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GJIL Recent Volumes

Volume 48

Issue 2

FOREWORD

Sonia E. Rolland, Making International Economic Law Work: Integrating Disciplines and Broadening Policy Choices

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ARTICLES

Lilian V. Faulhaber, Beyond Apple: State Aid as a Model of a Robust Anti-Subsidy Rule

In 2016, the European Commission ordered Ireland to recover over €13 billion in back taxes from Apple. This decision was met with outrage in the United States, where many lawmakers and academics were unfamiliar with the European Union’s prohibition on state aid. This prohibition, which has existed since the founding of the European Coal and Steel Community in the early 1950s, aims to uphold competition within the European Union by preventing EU Member States from providing subsidies to specific undertakings.
This Article uses Apple and other recent state aid investigations to illustrate the broad scope and strong enforcement provisions of the EU prohibition on state aid. In response to calls for a more robust anti-subsidy regime at the WTO level, this Article sets out state aid as a model of one such regime. This Article does not argue that the WTO needs a more robust anti-subsidy regime but instead points to the EU’s state aid prohibition as an example of such a regime for reformers who have themselves called for greater international prohibitions on subsidies.
This Article also argues that, for reformers who want stronger anti-subsidy rules, the WTO is in many ways a more appropriate space for anti-subsidy rules than the European Union. Imposing the state aid prohibition at the WTO level could remove many of the legitimacy concerns that are at the root of the recent criticisms of the state aid prohibition. Because the European Union and its Member States are WTO members, this could also obviate the need for a state aid prohibition at the EU level. These conclusions do not mean that the prohibition on state aid is without its weaknesses, and this Article does not suggest that all elements of the prohibition should be adopted by other jurisdictions. But the European Union takes a very different approach to policing subsidies than does the WTO, and the differences between the state aid prohibition and the WTO’s anti-subsidy rules illustrate how the latter could be strengthened by choosing some elements of state aid doctrine and leaving the rest.
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Mira Burri, The Regulation of Data Flows Through Trade Agreements

Cross-border data flows are essential to the contemporary digital economy. While states are eager to seize the opportunity of digitization as the fourth industrial revolution, they also often impose borders in the digital space, so as to protect vital interests, such as national security or privacy. Free trade agreements have gained new value in the last decade and shape the regulatory environment for digital data by overcoming some of the problems and inconsistencies of the multilateral regime of the World Trade Organization (WTO) and by active norm-creation in discrete fields of digital trade. The Article maps these developments by looking first at the legal foundations laid by the WTO and then at the many free trade agreements that regulate digital trade beyond the older multilateral rules. The Article examines their design and evolution with a particular focus on the models that the United States and the European Union have developed. The Article contextualizes and assesses the impact of free trade agreements for the burgeoning digital economy by highlighting the positive as well as the many negative sides such a proactive, power-driven norm-setting may have, in particular in an environment as fluid as the digital space.
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Julian Scheu, Trust Building, Balancing, and Sanctioning: Three Pillars of a Systematic Approach to Human Rights in International Investment Law and Arbitration

The aim of the present contribution is to develop a conceptual framework which gives guidance on how, under which circumstances, and to which extent human rights considerations should be taken into account in international investment arbitration. To this end, investment law is considered a legal instrument fulfilling international economic policies rather than a rigid framework whose sole purpose is to protect foreign investments from host state actions. To lay the groundwork, investment law’s object and purpose are clarified before different scenarios of interaction between investment law and human rights are identified, analyzed, and linked to the arbitral tribunal’s interpretative powers pursuant to Article 31(1) and (3)(c) of the Vienna Convention on the Law of Treaties. It is shown that human rights considerations are on the one hand raised by investors in order to reinforce their claim, which reflects their legitimate expectation to be treated in a human rights compliant manner by the host state. By taking these arguments seriously, tribunals can build additional trust in the system of international investment protection. On the other hand, host states bring up human rights as a defense in order to illustrate that investment protection conflicts with the obligation to promote or protect non-investment rights and interests. In light of investment law’s purpose, arbitrators have the authority to deal with this conflict by balancing investment protection and human rights. Moreover, states can, by referring to investor misconduct adversely affecting human rights, substantiate why investment protection is being abused. As a result, it is suggested that arbitrators should react differently to each of these three scenarios by ‘trust building,’ ‘balancing,’ or ‘sanctioning.’ In light of arbitral practice, it is shown that each of the three pillars of a systemic approach to human rights in investment arbitration has the potential to influence the arbitral process in the context of jurisdiction, admissibility, the interpretation of substantive investment protection standards, the assessment of damages, or the allocation of costs.
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Otabek Ismailov, Interaction of International Investment and Trade Regimes on Interpreting Treaty "Necessity" Clauses: Convergence or Divergence?

