance programmes, of insurance or guarantee programmes against increases in the cost of exported products or of exchange risk programmes, at premium rates which are inadequate to cover the long-term operating costs and losses of the programmes.’ 41 Emphasis added. 42 US–Cotton Report of the Appellate Body, above n 34, para 596, and Report of the Panel, above n 34, para 7.901. See generally McMahon, above n 17, 96–97 and generally ch 4 on export subsidy commitments. 43 US–Cotton Report of the Panel, above n 34, para 7.803; Report of the Appellate Body, above n 34, para 592. 44 US–Cotton Report of the Panel, above n 34, para 7.867.

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10, which, in turn, makes it clear that members should not be permitted to circumvent their commitments under the agreement.45 The panel also felt that the United States’ view that export credit guarantee programmes fell outside the scope of the Agreement on Agriculture was not advocated by other members, and that the drafting history of the provision supported its view (even though the panel did not specifically examine this argument in detail).46 On appeal, the United States criticized the panel’s use of Article 10.1 as context for the inclusion of export credit guarantee programmes in the rules on agricultural export subsidies.47 It strongly reiterated its understanding of the scope of Article 10.2 as an ‘agreement not to agree’ on the inclusion of export credits within the export subsidy commitments for agricultural products. For the United States, relying on the negotiating history was a general exhortation to an alternative view, ‘defying logic’. In contrast, the United States argued Article 10.2 created twin obligations: that members would undertake to work towards multilateral disciplines on export credit guarantee programmes, and after agreement on the scope of those commitments, members would only provide export credit guarantees for agricultural products in conformity with those newly agreed disciplines.48 The Appellate Body again rejected the United States’ approach. For them Article 10.2 did not expressly define the disciplines that ‘currently’ apply to export credits; it did not state when members would work towards an agreed discipline in export credit guarantee programmes for agricultural products, nor when conformity with those new disciplines should begin.49 More importantly for the Appellate Body, there was also no indication in Article 10.2 of which existing rules should be used to address export credit guarantee programmes.50 The original panel argued that for a full exemption from the SCM Agreement’s application to the programmes to operate, it must be indicated in the rules. For the panel, Article 10.2 did not contain any language which ‘would modify the scope of the application of the general export subsidy disciplines in Article 10.1 of the Agreement on Agriculture so as to carve out or exempt export credit guarantees from the export subsidy disciplines imposed by that agreement’.51 The Appellate Body agreed this point, stating Article 10.2 does not include express language suggesting that it is intended as an exception, nor does it expressly state that the application of any export subsidy 45 46 47 48 49 50 51

Ibid., para 7.901. Ibid., para 7.933. US–Cotton Report of the Appellate Body, above n 34, para 598. Ibid., paras 599–600. Ibid., para 607. Ibid., para 608. US–Cotton Report of the Panel, above n 34, paras 7.903–7.904.

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disciplines to export credits or export credit programmes is ‘deferred’ as the United States suggests. Given the drafters were aware that subsidized export credit guarantees, export credits and insurance programmes could fall within the export subsidy disciplines in the Agreement on Agriculture and the SCM Agreement, it would be expected that an exception would have been clearly provided had this been the drafters’ intention.52

Unlike other provisions where specific exemption from the application of the rules was made express, the fact that the Agreement on Agriculture did not specifically exclude its application to export credit guarantee programmes ensured that the rules in Articles 8 and 10.1 applied to them.53 Despite this finding, the United States did try to resurrect their argument in a slightly different guise before the Appellate Body in the appeal from the Article 21.5 DSU report of the panel.54 Here, the United States argued that the Article 21.5 DSU’s panel created modified multilateral obligations on export credits by comparing the fees charged in one of the United States’ export credit schemes (GSM 102) to the ‘minimum premium rates’ from the OECD’s Arrangement on Officially Supported Export Credits when making assessments under Item J of the Illustrative List of Subsidies in the SCM Agreement.55 In other words, the panel had tried to create disciplines on export credit guarantee programmes by the ‘back door’.56 The panel argued that alignment with MPRs did not specifically tell the panel whether an export credit guarantee programme would in fact come within the scope of Item J of the Illustrative List of Prohibited Subsidies. This was because the MPRs were not specifically referred to in Item J, even though they had been negotiated with a view of enabling members to ensure their export credit guarantee programmes complied with 52

