The WTO Consistency of the EU Timber Regulation. Dylan Geraets and Bregt Natens. KLIMOS-workshop 12 februari 2014

Transcription

1 The WTO Consistency of the EU Timber Regulation Dylan Geraets and Bregt Natens KLIMOS-workshop 12 februari 2014

2 Overview Problem: Illegal Logging Response: EU Timber Regulation (995/2010) WTO Consistency Obligations (General) Exceptions Likelihood of a complaint Key lessons for WTO compliance -> Governing Through Trade Effectiveness? Questions for debate

3 Problem: Illegal Logging Illegal logging: accounts for 15-30% of all forestry products worldwide and 50-90% of all forestry products in key producer tropical countries (Malaysia, Indonesia, Brazil, DRC); Depletion of forests, destruction of wildlife habitat, corruption, anti-competitive practices; Impact on legal trade

4 Response: EU Timber Regulation Forestry Governance Private Schemes: Forest Stewardship Council Public Schemes: Australian Illegal Logging Prohibition Bill, U.S. Lacey Act Legality Verification Prohibition on the importation of illegally logged timber EU Timber Regulation (995/2010) Entry Into Force: 03 March 2013 Prohibition to place illegally logged timber on the market Due Diligence obligations

5 WTO Obligations Border Measure or Internal Measure? Article XI GATT 1994 (Border) Prohibition on quantitative restrictions Violation likely Article III:4 GATT 1994 (Internal) EUTR also applies to EU Timber Treatment no less favourable: maybe disparate impact upon certain exporters Like Products Article I:1 GATT 1994 Advantage granted immediately and unconditionally to like products

6 WTO Obligations Key Issue: likeness of legal vs illegal timber Likeness: product characteristics, end-uses, consumer tastes and habits, tariff classifications (HS Code) Is there a competitive relationship between a product that is illegal in a certain jurisdiction and a like product that is allowed in another jurisdiction? Do WTO Rules apply to trade in illicit goods?

7 WTO General Exceptions Justification? Article XX GATT 1994 Sub-paragraphs Article XX(b): protect human/animal/plant life/health Article XX(d): secure compliance with WTO consistent domestic laws Article XX(g): conservation of natural resources Chapeau No arbitrary or unjustifiable discrimination No disguised restriction on trade Violations of WTO obligations by EUTR likely to be justified by one of the general exceptions listed under Article XX GATT 1994.

8 Likelihood of WTO Complaint Limited: no incentive for countries whose domestic legislation determines (il)legality to challenge measure by EU One exception: disparate impact of due diligence obligations (Article III:4 GATT) No complaint so far. Concerns raised by some Timber Exporting countries in the context of the WTO s Committee on Technical Barriers to Trade and in the 2011 Trade Policy Review of the European Union (+ in leaked diplomatic cables)

9 Key lessons for WTO compatibility I Legality verification refers back to law of harvesting state (>< ILPB) Remedies concerns about regulatory sovereignty Reduces likelihood of complaint (who has incentive?) Only usable in case of legal v illegal products or also for other standards/norms/? E.g. labour rights?

10 Key lessons for WTO compatibility II EUTR drafted as internal measure, not border measure (goal: no Article XI issue); may still be disparate impact issue (de facto discrimination) Measure should be part of larger set of policies (coherence) aimed at (closed list of) legitimate goal, and be applied in a consistent way (no disguised protectionism)

11 Governing Through Trade : Effectiveness Timber Production very dynamic Substitution: Shift from countries / types of timber that cannot guarantee legality to timber that is certified Trade Diversion: f.e. Indonesian timber exporters choosing to export to countries with less stringent regulatory frameworks (China) Representatives of some large European wood importers report that they are already seeing an upturn in business as many smaller importers are being discouraged by the risks associated with direct imports from outside the EU. Trends benefit large companies with capital for investment in due diligence and certification

12 Governing Through Trade : Questions for debate Using access to internal market (=largest in world) as a carrot Governing through trade E.g. Seals Regulation, REACH, GSP (GSP+/EBA), HRs/SD provisions in RTAs, but exporting values with a stick? Is trade (and market access) the right tool?» Neo-colonialism?» Making trade agreements about trade again? Regulatory jurisdiction vs regulatory impact Risk of incompatibility with trade agreements

13 Thanks for your attention! Questions? Contact: