Simon Lester

The Problem of Subsidies as a Means of Protectionism: Lessons from the WTO EC — Aircraft Case

In this article, I examine the problem of subsidies in international trade. In this regard, I consider that a possible purpose of international regulation of subsidies is to fight protectionist subsidies, as opposed to subsidies used for other goals. With this purpose in mind, I then consider whether the SCM Agreement can be said to reflect this purpose. I also discuss whether the interpretations of the SCM Agreement in the EC — Aircraft dispute provide any insights on this issue. The dispute involved alleged subsidies to the aircraft maker Airbus by the European Union and certain member state governments, and has been one of the highest profile and most commercially significant disputes in the history of the WTO. The issues in the case were extensively argued by two of the leading WTO members, and thus its findings on these issues are particularly significant. Reviewing the EC — Aircraft Panel and Appellate Body findings on a number of specific legal issues, I conclude that a case can be made that the SCM Agreement and the EC — Aircraft dispute reflect an underlying purpose of the SCM Agreement of fighting protectionism.

Does safeguards need saving? : lessons from the Ukraine - Passenger Cars dispute

The Panel Report in Ukraine–Passenger Cars provides an opportunity to revisit an old debate over the role of safeguard measures in the WTO. With regard to the legal findings, the Panel followed the established jurisprudence in this area, and found a number of violations of the Safeguards Agreement. With regard to the economics, we delve more deeply into the economic and political background of the safeguards investigation. Ukraine was hit by the economic crisis shortly after its WTO accession that significantly liberalized import tariffs on passenger cars. Next, we offer a de novo look at the injury and causation issues in this case, and discuss the challenges of an industry reliant on offshored production that sees a safeguard as a mechanism to attract foreign direct investment (FDI) for production. We conclude with an assessment of the operation of the WTOs safeguards regime, along with some tentative suggestions for reform. Overall, our examination of the economic analysis by the investigating authority and the legal review by the WTO Panel raises questions about particular aspects of the domestic and WTO processes, but concludes that the system worked well in this case.

Addressing Regulatory Trade Barriers in Mega-Regional Trade Agreements

Mega-Regional trade agreements are generating a lot of discussion over the future shape and scope of international trade regimes. The Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP), and the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU break some new ground with old issues. In particular, regulatory trade barriers have come into focus as an area ripe for cooperation that is predicted to yield great benefits. In this chapter, we examine how these three mega-regionals approach this issue. First, we provide a conceptual framework for understanding regulatory trade barriers, separating them into three core categories: regulatory protectionism, regulatory divergence, and regulatory reform. Next, we examine how regulatory cooperation is envisioned across these mega-regionals, noting, inter alia, where they remain vague on obligations, and where they take innovative steps. Ultimately, the success of regulatory cooperation will depend on how these chapters are implemented in practice. Though they lay a promising groundwork, we remain cautious in predicting how broad an impact they will have.

Six Degrees of Integration: How Closely Will the TTIP Integrate the Transatlantic Market?

There are real differences in the varying conceptions of free trade. The TTIP brings these differences to the fore and makes addressing them unavoidable. The TTIP could push the boundaries of economic integration in a number ways, most prominently by trying to ‘smooth out’ regulatory differences between the United States and the European Union, and in the process moving us towards a single market. There are various ways this can be done—mutual recognition and harmonization are two of the main ones—but all involve reducing the variances between the regulation of different national markets. International economic governance involves a careful balancing of economic efficiency and national autonomy, and which conception of free trade to use has a real impact. If the proper balance is not achieved, groups from a wide range of political ideologies could be upset. The challenge for TTIP negotiators is to find that right balance.