US–Cotton Report of the Appellate Body, above n 34, para 609 (emphasis

added). 53

The Appellate Body pointed to the Article 6.1(a) and footnote 24 to Article 8.2(a) SCM Agreement together with Article XIII General Agreement on Trade in Services (GATS) which is explicit in its exclusion of the subsidy rules to services pending further negotiations: US–Cotton Report of the Appellate Body, above n 34, para 610. 54 This illustrates the points raised in the main body of this book that the polycentric nature of the problem of international agricultural trade means that ways in which the problem is understood are not eliminated following an adverse panel Appellate Body finding. Rather, they can shift round on the polycentric axis and can be raised in a slightly different way. See Chapters 4 and 5 particularly, above. 55 US–Cotton – Recourse to Article 21.5 DSU, Report of the Appellate Body, above n 34, para 32. 56 US–Cotton – Recourse to Article 21.5 DSU, Report of the Panel, above n 34, para 14.94; United States’ Appellant Submission to the Appellate Body in US–Cotton – Recourse to Article 21.5 DSU, Report of the Appellate Body, above n 34, para 302.

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Item J.57 Despite this, the panel did feel that MPRs ‘may give an indication’ and be ‘regarded as representing an assessment, developed by and agreed upon by the export credit exports of the Participants of the [OECD] Arrangement’ (of which the United States was a member) as to whether fees in an export guarantee programme were sufficient to cover the long-term operating costs and losses of, inter alia, the United States GSM 102 programme.58 For the Appellate Body, the United States exaggerated the extent to which the panel tried to import the OECD Arrangement. The fact that the panel made it explicit that the MPRs were not referred to in Item J and that they do not consider them applicable specifically to the determination of violation did not prevent the panel relying on their relevance ‘from an evidentiary point of view’ to assess the ‘magnitude of the difference’ in fees in the United States’ programmes: for example, the panel stated that the United States’ fees were 106 per cent below the OECD’s MPRs repeatedly. This magnitude of difference was not itself determinative for the panel, but instead indicated that the United States’ fee level might be problematic for the purposes of Item J.59 In rejecting the United States’ arguments on this point, the Appellate Body is ‘fleshing out’ how the export subsidy commitments in Article 10.1 Agreement on Agriculture apply to export credit guarantee programmes, despite the existence of Article 10.2. If ‘agreements not to agree’ are the preferred option as a multilateral compromise in the Draft Modalities US–Cotton appears to indicate that they should be drafted in a manner which fully reflects members’ intentions: if an exemption is truly the object of the provision, then this should be made express in the agreement.

IMPLICATIONS FOR THE JULY 2008 DRAFT MODALITIES In some respects the concern about fluid constructions seems to have been alleviated: as a whole, the text moves away from very general language to a point where many obligations are phrased in terms of numerical obligations, with the various steps towards their achievement being expressed in empirical terms. For example, looking at paragraph 15 on the staged implementation of the tiered reduction formula for the Final Bound Aggregate Measurement of 57 US–Cotton – Recourse to Article 21.5 DSU, Report of the Panel, ibid., para 14.94. This is in contrast with Item K where such an analogy is made. 58 Ibid., paras 14.95–14.96. 59 US–Cotton – Recourse to Article 21.5 DSU, Report of the Appellate Body, above n 34, para 305.

