Developments in international law, prepared by the Editorial Staff of International Legal Materials
The American Society of International Law April 20 , 2007
The United States concluded free trade agreement negotiations with Korea (KORUS FTA) on April 1, 2007. The Office of the United States Trade Representative reported that the agreement is anticipated to be the most “commercially significant FTA since NAFTA” for the U.S. Korea represents the 7th largest trading partner for the U.S. In 2006 the U.S. exported $32.5 billion worth of goods to Korea. The U.S. is Korea’s second largest market, with imports representing 17% of Korea’s exports.
The agreement has important ramifications for a number of sectors. It is expected to increase Korean import of U.S. wheat, feed corn, soybeans, hides and skins, almonds, pistachios, bourbon whiskey, wine, raisins, grape juice, orange juice and frozen orange juice concentrate, and pet food, because it will eliminate duties on these products. Within two years, there will be a phase-out of tariffs on avocados, lemons, dried prunes, and sunflower seeds. Within five years, a tariff phase-out on chocolate and chocolate candies, sweet corn, alfalfa, breads, grapefruits, and dried mushrooms, should expand those markets as well.
Korea has agreed to eliminate its Special and Annual Vehicle Taxes, and not to levy new engine displacement taxes. The agreement further creates an “Autos Working Group” to address possible future regulatory issues; and an expedited dispute mechanism to resolve disputes regarding automobile related actions that violate the FTA.
The U.S. has committed to provide Korean apparel using either U.S. or Korean fabric or thread with preferential treatment. Korea will permit U.S. investors to invest in Korea in “almost all circumstances” the right to establish, acquire, and operate investments in Korea on an equal par as Korean investors. The agreement provides greater intellectual property protections that are consistent with those of the U.S.; and the agreement includes rules on civil, criminal, and customs enforcement of intellectual property rights.
*Note that as of April 18, 2007 the United States Trade Representative’s website had not posted the actual agreement. When it becomes available, ILIB will post it.
World Trade Organization Appellate Body Report: U.S. Oil Country Tubular Goods from Argentina Sunset Reviews (12 April 2007).
Click here for document. (Approximately 84 pages)(Findings 1 page)(Reasoning approximately 35 pages).
The World Trade Organization (WTO) Appellate Body reversed the Panel’s findings of November 30, 2006, in paragraphs 7.41 and 8.1(a) that § 751(c)(4) (B) of the Tariff Act in conjunction with §751(c)(4)(A) of the Tariff Act and §351.218(d)(2) of the Regulations, is inconsistent with the Anti-Dumping Agreement Article 11.3. It upheld the Panel’s finding in paragraphs 7.91 and 7.96 that the United States Department of Commerce’s (USDOC) volume analysis upon which the USDC had in-part based its first sunset determination, and which it incorporated by reference into the Section 129 determination, was properly before the Panel.
The Appellate body noted that Article 11.3 of the Anti-Dumping Agreement requires WTO members to end an anti-dumping duty within five years of its imposition, unless three factors are met: 1) that a review be conducted before the five years expire; 2) in the review officials determine that lifting the duty is likely to lead to continued or renewed dumping; and 3) in the review officials also determine that lifting the duty is likely to lead to continuation or recurrence of injury. WTO members are not to rely upon assumptions or conjecture in its review; and must arrive at their conclusions based upon a “reasoned determination resting upon a sufficient factual basis.”
Section 751(c)(4) of the U.S. Tariff Act allows any party to affirmatively waive its participation in a review in a review conducted by USDOC and only participate in a review conducted by the U.S. International Trade Commission (USITC). The amended regulations at §351.218(d)(2)(ii) require parties making “affirmative waivers” to state that the party is likely to dump if the order is revoked or the investigation ended. Because the conclusion drawn by the USDOC is based upon statements that the party has filed, the Appellate Body stated that the waiving exporter’s statement constitutes positive evidence and provides a reasoned basis for the USDOC to make the company-specific findings that are required, and thus does not run afoul of Article 11.3 of the Anti-Dumping Agreement. In part, the Appellate Body’s determination appears based upon the fact that the amended regulations require the exporter to make an affirmative statement of the possibility of future dumping and this mandate was not included in the earlier proceedings.
The Appellate Body recalled that the USDOC’s affirmative finding of a likelihood of dumping in its section 129 Determination was based upon two factual bases: 1) the finding of the likelihood of past dumping during the period in review; and 2) its determination that import numbers decreased after the antidumping duty was ordered. The Appellate Body recalled that Article 21.5 of the DSU endeavors to bring about prompt compliance with DSB rulings and to make efficient use of the original panelists and their experience. It noted that the USDOC’s determination of import volumes constituted part of its “measure to comply” pursuant to DSB Article 21.5 These considerations led the Appellate Body to uphold the panel’s determination that the volume analysis was properly before it.
