The EU as a Global Regulator for Environmental Protection: A Legitimacy Perspective 9781509925605, 9781509925636, 9781509925629

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THE EU AS A GLOBAL REGULATOR FOR ENVIRONMENTAL PROTECTION This book critically examines the extension of EU environmental legislation beyond EU borders through measures that determine access to the single market on the basis of processes that take place in third countries. It makes a timely contribution to political debates about the relations between EU and non-EU countries, and the Union’s role in the global governance of environmental policy, where it has been considered a global leader. The book aims to identify and explain the emerging legal phenomenon of internal environmental measures with extraterritorial implications as an important manifestation of EU global regulatory power, and assesses the extraterritorial reach of EU environmental law from a legitimacy perspective. It examines mechanisms that can bolster its legitimacy, focusing on the legal orders of the EU and the World Trade Organization, which are key legal fora for controlling the EU’s global regulatory power. Volume 92 in the Series Modern Studies in European Law

Modern Studies in European Law Recent titles in this series: The Rule of Law in the European Union: The Internal Dimension Theodore Konstadinides The Division of Competences between the EU and the Member States: Reflections on the Past, the Present and the Future Edited by Sacha Garben and Inge Govaere Unity in Adversity: EU Citizenship, Social Justice and the Cautionary Tale of the UK Charlotte O’Brien The Use of Force and Article 2 of the ECHR in Light of European Conflicts Hannah Russell Environmental Crime in Europe Edited by Andrew Farmer, Michael Faure and Grazia Maria Vagliasindi Questioning EU Citizenship: Judges and the Limits of Free Movement and Solidarity in the EU Edited by Daniel Thym The European Union under Transnational Law: A Pluralist Appraisal Matej Avbelj Illegally Staying in the EU: An Analysis of Illegality in EU Migration Law Benedita Menezes Queiroz Social Legitimacy in the Internal Market: A Dialogue of Mutual Responsiveness Jotte Mulder The EU Better Regulation Agenda: A Critical Assessment Edited by Sacha Garben and Inge Govaere Administrative Regulation Beyond the Non-Delegation Doctrine: A Study on EU Agencies Marta Simoncini The Interface Between EU and International Law: Contemporary Reflections Edited by Inge Govaere and Sacha Garben The Rise and Decline of Fundamental Rights in EU Citizenship Adrienne Yong The Court of Justice and European Criminal Law: Leading Cases in a Contextual Analysis Edited by Valsamis Mitsilegas, Alberto di Martino and Leandro Mancano The EU as a Global Regulator for Environmental Protection: A Legitimacy Perspective Ioanna Hadjiyianni For the complete list of titles in this series, see ‘Modern Studies in European Law’ link at www.bloomsburyprofessional.com/uk/series/modern-studies-in-european-law

The EU as a Global Regulator for Environmental Protection A Legitimacy Perspective

Ioanna Hadjiyianni

HART PUBLISHING Bloomsbury Publishing Plc Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, UK HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2019 Copyright © Ioanna Hadjiyianni, 2019 Ioanna Hadjiyianni has asserted her right under the Copyright, Designs and Patents Act 1988 to be identified as Author of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/doc/ open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2019. A catalogue record for this book is available from the British Library. A catalogue record for this book is available from the Library of Congress ISBN: HB: 978-1-50992-560-5 ePDF: 978-1-50992-562-9 ePub: 978-1-50992-561-2 Typeset by Compuscript Ltd, Shannon

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Foreword

I

oanna Hadjiyianni has written an important and engaging book. It ­examines the role of the EU as a global environmental actor, exploring the external effects of environmental legislation adopted unilaterally by the EU. In essence, H ­ adjiyianni’s focus is on the ways in which the EU uses its market power to shape environmental performance outside of the EU, and to ratchet up and enforce environmental standards internationally and in third countries. While the examples that she draws on are rich and diverse, the EU’s efforts to fill a regulatory vacuum in relation to greenhouse gas emissions from international aviation, and to serve as a norm catalyst in third countries and internationally in this regulatory domain, is perhaps the best known. Hadjiyianni’s book is characterised by a combination of legal precision, theoretical richness and sensitive normative evaluation. In terms of legal precision, Hadjiyianni carefully dissects the different features of EU environmental legislation entailing ‘extraterritorial implications’. She examines the origin of the standards incorporated within this legislation, the nature of the behavioural or regulatory change in third countries that this legislation requires and the regulatory space or autonomy that it leaves for third countries. Although she includes all of her examples under the single rubric of ‘internal environmental measures with extraterritorial implications’, she demonstrates the rich diversity that characterises measures of this kind. Hadjiyianni’s legal analysis is not confined to specific examples of EU ­legislation but is contextual and multi-level in nature. For instance in the second part of her book, she includes a fascinating discussion of EU administrative law and processes, including in relation to the right to be heard and the weighing of the third country impacts of environmental measures of this kind. She dissects the relevant case law of the Court of Justice and includes a careful and insightful discussion of public international law dimensions, including the law of the World Trade Organization. In relation to the book’s theoretical richness, the second chapter of the book makes an impressive and original contribution by elaborating a legitimacy framework to evaluate EU environmental measures with extraterritorial implications. It is a complex chapter that merits careful reading. Hadjiyianni conceives legitimacy as entailing legality and adherence to the rule of law, good governance and accountability and procedural and substantive justice, ­including ecological justice and distributive justice. Building upon these different ­conceptions of legitimacy, Hadjiyianni develops a ‘“web” of legitimising norms and m ­ echanisms that can serve to maximise the legitimacy’ of environmental measures with extraterritorial implications (pp 86–87). She argues that

vi  Foreword the concept of legality should be viewed not as a benchmark for legitimacy but as a vehicle to inculcate these legitimising norms and mechanisms. It is in light of this understanding of legality that Hadjiyianni turns in the second part of her book to explore and evaluate the legitimising function of law, with a focus on the law and administrative practices of the EU and the World Trade ­Organization. Hadjiyianni draws upon her multi-faceted conception of legitimacy, and on the practice of legality in the EU and WTO legal orders, to evaluate to what extent EU environmental measures which entail an extraterritorial dimension may be thought to suffer from one or more legitimacy gaps. Her evaluation is careful and balanced, perhaps reflecting her expertise and interest in environmental issues, as well as in EU constitutional administrative law. In relation to the EU, Hadjiyianni identifies several shortcomings in the EU legal order which limit its capacity to fill her legitimacy gaps. Thus, notwithstanding the EU’s strong commitment to legitimacy, she considers that the EU does not always act in a manner that is consistent with its values and that it does not always adequately take third country interests into account. She identifies deficiencies in relation to the right to be heard, public participation, the preparation of impact assessments, the provision of reasons and judicial review. In relation to the WTO, Hadjiyianni examines both its quasi-judicial dispute settlement system as well as its processes for institutionalizing transparency and consultation in the adoption of trade-related environmental measures. She argues that the WTO has served to destabilise established processes in Member States by requiring them to take external concerns into account. Nonetheless, she argues that that WTO norms do not perform well in addressing the interests of developing countries or in filling the distributive justice gap. As with the EU, her analysis of the legitimising function of the WTO is replete with explicit and implicit suggestions for how law and administrative practices could be improved. As the UK moves to ‘take back control’ by leaving the EU, this stimulating book offers important insights into the global reach of EU law. Even if the measures examined by Hadjiyianni are not extraterritorial in a strict sense, they exemplify the EU’s market-based global regulatory power. Her discussion also brings to the fore in an impressive way both the ‘enabling’ and ‘constraining’ functions that law plays in authorizing and legitimizing regulatory power and authority beyond the state. The topic addressed by this book is of the utmost importance given the scale and urgency of the environmental and climate challenges that we confront today. Against this backdrop it is not appropriate to ignore the fact that environmental pressures are often displaced through trade or the fact that trade-related environmental measures have the potential to make an important contribution to tackling the world’s pressing environmental problems. However, it is ­imperative that measures of this kind are not used by rich countries to protect their own

Foreword  vii economies or to off-load their responsibilities towards the environment to ­countries and peoples which have contributed less to causing these problems and which are vastly less technologically or financially equipped to tackle them. Hadjiyianni’s impressive legal analysis and sophisticated elaboration and application of her legitimacy framework has the potential to help us to confront the dilemmas posed by such measures and to improve their design. Joanne Scott Professor of European Law, European University Institute

viii

Acknowledgements ‘Σα βγεις στον πηγαιμό για την Ιθάκη, να εύχεσαι να’ναι μακρύς ο δρόμος, γεμάτος περιπέτειες, γεμάτος γνώσεις.’ Κ.Π Καβάφης ‘When you set out for Ithaca, hope that the journey is a long one, full of adventure, full of knowledge’. CP Cavafy

T

he research presented in this book is the result of a significant ­journey full of new and challenging experiences in different parts of the world. In this special journey, I was fortunate to be surrounded by some amazing people who each in their own unique way contributed to the completion of this research project, from the PhD degree to the transformation of the thesis into this monograph. My first and special thanks go to my primary PhD supervisor, Professor Eloise Scotford, who has always been extremely helpful, positive and enthusiastic about my work. I am very grateful for her special way of challenging me to improve in a most supportive way and for her constructive and detailed feedback. My understanding and assessment of IEMEIs has been extensively improved by her very insightful advice and I will always be grateful to her for that. I am also thankful to my second PhD supervisor, Dr Federico Ortino for his helpful advice on the international trade law aspects of my research. I am immensely grateful to the person most cited in this thesis, Professor Joanne Scott, for her advice, encouragement and insightful feedback and for inspiring me to conduct research on the extraterritorial reach of EU environmental law. Without her excellent research on territorial extension and her personal encouragement, this book would not have been possible, and I am always grateful to her. For the completion of this research, I am grateful to the Dickson Poon Postgraduate Research Scholarship for funding my PhD degree and to the Max Weber post-doctoral programme for funding my post-doctoral fellowship at the European University Institute. Many thanks go to my PhD examiners, Professor Piet Eeckhout and Professor Elisa Morgera, for taking the time to read my PhD thesis and for providing me with constructive and insightful feedback for improving and expanding my research both in the PhD viva examination and in their detailed reports.

x  Acknowledgements I am also grateful to the anonymous reviewer at Hart Publishing for their insightful feedback and their positive attitude towards my research work. I also thank everyone at Hart Publishing for believing in my research and for their excellent support during the publication process. I am thankful to my friends and colleagues Anna Wallerman, Marta Morvillo, Adrienne Yong, Ermioni Xanthopoulou and Justin Koo for reading parts of my research and providing me with useful feedback for improvement. I am also grateful to Mirjam Dagëforde for hosting me in Florence in the autumn of 2019 and for her immense support during the final stretch of revisions to the book manuscript. Many thanks go to the participants of the roundtable on ‘The EU as a Global Environmental Regulator – Extraterritoriality, Transnational Effects and Legitimacy’, held at the University of Amsterdam in November 2018 for their constructive and useful feedback on the research presented in this book. Special thanks go to Dr Maria Weimer and Professor Jonathan Zeitlin for making this event happen. I am also immensely grateful to my husband, Tasos, the first non-lawyer I explained IEMEIs to, and who seemed to understand and appreciate what I was talking about. Thank you for your constructive feedback on my writing and presentations. Thank you for welcoming me to your home in Abu Dhabi where I conducted some of the most challenging parts of my research in a supportive and inspiring environment. Thank you for being patient and understanding, and for always being there for me, making my life these past five years much brighter with your love, support and humour! Last, but definitely not least, greatest thanks go to my family. I thank my ‘koumparakia’ Demetria and Ryan, my sister Natalie and my little brother Yiangos for their unique support. I also thank my niece and nephews, Chara, Panagiotis and Michalis for reminding me of our immense duty to protect our planet for the next generation. Finally, I am most thankful to my parents, ­Soteroulla and Charalambos without whom I would not be the person I am today nor have had such amazing educational opportunities. Their unconditional love and belief in me mean the world to me. Final thanks go to you, the reader, who is taking the time to engage with my research. I hope you find that this book expands our understanding of how transnational regulatory governance takes place and how we can improve its operation from the perspective of those most affected by regulatory measures in different parts of the world. And the journey continues, as scholarly research into this immense field expands.

Contents Foreword�������������������������������������������������������������������������������������������������������v Acknowledgements�������������������������������������������������������������������������������������� ix Abbreviations����������������������������������������������������������������������������������������������xv Table of Cases�������������������������������������������������������������������������������������������xvii Table of Legislation�����������������������������������������������������������������������������������xxv Introduction: Scope and Frame of Inquiry������������������������������������������������������1 I. The Focus on the Environment���������������������������������������������������������2 II. Analytical Approach and Outline of the Book����������������������������������6 PART I IEMEIs AS MANIFESTATIONS OF EU GLOBAL REGULATORY POWER 1. Identifying and Mapping the Legal Phenomenon of Internal Environmental Measures with Extraterritorial Implications (IEMEIs)�����11 I. Introduction����������������������������������������������������������������������������������11 II. IEMEIs within the Broader Context of EU External Environmental Action��������������������������������������������������������������������12 A. Different Modes of EU External Environmental Action and IEMEIs�����������������������������������������������������������������������������12 B. Explaining the Recourse to IEMEIs������������������������������������������16 III. Examples of IEMEIs: Mapping their Legal Features�����������������������20 A. Access to the EU Market on the Basis of Environmental Regulatory Requirements���������������������������������������������������������22 B. Compliance with IEMEIs: ‘Contingent Unilateralism’, Flexibility and Equivalence������������������������������������������������������35 IV. Assessing IEMEIs as a Legal Phenomenon at the Intersection of Multiple Legal Regimes�������������������������������������������������������������44 2. The Legitimacy of Global Regulatory Power – The Case of IEMEIs��������50 I. Introduction����������������������������������������������������������������������������������50 II. The Legitimacy Gaps���������������������������������������������������������������������52 III. Different Understandings of Legitimacy and IEMEIs����������������������56 A. Legitimacy as Legality and Adherence to the Rule of Law���������57 B. Legitimacy as Good Governance and Accountability����������������69 C. Legitimacy as Justice���������������������������������������������������������������77

xii  Contents IV. Filling the Legitimacy Gaps: Reframing Legitimacy Models for IEMEIs�����������������������������������������������������������������������������������86 A. Evaluating IEMEI Legitimacy: Affected Third Country Interests and Legitimacy Gaps������������������������������������������������87 B. Enhancing IEMEI Legitimacy: Combining Legitimacy Norms and Mechanisms��������������������������������������������������������90 C. Practical Legitimacy for IEMEIs: Combining Overlapping Legal Regimes�����������������������������������������������������������������������94 V. Conclusion����������������������������������������������������������������������������������97 PART II IEMEIs IN THE EU LEGAL ORDER Introduction: The Legitimising Function of EU Law for IEMEIs����������������� 101 I. Introduction������������������������������������������������������������������������������ 101 II. The Constitutional Basis for Conducting EU External Action as a Normative Basis for Legitimising IEMEIs���������������������������� 103 A. The Constitutional Values Guiding EU External Action�������� 104 B. The Legal Implications of EU External Action Values for IEMEI Action����������������������������������������������������������������� 107 III. Conclusion�������������������������������������������������������������������������������� 113 3. EU Decision-Making Processes and IEMEIs����������������������������������������� 115 I. Introduction������������������������������������������������������������������������������ 115 II. Right to be Heard���������������������������������������������������������������������� 117 A. Formulation of IEMEIs�������������������������������������������������������� 117 B. Implementation and Enforcement of IEMEIs������������������������ 120 III. Public Participation in the Aarhus Convention���������������������������� 122 IV. EU Regulatory Processes: Better Regulation and the Case of Impact Assessments��������������������������������������������������������������� 124 A. Consideration of Third Country Impacts in the Impact Assessment Process�������������������������������������������������������������� 126 B. Consideration of Third Country Impacts in the Impact Assessments of IEMEIs�������������������������������������������������������� 129 V. Duty to Provide Reasons������������������������������������������������������������ 138 VI. Access to Information���������������������������������������������������������������� 140 VII. Conclusion�������������������������������������������������������������������������������� 144 4. Judicial Review of IEMEIs in the EU Legal System������������������������������� 145 I. Introduction������������������������������������������������������������������������������ 145 II. Access to Justice������������������������������������������������������������������������ 148 A. Avenues for Accessing the EU Courts for Different Kinds of Third Country Actors������������������������������������������������������ 148

Contents  xiii B. Standing�������������������������������������������������������������������������������� 151 C. The Aarhus Convention and Access to Justice������������������������ 156 III. Grounds of Judicial Review��������������������������������������������������������� 162 A. Competence�������������������������������������������������������������������������� 163 B. Essential Procedural Requirements����������������������������������������� 169 C. Soft Law and General Principles of EU Law��������������������������� 173 D. Proportionality���������������������������������������������������������������������� 178 E. International Law������������������������������������������������������������������ 197 IV. Conclusion���������������������������������������������������������������������������������� 208 PART III IEMEIs IN THE WTO LEGAL ORDER Introduction: The Legitimising Function of WTO Law for IEMEIs������������� 213 I. Introduction�������������������������������������������������������������������������������� 213 II. WTO Law as a Relevant Legal Frame for Legitimising IEMEIs����� 216 A. The De Facto Legitimising Function of WTO Law and its Limitations����������������������������������������������������������������� 217 B. The Legitimising Potential of WTO Law in Relation to Developing Countries�������������������������������������������������������� 219 III. Conclusion���������������������������������������������������������������������������������� 223 5. WTO Influence and Legal Control of IEMEIs: Substantive Obligations�����225 I. Introduction�������������������������������������������������������������������������������� 225 II. IEMEIs and Non-Discrimination������������������������������������������������� 226 A. IEMEIs as Non-Product-Related Process and Production Methods Measures���������������������������������������������������������������� 227 B. IEMEIs and MFN Discrimination������������������������������������������ 230 III. IEMEIs and the Agreement on Technical Barriers to Trade����������� 238 A. Scope of the TBT Agreement������������������������������������������������� 238 B. Substantive Obligations under the TBT Agreement���������������� 239 IV. Conclusion���������������������������������������������������������������������������������� 248 6. Justifying IEMEIs under Exceptions in the WTO���������������������������������� 249 I. Introduction�������������������������������������������������������������������������������� 249 II. Pursuance of Legitimate Objectives Through IEMEIs under Exceptions������������������������������������������������������������������������� 250 A. Relevant Grounds of Exceptions for IEMEIs�������������������������� 251 B. Contribution of IEMEIs to the Regulatory Objective�������������� 257 III. IEMEIs under the Chapeau���������������������������������������������������������� 265 A. Duty to Engage in Good Faith Negotiations��������������������������� 267 B. Flexibility������������������������������������������������������������������������������ 272 C. Due Process Requirements����������������������������������������������������� 278 IV. Conclusion���������������������������������������������������������������������������������� 282

xiv  Contents 7. The WTO as a Forum of Transparency and Consultation on IEMEIs���� 284 I. Introduction�������������������������������������������������������������������������������� 284 II. Ex Post Notification Obligations as Transnational Avenues of Accountability and Due Process����������������������������������������������� 285 III. Ex Ante Notification Obligations and Consultation Procedures in Specialised WTO Organs: The Case of the TBT Agreement and the TBT Committee�������������������������������������������������������������� 287 A. TBT Obligations for Notification of Draft Measures�������������� 287 B. Consultation on Specific Trade Concerns in the TBT Committee���������������������������������������������������������������������������� 290 IV. Conclusion to Part III: IEMEIs under WTO Law�������������������������� 294 Conclusion: Combining Legal Orders to Legitimise Global Regulatory Power�������������������������������������������������������������������������������������������������� 297 Bibliography���������������������������������������������������������������������������������������������� 303 Index��������������������������������������������������������������������������������������������������������� 319

Abbreviations AB

Appellate Body

ACCC

Aarhus Convention Compliance Committee

AG

Advocate General

CAP

Conformity Assessment Procedure

CBD

Convention on Biological Diversity

CBDR

Common But Differentiated Responsibilities

CJEU

Court of Justice of the European Union

DSB

Dispute Settlement Body

DSS

Dispute Settlement System

ECJ

Court of Justice

ECHR

European Convention on Human Rights

EU

European Union

EU ETS

EU Emissions Trading System

EUTR

EU Timber Regulation

FAO

Food and Agriculture Organization

FLEGT

Forest Law Enforcement, Governance and Trade

GATS

General Agreement on Trade in Services

GATT

General Agreement on Tariffs and Trade

GHG

Greenhouse Gas

GMO

Genetically Modified Organism

IA

Impact Assessment

ICAO

International Civil Aviation Organization

IEMEIs

Internal Environmental Measures with Extraterritorial Implications

xvi  Abbreviations ILO

International Labour Organization

ILUC

Indirect Land Use Change

IMO

International Maritime Organization

IUU

Illegal, unreported and unregulated fishing

MEA

Multilateral Environmental Agreement

MFN

Most-Favoured Nation

MRV

Monitoring, Reporting and Verification

NPR

Non-Product-Related

PA

Paris Agreement on Climate Change

PPMs

Process and Production Methods

REACH

Registration, Evaluation, Authorisation and Restriction of Chemicals

RED

Renewable Energy Directive

RFMO

Regional Fisheries Management Organisation

SPS

Sanitary and Phytosanitary Measures

SRF

Ship Recycling Facility

SRR

Ship Recycling Regulation

TBT

Technical Barriers to Trade

TEU

Treaty on the European Union

TFEU

Treaty on the Functioning of the European Union

UK

United Kingdom

UNFCCC

UN Framework Convention on Climate Change

UNCLOS

UN Convention on the Law of the Sea

VCLT

Vienna Convention on the Law of Treaties

VPA

Voluntary Partnership Agreement

WEEE

Waste Electrical and Electronic Equipment

WTO

World Trade Organization

Table of Cases EU Cases Case 26/52 Plaumann & Co v Commission, EU:C:1963:17�������������������������� 151 Joined Cases 21/72–24/72 International Fruit Company, EU:C:1972:115�������������������������������������������������������������������������������200, 202 Case 148/73 Louwage v Commission, EU:C:1974:7������������������������������������� 177 Case 17/74 Transocean Marine Paint Association v Commission, EU:C:1974:106 ������������������������������������������������������������������������������117, 120 Case C-55/75 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof, EU:C:1976:8����������������������������������������������������������179, 185 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, EU:C:1979:42�������������������������������������������������������������������� 185 Case C-234/84 Belgium v Commission, EU:C:1986:302������������������������������� 118 Case C-70/87 Fédération de l’industrie de l’huilerie de la CEE (Fediol) v Commission, EU:C:1989:254���������������������������������������������������������202–03 Case C-322/88 Grimaldi v Fonds des maladies professionelles, EU:C:1989:646�������������������������������������������������������������������������������������� 175 Case C-331/88 R v Ministry of Agriculture, Fisheries and Food, ex parte Fedesa and others EU:C:1990:391��������������������������������������������� 182 Case C-69/89 Nakajima All Precision Co Ltd v Council, EU:C:1991:186���������������������������������������������������������������������������������202–03 Case C-169/89 Criminal proceedings against Gourmetterie Van den Burg EU:C:1990:227�������������������������������������������������������������������������������������� 185 Case C-286/90 Anklagemyndigheden v Peter Michael Poulsen and Diva Navigation Corp, EU:C:1992:453������������������������������������������� 167 Case T-521/93 Atlanta AG and others v Council and Commission, EU:T:1996:184�������������������������������������������������������������������������������118, 171 Case T-585/93 Greenpeace and Others v Commission, EU:T:1995:147��������� 152 Case C-5/94 R v Ministry of Agriculture Fisheries and Food, ex parte Hedley Lomas (Ireland) Ltd, EU:C:1996:205���������������������������� 185 Case C-61/94 Commission v Germany, EU:C:1996:313������������������������������� 204 Case C-150/94 United Kingdom v Council, EU:C:1998:547������������������������� 109 Case C-202/94 Criminal proceedings against Godefridus Van der Feesten, EU:C:1996:39��������������������������������������������������������������������������������������� 185 Case C-32/95 P Commission v Lisrestal Organização Gestão de Restaurantes Colectivos, Lda and others, EU:C:1996:402������������������������������������������� 118

xviii  Table of Cases Case C-183/95 Affish BV v Rijksdienst voor de keuring van Vee en Vlees, EU:C:1997:373�������������������������������������������������������������������������������������� 185 Case C-321/95 P Greenpeace and others v Commission, EU:C:1998:153������ 152 Case C-367/95 P Commission v Sytraval and Brink’s France SARL, EU:C:1998:154�������������������������������������������������������������������������������������� 171 Case C-1/96 R v Minister of Agriculture, Fisheries and Food, ex parte Compassion in World Farming Ltd, EU:C:1998:113������������������ 184 Case C-53/96 Hermès International (a partnership limited by shares) v FHT Marketing Choice BV, EU:C:1998:292���������������������������������������� 204 Case T-102/96 Gencor Ltd v Commission, EU:T:1999:65������������������������166–67 Case C-149/96 Portugal v Council, EU:C:1999:574�������������������������������������� 202 Case C-180/96 United Kingdom v Commission, EU:C:1998:192������������������ 178 Case C-377/98 Kingdom of the Netherlands v Parliament and Council, EU:C:2001:523�������������������������������������������������������������������������������������� 201 Case T-13/99 Pfizer Animal Health SA v Council, EU:T:2002:209����������������������������������������������������������� 118, 182, 186, 188–89 Case T-70/99 Alpharma Inc v Council, EU:T:2002:210�������������������������182, 188 Case T-155/99 Dieckmann v Commission, EU:T:2001:256��������������������������� 176 Case C-120/99 Italy v Council, EU:C:2001:567�������������������������������������������� 186 Case C-50/00 Union de Pequenos Agricultores (UPA) v Council, EU:C:2002:462�������������������������������������������������������������������������������������� 156 Case C-122/00 Omega Air and Others, EU:C:2002:161���������������������������182–83 Case T-339/00 Bactria Industriehygiene-Service Verwaltungs GmbH v Commission, EU:T:2002:107�������������������������������������������������������������� 155 Case T-177/01 Jégo-Quéré et Cie SA v Commission, EU:T:2002:112������������ 156 Case T-176/01 Ferriere Nord SpA v Commission, EU:T:2004:336���������������� 175 Case T-5/02 Tetra Laval BV v Commission, EU:T:2002:264������������������������� 186 Case T-212/02 Commune de Champagne and Others v Council and Commission, EU:T:2007:194���������������������������������������������������������� 153 Case T-228/02 Organisation des Modjahedines du peuple d’Iran v Council, EU:T:2006:384�������������������������������������������������������������������������������������� 171 Case C-288/03 Zaoui v Commission, EU:C:2004:633���������������������������192, 195 Joined Cases C-154/04 and C-155/04 R, on the application of Alliance for Natural Health and others v Secretary of State for Health and National Assembly for Wales, EU:C:2005:449����������������������������172–73 T-264/04 WWF European Policy Programme v Council, EU:T:2007:114������� 143 Case C-310/04 Spain v Council, EU:C:2006:521�����������������������������������173, 186 Case C-351/04 Ikea Wholesale Ltd v Commissioners of Customs & Excise, EU:C:2007:547�������������������������������������������������������������������������������������� 203 Case T-362/04 Leonid Minin v Commission, EU:T:2007:25������������������������� 167 Case C-49/05 P Ferriere Nord SpA v Commission, EU:C:2008:259��������������� 175 Cases C-402 and 415/05 P Yassin Abdullah Kadi and Al Barakaat International Foundation v Council and Commission (Kadi I), EU:C:2008:461��������������������������������������������������������� 108, 172, 182, 186, 191

Table of Cases  xix Joined Cases C-120/06 P and C-121/06 P FIAMM and Others v Council and Commission, EU:C:2008:476�����������������������������������200, 202 Case C-308/06 R, on the application of International Association of Independent Tanker Owners (Intertanko) and Others v Secretary of State for Transport, EU:C:2008:312����������������������������200–01 Case T-257/07 France v Commission, EU:T:2011:444���������������������������������� 189 Case T-332/08 Melli Bank plc v Council, EU:T:2009:266����������������������139, 171 Case C-58/08 Vodafone Ltd and Others v Secretary of State for Business, Enterprise and Regulatory Reform, EU:C:2010:321������������������������������� 187 Case C-240/09 Lesoochranárske zoskupenie v Ministerstvo životného prostredia Slovenskej republiky (‘Slovak Brown Bear’), EU:C:2011:125������������������������������������������������������������������������� 159–60, 201 Case T-292/09 Mugraby v Council and Commission, EU:T:2011:418��������192, 195 Case T-18/10 Inuit Tapiriit Kanatami v Parliament and Council (Inuit I), EU:T:2011:419���������������������������������������������������������������������������������152–53 Case C-70/10 Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM), EU:C:2011:771���������������������� 194 Case T-262/10 Microban International Ltd and Microban (Europe) Ltd v Commission, EU:T:2011:623�����������������������������������148, 152 Case C-316/10 Danske Svineproducenter v Justitsministeriet, EU:C:2011:863�������������������������������������������������������������������������������������� 184 Case C-366/10 Air Transport Association of America and others v Secretary of State for Energy and Climate Change (ATAA), EU:C:2011:864�������������������������������������������������������� 2, 18, 34, 111, 149, 152, 165–67, 197, 199–201, 204–05, 254, 270 ––– Opinion of AG Kokott, EU:C:2011:637������������ 18, 33, 165–66, 170, 204–05 Cases T-120/10 and T-449/10 ClientEarth and Others v Commission, EU:T:2011:647�������������������������������������������������������������������������������������� 142 Case T-496/10 Bank Mellat v Council of the European Union, EU:T:2013:39���������������������������������������������������������������������������������172, 191 Case T-526/10 Inuit Tapiriit Kanatami v Parliament and Council (Inuit II), EU:T:2013:215������������������������������������������ 154, 164, 170, 183, 205 Case C-544/10 Deutsches Weintor eG v Land Rheinland-Pfalz, EU:C:2012:526���������������������������������������������������������������������������������193–94 Joined Cases C-584/10 P, C-593/10 P & C-595/10 P Commission et al v Kadi (Kadi II), EU:C:2013:518���������������������������������������108, 172, 191 Case C-12/11 Denise McDonagh v Ryanair, EU:C:2013:43�������������������������� 194 Case T-278/11, Clientearth and others v Commission, EU:T:2012:593��������� 280 Case C-283/11 Sky Österreich GmbH v Österreichischer Rundfunk, Opinion of AG Bot, EU:C:2012:341������������������������������������������������������ 193 Case T-381/11 Europäischer Wirtschaftsverband der Eisen- und Stahlindustrie (Eurofer) ASBL v Commission, EU:T:2012:273������������������������152, 155, 169 Case C-581/11 Mugraby v Council and Commission, EU:C:2012:466��������192, 195

xx  Table of Cases Case C-583/11 P Inuit Tapiriit Kanatami and others v Parliament and Council (Inuit I), EU:C:2013:625���������������������������������������������������� 154 Joined Cases C-404/12 P and C-405/12P Council and Commission v Stichting Natuur en Milieu, EU:C:2015:5�������������������������������������159, 201 Case T-512/12 Front Polisario v Council, EU:T:2015:953����������������������112, 189 Case T-156/13 Petro Suisse Intertrade Co SA v Council, EU:T:2015:646�������������������������������������������������������������������������������138, 149 Case C-176/13 Council v Bank Mellat, EU:C:2016:96���������������������������������� 172 Case T-177/13 Testbiotech v Commisison, EU:T:2016:736��������������������������� 160 Case C-209/13 United Kingdom v Council, EU:C:2014:283������������������������� 167 Case T-276/13 Growth Energy and Renewable Fuels Association v Council, EU:T:2016:340��������������������������������������������������������������������� 169 Case C-398/13 Inuit Tapiriit Kanatami and Others v European Commission (Inuit II), EU:C:2015:535����������� 154, 164, 193, 205 Case C-424/13 Zuchtvieh-Export GmbH v Stadt Kempten, EU:C:2015:259������������������������������������������������ 3, 43, 163, 168, 180, 184, 255 Case C-673/13 Commission v Stichting Greenpeace Nederland and PAN Europe, EU:C:2016:889���������������������������������������������������������� 141 Case C-362/14 Maximillian Schrems v Data Protection Commissioner, EU:C:2015:650������������������������������������������������������������������������� 43, 180, 275 Case C-413/14 Intel Corp v Commission, EU:C:2017:632���������������������������� 166 Case C-592/14 European Federation for Cosmetic Ingredients v Secretary of State for Business, Innovation and Skills and Attorney General, EU:C:2016:703��������������������������������� 3, 163, 181, 255 Case C-272/15 Swiss International Air Lines AG v Secretary of State for Energy and Climate Change, Environment Agency, Opinion of AG Saugmandsgaard Øe, EU:C:2016:573���������������������������� 179 Case C-57/16 ClientEarth v European Commission, EU:C:2018:660������������������������������������������������������������������������124, 140, 142 Case C-104/16 Council v Front Polisario, EU:C:2016:973���������������������112, 189 Case C-266/16 Western Sahara Campaign UK v Commissioners for Her Majesty’s Revenue and Customs, Secretary of State for Environment, Food and Rural Affairs, EU:C:2018:118���������������112, 206 Case T-12/17 Mellifera eV, Vereinigung für wesensgemäße Bienenhaltung v Commission, EU:T:2018:616�������������������������159, 162, 201 Case C-82/17 P TestBioTech v Commission������������������������������������������������ 160 GATT/WTO Cases GATT Panel Report, Belgian Family Allowances, G/32, adopted on 7 November 1952����������������������������������������������������������������������231, 235 GATT Panel Report, US – Restrictions on Imports of Tuna, DS21/R, DS21/R, 3 September 1991, unadopted�������������������������������������������������� 249

Table of Cases  xxi GATT Panel Report, US – Restrictions on Imports of Tuna, DS29/R, 16 June 1994, unadopted����������������������������������������������������������������������� 249 AB Report on US – Standards for Reformulated and Conventional Gasoline (US–Gasoline), WT/DS2/AB/R, adopted 29 April 1996��������������������������������������������������������������221, 250–51, 257–58, 262, 266–68, 277 AB Report on Japan – Taxes on Alcoholic Beverages, (Japan-Alcoholic Beverages) WT/DS8/AB/R, WT/DS10/AB/R, WT/DSI1/AB/R, adopted 4 October 1996���������������������������������������227, 229 AB Report, United States – Restrictions on Imports of Cotton and Man-made Fibre Underwear (US–Underwear), WT/DS24/AB/R, adopted 10 February 1997������������������������������������������� 286 Panel Report on EC – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras (EC–Bananas III), WT/DS27/R/GTM, WT/DS27/R/HND, adopted 22 May 1997��������������� 231 AB Report on EC – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras (EC–Bananas III), WT/DS27/AB/R, adopted 19 September 1997��������������������������� 227, 232–33 Panel Report on US – Import Prohibition of Certain Shrimp and Shrimp Products (US–Shrimp), WT/DS58/R, 15 May 1998�������253, 267 Panel Report on Indonesia – Certain Measures Affecting the Automobile Industry (Indonesia–Autos), WT/DS54/R; WT/DS55/R; WT/DS59/R; WT/DS64/R, adopted 23 July 1998����������������������������������� 231 AB Report on US – Import Prohibition of Certain Shrimp and Shrimp Products (US–Shrimp), WT/DS58/AB/R, adopted 12 October 1998���������������������������������������������������������216, 221–23, 249–53, 257–58, 265, 267–68, 272, 275, 278 Panel Report on Canada – Certain Measures Affecting the Automotive Industry (Canada–Autos), WT/DS139/R, circulated 11 February 2000������������������������������������������������������������������� 231 AB Report on Canada – Certain Measures Affecting the Automotive Industry (Canada–Autos), WT/DS139/AB/R, WT/DS142/AB/R, adopted 31 May 2000���������������������������������������������������������������������������� 227 AB Report on Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef (Korea–Beef), WT/DS169/AB/R, adopted 11 December 2000��������������������������������������������������������������259–62 AB Report on EC – Measures Affecting Asbestos and Asbestos-Containing Products (EC–Asbestos), WT/DS135/AB/R, adopted 5 April 2001����������������������������������������������������������������������������229, 238, 260 AB Report on US – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia (US–Shrimp (21.5)), DS/58/AB/RW, adopted 22 October 2001. ������������������������������������������������������������ 222, 252, 267–69, 272, 274, 277

xxii  Table of Cases Panel Report on EC – Trade Description of Sardines (EC–Sardines), WT/DS231/R, adopted 29 May 2002����������������������������������������������������� 245 AB Report on EC – Trade Description of Sardines (EC–Sardines), WT/DS231/AB/ R, adopted 26 September 2002���������������������������������244–45 AB Report on EC – Conditions for the Granting of Tariff Preferences to Developing Countries (EC–Tariff Preferences), WT/DS246/AB/R, adopted 7 October 2004������������������������������������������������������������������������ 236 Panel Report on US – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US–Gambling), WT/DS285/R, adopted 10 November 2004������������������������������������������������������������������� 255 AB Report on US – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US–Gambling), WT/DS285/AB/R, adopted 7 April 2005��������������242, 250, 260–61, 265, 268 AB Report on Mexico – Tax Measures on Soft Drinks and Other Beverages (Mexico–Soft Drinks), WT/DS308/AB/R, adopted 6 March 2006���������������������������������������������������������������������������������������� 256 Panel Report on EC – Measures Affecting the Approval and Marketing of Biotech Products (EC–Biotech), WT/DS291/R, WT/DS292/R, WT/DS293/R, adopted 29 September 2006�������������������������������� 13, 221–22, 246, 252–53 Panel Report on Brazil – Measures Affecting Imports of Retreaded Tyres (Brazil–Tyres), WT/DS332/R, adopted 12 June 2007��������������������� 268 AB Report on Brazil – Measures Affecting Imports of Retreaded Tyres (Brazil–Tyres), WT/DS332/AB/R, adopted 17 December 2007������ 251, 259, 261, 263–65 Panel Report on US – Measures Concerning the Production and Sale of Clove Cigarettes (US–Clove Cigarettes), WT/DS406/R, adopted 2 September 2011������������������������������������������������ 246, 286, 288–89 Panel Report on US – Certain Country of Origin Labelling Requirements (US–COOL), WT/DS386/R, adopted 18 November 2011���������� 241, 246–47 Panel Report on US – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US–Tuna II), WT/DS381/R, adopted 15 September 2011�������������������������������������239, 244 AB Report on US – Measures Affecting the Production and Sale of Clove Cigarettes (US–Clove Cigarettes), WT/DS406/AB/R, adopted 4 April 2012����������������������������������������������������239–40, 286, 288–89 AB Report on US – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US–Tuna II), WT/DS381/AB/R, adopted 13 June 2012�������������������������� 239–42, 245, 254, 260–61, 265, 290 Panel Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products (EC–Seal Products), WT/DS400/R, WT/DS401/R, adopted 25 November 2013���������������252, 255

Table of Cases  xxiii AB Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products (EC–Seal Products), WT/DS400/AB/R, WT/DS401/AB/R, adopted 18 June 2014����� 13, 155, 238, 254–56, 269 International Cases SS Lotus (France v Turkey), PCIJ Reports, (1927) Series A, No 10����������63, 167 Case concerning the Gabčikovo-Nagymaros Project (Hungary/Slovakia), Separate Opinion of Vice-President Weeramantry, (1997) ICJ Reports 7���������������������������������������������������������67

xxiv

Table of Legislation EU Charter of Fundamental Rights of the European Union [2012] OJ C326/391���������������������������������������������������������������������� 59, 116–17, 140, 172, 190–91, 193–95 Commission Delegated Regulation (EU) 363/2012 on the procedural rules for the recognition and withdrawal of recognition of monitoring organisations [2012] OJ L115/12�������������������������������������������������������������41 Commission Implementing Decision (EU) 2018/1906 amending Implementing Decision (EU) 2016/2323 to update the European List of ship recycling facilities established pursuant to Regulation (EU) No 1257/2013 of the European Parliament and of the Council [2018] OJ L310/29��������������������������������������������������������������������������������������31, 153 Commission Implementing Decision 2016/2323/EU establishing the European List of ship recycling facilities pursuant to Regulation 1257/2013/EU on ship recycling [2016] OJ L345/19�������������������� 31, 153, 159 Commission Implementing Regulation (EU) 2016/1852 amending Regulation (EU) No 468/2010 establishing the EU list of vessels engaged in illegal, unreported and unregulated fishing [2016] OJ L 284/5�������������������������������������������������������������������������������������������� 152 Commission Regulation (EU) 1307/2014 on defining the criteria and geographic ranges of highly biodiverse [2014] OJ L351/3�������������������24 Commission Regulation (EU) 468/2010 establishing the EU list of vessels engaged in illegal, unreported and unregulated fishing [2010] OJ L131/22�������������������������������������������������������������������������������� 152 Commission Regulation (EU) 607/2012 on the detailed rules concerning the due diligence system and the frequency and nature of the checks on monitoring organisations [2012] OJ L177/16��������������������������������������41 Consolidated Version of Parliament and Council Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32������� 21, 37, 42, 54, 166, 235, 270, 274 Consolidated Version of the Treaty on the European Union [2008] OJ C326/13 (TEU)��������������������������������������������������������������������� 13, 59, 104 Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C326/47 (TFEU)���������� 2, 5, 12, 19, 95, 104, 108, 116, 118, 126, 138, 140, 142, 148–53, 160, 163–65, 169, 171, 173–74, 178, 183, 185, 198

xxvi  Table of Legislation Council Regulation (EC) 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing [2008] OJ L286/1 (IUU Regulation)�������������� 21, 26, 29–30, 118, 121, 126, 130–34, 139, 149, 151, 164, 180, 186, 194, 198–99, 225, 230, 233–35, 239, 247, 252–53, 258, 266, 273, 279. Energy Community Treaty [2006] OJ L198/18����������������������������������������������13 Parliament and Council Decision 377/2013/EU, derogating temporarily from Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2013] OJ L113/1�������37 Parliament and Council Directive 2008/101/EC amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community [2009] OJ L8/3 (Aviation Directive)�������������� 1, 18, 21, 33, 37–38, 42, 54–55, 84–85, 111, 149, 164, 166, 225–26, 230, 234–35, 237, 270, 274–75 Parliament and Council Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2009] OJ L140/16 (RED)����������������������������������������� 20, 24–25, 32, 40–41, 54, 139, 142, 157, 173, 196, 198, 232, 252–54, 262, 271, 279, 287, 292–93 Parliament and Council Directive 2009/29/EC amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community [2009] OJ L140/63��������������36 Parliament and Council Directive 2009/30/EC amending Directive 98/70/EC as regards the specification of petrol, diesel and gas-oil and introducing a mechanism to monitor and reduce greenhouse gas emissions and amending Council Directive 1999/32/EC as regards the specification of fuel used by inland waterway vessels and repealing Directive 93/12/EEC [2009] OJ L140/88 (FQD)����������������������������������������20 Parliament and Council Directive 2012/19/EU on waste electrical and electronic equipment (WEEE) [2012] OJ L197/38������������ 21, 25, 32, 42, 118, 120, 129–33, 147, 154–55, 157, 164, 239, 255, 275, 287, 289 Parliament and Council Directive 2015/1513/EU amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2015] OJ L239/1 (ILUC Directive)�������25 Parliament and Council Regulation (EC) 1007/2009 on trade in seal products [2009] OJ L286/36 (Seals Regulation)��������� 3, 153, 164, 183, 193, 195, 205, 255 Parliament and Council Regulation (EC) 1049/2001 regarding public access to European Parliament, Council and Commission documents [2001] OJ L145/43 (Transparency Regulation)��������� 141–42, 157

Table of Legislation  xxvii Parliament and Council Regulation (EC) 1367/2006 on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community institutions and bodies [2006] OJ L264/13 (Aarhus Regulation)������������������������123, 141–42, 157–62 Parliament and Council Regulation (EC) 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals [2006] OJ L396 (REACH Regulation)��������������16, 22, 134–36, 143, 159, 188, 288, 291 Parliament and Council Regulation (EC) 391/2009 on common rules and standards for ship inspection and survey organisations [2009] OJ L131/11����������������������������������������������������������������������������������32 Parliament and Council Regulation (EU) 1257/2013 on Ship Recycling [2013] OJ L330/1 (Ship Recycling Regulation)�������������� 21, 27–29, 31–32, 34, 43, 62, 120–21, 126, 128, 139, 147, 164, 172, 180, 186, 194, 196, 198–99, 232–34, 252, 255, 275 Parliament and Council Regulation (EU) 2015/757 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and amending Directive 2009/16/EC [2015] OJ L123/55����36, 167 Parliament and Council Regulation (EU) 421/2014 amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in view of the implementation by 2020 of an international agreement applying a single global market-based measure to international aviation emissions [2014] OJ L129/1������������������������������������������������������������������������������������37 Parliament and Council Regulation (EU) 2017/2392 amending Directive 2003/97/EC to continue current limitations of scope for aviation activities and to prepare to implement a global market-based mechanism from 2021 [2017] OJ L350/7����������������������38, 270 Parliament and Council Regulation (EU) 995/2010 laying down the obligations of operators who place timber and timber products on the market [2010] OJ L295/23 (EU Timber Regulation)���������������� 21, 27, 29–30, 38–39, 41, 63, 118, 130–33, 136, 147, 154, 164, 174, 194, 218, 228, 230, 233, 236, 253, 256, 263–64, 266, 270, 280, 295 Protocol No 2 on the application of the principles of subsidiarity and proportionality, [2010] OJ C83/206������������������������������������������������� 116 VPA between the European Union and the Republic of Indonesia on forest law enforcement, governance and trade in timber products into the European Union [2014] OJ L150/252������������������������������������������39

xxviii  Table of Legislation International Agreement on Technical Barriers to Trade, 1868 UNTS 120 (TBT Agreement)������������������������������������������������215–16, 220, 223, 226–28, 232, 238–248, 250, 255, 259–61, 266, 274, 280, 284–91, 299 Agreement on the Application of Sanitary and Phytosanitary Measures, 1867 UNTS 493 (SPS Agreement)����������������������������246, 287, 291 Basel Ban Amendment 1995 Conference Decision II/12���������������������������������28 Basel Convention on the Control of the Transboundary Movements of Hazardous Wastes and their Disposal, 22 March 1989, 1673 UNTS 57������������������������������������������������������������������������� 28, 133, 198 Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as amended)������������������������������������������������������������59, 192 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, 25 June 1998, 2161 UNTS 337 (Aarhus Convention)������� 78, 115, 117, 122–24, 141, 148, 156–62, 201, 204 Convention on Biological Diversity, 5 June 1992, 1760 UNTS 79 (CBD)��������������������������������������������������������������������� 4, 67, 84, 133, 253, 268 Convention on International Civil Aviation, 7 December 1944, 15 UNTS 295���������������������������������������������������������������������������������198, 200 Convention on Wetlands of International Importance, 2 February 1971, 996 UNTS 245��������������������������������������������������������������14 General Agreement on Tariffs and Trade 1994, 1867 UNTS 187 (GATT)�������������������������������������������������������������������� 215, 220, 223, 225–27, 229–42, 244, 248–51, 254–61, 276, 278, 280, 284–85, 287, 293, 295 General Agreement on Trade in Services, 1869 UNTS 183 (GATS)�����������������������������������������������������������������������215, 225–28, 230–34, 237–39, 248–50, 255, 261, 266, 280, 284–85, 287, 293 Hong Kong International Convention on the Safe and Environmentally Sound Recycling of Ships, 19 May 2009 (not yet in force) SR/CONF/45�������������������������������������������������������������������� 27, 129, 198, 252 Kyoto Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, 2303 UNTS 148���������� 33, 201, 270 Marrakesh Agreement Establishing the World Trade Organization, 1867 UNTS 154 (1994)�������������������������������������������������������������������������� 222 Paris Agreement adopted under the UNFCCC, 12 December 2015, FCCC/CP/2015/L.9������������������������������������������������������������� 55, 83, 205, 222

Table of Legislation  xxix United Nations Convention on the Law of the Sea, 10 December 1982, 1833 UNTS 3 (UNCLOS)���������������������������������������������������������������201, 206 United Nations Framework Convention on Climate Change, 9 May 1992, 1771 UNTS 107 (UNFCCC)������������������������������4, 55, 198, 221 Understanding on Rules and Procedures Governing the Settlement of Disputes, 1869 UNTS 401 (DSU)�����������������������216, 220, 222, 252, 282, 291 Vienna Convention on the Law of Treaties, 23 May 1969, 1115 UNTS 331 (VCLT)����������������������������������������������������������������������������������221, 252, 290

xxx

Introduction: Scope and Frame of Inquiry

T

he external environmental regulatory action of the European Union (EU) today is extensive. It involves an array of legal approaches and it can be legally framed and analysed in different ways. This book deals with a specific legal mechanism through which the EU conducts external environmental action by extending the scope of application of its domestic legislation beyond EU borders through Internal Environmental Measures with Extraterritorial Implications (IEMEIs). The book aims to identify and explain this emerging legal phenomenon and assess the legitimacy of the EU’s exercise of global regulatory power. In this book, IEMEIs are understood as unilateral trade-related measures, which address global or transboundary environmental problems, including climate change. In particular, the book examines the extension of the scope of application of EU legislation beyond EU borders by conditioning access to the EU market on the basis of processes or conduct that takes place abroad. An example of such regulation is the Directive that included international greenhouse gas emissions from aviation in the EU Emissions Trading System (EU ETS).1 This provisionally required all airlines arriving at or departing from EU airports to surrender emission allowances, including for emissions occurring outside EU airspace. Due to the economic power of the EU market, third country operators have strong incentives to comply with such requirements. EU unilateral regulation can thus significantly influence foreign company practices and affect third country and international regulatory approaches. By their legal design, IEMEIs regulate conduct or processes taking place, at least partly, in third countries,2 and influence business practices and regulatory approaches abroad, thus having important impacts on third country actors.3 IEMEIs reflect the extraterritorial reach of EU environmental law and constitute an important manifestation of the exercise of the EU’s global regulatory power.4

1 Directive 2008/101/EC amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community [2009] OJ L8/3. 2 Third countries are understood as non-EU countries. 3 Third country actors consist of non-EU public and private interests, including government, industry, civil society and individual interests situated outside the borders of the EU. 4 Drawing upon terminology used in J Scott, ‘Extraterritoriality and Territorial Extension in EU Law’ (2014) 62 American Journal of Comparative Law 87.

2  Introduction Notably, IEMEIs are internal measures adopted in the form of EU ­legislative acts.5 They thus differ from conventional external relations tools, which are developed in cooperation with third countries and primarily aim at governing the relationship of the EU with third countries. IEMEIs blur the distinction between the ‘internal’ and the ‘external’ of the EU legal order: by simultaneously regulating the EU internal market and foreign trade, IEMEIs give rise to transnational governance that calls into question conventional understandings of state sovereignty, jurisdiction, and legitimacy. They are unilateral in the sense of incorporating ‘single – or multistate – rule and decision making on global issues affecting other jurisdictions without their consent’.6 Their unilateral character is of varying degrees and manifests in different ways, by imposing obligations in the absence of, or beyond, existing international standards, or by creating a role for the EU to enforce international standards.7 The term used in this book – ‘internal environmental measures with extraterritorial implications’ – is deliberately neutral and broad and has been widely used in the scholarship.8 The breadth of this definition is important in identifying the nature of the phenomenon in EU environmental law and the motivations for its increased occurrence. It is also important in identifying the overlapping legal regimes relevant to the operation of IEMEIs, which informs the analytical approach of the book. In terms of developing a framework for analysing the legal nature and legitimacy of these measures, the book adopts a more targeted scope. The book focuses on examples of EU environmental measures that are legally designed with a broad territorial scope by imposing conditions on how processes take place, and aim to influence regulatory developments outside of EU borders. The examples examined in this book include the sustainability criteria for biofuels, the regulation of ship recycling, the inclusion of aviation emissions in the EU ETS, and the regulation of imports of timber. I.  THE FOCUS ON THE ENVIRONMENT

The extension and reach of EU law beyond EU borders through domestic legislation is not confined to the environmental sphere but rather is evident in many 5 Regulations, directives or decisions, Treaty on the Functioning of the European Union [2008] OJ C326/47 (TFEU) Art 288. 6 N Krisch, ‘The Decay of Consent: International Law in an Age of Global Public Goods’ (2014) 108 The American Journal of International Law 1, 8. 7 Scott, ‘Territorial Extension’ (n 4 above). See Chapter 1, Section III. 8 Among others, G Marín Durán and E Morgera, Environmental Integration in the EU’s External Relations: Beyond Multilateral Dimensions (Hart, 2012); G Shaffer and D Bodansky, ‘Transnationalism, Unilateralism and International Law’ (2012) 1 Transnational Environmental Law 31; S Bogojević, ‘Legalising Environmental Leadership: A Comment on the CJEU’s Ruling in C-366/10 on the Inclusion of Aviation in the EU Emissions Trading Scheme’ (2012) 24 Journal of Environmental Law 345; E Morgera, ‘Ambition, Complexity and Legitimacy of Pursuing Mutual Supportiveness through the EU’s External Environmental Action’ in Bart Van Vooren, Steven Blockmans and J Wouters (eds), The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013).

The Focus on the Environment  3 policy areas. In most accounts of the global reach of EU law through domestic legislation,9 IEMEIs would constitute an example of a wider trend noticed in EU law more generally.10 Such policy areas include competition law,11 data protection,12 maritime and air transport,13 and financial services regulation,14 which all demonstrate that EU extraterritorial action can go a long way, possibly further than it currently does in environmental law. More closely related to the field of environmental protection, the global reach of EU law is evident in the areas of animal welfare,15 and food safety, particularly organic food16 and genetically modified organisms.17 Environmental law and the problems it addresses often transcend national frontiers and challenge state sovereignty.18 Furthermore, the way in which environmental law is constructed is increasingly ‘transnationalised’, giving rise to interactions between different levels of governance19 and different environmental governance regimes.20 Environmental regulators are often affected by, or rely upon, action taken elsewhere, in other jurisdictions and especially action of important market actors such as the EU.21 Environmental law thus presents a policy area in which the increasing proliferation of IEMEIs is explicable and

9 The global reach of EU law is also evident in other types of instruments, beyond the unilateral extension of domestic legislation: E Fahey, The Global Reach of EU Law (Routledge, 2016). 10 A Bradford, ‘The Brussels Effect’ (2012) 107 Northwestern University Law Review 1; Scott, ‘Territorial Extension’ (n 4 above). 11 For example, U Aydin, ‘Promoting Competition: European Union and the Global Competition Order’ (2012) 34 Journal of European Integration 663; Krisch (n 6 above). 12 C Kuner, ‘The European Union and the Search for an International Data Protection Framework’ (2014) 2 Groningen Journal of International Law 55; C Kuner, ‘Extraterritoriality and Regulation of International Data Transfers in EU Data Protection Law’ (2015) 5 International Data Privacy Law 235. 13 Scott, ‘Territorial Extension’ (n 4 above) 100–102. 14 Where there is evidence of the EU engaging in extraterritorial measures with no clear territorial link to the EU, J Scott, ‘The New EU ‘Extraterritoriality’’ (2014) 51 Common Market Law Review 1343; Fahey (n 9 above) ch 2. 15 Examples include regulation of seal products, Regulation (EC) No 1007/2009 on trade in seal products [2009] OJ L286/36, transportation of animals, Case C-424/13 Zuchtvieh-Export GmbH v Stadt Kempten, EU:C:2015:259 and animal testing for cosmetics, Case C-592/14 European Federation for Cosmetic Ingredients v Secretary of State for Business, Innovation and Skills and Attorney General EU:C:2016:703. 16 L Krämer, ‘Exporting EU Environmental Product Standards to Third Countries’ in WT Douma and S van der Velde (eds), EU Environmental Norms and Third Countries: The EU as a Global Role Model? (CLEER Working Papers 2013/5). 17 MA Pollack and GC Shaffer, When Cooperation Fails: The International Law and Politics of Genetically Modified Foods (OUP, 2009); Bradford (n 10 above) 32–35. 18 E Hey, ‘Common Interests and the (Re)constitution of Public Space’ (2009) 39 Environmental Policy and Law 152. See also T Cottier and S Matteotti-Berkutova, ‘International Environmental Law and the Evolving Concept of “Common Concern of Mankind”’ in T Cottier, O Nartova and SZ Bigdeli (eds), International Trade Regulation and the Mitigation of Climate Change (CUP, 2009). 19 V Heyvaert and T Etty, ‘Introducing Transnational Environmental Law’ (2012) 1 Transnational Environmental Law 1. 20 E Fisher, B Lange and E Scotford, Environmental law: Text, Cases and Materials (OUP, 2013) 30. 21 Shaffer and Bodansky (n 8 above) 34.

4  Introduction which is ideal for examining the transnational impacts to which EU domestic legislation gives rise. This book focuses on the extraterritorial and global reach of EU law through internal measures as it occurs in the environmental sphere, since the distinct nature of environmental law and environmental problems make this a regulatory area that is worthy of discrete study. This is for at least three reasons, which both explain the existence of IEMEIs in relation to environmental issues and justify the analytical focus of this book. First, environmental law is special due to its subject-matter. Many environmental problems addressed by IEMEIs are transboundary or global, affecting multiple states in different parts of the world.22 Because of their inherent transnational nature, environmental problems are preferably addressed through cooperative action to achieve effective results.23 Transboundary and global environmental problems are often legally constructed as global-collective-action problems and common interest problems, and some are treated as problems of common concern to the whole international community.24 However, these concepts do not denote specific enforceable obligations either in their own right or through the international regimes that incorporate them.25 Even in areas where ‘common concern’ has been explicitly recognised in Multilateral Environmental Agreements (MEAs),26 effective international collective action is not fully achieved. In light of ineffective global common action on many environmental issues, one function of IEMEIs is to fill the regulatory gaps of international environmental law as discussed in Chapter one. This may influence the assessment of the legitimacy of the EU’s action in unilaterally delivering such global public goods, particularly in terms of the EU potentially fulfilling a moral responsibility in addressing global environmental problems through IEMEIs.27 Second, environmental law has long been considered as a unique arena in which the EU could develop as a leader. Environmental issues have provided the EU with legitimate and attractive reasons for advancing its environmental policy internally, given the strong public support in the EU for acting on environmental matters and the urgency of addressing environmental problems.28 22 G Handl, ‘Transboundary Impacts’ in D Bodansky, J Brunnée and E Hey (eds), The Oxford Handbook of International Environmental Law (OUP, 2007); Fisher, Lange and Scotford (n 20 above) ch 2. 23 Hey (n 18 above). 24 E Ostrom, ‘Polycentric Systems for Coping with Collective Action and Global Environmental Change’ (2010) 20 Global Environmental Change 550. 25 J Brunnée, ‘Common Areas, Common Heritage, and Common Concern’ in D Bodansky, J ­Brunnée and E Hey (eds), The Oxford Handbook of International Environmental Law (OUP, 2007). 26 Convention on Biological Diversity, 5 June 1992, 1760 UNTS 79 (CBD) Recital 3; United Nations Framework Convention on Climate Change, 9 May 1992, 1771 UNTS 107 (UNFCCC) Recital 1. 27 See Chapter 2. Also see J Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (2015) 17 Cambridge Yearbook of European Legal Studies 92. 28 S Oberthür, ‘The Role of the EU in Global Environmental and Climate Governance’ in M Telo (ed), The European Union and Global Governance (Routledge 2009); A Lenschow and C Sprungk, ‘The Myth of a Green Europe’ (2010) 48 Journal of Common Market Studies 133, 142–47; M Lee, EU Environmental Law, Governance and Decision-Making, 2nd edn (Hart, 2014) 20.

The Focus on the Environment  5 In fact, environmental policy has played an important role in the transformation of the EU into a political entity, as an area through which the EU creates common identity and solidarity within the EU.29 Additionally, the EU has developed into an important actor and leader at the international level, pursuing an active role in the development of international environmental regimes.30 In this respect, as demonstrated in Chapter one, the unilateral extension of EU domestic environmental measures abroad presents an additional way for the EU to pursue global leadership within a well-developed external action policy. Third, environmental problems and legal responses to them are polycentric, in the sense that there are many different causes and a wide range of interests and actors that are relevant to any environmental problem.31 Regulating them involves taking into account different kinds of considerations and balancing conflicting interests, including aiming to achieve a high level of environmental protection32 whilst addressing economic development concerns.33 These polycentric considerations make environmental measures difficult to develop, because they involve an exercise of balancing of different interests – related to environmental protection but also economic and social interests more broadly – at multiple levels and across sectors. In this respect, regulating environmental problems raises challenges in reconciling environmental protection goals with other legitimate objectives of an economic and trade nature within the EU legal order.34 Additionally, regulating transnational environmental problems raises questions as to the appropriate level of governance and the distribution of responsibilities and obligations for addressing environmental problems, especially when there are multiple causes of an environmental problem.35 This is particularly difficult at the international level where the economic concerns of different countries diverge significantly. This difficulty is accentuated by the fragmented interaction among distinct relevant international regimes which incorporate environmental, trade and developmental agendas and which could provide guidance about how to reconcile conflicting interests of different countries.36 29 Lenschow and Sprungk (n 28 above); E Reid, Balancing Human Rights, Environmental Protection and International Trade: Lessons from the EU Experience (Hart, 2015) ch 2. 30 J Vogler, ‘The External Environmental Policy of the European Union’ in Olav Schram Stokke and OB Thommessen (eds), Yearbook of International Co-Operation on Environment and Development (Earthscan, 2003); AR Zito, ‘The European Union as an Environmental Leader in a Global Environment’ (2005) 2 Globalizations 363; DR Kelemen and D Vogel, ‘Trading places: The Role of the United States and the European Union in International Environmental Politics’ (2010) 43 Comparative Political Studies 427. 31 Fisher, Lange and Scotford (n 20 above) 25. 32 TFEU, Art 191. 33 Treaty on the European Union [2008] OJ C115/13 (TEU), Art 3(3); L Krämer, ‘Sustainable Development in EC Law’ in HC Buggge and C Voigt (eds), Sustainable Development in National and International Law (Europa Law Publishing, 2008); Lee (n 28 above) ch 3. 34 The EU’s framework for reconciling different kinds of values in its external action particularly is discussed in the Introduction to Part II of the book. 35 Fisher, Lange and Scotford (n 20 above) 31. 36 On the fragmentation of international regimes to govern climate change for example, albeit from a positive light, see RO Keohane and DG Victor, ‘The Regime Complex for Climate Change’ (2011) 9 Perspectives on Politics 7.

6  Introduction The EU’s unilateral action in this domain is particularly contentious when IEMEIs target and affect developing countries37 whose capacities, development needs and priorities are different from the EU. Legitimacy concerns about IEMEIs are particularly poignant because they give rise to situations whereby one jurisdiction pursues a legitimate goal, such as environmental protection, in ways that could detrimentally affect other kinds of legitimate interests of poorer third countries. For these reasons, environmental law represents a policy area of EU law that merits distinct study of the emerging phenomenon of the global reach of EU law and its legitimacy. At the same time, the normative analysis of the EU as a global regulator in this book contributes to broader discussions about the legitimacy of the role of the EU in the world and the extension of its domestic legislation beyond EU borders in other policy fields. II.  ANALYTICAL APPROACH AND OUTLINE OF THE BOOK

The book engages in a doctrinal analysis of IEMEIs, combining (1) a descriptive analysis identifying this emerging legal phenomenon and the regulatory techniques employed by the EU in extending its regulatory power beyond its borders; (2) a normative analysis for understanding and assessing the legitimacy of transnational regulatory power as exercised through IEMEIs; and (3) a legal analysis, by applying this normative understanding of the legitimacy of IEMEIs to specific applicable legal regimes. In identifying this legal phenomenon, the book covers a broad range of IEMEIs, both to demonstrate that these measures are proliferating and to stress the need for applicable legal regimes to respond to their complexities. The various examples demonstrate the multifaceted legal nature and features of IEMEIs, providing evidence of the growing legal phenomenon of IEMEIs and the opportunity for comparative analysis of different kinds of regulatory techniques in different policy areas. The book assesses the legality of adopting these measures, examines the modalities of their adoption and implementation, and explores the appropriate role of law in controlling how EU global regulatory power is exercised from a normative perspective. None of these inquiries is straightforward, considering that IEMEIs have a transnational operation, existing and operating across different legal regimes. In legal terms, IEMEIs are characterised by legal hybridity. This is due to their nature as EU internal measures designed to apply to countries outside the EU.