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Support (AMS) for the calculation of domestic support, paragraph 15 makes it clear that reductions in final bound AMS will be made in six steps over five years. Depending on the tier into which the developed country falls, the steps must be made in specific annual instalments starting with a possible down payment of 25 per cent on the first day.60 This appears very clear, with very little room to manoeuvre: the problems I have identified therefore seem to have disappeared. It is not as simple as that however. We should remain vigilant for a number of reasons. The Draft Modalities seem clear, but in fact we can only really tell how much movement there may be in the wording through use. Who would have really predicted the dynamic interpretation the Appellate Body placed on the interaction of the SCM Agreement and the Agreement on Agriculture in US–Cotton;61 or the expansion of the prohibited measures in Article 4(2) in Chile–Price Band?62 We must remain vigilant with regard to how flexible our linguistic constructions really are as settlement of politically tricky areas of international agricultural trade regulation. Meanings change over time; certain linguistic constructions pick up ‘baggage’, which then allows the wording to take on different meanings. This might be a drastic change, or it might be very subtle. For example, we all knew that the WTO (or GATT as it then was) was a trade agreement, and as such, was confined to trade issues, as in Tuna–Dolphin.63 However, now we accept, following the Appellate Body’s cases in Shrimp/Turtle and Brazil/Tyres64 that in fact the relationship was more subtle than that. It is difficult to know today which meanings will evolve in this way. Ideas also change over time. In the Draft Agreement we have very clear ideas of how the international agricultural trading environment should be regulated in the future and how, ideally, we would like to progress to that stage. It is good to see a gradual movement towards effective control of protectionism. This Draft Agreement is an attempt to fix those ideas into word form. However, although the words remain fixed, the ideas underlying them do not. They evolve and change.

60 61 62 63

This is unbracketed text in the July 2008 Draft, above n 7. US–Cotton, above n 34. Chile–Price Band dispute, above n 21. GATT Panel Report, United States–Prohibition of Imports of Tuna and Tuna Products from Canada, L/5198, adopted 22 February 1982, BISD 29S/91. 64 United States–Import Prohibition of Certain Shrimp and Shrimp Products, Report of the Panel, WT/DS58/R, 15 May 1998, Report of the Appellate Body, WT/DS58/AB/R, 12 October 1998, Recourse to Article 21.5 DSU, Report of the Panel, WT/DS58/RW, 15 June 2001, Recourse to Article 21.5 DSU, Report of the Appellate Body, 22 October 2001 and Brazil–Measures Affecting the Imports of Retreaded Tyres, Report of the Panel, WT/DS332/R, 12 June 2007, Report of the Appellate Body, WT/DS332/AB/R, 3 December 2007.

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With this in mind, I would still like to highlight two potential fluid constructions from the Draft Agreement which may prove problematic in the light of the previous analysis. One of the most controversial areas in the current round is a member’s ability to identify certain ‘sensitive products’ for special market access treatment on the grounds that they are politically sensitive.65 Following on from paragraph 7 of the Hong Kong Ministerial Declaration66 and paragraphs 31–34 of the July Framework Agreement,67 sensitive products are those which a country self-designates as ‘sensitive’ on political grounds. Under the current proposals, developed nations can designate up to 4, or possibly up to 6 per cent of their tariff lines as sensitive. For developing countries, the figure is currently set at one-third.68 Currently, the designation of a product as ‘sensitive’ is up to the member concerned, although Annex Ai does contains partial designation criteria which specify how a product chosen as sensitive should be notified as such.69 In other words, it is the notification and not the identification of the product which is defined at the current time. As it stands, the scope of the obligation could be tricky, as there is no definition of what constitutes a ‘sensitive product’, other than the bald statement in the text that the proposed new rules recognize this category of product. This wording could give rise to a similar definition to that in Chile–Price Band,70 (i.e., the truncated definition) as there is nothing to indicate whether we are discussing a designation by the state, but subject to externally verifiable criteria, or whether the state can substitute its own criteria for sensitivity. Developing countries are also entitled to designate certain products as ‘special’. Such a designation allows the developing nations less severe cuts in their market access reduction commitments for such products. Under the July 2008 Draft Modalities, a developing country is permitted to self-designate 65 Earliest indicators that certain products should be treated as sensitive are found in Norway’s original proposal: WTO (2001), WTO Agriculture Negotiations: Proposal by Norway, Geneva, Switzerland: WTO, G/AG/NG/W/101, 16 January 2001 para 9. For the impact of tariffs on sensitive products see ESCAP (1996), Agricultural Policy Reform under the Uruguay Round: Implications for Developing Countries of the ESCAP Region, Asian and Pacific Developing Economies and the First WTO Ministerial Conference: Issues of Concern, Bangkok, Thailand: United Nations; also WTO (2006), Chair’s Reference Paper: Sensitive Products, 11 May 2006. 66 WTO (2005), Ministerial Declaration, Geneva, Switzerland: WTO, WT/MIN(05)/DEC, 22 December 2005. 67 WT/L/579, 2 August 2004. 68 July 2008 Draft Modalities, above n 7, para 71: the difference between the use of percentages and words for developed and developing country commitments is reproduced in the Revised Draft Modalities themselves. 69 July 2008 Draft Modalities, ibid. 70 Chile–Price Band, above n 21.

