Friend-shoring risks drifting into a costly snow job

By Robert Wolfe*
POSTED JUNE 17, 2023 | UPDATED JUNE 17, 2023

One of the hottest topics in trade right now is the meaning of “security”, particularly as a broad set of exceptions to the international rules that normally constrain policy. It also pops up in another hot topic: how to handle environmental issues such as taxing carbon content, and subsidising favoured environmentally-friendly products.

This can be summed up in a question: have free trade and secure trade become conflicting aims?

The debate hit the headlines under the Trump administration in the US when “security” was used to justify raising trade barriers and providing subsidies to favoured sectors such as steel and agriculture. It seemed any economic setback, from having to import strategic materials to loss of export markets, could be seen as a security issue.

A ‘snow job’ is an attempt to persuade someone that something is good or true when it is not

The Biden administration has rephrased the objective: it’s now “worker-centred”. But the policies have not changed much.

One aspect of this is to try to shift supply chains back home, or failing that to favour off-shore chains in “friendly” countries — “friend-shoring”.

Türkiye and EU: appeal-by-arbitration cases leave questions about WTO law

Originally published as
“Alternative to the alternative: Turkey and EU use arbitration for WTO appeals”
and previously as one section in
“Arbitration — the stop-gap when WTO appeals are unavailable”

By Peter Ungphakorn
POSTED AUGUST 30, 2022 | UPDATED SEPTEMBER 26, 2022

Türkiye told World Trade Organization members on August 29, 2022 that it would comply with dispute rulings that said it was violating WTO agreements by giving preferences to locally-produced pharmaceutical products, even though the rulings have not been formally adopted.

So far, the case is unique among WTO legal disputes. It is the first use of appeal-by-arbitration as a route to a second legal opinion on a ruling, while the WTO Appellate Body cannot function.

And because at the time arbitration was the only route open to Türkiye to appeal the case, neither the first-stage “panel” ruling, nor the findings in the appeal, have been formally adopted by the WTO’s membership.

This raises questions about the status of the rulings in WTO law. When a ruling has been formally adopted, governments (and others involved in trade) can assess with a degree of confidence whether similar policies or measures comply with WTO agreements.

When the membership has not adopted a ruling, that confidence is weakened, although some legal experts suggest the difference is small. The US treats non-adoption as significant without explaining why.

Alternative to the alternative: Turkey and EU use arbitration for WTO appeals

This has now been republished as
“Türkiye and EU: appeal-by-arbitration cases leave questions about WTO law — Similar to the 50-member ‘Multi-party Interim Appeal Arrangement (MPIA)’, one ruling has been formally adopted, the other not”

Arbitration — the stop-gap when WTO appeals are unavailable

By Peter Ungphakorn
POSTED AUGUST 4, 2020 | UPDATED APRIL 13, 2022

On August 3, 2020, a group of 50 World Trade Organization members — 30% of the membership — announced that an alternative arrangement was up and running, as a means of getting round a blockage preventing formal appeals in WTO dispute settlement.

Developed gradually since early 2019, the system would retain countries’ ability to get a second opinion after a first-stage “panel” ruling, through arbitration instead of going through the non-functioning Appellate Body.

But unlike a standard appeal, the outcome of the arbitration would not be formally adopted by the WTO’s membership, and therefore would not be part of official WTO law — at least not with the same weight as a full appeal.

On October 6, 2022, the first case was appealed. Less than three months later on December 21, it produced the first arbitration appeal ruling.