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trade rules
Law Is Not on the US Side in GMO Corn Fight With Mexico
Put simply, the U.S. gets it wrong when it comes to trade rules on food safety. Their lawyers—experienced as they are—should know better.
May 14, 2024
The United States ups the ante in its legal clash with Mexico over genetically modified (GMO) corn. Last month, a trade panel released the US’s latest legal filing. It essentially doubts the science Mexico offers and claims Mexico violates obligations from the USMCA trade pact.
This regards Mexico’s Decree from April 2023 banning GMO corn for human consumption. The ban cites harms from genetic manipulation of corn seeds and cancer risks from herbicides like glyphosate, needed by GMO farms. A USMCA panel will hold hearings on American complaints in June.
The U.S. position is not as strong as it claims—far from it. Observers analyze why Mexico’s scientific justifications are on solid ground. As a law professor, I explain how the U.S. overstates its legal case, at times severely so, when it comes to the ban on GMOs in tortillas and masa (dough).
Put simply, the U.S. gets it wrong when it comes to trade rules on food safety, called sanitary and phytosanitary measures (SPS) and covered in USMCA Chapter 9. Weaknesses regard two aspects of food safety: protection levels and health risks. In a recent journal article, I offer detailed examinations of these and other obstacles.
American faults involve established international law. The USMCA is three years old and this case raises its first SPS controversy. Fortunately, there are long-settled understandings in international law specific to SPS and trade obligations. For decades, panels have interpretated the World Trade Organization’s (WTO) SPS Agreement. This will inform the USMCA panel.
SPS Agreement obligations are central to the USMCA. In the new trade pact, the U.S., Mexico and Canada expressly agreed to affirm “rights and obligations” from the SPS Agreement. Numerous tribunals have ruled on disputes about the SPS Agreement. They’ve examined food safety measures and impacts on trade in food and agriculture, similar to gripes concerning Mexico’s Decree.
Both sides refer to panel reports from SPS cases. Reports are like court opinions. The U.S. cites over 40 reports, including 16 from the highest level, the WTO’s Appellate Body. Mexico references nearly50 and 23 from the highest level. The U.S. problem : it excludes important legal aspects from these reports.
One omission regards what is called the “appropriate level of protection” (ALOP). The USMCA uses the WTO definition for ALOP: the “level of protection deemed appropriate” by the country establishing a measure to protect human life.
The U.S. gets it wrong in terms of what this level can be and who determines it, to then say Mexico inadequately defines it. Mexico is clear that for human consumption of GMO corn, its ALOP is “zero risk.”
The U.S. may not like this, but it is legal under trade rules. This is irrefutable. In 1998, the Appellate Body found “zero risk” is permitted for an ALOP. This comes from a controversy between Australia and Canada over salmon imports. In the corn dispute, the U.S. refers to the case but not to its sections approving “zero risk” levels.
This is forgetful lawyering. Trade law treatises describe “zero risk” as a settled option and interpreted as such by later trade panels. Like legal encyclopedias, treatises summarize how legal doctrine develops, based on new rulings. Attorneys and judges use them to identify how courts and panels interpret legal rules. For ALOP, American lawyers fail with the basics.
The US underplays who actually determines the ALOP. Mexico does, according to the USMCA. Trade rules are explicit that countries in situations like Mexico have wide discretion to determine the ALOP. This is “unambiguous.”
Prior cases are clear. In 2008, the Appellate Body said a country employing a food safety measure has the “prerogative” to determine the ALOP. This involved an American challenge to European Union (EU) controls of hormones in beef.
Second, the US exaggerates requirements in evaluating food safety, called “risk assessment.” Risk assessments are “evaluation[s] of the potential for adverse effects on human health.” This definition comes from the SPS Agreement and is incorporated by the USMCA. Mexico’s assessment is titled the “Scientific Record on Glyphosate and GM Crops” published in 2020 and available since then online from the National Council of Humanities, Sciences and Technologies (CONAHCYT).
The U.S. overstates what is legally needed, to then characterize Mexico’s assessment as “incoherent and inadequate.” WTO cases find that risk assessments must only establish a “potential” for adverse effects. The Appellate Body confirmed this standard in the US’s first challenge of EU controls for hormones in beef in 1998.
The standard has staying power. Ten years later, the tribunal re-affirmed this requirement in the U.S.’s second trade case against beef hormone regulations.
The standard is a fixture of SPS doctrine. Recent treatises explain that for risks in human food, trade rules are deferential to SPS measures since “protection of public health is at stake.”
