“It is the end of an era”

Whatever the outcome, the vision of an authoritative, quasi-constitutional, international court to resolve conflicts and develop jurisprudence is in retreat. In retrospect, the AB was a remarkable experiment in international relations.

Ever since I started to learn the law of world trade, there has always been the Appellate Body. There has always been “at least the semblance of the rule of law in international trade relations.” It is indeed a sea change for this generation of mine.

The Report of the Appellate Body in Indonesia – Safeguard on Certain Iron or Steel Products (DS490)

To be a safuguard measure, a measure "provided for in Article XIX", it must suspend, in whole or in part, a GATT obligation or withdraw or modify a GATT concession. In addition, the suspension, withdrawal, or modification in question must be designed to prevent or remedy serious injury to the Member's domestic industry caused or threatened by increased imports of the subject product.

That is to say, if a Member does not have the right to use safeguard if it is free under GATT. Even though it is not really free under GATT.

Challenge of arbitrators

[UPDATED with full analysis] – Another challenge to Gary Born is rejected, this time by Bruno Simma and Daniel Bethlehem in the KS Invest & TLS Invest v. Spain case | Investment Arbitration Reporter

More precisely, Spain sought the disqualification of Mr. Born on the ground that he allegedly “reached an immutable and biased position on key issues at stake in this arbitration,” such as “the assessment of investors’ expectations (which he does not seem to balance against any other consideration in his dissent); the legal effect of regulatory measures concerning renewable energy prices (which he views as unqualified commitments of stabilization) and the applicability and effects of EU Law (which he largely downplays if not to reinforce investor’s expectations).”

As to Mr. Born’s conduct during the Masdar and KS Invest hearings, Spain notably saw bias in his interruption of the cross-examination of a witness for Spain, and in an allegedly “disdainful comment” he made to this witness. Spain compared this “attitude” to the circumstances that led to the successful challenge of Francisco Orrego Vicuna as an arbitrator in Burlington v. Ecuador (see here).

Concluding, the unchallenged arbitrators held that Mr. Born “acted entirely properly, within the bounds of independence and impartiality required of an arbitrator,” and found “no basis” to Spain’s suggestions that his impartiality and independence were impaired.

Challenge filed against Eduardo Zuleta as hearings loom | Investment Arbitration Reporter

As we’ve chronicled, Spain has sought to dislodge several arbitrators in the battery of renewable energy arbitrations currently pending. A pair of challenges directed at Gary Born were rejected by his co-arbitrators, however Mr. Born later resigned from the ICSID cases in question. A separate challenge to Stanimir Alexandrov led to a split decision between the remaining tribunal members, leading him to resign despite insisting that the challenge had no merits.

Issue conflict of arbitrators

Arbitrator Zachary Douglas reverses course and resigns as ruling on disqualification loomed from PCA; parallel challenge in ICSID case is next battleground | Investment Arbitration Reporter

An arbitrator has resigned in the face of a challenge in an ongoing arbitration under the U.S.-Colombia Free Trade Agreement.

Arbitrator Zachary Douglas notified the parties of his resignation on August 23rd in the case of Alberto Carrizosa Gelzis, Felipe Carrizosa Gelzis, and Enrique Carrizosa Gelzis v. Colombia.

Investors lodge challenge to Zachary Douglas, alleging prejudgment of a core legal issue that arises in their investment treaty arbitration | Investment Arbitration Reporter

The challenge raised by the claimants to Mr. Douglas is rooted in a so-called “issue conflict”, specifically the claimants belief that Mr. Douglas has taken a fixed (and restrictive) view in several academic writings as to the scope for using a generic MFN clause to expand the jurisdiction of an international tribunal. The claimants allege that Mr. Douglas takes a principled view that cuts across different cases and fact-patterns, and reaches a negative answer (unless the relevant MFN clause explicitly reaches to dispute settlement).

21-month Brexit Transition Agreement

Jacob Rees-Mogg, the leader of Eurosceptic Conservative backbench opinion, said the deal was “unsatisfactory” and that the government had “rolled over without even having its tummy tickled”.

India’s Cloudy Solar Energy Market [ft.com]

From last July, developers have had to pay 5 per cent under the new goods and services tax on solar equipment, while some ports are charging an additional 7.5 per cent import duty on panels from abroad.

Regulators are now proposing an “emergency” 70 per cent tariff on solar parts made in China, Malaysia and the west, in a bid to protect the few Indian panel manufacturers. The move follows similar actions by the US and EU.

“Some ports” are charging additional duty on foreign goods.

Better move fast on data legislation [ft.com]

[T]he European Commission said on Wednesday that of the bloc’s 28 member states only Austria and Germany had fully adopted changes to their legislation ahead of the new regulations, which come into force on May 25.

Prime Minister Theresa May's speech on the future economic partnership with the European Union - The Mansion House Speech on 2 March 2028

So I want the broadest and deepest possible partnership – covering more sectors and co-operating more fully than any Free Trade Agreement anywhere in the world today. And as I will go on to describe we will also need agreements in a range of areas covering the breadth of our relationship.

I believe this is achievable because it is in the EU’s interests as well as ours.