37 The term ‘developing countries’ in this book includes countries at different stages of development, including less developed, developing and least developed countries, depending on the countries affected by each IEMEI. The book treats these groups of countries together in assessing how legal regimes deal with impacts of IEMEIs on poorer countries at different stages of development from the EU.

Analytical Approach and Outline of the Book  7 IEMEIs often incorporate third country and international standards and link the application of EU law to legal developments abroad. They thus create different kinds of regulatory interactions with third country law and bilateral and multilateral agreements. As demonstrated in Chapter one, whilst IEMEIs are created within the EU legal order, they affect and are affected by legal regimes that operate in third countries and transnationally. IEMEIs are measures that operate within multiple established legal frames that are all relevant and applicable in some senses, but no one frame covers comprehensively their transnational operation. One might think of IEMEIs as a good example of transnational or global environmental law,38 challenging the boundaries of nation-state-centred environmental regulation, having ‘effects in more than one jurisdiction’ and involving a dynamic relationship between different levels of governance.39 The legal analysis of this phenomenon therefore does not fit comfortably within a single pre-established jurisdictional frame of legal analysis, but nor do purely global or transnational characterisations provide an established analytical platform for understanding and evaluating IEMEIs. The challenge of analysing these legally elusive phenomena is particularly acute in assessing the legitimacy of transnational exercise of regulatory power through measures that originate in one legal order but affect actors and regimes beyond its borders. The ways in which IEMEIs influence regulatory approaches abroad can raise important legitimacy questions, as will be analysed in Chapter two. While the extension of EU environmental regulation beyond EU borders provides a novel governance mode that can fill regulatory gaps at the international level, it also raises significant legitimacy concerns from the perspective of third countries affected by EU regulation. This book does not advocate against EU unilateral regulation to address transnational environmental concerns. Rather, while recognising the importance of such unilateral regulatory measures, it draws attention to the questions that need to be asked about how the EU exercises global regulatory power and puts forward ways in which law can contribute to enhancing the legitimacy of the EU’s action. IEMEIs give rise to global governance through unilateral regulation with extraterritorial reach, affecting other jurisdictions without their consent. The source of legitimacy for the EU’s authority in regulating conduct beyond its borders in this way is not obvious. Additionally, IEMEIs are problematic because regulatory standards are extended to actors that do not usually have a voice in the formulation and implementation of decisions that affect them. This can lead

38 On the relationship and differences between transnational and global environmental law see G Shaffer, ‘Transnational Legal Process and State Change’ (2012) 37 Law & Social Inquiry 229, 234. While recognising that there are differences between transnational and global governance, for the purposes of this book, the analysis draws on both strands of literature and these terms are used interchangeably on the basis of their ‘shared affinity’, as identified in Heyvaert and Etty (n 19 above) 3. 39 Shaffer and Bodansky (n 8 above); T Yang and RV Percival, ‘The Emergence of Global Environmental Law’ (2009) 36 Ecology Law Quarterly 615.

8  Introduction to exercise of regulatory power without accountability, representation or participation of affected interests situated outside the EU as the regulating jurisdiction, thus giving rise to a series of ‘external legitimacy gaps’. The book develops an analytical approach for understanding and assessing the unilateral exercise of regulatory power beyond established territorial and jurisdictional borders at the intersection of multiple legal regimes. As there is no robust methodology for assessing transnational regulatory power exercised beyond the nation-state, the book seeks to conceptualise what legitimacy means in this context. In Chapter two, the book develops a framework for evaluating intersecting applicable legal regimes and their legitimising functions in relation to the exercise of EU global regulatory power through IEMEIs. After identifying IEMEIs as a manifestation of the exercise of EU global regulatory power in Part I, the book then applies the analytical framework developed to IEMEIs and examines how the legal orders of the EU (Part II) and the WTO (Part III) can in combination legally control EU global regulatory power and enhance its legitimacy. EU law as the ‘home’ legal system from which IEMEIs originate, and WTO law, which governs the EU’s trade relations with third countries, provide vital legal sites for controlling IEMEIs and the most elaborate legal systems that can provide third country actors with possibilities for controlling the EU’s extension of its power. The book evaluates the extent to which the current application of legal doctrines and procedures in EU and WTO law accounts for this emerging legal phenomenon and the legitimacy concerns it raises. Particularly, it investigates the extent to which the legal orders of EU and WTO law provide transnational avenues for holding the EU to account and addressing the different legitimacy gaps in relation to the impacts of EU domestic legislation beyond its borders. It argues that the legitimacy of EU global regulatory power is determined by the balance achieved between the enabling and the constraining functions of law. In doing so, it identifies ways in which these regimes enable the existence of such measures, thus providing the legal basis for their adoption and the normative justification for the EU to act, as well as ways in which they constrain the extension of EU law to third countries, by disciplining the unilateral exercise of EU global regulatory power. In this respect, the book assesses how these legal regimes, in combination, partly address some of the legitimacy concerns that IEMEIs raise, but also exposes their shortcomings in fulfilling their legitimising potential and accounting for this emerging legal phenomenon.40



40 The

law and policy developments are discussed in this book as they were on 30 November 2018.

Part I

IEMEIs as Manifestations of EU Global Regulatory Power

10

1 Identifying and Mapping the Legal Phenomenon of Internal Environmental Measures with Extraterritorial Implications (IEMEIs) I. INTRODUCTION

T

his chapter explores the legal phenomenon of IEMEIs by i­dentifying their legal nature as a mechanism of EU external environmental action and by examining the regulatory techniques they incorporate in extending EU environmental legislation beyond EU borders. The purpose of this chapter is to identify IEMEIs as a manifestation of EU global regulatory power, adopted alongside different types of EU external relations tools. The chapter also seeks to map the legal features of the various examples of IEMEIs examined in this book, providing the foundation for their legal analysis in Parts II and III. In analysing the legal nature of IEMEIs the chapter draws attention to the fact that IEMEIs fit within, but also fall uneasily between, legal regimes in EU, national and international law, including WTO law. In addition to informing the analytical method of the book, the recurring theme of the interplay of multiple legal regimes is identified as critical to the legal understanding of IEMEIs. The chapter proceeds in the following manner. Section II identifies the legal nature of IEMEIs as an emerging mode of EU external environmental action and explains the prevalence of IEMEIs in terms of the EU’s environmental leadership ambitions. In doing so, it demonstrates how the interplay of governance frames relevant in the operation of IEMEIs informs and partly explains their proliferation. Section III further identifies the legal nature of IEMEIs by exploring features of their legal design and transnational operation. A closer look at these legal features further exemplifies the interplay of multiple legal regimes relevant for the analysis of IEMEIs. This is because IEMEIs make references to international standards and third country law in setting regulatory restrictions on the EU market and often make explicit links to legal developments

12  Identifying and Mapping the Legal Phenomenon of IEMEIs outside the EU. In light of the legal nature of IEMEIs, Section IV then explains the analytical approach of this book, in examining IEMEIs as a legal phenomenon that operates at the intersection of multiple legal regimes. II. IEMEIs WITHIN THE BROADER CONTEXT OF EU EXTERNAL ENVIRONMENTAL ACTION

This section situates IEMEIs within the broader context of EU external environmental action. It explores the legal nature of IEMEIs, by identifying IEMEIs as one mode of pursuing external environmental action alongside the EU’s multifaceted environmental action at the international level (Section II.A), and by considering the motivations of the EU in adopting IEMEIs for pursuing environmental leadership (Section II.B). This discussion demonstrates how multiple legal regimes, particularly in international environmental law and EU external relations law, are a critical part of the story in identifying the legal nature of IEMEIs and explaining their proliferation. A.  Different Modes of EU External Environmental Action and IEMEIs The external environmental action of the EU is typically associated with different types of external measures regulating the relations of the EU with third countries in the international plane. The EU and its Member States usually promote and influence the development of international environmental law through active participation in Multilateral Environmental Agreements (MEAs).1 This is where EU law ordinarily interacts with public international law in the environmental sphere. The EU, as a strong regulating bloc, usually seeks to gain ‘first mover’ advantages by setting out its position early in the process of multilateral agreements.2 Its global leadership role in this field has thus been usually associated with a preference for multilateralism,3 which is also explicitly embedded in its environmental legal competence.4

1 G Marín Durán and E Morgera, Environmental Integration in the EU’s External Relations: Beyond Multilateral Dimensions (Hart, 2012) 21–24. 2 AR Zito, ‘The European Union as an Environmental Leader in a Global Environment’ (2005) 2 Globalizations 363. 3 J Vogler and HR Stephan, ‘The European Union in Global Environmental Governance: Leadership in the Making?’ (2007) 7 International Environmental Agreements: Politics, Law and Economics 389; T Delreux, ‘The EU as an Actor in Global Environmental Politics’ in A Jordan and C Adelle (eds), Environmenal Policy in the EU, Actors, Institutions and Processes, 3rd edn (Routledge, 2012). 4 Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C326/47 (TFEU) Art 191(1).

IEMEIs within the Broader Context of EU External Environmental Action  13 In the public international law arena, the EU’s environmental action extends further than the traditional sense of MEAs, encompassing a variety of ­external relations tools ‘beyond multilateralism’.5 The EU often externalises its own environmental standards to third countries within bilateral and inter-regional agreements. Through ‘environmental conditionality’, the EU promotes its legal standards as a benchmark for development of third country law by providing incentives, usually relating to market integration, for ‘voluntary’ adoption of EU environmental standards.6 Ordinarily these incentives are demarcated in different types of consensual agreements developed in co-operation with third countries,7 unlike IEMEIs, which are unilaterally adopted by the EU. ­Furthermore, EU practice includes incorporation of environmental integration clauses8 in various types of bilateral or regional agreements,9 as well as in the EU Generalised System of Preferences.10 Also at the level of international law, the EU has been attempting to ‘green’ WTO law.11 On the one hand, the EU has sought through political negotiations to include provisions that would place MEAs and WTO law on an equal footing, in accordance with the principle of mutual supportiveness, albeit with little success.12 On the other hand, the EU has been invoking environmental and other societal concerns in the WTO’s dispute settlement system, including defending its domestic policies in disputes.13 In addition to these modes of EU external action that take place in the realm of public international law, the EU has been pursuing external environmental

5 Marín Durán and Morgera (n 1 above) ch 7. 6 M Montini, ‘EC External Relations on Environmental Law’ in J Scott (ed), Environmental Protection: European Law and Governance (OUP, 2009) 680. 7 A prime example of the EU as direct ‘rule exporter’ is The Energy Community Treaty [2006] OJ L198/18. 8 Environmental integration requirements are also included in the provisions governing EU external action, Consolidated Version of the Treaty on the European Union [2008] OJ C326/13 (TEU) Arts 21(2)(d), (f). 9 For a comprehensive analysis of different types of agreements see Marín Durán and Morgera (n 1 above) chs 2, 4. See also G Marin-Duran, ‘The Role of the EU in Shaping the Trade and Environment Nexus Multilateral and Regional Approaches’ in B Van Vooren, S Blockmans and J Wouters (eds), The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013); E Reid, Balancing Human Rights, Environmental Protection and International Trade: Lessons from the EU Experience (Hart, 2015) ch 5. 10 Marín Durán and Morgera (n 1 above) ch 3. 11 DR Kelemen, ‘Globalizing European Union Environmental Policy’ (2010) 17 Journal of ­European Public Policy 335; Marin-Duran (n 9 above). 12 Kelemen (n 11 above); Marin-Duran (n 9 above). See also R Eckersley, ‘The Big Chill: The WTO and Multilateral Environmental Agreements’ (2004) 4 Global Environmental Politics 24. 13 For example, Panel Report on EC – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R adopted 29 September 2006; AB Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R, WT/DS401/AB/R adopted 18 June 2014.

14  Identifying and Mapping the Legal Phenomenon of IEMEIs action through its internal measures. In fact, the EU’s internal environmental policy has always been informed by strong external dimensions such as the international sustainable development agenda14 and international environmental treaties.15 Also, environmental measures have traditionally aimed at protecting the natural environment of the EU as well as the environment beyond EU borders, especially through the implementation of international conventions within the EU.16 Furthermore, the EU would usually adopt internal environmental measures on contentious issues, with the aspiration that by showing the rest of the world what can be achieved internally, the EU policy would then provide an example to be followed internationally. The EU would thus assume a directional leadership role, leading ‘by example’.17 The success of this leadership mode has been called into question, because of challenges for the EU to achieve internal coherence and demonstrate credibility externally.18 Beyond such internal measures with external dimensions, in situations where cooperative regimes fail or are inadequate, the EU increasingly pursues global environmental protection through IEMEIs. IEMEIs involve the unilateral exercise of EU regulatory power in the form of market access requirements adopted in the absence of, or above, existing international standards. IEMEIs more directly and deliberately aim at instigating regulatory changes abroad and influencing third country and international policies. IEMEIs are legally designed to unilaterally extend the territorial remit of EU legislation,19 by making access to the EU market conditional upon the basis of conduct or processes that take place abroad and explicitly linking their application to developments in third countries, or at the international level. The book does not focus on measures that incidentally have extraterritorial implications but rather on measures legally designed to have extraterritorial legal impacts and regulatory effects. The effects of IEMEIs on international trade are key in achieving their regulatory goal by ‘affecting the distribution of costs and benefits accruing from

14 For example, Rio Declaration on Environment and Development (12 August 1992) UN Doc A/CONF.151/26 vol 1, Principle 4. 15 For example, in regulating the protection of nature and biodiversity, the EU relied on many treaties such as the Convention on Wetlands of International Importance, 2 February 1971, 996 UNTS 245. 16 JH Jans and H Vedder, European Environmental Law, 3rd edn (Europa Law Publishing, 2008) 31–35. 17 Directional leadership consists of ‘non-confrontational means of diplomacy, persuasion and argumentation’: S Oberthür, ‘The Role of the EU in Global Environmental and Climate Governance’ in M Telo (ed), The European Union and Global Governance (Routledge, 2009) 195–96. 18 B Kilian and O Elgström, ‘Still a Green Leader? The European Union’s Role in International Climate Negotiations’ (2010) 45 Cooperation and Conflict 255; H Vedder, ‘The Formalities and Substance of EU External Environmental Competence: Stuck Between Climate Change and Competitiveness’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012). 19 J Scott, ‘Extraterritoriality and Territorial Extension in EU Law’ (2014) 62 American Journal of Comparative Law 87.

IEMEIs within the Broader Context of EU External Environmental Action  15 international trade’.20 Notably, through IEMEIs, the EU’s approach is shifting from leadership by example, to structural or power-based leadership,21 which utilises EU market power to prompt regulatory changes in third countries.22 As demonstrated in Section III below, IEMEIs combine features of coercion in the form of conditionality, with the possibility of exclusion from the EU market, as well as persuasion,23 through cooperative elements, thus exhibiting a combination of structural and directional leadership in triggering regulatory changes. In this respect, IEMEIs contribute to transnational processes of policy ­diffusion24 through regulatory competition among trading partners,25 as well as through different forms of regulatory co-operation.26 Through such processes the EU exercises both normative power27 and market power28 in stimulating regulatory changes abroad in different ways.29 Regulatory standards in IEMEIs often act as ‘norm catalysts’ setting a baseline that creates incentives and affects the costs and benefits of analogous third country and international policies.30 IEMEIs can also influence multilateral regimes, in the 20 Suttle identifies such measures as external trade measures that require special justification towards outsiders subject to them: O Suttle, ‘Equality in Global Commerce: Towards a Political Theory of International Economic Law’ (2014) 25 European Journal of International Law 1043. 21 This shift is demonstrated in how IEMEIs influence regulatory approaches abroad in Section III below. 22 J Scott, ‘The Multi-Level Governance of Climate Change’ in P Craig and G de Burca (eds), The Evolution of EU Law (OUP, 2011); J Scott, ‘EU Global Action on Climate Change: Contingent Unilateralism and Regulatory Penalty Defaults’ (2012) 2(1) SADC Law Journal 1; VL Birchfield, ‘Coercion with Kid Gloves? The European Union’s Role in Shaping a Global Regulatory Framework for Aviation Emissions’ (2015) 22 Journal of European Public Policy 1276. 23 AR Young, ‘The European Union as a Global Regulator? Context and Comparison’ (2015) 22 Journal of European Public Policy 1233. 24 Policy diffusion is defined as ‘the interdependent process that is conducive to the spread of policies’ around the world, F Gilardi, ‘Four Ways We Can Improve Policy Diffusion Research’ (2016) 16 State Politics and Policy Quarterly 8. 25 Regulatory competition arises when domestic decision-makers respond to regulatory decisions of other states either through a ‘race to the bottom’ by lowering their own standards to attract investment or more likely through a ‘race to the top’ whereby states raise their own standards in response to the more stringent policies of their trading partners. For an explanation of how regulatory competition leads to a ‘race to the top’ see David Vogel, ‘Trading Up and Governing Across: Transnational Governance and Environmental Protection’ (1997) 4 Journal of European Public Policy 556. For a legal account of regulatory competition, see V Heyvaert, ‘Regulatory Competition – Accounting for the Transnational Dimension of Environmental Regulation’ (2013) 25 Journal of Environmental Law 1. For a perspective from political science, Young (n 23 above). 26 Young (n 23 above). 27 The EU is understood as a normative power by promoting and extending normative values such as democracy, the rule of law, sustainable development and good governance beyond its borders through different diffusion processes, usually of non-coercive nature: I Manners, ‘Normative Power Europe: A Contradiction in Terms?’ (2002) 40 Journal of Common Market Studies 235. 28 Due to the economic power of the single market, the EU’s institutional features that render it akin to a regulatory state and interest contestation involved in the development of EU internal policies, the EU’s market-related measures are often externalised through both coercive and persuasive means: C Damro, ‘Market Power Europe’ (2012) 19 Journal of European Public Policy 682. 29 A rigid dichotomy between normative and market power is not always constructive, Birchfield (n 22 above). 30 Scott, ‘Territorial Extension’ (n 19 above).

16  Identifying and Mapping the Legal Phenomenon of IEMEIs form of ‘uploading’ of EU rules to international regimes.31 The ways in which IEMEIs affect third country practices and regulatory behaviour vary, and depend on the EU’s market power, the nature of the issue regulated, the EU’s regulatory capacity and the nature of the standards adopted.32 IEMEIs may thus lead to ‘divergent convergence’33 or mimesis34 in certain areas; provide a ‘source of inspiration’ in others;35 or trigger ‘reflection, debate and reform’.36 This book does not examine the actual impact of EU legislation beyond its borders from an empirical perspective, but rather engages in a doctrinal and normative analysis of how EU legislation is designed to extend beyond EU borders and influence third country policies. Overall, the EU’s global environmental leadership role is pursued through multiple channels of regulatory action, utilising its legal competences in different ways. In this respect, IEMEIs are identified as a regulatory mechanism through which the EU pursues and influences global environmental governance, alongside other types of trade-related legal mechanisms.37 IEMEIs function as a supplementary mode of EU leadership, used in combination with other external relations tools, to stimulate regulatory changes in third countries and international regimes.38 On the basis of this analysis, the following sub-section seeks to explain why the EU increasingly resorts to IEMEIs in pursuing external action, demonstrating their legal nature as a legally hybrid mode of EU environmental action that simultaneously governs the EU internal market and the EU’s external relations. B.  Explaining the Recourse to IEMEIs EU unilateral action in environmental matters can be explained in different ways that demonstrate the legal character of IEMEIs. Understanding the increasing

31 JB Wiener, ‘Something Borrowed for Something Blue: Legal Transplants and the Evolution of Global Environmental Law’ (2000) 27 Ecology Law Quarterly 1295. 32 A Bradford, ‘The Brussels Effect’ (2012) 107 Northwestern University Law Review 1. See also D Vogel, Trading Up: Consumer and Environmental Regulation in a Global Economy (Harvard University Press, 1995) ch 8. 33 D Levi-Faur and J Jordana, ‘Regulatory Capitalism: Policy Irritants ands Convergent Divergence’ (2005) 598 The Annals of the American Academy of Political and Social Science 191. 34 G Shaffer and D Bodansky, ‘Transnationalism, Unilateralism and International Law’ (2012) 1 Transnational Environmental Law 31. 35 Marín Durán and Morgera (n 1 above) ch 7. 36 E Fisher, ‘The ‘Perfect Storm’of REACH: Charting Regulatory Controversy in the Age of Information, Sustainable Development, and Globalization’ (2008) 11 Journal of Risk Research 541. 37 On different kinds of trade-related mechanisms employed in EU external governance, see B Van Vooren, S Blockmans and J Wouters, The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013); Axel Marx and others, Global Governance through Trade, EU Policies and Approaches (Edward Elgar, 2015); J Zeitlin, Extending Experimentalist Governance? The European Union and Transnational Regulation (OUP, 2015). 38 Marín Durán and Morgera (n 1 above) ch 7.

IEMEIs within the Broader Context of EU External Environmental Action  17 recourse to IEMEIs informs how IEMEIs fit within the EU’s multi-faceted external environmental action, and demonstrates the multiple frames of governance at play, informing and shaping EU policy choices. There are many explanations for the motives of the EU in unilaterally extending internal environmental measures beyond its borders, with these motives involving a ‘gamut from idealism to self-interest, often intertwined in complex ways.’39 The following analysis sets out four of the motives driving the proliferation of IEMEIs, which in different ways highlight the multiple legal regimes relevant to the operation of IEMEIs. The legal nature of IEMEIs can be attributed to: avoiding complexities and shortcomings of public international law regimes; effectively addressing transboundary or global environmental problems; protecting competitive opportunities of domestic economic actors while avoiding WTO incompatibility; and side-stepping the EU’s internal challenges for exercising external competence in multilateral regimes. First, in light of slow progress under some international regimes, the EU is increasingly resorting to IEMEIs as a way of filling environmental regulatory gaps. Because of their inherent transnational nature, some environmental problems are preferably addressed through cooperative action to achieve effective results.40 Conversely, unilateral solutions to transboundary or global environmental problems are considered ‘second-best’41 as they could undermine multilateral efforts or give rise to ‘ecological imperialism’42 or ‘protectionism’43 and should thus be avoided.44 However, unilateral measures may be necessary as the alternative is often ‘pure inaction’.45 The increasing prevalence of IEMEIs is partly due to the shortcomings of multilateral regimes. These shortcomings include slow progress of international regimes, adoption of weak standards based on the lowest common denominator, and ineffective implementation of such ­standards.46 Therefore, in situations of ‘limp-wristed international progress’, the EU is not willing to wait for international regimes to move forward, but

39 Zeitlin (n 37 above) 8. 40 E Hey, ‘Common Interests and the (Re)constitution of Public Space’ (2009) 39 Environmental Policy and Law 152. 41 D Bodansky, ‘What’s so Bad about Unilateral Action to Protect the Environment?’ (2000) 11 European Journal of International Law 339; LB de Chazournes, ‘Unilateralism and Environmental Protection: Issues of Perception and Reality of Issues’ (2000) 11 European Journal of International Law 315. 42 B Jansen, ‘The Limits of Unilateralism from a European Perspective’ (2000) 11 European ­Journal of International Law 309; T Cottier and S Matteotti-Berkutova, ‘International Environmental Law and the Evolving Concept of “Common Concern of Mankind”’ in T Cottier, O Nartova and SZ Bigdeli (eds), International Trade Regulation and the Mitigation of Climate Change (CUP, 2009). 43 L Ankersmit, J Lawrence and G Davies, ‘Diverging EU and WTO Perspectives on Extraterritorial Process Regulation’ (2012) 21 Minnesota Journal of International Law Online 14. 44 Rio Declaration (n 14 above) Principle 12. 45 Bodansky (n 41 above). 46 JE Alvarez, ‘Multilateralism and its Discontents’ (2000) 11 European Journal of International Law 393; Bodansky (n 41 above).

18  Identifying and Mapping the Legal Phenomenon of IEMEIs instead proceeds with unilateral measures.47 The urgency of addressing global collective action problems, such as climate change, may thus justify a move away from consensual modes of governance in pursuing global public goods.48 Second, the broad territorial scope of IEMEIs, covering activities and actors beyond the borders of the EU, is often justified as necessary to effectively tackle transboundary or global environmental problems, such as air pollution that ‘knows no boundaries’.49 At least in principle, IEMEIs that also apply to processes occurring abroad circumvent ‘free rider’ problems50 that could result in the creation of pollution havens or lead to carbon leakage.51 They aim to avoid situations whereby commercial activities transfer to countries with less stringent environmental or climate change policies, effectively relocating the problem to a different part of the world. Third, by equally applying environmental process standards to foreign economic operators, IEMEIs are increasingly adopted as a more direct way of protecting the competitiveness position of EU domestic operators that would face additional costs in comparison with their international competitors,52 thereby levelling the playing-field.53 ‘By putting pressure on other jurisdictions to adopt similar environmental standards and/or adopt corresponding international standards’, IEMEIs protect the competitiveness position of EU domestic industry, while avoiding WTO inconsistency.54 However, when the EU uses IEMEIs to primarily protect domestic businesses, its action can be problematic from the perspective of third countries.55

47 HH Vedder, ‘Diplomacy by Directive? An Analysis of the International Context of the ­Emissions Trading Scheme Directive’ in M Evans and P Koutrakos (eds), Beyond the Established Legal Orders (Hart, 2011). 48 N Krisch, ‘The Decay of Consent: International Law in an Age of Global Public Goods’ (2014) 108 The American Journal of International Law 1. 49 Case C-366/10 The Air Transport Association of America and others v The Secretary of State for Energy and Climate Change (ATAA) EU:C:2011:637, Opinion of AG Kokott, para 154. 50 Identified as an important challenge for protecting global public goods, G Shaffer, ‘International Law and Global Public Goods in a Legal Pluralist World’ (2012) 23 European Journal of International Law 669. 51 This reason was identified in including international flights in the EU ETS, Directive 2008/101/ EC amending Directive 2003/87/EC so as to include aviation activities in the scheme for g­ reenhouse gas emission allowance trading within the Community [2009] OJ L8/3 (Aviation Directive) Recital 25. 52 Protection of domestic competitiveness is also identified as a motive of EU environmental leadership through MEAs, DR Kelemen and D Vogel, ‘Trading places: The Role of the United States and the European Union in International Environmental Politics’ (2010) 43 Comparative Political Studies 427. 53 C Ryngaert and M Koekkoek, ‘Extraterritorial Regulation of Natural Resources: A Functional Approach’ in Axel Marx and others (eds), Global Governance through Trade, EU Policies and Approaches (Edward Elgar, 2015). 54 K Kulovesi, E Morgera and M Muñoz, ‘Environmental integration and Multi-Faceted International Dimensions of EU Law: Unpacking the EU’s 2009 Climate and Energy Package’ (2011) 48 Common Market Law Review 829, 889; Kelemen (n 11 above). 55 Ryngaert and Koekkoek (n 53 above).

IEMEIs within the Broader Context of EU External Environmental Action  19 Fourth, both in political and legal terms, IEMEIs represent an alternative and perhaps more effective mode of pursuing environmental leadership, addressing some of the internal challenges the EU faces in acting internationally. Through internal measures, the EU can avoid the constitutional complexities associated with EU external competence, at least at an initial stage.56 Despite not being particularly problematic in the environmental field,57 external competence may still give rise to uncertainty as to the legal basis on which MEAs are based, and the exact scope that EU external competence covers,58 given its shared nature.59 The nature of IEMEIs as domestic measures also side-steps some of the difficulties of exercising competence in mixed agreements to which both the EU and the Member States are parties,60 specifically in terms of the EU speaking with a ‘single voice’ in environmental negotiations.61 To a certain extent, IEMEIs can be seen as a way of first achieving internal coherence within the EU, which can then be projected more easily in multilateral fora as the EU’s negotiating position. Both EU Member States and industry are usually more willing to agree on stringent environmental standards domestically, knowing that they will automatically apply to non-EU actors, rather than to adopt strict domestic standards and go on to agree to less stringent, ‘watered down’ standards in multilateral fora. Therefore, in legally analysing IEMEIs, the focus shifts from conventional issues on EU external environmental action regarding external competence and international representation of the EU, to the internal decision-making processes of the EU legal order where IEMEIs are designed and adopted. In summary, Section II has examined how IEMEIs provide a different direction for EU environmental leadership that supplements multilateral efforts undertaken by the EU in the realm of public international law. It has sought to understand their increasing prevalence as a mode of pursuing environmental leadership, by identifying how multiple legal regimes influence the EU’s policy choices in simultaneously pursuing internal and external environmental action.

56 ‘competence is the EU terms for “powers”, determining when the EU can act.’ J Vogler, ‘The External Environmental Policy of the European Union’ in Olav Schram Stokke and OB Thommessen (eds), Yearbook of International Co-Operation on Environment and ­Development (Earthscan, 2003) 65. 57 TFEU Art 191(4); Vedder, ‘Formalities and Substance’ (n 18 above); Marín Durán and Morgera (n 1 above) ch 1. 58 Geert de Baere, ‘International negotiations post Lisbon: a case study of the Union’s external environmental policy’ in P Koutrakos (ed), The European Union’s External Relations A Year After Lisbon (2011) CLEER Working Papers TMC Asser Institut 3/2011. 59 TFEU Arts 4(2), 191(4). 60 A Dashwood, ‘Mixity in the era of the Treaty of Lisbon’ in C Hillion and P Koutrakos (eds), Mixed Agreements Revisited: the EU and its Member States in the World (Hart, 2010). 61 de Baere (n 58 above); J Thomson, ‘A Member State’s Perspective on the Post-Lisbon Framework for the EU’s Representation in Multilateral Environmental Negotiations’ and M Buck, ‘The EU’s Representation in Multilateral Environmental Negotiations after Lisbon’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012).

20  Identifying and Mapping the Legal Phenomenon of IEMEIs The following section continues the identification of the legal nature of IEMEIs by more closely examining examples of IEMEIs and discerning key features of their legal design. III.  EXAMPLES OF IEMEIs: MAPPING THEIR LEGAL FEATURES

This section maps the examples of IEMEIs examined in this book, so as to provide a clearer functional understanding of their legal nature and impacts, and their extraterritorial character. The term ‘internal measures with extraterritorial implications’ may incorporate different kinds of measures,62 from purely unilateral and extraterritorial measures63 to transnational regulation.64 The scope of this book is narrower, focusing on unilateral process-based measures that regulate access to the EU market for goods and services by imposing conditions on procedures that partly take place abroad. They often manifest ‘territorial extension’ whereby the application of EU legislation is triggered by a territorial connection between the EU and the regulated activity, and takes into account conduct or circumstances partly taking place in third countries.65 These measures are chosen as the focus of this book because they demonstrate this emerging legal phenomenon in the environmental field, they show a great variety of regulatory techniques employed in extending the regulatory remit of EU legislation, and they bring out a constellation of questions about the legitimacy of the EU’s action. The examples examined in this book do not represent an exhaustive list of EU measures that could qualify as IEMEIs. Rather, they provide a suitably wide sample, involving different policy areas and legal regimes at different stages of development and maturity. The various examples demonstrate the multi-faceted legal nature and features of IEMEIs and provide evidence of the growing legal phenomenon of IEMEIs. The IEMEIs covered in this book consist of measures regulating: imports of products relating to the sustainability of biofuels,66 the 62 For an overview of different kinds of global reach of EU law see E Korkea-Aho, ‘“Mr Smith Goes To Brussels”: Third Country Lobbying and the Making of EU Law and Policy’ (2016) 18 Cambridge Yearbook of European Legal Studies 1. 63 Particularly prevalent in financial regulation, see J Scott, ‘The New EU “Extraterritoriality”’ (2014) 51 Common Market Law Review 1343. 64 Such as the regulation of chemicals and GMOs, Korkea-Aho (n 62 above). See also J Scott, ‘From Brussels with Love: The Transatlantic Travels of European Law and the Chemistry of Regulatory Attraction’ (2009) 57 American Journal of Comparative Law 897; Zeitlin (n 37 above). 65 Scott, ‘Territorial Extension’ (n 19 above). 66 Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2009] OJ L140/16 (Renewable Energy Directive (RED)); Directive 2009/30/EC amending Directive 98/70/ EC as regards the specification of petrol, diesel and gas-oil and introducing a mechanism to monitor and reduce greenhouse gas emissions and amending Directive 1999/32/EC as regards the specification of fuel used by inland waterway vessels and repealing Directive 93/12/EEC [2009] OJ L140/88 (Fuel Quality Directive (FQD)).

Examples of IEMEIs: Mapping their Legal Features  21 legality of timber and timber products,67 and illegal, unregulated and unreported fishing (IUU).68 The book also examines measures on the export side of trade on the treatment of waste electrical and electronic equipment (WEEE)69 and ship recycling.70 Furthermore, the book examines the inclusion of aviation emissions in the EU Emissions Trading System (EU ETS).71 The mapping of these select IEMEIs in this section is undertaken by exploring features of IEMEIs that demonstrate their varying unilateral nature and extraterritorial effects. The analysis focuses on two inter-related regulatory techniques through which the EU extends the regulatory remit of its domestic environmental measures to processes occurring partly abroad. First, it highlights features of the legal design of IEMEIs as trade restrictions that regulate access to the EU market on the basis of processes that take place partly abroad (Section III.A). Second, it explores features of their legal design concerning compliance by third countries through features of ‘contingent unilateralism’,72 flexibility and equivalence that link to, and implicate, legal developments outside EU borders (Section III.B). This categorisation is not the only way of analysing processbased measures73 that exhibit territorial extension.74 However, unpacking these two regulatory techniques and identifying their varied features is a useful exercise in further understanding the legal nature and functioning of IEMEIs and how they may affect third country actors, directly or indirectly. These features demonstrate the variety of legal mechanisms employed by the EU in unilaterally regulating environmental problems, which extend beyond exportation of EU-set standards in a rigid manner and exhibit relative unilateralism. These regulatory techniques also demonstrate how IEMEIs operate across multiple legal regimes by explicitly and variously incorporating international standards and making references to third country law and international developments in their legal design.

67 Regulation (EU) 995/2010 laying down the obligations of operators who place timber and timber products on the market (Timber Regulation) [2010] OJ L295/23. 68 Regulation (EC) 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing [2008] OJ L286/1 (IUU Regulation). 69 Directive 2012/19/EU on waste electrical and electronic equipment (WEEE) [2012] OJ L197/38. 70 Regulation (EU) 1257/2013 on Ship Recycling [2013] OJ L330/1. 71 Aviation Directive (n 51 above); Consolidated Version of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32. 72 J Scott and L Rajamani, ‘EU Climate Change Unilateralism’ (2012) 23 European Journal of International Law 469; Scott, ‘Territorial Extension’ (n 19 above). 73 See L Ankersmit, Green Trade and Fair Trade in and with the EU: Process-based Measures within the EU Legal Order (Cambridge University Press, 2017) Ch 1 (Ankersmit categorises process-based measures into three categories depending on how rules regulate trade: country-based, producerbased and consumer-based rules). 74 Scott, ‘Territorial Extension’ (n 19 above) 107 (Scott analyses the different ‘spheres of regulatory intervention’, taking into account third country circumstances at the level of specific transactions; firms; third countries; or the entire globe).

22  Identifying and Mapping the Legal Phenomenon of IEMEIs A.  Access to the EU Market on the Basis of Environmental Regulatory Requirements This section focuses on the legal mechanisms used to regulate access to the EU market on the basis of environmental regulatory restrictions on processes that partly take place abroad. IEMEIs make such conduct subject to the same or equivalent environmental standards as apply to similar conduct carried out in the EU, possibly to avoid WTO inconsistency. The legal design of IEMEIs as regulatory restrictions that determine access to the EU market operates in two ways. First, certain IEMEIs regulate conduct abroad by making access to the EU market conditional on the basis of how production, harvesting or waste treatment processes take place in third countries. Second, other IEMEIs regulate conduct occurring outside EU borders by attaching economic obligations to such conduct. ‘Regulating’ conduct is understood here broadly to include both ‘command and control’ measures as well as economic incentive i­nstruments.75 It also covers situations where the EU may not be directly imposing its own environmental standards on actors in third countries, but still ‘indirectly assert[s] authority over’ processes that take place abroad.76 Notably, ‘regulating’ processes abroad does not mean that the EU imposes restrictions on how conduct takes place abroad in the form of enforcement through sanctions for non-compliance, even when not accessing the EU market.77 IEMEIs thus incentivise rather than compel specific behaviour.78 Nonetheless, the effects of such EU market-related measures for third countries can be far-reaching in practice. Through ‘unilateral regulatory globalization’, the EU is sometimes able to ‘externalize its laws and regulations outside its borders through market mechanisms’,79 giving rise to a ‘Brussels effect’.80 EU market-related measures create incentives for non-EU operators to comply with EU standards if they want to trade with the EU, which may lead to changes in private behaviour more generally. Non-EU economic operators may change their business practices to match EU regulatory standards across their entire

75 R Baldwin, M Cave and M Lodge, Understanding Regulation: Theory, Strategy, and Practice (OUP, 2011) ch 7. 76 D Augenstein, ‘The Human Rights Dimension of Environmental Protection in EU External Relations Post-Lisbon’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012) 283. 77 R Howse and D Regan, ‘The Product/Process Distinction – An Illusory Basis for Disciplining “Unilateralism” in Trade Policy’ (2000) 11 European Journal of International Law 249. 78 Ankersmit, Lawrence and Davies (n 43 above). 79 Bradford (n 32 above) 3. See also V Heyvaert, ‘Globalizing Regulation: Reaching Beyond the Borders of Chemical Safety’ (2009) 36 Journal of Law and Society 110; Y Naiki, ‘Assessing Policy Reach: Japan’s Chemical Policy Reform in Response to the EU’s REACH Regulation’ (2010) 22 ­Journal of Environmental Law 171. 80 Bradford (n 32 above). On the relationship between territorial extension and the Brussels effect, see J Scott, ‘The Global Reach of EU Law: Is Complicity the New Effects?’ in J Scott and M Cremona (eds), EU Law beyond EU Borders: The Extraterritorial Reach of EU Law (OUP, forthcoming).

Examples of IEMEIs: Mapping their Legal Features  23 production irrespective of its ultimate market (‘de facto Brussels effect’).81 In turn, domestic industry may, albeit not always, urge third country governments to change their regulatory policies to be similar to those of the EU, thus leading to formal changes in third country law (‘de jure Brussels effect’).82 In this way the EU is using the ‘lure of its green markets’ as leverage for compliance and regulatory change elsewhere,83 often influencing the relations of the EU with third countries in different ways.84 (i)  Regulating Conduct Abroad: Process Standards In examining how process standards are employed in the different IEMEIs, the analysis unpacks two distinct features. First, it explores different types of process standards in IEMEIs, and second, how these standards are utilised as market access conditions in regulating trade with third countries. These features demonstrate how the EU’s regulatory approach expands beyond direct exportation of standards set by the EU as mandatory conditions for market access, but often incorporates international and third country standards that create incentives through qualified trade restrictions. There are different levels85 or shades86 of unilateral measures: ranging from purely unilateral measures that incorporate policies not recognised internationally, through measures that incorporate international policies, and unilateral trade measures, to measures that merely enforce internationally agreed norms.87 This book adopts a broad definition of unilateralism that covers different degrees of unilateral action by the EU. IEMEIs constitute a non-consensual mode of governance in the sense of third countries not consenting to the specific policy, specific type of trade-restrictive measure, or specific type of enforcement method. Even ‘merely’ enforcing international standards can raise concerns for third countries, as states usually strive to strike a balance between substance and enforcement in international negotiations; unilateral enforcement may have influenced third countries not to agree to international standards.88 All kinds of

81 Bradford. See also AR Young, ‘Political Transfer and “Trading Up”?: Transatlantic Trade in Genetically Modified Food and US Politics’ (2003) 55 World Politics 457. 82 Bradford (n 32 above). Also see Young, ‘Political Transfer’ (n 81 above). 83 D Vogel, ‘Trading Up and Governing Across: Transnational Governance and Environmental Protection’ (1997) 4 Journal of European Public Policy 556; Bradford (n 32 above); Scott, ‘EU Global Action’ (n 22 above). 84 Including the relations of the EU with the UK following Brexit: I Hadjiyianni, ‘The UK and the World: Environmental Law’ in A Biondi and P Birkinshaw (eds), Britain Alone, The Implications and Consequences of United Kingdom Exit from the EU (Kluwer Law International, 2016). 85 Bodansky, ‘What’s so bad about unilateral action’ (n 41 above). 86 De Chazournes (n 41 above). 87 Bodansky, ‘What’s so bad about unilateral action’ (n 41 above); de Chazournes (n 41 above); Scott, ‘Territorial Extension’ (n 19 above). 88 K Raustiala, ‘Form and Substance in International Agreements’ (2005) 99 American Journal of International Law 581.

24  Identifying and Mapping the Legal Phenomenon of IEMEIs unilateral measures can be problematic from a legitimacy point of view. None should be either outright prohibited or allowed.89 Rather they should be accompanied by different kinds of safeguards to guard against abuse of power, which may occur at different stages. With purely unilateral measures for example, abuse can occur at the formulation stage of the measure and therefore input on and consideration of third country impacts when designing the regulatory measure become critical. For unilateral measures that enforce international norms, the implementation and enforcement stages become crucial in ensuring that regulatory discretion in enforcing standards is sufficiently controlled, including through the protection of procedural rights of complying actors. (a)  Different Types of Process Standards IEMEIs that make market access conditional on the basis of how processes take place abroad impose different kinds of standards, varying from standards unilaterally set by the EU, equivalent standards, third country domestic requirements, or international standards, which are often combined within single legislative measures. IEMEIs thus exhibit a great variety in legal terms, often avoiding imposing purely unilateral EU standards. First, some types of IEMEIs require third country operators to comply with standards set by the EU in its internal legislation. This is the case with the sustainability criteria for biofuels under the Renewable Energy Directive (RED), which impose requirements on production processes when biofuels are imported into the EU.90 The sustainability criteria aim to regulate t­ ransboundary ­greenhouse gas (GHG) emissions and combat climate change, as well as to affect land use decisions and protect biodiversity in third countries.91 The criteria impose restrictions on the origin of biofuels harvested on specific types of land.92 EU legislation unilaterally links these types of land with sustainability criteria for the production of biofuels in the form of trade restrictions. It sometimes refers to international definitions of different types of land,93 while also setting new definitions.94 The criteria also stipulate specific amounts of GHG emission savings, set unilaterally by the EU.95 The criteria have been revised to

89 B Cooreman, Global Environmental Protection Through Trade, A Systematic Approach to Extraterritoriality (Edward Elgar, 2017). 90 RED (n 66 above) Arts 17–18; FQD (n 66 above) Arts 7(b)–7(d). However, the criteria do not constitute mandatory market access conditions, as discussed below in this section. 91 Scott, ‘Multi-Level Governance’ (n 22 above). 92 RED (n 66 above) Arts 17(3)–(5). 93 Biodiverse forests are defined in accordance with the Food and Agriculture Organisation’s definition used for the Global Forest Resource Assessment, RED (n 66 above) Art 17(3), Recital 69. 94 In relation to highly biodiverse grasslands: RED (n 66 above) Art 17(3)(c); Regulation (EU) 1307/2014 on defining the criteria and geographic ranges of highly biodiverse [2014] OJ L351/3. 95 RED (n 66 above) Art 17(2).

Examples of IEMEIs: Mapping their Legal Features  25 address concerns from indirect land use change (ILUC),96 by imposing a limit on first-generation biofuels produced from crops or agricultural land,97 and by prompting Member States to promote advanced biofuels,98 which can produce greater emissions reduction and do not compete with food crops.99 Apart from process standards, the Directive imposes reporting obligations on the European Commission in reviewing impacts from biofuel production, relating to environmental concerns, labour exploitation and increases in food prices.100 Instead of imposing EU-set labour and environmental standards abroad that would have raised WTO compatibility questions,101 these obligations incorporate third country and international law in the reporting and reviewing system,102 thus implicating international legal regimes in their legal design. In principle, future revisions of the criteria should take into account impacts of EU domestic policies on legal, policy and social developments outside the EU.103 Second, some IEMEIs require compliance with EU-equivalent process standards. For example, the WEEE Directive specifies that WEEE shipped from the EU to third country facilities should be treated under conditions that ‘are equivalent to the requirements of the Directive’.104 The EU’s regulatory requirements on WEEE aim to contribute to sustainable production and consumption through prevention of WEEE and through re-use, recycling and other forms of recovery of WEEE.105 In relation to exports of WEEE in particular, the Directive aims to fight illegal exports of WEEE and treatment of such wastes in suboptimal conditions in third countries. Even though EU waste treatment conditions are not imposed on third country facilities, equivalence is unilaterally determined by the EU,106 thus determining the conditions in which waste treatment takes place in third countries, at least in relation to EU waste. Equivalence is also relevant in proving compliance and is further discussed in Section III.B below.

96 DA Farber, ‘Indirect Land Use Change, Uncertainty, and Biofuels Policy’ (2011) University of Illinois Law Review 381, 389 (ILUC concerns situations where ‘use of cropland for biofuels raises food prices and increases the incentive to convert forests and grasslands to crop production, thereby releasing stored carbon and decreasing future carbon sequestration’). 97 Directive 2015/1513/EU amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2015] OJ L239/1 (ILUC Directive) Art 2. 98 ibid, Art 2(2)(iv). 99 Advanced biofuels count twice towards the target of biofuel use, RED (n 66 above) Art 21(2). 100 On food prices RED (n 66 above) Arts 17(7), 23 (2); on ILUC Arts 19(6), 23(8). On concerns raised by biofuels production, see Robert Edwards and others, ‘Biofuels in the European Context: Facts and Uncertainties’ (European Commission Joint Research Centre, 2009). 101 EB Lydgate, ‘Biofuels, Sustainability, and Trade-Related Regulatory Chill’ (2012) 15(1) Journal of International Economic Law 157. 102 Reviewing third country compliance and implementation of international labour, social and environmental conventions, RED (n 66 above) Art 17(7). 103 Particularly on food prices in relation to which the Commission may take ‘corrective action’, RED (n 66 above) Art 17(7). 104 WEEE Directive (n 69 above) Art 10(2). 105 ibid, Recital 6. 106 ibid Art 10(3).

26  Identifying and Mapping the Legal Phenomenon of IEMEIs Third, certain IEMEIs impose restrictions on processes abroad on the basis of third country or international law. For example, the Regulation on IUU fishing (IUU Regulation) requires fishing activities which result in fishery products being exported to the EU – wherever these may occur, including in the high seas and in maritime waters of coastal states107 – to be carried out in accordance with legality requirements of the flag state of the fishing vessel, and in accordance with international standards on conservation and management.108 The IUU Regulation aims to fight IUU fishing, which constitutes one of the most serious threats to the sustainable exploitation of living aquatic resources109 and can have detrimental socio-economic effects on fishermen that abide by regulatory requirements on conservation and management of fisheries resources.110 While the Regulation does not impose EU fishing standards,111 it requires third countries to have specific kinds of measures in place through the definition of ‘unregulated’ fishing,112 and to ensure enforcement of and compliance with such standards.113 In effect, the IUU Regulation imposes a robust regime in unilaterally enforcing existing third country obligations to prevent illegal fishing under international law114 by restricting access to the EU market,115 thus giving teeth to loosely defined, or insufficiently enforced, international obligations. While the incorporation and strengthening of international obligations in the EU Regulation may make it seem less contentious, the unilateral enforcement of international standards in the form of market access conditions in the IUU Regulation can give rise to comparable effects and raise similar legitimacy concerns about how the EU unilaterally determines the enforcement of and compliance with such international obligations by third countries in practice.116 In fact, the ‘confusing, three-pronged definition of IUU fishing’ as established internationally complicates even further the unilateral imposition of restrictions on IUU fishing by the EU, given that it has to unilaterally determine at which point the third country fails to meet its international obligations.117 107 IUU Regulation (n 68 above) Recital 7. 108 ibid, Arts 2(2)(a), 12(3). 109 ibid, Recital 3. 110 ibid, Recital 6. 111 However there is still uncertainty as to whether the IUU Regulation goes beyond international standards when determining if a third country has fulfilled its flag-state obligations: ER van der Marel, ‘An Opaque Blacklist: the Lack of Transparency in Identifying Non-Cooperating Countries under the EU IUU Regulation’ in L Martin, C Salonidis and C Hioureas (eds), Natural Resources and the Law of the Sea, Exploration, Allocation, Exploitation of Natural Resources in Areas under National Jurisdiction and Beyond (Juris, International Law Institute, 2017). 112 ibid Art 2(4). 113 ibid Art 20; M Tsamenyi and others, ‘The European Council Regulation on Illegal, Unreported and Unregulated Fishing: An International Fisheries Law Perspective’ (2010) 25 The International Journal of Marine and Coastal Law 5. 114 IUU Regulation (n 68 above) Recital 1; EM Basse, ‘Environmental Reviews and Case Studies: The Legal Design of Sustainability Criteria on Biofuels Used by the European Union’ (2013) 15 Environmental Practice 50. 115 For example, IUU Regulation (n 68 above) Arts 31(3), (6). 116 van der Marel (n 111 above). 117 ibid, 255.

Examples of IEMEIs: Mapping their Legal Features  27 In a different way, the EU Timber Regulation, which forms part of a wider EU initiative on Forest Law Enforcement, Governance and Trade (FLEGT),118 requires that only legally harvested timber and timber products can enter the EU market. The Regulation forms part of a wider package of measures to support global efforts in the fight against illegal logging, which poses a significant threat to forests as it contributes to the process of deforestation and forest ­degradation.119 It regulates market access, not by reference to EU legality standards, but by reference to legality standards of the country of origin of timber. In this way, the Timber Regulation renders the legal landscape of the third country an intrinsic part of the legal design of the EU measure, thus vicariously enforcing third country laws,120 rather than imposing its own rules.121 By using third country law as the starting point in influencing third country developments, the Timber Regulation creates space for third countries to advance their own regimes, while respecting their sovereignty, rendering EU unilateral action less contentious.122 Incorporation of international standards or deference to third country law, however, does not alleviate the concerns that the EU’s unilateral action through trade restrictions may give rise to or provide all the answers about how to control the interaction between different levels of governance. Additionally, within a single measure, the EU can impose both EU and internationally agreed process standards. The Ship Recycling Regulation imposes requirements for ship recycling to occur in ‘safe and environmentally sound facilities’, including those located in third countries, when they receive EU ships.123 The extension of EU law in this case is thus not based on a territorial trigger, but rather on the nationality of the flag under which the ship operates. The requirements of the EU Regulation largely incorporate standards agreed under the Hong Kong Convention on Ship Recycling,124 which could contribute

118 For an overview of FLEGT, see C Overdevest and J Zeitlin, ‘Forest Law Enforcement Governance and Trade (FLEGT): Transnational Dynamics of an EU Experimentalist Regime’ in J Zeitlin (ed), Extending Experimentalist Governance? The European Union and Transnational Regulation (OUP, 2015). See also the EU FLEGT Facility: http://www.euflegt.efi.int/home. 119 Timber Regulation (n 67 above) Recital 3. 120 C Ryngaert, ‘Whither Territoriality? The European Union’s Use of Territoriality to Set Norms with Universal Effects’ in C Ryngaert, EJ Molenaar and S Nouwen (eds), What’s Wrong with International Law? (Brill, 2015). 121 Ryngaert and Koekkoek (n 53 above). 122 E Morgera, ‘Ambition, Complexity and Legitimacy of Pursuing Mutual Supportiveness through the EU’s External Environmental Action’ in B Van Vooren, S Blockmans and J Wouters (eds), The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013); E Morgera and K Kulovesi, ‘The Role of the EU in Promoting International Standards in the Area of Climate Change’ in Inge Govaere and SP Ghent (eds), EU Management of Global Emergencies, Legal Framework for Combating Threats and Crises (Martinus Nijhoff, 2014). 123 Ship Recycling Regulation (n 70 above) Arts 13, 15. 124 Hong Kong International Convention on the Safe and Environmentally Sound Recycling of Ships, 19 May 2009 (not yet in force) SR/CONF/45; UD Engels, European Ship Recycling R ­ egulation: Entry-Into-Force Implications of the Hong Kong Convention (Springer, 2013).

28  Identifying and Mapping the Legal Phenomenon of IEMEIs to justifying their extraterritorial impact,125 but also go beyond such standards in some respects.126 The purpose of this Regulation is also to reduce disparities between operators in the Union, in OECD countries and in relevant third countries in terms of health and safety at the workplace and applicable environmental standards. It aims to direct ships flying the flag of an EU Member State to ship recycling facilities that practise safe and environmentally sound methods of dismantling ships instead of directing them to substandard sites as is sometimes currently the practice.127 While the Ship Recycling Regulation is meant to f­ acilitate the early ratification of the Hong Kong Convention,128 its ­effectiveness in creating incentives and impetus for ratification of the Convention is ­doubtful.129 By creating a sub-division of recognised foreign ship recycling facilities, the Ship Recycling Regulation might have the effect of making the Convention redundant, and imposing the EU’s own standards on third country facilities could instead hinder ratification of the Convention.130 Furthermore, the Ship Recycling Regulation deviates from the Basel Ban,131 which prohibits hazardous waste from being sent to non-OECD countries, even though the relationship between the two international regimes is not conclusively settled.132 While the Ship Recycling Regulation puts in place standards that will not come into force under international law for a long time, it also highlights the limitations of unilateral regulation in addressing such a transboundary problem, which requires coordination of different international regimes to avoid fragmentation and circumvention of international standards through illegal practices. The discussion above demonstrates that IEMEIs avoid rigidly exporting EU-set process standards abroad, but rather they often refer to international and third country standards, thus exhibiting different degrees of relative unilateralism and showing how different legal regimes are inherent in the design of these IEMEIs. IEMEIs implicate third country and international legal regimes by changing the regulatory landscape and by assuming a role in the enforcement of pre-existing obligations. At the same time, as further demonstrated below,

125 T Ormond, ‘Enforcing EU Environmental Law Outside Europe? The Case of Ship Dismantling’ (2009) 1 Review of the Environmental Law Network International 13, cf MN Tsimplis, ‘­Recycling of EU Ships: From Probition to Regulation?’ [2014] Lloyd’s Maritime and Commercial Law Quarterly 415, 433. 126 For example, in relation to waste treatment, Commission, ‘Requirements and procedure for inclusion of facilities located in third countries in the European List of ship recycling facilities – Technical guidance note under Regulation (EU) No 1257/2013 on ship recycling’ (Communication) [2016] OJ C128/1; M Galley, Shipbreaking: Hazards and Liabilities (Springer International, 2014). 127 Ship Recycling Regulation (n 70 above) Recital 5. 128 Ship Recycling Regulation (n 70 above) Recital 5. Especially given the Convention’s demanding ratification conditions, Hong Kong Convention (n 124 above) Art 17. 129 Tsimplis (n 124 above). 130 ibid. 131 Basel Convention on the Control of the Transboundary Movements of Hazardous Wastes and their Disposal, 22 March 1989, 1673 UNTS 57; Basel Ban Amendment 1995 Conference Decision II/12; Ship Recycling Regulation (n 70 above) Recital 27, Art 27. 132 Engels (n 124 above); Galley (n 126 above) 199.

Examples of IEMEIs: Mapping their Legal Features  29 the EU unilaterally turns such standards into market access requirements that impose different kinds of obligations on foreign operators, outside and beyond international regimes. (b)  Regulating Trade: Mandatory and Non-Mandatory EU Market Access Conditions Process standards for conduct that takes place abroad are used as market access conditions by IEMEIs in different ways, as mandatory conditions or as non-mandatory, partial restrictions to the EU market. Also, IEMEIs impose obligations on foreign actors directly or indirectly. The ways in which market access restrictions based on process standards apply to third country actors may influence how those actors come within the scope of EU law or have access to the EU courts,133 as well as determine the trade-restrictiveness of these measures under WTO law.134 IEMEI standards are often legally designed as mandatory conditions for access to the EU market. This is the case with the IUU Regulation, the Timber Regulation and the Ship Recycling Regulation. Under the IUU Regulation, access of fishing vessels to EU ports is subject to authorisation, which includes an obligation to have a catch certificate on board the fishing vessel,135 which has been validated by an eligible flag state.136 The IUU Regulation contains far-reaching enforcement measures for excluding illegal fishery products from the EU market and ensuring direct compliance both by fishing vessels and flag states.137 Fishing vessels can be included in the Community IUU vessel list when there is information about the vessel engaging in IUU fishing and the flag state fails to investigate and take enforcement measures against it.138 Flag states that fail to take action to prevent, deter and eliminate IUU fishing may be identified by the Commission as ‘non-cooperating’ countries whose products and catch certificates are not accepted in the EU market, thus banning fishery products caught by vessels flying the flag of a blacklisted country.139 A third country is identified as non-­cooperating ‘if it fails to discharge the duties incumbent upon it under international law as flag, port, coastal or market State, to take action to prevent, deter and eliminate IUU fishing.’140 The procedure by which a third 133 Chapter 4, Section II. 134 Chapter 5, Section II.B and Chapter 6, Sections II.B.(ii) and III.B.(ii). 135 IUU Regulation (n 68 above) Arts 7(1), 12. 136 ibid Arts 12(2), 20. 137 Products not accompanied by catch certificates will be refused importation: ibid Art 18. Also, if not complying with the Regulation, fishing vessels may be included in the EU’s IUU Fishing vessel list and flag-states may be included in the list of non-cooperating countries: ibid Arts 27, 33. 138 IUU Regulation (n 68 above) Art 27. 139 ibid, Arts 31, 33, and 38. For example, Commission Implementing Decision (EU) 2017/889 of 23 May 2017 identifying the Union of the Comoros as a non-cooperating third country in fighting illegal, unreported and unregulated fishing [2017] OJ L135/35. 140 IUU Regulation (n 68 above) Art 31(3).

30  Identifying and Mapping the Legal Phenomenon of IEMEIs country is identified as such involves the issuance of a formal warning in the form of a ‘yellow card’141 before the more restrictive ‘red card’ is issued, which formally places a third country on the list of non-cooperating countries.142 A third country is removed from the blacklist if the Commission is satisfied that the situation that warranted the listing is remedied, including taking into consideration ‘whether the identified third countries concerned have taken concrete measures capable of achieving a lasting improvement of the situation.’143 The blacklist of non-cooperating countries thus aims to incentivise third countries to change their legislative and regulatory framework, while doing so through the enforcement of existing international obligations rather than EU-set s­ tandards.144 The actual effect of the IUU Regulation on global efforts to fight IUU fishing, however, is not straightforward.145 Mandatory conditions for access to the EU market take a different form under the Timber Regulation, which imposes a due diligence obligation on operators placing timber on the EU market for the first time. Operators are required to provide information on the imported timber,146 to carry out a risk assessment evaluating the risk of illegal timber in their supply chain147 and take risk mitigation steps when the risk of illegality is found to be non-negligible.148 Notably, the Timber Regulation sometimes directly imposes due diligence obligations on non-EU actors when they are the first to place timber in the EU market. The due diligence obligations increase the administrative burden for producers, which can be more difficult to fulfil for producers from developing countries.149 Even in situations where non-EU suppliers are not the ones placing timber products on the EU market, the Timber Regulation requires them to provide information about their harvesting processes to the operator.150 Due diligence is of growing importance in the EU, leading to mandatory due diligence obligations in other policy areas.151 Furthermore, the EU’s FLEGT

141 ibid, Art 32(1). 142 For an overview of implementation measures against third countries, see https://ec.europa.eu/ fisheries/sites/fisheries/files/illegal-fishing-overview-of-existing-procedures-third-countries_en.pdf. 143 IUU Regulation (n 68 above) Art 34. 144 Cooreman (n 89 above) 215. 145 ER Van der Marel, ‘Problems and Progress in Combatting IUU Fishing’ in R Caddell and EJ Molenaar (eds), Strengthening International Fisheries Law in an Era of Changing Oceans (Hart, 2019). 146 Timber Regulation (n 67 above) Art 6(1)(a). 147 ibid Art 6(1)(b). 148 ibid Art 6(1)(c). 149 Ryngaert and Koekkoek (n 53 above). 150 Timber Regulation (n 67 above) Art 6(1)(a). 151 Due diligence obligations will be imposed on companies importing ­ minerals to the EU, Press Release, ‘Conflict minerals: MEPs secure mandatory due diligence for importers’: http://www.europarl.europa.eu/news/en/news-room/20160615IPR32320/conflict-minerals-mepssecure-mandatory-due-diligence-for-importers.

Examples of IEMEIs: Mapping their Legal Features  31 initiative has influenced regulatory changes abroad on the legality of timber, particularly prompting the adoption of US legislation.152 The cumulative effect of these unilateral measures ensures that illegal timber is not diverted to other major wood markets due to lack of regulation, at least in the EU and the US.153 Mandatory restrictions on trade are also imposed in export measures. The Ship Recycling Regulation requires ship recycling facilities (SRFs) to apply to be included in the ‘European list’ of authorised facilities that can receive EU-flagged ships for disposal.154 In this way, it imposes direct obligations on foreign facilities if they want to receive EU ships. Although the primary aim of export waste treatment standards is to ensure that EU ships are not recycled in facilities with lower standards, their operation restricts the possibilities for third country facilities to receive business from the EU and thus has the potential to influence their practices more generally. In particular, the technical and economic ‘non-divisibility’ of the standards imposed on SRFs,155 such as those relating to the design and construction of facilities,156 could lead to third country facilities expanding EU standards to the entirety of their business, extending to all ships received in that facility. In turn, this could lead to regulatory reforms in ship recycling countries and stimulate developments internationally by prompting other countries to ratify the Hong Kong Convention. However, such implications in relation to ship recycling may be realistically hampered. As EU requirements do not apply to ships flying the flag of a non-EU country, the EU Ship Recycling Regulation creates a non-level playing-field internationally and raises significant implementation challenges. As a result, ships may change flags before disposal (‘out-flagging’), rendering the Regulation ineffective, or shipowners may avoid registering their ships under EU flags altogether. This demonstrates the ineffectiveness of flag-state jurisdiction and the challenges for unilateral standards to effectively alter environmental practices and approaches abroad. Conversely, under the EU’s Regulation on authorising ship inspection societies, which could also be classified as an IEMEI, authorisation is determined on the basis 152 C Overdevest and J Zeitlin, ‘Assembling an Experimentalist Regime: Transnational Governance Interactions in the Forest Sector’ (2014) 8 Regulation and Governance 22. 153 Overdevest and Zeitlin, ‘FLEGT’ (n 118 above). 154 Ship Recycling Regulation (n 70 above) Art 13. The first facilities authorised were in the EU while applications from third country facilities have been gradually approved. Authorisation is still ­ongoing for more facilities, pending site inspections, Commission Implementing Decision 2016/2323/ EU establishing the European List of ship recycling facilities pursuant to Regulation (EU) 1257/2013 on ship recycling [2016] OJ L345/19; Commission Implementing Decision (EU) 2018/1906 amending Implementing Decision (EU) 2016/2323 to update the European List of ship recycling facilities established pursuant to Regulation (EU) No 1257/2013 of the European Parliament and of the Council [2018] OJ L310/29. 155 Bradford (n 32 above) 17, (non-divisibility occurs when ‘the exporter has an incentive to adopt a global standard whenever its production or conduct is non-divisible across different markets or when the benefits of a uniform standard due to scale economies exceed the costs of forgoing lower production costs in less regulated markets’). 156 Ship Recycling Regulation (n 70 above) Art 13.