In its legal filing, the U.S. demands far more than is legally necessary. It calls for excessive proof. This includes “estimates of hazard, exposure, or risk” and “levels that can cause” adverse effects when eating corn. It faults Mexico for not proving that imported GMO corn “presents unsafe levels of glyphosate residue.” These are a few examples that veer from what international trade law actually requires.
SPS cases on risk assessments further undercut American positions. In the first beef hormone controversy, the Appellate Body explained that food safety measures must have a “rational relationship with the risk assessment” and that risk assessments must “reasonably support” this food safety measure. This U.S. must have missed these trade rules, since it asks for significantly more from Mexico.
Emotionally, the U.S. presents criticisms of GMOs as fringe and unacceptable. The filing says that scientific evidence provided by Mexico only “distract[s] from prevailing scientific opinion.” This is demeaning.
Trade rules are more based on reason. They do not require SPS measures to reflect majority scientific opinion. Lawyers for the U.S. should know this. In the first fight over beef hormones, the report explained that assessments do not need to “embody” the “view of a majority” of the scientific community. Then with a second American try, the Appellate Body added that scientific support is acceptable as long as it is “considered to be legitimate science.”
Where does this take us? With legal lapses in several areas, the U.S. should try to resolve its gripes with Mexico versus pursuing fruitless disputes. The commercial reality is U.S. corn exports to Mexico have dramatically increased since the Decree.
Be careful what you ask for, when it comes to trade rulings. It is 2024 and trade lawyers for the U.S. eerily face the same legal questions from 1998 and 2008. Then they concerned American beef exports. U.S. lawyers should re-read those rulings. Trade law is clear on ALOP and risk assessments. American farmers don’t need another trade loss, they need better legal advice.
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US Trade Policy Shift on Big Tech Offers Hope Despite Huge Fights Ahead
The implications of the U.S. withdrawal of support for extreme Big Tech trade provisions for developing countries
and people across the world.
Dec 05, 2023
On October 24, the U.S. government withdrew support for a set of proposals for digital trade rules in talks at the World Trade Organization (WTO) that the U.S. itself had proposed in 2019.
With regard to negotiations on digital trade, or “e-commerce,” the Office of the U.S. Trade Representative stated: “many countries, including the United States, are examining their approaches to data and source code, and the impact of trade rules in these areas. In order to provide enough policy space for those debates to unfold, the United States has removed its support for proposals that might prejudice or hinder those domestic policy considerations.” However, variations on the proposed rules continue to be supported by other WTO members, as can be seen in the most recent leaked text, and it remains to be seen where the U.S. will sit in relation to those.
The proposals, developed and backed by Big Tech lobbying groups, were intended to limit governments’ ability to regulate cross-border transfers of data, as well as governments’ regulation of source code and algorithms, a source of significant public debate in many countries around the world.
Although Big Tech includes the largest corporations in world history, the industry is subject to far less regulation than other economic sectors.
The Biden administration’s step back from outdated Big Tech proposals in trade agreements is a huge symbolic win for workers and small businesses, as well as for fairness, democracy, and development around the world. It’s a major win for the civil society groups that form part of the Our World Is Not for Sale (OWINFS) global network that has campaigned against these rules since they were first proposed in other trade agreements as far back as 2015.
The U.S. first proposed these Big Tech rules when public opinion was largely unaware of the dangers of Big Tech corporations controlling our data, monopolizing key technologies, and preventing effective regulation of the digital environment.
Today, much of the world is far more aware of the damage caused by Big Tech as it monopolizes vast swathes of our economy to lock out fair competition for small businesses, profits from discrimination and surveillance, undermines civil rights, and foments extremism and disinformation. Using its vast economic power, it intervenes in policy-making processes to evade regulation, thereby weakening our democracies. Big Tech hoards, steals, and illegally collects data, the key economic resource today, thereby exacerbating inequities between industry owners and the rest of us. It also invades our privacy and makes us and our children less safe online. It violates workers’ rights in order to maximize profits.
All of these issues, and more, are subjects of contemporary debate, as well as multiple lawsuits, indictments, and financial penalties, in the U.S. and around the world.
For nearly a decade, Big Tech has tried to secure binding new global disciplines to constrain regulation on these issues and preempt appropriate governance through democratic channels. Although Big Tech includes the largest corporations in world history, the industry is subject to far less regulation than other economic sectors.
