- Subramanya V. Mysore
A CASE FOR GLOBAL COOPERATION
In the times of uncertainty, global partnership can be an avatar of stability
Post World War II countries began cooperating for political and economic reasons via trade agreements, dialogues and international institutions. This yielded in reducing poverty by 40% and moderate rising global population by 10% just in the periods between 1990 and 2015. The answer to this achievement was global integration of supply chains and merit-based competition facilitated by global norms. As part of U.N’s seventy fifth anniversary in 2020, under its aegis, a virtual survey was conducted. Primary motive abaft the survey was to solicit people’s opinions on global concerns.
Leading response amongst survey participants, in contrast to growing inwardness or protectionism witnessed in geo-politics was nine out of ten participants believed international joint efforts were crucial to tackle contemporary global threats. With three quarters opinionating U.N. should lead global efforts. Another area of unanimity was the need for U.N. to foster global cooperation. In support, U.N. concluded hundreds of rounds of deliberations ranging from Security Council reform, engaging youth in global politics to renewable energy and promised to widen its agendas in its seventy fifth anniversary declaration.
Virtually, all survey participants concurred that Covid-19 pandemic has exacerbated already existing wounds such as fragmentation of supply chains and created a tumultuous global political system making international relations appear debilitated. On the flip side, pandemic has opened long closed doors under the umbrella of us as one ‘humanity’ fighting for our existence. This refurbishment in global outlook should be nurtured to harness decades old contestations towards resolution.
To combat the pandemic, G20 members cumulatively are investing $5 trillion and are cooperating to “maximize the benefit of stimulus responses to their own citizens and businesses”. If country specific decisions are given precedence over global necessities, it would cause disruption in almost 50% of global value chains. An outstanding evidence of global cooperation working its magic is of recovery made post 2008 Financial Crisis. Shortly after the crisis, global financial institutions reduced interest rates. G20 members met to attest they are “determined to enhance… cooperation and work together to restore global growth”. Essence of 2008 crisis is countries mutually identified their stakes in each other’s interests and recognized it is advantageous to shoulder each other’s responsibility. On similar lines, to improve declined global output of 4.9% in 2020, international collaboration and interplay is the remedy.
Controlled Trade Contests
Quite recently, palm oil and rubber glove exports were blocked against entry to E.U and U.S. shores respectively, on the pretext of poor labor standards in exporting countries. Labor standards are now excessively devised as a non-tariff barrier. The general theme behind this observation is, fundamentalist countries dictating terms of trade per their free judgment. It is precisely to balance this power dynamics, World Trade Organization (the WTO) and the U.N. propounded global trade norms based on fairness and bipartisanship with an objective of global association.
A polarizing case of E.U. Seal Ban was adjudged ‘justified’ but flawed in execution. In this case, E.U. imposed a ban on seal trade into its common market with exceptions of seal hunting by indigenous communities such as the Inuits, seal products imported by travellers in personal capacity and seal imports for marine resource management purposes. Shortly after implementation, Canada and Norway challenged it being discriminatory before the WTO Panel. WTO considered seals to be emotive and “sentient beings” based on ‘public moral’ and ‘protection of animal’ grounds as enshrined in Article XX General Exceptions of General Agreement on Trade and Tariff (the GATT), rejected Canada’s and Norway’s contention to permit commercial hunting and approved E.U. regulation.
On appeal to WTO Appellate Body, favoritism shown by E.U. to Greenland which is part of Denmark an E.U. member over foreign competition was flagged. WTO left presence of technical barriers per Annex 1 of WTO Agreement on Technical Barriers to Trade open ended but reiterated Panel’s view of E.U’s regulation not offering “immediately and unconditionally” same market access to Norway and Canada in violation of GATT Art. I. WTO found E.U. protecting indigenous communities’ seal hunting in Greenland as ‘necessary’ but negated E.U’s attempts to unilaterally safeguarding its industry against foreign competition by masking it as animal welfare inconsistent to Art. XX ‘chapeau’ exception. E.U. attempted to place animal welfare with mere “instrumental value” not “intrinsic value”, the former treats animal welfare as a means to achieve the end of a zoophilic image and domestic industry protection but the latter places animal welfare as the end goal.
The U.S. - E.U. Beef Hormone Dispute is another peculiar case, in U.S. for over 30 years, farmers have used both natural and artificial hormones to accelerate their poultry growth. E.U. noticing rampant use of artificial hormones such as diethylstilbestrol which was found to be carcinogenic and capable of causing birth defects decided to ban U.S. beef into its region. The ban was an aftereffect of continent wide uproar against using hormones injected meat. U.S. beef industry became a casualty of almost $140 million. U.S. disputed the ban in WTO and managed to get a favorable decision in preliminary and appeal stages.
WTO reasoned its judgment based on Agreement on the Application of Sanitary and Phytosanitary Measures, this agreement tries to reexamine national safety norms on meat and plant exports with international food safety mechanism. WTO held E.U. had failed in conducting scientific risk analysis per Art. 5, the ban could not be justified with sufficient technical corroborations and international principles per Art. 3.
Overall, it was declared unilateral and trade restraining. This dispute reminds us, countries can go the extra mile to safeguard their domestic voices by dismissing international norms. Yet, global institutions police countries to follow on their commitments and enable coalition.
