POMFR: L. Ankersmit, Green Trade and Fair Trade in and with the EU: Process-based Measures within the EU Legal Order (Cambridge: CUP, 2017)

By Thomas Horsley

Green Trade and Fair Trade in and with the EU: Process-based Measures within the EU Legal Order, by Laurens Ankersmit (Cambridge, Cambridge University Press, 2017, ISBN 9781107191228); 294 pp.; £85.00

This monograph examines the position of ‘process-based measures’ within the EU legal order. PBMs (also known as ‘process and production method’ rules) are characterised as public and private initiatives that, in the context of international trade, seek to address environmental and social concerns that arise externally; in other words, beyond the territory of the regulating state. Examples include, bans on the importation and sale of cosmetics tested on animals; national and regional product labelling schemes; and private initiatives such as Fairtrade and the Marine Stewardship Council certification programme.

PBMs respond directly to the geographical separation of production from consumption as a result of globalisation. The reality of global supply chains is such that the environmental and social costs of producing goods are rarely contained within the state in which those goods are ultimately consumed. Accordingly, States (and also private actors) use PBMs as tools to mandate, reward or at least incentivise responsible production in other jurisdictions. As Ankersmit argues, this poses numerous challenges. As a matter of trade policy, the use of PBMs – often by developed countries against developing nations – is open to accusations of protectionism or, worse still, neo-colonialism. From an international law perspective, PBMs run counter to the general principle that states should not interfere in the domestic affairs of other sovereign states. Similarly, as unilateral acts, PBMs also sit awkwardly with the established preference for multilateral responses to transnational regulatory problems in international trade. Finally, the increased use of PBMs by multinationals and civil society prompts questions about the role of private stakeholders in the promotion and enforcement of global environmental and social standards.

The legality of PBMs as instruments to promote positive global environmental and social change is a familiar topic in WTO law, but presently underdeveloped in the scholarship on European integration. Ankersmit’s book addresses that gap. Its central claim is that PBMs pose important challenges for cross-border trade ‘in and with’ the world’s most highly developed regional trading block: the EU internal market. In summary, the book aims to:

‘provide a map of the legality of process-based measures in the EU, demonstrating where there are gaps and inconsistencies in EU law and policy, and investigating how process-based measures might be designed so as to be compatible with EU law’ (at p.236).

Chapter 1 establishes the book’s overarching analytical framework. Drawing on existing scholarship on international trade law, Ankersmit identifies three challenges to PBMs as instruments of trade policy: extraterritoriality, unilateralism and the public/private divide. First, he points to a tension between the nature of PBMs as regulatory tools and the basic principle of international law that states should not interfere in the domestic affairs of other sovereign states (extraterritoriality). Secondly, he highlights that such measures may run counter to the established preference for multilateral responses to transnational regulatory problems in international trade (unilateralism). Thirdly, engaging private actors, PBMs are considered to raise potential concerns with reference to the role of multinationals and civil society in the promotion of global environmental and social standards (the public private divide). Chapter 1 also isolates three categories of PBMs: (1) country-based measures; (2) producer-based measures; and (3) consumer-based measures. Country-based measures target government behaviour; for example, by prohibiting the importation of products from countries that have not adopted adequate legislation on health, safety and environmental standards. Producer-based initiatives focus on those manufacturing products and (typically) impose restrictions on market access where goods are produced in socially or environmentally degrading ways. Consumer-based PBMs incentive consumers to purchase particular goods over others in an attempt to promote responsible production in other states.

Chapter 2 tackles familiar, but important questions of competence and legal doctrine at Union level. To what extent does the EU enjoy competence to integrate PBMs into internal and external policy instruments? What, if any limits, has the Court of Justice imposed on the Union legislature with regard to PBMs? Chapters 3-4 then explore the Member States’ freedom to enact PBMs in the shadow of EU rules on the free movement of goods and public procurement. To what degree are Member States free under those rules to formulate PBMs unilaterally to promote environmental and social concerns that arise outside their respective national markets? Finally, Chapter 5 considers the implications of EU competition law for private PBM initiatives. This includes examining the constraints that EU competition law place on market actors as norm-generators. The relationship between EU law, PBMs and private activity is also considered in Chapter 3 (analysing the horizontal effect of the Treaty rules on the free movement of goods).

