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Non-Discrimination and the Pillars of International Economic Law – Comparative Analysis and Building Coherency

Nicolas F. Diebold University of Lucerne Date Written: June 30, 2010 Abstract This working paper was presented at the Second Biennial Global Conference of the Society of International Economic Law (SIEL) 2010 in Barcelona, available on SSRN and as IILJ Emerging Scholars Paper 18 (2010). The final version is published uner the title 'Standards of Non-Discrimination in International Econocmic Law' 60 International and Comparative Law Quarterly (2011), 831-865. The principle of non-discrimination constitutes a corner-stone in different fields of international economic law, notably international trade in goods and services as well as intellectual property and investment protection. While its basic rationale appears to be straight forward, the application of the different elements which constitute a non-discrimination obligation has proven to be most complicated. Due to the high fragmentation in international economic law, adjudicating bodies are applying different interpretations and standards with regard to ‘less favourable treatment,’ ‘likeness,’ ‘regulatory purpose’, and ‘necessity’. This article shows the different theories for each of these elements on the examples of WTO law, NAFTA, investment protection and EU law and demonstrates how these theories affect the scope and liberalizing effect of the non-discrimination obligation. The article then attempts to develop a coherent factor-based application of non-discrimination rules suitable for all fields of international economic law. The article submits the theory that the elements of nondiscrimination should not be applied as strict legal conditions which must be proven by a complainant, but as a range of soft-factors which may be weighed and balanced by the adjudicating bodies. Keywords: Non-Discrimination, National Treatment, Like Products, Like Circumstances, Less Favourable Treatment, WTO, GATT, GATS, NAFTA, Bilateral Investment Treaties

The Draft GATS Domestic Regulation Disciplines – Potential Conflicts With Developing Country Regulations

(This is really a must read to understand what kinds of new destructions of democracy are in the pipeline, and what they mean.) "The most recent draft by the WPDR chairperson would impose seventy-one separate disciplines on domestic regulation that could be used separately or in combination to challenge services regulations through the WTO dispute process. The South Centre’s 2006 Analytical Note identified a number of common themes in the submissions developing countries have made to the WPDR. These themes are used below to organize discussion of key disciplines. A. Necessity tests"

The Necessity Test The following communication has been received from the delegation of Korea with the request that it be circulated to the Members of the Working Party on Domestic Regulation.

COMMUNICATION FROM THE REPUBLIC OF KOREA 1. There have been many constructive discussions on how to define the “necessity test” in the context of domestic regulation for trade in services. The proposals made by Canada, Australia, and EC have each contributed to stimulating and advancing the discussions in this area. However, as each proposal and relevant agreement uses different wording for outlining and defining the necessity test, there has been some confusion as to the exact meaning and implications of its use. 2. Korea is of the view that the different wording – such as “trade-restrictive” or “burdensome,” – despite some variance in nuance and focus, does not differ in their implications. This paper thus aims to clarify any differences that exist, elaborate on the possible alternatives that can be used, and suggest a draft provision for the necessity test that could be used in establishing multilateral rules for domestic regulation. 3. In the meantime, there still remain unresolved issues like what should be considered a “legitimate policy objective,” or what factors should be considered to determine the feasibility of an alternative measure. For an effective and strict application of the necessity test, these two issues need to be resolved. However, they will have to be discussed at another time.

General Agreement on Trade in Services: negotiations concerning Domestic Regulations under GATS Article VI(4)

(November 24, 2000) "In the current preparatory negotiations on services (part of the “built-in” agenda at the WTO) governments are developing positions regarding GATS Article VI(4) which requires the development of “disciplines” on countries’ domestic regulations over services. Specifically, the article seeks to prevent “unnecessary barriers to trade” in regulations regarding “qualification requirements and procedures, technical standards and licensing requirements” and to ensure that regulations are “not more burdensome than necessary to ensure the quality of the service.” In our view, this entire exercise is unjustified. There should be no role for the WTO in overseeing non-discriminatory domestic regulations (those which do not discriminate in standards and qualifications based on nationality.) This exercise represents a wholly unwarranted intrusion of trade law into important domestic public safety laws".