In 1995 the U.S. completed an anti-dumping investigation on Argentine Oil Country Tubular Goods (OCTG), which are steel tubes, drill pipes, drill casings, and other goods, used by the oil and gas industry. The sole Argentine exporter that participated in the original investigation was a company named Siderca. The inquiry resulted in the U.S. imposition of an anti-dumping duty of 1.36 per cent for other Argentine exporters as well, the same rate as the dumping margin for Siderca. From 1995 to 2000, the U.S. Department of Commerce (USDOC) conducted four administrative reviews at the request of U.S. OCTG producers. During the investigation Siderca indicated that it had not shipped any OCTG products for use in the U.S. In July 2000, the USDOC began a sunset review of the anti-dumping duty from Argentina, and determined that dumping was likely to recur or continue if the duty was no longer imposed. On July 25, 2001, the USDOC published a notice of continuation of the anti-dumping duty on OCTG from Argentina.
In October 2002 Argentina requested consultations with the U.S. regarding certain aspects of laws, regulations and procedures on sunset reviews and the OCTG sunset review carried out by US authorities, but because these discussions did not result in a mutually agreed solution the Dispute Settlement Body (DSB) created a panel to examine the issues. The panel circulated its report to WTO members, and the U.S. appealed a number of areas of law and interpretations of the panel and Argentina cross-appealed. The Appellate Body issued its report on November 29, 2004. The DSB adopted the Appellate Body report on December 17, 2004. In January 2006, Argentina requested the establishment of a panel pursuant to Article 21.5 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) on the alleged failure of the U.S. to implement the 2004 recommendations and rulings of the DSB.
On November 30, 2006, the panel found that the U.S. had failed to comply with the 2004 panel decision faulting the sunset review procedures in antidumping cases. Specifically, the panel concurred with Argentina that a number of waiver provisions for sunset reviews set forth in the U.S. Tariff Act 715(c)(4)(A), (B), in conjunction with implementing regulations 351.218(d)(2) are inconsistent with WTO antidumping rules requiring governments to ascertain that the continuation or recurrence of dumping is likely to occur, before being able to keep a dumping order in place beyond the five year time limit. The panel further found that the U.S. Commerce Department lacked a sufficient factual basis to be able to conclude that dumping was likely to reoccur.
United States: Sarei v. Rio Tinto (12 April 2007, 9th Cir.)
Click here for document. (Opinion approximately25 pages, dissent approximately 25 pages).
The United States Court of Appeals for the Ninth Circuit reversed the district court’s August 2006 holding in part, and concluded that the district court erred in dismissing all of the plaintiff’s claims as nonjusticiable political questions, and in dismissing the plaintiffs’ racial discrimination claim under the act of state doctrine. The Ninth Circuit vacated for reconsideration the district court’s dismissal of the plaintiffs’ United Nations Convention on the Law of the Seas (UNCLOS) claim under the act of state doctrine, and its dismissal of the racial discrimination and UNCLOS claims under the international comity doctrine. It affirmed the district court’s holding that no exhaustion requirement of local remedies currently exists for Alien Torts Claims Act (ATCA) suits.
Rio Tinto is an international mining corporation with its headquarters in London. It built a mine in Panguna village on Bougainville Island in Papua New Guinea (PNG) that began operations in 1972. Waste products from the mine allegedly polluted Bougainville’s waterways and atmosphere. The islanders who worked for Rio Tinto, who are black, were paid lower salaries than white workers who were recruited elsewhere. In November 1988 Bougainvilleans sabotaged the mine, forcing it to shut down. Rio Tinto sought and obtained assistance from the government of PNG, and its army attacked February 14, 1990, killing many civilians. The Bougainvilleans subsequently sought to secede from PNG, and a civil war raged for ten years, during which, plaintiffs allege, PNG committed war crimes and human rights abuses for Rio Tinto, including aerial bombing of civilian targets, burning of villages, rape, and pillage. Plaintiffs brought suit seeking compensatory, punitive, and exemplary damages, equitable and injunctive relief on environmental contamination and medical monitoring, as well as attorney’s fees and costs. The U.S. State Department filed a statement of interest (SOI) November 5, 2001, indicating that in its view, continuation of the suit on U.S.-PNG relations and the wider regional interests would be “very grave.”