Big Tech’s proposals on source code are illustrative. The use of artificial intelligence (AI) has increased exponentially in recent years. AI involves using large data sets to train computers to make decisions using the data provided to them, based on instructions from algorithms written into the source code.
However, algorithmic systems can exacerbate racial, gender, and labor discrimination; facilitate corporate evasion of regulatory oversight; and be used to prevent competition. Yet Big Tech is pursuing proposals that would bar governments from having access to the source code for algorithms in order to regulate it. Companies use AI to decide more and more business practices, many of which, it turns out, often violate competition rules, privacy, or civil or labor rights. Thus, Big Tech wants to lock source code up in permanent, binding “trade” agreements to ensure that governments can’t regulate most of their business practices!
Proponents argue that these source code provisions are needed to protect against forced technology transfer (usually referencing China). But this is not considered a real issue in most of the countries party to digital trade deals. Source codes are already protected by intellectual property law, including copyright and, in some cases, patents, as well as trade secrets. The proposed bans on source code disclosures would have represented an additional layer of protection for algorithms embedded in source code, affecting a broad swathe of human activity in which hardly any other counterbalancing human, social, economic, or cultural rights would have been affirmed.
Extensive further reasons why exceptions to the source code text in these agreements are insufficient — in the US, the European Union (EU), and around the world — can be found in the report, “The European Union’s Digital Trade Rules: Undermining European Policy to Rein in Big Tech.” For example, experts have noted that for algorithmic systems, “white box” testing (with access to the source code) is far superior to “black box” testing (without it). True public oversight would require scrutiny, and thus access to the source code, by academics, media, critical engineers, and trade unions, and not only by the regulators and judicial adjudicators currently recognized in the proposed provisions.
In a debate in the European Parliament with this author, the head of services and digital trade for the European Commission, Sylvia Baule, tried to claim that the “general exceptions” in the WTO — the model for those in the digital trade provisions — would be sufficient to protect the public interest. However, these provisions have been successful in defending public interests in trade cases only 2 out of 48 times in the WTO’s history, which Baule sheepishly acknowledged was “not 100 percent.” In addition, enforcement of public interest laws, labor rights, and civil rights such as privacy must not be subject to review by a trade tribunal, which prioritizes trade considerations over human and fundamental rights.
Finally, the exceptions contemplate, however insufficiently, only some known risks inherent to AI systems. As new risks and social harms become known, it will be even more important for governments to maintain the power to regulate algorithmic systems, including their source codes, to ensure that human rights are upheld and that harms to society are reduced.
[Countries] need to use the public’s data for the public’s interest, such as for addressing climate change or resolving global pandemics — rather than having it monopolized for the private profit of a handful of Big Tech corporations.
Allowing Big Tech monopolies to establish rules enabling them to transfer data around the world without regulation would also further tilt the playing field against workers, consumers, citizens, small businesses, and developing countries generally, thereby locking in unequal access to the greatest source of wealth creation in the future: data. Countries need to be able to use their data for digital industrialization, based on decent job creation. They also need to use the public’s data for the public’s interest, such as for addressing climate change or resolving global pandemics — rather than having it monopolized for the private profit of a handful of Big Tech corporations.
When these risks are considered, together with the myriad harms to society and development potential becoming more well-known each day (and detailed in “Digital Trade Rules: A disastrous new constitution for the global economy written by and for Big Tech”), it is difficult to avoid a conclusion: there is no compelling justification for, and in fact an abundance of arguments against, including provisions that bar governments from requiring the disclosure of source code, and from regulating data flows, in “trade” agreements.
Other provisions would also be harmful for development, according to the United Nations Conference on Trade and Development’s “Joint Statement Initiative on E-Commerce (JSI): Economic and Fiscal Implications for the South,” and much other research available at the OWINFS site here.
Nevertheless, Big Tech has thrown a predictable temper tantrum since the announcement, deluging the press with outlandish claims that this prudent and cautious change will somehow benefit China (it won’t) or that it’s harmful to workers (it isn’t, and Big Tech wouldn’t care anyway).
None of these claims have merit. Yet their lobbying offensive demonstrates clearly how much Big Tech stood to gain economically from the provisions.
The EU, Japan, Australia, Canada, and other countries pushing these proposals should also hit the “pause” button. Their national industries were never set to gain from them; rather it would have been the local divisions of Google, Apple, Facebook, Amazon, and the like, which formed the core of the lobbying pressure for the provisions around the world.