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between 10–18 per cent of their tariff lines as special products. Only up to 6 per cent may have no cut at all and there should be a general overall average reduction in the levels of market access support for these products of between 10–14 per cent.71 It is possible that as the treatment of ‘special products’ contains specific reference to self-designation as against externally verifiable criteria, the same approach may be taken for ‘sensitive products’ (i.e., the truncated definition issue). Rather than rushing to conclude some sort of wording on the sensitive product point, perhaps the alternative to expand the special safeguard might be the best approach. In contrast to the designation of products in the Draft Modalities as special or sensitive where the emphasis appears to be on very loose obligations with the emphasis on self-designation, different problems arise with the Draft’s approach to geographical indications, or GIs. The best illustration of the problem is probably the French use of GIs. The French emphasis on the importance of special cultivation methods for certain special food types is identified in their domestic agricultural policies.72 Such products grown by these special methods are eligible to be marked with the geographic origin of the product. Such delineation is achieved through the use of a mark clearly indicating the product’s geographic origin: a geographical indicator or GI. The French system has already been discussed in the WTO dispute settlement system in European Communities–Protection of Trademarks and Geographical Indications for Agricultural Products,73 but there is as yet no agreement on how to take the GI issue forward in the Draft Modalities. How this is handled is very important, as it is tempting to fudge the issue by noting in the text that agreement on specific modalities may be left until later when members have had an opportunity to consider these issues further: that is, to put an ‘agreement not to agree’ clause into the text. This solution is problematic however, especially following the difficulties surrounding the ‘agreement not agree’ strategy in the context of Article 10.2 Agreement on Agriculture on export credit guarantee programme disciplines.74 To summarize, it is important, at a time when there is renewed hope that the Doha Development Round will finally conclude after seven years, that we 71 July 2008, Draft Modalities, above n 7, paras 120–22; there are different provisions for small and vulnerable economies and recently acceded members. See Chapter 3 generally for a more detailed analysis of the problem of sensitive and special products. 72 See Broude, T (2005), ‘Taking “Trade and Culture” Seriously: Geographical Indications and Cultural Protection in WTO’, 26 University of Pennsylvania Journal of International Economic Law 623. 73 European Communities–Protection of Trademarks and Geographical Indications for Agricultural Products, WT/DS174, 15 March 2005. 74 See this chapter.

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should not rush to use any form of wording as a diplomatic fudge. The ‘sticky’ nature of politically acceptable linguistic constructions is readily apparent from the dispute settlement reports like Chile–Price Band and US–Cotton discussed above.75 We should be on our guard against assuming that members and dispute settlement panels alike in the future will recognize the true nature of a linguistic compromise as merely a diplomatic mechanism to bring this Round to an end. The Appellate Body’s increasing emphasis on the precedential effect of its rulings means that unfettered freedom to choose linguistic constructions is now potentially fraught with problems.76 Language which is seemingly flexible may be unable to fully achieve the task we would wish it to if a previous dispute settlement report’s understanding of such constructions is relied on. As the negotiators strive towards an amended Agreement on Agriculture they must undertake their task in full cognition of the fetters on their ability to reach an acceptable settlement.