32  Identifying and Mapping the Legal Phenomenon of IEMEIs of their overall environmental and safety performance, including classification of non-EU ships.157 Such a broad scope of ‘regulatory intervention’ at global level has not been adopted in the Ship Recycling Regulation,158 showing how the extension of EU legislation abroad is already constrained in certain ways, in line with relevant international regimes, in this case the Hong Kong Convention. Beyond mandatory conditions on trade, certain IEMEIs partially and indirectly restrict access to the EU market through an ‘incentive-based market approach’.159 Such IEMEIs do not entirely close off the EU market to noncomplying third country operators or products, but rather reduce the incentives for EU operators to trade with non-complying products or operators.160 Examples of such legislation include the sustainability criteria for biofuels. Non-complying biofuels are not excluded from the EU market altogether, but compliance is required for energy from biofuels to count towards the obligation of achieving the target for biofuel use in transport, and for EU operators to be eligible for funding for consumption of biofuels.161 It is thus more attractive for EU operators to trade with producers that satisfy the sustainability criteria. Similarly, treatment of WEEE outside the EU has to take place in equivalent conditions162 in order for it to count towards the recovery targets imposed on EU Member States under the Recast WEEE Directive.163 The criteria for determining equivalence are currently being developed by the Commission in a delegated act. Strengthened recovery targets imposed on EU Member States reduce the incentives for EU exporters, who are the ones required to prove equivalence of WEEE treatment in third countries, in order to export waste to facilities that do not meet equivalent standards. Although indirectly restricting the EU market, these IEMEIs function on the basis of a similar logic to mandatory market access conditions and give rise to comparable kinds of implications in influencing business practices in third country facilities and potentially influencing international regulatory regimes. The key difference between the design of IEMEIs in the form of direct or indirect obligations on third country actors is the fact that when third country actors are directly affected by EU acts, they are more likely to be able to rely on enforcement mechanisms in the EU164 and may become ‘subjects’ rather than merely ‘objects/addressees’ of EU law.165 The trade-restrictive effects, however, are largely similar. 157 Regulation (EC) 391/2009 on common rules and standards for ship inspection and survey ­organisations [2009] OJ L131/11, Arts 14(1)(1), 2(c). 158 Scott, ‘Territorial Extension’ (n 19 above) 101. 159 Morgera and Kulovesi (n 122 above). 160 Basse (n 114 above). 161 RED (n 66 above) Art 17(1). 162 WEEE Directive (n 69 above) Art 10(2). 163 ibid Art 11. 164 See Chapter 4. 165 E Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law – Towards Full Legal Subjectivity?’ in S Bardutzky and E Fahey (eds), Framing the Subjects and Objects of Contemporary EU Law (Edward Elgar, 2017) 211.

Examples of IEMEIs: Mapping their Legal Features  33 Overall, process standards in IEMEIs create different kinds of incentives for third country operators to change their practices, and influence regulatory behaviour in third countries and internationally by linking to third country and international regimes and using access to the EU market to instigate changes. These incentives do not always amount to outright restrictions on the EU market or exportation of EU-set standards. Beyond process standards, regulating conduct abroad through IEMEIs also manifests in the form of economic incentive obligations. (ii)  Regulating Conduct Abroad: Economic Instruments A different way in which the EU may unilaterally regulate conduct abroad is by making access to the EU market conditional on fulfilling economic obligations. Economic instruments seem to cause greater political backlash and international resistance to the EU’s unilateral extension of internal legislation. EU unilateral action may thus be subject to additional political and legal constraints that dictate the kinds of regulatory mechanisms it can employ. However, even ‘unsuccessful’ use of market access requirements in IEMEIs can influence international developments, demonstrating how IEMEIs can have implications beyond EU borders in different ways. The most prominent example of unilateral regulatory extension through an economic instrument is the inclusion in the EU ETS of domestic and international flights departing from or arriving at EU airports.166 This unilateral measure was adopted by the EU to address the increasing climate change impact of aviation emissions which falls outside the scope of the UNFCCC framework,167 and which has been the subject of slow progress under the International Civil Aviation Organization (ICAO). The territorial extension of the Aviation Directive is particularly exhibited in the calculation of allowances to be surrendered by airlines, which is based on the whole journey, ‘taking into account’ those parts that take place beyond EU borders.168 Although the Directive does not impose any ‘concrete rule’ on airlines when flying outside EU airspace,169 it requires the surrendering of ETS allowances for those parts of the journey as well.170 These obligations are directly imposed on third country airlines that would incur a penalty if they failed to surrender allowances171 and could also potentially be banned from the EU.172 These are significant obligations for foreign airlines that 166 Aviation Directive (n 51 above). 167 Kyoto Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, 2303 UNTS 148, Art 2(2). 168 Opinion of AG Kokott (n 49 above) para 147. 169 ibid. 170 BF Havel and JQ Mulligan, ‘The Triumph of Politics: Reflections on the Judgment of the Court of Justice of the European Union Validating the Inclusion of Non-EU Airlines in the Emissions Trading Scheme’ (2012) 37 Air and Space Law 3. 171 Aviation Directive (n 51 above) Art 16(3); Morgera and Kulovesi (n 122 above). 172 Aviation Directive (n 51 above) Arts 16(5)–16(12).

34  Identifying and Mapping the Legal Phenomenon of IEMEIs could not realistically avoid airports in the EU in light of its significance as an important economic market. The EU’s unilateral action in this field caused considerable reaction in different parts of the world, from both industry and third countries,173 claiming that it infringed the sovereignty of third countries by regulating conduct that occured within their airspace and thus presented controversial extraterritorial elements.174 Such situations usually either lead to lobbying and changes in third country policies, or to pressures in altering or repealing the extraterritorial policy through mobilisation of industry, third countries and international organisations as part of a ‘recursive process’.175 In this case, the EU provisionally backed out by suspending the application of the Directive to international flights, pending developments within the ICAO.176 As further discussed in Section III.B below, the EU’s unilateral action was a ‘decisive factor’ in influencing developments in the ICAO, which had been stagnant for years.177 A different kind of economic instrument, in the form of a ship recycling fund, has been considered in relation to the enforcement of the Ship Recycling Regulation. In light of significant implementation challenges and ‘out-flagging’ practices in this sector, such a mechanism could contribute to increasing the effectiveness of the process standards discussed above by expanding the scope of coverage of ship recycling requirements to non-EU ships. The initial proposal for a ship recycling fund, in the form of an annual levy paid by all ships calling at EU ports, was met with resistance from the international community and was rejected by the European Parliament.178 Instead, the Ship Recycling Regulation requires the Commission to report on the ‘feasibility of a financial instrument that would facilitate safe and sound ship recycling’ by the end of December 2016.179 A new report has been published suggesting the use of a ship recycling licence for ships calling at EU ports, accompanied with fees to ‘serve capital accumulation with the aim to cover the revenue gap between sound and unsound recycling’.180 The capital amount would only be paid to the final ship-owner after proving that the ship had been recycled at a facility included in the ­‘European list’. In its Report in August 2017, the Commission opted not to adopt a ship

173 For an overview of international reactions see Morgera and Kulovesi (n 122 above). 174 Case C-366/10 The Air Transport Association of America and others v Secretary of State for Energy and Climate Change (ATAA) EU:C:2011:864. 175 Shaffer and Bodansky (n 34 above) 41. 176 K Kulovesi, ‘“Make your Own Special Song, Even if Nobody Else Sings Along”: International Aviation Emissions and the EU Emissions Trading Scheme’ (2011) 2 Climate Law 535. 177 Birchfield (n 22 above). 178 Commission, ‘An EU Strategy for Better Ship Dismantling’ (Communication) COM(2008) 767 final. 179 Ship Recycling Regulation (n 70 above) Art 29. 180 Commission, Final Report, ‘Financial instrument to facilitate safe and sound ship recycling’: http://ec.europa.eu/environment/waste/ships/pdf/financial_instrument_ship_recycling.pdf.

Examples of IEMEIs: Mapping their Legal Features  35 recycling licence instrument for the moment. The Commission cited opinions of stakeholders on both sides and justified its ‘inaction’ by the need for further analysis as to the legal compatibility of this financial instrument with EU and international law, particularly WTO law.181 Beyond their legal design as market access requirements, the next sub-section shows how IEMEIs link the application of market access requirements to legal developments outside the EU through flexible clauses. These features demonstrate further how IEMEIs aim to ‘to galvanise or incentivise regulatory or normative engagement elsewhere’182 and how multiple legal regimes are implicated in their operation. B.  Compliance with IEMEIs: ‘Contingent Unilateralism’, Flexibility and Equivalence Within trade-related measures that incorporate environmental restrictions for access to the EU market, the EU increasingly employs novel regulatory techniques in conditionally and flexibly applying IEMEIs to third countries.183 These techniques are manifested in different kinds of clauses that determine the application of IEMEIs to third countries on the basis of legal regimes beyond EU law. These techniques qualify the unilateral nature of IEMEIs by reference to international developments and alleviate the trade-restrictive effects of IEMEIs through flexible clauses regarding compliance that demonstrate the influence of WTO law on IEMEIs.184 These clauses show that IEMEIs are not only EU-contained measures but directly implicate other legal orders as they are designed to catalyse legal developments in a unique way that links to third country regimes and international developments. The EU is innovative and employs different kinds of techniques to avoid purely exporting its own unilaterally-determined standards. However, the use of such flexibility, contingency and equivalence clauses gives rise to different kinds of questions and does not completely alleviate legitimacy concerns or answer legal questions about how to control unilateral regulatory power at the intersection of multiple regimes. The compliance features of IEMEIs are examined through clauses providing for conditional application of EU measures (Section B.(i)), alternative or supplementary modes of compliance with EU legislation (Section B.(ii)), and equivalence with EU requirements (Section B.(iii)). In contentious areas where international consensus is difficult to reach, IEMEIs often render application of EU legislation ‘contingent’ upon legal developments in third countries or upon

181 Report from the Commission to the European Parliament and Council on the feasibility of a financial instrument that would facilitate safe and sound ship recycling COM(2017) 420 final. 182 Scott, ‘Multi-Level Governance’ (n 21 above). 183 Scott, ‘Territorial Extension’ (n 19 above) 116–17. 184 See Chapter 6, Section III.B.(ii).

36  Identifying and Mapping the Legal Phenomenon of IEMEIs bilateral or international agreements in order to incentivise regulatory changes abroad.185 Through market access requirements, IEMEIs sometimes function as ‘penalty defaults’ that induce the cooperation of third countries or prompt them to adopt and adjust their own policies by ‘sanctioning non-cooperation’186 through EU market power.187 Flexibility clauses within IEMEIs also take the form of possibilities to use private certification or organisations in complying with EU requirements, which may prompt developments outside the EU by private actors, thus triggering the creation of transnational governance frameworks. These clauses can be explained as ‘escape routes’188 by way of either ‘escaping’ the obligations imposed by EU legislation or using different avenues for securing access to the EU market. (i)  Conditional Application of EU Measures Certain IEMEIs apply provisionally, providing the possibility to disapply EU legislation in light of international developments.189 This is done with the continued presence of the unilateral IEMEI, which functions as a penalty default, threatening to apply in case an international agreement is not reached.190 This regulatory approach is observed in areas where international agreements are on-going and specifically in relation to climate change policy, within the EU’s cornerstone ETS.191 Due to the overwhelming international resistance to the aviation regime, the EU has reconsidered including shipping emissions in the EU ETS. Instead, it opted for a less controversial and less economically burdensome Monitoring Reporting and Verification (MRV) mechanism applicable to ships arriving and departing from EU ports.192 The EU’s MRV system has been instrumental in driving international developments under the IMO with the ‘threat’ of including the shipping sector in the EU ETS post-2020 if an international agreement is not reached in the International Maritime Organization (IMO).193 Sufficient action by the IMO at the international level had been specifically identified by the European Parliament as ‘a prerequisite for the Union not to act further on the inclusion of the maritime sector within the EU ETS’.194 While the IMO has 185 Scott, ‘Territorial Extension’ (n 19 above). 186 G De Búrca, RO Keohane and C Sabel, ‘Global Experimentalist Governance’ (2014) 44 British Journal of Political Science 477, 478. 187 Scott, ‘EU Global Action’ (n 22 above); Zeitlin (n 37 above). 188 Scott, ‘EU Global Action’ (n 22 above). 189 Scott ‘Territorial Extension’ (n 19 above) 116–17. 190 ibid; Zeitlin (n 37 above). 191 For more examples under the EU ETS see Scott, ‘EU Global Action’ (n 22 above). 192 Regulation (EU) 2015/757 on the monitoring, reporting and verification of carbon dioxide ­emissions from maritime transport, and amending Directive 2009/16/EC [2015] OJ L123/55. 193 Directive 2009/29/EC amending Directive 2003/87/EC so as to improve and extend the g­ reenhouse gas emission allowance trading scheme of the Community [2009] OJ L 140/63. 194 European Parliament, Committee on the Environment, Public Health and Food Safety, ­Compromise Amendments, Report, on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and ­low-carbon investments, Recital 2b(new).

Examples of IEMEIs: Mapping their Legal Features  37 recently reached an ‘initial strategy’ to reduce CO2 emissions, it has not yet put in place concrete rules.195 It therefore remains to be seen whether the EU would resort to a market-based mechanism on shipping emissions and how this would interact with the IMO strategy. Furthermore, the initial inclusion of aviation emissions in the EU ETS was explicitly linked to developments at the international level, providing the possibility for revising the scheme in case an international agreement was reached.196 Responding to the international reaction to the inclusion of aviation emissions in the EU ETS, the EU suspended the application of the Aviation Directive, by temporarily excluding international flights from the regime. This suspension was provisional, providing that the default position after a specific time period would be for the full scope of the Directive to automatically resume to cover international flights, unless further action was taken to continue this suspension.197 The possibility to resume the application of the EU ETS to international flights has functioned as a ‘stick’ in urging for a global agreement to be reached.198 Beyond ‘serving as a model’ for how aviation emissions could be regulated through carbon trading,199 it also exerted pressure on the international community through ‘bargaining with the possibility of exclusion’ from the EU market.200 After the conclusion of a global market-based mechanism under ICAO in 2016, which aims to stabilise CO2 emissions at 2020 levels through an offsetting system201 which is less stringent than the EU Directive,202 the EU has opted to continue excluding international emissions from the EU ETS. This exclusion has again been formulated in ‘contingent’ terms, at the insistence of the European Parliament. International emissions from aviation are only provisionally excluded until 2023, while the Commission is expected to report on progress of implementation of the ICAO mechanism and action by third countries on this issue, the EU institutions will then determine, once more, whether to continue

195 Initial IMO Strategy on Reduction of GHG Emissions from ships, https://unfccc.int/sites/ default/files/resource/250_IMO%20submission_Talanoa%20Dialogue_April%202018.pdf. 196 Directive 2003/87/EC (n 71 above) Art 25(a)(2). 197 Decision 377/2013/EU, derogating temporarily from Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2013] OJ L113/1; Regulation (EU) 421/2014 amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in view of the implementation by 2020 of an international agreement applying a single global market-based measure to international aviation emissions [2014] OJ L129/1. 198 Birchfield (n 22 above). 199 Aviation Directive (n 71 above) Recital 17. 200 Birchfield (n 22 above); Kulovesi (n 176 above). 201 At ICAO’s 39th Assembly in September 2016, agreement on a new global market-based measure (GMBM) was reached to offset CO2 emissions from international flights post 2020, http://www.icao. int/Newsroom/Pages/Historic-agreement-reached-to-mitigate-international-aviation-emissions. aspx. 202 It provides for voluntary adoption in the first two phases and includes exemptions from the agreement and for the distribution of offsetting obligations among airlines.

38  Identifying and Mapping the Legal Phenomenon of IEMEIs suspending the full scope of the Aviation Directive or revert back to its original scope.203 While ‘freezing’ the full scope of the EU ETS to exclude international aviation emissions may be interpreted by some as a failure of the EU to regulate this issue globally, it has significantly influenced international developments in dynamic and complex ways. At the same time, the EU has insisted on the inclusion of aviation emissions in the linking of the EU ETS with the Swiss carbon trading system,204 demonstrating its commitment to addressing aviation emissions beyond EU borders, through different channels of governance.205 The interaction between EU unilateral action and the developments in ICAO demonstrate how IEMEIs are part of a reciprocal ‘dynamic process of action and reaction’ within a wider regime of transnational legal processes.206 (ii)  Alternative or Supplementary Modes of Compliance Given the far-reaching obligations imposed on economic operators by IEMEIs, certain IEMEIs provide for alternative or supplementary routes of compliance with EU market access requirements that particularly influence compliance by third countries.207 This feature is a critical component of the Timber Regime and the sustainability criteria for biofuels. Compliance modes in these regimes manifest in two different ways: on the one hand, through bilateral agreements with the EU, thus implicating other kinds of EU external relations tools; and on the other hand, through private certification. (a)  Bilateral Agreements Under the Timber Regulation, one of the ‘green lanes’ for access to the EU market is through a FLEGT licence, available for countries that have concluded a bilateral Voluntary Partnership Agreement (VPA) with the EU.208 FLEGT

203 Regulation (EU) 2017/2392 amending Directive 2003/97/EC to continue current limitations of scope for aviation activities and to prepare to implement a global market-based mechanism from 2021 [2017] OJ L350/7, Art 7(1). This Report is meant to be detailed, covering the progress in international negotiations, domestic measures taken by third countries and the implications of reservations by third countries. Additionally, it is mean to examine the overall environmental integration of global market-based mechanism, including its ambition in relation to the goals under the Paris Agreement, the level of participation, enforceability, transparency, penalties for non-compliance, processes for public input, quality of offset credits, MRV of emissions, registries, accountability and rules on the use of biofuels. 204 Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems [2017] OJ L322/3, Chapter III. 205 The success of the extension of the EU ETS to aviation emissions beyond the EEA in this case may, however, be partly due to the consent-based nature of the linkage with the Swiss system. 206 Shaffer and Bodansky (n 34 above) 41. 207 Ryngaert and Koekkoek (n 53 above). 208 Timber Regulation (n 67 above) Art 3.

Examples of IEMEIs: Mapping their Legal Features  39 licences guarantee access to the EU market, as timber is thereby considered to have been legally harvested rather than requiring individual verification under the due diligence obligation of the Timber Regulation.209 Despite incentives to conclude VPAs prior to the Timber Regulation,210 it was only after the adoption of the Regulation restricting access to the EU market, that conclusion of VPAs expanded,211 showing the strong incentivising function that compulsory, traderestricting IEMEIs can have.212 The IEMEI – that is the Timber R ­ egulation – was adopted to complement the existing EU regulatory framework and get the FLEGT regime off the ground, functioning as a necessary component in the form of a penalty default to incentivise third countries to conclude VPAs. Notably, this trade-restrictive measure was desired by partner countries, like Indonesia, making the Timber Regulation a special case among the other examples of IEMEIs examined in this book. The Timber Regulation was viewed as an effective way of preventing VPA countries from being undercut by trade diversion to competitors that did not comply with the EU’s requirement on legality of timber.213 Through VPAs, the EU is engaged in a more cooperative approach, prompting legal developments in third countries by developing legality frameworks for timber jointly with third countries.214 Local actors, including civil society, both participate in the formulation of the legality regimes in third countries and have a role in the oversight and implementation of the agreement.215 The VPA process can significantly improve forest governance in third countries, sometimes even in trading with other countries. This, in turn, can contribute to the engagement of these third countries with international regimes on sustainable forest management by ‘building consensus from the bottom up’216 and possibly lay the

209 A Savaresi, ‘EU External Action on Forests: FLEGT and the Development of International Law’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP 2012); Overdevest and Zeitlin, ‘Assembling an Experimentalist Regime’ (n 152 above). 210 Prior to the Timber Regulation, third countries had other incentives under the FLEGT regime, including getting priority assistance for modifying their forest management frameworks, Marín Durán and Morgera (n 1 above) ch 7. 211 The EU has concluded VPAs with six countries to date (Ghana, Cameroon, Republic of Congo, Central African Republic, Liberia, Indonesia), while it is in negotiations with nine more (Democratic Republic of Congo, Gabon, Côte d’Ivoire, Malaysia, Thailand, Laos, Vietnam, Guyana, Honduras), EU FLEGT Facility: http://www.euflegt.efi.int/vpa. 212 Savaresi (n 209 above); Overdevest and Zeitlin, ‘Assembling an Experimentalist Regime’ (n 152 above). 213 C Overdevest and J Zeitlin, ‘Experimentalism in Transnational Forest Governance: Implementing European Union Forest Law Enforcement, Governance and Trade (FLEGT) Voluntary Partnership Agreements in Indonesia and Ghana’ (2018) 12 Regulation and Governance 64. 214 Morgera and Kulovesi (n 122 above). 215 The implementation of VPAs is overseen by a Joint Implementation Committee with members representing the EU and the VPA partner country. For example, VPA between the European Union and the Republic of Indonesia on forest law enforcement, governance and trade in timber products into the European Union [2014] OJ L150/252, Art 14. 216 Marín Durán and Morgera (n 1 above) ch 7.

40  Identifying and Mapping the Legal Phenomenon of IEMEIs ground for the development of related international regimes.217 The conclusion of bilateral agreements is also provided for in relation to sustainable ­biofuels.218 However, this possibility has not materialised yet, as the main compliance method utilised in this context is instead private certification schemes, discussed next.219 (b)  Private Certification and Monitoring Alternative or supplementary modes of compliance are also provided in relation to biofuels and timber through possibilities to use private schemes. These could alleviate the trade-restrictive effect of the obligations imposed on non-EU economic operators. Under the Renewable Energy Directive, producers of biofuels can verify compliance through private voluntary certification schemes that are benchmarked against the ‘meta-standard’ of the sustainability ­criteria.220 If the Commission accepts the scheme as a qualifying standard, then producers can conclusively verify compliance with the criteria. In this way, the unilateral IEMEI incorporates existing certification schemes into its regulatory approach as well as prompting the creation of new ones. It can thus influence the regulatory approaches of third countries and possibly promote global harmonisation of standards.221 However, promoting the use of private certification generates questions about the appropriateness of these schemes to ensure sustainability of biofuels.222 Notably, the certification system ‘places great faith in the ­contribution that independent auditors can make’ in verifying the systems of economic operators,223 while the independence of these auditors is generally problematic and difficult to ensure.224 Additionally, this approach raises concerns about the EU outsourcing its responsibility to ensure compliance with EU law to private actors.225 Such outsourcing or delegation to private actors usually carries a

217 For example REDD+, Savaresi (n 209 above); Morgera and Kulovesi (n 122 above). 218 Renewable Energy Directive (n 66 above) Art 18(4). 219 The bilateral route, adopted in relation to timber, could be beneficial for enforcing the sustainability criteria: JC Westberg and FX Johnson, ‘The Path Not Yet Taken: Bilateral agreements to Promote Sustainable Biofuels under the EU Renewable Energy Directive’ (2013) Stockholm ­Environmental Institute Working Paper 41/2013. 220 J Lin, ‘Environmental Regulation of Biofuels: Limits of the Meta-Standard Approach’ (2011) 5 Carbon and Climate Law Review 34. 221 For example in relation to the Indonesian Sustainable Palm Oil Scheme: J Lin, ‘Transnational Environmental law in Action: The European Union’s Sustainable Biofuels Experiment’ (2013) University of Hong Kong Faculty of Law Research Paper 2013/034. 222 ibid. 223 Scott, ‘Multi-Level Governance’ (n 22 above). 224 Lin, ‘Environmental Regulation of Biofuels’ (n 220 above). 225 ClientEarth, ‘Achieving credible EU-wide verification of biofuel sustainability’ (November 2013): http://www.clientearth.org/reports/131114-climate-and-forests-credible-verification-of-biofuelsustainability.pdf.

Examples of IEMEIs: Mapping their Legal Features  41 negative connotation, as private regulatory actors are generally considered less legitimate.226 However, there is evidence of biofuel certification schemes increasingly striving for legitimacy, such as the Roundtable on Sustainable Palm Oil,227 particularly through input by multiple stakeholders in their decisionmaking processes and through increased transparency.228 At the same time, the EU regulatory framework has sought to adapt to concerns raised by the use of private certification and concerns about the independence of auditors involved. In the revised version of the RED, additional obligations have been imposed on the Commission to report on approved certification schemes, particularly regarding their independence, transparency, stakeholder involvement and robustness.229 The Timber Regulation also provides for use of private schemes and organisations. First, it provides for certification schemes or other third-party verified schemes for assessing and dealing with the risk of illegal logging.230 Second, it provides for the use of monitoring organisations (MOs) as a ‘supplementary’ route for complying with the due diligence obligation. MOs provide and maintain due diligence systems that can be used by operators in complying with the Timber Regulation,231 while both the obligation of due diligence and liability remain with the operator. Such MOs have to be established in the EU232 and fulfil certain criteria233 to be recognised by the Commission in a delegated act, not yet adopted.234 The due diligence system offered by MOs may also incorporate certification schemes, which are indirectly reviewed in the recognition process of MOs.235 The potential influence of the Timber Regulation is significant and ‘has already spurred institutional developments by private actors in creating legality verification and certification schemes’.236 While such certification schemes 226 Y Naiki, ‘Trade and Bioenergy: Explaining and Assessing the Regime Complex for Sustainable Bioenergy’ (2016) 27 European Journal of International Law 129; J Black, ‘Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes’ (2008) 2 Regulation and Governance 137. 227 Naiki (n 226 above); G Schouten and P Glasbergen, ‘Creating Legitimacy in Global Private Governance: The Case of the Roundtable on Sustainable Palm Oil’ (2011) 70 Ecological economics 1891. 228 Naiki (n 226 above). 229 RED (n 66 above) Art 18(6). See Consolidated Version Commission Directive 2015/1513 amending Directive 98/70/EC and RED, [2015] OJ L239/1. A consolidated version of the Renewable Energy Directive is available at http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX:020 09L0028-20151005. 230 Timber Regulation (n 67 above) Art 6(1)(b) and 6(1)(c); Commission Regulation (EU) 607/2012 on the detailed rules concerning the due diligence system and the frequency and nature of the checks on monitoring organisations [2012] OJ L177/16. 231 Timber Regulation (n 67 above) Art 4(2). 232 Commission Delegated Regulation (EU) 363/2012 on the procedural rules for the recognition and withdrawal of recognition of monitoring organisations [2012] OJ L115/12, Art 5. 233 ibid Arts 6–8. 234 Timber Regulation (n 67 above) Art 8(2); Regulation 363/2012 (n 232 above). 235 Overdevest and Zeitlin, ‘Assembling an Experimentalist Regime’ (n 152 above). 236 Overdevest and Zeitlin, ‘FLEGT’ (n 118 above) 149.

42  Identifying and Mapping the Legal Phenomenon of IEMEIs provide novel ways of achieving and proving compliance with EU requirements, they can also raise important concerns that relate to the nature of private certification, as evidenced by the use of forest certification standards in the context of VPAs, where compliance is conclusively assumed. For example, the definition of legal timber in the VPA with Indonesia has developed into an auditable forest certification standard. Its use has raised significant concerns regarding the quality of auditors and audits involved and the ability of such a standard to deal with issues about land use by indigenous peoples in third countries.237 Overall, private certification provides novel ways in which transnational governance can emerge, providing flexibility in complying with regulatory requirements. At the same time, it comes with varied risks, such as lack of transparency and independence of auditors, which call for enhanced monitoring. (iii) Equivalence A different kind of ‘contingency’ and flexibility manifests itself in the design of IEMEIs through equivalent requirements of environmental protection in third countries. Instead of exporting EU standards, this feature leaves room for discretion and variation of third country standards as long as they meet an equivalent level of protection. However, equivalence can have different meanings and is ultimately determined by the EU Commission. Equivalence involves determinations about the adequacy of third country law and can raise questions about respecting the sovereignty of third countries in setting their own regulatory standards. First, equivalence can be imposed at country-level, as illustrated in the Aviation Directive.238 Airlines departing from countries with legislation reducing the climate change impact of flights may, where necessary, be exempted from the EU ETS, after consultation with the third country.239 In particular, when a third country adopts measures that have ‘an environmental effect at least equivalent’ to that of the Aviation Directive,240 the Commission should ensure the ‘optimal interaction’ between such third country measure and the EU ETS.241 This conditionality link triggers consultations and directly implicates the legal regimes applicable in third countries, while the EU unilateral measure may still be applied in case the EU is not satisfied. Second, equivalence is imposed directly on third country economic operators, specifically within the export IEMEIs that impose conditions on how processes take place in third country facilities. As mentioned above, under the WEEE Directive, waste exported to third country facilities should take place in equivalent conditions determined on the basis of criteria set by the ­Commission.242

237 Overdevest

and Zeitlin, ‘Implementing FLEGT VPAs in Indonesia and Ghana’ (n 213 above). ‘Territorial Extension’ (n 19 above) 110. 239 Directive 2003/87/EC (n 71 above) Art 25(a). 240 Aviation Directive (n 51 above) Recital 17. 241 ibid. 242 WEEE Directive (n 69 above) Art 10(3). 238 Scott,

Examples of IEMEIs: Mapping their Legal Features  43 Additionally, the Ship Recycling Regulation requires third country facilities that receive EU ships to demonstrate that waste management facilities carry out waste recovery or disposal operations in accordance with broadly equivalent human health and environmental standards.243 There are therefore variations of equivalence incorporated in different IEMEIs that display a spectrum of coerciveness, some being more flexible, while others require almost the same level of protection to be achieved by the third country itself or by the individual third country operators. In extending EU domestic legislation abroad, there may be legal requirements stemming from different applicable legal regimes that determine the lawful application of IEMEIs in practice. WTO law encourages flexibility of unilateral measures as long as they do not essentially require the adoption of the same policy by a third country.244 Equivalence decisions under EU law may be subject to judicial review before the Court of Justice of the European Union (CJEU), which may annul equivalence decisions that do not ensure a similar level of protection in third countries, as was the case in relation to data protection requirements.245 At the same time, equivalence has become increasingly relevant when determining whether EU legislation applies to processes taking place in third countries with the result that it is sometimes ‘read into’ legislation by the CJEU, even when not provided explicitly, as a mechanism for avoiding a conflict of norms with third country legislation.246 Overall, flexibility and conditionality features exhibit a mixture of unilateralism and cooperation.247 By promoting development of bilateral and international agreements, the EU is viewed as a ‘co-creator’ of third country policy rather than an ‘exporter’ of its own standards.248 These regulatory techniques demonstrate the readiness of the EU to respond and adapt to developments in third countries and international regimes, but at the same time they can raise different kinds of concerns about the EU’s unilateral action through IEMEIs. As already seen, clauses linking to developments beyond EU borders are used in different ways: as negotiating tools; as incentives for concluding bilateral agreements and advancing international regimes; and as catalysts for the development of private regimes. They all contribute in different ways to creating a dynamic relationship between EU unilateral measures and legal developments in third countries, also highlighting how multiple legal regimes are inherently relevant for the operation of IEMEIs.

243 Ship Recycling Regulation (n 70 above) Art 15(5). 244 See Chapter 6. 245 Case C-362/14 Maximillian Schrems v Data Protection Commissioner, EU:C:2015:650. 246 Case C-424/13 Zuchtvieh-Export GmbH v Stadt Kempten EU:C:2015:259, para 54; See Chapter 4, Section III.D; I Hadjiyianni, ‘The Role of Domestic Courts in Global Environmental Governance: Judicial Review of Extraterritoriality by the Court of Justice of the European Union’ (2018) EUI Working Paper MWP/RNS/2018/. 247 Scott, ‘Territorial Extension’ (n 19 above) 114. 248 Morgera (n 122 above).

44  Identifying and Mapping the Legal Phenomenon of IEMEIs To conclude, Section III has demonstrated how the EU employs novel regulatory techniques that usually avoid outright exportation of its domestic standards but rather dynamically link to international and third country legal regimes. The features of IEMEIs examined here provide insight as to their relative and qualified ‘unilateral’ and extraterritorial nature and their trade-restrictive effects, which are particularly relevant for their legal analysis under EU law and WTO law due to legal obligations under these regimes that relate to these features. These features provide evidence of the influence of WTO law on the legal design of IEMEIs which avoid being purely unilateral or extraterritorial. Furthermore, the structure of IEMEIs in imposing obligations directly or indirectly on different kinds of third country actors are catalytic in examining the legal position of third country actors in the EU legal order that are more likely to be protected when IEMEIs directly apply to them. While the relative unilateral and extraterritorial nature of IEMEIs may make them less contentious at first sight, they still raise important legitimacy questions about the exercise of EU regulatory power beyond its borders, particularly relating to how the EU unilaterally asserts its regulatory authority and exercises discretion across legal regimes in adopting and implementing IEMEIs. The discussion in this section has shed light on the legal nature and effects of IEMEIs in third countries so as to identify the different ways in which multiple legal regimes influence and determine the transnational operation of IEMEIs. It has acknowledged the range of features and functions of IEMEIs that do not exclusively aim to regulate the external relations of the EU but rather regulate the internal market by imposing obligations on both domestic and third country actors in a variety of ways, while at the same time explicitly aiming to influence third country practices and regulatory approaches. This influence is not a simple one-way export of EU standards however; it involves a complex interplay of norm development in multiple legal spheres triggered by EU internal action. The legal analysis of IEMEIs thus necessarily involves overlapping governance frameworks as their operation starts within the EU law framework and extends to public international law and beyond. The interplay of governance frameworks applying to IEMEIs accordingly characterises the legal analysis of IEMEIs. In this respect, this book analyses IEMEIs as a legal phenomenon that operates across multiple legal regimes, which determine their legal functioning in different ways. IV.  ASSESSING IEMEIs AS A LEGAL PHENOMENON AT THE INTERSECTION OF MULTIPLE LEGAL REGIMES

The chapter has so far identified the project of this book by situating IEMEIs within the broader context of EU external environmental action, explaining their legal nature and features, and demonstrating their characteristic operation across legal and governance frames. Given the interplay of multiple frames in

Assessing IEMEIs as a Legal Phenomenon  45 which IEMEIs operate, the book explores IEMEIs in multiple legal regimes in legally analysing this emerging phenomenon. This is a necessary methodological step in analysing IEMEIs legally, in light of the different legal requirements they are subject to and the ways in which overlapping legal regimes influence their formulation and determine their application. The book develops an analytical framework which can be applied in examining the legitimisation of the unilateral exercise of transnational power, in particular in cases where multiple legal regimes are applicable, but none of them provides a complete legal framework. It tests this by examining the respective roles of EU law and WTO law as the central and most elaborate legal regimes relevant to providing appropriate legitimacy mechanisms to control IEMEIs. This section justifies this analytical methodology. It does so by drawing out the types of legal regimes relevant for the analysis of IEMEIs and by identifying the functions of these regimes in influencing and determining the legal functioning of IEMEIs. There are at least four legal regimes relevant to the operation of IEMEIs. First, EU law – as the home legal system from which IEMEIs originate – is necessarily pertinent for their analysis.249 As a mode of EU external environmental action, IEMEIs firstly operate within EU constitutional and external relations law. Beyond conventional issues in this field concerning the competence of the EU and its international representation, IEMEIs also implicate areas of EU law that have been less explored in relation to EU external action. Particularly, they raise ‘transnationalised’ questions in EU administrative law about controlling the unilateral exercise of regulatory power, given that IEMEIs bring third country actors within the scope of application of EU law and within the internal decision-making processes of the EU legal order. Second, because IEMEIs regulate transboundary and global environmental problems, most of which are subject to existing international regimes, and affect the relations of the EU with third countries, public international law is also relevant for their analysis. As examined in Section III.B, international law regimes are implicated in IEMEIs that explicitly link the application of IEMEIs to legal developments in international regimes in dynamic ways. At least two branches of public international law are relevant. First, public international rules on jurisdiction that determine the authority of states to regulate specific activities are pertinent for understanding the extraterritorial nature of IEMEIs and their permissibility.250 Second, subject-specific international treaty regimes could also be relevant, depending on the policy area. Such regimes can impose additional conditions on the legality of IEMEIs, for example, limits to regulating matters in the high seas or in relation to flag-state jurisdiction. They can also embody

249 Member State legal regimes may also become relevant, particularly for the implementation and enforcement of IEMEIs. 250 Chapter 2, Section III.A.(ii).

46  Identifying and Mapping the Legal Phenomenon of IEMEIs rules that require the EU to consult with and consider the effects of its internal measures on third countries.251 Third, because of their nature as trade-restrictive measures, IEMEIs fall under the remit of WTO law, which governs trade relations between the EU and third countries. Through its operation, WTO law affects national regulatory approaches, including those of the EU and provides a forum of interaction among trading partner governments in a multilateral context. Its legal requirements delimit the scope of permissible EU unilateral action and provide parameters that control the ways in which the EU regulates trade. Fourth, IEMEIs also implicate the domestic legal orders of third countries to which they apply. This is done in different ways depending on the legal design of IEMEIs, which may explicitly incorporate third country legal regimes in setting process standards, as explained in Section III.A, and in creating dynamic transnational regulatory interactions with third countries in co-creating and co-developing environmental regimes, as explained in Section III.B. The domestic legal orders of third countries are also implicated by the ways in which they are influenced through the application of IEMEIs to third country activities and third country actors. The multiple legal regimes set out above influence and determine the legal operation of IEMEIs in inter-related ways. First, IEMEIs are subject to legality requirements under these different regimes. Requirements stemming from EU law, public international law and WTO law mostly relate to whether the EU has the authority and jurisdiction to regulate specific processes. In this respect, much of the existing legal scholarship on such measures has mainly focused on the permissibility of such measures. It has focused particularly on the notion of extraterritoriality in terms of jurisdiction and competence, under EU law252 and international law,253 questioning whether territoriality is still appropriate for delimiting the permissible scope of application of domestic measures.254 Existing scholarship has also examined the legality of unilateral trade-related, processbased measures to pursue non-trade objectives, particularly under WTO law.255 251 Such as the FAO Code of Conduct for Responsible Fisheries and International Action Plan of Action to prevent, deter and eliminate illegal, unreported and unregulated Fishing; S Cassese, ‘A Global Due Process of Law?’ in G Anthony and others (eds), Values in Global Administrative Law (Hart, 2011). 252 Ankersmit, Lawrence and Davies (n 43 above); Ankersmit (n 73 above). 253 Ankersmit, Lawrence and Davies (n 43 above); JA Zerk, ‘Extraterritorial Jurisdiction: Lessons for the Business and Human Rights Sphere from Six Regulatory Areas’ (2010) 59 Corporate Social Responsibility Initiative Working Paper 59/2010; S Battini, ‘Globalisation and Extraterritorial Regulation: An Unexceptional Exception’ in G Anthony and others (eds), Values in Global Administrative Law (Hart, 2011). 254 Scott, ‘Territorial Extension’ (n 19 above); Ryngaert (n 120 above); A Hertogen, ‘Sovereignty as Decisional Independence over Domestic Affairs: The Dispute over Aviation in the EU Emissions Trading System’ (2012) 1 Transnational Environmental Law 281. 255 E Vranes, Trade and the Environment: Fundamental Issues in International Law, WTO Law, and Legal Theory (OUP, 2009); MA Young, ‘Trade Measures to Address Environmental Concerns in Faraway Places: Jurisdictional Issues’ (2014) 23 Review of European, Comparative and ­International Environmental Law 302.

Assessing IEMEIs as a Legal Phenomenon  47 Second, an inter-related, derivative function of these multiple legal regimes is evident in how ex ante they influence the formulation of IEMEIs in different ways. IEMEIs are often designed to meet legality requirements within applicable regimes, particularly under WTO law.256 Different requirements under multiple legal regimes can thus partly explain the legal design and nature of IEMEIs. These regimes also explain the recourse to IEMEIs in terms of the EU avoiding complexities associated with such regimes in effectively achieving environmental goals. This is particularly the case in relation to the failures of multilateral treaty regimes, as outlined above in Section II.B. Third, given that IEMEIs operate across established legal regimes and institutional frameworks, multiple legal regimes, in combination, provide mechanisms to regulate and control the exercise of EU regulatory power beyond EU borders. This is because these regimes determine the legal parameters for the adoption and implementation of IEMEIs in third countries. They also provide different kinds of legal mechanisms that protect the rights and interests of those affected by regulatory power, but who are situated outside the EU, and thereby create transnational accountability avenues. Particularly, dispute settlement avenues, specifically in the WTO and in the EU legal order, provide significant mechanisms for controlling the EU’s regulatory power. The multiple legal orders implicated in the operation of IEMEIs, are thus also relevant as the legal regimes within which to seek answers about how legally hybrid measures like IEMEIs are regulated and can be controlled. Different legal regimes may be relevant for the legal analysis of distinct examples of IEMEIs depending on their legal design and how they fit within the pre-existing regulatory framework. In examining IEMEIs as an emerging legal phenomenon, this book focuses on the legal regimes of EU and WTO law in doctrinally analysing the role of overlapping legal orders in legitimising IEMEIs. The book also briefly examines international jurisdictional rules that could influence and determine the legal functioning of IEMEIs. As demonstrated in Chapter two, these public international law rules fall short of providing appropriate and sufficient legitimacy mechanisms.257 The book does not examine the role of domestic third country legal regimes, bilateral agreements and bespoke subject-specific international regimes for analysing and legitimising IEMEIs. These regimes would be particularly relevant for future research extended through empirical studies on individual third countries or through a case-study approach on specific policy areas and examples of IEMEIs, where third country legal regimes and subject-specific international regimes may play a critical role. This book deliberately focuses on the EU and WTO legal regimes, which broadly apply to different kinds of IEMEIs as EU trade-related measures, consistently determining the legal functioning of IEMEIs as a legal phenomenon. Also, these two legal orders have particular relevance in exemplifying



256 Chapter 257 Chapter

5. 2, Section III.A.(ii).

48  Identifying and Mapping the Legal Phenomenon of IEMEIs legitimacy norms that can contribute to enhancing the legitimacy of IEMEIs.258 They provide primary sources of legal control and significant avenues for controlling the EU’s power. EU and WTO law have elaborate regimes, backed up by developed dispute settlement regimes that can provide third country actors with possibilities for controlling the EU’s extension of its regulatory power. In pragmatic terms, EU decision-making is largely influenced by EU law considerations and in terms of external considerations, the WTO legal disciplines are very much dominant. The dominance of a trade liberalisation regime in the EU’s considerations can be problematic. However, as Part III of the book demonstrates, the WTO also bears significant potential for controlling the EU’s global regulatory power, requiring it to take into account third country interests in different ways. Furthermore, due to the legally hybrid nature of IEMEIs that operate at the intersection of established jurisdictional frames of legal analysis, a combination of legal regimes is required for analysing and legitimising IEMEIs. In this respect, the EU and WTO legal orders provide a good combination for testing this analytical approach and exploring the extent to which the exercise of EU regulatory power beyond EU borders through IEMEIs is legally controlled. While some IEMEIs have been examined within either EU law259 or WTO law,260 this book examines how both legal regimes in combination can control EU transnational regulatory power through IEMEIs as it is exercised at the interconnection of these regimes. While the permissibility of unilateral, process-based measures has been discussed under either EU law or WTO law, this has been done in a piecemeal way to date. This book fills a gap in the existing literature by assessing how these two regimes can together control the extraterritorial reach of EU environmental law, examining important interactions between different legal orders. It shows how EU and WTO law could respectively address different aspects of the legality and legitimacy of IEMEIs through procedural and substantive requirements on how regulatory power can lawfully be exercised. Legal requirements in EU, international and WTO law are often inter-connected. They sometimes defer to each other or can be contradictory. Analysing IEMEIs under only one of these relevant legal systems would provide an incomplete picture of the function of applicable law to analyse and legitimise IEMEIs. In examining IEMEIs through these two legal lenses, the book focuses on the role of these regimes in both enabling the adoption of such measures – by providing the legal basis and normative justification for the adoption of IEMEIs – and also constraining IEMEIs – by imposing checks that discipline how EU regulatory power is exercised. This distinction of the role of law in legitimising the EU’s global regulatory power is further developed from a normative perspective in Chapter two and from an evaluative perspective in Parts II and III.

258 Chapter

2, Section IV.C. a focus on internal market, competence and state aid, Ankersmit (n 73 above). 260 Cooreman (n 89 above). 259 With

Assessing IEMEIs as a Legal Phenomenon  49 The rest of the book builds on the identification of the legal phenomenon of IEMEIs, their legal nature and the multiple legal regimes involved in their operation as explored in this chapter. Chapter two develops a framework for analysing IEMEIs by identifying mechanisms for legitimising regulatory power exercised across pre-defined territorial jurisdictions and established legal regimes. In this respect, the book also contributes to broader normative understandings of legitimacy and accountability about the exercise of regulatory power across legal boundaries, and in the absence of authorisation or consent from those affected by such power. Parts II and III of the book then examine the respective roles of EU law and WTO law in relation to this theoretical legitimacy framework through legal analysis of IEMEIs under these two regimes. They show that these two regimes, acting in combination, bear great potential in legitimising IEMEIs by controlling the exercise of EU regulatory power beyond EU borders.

2 The Legitimacy of Global Regulatory Power – The Case of IEMEIs I. INTRODUCTION

T

he extension of EU environmental regulation beyond EU borders provides a novel governance mode that can fill international regulatory gaps by urging other states to act on pressing environmental p ­ roblems, including climate change. However, the unilateral exercise of EU global regulatory power raises significant legitimacy concerns from the perspective of third countries affected by IEMEIs. The EU’s unilateral action through IEMEIs is particularly contentious because they often affect developing countries, which may lack the necessary resources and capacity to adapt to EU standards, raising important questions about the adherence of EU unilateral action to principles of international distributive justice. Additionally, IEMEIs extend regulatory standards to actors that usually have no voice in their formulation and implementation. EU regulatory power may thus be exercised without sufficient accountability, consideration or participation of affected interests situated outside the EU’s borders, thus creating a series of ‘external legitimacy gaps’. This chapter identifies and explains the emergence of these legitimacy gaps through a survey of different models of legitimacy developed in relation to regulatory power exercised within the nation-state and at the international level. Identifying mechanisms that could enhance the legitimacy of IEMEIs is not straightforward, as they occupy a regulatory space at the intersection of multiple legal regimes. Whilst IEMEIs are created in EU law, they affect and are affected by legal regimes that operate in third countries and transnationally. Therefore, neither legitimacy mechanisms developed within state or state-like structures, such as the EU, nor mechanisms associated with global institutions and multilateral regimes, are wholly appropriate for this legal phenomenon that occupies a transnational regulatory space in between these frames.1 This is because of ‘the overlaps between jurisdictions, the legal and personal spaces where m ­ ultiple

1 For an analysis of the evolution of governance spaces in global governance, see P Zumbansen, ‘Defining the Space of Transnational Law: Legal Theory, Global Governance and Legal Pluralism’ (2012) 21 Transnational Law and Contemporary Problems 305.

Introduction  51 sets of rules apply but none has the power to govern’.2 As there is no robust methodology for assessing transnational regulatory power, this chapter develops an analytical approach for understanding and assessing the unilateral exercise of regulatory power beyond established territorial and jurisdictional borders at the intersection of multiple legal regimes. The EU’s normative justification for exercising regulatory power beyond its borders and the acceptance of its action by those affected is by no means obvious. This chapter argues that, in the absence of an established political or legal basis for legitimising IEMEIs, an optimal combination of legitimacy mechanisms and norms, as applied in multiple legal regimes, is required to legitimise the creation and operation of IEMEIs. As Bodansky suggests, ‘many factors can contribute to or detract from a regime’s legitimacy. Legitimacy is a matter not of all or nothing, but of more or less.’3 In identifying the combination of legitimacy norms and mechanisms best suited for IEMEIs, the chapter examines different understandings of legitimacy developed in relation to regulatory power exercised within state-like structures and at the international level, and identifies how these can legitimise global regulatory power as exercised through IEMEIs. In evaluating these understandings, it must be recognised that applicable legal frameworks have a dual function in legitimising IEMEIs. On the one hand, they concern whether the adoption and application of IEMEIs is legally permitted and justified, thus enabling the exercise of EU regulatory power. On the other hand, legal regimes determine whether sufficient constraints and checks are in place to discipline how such power is exercised to prevent abuse of the extension of EU regulatory power beyond EU borders. Both facets of legal control are important in legitimising IEMEIs and are reflected in the different legitimacy models examined in this chapter, albeit that the constraining aspects are more controversial. The ways in which IEMEIs are legally designed to create incentives and influence practices and regulatory behaviour beyond EU borders can raise important legitimacy concerns from the perspective of third country actors. These are set out in Section II of this chapter, which demonstrates the different legitimacy gaps relating to IEMEIs and exposes the importance of examining the legitimacy of this legal phenomenon. In understanding how the exercise of power through IEMEIs may be justified and controlled, the chapter then identifies different legitimate bases for the allocation and control of regulatory power. This is necessary because no single vision of legitimacy perfectly captures the transnational legal nature of IEMEIs and the multi-faceted legitimacy concerns they raise. Section III thus surveys different understandings of legitimacy and explores how each model renders IEMEIs controversial in different ways. 2 G Davies, ‘International Trade, Extraterritorial Power, and Global Constitutionalism: A Perspective from Constitutional Pluralism’ (2012) 13 German Law Journal 1203, 1210. 3 D Bodansky, ‘The Legitimacy of International Governance: A Coming Challenge for International Environmental Law?’ (1999) 93 American Journal of International Law 596, 623.

52  The Legitimacy of Global Regulatory Power – The Case of IEMEIs This  inquiry ­demonstrates how the legitimacy of IEMEIs does not neatly fit within a pre-established theoretical model or legal framework and identifies mechanisms that could contribute to their legitimisation across multiple models. Section  IV explores how different legitimacy ideas derived from these models can be re-framed to fill the IEMEI legitimacy gaps. This reframing is done by focusing on the third country interests affected by IEMEIs and the transnational nature of the legitimacy gaps they create with a view to building a ‘web’ of legitimacy norms and mechanisms to bolster the legitimacy of IEMEIs. The legal regimes of EU law and WTO law, in combination, go some way to implementing this legitimacy framework, both by enabling and disciplining the exercise of global regulatory power through IEMEIs. II.  THE LEGITIMACY GAPS

The legitimacy of IEMEIs can be controversial in different ways, which relate to the unilateral exercise of regulatory power across jurisdictions and across different legal frames. For the purpose of this analysis, legitimacy is understood as ‘justification of authority’ in a normative sense,4 which can encompass different theoretical ideas, as explored in Section III. This is supplemented by the inter-related aspect of ‘acceptance of authority’ by those affected by ­decisions.5 The latter, mainly sociological, dimension of legitimacy is particularly important for legitimacy questions raised in relation to transnational problems that no single state can deal with. There are different definitions of legitimacy, including input and output legitimacy.6 While such definitions capture some of the problematic issues raised by IEMEIs, there is no one established model of legitimacy that captures the multi-faceted concerns they raise as measures that operate across established legal and jurisdictional frames. For this reason, this chapter adopts a broad definition of legitimacy in developing a fundamental understanding about what the legitimacy of IEMEIs encompasses. IEMEIs are particularly problematic in legitimacy terms because there are no clear accountability lines and relationships in the exercise of transnational regulatory power, which is increasingly exercised within a ‘global administrative space’.7 Additionally, IEMEIs demonstrate the complexities of regulating environmental problems in light of the polyarchic distribution of power, where one jurisdiction on its own cannot solve the problem, and in light of strategic uncertainty about how effectively to deal with particular problems that require

4 ibid. 5 ibid. 6 FW Scharpf, Governing in Europe: Effective and Democratic? (OUP, 1999). 7 N Krisch and B Kingsbury, ‘Introduction: Global Governance and Global Administrative Law in the International Legal Order’ (2006) 17 European Journal of International Law 1.

The Legitimacy Gaps  53 urgent  action.8 These complexities are accentuated when regulatory regimes that deal with such problems operate through the unilateral territorial extension of legal measures across jurisdictional borders. In light of these controversies, IEMEIs raise at least four overlapping kinds of legitimacy concerns that demonstrate the complex legitimacy gaps created by the exercise of global regulatory power. First, given the unilateral and extraterritorial aspects of IEMEIs and the lack of formal consent to their application by third countries, their source of legitimacy is not obvious. This is because they challenge conventional bases of legitimacy centred on territorially-restrained state sovereignty and the principle of non-interference. Externally, the action of the EU through IEMEIs bears the risk of being misunderstood and possibly creating mistrust by third country stakeholders.9 In particular, the EU could be perceived as a ‘normative empire’,10 which engages in protectionism and exports its own standards. This is particularly problematic under WTO law. Even though IEMEIs do not involve direct exportation of EU standards abroad or the exercise of purely extraterritorial jurisdiction, they still have legal impacts in third countries and engage in contingent unilateralism which includes ‘penalties and disincentives for external partners’ if they are not followed.11 Even if standards imposed through IEMEIs could in principle be avoided by not engaging in trade with the EU, the economic reality signifies that given the EU’s market power, foreign trading partners often have to follow EU standards de facto.12 IEMEIs can therefore have significant coercive effects on third country actors. As explained in Chapter one, the EU often incorporates third country and international standards in IEMEIs, thus avoiding direct exportation of unilateral standards. The legitimacy of the EU’s unilateral action is arguably less problematic when IEMEIs incorporate internationally agreed standards or are based on international instruments.13 However, even in situations of relative unilateralism, when IEMEIs incorporate international standards, their unilateral enforcement through trade restrictions can still be problematic for third countries. The unilateral imposition of environmental

8 CF Sabel and J Zeitlin, ‘Experimentalist Governance’ in D Levi-Faur (ed), The Oxford ­Handbook of Governance (OUP, 2012). 9 E Morgera, ‘Ambition, Complexity and Legitimacy of Pursuing Mutual Supportiveness through the EU’s External Environmental Action’ in B Van Vooren, S Blockmans and J Wouters (eds), The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013). 10 Z Laïdi, ‘The Normative Empire: The Unintended Consequences of European Power’ (Centre d’études européennes de Sciences Po, 2008) hal-00972756. 11 B Van Vooren, S Blockmans and J Wouters, The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013) 339. 12 A Bradford, ‘The Brussels Effect’ (2012) 107 Northwestern University Law Review 1. See also Davies (n 2 above). 13 B Cooreman, Global Environmental Protection Through Trade, A Systematic Approach to Extraterritoriality (Edward Elgar, 2017); O Suttle, ‘Equality in Global Commerce: Towards a Political Theory of International Economic Law’ (2014) 25 European Journal of International Law 1043.

54  The Legitimacy of Global Regulatory Power – The Case of IEMEIs standards, however relative, could give rise to ‘ecological imperialism’,14 which may be illegitimate from the perspective of countries that are economically disadvantaged as a result and whose local demands and characteristics may be ignored.15 Second, with the unilateral extension of domestic standards, there is always the risk that powerful actors like the EU could abuse their role by outsourcing climate change and environmental protection responsibilities outside their territory, thus minimising the inconvenience and upheaval of social and structural change associated with transitional environmental change within their own jurisdiction. And, especially because those bearing the costs may not be represented in the regulating entity, the costs imposed on them can be ignored or insufficiently taken into account.16 For example, the promotion of b ­ iofuels worldwide under the Renewable Energy Directive has created significant detrimental impacts related to land use in third countries, taking insufficient account of the negative environmental and food security impacts they can have on third  countries. Even when there are good intentions behind unilateral regulatory initiatives, there is a tendency to pass the cost of meeting the ‘general interest’, such as environmental protection objectives, onto others or to use support for such objectives as ‘a bargaining chip’ in the interests of the regulating entity.17 For example, the Aviation Directive, which included emissions from international flights in the EU ETS, would give rise to generation of revenue by third c­ ountry airlines which had to pay allowances to EU Member States. Such revenues ‘should be used to tackle climate change in the EU and third ­countries’ while allowing significant discretion to Member States in administering their use.18 As Young puts it, with the Aviation Directive ‘the EU was forcing behavioural change in other states but also distributing a burden that it would otherwise have to meet.’19 Such outsourcing of responsibilities could raise international distributive justice questions as to the fair allocation of costs and benefits from environmental protection. Third, the controversy of IEMEIs is accentuated by the fact that EU unilateral choices about distribution of costs and benefits in pursuing environmental protection goals often largely affect developing countries. Especially in ­situations where territorial extension is targeted towards developing countries, the EU  may be criticised for ‘hegemonic’ tendencies that raise questions of

14 T Cottier and S Matteotti-Berkutova, ‘International Environmental Law and the E ­ volving Concept of “Common Concern of Mankind”’ in T Cottier, O Nartova and SZ Bigdeli (eds), ­International Trade Regulation and the Mitigation of Climate Change (CUP, 2009). 15 E Benvenisti, The Law of Global Governance (Hague Academy of International Law, 2014) 76. 16 Davies (n 2 above). 17 J Burnheim, ‘Power–Trading and the Environment’ (1995) 4 Environmental Politics 49. 18 Consolidated Version of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32, Art 3d(4). 19 M Young, ‘Trade Measures to address Climate Change: Territory and Extraterritoriality’ in P Delimatsis (ed), Research Handbook on Climate Change and Trade Law (Edward Elgar, 2016) 343.

The Legitimacy Gaps  55 f­ airness and distributive justice. The EU may be imposing higher environmental standards than developing countries have the capacity to cope with, ignoring their special needs and capacities.20 These special needs were arguably ignored in the design of the initial Aviation Directive, which required all airlines to surrender allowances to EU Member States, irrespective of whether they originated from developing countries.21 The EU’s unilateral action may thus violate international principles on the distribution of global responsibilities, such as the principle of Common but Differentiated Responsibilities (CBDR),22 which has been particularly d ­ eveloped in the context of climate change,23 but is also relevant in a more general context.24 Finally, territorial extension through IEMEIs gives rise to a situation where the EU is essentially ‘purporting to govern actors that do not have a voice in its political processes.’25 Even though IEMEIs are internal measures developed within the EU legal order, they regulate processes that partly occur in third countries and have important legal impacts in third countries. This gives rise to situations where those regulated by IEMEIs do not have a say in the formulation and implementation of decisions that affect them. The exercise of transnational power over interests in other jurisdictions that do not have a say in the law-making processes of the regulating jurisdiction creates a ‘constitutional gap’,26 whereby power is exercised ‘without accountability or representation’.27 As third country actors may not be represented within EU domestic decisionmaking procedures, this creates an ‘actor mismatch’: ‘actors who wield power in the national and local implementation of transnational legal norms are not represented or otherwise do not prevail’ in the transnational decision-making procedures of the EU.28 This goes against understandings of legitimacy as good governance and accountability, examined below in Section III.B, as those affected by decisions may not be given sufficient opportunities for participation and for holding power to account. It can also raise questions of procedural fairness in relation to affected third country actors. In light of these controversies, legitimacy concerns about IEMEIs are multifaceted and complex from the perspective of third country affected actors,

20 Morgera, ‘Ambition, Complexity and Legitimacy’ (n 9 above). 21 J Scott and L Rajamani, ‘EU Climate Change Unilateralism’ (2012) 23 European Journal of International Law 469. 22 ibid; J Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (2015) 17 Cambridge Yearbook of European Legal Studies 92. 23 UN Framework Convention on Climate Change, 9 May 1992, 1771 UNTS 107, Art 3(1). See also Paris Agreement adopted under the UNFCCC, 12 December 2015, FCCC/CP/2015/L.9, Art 2(2). 24 Rio Declaration on Environment and Development (12 August 1992) UN Doc A/CONF.151/26 vol 1, Principles 6, 7. 25 G Shaffer and D Bodansky, ‘Transnationalism, Unilateralism and International Law’ (2012) 1 Transnational Environmental Law 31. 26 Davies (n 2 above) 1204. 27 ibid. 28 TC Halliday and GC Shaffer, Transnational Legal Orders (CUP, 2015) 38.

56  The Legitimacy of Global Regulatory Power – The Case of IEMEIs who as a result may distrust EU action. The legitimacy concerns outlined above reveal how the unilateral exercise of EU global regulatory power through IEMEIs can create different kinds of inter-related legitimacy gaps, which are further discussed below in Sections III and IV. These include an ‘accountability gap’, a ‘participation and representation gap’ and potentially a ‘justice gap’, which are inter-connected and particularly relate to the lack of voice and representation within the regulating jurisdiction that exercises transnational regulatory power, of those affected but situated outside the jurisdiction.29 Because of these significant gaps, an inquiry into the legitimacy of IEMEIs becomes a vital question in the analysis of this emerging legal phenomenon. The next section seeks to reveal the different ways and degrees in which IEMEIs are problematic according to different understandings of legitimacy, so as to demonstrate how the analysis of their legitimacy does not fit within a single pre-established model of legitimacy but requires the assembling of an appropriate and adapted legitimacy framework. The discussion of different legitimacy models also sheds light on how the different legitimacy gaps are created and provides norms and mechanisms that could indicate appropriate ways for addressing these gaps. III.  DIFFERENT UNDERSTANDINGS OF LEGITIMACY AND IEMEIs

This section explores three ways of understanding legitimacy, with the aim of assembling an analytical framework for evaluating the legitimacy of IEMEIs that captures the different kinds of concerns they raise. The examination of multiple legitimacy models is undertaken because IEMEIs operate in an uncertain normative and legal space, within overlapping legal regimes. For this reason, the legitimacy gaps of IEMEIs can be understood and tackled in a number of normative and procedural ways, none of which provide a neat fit for IEMEIs, but all of which have something relevant to contribute. This section considers different legitimacy models that relate to different dimensions of IEMEIs discussed in Chapter one, including their origin, legal nature, and their effects beyond jurisdictional borders. They include: state-centred understandings of legitimacy developed and applied within coherent legal orders; understandings associated with international exercise of power in inter-state regimes; and more novel understandings concerning the legitimisation of transnational power exercised beyond established legal borders. While a transnational approach to legitimacy is helpful in conceptualising how legitimacy norms can be operationalised across legal systems and borders, state-centred understandings of legitimacy and accountability are equally relevant. This is because IEMEIs originate in 29 On normative gaps created by transnational regulatory power, see RO Keohane, ‘Global Governance and Democratic Accountability’ in D Held and M Koenig-Archibugi (eds), Taming Globalization: Frontiers of Governance (Polity Press, 2003); Davies (n 2 above). See also Sections III.B.(ii) and IV below.

