Please check against delivery Guest Lecture for the Formal Launching of the Masters in International Trade Law Program The Importance of International Trade Law in Today s Global Trading Community By H.E. Dr. Mari Elka Pangestu Minister of Trade Republic of Indonesia Faculty of Law University of Indonesia Jakarta 14 September 2007
[List of attending dignitaries and VIPS to go here, e.g.,:] Mr./Mrs. (from U.S. Embassy/USAID), Prof. Dr. Juwana, Mr. Secretary General, Distinguished Guests, Professors and students, Ladies and Gentlemen: Selamat Sore, Good afternoon. Introduction and thanks Let me begin by saying what a pleasure it is for me to be here today to give the opening lecture for the new Masters in International Trade Law Program. I am pleased that from the United States Agency for International Development and Professor Hikmahanto Juwana of the Faculty of Law of the University of Indonesia are with us today. I would also like to express my thanks to the University s Faculty of Law for the hard work put into making the launch of this program possible today, to ITAP and USAID for their support for this new program. I would also like to congratulate the seventeen Ministry of Trade lawyers who have been selected to participate in the program. The growing importance of trade law in international trade policy I think everyone here today would agree that this program represents a positive initiative and an exciting step forward for the University of Indonesia in the expansion and advancement of its graduate legal curriculum. I have often said that the Ministry and the country have a great need for welltrained international trade lawyers. When I attend meetings with my counterparts from other countries, it is not uncommon to observe that they are accompanied by senior trade lawyers. This provides them with a competitive advantage that this program will help to address for Indonesia in the future. I would argue, however, that the presence of senior trade lawyers as key participants in Indonesia s trade policy deliberations and negotiations is no longer Masters in International Trade Law Program Guest Lecture Page 2
an advantage we can afford to be without. Such expertise has become essential to understanding the complex legal implications of international policy decisions, and to ensuring that negotiations are translated into the intended policy outcomes. For Indonesia to be competitive in today s global trading system, we need competent and experienced international trade lawyers to help us take advantage of the global trading system. The role of the GATT and WTO in increasing the need for international trade lawyers Trading nations have been negotiating trade agreements, applying tariffs and imposing other trade restrictions against one another s goods for many centuries. But it was in 1947 that the modern era of international trade law emerged with the signing of the General Agreement on Tariffs and Trade (GATT), accompanied by efforts to launch what was supposed to be the International Trade Organization in 1948. It was over forty-five years later, in April 1994, when one hundred and twenty three nations, including the Republic of Indonesia, agreed, in Marrakesh, Morocco, to establish the World Trade Organization (WTO). With the stroke of the pen, in 1995, international economic law assumed a newfound importance. However, it is fair to say that law faculties throughout the world, in both developing and developed countries, have been relatively slow to adapt to these new developments, as many have yet to begin educating their students in this new body of law. This is a shortcoming that is now being remedied by the Faculty of Law of the University of Indonesia. I will return to what a unique step this represents shortly. Governments, like law schools, have also been slow to adapt to the recently heightened degree of importance attributable to law in the field of international economic relations. This is because the old GATT was more of a club of diplomats and a forum for the art of international commercial diplomacy, and less of an institution that was run on the basis of legal texts and procedures. That, too, changed in 1995 with the establishment of the WTO. The rule of law, rule-making, Masters in International Trade Law Program Guest Lecture Page 3
legal interpretation and the enforcement of rights and obligations have all been given new significance by the establishment of what, despite the various shortcomings of the WTO and the world trading system, is a rules-based organization overseeing a rules-based system. Rules now matter. And because of this, lawyers now clearly matter much more than they used to. Let me explain why this is so. Trade negotiations today, more than ever, are negotiations about legal texts International trade agreements contain rules, commitments, rights and obligations. In many ways, trade agreements are essentially contracts between two or more contracting nations. Before a contract is signed, legal advice should be sought, or better yet, a lawyer should be present when working out the details. So today, more often perhaps than most of us realize, when we are engaged in the process of negotiating, we are in fact discussing different ways of formulating - in binding legal language - what will become a set of legal rules. Those international legal rules then need to be converted usually into domestic laws and regulations. Drafting laws and regulations is a highly technical task that skilled lawyers are trained for. Drafting laws and regulations to implement these trade agreements on the domestic level, in a manner which