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Trump ‘trumps’ the WTO

Javier D. Spencer, Guest Contributor 

Javier

THE WTO

The 1995 organization has done considerably well to date as an arbiter of international trade. The organization was created as a response to the economic situation in the 1930’s that resulted in global tensions. Its predecessor, the General Agreement on Tariffs and Trade (GATT), was ostensibly limited in scope and so, the consensual demand was for an inclusive and comprehensive institution to govern and promote international trade.

Achieving inclusive and comprehensive trade was daunting; nevertheless, the organization has attained the aforementioned buzzwords and continues along this trajectory. For instance, the WTO started with only 123 signatories under the Marrakesh Agreement in 1994 and today has over 160 members, with pending ascensions. Additionally, it is remarkable to note that the WTO agreements are comprehensive. They cover trade in goods, services, agriculture, sanitary and phytosanitary measures, intellectual property, rules of origin, subsidies, dispute settlement, and many more.

The WTO rests on its founding principles of non-discrimination, reciprocity, transparency, safety values, and binding and enforceable commitments such as the tariffs commitments in order to liberalize and promulgate free trade as a global public good. With these at its core, it is fair to say that the organization has lived up to its core function and objective.

Having regard to the organization’s core functions and objectives, governing global trade is no easy feat, especially taking into consideration competing political and economic interests among WTO member . The organization is a rules-based organization and these rules are agreed upon by consensus of member states. In this regard, the organization’s Dispute Settlement system remains a feather in the cap and its prized arm. The Dispute Settlement Body (DSB) has provided stability to the global economy by ensuring that agreed rules are enforced. Since its existence, the DSB has successfully deliberated on many cases that have maintained the integrity of the WTO rules.

Despite its successes, the future of the WTO remains vulnerable. At present, it is on the receiving end of dire threats from one of its founding members – the United States (US). Interestingly, the US led the global effort to establish the machinery to manage global trade. However, the present President of the United States (POTUS) lashes the organization as the worse deal for the US. POTUS’ actions to date are alarming – from delaying the appointment of members to the WTO Appellate body to dusting off Section 301 of the Trade Act to a brewing trade war with China and other countries to the burial of the NAFTA to public statements of leaving the WTO and much more. We should be worried about the future of the WTO.

TRUMP

The WTO is lauded by many countries as a fair and just organization that seeks to level the playing field and as much as possible promulgate all-inclusivity. However, not all world leaders share these sentiments. One example is the President of the United States, Donald Trump. Trump was elected as the 45th President of the United States and has been in office since January 2017. He triumphed over his opponent with his patented and infamous campaign slogan, “Make American Great Again”, a slogan that is purported to usher in better economic times for the United States of America. It was envisioned to focus on military operations and to focus on implementing mechanisms to fillip the job market and ailing industries in the US. The implication of this, of course, is that Trump’s actions would focus on US’ external trade policy. However, at what cost is Trump willing to “Make America Great Again?” Does he mean to make America great again by ruffling the feathers of a peaceful, collaborative, rules-based multilateral trading system?

It is without a doubt that Trump has very little faith in multilateral organizations. To date, the POTUS has adopted many controversial positions in global affairs, with harsh jabs towards the WTO. He has aired that the WTO does not serve the interest of the US and as such, the organization is biased and unfair to the country. He has further iterated that the WTO and the EU are collaborating against the US and as a result, transactions by these organizations are very ‘bad’ for the United States. These sentiments all lead to a threat to withdraw the US from the organization – much like the US withdrawal from the UN Human Rights body. The threats and dire warning aimed at the multilateral organization from the POTUS show isolationism, protectionism, nationalism, and I even dare say reverse globalization.

The stance on global trade, in particular, and actions that are taken show that POTUS’  external trade policy remains a mystery. One thing is for certain, he strives to deliver on his campaign promise of remedying the trade [im] balances that the US has with other countries, in an effort to “Make America Great Again”. The achievement of this infamous slogan has led to a trade war with China, sanctions against Turkey, a failed trilateral negotiation of NAFTA and other trade turbulences – with surely more to follow.