Different Understandings of Legitimacy and IEMEIs  57 a state-like entity, within the borders of a regional organisation consisting of sovereign states, and transnational power must still be ‘localised’ in jurisdictions in its operation in order to be effectively controlled. Adopting a broad approach to legitimacy is essential in ascertaining issues that relate to an emerging legal phenomenon that does not clearly reside in any one jurisdiction or belong to any one legal approach or culture. This approach is also important in fleshing out the more specific issues of procedural justice, transparency and participation, which in different ways can all contribute to enhancing the legitimacy of the EU’s action. These insights move beyond issues already discussed in the literature regarding the permissibility of IEMEIs, and focus on how they are adopted, designed and applied. The models explored in this section relate to different aspects of IEMEI ­legitimacy, including the power of the EU to act, the structure and exercise of such regulatory power and the substance of such power relating to the content of law. They cover a spectrum of normative ideas: formal understandings of legitimacy in terms of legality and the rule of law (Section III.A); understandings that relate to how regulatory power is exercised in terms of good governance and accountability (Section III.B); and philosophical ideas about justice (Section III.C). This mapping of different understandings of legitimacy follows a spectrum from more formal to more substantive ideas, both in categorising these three different models and within each model in analysing different versions of legitimacy understandings. There is some overlap of legitimacy ideas in the different models, although these overlapping ideas are accorded different weights and functions within the terms of each model. These models provide different normative understandings of legitimacy and their examination demonstrates how IEMEIs are problematic in various ways that further demonstrate the nature of the legitimacy gaps they create. The following discussion also shows how none of these established legitimacy understandings are themselves a perfect fit for IEMEI action that takes place at the intersection of legal regimes, thus exposing the inadequacies of each model in securing the legitimacy of IEMEIs. At the same time, the different models encompass legitimacy ideas that, when adapted to take account of the exercise of regulatory power beyond jurisdictional borders, may nonetheless provide useful norms and mechanisms which, in combination, can bolster the legitimacy of IEMEIs, as discussed in Section IV below. A.  Legitimacy as Legality and Adherence to the Rule of Law This section’s inquiry into different understandings of legitimacy starts with the formal model of legitimacy as legality and adherence to the rule of law, which is relevant for both state-centred and international exercises of regulatory power. Different aspects of legitimacy as legality and adherence to the rule of law are relevant for IEMEIs, relating to where regulatory power comes from and how

58  The Legitimacy of Global Regulatory Power – The Case of IEMEIs it needs to be constrained. Regulatory action that is ‘in accordance with law or principle’30 may justify and facilitate the exercise of EU regulatory power, at least fulfilling the first of the dual functions of law for the legitimacy of IEMEIs. Aspects of the rule of law could also indicate some ways for constraining how power is exercised in a non-arbitrary manner. (i)  Legitimising Functions of Legality and the Rule of Law for IEMEIs The meaning and content of the rule of law varies among different legal systems and different legal traditions and sometimes even within a single legal tradition.31 Thus, a single conception of the rule of law may be insufficient to guarantee the legitimacy of IEMEIs, which are created and operate across multiple legal systems and jurisdictions. In situations of unilateral exercise of transnational regulatory power, it is possible that there are differences and debates on the conceptions of the rule of law between the regulating country’s version and that of the affected third country. Given the variability of conceptions of the rule of law, from predictability to fairness and procedural or substantive versions, what the rule of law requires can vary. Aspects of both formal and substantive versions are considered in this section in order to explore the different opportunities and inadequacies of this model for the legitimacy of IEMEIs. After setting out the basic elements of this legitimacy model that are largely state- or ­jurisdiction-based, the section focuses on international understandings of legality and the rule of law in examining the relevance of this legitimacy model and of international public law for IEMEIs. Formal understandings of the rule of law primarily comprise notions of legality, relating to whether the EU can lawfully act, and can provide characteristics and requirements for IEMEIs and decision-making that can ensure that their adoption and application to third country actors is not done in an arbitrary manner. Adherence to the rule of law can enhance the legitimacy of regulatory governance as it requires, at a minimum, for general rules to be laid down in advance, that those rules be enforced and that disputes be resolved effectively and fairly.32 Also, the minimum content of the rule of law stipulates that administrators should have neither too much nor too little discretion.33 In this respect, administrators must be accountable for their action,34 particularly through judicial review to which access by those bound by law should be guaranteed.35

30 Bodansky, ‘Legitimacy of International Governance’ (n 3 above). 31 M Rosenfeld, ‘The Rule of Law and the Legitimacy of Constitutional Democracy’ (2001) 74 California Law Review 1307. 32 AV Dicey, Introduction to the Study of the Law of the Constitution, 10th edn (Macmillan, 1959) 193; C Saunders and K Le Roy, The Rule of Law (Federation Press, 2003) 5. 33 Saunders and Le Roy (n 32 above). 34 ibid. 35 J Raz, The Authority of Law: Essays on Law and Morality (Clarendon Press, 1979) ch 11; T Bingham, The Rule of Law (Penguin, 2011).

Different Understandings of Legitimacy and IEMEIs  59 Such elements of the role of law indicate the kinds of administrative and constitutional safeguards that should be in place to control regulatory power. Substantive versions of the rule of law can also be relevant for the legitimacy of IEMEIs because they support the principle that applicable laws should reflect a legitimate legal order that is based on substantive values. ‘Thicker’ versions of the rule of law thus go beyond legality and formal properties that laws must possess, and touch upon the content that the law should have. Unlike ‘thin’ versions that consider that even non-democratic systems can still conform to the rule of law, such understandings support the idea that the law should promote substantive values. They also inject more substance into the elements of the rule of law that contribute to good governance and good administration. ­Accordingly, executive power should be exercised in good faith, be fair, be exercised for the purpose for which it is conferred, and be reasonable.36 One of the fundamental additions of a ‘thick’ version of the rule of law is the protection of human rights, which is increasingly recognised as normatively desirable both in internal legal orders37 and internationally.38 However, the protection of human rights is characterised by some vagueness, as the ‘outer edges of human rights are not clear-cut’.39 Thus the closer the rule of law gets to dictating specific values, the more vagueness and uncertainty there is as to what it requires. This uncertainty is even more present when domestic legislation affects human rights beyond the borders of the regulating jurisdiction. Even when domestic or international rule of law requirements include protection of fundamental rights, it is unclear whether these extend transnationally to protect rights of individuals situated abroad and how such protection is to be guaranteed.40 Due to the hybrid legal nature of IEMEIs and their impacts beyond EU borders, it is not straightforward how the rule of law is to be operationalised transnationally as IEMEIs do not neatly fit within established jurisdictionbased legal procedures that are meant to guarantee the rule of law. This makes it unlikely for legality-based legitimacy to be sufficient, on its own, to legitimise unilateral territorial extension of EU regulatory power. ‘“Legitimacy” implies an external legal rule or principle by reference to which authority is constituted, identified and controlled.’41 A key problem with establishing legitimacy of IEMEIs is in locating the relevant legal rule or principle, within the overlapping legal regimes relevant to their operation, and in the fact that applicable

36 L Bingham, ‘The Rule of Law’ (2007) 66 The Cambridge Law Journal 67. 37 Consolidated Version of the Treaty on the European Union [2008] OJ C326/13 (TEU), Art 6; Charter of Fundamental Rights of the European Union [2012] OJ C326/391. 38 Universal Declaration of Human Rights, GA Res 217A (III), UN Doc A/810; Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as amended). 39 L Bingham (n 36 above) 70. 40 D Augenstein, ‘The Human Rights Dimension of Environmental Protection in EU External Relations Post-Lisbon’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012). See also Chapter 4, Section III.D. 41 Saunders and Le Roy (n 32 above).

60  The Legitimacy of Global Regulatory Power – The Case of IEMEIs rules do not necessarily control the extension of EU regulatory power in ways that address their legitimacy concerns. Legality-based legitimacy is very much linked to the legal system applicable and, in the case of IEMEIs, this requires consideration of different aspects of multiple legal regimes that determine their legal functioning. As discussed in Chapter one, these regimes include EU law, international public law and WTO law.42 IEMEIs are affected by legality and rule of law requirements in all these regimes. In examining IEMEIs under the EU legal order in Part II and under WTO law in Part III, the analysis examines the extent to which legality and different aspects of the rule of law contribute to legitimising IEMEIs, including through the operation of their judicial review mechanisms. The remainder of this section instead focuses on international law understandings of legality and the rule of law in exploring how this related and contingent model of legitimacy informs the legitimacy of IEMEIs. In doing so, it also demonstrates how international public law does not offer a comprehensive legal framework for evaluating the legitimacy of IEMEIs as a legal phenomenon. Whilst international requirements linked to lawfulness in terms of jurisdiction are particularly relevant in ­determining the extent to which the EU has the power to act, enabling the adoption of IEMEIs, a comprehensive analysis of IEMEI legitimacy also involves questions about whether sufficient legal constraints and checks control EU transnational regulatory power. International understandings of legality and the rule of law are inadequate in providing effective and workable constraints on the exercise of transnational regulatory power. This inadequacy is established by approaching public international law as an overarching legal frame without examining how international requirements in bespoke, subject-specific treaty regimes could provide additional ways of controlling specific examples of IEMEIs when examined more in depth as case studies,43 as this is beyond the scope of this book.44 As an overarching legal frame, international law can only go so far in enhancing the legitimacy of IEMEIs. In relation to legality-based legitimacy, the legal regimes of EU and WTO law are more fully explored in Parts II and III of the book as they provide more dynamic and robust ways in which legality and adherence to the rule of law could legitimise IEMEIs, in both enabling and constraining their use. This does not mean that international law norms are irrelevant, but that public international law does not provide the central legal arena within which the legitimacy

42 Chapter 1, Section IV. 43 For example, certain international regimes impose specific obligations requiring respect of the rights and interests of third countries, which would have more constraining effects on the EU. For example, the EU is under a soft law obligation to consult with and consider the effects of its unilateral regulation on third countries under the FAO Code of Conduct for Responsible Fisheries and International Action Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing: http://www.fao.org/publications/card/en/c/71be21c9-8406-5f66-ac68-1e74604464e7. 44 Chapter 1, Section IV.

Different Understandings of Legitimacy and IEMEIs  61 of IEMEIs as a legal phenomenon can be bolstered, either under legality-based legitimacy or indeed under any of the models explored in this chapter. However, the legitimising function of international law norms remains relevant in this book in how they are incorporated and enforced within the legal regimes of EU45 and WTO law.46 (ii)  Legality and the Rule of Law in the International Legal Frame As IEMEIs regulate processes across and beyond EU borders and have important impacts in third countries and international regimes, legitimacy understandings about the relations between nation-states and the exercise of regulatory power across legal borders, as developed at the international level, are pertinent in framing IEMEI legitimacy. Despite rule of law theories being mainly developed within state structures, the importance of the rule of law at the international level should not be underestimated.47 However, the international rule of law is deficient in some ways, especially because states can ‘rewrite the rules to meet perceived exigencies of the political situation’ and can therefore be ­amenable to political manipulation in favour of the interests of particular states.48 What  legality and the rule of law require internationally can mean different things and the following discussion examines what it can mean for IEMEIs. (a)  Formal Understandings: State Consent and International Rules on Jurisdiction In a formal sense, international understandings of legality and the rule of law provide structural bases for legitimising regulatory power under public international law, relating to how law is created. Such formal understandings concern both international and state-like aspects of EU regulatory power through IEMEIs. On the one hand, they consist of conventional bases for legitimising international power in inter-state relations, relating to state consent, while on the other hand they comprise jurisdictional rules of public international law on how states can lawfully act in regulating specific conduct. The discussion of these formal international understandings of legality-based legitimacy demonstrates how IEMEIs are problematic because they fail to incorporate state consent as a recognised legitimacy basis for regulating global environmental problems, while their formal legality under other jurisdictional rules does not necessarily ­guarantee their legitimacy. This is primarily because public international law facilitates transnational regulatory power without sufficiently disciplining its exercise.

45 See

Chapter 4, Section III.E. Introduction to Part III. 47 Bingham (n 36 above) 110. 48 ibid 128. 46 See

62  The Legitimacy of Global Regulatory Power – The Case of IEMEIs State consent has long constituted an acceptable basis for legitimacy of international environmental law, and thus multilateral solutions are generally viewed as more legitimate.49 As allocation of authority at the international level has usually been premised on principles of non-intervention, state sovereignty and equality of states, state consent usually provides a credible source of authority to international institutions and decisions. With the evolution of international environmental law however, state consent is no longer sufficient to guarantee legitimacy of action at the international level in all situations. This is particularly due to the increasing effects of international action on domestic actors, including non-state actors, for which state consent may be irrelevant.50 Also, this insufficiency is attributed to the nature of many contemporary environmental problems that require quick and flexible decision-making, which cannot accommodate the difficulties associated with consensual regimes.51 The reasons why state consent is increasingly viewed as an insufficient basis for legitimacy of international environmental law can also partly explain the emergence of IEMEIs as a mode of ‘expeditious and flexible lawmaking approaches’52 which avoid the difficulties related with state consent.53 At the same time, the absence of this long-established source of authority for governmental action, in relation to IEMEIs, calls their legitimacy into question. State consent is to some extent present at different stages of IEMEIs. There may be situations where third countries have consented to an international agreement and the EU then unilaterally incorporates standards from such an agreement in its internal measures, sometimes in the interim, until such an agreement enters into force. Such an example is the Ship Recycling Regulation, which pre-empted the entry into force of the Hong Kong Convention on Ship Recycling. However, such consent is not a strong basis for IEMEIs when the EU extends its regulatory authority to third countries on its own terms, going beyond international standards and unilaterally enforcing any internationally agreed standards. The unilateral enforcement of international standards through trade-restrictive measures could have influenced third countries not to accept such international standards. Furthermore, any elements of state consent usually enter the picture at the stage of implementation of IEMEIs, while they are more limited at the initial stages of their adoption. State consent at the implementation stage is presented through different kinds of provisions for bilateral or multilateral cooperation in complying with EU standards. One such example is the conclusion of bilateral VPAs in relation to imports of timber. However, this element of state consent 49 Bodansky, ‘Legitimacy of International Governance’ (n 3 above). 50 ibid. See also S Bernstein, ‘The Elusive Basis of Legitimacy in Global Governance: Three Conceptions’ (2004) Institute for Globalization and the Human Condition Working Paper Series, University of Toronto. 51 Bodansky, ‘Legitimacy of International Governance’ (n 3 above). 52 ibid, 606. 53 Chapter 1, Section II.B.

Different Understandings of Legitimacy and IEMEIs  63 comes after the EU has unilaterally introduced a trade-restrictive m ­ easure – the Timber Regulation – which creates incentives for the conclusion of such agreements. Furthermore, the legitimacy of the VPA process is not solely based on state consent but rather involves participation of other relevant non-state ­stakeholders.54 In situations where state consent in the form of bilateral agreements is used as an alternative mode of compliance with EU standards,55 state consent is undermined as a legitimacy base given the intertwined trade and bargaining conditions attached to such cooperation. In such situations, third countries may have little choice but to negotiate with the EU in order to gain access to its market. Overall, state consent is inadequate to provide a complete basis for justification and control of IEMEIs due to political power relations in practice and the structure of IEMEIs which incorporate state consent only at the compliance stage. At the same time, it still provides a prevalent legitimacy basis in inter-state relations and thus the inclusion of cooperative elements in IEMEIs, even at the implementation stage, does influence the perception of their legitimacy by third countries. Lacking state consent, IEMEIs manifest unilateral exercise of regulatory power by a jurisdictional entity, which is required to act within the boundaries of its international competence. International law rules on jurisdiction are relevant for the legitimacy of IEMEIs, as they determine the regulatory rights of states56 and provide recognised jurisdictional bases for their adoption,57 thus enabling their creation. The EU’s action through IEMEIs would most likely be justified jurisdictionally under international law.58 Most IEMEIs could be justified under the territoriality principle, which is broadly construed59 and is increasingly used as a ‘sword to spread domestic law at the global level’,60 thus f­acilitating the global reach of EU law. IEMEIs would most likely fit within territorial ­jurisdiction61 premised on a territorial nexus between the activity regulated and the EU territory.62 Alternatively, IEMEIs could be justified on the basis that they

54 Morgera, ‘Ambition, Complexity and Legitimacy’ (n 9 above). 55 See Chapter 1, Section III.B.(ii). 56 V Stalker and C Lowe, ‘Jurisdiction’ in M Evans (ed), International Law (OUP, 2010) 309. 57 C Ryngaert, Jurisdiction in International Law, 2nd edn (OUP, 2015). 58 For an overview of the permissibility of IEMEIs as non-product-related process-based measures under international rules of jurisdiction, see Cooreman (n 13 above) ch 4. 59 L Ankersmit, J Lawrence and G Davies, ‘Diverging EU and WTO Perspectives on Extraterritorial Process Regulation’ (2012) 21 Minnesota Journal of International Law Online 14. However, it is not a Lotus approach, which would permit prescriptive extraterritorial jurisdiction as a ‘general matter’ unless expressly prohibited, SS Lotus (France v Turkey), PCIJ Reports, (1927) Series A, No 10; Ryngaert, Jurisdiction in International Law (n 57 above). 60 C Ryngaert, ‘Whither Territoriality? The European Union’s Use of Territoriality to Set Norms with Universal Effects’ in C Ryngaert, EJ Molenaar and S Nouwen (eds), What’s Wrong with ­International Law? (Brill, 2015). 61 Except for requirements on ship recycling facilities in third countries, which are based on ­flag-state jurisdiction in accordance with the nationality principle. 62 J Scott, ‘The Geographical Scope’ (n 22 above).

64  The Legitimacy of Global Regulatory Power – The Case of IEMEIs regulate processes that take place partly abroad, but which have effects within the EU. In some respects, this could provide a more useful basis on which to develop limits to the kinds of effects that are relevant.63 However, effects-based jurisdiction has not been fully developed and reconciled in international law in most regulatory areas64 and the EU seems to be avoiding explicit recognition and endorsement of this jurisdictional basis for IEMEIs.65 Furthermore, IEMEIs would probably not be justified on the basis of exercising universal jurisdiction in pursuing international legal values beyond EU borders. While this would be in line with legitimacy understandings of pursuing global common environmental problems, discussed below, such a broad approach has not been reflected in international law on jurisdiction.66 In any case, even if IEMEIs are formally lawful under international law, international rules on jurisdiction fail to provide effective constraints on the extension of EU regulatory power beyond EU borders. In this respect, legality is relevant, but it is not the ultimate norm for assessing the legitimacy of global regulatory power. The EU’s action through IEMEIs could be displacing that of third countries more closely connected to a particular problem, or delimiting the regulatory action they can subsequently undertake.67 International rules on jurisdiction are generally unable to deal with overlapping or conflicting claims of jurisdiction over processes that have territorial links with more than one ­jurisdiction,68 which in turn may threaten the coexistence between states.69 There is some support for a balancing test expressed through a ‘reasonableness rule’ based on international comity for situations of overlap. As formulated in the Restatement of the Law (Third) of the Foreign Relations Law of the United States, this reasonableness test requires relevant factors to be taken into account to determine whether exercise of jurisdiction is reasonable. Such factors include the link of the activity to the territory of the regulating state, the importance of the regulation internationally, the extent to which another state may have an interest in regulating the activity, and the likelihood of conflict with regulation by another state.70 However, it is unlikely that such a jurisdictional rule would effectively require states to objectively weigh third country

63 A Hertogen, ‘Letting Lotus Bloom’ (2015) 26 European Journal of International Law 901. 64 It has been more extensively developed in antitrust regulation: N Krisch, ‘The Decay of Consent: International Law in an Age of Global Public Goods’ (2014) 108 The American Journal of International Law 1. 65 Chapter 4, Section III.A. See also J Scott, ‘Extraterritoriality and Territorial Extension in EU Law’ (2014) 62 American Journal of Comparative Law 87. 66 Universality provides very limited space for the pursuance of internationally important values, Stalker and Lowe (n 56 above). 67 Ryngaert, Jurisdiction in International Law (n 57 above). 68 Principles such as non-intervention, proportionality, equity and abuse of rights could assist in such situations, ibid. 69 Hertogen, ‘Letting Lotus Bloom’ (n 63 above) 920. 70 Restatement of the Law (Third) of the Foreign Relations Law of the United States, para 403.

Different Understandings of Legitimacy and IEMEIs  65 r­ egulatory interests in their considerations.71 According to Scott, this reasonableness test is too broad and abstract, as it answers the question of whether it is reasonable for a state to act in regulating a specific matter ‘as opposed to the question of whether it is reasonable for a state to act in the manner it has, having regard to the design features of the measure at hand’.72 The design features of a ­measure can take into account third country interests in more practical and realistic terms,73 for example by incorporating flexibility clauses in the form of ‘contingency’, discussed in Chapter one, demonstrating deference to the interests of other states in regulating the same matter. This is not necessarily in response to the existence of a clear international rule on jurisdiction, but rather to a complex combination of legal norms and political considerations that­ influence the policy choices of a regulating jurisdiction. In light of the nature of international rules on jurisdiction, the unilateral exercise of power is not sufficiently controlled given that it has developed ‘­without supervisory guidance by an international court or regulator’.74 This is also obvious from the reluctance to uphold international jurisdictional rules within adjudicative systems, including in the EU75 and WTO legal systems.76 ­Moreover, when third countries disagree with a state’s exercise of jurisdiction, they cannot always effectively resist it, particularly if they are less p ­ owerful. In fact, there is no international law norm that requires states to defer to foreign governmental protest to jurisdiction. Rather, control of such exercise of ­jurisdiction stems solely from the ‘intricate workings of balance of power’,77 which may lead to a regulator ‘backing down’ from its unilateral action.78 The EU’s suspension of the aviation scheme that had included foreign airlines is a clear example of this. Indeed, the inclusion of aviation emissions in the EU ETS is the only IEMEI examined in this book largely affecting all countries, including powerful developed countries that were able to threaten the EU with retaliatory action. It is doubtful whether the EU would have backed out of a measure that mainly affected developing countries, which would not have been able to effectively resist the extension of EU regulatory power. As Young duly observes in the context of climate change, There is, therefore, a need for a framework that allows entities such as the EU to use their market power in an effort to induce other countries to mitigate climate change,

71 Ryngaert, Jurisdiction in International Law (n 57 above) ch 5. 72 J Scott, ‘The New EU “Extraterritoriality”’ (2014) 51 Common Market Law Review 1343, 1376. 73 Cooreman (n 13 above) 100. 74 Ryngaert Jurisdiction in International Law (n 57 above) ch 5. 75 See Chapter 4, Section III.E. 76 PC Mavroidis, ‘Reaching Out for Green Policies – National Environmental Policies in the WTO Legal Order’ in Axel Marx and others (eds), Global Governance Through Trade, EU Policies and Approaches (Edward Elgar, 2015). 77 Ryngaert, Jurisdiction in International Law (n 57 above) 42. 78 Ryngaert, ‘Whither Territoriality’ (n 60 above).

66  The Legitimacy of Global Regulatory Power – The Case of IEMEIs but also respects the fair and ethical apportionment of costs that the CBDR principle encapsulates. Such a framework is not currently contained in jurisdictional rules.79

In summary, the public international legal framework on jurisdiction is unlikely to adequately ensure the legitimacy of IEMEIs, as it is heavily weighted towards facilitating the adoption of IEMEIs without providing sufficient constraints on the exercise of jurisdiction beyond state borders. (b)  Substantive Understandings: IEMEIs Pursuing Common Concern Problems or Global Public Goods Beyond formal understandings of the rule of law, which largely relate to whether the EU has the power to act in public international law terms, more substantive understandings relating to the content and subject-matter of international law are also relevant for the legitimacy of IEMEIs. These understandings can inject substance into legality, as understood internationally, and provide the normative basis for IEMEIs. This can also affect the acceptance of regulatory authority by third countries. EU regulatory authority could stem from pursuing substantive values transnationally, particularly by addressing common concern problems or global public goods. In this way, the EU may be seen as extending the ­territorial scope of its measures in an effort to ‘prevent or remedy collective action failures that produce global public bads’, thus ‘legislating for humanity’.80 This could offer a moral justification for the EU to unilaterally pursue environmental ­protection goals, including climate change beyond its borders, in ways that correspond with some of the EU’s motivations in resorting to IEMEIs.81 However, while such understandings may provide justifications for adopting IEMEIs to pursue substantive values relating to environmental protection, they also demonstrate the challenges of controlling how IEMEIs are applied when they affect third countries with different substantive values. In this respect, normative justifications in terms of pursuing common concern problems or global public goods do not provide a comprehensive framework for evaluating the legitimacy of IEMEIs. This is particularly because such substantive legitimacy understandings do not provide clear direction on how lawfully to pursue global public goods unilaterally in ways that would take into account third country interests affected by unilateral action with extraterritorial impacts. The inadequacies and consequences of this understanding of legitimacy for IEMEIs become clear with a closer look at what the pursuance of common concern problems and global public goods would warrant. First, the EU could be seen as pursuing problems of common concern, which under ­international



79 Young

(n 19 above) 343. The Law of Global Governance (n 15 above) 75. 81 Chapter 1, Section II.B. 80 Benvenisti,

Different Understandings of Legitimacy and IEMEIs  67 law incorporates ‘commonality’ in the sense of serving the ‘greater interests of humanity as a whole’.82 In some cases, MEAs recognise specific problems – climate change83 and protection of biodiversity84 – as problems of common concern, the tackling of which benefits all states.85 However, the exact legal ramifications of such recognition are not clear. The concept of common concern does not extend the jurisdiction of states to regulate beyond their territory86 and collective responses to such problems are encouraged. Thus, addressing common concern problems is not usually disconnected from state consent and is closely linked to state sovereignty and territorial jurisdictional boundaries.87 This approach is also reflected in international jurisdictional rules, which do not provide an additional basis for pursuing international community interests beyond the territory of the regulating jurisdiction as examined above. Rather than providing jurisdictional basis, such concepts may provide normative justifications in a moral sense while being partly rooted in international legal instruments. Second, in a similar vein, the EU could be seen as seeking to promote global public goods that are normatively desired and can benefit the entire international community.88 In particular, the EU through IEMEIs strives to address ‘­aggregate-efforts global public goods’ through single-best efforts89 that are based on unilateral initiatives and which prompt bilateral, mini-lateral and potentially multilateral solutions that could lead to desired aggregate efforts.90 Irrespective of whether regulating jurisdictions may assume legal responsibilities on the basis of addressing problems of common concern or pursuing global public goods beyond their territory without consent, they could have moral responsibilities to act in regulating global environmental problems preventing a ‘tragedy of the commons’,91 which may lead to inaction towards the common interest.92 The EU could thus be seen as fulfilling such moral r­esponsibilities 82 Separate Opinion of Vice-President Weeramantry, Case concerning the Gabčikovo-Nagymaros Project, (Hungary/Slovakia) (1997) ICJ Reports 7. 83 UNFCCC (n 23 above) Recital 1. 84 Convention on Biological Diversity, 5 June 1992, 1760 UNTS 79 (CBD) Recital 3. 85 J Brunnée, ‘Common Areas, Common Heritage, and Common Concern’ in D Bodansky, J  ­Brunnée and E Hey (eds), The Oxford Handbook of International Environmental Law (OUP, 2007). 86 ibid. 87 E Hey, ‘Common Interests and the (Re)constitution of Public Space’ (2009) 39 Environmental Policy and Law 152. 88 D Bodansky, ‘What’s in a Concept? Global Public Goods, International Law, and Legitimacy’ (2012) 23 European Journal of International Law 651. 89 On different ways of producing global public goods see S Barrett, Why Cooperate?: The ­Incentive to Supply Global Public Goods (OUP, 2010). 90 E Morgera, ‘Bilateralism at the Service of Community Interests? Non-Judicial Enforcement of Global Public Goods in the Context of Global Environmental Law’ (2012) 23 European Journal of International Law 743. 91 G Hardin, ‘The Tragedy of the Commons’ (1968) 162 Science 1243. 92 T Cottier, ‘The Emerging Principle of Common Concern: A Brief Outline’ (2012) NCCR Trade Working Paper 20/2012. See also Cottier and Matteotti-Berkutova (n 14 above).

68  The Legitimacy of Global Regulatory Power – The Case of IEMEIs in the form of ‘second-order responsibilities’,93 by incentivising action by third countries through IEMEIs. While the concepts of common concern and global public goods could constitute justification for some EU action in pursuing substantive values, the question of how much and what kind of action remains a contentious issue.94 Fundamental questions thus remain about how global public goods are to be lawfully governed.95 Unilateral action that addresses such problems involves value ­judgements on how much of a specific global public good is to be produced, which may ignore the values and perspectives of other countries in relation to that public good.96 For example, despite universal agreement on the need to address climate change, there is still disagreement as to how much action is needed, at what pace reduction of greenhouse gas emissions should be achieved and who should bear the mitigation costs.97 In this respect, principles on the distribution of global responsibilities to address global environmental problems, such as the CBDR principle, could be of relevance, albeit without always providing precise guidance outside of specific treaty regimes.98 Unilateral pursuance of global public goods can create contradictions with the attainment of other global public goods, by creating new risks and harms.99 Pursuance of specific global public goods redirects efforts from the provision of other global public goods and therefore also involves distributive choices about who is to bear the related risks and costs.100 Such unilateral action could generate negative externalities for third countries, which depend on access to the EU market and which could have more limited capacities to comply with EU requirements, creating risks of ‘ecological imperialism’.101 These controversial remaining questions demonstrate how no overarching conceptual approach exists to regulating problems of common concern or global public goods efficiently. They also show how substantive understandings about the rule of law in pursuing substantive values fail to provide useful guidance about how legality can regulate the unilateral pursuance of such goals. Overall, the tackling of common concern problems or the production of global public goods by a single actor cannot, on its own, justify regulatory authority and induce acceptance of such authority by those affected. This is particularly

93 Second-order responsibilities are of moral nature and are different from the emerging concept of a ‘responsibility to protect’ regarding humanitarian intervention in relation to crimes like genocide, S Caney, ‘Two Kinds of Climate Justice: Avoiding Harm and Sharing Burdens’ (2014) 22 Journal of Political Philosophy 125; J Scott, ‘The Geographical Scope’ (n 22 above). 94 Bodansky, ‘Legitimacy of International Governance’ (n 3 above). 95 ibid. 96 Barrett (n 89 above). 97 Krisch (n 64 above). 98 Section III.C.(ii) below. 99 Barrett (n 89 above); Morgera, ‘Bilateralism’ (n 90 above). 100 G Shaffer, ‘International Law and Global Public Goods in a Legal Pluralist World’ (2012) 23 European Journal of International Law 669; Bodansky, ‘What’s in a Concept?’ (n 88 above). 101 Cottier and Matteotti-Berkutova (n 14 above).

Different Understandings of Legitimacy and IEMEIs  69 because such understandings of legitimising unilateral action are inadequate to control how protection of global public goods will be lawfully pursued by a single actor. In summary, this first model of legitimacy as legality and adherence to the rule of law provides useful insights about how normatively to understand the legal basis of the regulatory authority of the EU in acting through IEMEIs. At the same time, legality-based legitimacy conceptions fall short of providing a comprehensive framework for analysing and ensuring the legitimacy of IEMEIs. This inadequacy can be attributed to the failure of legality and rule of law requirements to control the exercise of transnational power that operates at the intersection of established legal regimes. The ways in which legality and adherence to the rule of law can contribute to legitimising IEMEIs can be further discerned when this understanding of legitimacy is supplemented and guided by other normative understandings of legitimacy relating to how regulatory power is exercised, how decisions are taken and how regulatory power is held to account and controlled. B.  Legitimacy as Good Governance and Accountability The second model of legitimacy considered in this section relates to how decision-making is carried out, combined with how regulatory power is held to account. This model of legitimacy builds on and substantiates some of the legitimacy ideas also recognised under rule of law versions of legitimacy that relate to accountability and good administration, and more extensively develops ways for controlling how regulatory power is exercised through processes of lawful administration. It covers principles of good regulation that include, but are not limited to, accountability and administering fair, open and accessible procedures.102 In assessing the legitimacy of decision-making processes, appropriate mechanisms of accountability, transparency, participation, deliberation and sometimes fairness can be pertinent.103 These can render decisions more legitimate from the perspective of those affected and could thus contribute to legitimising IEMEIs from the perspective of affected third country actors. Good governance and accountability are often assumed to be essential requirements for the legitimacy of both national state-centred104 and international governance systems.105 Understandings of legitimacy as good governance 102 R Baldwin, Rules and Government (Clarendon Press, 1995); R Baldwin, M Cave and M Lodge, Understanding Regulation: Theory, Strategy, and Practice (OUP, 2011) ch 3. 103 S Bernstein, ‘Legitimacy in Global Environmental Governance’ (2004) 1 Journal of International Law and International Relations 139. 104 Baldwin (n 102 above); B Morgan and K Yeung, An Introduction to Law and Regulation: Text and Materials (CUP, 2007) ch 5. 105 Bernstein (n 103 above); A Buchanan and RO Keohane, ‘The Legitimacy of Global Governance Institutions’ (2006) 20 Ethics and International Affairs 405; RW Grant and RO Keohane, ‘Accountability and Abuses of Power in World Politics’ (2005) 99 The American Political Science Review 29.

70  The Legitimacy of Global Regulatory Power – The Case of IEMEIs and accountability have also been more extensively adapted to transnational regulatory power exercised across and beyond territorial and legal borders. In this respect, this model of legitimacy comes closer to providing a workable framework for assessing the legitimacy of IEMEIs, particularly because it highlights the nature of the legitimacy gaps that relate to IEMEIs. At the same time, it provides for mechanisms that could contribute to legitimising transnational regulatory power, albeit without offering all the answers about how to operationalise good governance and accountability mechanisms at the intersection of overlapping legal regimes. (i)  Legitimising Functions of Good Governance and Accountability In this first section, the analysis draws out the legitimising functions of good governance and accountability so as to demonstrate the contribution of this model to the legitimacy of IEMEIs. In doing so, it also demonstrates how IEMEIs are problematic because they raise questions about how good governance and accountability can be operationalised outside the contours of nation-states in order to fulfil these legitimising functions in relation to transnational regulatory power. This model covers a breadth of approaches to legitimacy that are all relevant to the operation of the modern administrative state, which gives rise to different kinds of questions about legitimate governance and administration. The legitimising functions of good governance and accountability can take many forms that relate both to ‘input’ and ‘output’ legitimacy, which are often inter-linked. First, accountability is often recognised in its own right as a significant avenue for achieving legitimacy.106 Accountability is understood as ‘the duty to give account for one’s actions to some other people or body’.107 In a narrow sense, according to Bovens, accountability is a relationship between an actor and a forum, in which the actor has an obligation to explain and to justify his or her conduct, the forum can pose ­questions and pass judgement, and the actor may face consequences.108

Accountability mechanisms are crucial for the good governance of the administrative state,109 for actors like the EU, which increasingly engages in exercise of public authority through administrative structures,110 as well as for international institutions.111 Normatively, accountability plays a crucial role ‘as a

106 Morgan and Yeung (n 104 above). 107 C Scott, ‘Accountability in the Regulatory State’ (2000) 27(1) Journal of Law and Society 38. 108 M Bovens, ‘Analysing and Assessing Accountability: A Conceptual Framework’ (2007) 13 ­European Law Journal 447, 450. 109 C Scott, ‘Accountability’ (n 107 above). 110 E Fisher, ‘The European Union in the Age of Accountability’ (2004) 24(3) Oxford Journal of Legal Studies 495. 111 Bernstein (n 103 above).

Different Understandings of Legitimacy and IEMEIs  71 means … to ensure that legitimacy claims are met’,112 particularly as a ‘means by which challenge and debate can occur’113 and through which the exercise of public authority is controlled. There are different kinds of accountability that may coexist and may variably contribute to enhancing legitimacy. These include, among others, peer accountability, public reputational accountability, political accountability, social accountability and legal accountability.114 Accountability regimes are made functional through different mechanisms of good governance including transparency, participation, due process and openness.115 The precise ways in which accountability can ensure legitimacy are not clear, as accountability relationships are not straightforward. The questions of ‘who, to whom and for what’116 as well as ‘through what processes, by what standards and with what effect’117 accountability relationships are established, do not have fixed answers and there are different ways in which accountability relationships are built in different contexts.118 These questions become more complex outside institutionalised contexts and in relation to regulatory power exercised beyond jurisdictional boundaries. Given that IEMEIs have significant legal impacts beyond EU borders, established accountability relationships and mechanisms within the EU and within international fora may not be sufficient, as IEMEIs operate in the regulatory space at the intersection of such regimes that may be subject to a slippery or even non-existent accountability regime. Second, different kinds of good governance mechanisms can support other bases of legitimacy, such as expertise, which also forms part of good environmental governance and good regulation, and often affects the outcome of decisions.119 Even when environmental decisions are substantiated by expert knowledge, environmental regulatory measures involve value judgements about what should be done and the degree of protection to be pursued.120 Some control over and checks on the exercise of power on the basis of expertise are thus necessary at the stage of value judgements and on how expertise is relied upon. Such control may be provided through good governance mechanisms such as transparency, reason giving, due process, public participation and judicial  review.

112 J Black, ‘Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes’ (2008) 2 Regulation and Governance 137. 113 Fisher (n 110 above) 513. 114 Grant and Keohane (n 105 above); RB Stewart, ‘Remedying Disregard in Global Regulatory Governance: Accountability, Participation, and Responsiveness’ (2014) 108 American Journal of International Law 211. On how the different kinds of accountability operate in EU external relations see, M Cremona and P Leino, ‘Introduction: The New Frontiers of EU Administrative Law and the Scope of our Inquiry’ (2017) 2(2) European Papers 467, 480–82. 115 Baldwin (n 102 above). 116 C Scott, ‘Accountability’ (n 107 above). 117 JL Mashaw, ‘Structuring a “Dense Complexity”: Accountability and the Project of Administrative Law’ (2005) 5(1) Issues in Legal Scholarship 1. 118 C Scott, ‘Accountability’ (n 107 above). 119 Baldwin, Cave and Lodge (n 102 above) ch 3. 120 Bodansky, ‘Legitimacy of International Governance’ (n 3 above).

72  The Legitimacy of Global Regulatory Power – The Case of IEMEIs At the same time, it is particularly difficult to see how foreign actors may impose such checks on how expertise is relied upon within the EU legal and political machinery. Third, participation of the ‘governed’ in decision-making processes121 can signi­ficantly increase the input legitimacy of institutional decisions.122 Democratic decisions are founded on the acceptance of those governed by them123 and they are justified and accountable for them to such ‘governed’ constituencies.124 Furthermore, providing for and incorporating the input of affected stakeholders into decision-making and extending accountability to those affected creates a sense of ‘ownership’ of outcomes towards such stakeholders125 and improves the ‘participatory quality of decision-making’.126 Participation of affected interests is also important as it ensures provision of relevant information about the factual situation addressed by regulatory action and thus can increase the responsiveness of decisions.127 The participation model of accountability, however, becomes very complex at the global level.128 Fourth, creating a sense of ‘ownership’ of outcomes, as described above, can in turn enhance the effectiveness and implementation of decisions by increasing popular legitimacy through those involved in the decision-making process.129 As input and output legitimacy are often complementary concepts, ‘more participation and more deliberation by affected stakeholders will generate more effective collective problem-solving’.130 Participation of affected interests promotes effective implementation of measures, as those affected will generally be keener to comply with standards that they were involved in developing.131 In other words, the affected stakeholders who are not allowed to participate in decision-making processes are likely to consider the relevant regime as illegitimate, which can affect their willingness and readiness to implement it.132 Overall, good governance and accountability can contribute to the legitimisation of regulatory and governance systems in many ways. When identifying these ways, the inquiry into their legitimising functions in this section focuses

121 Scharpf (n 6 above). 122 K Bäckstrand, ‘Democratizing Global Environmental Governance? Stakeholder Democracy after the World Summit on Sustainable Development’ (2006) 12 European Journal of International Relations 467. 123 Baldwin (n 102 above). 124 Bernstein (n 103 above); D Held, ‘Democracy and Globalization’ (1991) 16 Alternatives: Global, Local, Political 201. 125 Bäckstrand (n 122 above). See also Bernstein (n 103 above). 126 Bäckstrand (n 122 above). 127 J Mendes, Participation in EU Rule-Making: A Rights-Based Approach (OUP, 2011). 128 Grant and Keohane (n 105 above). 129 Bodansky, ‘Legitimacy of International Governance’ (n 3 above). 130 Bäckstrand (n 122 above) 474. However, more participation and accountability could act to the detriment of effectiveness, Bernstein (n 103 above). 131 Mendes (n 127 above). Also see Krisch (n 64 above). 132 SS Raines, ‘Perceptions of Legitimacy and Efficacy in International Environmental Management Standards: The Impact of the Participation Gap’ (2003) 3 Global Environmental Politics 47.

Different Understandings of Legitimacy and IEMEIs  73 on the interests affected by the exercise of such power. As Stewart puts it, ‘the ultimate function of accountability mechanisms is to promote due regard by the accounter for the interests, concerns, and rights of the account holder.’133 In relation to IEMEIs, the interests affected include third country actors situated outside the EU, while it is not clear whether such third country actors are considered to be ‘account holders’ in relation to EU institutions as the accounters, thus raising challenging questions about how good governance and accountability can occur across territorial and legal borders. Under this general model of legitimacy, some theories have dealt more extensively with such challenges and adapted their thinking to legitimising transnational power exercised across legal borders. (ii)  Transnational Versions of Good Governance and Accountability In light of globalisation-induced interdependence, regulatory power is increasingly exercised beyond the familiar contours of state sovereignty and requires the expansion of conceptions of the regulatory space within which good governance is to take place. There is thus a need to move ‘beyond sovereignty’ in analysing law in a global era and conceiving legitimacy of regulatory action in a globalised world.134 In this respect, some legitimacy theories of good governance and accountability have started expanding such understandings to address transnational regulatory power. The theories discussed in this section demonstrate the complexities of IEMEIs as internal measures with extraterritorial reach while also providing normative understandings of how to start thinking of ways of addressing legitimacy concerns raised beyond established legal borders. These transnationalised versions of legitimacy as good governance and accountability provide a framework that is more closely suited to assessing IEMEIs, particularly in understanding some of the legitimacy gaps they create transnationally. The legitimacy theories discussed in this section demonstrate how territorial and state borders are not always appropriate for demarcating how good governance and accountability can legitimise regulatory action particularly by highlighting that the interests affected may be situated outside such borders. These transnational understandings of legitimacy capture and express significant aspects of the legitimacy concerns raised by IEMEIs as domestic measures developed and adopted within a regulating jurisdiction, but which affect the interests of third country actors. Because of a mismatch between sovereign authority and affected stakeholders,135 which are no longer confined within the 133 Stewart (n 114 above) 249. 134 J Delbruck, ‘Exercising Public Authority Beyond the State: Transnational Democracy and/ or Alternative Legitimation Strategies?’ (2003) 10 Indiana Journal of Global Legal Studies 29; PS  Berman, ‘From International Law to Law and Globalization’ (2005) 43 Columbia Journal of Transnational Law 485. 135 E Benvenisti, ‘Sovereigns as Trustees of Humanity: On the Accountability of States to Foreign Stakeholders’ (2013) 107 American Journal of International Law 295, 300.

74  The Legitimacy of Global Regulatory Power – The Case of IEMEIs sovereign state that exercises authority, there is a need to ‘rethink democratic legitimacy and accountability beyond the conceptual trap of the nation state’.136 Increasingly, those affected by decisions do not view them as legitimate.137 This dissatisfaction can be attributed to what Keohane identifies as an ‘accountability gap’, which is created because of a gap between jurisdiction and impact and because, conventionally, national authorities would not be accountable to foreign affected actors.138 This discrepancy between authority and affected actors is accentuated by a ‘participation and representation gap’ when participation is determined on a territorial basis while ‘the outcomes of these decisions often transcend national frontiers’.139 When the relevant community is determined territorially and therefore only the consent of people within such community is pertinent, foreign affected stakeholders are precluded from participating in decision-making. In particular, if the legitimacy of national laws in democratic states rests on the understanding that citizens are the ‘authors’ of the law, then we face a lack of democratic legitimation in situations where national laws affect subjects and interests across state borders that have not been represented.140

In turn, this may create a ‘justice gap’, as explained below in Section III.C. The need to expand good governance and accountability transnationally to address these legitimacy gaps is recognised from different perspectives; in theories focusing on legitimacy at different levels of governance, ranging from state, to global, to cosmopolitan conceptions. First, from a state perspective, Eckersley’s green state is conceived as an ‘ecological steward and facilitator of transboundary democracy’ which as a legitimate transnational state meets the demands and builds on the confidence of both its own citizens but also those of other relevant communities affected by its decisions.141 This approach builds on Habermas’ ideal communicative action, according to which valid norms are only those that meet with the approval of those affected in so far as they participate in rational discourse.142 In a different way, Benvenisti conceives of states as ‘trustees of humanity’, legitimately acting for the benefit of the international community through unilateral action, provided that they pay due regard to the interests and concerns of third country stakeholders.143 Second, within global 136 Bäckstrand (n 122 above) 473. 137 Keohane (n 29 above). 138 ibid. See also S Battini, ‘Globalisation and Extraterritorial Regulation: An Unexceptional Exception’ in G Anthony and others (eds), Values in Global Administrative Law (Hart, 2011). 139 Held, ‘Democracy and Globalization’ (n 124 above) 204. 140 J Ebbesson, ‘Piercing the State Veil in the Pursuit of Environmental Justice’ in J Ebbesson and PN Okowa (eds), Environmental Law and Justice in Context (CUP, 2009) 276. 141 R Eckersley, The Green State: Rethinking Democracy and Sovereignty (MIT Press, 2004). 142 J Habermas, Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy (Polity Press, 1996). 143 Benvenisti (n 135 above).

Different Understandings of Legitimacy and IEMEIs  75 governance, Keohane’s vision of accountability stresses how resistance to external accountability claims, shielded by state sovereignty, can no longer stand in the way of enhancing the legitimacy of global forms of governance.144 He thus argues for external accountability to ‘people outside the acting entity, whose lives are affected by it’.145 Finally, Held’s cosmopolitan version of sovereignty and democracy requires the ‘relevant democratic constituency to be expanded’ beyond territorial boundaries146 in order to ensure that those who are ‘choice determining’ for some people, even when situated beyond national borders, are fully accountable for their actions.147 While these theories were not developed with IEMEIs in mind, but more generally in response to the evolution of regulatory problems and regulatory governance in an increasingly inter-connected, globalised world, they offer significant contributions on how to assess the legitimacy of IEMEIs, which are legally designed to ‘regulate’ and affect actors beyond the borders of the regulating jurisdiction. At the same time, however, they do not offer all the answers about how to operationalise good governance and accountability in the exercise of transnational regulatory power within overlapping legal regimes. A common thread of controversy within these transnationalised legitimacy understandings that makes their application to IEMEIs difficult, is the notion of ‘affectedness’. These understandings stipulate that those significantly affected by decisions taken elsewhere have a right of consultation and the regulating entity has a duty of accountability towards them. This builds on principles of inclusiveness that provide that ‘all those affected’ by a norm or a risk should have a say in the decision-making process.148 The main challenge with such an idea of extending accountability and participation mechanisms to all those affected by decisions, is the determination of who is significantly affected. This relates to questions of moral standing, justice claims, participatory opportunities and rights, as well as legal standing in bringing legal actions before the courts.149 Who has a right to an accountability claim is also critical because more participation and accountability could instead have a de-legitimising effect by giving too much voice to industry stakeholders in formulating decisions.150 While the specifics of who is affected are determined on a case-by-case basis, some ­expansion of inclusiveness is necessary to capture the different ways in which third country interests can be affected by IEMEIs. At the same time, it is impossible for everyone to be considered as affected,151 in the sense of having a right to participate in decision-making, as this would 144 Keohane (n 29 above). 145 ibid. 146 Held, ‘Democracy and Globalization’ (n 124 above) 205. 147 D Held, ‘Law of States, Law of Peoples’ (2002) 8 Legal Theory 1. 148 Eckersley (n 141 above); M Saward, ‘A Critique of Held’ in B Holden (ed), Global Democracy: Key Debates (Routledge, 2000). 149 On standing of third country actors in the EU legal order, see Chapter 4, Section II.A. 150 Bernstein (n 103 above). 151 N Fraser, ‘Reframing Justice in a Globalizing World’ (2005) 36 New Left Review 69.

76  The Legitimacy of Global Regulatory Power – The Case of IEMEIs make regulatory processes stagnant and practically unworkable.152 In this respect, law and its interpretation by judicial bodies plays a crucial role in delimiting the appropriate boundaries of who is affected so as to claim legal rights and when disregard of those affected can be justified.153 The difficulties of determining who may be involved in and affected by exercises of transnational power demonstrate the inadequacies of this understanding of legitimacy to provide a comprehensive model for IEMEIs. These understandings could be supplemented by normative theories of justice, considered below in Section III.C, as well as understandings of legitimacy as legality considered in Section III.A. These can provide guidance for determining the interests affected in specific situations, demonstrating how a single vision of legitimacy, even on the basis of theories adapted to transnational power, is inadequate for evaluating IEMEIs. This links to another controversial issue in determining the degree of affectedness that would determine the validity of external accountability claims: the kinds of effects that are relevant. While Eckersley focuses on ecological risks and on an ecological nexus between the decision and those affected,154 relevant impacts and effects could also be of economic, social or developmental nature. The impact of internal measures with extraterritorial impacts extends to delimiting the choices and autonomy of foreign stakeholders in terms of how they can act and what kinds of policy they could deploy to regulate similar issues.155 ­Notably, IEMEIs may affect different kinds of third country interests. These include individual interests, sectoral interests, or government interests, and their implications may extend beyond economic interests, affecting individuals’ ­livelihoods and influencing social conditions, human health and development needs. The validity of external accountability claims would thus have to be determined on the basis of different kinds of effects that IEMEIs may have outside EU borders. Moreover, the problems addressed by IEMEIs are not necessarily viewed as environmental issues by third countries, given the ‘diverse interests and ideological outlooks of states’.156 Thus a problem like climate change could be primarily a development or equity issue rather than an environmental issue for some third countries, especially developing countries.157 For example, seal hunting is not viewed as a problem of animal welfare by indigenous communities, but rather as an issue of traditional custom and of economic subsistence. Therefore, any attempt to frame and regulate such problems in specific ways by the EU involves important choices as to the responsibilities and burdens imposed on third ­country actors.158 This leads to the last version of legitimacy examined in 152 Grant and Keohane (n 105 above). 153 On the meaning of unjustified disregard see Stewart (n 114 above). 154 Eckersley (n 141 above). 155 Keohane (n 29 above). 156 D Bodansky, ‘Climate Change, Transnational Legal Order or Disorder?’ in TC Halliday and GC Shaffer (eds), Transnational Legal Orders (CUP, 2015) 304. 157 ibid. 158 On the importance of regulatory framing within the EU legal order, see Chapter 3, Section IV.

Different Understandings of Legitimacy and IEMEIs  77 this section, which concerns legitimacy as justice. Legitimacy as justice includes both procedural fairness, which is also linked to good governance principles of due process, and distributive justice, which is particularly pertinent for IEMEIs that may give rise to unjust distributive implications. C.  Legitimacy as Justice The final model of legitimacy considered in this section comprises theoretical concepts of legitimacy relating to justice. Although Sections III.A and III.B show that a governance regime can be legitimate without meeting the demands of justice, justice considerations can be critical in legitimising IEMEIs from the perspective of third countries, and especially developing countries, in terms of the acceptance of externally imposed regulation. Recalling the reasons why IEMEIs are controversial, as examined in Section II, understandings of legitimacy as justice become pertinent for assessing the fairness of EU action in extending EU environmental standards abroad without input or participation from affected third country actors. Procedural justice theories provide for safeguards in decision-making processes, ensuring due process, democratic accountability and protection of individual rights in the implementation of IEMEIs, while substantive justice theories provide normative understandings that could inform the legal design and application of IEMEIs to third countries. This model is thus relevant for the legitimacy of IEMEIs in terms of how EU regulatory power is exercised as well as relating to the content of the legal measures that constitute IEMEIs. (i)  Procedural Justice and Fairness There are multiple dimensions of justice relevant to environmental law, including procedural, distributive and corrective justice.159 The analysis starts from the more formal understanding of justice, relating to procedural justice, which also connects to aspects of the previous model of legitimacy as good governance relating to due process. Procedural fairness requires that ‘those affected by decisions are allowed to participate in the formulation of those decisions’.160 In ­particular, procedures that derive from ‘due process and institutions that provide equal opportunities for participation’161 can significantly contribute to the legitimacy and fairness of a regime.162 Procedural fairness is thus enhanced through equal treatment of participants in decision-making 159 J Ebbesson, ‘Introduction: Dimensions of Justice in Environmental Law’ in J Ebbesson and PN Okowa (eds), Environmental Law and Justice in Context (CUP, 2009). 160 PG Harris, ‘The European Union and Environmental Change: Sharing the Burdens of Global Warming’ (2005) 17 Colorado Journal of International Environmental Law and Policy 309. 161 Ebbesson, ‘Introduction’ (n 159 above). 162 Fraser (n 151 above).

78  The Legitimacy of Global Regulatory Power – The Case of IEMEIs processes, opportunities for stakeholders to be heard,163 and transparency of procedures.164 The importance of participation by those concerned is explicitly recognised at the international level.165 Also, procedural justice elements have been recognised and elaborated in terms of access to information, public participation in decision-making and access to justice in relation to environmental matters.166 Procedural fairness thus touches upon different kinds of procedural rights and provides different ways in which to control how regulatory power is exercised. The focus on such procedural opportunities and rights enhances democratic legitimacy as it allows for contribution by those regulated, to the decisionmaking process. Additionally, fair procedures that include the elements identified above are more likely to lead to fair decisions167 that permit all relevant social actors to participate as peers.168 Procedural justice is thus essential to achieving distributive justice, which is explored below.169 Furthermore, procedural justice is pertinent in influencing third country perceptions of legitimacy of EU action, particularly by developing countries, which in turn plays a role in the effective implementation of policies that address global environmental concerns, as third country actors are more willing to comply with policies they consider ­legitimate.170 While procedural justice safeguards could in principle enhance the legitimacy of IEMEIs, in practice it is challenging to meet procedural justice claims for those affected by regulatory action, who are situated outside the legal order within which decision-making occurs and may not enjoy procedural rights. The justice gap thereby created relates to the appropriate framing of justice – the ‘who’ of justice – which is increasingly being questioned.171 In light of increased globalisation and interconnectedness of decisions and impact, the Westphalian structure of states does not necessarily ensure the correct framing of justice, but instead excludes ‘transnational democratic decisionmaking on issues of justice’.172 State borders should not matter as much in determining the procedural opportunities of those affected to participate and influence ­ decision-making processes.173 Similarly to transnational versions of ­accountability, some  ­procedural justice theories support the proposition

163 Raines (n 132 above). 164 Buchanan and Keohane (n 105 above). 165 Rio Declaration (n 24 above) Principle 10. 166 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, 25 June 1998, 2161 UNTS 337 (Aarhus Convention). 167 Raines (n 132 above). 168 Fraser (n 151 above). 169 Ebbesson, ‘Introduction’ (n 159 above); Benvenisti, The Law of Global Governance (n 15 above) 22. 170 Raines (n 132 above). 171 Fraser (n 151 above). 172 ibid. 173 Ebbesson, ‘Piercing the State Veil’ (n 140 above).

Different Understandings of Legitimacy and IEMEIs  79 that the relevant community should not necessarily be depicted by territorial borders, but rather by a focus on whose interests are affected by decisions.174 Although procedural understandings of justice have something to offer to the legitimacy of IEMEIs, they are nonetheless not a perfect fit for IEMEIs by themselves. This is because procedural justice, particularly as applied transnationally, is not spelled out in clear terms or put into practice through transparent procedures that will guarantee such justice claims beyond territorial borders. Determining who has a claim to justice and the mechanisms by which such a claim is to be met therefore requires further thought and conceptualisation. Thus, accountability mechanisms developed within the legitimacy model of good administration and governance considered above may provide a good source of procedures and mechanisms through which justice claims can be operationalised. Additionally, more substantive understandings of justice in terms of fair distribution may help to determine who is affected by IEMEIs and thus who may have a valid claim to procedural justice and accountability. This further demonstrates the need for a combination of legitimacy models and legal regimes in assessing and enhancing the legitimacy of global regulatory power as ­exercised through IEMEIs. (ii)  Substantive Justice Substantive justice theories are also relevant for IEMEIs as they indicate normative benchmarks against which the fairness, and thus the legitimacy, of EU action can be assessed. In light of how IEMEIs often impose significant economic burdens on third countries and individual actors within third countries, they may raise concerns as to the distribution of burdens for addressing environmental externalities. Distributive justice considerations are particularly relevant in relation to the criticisms of the EU for outsourcing environmental responsibilities and sometimes imposing onerous obligations on developing countries. How the EU addresses legitimacy and equity concerns towards developing countries, which are often targeted by IEMEIs, can particularly affect its external credibility. Distributive justice may inform other understandings of justice and also supplement other understandings of legitimacy and the justifications of authority that they support. (a)  Ecological Justice Before exploring distributive justice in the conventional sense more closely, a brief consideration of two different understandings of substantive justice follows. These understandings consist of justice towards the non-human environment, and inter-generational equity, both of which constitute important aspects of



174 Fraser

(n 151 above).

80  The Legitimacy of Global Regulatory Power – The Case of IEMEIs ‘ecological justice’.175 These two understandings of justice could provide moral justifications for authority that support the extension of EU e­nvironmental legislation abroad.176 Ecological approaches to justice towards the environment provide for obligations to protect the environment irrespective of transboundary harm and require consideration of non-human species protection.177 Such an understanding of justice could potentially reinforce the EU’s claim to authority to regulate environmentally degrading processes beyond its territory in an effort to fulfil such obligations. Additionally, inter-generational justice, which is an important aspect of sustainable development, requires consideration and respect of the needs of future generations.178 This understanding of justice is not limited by territorial contours, but rather requires action both within and beyond the state.179 From an inter-generational justice point of view, IEMEIs could be seen as affecting and fulfilling duties towards future generations both within and outside EU borders, especially in light of insufficient international action on global problems like climate change. However, it is not straightforward whether such an approach would address concerns that ‘sustainable development simply means to sustain the Western way of life at the expense of the poor and of future generations’.180 Furthermore, neither of these understandings of justice provides guidance as to how such justice is to be ensured, especially in light of the need to balance economic, social and environmental interests among different countries in the formulation of environmental laws.181 Thus, even if pursuance of justice in these respects could normatively justify IEMEIs, the way in which balancing of competing interests is undertaken unilaterally by the EU involves choices as to the distribution of burdens and benefits that cannot be simply assumed to be just and equitable for affected third countries, thus failing to provide ways of controlling the exercise of global regulatory power. (b)  Distributive Justice In exploring distributive justice in relation to IEMEIs, their distinct legal nature situated in-between public international law and internal EU law indicates that 175 K Bosselmann, ‘Ecological Justice and Law’ in B Richardson and S Wood (eds), Environmental Law and Sustainabilty (Hart, 2006). 176 Similarly to substantive grounds for action considered in Section III.A.(ii). 177 A Nollkaemper, ‘Sovereignty and Environmental Justice in International Law’ in J Ebbesson and PN Okowa (eds), Environmental Law and Justice in Context (CUP, 2009); Eckersley (n 141 above). 178 United Nations Commission on Environment and Development, Our Common Future (OUP, 1987); EB Weiss, ‘Agora: What Obligation Does Our Generation Owe to the Next? An Approach to Global Environmental Responsibility, Our Rights and Obligations to Future Generations for the Environment’ (1990) 84 American Journal of International Law 198. 179 Nollkaemper (n 177 above). 180 Bosselmann (n 175 above) 153. 181 Nollkaemper (n 177 above).

Different Understandings of Legitimacy and IEMEIs  81 distributive justice conceptions developed both at international level as well as within the nation-state may be relevant. Distributive justice theories within the nation-state have been advanced in different ways, with the seminal work still being Rawls’ A Theory of Justice.182 The main principles of Rawlsian justice include equality of opportunities, equal distribution of wealth and income as well as the ‘difference’ principle, which stipulates that financial inequalities should only occur to the advantage of those who are least well off in society.183 For the purposes of the current discussion, the focus on such theories is on how they may fit within global governance structures, regarding relations among states or between one jurisdictional order and subjects of another and thus be relevant for transnational exercise of power in a just way.184 This is because any distributive choices that IEMEIs incorporate, through trade-restrictive obligations, affect the burdens and responsibilities imposed on other states or nationals of other states. The main question is thus whether principles of distributive justice, as developed in relation to the nation-state, can be applied at the global level. According to Rawls, these principles cannot be applied internationally, among different states.185 Even though he recognises a duty to assist societies facing unfavourable conditions to achieve protection of human rights and basic needs, the ‘difference’ principle does not have ‘an international parallel’.186 This is mainly due to the impossibility of agreement on the meaning of international justice among different societies.187 Nevertheless, more modern theorists have adapted understandings and principles of distributive justice beyond municipal state structures, including cosmopolitan conceptions of justice.188 The applicability of distributive justice principles internationally is defended among other things, on the basis of emerging shared expectations of justice at the international level.189 Diversity of views on justice among different states and legal cultures does not necessarily preclude principles of distributive justice from being applied. In any case, diversity often exists within national societies where distributive justice principles have been developed.190 How distributive justice principles are translated at the international and transnational level, however, is not straightforward.

182 J Rawls, A Theory of Justice (Clarendon Press, 1972); J Rawls, A Theory of Justice, 2nd edn (OUP, 1999). 183 ibid; J Rawls, Justice as Fairness: A Restatement (Harvard University Press, 2001). 184 On the application Rawlsian principles beyond the state see Suttle (n 13 above). 185 J Rawls, The Law of People (Harvard Unversity Press, 1999). 186 CR Beitz, ‘International Liberalism and Distributive Justice: A Survey of Recent Thought’ (1999) 51 World Politics 269, 276. 187 ibid. 188 Ebbesson, ‘Piercing the State Veil’ (n 140 above). 189 J Brunée, ‘Climate Change, Global Environmental Justice and International Environmental Law’ in J Ebbesson and PN Okowa (eds), Environmental Law and Justice in Context (CUP, 2009). 190 ibid.

82  The Legitimacy of Global Regulatory Power – The Case of IEMEIs Distributive justice at the international level is about the ‘global distribution of environmental burdens and benefits’191 and is expressed in relation to the distribution among states, particularly through the principle of CBDR, which is further discussed below. Additionally, distributive justice considerations are expressed through the principle of intra-generational equity, which also forms part of the principle of sustainable development,192 and which requires burdens to be shared ‘equitably between the communities that constitute the present generations’.193 An international conception of justice is particularly important not only in terms of equity, but also in improving implementation of multilateral regimes by urging more countries to participate in MEAs.194 In a similar vein, it could contribute to the effective implementation of IEMEIs, which often depends on effective cooperation with third countries. Some sort of consensus has been emerging internationally regarding the content and requirements of international distributive justice among different states. In this regard, Biermann asserts three particular principles of justice: that more capable states have to accept more duties; that more capable states are to assist others; and that there should be equal participation and transparency of participation.195 Notably, these principles are considered relevant for the regulation of common concern problems that may require restriction of state sovereignty.196 Distributive justice considerations influence the distribution of burdens and benefits of environmental protection action across states. This could translate to obligations on Western states not to outsource their responsibilities by exporting hazardous waste to developing countries.197 However, distributive justice does not translate into obligations for developing countries to protect the environment within their own states themselves at all.198 IEMEIs in this respect could be seen as a desirable source of obligations on such countries. At the same time, IEMEIs should not restructure the distribution of burdens in ways that entirely ignore distributive justice requirements. In exploring how distributive justice becomes relevant for the legitimacy of IEMEIs, the principle of CBDR and its incorporation in distinct legal regimes is particularly salient. As a principle that embodies international

191 S Caney, ‘Cosmopolitan Justice, Responsibility, and Global Climate Change’ (2005) 18 Leiden Journal of International Law 747. 192 P Sands, Principles of International Environmental Law, 2nd edn (CUP, 2003). 193 V Lowe, ‘Sustainable Development and Unsustainable Arguments’ in A Boyle and D Freestone (eds), International Law and Sustainable Development: Past Achievements and Future Challenges (OUP, 1999). 194 D Shelton, ‘Describing the Elephant: International Justice and Environmental Law’ in J ­Ebbesson and PN Okowa (eds), Environmental Law and Justice in Context (CUP, 2009). 195 F Biermann, ‘Justice in the Greenhouse. Perspectives from International Law.’ in FL Toth (ed), Fair Weather? Equity Concerns in Climate Change (Earthscan, 2009). 196 ibid. 197 Nollkaemper (n 177 above). 198 ibid.

Different Understandings of Legitimacy and IEMEIs  83 justice ­considerations within a legal norm, it provides a basis for distributive and potentially corrective justice.199 Its relevance is particularly recognised in relation to the international climate change regime.200 It can also be relevant outside the climate change regime by virtue of its incorporation in the Rio ­Declaration.201 Even though the CBDR principle is not recognised as a global principle of justice,202 it embodies intra-generational equity considerations in ways that can be instrumental for distributive justice. Irrespective of its exact legal status, the CBDR principle ‘has altered the discourse by changing the nature of what are considered to be valid arguments’.203 It has thus provided developing countries with a ground for challenging the positions agreed within international treaty regimes and for requiring that their perspectives are taken into account. Although international distributive justice theories are usually associated with international institutions and the international community, international distributive justice can be relevant for domestic environmental regimes that are applied to developing countries without their consent. Especially when exercising transnational power, ‘we need guidance in making a range of choices whose outcomes bear on the well-being of individuals located in societies other than our own.’204 Such guidance in making distributive choices within IEMEIs can be provided through the principle of CBDR. As Scott emphasises, if the EU  endorses CBDR, it will be in a better position to convince third country actors that its action is appropriate, especially when it deviates from internationally agreed approaches.205 Indeed CBDR has been recognised as an important ‘benchmark to assess the legitimacy of EU external environmental action’ and the acceptance of its action by third countries.206 The uncertain content and normative value of the CBDR principle may limit its potential as a comprehensive legitimating factor for IEMEIs. Although there is agreement as to the basic parameters of what this principle requires,207 there is still uncertainty as to the intensity and extent of obligations it requires.208 The first component of the principle is the differentiation of obligations between

199 Shelton (n 194 above). 200 UNFCCC (n 23 above) Art 3(1). See also Paris Agreement adopted under the UNFCCC, 12 December 2015, FCCC/CP/2015/L.9, Art 2(2). 201 Rio Declaration (n 24 above) Principles 6 and 7. 202 At the very least it is considered a soft law principle affecting international environmental law: Brunée, ‘Climate Change’ (n 189 above); E Hey, ‘Common But Differentiated Responsibilities’ in R Wulfrum (ed), Max Planck encyclopedia of Public International Law (OUP, 2010). In contrast, see CD Stone, ‘Common but Differentiated Responsibilities in International Law’ (2004) American Journal of International Law 276. 203 Hey, ‘Common But Differentiated Responsibilities’ (n 202 above). 204 Beitz (n 186 above) 270. 205 Scott, ‘The Geographical Scope’ (n 22 above). 206 Morgera, ‘Ambition, Complexity and Legitimacy’ (n 9 above). 207 Brunée, ‘Climate Change’ (n 189 above). 208 Scott, ‘The Geographical Scope’ (n 22 above).