In 2003 U.S. – Antigua Online Gambling Dispute, Antigua a tiny Caribbean nation disputed U.S.’s decision to prohibit remote internet based gambling. Internet gambling was a major economic source for Antigua second to tourism. Antigua contended U.S.’s actions as “barriers to trade” in “cross-border gambling services” and in contradiction to WTO General Agreement on Trade in Services (the GATS) Articles XIV and XVI which bars domestic legislations from unnecessarily restricting trade of services and mandates objectivity in imposing service obligations. With Antiguan economy hanging on online gambling, any move to hamper it would turn its economy into tatters. Antiguan defense of treating U.S.’s ban as against its public morals under Art. XX of GATS was upheld by WTO.
Alternatively, in U.S. - China Audiovisual Dispute, WTO found Chinese attempts to block U.S. information and entertainment materials into its territory as not totally in compliance with its Accession Protocol to WTO GATS. WTO renounced Chinese interpretation of “public moral” exception while confirming that China denied market entry and applied its regulations unfairly against Art. XVI and Art. XVII. A generic connection among trade disputes is application of “public moral” exception under Art. XX.
Countries often use this tool relying on national notions of fairness, cultural preferences and sometimes political undertones to defend their domestic aspirations and to undercut global trade obligations. WTO has succeeded in justly interpreting “public morals” in deserving settings.
Agreement on Agriculture
The 1995 Uruguay round of negotiations resulted in the Agreement on Agriculture. This agreement entered into force with an objective of prescribing member countries to limit their domestic support, widen market access and control export subsidies on agriculture. On domestic support front, countries are mandated to reduce their support based on 1986-88 limits to a set restraint of 5% and 10% for developed and developing countries respectively.
To segregate highly distortive support from less distortive ones, WTO categorized domestic support as Amber Box containing measures with high restraints on all products, Blue Box containing limits on few measures linked to one product and Green Box also called as “Peace” clause doesn’t contain limits or actions on measures as they are treated to be least distortive. For example: a government scheme of crop insurance or MNREGA.
For developing countries special treatment is granted under the clause, such as exemption from application of this agreement for 10 years and for purposes of food security, minimum support prices and poverty reduction. To improve market access, countries are mandated to reduce tariffs such as quotes or minimum import prices or authoritative licensing etc. by 24% (for developing countries) within 10 years of date of signing. Exception from special treatment is allowed for import surges beyond a curb or low import prices. Export subsidies too shall be reduced by 24% and 36% for developing countries and developed countries respectively from 1986-1990 levels.
WTO has considerably contributed in attaining global fair trade, ensuring equitable grain distribution and promoting clean ways of farming via consensus in agriculture market. However, advanced economies are equal benefactors of this agreement. Aside from gaining access to economical markets they curtailed developing countries by restricting disbursements meant for minimum support prices or subsidies on various agricultural goods through a fixed external price or international price based on 1986 levels. Similarly, India’s attempt to boost sugarcane farmers income was flagged by Australia, Brazil, Guatemala as trade distortive, awaiting final order from WTO’s Panel due post 1st half of 2021.
Environment is another contentious issue, Venezuela and Brazil questioned U.S’s action of imposing additional “characteristics” to imported gasoline. The same conditionality was found not applicable on domestically sourced gasoline. Venezuela and Brazil contended this action as antithetical to Art. III of GATT. Principle in question was “national treatment” principle which restricts discriminative treatment of imported goods vis-à-vis domestic goods. U.S. argued that its actions fell under exceptional category of “health and environment” measures made to protect exhaustible resources and comply with domestic laws under Art. XX. WTO sidelined U.S’s contention and ruled that the conditionality is disguised to impose “unjustifiable” discrimination. This instances the contesting voyage towards environment cooperation by countries across the world.
Despite that, countries throughout political spectrum have made strides in implementing instruments such as 1987 Montreal Protocol, focused on reducing hydrofluorocarbon content used in daily electronics, considered an accelerator of ozone depletion. 1997 UNFCCC’s Kyoto Protocol set curbs on greenhouse gas emissions from countries comparing 1990 levels. In 2013, International Civil Aviation Organization committed to attain carbon neutrality from 2020 with suitable technological and fuel modifications. 2015 Paris Agreement aims to limit global temperature rise below two degree centigrade comparing pre-industrial levels with nationally determined goals through technological and financial commitments.
International Solar Alliance was founded to harness solar capabilities in sunny countries to retreat from fossil fuel based power generation. Global Environment Facility is a 183 member partnership of various environment related conventions established with an objective to steer countries towards their climate pledges in a sea of agreements. The aforesaid initiatives have evidenced a strong multilateral collaboration of countries to combat humanity’s mightiest concern, climate change.
In the preceding context, global cooperation is deemed a predominant savior, without international norms and global institutional intervention, discriminatory behavior of countries, haphazard execution of policies and unfair competition would have uncontrollably flourished. This is an opportune time for moving away from self-sufficiency and to shift towards collective growth by forging trust in international relations and honoring differing viewpoints. In a multi-polar world, international wellbeing takes shape domestically. Hence, countries need to strive towards achieving quality health, education and jobs by eliminating plagues of inefficiency and corruption. To counter ongoing heath crisis, climate catastrophes, rise of AI systems, widening bigotry, daunting inequity and grave cyber threats, all of us need to agree that “globalization in particular is a tide that is impossible for any ruler to order back”.[i]
 Wto.org. 2021. WTO | Dispute Settlement - The Disputes - DS401. [online] Available at: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds401_e.htm [Accessed 20 January 2021] [i] Goodreads.com. 2021. A Quote From Enlightenment Now. [online] Available at: https://www.goodreads.com/quotes/9577697-globalization-in-particular-is-a-tide-that-is-impossible-for [Accessed 20 January 2021]
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