The EU is the UK’s biggest market – and of course the UK is also a big market for the EU. And furthermore, we have a unique starting point, where on day one we both have the same laws and rules.

So rather than having to bring two different systems closer together, the task will be to manage the relationship once we are two separate legal systems.

China’s cyber security law rattles multinationals

Reported by Yuan Yang for Financial Times

While the new law is causing angst in foreign boardrooms, the personal data privacy provisions are in line with worldwide practice, said Scott Thiel, partner at law firm DLA Piper in Hong Kong. For example, it accords with Europe’s General Data Protection Regulation, he said.

No it is not.

Reasons to keep or eliminate NAFTA

Carlos Alvarado wrote in 200 Billion Reasons for Keeping NAFTA

If President Trump’s administration wants to keep U.S. investors in Mexico happy, he will definitely need to think carefully about NAFTA. Chapter Eleven will be certainly a relevant part of the negotiations between NAFTA’s three signatories, but if President Trump is really ready for leaving NAFTA, he should have a plan B for protecting the more than US $200 billion invested by U.S. investors in Mexico. In the meantime, do not be surprised if notices of intent of arbitration under NAFTA’s Article 1119 from U.S. investors to Mexico increase significantly, in order to gain the benefit of NAFTA’s substantive protections and anticipate establishment of jurisdiction of an investment arbitration panel.

If he hates companies investing in Mexico so much, he would purposefully undermine protection for US FDI there.

The world moves on while the Trump administration stays in the GATT era.

Song Jung-a, reporting for Financial Times

The Trump administration is to review and reform the US trade deal with South Korea, Mike Pence said on Tuesday, citing a widening bilateral trade deficit and obstacles for American businesses in the east Asian nation.

“We have to be honest about where our trade relationship is falling short,” the US vice-president told US and Korean business leaders in Seoul. “Our businesses continue to face too many barriers to entry, which tilts the playing field against American workers.”

The US has to “level that playing field”, he added, saying “we will work with you” as we “reform Korus [the Korea-US trade deal] in the days ahead”.

Push for bilateral with the focus on goods continues. The world moves on while the Trump administration stays in the GATT era.

From ASIL annual meeting: TPP lives on

From TPP, Brexit, and After: The Uneasy Future of Deep Economic Agreements:

Christina Davis remarked that TPP broke the mold of East Asian regional trade agreements (RTAs), largely due to US leadership in pushing for new rules on labor, environment, digital trade, state-owned enterprises and competition -- features that persist past the US exit from TPP. For instance, the new administration’s stated goals for renegotiating NAFTA mention adding TPP disciplines; Vietnam is still moving forward on its TPP-related labor policy reforms.

Japanese Prime Minister Abe pushed Japan to join the TPP negotiations to advance domestic agricultural policy reforms. Moreover, geopolitically TPP signals deepening of the Japan-US relationship; TPP excluding China is part of that message. Japan has become the lead advocate for TPP, after the US election. Japan scores foreign policy gains from continuing to support TPP.

Kathleen Claussen of USTR (speaking in a personal capacity) noted the importance of Congress in determining US trade agreements’ template and agenda. To understand agreements’ impact, she suggested focusing on the process before entry into force when parties evaluate what implementation actions are necessary.

US pushing a bilateral deal with JApan

Shawn Donnan and Demetri Sevastoulo, reporting for Financial Times

The intervention came ahead of a visit to Japan this week by Mr Ross and vice-president Mike Pence for talks aimed partly at convincing Tokyo to open negotiations over a bilateral trade deal following the US withdrawal from the 12-country Trans-Pacific Partnership.

. . .

He said the “exploratory trip” to Japan was intended to see if Prime Minister Shinzo Abe, who visited the US in February, would agree on a “path forward” for a bilateral agreement. “The question will be whether they are ready to consider the concept,” he said.

He acknowledged that Mr Abe had expended significant political capital on the TPP but he derided efforts to revive the agreement. “It doesn’t make that much sense to do a TPP without the US. We’re the biggest market after all,” he said. “And I think you folks are aware there is no political will in the US for a new TPP.”

Any bilateral agreement with Japan would have to see Tokyo add to the concessions it made in the TPP, which he characterised as “minor gains” for the US in agriculture and intellectual property, and he said the US would not accept anything less.

“A card laid is a card played. And even though that hand [the TPP] is cancelled, somebody has put something on the table in writing that is an agreed thing,” he said. “It will be our intention to make it very hard for them to go back.”

That's why you don't usually like to negotiate with someone who is inclined to withdraw from the deal reached.

Japan launches push to save TPP

From Bangkok Post:

Tokyo had expressed reluctance to have the TPP come into force without Washington amid concern that Japanese exporters, such as automakers, would gain little benefit without the United States, the biggest market in the grouping.

But with free trade perceived to be under threat with the rise of protectionism since the Trump administration took office, calls have been growing in the government for Tokyo's leadership in keeping the momentum for free trade.

On Saturday, Chief Cabinet Secretary Yoshihide Suga indicated Tokyo's readiness to proceed with TPP implementation while ensuring US understanding, saying in an interview with Kyodo News, "We have a feeling that the 11-nation framework should be given weight."

