What is a Good (or Maybe a True ) International Standard? OECD 2 November 2016 International Regulatory Co-Operation: The Role of International Organisations RÉGIS BISMUTH PROFESSOR AT SCIENCES PO LAW SCHOOL
1. International Standards as a Tool of Economic Integration The economic outreach of standards devised by non-economic institutions (ex: WHO, etc.) (WHO, 2016) Two models of economic integration (Tinbergen, 1965) Negative economic integration Positive economic integration Bridging the gap between liberalization (global) and regulation (national/regional) Economic incentives of harmonization Interoperability Level-playing field, cross-border negative externalities International standards as the legal instrument of economic integration? A missing aspect in the OECD work on IRC 2
2. What is a Standard? (1/2) a) Etymology Standhard (Frankish) Estandard (Old-French) Etendard (French) Standard (English) The standard as a point of reference b) The processes of Recognition of Standards (Bismuth, 2014) (i) De facto Recognition by Market Actors Proprietary (ex: QWERTY) Non-proprietary standards (Ex: Blue-ray) (Stango, 2004) (ii) De Jure Recognition : Legal Endorsement Incorporation in a given legal framework (private contract, government procurement, national regulation) Issues : Free access (Strauss, 2016); delegation of legislative authority (De Bellis, 2011), judicial review (Schepel, 2013) 3
2. What is a Standard? (2/2) (iii) International De Jure Recognition : Legal Endorsement (1) Standards as a catalyzer of presumptions Whenever a technical regulation ( ) is in accordance with relevant international standards, it shall be rebuttably presumed not to create an unnecessary obstacle to international trade (TBT Agreement, Article 2(5)) Notification procedure when adopting an SPS measure that is not substantially the same ad the content of an international standard (SPS Agreement, Annex B(5)) (2) Standards as a Relevant Tool in the Institutional Practice IMF/World Bank Financial Sector Assessment Program (FSAP) Recognition of FSB international financial standards (OECD, FATF, Basel Committee, IOSCO, ect.) IMF recognition : technical assistance Fund s surveillance (IMF, 2010) 4
3. What is a true International Standard? (1/2) a) The recognitionability of international standards Relevance of WTO agreements Already recognized international standards (FAO/WHO Codex Alimentarius, IOE, etc.) (SPS, Annex A(3)) b) Intrinsic characteristics (or substance) of standards (negotium) standards are aimed at the achievement of the optimum degree of order in a given context (ISO/IEC, 2004, n 3.2) But the intrinsic characteristics do not govern recognition c) Extrinsic characteristics (or procedural/institutional aspects) of standards (instrumentum) open membership (Ex: appropriate standards, guidelines and recommendations promulgated by other relevant international organizations open for membership to all Members, as identified by the [SPS] Committee (SPS Agreement, Annex A(3)). See also (GATS, Article VI(5)(b) (note 3)) and (TBT Agreement, Annex 1(4)) Consensus? (TBT Agreement, Annex 1(2)) ( ) 5
3. What is a true International Standard? (2/2) c) Extrinsic characteristics (or procedural/institutional aspects) of standards (instrumentum) ( ) What about administrative best practices? Ex: TBT Principles for the Development of International Standards (TBT, 2000) : (1) Transparency / (2) Openess / (3) Impartiality and consensus / (4) Effectiveness and relevance / (5) Coherence / (6) Development dimension Other administrative practices (technical assistance, sunset reviews, implementation monitoring, etc.) Ensure effectiveness but not regarded as criteria for recognitionability 6
4. Criteria for international standards : Confronting Law with Practice (1/2) a) The Consensus Criterion: Not an Absolute prerequisite EC Sardines (WT/DS231/AB/R, 2002) b) The Open Membership Criterion: An Elastic Criterion in Practice Plurilateral standard-setters (Basel Committee, OECD, FATF, etc.) and Private standard-setters (IAASB, IASB, etc.) WTO AB: an international standardizing body that must be open to the relevant bodies of at least all Members and A panel must therefore carefully scrutinize the provisions, procedures, and practices governing accession to a standardizing body before concluding that it is "open to the relevant bodies of at least all Members (US Tuna II (WT/DS381/AB/R, 2012) In the WTO institutional practice Some pposition towards plurilateral regulatory strategies (see Slide No. 9) But now fully accepted by the CFTS (WTO CFTS, 2016); WTO TPRM (Bismuth, 2010) And even a WTO panel: the FATF Recommendations are recognized as the international standard against money laundering and the financing of terrorism (Argentina Financial Services (WT/DS453/R, 2015)) 7
