(By PANAGIOTIS DELIMATSIS)

4 Observations and Tentative Proposals

Early after its genesis, the Appellate Body underscored that ‘WTO rules are reliable, comprehensible and enforceable. WTO rules are not so rigid or so inflexible as not to leave room for reasoned judgments in confronting the endless and ever-changing ebb and flow of real facts in real cases in the real world.’ Can such a pragmatic approach square with the current rigid stance towards non-WTO rules as describe above? It appears that the issue is far from settled, particularly due to the ever-increasing emergence of specialized regimes which are ultimately aimed to satisfy pressing contemporary societal needs such as combating climate change, protecting biodiversity or shielding indigenous communities and their traditional cultural expressions. As interdependent regimes will increasingly realize the cul-de-sac that a solitary stance leads to, they will be looking for reconciling strategies, encouraged by their Members. Because, even if in some instances, fragmentation can create an advantage for a given state, such a situation can also turn out to the detriment of that state in another instance. For the purposes of this article, there are few reminders and avenues which, if taken into account, can help to reconcile apparent inter-regime conflicts.

A. A Matter of Principle?

First, international law is built upon the principles of good faith and pacta sunt servanda and the presumption that states, when they conclude agreements, promise to behave in a specific manner. It follows that it is for the states to keep in mind the obligations that they have undertaken in other fora and thus avoid agreements which would lead to breaching their obligations deriving from other agreements. Arguably, Article 3:10 DSU equally incorporates this obligation for WTO Members. This implies that real conflicts should not arise and international obligations of a state can be interpreted in a manner that accommodates all obligations of a given state in a harmonious manner. In addition, under Article 3:7 DSU, Members are called upon to consider the possible success of their claim before initiating a case. Thus, whereas there is nothing in the DSU or the WTO law in general that limits Members’ rights to bring an action before the WTO judiciary, Members do have a moral obligation168 to avoid forum shopping or manipulation of the several possibilities for adjudication that their participation in diverse regimes gives them.

B. The Misinterpretation and the Limits of the VCLT

Second, the VCLT, the utmost interpretive tool of international treaties, does not offer adequate solutions which can allow for defragmentation of international trade regulation. Notably, the relevant principles of lex specialis or lex posterior no longer provide handy solutions to contemporary problems. Regarding lex specialis, in an international legal system which increasingly serves functionalist needs of contemporary society, identifying the prevailing lex specialis becomes a daunting task. As to lex posterior, it is not always feasible to substantiate a claim that later commitments are to prevail over earlier ones, notably in the absence of identity of parties.171 Crucially, it appears that the DSU meant to bring in the WTO realm only ‘customary rules of interpretation of public international law’. Its erroneous application can also result in peculiar legal constructions which may prove harmful for inter-state and inter-regime relations overall.

The EC – Biotech Panel Report, in which the Panel refused to look into international environmental agreements (in casu, the Cartagena Biosafety Protocol) with broad participation because not all WTO Members where parties to them, is an emblematic case to the point. In this case, the Panel was interpreting Article 31:3(c) VCLT which requires that, when interpreting a treaty, account must be taken of ‘any relevant rules of international law applicable in the relations between the parties’. According to the Panel, by ‘parties’ the VCLT meant ‘parties to the Treaty’, thus the WTO Treaty, and not ‘parties to the dispute’. In addition, the Cartagena Protocol was not even applicable between all the parties to the dispute. Since the United States was not a party to the Cartagena Biosafety Protocol, the latter cannot be regarded as relevant for the purposes of the WTO dispute settlement proceedings. This result may be applauded for it will likely result in a coherent application of the WTO law across the WTO membership, but it is doubtful whether it produces equally coherent and indeed desirable results from an international law viewpoint. After all, in how many international treaties, all 153 WTO Members have consented to? By the same token, it gives an erroneous signal, i.e. that WTO law is hardly receptive to general public international law. At the very least, it is submitted that applying the Protocol to the parties to the dispute who were also parties to the Protocol (viz. EU, Argentina and Canada) would allow for more coherence in interpreting public international law as a whole and state obligations as far as these specific countries are concerned. Such an interpretation would also be consistent with Article 30:4 VCLT. It is submitted that coherence in interpreting the obligations of a state at the international arena vis-à-vis other states is more important than guaranteeing the internal coherence of a given international regime. Settling a dispute within a given system only without taking into account the broader picture reflects an outwardly short-sighted judicial thinking.

