Explaining the Genesis of a Trade Dispute: the European Union’s Seal Trade Ban

Abstract

Why has the European Union (EU) enacted a trade ban on seal products provoking a trade dispute with Canada, while it is the most ardent supporter of the multilateral trade regime and was about to start free trade negotiations with Canada? Rational functionalist explanations of compliance with international trade rules suggest that trade officials in the EU concerned with reputation costs and exporters concerned with the risk of retaliation should have prevented the ban. This article shows from an institutionalist perspective that if the European Parliament and the Council are little concerned with reputation costs and exporters do not mobilize against regulation under uncertainty that their exports will be affected by retaliation, the agenda‐setting power of the Commission is insufficient to ensure World Trade Organization (WTO) consistency. Compliance with WTO rules is contingent on domestic political processes, and in the EU, it is dependent on inter‐ and intra‐institutional tradeoffs of WTO consistency and non‐trade objectives.

Key Words:

• Compliance
• European Union
• institutionalism
• seal trade ban
• WTO

Acknowledgements

The author would like to thank the participants of the June 2010 ECPR Pan‐European Conference and the December 2010 ‘Diverging Paradigms on EU Trade Policy’ workshop panels, Jan Orbie and two anonymous referees at the Journal of European Integration.

Notes

1. This article has been presented in June 2010 at the ECPR Pan‐European Conference on EU Politics, Porto, Portugal, and the theoretical argument in December 2010 at the ‘Diverging Paradigms on EU Trade Policy’ workshop, Leuven, Belgium.

2. This absence of direct effect that is often overlooked by some critics of the WTO and trade law scholars alike has been aptly formulated by Bello: ‘[w]hen a panel established under the WTO Dispute Settlement Understanding issues a ruling adverse to a member, there is no prospect of incarceration, injunctive relief, damages for harm inflicted or police enforcement. The WTO has no jailhouse, no bail bondsmen, no blue helmets, no truncheons or tear gas’ (1996, 417).

3. ‘Reputation costs’ has been called ‘the linchpin of the dominant neoliberal institutionalist [more or less a synonym for rational functionalism] theory of decentralized cooperation’ (Downs and Jones 2002, 95). The standard argument is that the major reason why states keep commitments is because they fear that any evidence of unreliability will damage their current international relationships as well as lead other states to reduce their willingness to cooperate in the future and what they are willing to commit in return for commitments of the partner state.

4. For example, Regime for the Importation, Sale and Distribution of Bananas (DS 16), Measures Concerning Meat and Meat Products (Hormones) (DS26) and Measures Affecting the Approval and Marketing of Biotech Products (DS 291, 292 and 293).

5. This is also suggested by Goldstein and Steinberg, who conclude that their functionalist model for compliance with WTO rulings may be less appropriate in the case of EU trade measures because ‘[…] the Commission is up against multiple veto points, giving it and the Appellate Body relatively little leeway to push Europe toward greater openness’ (2008, 279).

6. Articles prior to the Treaty of Lisbon, which still applied during this case.

7. Interviews with officials from DG Environment and DG Trade, December 2009 and January 2010, respectively.

8. In Amendment 7 of the draft report (Wallis 2009a, 9).

9. Interview with Belgian diplomat, 14 December 2009. According to this as well as other sources, the Canadian government has actively lobbied member states, especially in Central and Eastern Europe, to vote against the ban.

10. Interview with Belgian animal welfare lobbyist, 25 March 2010.

11. See website of European Commission Trade, available at http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/canada/