What conclusions does this book reach with regard to the place of PBMs ‘in and with’ the EU legal order? First, with reference to Union policymaking (Chapter 2), Ankersmit’s book identifies the existence of several PBM instruments in the areas of animal welfare and environmental protection. The EU legislature, he concludes, is yet to enact PBMs to address social objectives. The suite of existing EU PBMs encompasses all three categories of measure. Examples of country-based PBMs include the EU Leghold Trap Regulation and the EU ban on conflict diamonds. The EU seal products ban and the prohibition on the import of cosmetics tested on animals are identified as examples of producer-based initiatives. Consumer-based PBMs at Union level include the EU Organic Labelling Regulation and the voluntary EU Ecolabel Scheme. Reviewing the case law, Ankersmit concludes that neither extraterritoriality nor unilateralism pose any serious obstacle to the Union legislature’s ability to use its Treaty competences to enact intra-EU and extra-EU trade measures incorporating PBMs.

Secondly, at Member State level, Ankersmit finds that the majority of national PBMs fall within the scope of the EU Treaty provisions on the free movement of goods – and Art 34 TFEU in particular. Accordingly, these measures require justification at Union level through the application of either Art 36 TFEU or the supplementary judicial category of mandatory requirements. Discussing the scope of the Treaty rules on intra-EU movement, the scope of their direct effect and the framework for justifications is familiar material for EU legal scholars. Chapters 3 and 4 inject the fresh perspective. Chapter 3 considers whether the Court of Justice places any territorial limits on Member State competence to justify restrictions on the free movement of goods (the extraterritorial challenge). In other words, how far does EU law permit Member States to integrate the protection of out-of-state environmental and social policy concerns into derogations to the Treaty rules on the free movement of goods? It considers arguments for and against such the imposition of such a territorial limit on public interest justifications and, through analysis of the case law, concludes that the Court of Justice is yet to adopt a clear and concise approach. Chapter 4 investigates whether there is a legal obligation in EU free movement law to cooperate, consult, or otherwise take account of external interests when designing and applying PBMs at national level (the unilateralism challenge). On this point he concludes that EU law does not, in principle, require Member States to engage in consultation with out-of-state interests in order to justify restrictions on the free movement of goods. Nonetheless, he argues that the existence of EU harmonising legislation and the principles of mutual recognition and sincere cooperation directly condition Member States’ freedom to defend PBMs within the Union legal order.

Finally, in relation to private activity, Chapter 5 scrutinises the compatibility of PBMs with the Treaty provisions on EU competition law – with specific focus on the prohibition on anti-competitive agreements (Art 101(1) TFEU). Ankersmit concludes that EU competition law poses the most significant challenges to PBMs within the EU legal order. He argues that PBMs violate Art 101(1) TFEU but may also be saved through application of Art 101(3) TFEU and/or the Court’s accompanying ‘rule of reason’ approach to Art 101(1) TFEU. The final section of Chapter 5 defends the legitimacy of including the achievement of social and environmental objectives as public interest exemptions and/or justifications as a matter of EU competition policy. Furthermore, in a continuation of the legitimacy theme, he reflects on the capacity of judges and competition law authorities to adjudicate on the definition of public interests when scrutinising anti-competitive agreements for compliance with Art 101(1) TFEU. He proposes a solution that directs judges and competition law authorities to verify whether the relevant public interest has already been exhaustively regulated. Only to the extent that it has not should adjudicators recognise specific environmental and social policy objectives as potential public interest objectives that may exempt and/or justify private PBM initiatives from the scope of the Treaty rules on anti-competitive agreements.

