Unit 7 - Problems & Exercises

Let us step beyond the digital economy to contemplate discussion and negotiation problems designed to be worked on in groups over the next several weeks.  By now you have some degree of understanding for basic principles and current issues in the multilateral WTO trading system, concerning which different groups of states may have very different views.  Never assume as lawyers that your (negotiating) counterparts see things the way you do, or that a sophisticated counterpart will respond to a jury speech.

So how would issues look from the language and negotiation perspective of lawyers, which is different from the conceptual level of simply debating a problem (the basic rule among transactional lawyers is that s/he who successfully negotiates and drafts final agreements wins, but a failure to reach agreement means everybody loses)?  Meanwhile, one of our administrative issues is that the Indonesians are in another country and university with their own COVID-19 schedule.  In a perfect world we would pair you up in student teams transpacific, but the issue is that we do not know when another university may suddenly go off-line depending upon local COVID-19 developments.  So we shall structure the exercise accordingly.

For now, you should be cognizant of the five “negotiation topics” to be allocated among five different groups:

Number 1 - Reform of the WTO dispute resolution system (it would appear that the Trump Administration favored abandoning the existing WTO system of binding arbitration via the dispute resolution body, in favor of negotiations so that I think they want to go back to something like system that existed 1947-94, meanwhile it is unclear what position the Biden Administration ultimately will take, because they seemingly have diverted to focusing on the IPEF, as opposed to the Trump Administration's active opposition to the multilateral trade system in seemingly throwing sand into its gears).

Number 2 - Taking up the "Singapore issues" again as a formal matter as WTO reform effort (meaning competition policy, government procurement and the like, which were raised in 1996, but were eventually excluded from the Doha round negotiations--  I think the competition policy part in particular is a way to address the Chinese subsidies, particularly to state-owned enterprises, complained of as flooding international markets with Chinese goods, so limit your negotiation here to competition policy as Singapore issue).

Number 3 - Looking at including as WTO reform a specific provision on state-owned enterprises (SOEs) for the GATT/WTO and GATS agreements, employing as model the SOE provision in the TPP-11 agreement, that would basically require the SOE to behave like a private company (this is another way to address the Chinese subsidy problem offered to SOEs, by treating them essentially as a distortion of competition)

Number 4 - Looking at including as WTO reform a specific provision on digital commerce (meaning in Indonesian terms covering TRIPs plus matters including internet governance and data storage, employing as a model the TPP-11 digital commerce chapter).

Number 5 - Coming up with a formal definition generally applicable across all WTO documentation of what constitutes a "developing country" that would be eligible for special and differential treatment as MFN exception (so clarifying when a country ceases to be a developing country, so that the idea of special and differential treatment would no longer be available)

The negotiations are structured around technical issues, but the basic point in legal terms was that the Trump Administration presumably wanted to change the existing WTO System and its governing arrangements, mostly in terms of dealing with China.  Meanwhile, the Biden Administration's approach to the WTO System looks more like benign neglect, and its approach to China seemingly relies more on technology export controls.  But you are dealing in treaty-based international economic law, so you presumably need to reach agreement on a mutually acceptable (treaty) text.

After being broken up into the groups, each student group needs to produce quickly a short circa 2-3 page statement of issues concerning its assigned topic for review, just to make sure you are generally focused on the right things.  As second step, each group will need to produce both a short summary explanation of its position as well as a draft of the proposed treaty language as point of departure.  It should be relatively easy to produce this language for Number 3 (SOEs) and Number 4 (Digital Commerce), since I would suggest you just use the applicable TPP-11 language as the basis for your negotiating document (adding or subtracting what you think is needed, since we already discussed digital commerce coverage and its limits in those documents).

Number 5 will be fairly compact as a drafting matter, but you shall need to decide first what your conceptual view is of (a) what really is the rationale for differentiated developing country treatment, and (b) how you propose to limit or eliminate special treatment (aka, “special and differential treatment” in trade law language) under whatever criteria.

In Number 2, the Singapore issues in the form of competition policy is again relatively compact as a drafting idea, but you need to figure out conceptually how to start with the kind of language the parties discussed 10-15 years ago, presumably cast widely enough to address on-going problems of Chinese subsidies.

Finally, for Number 1, you need to look closely at the Trump versus Biden Administrations' approaches.  What came out of the Trump Administration trade negotiators on the topic (Robert Leitheizer was Trump's USTR, and Peter Navarro was Assistant to the President and Director of Trade and Manufacturing Policy)?  How has the Biden Administration's approached changed in focusing on IPEF?   Then, you  presumably produce a compact document stating in line with one of the other how you think dispute resolution should be (re)structured.  I basically want you to channel the Trump/Biden Administration’s views as part of the exercise of forming an opinion whether they make sense in terms of whether you can present a colorable argument to other countries for why the WTO’s 1994 dispute settlement regime should be replaced (meaning ultimately, do we stay with a judicialized, rules-based trade law system, or move back in the direction of economic diplomacy generally).

We shall organize this chiefly as written exchange, so that I can step in if the foreign students become unavailable.  We shall solicit their views wherever possible, but it their university were suddenly to close due to infection rates rising again, etc., at best they would presumably be distracted.)  After your first draft draws a response, you can produce a second draft, and we decide where to go from there.  We can set the timeline for the different steps as we go along, but on a preliminary basis I would plan on two weeks at each stage to provide enough time for your group to meet outside class via Zoom, Microsoft Teams, or whatever, to work on the assignment.