75 76

Chile–Price Band, above n 21, and US–Cotton, above n 34. United States–Final Anti-Dumping Measures on Stainless Steel from Mexico, Report of the Appellate Body, WT/DS344/AB/R, 30 April 2008, paras 154–62.

Index Africa 113–14, 120, 123 aggregate measurement of support (AMS) 149–50, 159–60 Agreement on Agriculture 4, 26–7, 28, 35–7, 113 aim of 29 Annex 1: agricultural products 35–7, 69, 95–6, 150 Annex 5: special treatment 73, 89–92 Art 1: basic agricultural product 35–6, 150 Art 5: special safeguard provisions 92–5 Arts 15 and 16 96–7 Art 20: continuous process of reform 97, 98 domestic support 117 Annex 2: Green Box 46, 114, 137, 150 Blue Box 15 Draft Modalities July 2008 64–5, 74, 76–7, 102, 110, 146–9, 159–63 export subsidies 117–18, 129, 130–31 US–Cotton case 114, 154–9 legal knowledge and deficiencies in 43–5 market access 57–8, 59, 88, 110 Annex 5: special treatment 73, 89–92 Art 2/Annex 1: definition of agriculture products 35–6, 69, 95–6, 150 Art 4 88–9 Modalities Document (1993) 89, 90, 92 price gap methodology 90–91 special products/treatment 62–3, 67, 73–7, 89–92, 96–7, 110, 161–2 truncated definitions 149–54, 161–2

other WTO and GATT agreements and 97 technical knowledge of 41–2, 47, 48 agriculture, meaning of 21–4, 56–7, 69–70, 71, 76, 138–42 agriculture as food 21–3, 77, 139–41 definition of agricultural products 96, 98 Agreement on Agriculture Art 2/Annex 1 35–6, 69, 95–6, 150 basic agricultural product 35–6, 150 biofuels 123 aid programmes 60, 113, 133, 135 food 29, 97, 114, 120 aims of WTO 50–52 air/airspace 14–16, 71, 132–3 animal welfare 6, 56, 66, 73 Appellate Body 97, 100 Brazil/Tyres 160 Canada–Dairy 129 Chile–Price Band 102–10, 152–4 EC–Sugar 130–31, 138 ‘knowledge’ 40–41 precedent 114–15, 146, 163 Shrimp/Turtle 160 treaty interpretation 13, 40, 147 agreements not to agree 154–9 truncated definitions 149–54 Argentina Chile–Price Band dispute 102–10, 152–4 art 56, 135–6 Australia 76 bananas 86 bilateral agreements 133, 136 Biodiversity Convention 30, 85, 122 biofuels 6–7, 123 Blue Box 15

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Index

Brazil 29, 120 Brazil/Tyres 160 Bulgaria 102

culture 32 food and social structure 140–41 products 18, 56, 135–6

Cairns’ Group 61, 69, 70, 104, 107, 121–2 Cambodia 47 Canada 76 Canada–Dairy decision 129 Charlton, JE 45–8, 119–20 chemicals, trade in 16–17, 18 child labour 134–5, 136–7 Chile 47 Chile–Price Band dispute 102–10, 152–4 China 22, 29, 47, 120, 140 Chinese Taipei 102 Chiquita 86 Christianity 21 clean air, subsidies for 132–3 coherence combining human activity into ‘subject’ 49–50 ‘theory’ and 131 trade and non-trade concerns 50–52 commercial value 18–19, 70, 72, 75–6 Common Agricultural Policy (CAP) 114, 118, 121, 147 concept of international agricultural trade 24 agriculture see agriculture trade see trade constructive rationalism 32–3 consumers pro-environmental process element and 17 contractual rules/social ordering 100, 144 cotton 46, 113, 120, 150 US–Cotton case 114, 154–9 cultural divergence 11, 55–7 market access 57–8 conclusions 77–8 as function 65–7 product-centric perspective 58–62 ‘trade’/‘agriculture’, different understandings of 68–77 understanding of nature of product 62–5