In early July, in a claim to fix the unfairness in trade, the US imposed 25% tariffs on $34 billion worth of Chinese goods. This then extended to steel and aluminium imports from Canada and the European Union. (The move to extend the imposed tariffs to the other countries could be looked at from the lens of ensuring that Chinese firms do not engage in deflective trade strategies by establishing firms in these territories and export under the guise of these territories.) As the US imposed these tariffs on Chinese goods, China returned the favour by imposing tariffs on US goods and as such, a tit-for-tat trade war ensued. For Trump, he deemed that the imposition of tariffs was necessary and served as “national security” interest of the United States. This exemption clause is enshrined in the 1994 GATT Article XXI of the WTO agreement and is certainly one loophole of which the POTUS will take full advantage.

The example of the US-China brewing trade war definitely puts the global rules-based system in peril. It brings into question the authority or jurisdiction of the WTO to advise the US of the legitimacy of “essential” or national security claims. However, on the other hand, supporting Trump will legitimize a major loophole in the global trade rules. At this crossroads, the WTO faces an uphill battle with a world leader’s determination to dismantle decades of the global trade order.

The POTUS’ actions to weaken the organization goes beyond Section 301 of the Trade Act of 1974, which was the US domestic legislation used to spur the trade war. In fact, there is a draft a bill that the POTUS has advanced that would have dire consequences for the WTO and the global trading system. The Fair and Reciprocal Tariff Act (FART Act) is de facto a mechanism for the POTUS to completely disregard the WTO rules. In other words, the Act confers rights on the POTUS to adjust tariffs rates with countries outside of the WTO jurisdiction, without much red tape and authorization of Congress.

 WHAT WILL HAPPEN?

With all that is happening now in the global trade environment, the brewing question is what would happen if the WTO were dismantled by the US. As a global hegemon, the US’ exit of the WTO will certainly cause a domino effect. Other countries will follow and move to impose tariffs to their absolute advantage – making the rules-based organization and its decades of work useless.

POTUS certainly has no faith in the multilateral trading system and is reshaping the US’ external trade policy by striving for bilateral trade agreements with countries. There is nothing inherently wrong with negotiating bilateral agreements with third-party states. In fact, there are provisions made within the WTO rules-based system that enables countries to create regional trade agreements. However, it would seem that POTUS’ aim is to completely ignore the rules and create his own rules. Rules that would only advance the economic interest of the US, which may not maintain the integrity and ethos of free and fair global trade. This form of trade policy is one where we will see that the US will use economic pressure to its whims and fancy.

Many cases have proved the WTO’s worth in regulating global trade so that there is an equal opportunity available to all member states. Developing countries and countries of the Global South should make it a priority to save the WTO. In particular, the Caribbean Small Vulnerable Economies (SVEs) should focus on the future of the WTO against the backdrop of POTUS’ withdrawal threat. The US remains the Caribbean’s largest trading partner for both imports and exports.  So, what would a US withdrawal mean for these Member States? An appropriate question considering US-Antigua Gambling Case. Antigua is yet to be compensated and the possibility of the US complying with the WTO’s ruling is unpromising. With the US’ pronounced economic influence on the region, its withdrawal would further subject the Caribbean SVE’s to the US “beggar-thy-neighbour” trade policy.

It would be unfortunate for all if the actions of one President collapse a just and fair trading system.

Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.

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Global Governance: Why isn’t it working and what can be done?

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Javier D. Spencer

By Javier D. Spencer, Guest Contributor

At an exponential rate, the world is convulsing into a single space, which heightens the interconnectivity and interdependence of countries. As a result, it is evident that issues such as climate change, security, human rights among others, instantaneously alter global relations. It can be scary when you think about it, especially since matters arising are becoming more and more complex.

Our human response to address the complex issues at a global level is to increase the robustness of global governance through multilateralism. We could say that for almost every global issue (sometimes overlapping), there may be at least two or three global institutions created to address that one issue. This, evidently, creates a new global society that is constructed to bring order, reliability, predictability and transparency.

The New Global society eliminates a central authority and places emphasis on collaboration among states which will seek to encourage common practices and goals. However, as there is growing interdependence for economies to integrate into the global economy, we observe that global governance has acquiesced to the limitations and challenges of multilateralism. It is designed to promote international peace, stability and co-operation; but unfortunately, it does not work, as it should. For this reason, there are challenges arising in the dynamic global economy that undermines the effective institutional outcomes of global governance, including democratic deficits and accountability; representation and power; and compliance.

