International Trade Agreements Before Domestic Courts
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1 International Trade Agreements Before Domestic Courts
2 ThiS is a FM Blank Page
3 Maria Angela Jardim de Santa Cruz Oliveira International Trade Agreements Before Domestic Courts Lessons from the EU and Brazilian Experiences
4 Maria Angela Jardim de Santa Cruz Oliveira Brasilia Brazil ISBN ISBN (ebook) DOI / Library of Congress Control Number: Springer Cham Heidelberg New York Dordrecht London Springer International Publishing Switzerland 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer International Publishing AG Switzerland is part of Springer Science+Business Media (
5 Foreword What is, or should be, the role of domestic courts in the enforcement of international law, more specifically, state-to-state trade commitments? This is the ambitious question masterfully tackled in this volume. The work is unique in that it examines the interplay not from the conventional perspective of EU or US courts, but from the vantage point of developing countries, in particular, Brazil. It does so not in the abstract but with reference to rich jurisprudence before Brazilian courts, juxtaposing it, in particular, to the EU experience. The research also reaches a controversial conclusion: Brazil, which gives direct effect to trade agreement in its domestic courts, is not lauded as the champion of free trade. Instead, it is strongly advised to stop giving direct effect to trade agreements before its domestic courts. The starting point of the book is an intriguing puzzle: Why is it that the United States, the EU, Canada, Japan and even China, India, and South Africa have refused to give direct effect to WTO and other trade agreements before their domestic courts, whereas Latin American countries like Brazil, Mexico and Argentina do continue to give such direct effect? What explains this Latin American exceptionalism? Does it make sense? The author provides a forceful case for Brazil to end this exceptionalism. States are free to decide how they will implement treaty commitments. Nothing under international law obliges them to give direct effect to treaties before domestic courts. Indeed, when looking at the largest trading countries, almost all of them have decided to create a wedge between (1) their international, state-to-state trade obligations before, for example, the World Trade Organization, and (2) what binds them vis- a-vis private parties under domestic law or before domestic courts. As a result, in neither the United States nor the EU can traders invoke WTO commitments of the state before domestic courts. The recently concluded Canada EU Free Trade Agreement (CETA) goes as far as stating that [n]othing in this Agreement shall be construed... as permitting this Agreement to be directly invoked in the domestic legal systems of the Parties (Chapter 33, Article 14.6). Also China, India and South Africa have done the same. In Brazil, in contrast, a rich jurisprudence v
6 vi Foreword exists where domestic courts have applied, interpreted and found violations of trade agreements binding Brazil at the request of (often non-protectionist-inspired) private parties. Traditional international lawyers may applaud Brazil s commitment to international law. On their view, enlisting domestic courts in the enforcement effort of international law can compensate the flaws in the international enforcement of international law and thereby contribute to the effectiveness of the discipline. Dr. Oliveira tells a different story. In her view, and relying on rational choice approaches, allowing national courts to enforce trade agreements at the request of private parties is counterproductive, even for the effectiveness of international law. Building on the Brazilian experience, she points at a number of unintended consequences : (1) a flood of individual cases, (2) diverse and inconsistent rulings among domestic courts within Brazil, (3) domestic courts interpretation of WTO rules different from the international and foreign interpretation of trade rules, and (4) disequilibrium in international trade s concessions and rights. In the Brazilian experience, she argues, the executive, not courts (especially not lower courts) are more inclined to favor international law compliance. Direct effect shifts power from the executive to courts and is, on this view, more likely to harm rather than help the effectiveness of international law. The book presents a nuanced theory of how countries should assess the role to give to their domestic courts in relation to international law: not a one-size-fits-all solution, but a calibrated one, based on the subject matter and type of treaty in question. A variable solution also that may change over time, depending on the needs of the country. New, relatively weak countries may find it attractive to tie their hands to international law through direct effect to signal their good citizenship in the world community, to attract foreign direct investment, or for internal purposes, e.g., for central governments to keep sub-federal levels of government under control or to tie in domestic reforms. In countries with a past of military rule, such hand tying enforced by domestic courts (not the rulers of the day) makes sense. It may be further explained by a country s colonial past, especially if it resides in continental Europe, where a strong monist commitment to international law prevailed at least until recently. However, in Dr. Oliveira s opinion, as the Latin American economies grow, and their stance at the international trade system increases, it seems fairly reasonable to expect a move from traditionalism [direct effect] to the rational choice theory [no direct effect]...as it happened in European courts and US courts. It remains to be seen whether this prediction will materialize. In any event, this book is an eye opening read, to be taken seriously by anyone interested in how emerging economies should structure their domestic engagement with international law, looking not only at theories but at practical experience, including unintended consequences. Washington, DC, USA 29 October 2014 Joost Pauwelyn