does not violate any international commitments, is a task that involves the input of lawyers with different skills and expertise from ministries, agencies and stakeholders. The sudden need for lawyers in international dispute settlement Another field which has grown in importance since 1995 and where the role of lawyers has grown accordingly is international dispute settlement. The number of disputes under the various regional and bilateral agreements we have signed has been very limited. But its significance in the WTO has been very great. In the first ten years of the WTO, there were more disputes brought before panels than in the entire 47 years of the GATT. And the new WTO dispute settlement system, because of its binding nature, is a genuine and effective tool for enforcement. Masters in International Trade Law Program Guest Lecture Page 4
In the WTO, dispute settlement is a powerful instrument that can be used by Indonesia in pursuit of its interests, but also against Indonesia when we find ourselves on the wrong side of the rules. It is therefore important that we have at our disposal the legal expertise and experience to use the rules to our greatest advantage. We in Indonesia have learned the hard way what it means to be on the wrong side of WTO rules, as with the Indonesia - Automobiles case which I am sure will be studied in some detail during the masters program. But it was a useful lesson which brought us a deeper understanding of the domestic ramifications that entering into legally binding commitments at the multilateral level can create. We have also seen the positive side of the WTO dispute settlement system, in terms of the Korea Paper case, when we successfully sued Korea before the WTO over their illegal antidumping measures against Indonesian paper exporters another case which I am sure you will study in some detail during your program. Today, with 151 Members, the WTO is an organization where very few nations possess the full scope of legal expertise required to successfully bring a case or to defend themselves in a dispute using the Organization s complex dispute settlement rules. Even the larger and more active developing-country users of the system, like Brazil, or Korea, inevitably rely on the legal expertise of external lawyers when bringing or defending cases at the WTO. However, even when they do become involved in such disputes, those governments have seen the need for their own lawyers to have substantial WTO law expertise in order to monitor and support the work of outside counsel. With this Masters in International Trade Law program, Indonesia is taking a major step towards developing this much-needed legal expertise. The legal needs of a trade minister When a trade minister negotiates a trade agreement, there are many legal concerns which must be addressed. One should have a thorough understanding of the document one is signing and what rights and obligations one is entering into. In other words, one must understand the legal consequences and regulatory implications signing such an agreement will have. One needs to know how these Masters in International Trade Law Program Guest Lecture Page 5
rights and obligations can be understood and how the language of these rights and obligations will be interpreted in the event of a dispute. Competent legal advice is therefore essential in order to know whether a trade agreement that supposedly gives benefits to Indonesia is expressed in legal language that is unambiguous and capable of being implemented in operational and meaningful terms. A trade minister also needs to understand how the legal system of Indonesia relates to the obligations entered into under that trade agreement. One must be able to anticipate any difficulties our legal system might encounter when implementing these obligations, so that Indonesia s interests can be protected from unnecessary legal conflicts. Furthermore, when a domestic law or regulation is adopted, a trade minister needs to know that it does not violate any of our international legal commitments. If there is even a remote possibility that legal issues may arise, a trade minister needs to be aware of what positions are the most easily defendable as well as those that can only be defended at great cost. In order to be confident of this, the advice of competent legal counsel will be necessary in order to highlight the implications of our international obligations as well as those of our own laws and regulations. Of course, domestic laws and regulations, as well as international agreements, need to be properly drafted. THE MITL course on legal drafting will provide our students and future MOT trade lawyers with much-needed skills in this area. A trade minister regularly faces issues that have legal implications. We have numerous examples of such trade issues, including the recent Chinese measures adopted against Indonesian fisheries products, as well as the export ban - imposed earlier this year - on exports of sand from Indonesia. Another major area where the WTO legal rules interface with domestic regulations and procedures is in the trade remedy rules, such as antidumping, subsidy and safeguards cases. When our domestic authorities conduct an antidumping investigation into unfairly priced products being imported and causing injury to the Indonesian industry, a trade minister, reviewing and approving recommendations from such an investigation, must be confident not only that the facts and figures are Masters in International Trade Law Program Guest Lecture Page 6