de Gorter, H 119 Del Monte 86 Descartes, René 2 Desta, MG 34–8, 42 developed countries 3–4, 28, 46, 60, 84 domestic support 113–14, 132–3 export subsidies 117–18, 119, 120 overseas development assistance see aid programmes sensitive products 64, 161–2 see also domestic support measures; export subsidies; market access developing countries 27, 28, 38, 65–6, 76 aid see aid programmes child labour 134–5, 136–7 cultural products 135 development strand 6, 84–5, 119–21, 123 domestic support in developed countries 113–14 subsidies for clean air 132–3 export subsidies: developed countries 117–18, 119, 120 food 63, 73–7, 84, 89, 96–7 knowledge: technical and practical 45–8 LDCs see least-developed countries protectionism 119–20 sensitive products 64, 161–2 special products/treatment see special and differential treatment tariffs in developed countries 60 processed and primary products 84 trade as mechanism to promote development 76–7 traditional staple diet 73, 74, 77, 89 see also domestic support measures; export subsidies; market access differential treatment see special and differential treatment dirty tariffication 44 disagreement, models of see cultural divergence; polycentrism

Index Dispute Settlement Understanding (DSU) Art 3:2 12 Doha Development Round 27, 45, 59, 100, 102, 109, 143 Draft Modalities July 2008 64–5, 74, 76–7, 102, 110, 146–9, 159–63 gains from successful 60 sensitive products 64–5 special products 73–4, 76–7 Dole 86 domestic support measures 26–7, 44, 46 aggregate measurement of support (AMS) 149–50, 159–60 Blue Box 15 child labour, not using 134–5, 136–7 clean air 132–3 cultural products 135–6 food religion 139–40 social structure 140–41 Green Box 46, 114, 137, 150 non-trade aims: functional view of trade/agriculture 137–8, 141 polycentrism 116–18, 120, 123 product plus rights/process 133–4, 136–7 rural development 147 traditional conceptions of problem 112–15 Draft Modalities July 2008 102 differential tariff cuts 110, 161–2 drafting process 146–9, 159–63 sensitive products 64–5, 162 special products 74, 76–7, 161–2 drafting process see treaty construction Dunkel, Arthur 59 Dunoff, JD 128 emergency safeguard measures see safeguard measures emerging economies, newly 84–5 environmental protection 51, 56, 72 domestic support 141 clean air 132–3 polycentrism: strand 6–7, 85, 121–3 see also rural landscape European Communities/Union 66, 121–2, 141 animal welfare 66, 73

167

Common Agricultural Policy (CAP) 114, 118, 121, 147 EC–Sugar 130–31, 138 export subsidies 118 geographical indications (GIs) 67, 141, 162 safeguard measures 95 European East Asian Grouping 102 export credit guarantees 114, 154–9 export subsidies 26–7, 37, 38, 44, 114 polycentrism 117–18, 119, 120, 128–31 traditional conceptions of problem 113 US–Cotton case 114, 154–9 Falconer, Crawford 31, 75, 146 films 18 fish/fish products 96 food agriculture as 21–3, 77, 139–41 aid 29, 97, 114, 120 developing countries: special products/treatment 63, 73–7, 84, 89, 96–7 geographical indications (GIs) 67, 141, 162 medicine 22, 140 quality and market access 66, 67 religion 21–2, 56–7, 63, 139–40 right to 9, 23, 30, 66, 77, 123 safety 140 security 66, 74, 77, 84, 139 social structure 140–41 special products/treatment 63, 73–7, 84, 89, 96–7 Food and Agriculture Organization (FAO) 63 France 67, 140–41, 162 free trade 2, 30, 38, 51 knowledge: technical and practical 45–8 Fuller, LS 5, 80, 115–16 function/mechanism market access 65–7 trade as 19–20, 56–7, 72, 76–7, 137–8 G-33 75, 76, 109–10 G10 group 102