The Ninth Circuit applied U.S. Supreme Court precedent Baker v. Carr, 369 U.S. 186 (1962); and Sosa v. Alvarez-Machain, 542 U.S. 720, 733 n.1 (2004); and concluded that while it would accord the SOI “serious weight” it would not be a dispositive factor, and the court did not find that a political question was present. In doing so, it emphasized that the State Department did not request it to dismiss the case on political question grounds, and the court expressed its confidence that continuing would not “express any disrespect for the executive” or “embarrassment” from the court exercising its independent duty to determine whether the case should proceed. The Ninth Circuit disagreed with the district court that the alleged racial discrimination constituted an official act that the act of state would prevent it from scrutinizing because acts of racial discrimination are non-derogable jus cogens norms and international law does not consider a violation of a jus cogens norm a “sovereign act.” On the act of state claims, it concurred with the district court that PNG’s acts to use it copper resources were “public acts of the sovereign;” but it vacated the district court’s decision in light of the Ninth Circuit’s determination on the political question doctrine. Because the district court relied upon the SOI in dismissing on comity grounds, the Ninth Circuit vacated and remanded this aspect of the case to the district court as well. While the Torture Victim Protection Act (TVPA) explicitly requires an exhaustion requirement, the Alien Tort Claims (ATCA) act does not. The court examined the legislative history of the TVPA and noted that Congress did not discuss whether the ATCA should (or does) require exhaustion of local remedies and Congressional intent is unclear. It refused to read such a requirement into the ATCA, particularly in an area where the Supreme Court has called for courts to exercise caution rather than innovation. See Sosa, 542 U.S. at 728.
International Centre for Settlement of Investment Disputes (ICSID): Saipem S.p.A. v. The People’s Republic of Bangladesh (21 March 2007)
Click here for document. (Approximately 49 pages).
Arbitral Tribunal composed of: Prof. Gabrielle Kaufman-Kohler, President, Prof. Christoph H. Schreuer, Arbitrator, Sir Phillip Otton, Arbitrator.
The Arbitral Tribunal held that it possesses jurisdiction to hear the arbitration. It dismissed all of Bangladesh’s objections to the admissibility of claims, jurisdiction of ICSID, and the competence of the Tribunal. In its decision on provisional measures, the Tribunal recommended Bangladesh to take steps to ensure that Petrobangla does not cash a Warranty Bond.
Saipem, is a corporation incorporated in Italy. In February 1990, Saipem entered into a contract to build a pipeline to carry condensate and gas with the Bangladesh Oil Gas and Mineral Corporation (Petrobangla). The World Bank sponsored the project and the International Development Association funded a large portion of it. While the project was supposed to be completed by 30 April 1991, it was delayed because the local population rebelled against it. In May 1991, Saipem and Petrobangla agreed to extend the completion date to 30 April 1992. After the project was completed, Petrobangla paid the first portion of the “retention money” due Saipem, but failed to pay Saipem the second portion of it,.. Pursuant to the dispute resolution provision in the contract, Saipem referred the dispute to International Chamber of Commerce arbitration on 7 June 1993. After receiving a request from Petrobangla for it to do so, the Supreme Court of Bangladesh issued an injunction restraining Saipem from continuing the ICC Arbitration. Other decisions, including one of the Supreme Court of Bangladesh 23 March 1998, affirmed the stay. The First Court of the Subordinate Judge of Dhaka issued a decision revoking the jurisdiction of the ICC Arbitral Tribunal to hear the case on 5 April 2000. The ICC Arbitral Tribunal subsequently resumed the arbitration because the Bangladeshi courts’ revocation of the authority of the ICC Arbitral Tribunal was contrary to general precepts pertaining to international arbitration. The ICC Arbitral Tribunal issued an award May 9, 2003, holding that Petrobangla violated its obligations under the contract for failing to pay for the time extension and the Retention money. It ordered Petrobangla to pay USD 6,148,770 plus EUR 110, 995 plus 3.375% interest from 7 June 1993, and to return the Warranty Bond to Saipem.