right, but that all requirements of Indonesian law and WTO law have been complied with. The full semester course on trade remedies in the MITL curriculum will be very helpful here and will also help the MOT and the Indonesian government to better assist exporting companies in dealing with such cases when filed against them overseas. Many countries in the world today, and especially developing countries, face a shortage of necessary legal resources to handle the challenges which I have outlined above. We have needs in this respect, not least because we did little hiring of lawyers for a number of years. We are lucky to have a core of skilled lawyers working for us at the MOT. But there is undoubtedly scope for much more legal input and for lawyers to play a more proactive and influential role when these trade agreements are negotiated and implemented. The unique nature of University of Indonesia s MITL Program I have mentioned that the Masters in International Trade Law represents a uniquely positive development for Indonesian legal education. By initiating this degree program, the University of Indonesia has ambitiously catapulted itself into a very small circle of academic institutions worldwide that offer a comprehensive and fulltime degree program in the new and exciting field of international trade law. Within Asia, only a few universities have recognized professorial expertise on WTO law. In Korea, Seoul National University, which, like the University of Indonesia, is the country s flagship academic institution, is fortunate enough to have several professors who are well versed in the subject of international trade law and can offer courses on WTO and trade law in the University s Graduate School of International Studies. In Japan, academics such as Mitsuo Matsushita, the former Appellate Body Member, now at Seikei University, and Ichiro Araki, formerly of the WTO Masters in International Trade Law Program Guest Lecture Page 7
Secretariat, now at Yokohama National University, allows these law faculties to offer several trade law courses each semester. The University of Hong Kong was, until recently, running the WTO s Trade Policy Course and also engaged in efforts to hire trade law experts. This allowed the faculty of law to offer a limited number of courses on international economic law and the WTO. In South East Asia, the Faculty of Law at the National University of Singapore is currently entrusted with running the WTO s Trade Policy Course and has several professors and associate professors on the faculty who teach courses about the WTO and international trade law. Further afield, one finds established centers of expertise on trade law, like the Georgetown University Law Center in Washington DC, which, in any given semester, will offer several trade law and related courses from well-known experts such as Professor John Jackson. In Europe, one finds the Faculty of Law of the University of Maastricht with Peter van den Bossche, who has been involved with the conceptualization and development of the MITL, and the Graduate Institute of International Studies in Geneva. However, neither Maastricht nor Geneva currently offers more than a few courses on international trade law each semester. The number of academic institutions which go beyond offering just one or two courses on international trade law per semester and offer a comprehensive, fulltime graduate-level degree program on the law of the world trading system can probably be counted on one hand. The World Trade Institute in Berne, Switzerland is now in the seventh year of running such a program and we are fortunate enough to have had three experts from there helping with the design and development of the MITL. The masters program being launched today therefore joins a small and elite number of highly specialized trade law programs worldwide. Masters in International Trade Law Program Guest Lecture Page 8
How lawyers can help Indonesia reach its development goals I would like to address the important role trade law and trade lawyers can play, in helping Indonesia reach its development goals. But before I do that, let me reiterate what it takes to be good at the high-stakes practice of international commercial diplomacy. In order to best serve the interests of their country, a trade negotiator needs to know many things before participating in any negotiation. These would include four key understandings: (1) a fairly sophisticated understanding of what the trade rules say now, and what they would mean after the proposed changes; (2) a thorough grasp of the domestic legal and regulatory framework through which such trade rules must ultimately be implemented; (3) an instinctive feel for what any obligation will cost in terms of domestic political economy considerations; and finally (4) an appreciation of the value of the concessions being negotiated, in terms of the domestic politicaleconomy pressures of one s negotiating partner. The first two items require legal analysis; the last two involve a study of economic and policy frameworks. We are now in the sixth year of the Doha Development Agenda, the name under which the current Round of multilateral trade negotiations are being carried out in the WTO. Given the bold-sounding title, one could be forgiven for assuming that the concerns of developing countries would be front and center in the present Round. The unfortunate reality is that the concerns of developing countries will only be front and center, when developing countries are able to put their various and competing agendas on the table and advance them with skill, sophistication and tenacity. We have taken some steps in this direction already. Indonesia is assisting the G-33 group of developing countries to express themselves in a unified fashion in the WTO agricultural negotiations. We have also recently proposed a draft legal text in the WTO fisheries subsidies negotiations, the first time we have made detailed proposals on rules. These are significant achievements which highlight Indonesia s leadership role. While some developing countries are becoming increasingly sophisticated at engaging constructively and effectively in the formulation of international trade Masters in International Trade Law Program Guest Lecture Page 9
