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PPM-Based Trade Measures to Promote Sustainable Farming Systems? What the EU/EFTA-Mercosur Agreements Can Learn from the EFTA-Indonesian Agreement

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European Yearbook of International Economic Law 2020

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 11))

Abstract

More sustainable systems of food production are urgently needed. The global community and all involved actors must go beyond focusing narrowly on quantities of food produced; they must simultaneously address interlinked issues of water scarcity, soil fertility loss, agrobiodiversity, climate impacts, equitable land access, labour standards, and other environmental and social issues. The farming systems of the global North and South are highly interdependent, and agricultural trade rules can significantly influence global structures of food production. In view of the increasingly apparent flaws of private sustainability-oriented certification schemes, there is a growing consensus that states can and should use trade-related policy levers to foster more sustainable food production. The present text explores ways of doing so. The approaches taken in the European Free Trade Association (EFTA)-Mercosur Trade Agreement are juxtaposed with those of the EFTA-Indonesian Trade Agreement. The latter agreement structure is argued for, based on its incorporation of tariff differentiation along the lines of process and production methods (PPMs). Accordingly, some thoughts are presented on the conformity of PPM-related trade measures with trade law. The primary concern that emerges regarding PPMs is not whether, but how these can be designed to avoid impinging on fundamental principles of international law, but rather to respect those. Finally, based on a look at the current state of farming systems in Brazil and Argentina, some recommendations are provided as to the optimal design of nuanced, sustainability-oriented trade rules.

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Notes

  1. 1.

    Independent Group of Scientists appointed by the Secretary-General, Global Sustainable Development Report (GSDR) (2019), p. xxv [cited: GSDR (2019)]. The GSDR 2019 includes summaries of data relating to severe challenges such as biodiversity loss etc.

  2. 2.

    GSDR (2019), p. 64.

  3. 3.

    GSDR (2019), pp. 65–66.

  4. 4.

    For the “art of doing agriculture”, and what it entails, see Bürgi Bonanomi (2015), Chapter 7.3.3; Rist et al. (2020).

  5. 5.

    Ricciardi et al. (2018) and Graeub et al. (2016).

  6. 6.

    GSDR (2019), p. 65.

  7. 7.

    For related data, see Bürgi Bonanomi et al. (2018), pp. 27–65. For information concerning Switzerland, see chapter “International Sustainable Law: A New Branch of Law”.

  8. 8.

    Bundesamt für Umwelt (2018), p. 39.

  9. 9.

    The GSDR distinguishes between four levers relevant for transformation: governance, economy and finance, individual and collective action, and science and technology, see GSDR (2019), pp. 67 and 68.

  10. 10.

    The following WTO agreements are also playing an important role in governing trade in agriculture: WTO General Agreement on Tariffs and Trade of 1947 (GATT); the WTO Agreement on the Application of Sanitary and Phytosanitary Measures of 1994 (SPS Agreement); the WTO Agreement on Technical Barriers to Trade of 1994 (TBT Agreement); the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights of 1994 (TRIPS).

  11. 11.

    The provision has been in force since 24th September 2017.

  12. 12.

    EFTA countries include Norway, Switzerland, Iceland and Liechtenstein.

  13. 13.

    Some use the term “Free Trade Agreements FTA”. The term PTAs encompasses both bilateral and plurilateral trade agreements; it is more appropriate than FTA since in general, trade is facilitated through those agreements but no free trade area is established.

  14. 14.

    Transdisciplinary research project “Just transition: Tackling inequalities on the way to a sustainable, healthy and climate-neutral food system (JUST-FOOD)” of the Strategic Research Council of Finland, financed by the Academy of Finland and led by Dr. Minna Kaljonen, Finnish Environment Institute. The project includes a case study, which is implemented with research partners in Switzerland and Brazil: https://justfood.fi/.

  15. 15.

    Interdisciplinary research project “Towards Food Sustainability” of the Swiss Programme for Research on Global Issues for Development (r4d programme), financed by the Swiss National Science Foundation (SNF) and led by Prof. Stephan Rist of the CDE, University of Bern. The project has been implemented in collaboration with research partners in Bolivia, Kenya and Switzerland: https://www.cde.unibe.ch/research/projects/towards_food_sustainability/index_eng.html.

  16. 16.