This Article attempts to look into the question of whether the less restrictive means test used by World Trade Organization (WTO) dispute settlement bodies to examine the “necessity” of state measures under WTO instruments can be imported into the investor-state arbitration regime for the purpose of interpreting the non- of necessity clauses cannot be imported directly to investment arbitration regime for the purpose of interpreting this treaty clause, but rather it may serve as a valuable source for identifying the development of state practice on examining whether a state had other alternative means to safeguard its essential interests in necessity circumstances. The interpretation of the “only means” element of customary necessity by investment arbitration tribunals in the Argentine cases sparked an academic debate and some scholars considered such interpretation as “ill-suited” in the context of economic emergencies. In this Article, I contend that state practice found in WTO jurisprudence on the “reasonably available” nature of alternative means reflects the development of a customary rule on necessity as it represents a more progressive and practicable approach to interpreting the “only means” requirement of customary necessity, and thus should be incorporated into interpretation of the “only means” requirement of the customary necessity defense by future investment arbitral tribunals.
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David A. Gantz, The Spaghetti Bowl Revisited: Coexistence of Regional Trade Agreements Such as NAFTA with the Trans-Pacific Partnership

The rule governing the Trans-Pacific Partnership’s (TPP’s) relationship with earlier trade agreements, to which at least two of the TPP Parties are also party, is “coexistence.” “Coexistence” requires that when a TPP Party believes there is a conflict between the TPP and another trade agreement, a consultation process between Parties to the earlier trade agreement commences, with possible resort to state-to-state dispute settlement under TPP Chapter 28. Coexistence differs from the approach taken by Canada and the United States when both ratified the North American Free Trade Agreement (NAFTA), which directed the Canada-United States Free Trade Agreement be “superseded” except where otherwise explicitly specified. Whether the corresponding lack of explicit conflict rules in the TPP regarding the “coexistence” protocol (except as to government procurement) exists because the TPP Parties were unable to agree on language for a clarifying agreement, for lack of sufficient attention, or simply because the TPP provisions that would override NAFTA provisions conflict with a NAFTA Party’s interests (such as those related to investment, labor, or the environment), is unclear. Regardless of the reasons, this lack of clarity could lead to endless litigation or arbitration among the NAFTA Parties and with their stakeholders when and if TPP enters into force for all of them.
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NOTES

Mina Miljevic, Eradicating Corruption: Mission (Im)Possible? How Ethical Corporations Can Combat Corruption through Foreign Direct Investment

Several efforts to end corruption have been too narrowly focused on petty corruption and lacking in enforcement mechanisms or long-term sustainability. This paper argues for a new approach to combat grand corruption: engaging in corporate foreign direct investment in corrupt countries in order to systemically deal with corruption. The goal is to break the cycle of corruption by helping honest companies operate in an honest way. The question that follows from this recommended approach is, how does one encourage corporations to invest in traditionally corrupt nations? After all, plenty of academic research concludes that corruption deters investment. This paper proposes several positive incentive strategies to encourage corporate investment by minimizing the risk or cost of doing so in hopes of making ethical foreign direct investment possible even in corrupt nations. Because this is a global problem, this paper will primarily focus on corruption at an international level.
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Joseph DiPiero, The Common Law of Rebellion

This Note traces the lineage of the natural right to rebel against tyranny and oppression from its ancient and medieval roots to its modern enshrinement in the Universal Declaration of Human Rights. While the right to rebel has played an enormous role in the political evolution of the world, especially in Western societies, over the last several decades the right to rebel’s continuing vitality can be legitimately called into question due in large part to inattention from the international community. This Note attempts to counteract this trend by identifying existing sources of international law that bolster the notion that there does in fact exist a set of principles and guidelines that governs the international community’s approach towards rebels and rebellions, i.e., a common law of rebellion. This common law of rebellion dictates when individuals may legally—from an international standpoint—rise up and foment insurrection against their government and when they must resort to alternative means.
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Issue 1