. . .

Under the current rules, TPP implementation requires ratification by nations accounting for 85% of the combined GDP of the 12 member countries. The deal was therefore effectively dead in the wake of the withdrawal of the United States because the country represents over 60% of the trade bloc's GDP.

But Mr Trump, who took office in January pledging to pull the United States out of what he called a "job-killing" free trade pact, has not opposed the remaining 11 nations implementing the TPP.

One proposal to lower the threshold for bringing the pact into force envisions a separate protocol to allow the TPP to be applied to any remaining member that agrees to it, the source said.

“The decision of the decade” – US reaction to the UK’s landmark Unwired Planet FRAND judgment

Richard Lloyd, writing for IAM, citing former Unwired Planet CEO Boris Teksler

The key take away from Justice Birss’ opinion is his recognition that SEP FRAND issues can and should be resolved on a global basis, and not through piecemeal litigation on a country-by-country basis. Justice Birss took the bilateral FRAND obligations principle of the ECJ decision in Huawei v ZTE and applied that principle to an entire worldwide SEP portfolio. His approach, if adopted, will finally provide a much more efficient mechanism to resolve and hopefully avoid disputes about the appropriate value for a worldwide portfolio licence on FRAND terms.

Sounds judicial overreach to me. Also, how do overlapping and contradictory decisions among different courts be efficient?

U.S. business wary of skin-deep results from Trump-Xi trade talks

Michael Martina for Reuters:

On the market access side, lowering restrictions on foreign investment in Chinese banking, securities, investment management, futures, insurance, credit ratings and accounting sectors, as Beijing has already promised, would help China improve the quality financial of instruments and make their markets more stable and professional, said McGregor.

"If you look at the things that China is talking about opening, it's all areas where China needs help," McGregor said.

That is the offer. And Trump's demand has been redirected to North Korea.

Heavily influenced by the last person to whom he has spoken

Edward Luce, writing for Financial Times:

Then there is Mr Trump’s capricious nature. Friends of the president say he is heavily influenced by the last person to whom he has spoken. In recent days that has included Xi Jinping, China’s president. It has also included a number of Middle Eastern leaders. Each of them is happy with Mr Trump’s abrupt recent policy changes.

Financial Times on The astonishing reinvention of Donald Trump

Samsung alleged to work with NPE in Polaris-Kingston case

Heck Ellis summarized the filing of Kingston in the Polaris' patent infringement suit, in which an interesting strategy utilized by Samsung was revealed.

In May 2015, Samsung and Polaris entered into an agreement under which the Korean company agreed to pay the WiLAN subsidiary 50% of the future purchase price of the Qimonda portfolio, up to €16 million ($17 million), should Polaris acquire the rights. (The following month, WiLAN announced it had purchased the Qimonda portfolio from then-owner Infineon for $33 million. Infineon had itself acquired the patents a few months earlier as part of a settlement agreement with Qimonda's insolvency administrator.).

In return for a licence to the Qimonda portfolio, Samsung agreed to “not challenge the ownership, validity, enforceability, novelty, obviousness, or utility of the Qimonda… patents, to not assist anyone adverse in interest to a Qimonda… patent, and to not dispute infringement of any Qimonda… patent”.
“Particularly pertinent to Kingston’s counterclaims,” under the terms of Samsung’s agreement with Polaris, the Korean company was given the right to specify 15 Qimonda patents and “discuss in good faith with Polaris either giving Samsung an exclusive licence to them or having Polaris file patent infringement lawsuits against specified, agreed-upon third parties”.

Polaris agreed to pay Samsung a royalty equal to five percent of Polaris’s gross revenues from licensing the Qimonda portfolio. Polaris owes Samsung royalties up to the amount Samsung paid to Polaris to assist its purchase of the patents from Infineon.

If substantiated, Samsung in essence control these patents through an NPE. It's deal with Polaris perhaps is more like a funding mechanism in exchange for such control.

Ahead of major decision, Trump is struggling to deliver on his trade promises

By Damian Paletta in Ahead of major decision, Trump is struggling to deliver on his trade promises

Despite Trump's promise to challenge Xi on trade during the Mar-a-Lago meeting, they said the gathering was intended to serve as just the beginning of negotiations and allow the leaders to get to know each other.

To known each other better so that Trump could know how unrealistic his position was.

And they are considering more executive orders that could prod China on its trade practices, such as one that would launch an investigation into the use of subsidies to unfairly distort trade practices.

CVD is nothing new.

India’s bilateral investment pacts under cloud

India has discontinued bilateral investment treaties (BITs) with most of its prominent trading partners, with termination notices given to as many as 58 countries, including EU states.

All the BITs expired on April 1. According to sources, just a handful of countries — Tajikistan, Turkmenistan, Kyrgyz Republic, Switzerland, Oman, Qatar, Belarus, Thailand, Armenia, UAE and Zimbabwe — have agreed to renegotiate the treaties after the draft model BIT was approved by the Union Cabinet in December 2015.

India’s bilateral investment pacts under cloud