Saipem filed a request for Arbitration with ICSID 5 October 2004. pursuant to the Bi-lateral investment treaty between Italy and Bangladesh, Article 5 of which prohibits investments from being subject to expropriation or similar measures without immediate, full, and effective compensation. The Arbitral Tribunal held the hearing on jurisdiction 21 to 22 September 2006. The Tribunal rejected Bangladesh’s arguments to its exercise of jurisdiction. Bangladesh contended that: 1) there is no legal dispute between the parties; 2) Saipem had not made an “investment” as defined by Article 1(1) of the BIT; 3) Bangladesh’s agreement to arbitration does not include disputes arising from the acts of its courts; 4) the supposed treaty breaches did not demonstrate the necessary threshold for showing that the actions were those of Bangladesh in the “exercise of its sovereign authority.;” and 5) Saipem’s suit is an abuse of process. With regard to Bangladesh’s second argument for opposing the Tribunal’s exercise of jurisdiction, the Tribunal noted that it cannot depart from the general rule that treaties are to be interpreted according to international law, and it refused to define “investment” in Article 1(1) of the BIT according to Bangladeshi law. It applied the “Salini” test to ascertain whether Saipem made an “investment” for the purposes of Article 25 of the ICSID Convention. The test requires: 1) a payment of money or other resources with economic value; 2) a certain period of time; 3) a degree of risk; and 4) a contribution to the betterment of the host State. The Tribunal found all elements present here. The Tribunal also noted that the facts related by Saipem could constitute an expropriation pursuant to Article 5 of the BIT if recognized. The Tribunal rejected Bangladesh’s contention that Saipem needed to exhaust all local remedies because Article 26 of the Convention eliminates the need to exhaust local remedies, and that principle does not apply in expropriation law.
Article 47 of the ICSID Convention permits the Tribunal to recommend provisional measures if it considers “that the circumstances so require,” when requested measures are both necessary and urgent. The Tribunal recommended provisional measures to prevent Petrobangla from cashing the Warranty Bond, but refused to grant Saipem’s second request for Petrobangla to return the Retention Money because the Tribunal did not view this as “urgent and necessary.”
In resolution 1747, the Security Council recalls its previous resolutions1696 (2006), 1737 (2006) (46 ILM 1), and reaffirmed its commitment to the Nuclear Non-Proliferation Treaty (NPT) and the need for all States party to the NPT to fully comply with their obligations pursuant to the treaty to develop research, production, and use of nuclear energy for peaceful purposes. It recalled the report of the IAEA Director General of 22 February 2007 that Iran has failed to comply with UN Security Council Resolutions 1696 and 1737. The Security Council notes its concern about the proliferation risks posed by the Iranian nuclear program, and of Iran’s ongoing failure to comply with Security Council Resolutions.
Acting pursuant to Chapter VII, Article 41 of the UN Charter it called upon Iran to take the steps the Security Council enunciated in paragraph 2 of Resolution 1737, namely to take the steps required by the IAEA Board of Governors to build confidence in the peaceful purpose of Iran’s nuclear program; and to suspend “proliferation-sensitive” enrichment and reprocessing activities, as well as all work on heavy-water projects. It urges States to exercise “vigilance and restraint” regarding the entry into or transit through their territories of persons who are offering support for Iran’s proliferation sensitive nuclear activities. It decided that Iran may not supply, sell, or transfer directly or indirectly any arms related material, and that all States must prohibit the procurement of such items from Iran. It calls upon all States and international financial institutions not to enter into new commitments for grants, financial assistance and loans to the Government of Iran, except for humanitarian and developmental purposes. It further requires all States to report to the Committee on the steps that they have taken to implement the resolution.
It requests a report from the Director General of the IAEA within 60 days indicating whether Iran has suspended its prohibited activities and its compliance with the mandates of the IAEA Board and Security Council Resolutions. If Iran complies, the Security Council will end the specified sanctions.
Curitiba Declaration on Cities and Biodiversity (26 and 27 March, 2007)
Over 70 participants, including 34 mayors and top city officials from around the world, gathered in Curitiba, Brazil the 26 and 27 March 2007 and agreed on a range of actions for conservation and sustainable use of biodiversity to achieve the 2010 BioDiversity target. It endeavors to bring about a significant decrease in the loss of biodiversity at the global, regional, and national levels as a means to reduce poverty among other Millennium Development Goals. The Curitiba Declaration (the Declaration) was adopted within the context of the Convention on Biological Diversity (CBD). The concerns of the mayors will be shared at the Conference of the Parties to the CBD, being held in May 2008 in Bonn, Germany, that 100 environmental ministers are expected to attend.
In the declaration the mayors and other high-level officials recalled the UN CBD and its three goals of: 1) conserving biological diversity; 2) sustaining the use of the components of biodiversity; and 3) sharing the benefits arising from the use of genetic resources in a fair and equitable manner. They expressed their concern at the unparalleled rate of biodiversity loss and its grave environmental, societal, and cultural impacts, all of which are exacerbated by climate change. They emphasized that the consequences for biodiversity loss are most harsh for the poor, and that therefore biodiversity loss serves as an impediment to the attainment of the Millennium Development Goals, and particularly goal 7, ensuring environmental sustainability. They recognized the significant support the United Nations Environment Programme (UNEP), the United Nations Human Settlements Programms (UN-HABITAT), the United Nations Institute for Training and Research (UNITAR), and the World Conservation Union played in supporting the event.