168

Index

General Agreement on Tariffs and Trade (GATT) 26, 53, 59, 89, 97, 117, 143, 151 developing countries 96 safeguard measures 95 Uruguay Round 27, 69, 88, 100 genetically modified organisms 23, 85 geographical indications (GIs) 67, 141, 162 governance strand 7–8, 86–7, 122–3, 124–5 grains 46 Green Box 46, 114, 137, 150 Hayek, FA 32, 33, 37 health 72 medicines 22, 63, 140 Hertel, TW 38 Hinduism 21 historic trading arrangements 138 HS Code 35, 69, 91, 96, 150 human rights 30, 56, 66 development, right to 138 food, right to 9, 23, 30, 66, 77, 123 heard, right to be 9 polycentrism: strand 6, 7, 85–6, 123–4, 133 identification of problems 3–5, 25 conclusions 53–4 current perceptions 25–7, 112–15 reductions in trade barriers: fiscal cuts 27–8 special and differential treatment 28–9 trade and non-trade concerns 29–31 models of disagreement see cultural divergence; polycentrism ‘subject’ and ‘problem’ 31–2, 48–9 coherence: combining human activity into ‘subject’ 49–50 coherence: trade and non-trade concerns 50–52 constructing ‘subject’: knowledge 39–45 constructive rationalism, role of 32–3 knowledge yet disagreement 45–9

relationship between 52–3 understanding a ‘subject’ 32–9, 43 India 29, 120 indigenous communities 51, 86 intellectual property 141 International Convention on the Harmonized Commodity Description and Coding System 35, 69, 91, 96, 150 International Monetary Fund (IMF) 8 Irwin, D 46–8, 104 Islam 22, 63 Islamist views, radical 113 Israel 63, 139 Josling, T 94, 117, 118 Judaism 22, 63 knowledge 39–45, 128–31 disagreement and 45–9 labelling 67 labour rights 51 land ownership 15–16 language and meaning see treaty construction and interpretation least-developed countries 6, 27, 28, 60, 84–5, 96–7, 113, 119, 120 child labour 134–5, 136–7 market access as function 65–6 Leininger, M 21 Levin, Sander L. 114 Mali 113–14 market access 26–8, 38, 44, 46, 57–8 child labour 136–7 cultural divergence 77–8 market access as function 65–7 product-centric perspective 58–62 ‘trade’/‘agriculture’, different understandings of 68–77 understanding of nature of product 62–5 Draft Modalities July 2008 64–5, 74, 76–7, 110, 161–2 food 46, 63, 140 polycentrism 79–81, 110 Chile–Price Band dispute 102–10 existing rules and market access 81–3

Index polycentric problem, market access as 97–102 tensions in market access 83–7 WTO approach 87–97 sensitive products 64–5, 67, 73, 161–2 special products 62–3, 67, 73–7, 89–92, 161–2 truncated definitions 149–54 market/commercial value 18–19, 70, 72, 75–6 Marrakesh Agreement Establishing the WTO 89, 151 mechanism/function market access 65–7 trade as 19–20, 56–7, 72, 76–7, 137–8 medicines 63 food as 22, 140 Mercosur 107–8 MFN basis 92 models of disagreement see cultural divergence; polycentrism moral/societal approach 51, 138 multifaceted problems see polycentrism multifunctionality of agriculture 23 multilateral treaties and WTO rules, other 85, 107–8, 114, 122–3, 125, 133, 135 cultural products 135 multinational corporations 8, 84, 86–7 net-food importing developing countries 96–7 New Zealand 76 non-trade concerns/values 9, 20, 29–31, 66, 114 agriculture as mechanism to achieve 141 coherence: trade and 50–52 trade as mechanism to achieve 76–7, 137–8 see also environmental protection; human rights; rural landscape Oakeshott, M 41, 43, 48, 128, 130 objectives of WTO 50–52 O’Connor, B 43–5 OECD 23 oilseeds 46, 117