Developing countries being pressured to join these agreements can take this opportunity to strengthen their resolve. The Africa Group’s rejection of these proposals at the WTO in December 2017 set an important precedent. The majority of developing countries have stayed out of the so-called Joint Statement Initiative (JSI) by a breakaway group that led to negotiations on digital trade without a mandate from the WTO. This is despite an ongoing pressure campaign which includes the egregious use of “development aid” funds to lobby countries to join.
A few dozen developing countries have joined the JSI. Nigeria has proposed an exception that would allow them not to comply with the most problematic rules, but there’s no real chance it will be accepted. The change in the U.S. position is an important sign that the tide is turning against these rules, even in countries that have championed them. This new context provides a signal for countries to withdraw from participation. Many countries are also being pressured to accept the same provisions through bilateral or regional trade agreements, and these should also be rejected. And the US position could change again.
Preventing “trade” policy from imposing regulatory handcuffs on the digital economy is the first step toward using digitalization in the public interest, including for digital industrialization.
The change in the U.S. position is an important sign that the tide is turning...
Next, countries should fill that policy space with appropriate regulations. These would include rules to, for example, prevent monopolies and promote start-ups; prevent discrimination; ensure that civil rights, such as privacy and labor rights, are enforced in the digital sphere, and assess fair taxation; among others. For developing countries, technology transfer and a genuine commitment to supporting digital industrialization are top priorities.
Legal, policy, and programmatic developments in the EU, and some developing countries such as India, already go beyond the data flows and source code-related provisions proposed in the JSI. As their digitalization progresses, all countries will have to employ policies inconsistent with these provisions, as the U.S. — otherwise the home of digital laissez faire — has now realized.
In a few months’ time, WTO members will have to make a decision on another digital trade issue. More than 25 years ago, the U.S. snuck an agreement into the WTO to ban customs duties on electronic transmissions. But there is abundant evidence that Amazon, Netflix, Apple, and Microsoft can afford normal trade taxes on electronic books, movies, music, and software, while still making huge profits selling these products around the world. This agreement has been extended over and over. These taxes could be essential revenue sources for developing countries to build their digital infrastructures, not to mention for public services, climate resilience, and other key needs. A tax holiday for the most profitable of Big Tech corporations does nothing for workers or small businesses, in the United States or around the world. Now, developed country members of the WTO must drop their insistence on extending it yet again.
Instead, the moratorium on customs duties on electronic transmissions should be allowed to expire at the upcoming 13th Ministerial Conference of the WTO in Abu Dhabi in February 2024. This will be the next test of the “worker-centeredness” of the trade policy of the U.S., the EU, and other countries.
Only with proper policy space — by keeping rules preventing effective regulation of the digital economy out of trade agreements — will citizens worldwide have a chance to rein in Big Tech.
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Climate Activists Tell Macron to Stop Using Trade Rules to Thwart Clean Energy
"Governments should be empowered to fight climate change and support the clean energy transition without fear of being undermined by antiquated trade rules," said one advocate.
Dec 02, 2022
Environmental campaigners implored French President Emmanuel Macron to stop inhibiting sorely needed climate action by weaponizing global trade rules during a Thursday night protest outside the White House, where U.S. President Joe Biden hosted Macron for the first state visit of his tenure.
"We simply do not have time for governments to continue using outdated trade agreements to attack and undermine climate action."
In a nod to the ongoing World Cup, activists donning referee outfits and red cards called on Macron to stop threatening to launch a trade dispute against domestic electric vehicle manufacturing incentives, renewable energy tax credits, and other green provisions in the Inflation Reduction Act (IRA) passed earlier this year by the U.S. Congress.
"Macron claims France is a climate leader, but his vocal critique of the Inflation Reduction Act's climate measures deserves a penalty for hypocrisy," Public Citizen's Global Trade Watch tweeted.
Melinda St. Louis, the group's director, added: "Activists braved the cold to issue the 'red card' for Macron's threats to U.S. climate law on behalf of European business interests."
\u201c\ud83d\udfe5Breaking: Climate activists officiate Biden's State Dinner, issue President Macron climate red card\n \nMacron claims France is a climate leader, but his vocal critique of the Inflation Reduction Act's climate measures deserves a penalty for hypocrisy. \n\nhttps://t.co/Buq6RS1frv\u201d— Global Trade Watch (@Global Trade Watch) 1669935721
\u201cAs Biden and Macron dined at the White House, climate activists braved the cold to issue the "red card" for Macron's threats to US climate law on behalf of European business interests. \n\nWe urge @POTUS not to cave to trade threats that could undermine local clean energy jobs!\u201d— Melinda St. Louis (@Melinda St. Louis) 1669982042
"President Macron clearly cares about climate change, so he and other European leaders should drop all the complaints about the IRA and threats to launch a trade challenge against it," St. Louis said in a statement. "Governments should be empowered to fight climate change and support the clean energy transition without fear of being undermined by antiquated trade rules."