    Interdisciplinary research project “Sustainable Trade Relations for Diversified Food Systems”, financed by the Swiss National Science Foundation (SNF), as part of the National Research Programme 73 on “Sustainable Economy”, and led by Dr. iur. Elisabeth Bürgi Bonanomi of CDE, University of Bern: http://www.nrp73.ch/en/projects/governance/sustainable-trade-relations-for-diversified-food-systems.

  17. 17.

    Tension between crafting broadly applicable rules and doing justice to the diversity of individual cases has always been inherent in law-making and policymaking; see e.g. Ostrom (2005).

  18. 18.

    Cf. e.g. Oberlack et al. (2019).

  19. 19.

    The compilation stems from the workshop “agroecology works”, organised by various Swiss NGOs on 29th August 2019 in Bern.

  20. 20.

    Kremen et al. (2012).

  21. 21.

    Kremen et al. (2012), p. 5.

  22. 22.

    Kremen et al.(2012), p. 2.

  23. 23.

    Kremen et al. (2012), p. 2.

  24. 24.

    Kremen et al. (2012), p. 1.

  25. 25.

    Legally, the concept of “diversified food systems” relates to the idea of “diversity”, which is a key principle in sustainability research. It is opposed to the idea of “uniformity” as guiding paradigm of the twentieth century [see e.g. International Panel of Experts on Sustainable Food systems IPES-Food (2016); High Level Panel of Experts (HLPE) (2019)]. Reference to diversity has been made, for instance, in Article 6 of the International Seed Treaty (International Treaty on Plant Genetic Resources for Food and Agriculture [ITPGRFA] of 2001), which requires member states to pursue agricultural policies that promote “diverse farming systems”. Bürgi Bonanomi (2015), pp. 284–288.

  26. 26.

    Eyhorn et al. (2019).

  27. 27.

    Eyhorn et al. (2019).

  28. 28.

    Kremen et al. (2012); Messerli et al. (2014), pp. 449–459.

  29. 29.

    See e.g. for Kenya: Kiriti Nganga et al. (2018). The work is i.a. based on evidence from the R4D project “Towards Food Sustainability” in which the authors have participated. The R4D research in Bolivia, Kenya and further contexts has shown how those farming systems which are particularly relevant from a sustainability perspective are often too weak to evolve, given that they compete with systems producing more negative externalities. For related publications, see https://www.cde.unibe.ch/research/projects/towards_food_sustainability/index_eng.html.

  30. 30.

    De Schutter (2009a).

  31. 31.

    Food and Agriculture Organization of the United Nations (FAO), Institut national de la recherche agronomique (INRA) (2016); Tschopp et al. (2018), pp. 402–427.

  32. 32.

    See e.g. Bürgi Bonanomi (2011), pp. 68–88.

  33. 33.

    United Nations Conference on Trade and Development (UNCTAD) (2013), Chapter 5.

  34. 34.

    Theory on sustainability impact assessments (SIA) of trade agreements begins with the assumption that trade agreements should be understood as but one element of a broader policy picture: “Systemic thinking requires that the dynamics the agreement might trigger be explored in the context of the overall trade policy in which the agreement is embedded” (Bürgi Bonanomi 2017, pp. 481–503). Policy impacts may be anticipated based on detailed knowledge of the contexts involved.

  35. 35.

    European Free Trade Association Secretariat (EFTA) (2019) [cited: EFTA (2019)]. Final draft of the Agreement not yet published at the time of writing.

  36. 36.

    Signed at the 16th December 2018, but not yet ratified at the time of writing.

  37. 37.

    European Union EU (2019), p. 3.

  38. 38.

    See EFTA (2019).

  39. 39.

    By maintaining the partners’ “right to regulate” and “right to define level of protection” in those areas.

  40. 40.

    See e.g. Swiss Federal Council (2017), for sustainability chapters as included in EFTA-Agreements.

  41. 41.

    See EFTA (2019).

  42. 42.

    Cf. Bartels (2014).

  43. 43.

    Dommen (2020), p. 39.

  44. 44.

    The text of the agreement can be found here: https://www.efta.int/free-trade/Free-Trade-Agreement/indonesia.

  45. 45.

    For more detailed explanations regarding those commitments, see Bürgi Bonanomi (2019).

  46. 46.

    Harmonised system (HS) heading 15.11 refers to palm oil, HS 15.13 to oil from coconut, palm kernel and babassu.

  47. 47.

    An identic add-on is included in the versions relevant for the other EFTA countries Norway, Iceland and Liechtenstein.

  48. 48.

    See Bürgi Bonanomi (2019).

  49. 49.

    Annex II, lit. i of the CEPA.

  50. 50.

    Article 9.2 of the CEPA reads as follows: “Cooperation and capacity building shall cover sectors affected by the process of liberalisation and restructuring of the Indonesian economy as well as sectors with the potential to benefit from this Agreement.”

  51. 51.

    For academic literature concerning the challenges of palm oil production in Indonesia, see e.g. Znoj (2016), Colchester and Chao (2013), Murray Li (2014, 2017a, b), McCarthy (2010), Beckert et al. (2014) and Manoli et al. (2018).

  52. 52.

    See e.g. Znoj (2016), Colchester and Chao (2013), Murray Li (2014, 2017a, b), McCarthy (2010), Beckert et al. (2014) and Manoli et al. (2018).

  53. 53.

    The following WTO cases are particularly worthy of note: US-Restrictions on Imports of Tuna II (1994); US–Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (Tuna III, 2012); US–Import Prohibition of Certain Shrimps and Shrimp Products (Shrimps Case, 1998); EC–Measures Concerning Meat and Meat Products (Hormones Case, 1998); EC–Conditions for the Granting of Tariff Preferences to Developing Countries (GSP-Case, 2004); US–Measures Affecting the Cross Border Supply of Gambling and Betting Services (Gambling Case, 2005); EC–Measures Affecting the Approval and Marketing of Biotech Products (GMO-Case, 2006); Brazil–Measures Affecting the Imports of Retreaded Tyres (2007); China–Measures Related to the Exportation of Various Raw Materials (2012); and EC–Measures Prohibiting the Importation and Marketing of Seal Products (Seals Case, 2014). The full cases may be found at https://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.html or http://www.worldtradelaw.net/. For explanations and the relevance of the cases for sustainability concerns, refer to De Schutter (2015) or to Bürgi Bonanomi (2015), Chapter 3. For a sustainability related analysis of the seal case, refer to Cottier (2018), pp. 69–92.

  54. 54.

    PPMs in trade and related tariff differentiation have been debated in literature on climate protection and trade. See e.g. Holzer (2014) and Cottier et al. (2014a).

  55. 55.

    According to border tax adjustment criteria as developed by the WTO jurisprudence, products must be treated as “like” if they come with the same physical characteristics, if consumers’ tastes and habits imply that the products are substitutable, if the products’ end-uses in a given market are identic and if tariff classification is the same. See Cottier and Oesch (2005), p. 403.

  56. 56.

    See De Schutter (2015), pp. 48 ff. See also Howse (2012), p. 446.

  57. 57.

    Cottier (2015), p. 4.

  58. 58.

    The 1998 shrimp case is generally referred to as a key precedent. It was decided that a country seeking to introduce a trade-hindering measure based on public interest grounds must demonstrate that it is working towards a concerted approach at the international level. At the same time, the measures must be designed such that trading partners could also implement them; see: Bürgi Bonanomi (2015), pp. 111 ff. The jurisprudence on standards and technical rules such as labels directly or indirectly supported by the government similarly requires—based on the SPS and TBT agreements—that these be designed in a consistent and non-discriminatory manner. The SPS Agreement further requires that the standards withstand scientific scrutiny (which led the EU to lose, for example, in the hormone case). For a thorough analysis of the current legal situation and corresponding jurisprudence, refer to De Schutter (2015).

  59. 59.

    Musselli (2017).

  60. 60.

    Bürgi Bonanomi et al. (2018).

  61. 61.

    Cottier (2015), pp. 6–7.

  62. 62.

    Solar and Bürgi Bonanomi (forthcoming, 2021).

  63. 63.

    This was the agreed narrative at the World Trade Forum (WTF) 2019, organised by the World Trade Institute WTI in Bern, Switzerland. For a prominent reference in the media, see e.g. Vonplon (2019).

  64. 64.

    For Switzerland, for instance, compare with Rist et al. (2020). For example, cities like Nuremberg or Geneva, or even entire countries, like Brazil (see Inguaggiato 2014), have committed to purchasing mainly “sustainably produced food” when supplying hospitals or schools.

  65. 65.

    FAOSTAT (access to food and agriculture data of the Food and Agriculture Organization of the United Nations (FAO)) (2020).