Overall, there is much to commend this book. It offers a fresh perspective on some familiar, but important issues in EU trade law. It is broad in scope, considering the legality under EU law of public and private PBMs at both Union and Member State levels. Although focussed principally on isolated Treaty provisions on the free movement of goods (Art 34 TFEU) and EU competition law (Art 101(1) TFEU), it includes analysis of related substantive areas such as public procurement and taxation. Chapter 6 offers a neat summary of the main arguments with reference to broader themes. It also looks ahead to future developments, notably the extent to which the Commission’s 2015 ‘Trade for All’ strategy document addresses the challenges that PBMs pose for the Union legal order. Lastly, the book’s general readability further broadens its appeal. It is clear and well-written.

However, some specific points of criticism are worth noting. First, further contextualisation would have enhanced Ankersmit’s conclusions in several key places. For example, in relation to his review of Member State PBMs for compatibility with the EU Treaty provisions on the free movement of goods and anti-competitive agreements, the author could have usefully scrutinised in greater depth the extent to which the Court’s approach to PBMs displays any distinctive features against the background of its broader case law in both policy areas. Secondly, the dividing line between discussion of the external and internal PBMs could have been punchier and more clearly articulated. At times, Ankersmit’s assessment of the restraining impact of EU law on PBMs that regulate trade between the EU and third states is hard to differentiate from discussion of the rules governing the legality of PBM instruments within the internal market. If that distinction is significant to the main analysis, it could have been made more clearly.

More significant is the absence in Chapter 1 of a stronger justification for Ankersmit’s choice of analytical framework. In particular, the introductory chapter would have benefitted from a deeper and more reflective account of why the conceptual framework developed to structure analysis of PBMs at WTO-level is suitable for direct transposition to assess the legality of those measures under EU law. For Ankersmit, the decision to introduce the PBM concept – with its benchmarks of extraterritoriality, unilateralism and the public/private divide – is ultimately justified simply with reference to the fact that the EU, like the WTO, regulates cross-border trade. As he puts it,

‘While process-based measures have given rise to considerable controversy within the WTO law and scholarship, this debates has remained largely absent in the EU context… this is surprising because similarly to the WTO, the EU seeks to liberalize trade among its constituent members via provisions that prohibit restrictions on trade while at the same time permit trade restrictions for legitimate public interest purposes.’

This is not to criticise the decision to introduce the PBM concept into the existing legal scholarship on EU trade law. On the contrary, as already noted, Ankersmit uses that term most effectively to offer fresh perspectives on a range of key legal issues, such as the balancing of the Treaty rights of intra-EU movement with public interest requirements. However, for the EU constitutional lawyer at least, more could certainly been made of the suitability (or otherwise) of the WTO-level framework structuring PBMs as a mechanism to assess the position (and legality) of those measures within the distinctive constitutional context of the Union legal order.

The direct transposition of the PBM concept, together with, in particular, extraterritoriality and unilateralism as principles of international trade law to scrutinise public and private conduct as a matter of Union law jars somewhat with the Court of Justice’s established view of the Union as a ‘new legal order’ that it has, at times, expressly defined in opposition to international law. This has particular resonance in relation to Ankersmit’s scrutiny of Union, Member State and private activity in the context of the EU internal market. That sphere of EU law – a core focus in this book – displays some of the European Union’s most distinctive features that differentiate that legal order from the framework of international trade law under the WTO. Its very objective is the progressive consolidation of national markets into a single regulatory space that is more akin to a unified domestic market than a connected network of national markets. To what extent does that objective impact on the transposition and application of the concepts of extraterritoriality and unilateralism?

Admittedly, Ankersmit reflects on the distinctive features of the EU legal order at various points in his analysis – notably in Chapter 6. For instance, the conclusion points expressly to the particular ‘institutional features’ to explain differences in the approach to PBMs ‘in and with’ the Union. These features include, the existence of Union competence to adopt harmonising measures at Union; the EU’s overarching regional integration objective and its specific settlement procedures which create an important space for direct enforcement. However, this analysis tends to support rather than refute the criticism raised. Problematizing the WTO-level conceptual framework on PBMs prior to its application to assess the position of such measures within the Union legal order would have been more compelling intellectually. It would also make what is a highly engaging and readable study even stronger.

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