FOREWORD

Judge Claire R. Kelly

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ARTICLES

Shara L. Aranoff, Sonam Patel, and Molly J. Doggett, A Review of the Court of International Trade's 2015 Decisions Addressing Trade Remedy Determinations of The U.S. International Trade Commission and the Court's Decisions Pursuant to 28 U.S.C. § 1581(i)

In 2015, the United States Court of International Trade (CIT or court) issued seven opinions involving anti-dumping and countervailing duty injury determinations by the U.S. International Trade Commission (Commission or ITC). In addition, the court decided seven cases which touched on the court’s residual jurisdiction under 28 U.S.C. § 1581(i). This Article summarizes and assesses the significance of both groups of cases. With respect to appeals from the ITC, the court showed considerable deference to the agency, affirming its choice of methodology for analyzing record data relating to a variety of statutory injury factors. The court also supported the ITC’s interpretation of the “by reason of” causation standard, an area left ambiguous by several Federal Circuit decisions. In cases involving the court’s residual jurisdiction, the court continued to set a high bar for when invoking section 1581(i) is appropriate. In cases involving Customs’ application of deemed liquidation and its enforcement of antidumping and countervailing duties, the court agreed to hear only those cases where no action by the plaintiff could have qualified it to bring its claim under another jurisdictional provision.
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Thomas M. Beline and Allison Hollander, 2015 in Review: Procedural and Scope Matters Before the U.S. Court of International Trade

This Article summarizes the 2015 U.S. Court of International Trade (CIT) opinions addressing questions of procedure and whether imported products fall within the scope of antidumping and countervailing duty orders. It includes an analysis of the Icdas case in relation to recent questions surrounding jurisdiction and claims-processing rules in the federal courts. This Article also discusses the effects of three recent cases on the exhaustion doctrine at the CIT, who may be a party to the appeal and when, and the Court’s resolution of the tension between Commerce’s practice in determining country of origin and the statute’s anticircumvention proceedings in Bell Supply and Peer Bearing.
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Maureen E. Thorson, 2015 Cases Involving Adverse Inferences and Surrogate Values at the U.S. Court of International Trade

The use of adverse inferences in calculating anti-dumping and countervailing duty margins and the selection of surrogate values in non-market economy cases and are areas of perennial contention in litigation before the U.S. Court of International Trade. In this Article, Maureen Thorson describes how the court’s 2015 opinions provide agencies and practitioners alike with new guidance on these issues. Refining prior case law with respect to the impact of corroboration and “commercial reality” on the use of adverse inferences, the Court of International Trade’s 2015 opinions place renewed emphasis on properly determining the circumstances under which such inferences are warranted. In the arena of surrogate valuation, the court also provided significant clarifications regarding the legal standards for selecting surrogate countries, while dealing with increasingly complicated issues arising from the selection—and adjustment—of surrogate financial statements.
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Patricia M. McCarthy, Court of International Trade Decisions Issued During 2015 Concerning 28 U.S.C. § 1582

Charged by Congress with responsibility for protecting the revenue, U.S. Customs and Border Protection has long struggled with imports of merchandise that are subject to special duties intended to remedy unfair trade practices. Often the importers of this type of merchandise default on Customs’ bills for these duties, leading Customs to demand additional security for the imports and the United States to initiate litigation to collect on these customs bonds. In 2015, the United States Court of International Trade issued an unusually large number of decisions resolving collection issues ranging from Customs’ ability to impose enhanced bonding requirements on importers, to the types of interest to which a surety may be subject in a collection action brought by the United States, to the standards the United States must satisfy to obtain a judgment for duties and civil penalties. Although generally providing clarity, the court also exposed certain areas of tension in the customs civil penalties statute.
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Robert A. Shapiro, Review of 2015 Customs Cases Before the Court of International Trade

This article discusses the decisions of the U.S. Court of International Trade in 2015. The article focuses on the hurdles that must be observed for the court to assert jurisdiction over the issue. The article then discusses the identification of customs rulings, interpretive decisions and treatments that trigger statutory procedural rights and the enforceability of those rights. Finally, two classification decisions of the CIT are examined because of their potential impact on the classification of devices that are connected to automatic data processing machines.
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Shana Hofstetter and Bernd Janzen, 2015 Court of International Trade Review: From Targeted Dumping to Differential Pricing

This Article summarizes the 2015 U.S. Court of International Trade cases concerning the U.S. Department of Commerce’s calculations of dumping margins under its evolving regimes of targeted dumping and differential pricing. By reviewing how the U.S. Department of Commerce implemented its change in practice, and how the U.S. Court of International Trade viewed this implementation, practitioners will gain a better understanding of the two institutions’ roles and interactions.
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NOTES

Brittany Cohan Baclawski, Re-Thinking the WTO's Relationship to International Labor Standards: Is it Finally Time for a Global Approach?