84  The Legitimacy of Global Regulatory Power – The Case of IEMEIs developed and developing countries.209 However, it is unclear what kinds of ­obligations developing countries should have, if any, although this has gradually changed, as evidenced from the move to a more holistic approach to climate change mitigation obligations in the Paris Agreement. The second element recognised, at least within the climate change regime, is that CBDR requires developed countries to ‘take the lead’ in combatting climate change.210 This is a particularly relevant consideration, both in justifying IEMEIs, but also in demonstrating the need for due consideration of third country affected ­interests. The EU’s unilateral activity can be justified on the basis of ‘taking the lead’ by ‘pioneering environmental legislation with extraterritorial i­mplications.’211 When the EU, however, departs from the distribution of responsibilities agreed at the international level, as the EU did through the imposition of equal obligations on developing countries in the Aviation Directive,212 it may exercise jurisdiction that should have been exercised by another state, or impose burdensome ­obligations on developing countries that ignore their special needs and capacities. On this basis, the EU’s approach should accommodate CBDR considerations that are not confined to ‘taking the lead’. Beyond these the two principles, further elements are less clear and more contested. In particular, it is not clear how compelling the obligations that commit developed countries to transfers of technology and financial aid are,213 although more extensive provisions have been included in the Paris­ Agreement.214 Additionally, despite some indications that the effective implementation of obligations of developing countries is dependent on such assistance being transferred from developed countries,215 the intensity and significance of this dependence is not clear.216 Even less clear is the content of the CBDR ­principle beyond the climate change regime that makes explicit references to CBDR elements. A further uncertainty as to the scope of CBDR and its relevance for IEMEIs relates to whether it applies only to relations between states and the fact that it may not necessarily be relevant when regulatory action affects

209 Hey, ‘Common but Differentiated Responsibilities’ (n 202 above). 210 UNFCCC (n 23 above) Art 3(1); Paris Agreement (n 200 above) Art 4(4). 211 Morgera, ‘Ambition, Complexity and Legitimacy’ (n 9 above) 200. 212 The EU departed from the international understanding of regulating climate change in a territorially constrained manner on the basis of a production-based approach, by embodying a consumption-based approach to regulating aviation emissions embodied in products or services in the EU: J Scott, ‘The Geographical Scope’ (n 22 above). See also Scott and Rajamani (n 21 above). 213 UNFCCC (n 23 above) Art 4(5); CBD (n 84 above) Arts 16 and 20(2); E Hey, ‘Global Environmental Law and Global Institutions: A System Lacking “Good Process”’ in R Pierik and W Werner (eds), Cosmopolitanism in Context: Perspectives From International Law and Political Theory (CUP, 2010). 214 Paris Agreement (n 200) Arts 9, 10, 11. 215 UNFCCC (n 23 above) Art 4(7); CBD (n 84 above) Art 20(4). See also Paris Agreement (n 200 above) Art 4(5). 216 Bodansky, ‘Climate Change’ (n 156 above) 291. However, the Paris Agreement provides for more specific obligations in the provision of financial assistance and requires developed parties to biennially report on these, Paris Agreement (n 200 above) Arts 9, 13.

Different Understandings of Legitimacy and IEMEIs  85 individual interests.217 Arguably CBDR considerations are not confined to state relations but rather also extend to how unilateral state action affects individual actors from developing countries, particularly in relation to industries that have close links with the state, and vulnerable communities from developing ­countries.218 Nonetheless, the uncertain content and reach of CBDR should not undermine its relevance for IEMEI legitimacy. The incorporation of CBDR elements in the formulation of IEMEIs that extend EU regulatory authority to processes in developing countries can substantially enhance EU decision-making procedures by accommodating developing country concerns. CBDR can thus become relevant not only in international regimes but also in relation to unilateral regimes that are indirectly imposed on developing countries, particularly ­unilateral climate change measures.219 The incorporation of CBDR within IEMEIs, however, is complicated by the fact that, differently from the principle of CBDR, which is usually developed within international fora, IEMEIs are formulated within the EU legal order, which may insufficiently consider the effects of IEMEIs on developing countries, thus giving rise to a distributive justice gap. Thus any incorporation of CBDR issues is largely determined unilaterally by the EU,220 which may favour a ‘weak’ interpretation as to differentiation of obligations or even exclude its applicability altogether, especially towards private actors.221 Furthermore, if the EU were to more actively address the needs and concerns of developing countries unilaterally, this could give rise to incompatibility with non-discrimination under WTO law,222 demonstrating how overlapping legal regimes applicable to IEMEIs need to work in combination in legitimising IEMEIs. It also shows that the effects of international norms relevant to IEMEIs will often be determined within EU or WTO law as the key legal sites that determine the legal functioning of IEMEIs. It should be noted that CBDR considerations can influence EU ­decision-making processes not only as an international principle, but also as values and commitments internal to the EU, that require consideration of the impacts of EU policies on developing countries and invoke obligations to provide assistance to developing countries.223 In general, even though theories of distributive justice may have something to offer in ensuring fairness of IEMEIs, such understandings do not ­necessarily

217 This was one of the justifications put forward by the Commission for not incorporating CBDR in the design of the Aviation Directive, as the obligations were imposed on individual airlines and not on the third countries: Scott and Rajamani (n 21 above). 218 ibid. 219 ibid. 220 J Scott, ‘The Geographical Scope’ (n 22 above). 221 Scott and Rajamani (n 21 above). 222 J Scott, ‘Geographical Scope’ (n 22 above). See Chapter 5, Section II.B.(iv). 223 See in particular Treaty on the European Union, Art 21; Treaty on the Functioning of the ­European Union, Arts 208–214.

86  The Legitimacy of Global Regulatory Power – The Case of IEMEIs provide a perfect fit for the legitimacy of IEMEIs. This is because, while they would involve international distributive justice considerations, they would have to be applied unilaterally within a domestic legal order. At the same time, distributive justice theories, at least as developed within the nation-state, may detract from IEMEI legitimacy, as aiming for fair distribution within the EU legal order may not necessarily lead to fair distribution among different countries. Instead, ensuring that the poor within the EU are not worse off may mean that the EU outsources some of its responsibilities to even poorer parts of the world. Fairness of distribution internationally is subjective and can be easily clouded by each state’s individual interests. Nonetheless, distributive justice considerations can indicate normative benchmarks for constraining the extension of EU regulatory power through IEMEIs in ways that do not wholly ignore how its domestic policies and preferences affect actors in developing countries. To conclude, the inquiry into a range of legitimacy understandings demonstrates how legitimacy is a multi-faceted concept that requires exploring and taking accounting of a range of normative ideals depending on one’s chosen normative perspective. The legitimacy models examined in this section have shown how the legitimacy of IEMEIs can be problematic from different normative points of view. IEMEI legitimacy, broadly concerned, is thus multi-faceted. It relates to the way in which IEMEIs are created, to how regulatory power is exercised within and beyond the EU as the regulating jurisdiction, to how affected interests are taken into account, and to the content of law through which EU regulatory power is exercised. These different normative understandings demonstrate that a single model of legitimacy does not comprehensively capture the range of legitimacy concerns raised by IEMEIs, but they also indicate different ways for enhancing their legitimacy. The following section explores how legitimacy concepts stemming from all three models could provide different kinds of legitimacy norms and mechanisms to fill the legitimacy gaps related to IEMEIs, identified in Section II and further illustrated in Section III, particularly by providing due consideration of third country affected interests. In doing so, it focuses on how these norms and mechanisms can be operationalised through the legal systems of EU and WTO law working in combination to enhance the legitimacy of IEMEIs. IV.  FILLING THE LEGITIMACY GAPS: REFRAMING LEGITIMACY MODELS FOR IEMEIs

While Section III outlined different legitimacy models and their relevance and inadequacies for evaluating IEMEIs, this section seeks to investigate more closely the ways in which particular elements of these models, combined and re-framed, could legitimise IEMEIs. This section builds on the analysis of the legitimacy models explored in Section III and discerns their core common elements, with a view to coming up with a ‘web’ of legitimising norms and mechanisms that

Filling the Legitimacy Gaps: Reframing Legitimacy Models for IEMEIs   87 maximises the legitimacy of IEMEIs.224 This is with a particular view to fi ­ lling the three main legitimacy gaps identified in Section II – participation and representation, accountability, and justice gaps – with respect to third country interests affected by IEMEIs. In looking to fill the gaps, no single normative vision of legitimacy can offer all the answers, both because there are multiple legitimacy issues relating to IEMEIs and because there is no one model of legitimacy that caters perfectly for IEMEIs. Rather, legitimacy norms and mechanisms as they derive from the multiple models discussed in Section III can, in combination, bolster the legitimacy of EU transnational regulatory power through IEMEIs. In reframing these legitimacy models for IEMEIs, the analysis considers other theoretical approaches that have sought to address the complexities of transnational regulatory power in light of their similar aims and efforts to provide mechanisms through which unilateral exercise of transnational power can be justified and accounted for. A.  Evaluating IEMEI Legitimacy: Affected Third Country Interests and Legitimacy Gaps A review of the legitimacy models examined in this chapter reveals certain dominant ideas deriving from multiple models, which, although developed and theorised in different contexts, may provide norms and mechanisms suitable for evaluating and enhancing the legitimacy of IEMEIs. There are two key aspects of IEMEIs that determine how these norms and mechanisms can contribute to legitimising IEMEIs: (1) the interests affected by them, and (2) the nature of the legitimacy gaps that relate to IEMEIs. In this respect, this sub-section sets out relevant norms and mechanisms deriving from the legitimacy models examined in Section III, and identifies how these can contribute to bolster the legitimacy of IEMEIs. The first overarching norm highlighted throughout the chapter is that of accountability which is crucial in thinking about ways of controlling regulatory power and offers one crucial way for constraining regulatory power.225 Rule of law versions emphasise the need to hold administrators to account when e­ xercising discretion, while good governance accounts have been expanding the ways and structures of accountability relationships in different regimes. As Grant and Keohane put it, the answer is not simply ‘more accountability.’ Instead, we need more intelligently designed accountability systems that are sensitive to the variety of possible

224 The idea of a ‘web’ of legitimacy mechanisms is discussed in C Scott, ‘Accountability’ (n 107 above); Bodansky, ‘Legitimacy of International Governance’ (n 3 above). 225 Grant and Keohane (n 105 above).

88  The Legitimacy of Global Regulatory Power – The Case of IEMEIs ­ echanisms of constraint, the shortcomings of existing accountability mechanisms, m and the normative claims of those adversely affected.226

The second norm is due process, relating to decision-making taking into account all relevant interests and considerations, as identified across the different ­legitimacy models of the rule of law, good governance and procedural justice. The third norm relates to substantive justice, especially in terms of fair distribution of costs and benefits, which mainly derives from normative accounts of justice but can also substantiate other grounds of legitimacy as normative ­justifications of authority, such as substantive versions of the rule of law. The models of legitimacy examined in Section III also provide common legitimacy mechanisms for pursuing such norms. The first such mechanism is transparency, which includes both transparency of applicable rules, in accordance with the rule of law, as well as transparency of decision-making processes, which is crucial for good governance and accountability. The second mechanism is participation of affected interests in decision-making processes, which is identified both as essential for good governance and for achieving procedural justice. The third mechanism relates to procedural fairness, which aims to ensure protection of procedural rights and application of fair adjudicative procedures, identified from different perspectives in all three models. Finally, judicial review is particularly identified as an important mechanism for holding power to account, and through which the validity and legality of rules is tested, thus upholding the rule of law. Notably, within this framework, legality is not understood as a benchmark for assessing the legitimacy of IEMEIs, but rather as a vehicle through which the aforementioned norms and mechanisms could be realised through the enabling and constraining functions of law further discussed below. These different kinds of legitimacy norms and mechanisms shed light to how the IEMEI legitimacy gaps are created but also provide different avenues by which the gaps could be filled, particularly through due consideration of third country affected interests. The interests affected by IEMEIs include foreign interests situated beyond the EU as the regulating jurisdiction, and thus require expansion of relevant legitimacy norms and mechanisms to such third country affected interests. It should be noted that ‘third country interests’ are understood broadly to include objective interests and subjective concerns, as classified by Stewart: interests as grounded in the material conditions of human welfare, including sustenance, health, security, housing, and education, that can be more or less objectively determined. Concerns have a more subjective character, reflecting values like individual dignity, justice and equity, integrity of institutions and community, and cultural, religious, social, and ecological ideals.227



226 ibid,

41.

227 Stewart

(n 114 above).

Filling the Legitimacy Gaps: Reframing Legitimacy Models for IEMEIs   89 The focus on interests affected by regulatory power for assessing and enhancing legitimacy is supported by good governance understandings of legitimacy and by justice theories, including transnationalised theories that extend to foreign affected interests. Because IEMEIs are legally designed to apply and affect practices and regulatory behaviour in third countries, accountability relationships are no longer confined to those internally between the EU and its Member States but extend to affected third country interests. Especially because IEMEIs ­incorporate requirements on production methods of products and services abroad, the interests affected by the exercise of EU regulatory power are ‘intertwined’ in ways that may require the regulating entity to ‘listen’ to foreign affected interests and take due consideration of third country impacts.228 This line of argument supporting due regard of foreign affected interests, has been advanced in the literature from different perspectives. These provide support for the normative claim advanced in this chapter, while not offering a comprehensive analysis of how applicable law calls for such due consideration of third country affected interests in relation to IEMEIs. As Benvenisti argues, when sovereigns legislate for the benefit of humanity by regulating concerns and activities that extend beyond their territory, in ways that would affect the right of self-determination of third countries, they should be subject to other-regarding obligations to take into account foreign interests of affected stakeholders.229 Additionally, in appraising the use of territorial extension, Scott argues that the logic of ‘power brings responsibility’230 may justify the extraterritorial reach of EU environmental law, with the EU fulfilling a moral responsibility in addressing global problems231 or addressing negative environmental impacts beyond its borders because it has been complicit in creating them.232 At the same time, Scott emphasises that sufficient constraints should be in place to guard against abuse of power that may lead to the creation of different kinds of negative impacts for third countries. As discussed in Section II, IEMEIs raise different kinds of legitimacy concerns and create three main gaps, which can be largely attributed to the fact that they are unilaterally created within one legal order while affecting interests situated beyond the regulating jurisdiction. The extent of these gaps largely depends on how applicable law requires due consideration of third country impacts when unilaterally regulating conduct beyond the borders of the regulating jurisdiction. These inter-linked gaps represent the kinds of legitimacy concerns raised by IEMEIs from the perspective of third countries and correspond to norms and mechanisms that derive from the legitimacy models.

228 Davies (n 2 above) 1213. 229 Benvenisti, ‘Sovereigns as Trustees’ (n 135 above). 230 Caney, ‘Two kinds of Climate Justice’ (n 93 above). 231 J Scott, ‘Geographical Scope’ (n 22 above). 232 J Scott, ‘The Global Reach of EU Law: Is Complicity the New Effects?’ in J Scott and M Cremona (eds), EU Law beyond EU Borders: The Extraterritorial Reach of EU Law (OUP forthcoming).

90  The Legitimacy of Global Regulatory Power – The Case of IEMEIs An accountability gap arises because IEMEIs are adopted within a coherent legal order that exercises sovereign jurisdiction, which is not usually accountable to third country actors affected by its regulatory action. The EU is usually not under a legal obligation to justify and explain its actions in relation to third country effects. Therefore, in accordance with Bovens’ definition of accountability, discussed above in Section III.B, there is no clear relationship between the EU institutions in exercising regulatory power through IEMEIs and third ­country affected interests as a relevant forum for holding EU actors to account.233 A participation and representation gap is also created because IEMEIs are adopted in the absence of state consent, by a regulating jurisdiction within which third country actors are not usually represented or have a voice in decision-making processes. As Krisch puts it, ‘as sites of governance shift away from the multilateral process, bit by bit, consent is replaced by representation and consultation’.234 While this may be happening in relation to some regulatory areas such as antitrust, the extent to which sufficient ‘procedural mitigation’235 is offered by participation opportunities for foreign interests in the context of IEMEIs, requires further investigation. Finally, a justice gap is potentially created because third country affected interests are not usually represented in the regulating jurisdiction, thus more likely leading to procedurally or substantively unjust decisions. IEMEIs may fail to meet the demands of due process and procedural fairness when IEMEIs are implemented and enforced against third country actors while taking insufficient account of the detrimental economic and developmental effects of IEMEIs in developing countries. These gaps could be filled through a combination of ­legitimacy norms and mechanisms as they derive from the multiple legitimacy models examined in Section III. B.  Enhancing IEMEI Legitimacy: Combining Legitimacy Norms and Mechanisms The following analysis seeks to explore how the legitimacy norms and mechanisms set out in Section IV.A could contribute to filling the legitimacy gaps related to IEMEIs. In doing so, it demonstrates how a cumulative approach of a variety of legitimacy norms and mechanisms, as they derive from the spectrum of legitimacy understandings examined in Section III, is suitable for maximising the legitimacy of IEMEIs that operate in an uncertain legal and normative space.



233 Bovens 234 Krisch 235 ibid.

(n 108 above). (n 64 above).

Filling the Legitimacy Gaps: Reframing Legitimacy Models for IEMEIs   91 A combination of legitimacy norms and mechanisms to legitimise the exercise of transnational regulatory power is also supported by global administrative law proponents who suggest that global governance can be legitimised through adequate standards of transparency, participation, reasoned decisions, legality and independent review.236 In this way, global administrative law incorporates mechanisms developed within domestic administrative regimes, at the global level,237 thus helping to conceptualise how domestically developed understandings of legitimacy and accountability can be transformed to apply to global and transnational governance structures.238 These mechanisms can be particularly useful for the governance of global public goods, as they also apply within domestic legal orders where such governance often takes place.239 The following analysis explores how the core legitimacy norms and mechanisms identified in Section IV.A can fill the different legitimacy gaps of IEMEIs, particularly by providing avenues for consideration of third country affected interests. Additionally, this analysis indicates where to look for and how to assess the extent of the legitimacy gaps when legally analysing IEMEIs under EU and WTO law. (i)  Filling the Accountability Gap Holding EU transnational regulatory power to account in relation to its impacts on third country affected interests is crucial for the legitimacy of IEMEIs and could be achieved through different mechanisms that have been developed in both national and global governance regimes, such as transparency, participation and judicial review. Transparency of decision-making can enable participation; it is a crucial condition for different kinds of accountability;240 and it requires decision-makers to put forward justifications for their regulatory choices, which is particularly important for choices that may create negative externalities for foreign actors. Additionally, judicial review provides a promising accountability avenue through which the rule of law is upheld, including by applying legal norms that may require consideration of the perspectives of those affected by decision-making or the protect rights of affected interests. Regulators and adjudicators may thus be required to ‘take into account wider interests than those of their own constituents and listen to those in other jurisdictions’.241 However, operationalising accountability mechanisms across jurisdictional borders and legal regimes can be challenging, particularly because contradictory accountability claims may arise. Internal and external accountability claims 236 B Kingsbury, N Krisch and RB Stewart, ‘The Emergence of Global Administrative Law’ (2005) Law and Contemporary Problems 15. 237 Shaffer (n 100 above). 238 Benvenisti, The Law of Global Governance (n 15 above) 22. 239 Shaffer (n 100 above). 240 Grant and Keohane (n 105 above). 241 Davies (n 2 above) 1222.

92  The Legitimacy of Global Regulatory Power – The Case of IEMEIs can conflict,242 as responding to external accountability claims could undermine internal accountability claims and vice versa. In relation to IEMEIs, responding to external accountability claims may expose domestic actors to a competitive disadvantage or lower the protection of rights deriving from EU law. Because of such potential contradictions between internal and external accountability claims, the legitimising role of external accountability towards third country actors cannot be understood in absolute terms that would give priority to third country interests.243 Nonetheless, consideration and protection of third country affected interests through transnational accountability avenues need to be accommodated in legitimising the adoption and application of IEMEIs to third countries. (ii)  Filling the Participation and Representation Gap As explained above, the legitimacy of IEMEIs is linked to the participation and representation of third country affected interests in the regulating jurisdiction. This is closely connected to the accountability gap, which can be partly filled through participation of affected interests, but also raises distinct questions about third country interests having a voice in and potentially deliberating on the formulation and implementation of measures that affect them. This relates to EU transnational regulatory power meeting due process requirements, whereby regulatory action takes into account and affords participation opportunities to those affected by such action. In this respect, the transparency of rules and decision-making processes is particularly important in enabling participation of affected interests which are not officially part of the regulating entity. Furthermore, providing third country affected actors with participation opportunities can also be beneficial for the EU. Participation of third country stakeholders ‘may actually assist … in adopting optimal policies’ as the EU can become aware of the external effects of its policies and of the difficulties faced by third country actors in applying EU standards locally.244 As IEMEIs regulate activities taking place abroad, becoming aware of local concerns and circumstances may allow essential adaptation of regulatory requirements, which could in turn increase the effectiveness of policies. The need for on-going dialogue and consultation with local actors involved in the implementation of policies is also supported by experimentalist governance regimes, particularly in situations where a large jurisdiction unilaterally extends experimentalist regimes beyond its borders.245 242 Black (n 112 above). 243 Benvenisti, ‘Sovereigns as Trustees’ (n 135 above). 244 ibid 301. 245 For example, the FLEGT regime has been identified as such a regime, C Overdevest and J ­Zeitlin, ‘Forest Law Enforcement Governance and Trade (FLEGT): Transnational Dynamics of an EU Experimentalist Regime’ in J Zeitlin (ed), Extending Experimentalist Governance? The ­European Union and Transnational Regulation (OUP, 2015).

Filling the Legitimacy Gaps: Reframing Legitimacy Models for IEMEIs   93 Expanding deliberative processes of decision-making in such situations is identified as a crucial element in legitimising such forms of governance and contributing to their acceptance by third countries.246 Particularly, third ­country stakeholders are more likely to consider IEMEIs as legitimate if they are afforded real opportunities to raise their concerns and opinions through participatory mechanisms that can incentivise third countries to cooperate with the EU. Providing third country interests with a voice in EU decision-making processes the results of which directly affect them, is thus particularly important for IEMEI legitimacy. Participation mechanisms can take many forms and extend beyond the often-unworkable notion of direct participation, to include procedures of ‘notice and comment’ and transparency of decision-making, which may be more well-suited to governance beyond the state.247 (iii)  Filling the Justice Gap Particularly because of the accountability, and the participation and representation gaps, IEMEIs can also give rise to a justice gap, comprising both procedural and substantive aspects. First, justice concerns relate to the administration of IEMEIs with regard to third country actors in the absence of clear and established procedural safeguards for actors situated outside the regulating jurisdiction. Ensuring procedural fairness by upholding individual procedural rights of affected third country actors, as well as providing them with access to justice through adjudicative procedures of judicial review, can go a long way in expanding the legal protection of individuals affected by transnational power. In this respect, transparent decision-making at the stage of implementation of IEMEIs with regard to third country actors can enable them to challenge ­decisions when not procedurally or substantively fair. Second, justice concerns relate to the impacts of IEMEIs on developing countries, and actors therein, that can give rise to questions about the distribution of costs and benefits between the EU and developing countries in pursuing environmental protection goals. Even if the EU is perceived as tackling common concern environmental problems and sidestepping the inadequacies of international environmental regimes, or pursuing ‘second-order responsibilities’,248 the extension of its regulatory power through trade cannot be unrestricted. Environmental responsibilities on the part of the EU cannot be fully fulfilled without consideration of ‘“economic” rights and duties’ of poor first-order responsibility holders.249 As Scott warns, it is necessary to ensure that actors that exercise such responsibilities do not manipulate their position in such a way

246 ibid. See also C Armeni, ‘Global Experimentalist Governance, International Law and Climate Change Technologies’ (2015) 64 International and Comparative Law Quarterly 875. 247 Grant and Keohane (n 105 above). 248 Caney, ‘Cosmopolitan Justice’ (n 191 above). 249 ibid 763.

94  The Legitimacy of Global Regulatory Power – The Case of IEMEIs that d ­ istribution of obligations is done to the advantage of first-responsibility holders and to the detriment of less economically capable first-order responsibility holders.250 Due consideration of the interests and capabilities of developing countries could further substantiate the need for inclusiveness and expansion of good governance and accountability to affected foreign stakeholders, especially from developing countries. Through adequate representation and participation of third country actors, the EU can be made aware of the effects of its policies on developing countries in ways that may enable it to incorporate substantive justice considerations towards third countries in more appropriate ways. In short, a combination of legitimising norms and mechanisms as they are understood and developed in different legitimacy models could provide ways for accommodating affected third country interests and contributing to filling the legitimacy gaps related to IEMEIs. However, it is not clear through what precise legal means and within what jurisdictional authority or legal regime such a combination will be operationalised to address the multi-faceted legitimacy concerns raised by IEMEIs. The form of ‘other-regarding obligations’ depends on the applicable law and the requirements it imposes on the exercise of regulatory power.251 The rest of the book seeks to explore the extent to which the legal regimes of EU and WTO law provide for legal procedures and doctrines to put into practice a web of legitimacy norms and mechanisms to fill IEMEI ­legitimacy gaps by providing due consideration of third country affected i­ nterests. C.  Practical Legitimacy for IEMEIs: Combining Overlapping Legal Regimes In examining how the relevant legitimacy norms and mechanisms can be practically implemented to fill the IEMEI legitimacy gaps, the book looks to the most relevant and elaborate legal regimes of EU law and WTO law. There may be further legal regimes that can contribute to the legitimacy of IEMEIs, but these two are at least vital legal sites for legitimising IEMEIs, in light of the EU being the legal source of this regulatory power and WTO law capturing the transnational interaction of trade-related regulatory measures that pursue noneconomic goals.252 The hybrid legal nature of IEMEIs requires examination of their ‘home’ legal order as well as looking outside to external regimes that can provide mechanisms for bolstering the legitimacy of measures that operate at the intersection of overlapping regimes.

250 J Scott, ‘Geographical Scope’ (n 22 above). 251 NL Dobson and C Ryngaert, ‘Provocative Climate Protection: EU “Extraterritorial” Regulation of Maritime Emissions’ (2017) 66 International and Comparative Law Quarterly 295, 304. 252 On the choice of these two legal regimes as the focus of the legal analysis, see Chapter 1, Section IV.

Filling the Legitimacy Gaps: Reframing Legitimacy Models for IEMEIs   95 Legal procedures and doctrines in EU and WTO law can in different ways incorporate the relevant legitimacy norms and mechanisms – a­ ccountability, due process, justice, transparency, procedural fairness and judicial review – in ways that provide for due consideration of third country affected interests and contribute to filling the IEMEI legitimacy gaps. This is particularly through constitutional and administrative legal requirements in these regimes that govern the exercise of EU regulatory power. These two overlapping legal regimes thus, in combination, may provide different kinds of legitimising mechanisms for different sets of actors in filling the IEMEI legitimacy gap. EU law can provide internal accountability mechanisms, primarily for private actors with some possibilities for involvement of third country government representatives, while WTO law can provide external accountability mechanisms, primarily for state interests, which have direct and recognised access to the institutional ­mechanisms of the WTO.253 In together bolstering the legitimacy of IEMEIs, these two legal regimes can serve a dual function; on the one hand enabling and facilitating the adoption of IEMEIs by legally authorising the EU to act, while on the other hand ­constraining and disciplining how the EU exercises regulatory power beyond EU borders. While both functions are important for the legitimacy of IEMEIs, the disciplining role is more contentious, and its realisation largely determines the extent of the legitimacy gaps. If law largely enables global regulatory power without sufficient constraints, the different legitimacy gaps can be exacerbated. This distinction is helpful in framing the legitimising role of EU and WTO law and how IEMEIs fit within them. It also enables an assessment of the current state of the law as it applies to IEMEIs and the extent to which legitimacy gaps are filled. Furthermore, it enables normative reflections in assessing how the law should develop, in further enabling or constraining the use of IEMEIs. The normative claim for applicable legal regimes to work towards legitimising IEMEIs that operate in a transnational regulatory space, through a dual function of law, finds some support under both EU and WTO law. Under EU law, the EU regulator usually enjoys broad environmental competences,254 including the mandate to adopt trade regulation to pursue environmental protection,255 thus largely enabling the adoption of IEMEIs.256 At the same time, EU law could operationalise a system that can discipline how transnational regulatory power

253 However, private interests are also indirectly represented through government positions and through different kinds of procedures both in the dispute settlement system and in other processes of the WTO, see for example, GC Shaffer, Defending Interests, Public–Private Partnerships in WTO Litigation (Brookings Institution Press, 2003). 254 Arts 191, 192, Treaty on the Functioning of the European Union (TFEU). 255 Art 11 TFEU. 256 Ankersmit analyses how EU internal market law enables the adoption of unilateral processbased measures to pursue such objectives, L Ankersmit, Green Trade and Fair Trade in and with the  EU: Process-based Measures within the EU Legal Order (Cambridge University Press, 2017) chs 3 and 4.

96  The Legitimacy of Global Regulatory Power – The Case of IEMEIs is exercised by EU institutions and how third country actors affected by IEMEIs may be afforded legal protection when they come under the scope of EU law. The scope for such EU legal control is supported by its declared commitment to the rule of law, which encompasses substantive values, linked to democracy, respect of human rights and good governance principles, and to which it commits in relation to its external action.257 Such principles are relevant when unilateral exercise of EU regulatory power affects foreign interests.258 On this basis, the EU’s own constitutional requirements may require the EU to open up its decision-making processes and expand administrative procedures and legal doctrines of accountability, participation and justice to accommodate the ­legitimacy concerns generated by IEMEIs. Under WTO law, states are authorised to pursue non-economic objectives through unilateral trade-restrictive measures, thus enabling the adoption of IEMEIs. At the same time the WTO regime, by promoting trade liberalisation, provides different legal requirements and procedures that aim to protect against protectionism and maintain a balance of equilibrium among WTO members. These can act as catalysts for disciplining the exercise of EU transnational regulatory power by requiring the EU to take into account how its measures affect third countries. In this respect, WTO law has been recognised as an ‘engine’ of global administrative law, which imposes limitations on the exercise of power through ‘distributed administration’,259 such as IEMEIs. Furthermore, experimentalist governance literature recognises that necessary experimentalist characteristics may not always stem from the measures at issue or from the relevant regulating entity, but also from ‘transnational governance interactions’ through the application of rules under other applicable legal regimes.260 WTO law can thus act as a useful ‘destabilisation mechanism’, providing the feedback loop, learning and revision elements of experimentalism by making unilateral initiatives more cooperative under its auspices.261 These two regimes could thus act in combination in building a web of legitimacy and accountability mechanisms for IEMEIs that have no neat legal home and operate transnationally. The rest of the book explores the extent to which EU law (Part II) and WTO law (Part III) work together to fill the legitimacy gaps of IEMEIs by implementing the legitimacy norms and mechanisms identified in this section through legal procedures and doctrines that govern the exercise of regulatory power by the EU.

257 Art 21 TEU. 258 On the EU’s normative basis in conducting external action see Introduction to Part II. 259 A Lang and J Scott, ‘The Hidden World of WTO Governance’ (2009) 20 European Journal of International Law 575. 260 C Overdevest and J Zeitlin, ‘Assembling an Experimentalist Regime: Transnational Governance Interactions in the Forest Sector’ (2014) 8 Regulation and Governance 22. 261 Sabel and Zeitlin (n 8 above) 178.

Conclusion   97 V. CONCLUSION

Overall, this chapter has revealed the legitimacy gaps of the EU’s action in unilaterally introducing and applying IEMEIs. These gaps have been identified and framed through an examination of different legitimacy models that ­demonstrate how IEMEIs are problematic from different normative points of view. This inquiry into different understandings of legitimacy has also provided a variety of legitimacy norms and mechanisms through which the gaps could be filled. The rest of the book examines the extent to which EU and WTO law could practically implement a combination of such legitimising mechanisms. The inquiry that follows in Parts II and III evaluates the legitimacy of IEMEIs by examining the extent to which the legal landscape of IEMEIs, as determined by these two legal regimes, is weighted towards enabling or towards constraining IEMEI action. While both functions of law are important for the legitimacy of IEMEIs, unconstrained transnational regulatory power can exacerbate the ­legitimacy gaps. The legal analysis of IEMEIs under EU and WTO law examines this dual role by identifying relevant legal procedures and doctrines in these regimes, examining how they apply to IEMEIs and affected third country interests, and by exploring how these legal requirements influence ex ante the formulation of IEMEIs through checks and balances, as well as control ex post their application and constrain regulatory power. In doing so, the book examines the extent to which these regimes serve a de facto legitimising function while also identifying their legitimising potential. In this way, the analysis measures the extent to which EU and WTO law doctrines and procedures incorporate the normative framework of legitimacy developed in Section IV, and demonstrates the extent of the IEMEI legitimacy gaps.

98

Part II

IEMEIs in the EU Legal Order

100

Introduction: The Legitimising Function of EU Law for IEMEIs I. INTRODUCTION

A

s discussed in Chapter two, the exercise of EU regulatory power beyond EU borders through IEMEIs creates legitimacy gaps towards affected interests located outside the EU. This is because there are usually neither established legitimacy frameworks nor accountability avenues for measures such as IEMEIs that operate at the intersection of legal regimes and outside of a solid institutional and political framework. The purpose of Part II of the book is to explore the extent to which the EU legal order provides legal procedures and doctrines that contribute to filling the legitimacy gaps related to IEMEIs, particularly by providing due consideration of third country affected interests. This is the first of two Parts that analyse IEMEIs through different legal regimes. Part II examines IEMEIs through the lens of EU law and seeks to determine the extent to which EU law provides internal mechanisms to legitimise IEMEIs, while Part III examines external mechanisms within the WTO legal order. The EU legal frame is particularly pertinent for the legal analysis of IEMEIs. Despite their various external effects and their transnational character, IEMEIs are measures that originate and are administered in the EU legal order. They thus have a ‘home-state’ character, a ‘national’ legal identity within the EU legal order, which, as the source of EU regulatory power, could offer the legal means for legitimising it. Part II of the book identifies the legitimising scope and potential of EU law and its shortcomings by exploring how far EU legal procedures and doctrines reach in filling the participation and representation, accountability and justice gaps identified in Chapter two. The analysis explores procedures and doctrines of EU constitutional and administrative law that may contribute to legitimising the EU legal order as a system of governance that claims to abide by the rule of law, which could also contribute de facto toward legitimising the exercise of regulatory power beyond EU borders through IEMEIs. EU constitutional law, which determines whether the EU has the power to act and the parameters within which power is exercised, is particularly pertinent in legitimising the adoption of IEMEIs. Additionally, EU administrative law, which controls the exercise of public power and governs the legality of EU action, is important in holding the exercise of EU power beyond EU borders to account.

102  Introduction: The Legitimising Function of EU Law for IEMEIs Current literature on EU constitutional and administrative law, as well as literature on the extraterritorial reach of EU law, does not comprehensively address the position of third country interests in the EU legal order.1 Examination of this issue is usually undertaken only when consideration of third country interests is specifically required by bilateral agreements,2 within regional regimes of cooperation with third countries,3 or under international agreements.4 Thus the inquiry of Part II of the book is also important in filling a gap in the existing literature, which scholarship has only recently started to address.5 The legitimising function of EU law for IEMEIs is evaluated by examining its dual role; on the one hand enabling the adoption of IEMEIs by providing the legal basis for the EU to act, while on the other hand constraining how EU regulatory power is exercised towards third country affected interests. This distinction has been examined in relation to process-based measures by Ankersmit, who assesses the enabling and constraining functions of EU law in relation to the adoption of process-based measures by the EU, the Member States and private bodies, focusing on the current state of the law under EU internal market law and competition law.6 In contrast, this book develops this distinction further from a normative perspective, with the balance between the enabling and constraining functions of law determining the extent of the different legitimacy gaps, and offers an evaluative lens for assessing the legitimising role of applicable law. It also adopts a different scope by examining IEMEIs under EU constitutional and administrative law, including soft law regulatory procedures involved in the formulation of IEMEIs and within the context of judicial review by the Court of Justice of the European Union (CJEU).7 1 At least not with a focus on EU administrative and constitutional law. Ankersmit deals with the question of whether extraterritorial interests should be taken into account in relation to Member State legislation that addresses extraterritorial concerns in the context of EU internal market law: L Ankersmit, Green Trade and Fair Trade in and with the EU: Process-based Measures within the EU Legal Order (Cambridge University Press, 2017) ch 4. 2 E Reid, Balancing Human Rights, Environmental Protection and International Trade: Lessons from the EU Experience (Hart, 2015). 3 I Vianello, ‘Guiding the Exercise of Union’s Administrative Power in the EU Wider Neighbourhood. The Rule of Law from Paper to Operationalisation’ (2015) EUI Working Paper Law 8/2015. 4 S Cassese, ‘A Global Due Process of Law?’ in G Anthony and others (eds), Values in Global Administrative Law (Hart, 2011). 5 A Berman, ‘Taking Foreign Interests into Account: Rulemaking in the US and EU’ (2015) GlobalTrust Working Paper WPS 03/2015; E Korkea-Aho, ‘“Mr Smith Goes To Brussels”: Third Country Lobbying and the Making of EU Law and Policy’ (2016) 18 Cambridge Yearbook of European Legal Studies 1; E Korkea-aho, ‘Evolution of the role of third countries in EU law – Towards full legal subjectivity?’ in Samo Bardutzky and E Fahey (eds), Framing the Subjects and Objects of Contemporary EU Law (Edward Elgar, 2017); Special Section, M Cremona and P Leino (eds), The  New Frontiers of EU Administrative Law: Is There an Accountability Gap in EU External Relations? (2017) 2(2) European Papers 467, especially I Hadjiyianni, ‘The Extraterritorial Reach of EU Environmental Law and Access to Justice by Third Country Actors’, 519. 6 Ankersmit (n 1 above). 7 ‘CJEU’ refers both to the Court of Justice and to the General Court in accordance with Art 19(1) TEU. In certain instances, separate references will be made to the individual courts. When it is not necessary to distinguish between the two courts, references will be made to the ‘CJEU’ or the ‘EU courts’.

The Constitutional Basis for Conducting EU External Action  103 Chapters three and four demonstrate that there is an imbalance to date between the enabling and constraining functions of EU law in favour of its permissive function that enables adoption of IEMEIs without always providing sufficient checks to control them. While the EU legal order is more inclusive toward third country interests than one might initially think, the analysis demonstrates the shortcomings of EU law in controlling EU regulatory power with respect to affected interests. These shortcomings are not necessarily exclusive to regulatory power exercised beyond EU borders, and may be equally true for regulatory power exercised within the EU, in relation to EU affected actors as well. This may indicate internal legitimacy problems of the EU governance system more broadly. In examining the extent of the different kinds of legitimacy gaps and how they may be filled through EU law, Part II of the book adopts the following structure. This introductory chapter sets out the constitutional framework of EU external action as embodied in the EU Treaties and explores how its values can legally support consideration of third country affected interests in the exercise of EU global regulatory power in line with the legitimacy framework developed in Chapter two. It thus examines the legitimising function of the EU legal order for IEMEIs and identifies the complexities of reconciling the internal and external interests involved. Chapters three and four then examine legal procedures and doctrines that can embody these external action values and contribute to filling the different legitimacy gaps identified in Chapter two. Chapter three explores the extent of the accountability, participation and representation, and procedural justice gaps related to IEMEIs within EU decision-making processes carried out in accordance with EU administrative law principles. It explores the extent to which third country actors can have a say in the formulation of IEMEIs by examining the extent to which they have participation rights and opportunities. The discussion also examines how EU administrative law can enhance transparency and procedural fairness when IEMEIs are enforced in respect of third country actors, particularly through different kinds of procedural rights. Chapter four explores the accountability and justice gaps by examining judicial review in the EU legal order as a significant accountability avenue at the disposal of affected third country actors for challenging IEMEIs. II.  THE CONSTITUTIONAL BASIS FOR CONDUCTING EU EXTERNAL ACTION AS A NORMATIVE BASIS FOR LEGITIMISING IEMEIs

In examining how EU law contributes to legitimising IEMEIs, the analysis starts by examining constitutional norms that govern EU external action. The constitutional framework for EU external action provides the normative basis for extending EU legal doctrine and procedures to take into account third country affected interests in ways that contribute to filling the legitimacy gaps related to IEMEIs. This is because the EU has committed to certain constitutional values in its external action that set a normative direction for the EU to achieve certain

104  Introduction: The Legitimising Function of EU Law for IEMEIs values in its relations with third countries in ways that concur with the IEMEI legitimacy framework developed in Chapter two. The fact that the EU has signed up to specific values in its external relations that sustain the legitimacy values identified in Chapter two further justifies the evaluation of EU doctrine against this legitimacy framework and shows the potential for evolution of EU doctrine to line up with the EU’s external action values. This section explores the spectrum of substantive values that the EU seeks to achieve in its external action and how these could be legally relevant for analysing the legitimacy of IEMEIs in the EU legal order. A.  The Constitutional Values Guiding EU External Action Due to the hybrid EU legal nature of IEMEIs as internal measures that pursue external action, the constitutional basis for IEMEIs is informed both by internal and external EU constitutional values. The EU’s internal values and principles relating to open decision-making processes,8 substantive values9 and environmental principles10 could also support the legitimacy framework of IEMEIs developed in Chapter two. They provide support for legitimacy values of due process and accountability through open and participatory decision-making as well as supporting pursuance of environmental protection goals while also achieving sustainable development. The relevance of internal EU values for the legitimacy of IEMEIs is further explored in Chapters three and four in relation to specific EU law doctrines and how they are applied in internal EU decisionmaking processes and in judicial review. This chapter first focuses on values that the EU has specifically committed to in its external action,11 which could support a transnationalised approach to legitimacy requiring the EU to act in a normatively predisposed manner and could provide direction about how EU law can and should function to legitimise IEMEIs, particularly through consideration of third country affected interests. Since the Lisbon Treaty, the EU has committed to abiding by its own constitutional values in its external relations. In particular, according to Article 3(5) of the Treaty on the European Union (TEU), in its relations with the wider world, the Union has committed to upholding and promoting its values and interests by contributing, inter alia, to the sustainable development of the Earth, free and fair trade, eradication of poverty and the protection of human rights, as well as to the strict observance and the development of international law.

8 Consolidated Version of the Treaty on the European Union [2008] OJ C326/13 (TEU), Art 1; Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C326/47 (TFEU), Arts (2), 11(3), 15. See Chapter 3. 9 TEU, Art 2. 10 TFEU, Arts 11, 191. See also TEU, Art 3(3). 11 TEU, Arts 3(5), 21.

The Constitutional Basis for Conducting EU External Action  105 The text of Article 3(5) TEU, as it is written, does not mean, by the promotion of EU economic interests to undermine the promotion of its values, but they are instead meant to be complementary.12 The relevance and promotion of these values externally is further spelled out, in the form of ‘principles and objectives’13 in Article 21 TEU in the following terms, The Union’s action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law.14

The EU in this way extends its own constitutional values abroad and the TEU requires these to inform its actions in dealings with third countries. The EU’s exercise of external power is guided by values that are constitutionally entrenched and are ‘constitutionally normative’ in a legal sense. On this basis, according to Eeckhout, ‘the EU is required to act externally in accordance with its own constitutionally determined normative basis, its values and objectives’.15 As Cremona notes, EU external values have two different functions: they are constitutive, forming essential characteristics of the EU’s identity; and they are instrumental in achieving specific EU objectives.16 In both these functions, they can play an important role in ensuring that the EU abides by its own values, particularly its own rule of law, when conducting external action through unilateral measures.17 As demonstrated below, the EU’s external action values demonstrate the dual role of EU law in relation to the legitimacy of IEMEIs: on the one hand, providing constitutional justification for the existence of IEMEIs, while on the other, providing constitutional requirements that call for consideration of third country interests when acting externally that could require limits and checks to the extension of EU regulatory power beyond EU borders. A closer look at the provisions that form the constitutional basis for EU external action reveals that the EU is under some sort of obligation, formulated 12 M Cremona, Specialised Course on ‘EU External Relations and the Global Reach of EU Law’, Academy of European Law Summer School on the Law of the European Union (EUI, Florence, July 2016). In contrast, see C Kuner, ‘The Internet and the Global Reach of EU Law’ in M Cremona and J  Scott (eds), EU Law beyond EU Borders: The Extraterritorial Reach of EU Law (Oxford University Press, forthcoming). 13 TEU, Art 21(3). 14 TEU, Art 21(1). 15 P Eeckhout, ‘A Normative Basis for EU External Relations? Protecting Internal Values Beyond the Single Market’ in M Krajewski (ed), Services of General Interest Beyond the Single Market: External and International Law Dimensions (TMC Asser Press, 2015) 226. 16 M Cremona, ‘Values in EU Foreign Policy’ in MD Evans and P Koutrakos (eds), Beyond the Established Legal Orders: Policy Interconnections between the EU and the Rest of the World (Hart, 2011). 17 ibid.

106  Introduction: The Legitimising Function of EU Law for IEMEIs in mandatory terms,18 to achieve and ‘actively pursue’ certain overlapping external objectives.19 In particular, in Article 21(2) TEU the EU has committed to ‘define and pursue common policies and actions and … work for a high degree of cooperation in all fields of international relations, in order to’, inter alia, ‘consolidate and support democracy, the rule of law, human rights and the principles of international law’,20 ‘foster the sustainable economic, social and environmental development of developing countries, with the primary aim of eradicating poverty’,21 ‘encourage integration of all countries in the world economy, including through the progressive abolition of restrictions on international trade’,22 ‘help develop international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources, in order to ensure sustainable development’,23 [and] ‘promote an international system based on stronger multilateral cooperation and good global governance’.24

These objectives support the legitimacy framework developed in Chapter two, particularly providing support for transnationalising domestic legal procedures and doctrines to account for third country affected interests. They thus have potential to operationalise the theoretical framework of legitimacy of IEMEIs in a legally constitutional manner. Depending on how they are applied in practice they could address some of the legitimacy concerns that IEMEIs raise, relating to the exportation of EU values without consideration of conflicting values or the ‘hegemonic’ tendencies that may characterise EU unilateral action.25 They can also support a legitimacy understanding that is founded on the incorporation of different kinds of third country interests, including of an economic and social nature. Different EU external action values may support relevant legitimacy ideas in different ways. For example, references to principles of international law – including sustainable development, as defined internationally, and respect for the needs of developing countries – are important in terms of distributive justice. Furthermore, the commitment to democracy, the rule of law, the protection of fundamental rights and good global governance, can support the legitimacy values of due process, justice and accountability to be operationalised beyond EU borders when the EU engages in global governance through IEMEIs. 18 Eeckhout, ‘A Normative Basis’ (n 15 above). 19 E Morgera and K Kulovesi, ‘The Role of the EU in Promoting International Standards in the Area of Climate Change’ in I Govaere and SP Ghent (eds), EU Management of Global Emergencies, Legal Framework for Combating Threats and Crises (Martinus Nijhoff, 2014). 20 TEU, Art 21(2)(b). 21 ibid Art 21(2)(d). 22 ibid Art 21(2)(e). 23 ibid Art 21(2)(f). 24 ibid Art 21(2)(h). 25 Chapter 2, Section II.

The Constitutional Basis for Conducting EU External Action  107 While the values discussed above may provide constitutional support for extending EU law safeguards to third country affected interests in ways that may fill the IEMEI legitimacy gaps, the legal manifestations of these values are not straightforward. Nonetheless, they could guide the application of EU legal procedures and doctrine to affected third country interests within the EU legal order. B.  The Legal Implications of EU External Action Values for IEMEI Action (i)  The Abstract Nature of EU External Action Values The values, principles and objectives of EU external action set out above reveal the EU’s global mission, but in legal terms provide very vague and abstract benchmarks for the EU’s external action. This is because of the abstract nature of the notions they incorporate and the discretion inherent for their achievement. The EU’s commitment to values such as sustainable development or universal human rights does not specify any particular contents of these values,26 which are open to varying interpretations. Also, these external action values and objectives do not specify how they will be achieved in practice, establish specific competences, or create individual rights.27 Thus, legally, they can instead guide more specific EU legal procedures and doctrines, examined in Chapters three and four, such as procedural rights, proportionality, and the protection of fundamental rights. Despite notable scepticism that external action objectives are too vague and utopian,28 they ‘are not entirely unrealistic’.29 They provide the constitutional basis for the exercise of EU regulatory power externally and largely incorporate Manners’ norms on which he developed the idea of the EU as a ‘normative power’.30 Their usefulness should thus not be disregarded because of their inherent discretion and abstractness. As Larik observes, ‘global governance goals must not necessarily be legal in nature’,31 but EU constitutional texts are legally relevant and their ‘constitutional entrenchment’32 can legitimately guide the development and interpretation of EU law in a way that reflects them. 26 P Leino, ‘The Journey Towards All that is Good and Beautiful: Human Rights and “Common Values” as Guiding Principles of EU Foreign Relations Law’ in M Cremona and B de Witte (eds), EU Foreign Relations Law: Constitutional Fundamentals (Hart, 2008) 263. 27 J Larik, ‘Shaping the International Order as an EU Objective’ in D Kochenov and F Amtenbrink (eds), The European Union’s Shaping of the International Legal Order (CUP, 2014) 64. 28 A Dashwood and D Wyatt, Wyatt and Dashwood’s European Union Law, 6th edn (Hart, 2011) ch 27. 29 J Larik, ‘Entrenching Global Governance: The EU’s Constitutional Objectives Caught Between a Sanguine World View and a Daunting Reality’ in B Van Vooren, S Blockmans and J Wouters (eds), The EU’s Role in Global Governance: the Legal Dimension (OUP, 2013) 18. 30 I Manners, ‘Normative Power Europe: A Contradiction in Terms?’ (2002) 40 Journal of Common Market Studies 235. 31 Larik, ‘Entrenching Global Governance’ (n 29 above) 15. 32 ibid.

108  Introduction: The Legitimising Function of EU Law for IEMEIs One notable weakness of these values, which could make the EU more susceptible to criticism for failing to achieve them adequately,33 is that Article  21 TEU does not set out ways of reconciling its different objectives where they might contradict each other. While it stipulates that ‘the Union shall ensure consistency between the different areas of its external action and between these and its other policies’, the modalities for achieving such consistency are not provided. Inconsistencies and incoherence among the different and ambitious EU objectives are indeed possible,34 given their vague and abstract nature and the many ways in which EU values may be promoted outside the EU. For example, a unilateral measure that promotes environmental protection may increase trade restrictions, be detrimental to human rights or have detrimental effects on the development of developing countries. A different example of inconsistency can be seen in instances where observance of international law, in the form of enforcement of economic sanctions agreed under a UN resolution, could result in the violation of human rights.35 Furthermore, interpretation of the different values by the EU and third countries concerned may be substantially different.36 The interconnection and need for coherence between the EU’s different policies is sometimes made explicit in other parts of the Treaties. For example, it is incorporated in a legal obligation under Article 208 of the Treaty on the Functioning of the European Union (TFEU), which requires EU action on development cooperation to be carried out within the ‘framework of the principles and objectives of the Union’s external action’. Moreover, and more relevant for IEMEIs, Article 208 TFEU requires the EU to take account of development cooperation objectives in implementing other policies that are likely to affect developing countries. This provision demonstrates one way in which contradicting policy objectives may be reconciled in a legal norm. The ways in which such effects on developing countries are to be considered in practice, however, are not straightforward. Nonetheless, the combination of Article 21 TEU and Article 208 TFEU may in practice inform the formulation and application of IEMEIs to developing countries.37 Overall, in the absence of clear indications on reconciling different external action values, EU institutions have legal discretion in deciding on the coherence between the different values. For example, reducing barriers to international trade is not an absolute objective and the EU legislator can exercise discretion

33 Morgera and Kulovesi (n 19 above). 34 Eeckhout, ‘A Normative Basis’ (n 15 above). 35 Joined Cases C-402/15 P and C-415/05 P Yassin Abdullah Kadi and Al Barakaat International Foundation v Council and Commission (Kadi I), EU:C:2008:461; Joined Cases C-584/10 P, C-593/10 P & C-595/10P Commission et al v Kadi (Kadi II), EU:C:2013:518; Eeckhout, ‘A Normative Basis’ (n above 15). 36 For example in relation to the right to development, Leino (n 26 above). 37 See on Art 208 TFEU influencing impact assessments, Chapter 3, Section IV.

The Constitutional Basis for Conducting EU External Action  109 when balancing different policy options.38 In the exercise of discretion, EU external action constitutional values can inform and at the same time be informed by more concrete legal procedures and doctrines that govern the legality of EU power, examined in Chapters three and four. (ii)  The Legal Relevance of EU External Action Values for IEMEIs Despite shortcomings and uncertainty as to the legal impacts of EU external action values, they are legally relevant for the analysis of IEMEIs under EU law in two important respects. First, they capture and reflect the legal nature of IEMEIs as internal measures that pursue external action. Second, they may potentially be enforced, or otherwise applied, before the EU courts, thus holding EU institutions to account on the basis of EU constitutional requirements for conducting external action. (a)  The Applicability of EU External Action Values to IEMEIs Notably, the principles set out in Article 21 TEU should guide not only EU external action but also the external aspects of its other policies.39 These include different kinds of policies, including development and trade as well as agricultural, fisheries, transport and energy, and environmental policies.40 They would thus include IEMEIs. The different ways in which the EU’s external action principles and objectives would be relevant for IEMEIs illustrate the dual role of EU law in relation to IEMEIs. On the one hand, environmental protection is predominantly featured among the EU’s external action objectives, including in the context of the development of developing countries,41 which could strengthen the EU legal basis for adoption of unilateral IEMEIs to protect the global environment.42 On the other hand, different values such as sustainable development, protection of human rights and commitment to international law could indicate how the promotion of certain values should be balanced against other values, and that when the EU is promoting one kind of value it cannot disregard the rest.

38 Case C-150/94 United Kingdom v Council, EU:C:1998:547; M Cremona, ‘A Reticent Court? Policy Objectives and the Court of Justice’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law: Constitutional Challenges (Hart, 2014). 39 TEU, Art 21(3). 40 M Cremona, ‘Coherence and EU External Environmental Policy’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012) 37. 41 TEU, Art 21(2)(d); G Marín Durán and E Morgera, Environmental Integration in the EU’s External Relations: Beyond Multilateral Dimensions (Hart, 2012) ch 1. 42 ibid; C Eckes, ‘EU Climate Change Policy: Can the Union be Just (and) Green?’ in D Kochenov and F Amtenbrink (eds), The European Union’s Shaping of the International Legal Order (CUP, 2014).

110  Introduction: The Legitimising Function of EU Law for IEMEIs One of the values which is particularly relevant to IEMEIs as unilateral measures is the commitment to multilateralism and international law.43 This commitment should in principle guide IEMEIs in terms of when unilateral action should be taken and to what end,44 or how IEMEIs should contribute towards and not inhibit international measures as well as remain open to resumption of international negotiations.45 These multiple links and references to international law are important and influence the way in which the EU designs its unilateral traderelated measures to accommodate parallel developments and standards at the international level, including under WTO law.46 Furthermore, international law provides an external source of norms, recognised by EU law, which could control the exercise of EU transnational power through IEMEIs. The EU may thus be required to respect relevant international commitments when adopting and implementing IEMEIs. The disciplining potential of international law, however, is qualified given the uncertain legal effects of international law in the EU legal order as interpreted by the EU courts.47 The above discussion demonstrates the dual function of EU law in relation to IEMEI legitimacy, with EU external action values justifying IEMEIs, but also potentially limiting the extension of EU regulatory power abroad. While the EU’s global mission for promoting its ‘own’ values externally may support the extension of its internal environmental measures abroad, there is a lacuna in terms of representation of external interests and insufficient external accountability mechanisms.48 In pursuing these values in a constitutionally legitimate way, the EU cannot simply choose to export one set of values abroad and ignore the rest. When extending its regulatory clout over activities abroad to exert influence over third countries, the full range of external action values it has committed to, including protection of fundamental rights and consideration of the interests of developing countries, should accompany such exercise of power. The ways in which EU external action norms capture the hybrid legal nature of IEMEIs can provide the constitutional and normative bases on which to develop EU legal procedures and doctrine in ways that would require consideration of third country affected interests as a matter of EU law. However, it is unclear how these values can be transformed from general policy directions, which are more easily manipulated politically to justify EU external action,

43 TEU, Arts 3(5), 21(1), 21(2)(h). 44 C Verkuijl, ‘Legitimacy through Law? How EU Obligations to Multilateralism and the CBDR Principle Can Legitimise EU Climate Unilateralism’ (Master’s Dissertation, University of Edinburgh 2013). 45 E Benvenisti, The Law of Global Governance (Hague Academy of International Law, 2014) 231. 46 Part III of this book. 47 Chapter 4. 48 E Herlin-Karnell, ‘EU Values and the Shaping of the International Legal Context’ in Dimitry Kochenov and F Amtenbrink (eds), The European Union’s Shaping of the International Legal Order (CUP, 2014).

The Constitutional Basis for Conducting EU External Action  111 to administrative law benchmarks that can control the exercise of such power. In the context of the global reach of EU law on internet regulation, Kuner warns against political interests being presented as legal values in the form of EU external action values, creating the risk ‘that legal values will be diluted to fit a particular political agenda’.49 (b)  EU External Action Values before the EU Courts In determining the extent to which EU external action norms could control the exercise of EU transnational power, the justiciability of these norms before the EU courts is important as a mechanism through which EU institutions can be held to account and uphold the constitutional values that the EU has committed to in its external action.50 The role that the CJEU can play in upholding external action values and objectives is not straightforward in the sense of strict enforceability, especially given the political nature of conducting external relations and the ample discretion inherent in these values.51 Nonetheless, EU external action values have a role to play in judicial review and their ‘practical function’ lies in the ‘interpretation of other constitutional norms in their light rather than strict enforcement through courts’.52 They are thus relevant in the reasoning and approach of the CJEU in reviewing or interpreting EU measures on the basis of administrative law doctrines relating to proportionality or interference with fundamental rights when third country actors are affected by EU measures.53 As cases like Kadi54 and Air Transport for Association of America (ATAA)55 demonstrate, external action ‘values and objectives are meaningful to judicial discourse and have some degree of enforceability’.56 Thus in ATAA, when the Court of Justice (ECJ) upheld the EU’s commitment to international law as incorporated in Article 3(5) TEU when reviewing the validity of the Aviation Directive,57 it opened avenues in relation to the kinds of legal arguments that can be put forward by third country actors when challenging the legality of EU law on the basis of international law norms on jurisdiction.58 However, the strength of such arguments may be qualified in light of the uncertain legal effects of international law in the EU legal order, which are often determined

49 Kuner (n 12 above). 50 Eeckhout, ‘A Normative Basis’ (n 15 above). 51 Cremona, ‘A Reticent Court’ (n 38 above). 52 Larik, ‘Shaping the International Order’ (n 27 above) 17. 53 Chapter 4. 54 Kadi (n 35 above). 55 Case C-366/10 Air Transport Association of America and others v Secretary of State for Energy and Climate Change (ATAA), EU:C:2011:864. 56 Eeckhout, ‘A Normative Basis’ (n 15 above) 231. 57 This case is further discussed in Chapter 4. 58 Eeckhout, ‘A Normative Basis’ (n 15 above).

112  Introduction: The Legitimising Function of EU Law for IEMEIs by the CJEU, as discussed in Chapter four. In Kadi, the ECJ upheld the EU’s commitment to the protection of fundamental rights of a non-EU citizen affected by EU law, demonstrating how the legality of EU law has increasingly become dependent on respect of fundamental rights even beyond EU borders. By extension, the EU could be required to consider impacts on fundamental rights beyond its borders when designing and applying IEMEIs. In this respect, EU external action values and specifically Articles 2, 3(5) and 21 TEU, have been invoked before the General Court in challenging the Council’s decision amending the Association Agreement with Morocco.59 The General Court’s decision, requiring the Council to take into account effects on fundamental rights abroad, could be seen as an example of how EU external action values can have concrete effect in holding the EU to account in its external action. However, in light of the ECJ’s decision, which set aside the General Court’s decision and avoided dealing with the substantive parts of the case, it is unclear whether such controlling function would be operationalised in external relations cases.60 More recent case law concerning a fisheries agreement with Morocco demonstrates that the CJEU, in certain cases, uses the legal values of EU external action, and particularly Article 3(5) on the respect of international law, in dynamic ways that determine the relations of the EU with third countries in accordance with international principles such as the principle of self-determination.61 Overall, the CJEU has a significant role in controlling the exercise of EU power beyond EU borders and realising the disciplining potential of EU law. General principles such as effectiveness, loyalty and unity have been developed through the CJEU in shaping the EU’s international representation so as to manage the relationship between the EU and the Member States at the international level.62 In a similar vein, relevant principles of EU administrative law, such as proportionality,63 could develop in relation to the emerging legal phenomenon of IEMEIs, which are designed to apply to third country actors and influence third country and international practices. The constitutional values of EU external action enriched in the Treaties can provide guidance for the CJEU in developing EU doctrine to respond to the novel legal questions that IEMEIs raise beyond EU borders as further discussed in Chapter four.

59 Case T-512/12 Front Polisario v Council of the European Union, EU:T:2015:953. 60 Case C-104/16 Council v Front Polisario, EU:C:2016:973. 61 Case C-266/16 Western Sahara Campaign UK v Commissioners for Her Majesty’s Revenue and Customs, Secretary of State for Environment, Food and Rural Affairs, EU:C:2018:118. This case will be further examined in Chapter 4. 62 C Eckes, ‘The Court of Justice’s Participation in the Judicial Discourse: Theory and Practice’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law (Hart, 2014). 63 Chapter 4, Section III.D.

Conclusion  113 III. CONCLUSION

To conclude, despite important limitations, EU external action values and objectives indicate the version of the rule of law the EU is striving for externally, which includes substantive elements of protection of human rights and substantive justice and can thus inform how IEMEIs legitimacy gaps may be filled through EU law. EU external action values can provide legal benchmarks for the interpretation of EU law in ways that can contribute to filling the legitimacy gaps identified in Chapter two. However, as discussed in this chapter, EU external action values do not specify any specific content or action that should be taken but rather set a general direction for the EU in abstract terms. Therefore, these values will be informed by more precise legal procedures and doctrines that can practically contribute to filling the IEMEI legitimacy gaps. The usefulness of EU external action values lies in how they can inform the design of IEMEIs and in the interpretation of constitutional and administrative doctrines that protect affected interests and vice versa. In formulating and applying EU measures, there are procedures and doctrine of EU administrative law that deal with legitimacy gaps identified in Chapter two and with EU constitutional values discussed in this chapter. The following two chapters examine how these apply to third country affected interests in ways that may operationalise EU external action values and fill relevant legitimacy gaps.