169

overseas development assistance 60, 113, 133, 135 food aid 29, 97, 114, 120 ownership of land 15–16 panels, WTO 40–41, 97, 100, 114–15, 118, 147 agreements not to agree 154–9 truncated definitions 150, 154 perishable products 93, 94 polycentrism 4–5, 55, 79–80 market access 79–81, 110 Chile–Price Band dispute 102–10 existing rules 81–3 as polycentric problem 97–102 tensions in 83–7 WTO approach 87–97 strands, linking of 9–12, 126–7, 131–2, 142–4 ‘agriculture’ 138–42 patterns 127–8 practical knowledge 130–31 technical knowledge 128–31 ‘trade’ 132–8, 141–2 strands of problem 4–5, 7, 115–16, 125–6 development 6, 84–5, 119–21, 123 environment 6–7, 85, 121–3 governance 7–8, 86–7, 122–3, 124–5 human rights 6, 7, 85–6, 123–4 trade measures 5, 84, 116–18, 119, 120, 121, 122–3 practical knowledge 43–5, 130–31 disagreement: technical and 45–9 precautionary principle 85 precedent and WTO jurisprudence 114–15, 146, 163 price gap methodology 90–91 processed and primary products 84 price gap methodology 90–91 property rights 15–16, 70–71 public goods 14–16, 18, 71, 132–3 market access, public element and special status 71–7 multifunctionality of agriculture 23 Rangel, Charles B. 114 Recently Acceded Members (RAM) Grouping 102

170

Index

religion 21–2, 56–7, 63, 139–40 Ruggie, J 128 rural landscape/population/development needs 6, 9, 23, 66, 67, 74, 86, 121, 147

Subsidies and Countervailing Measures Agreement 37, 114, 117, 129, 154–9 sugar 46, 117, 152 EC–Sugar 130–31, 138

safeguard provisions, special 62, 66, 92–5, 108, 109–10, 146, 162 Safeguards Agreement 95, 108 Sanitary and Phytosanitary Measures Agreement 37, 96, 97 Saudi Arabia 63, 139 Schoenbaum, T 118 SCM Agreement (Subsidies and Countervailing Measures) 37, 114, 117, 129, 154–9 seasonal products 93, 94 Simmonds, N 49, 50 social ordering/contractual rules 100, 144 societal/moral approach 51, 138 sovereignty/autonomy 84, 86, 122–3, 138 special and differential treatment 28–9, 46, 96–7, 110 functional approach: market access 67 historic trading arrangements 138 nature of product: market access 62–5 polycentrism development strand 6, 84–5, 119–21, 123 product-centric vision of market access 61–2 public element, products with 71–7 sensitive products 64–5, 67, 73, 161–2 special products 62–3, 67, 73–7, 89–92, 110, 161–2 special safeguard provisions 62, 66, 92–5, 108, 109–10, 146, 162 SPS Agreement (Agreement on Sanitary and Phytosanitary Measures) 37, 96, 97 statistics 3–4, 25, 60, 75 Stiglitz, JE 45–8, 119–20 Sturgess, I 38, 42 subsidies see domestic support measures; export subsidies

Tangermann, S 117, 118 tariffs see market access Tarullo, D 128 Technical Barriers to Trade Agreement 37 technical knowledge 41–5, 128–31 disagreement: practical and 45–9 Thailand 75, 76 ‘theory’ and coherence 131 trade 21 function/mechanism 19–20, 56, 57, 137–8 market access and cultural divergence 72, 76–7 non-trade values see non-trade concerns/values ‘trade in products’ 12–19, 56, 132–7 market access and cultural divergence 68–76 treaty construction and interpretation 145–9 agreements not to agree 154–9, 162 discovering meaning 147 Draft Modalities July 2008 146–9, 159–63 flexibility and fluidity 147–9 interpretation 12–13, 40, 145, 147 truncated definitions 149–54, 161–2 tropical products 46, 120 Tuna–Dolphin case 160 United Nations Conference on Trade and Development (UNCTAD) 133 Millennium Goals 120, 123 United States 69, 75, 125 cotton farmers 113 US–Cotton case 114, 154–9 precedent and WTO jurisprudence 114–15 rice 154 Uruguay Round 27, 69, 88, 100

Index Vienna Convention on the Law of Treaties 12–13, 40, 145, 147, 153, 154 Wall Street Journal 113 welfare, global 30, 76, 88, 138

171

women 120–21, 123 World Bank 8, 60 World Customs Organization 86 World Trade Organization, objectives of 50–52