This Note explores the World Trade Organization’s (WTO’s) relationship to labor standards. It considers the possibility of WTO adoption of international labor standards, analyzing the arguments in favor of and against this approach. It then analyzes the use of free trade agreements as an alternative mechanism for both the setting and enforcement of labor standards, using previous free trade agreements and the Trans-Pacific Partnership Agreement as vehicles through which to explore the pros and cons of this approach. It concludes with recommendations regarding how the WTO can amend its organizational documents in order to adopt international labor standards.
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Sherri J. Deckelboim, Consumer Privacy on an International Scale: Conflicting Viewpoints Underlying the EU-U.S. Privacy Shield Framework and How the Framework Will Impact Privacy Advocates, National Security, and Business

Despite differing standards for online privacy and data transfers, the United States and the EU exchange vast amounts of personal data every day as part of the transatlantic economy. However, recent revelations from Edward Snowden concerning U.S. data surveillance practices have led to distrust of the United States among its trade partners, including the EU. As a result, the two parties have negotiated new guiding principles for data transfers in the form of the EU-U.S. Privacy Shield Framework. The Privacy Shield reportedly accounts for modern developments in EU human rights law and modifications to U.S. surveillance practices following the Snowden revelations and subsequent backlash. Through this instrument, the United States attempts to provide for greater privacy protections and recourse methods as compared to prior trade instruments, yet strong similarities to prior instruments will likely draw backlash against the Privacy Shield from privacy advocates. In addition, the voluntary nature of the Privacy Shield presents businesses with a choice of whether to comply with the contentious Privacy Shield or to pursue alternative options that may result in challenges for national security, such as encryption. This Note evaluates the potential impact of the Privacy Shield through the lens of the differing historical backgrounds of U.S. and EU privacy practices. It also traces the trajectory of attempts by the United States and EU to bridge the gap between privacy practices for the purpose of data privacy in trade.
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Michael Flynn, China: A Market Economy?

This Note analyzes China’s status as a nonmarket economy from the perspectives of both the World Trade Organization (WTO) and U.S. law. The Note begins by providing background information about nonmarket economies and how nonmarket economy status impacts international trade. The Note then discusses and analyzes the controversial topic of how to interpret certain provisions in China’s Protocol of Accession to the WTO. The analysis of China’s Protocol of Accession, from the perspectives of both a textual analysis and under WTO law, concludes that WTO members can treat China as a nonmarket economy, both currently and in the future, regardless of a sunset provision included in China’s Protocol of Accession. Finally, the Note reviews the U.S. statutory framework for nonmarket economy treatment of China under applicable U.S. law and concludes that the relevant factors do not present a finding of a market economy in China.
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Sean M. Topping, Defying Schengen Through Internal Border Controls: Acts of National Risk-taking or Violations of International Law at the Heart of Europe?

Despite recently celebrating its thirtieth anniversary, the Schengen Area—with its free movement of people across twenty-six European states— has drawn renewed notoriety and criticism following the Syrian refugee crisis. Despite beginning as ad hoc cooperation amongst states, the Schengen Protocol has become part of the foundation of the European Union and of what it means to be “European.” Following the massive influx of Syrian refugees into Europe in the fall of 2015, however, some states implemented temporary border checks along internal Schengen boundaries and past crises indicate a willingness to go further in years to come. While states could conceivably achieve internal consensus in order to erect permanent or semi-permanent controls as a matter of politics, border controls would have negative political, economic, and social consequences across borders. While states may defend advanced border controls as a necessity, such actions are ripe for legal challenge from other states or individuals whose rights would be infringed. Following “Brexit” and other states threatening withdrawal from the European Union—in part a response to fears of unchecked migration—Schengen’s fate remains uncertain but will undoubtedly remain a prominent feature of law and politics in the future.
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