114

3 EU Decision-Making Processes and IEMEIs I. INTRODUCTION

H

aving considered the legitimising function of EU law on the basis of the constitutional values of EU external action, this chapter turns to administrative law doctrines and procedures that could inform and be informed by such values and explores the different ways in which they contribute to filling the legitimacy gaps related to IEMEIs. Despite some scepticism as to the need to pay due regard to interests located outside the borders of the EU,1 this chapter builds on the legitimacy framework developed in Chapter two and theories that advocate for greater inclusion of third country affected interests,2 in examining the legitimising function of EU law. It examines the extent to which the EU institutions are required by law to consider third country impacts in designing and applying IEMEIs. In this respect, this chapter examines the right to be heard (Section II), public participation rights under the Aarhus Convention (Section III),3 regulatory processes for the formulation and revision of EU measures (Section IV), the duty to provide reasons for ­decision-making (Section V) and the right of access to information (Section VI). The analysis examines the extent to which these procedures and principles contribute to filling the different kinds of legitimacy gaps related to IEMEIs in EU decisionmaking processes, both at the stage of formulation and adoption of IEMEIs, as well as at the stage of their implementation and enforcement. The formulation of EU measures connects particularly with the accountability gap as well as with the participation and representation gap in terms of third country actors having a voice in the adoption of IEMEIs. In the absence

1 MP Maduro, ‘The Importance of being called a Constitution: Constitutional Authority and the Authority of Constitutionalism’ (2005) 3 International Journal of Constitutional Law 332; DH Regan, ‘An Outsider’s View of Dassonville and Cassis de Dijon: On Interpretation and Policy’ in M Maduro and L Azoulai (eds), The Past and the Future of EU Law: The Classics of EU Law Revisited on the 50th Anniversary of the Rome Treaty (Hart, 2010). 2 See in particular, E Benvenisti, ‘Sovereigns as Trustees of Humanity: On the Accountability of States to Foreign Stakeholders’ (2013) 107 American Journal of International Law 295. 3 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, 25 June 1998, 2161 UNTS 337 (Aarhus Convention).

116  EU Decision-Making Processes and IEMEIs of state consent, input from third country actors is important at early stages of conceptualisation of IEMEIs in order to gather information about processes in third countries and increase the participation of affected interests. As discussed in Chapter two, participation of affected interests can enhance legitimacy by inducing acceptance of norms, encouraging accountability and providing opportunities for affected actors to give useful information.4 Transparency and consultation also form an important part of a deliberative model of governance, for which the EU strives.5 As a matter of EU law, EU decisions should be taken as openly as possible6 and EU institutions should work as openly as possible7 within a framework of open, transparent and regular dialogue as well as public exchange of views with representative associations and civil society.8 Additionally, the Commission is required to carry out broad consultations with parties concerned.9 These internal EU constitutional requirements incorporate legitimacy values and mechanisms of good governance that require due process, transparency, accountability and procedural justice in decision-making as discussed in Chapter two. Therefore, legally it should not be challenging for the EU to achieve legitimacy norms and mechanisms in its IEMEI action as it has already committed to such values in its constitutional texts internally. However, in practice, the extent to which EU decision-making incorporates such norms and mechanisms, particularly towards third country affected interests, requires further investigation. At the stage of implementation and enforcement of IEMEIs in relation to third countries, EU administrative law principles that promote transparency and due process can contribute to filling the procedural justice gap as well as providing transnational accountability avenues through protection of procedural rights granted to third country actors. The implementation of IEMEIs mainly consists of situations where regulatory requirements that determine access to the EU market are applied to specific third country actors. For example, the application of IEMEIs to third country operators that include authorisation requirements for products or processes could provide ways for the affected third country interests to be sufficiently informed and have the opportunity to be heard. In terms of due process rights that can contribute to the procedural justice gap related to IEMEIs, it is remarkable that the Charter of Fundamental Rights (‘the Charter’) includes a right to good administration, which is not limited to EU nationals.10 This includes the right to a hearing and other specific procedural

4 J Mendes, Participation in EU Rule-Making: A Rights-Based Approach (OUP, 2011). 5 Commission, ‘European Governance: A White Paper’ COM(2001) 428 final. 6 TEU, Art 1. 7 TFEU, Art 15. 8 TEU, Art 11. 9 TEU, Art 11(3) and Protocol No 2 on the application of the principles of subsidiarity and proportionality [2010] OJ C83/206, Art 2. 10 Charter of Fundamental Rights of the European Union [2012] OJ C326/391 (the Charter), Art 41.

Right to be Heard  117 rights such as the duty to give reasons and access to a person’s file. While this right is certainly significant, it has limits. It does not create any new rights and does not refer to participation, transparency or accountability, all of which are essential for good governance.11 Nonetheless, the inclusion of procedural rights in the Charter could enhance their protection and provide a ‘stimulant of good a­ dministration’.12 Overall, EU decision-making processes have great potential to fill the IEMEI legitimacy gaps through consideration of third country affected interests, but the extent to which they fulfil such a function is qualified in many respects. At the formulation stage, the legally recognised right to be heard and commitments under the Aarhus Convention do not indicate recognised participation rights, while the greatest potential lies with ‘soft law’ regulatory procedures of consultation and policy-making that are formally open to third country actors but are variable in their consideration of different kinds of third country impacts. The disciplining function of EU law is more evident in the implementation and enforcement of EU measures with respect to individual third country actors, when it is more likely for third country actors to derive procedural rights, which can also be enforced before the EU courts.13 II.  RIGHT TO BE HEARD

Procedural safeguards in the adoption and implementation of regulatory measures can take many forms. In terms of legally recognised rights of participation, the right to be heard is the most prominent legal safeguard in EU law, albeit limited in certain circumstances as explained below. This right was developed and recognised as a general principle of EU law14 and is also recognised as a fundamental right.15 It is important in providing affected persons with the opportunity to give useful information and input before a decision is taken, as well as constituting an important right of defence. A.  Formulation of IEMEIs Despite its potential in incorporating affected interests, the right to be heard is restricted in important respects that diminish its relevance at the initial stage of formulation of EU measures. The right to be heard does not extend to legislative

11 See Chapter 2, Section III.B; C Harlow and R Rawlings, Process and Procedure in EU Administration (Hart, 2014). 12 ibid 92. 13 See Chapter 4. 14 Case 17/74 Transocean Marine Paint Association v Commission EU:C:1974:106, para 15. 15 Charter, Art 41.

118  EU Decision-Making Processes and IEMEIs measures, or acts of general application involving a choice of economic policy.16 It is limited to situations where administrative acts are of direct and individual concern to the applicant.17 Also, it does not apply to legislative procedures, even if the decisions are of direct and individual concern to the applicant.18 These restrictions relate to the function that the right to be heard is meant to serve. It is distinct from participation and consultation rights – these rights serve different functions, with the right to a hearing being recognised more as an individual right serving the adjudication process.19 This distinction is reflected in the situations when the right to be heard does apply. It is recognised in relation to individual measures adversely affecting a person,20 including proceedings initiated against a person21 or measures where a person is named or addressed.22 The right to be heard would not apply in the formulation of IEMEI legislative measures, such as the Timber Regulation or the IUU Regulation adopted by legislative procedure, due to the limitations outlined above, thus falling short of creating participation and representation opportunities in the formulation of IEMEIs, at least in the form of a legally recognised right. Also, it would not apply in the formulation of implementing measures or non-legally binding guidelines that determine the details of implementation of IEMEIs. Although delegated regulation is not likely to be considered as ‘legislative’ in nature in this context,23 there are no recognised participation rights in relation to non-legal acts either in the TFEU24 or within the secondary legislation that provides for their adoption, and such measures would usually be of general application.25 Therefore, for example, the right to be heard would not apply when formulating the technical requirements for ship recycling facilities in third countries26 or the criteria for assessing equivalent conditions of treatment of WEEE in third countries.27 In contrast, a right to be heard would more likely arise when IEMEIs

16 Case T-521/93 Atlanta AG and others v Council and Commission, EU:T:1996:184. 17 P Craig, EU Administrative Law, 2nd edn (OUP, 2012) ch 11. 18 Case T-13/99 Pfizer Animal Health SA v Council, EU:T:2002:209. 19 T Tridimas, The General Principles of EU Law, 2nd edn (OUP, 2006) ch 8. 20 Charter, Art 41. 21 Case C-234/84 Belgium v Commission, EU:C:1986:302, para 27. 22 Case C-32/95 P Commission v Lisrestal and others, EU:C:1996:402, para 30. 23 AH Türk, ‘The Concept of Legislation and Participation Rights in European Union Law’ (2013) 6 The Indian Journal of Constitutional Law 76. 24 TFEU, Arts 290, 291. 25 In such situations, third country actors could participate through non-legally binding participation processes discussed in Section IV below. 26 Commission, ‘Requirements and procedure for inclusion of facilities located in third countries in the European List of ship recycling facilities – Technical guidance note under Regulation 1257/2013/EU on ship recycling’ (Communication) [2016] OJ C128/1. 27 Parliament and Council Directive 2012/19/EC on waste electrical and electronic equipment (WEEE) [2012] OJ L197/38, Art 10(2). Here there may also be issues as to whether it is third country facilities that are adversely affected or the EU exporter of waste who should have a say, given that the obligations are directly applied to the EU exporter and indirectly generate obligations for the third country facilities, see Chapter 1, Section III.A.(i).(b).

Right to be Heard  119 are applied to and enforced against specific third country operators or countries, as discussed below. The distinction between when the right applies and when it does not may be seen as unduly restrictive and arbitrary in terms of delimiting the interests which are legitimately affected. Even though the CJEU has made a choice to limit legally recognised participation rights in more generalised measures,28 the rationale behind that choice can be fraught. This is partly because the parameters of the distinction give rise to situations where legislative measures affect a person individually and adversely but where they are not afforded a chance to express their views.29 Given its limited scope, some scholars have suggested expanding the scope of the right to be heard. Türk calls for the criteria of sufficient individualisation and adverse effect to be expanded to legislative measures so as to avoid a rigid and arbitrary distinction between individual measures and legislative measures of general application.30 Mendes goes even further, as she is particularly sceptical of the adversarial approach to participation and advocates a broader concept of participation that would allow for legally recognised intervention by persons with ‘legitimate’ and ‘general’ interests potentially affected by a measure.31 ‘Legitimate’ interests are understood as those directly affected and whose legal position is protected by the system, while, in contrast, ‘general’ interests are indirectly affected, and while pertinent to the material situation, they are only legally relevant in so far as their fulfilment is a goal of the legal system.32 In relation to IEMEIs, it is not straightforward whether third country interests affected by IEMEIs are or should be legally protected by the EU legal system in the sense that ‘their fulfilment is one of the goals of the legal system’.33 In any case, the procedural status of such general interests is generally much weaker. A broad approach to a legally recognised participation right at the formulation stage fits with the legitimacy framework developed in Chapter two that aims to satisfy the interests affected by regulatory power, irrespective of where these are situated. Although such an approach may seem too expansive for a legally recognised right, such an approach to a right to be heard would not extend to an obligation to follow the views put forward and thus significantly constrain EU power, but rather an obligation simply to take such views into account, by providing the opportunity and forum for such consultation.34 Participation has an ‘independent value’ beyond affecting the final outcome35 that can control the

28 Craig, EU Administrative Law (n 17 above) ch 11. 29 Türk, ‘The Concept of Legislation’ (n 23 above). 30 ibid. 31 Mendes (n 4 above) ch 10. 32 ibid. 33 ibid. 34 ibid; Benvenisti (n 2 above). 35 S Cassese, ‘A Global Due Process of Law?’ in G Anthony and others (eds), Values in Global Administrative Law (Hart, 2011).

120  EU Decision-Making Processes and IEMEIs exercise of EU power beyond EU powers through a legal requirement to ‘hear’ third country views on the adoption of IEMEIs. Overall, it seems that expansion of participation rights, in the legislative process at least, is not likely to come from the courts in the form of a right to be heard.36 Thus the prospects of realising the controlling function of EU law, in relation to IEMEIs and participation, through the right to be heard at the formulation stage are relatively low. Instead, participation opportunities at the formulation stage exist in other forms, particularly through ‘soft law’37 decisionmaking procedures such as Impact Assessments (IAs) considered in Section IV. This may be more realistic and appropriate given that the procedural right to be heard was not designed to provide input opportunities when adopting new measures, but mostly as a procedural right when those adversely affected are given the opportunity to react to individual decisions. It is thus more relevant in the implementation and enforcement of IEMEIs in relation to third country actors. B.  Implementation and Enforcement of IEMEIs In contrast to the limitations of the right to be heard at the formulation stage, it provides opportunities for those affected to express views in relation to administrative decisions of individual nature at the implementation stage. At this stage, the right to be heard can contribute to filling the procedural justice gap and potentially allow for participation and representation of third country affected interests. Notably, the right to be heard cannot be excluded by legislation and exists even if legislation does not specifically provide for it.38 For parties to qualify for this right, two conditions must be met. First, they should present a sufficient degree of individualisation, ie, when they are under investigation and the relevant act is based on determinations of their conduct. Second, their position is likely to be affected adversely, either in terms of their legal position or potentially in terms of economic impact.39 A right to be heard would usually apply when IEMEIs are directly enforced against a third country actor.40 A right to be heard could, for example, apply when a facility applies to be included in the European ship recycling list.41 36 Craig, EU Administrative Law (n 17 above) ch 16. 37 Soft law is defined as ‘rules of conduct which, in principle, have no legally binding force but which nevertheless may have practical effects’: F Snyder, ‘The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques’ (1993) 56 Modern Law Review 19. 38 Transocean (n 14 above); Craig, EU Administrative Law (n 17 above) ch 16. 39 Türk, ‘The Concept of Legislation’ (n 23 above). 40 Note that a right to be heard would not apply to third country actors when EU requirements are enforced against an EU operator and third country actors are indirectly influenced. For example, this is the case with the WEEE Directive, which imposes obligations on the EU exporter of waste rather than the third country facility. See Chapter 1, Section III.A.(i).(b). 41 Regulation (EU) 1257/2013 on Ship Recycling [2013] OJ L330/1, Art 15.

Right to be Heard  121 The ship recycling facility (SRF) would be under investigation, including through site inspections by the Commission or agents acting on its behalf.42 However, the fact that authorisation of SRFs is done on the basis of general conditions43 and the European List is set out in implementing legislation, most likely considered of general nature,44 could raise questions as to whether a right to be heard would apply at this stage in the absence of an explicit right. A right to be heard could arise at different stages of implementation. The Commission’s guidance provides for third country facilities the opportunity to present their case and answer the Commission’s questions when the Commission considers removing an SRF from the European List.45 Although this is provided in a non-legally binding instrument, such a right would likely apply as a general principle of law since the decision to remove a facility from the list would likely be set out in an individual decision. In a similar way, Article 23 of the Ship Recycling Regulation, further discussed below in Section V, provides the opportunity to SRFs to be heard when the Commission has been requested by civil society to take action in light of an imminent breach of the Regulation. A right to be heard is also specifically provided in the IUU Regulation when implementing the requirements of the Regulation through decisions to blacklist a third country vessel46 or a third country.47 In relation to non-cooperating countries in particular, provision is made for third countries to respond at the initial first warning, known as ‘yellow card’, where the third country is given reasonable time to respond to the warning and remedy the situation before a ‘red card’ is issued.48 The application of a right to be heard as a matter of EU law at the enforcement stage of IEMEIs can play a significant role in ensuring due process and procedural fairness in the application of EU regulatory requirements to third country actors. In practice, the legitimising function of a right to be heard also depends on the extent to which it can be enforced before the EU courts, which is discussed in Chapter four.49 In summary, the right to be heard constitutes an important procedural safeguard that can contribute to filling the procedural justice gap when IEMEIs are applied to third country actors. Conversely, a general right to be heard is not recognised when IEMEIs are adopted and thus does not contribute to filling the participation and representation gap at the formulation stage. Even in the

42 ibid, Art 15(4). 43 ibid, Art 13. 44 ibid, Art 16. 45 Guidance on Ship Recycling Facilities (n 26 above) 5. 46 For example, when a vessel is put on the IUU vessel list: Regulation (EC) 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing [2008] OJ L286/1 (IUU Regulation), Art 27(2). 47 ibid, Arts 32, 33 in relation to non-cooperating countries. 48 ibid, Art 32. 49 See in particular, Chapter 4, Section III.B.(i).

122  EU Decision-Making Processes and IEMEIs absence of a legally recognised right of participation in the form of the right to be heard, there may be alternative, legally recognised participation avenues for third country affected actors, stemming from the EU’s commitments under the Aarhus Convention. III.  PUBLIC PARTICIPATION IN THE AARHUS CONVENTION

Being ‘a Convention about government accountability, transparency and ­responsiveness’,50 the Aarhus Convention and its implementation in the EU could realise the controlling function of disciplining EU law for IEMEIs through procedural obligations. The Aarhus Convention is legally relevant for IEMEIs in terms of public participation, access to justice and access to environmental information in different ways. Notably, its provisions do not discriminate on the basis of nationality in terms of who can access the Convention’s rights and could thus be relied upon by third country actors. This section considers rights that could primarily contribute to filling the participation and representation gap relating to IEMEIs. The second pillar of the Aarhus Convention provides for varying obligations on public participation. The most relevant provision for the adoption of IEMEIs would be Article 8 on public participation in the preparation of generally applicable legally binding normative instruments. This provision does not impose strict obligations but rather sets out guidelines for effective participation. These can be helpful and may even inform the Commission’s consultation standards discussed below, but they do not create concrete opportunities for participation when such rights do not exist. An additional category of public participation that could potentially be relevant in the context of IEMEIs is that set out in Article 6(1)(b) of the Convention, which provides for public participation in relation to ‘additional activities’ that may have a significant effect on the environment.51 However, this provision leaves discretion to parties to determine whether such additional activities might have a significant impact on the environment and will be subject to public participation requirements. In principle, there might be some support for a broad interpretation of this provision, calling for public participation in activities presenting high risk,52 which could potentially include activities such as biofuel production, waste treatment, and ship recycling as activities that may have significant environmental effects. These effects would be primarily felt in third countries where these processes take place, but they would also indirectly have effects within

50 Harlow and Rawlings (n 11 above) ch 12. 51 These are activities not included in Annex I of the Aarhus Convention. 52 G Winter, ‘National Administrative Procedural Law Under EU Requirements’ in JH Jans, R Macrory and A-M Moreno Molina (eds), National Courts and EU Environmental Law (Europa Law Publishing, 2013).

Public Participation in the Aarhus Convention  123 the EU. A transnational approach to participation could particularly extend to the ‘public concerned’, which can extend beyond the boundaries of the regulating country in relation to plans and programmes.53 It is unclear when such public participation rights would apply – whether it would be at the formulation stage of general legislative measures that regulate how such activities would be carried out in general or whether it would be at the implementation stage when these activities are authorised in specific situations. Any participation rights deriving on this basis may thus be relevant either at the formulation or at the implementation stage of IEMEIs. While the above approach may present an interesting theory that could expand participation opportunities for the public concerned in relation to such activities, it is unlikely that the EU legislature would adopt such an interpretation of the Aarhus provisions, for the scope of activities and the public concerned to extend beyond EU borders, and it has not incorporated such interpretation in its implementing legislation. On the contrary, the EU has only imposed public participation requirements on EU institutions in relation to plans and programmes.54 Given scepticism as to whether the Aarhus Convention has had a real impact in the EU in terms of accountability and transparency in relation to internal interests,55 there are important limitations as to its potential in opening up procedures to third countries’ interests, especially countries not parties to the Convention, and the application of participation rights is exemplary in this regard.56 Overall, in filling the participation and representation gap related to IEMEIs, despite the shortcomings and narrow scope of application of the right to be heard and of public participation obligations under the Aarhus Convention, consultation and participation of affected interests ‘can occur even if it is not backed up by a legal right’.57 Indeed, most Commission consultation practices have been developed through non-legally binding instruments and strategies. While this allows for a non-legalistic approach that might be more appropriate in engaging with foreign actors,58 it leaves much discretion to the Commission and participation opportunities are variable, as seen in the following section. Furthermore, the soft law nature of participation practices

53 UN Economic & Social Council, Decision 1/7, Review of Compliance, UN Doc ECE/MP.PP/2/ Add.8 (2 April 2004); Benvenisti, ‘Sovereigns as Trustees’ (n 2 above) 319. 54 Parliament and Council Regulation (EC) 1367/2006 on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community institutions and bodies [2006] OJ L264/13 (Aarhus Regulation). 55 Harlow and Rawlings (n 11 above). 56 For further potential of the Aarhus Convention expanding procedural rights to third country actors, see below Section VI on Access to information and Chapter 4, Section II. 57 Craig, EU Administrative Law (n 17 above) ch 10. 58 DM Trubek, P Cottrell and M Nance, ‘“Soft Law”, “Hard Law”, and EU Integration’ in G de Búrca and J Scott (eds), Law and New Governance in the EU and the US (Hart, 2006) 74.

124  EU Decision-Making Processes and IEMEIs affects their enforceability before the EU courts, as discussed in Chapter four, and ­ultimately their controlling function in disciplining EU power. IV.  EU REGULATORY PROCESSES: BETTER REGULATION AND THE CASE OF IMPACT ASSESSMENTS

Regulatory processes for assessing the impacts of EU measures are important in exploring the extent to which EU decision-making procedures fill the representation and participation gap relating to IEMEIs as well as potentially providing external accountability mechanisms. These procedures indicate the ways and extent to which EU institutions consider third country impacts when formulating and revising EU measures, as well as whether third country actors have opportunities to express their views through formal avenues in the EU. As part of the more general agenda of ‘Better Regulation’,59 the Commission is meant to carry out stakeholder consultations for the introduction of a greater scope of measures60 throughout the policy cycle.61 The following analysis examines the consideration of third country impacts in Impact Assessments (IAs) that provide formal and institutionalised processes,62 occurring as a matter of practice in relation to legislative initiatives that are likely to have significant social, environmental or economic impacts.63 IAs partly aim at increasing input legitimacy by gathering information from different affected constituencies.64 At the same time, policy decisions are made publicly available, thus increasing transparency and accountability of decision-makers.65 In this respect, the ECJ held in September 2018 that draft impact assessment documents should be made publicly available when requested, even if the Commission has not made a decision on whether to proceed to a legislative proposal yet.66 With this decision, the ECJ increased the transparency of EU legislative decision-making,

59 Commission, ‘Better Regulation for Better Results – An EU Agenda’ (Communication) COM(2015) 215 final; Commission, ‘Better Regulation Guidelines’ (Staff Working Paper) SWD(2015) 111; Better Regulation ‘Toolbox’ complementing Commission Staff Working Paper SWD(2015) 111. See also Interinstitutional Agreement between the Parliament, the Council and the Commission on Better Law-Making [2016] OJ L123/1. 60 This now includes delegated and implementing acts, Better Regulation Guidelines (n 59 above) 17. 61 Better Regulation Guidelines (n 59 above) 66. 62 There are also less formal and institutionalised processes through which third country actors could influence adoption of legislation, for example through informal meetings and Commission networks. 63 Better Regulation Guidelines (n 59 above) 17. 64 GC Rowe, ‘Tools for the Control of Political and Administrative Agents: Impact Assessment and Administrative Governance in the European Union’ in HCH Hofmann and AH Türk (eds), EU Administrative Governance (Edward Elgar, 2006). 65 ACM Meuwese, Impact Assessment in EU Lawmaking (Kluwer Law International, 2008). 66 Case C-57/16 ClientEarth v European Commission, EU:C:2018:660. This case is further discussed below in Section VI.

EU Regulatory Processes  125 at  an even earlier stage, thereby enhancing the legitimacy and credibility of these processes. If done well, IAs could provide an important accountability mechanism for the formulation and revision of IEMEIs. As Alemanno puts it, IAs offer a ‘legality check’ of substantive (subsidiarity and proportionality) and procedural tests (public participation) of proposed legislation.67 Similar principles and practices also apply in evaluations68 and fitness checks69 that could provide mechanisms for experimentalist governance to occur across borders whereby feedback from implementation at the local level could inform revision of IEMEIs. IAs and the Better Regulation Guidelines operationalise participation in the EU decision-making processes as provided in Article 11 TEU. While some provisions of Article 11 TEU are clearly limited to EU citizens,70 others appear to be more inclusive, requiring dialogue with ‘representative associations and civil society’,71 which is not necessarily territorially confined. Also, broad consultations by the Commission with ‘parties concerned’72 would likely include third country actors with interest in EU action.73 Accordingly, participation in regulatory processes is in principle open to third country actors and the Better Regulation guidelines draw attention to third country interests in different ways. The analysis that follows explores the extent to which the Commission is required to consider third country impacts in the IA process (Section IV.A), and the extent to which third country impacts have been considered in the IAs carried out so far for IEMEIs (Section IV.B). The consideration of third country impacts in relation to IEMEIs is in practice variable and qualified. This is particularly the case when affected interests are countries and third country actors without sufficient resources and established participation and lobbying practices in the EU. Also, the consideration of third country impacts is often framed primarily by internal considerations concerning the relationship of the EU with the Member States that distract from the external effects of IEMEIs.

67 A Alemanno, ‘A Meeting of Minds on Impact Assessment – When Ex Ante Evaluation Meets Ex Post Judicial Control’ (2011) 17 European Public Law 11. 68 ‘Evaluations gather evidence to assess how well a specific intervention has performed (or is working), taking account of earlier predictions made in the context of an impact assessment and whether there were unintended/unexpected effects which were not anticipated by the impact assessment or the act agreed by the Legislator’: Better Regulation Guidelines (n 59 above) 8. 69 ‘A Fitness Check is a comprehensive evaluation of a policy area that usually addresses how several related legislative acts have contributed (or otherwise) to the attainment of policy objective’: Better Regulation Guidelines (n 59 above) 8. 70 Art 11(1) and 11(4) TEU. 71 Art 11(2) TEU. 72 Art 11(3) TEU. 73 For a detailed analysis of the territorial scope of Art 11 TEU, see E Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law – Towards Full Legal Subjectivity?’ in S Bardutzky and E Fahey (eds), Framing the Subjects and Objects of Contemporary EU Law (Edward Elgar, 2017).

126  EU Decision-Making Processes and IEMEIs A.  Consideration of Third Country Impacts in the Impact Assessment Process The Better Regulation Guidelines require consideration of and consultation with third country interests in different ways that are arguably more inclusive than the previous version of the guidelines.74 These can be traced in the consultations on alternative policy options that require the Commission to also consider the options put forward by third country trading partners and ­stakeholders.75 Additionally, the relevant impacts to be examined include impacts on those who are required to comply with regulatory requirements.76 In relation to IEMEIs these would usually include third country actors, as IEMEIs often directly apply to third country economic operators, such as third country ship recycling ­facilities,77 and sometimes require enforcement action by third countries, for example in relation to IUU fishing.78 Additionally, in classifying the different kinds of impacts to be considered, the guidelines explicitly refer to impacts on third countries.79 However, they ascribe different kinds of weight to different kinds of third country impacts. Third country impacts are predominantly mentioned in relation to trade and investment, with specific emphasis on WTO obligations and preferential trade agreements.80 As discussed in Chapter six, the EU takes steps to avoid and anticipate WTO inconsistency, which steps are often set out in IAs.81 When consulting on trade and investment, the guidelines provide that EU and third country operators should be given equal opportunities to express their views,82 also highlighting the priority of these particular kinds of external effects,83 while incorporating procedural fairness in participation. In relation to impacts on external trade and investment, the guidelines also differentiate between different groups of countries and highlight impacts on developing countries. The guidelines focus on Article 208 TFEU, mentioned in the Introduction to Part II, which requires taking into account impacts on developing countries.84 The consideration of impacts on developing countries in the IA regime demonstrates how a legally binding obligation is operationalised through soft law decision-making procedures that enable ex ante assessment to

74 ibid. 75 Better Regulation Guidelines (n 59 above) 23; Better Regulation Toolbox (n 59 above) 97. 76 Better Regulation Guidelines (n 59 above) 25. 77 Ship Recycling Regulation (n 41 above) Arts 13, 15. See also Chapter 1, Section III.A 78 IUU Regulation (n 46 above) Arts 12(3), 20. See also Chapter 1, Section III.A 79 Better Regulation Toolbox (n 59 above) Tool 16. 80 ibid, 102,103 and tool 22. 81 Chapter 6, Section II.B.(iii). 82 Better Regulation Toolbox (n 59 above) 155. 83 Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law’ (n 73 above) 220. 84 These include trade impacts, adjustment costs and effects on competitiveness of developing country products, ibid 156.

EU Regulatory Processes  127 ensure impacts on developing countries are taken into account at an early stage.85 The consideration of impacts on developing countries in IAs could contribute to filling the distributive justice gap related to IEMEIs. The extent to which IAs give sufficient weight to developing country interests in practice, however, is q ­ uestionable,86 particularly as IAs often prioritise the efficiency of EU measures over economic burdens imposed on developing countries, as discussed further below in Section B in the context of specific IEMEIs. Additionally, the Better Regulation Toolbox requires consideration of social impacts in third countries, including employment, social protection and poverty impacts.87 Furthermore, the Toolbox calls for consideration of international environmental impacts in third countries specifically in ways that could affect the EU’s development policy. The Commission should also take into account international standards and third country regulatory action in order to avoid unnecessary regulatory differences between proposed EU requirements and existing standards.88 Third country interests thus become relevant in many ways within the IA process. However, identification of third country impacts in Better Regulation instruments does not necessarily mean that they would be given significant weight, as the Commission retains considerable discretion in identifying which impacts are likely to be significant and would merit further investigation. Even though the guidelines draw attention to third country impacts, their influence on final policy choices is unclear. First, this is due to the unclear effects of IA results on policy choices in the EU. Despite an obligation to take into account the results of IAs and to include an explanatory memorandum explaining how contributions have been taken into account, there is a danger that consultation may become ‘no more than a formal hoop to climb through for EU institutions’.89 In practice, explanatory memoranda are very short and IA reports are purely descriptive without much explanation of actual reliance on alternative options or consideration of specific impacts.90 Second, while the Better Regulation Guidelines draw attention to third country impacts and call for consultation with third country actors, this does not give rise to legally enforceable rights of participation which could be pleaded before the EU courts. As further discussed in Chapter four, it is unlikely that EU or third country actors could rely on Article 11 TEU or the Better Regulation Guidelines to challenge whether their views have been sufficiently heard by the

85 Commission, ‘Policy Coherence for Development EU Report’ (Staff Working Document) SWD(2015) 159 final, 15. 86 A Berman, ‘Taking Foreign Interests into Account: Rulemaking in the US and EU’ (2015) GlobalTrust Working Paper WPS 2015-03. 87 Better Regulation Toolbox (n 59 above) 106. 88 ibid 157. 89 D Chalmers, G Davies and G Monti, European Union Law: Text and Materials, 3rd edn (CUP, 2014) 407. 90 ibid.

128  EU Decision-Making Processes and IEMEIs ­ ommission before the courts. Rather, participation and consideration of third C country interests is done within a political and discretionary context, serving the right of the Commission to receive information.91 Third, the ways in which the Commission is required to or will address external impacts are often unsatisfactory or refer to existing mechanisms such as the WTO machinery.92 While these linkages to the WTO could provide for interaction with the multilateral system in engaging in discussion with third countries, deferring to WTO law is characterised by a circular nature, as WTO law also often defers to national systems for ensuring compatibility and dialogue. There is thus a need for more effective interaction and co-ordination between these two regimes, as further demonstrated in Part III of the book. Despite multiple references to third country impacts in Better Regulation documents, their role in the substantive assessment of EU measures is not straightforward. This can be seen in how third country impacts are weighed in the assessment of EU action against compliance with the general principles of proportionality and subsidiarity. At the legislative stage, proportionality is meant to guide the choice and extent of regulatory action.93 In accordance with Article 5(4) TEU, ‘the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.’94 In assessing compatibility with the proportionality principle at the legislative stage, the Commission sometimes takes into account economic burdens imposed on third countries in determining the necessity of measures to achieve the regulatory objective pursued. For example, this was briefly done in relation to the Ship Recycling Regulation. It was recognised that economic operators, including in third countries, would face additional financial costs as a result of the Regulation’s requirements, which justifiably go beyond the requirements of the Hong Kong Convention to enhance the safety and environmental sustainability of ship recycling.95 Also, a proportionality test was applied in finding a cost-effective approach for addressing IUU fishing. While recognising the considerable impacts imposed on third countries and particularly developing countries, the efficiency of the policy was clearly prioritised.96 Generally, the determination of proportionality as part of the legislative process is closely connected to the principle of subsidiarity and competence

91 Better Regulation Guidelines (n 59 above) 4; Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law’ (n 73 above) 223. 92 Better Regulation Toolbox (n 59 above) 157. 93 ibid 24. Proportionality is also relevant for IEMEIs under judicial review, see Chapter 4, Section III. 94 TEU, Art 5(4). 95 Commission, ‘Impact Assessment of Proposal for Council Regulation on ship recycling’ (Staff Working Document) SEC(2012) 47 final, 28. 96 Commission, ‘Impact Assessment of Proposal for Council Regulation establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing’ (Staff Working Document) SEC(2007) 1336, 75–76.

EU Regulatory Processes  129 which is applied in a political context.97 It is thus not always clear which aspects relate to proportionality and which to subsidiarity, as proportionality at the legislative stage is often assessed by reference to how much regulatory space is provided for Member States at the national level,98 which closely resembles the purpose of subsidiarity. While subsidiarity is usually about the added value of EU action in relation to discretion of Member States, it can also have external dimensions. Subsidiarity can become relevant in determining regulatory action in the form of IEMEIs when considering whether action is necessary at EU level. For example, the IA on ship recycling emphasised the global nature of ship recycling effects and environmental problems, as well as the need to speed-up the ratification of the Hong Kong Convention on Ship Recycling99 in justifying regulatory action at EU level.100 Such external dimensions, however, do not necessarily contribute to filling the representation and participation gap towards third country affected interests. Rather, they show how the enmeshment of internal and external aspects of EU policies may serve to justify the existence of IEMEIs at EU level without corresponding checks and accountability avenues to discipline the exercise of EU power towards affected third country interests. B.  Consideration of Third Country Impacts in the Impact Assessments of IEMEIs Having identified the main ways in which third country impacts are in principle required to be considered in IAs, the discussion now turns to examine how these have been considered in practice in relation to IEMEIs. A survey of IA reports, which are available for all IEMEIs examined in this book, shows how consideration of third country impacts and consultation with third country actors are variable and depend on the framing of the regulatory problem and the justification used for pursuing regulatory objectives through IEMEIs. (i)  Relevance and Framing of Third Country Impacts The legal design and scope of each measure indicates whether third country impacts are directly relevant and partly determines the extent of their consideration in IAs. For example, when a measure aims to address illegal activities in third countries, as is the case with the measures on IUU fishing and WEEE,

97 W Sauter, ‘Proportionality in EU Law: A Balancing Act?’ (2013) 15 Cambridge Yearbook of European Legal Studies 439. 98 ibid. 99 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships 19 May 2009 (not yet in force) SR/CONF/45. 100 IA on ship recycling (n 95 above).

130  EU Decision-Making Processes and IEMEIs it is more likely for third country effects to be given attention.101 Additionally, when an EU measure entails restrictive trade sanctions against third country actors and regulatory changes by third countries, as is the case with the IUU Regulation, third country impacts undergo a more comprehensive analysis.102 Also, as shown in the area of seal hunting, when a measure targets an activity that is mainly carried out abroad and would thus significantly affect specific third country actors, in this case indigenous peoples whose livelihoods depend on the specific economic activity, then the very nature of the regulatory object determines the interests that should be addressed.103 Indeed, when formulating the Regulation that banned trade in seal products in the EU, the Commission consulted with indigenous communities in ways that provided these communities with greater representation than that usually provided in regulatory processes in their home countries.104 Third country and international impacts become relevant in IAs for different reasons, which reflect the EU’s motivations in adopting IEMEIs.105 Third country impacts often become relevant in ensuring compatibility with WTO law106 or international environmental agreements.107 Third country impacts also become relevant when determining whether EU action would complement and not inhibit action in relevant international fora.108 The positive effects of IEMEIs on international regulatory efforts play a significant role in justifying EU unilateral action. In this respect, the positive impact on the international regulation of timber, the incentives created for third countries to address this issue and conclude bilateral agreements with the EU, were identified as the main reasons for maintaining the Timber Regulation.109 Also, external impacts can become relevant as part of the EU’s efforts to create a regulatory ‘model for expansion’ or maintain a level playing-field of international competition, as was the case with the inclusion of global aviation emissions in the EU ETS.110 101 Commission, ‘Impact Assessment on Directive on Waste Electrical and Electronic Equipment (WEEE)’ (Staff Working Document) SEC(2008) 2933, 25–26, 32, 38; IA on IUU Regulation (n 96 above) Section 2. 102 IA on the IUU Regulation (n 96 above) 63–67. 103 Commission, ‘Impact Assessment on the potential impact of a ban on products derive from Seal Species’ (Staff Working Document) SEC(2008) 2290. 104 M Young, ‘Trade Measures to address Climate Change: Territory and Extraterritoriality’ in P Delimatsis (ed), Research Handbook on Climate Change and Trade Law (Edward Elgar, 2016) 348. 105 Chapter 1, Section II.B. 106 IA on the IUU Regulation (n 96 above); Commission, ‘Impact Assessment on Regulation determining the obligations of operators who make timber and timber products available on the Market’ (Staff Working Document) SEC(2008) 2615. 107 Commission, ‘Impact Assessment on proposal for amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community’ (Staff Working Document) SEC(2006) 1684. 108 IA on ship recycling (n 95 above); IA on the IUU Regulation (n 96 above). 109 Commission, ‘Evaluation of Regulation 995/2010/EU laying down the obligations of operators who place timber and timber products on the market (the EU Timber Regulation)’ (Staff Working Document) SWD(2016) 34 final, 21, 23, 28. 110 IA on aviation emissions (n 107 above).

EU Regulatory Processes  131 As indicated above, consideration of third country impacts may be presented in IAs in a way that serves the EU’s own interests in convincing Member States of the need for EU action or in pre-empting international resentment to its unilateral approach. Balancing internal and external interests cannot always be easily achieved. An ‘inward-looking’ approach that seeks to convince EU actors of the need for EU-level action can sometimes harm external legitimacy by making the EU ‘blind’ to controversial effects of its policies beyond EU borders. In this respect, assessment of third country impacts in IAs usually captures the direct impacts of IEMEIs, while potentially ignoring the indirect economic incentives that IEMEIs create. IAs may fail to take account of subsequent social, economic and environmental impacts in third countries, as demonstrated for example by the failure to include CBDR considerations in the inclusion of aviation emissions in the EU ETS initially,111 or to incorporate considerations of indirect land use change (ILUC) in the initial formulation of the sustainability criteria for biofuels. The extent to which consideration of third country impacts in IAs contributes to filling the legitimacy gaps related to IEMEIs is qualified by how the EU regulator frames a regulatory problem when adopting IEMEIs. In identifying the relevant regulatory problem and who will be affected by EU action, EU institutions tend to emphasise beneficial impacts of proposed regulatory action for third countries, thus presenting the EU as a ‘hero’ addressing negative impacts for the benefit of third countries. For example, emphasis was placed on the negative health impacts for the population of third countries from current practices in recycling WEEE in illegal facilities.112 Similarly, attention was drawn to IUU practices depriving third country governments of valuable fish resources,113 or third country governments losing large potential revenues from trading in illegal timber,114 while not drawing attention to the detrimental impact on the economic security of vulnerable groups involved in such activities. In relation to ship recycling, the IA over-emphasised the positive impacts of EU regulation in terms of addressing accidents among workers, while insufficiently considering the negative economic impacts that the Regulation would have by detrimentally affecting job opportunities for vulnerable migrant groups.115 The consideration of economic impacts was rather EU-centric, focusing on effects on EU Member States, consumers, enterprises and the EU budget.116 In contrast, it did not 111 J Scott and L Rajamani, ‘EU Climate Change Unilateralism’ (2012) 23 European Journal of International Law 469. 112 For example, with a focus on avoiding illegal shipments of WEEE to third countries, the consideration of third country impacts is done in a deterrent fashion instead of exploring ways of promoting lawful treatment in facilities in developing countries, see IA on WEEE (n 101 above). 113 IA on the IUU Regulation (n 96 above). 114 IA on the Timber Regulation (n 106 above). 115 IA on ship recycling (n 95 above) 46. See also J Scott, ‘The Global Reach of EU Law: Is Complicity the New Effects?’ in J Scott and M Cremona (eds), EU Law beyond EU Borders: The Extraterritorial Reach of EU Law (OUP, forthcoming). 116 IA on ship recycling (n 95 above) 42–43.

132  EU Decision-Making Processes and IEMEIs consider how third country facilities would cover the costs of adapting to EU standards,117 while recognising that significant investments were needed by third countries for adapting facilities to EU standards, which would prevent certain countries from being able to comply with the Regulation for some time.118 While justifications that demonstrate how the EU acts for the benefit of a third country contribute to legitimately justifying and enabling IEMEIs, this framing seems to downgrade a constraining function of EU regulatory processes to ensure that such action is formulated by taking into account the burdens imposed on third countries in bringing about the necessary changes for achieving the regulatory goals. The balance between the positive and negative effects of EU policies is complicated and involves delicate consideration of an array of interests and perspectives. This should be reflected in impact assessments carried out by the Commission that should not only consider external impacts by overemphasising the benefits of EU policies for third countries. Additionally, positive impacts from EU action identified in IAs are often based on the presumption that EU action will be effective in reducing illegal activities in third countries. This may be explicitly identified, as done in the IA on the IUU Regulation,119 or implied as in relation to ship recycling that is affected by out-flagging practices. This presumption signifies that additional action may be needed on the part of the EU to ensure effective implementation and enforcement, whether by the third countries or by the EU, in cooperation with third countries. The EU sometimes recognises obstacles to the effective enforcement of its measures abroad. For example, it recognised how difficulties in gathering information on applicable law in third countries in relation to timber production have hindered the effective and full implementation of the Timber Regulation.120 The IA report also recognises loopholes for deviating from the Regulation’s requirements and refers to potential remedies. The extent to which identifying third country impacts provides for due consideration of third country interests often depends on whether and how the EU purports to remedy potential negative impacts on third countries by providing financial and technical support to developing countries that may lack the capacity to adapt to EU standards. In this respect, the Commission sometimes indicates that difficulties and costs faced by third countries would be alleviated through intensified EU efforts to support third countries through bilateral and regional agreements and under the EU’s development action. For example, in relation to WEEE exports, the EU has been taking additional steps to address illegal exports through better European border controls under the WEEE Directive and through international cooperation. For example the EU co-finances the ‘E-waste Africa Project’, a programme coordinated by the

117 ibid. 118 IA

on ship recycling (n 95 above) 118. on the IUU Regulation (n 96 above). 120 Evaluation of the Timber Regulation (n 109 above) 29. 119 IA

EU Regulatory Processes  133 secretariat of the Basel Convention, which aims to enhance the capacity of African countries to tackle the growing problem of e-waste.121 The EU has also been providing support to developing countries in relation to the fight against illegal logging as part of the FLEGT regime, in cooperation with the Food and Agriculture Organisation (FAO).122 International law efforts to more strictly review compliance of developed countries with financial and technical aid obligations also become relevant in this respect,123 demonstrating how the legitimacy and control of IEMEIs do not stem from the operation of a single legal regime but rather require examination of multiple overlapping legal orders. Financial and technical support to developing countries can go a long way toward legitimising the extension of EU standards abroad and addressing the distributive justice gap related to IEMEIs, but the intensity of such support and its relationship with EU market access requirements is not always clearly demarcated. Issues of assistance to developing countries are often addressed after the application of the unilateral trade-restrictive measures, as an afterthought, and they are not clearly incorporated in the legal design of the measure in a dependent, contingent manner. For example, formal assistance is provided to third countries after being warned that they will be identified as non-cooperating countries under the IUU Regulation.124 However, the issuance of a ‘yellow card’ already creates reputational damage and financial losses to the third country, at which point the EU formally engages in providing assistance to the third country in remedying the situation and avoiding being excluded from the EU market. Such assistance should be formalised and provided at an earlier stage, in accordance with the IUU Regulation, which calls for consideration of the special constraints of developing countries in complying with the R ­ egulation’s requirements.125 121 Basel Convention, ‘E-waste Africa Programme’: www.basel.int/Implementation/Ewaste/eWasteactivitiesinAfrica/EwasteinAfrica/Overview/tabid/2546/Default.aspx. See also on the implementation of the WEEE Directive through the European Union Network for the Implementation and Enforcement of Environmental Law: https://www.impel.eu/projects/implementation-of-the-weee-directive/. 122 EU-FAO FLEGT Programme, http://www.fao.org/in-action/eu-fao-flegt-programme/en/. On an analysis of the interaction between the EU Timber Regulation and the international regime see A Savaresi, ‘EU External Action on Forests: FLEGT and the Development of International Law’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012). 123 For example, the EU recognises the need to incorporate relevant international guidance on financing under the Convention on Biological Diversity, in respect to EU proposals that might affect the lands of indigenous communities in third countries, Commission, ‘Impact Assessment for the Communication Halting the Loss of Biodiversity by 2010 and Beyond’ (Commission Staff Working Document) SEC(2006) 607, 81. See further on this, E Morgera, ‘Ambition, Complexity and Legitimacy of Pursuing Mutual Supportiveness through the EU’s External Environmental Action’ in B Van Vooren, S Blockmans and J Wouters (eds), The EU’s Role in Global Governance: The Legal Dimension (OUP, 2013). 124 B Cooreman, Global Environmental Protection Through Trade, A Systematic Approach to Extraterritoriality (Edward Elgar, 2017) 216. 125 IUU Regulation (n 46 above) Recital 14, Art 31(7).

134  EU Decision-Making Processes and IEMEIs At the same time, it is notable that the Commission seeks to become aware of impacts on developing countries through different channels. In the case of IUU fishing for example, a study was commissioned by the Commission before the IUU Regulation entered into force, to examine the consequences of the IUU Regulation for developing countries. This included field visits in developing countries and consultations with key stakeholders on the ground. The study identified challenges for the implementation of the IUU requirements by specific third countries, and made recommendations for effective implementation, including by providing different kinds of support to developing countries to ensure effective implementation.126 (ii)  Participation Opportunities for Third Country Actors The extent to which IAs provide for due consideration of third country impacts also depends on whether third country actors have sufficient opportunities to voice their concerns about IEMEIs. The EU can only take account of third country impacts on its own to a certain extent. This is because of lack of available data for operations carried out abroad, especially when these involve unlawful operations,127 and the variability of circumstances among different countries. This suggests the need for input from third country affected actors to allow for more accurate factual assessment of the processes carried out in third countries, and for awareness of third country impacts. Generally, consultations with stakeholders should be carried out by following an inclusive approach to participation, openness and accountability, effectiveness and coherence.128 Consultations are open to third country actors that can influence EU decision-making through ‘lobbying’, as evidenced by registration of third country actors on the EU Transparency Register129 and their active participation in influencing high-profile measures such as the Regulation concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH).130 The Better Regulation guidelines specifically call for consultations with different kinds of stakeholders, including ‘organisations in the EU and those in non-member countries’.131

126 Final Report, ‘Analysis of Expected Consequences for Developing Countries of the IUU Fishing Proposed Regulation and Identification of Measures needed to Implement the Regulation – Phase 2’: http://aei.pitt.edu/46910/1/contrat.cadre.fish.no.15.pdf. 127 IA on ship recycling (n 95 above). 128 Better Regulation Guidelines (n 59 above) 63. 129 Berman (n 86 above); E Korkea-Aho, ‘‘Mr Smith Goes To Brussels’: Third Country Lobbying and the Making of EU Law and Policy’ (2016) 18 Cambridge Yearbook of European Legal Studies 1. 130 Parliament and Council Regulation (EC) 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals [2006] OJ L396 (REACH); E Fisher, ‘The ‘Perfect Storm’of REACH: Charting Regulatory Controversy in the Age of Information, Sustainable Development, and Globalization’ (2008) 11 Journal of Risk Research 541; Korkea-Aho, ‘Mr Smith Goes to Brussels’ (n 129 above). 131 Better Regulation Guidelines (n 59 above) 74.

EU Regulatory Processes  135 Routine online consultations of the Commission in principle provide easy participation avenues.132 In practice, however, effective consultation with all kinds of affected third country actors is not necessarily achieved. For example, despite a public consultation being carried out in relation to the extension of the EU ETS to global aviation emissions, this did not extend to and provide for participation of third country governments.133 Furthermore, even when consultations are open to third country actors, they do not necessarily provide for effective participation and representation of all kinds of third country interests, especially when poorer countries are affected.134 Consultation with third country actors is often carried out without sufficient transparency135 and its impact on the final decision is unclear. When consulting and incorporating third country governments in particular, ‘we are dealing with a very special type of stakeholder’ and international relations may complicate matters.136 Nonetheless, there are important benefits from participation of national governments in the decision-making procedures of other national governments.137 These include information exchange, adaptation of procedures and processes by other countries in response to changes in national legislation, promotion of multilateral cooperation,138 as well as anticipating resistance by third countries. While the EU has a special consultation relationship with some countries, particularly the US,139 participation by other third country government representatives, particularly from developing countries, may be less facilitated. Thus, while third country actors may have been active in certain IAs, it is not always the case that all kinds of third country actors participate to the same degree and that all third country interests are given sufficient weight. Given that decision-making processes take place internally within the EU legal order, the steps taken by the Commission to engage with third country affected interests are crucial for the effective participation of third country actors. Such a proactive approach on the part of the Commission does

132 A Rasmussen and P Alexandrova, ‘Foreign Interests Lobbying Brussels: Participation of non-EU Members in Commission Consultations’ (2012) 50 Journal of Common Market Studies 614; Korkea-Aho, ‘Mr Smith Goes to Brussels’ (n 129 above). 133 Commission, ‘Reducing the Climate Change Impact of Aviation: Report on the Public Consultation March–May 2005’ ec.europa.eu/clima/sites/clima/files/transport/aviation/docs/ report_publ_cons_en.pdf; N Krisch, ‘The Decay of Consent: International Law in an Age of Global Public Goods’ (2014) 108 The American Journal of International Law 1, 33. 134 Rasmussen and Alexandrova (n 132 above). 135 Third country governments are exempt from registration on the Transparency Registry, while third country industry actors are expected but not obliged to register, Interinstitutional Agreement between the Parliament and the Commission on the transparency register for organisations and selfemployed individuals engaged in EU policy-making and policy implementation [2014] OJ L277/11, Art 15; Korkea-Aho, ‘Mr Smith Goes to Brussels’ (n 129 above). 136 Meuwese (n 65 above) ch 5. 137 Cassese (n 35 above). 138 ibid. 139 Rasmussen and Alexandrova (n 132 above) 622.

136  EU Decision-Making Processes and IEMEIs s­ometimes occur. The  EU seems more prepared to engage and consult with third countries when the unilateral measure aims to prompt bilateral cooperation with the EU. This is the case with the Timber Regulation, which forms part of a more collaborative regime with the parallel ongoing VPA negotiations, providing for input and consultation with third country actors.140 Furthermore, more specific consideration and consultation with third country interests seems to occur in revision of IEMEIs, such as the adoption of rules on ILUC caused by increased demand of biofuels.141 Such proactive consultations with third country actors are particularly desirable when in the course of implementation, EU action does not seem to be fit for purpose, in this case achieving effective reduction of carbon emissions. The need for consultation with third country actors within the EU legal order in relation to IEMEIs therefore does not exclusively arise ex ante. On-going consultation could enable input by third country actors that implement EU measures at the local level. Transnational on-going consultation is sometimes provided for in the regulatory regime set up by the unilateral measure. This can be seen through the ‘extended governance’ incorporated in the REACH regime,142 which provides for third country participation in specialised authorities and agencies created under the chemicals regime, including providing input in the formulation of implementing legislation.143 In order to achieve effective consultation and participation, additional institutional embedding may be required to include third country affected interests, by creating specially adapted consultation and representation opportunities for third country actors when IEMEIs are designed to regulate third country practices. To conclude, this survey of IAs demonstrates that regulatory processes often engage with third country impacts when a measure is designed to apply abroad and affects trade relations with third countries. Therefore, current practice in the ‘soft law’ and political processes of IAs is generally inclusive of third country actors and impacts. The consideration of third country impacts, however, is often done from an internal, EU-Member State perspective through which the EU institutions seek to convince Member States of the need for EU action,

140 Commission, ‘Consultations on the evaluation of the EU Timber Regulation two years after its entry into application’. The target groups for this consultation include ‘other relevant stakeholders and citizens (inside and outside of the European Union)’: http://ec.europa.eu/environment/ consultations/eutr_en.htm. 141 Commission, ‘Impact Assessment accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources’ (Staff Working Document) SWD(2012) 343 final. 142 K Biedenkopf, ‘EU Chemicals Regulation: Extending Its Experimentalist REACH’ in J Zeitlin (ed), Extending Experlimentalist Governance? The European Union and Transnational Regulation (OUP, 2015). 143 ibid.

EU Regulatory Processes  137 thus distracting from external effects. In practice, policy options are set early without much flexibility for adaptation.144 As such procedures create important lobbying opportunities, they can create openings for stakeholders and countries with large resources to significantly influence EU policies,145 while excluding other third country actors. This can lead to unequal opportunities for participation – given the strong lobbying power of certain interests, such as multinational corporations and large trading partners – which is against procedural fairness and can ultimately lead to substantive injustice if developing country interests or weaker interests within countries are underrepresented. As Korkea-aho puts it, there is no trade-off between nationality and access to the legislative process for third-country actors. Instead, what can best be described as ‘access deficit’ emerges between economic and non-economic actors, not between EU actors and those in third countries.146

Given the importance of the IA as a significant ‘communication tool’ to foster and integrate affected stakeholders,147 it could, when appropriately used by the Commission, enhance the legitimacy of IEMEIs by addressing the participation and representation, and accountability gaps. While the institutional framework for consultation and consideration of third country interests through IAs exists and specifically draws attention to third country impacts, EU regulatory processes require further opening up to provide for due consideration of third country impacts in the formulation of IEMEIs. Third country participation, as evidenced by the numbers of third country actors involved in legislative decision-making to date,148 is unlikely to ‘threaten the proper functioning of the EU legislative process’.149 At the same time, third country impacts are only one kind of consideration in EU policy-making, alongside different kinds of domestic state and non-state interests that already render carrying out an IA a very complex process. There exist therefore inherent limitations on how far EU regulatory processes can accommodate third country interests in an already complex and multi-level process informed by a myriad of affected interests.

144 For example, the aviation policy option was set out in the preliminary IA, although it was subsequently presented as put forward by NGOs and airline operators: J Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (2015) 17 Cambridge Yearbook of European Legal Studies 92, 96. 145 Meuwese (n 65 above) ch 6; Rasmussen and Alexandrova (n 132 above); Korkea-Aho, ‘Mr Smith Goes to Brussels’ (n 129 above) 46. 146 Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law’ (n 73 above) 222. 147 Rowe (n 64 above). 148 Rasmussen and Alexandrova (n 132 above). 149 Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law’ (n 73 above) 217.

138  EU Decision-Making Processes and IEMEIs V.  DUTY TO PROVIDE REASONS

Some of the shortcomings of transparency and consideration of third country impacts in regulatory processes, as described above, could be counter-balanced by related principles of due process, such as the duty to provide reasons.150 The duty to provide reasons incorporated in Article 296 TFEU is identified as a cornerstone of good administration and good governance in EU law,151 which can contribute to enhancing due process of decision-making and indirectly enable the participation of affected interests. The duty to provide reasons applies when adopting a measure of general application and would thus require that there be justification for the adoption of IEMEIs. Arguably, this procedural duty could require the EU to justify the legal design of an IEMEI in applying beyond the borders of the EU. The duty to provide reasons also applies in relation to individual decisions when IEMEIs are implemented in relation to specific third country actors. The obligation to provide reasons ensures that decisions are based on solid evidence and encourages rational decisionmaking, thus avoiding the adoption of arbitrary decisions, in accordance with rule of law requirements. In principle, it can enable those affected to determine whether a decision is well-founded and in turn determine whether to challenge its legality.152 In the absence of participation rights at the formulation stage, the duty to give reasons becomes even more crucial.153 In principle, this duty could enhance participation opportunities by providing information on how third country impacts and concerns have been taken into account towards the final decision. However, while the duty to give reasons is important as a procedural safeguard, as discussed below, it is doubtful whether it creates a dialogue between the Commission and stakeholders in practice,154 thus enabling effective participation. This is due to the formal requirements of the duty to provide reasons which, at the formulation stage, usually consist of the need to provide brief justifications about the rationale of a measure without a requirement to ‘respond to points made by those who have been consulted’.155 Its purpose and function as currently applied, at the formulation stage, is not to create dialogue and consultation, but mostly to further transparency and enable ex post facto accountability through judicial review. The duty to provide reasons as a general principle of EU law would also apply when IEMEIs are applied to third country actors, inasmuch as the EU institution in question would be required to provide reasons for a decision taken



150 Mendes

(n 4 above) ch 5. and Rawlings (n 11 above) 73. 152 Mendes (n 4 above) ch 5. 153 Case T-156/13 Petro Suisse Intertrade Co. SA v Council, EU:T:2015:646, para 63. 154 P Craig and G de Búrca, EU Law: Text, Cases and Materials, 6th edn (OUP, 2015) 548. 155 Chalmers, Davies and Monti (n 89 above) 375. 151 Harlow

Duty to Provide Reasons   139 against an operator. Therefore, for example a decision on the authorisation of a certification scheme for sustainable biofuels would have to be accompanied by a statement of reasons explaining why the specific scheme falls short of the requisite EU standards or fulfils those standards, depending on the decision. However, as discussed further in Chapter four,156 it is not necessary for the Commission to go through all points of fact and law in order to fulfil the duty to provide reasons and the strength of the duty might therefore be limited.157 For example, the procedures for authorisation of certification schemes on the sustainability of biofuels has been criticised for lengthy delays, interference by third parties and general lack of transparency.158 Given the absence of clear provisions on the administration and selection of private certification schemes,159 it is not clear whether a decision and the reasons for it would be given in a comprehensive manner and the applicant would face difficulties in challenging the basis of a negative decision. Apart from being a general principle of law, the duty to provide reasons is also explicitly provided in some IEMEIs at the stage of enforcement. This inclusion provides for interaction between the EU regulator and the foreign affected operators, especially in situations where decisions would adversely affect their legal and economic position. For example, the IUU Regulation requires the Commission to provide a detailed statement of reasons in relation to presumed or alleged IUU fishing or when placing a vessel on the IUU list.160 Particularly at the initial stage of a ‘yellow card’ being issued against a third country, thereby informing it of the possibility of being identified as a non-cooperating country, such a decision needs to be accompanied by a detailed statement of reasons and supporting evidence. Even if such a decision does not formally restrict access to the EU market yet, it can give rise to significant detrimental reputational effects.161 The duty to provide reasons, as incorporated in specific IEMEIs, can also create opportunities for interaction between EU institutions and third country actors concerning the implementation and enforcement of IEMEIs in third countries. The Ship Recycling Regulation provides such an example where the duty to provide reasons creates a relationship between the Commission and actors that might be affected, including third country interests.162 Article 23 of the Ship 156 Chapter 4, Section III.B.(ii). 157 Case T-332/08 Melling Bank plc v Council, EU:T:2009:266, para 145. 158 M Gaebler, ‘Recognition of Private Sustainability Certification Systems for Public Regulation (Co-Regulation): Lessons Learned from the EU Renewable Energy Directive’ in C Schmitz-­Hoffmann and others (eds), Voluntary Standard Systems: A Contribution to Sustainable Development (Springer, 2014). 159 ibid. 160 IUU Regulation (n 46 above) Arts 25, 26, 27. 161 ER Van der Marel, ‘Problems and Progress in Combatting IUU Fishing’ in R Caddell and EJ Molenaar (eds), Strengthening International Fisheries Law in an Era of Changing Oceans (Hart, Forthcoming). 162 Ship Recycling Regulation (n 41 above) Art 15.

140  EU Decision-Making Processes and IEMEIs Recycling Regulation enables natural or legal persons affected or likely to be affected by a breach of the Regulation to request the Commission to take action. In this way, the Regulation enables third country actors, including citizens and NGOs, to play an active role in the enforcement of the Regulation in third country facilities, possibly creating a mechanism of ‘social accountability’.163 While the Regulation does not impose a substantive obligation on the Commission to take action against the SRF, it does require the Commission to respond to the request for action and provide reasons for its decision. In summary, these examples demonstrate how providing reasons for a decision could ensure due process in dealings of the EU with third countries and thus contribute to filling the procedural justice gap related to IEMEIs. The strength of the duty in holding EU institutions to account through judicial review, however, can be significantly qualified by the particular circumstances as further examined in Chapter four.164 VI.  ACCESS TO INFORMATION

An inter-related avenue of transparency and due process in the EU legal order, through which more information can be obtained, is provided by the right of access to information. Access to information is identified as a prerequisite for effective exercise of participation rights and is crucial to ensuring transparency, due process and good governance.165 Access to information could thus contribute to filling the procedural justice gap related to IEMEIs. Access to information is important both in the formulation of IEMEIs – in terms of accessing information on the basis of which IEMEIs may be adopted at an early stage of the decision-making process166 – as well as in the implementation of IEMEIs on the basis of which individual decisions are taken. Depending on how information is used, access to information can also enable accountability by providing the necessary information to hold decision-makers to account, possibly through legality challenges. Access to information can enable third country actors to be aware and understand the implications of IEMEIs. This transparency has to be provided from within the EU where IEMEIs originate, because the information relied upon is usually in the hands of EU institutions. The importance of access to documents and information is specifically recognised in Article 15(3) TFEU and Article 42 of the Charter. Both references, however, are limited in scope. They only provide for access to information by ‘any citizen of the Union, and any natural or legal person residing or having

163 M Bovens, ‘Analysing and Assessing Accountability: A Conceptual Framework’ (2007) 13 ­European Law Journal 447. 164 See in particular Chapter 4, Section III.B.(ii). 165 Mendes (n 4 above) ch 5. 166 ClientEarth v European Commission (n 66 above). See above Section IV.

Access to Information   141 its registered office in a Member State’. Although these provisions may seem to provide limited access to information by third country actors, this is not the whole story for access to information by third country actors in the EU. Access to information in environmental matters in the EU is also governed by the first pillar of the Aarhus Convention.167 The EU has transposed elements of the Aarhus provisions on access to information through a number of EU measures. For the purposes of the current analysis the most relevant ones are the Transparency Regulation,168 which establishes public access to documents held by EU institutions, and the Aarhus Regulation,169 which implements the Aarhus provisions on access to information in respect of EU institutions and agencies. If a request for access to information is denied, the applicants can ask for a re-examination of their request following which they can challenge a negative decision before the EU courts.170 When determining whether non-EU stakeholders could require access to information, reading these two Regulations in conjunction reveals that access to information may be more open than initially thought. Specifically, the Aarhus Regulation provides that requests for access to environmental information under the Transparency Regulation, which initially was also limited in scope, apply without discrimination as to citizenship, nationality or domicile and without discrimination as to where legal persons have their registered seats or effective centre of activities.171 A broad interpretation of these terms implies that access to information is available for any person in the world.172 A combined reading of the Aarhus and Transparency Regulations covers persons from non-signatory states to the Aarhus Convention, enabling third country actors to require the disclosure of information based on which IEMEIs are adopted and applied, as well as providing the possibility to institute court proceedings in cases where access to information is refused.173 Notably, ‘environmental information’ under the Aarhus Regulation is  a broad concept that includes any measures likely to affect environmental factors as well as cost–benefit and other economic analyses and assumptions used within the framework of measures and policies.174 Information relating to the environment has also been interpreted to include foreseeable emissions into the environment175 which can be particularly relevant for IEMEIs relating to 167 Regulation 1367/2006 (n 54 above). 168 Regulation (EC) 1049/2001 regarding public access to European Parliament, Council and Commission documents [2001] OJ L145/43 (Transparency Regulation). 169 Regulation 1367/2006 (n 54 above). 170 Regulation 1049/2001 (n 168 above) Art 8. 171 Regulation 1367/2006 (n 54 above) Art 3. 172 A Berthier and L Krämer, ‘The Aarhus Convention: Implementation and Compliance in EU Law’ (ClientEarth, The European Union Aarhus Centre, 2014): http://www.clientearth.org/ reports/20141028-the-aarhus-convention-implementation-and-compliance-in-EU-law.pdf. 173 See further discussion on this in Chapter 4, Section II.C. 174 Regulation 1367/2006 (n 54 above) Art 2(1)(d). 175 Case C-673/13 Commission v. Stichting Greenpeace Nederland and PAN Europe, EU:C:2016:889.