Democratic Deficits & Accountability

Democratic deficits are prevalent in global governance when nothing holds the institutions and regimes accountable to a democratic electorate. There is a divergence between ‘what is’ and ‘what ought to be’ in respect of trust by the masses in the governance regimes and institutions. For example, we have seen a proliferation of trade agreements, like the now defunct negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU, and the Trans-Pacific Partnership (TPP) (which was replaced by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the US withdrew from the TPP), that were being negotiated in secrecy. Secrecy violates the very basic concept of democracy. Citizens have the fundamental right to be aware and to be able to air their concerns on policies and legislation. The absence of this right results in the deficit as the perception of governance goes beyond the influence of the citizenry.

There is also a growing concern about lack of accountability at the global governance level.  Accountability includes transparency, consultation, evaluation, and correction. Transparency means that there is visibility present; eliminating decision-making done in secrecy. Additionally, consultation purports an explanation of intentions by one party, and flexibility to adjust plans that will negatively affect another party. Consultation then ushers in evaluation where there is an independent monitoring and assessment of activities; and in the final analysis, there is correction, which means that there are provisions for redress or reform.

Representation and Power

An overwhelming question on the issue of representation is, “whose interest do these organizations represent?”   Global Governance regimes were created by and for the most influential states that were too important to fail. Therefore, the goals and objectives are partially beneficial to the major actors in global system. For example, voting at the International Monetary Fund (IMF) remains weighted, which means that one state is does not equal to one vote. How is finance for economic development expected to be achieved? It automatically disenfranchises the global south in crucial development decisions.

Another case in point is the daunting process of ensuring that developing countries, more specifically Least Developed Countries, are able to participate in international trade at the multilateral level. Although the Nairobi Decision on Rules of Origin and Export competition enables greater LDC participation, facilitation remains elusive. Interestingly, the Nairobi round is a successor to the Doha Round. The Doha Round, which was coined a being ‘development’ oriented failed miserably after many years of negotiations. The main aim of the Doha Round was to further liberalize trade, invest more in development, and address complex global issues. However, the rounds’ failure illumes the shortcomings of global governance regimes, especially for developing and least developed countries.

There are, however, proposed problems of increased representation at the global governance level. There will be an increased inefficiency, as more participants in the decision-making process could hinder coming to a single decision, due to the diversity of interests and goals. However, inadequate representation results in skewed authority and power within the governance regime. Ultimate power is given to whom it favourably represents and vice versa, representation reflects to the economies with economic dominance and power. It becomes a case where “the strong will do what they can and the weak must accept what they must”.

Compliance

If all states are sovereign, who ensures that states comply with these rules to yield an ideal outcome in the governance of the international system?   The enforcement problem arises because that is no authoritative international government since states value their autonomy. For instance, the United States has iterated its right to ignore any rulings from the WTO’s Dispute Settlement Body. Therefore, to what extent are states willing to sacrifice their political autonomy for a well-functioning international economy? None.

So, what’s next? Reform? How?

In order to align with the original mandate of international stability, peace, and cooperation, issues of democratic deficits and accountability; representation and power; and compliance must be addressed through speedy reform. The start of attaining reform is by identifying an effective global mechanism that provides strategic guidance. Global issues today are closely knitted into a web. Therefore, strategic guidance must view the international system as a whole.

At present, there are sufficient agencies created to tackle emanating issues. As such, there is no need to recreate the global governance regime. Instead, the existing structure needs to be appropriately matched to issues, in order to strengthen its efficacy.

This will certainly result in a change in the global agenda. An agenda that is inclusive, modern, flexible, agile, and resilient.  This envisioned modern-day agenda will mitigate the democratic deficit and increase accountability, linking leadership, vision and institution. An inclusive agenda fosters participation, which balances representation and power. Reform needs to happen faster.

Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.

Written History: The Classic Tale of the CCJ and Caribbean Jurisprudence

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Javier Spencer

The 19th meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) agreed that a Caribbean court of appeal should be established to replace the Judicial Committee of the Privy Council (JCPC) – commonly known as The Privy Council- as the final appellate court for the Region. The overall goal of this decision was to increase access to justice that is applicable and unique to the socio-cultural environment of the People of the Region. In many instances, judgements passed down from the Privy Council have not been contextualized in the Caribbean reality. To this end, there has been an evident need for a court of appeal that considers the intricacies of the Region’s culture and reality. This article will briefly retell the tale of how the Court has improved the Region’s jurisprudence on decided cases in its appellate jurisdiction.

Purpose and Structure

The Caribbean Court of Justice (CCJ) has been described, by many, as a unique experiment with two courts in one. But its existence is one that is critical for bringing about independence, integration, and development for an indigenous jurisprudence in the region. Having regard to the aim of strengthening the Region’s economic integration, the Court’s remit is to hear and determine cases in its original and appellate jurisdictions. In its Original Jurisdiction, the CCJ interprets and applies the Revised Treaty of Chaguaramas (RTC) with compulsory and exclusive jurisdiction. On the other hand, its Appellate Jurisdiction hears appeals as the court of last resort in both civil and criminal matters. Since its inception in 2005, the Court has heard and determined complex cases which have contributed to the shaping and moulding of a Caribbean jurisprudence.

The Cases and Legal Principles

The Law of Human Rights

In 2006, the CCJ had the privilege of shaping the Region’s understanding of the law of human rights and further shaped its jurisprudence in this respect. For example, the exercise of the prerogative of mercy was brought to the fore in the case of Attorney General v. Joseph, [2006] CCJ 1 (AJ). The prerogative of Mercy was introduced in the Region when the Privy Council ruled against an execution delay in excess of 5 years. In such cases, all death sentences under this rule should be commuted to only life imprisonment. The Court’s judgement in the Joseph and Boyce refuted this principle upheld by the Privy Council, especially where the death sentence was mandatory in Barbados.

The prominent concern was whether the state (Barbados) should await the decision from the Inter-American Commission on Human Rights. The Court had to closely analyse precedent set out by the Privy Council and having regard to due process, the condemned has right to await the decision of the International Tribunal. However, the discrepancy existed where International Law differed from Constitutional Law of Barbados, and the onus was on the Court to strike a balance between the rights stipulated by the international body to that of the national law of Barbados. In its deliberation, the Court opined that it was unacceptable for the state to wait indefinitely for the completion of a foreign process over which it had no control. The undue delay in this process did not consider an extension of the 5 year time limit or by excluding it in computing that period. At this turning point, the Court had to duly interpret and apply the doctrine of legitimate expectation. However, if the decision-making of the Inter-American Commission on Human Rights was in excess of 18 months, within a 5 year period, the state should not be required to wait beyond a reasonable time.

Standard of Proof & Admissibility of Evidence

Standard of Proof became another jurisprudential subject in effectively shaping the legal system in the Region. The admissibility of evidence was challenged on the basis that sample evidence could not be proven since it came from the accused. In this regard, the Court’s interpretation of the Evidence Act Statute of Barbados determined that there had to be stricter standard of proof relevant to the proceedings. By way of the Evidence Act, oral admission by the accused lacked authenticity and reliability as illuminated in the case of Grazette v The Queen, [2009] CCJ 2 (AJ). In its interpretation of the Evidence Act Statute of Barbados, the Court had to jostle with the effective application of the Act since it was modelled from the Australian Law Commission.

Land Law

Jurisprudence throughout the Caribbean continues to have international influence as evidenced in Guyana’s land law. The legislation comprised of a hybrid between Roman-Dutch Law and the English Common Law; and to this end, peculiar interpretation was needed in respect of adverse possession (change of ownership). Espoused in Toolsie Persaud Ltd. v. James Investments, [2008] CCJ 5 (AJ), the Court had to determine whether there could have been a change in ownership when the title documents were declared invalid. Additionally, determining specific performance involving the sale of land in Guyana was captured in Ramkishun ad item Sukhree v. Fung-Kee-Fung, [2010] CCJ 2 (AJ) where the owner agreed to sell the land to the purchaser and died before conveyance. The owner’s administrator transferred it to the owner’s heir instead of the purchaser. Under the principles of English Common Law, the transaction would have been granted but the purchaser would have acquired an equitable interest. Differently, using the principles of Roman-Dutch Law, the system on equitable interest would have granted the transaction. The Court’s amalgamation of the two legal systems had formulated the Law of Immovable in Guyana, refusing specific performance. In this instance, the CCJ has demonstrated its capacity to devise appropriate and effective solutions regarding the land law principle in Guyana (Byron, 2011).

