Unit 3 - Problems & Exercises

1. Harkening back to the TBT versus SPS Agreement issue for GMO goods, such a GMO regulatory coverage dispute is not just the concern of the EU and the United States.  So try to work the following problem on a preliminary basis under the SPS versus TBT Agreements.  One of Indonesia’s major exports is crude palm oil (CPO) that may be employed to make cooking oil, soap, etc.  How do the Indonesians decide whether they can only export CPO from “heritage” oil palm trees, as opposed to planting newly developed and more productive CPO trees created with GMO technology?  You might answer that the Indonesians could just rely on traditional plant modification techniques (hybridization) to develop more productive oil palm plants, but what about the idea that climate in specific growing areas (e.g., incidence of drought or heat levels) may be changing faster than traditionally was the case (the climate change issue).  Do the Indonesians simply grow both heritage and GMO oil palm trees, exporting separately heritage CPO to Europe and GMO CPO to the United States?

Now, think about the position of a multinational food company like formerly Nabisco, now Mondelez, as maker of Oreo cookies (sold worldwide), how do they as major users of CPO decide whether to use heritage versus GMO CPO as industrial bakers of cookies?  After working the problem preliminarily, reward yourself with an oreo cookie (final good), being careful to also read the oreo cookie package label to see what it says about oreo cookie ingredients (intermediate goods).  On the whole, during the course you might accustom yourself to doing odd things like reading package labels for regulatory content, and country of origin information.  Did the oreo package label say where the canola or palm oil baked into your oreo cookie came from?  And do you think we produce CPO in the United States?  Maybe Australian students could find some oil palm in Queensland, but there are no commercial oil palm groves in the United States.

Consider that Mondelez buys millions of gallons/hectolitres of CPO annually, how does its purchasing power as major user affect CPO exporters like Indonesia in terms of growing heritage versus GMO oil palm trees?  (Hint, we shall look at an analogous question later more in conjunction with major users of CPO specifying that “sustainably” produced CPO, meaning harvested from plantations not cleared the traditional way by simply burning forests.)  What does it mean when private concerns like Mondelez demand products be produced in a certain way, is that the same thing as a national government food safety regulation requiring that products be produced a certain way?  And what is the “product” for regulatory purposes, CPO as such, “heritage” versus “GMO” CPO, refined cooking oil, or what?  What does this tell you generally about the GATT/GATS’ coverage if applicable product standards are promulgated by a government, versus a private industry group, or NGO?

2. Please assume that investor-state arbitration has been eliminated under a US treaty applicable to a corporate client's investment dispute (think USMCA and most investments in Mexico), or that your private sector client (a multinational corporation) has an interest in the resolution of a particular issue in state to state WTO dispute resolution.  In a practical sense, how do you proceed to secure diplomatic protection for your client in the investment dispute, or convince a state to pursue the idea or interpretation advantageous to your client?  You are looking effectively at a lobbying problem (dealing perhaps with the State Department, Treasury Department, Commerce Department, US Trade Representative's Office, etc.), but how in practical terms do you proceed to assert/pursue your client's position in actually securing diplomatic protection?