4. Criteria for international standards : Confronting Law with Practice (2/2) WTO, CTFS, Report of the Meeting Held on 6 October 2003, Note by the Secretariat, S/FIN/M/42 (12 November 2003) (about OECD, FATF and Basel Committee standards) Flying in the face of that common sense approach, some larger and more powerful countries adopted unfair and coercive practices in plurilateral organizations ( ) to compel many other countries to implement measures which they alone had devised ( ) Over the past few years, the financial community had seen an unprecedented growth in the number of codes, standards and guidelines that were fashioned entirely by these plurilateral groups and with which they expected conformity from others ( ) The proposal derived from a long experience of exclusion of small developing states in standard setting...[t]hese countries could not accept that a handful of states, however powerful, usurped the right to dictate standards to the rest of the world ( ) 8
5. Relative Open Membership and the Strategies of International Standardization Open membership no longer a criterion for international standards Being part of a system of global governance : the philosopher's stone transforming the basic metal of plurilateralism into golden multilateralism Example of international financial standards: IMF/Word Bank FSAP + G20/FSB/IMF Trinity Strategy #1: Defense against potential competitors Combatting overlapping private standards Ex: (OIE, 2010): the role of private standards should be limited to supporting the implementation of official standards Strategy #2: Join the closed circle of global governance Necessary due diligence towards self-declared fake international standards Ex: the Santiago Principles for sovereign wealth funds (Bismuth, 2017) 9
Thank you for your attention regis.bismuth@sciencespo.fr Bismuth, R. (2017). The "Santiago Principles" for Sovereign Wealth Funds: The Shortcomings and the Futility of Self-Regulation. European Business Law Review. (forthcoming). Bismuth, R. (2014). Une cartographie de la standardisation internationale privée Tentative d identification de l objet et de ses enjeux. In R. Bismuth (Ed.), La standardisation internationale privée Aspects juridiques (pp. 9-26). Bruxelles: Larcier. Bismuth, R. (2010). Financial Sector Regulation and Financial Services Liberalization at the Crossroads: The Relevance of International Financial Standards in WTO Law. Journal of World Trade, 44(2), 489-514. De Bellis, M. (2011). Public Law and Private Regulators in the Global Legal Space. I CON, 9(2), 425-448. IMF (2010). IMF Expanding Surveillance to Require Mandatory Financial Stability Assessments of Countries with Systemically Important Financial Sectors, Press Release No. 10/357, 27 September 2010. ISO/IEC. (2004). ISO/IEC Guide 2:2004 Standardization and related activities General vocabulary (8th ed.). OIE (2010). Resolution No. 26 Roles of Public and Private Standards in Animal Health and Animal Welfare, 78 SG/FR, 27 May 2010. Schepel, H. (2013). The New Approach to the New Approach: The Juridification of Harmonized Standards in EU Law. Maastricht Journal of European and Comparative Law, 12(4), 521-533. Stango, V. (2004). The Economics of Standards Wars 3(1). Review of Network Economics, 3(1), 1-19. Strauss, P. L. (2016). The Troubling Conjunction of Public and Private Law. In F. Bignami & D. Zaring (Eds.), Comparative Law and Regulation Understanding the Global Regulatory Process (pp. 385 402). Cheltenham: Edward Elgar. TBT Committee (2000). Decision of the Committee on Principles for the Development of International Standards, Guides and Recommendations with Relation to Articles 2, 5 and Annex 3 of the Agreement, G/TBT/9, 13 November 2000 (Annex 4) Tinbergen, J. (1965). International Economic Integration (2nd ed.). Amsterdam: Elsevier. WHO Office of the Legal Counsel. (2016). International Regulatory Cooperation and International Organisations: The Case of the World Health Organisation. WTO, CTFS (2016). International Standard-Setting Bodies Recent Developments, S/FIN/W/90, 16 June 2016. 10