They therefore reaffirmed their commitment to implement the three objectives of the CBD and to achieve the 2010 biodiversity target as well as to create an international regime to share and protect the benefits from using genetic resources. They further reaffirmed their commitment to incorporate biodiversity considerations in urban planning and development to improve the lives, particularly of poor urban dwellers. They emphasized the need to raise public awareness and to alter behaviors that reduce biodiversity by sharing “success stories”, cooperation among cities, community education plans, and by celebrating International Biodiversity Day each May 22. They invited the Secretariat of the Convention on Biological Diversity to share the case studies presented at the meeting with the public. Because of the role their respective cities play as the meeting sites and home of the Secretariat for the Convention, they mandated the Mayors of Curitiba, Montreal, Bonn, and Nagoya, to act as a steering committee to develop synergies between existing associations and to implement tangible products, awareness campaigns and sharing of best practices.
Intergovernmental Panel on Climate Change
Summary of Working Group II Report: Climate Change 2007: Impacts, Adaptation, and Vulnerability (April 2007) (Approximately 22 pages).
The United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) established the Intergovernmental Panel on Climate Change (IPCC) in 1988. Membership is open to members of the UN and WMO. Its role is to evaluate on a “comprehensive, objective, open and transparent basis” the scientific, technical and socio-economic information relevant to understanding the “scientific basis of risk of human-induced climate change, its potential impacts and options for adaptation and mitigation.” It does not conduct research nor review climate related data but provides assessments based upon data in peer-reviewed literature from experts around the world. It seeks to balanced reporting of viewpoints and be “policy relevant” but not “policy-prescriptive.” It has three working groups and a task force on National Greenhouse Gas Inventories. The three working groups focus on the following: 1) I—the scientific aspects of the climate system and climate change; 2) II—the vulnerability of socio-economic and natural systems to foster a changing climate, as well as its consequences; and 3) III-possible ways in which greenhouse gas emissions and other aspects of climate change can be mitigated. In addition to working group reports, the IPCC conducts assessments, and will finalize its Fourth Assessment Report (FAR) in 2007 incorporating each of the Working Group reports issued in 2007 in a chapter format.
In April 2007 the IPCC Working Group II issued the summary of its report “Climate Change 2007: Impacts, Adaptation and Vulnerability.” It will become chapter II of the FAR. The Working Group report notes that while the quality of data sets has improved since the Third Assessment in 2001, and the number of studies of observed trends in physical and biological environments and their connection with regional climate change has also increased, there is nevertheless still a geographic disparity of data and studies on observed changes, with a paucity from developing countries. Working Group II finds that: 1) observational evidence exists from all continents and most oceans that regional climate changes are having an impact upon numerous environments, particularly with respect to temperature increases. For example, there are more and larger glacial lakes; greater number of avalanches in permafrost areas; and alterations in Artic and Antarctic ecosystems including with respect to predators. Temperatures are increasing in lakes and rivers in numerous areas, with concomitant impacts upon water quality. Evidence is demonstrating earlier springs; bird migrations; and egg-laying; as well as shifts in vegetation poleward. Looking to the future, in North America, increased temperatures in western mountains is anticipated to cause future winter flooding and less water availability in the summers. Cities faced now with heat waves are expected to have more, hotter, and longer heat waves with the possibility of negative health consequences, particularly for the elderly.
The Environment Ministers from the “G8” Industrialized nations (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) as well as China, Brazil, India, Mexico, and South Africa, met in Potsdam, Germany and adopted the “Potsdam Initiative.” The Initiative includes ten areas upon which the group will focus to achieve a significant reduction in the loss of biodiversity by 2010. These areas are: 1) a global study of the global economic benefits of biological diversity; and costs of its loss; 2) a commitment to strengthen the scientific underpinnings for biodiversity and to ameliorate the connection between science and policy; 3) examining whether to create a “Global Species Information System,” to compile and disseminate information on all identified species; 4) a commitment to improve the synergies of government, industry, civil society, and consumers regarding production and consumption patterns; 5) a commitment to improve collaboration to prevent the illegal trade in wildlife; 6) a commitment to improve international cooperation efforts to identify, prevent, and control invasive alien species including the Global Invasive Species Programme (GISP); 7) increased research and cooperation to identify and protect a global network of marine areas; 8) an attempt to improve the synergy between climate and biodiversity policies; 9) to improve the integration of biodiversity into development cooperation, including systematically including Environmental Impact Assessments; and working with the financial sector to include biodiversity in its decision-making; and 10) acknowledging the urgent necessity to decrease biodiversity loss. They will create and implement national targets and strategies to achieve the 2010 target.
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