142  EU Decision-Making Processes and IEMEIs climate change. In the context of IEMEIs, environmental NGOs brought a case against the Commission for failure to provide access to information about the authorisation of biofuels voluntary certification schemes.176 This information also related to effects in third countries in terms of food prices and effects on the environment, which the Commission is specifically required to monitor under the Renewable Energy Directive,177 and which third country actors may also wish to challenge. However, there are important exceptions to the obligations to provide i­ nformation,178 which are invoked relatively frequently.179 Therefore, the potential of the right of access to information to control EU power is qualified in ways that enable the EU institutions to escape accountability towards those affected. In practice, a lot of information is still withheld by EU institutions even in relation to EU actors that request access. Because of the complex processes of EU decision-making that involve closed doors and secret trilogue discussions, crucial information that determines the final decision is never provided to the public, or provided too late.180 Recent developments demonstrate that decision-making procedures are not entirely shielded from access to information requirements. The decision taken by the ECJ in September 2018, mentioned above in Section IV, to grant access to an environmental NGO to impact assessment documents, demonstrates that openness and transparency of decision-making processes is particularly valued and that it should not be undermined by the need to ensure the practical ease and independence of the Commission’s processes to the detriment of public participation and transparency.181 While the Court clarified that the Commission is not under an obligation to respond to or reflect any remarks received following disclosure of the documents,182 it held that the disclosure does not necessarily pose a significant risk to the Commission’s independence or power of initiative.183 The ECJ based its decision not only on general considerations of openness of decision-making in the EU legal order,184 but also placed emphasis on the rights of EU citizens to participate in legislative decision-making, recognised under Article 10(1) TEU.185 This reasoning may indicate more willingness to expand transparency in relation to EU citizens and representative associations than toward third country affected actors. Nonetheless, such a

176 Case T-449/10 ClientEarth et al v Commission, EU:T:2011:647. 177 Directive 2009/28 (n 175 above) Art 17(7). 178 Regulation 1049/2001 (n 168 above) Art 4; Regulation 1367/2006 (n 54 above) Art 6. 179 Chalmers, Davies and Monti (n 89 above) 414. 180 ibid 419. 181 ClientEarth v European Commission (n 66 above). 182 ibid 107. 183 ibid paras 108, 121. 184 Particularly Art 11 TEU and Art 15 TFEU. See ClientEarth v European Commission (n 66 above) paras 74, 107. 185 ClientEarth v European Commission (n 66 above) para 84.

Access to Information   143 limitation was not explicitly indicated as a condition for denying a presumption of confidence for such documents. Generally however, given that access to information has been attained only through strenuous judicial challenge for EU actors,186 the scope of access to information by foreign interests would face an uphill battle. Providing unfettered access to information to third country actors is also complicated by the inherently contradictory internal and external accountability claims related to IEMEIs. Given the many kinds of domestic and foreign interests that may be affected by IEMEIs, it may be difficult or unfeasible to provide information about EU measures to foreign actors when such information has also been requested by EU actors, especially civil society. For instance, access to information may be refused on the basis of undermining international relations, which is particularly relevant for IEMEIs and could be done in situations where the EU is engaged in bilateral negotiations with third countries in implementing IEMEIs. This ground is usually applied to protect the EU’s relations with third countries by refusing access to information for EU interest groups on international trade negotiations.187 In relation to IEMEIs, situations might also arise where third country actors are refused access to information to protect EU internal interests. While a system for access to information exists within the EU as described above, it is doubtful whether access to information and transparency are provided in a way that is ‘properly integrated and interpreted … and directed to the accountability holders’188 that may be situated outside the EU legal order, in order to contribute to filling the IEMEI accountability gap. This is because of the uncertainty as to the personal scope of access to information, the many exceptions to access to information, the potentially contradictory, politically-charged implications of granting access to information to foreign actors and the inherent secrecy characterising EU decision-making procedures. The transparency shortcomings in relation to access to information could be compensated for through information exchange and transparency mechanisms that have been used successfully in other policy areas, for example under the REACH regime.189 Such transparency and information platforms could promote understanding of the EU standards that third countries need to fulfil. Given that actors situated outside the EU legal order may not be familiar with the terminology and standards of the EU, ensuring that they are provided with accessible information is crucial on the part of the EU in seeking to promote higher environmental standards abroad, especially to countries with differing capacities.

186 Chalmers, Davies and Monti (n 89 above) 421. 187 T-264/04 WWF European Policy Programme v Council, EU:T:2007:114. 188 A Buchanan and RO Keohane, ‘The Legitimacy of Global Governance Institutions’ (2006) 20 Ethics and International Affairs 405, 427. 189 Biedenkopf (n 142 above).

144  EU Decision-Making Processes and IEMEIs VII. CONCLUSION

To conclude, this chapter has examined the extent to which third country actors have opportunities to express their opinions as well as whether third country interests are considered in the formulation and implementation of IEMEIs. It has thus explored whether EU administrative law procedures provide mechanisms to fill the external accountability gap, while also examining the more specific gaps of participation and representation, and procedural justice where relevant. Even in the absence of recognised participation rights at the formulation stage, there are different kinds of regulatory procedures that allow for participation and input from third country interests at the stage of adoption of IEMEIs, albeit in an informal and ad hoc manner. There are limitations in the consideration of third country interests through these processes due to the unpredictability of participation opportunities in soft law practices, and unstable, politicallycharged processes of lobbying. More concrete protection of third country affected interests is currently afforded at the implementation and enforcement stage of IEMEIs where EU administrative principles and procedural rights enhance due process in the application of EU law. The procedural justice gap is thus partly addressed through procedural rights that either enable third country actors to be heard or require the provision of reasons when individual decisions are taken against them. At the implementation stage, there are important procedural rights and safeguards under EU law that can increase procedural justice and transparency when IEMEIs apply to third country actors. Examining these doctrines and procedures within the EU judicial system and the extent to which they can be enforced before the EU courts by third country affected actors, in Chapter four, further demonstrates the potential of EU law to legitimise IEMEIs.

4 Judicial Review of IEMEIs in the EU Legal System I. INTRODUCTION

T

his chapter continues with the examination of IEMEIs in the EU legal order, focusing in particular on the function of judicial review by the Court of Justice of the EU (CJEU) in controlling EU global regulatory power and providing a transnational accountability avenue for third country affected actors. As discussed in Chapter two, judicial review is an important mechanism for holding regulatory power to account and upholding the rule of law, as well as ensuring that procedural requirements are followed by administrative bodies. The EU courts exercise ‘a catalyst role’ in ‘enhanc(ing) the capacity of other actors to make legitimate and effective decisions’, especially by requiring transparency and accountability in decision-making.1 In developing doctrines and procedures that determine the legality of EU action, the CJEU’s role has been critical, particularly in relation to internal EU action.2 To some extent, the role of the CJEU in reviewing extraterritoriality does not differ much from its role in the internal functioning of the EU. At the same time, ‘adjudication on exercises of extraterritoriality by domestic constitutional courts sets the stage for a broader debate as to the appropriate place of national courts in global governance’3 and the place of states in unilaterally regulating transboundary or global problems beyond their territory. The EU courts can play an important role in recognising the extraterritorial effects of internal legislation and in upholding EU legal requirements and individual rights that are granted to non-EU nationals when EU law applies to them. This is in line with the EU’s self-proclaimed values in external action, examined in the Introduction to Part II, which include, among others, consolidating and supporting democracy, the rule of law and human rights, fostering the

1 J Scott and S Sturm, ‘Courts as Catalysts: Re-Thinking the Judicial Role in New Governance’ (2006) 13 Columbia Journal of European Law 565. 2 C Harlow and R Rawlings, Process and Procedure in EU Administration (Hart, 2014) ch 3. 3 D Ireland-Piper, Accountability in Extraterritoriality (Edward Elgar, 2017).

146  Judicial Review of IEMEIs in the EU Legal System s­ ustainable development of developing countries and multilateral c­ ooperation,4 as well as the strict observance of international law.5 In relation to IEMEIs, it could be argued that, ideally, third country actors would be able to challenge their legality before international courts to ensure objective and ‘external’ oversight of the EU’s external action, which is considered important for enhancing external accountability of regulating states towards third country constituencies.6 However, there are in fact limited opportunities for this,7 and these would usually not enable challenges to IEMEIs on the basis of EU law, which constitutes the internal law of the regulating jurisdiction.8 In any case external review by international courts may have uncertain legal effects in the EU legal order,9 which may downgrade its disciplining effects. The extent to which third country affected interests can access the EU courts and be ­represented and protected judicially, bears great potential for legitimising the exercise of EU regulatory power, primarily by filling the accountability gap related to IEMEIs. Beyond legal accountability, the possibility to access the EU courts as well as their role in upholding procedural rights can also contribute to filling the procedural justice gap. At the same time, judicial review incorporates elements of substantive justice in reaching fair decisions in individual situations when courts are called upon to balance different kinds of affected interests with the general public interest, thus potentially addressing the distributive justice gap related to IEMEIs. The CJEU as the final arbiter of the interpretation and legality of EU law, can play a significant role in legitimising the extraterritorial reach of EU regulation by determining the balance between the enabling and constraining functions of EU law, which in turn, determines the extent of the different legitimacy gaps. Enabling IEMEIs without sufficiently disciplining EU regulatory power can exacerbate the legitimacy gaps. Judicial review of IEMEIs illustrates an imbalance between the two functions of EU law, with a bias towards enabling the exercise of EU regulatory power beyond EU borders with less oversight in how it is disciplined. This is evident particularly in the restrictive criteria for access to the EU courts, which, however, are not unique to third country actors; in the broad interpretation of competences under which IEMEIs are adopted; in the

4 TEU Art 21. 5 TEU Art 3(5). 6 On the role of international courts in bridging the external accountability gap and reviewing other-regarding obligations see E Benvenisti and SS Agon, ‘The Law of Strangers: The Form and Substance of Other-Regarding International Adjudication’, GlobalTrust Working Paper 08/2017, 3–6: http://globaltrust.tau.ac.il/publications. 7 P Eeckhout, ‘A Normative Basis for EU External Relations? Protecting Internal Values Beyond the Single Market’ in M Krajewski (ed), Services of General Interest Beyond the Single Market: External and International Law Dimensions (TMC Asser Press, 2015). 8 E Benvenisti, The Law of Global Governance (Hague Academy of International Law, 2014) 249. 9 Section III.E below.

Introduction  147 deferential approach of judicial review of EU complex policy decisions; and in the review of EU measures on the basis of international law. This chapter demonstrates the extent of the accountability and justice gaps, but also explores the disciplining potential for judicial review of IEMEIs to develop further in controlling the exercise of EU transnational regulatory power. The function of judicial review in controlling the exercise of EU global regulatory power through IEMEIs is determined in this chapter by two factors. First, the extent to which judicial review by the CJEU functions as a transnational accountability avenue depends on whether different kinds of third country litigants can access the EU courts (Section II). Second, the different grounds of review and the intensity of review applied by the CJEU can determine the scope of legal protection of third country interests as a matter of EU law (Section III). The grounds on which EU acts can be challenged and the intensity of review applied, further demonstrate the potential and limitations of consideration of third country interests in the EU decision-making procedures discussed in C ­ hapter three. It should be noted that apart from general rules and doctrine on access to justice and grounds of review in the EU judicial system, the legal design and effects of specific IEMEIs may determine whether they can be challenged in the EU legal order on the basis of a reviewable EU act. If a measure is designed to impose direct obligations on EU actors which only indirectly affect third country actors,10 it is less likely that third country actors will be able to challenge the EU measure. Furthermore, when IEMEIs give rise to extraterritorial impacts in the form of a ‘de jure Brussels effect’, where a third country government formally changes its own legislation to match EU standards, or when the EU measure incorporates third country legal standards, such as the Timber Regulation,11 it is third country law that largely imposes obligations on third country actors, which cannot be challenged before the EU courts. Given the operation of IEMEIs at the intersection of multiple legal regimes as identified in Chapter one,12 the examination of IEMEIs under one legal order provides only part of the overall picture of the transnational governance of this phenomenon. The analysis in this chapter focuses on judicial review of IEMEIs when EU law produces effects for third country actors, while recognising the inherent limitations of the EU legal order to take account of all impacts generated through IEMEIs beyond the borders of the EU.

10 Such as under the WEEE Directive which imposes obligations on EU exporters, Parliament and Council Directive 2012/19/EU on waste electrical and electronic equipment (WEEE) [2012] OJ L197/38. See Chapter 1, Section III.A.(i).(b). 11 Parliament and Council Regulation (EU) 1257/2013 on Ship Recycling [2013] OJ L330/1; See Chapter 1, Section III.A.(i).(a). 12 See in particular Chapter 1, Section IV.

148  Judicial Review of IEMEIs in the EU Legal System II.  ACCESS TO JUSTICE

This section explores the extent to which third country actors have the right to challenge the legality and interpretation of IEMEIs within the EU legal order. Section II.A sets out different routes through which third country litigants can have access to the EU judicial system and Section II.B discusses the conditions that determine whether litigants have locus standi to bring a case directly before the CJEU and their implications for third country actors affected by IEMEIs. While in principle, access to the EU courts is open to non-EU nationals, the legal design of IEMEIs indicates that often third country actors will not be able to satisfy standing requirements to prove that they are legitimately affected by IEMEIs in ways that warrant access to the CJEU. Section II.C then examines the operation of the Aarhus Convention,13 which is legally relevant for access to justice in environmental matters and which may provide ways for expanding procedural rights through its implementation in the EU legal order. Overall, while third country actors can employ different avenues to the EU j­udicial system, in practice direct access by affected interests to the EU courts is restricted, particularly because of strict standing requirements. A.  Avenues for Accessing the EU Courts for Different Kinds of Third Country Actors Different kinds of third country actors may seek to challenge the legality or interpretation of IEMEIs, ranging from third country individuals and companies, to foreign governments. Depending on the legal design of the particular IEMEI and the kind of actor, three main avenues of access to justice may be used. First, direct access to the EU courts; second, access through national courts under the preliminary ruling procedure; and third, access through the non-judicial route of the European Ombudsman in cases of maladministration by an EU institution. First, as a general rule, any natural or legal person can access the EU courts14 and apply for annulment of EU law under Article 263(4) TFEU irrespective of nationality, place of residence or registration.15 Indeed there are many instances of cases brought by third country natural or legal persons.16 Compared to

13 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, 25 June 1998, 2161 UNTS 337 (Aarhus Convention). 14 TEU Art 19(3). 15 K Lenaerts, I Maselis and K Gutman, EU Procedural Law, 1st edn (OUP, 2014) 316. 16 For example, Case T-262/10 Microban International and Microban (Europe) v Commission, EU:T:2011:623.

Access to Justice  149 external review regimes, such as the WTO dispute settlement system, which is confined to state disputes, the EU judicial system provides broader possibilities for private actors to directly bring an action before the CJEU without depending on their governments to bring a claim. As for access by third country governments, the CJEU has not conclusively ruled on whether non-EU countries can bring a claim under Article 263(4) TFEU. However, it has implied that companies that constitute ‘emanations of the state’ would have access to the EU courts as there is no EU rule preventing them from doing so, and denying them access would go against the principle of effective judicial protection.17 Therefore, in principle, non-EU country actors, including third country governments, could apply to the EU courts for annulment of IEMEIs or IEMEI-related decisions. Unlike Member States that have privileged access to the EU courts under ­Article 263(2), third country governments have to satisfy the standing requirements under Article 263(4) TFEU, which, as discussed in Section II.B below, are difficult to fulfil for both EU and non-EU affected actors. It is not argued here that third country governments should have equal access to the EU courts as do Member State governments, but rather that this distinction demonstrates that while third country governments may have access to the EU courts in principle, having to satisfy the strict requirements of standing substantially limits their access in practice. Second, apart from direct access to the EU courts, third country actors could also challenge the validity and interpretation of IEMEIs through the preliminary reference procedure under Article 267 TFEU. Third country companies incorporated under national law in Member States can bring cases before the national courts that could then be referred to the CJEU. This is particularly important as it is often difficult for such companies to satisfy the standing requirements for direct access, as discussed in the following section. This route has been employed in a number of cases, including in Air Transport Association of America (ATAA) brought before the High Court in the United Kingdom, where US airlines challenged the legality of the Aviation Directive.18 It should be noted that access of third country actors to the CJEU through this route is more readily available to multinational corporations with registered offices in the EU, than to smaller companies and actors in developing countries, such as the fisherman affected by the IUU Regulation or the landowners affected by the EU’s biofuel policy. Weaker affected interests may therefore be in a disadvantaged position in global governance to hold powerful actors like the EU to account, raising important questions of procedural and substantive fairness.

17 Charter of Fundamental Rights Art 47; Case T-156/13 Petro Suisse Intertrade Co SA v Council, EU:T:2015:64. 18 Case C-366/10 Air Transport Association of America and others v Secretary of State for Energy and Climate Change (ATAA), EU:C:2011:864.

150  Judicial Review of IEMEIs in the EU Legal System Third, in relation to review of EU administrative acts, an alternative route to justice could be provided through the European Ombudsman, who is empowered to conduct inquiries in cases of alleged maladministration in all areas of EU law.19 Access to the European Ombudsman is relatively broad, including citizens of a Member State or those who reside in a Member State, and businesses, associations or other bodies with a registered office in the Union.20 Companies or NGOs representing foreign interests with a registered office in the EU could thus employ the Ombudsman route. For example, in a case brought before the Ombudsman regarding the conclusion of the free trade agreement with Vietnam, the complainants – the International Federation of Human Rights with a registered office in the EU, and the Vietnam Committee on Human rights, which is a member of the International Federation – were able to easily access the European Ombudsman and their standing was not disputed.21 The Ombudsman’s role is increasingly important in cases involving bilateral or regional agreements, in applying and upholding administrative law safeguards and in imposing obligations requiring consideration of affected third country interests.22 Ombudsman decisions do not concern the assessment of legality but merely involve declarations of maladministration that EU institutions can ignore or sidestep relatively easily.23 Nonetheless, they could exert pressure on the Commission and the Council, especially when the European Parliament has a say in approving the final measure and supports the finding of maladministration by the Ombudsman, as was the case in the Vietnam case. Despite the potential of this route, the focus of this chapter is mainly on judicial review before the CJEU as a promising avenue for transnational legal accountability, while the Ombudsman route is mentioned as an alternative where appropriate. Overall, third country individual actors face similar challenges in directly accessing the EU courts to those faced by EU actors, while their access to national courts and the preliminary reference procedure may be more restricted. As for third country governments, their position as non-privileged applicants imposes additional limitations for accessing the CJEU, compared to access by Member States. This is due to strict standing requirements imposed on nonprivileged applicants, which third country actors may find more challenging to satisfy due to the legal design of IEMEIs. 19 TFEU Art 228. 20 ibid. 21 Decision on 26 February 2016 of the European Ombudsman in case 1409/2014/MHZ on the Commission’s failure to carry out a prior human rights impact assessment of the EU–Vietnam free trade agreement. 22 I Vianello, ‘Guiding the Exercise of Union’s Administrative Power in the EU Wider Neighbourhood. The Rule of Law from Paper to Operationalisation’ (2015) EUI Working Paper Law 8/2015. 23 For example, in the complaint regarding the agreement with Vietnam (n 21 above), the Commission failed to provide sufficient reasons for refusing to carry out a human rights IA, according to the Ombudsman who found maladministration. The Commission concluded the agreement nevertheless.

Access to Justice  151 B. Standing Having established that third country actors are eligible to bring a case before the EU courts, the next step concerns the admissibility of a case before the CJEU. This is governed by standing rules under Article 263(4) TFEU, which provides that, any natural or legal person may … institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.

As becomes obvious, the Treaty does not explicitly limit direct access to the EU courts on the basis of nationality or place of residence/registration and therefore third country actors could in principle have direct access to the EU courts. However, in practice third country actors face particular difficulties in meeting standing requirements, as the legal design of IEMEIs often implies that they will not be directly and individually concerned. At least in some instances of implementation of IEMEIs in relation to specific third country actors, standing can be established. The easiest way of accessing the courts is when a decision is addressed to a specific person as this right is granted unconditionally. Thus, a decision addressed to a third country operator that is refused access to the EU market can be challenged before the EU courts, irrespective of nationality. For example, a decision notifying a third country of the possibility of being identified as a non-cooperating country or a decision identifying a third country as a non-cooperating country under the IUU Regulation could be directly challenged before the EU courts, as the specific country is individually named in the implementing legislation.24 However, many EU acts would not be individually addressed to a specific person and would thus have to satisfy the accompanying conditions of Article 263(4). In particular, the condition of ‘individual concern’, required for acts not addressed to the person, has been very narrowly construed by the CJEU with the result that standing is accorded only in exceptional cases. The Plaumann formulation, which is still upheld by the CJEU, determines that, persons other than those to whom a decision is addressed may only claim to be individually concerned if that decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.25 24 For example, Commission Implementing Decision (EU) 2017/918 of 23 May 2017 identifying Saint Vincent and the Grenadines as a non-cooperating third country in fighting illegal, unreported and unregulated fishing [2017] OJ L139/70; Commission Decision of 23 October 2017 notifying the Socialist Republic of Vietnam of the possibility of being identified as a non-cooperating third country in fighting illegal, unreported and unregulated fishing [2017] OJ C364/3. 25 Case 26/52 Plaumann & Co v Commission, EU:C:1963:17, 107.

152  Judicial Review of IEMEIs in the EU Legal System This approach has been extensively criticised as ‘highly restrictive’,26 particularly in relation to environmental matters, where collective affected interests are often represented by NGOs that would not satisfy this test.27 With respect to IEMEIs, third country operators, third country governments or NGOs representing third country interests would usually not satisfy the ‘individual concern’ test as they would not usually have special attributes distinguishing them individually. This restrictive approach may also explain why third country operators would seek to challenge the legality of EU measures through Member State national courts instead.28 Nonetheless, at least in some instances regarding the implementation of IEMEIs, third country actors may be able to satisfy the requirements of individual and direct concern. This is the case for example when a fishing vessel is added to the IUU vessel blacklist that is published in the form of a Commission Regulation, updated through implementing legislation, under which the specific vessel is individually named.29 The alternative test for standing under Article 263(4) TFEU introduced with the Lisbon Treaty, according to which an applicant can challenge ‘a regulatory act which is of direct concern to them and does not entail implementing measures’, covers measures of general application. However, as interpreted by the courts, this test does not substantially expand the standing requirements, at least not as much as would be expected.30 First, this only applies to regulatory acts, which exclude legislative acts,31 and second, these acts should not entail any implementing act, which has also been interpreted narrowly.32 Once these two requirements are met, regulatory acts that apply to objectively determined situations and produce legal effects with respect to categories of persons envisaged in general and in the abstract, are covered.33 The scope of regulatory acts is therefore relatively broad in some senses, albeit not as broad as would have been expected to ensure effective access to justice at EU level by non-privileged applicants.34 Importantly, the Lisbon test for standing could lead

26 D Chalmers, G Davies and G Monti, European Union Law: Text and Materials, 3rd edn (CUP, 2014) 452; P Craig, ‘Standing, Rights, and the Structure of Legal Argument’ (2003) 9 European Public Law 493. 27 Case T-585/93 Greenpeace and others v Commission, EU:T:1995:147; Case C-321/95P Greenpeace and others v Commission, EU:C:1998:153; L Krämer, ‘Environmental Justice in the European Court of Justice’ in J Ebbesson and PN Okowa (eds), Environmental Law and Justice in Context (CUP, 2009). 28 ATAA (n 18 above). 29 Commission Regulation (EU) 468/2010 establishing the EU list of vessels engaged in illegal, unreported and unregulated fishing [2010] OJ L131/22; Commission Implementing Regulation (EU) 2016/1852 amending Regulation (EU) No 468/2010 establishing the EU list of vessels engaged in illegal, unreported and unregulated fishing [2016] OJ L284/5. 30 TC Hartley, The Foundations of European Union Law, 8th edn (OUP, 2014) 384. 31 Case T-18/10 Inuit Tapiriit Kanatami v Parliament and Council (Inuit I), EU:T:2011:419. 32 Case T-381/11 Europäischer Wirtschaftsverband der Eisen und Stahindustrie (Eurofer) ASBL v Commission, EU:T:2012:273. 33 Microban (n 16 above). 34 Hartley (n 30 above) 384.

Access to Justice  153 to more extensive judicial review of delegated and implementing acts which are non-legislative in nature, according to the post-Lisbon taxonomy of legal acts,35 and which are often used in the implementation of IEMEIs.36 For example, this would apply in relation to the implementing act establishing the European list of authorised ship recycling facilities, which since December 2018 also includes some third country facilities.37 An additional element of the standing requirements relevant for third country affected actors is the interpretation of ‘direct concern’, which further determines the parameters of ‘affectedness’ in a legal sense to merit protection in the EU legal system. The interpretation of ‘direct concern’ in relation to third country actors was elaborated by the General Court in Inuit I.38 This was a case brought by indigenous communities in third countries challenging the legality of an EU Regulation establishing a qualified ban on trade in seals and seal products in the EU market.39 In determining the standing of the third country individuals and NGOs that brought the case, the General Court expanded the understanding of standing adopted in earlier EU case law, according to which an EU unilateral act could not create rights and obligations outside the EU territory.40 At the same time, however, the General Court identified only a sub-category of third country actors that would be sufficiently affected by the EU acts to satisfy the standing requirements. Only the applicants that were active in placing seal products on the EU market, and whose legal position would be affected, were found to be ‘directly affected’. In contrast, the applicants engaged in seal hunting outside the EU, whose economic position would be affected, were found to be only indirectly affected.41 In her opinion, Advocate General (AG) Kokott sought to expand this interpretation, finding that ‘direct concern’ should not be limited to legal effects but rather should extend to cover factual effects when operators ‘are directly affected

35 TFEU, Art 289. 36 C Buchanan, ‘Long Awaited Guidance on the Meaning of Regulatory Act for Locus Standi under the Lisbon Treaty’ (2012) 3 European Journal of Risk Regulation 115. 37 The list initially included only facilities located in the EU, Commission Implementing Decision 2016/2323/EU establishing the European List of ship recycling facilities pursuant to Regulation (EU) 1257/2013 on ship recycling [2016] OJ L345/19. The authorisation of third country facilities is ongoing, while two yards in Turkey and one in the USA have already been approved, Commission Implementing Decision (EU) 2018/1906 amending Implementing Decision (EU) 2016/2323 to update the European List of ship recycling facilities established pursuant to Regulation (EU) No 1257/2013 [2018] OJ L310/29. 38 Case T-18/10 Inuit I (n 31 above). 39 Regulation (EC) 1007/2009 on trade in seal products [2009] OJ L286/36 (Seals Regulation). 40 Case T-212/02 Commune de Champagne, EU:T:2007:194 para 2. For a critical analysis of the Court’s approach in this case see L Bartels, ‘The EU’s Human Rights Obligations in relation to Policies with Extraterritorial Effects’ (2014) 25 European Journal of International Law 1071, 1088. Note that Bartels argues that direct action to challenge the validity of EU action may still be precluded ipso facto. 41 Case T-18/10 Inuit (n 31 above) para 75.

154  Judicial Review of IEMEIs in the EU Legal System in their capacity as market participants in competition with other market participants’.42 Nonetheless, the AG emphasised that this distinction did not make a difference in this particular case and warned against broadening the meaning of direct concern ‘endlessly’ to cover operators active in the upstream levels of trade.43 The relevant effects need to be more than merely indirect. This legal point was not reviewed by the ECJ, which determined that the measure was not a regulatory act and the applicants were not individually concerned in any case,44 and therefore the question of ‘direct concern’ in the context of third country actors involved in the upstream level of trade remains unclear.45 The exact nuances of the interpretation of ‘direct concern’ and the distinction between interests directly or indirectly, factually or legally, affected can be critical for third country actors affected by IEMEIs and the extent to which they can have judicial redress in the EU. This is particularly the case when third country actors are not directly involved in placing products in the EU market but are less directly affected as a result of requirements imposed on production processes outside the EU.46 For example, the Timber Regulation places a due diligence obligation on those who place timber on the EU market for the first time, thus indirectly affecting harvesters of timber in third countries. Although there may be situations where ‘the operator’ under the Timber Regulation will be the non-EU entity, in most transactions the ‘operator’ will be the EU entity importing the timber.47 If third country harvesters seek to challenge the application of the Timber Regulation, they could instead seek to challenge third country standards determining whether timber is legally harvested under third country law, on the basis of which the Timber Regulation and VPAs apply. The shortcomings of one legal system applying to IEMEIs could thus be compensated for by the application of another regime. However, given that timber producing countries are often developing countries with less established legal and judicial systems, affected actors may face other kinds of hurdles in challenging timber regulation in third countries. In a similar vein, the Waste Electrical and Electronic Equipment Directive imposes obligations on the EU exporter of WEEE to third country facilities

42 Case C-583/11 Inuit Tapiriit Kanatami, Opinion of Advocate General Kokott, EU:C:2013:21, para 71. 43 ibid para 75. 44 Case C-583/11 P Inuit Tapiriit Kanatami and others v Parliament and Council (Inuit I), EU:C:2013:625. 45 Neither the General Court nor the ECJ considered the issue of standing in Inuit II. This was justified by the General Court in terms of ‘economy of procedure’, which, however, left this important question open. Case T-526/10 Inuit Tapiriit Kanatami v Parliament and Council (Inuit II), EU:T:2013:215, para 21. See also Case C-398/13 Inuit Tapiriit Kanatami and Others v European Commission (Inuit II), EU:C:2015:535. 46 Chapter 1, Section III.A.(i).(b). 47 Commission, ‘Guidance Document for the EU Timber Regulation’ COM(2016) 755 final, Annex I.

Access to Justice  155 to ensure treatment takes place in equivalent conditions thus directly applying to the exporter rather than the third country facility involved.48 The way in which IEMEIs are often designed, by imposing direct obligations on EU operators and only indirectly affecting third country actors, signifies that foreign operators will often not be able to rely on EU law protection. This reveals the shortcomings of judicial protection of less directly affected interests in the EU judicial system, which provides an insufficient transnational accountability avenue. Third country actors may instead resort to WTO dispute settlement as an alternative judicial review mechanism, as third countries did in relation to the Seals Regulation.49 It should be noted, however, that the WTO dispute settlement does not offer opportunities for challenging IEMEIs on the basis of EU law which provides for various procedural and substantive individual rights. Furthermore, the WTO system is confined to state disputes and therefore individuals and economic operators depend on whether their state decides to initiate a dispute. Overall, the restrictive interpretation of standing requirements protects the EU judicial system from being flooded with endless claims by third country actors that may be indirectly or incidentally affected by EU legislation with extraterritorial reach. This in turn can strengthen the argument for substantive protection of the third country interests that are directly affected and have access to the EU courts. Before concluding on standing requirements, it should be noted that the EU courts have also developed a rights-based approach to a participation exception, which could potentially provide an alternative avenue for establishing standing before the EU courts.50 This essentially allows those with a right of participation to challenge the application of this right.51 When standing is established on this basis, the applicant can only challenge the refusal of their right to participation and not the substantive content of a specific decision52 or the fact that the Commission has not followed specific representations made in the consultation processes.53 As discussed in Chapter three, a right to be heard and participate only arises in situations where it is so provided in legislation or as a general right to be heard in relation to individual measures when IEMEIs are implemented in third countries.54 As for the intensity of review of such rights, this is further discussed below in Section III.B.(i). When such rights are not provided under secondary legislation or as a general principle

48 WEEE Directive (n 10 above) Art 10. 49 AB Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R, WT/DS401/AB/R adopted 18 June 2014. See Chapters 5 and 6. 50 Scott and Sturm (n 1 above). 51 Case T-339/00 Bactria Industriehygiene-Service Verwaltungs GmbH v Commission, EU:T:2002:107. 52 Eurofer (n 32 above). 53 Scott and Sturm (n 1 above). 54 Chapter 3, Section II.B.

156  Judicial Review of IEMEIs in the EU Legal System of law, this avenue of standing would not be available by virtue of general consultation with third country actors, for example in the context of Impact Assessments (IAs). Overall, direct access to the EU courts is restricted for both EU and non-EU actors. As discussed in this section, given the legal design of IEMEIs, third country actors face additional hurdles in satisfying even the seemingly uncontroversial requirement of ‘direct concern’. This restrictive approach to standing in the EU legal order is problematic and is possibly incompatible with the right to effective judicial protection provided under the EU Charter on Fundamental Rights, which applies to ‘everyone’.55 As the ECJ has emphasised in numerous cases, the complete system of legal remedies of the EU legal order consists of a combination of direct action before the EU courts, judicial review in national courts and references for preliminary rulings.56 The shortcomings of providing a full system of judicial protection – primarily through the preliminary references route – have been repeatedly identified, both by judiciary57 and by academia,58 specifically in the environmental law context.59 These shortcomings are equally true, or even more so, in relation to judicial protection of third country affected interests. Third country actors may not have easy access to national courts; the review of IEMEIs can raise political issues affecting EU external relations; and the variable systems of review by national courts can affect the effectiveness of the harmonisation of common European environmental standards that determines access to the single market. For these reasons, issues of consideration of third country interests should preferably be determined by the EU courts rather than national courts, as access to national courts may favour some kinds of privileged third country actors while excluding others. C.  The Aarhus Convention and Access to Justice When examining the possibilities for access to justice in environmental matters in the EU legal order, the third pillar of the Aarhus Convention on access to justice is also legally relevant, as it seeks to enhance access to justice for individuals and NGOs in relation to environmental matters. This relevance lies in the international commitments that bind the EU under Article 9 of the Convention and in the implementation of Article 9 in EU law, demonstrating how the

55 Charter Art 47; A Arnull, ‘Judicial Review in the European Union’ in A Arnull and D Chalmers (eds), The Oxford Handbook of European Union Law, 1st edn (OUP, 2015). 56 Case C-50/00 Union de Pequenos Agricultores v Council (UPA), EU:C:2002:462. 57 Case T-177/01 Jégo-Quéré et Cie SA v Commission, EU:T:2002:112, para 51. See also UPA (n 56 above) Opinion of AG Jacobs. 58 Arnull (n 55 above). 59 M Lee, EU Environmental Law: Challenges, Change and Decision-Making (Hart, 2005) ch 6.

Access to Justice  157 accountability gap and the procedural justice gap related to IEMEIs could be possibly filled through the implementation of an international agreement in the EU legal order. Notably, the implementation of the Aarhus Convention in the EU legal order also entails external oversight of EU action through the Aarhus Convention Compliance Committee (ACCC).60 Depending on the kind of act that applicants seek to challenge before the EU courts, different standing requirements apply. Article 9 provides for access to justice in three different situations, in relation to: access to information; public participation; and acts or omissions contravening national environmental law. Given that third country actors affected by IEMEIs would probably not have public participation rights in the Aarhus context as analysed in Chapter three,61 the focus in this section is on the other two situations. In relation to a negative decision for access to information, applicants can ask for a re-examination of their request in the form of a confirmatory decision, following which they can challenge the decision before the EU courts if also negative.62 As discussed in Chapter three, access to information is likely to be available to all persons without discrimination on the basis of nationality or place of residence/registration based on a combined reading of the Aarhus Regulation and the Transparency Regulation.63 Therefore, the possibility for instituting court proceedings against the EU institution which has refused to provide access to information would also be open to third country applicants.64 For example, third country actors could require information and challenge refusals of access regarding the basis of default values for biofuels, which can be used to more easily prove compliance with specific sustainability criteria65 or the bases on which the criteria for equivalent treatment of electrical waste are determined.66 When access to the EU courts is sought in relation to ‘acts or omissions relating to the environment’ as provided under the Convention, the procedure within the EU is not as clear. Article 9(3) of the Aarhus Convention requires signatories to ensure that the public has access to ‘administrative or judicial procedures to

60 The ACCC is responsible for the review of compliance by the parties with their obligations under the Convention and was established by Decision I/7 Review of Compliance, Report of the First Meeting of the Parties to the Aarhus Convention, ECE/MP.PP/2/Add.8, 2 April 2004. 61 Chapter 3, Section III. 62 Regulation (EC) 1049/2001 regarding public access to European Parliament, Council and Commission documents [2001] OJ L145/43 (Transparency Regulation) Art 8. 63 Chapter 3, Section VI. 64 ibid. 65 These are set out in Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2009] OJ L140/16, Annex V. However, the Commission can also add default values in accordance with criteria and processes set out in Commission, ‘Communication on voluntary schemes and default values in the EU biofuels and bioliquids sustainability scheme’ [2010] OJ C160/01. 66 WEEE Directive 2012/19 (n 10 above) Art 10(3).

158  Judicial Review of IEMEIs in the EU Legal System challenge acts or omissions by … public authorities which contravene provisions of its national law relating to the environment’. This includes a caveat that the contracting parties can lay down any criteria that will determine access to justice,67 although the ACCC has clarified that this does not leave discretion as ‘to acts that may be exempted by implementing laws’.68 While access to justice requirements under the Aarhus Convention at first sight seem promising in the sense of creating new procedural rights in the EU, implementing legislation has been construed and interpreted narrowly, considerably limiting this accountability avenue. In order to comply with Article 9(3) of the Convention, the EU established a procedure to apply for an internal review of an administrative act or alleged omission in relation to environmental law under Article 10 of the Aarhus ­Regulation.69 This procedure is limited in two important respects. First, it can only be invoked on the basis of violation of EU environmental law.70 Second, it is only open to a specific class of legal persons – NGOs established under the national law of an EU Member State – whose primary objective is the promotion of environmental protection.71 This procedure enables social accountability, as understood by Bovens, by identifying NGOs as relevant ‘stakeholders’ in rendering account of the EU’s action.72 However the limitations of the internal review procedure are important, as it does not extend to issues of procedural fairness that may have been circumvented by EU institutions, and the procedure is unavailable to other kinds of NGOs, such as trade unions, which may also be affected by such acts or omissions,73 or even to other members of the public.74 Inherently, this procedure is limited in scope in ways that prevent it from contributing substantially to addressing the procedural justice and accountability gaps related to IEMEIs.

67 Aarhus Convention (n 13 above) Art 9(3); V Rodenhoff, ‘The Aarhus Convention and its Implications for the “Institutions” of the European Community’ (2002) 11 Review of European Community and International Environmental Law 343. 68 Findings and Recommendations of the Compliance Committee with regard to Communication ACCC/C/2008/32 (Part II) concerning compliance by the European Union (adopted 17 March 2017). 69 Regulation (EC) 1367/2006 on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community institutions and bodies [2006] OJ L264/13 (Aarhus Regulation) Art 10; M Pallemaerts, ‘Access to Environmental Justice at EU Level: Has “the Aarhus Regulation” Improved the Situation?’ in M Pallemaerts (ed), The Aarhus Convention at Ten: Interactions and Tensions between Conventional International Law and EU Environmental Law (Europa Law Publishing, 2011). 70 Aarhus Regulation 1367/2006 (n 69 above) Arts 10(1) and 2(1)(f). 71 ibid Art 11. 72 M Bovens, ‘Analysing and Assessing Accountability: A Conceptual Framework’ (2007) 13 ­European Law Journal 447, 457. 73 Pallemaerts (n 69 above). 74 This was found to be contrary to Art 9(3), ACCC Findings (Part II) (n 68 above).

Access to Justice  159 Furthermore, internal review is only available for ‘administrative acts’, thus excluding legislative acts adopted by ordinary legislative procedure.75 The scope of this internal review is also limited to measures of individual scope, excluding measures of general application.76 This enables the Commission to refuse most requests for internal review. The narrow scope of reviewable acts has been challenged before the CJEU, which, however, refused to assess the compatibility of Article 10 of the Aarhus Regulation with Article 9(3) of the Aarhus Convention. In particular, the ECJ held that the Regulation is not meant to implement these provisions and that the Convention lacks direct effect in the EU legal order.77 More recently and after the ACCC’s findings on the violation of the Convention by the EU, discussed below, the General Court reaffirmed the CJEU’s approach. It held that it could not interpret the Regulation in conformity with the Aarhus Convention so as to broaden the scope of reviewable acts beyond those of ‘individual scope’ as this would be contra legem.78 Despite its narrow scope, the administrative review procedure established by the Aarhus Regulation allows for review of some measures such as the authorisation of placing on the market of GMOs or authorisations under the REACH regime,79 but may still be restrictive on the merits.80 On the basis of current interpretation, it could allow environmental NGOs to challenge decisions such as the inclusion of a ship recycling facility on the European List, which, however, is set out in an implementing act that may not be found to be of an ‘individual scope’,81 or the recognition of a sustainability certification scheme, which is set out in an individual implementing act.82 In these situations environmental NGOs would seek to challenge EU acts on the basis of contravention with EU environmental law. These grounds would likely be in conflict with the grounds on which third country actors may seek to challenge IEMEI-related decisions, based on economic and developmental interests affected. This provides one example of the conflict between internal and external accountability claims arising from the exercise of EU global regulatory power. Furthermore, the Aarhus Regulation provides the possibility for NGOs that make requests for internal review under Article 10 of the Aarhus Regulation, to

75 Aarhus Regulation 1367/2006 (n 69 above) Art 10. 76 ibid Art 2(1)(g). 77 Case C-240/09 Lesoochranárske zoskupenie VLK v Ministerstvo životného prostredia S­ lovenskej republiky (‘Slovak Brown Bear’), EU:C:2011:125; Joined Cases C-404/12 P and C-405/12 P Council and Commission v Stichting Natuur en Milieu, EU:C:2015:5. 78 Case T-12/17 Mellifera v Commission, EU:T:2018:616, para 87. 79 Pallemaerts (n 69 above). 80 ibid. 81 Commission Implementing Decision 2016/2323/EU establishing the European List of ship recycling facilities pursuant to Regulation (EU) 1257/2013 on ship recycling [2016] OJ L345/19. 82 For example, Commission Implementing Decision (EU) 2017/500 of 21 March 2017 on recognition of the ‘Bonsucro EU’ voluntary scheme for demonstrating compliance with the sustainability criteria under Directives 98/70/EC and 2009/28/EC of the European Parliament and of the Council [2017] OJ L76/40.

160  Judicial Review of IEMEIs in the EU Legal System challenge this process before the EU courts.83 This combines social accountability through the involvement of environmental NGOs, with legal accountability through the involvement of the CJEU as an important legal forum.84 However, the scope of judicial review under Article 12 of the Aarhus Regulation has been interpreted in a narrow manner. Despite the Aarhus Convention Compliance Committee clarifying that Article 12 of the Aarhus Regulation should allow for judicial review of the substance of the administrative act,85 the General Court has held that Article 12 does not allow for the substance of the original act to be reviewed.86 Rather it is limited to review of the written reply provided under Article 10 of the Aarhus Regulation, in accordance with the procedural requirements set out in Articles 10(2) and (3).87 If the NGO wishes to challenge the initial act or omission, it would have to qualify under the normal standing rules, which, as analysed above, are very restrictive for NGOs representing collective interests.88 The restrictive nature of standing requirements as applied by the EU courts has been criticised by the ACCC.89 In 2011, the ACCC noted that if the EU courts continued with the same restrictive approach to standing, this would eventually lead to a breach of the Convention’s access to justice provisions,90 unless administrative review procedures compensated for that.91 The Committee adopted its final findings in March 2017 and found that the new, post-Lisbon Article 263(4) TFEU, the internal review procedure under the Aarhus Regulation, and the CJEU’s case law in interpreting EU legislation implementing the Aarhus Convention, discussed above,92 do not constitute a change in direction to the effect of bringing the EU into compliance with access to justice provisions under the Convention.93 In its reply to the provisional findings, the EU Commission requested a further hearing and asked the Committee to take into account the ‘specific nature’ of the EU legal order in providing access to justice before reaching its final findings.94 Additionally, the Council merely 83 Aarhus Regulation 1367/2006 (n 69 above) Art 12. 84 Bovens (n 72 above) 456. 85 ACCC Findings (Part II) (n 68 above) paras 110–112. 86 Case T-177/13 Testbiotech v Commission, EU:T:2016:736. This case was decided too late for it to be taken into account by the ACCC in its review of the compatibility of EU requirements with the Aarhus Convention. The case is currently under appeal before the ECJ: Case C-82/17 P Testbiotech v Commission. 87 Pallemaerts (n 69 above). 88 C Poncelet, ‘Access to Justice in Environmental Matters – Does the European Union Comply with its Obligations?’ (2012) 24(2) Journal of Environmental Law 287. 89 Findings and recommendations with regard to communication ACCC/C/2008/32 (Part I) concerning compliance by the European Union (adopted 14 April 2011). 90 ibid para 88. 91 ibid. 92 Including Slovak Brown Bear and Sticthing Milieu (n 77 above). 93 ACCC Findings (Part II) (n 69 above). 94 Comments by the European Commission, on behalf of the European Union, to the draft findings and recommendations by the Aarhus Convention Compliance Committee with regard to Communication ACCC/C/2008/32 (Part II).

Access to Justice  161 called for the parties to the Aarhus Convention to ‘take note of’ the findings, as opposed to endorsing them.95 It also requested the removal of any references to the CJEU, defending its position on grounds of separation of powers between EU institutions and its inability to give directions to the CJEU.96 Given these requests, it was impossible for the parties to the Aarhus Convention to reach consensus on the adoption of the Decision ratifying the ACCC’s findings at the sixth Meeting of the Parties. A move to ‘taking note of’ ACCC findings would undermine the authority of the Meeting of the Parties and the compliance mechanism as it would be unclear whether any legal or political consequences would follow. Instead the parties deferred the decision to the next Meeting of the Parties in 2021.97 While ACCC findings, even when endorsed, are not strictly legally binding, the EU has committed to international obligations under the Aarhus Convention and to comply with findings of the ACCC. In terms of accountability, there is significant political and social pressure on the EU to comply with its obligations under the Aarhus Convention on access to justice and the ACCC findings, both from within the EU,98 and from outside,99 leading to the Council in June 2018 requesting the Commission to submit a study on the EU’s options to comply with the ACCC findings and to explore possible amendments to the Aarhus Regulation to that effect.100 In particular, the Council identified the possibility to widen the category of EU acts in respect of which internal review could be requested.101 While it seems unlikely that standing requirements will be drastically expanded, designing and interpreting Aarhus implementing legislation in accordance with the Convention, possibly through more expansive administrative procedures, could extend access to justice in the EU legal order. It remains to be seen whether and how the EU will change its approach to be in line with the Aarhus Convention and what this would mean for access to justice for different kinds of third country actors in the context of IEMEIs. Any expansion of access to justice rights is not likely to come from the CJEU, given

95 Draft decision VI/8f concerning compliance by the European Union with its obligations under the Convention ECE/MP.PP/2017/25 (30 June 2017). 96 Council Decision (EU) 2017/1346 of 17 July 2017 on the position to be adopted, on behalf of the European Union, at the sixth session of the Meeting of the Parties to the Aarhus Convention as regards compliance case ACCC/C/2008/32 OJ L186/15. 97 Report of the sixth session of the Meeting of the Parties to the Aarhus Convention, para 62. 98 Resolution of 15 November 2017 on an Action Plan for nature, people and the economy (2017/2819(RSP)) para 16; Resolution of 16 November 2017 on the EU Environmental Implementation Review (EIR) (2017/2705(RSP)) para 26. 99 Budva Declaration on Environmental Democracy for Our Sustainable Future, ECE/MP.PP/2017/ CRP.3–ECE/MP.PRTR/2017/ CRP.1 (adopted on 14 September 2017) para 21. 100 Council Decision (EU) 2018/881 of 18 June 2018 requesting the Commission to submit a study on the Union’s options for addressing the findings of the Aarhus Convention Compliance Committee in Case ACCC/C/2008/32 and, if appropriate in view of the outcomes of the study, a proposal for a Regulation amending Regulation (EC) No 1367/2006. 101 ibid Recital 9.

162  Judicial Review of IEMEIs in the EU Legal System its continued narrow interpretation of the Aarhus Regulation and its reluctance to conduct its review in accordance with the Aarhus Convention even after the issuance of the ACCC findings, which the General Court views as a simple ‘project’ of unclear legal force.102 Overall, the limits of access by non-privileged applicants to the EU courts, which apply equally to EU and non-EU actors, are unlikely to change drastically any time soon. The restricted access to the EU courts exacerbates the accountability and procedural justice gaps related to IEMEIs when third country affected actors do not have access to judicial review to challenge IEMEIs on the basis of EU law. However, this does not mean that third country actors do not have any opportunities to challenge IEMEIs. Depending on the design of IEMEIs and the way in which they are implemented, third country actors could have standing in situations where decisions are addressed to them or in the few cases where they are directly and individually concerned. They could also challenge any participation rights if not applied properly, and the legality or interpretation of EU acts through national courts that may refer questions to the CJEU through the preliminary ruling procedure. The following section considers different grounds of judicial review with the aim of assessing the extent to which third country affected interests are given due consideration by the EU courts when third country actors gain access or when the territorial scope of EU legislation is at issue. III.  GROUNDS OF JUDICIAL REVIEW

This section explores the different ways in which third country interests may become relevant in cases before the EU courts and the types of arguments that could be put forward by third country actors when challenging IEMEIs. The intensity of judicial review employed by the CJEU when reviewing EU action largely determines the extent to which EU law facilitates or constrains the exercise of EU global regulatory power. Judicial review determines the balance achieved between these dual functions of law and demonstrates the extent of the accountability and justice gaps related to IEMEIs. It also provides ways in which the gaps could be filled by the CJEU. The relevance of grounds of judicial review in this context lies not only in the possibilities of getting an EU act annulled but also in terms of legality benchmarks influencing EU decisionmaking practices, discussed in Chapter three.

102 Mellifera v Commission (n 78 above) para 86. Note that the General Court clarified it was not necessary to consider the compatibility with the ACCC findings in this case given that the contested Implementing Regulation was adopted before the issuance of the ACCC findings. It remains to be seen if its approach would be different regarding acts adopted after the ACCC findings. See M  Pagano, ‘The “Mellifera” Case and Access to Environmental Justice under the Aarhus Regulation: New Findings, Old Story’, EU Law Analysis Blog, 19 October 2018: http://eulawanalysis. blogspot.com/2018/10/the-mellifera-case-and-access-to.html?m=1.

Grounds of Judicial Review  163 The analysis that follows explores three out of the four grounds of review in Article 263(2) TFEU. First, the section examines competence, which is particularly relevant in enabling the adoption of IEMEIs. Second, it examines essential procedural requirements, including procedural rights discussed in Chapter three, which can ensure procedural fairness for third country actors, mainly at the implementation stage of IEMEIs. Third, it explores grounds under the heading of ‘infringement of the Treaties or any rule of law relating to their application’, which provide different ways for the EU courts to supervise how EU regulators and administrators exercise discretion. These include general principles of law, possibly invoked in conjunction with soft law, proportionality, fundamental rights as well as international law. The fourth ground under Article 263(2) TFEU relating to misuse of power is deemed an unlikely route for challenging IEMEIs, particularly because it requires proof of bad faith and intent to use power to achieve an improper purpose and has rarely succeeded in practice.103 It should also be noted that while in principle, non-EU actors could bring an action for damages against the EU under non-contractual liability,104 this is deemed an unlikely type of action to succeed in the context of IEMEIs. This is partly due to the strict requirements for proving such liability in EU law and partly because third country actors would face serious challenges in proving that the damage was indeed caused by EU domestic legislation with extraterritorial effects.105 For the purposes of this chapter, the primary focus is on the legality of IEMEIs, both in direct actions and in preliminary references, in examining the role of the EU courts in disciplining the exercise of EU regulatory power beyond EU borders, and thus the discussion is organised on the basis of the grounds listed above. However, the interpretation of EU legislation could also be at issue, in relation to whether EU requirements apply to conduct that takes place abroad, especially when the territorial scope of the measure is not explicitly clarified.106 Issues of interpretation can also inform the legitimising function of the EU courts both in enabling and constraining EU action, as they can determine the territorial scope of EU legislation and the impact of IEMEIs in third countries. In any case, the determination of lawfulness of EU acts could affect their interpretation. Where relevant, questions of legal interpretation are discussed in the following sub-sections. A. Competence The first ground of review, often discussed in relation to unilateral measures with extraterritorial implications, is that of competence. This refers to whether 103 Hartley (n 30 above) 425. 104 TFEU Art 340. 105 Bartels (n 40 above) 1089. 106 Case C-424/13 Zuchtvieh-Export GmbH v Stadt Kempten, EU:C:2015:259; Case C-592/14 European Federation for Cosmetic Ingredients v Secretary of State for Business, Innovation and Skills and Attorney General, EU:C:2016:703.

164  Judicial Review of IEMEIs in the EU Legal System the EU has the power to act under a relevant legal basis in the EU Treaties in accordance with the principle of conferral of powers.107 Issues of competence can be relevant for IEMEIs both in terms of the legal basis on which they are based and in terms of the scope of competence under which they are adopted. Competence can thus determine the extent of the accountability gap related to IEMEIs by controlling how EU institutions exercise their powers. As interpreted by the CJEU to date, competence is more about empowering the exercise of EU power beyond EU borders than constraining it. Most judicial challenges on competence concern the modalities of exercise of competence, relating to the choice of legal basis. As such cases usually focus on the delineation of powers between the EU and the Member States or between different EU institutions, they do not directly engage with third country interests. Nonetheless, the choice of legal basis can be legally relevant for the exercise of global regulatory power indirectly. Whether an IEMEI is adopted based on competence on the environment,108 the internal market109 or the common fisheries policy,110 can influence the level of EU action and the justification for such action, the scope of relevant competences, as well as the intensity of review of other grounds, such as proportionality. In Inuit II for example, the relevant scope of affected interests was determined in a narrow manner focusing on the fact that the aim of the Seals Regulation was to improve the functioning of the internal market and not to regulate animal welfare or the EU’s common commercial policy under Article 207 TFEU. The effects on international trade were thus seen as merely secondary.111 This approach was adopted, irrespective of the fact that most actors affected by the Regulation were located outside the EU.112 Article 114 TFEU was held not to be subject to a de minimis rule relating to the minimum volume of trade in products within the EU, thus further expanding the permissible boundaries of EU regulatory action.113 This approach influenced the review of proportionality, in determining whether the qualified ban on trade in seal products went beyond what was necessary to improve the functioning of the internal market, as further discussed below in Section III.D. While the choice of legal basis may have some potential to determine the relevance of third country interests in the courts’ assessment, it is more likely for third country actors to specifically challenge the territorial scope and the unilateral nature of IEMEIs. The CJEU tends to interpret the scope of EU

107 TEU Art 5(2). 108 The Ship Recycling Regulation, the Timber Regulation, the Aviation Directive and the WEEE Directive were adopted under Art 192(1) TFEU. 109 The sustainability criteria for biofuels were adopted under Art 114 TFEU. 110 The IUU Regulation (n 213 below) was adopted under Art 143 TFEU. 111 Case T-526/10 Inuit II (n 45 above) para 71. 112 ibid. 113 Case T-526/10 Inuit II (n 45 above) paras 55–56; Case C-398/13 Inuit II (n 45 above) paras 39–42.

Grounds of Judicial Review  165 competences broadly, as demonstrated in the environmental field by the case of Air Transport Association of America (ATAA).114 Both the ECJ and the AG in ATAA justified the EU’s unilateral activity in filling a regulatory gap at the international level by incorporating global aviation emissions within the EU ETS, thus facilitating the exercise of EU global regulatory power. While EU environmental competence provides that Union policy should contribute to ‘promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change’,115 it is not straightforward whether this includes unilateral extension of the regulatory remit of EU domestic legislation. Unilateral action may arguably be contrary to the EU’s own commitments to promote international action and act in cooperation with third countries.116 However, delegating power to an international body to act, as was the case with the International Civil Aviation Organization (ICAO) in regulating aviation emissions, cannot be interpreted as surrendering the attainment of important EU objectives to an external organisation.117 In justifying the EU’s unilateral action, the ECJ emphasised the importance of the environmental protection objectives in the EU Treaties and the fact that these objectives ‘follow on’ from international agreements to which the EU was signatory.118 As AG Kokott put it, EU institutions ‘could not reasonably be required to give the ICAO bodies unlimited time in which to develop a multilateral solution’ and thus it was within their powers to opt for a unilateral solution.119 This approach seeks to achieve a balance between unilateralism and multilateralism by justifying EU unilateral action in light of insufficient action by the relevant international body and by validating the existence of IEMEIs as necessary, albeit second-based, solutions to global environmental problems. The territorial scope of environmental competence was also given a broad meaning in ATAA. EU competence was found to extend to situations where the EU unilaterally imposes conditions on third country operators when they

114 ATAA (n 18 above). For a more detailed account of the ECJ’s and AG’s approach in this case see I Hadjiyianni, ‘The Role of Domestic Courts in Global Environmental Governance: Judicial Review of Extraterritoriality by the Court of Justice of the European Union’ (2018) EUI Working Paper MWP/RNS/2018/. See also S Bogojević, ‘Legalising Environmental Leadership: A Comment on the CJEU’s Ruling in C-366/10 on the Inclusion of Aviation in the EU Emissions Trading Scheme’ (2012) 24 Journal of Environmental Law 345; NL Dobson and C Ryngaert, ‘Provocative Climate Protection: EU “Extraterritorial” Regulation of Maritime Emissions’ (2017) 66 International and Comparative Law Quarterly 295; G de Baere and C Ryngaert, ‘The ECJ’s Judgment in Air Transport Association of America and the International Legal Context of the EU’s Climate Change Policy’ (2013) 18 European Roreign Affairs Review 389. 115 TFEU Art 191(1). 116 TFEU Art 191; TEU Art 21(1). 117 Lenaerts, Maselis and Gutman (n 15 above) 369. 118 ATAA (n 18 above) para 128. 119 Case C-366/10 Air Transport Association of America and others v The Secretary of State for Energy and Climate Change (ATAA), Opinion of AG Kokott, EU:C:2011:637, para 186.

166  Judicial Review of IEMEIs in the EU Legal System choose to conduct business with the EU – in this specific case when airlines choose to depart from or arrive at EU airports.120 According to the ECJ, the physical presence of foreign airlines in EU airports subjects them to the ‘unlimited jurisdiction of the EU’.121 This line of reasoning seems disconnected from commercial reality, which makes it difficult or commercially impossible for airlines to avoid EU airports altogether.122 Furthermore, rerouting aircraft to other airports could instead lead to higher emissions, defying the environmental integrity of the measure. In a different way, AG Kokott also emphasised that there is an adequate territorial link with the EU, and taking into account the whole duration of the flight is necessary due to the transboundary nature of air pollution which ‘knows no boundaries’ and requires regulating GHG emissions wherever these may occur.123 She thus justified the need for a broad territorial scope on the basis of effects-based reasoning. While the ECJ also referred to the effects of air polluting activities within the EU,124 this was not determined as a prerequisite for the exercise of EU competence beyond EU borders in this area.125 Regrettably, in holding that the Aviation Directive did not infringe international principles and the sovereignty of third countries, the ECJ did not use its ‘contingent’ features in upholding the legality of the EU’s action. In contrast, the AG drew on the ‘saving clause’ in the Aviation Directive, which provided the possibility for flights departing from third countries that regulate the climate change impact of flights to an equivalent level to be excluded from the EU ETS,126 thus avoiding the situation of double regulation.127 In establishing the EU’s competence to unilaterally regulate processes partly taking place abroad, the CJEU could more dynamically engage with such contingent features of IEMEIs in demonstrating respect of third country sovereignty and the principle of selfdetermination. In turn, such contingent features could develop into requirements when acting through IEMEIs to constrain the EU’s global regulatory power in ways that avoid a conflict with third country norms and demonstrate respect for the regulatory autonomy of third countries. 120 ibid. 121 ibid para 125. 122 BF Havel and JQ Mulligan, ‘The Triumph of Politics: Reflections on the Judgment of the Court of Justice of the European Union Validating the Inclusion of Non-EU Airlines in the Emissions Trading Scheme’ (2012) 37 Air and Space Law 3. 123 ATAA, Opinion of AG Kokott (n 119 above) para 154. 124 ATAA (n 18 above) para 129. 125 In contrast, the CJEU explicitly endorsed effects-based jurisdiction in competition law: Case T-102/96 Gencor Ltd v Commission EU:T:1999:65, paras 73–74; Case C-413/14 Intel v Commission, EU:C:2017:632, paras 40–46. For an analysis of these cases in the context of the global reach of EU law see G Monti, ‘The Global Reach of EU Competition Law’ in M Cremona and J Scott (eds), EU Law beyond EU Borders: The Extraterritorial Reach of EU Law (OUP, forthcoming). 126 Consolidated Version of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32 Art 25a(2); Directive 2008/101/EC amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community [2009] OJ L8/3, Recital 17. 127 ATAA Opinion of AG Kokott (n 119 above) para 159.

Grounds of Judicial Review  167 Based on the ECJ’s broad reasoning in ATTA, the territorial triggers embedded in most IEMEIs, which regulate activities abroad based on the physical presence of third country operators on the EU’s territory,128 would subject them to the ‘unlimited jurisdiction of the EU’.129 The ECJ thereby validated an interpretation of EU competences that largely facilitates the pursuance of environmental protection goals beyond EU borders ‘within the limits imposed by international law on the extraterritorial application of domestic environmental law’.130 These limits were established on the basis that the regulated activities have a territorial link with the EU and that EU regulation is enforced on the EU’s territory. The ECJ thus embraced a broad interpretation of international jurisdictional rules, following a Lotus permissive approach, whereby a state is allowed to exercise jurisdiction so long as there is no rule prohibiting such exercise of jurisdiction.131 Furthermore, with this judgment the ECJ reinforced the legitimacy of the EU’s claim to unilaterally impose economic obligations on foreign actors and has provided support for further EU unilateral action through economic instruments.132 The ECJ’s approach in ATAA follows earlier EU case law, where the CJEU adopted a broad interpretation of the territorial scope of EU competences, for example in relation to the conservation of fishery resources133 and asset-­freezing measures under the Common Foreign and Security Policy.134 In more recent years the CJEU has also variably embraced the global reach of EU competences in other policy areas, such as competition law, albeit on the basis of effectsbased reasoning,135 and financial regulation, where it engages in ‘light-touch’ review of competences.136

128 J Scott, ‘Extraterritoriality and Territorial Extension in EU Law’ (2014) 62 American Journal of Comparative Law 87. 129 ATAA (n 18 above) para 125. 130 G Marín Durán and E Morgera, Environmental Integration in the EU’s External Relations: Beyond Multilateral Dimensions (Hart, 2012) 14; JH Jans and H Vedder, European Environmental Law, 3rd edn (Europa Law Publishing, 2008) 31–36. 131 SS Lotus (France v Turkey), PCIJ Reports, (1927) Series A, No 10. On this interpretation see L Ankersmit, Green Trade and Fair Trade in and with the EU: Process-based Measures within the EU Legal Order (Cambridge University Press, 2017) 66–71. 132 Regulation (EU) 2015/757 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport [2015] OJ L123/55; Commission, Final Report, ‘Financial instrument to facilitate safe and sound ship recycling’, June 2016, 117. 133 The ECJ upheld EU competence only in so far as the EU Regulation at issue was enforced within the inland waters or at a port of a Member State, Case C-286/90 Anklagemyndigheden v Peter Michael Poulsen and Diva Navigation Corp, EU:C:1992:453, para 29. 134 The General Court emphasised that the Regulation at issue only applied to funds located in the EU territory and did not have any extraterritorial effect, Case T-362/04 Leonid Minin v Commission of the European Communities, EU:T:2007:25, para 106. 135 Gencor (n 125 above); Intel (n 125 above). 136 C-209/13 United Kingdom v Council, EU:C:2014:283. See on the ECJ’s approach E Fahey, The Global Reach of EU Law (Routledge, 2016) ch 2.