As Politico reported, Macron has "bristled against tax incentives for clean energy included in the Inflation Reduction Act--a move that European leaders fear could cause sectors of their own economies to shift operations to the United States."
According to the news outlet: "On Thursday, Biden made 'no apologies' for the legislation but acknowledged 'glitches' in the bill, declaring the U.S. 'never intended to exclude' allies who were cooperating with Washington. He also suggested there were 'tweaks we can make' to satisfy allies."
The rally outside the White House comes as progressive advocacy groups escalate their demands to prioritize climate action over corporate-friendly trade rules ahead of next week's U.S.-E.U. Trade and Technology Council (TTC) talks in Maryland.
In an analysis published Thursday, the Trade Justice Education Fund and the Sierra Club made the case for the urgent adoption of a "climate peace clause," which they defined as a "commitment from governments to refrain from using dispute settlement mechanisms in international trade agreements to challenge other countries' climate mitigation and/or clean energy transition measures."
"In the face of increasing use of trade pacts to challenge climate policies," the groups explained, "a climate peace clause would help governments safeguard existing climate mitigation and transition measures by protecting them from trade challenges and incentivize and offer countries time to work together and resolve conflicts between trade agreements and the imperative for climate action."
\u201cAs green jobs initiatives like the Inflation Reduction Act increasingly come under trade attack, @TradeJusticeEd, @SierraClub and others are calling for a #ClimatePeaceClause within the US-EU Trade & Technology Council https://t.co/9JxgVUrzko\u201d— Trade Justice Education Fund (@Trade Justice Education Fund) 1669896949
Hebah Kassam, director of the Sierra Club's Living Economy program, noted that the world "is not on track to reduce emissions at the scale needed to avoid irreversible damage to communities and ecosystems."
"Governments must have and use every tool in the toolbox to ratchet up climate ambition, and we simply do not have time for governments to continue using outdated trade agreements to attack and undermine climate action," said Kassam. "We are calling on the U.S. to propose a climate peace clause in the TTC negotiations to end trade attacks on climate policies such as initiatives to create green jobs and healthier communities."
"A climate peace clause is a commonsense step the U.S. and E.U. can take right now to show leadership both on trade and on climate."
According to Trade Justice Education Fund executive director Arthur Stamoulis, "Language similar to a climate peace clause had been included in TTC text leaked earlier this year, but was later reported to have been removed."
"As two trusted trading partners committed to tackling climate change, a climate peace clause is a commonsense step the U.S. and E.U. can take right now to show leadership both on trade and on climate," said Stamoulis. "We urge the U.S. to make good on its promise to create a worker- and climate-friendly model of trade and to propose and adopt a climate peace clause in the TTC."
Also on Thursday, the Transatlantic Consumer Dialogue, which represents more than 70 consumer advocacy organizations on both sides of the Atlantic, released a statement that said, in part, "If the U.S. and E.U. are serious about making trade more sustainable, they must first ensure that trade challenges do not undermine domestic climate policies needed to support the green transition of our economies."
The coalition called on the European Union and Washington to "find a solution to avoid a trade dispute around the U.S. Inflation Reduction Act that would weaken the new climate policy."
North American production requirements were key to securing the political support needed to pass the IRA, but as the Trade Justice Education Fund and the Sierra Club's new research details, progress on creating green jobs and slashing planet-heating pollution remains at risk of being derailed by Investor-State Dispute Settlement complaints and other objections lodged at neoliberal trade institutions.
To take just two examples of recent World Trade Organization (WTO) state-to-state cases mentioned in the paper, the U.S. successfully challenged India's program subsidizing local solar production in 2017. Two years later, India successfully challenged clean energy programs in eight U.S. states that included "buy-local" rules.
The Trade Justice Education Fund, the Sierra Club, and Public Citizen held a webinar last month documenting how corporate-managed trade agreements are impeding climate action. Recent actions follow a May letter in which more than 150 U.S.-based organizations urged the Biden administration to support a climate peace clause.
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