7 Acknowledgments This book would have never been completed without the generosity and wisdom of numerous people that supported me through this journey that I want to acknowledge and give my heartily thanks. I am greatly indebted to Joost Pauwelyn, who kindly encouraged me with insightful guidance and forward-thinking vision. Without him, none of this work would have been possible to achieve. I am also thankful to Andrea Bianchi, whose authoritative and challenging views stimulated me for academic dialogue and impelled me to deepen my argument with his invaluable insights. I would like to extend my gratitude to George Bandeira Galindo for his hard questions, thought-provoking comments and constructive feedback. A special note must be made to Nuno Garoupa, for his illuminative perspective on judicial behavior, profound intelligence and straightforward conversations. His friendship and support has been invaluable to the development of this book. I am grateful to the Honorable Justices Celso de Mello, Ellen Gracie Northfleet and Gilmar Mendes, for their kind support of my engaging in scholarly research. My gratitude also goes to Marcelo Kohen, for supporting my academic interest in international law, and Vera Thorstensen, for enlightening me about complex economic aspects of international trade and guiding me through the works of the World Trade Organization. I am also thankful to Deisy Ventura, for her insightful and thoughtful comments at the initial phase of this work. I would also like to express my appreciation for the help and guidance that various people have given me in different capacities throughout this research. I would like to thank Carl Baudenbacher for his generous invitation to the 2nd Saint- Gallen International Dispute Resolution Conference, and Christine Peter da Silva for my attendance to the 2nd World Conference of Constitutional Courts in Rio de Janeiro. I am thankful to Francisco Acuña, Lorena Sander, and Armando Reina for their helpful insights of the Mexican legal system. My thanks to Adriana Dreyzin de Klor, Alejandro Perotti, and Juliana Peixoto Batista for their kind availability to share their knowledge about Argentinean courts. I also recognize the help of Celso de Tarso Pereira, Franz Stirnimann Fuentes, Luiz Eduardo Salles, Graziela Picinin, Mattias Bietti, Ángel Horna, and Eva Keszeliova. Further, thanks to Brigitte vii
8 viii Acknowledgments Reschke, Julia Bieler and the Springer team for their valuable expertise and efficiency in the publication of this book. Most importantly, I would like to express my infinite gratitude to my parents who have always supported my intellectual endeavors. My deepest appreciation goes to my beloved husband José Carlos Santiago for his adorable companionship during the writing of this book, and for his endless supply of patience and spirited conversations. I dedicate this book to him.
9 Contents 1 Introduction Outline of Argument References The Relations Between International Law and Domestic Courts Comparative Studies on the Application of International Law by Domestic Courts The Role of Domestic Courts Regarding International Law: General Approaches in the International Legal Scholarship Ways Domestic Courts Usually Enforce International Law Traditional International Legal Scholarship on the Role of Domestic Courts Regarding International Law or Traditionalism Rational Choice Theory in the Law and Economics Approach on the Role of Domestic Courts Regarding International Law The Role of Domestic Courts in International Trade Law: A Substantial Field Approach The Traditionalism v. Rational Choice Theory Debate on the Role of Domestic Courts Regarding the WTO Agreements The American Creation of the GATT and Its Leadership in the Adoption of the Rational Choice Theory in International Trade Agreements An Assessment on the Role of Domestic Courts in International Trade Agreements The Function and Objective of International Trade Agreements ix
10 x Contents The Principle of Popular Sovereignty and Democratic Self-Government Conclusion References The Relations Between International Trade Agreements and Domestic Courts in Brazil Constitutional Arrangements at the National Level: The Domestic Status of International Treaties in Brazil The Traditionalist Role of Brazilian Courts in WTO Agreements Brazilian Cases The Imports of Codfish Case: Extraordinary Appeal n The Retreaded Tires Case: ADPF The Radial Tires Case: Extraordinary Appeal n The Thermo Bottles Case: Special Appeal n Conclusion References The Relations Between International Trade Agreements and Domestic Courts in the European Union The Domestic Status of International Treaties in the European Union The Rational Choice Theory Perspective of the European Court of Justice Regarding WTO Agreements ECJ Cases International Fruit Company Case Nakajima v. Council Germany v. Council Portugal v. Council Léon Van Parys v. Council Ikea Wholesale Ltd. v. Commissioners of Customs & Excise FIAMM v. Council Constitutional Pluralism: The Relationship Between the ECJ and National Courts Regarding WTO Agreements The German Jurisprudence The Italian Jurisprudence Conclusion References
11 Contents xi 5 Comparing the Role of Domestic Courts in International Trade Agreements The Main Similarities and Divergences Between Brazilian and European Union Courts in International Trade Agreements Thinking Beyond Brazilian Perspectives: The Patterns of Emerging Economies in Latin America Conclusion References Conclusion References
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