Arguably, the holistic approach that is warranted in treaty interpretation, as suggested by the Appellate Body, should also be extended to include the legal instruments available for interpretation beyond the WTO. It is unclear why the Protocol should not be regarded as applicable law by the WTO adjudicating bodies so that the WTO obligations of these parties are determined in the light of the obligations that they subsequently undertook in other fora. This is all the more so, as international obligations essentially are of a bilateral nature. A contrary approach would also entail disrespect of state will, whatever inherent contradiction such will may entail. A different approach seems to lead to an undesirable delinking of the WTO from other branches of international law and appears to allow to specific countries to avoid their obligations depending on the forum chosen, thereby increasing the chances for extensive forum shopping. In addition, the fact that a given non-WTO law treaty is not legally binding to all WTO Members is not dispositive of the otherwise international acceptance of such a treaty. More strikingly, the United States has not ratified the VCLT, but obviously tacitly accepts the universality of its treaty interpretation rules.

The view supported here appears to be buttressed by the relevant Appellate Body case-law. In EC – Chicken Cuts, as noted earlier, the Appellate Body looked at the Harmonized System to determine whether it constituted context within the meaning of Article 31:2 VCLT. In an ttempt to be more precise than the Panel, it concluded that the Harmonized System comes under Article 31:2(a). This provision stipulates that it can be considered as context ‘any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty’ (emphasis added). However, not all WTO Members are parties to the Harmonized System. As the Panel noted, only 102 WTO Members are signatories to the HS Convention and the vast majority (but importantly, not all) of Members, while not signatories, apply the Harmonized System. Furthermore, and quite contrary to the argumentation of the EC – Biotech Panel, in order to validate its decision to consider the Harmonized System as context under 31:2(a), the Appellate Body examines whether the parties to the dispute at hand are signatories of the Harmonized System. The fact that not all WTO Members are parties to the HS Convention is obviously irrelevant.

The Appellate Body hinted at the correctness of this interpretation in EC – Computer Equipment as well. In its ruling, the Appellate Body appears to be ‘puzzled’ by the fact that the Panel did not use the Harmonized System to interpret the EC Schedule, although both the EC and the US, that is, the parties to the dispute, had become parties to the Harmonized System before the conclusion of the Uruguay Round.

In the alternative, one could also argue for a harmonious interpretation of regimes that aspire to meet similar goals such as the one of sustainable development, which assembles broad support among states. Indeed, why foreclose from the WTO those regimes that substantially are aimed in the pursuit of common goals? In US – Shrimp, the Appellate Body highlighted the importance of the WTO Preamble by suggesting that the objectives of the WTO as depicted therein should ‘add colour, texture and shading’ to the interpretation of the WTO agreements. Opening the WTO to other regimes pursuing similar objectives would give effect to this ruling.

C. Proliferation of Courts: Too much ado about nothing?

Third, whilst the ever-increasing judicialisation of international relations through the establishment of several tribunals is regarded as inducing fragmentation of international law, it is submitted that the proliferation of courts may actually have the opposite effect: Indeed, the fact that states increasingly have recourse to peaceful means to resolve their disputes should be rather regarded as a positive evolution in international relations. Judicial control of state acts, coupled with the creation of loose communication networks among judicial bodies, can at least achieve the important objective of avoiding armed conflicts in international relations.For our study on international trade regulation the same goes for inter-regional law and the courts that they establish.

5 Concluding Remarks

The international legal system is probably experiencing the most pluralistic phase in its history. Over three hundred international organizations and forty institutionalized adjudicating bodies at regional and global level are currently active, covering virtually every aspect of human endeavour.The growing number of legal systems strengthens rule of law at the international level and shapes a more egalitarian and pluralistic vista of international law. In addition, in some trade areas, fragmentation may entail inherently coherent solutions that ultimately lead to more efficient regulation of these areas from an economic viewpoint. For instance, in services, allocation of regulatory authority at the regional level may prove to generate superior outcomes when compared to those produced to date at the WTO level. Rather than condemning fragmentation without further consideration, careful analysis and interdisciplinary studies on the relation of international trade law with other issue-areas from a positive and normative viewpoint are necessary.

Nevertheless, this article also aspired to identify instances of problematic fragmentation in which a typical dialogue des sourds occurs. Such concerns can be remedied through a more effective co-operation and co-ordination among regimes even if they simultaneously compete for regulatory authority. Strengthened co-operation of leading players in the global arena is equally of paramount importance and can achieve more already through low-profile strategies which also give the floor to voices from the private sector and civil society. For instance, an interesting example is the agreement within the Transatlantic Economic Council (TEC) on the need to co-ordinate future technical regulations with a view to preventing trade barriers from developing. This approach is based on what is termed as ‘upstream regulatory cooperation’. This concept is based on the recognition that, to prevent any unnecessary dispute, regulatory endeavours should be co-ordinated at the time that the legislation is prepared so that divergent approaches can be taken into account before the legislation is enacted. However, inter-regime cooperation is even more important. Ideally, communication networks establishing notice and comment procedures and progressive integration of decision-making may be beneficial to avoid conflicts.

(Edited by: China West Lawyer)