Right to a Fair Trial

The Court continued along its trajectory to contribute to the development of the Region’s jurisprudence by establishing the meaning of fairness concerning the constitutional right to a fair trial as exhibited in Gibson v. Attorney General, [2010] CCJ 3 (AJ). After Gibson pleaded not guilty to charge brought against him, he sought after expert evidence which was costly. In this regard, the Court was faced with the decision as to whether Gibson should have access to expert facilities funded by the state. The inequality of arms was so serious that denying access to expert advice could adversely affect the fairness of the trail. Therefore, Gibson was granted access to expert facilities. This case solidified and set precedent in respect of legal rights in the Region.

Accountability and Good Governance

Can a State bring an action in tort for misfeasance in public office? Florencio Marin v. Attorney General of Belize, [2011] CCJ 9 (AJ) highlighted that two former ministers were alleged to have transferred land to a company owned by one of them for something of sufficient value in return (consideration). Remedies include dismissal from office, disciplinary actions, prosecution, and the imposition of legislation for a breach of trust and integrity.

Access to Justice

Along with the development of a sui generis jurisprudence for the Region, one of the main tenets of the Court is to significantly improve access to justice in order to promote social stability and economic development. For instance, appeals at the Court have been heard in forma pauperis so as to facilitate the Court’s use by ordinary citizens of Member States. Ross v. Sinclair, [2009] CCJ 11 (AJ) allowed two very underprivileged ladies from Guyana to bring civil appeals to be determined by the Court. In support of the main aim of ordinary citizens to derive the benefits from the Court, Bar Associations in the Region have had Attorneys provide pro bono services so that important matters could be ventilated for persons who could not afford to have their own legal representation (Byron, 2011).

Access to justice at the Court is enhanced through the use of technology. Lawyers can make submissions and receive judgments electronically. The Court, to date, has been hearing interlocutory matters via audio video which are available on the Court’s website, at a minimal cost. Having regard to the effective use of technology, the Court is saving the Region large sums of money by providing quality access to justice (Gibson, 2012).
The Modern Day Conversation/ Conclusion

To date, many CARICOM Member States are debating whether the Court should be the final Court of Appeal in the Region to replace the Privy Council. The modern day debate stems from grounded criticism of political intrusion in the Court’s decision-making process and sustainable financing of its operations. The argument of political intrusion came about in respect of the selection of Judges for the Court. Originally, it was the Heads of Government to directly appoint Judges and in response, to mitigate the risk of political intrusion, the Regional Legal Services Commission (the Commission) was established in February 2001. The remit of the Commission is to appoint Judges, from the legal profession, through open applications received from throughout the Region. One possible downfall to this, however, is that the selection of the Judges for the Court is conducted by regional entities which are creatures of political influence. Therefore, is the Court truly insulated from political influence?

Out of the 15 Member States, Barbados, Belize, Dominica, and Guyana utilize the Court as the final court of appeal. Considerations to accede are being discussed in other Member States such as Antigua and Barbuda, St. Lucia, and Jamaica. However, to fully accept the Court as a replacement of the old colonial relic remains a daunting process and discourse continues throughout the Region. Some arguments in favour of the CCJ as the final court of appeal in the region are: 1) it is cost effective access to justice, 2) judgements will take into consideration the Caribbean reality, 3) it is a regional court that will implement specific rules and laws, which will augur well for good governance in the Region, 4) judgements on cases will be delivered faster, and 5) it will bode well for the Region as one that is independent and confident to determine its own fate.

This historic tale has proven the Court’s ability to replace the Privy Council. In this regard, there should not be any doubt lurking amongst our Member States about the Court’s rightful place as the final court of appeal. In closing, one should cogitate on this question asked by Dr. Kenny Anthony,

Why on earth should we compel the British to maintain the Privy Council, when the British have said to us time and time again to take your bundle and go?”

Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.