  66. 66.

    Graesser et al. (2018).

  67. 67.

    Bowman et al. (2012).

  68. 68.

    Graesser et al. (2018).

  69. 69.

    Escobar (2019).

  70. 70.

    Graesser et al. (2018); Moffette and Gibbs (2018), p. 21.

  71. 71.

    Chappell and LaValle (2011).

  72. 72.

    Celentano et al. (2017), p. 694.

  73. 73.

    International Social Science Council (ISSC), Institute of Development Studies (IDS), United Nations Educational, Scientific and Cultural Organization (UNESCO) (2016).

  74. 74.

    Góes and Karpowicz (2017), p. 4.

  75. 75.

    The World Bank (2020) World Development Indicators. http://datatopics.worldbank.org/world-development-indicators/ (last accessed 16 January 2020).

  76. 76.

    Kempner and Loureiro (2002), p. 336.

  77. 77.

    De Schutter (2009b), p. 19.

  78. 78.

    For an analysis of the impact of the policies, see e.g. Inguaggiato (2014) and De Schutter (2009b).

  79. 79.

    Veiga Aranha (2010), p. 96.

  80. 80.

    Sanches Peraci and Alceu Bittencourt (2010), pp. 193ff.

  81. 81.

    De Schutter (2009b).

  82. 82.

    Diele-Viegas and Rocha (2020).

  83. 83.

    See Ley 26.331 de Presupuestos Minimos de Proteccion Ambiental de los Bosques Nativos; Ley 27.118 de Agricultura Familiar, https://www.agro.unlp.edu.ar/novedad/argentina-tiene-una-ley-de-agricultura-familiar; and the Plan Nacional de Manejo de Bosques con Ganadería Integrada (PNMBGI), https://www.argentina.gob.ar/ambiente/tierra/bosques-suelos/manejo-sustentable-bosques/ganaderia-integrada.

  84. 84.

    The EU funded Include project assesses the impacts of these policies: https://includeproject.wordpress.com/; see e.g. Inguaggiato (forthcoming, 2021).

  85. 85.

    For the emerging concept of common concern, see e.g. Cottier et al. (2014b).

  86. 86.

    Porto et al. (2019).

  87. 87.

    Food and Agriculture Organization (FAO) (2012).

  88. 88.

    While, from a sustainability perspective, farming systems of closed nutrient cycles are to be promoted, there is a complementary need for a trading system encouraging not so much commodity trade but rather trade in value-added products. See e.g. a related World Bank report: Mattoo et al. (2013).

  89. 89.

    See Bürgi Bonanomi et al. (2018), Chapter 3.

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Authors and Affiliations

  1. Centre for Development and Environment (CDE), University of Bern, Bern, Switzerland

    Elisabeth Bürgi Bonanomi & Theresa Tribaldos

Authors
  1. Elisabeth Bürgi Bonanomi
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  2. Theresa Tribaldos
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Corresponding author

Correspondence to Elisabeth Bürgi Bonanomi .

Editor information

Editors and Affiliations

  1. Faculty of Law, Saarland University, Saarbrücken, Germany

    Marc Bungenberg

  2. Faculty of Law, University of Erlangen-Nuremberg, Erlangen, Germany

    Markus Krajewski

  3. School of Law, University of Glasgow, Glasgow, UK

    Christian J. Tams

  4. Competition and Regulation Institute, Leuphana University of Lüneburg, Lüneburg, Germany

    Jörg Philipp Terhechte

  5. Faculty of Law and Criminal Sciences, University of Lausanne, Lausanne, Switzerland

    Andreas R. Ziegler

Additional information

With our warmest thanks to Anu Lannen, editor, and Franziska Orler, research associate, both at the Centre for Development and Environment (CDE), University of Bern, who provided valuable assistance and feedback.

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Bonanomi, E.B., Tribaldos, T. (2020). PPM-Based Trade Measures to Promote Sustainable Farming Systems? What the EU/EFTA-Mercosur Agreements Can Learn from the EFTA-Indonesian Agreement. In: Bungenberg, M., Krajewski, M., Tams, C.J., Terhechte, J.P., Ziegler, A.R. (eds) European Yearbook of International Economic Law 2020. European Yearbook of International Economic Law, vol 11. Springer, Cham. https://doi.org/10.1007/8165_2020_64

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  • DOI: https://doi.org/10.1007/8165_2020_64

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