rules, many others lack the necessary institutional capacity to do anything more than simply show up at the meetings. Whereas it is certainly true in Indonesia that we have some qualified trade law expertise in different ministries, it is equally true that the government as a whole, and the private sector interests who are affected by trade rules and trade policy, have yet to avail themselves of lawyers and trade law expertise in such a manner that would allow Indonesia to proactively formulate and aggressively pursue its trade law and policy interests on all fronts. The need for educational capacity in international trade law For this reason, it is imperative that we develop the kind of long-term educational capacity to help us build and sustain the institutional capacity we need in order to take our place of leadership in international commercial diplomacy and legal rulemaking. I think there can be little doubt that given the size of Indonesia as a country, the magnitude and inherent capabilities of its population, the abundance of its natural resources, and the diversity of its economy, we deserve to be present and accounted for at these negotiations and to play a leading role in the formulation of international trade rules. Opportunities and challenges for Indonesia in trade negotiations Indonesia continues to play a leading role on certain issues in the multilateral trade negotiations going on at the WTO. Let us not forget that, in our capacity as Chair of the G-33, our country has been instrumental in getting a number of issues onto the international agenda. These include food security and protection for special product status to developing countries, so that they can protect key agricultural sectors. These are issues we will continue to advocate and pursue in accordance with the demands of our national economic interests. However, the Indonesian government needs lawyers who have mastered the intricate technical and legal complexities of the WTO Agreement on Agriculture as this agreement is of key importance to our country. Similarly, we need this type of legal expertise in each area of importance to Indonesia s trade policies. Masters in International Trade Law Program Guest Lecture Page 10
Our economy is so diverse and our economic interests so broad that we should be at the forefront of the negotiating agenda on all issues, from agriculture, to non agricultural market access, from future services liberalization to revised rules on antidumping, from geographical indications to the issue of fisheries subsidies. These are all negotiations in which the vital economic interests of Indonesia will suffer if we are not present and active in these negotiating groups, accompanied by the necessary legal expertise. Other equally important negotiations are constantly taking place in the context of such fora as ASEAN, as well as at the bilateral level, for example, our recentlyconcluded Economic Partnership Agreement with Japan. We have also just committed to an ASEAN Economic Community, and we expect to sign a Blueprint for completion of it by 2015 when we meet in Singapore in November. This will require many legal and regulatory changes in the coming years. There s a lot of work out there for trade lawyers, and we simply do not have enough of them in Indonesia today. In summary, the importance of international economic law means that trade lawyers have a critical role to play for Indonesia and other developing countries when it comes to advancing our own vital national economic interests at home and abroad. Indonesia is a country which benefits enormously from trade and which needs trade to meets its own economic development goals. We cannot get to where we want to go without the benefits of an open and increasingly liberalized world trading system. But we cannot avail ourselves of these benefits unless we have a sophisticated understanding of the legal rules inherent to the system. The challenges for the University of Indonesia and for our lawyers as MITL Students The job that these seventeen masters students face today is to spend the next twelve months gaining a more profound and detailed understanding of these specialized legal rules. And this is, at the same time, the challenge which faces the Masters in International Trade Law Program Guest Lecture Page 11
Faculty of Law of the University of Indonesia: to impart in these students the sophisticated international legal knowledge and expertise they have come here to learn. This will be an exciting challenge on both sides, and we are grateful for the assistance that has been offered in this task by the United States Agency for International Development. In closing, when you the seventeen MOT lawyers - return to the Ministry and take up the important legal work that awaits you, I look forward to benefiting from the study and learning that you will experience over the next twelve months. I challenge you to study hard, and wish you the best in your studies. Thank you. Masters in International Trade Law Program Guest Lecture Page 12