168  Judicial Review of IEMEIs in the EU Legal System Beyond validating the explicit broad territorial scope of EU legislation, the EU courts are also prepared to interpret legislation with a broad territorial scope even if not explicitly provided. In two cases concerning the territorial scope of EU animal welfare legislation, the ECJ was prepared to extend the territorial scope of EU legislation to activities taking place abroad, even if this was not explicitly provided in the legislative instruments, thus playing an even more critical role in expanding the territorial scope of EU legislation beyond EU borders.137 Arguably, in such cases where the ECJ ex post interprets EU legislation with a broad territorial scope, the judicial intervention may be exacerbating the legitimacy gaps related to the EU’s global regulatory power, as the possibility of third country affected actors and third country impacts would most likely not have been considered when the legislation was being formulated.138 The broad interpretation adopted by the EU courts in relation to unilateral competence to regulate processes that partly take place abroad characterises IEMEIs as something that the EU can legitimately do. It is thus unlikely for a challenge on the basis of ‘lack of competence’ to succeed in relation to IEMEIs. Such a scenario would currently only succeed in situations where there is no territorial or nationality link between the EU and the regulated procedure or where the EU measure provides for mandatory enforcement of EU standards directly in third countries, which is unlikely. The interpretation of competences in this way enables the adoption of IEMEIs and allows the EU to legitimately employ novel regulatory techniques in pursuing environmental protection goals that may be insufficiently regulated internationally.139 However, the focus on whether the EU has the power to act, ie, on the enabling role of EU law, without sufficient consideration of its disciplining role gives an incomplete picture about the legitimacy of EU global power. EU judicial review on the basis of competences is thus limited in filling the accountability gap related to IEMEIs. While the interpretation of competence has functioned to date to enable the adoption of IEMEIs, different grounds of review beyond competence could constrain the exercise of EU global regulatory power through IEMEIs.

137 Zuchtvieh-Export (n 106 above); European Federation for Cosmetic Ingredients (n 106 above). See I Hadjiyianni, ‘The Court of Justice of the European Union as a Transnational Actor through Judicial Review of the Territorial Scope of EU Environmental Law’ (2019) 21 Cambridge Yearbook of European Legal Studies (forthcoming). 138 Hadjiyianni, ibid. 139 On the enabling function of EU competences as interpreted by the CJEU, see I ­Hadjiyianni, ‘The Role of Domestic Courts in Global Environmental Governance: Judicial Review of ­Extraterritoriality by the Court of Justice of the European Union’ (2018) EUI Working Paper MWP/ RNS/2018/; Ankersmit (n 131 above) 76–77; J Scott, ‘The Global Reach of EU Law: Is Complicity the New Effects?’ in J Scott and M Cremona (eds), EU Law beyond EU Borders: The Extraterritorial Reach of EU Law (OUP, forthcoming); Fahey (n 136 above) ch 2.

Grounds of Judicial Review  169 B.  Essential Procedural Requirements The EU courts have a fundamental role in enforcing procedural rights, which also enables them to assess the rationality of decision-making.140 The enforcement of procedural requirements can enhance the due process and transparency of IEMEIs as applied to third country actors, contributing to filling the procedural justice and accountability gaps as well as addressing the participation gap by reviewing the application of consultation rights. Different process rights constitute ‘essential procedural requirements’ under Article 263(2) TFEU. This section examines three aspects of procedural requirements that may be relevant for third country affected actors: the right to be heard, the duty to provide reasons, and how procedural rights may be combined with other grounds of review. While in principle different procedural requirements could contribute to addressing various legitimacy gaps, in practice the scope of procedural rights as interpreted by the CJEU is limited in many respects that undermine the potential for judicial review to uphold such rights. (i)  Right to be Heard and Participation Rights As discussed in Chapter three, the right to be heard arises in situations where EU decisions are taken on the basis of individual determinations and not usually in relation to generally applicable legislative measures.141 Its enforcement through the EU courts would thus be possible only in such limited situations at the implementation stage of IEMEIs. Furthermore, the lack of an opportunity to be heard when such a right exists could lead to annulment if the Court considers that the outcome of the administrative procedure might have been different if such a right had been granted.142 This does not necessarily require the outcome to have been different but rather that the applicant would have been in a better position to ensure the defence of its interests.143 In any case, the applicant cannot challenge the substantive content of a decision on this basis.144 Third country actors could thus challenge irregularities in the implementation of IEMEIs where they are detrimentally affected by individual decisions or a right to be heard is explicitly provided in the legislation, when they would have been in a better position to defend themselves, which can be difficult to prove in practice. For example, a third country ship recycling facility could challenge

140 A Türk, ‘Judicial Review of Integrated Administration in the EU’ in H Hofmann and A Türk (eds), Legal Challenges in EU Administrative Law: Towards an Integrated Administration (Edward Elgar, 2009). 141 Chapter 3, Section II. 142 T Tridimas, The General Principles of EU Law, 2nd edn (OUP, 2006) ch 8. 143 Case T-276/13 Growth Energy and Renewable Fuels Association v Council, EU:T:2016:340, para 252. 144 Eurofer (n 32 above).

170  Judicial Review of IEMEIs in the EU Legal System a Commission decision to remove it from the European List of approved facilities if it had not been given the opportunity to be heard and to reply to the Commission’s questions.145 However in such a situation, the challenge would only lead to an annulment of the Commission’s decision if it were proven that the third country would have been in a better position to defend its interests, for example on the basis of evidence that steps were being taken to remedy any infringement of the Regulation. In any case, the third country facility would not be able to challenge the content of the Commission’s decision and therefore the parameters of the legal challenge are inherently limited. Given the reluctance of the EU courts to extend the right to be heard to legislative measures of general application there are many situations where the applicant will not be able to rely on this before the Courts.146 In the absence of a formal right to be heard, the question arises as to whether other participation rights may arise under constitutional requirements for EU institutions to maintain an open dialogue and for the Commission to consult broadly under Article 11 TEU, or as a result of informal consultation practices in the context of Impact Assessments. While consultation with affected interests in the decisionmaking procedures of the EU may be used by the Court or by applicants as evidence when reviewing other grounds of review, such as proportionality,147 the CJEU does not seem prepared to examine how such consultation has been carried out or to consider invalidating a measure on the basis of insufficient consultation or consideration of affected interests. In Inuit II, further discussed below, both the General Court and the AG referred to consultations by the EU Commission with Inuit and indigenous communities as evidence of sufficient consideration of their rights, while emphasising that such consultation was not a legal requirement amenable to judicial review, but rather falls within political discretion.148 As for Article 11 TEU, it is framed in discretionary terms, leaving it up to the institutions to determine the modalities for consultation, and it does not seem to create any enforceable legal rights.149 While arguably the insertion of Article 11 TEU into the EU’s constitutional text may change the normative narrative by providing support for participatory democracy in the EU,150

145 This is provided in Commission, ‘Requirements and procedure for inclusion of facilities located in third countries in the European List of ship recycling facilities – Technical guidance note under Regulation 1257/2013/EU on ship recycling’ (Communication) [2016] OJ C128/1, 5. It would also exist as a matter of a general principle of EU law. See Chapter 3, Section II.B. 146 Case T-526/10 Inuit II (n 45 above) paras 110–111. 147 See Section III.D below. 148 Case T-526/10 Inuit II (n 45 above) para 114; Case C-398/13 Inuit Tapiriit Kanatami, EU:C:2015:190, Opinion of AG Kokott, para 94. See further on this Hadjiyianni, ‘The Role of Domestic Courts in Global Environmental Governance (n 139 above) and below Section III.D. 149 E Korkea-aho, ‘Evolution of the Role of Third Countries in EU Law – Towards Full Legal Subjectivity?’ in S Bardutzky and E Fahey (eds), Framing the Subjects and Objects of Contemporary EU Law (Edward Elgar, 2017). 150 J Mendes, ‘Participation and the Role of the Law after Lisbon: A Legal View on Article 11 TEU’ (2011) 48 Common Market Law Review 1849.

Grounds of Judicial Review  171 it has not to date influenced the Courts’ approach in reviewing rights of participation. It should be noted that while the CJEU’s approach to the right to be heard has consistently endorsed the Atlanta approach based on individual determinations,151 there has not been a case so far where participation rights have been argued specifically on the basis of Article 11 TEU. It therefore remains to be seen whether the CJEU would change its approach on this issue given that there is now a specific treaty provision that enriches rights of consultation of a more general nature.152 (ii)  Duty to Provide Reasons The duty to give reasons has also been recognised as an ‘essential procedural requirement’ within the meaning of Article 263 TFEU,153 and represents an interesting process guarantee with a broad scope covering all administrative and legislative acts as set out in Chapter three.154 Especially when a right to be heard does not exist, the duty to provide reasons becomes crucial for the person affected to defend their rights and might even be raised by the Court on its own motion when evaluating the validity of a measure.155 In the context of IEMEIs, it could provide a transnational accountability mechanism through which the relevant EU institution is required to justify its action, including the broad territorial scope of EU legislation and detrimental effects when IEMEIs are enforced against third country actors. The CJEU’s approach towards this duty is variable, from a light review satisfied by general reasons, to a more substantive approach that requires ‘reasoning’ and where the Court may even ask the Commission additional questions to which reasoned answers must be provided.156 Thus, for example the EU courts could require EU institutions to provide more substantive reasons and evidence about the decision to include a vessel in the IUU list, a third country on the list of non-cooperating countries, or reject a third country ship recycling facility. However, while a merely formal statement of reasons is insufficient, it is not necessary for the Commission to specify all relevant matters of fact and law and justification for technical choices.157 Also, the EU courts weigh the practical feasibility of reason-giving against the precision of reasons required.158 151 See Chapter 3, Section II. 152 The absence of treaty provisions on consultation was one of the reasons for the Court’s restrictive approach to a right to be heard, Case T-521/93 Atlanta AG and others v Council and Commission, EU:T:1996:184, paras 70–71. 153 Case C-367/95 P Commission v Sytraval and Brink’s France SARL, EU:C:1998:154, para 67. 154 Chapter 3, Section V. 155 Harlow and Rawlings (n 2 above) 73. 156 ibid. 157 Case T-332/08 Melling Bank plc v Council, EU:T:2009:266 para 145; J Mendes, Participation in EU Rule-Making: A Rights-Based Approach (OUP, 2011) 250. 158 Case T-228/02 Organisation des Modjahedines du peuple d’Iran v Council, EU:T:2006:384, para 141.

172  Judicial Review of IEMEIs in the EU Legal System Furthermore, the procedural nature of the duty to give reasons affects the likelihood of the right to provide reasons being judicially reviewed, at least on its own, even in situations when it is explicitly provided in legislation. For example, Article 23 of the Ship Recycling Regulation requires the Commission to reply to requests for action by affected or potentially affected parties in case of imminent breach. The Regulation merely requires the Commission to inform the persons who submitted a request of its decision and to provide reasons for it. The lack of a substantive obligation on the Commission makes it unlikely for this obligation to be subject to judicial review. Failure of the Commission to respond and provide adequate reasons would more likely amount to maladministration and be subject to a complaint before the European Ombudsman. In general, there are limits as to the protective role of the duty to give reasons, bearing in mind the balance between the institution’s discretion and the exercise of judicial review. However, the duty to give reasons combined with the right to effective judicial protection under Article 47 of the Charter require the existence of a sufficiently solid factual basis for regulatory action. This may lead to a far-reaching role for the CJEU when balancing the protection of these rights with public interests, such as combating terrorism.159 The combination of procedural requirements with other rights or principles of EU law could thus increase the intensity of judicial review. (iii)  Procedural Requirements Combined with Other Grounds of Review The existence of procedural guarantees and the fulfilment of procedural rights can affect the determination of other, substantive grounds of review. In this respect, the right to good administration under Article 41 of the Charter, which encompasses the right to be heard and the duty to provide reasons, has been used in conjunction with other grounds of review, such as proportionality.160 For example, in Kadi, infringement of the right of property was deemed disproportionate especially because there was no opportunity for Mr. Kadi to be heard and to contest the decision made against him.161 In a different context, in the Vitamins case, where the Commission was to establish a positive list of food supplements, the lack of procedural guarantees and due process for adding new substances to the list was deemed important.162 The AG p ­articularly

159 Joined Cases C-584/10 P, C-593/10 P & C-595/10P Commission et al v Kadi (Kadi II), EU:C:2013:518. 160 Case T-496/10 Bank Mellat v Council of the European Union, EU:T:2013:39. See also on appeal Case C-176/13 Council of the European Union v Bank Mellat, EU:C:2016:96. 161 Cases C-402/05 P and C-415/05 P Yassin Abdullah Kadi and Al Barakaat International Foundation v Council and Commission (Kadi I), EU:C:2008:461; Kadi II (n 159 above) para 125. 162 Joined Cases C-154/04 and C-155/04 R (on the application of Alliance for Natural Health and others) v Secretary of State for Health and National Assembly for Wales, EU:C:2005:449.

Grounds of Judicial Review  173 emphasised the ­ importance ‘of legal protection, of legal certainty and of sound ­administration’163 in this respect in the proportionality analysis, while the ECJ imposed significant requirements for the EU administration to follow in deciding which substances to refuse.164 The existence and application of clear due process procedures can contribute to dealing with the ‘transparency of a black box’ in decision-making processes165 as well as influence the determination of proportionality,166 which is more fully discussed below.167 The combination of procedural requirements with substantive requirements, such as proportionality, can strengthen the potential to challenge IEMEIs especially in relation to their effects on third country actors at the implementation stage. This could indicate that clear procedures and criteria are required for the application of EU standards to third country operators, for example in relation to the authorisation of biofuel certification schemes which has been insufficiently transparent,168 as well as other enforcement procedures such as the establishment of the European List of ship recycling facilities, which is currently underway in relation to third country facilities, and the operation of the IUU blacklists. Judicial review of implementation and enforcement procedures can go a long way in addressing the procedural justice gap related to IEMEIs as well as providing for ways of holding the EU institutions to account. Overall, procedural guarantees could have far-reaching effects in challenging the legality of EU measures and in disciplining administrative discretion, when used as benchmarks in combination with more substantive grounds of review. As the following sub-section demonstrates, this is also the case with invoking soft law instruments in judicial review. C.  Soft Law and General Principles of EU Law This is the first of three sub-sections that examine the review of IEMEIs on the basis of ‘infringement of the Treaties or of any rule of law relating to their a­ pplication’.169 This ground is broad and has allowed the CJEU to develop 163 Joined Cases C-154/04 and C-155/04 R (on the application of Alliance for Natural Health and others) v Secretary of State for Health and National Assembly for Wales, EU:C:2005:199 Opinion of AG Geelhoed, para 87. 164 Tridimas (n 142 above) 148; X Groussot, ‘Case C-310/04, Kingdom of Spain v. Council of the European Union’ (2007) 44 Common Market Law Review 761. 165 Alliance for Natural Health (n 163 above) Opinion of AG Geelhoed, para 85; Groussot (n 164 above). 166 W Sauter, ‘Proportionality in EU Law: A Balancing Act?’ (2013) 15 Cambridge Yearbook of European Legal Studies 439. 167 Section III.D below. 168 M Gaebler, ‘Recognition of Private Sustainability Certification Systems for Public Regulation (Co-Regulation): Lessons Learned from the EU Renewable Energy Directive’ in C Schmitz-­Hoffmann and others (eds), Voluntary Standard Systems: A Contribution to Sustainable Development (Springer, 2014). 169 TFEU Art 263(2).

174  Judicial Review of IEMEIs in the EU Legal System general principles of law as grounds for judicial review.170 These include among others the rights of defence, some of which have been discussed under procedural rights above, proportionality and fundamental rights, discussed in Section III.D below, as well as legal certainty, legitimate expectations and equal treatment, discussed in this sub-section. This sub-section examines the role of soft law in judicial review of EU measures before the EU courts with a focus on its invocability in conjunction with general principles of EU law. The possibility to invoke soft law in judicial review of IEMEIs is critical when evaluating the role of judicial review by the CJEU in addressing the accountability, participation and justice gaps related to IEMEIs. On the one hand, the modalities of consideration of third country interests and consultation with third country actors are often determined in soft law instruments, such as the Better Regulation Guidelines, discussed in Chapter three. On the other hand, soft law instruments specify how provisions and processes set out in the legislative instruments of IEMEIs will apply in practice, including when applied to third country actors. For example, the criteria for certification of sustainable biofuels, the technical requirements for ship recycling facilities located outside the EU, and details of practical implementation of the Timber Regulation are set out in Commission guidance instruments.171 The non-legally-binding nature of such instruments begs the question as to the role of the EU courts in supervising consultation practices in accordance with Better Regulation guidelines, and implementation procedures in accordance with Commission guidance. Soft law does not constitute a separate ground of review and it would not amount to a ‘relevant rule of law’ under Article 263 TFEU. However, EU soft law instruments can still be relevant to judicial review of IEMEIs when invoked through other recognised grounds of review. Soft law instruments can have practical effects172 and potentially legal effects within the EU legal order.173 Different kinds of soft law instruments may produce different kinds of legal effects that could lead either to direct challenges to soft law or to indirect challenges to other EU acts on the basis of soft law. In relation to direct challenges, for an EU act to be reviewed directly by the EU courts, it has to be intended to produce legal effects towards third parties.174 This could be the case with soft law instruments relevant to the ­implementation

170 P Craig and G de Búrca, EU Law: Text, Cases and Materials, 6th edn (OUP, 2015) 550. 171 Commission Communication on voluntary schemes and default values in the EU biofuels and bioliquids sustainability scheme (n 65 above); Commission Guidance on Ship Recycling Facilities in third countries (n 145 above); Commission, ‘Guidance Document for the EU Timber Regulation’ (Notice) COM(2016) 755 final. 172 F Snyder, ‘The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques’ (1993) 56 Modern Law Review 19. 173 O Stefan, ‘European Union Soft Law: New Developments Concerning the Divide Between Legally Binding Force and Legal Effects’ (2012) 75 Modern Law Review 879. 174 TFEU Art 263.

Grounds of Judicial Review  175 of IEMEIs, such as the Commission’s guidance on the authorisation of ship recycling facilities located in third countries.175 Soft law guidance may be amenable to judicial review when it creates new obligations, adds to the legislative text, or where an EU institution adopts guidance which determines how it will exercise its discretion and supervisory powers in situations where the guidance applies.176 The guidance on ship recycling facilities could potentially satisfy these parameters given that it specifies the details of the authorisation process and determines the level of obligations imposed on facilities, for example regarding compliant waste management177 and the prohibition of the ‘beaching’ method of dismantling ships by clarifying what constitutes a ‘built structure’ under the Regulation.178 However, in practice it is difficult to delimit the situations where new obligations are created and there might be limits to self-binding line of conduct adopted by the Commission. While the CJEU looks at substance instead of form, only a small number of soft law instruments have been found to be directly reviewable.179 Despite difficulties in directly challenging soft law instruments, they could still have indirect legal effects before the CJEU. As the seminal case of Grimaldi established, the EU courts are required to ‘take into consideration’ soft law when deciding cases.180 Therefore, soft law could have indirect relevance before the EU courts as an aid to interpretation of hard law provisions, as an aid to parties in making their arguments, or even as an aid to the courts.181 This would arise in situations where a binding EU act is challenged on the basis of breach of soft law.182 Irrespective of how soft law finds its way into judicial challenges, it could be ‘enforced’ ‘through the intermediary of general principles of law’, such as the principle of legal certainty and legitimate expectations and the principle of equality.183 Soft law instruments could indicate a specific line of conduct that is meant to ensure legal certainty,184 and may create legitimate expectations,185 and

175 Commission Guidance on Ship Recycling Facilities in third countries (n 145 above). 176 J Scott, ‘In Legal Limbo: Post-Legislative Guidance as a Challenge for European Administrative Law’ (2011) 48 Common Market Law Review 329. 177 Commission Guidance on Ship Recycling Facilities in third countries (n 145 above) Section 2.2.5. 178 ibid Section 2.2.4. 179 Scott, ‘In Legal Limbo’ (n 176 above). 180 Case C-322/88 Grimaldi v Fonds de maladies profesionelles, EU:C:1989:646; Stefan, ‘European Union Soft Law’ (n 173 above). 181 A Alemanno, ‘A Meeting of Minds on Impact Assessment – When Ex Ante Evaluation Meets Ex Post Judicial Control’ (2011) 17 European Public Law 11. 182 ibid. 183 The EU courts often address these principles in conjunction: O Ştefan, Soft Law in Court: Competition Law, State Aid and the Court of Justice of the European Union (Kluwer Law International, 2013) ch 8. 184 ibid. 185 Case T-176/01 Ferriere Nord SpA v Commission, EU:T:2004:336, upheld on appeal Case C-49/05 P Ferriere Nord SpA v Commission, EU:C:2008:259; P Craig, EU Administrative Law, 2nd edn (OUP, 2012) 582.

176  Judicial Review of IEMEIs in the EU Legal System thus may have a self-binding effect. The Commission could be held to account on this basis. For example, legitimate expectations may have been created as a result of the Commission’s Communication on voluntary schemes and default values in relation to sustainable biofuels.186 Such expectations, which relate to legal certainty, may concern the assessment of a scheme regardless of origin, in relation to specific requirements for the verification system or in relation to when the Commission may update or add default values as set out in the Communication. Importantly, such legitimate expectations may potentially be created from the perspective of certification scheme providers or even economic operators and not from the perspective of environmental NGOs that rely on the Commission approving certification on the basis of criteria that safeguard the environmental integrity of the sustainability of biofuels. From a legitimacy perspective therefore, concerns may be raised as to whether justiciable legitimate expectations of economic operators would contribute to enhancing the legitimacy of IEMEIs or create an imbalance in the protection of different kinds of third country interests affected by IEMEIs. In any case, there are strict conditions for assurances and representations to amount to legitimate expectations, especially in proving that assurances are sufficiently precise and specific.187 When guidelines incorporate discretion as to how they will be applied and are ‘relatively open textured’, it is unlikely that a claim based on legitimate expectations will succeed.188 On this basis, it would be unlikely for Better Regulation documents,189 which provide directions with inherent discretion in their application, to succeed in challenging how the Commission carries out consultations with third country actors or includes third country impacts in Impact Assessments on the basis of legitimate expectations. In any event, the creation of legitimate expectations cannot prevent discretionary policy from being changed.190 Even when a legitimate expectation is found to exist, the EU courts will examine whether there is an overriding public interest protected by the measures adopted that takes precedence over the legitimate expectation.191 For example, the protection of health of consumers may justify the absence of transitional measures in changing a trade policy that affects the applicant’s legitimate expectations.192 Nonetheless, when legitimate expectations are created on the basis of non-legally-binding guidelines, internal rules or inter-institutional agreements,

186 Commission Communication on voluntary schemes (n 65 above). 187 Craig, EU Administrative Law (n 185 above) 583. 188 ibid 584. 189 Commission, ‘Better Regulation Guidelines’ (Staff Working Paper) SWD(2015) 111; Better Regulation ‘Toolbox’ complementing Commission Staff Working Paper SWD(2015) 111. 190 Craig, EU Administrative Law (n 185 above) ch 18. 191 ibid 577. 192 Case T-155/99 Dieckmann v Commission, EU:T:2001:256; ibid.

Grounds of Judicial Review  177 the Commission is required to justify any departure from the general p ­ ractice, in line with the principle of legal certainty.193 This line of argument has been developed in staff cases as well as in competition law and state aid, where the Commission cannot depart from guidelines at will.194 The Commission is precluded from departing from non-legally-binding guidelines which it has set out to follow in individual situations without providing reasons that justify non-equal treatment,195 thus creating an avenue through which the Commission is held to account. In this respect, a third country ship recycling facility could challenge a Commission decision to reject its application or remove it from the European List if it deviates from the substantive requirements or procedures set out in Commission guidance.196 This is because the Commission commits itself, through such guidance, to apply these requirements to all facilities applying to be included in the European List and departure from it should be justified. The general principles of rights of defence and specifically the duty to provide reasons also come into play in such situations, as the Commission is required to justify departure from soft law commitments thus creating an avenue of accountability towards affected actors who could potentially challenge the Commission’s conduct before the EU courts. Beyond the situations examined in this sub-section where soft law could be given legal effect through general principles of legal certainty, legitimate expectations and equal treatment, soft law instruments can influence judicial review carried out by the courts in other ways. As examined below in Section III.D, the EU courts may rely on non-legally-binding IAs in reviewing the factual basis of EU acts. The absence of an IA could indicate infringement of the principle of proportionality.197 Furthermore, the results of IAs could be used as evidence towards challenging the adequacy of reasons provided in adopting a specific decision.198 In this way, the justiciability of soft law practices in conjunction with general principles of law could indicate specific conduct to be followed by EU institutions, particularly in the form of procedural obligations that may contribute to addressing the procedural justice and accountability gaps related to IEMEIs. Overall, soft law has a role to play in judicial review of EU acts, but this role is indirect and variable. Despite the CJEU’s increasing willingness to refer to soft law, it does not usually engage in close scrutiny of the adoption of soft law or of deviance from soft law. The disciplining function of review of EU action on the basis of soft law commitments for IEMEIs is thus significantly qualified, providing insufficient mechanisms for addressing the accountability and procedural justice gaps related to IEMEIs.

193 Craig,

EU Administrative Law (n 185 above) 578. 578–79. 195 Case 148/73 Louwage v Commission, EU:C:1974:7. 196 Guidance on Ship Recycling Facilities in third countries (n 145 above). 197 Alemanno (n 181 above). 198 ibid. 194 ibid

178  Judicial Review of IEMEIs in the EU Legal System D. Proportionality One of the most far-reaching grounds of review under the heading of ‘infringement of the Treaties or a rule of law relating to their application’ under Article 263(2) TFEU relates to proportionality. Proportionality provides a very important method through which the EU courts supervise EU regulatory action in relation to its effects on other interests. In particular, the EU courts could identify different kinds of third country interests as ‘worthy of legal protection’ under the doctrine of proportionality,199 thus contributing to filling the external accountability gap related to IEMEIs. The review of EU measures on proportionality grounds serves different functions: (1) it functions as a ground of review of EU measures where public and private interests are balanced;200 (2) it governs the exercise of competence;201 and (3) it determines the lawfulness of fundamental rights infringements.202 This sub-section focuses on proportionality as a ground of review of EU measures, including in relation to fundamental rights, with a view to demonstrating the extent of the accountability gap related to IEMEIs and their extraterritorial impacts. The application of proportionality in review of EU measures, again, exposes the dual role of EU law in relation to the legitimacy of IEMEIs. On the one hand, proportionality is meant to discipline EU power by delimiting how far the effects of EU regulatory power can lawfully extend. On the other hand, the application of proportionality in reviewing EU policy choices entails discretion for EU institutions in deciding how to pursue regulatory objectives and has thus facilitated the exercise of power through IEMEIs in some respects. While to date there is little evidence that review of EU measures on proportionality grounds incorporates third countries interests, the development of proportionality in some contexts demonstrates that the EU courts could engage in closer review of how EU institutions exercise regulatory discretion in adopting and applying IEMEIs. Proportionality could thus serve a greater disciplining function, primarily in filling the accountability gap related to IEMEIs. (i)  Relevance and Applicability of Proportionality to IEMEIs While the legal relevance and applicability of proportionality in relation to third country impacts is not clearly established, proportionality is a general principle of EU law,203 binding all EU action, both internal and external,204 and could



199 Tridimas

(n 142 above) 139. 137–38. 201 TEU Art 5(4). 202 Charter Art 52(1). 203 Case C-180/96 United Kingdom v Commission, EU:C:1998:192. 204 Marín Durán and Morgera (n 130 above) 14. 200 ibid

Grounds of Judicial Review  179 thus also apply to extraterritorial effects. Proportionality can incorporate an outward-looking approach to judicial review that matches the regulatory ambition of IEMEIs, which seek to influence third country regulatory behaviour and business practices. This would be in line with EU external action commitments, examined in the Introduction to Part II, which, among other things, require the EU to foster the sustainable economic, social and environmental development of developing countries, promote protection of fundamental rights, and reduce trade barriers.205 In this respect, proportionality is a useful tool for making decisions when conflicting objectives are at stake, such as environmental protection and economic and social development,206 including when EU legislation affects third countries. While there is no requirement for non-discrimination towards third countries under the principle of equal treatment in EU law,207 including external aspects of internal policies, such as environmental protection,208 this does not mean that third country impacts are entirely ignored in judicial review of EU measures, particularly in reviewing compatibility with proportionality. Arguably there is some support in EU policy practices, secondary legislation and in the CJEU’s case law for proportionality to take account of third country affected interests, relating to different functions of proportionality. First, proportionality is meant to guide policy-making and it is sometimes employed in the assessment of impacts and burdens imposed on third country actors by proposed IEMEIs in the context of impact assessments. As discussed in Chapter three, the IA on ship recycling examined the impacts of the proposed Regulation on economic operators and justified the EU’s action in going beyond the requirements of the Hong Kong Convention as necessary for enhancing the safety of ship recycling activities including in third countries.209 The IA on IUU fishing also drew attention to detrimental economic impacts on third country actors in the context of proportionality.210 While these instances provide examples of proportionality testing weighted in favour of EU objectives, they also demonstrate how third country impacts are a relevant consideration in proportionality assessment. As third country impacts become relevant in EU decision-making

205 TEU Art 21. 206 E Reid, Balancing Human Rights, Environmental Protection and International Trade: Lessons from the EU Experience (Hart, 2015) 12–15, 99–102. 207 Case C-55/75 Balkan-Import Export GmbH v Hauptzollamt Berlin-Packhof, EU:C:1976:8, para 14. 208 Case C-272/15 Swiss International Air Lines AG v The Secretary of State for Energy and Climate Change, Environment Agency, Opinion of AG Saugmandsgaard Øe, EU:C:2016:573, paras 58–59. 209 Commission, ‘Impact Assessment of Proposal for Council Regulation on ship recycling’ (Staff Working Document) SEC(2012) 47 final, 28. See Chapter 3, Section IV. 210 Commission, ‘Impact Assessment of Proposal for Council Regulation establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing’ (Staff Working Document) SEC(2007) 1336, 75–76. See Chapter 3, Section IV.

180  Judicial Review of IEMEIs in the EU Legal System processes, they can also be relevant to proportionality as a judicial review test that is meant to assess the outcome of policy-making in relation to how IEMEIs are formulated. Second, different versions of proportionality concerning the impact of regulatory action on individual interests are explicitly embodied in some IEMEIs. For example, the Ship Recycling Regulation provides that it aims to facilitate the early ratification of the Hong Kong Convention both within and outside the EU through ‘proportionate controls’ on ships and ship recycling facilities with the aim of reducing disparities between EU operators, OECD countries and other third countries.211 It also explicitly requires that the principle of equality is applied and its application monitored, when establishing the European list of ship recycling facilities between facilities located in the Member States and those located in third countries.212 In a different way, the IUU Regulation provides that EU action should target IUU fishing that causes the most serious damage to the marine environment, sustainability of fish stocks and the socioeconomic situation of fishermen,213 as well as take into account the capacities of developing countries when implementing the Regulation.214 Proportionality thus becomes directly relevant when these IEMEIs are implemented in third countries, with the legislature specifically requiring their proportionate enforcement beyond EU borders. Third, aspects of proportionality can be traced in the ECJ’s interpretation of the territorial scope of EU legislation, particularly in the area of animal welfare. In Zuchtvieh-Export, while the ECJ extended the scope of the Animal Transport Regulation to cover those parts of animal transportation journeys that occur in third countries, it imposed certain limits by providing for recognition of third country arrangements safeguarding animal welfare to an equivalent level.215 In this way, equivalence of third country protection could develop into a new way of applying proportionality to EU measures with extraterritorial reach, particularly when the EU courts interpret EU legislation with a broad territorial scope. Equivalence decisions, however, could themselves be subject to intensive judicial review, especially if they intervene with fundamental rights of EU citizens, as examined below.216 In a different way, in European Federation for Cosmetic Ingredients, the ECJ held that the prohibition on placing on the market of cosmetic products tested on animals extended

211 Ship Recycling Regulation 1257/2013 (n 11 above) Recital 5. 212 ibid Recital 8. 213 Council Regulation (EC) 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing [2008] OJ L286/1 (IUU Regulation) Recital 6. 214 ibid Recital 14, Art 31(5). 215 Zuchtvieh-Export (n 106 above) para 54. Council Regulation (EC) 1/2005 on the protection of animals during transport and related operations and amending Directives 64/432/EEC and 93/119/ EC and Regulation (EC) 1255/97. 216 Case C-362/14 Maximillian Schrems v Data Protection Commissioner, EU:C:2015:650.

Grounds of Judicial Review  181 to animal testing carried out in third countries ‘when the results of this testing were used to prove product safety’ for the purposes of the EU Regulation.217 By limiting the prohibition to when results are relied upon for entry into the EU market, the ECJ indirectly balanced the extension of EU regulatory standards abroad with the regulatory autonomy of third countries that may not have such prohibition in place.218 These instances demonstrate how judicial review largely enables the extension of EU regulatory power beyond EU borders, albeit subject to some constraints that avoid a conflict of norms with third country legislation. Despite the arguments set out above supporting the relevance of proportionality when reviewing the extraterritorial impacts of EU legislation, its applicability in this context is not without its opponents. In particular, Regan argues against consideration by transnational courts of effects on foreign interests, particularly in the context of the proportionality test as applied by the CJEU.219 In his view, domestically rational measures that prioritise domestic interests are globally efficient and therefore should not involve intervention by courts in questioning the balancing that has occurred in national regulatory processes. However, he clarifies that this assumption does not apply when a regulation is challenged on the basis of individual rights principles where the issue is not efficiency or cross-border effects. A less deferential review of proportionality when reviewing the infringement of fundamental rights of third country actors affected by IEMEIs, discussed below,220 may therefore be endorsed even by sceptics of the applicability of proportionality to the review of extraterritorial impacts. The following discussion surveys the way in which proportionality has been applied to review EU measures, drawing attention to different levels of intensity of review that may influence the consideration of third country interests in the assessment of proportionality if applied to IEMEIs and their effects. There is limited evidence to date that the CJEU has engaged in direct and close assessment of third country effects in reviewing EU measures. To some extent, this is attributed to the CJEU’s deferential approach in reviewing whether EU measures infringe proportionality, which accords considerable discretion to the EU regulator. However, the CJEU has sometimes engaged in more intensive review of facts, in light of which proportionality is applied. Also, the CJEU usually

217 European Federation for Cosmetic Ingredients (n 106 above) para 43. 218 J Lawrence, ‘The Extraterritorial Reach of EU animal welfare rules (again): Case C-592/14 European Federation for Cosmetic Ingredients’ (European Law Blog, 16 November 2016): http:// europeanlawblog.eu/2016/11/16/the-extraterritorial-reach-of-eu-animal-welfare-rules-again-case-c59214-european-federation-for-cosmetic-ingredients/. 219 DH Regan, ‘An Outsider’s View of Dassonville and Cassis de Dijon: On Interpretation and Policy’ in M Maduro and L Azoulai (eds), The Past and the Future of EU Law: The Classics of EU Law Revisited on the 50th Anniversary of the Rome Treaty (Hart, 2010). 220 Section III.D.(iv) below.

182  Judicial Review of IEMEIs in the EU Legal System engages in closer scrutiny when fundamental rights are at stake and to which proportionality always applies. A closer review of EU measures could indicate ways in which third country affected interests may become relevant in holding the EU regulator to account and reveal novel directions for judicial review to contribute to legitimising the exercise of EU global regulatory power. It should be noted that while this sub-section focuses on the proportionality test overall, the analysis also refers to more particular administrative law tests employed in reviewing the exercise of discretion by EU institutions that are relevant to the intensity of review exercised by the courts under proportionality. These relate to the test of manifest error of assessment and to the tests applied in relation to the precautionary principle. In some cases, these tests have informed the proportionality assessment, albeit treated as different grounds of review,221 while in others they have been applied in determining different limbs of the proportionality test.222 (ii)  Deferential Review of IEMEIs as EU Measures on the Ground of Proportionality The general formulation of proportionality in review of EU measures provides that where there is a choice between several appropriate measures, recourse should be had to the least onerous, and the disadvantages caused by it must not be disproportionate to the aims pursued.223 The CJEU’s approach usually translates to a suitability test – relationship between means and ends – and a necessity test – weighing competing interests.224 A third limb of the test, which is sometimes applied, is that of proportionality stricto sensu, which requires consideration of whether a measure has excessive effects on the interests of the individual, usually involving a cost–benefit analysis.225 The proportionality test is inherently limited in the kinds of assessment it may involve. Usually the CJEU will not question the suitability of a trade-related process measure in pursuing environmental protection, as it is cautious not to substitute the regulator’s assessment in matters of discretionary policy. Additionally, in assessing necessity, the CJEU does not examine the efficacy of a measure.226 This is something that might be contested by third country actors in relation

221 The precautionary principle was treated as a separate ground in Case T-13/99 Pfizer Animal Health SA v Council, EU:T:2002:209; Case T-70/99 Alpharma Inc v Council, EU:T:2002:210. Manifest error of assessment of facts was also pleaded as separate ground in Kadi I (n 161 above). 222 The manifest error test has been used to determine the necessity of a measure, Case C-122/00 Omega Air and Others v Irish Aviation Authority EU:C:2002:161, paras 64, 72. 223 Case C-331/88 R v Ministry of Agriculture, Fisheries and Food, ex parte Fedesa and others, EU:C:1990:391, para 13. 224 Tridimas (n 142 above) 139. 225 ibid. 226 ibid.

Grounds of Judicial Review  183 to the i­mplementation of IEMEIs when the expertise or standards used are questionable in terms of environmental effectiveness compared to their adverse economic impacts in third countries. When reviewing EU measures, as opposed to Member State measures, the CJEU has historically applied a light test of proportionality,227 usually consisting of an examination of whether a measure is manifestly inappropriate to the objective pursued.228 When this test is applied, the Court examines whether exercise of discretion ‘discloses manifest error or constitutes a misuse of powers or a clear disregard of the limits of its discretion’.229 The CJEU does not usually engage in extensive consideration of alternative, less trade-restrictive measures in assessing whether there is manifest error, if at all.230 In general the EU courts accord considerable discretion in areas involving complex political, economic and social policy choices as well as in areas where the EU has more harmonisation powers such as the common agricultural or fisheries policy.231 A deferential approach is likely to be applied to IEMEIs given the complex policy choices involved and EU’s commitment to pursuing a high level of environmental protection,232 including through integration of environmental protection requirements in the Union’s other policies.233 The CJEU’s deferential approach to reviewing proportionality of EU measures can be seen in the context of the global reach of EU law particularly in cases on animal welfare. In Inuit II, the General Court held that the fact that the EU Seals Regulation was not an outright ban, as initially envisioned in the Commission’s proposal, but rather included a qualified exception,234 provided evidence of its having sufficiently taken into account the situation of the Inuit communities.235 An alternative measure in the form of labelling was not deemed to be as effective and easy to comply with in ensuring free movement of goods and satisfying EU consumer concerns.236 Notably, the General Court did not engage in an analysis of this alternative less trade-restrictive measure, as it often does in relation to Member State measures, but rather deferred to the legislature’s reasoning,237 thus insufficiently addressing the accountability gap related to the unilateral exercise of EU global regulatory power. At the same time, while

227 P Craig, UK, EU and Global Administrative Law: Foundations and Challenges (CUP, 2015) 479. 228 Fedesa (n 223 above). 229 Omega Air (n 222 above) para 64; Tridimas (n 142 above) 144. 230 Sauter (n 166 above). 231 Tridimas (n 142 above). 232 TFEU Art 191. 233 TFEU Art 11. 234 This exception allows for trade in seal products ‘where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence’, Seals Regulation (EC) 1007/2009 (n 39 above) Art 3(1). 235 Case T-526/10 Inuit II (n 45 above) paras 45–48. 236 ibid para 95. 237 ibid paras 95–96.

184  Judicial Review of IEMEIs in the EU Legal System the General Court engaged with the question of strict proportionality, in the sense of the Regulation having considerable effects on the survival of the Inuit communities in particular, it dealt with this question very briefly, holding that the supporting evidence was general and unsubstantiated.238 This approach demonstrates how the distributive justice gap is created through the unilateral exercise of EU global regulatory power and a missed opportunity for the CJEU to address it. In a different way, in extending the territorial scope of the Animal Transport Regulation, the ECJ in Zuchtvieh-Export also applied a light standard of review, while devising some judicial mechanisms for constraining the extraterritorial effects of EU legislation. As discussed above, the ECJ ‘read’ equivalence into the Animal Transport Regulation as a way of disciplining the extraterritorial reach of EU law and with a view to avoiding a potential conflict with third country norms. Mutual recognition of third country equivalent arrangements for safe transport of animals could alleviate rigid compliance with EU standards and demonstrates respect of the regulatory autonomy of third countries. However, the exception created by the ECJ is very narrow, confined to situations where it would be impossible for animal transport abroad to comply with EU technical rules due to third country legal or administrative requirements.239 The instances where it would actually be legally impossible to comply with EU requirements are very few, given that third country legislation on animal welfare usually imposes minimum obligations, while allowing facilities to implement stricter standards.240 In contrast to its approach in reviewing the territorial scope of Member State measures that aim at protecting concerns outside of their jurisdiction, where the CJEU closely reviews proportionality,241 the ECJ in Zuchtvieh-Export did not apply proportionality in the conventional sense of balancing the objectives of protecting animal welfare and facilitating trade. Member State measures that go beyond EU legislation to protect animals in transport, for example through requirements on the height of internal compartments,242 or through a ban on the export of calves,243 had to be proportionate and should not result in adverse interference with the functioning of the internal market.244 However, 238 ibid paras 97–98. 239 Zuchtvieh-Export (n 106 above) para 54. See Hadjiyianni, ‘The Court of Justice of the EU as a Transnational Actor’ (n 137 above). 240 C Ryngaert, ‘The long arm of EU law: EU animal welfare legislation extended to international road transport’, Renforce Blog: http://blog.renforce.eu/index.php/en/2015/08/24/the-long-arm-of-eulaw-eu-animal-welfare-legislation-extended-to-international-road-transport-2/. 241 On the permissibility of Member State unilateral measures under EU law see Ankersmit (n 131 above) chs 2 and 3. 242 Case C-316/10 Danske Svineproducenter v Justitsministeriet, EU:C:2011:863. 243 Case C-1/96 R v Minister of Agriculture, Fisheries and Food, ex parte Compassion in World Farming Ltd, EU:C:1998:113. 244 A Oriolo, ‘The Zuchtvieh-Export GmbH v. Stadt Kempten Case – The Triggering of a Substantial Link to “Export” EU Animal Welfare Law?’ in GZ Capaldo (ed), The Global Community Yearbook of International Law and Jurisprudence 2016 (OUP, 2017).

Grounds of Judicial Review  185 these earlier cases are of a different nature, dealing with issues of extraterritoriality from an ‘internal’ perspective, relating to whether Member States are allowed to adopt unilateral measures to pursue non-trade objectives beyond their territory. ­Internally, the starting point is mutual recognition of regulatory requirements,245 with unilateral measures having to be justified under Article 36 TFEU or mandatory requirements. In contrast, as mentioned above, there is no requirement under EU law for equal treatment of foreign traders.246 Instead, equivalence is sometimes embedded in qualified terms as a way of avoiding direct conflict of norms. Inherently the issues arising in relation to ‘internal’ and ‘external’ extraterritoriality are fundamentally different. Internally, the CJEU is concerned about European integration in the form of harmonisation of the internal market, involving a close review of how the unilateral measure affects harmonisation of EU law.247 Externally, the CJEU is concerned about giving effect to EU legislative intent, ensuring the practical effectiveness of EU harmonised measures across the EU and beyond, and creating a level playing-field with external operators by extending similar regulatory obligations to foreign competitors. An approach characterised by deference to the regulator would thus most likely be applied in relation to the enforcement of IEMEIs in third countries. For example, in Affish, a ban on imports of Japanese fish was found to be proportionate even though not all fish factories in Japan had hygiene problems.248 The ECJ adopted a pragmatic approach and held that it would not be practical to check all factories and testing a representative sample was enough to comply with the expression of the principle of proportionality in the relevant measure. It is notable that in most IEMEIs involving serious trade sanctions, which may raise questions of proportionality, the legislation sets out detailed procedures for determining application of requirements to third countries in a proportionate manner. Thus, just as the absence of procedural requirements may contribute to finding some measures disproportionate as discussed in Section III.B above, so the existence of detailed implementation procedures can also contribute to finding the measures proportionate. For example, the inclusion of facilities on the European ship recycling list is subject to site inspections by independent verifiers whenever the List is updated, as well as possibly to site inspections by the

245 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, EU:C:1979:42. 246 Balkan-Import (n 207 above) para 14. 247 Case C-169/89 Criminal proceedings against Gourmetterie van den Burg, EU:C:1990:227; Case C-202/94 Criminal proceedings against Godefridus Van der Feesten, EU:C:1996:39; Case C-5/94 Hedley Lomas, EU:C:1996:205. See G Davies, ‘“Process and Production Method”-based Trade Restrictions in the EU’ (2007) 10 Cambridge Yearbook of European Legal Studies 69; L Ankersmit, J Lawrence and G Davies, ‘Diverging EU and WTO Perspectives on Extraterritorial Process Regulation’ (2012) 21 Minnesota Journal of International Law Online 14. 248 Case C-183/95 Affish BV v Rijksdienst voor de keuring van Vee en Vlees, EU:C:1997:373.

186  Judicial Review of IEMEIs in the EU Legal System Commission, especially if the ship recycling facility is suspected of no longer fulfilling the Regulation’s requirements.249 In a similarly detailed way, the IUU Regulation sets out a comprehensive system for administration and enforcement of the regime with an alert system, action to follow alerts, for identification of IUU vessels, or for presumed IUU fishing.250 Establishing and following such procedures for verifying compliance would likely lead the Court to find such measures proportionate and avoid interference with the decision-maker’s discretion. Despite the deferential approach of the EU courts towards reviewing EU measures, including in cases on the extraterritorial reach of EU law, proportionality is not without potential for reviewing IEMEIs and their effects in third countries in ways that would contribute to enhancing the legitimacy of EU global regulatory power. There are at least two situations in which proportionality may involve more intensive review of EU measures and these concern review of the factual basis on which discretion has been exercised and review of measures alleged to be in violation of fundamental rights. (iii)  Varying Deference: Review of Facts and Proportionality Despite an initial light approach to review of EU measures, the EU courts increasingly engage in more intensive review of the factual basis on which EU acts are based, even in complex policy fields.251 Even though the Commission enjoys discretion in relation to the findings of basic facts,252 the CJEU requires that decisions are not arbitrary and thus that they are based on accurate, reliable and consistent evidence.253 To that effect, assessment of proportionality requires the relevant institution to consider all relevant factors and circumstances of the ‘situation the act was intended to regulate’.254 When relevant factors have not been taken into account in exercising institutional discretion, this could lead to an infringement of proportionality.255 The CJEU has engaged in vigorous review of facts in areas such as risk regulation,256 competition law,257 and fundamental rights,258 while medium intensity review is engaged in EU common policies.259

249 Ship Recycling Regulation (EU) 1257/2013 (n 11 above) Art 15. See also Commission Guidance on Ship Recycling Facilities in third countries (n 145 above). 250 IUU Regulation (n 213 above) Chapter IV. 251 Craig, UK, EU and Global Administrative Law (n 227 above) 479. 252 Case C-120/99 Italy v Council, EU:C:2001:567, para 44. 253 AH Türk, ‘Oversight of Administrative Rulemaking: Judicial Review’ (2013) 19 European Law Journal 126. 254 Groussot (n 164 above) 768. 255 Case C-310/04 Spain v Council EU:C:2006:521, paras 123, 133–135. 256 Pfizer (n 221 above). 257 Case T-5/02 Tetra Laval BV v Commission, EU:T:2002:264; Craig, EU Administrative Law (n 185 above) 420. 258 Kadi I (n 161 above). 259 Craig, EU Administrative Law (n 185 above) ch 15.

Grounds of Judicial Review  187 The General Court is usually more willing to engage in a higher intensity review,260 as it engages in more fact-finding as a court. The following analysis demonstrates how proportionality could develop into a more systematic mechanism of review of the consideration of third  ­country impacts in ways that would contribute to filling the different legitimacy gaps related to IEMEIs. It draws on three relevant contexts where there have been significant developments in the review of facts, in light of which proportionality is applied, and examines how they could inform the review of IEMEIs: (1) the review of decision-making in light of IAs as a source of factual evidence; (2) the review of risk regulation in light of the precautionary principle; and (3) the review of external relations instruments in light of impacts (on fundamental rights) in third countries. The approach of more closely reviewing the factual basis on which EU institutions exercise discretion in these contexts, while not reflecting the current state of the law on reviewing the extraterritorial reach of EU law, could be indicative of future progressions in the review of IEMEIs in relation to third country impacts. Despite reluctance to engage in intensive review in the domain of external relations, the intensity of review by the courts is not static and could evolve over time. The proliferation of IEMEIs could invite closer review of the factual basis on which the EU regulates processes taking place in third countries, which would contribute to enhancing the legitimacy of IEMEIs. In assessing the factual basis of decisions, the EU courts may look at whether the relevant institution has conducted an impact assessment and whether particular factors were taken into account. In fact, the lack of impact studies has informed the ECJ’s approach in finding a breach of proportionality in some cases.261 Thus consideration of third country impacts or lack thereof in IAs could form the subject of judicial review, possibly giving concrete effect to the consideration of third country impacts in EU regulatory processes at the formulation stage of IEMEIs.262 It is unclear whether this indicates that an IA is required to be carried out. Nonetheless, it seems that the CJEU has established a link between transparency of the decision-making process, to which an IA is relevant, and the assessment of proportionality and judicial review of facts.263 Indeed, when an IA has been carried out and relevant interests have been considered, the CJEU can derive information from IAs in finding that a decision is well-founded and proportionate.264 In a different way, the information contained in an IA could come to the aid of the parties challenging a measure, especially in proving significant effects under the strict proportionality test.265 260 ibid 439. 261 Spain v Council (n 255 above); Case C-58/08 R (on the application of Vodafone Ltd and Others) v Secretary of State for Business, Enterprise and Regulatory Reform, EU:C:2010:321. 262 Chapter 3, Section IV. 263 Alemanno (n 181 above). 264 Vodafone (n 261 above) para 65; ibid. 265 ibid.

188  Judicial Review of IEMEIs in the EU Legal System Overall, if an IA is considered as a requirement for rational and good decision-making in relation to EU measures that are likely to have significant social, environmental or economic impacts,266 then the EU courts should have a role in reviewing how IAs are carried out. The guidelines for conducting IAs and consultations, examined in Chapter three, could thus be subject to judicial review in ways that could translate into concrete obligations on the relevant institution to take into account third country factors and engage in consultation with third country actors in gathering necessary evidence for IEMEIs. This is particularly because IEMEIs purport to govern processes and circumstances taking place in third countries with which the EU may not be familiar. It may thus be required to become aware of relevant regulatory regimes in third countries, factual circumstances, local conditions and affected communities before resorting to regulatory measures with extraterritorial reach. The EU courts have grappled with similar difficulties in assessing complex facts in other areas. As evidenced in cases involving risk assessment in ­accordance with the precautionary principle, the EU courts, and particularly the General Court, have been ‘adventurous’ in reviewing and devising ­requirements for rational decision-making. The precautionary principle is not directly relevant to IEMEIs examined in this book, as they do not involve risk regulation where EU institutions act in light of scientific uncertainty.267 However, the approach of the EU courts in cases involving the precautionary principle is informative about how general principles like proportionality, and the intensity of review of EU measures, could develop in relation to IEMEIs examined in this book. The cases mostly relevant are those where measures are allegedly too precautionary and particularly those which Scotford identifies as ‘informing legal test cases’.268 In these cases, the precautionary principle has both led to the creation of new tests and influenced the application of existing tests, such as proportionality, in the review of factual assessments. In particular, the General Court has established conditions upon which the precautionary principle could be relied on, requiring that a risk assessment is carried out, and establishing standards that the risk assessment should fulfil.269 Thus, while it upheld precautionary measures, it did so on the basis of important procedural qualifications, and by requiring a specific decision-making process to be followed.270 Despite higher intensity of review in such cases, the EU courts reiterate the deferential approach

266 Better Regulation Guidelines (n 189 above) 17. 267 The precautionary principle would be directly relevant for examples of transnational regulation, such as REACH and GMO regulation. 268 E Scotford, Environmental Principles and the Evolution of Environmental Law (Hart, 2016) ch 4. 269 Pfizer (n 221 above) paras 162, 172; Alpharma (n 221 above). 270 Craig, EU Administrative Law (n 185 above) ch 21.

Grounds of Judicial Review  189 to the EU institutions’ discretion in deciding on the level of risk deemed unacceptable for society,271 albeit provided that the institutions follow specific procedures in identifying risks.272 Nonetheless, the ways in which the EU courts have become more willing to impose conditions on how discretion is exercised on the basis of factual evidence in light of scientific uncertainty, demonstrate that the EU courts have a variety of tools at their disposal to achieve a balance between allowing for discretionary policy-making and controlling the exercise of public authority by EU institutions. This approach could guide the evolution of EU administrative law as applied to IEMEIs to ensure that EU institutions act on the basis of all relevant factors when regulating processes taking place abroad, particularly by imposing obligations for assessing third country impacts through consultations with third country actors. There are some indications of such obligations in assessing third country impacts by carrying out IAs in the field of external relations, in relation to impacts of international agreements on third country fundamental rights. The Commission has committed to assessing human rights impacts in all IAs, including trade agreements that have significant economic, social and environmental impacts.273 On this basis, the Ombudsman found that the Commission committed maladministration by failing to carry out a human rights IA in concluding the trade agreement with Vietnam.274 In a similar vein, the General Court held that the Council was under an obligation to assess the impact of the EU–Morocco Agreement on the fundamental rights of Western ­Saharan ­populations.275 Despite acknowledging the discretion of the Council to conclude an international agreement, the General Court emphasised the need for such assessment to be impartial and to support the conclusion which the Council would reach.276 However, the ECJ has put aside this decision by interpreting the territorial scope of the agreement as not applying in the first place to the territory of Western Sahara, while avoiding dealing with substantive parts relating to whether the Council had to take into account the effects on fundamental rights of third country populations, thus leaving the question open.277 While such obligations in relation to third country impacts may be more likely to be imposed in relation to international agreements where external effects are more directly apparent, it is not impossible for similar obligations to

271 Pfizer (n 221 above); ibid ch 21. 272 Case T-257/07 France v Commission, EU:T:2011:444, paras 78–80. 273 Council, ‘Human Rights and Democracy: EU Strategic Framework and EU Action Plan’ (2012) 11855/12, 11. 274 Decision of the European Ombudsman in Case 1409/2014/MHZ (n 21 above). See also Case C-104/16 Council v Front Polisario, EU:C:2016:677, Opinion of AG Wathelet, para 264. 275 Case T-512/12 Front Polisario v Council, EU:T:2015:953. 276 ibid para 228. 277 Case C-104/16 Front Polisario (n 274 above).

190  Judicial Review of IEMEIs in the EU Legal System arise in relation to internal measures such as IEMEIs, which regulate processes partly taking place abroad. The consideration of economic and social impacts of EU legislation on affected interests, including in third countries, is explicitly required by Better Regulation Guidelines.278 Reliance on such requirements, however, raises challenges as to the justiciability of soft law instruments, as discussed above in Section III.C. Overall, judicial review of the factual basis of regulatory action can determine third country impacts as relevant factors and give direction on how such impacts should be assessed, particularly in IAs, which may become subject to oversight by the courts. This could particularly contribute to filling the accountability gap related to IEMEIs by judicially identifying third country affected actors as a ‘relevant forum’ to which the EU needs to justify its action and in relation to which it may face consequences, in accordance with Bovens’ definition of accountability.279 Despite this potential, the CJEU applies a diverging standard of review when reviewing facts and thus consideration of third country interests in this way may be uncertain, particularly as IEMEIs cover different EU policy areas that may be subject to different standards of judicial review. Beyond review of facts potentially involving a higher intensity of review, the EU courts also usually engage in closer review of the impacts of EU measures on fundamental rights. (iv)  Varying Deference: Fundamental Rights and Proportionality Proportionality in reviewing EU measures becomes a stronger instrument when individual rights are restricted and especially when fundamental rights are at stake. The invocability of fundamental rights is particularly relevant in seeking a fair balance between individual rights and the general public interest of environmental protection and could thus contribute to filling the accountability and justice gaps related to IEMEIs. Fundamental rights, particularly under the Charter, constitute a separate ground of review but are also invoked in conjunction with other grounds. Proportionality forms part of the analysis in determining whether there has been an unlawful infringement of the relevant right.280 Notably, nothing precludes the extraterritorial application of the C ­ harter.281 In fact, there is support for the view that the Charter binds EU external action, in line with EU external action objectives, examined in the ­Introduction to

278 Better Regulation Toolbox (n 189 above) 97, 102, 106. 279 Bovens (n 72 above). See Chapter 2, Section III.B. 280 Charter Art 52(1). 281 D Augenstein, ‘The Human Rights Dimension of Environmental Protection in EU External Relations Post-Lisbon’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Law Perspectives (CUP, 2012).

Grounds of Judicial Review  191 Part II of the book, which refer to the ‘universality and indivisibility of human rights and fundamental freedoms’.282 In the absence of specific case law on fundamental rights protection of third country actors affected by IEMEIs, the analysis explores: (1) the extraterritorial protection of fundamental rights as developed in case law; and (2) the different kinds of third country rights that may be affected by IEMEIs and how these may be balanced under proportionality. (a)  The Extraterritorial Protection of Fundamental Rights in the EU Legal Order The protection of fundamental rights beyond EU borders can take at least two forms. It involves, first, situations where the protection of rights of EU citizens is extended abroad, and second, situations where the rights of foreign actors are affected by EU measures. The first scenario can be illustrated in Schrems relating to data protection legislation.283 This case demonstrates the extensive lengths to which the ECJ is willing to go in protecting certain fundamental rights of EU citizens beyond EU borders,284 requiring an ‘essentially equivalent’ level of protection.285 The ECJ, in upholding the rights to privacy and data protection, annulled the Commission’s equivalence decision as to the adequacy of US data protection requirements. This case demonstrates how accommodating third country interests can be contradictory to ensuring protection of EU citizens’ rights. Apart from the proactive approach to protecting certain fundamental rights of EU citizens in third countries, the CJEU has also been active in protecting fundamental rights of third country actors affected by EU measures in certain areas. The CJEU has recognised the importance of extending protection of fundamental rights under the Charter to non-EU nationals situated outside the EU and balanced the protection of fundamental rights against the public interests of protection against terrorism in economic sanctions cases.286 Some rights apply to ‘everyone’, possibly including emanations of the state.287 In this context, the General Court notably stated that the fact that a State is the guarantor of respect for fundamental rights in its own territory is of no relevance as regards the extent of the rights to which legal persons which are emanations of that same State may be entitled in the territory of other States.288 282 TEU Art 21; Bartels (n 40 above). 283 Schrems (n 216 above). 284 C Kuner, ‘The European Union and the Search for an International Data Protection Framework’ (2014) 2 Groningen Journal of International Law 55. 285 Schrems (n 216 above) para 73. 286 Kadi I (n 161 above); Kadi II (n 159 above); Eeckhout, ‘A Normative Basis’ (n 7 above). 287 In relation to Charter Arts 17, 41 and 47, Case T-496/10 Bank Mellat (n 160 above) para 36. 288 Case T-496/10 Bank Mellat (n 160 above) para 40.

192  Judicial Review of IEMEIs in the EU Legal System Despite such recognition of protection of fundamental rights abroad, the question of whether the EU owes human rights obligations towards third country actors is not settled as a matter of EU law or indeed as a matter of international law.289 In this context, it is not the jurisdiction of the EU to act through IEMEIs in third countries that is at issue, but whether the effects of IEMEIs in third countries bring affected third country actors within the remit of EU human rights obligations.290 In principle, the EU’s human rights obligations could be informed by case law on the extraterritorial application of the European Convention on Human Rights (ECHR).291 However, this case law is not settled,292 and it is underdeveloped or non-existent in relation to domestic measures with extraterritorial effects. Arguably, at least some principles on the extraterritorial application of human rights obligations under the ECHR could inform the EU’s obligations in the context of the extraterritorial impacts of its domestic policies.293 Such influence from the interpretation of the ECHR has not materialised in the EU legal order to date.294 While some EU law cases indicate that in principle the EU may be held responsible for violations of human rights abroad,295 no such case has succeeded or explicitly dealt with the EU’s obligations in relation to the protection of fundamental rights abroad in the context of EU unilateral trade policies with extraterritorial effects. (b)  Third Country Fundamental Rights affected by IEMEIs and their Review by the CJEU In general, it is not clear how the EU courts would carry out a balancing exercise when different kinds of fundamental rights of third country actors might 289 On this issue under international law see Bartels (n 40 above); M Milanovic, Extraterritorial Application of Human Rights Treaties: Law, Principles, and Policy (OUP, 2011); K Da Costa, The Extraterritorial Application of Selected Human Rights Treaties (Martinus Nijhoff Publishers, 2012). 290 On the different notions of jurisdiction in international law and international human rights law see M Den Heijer and R Lawson, ‘Extraterritorial Human Rights and the Concept of “Jurisdiction”’ in W Vandenhole and others (eds), Global Justice, State Duties: The Extraterritorial Scope of Economic, Social, and Cultural Rights in International Law (CUP, 2013). 291 Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as amended). ECHR case law is relevant for the interpretation of Charter rights, Charter Art 53. 292 In fact, ECHR case law can be contradictory. Some cases support the extraterritorial application of the ECHR: Loizidou v Turkey (1995) 20 EHRR 99; Kovačič v Slovenia Application No 44574/98 (ECtHR, admissibility, 9 October 2003), while others preclude such application: Ben El Mahi v Denmark Application No 5853/06 (ECtHR, 11 December 2006); Bankovic and Others v Belgium Application No 52207/99 (ECtHR, 12 December 2001). See Bartels (n 40 above); Milanovic (n 289 above). 293 For example, the lack of extraterritorial control does not absolve states of positive obligations under Art 1 of the ECHR to take measures to secure protection of Convention rights, Augenstein (n 281 above) 284. 294 Bartels (n 40 above). 295 For example, Case T-292/09 Mugraby v Council and Commission, EU:T:2011:418; Case C-581/11 Mugraby v Council and Commission, EU:C:2012:466; Case C-288/03 Zaoui v Commission, EU:C:2004:633. Bartels argues that these cases demonstrate that there is no bar to the EU’s human rights obligations applying to situations of domestic legislation with extraterritorial effects, ibid.

Grounds of Judicial Review  193 be detrimentally affected by discretionary policies embodied in IEMEIs. The intensity of review in determining whether fundamental rights have been disproportionately affected varies depending on the type of right at stake and any countervailing fundamental rights affected, as well as the legal source of protection of third country rights. In the context of IEMEIs, different kinds of rights may be relevant, ranging from procedural rights of good administration, to the right to conduct business in the EU. Depending on the right at stake, protection of rights of third country actors can contribute to filling the procedural and substantive justice gaps related to IEMEIs as well as providing for transnational accountability. The analysis that follows focuses on substantive rather than procedural rights, as the latter have been considered in Section III.B above.296 First, two economic rights may be relevant in terms of effects on third country individuals affected by IEMEIs: the right to property297 and the freedom to pursue an economic activity.298 In principle, any individual or company can rely on these rights under the Charter. However, they are not absolute rights and must be viewed in relation to their social function.299 Their interpretation would be unlikely to capture third country economic interests affected by IEMEIs. For example, the right to property of Inuit communities affected by the EU Seals Regulation was not found to be infringed. In particular, the right to property does not extend to the protection of mere commercial interests or opportunities and thus ‘the mere possibility of being able to market … products’ in the EU market is not considered to be protected.300 The CJEU in this case failed to interpret fundamental rights in ways that would accommodate different cultural interpretations in line with international developments on the collective rights of indigenous peoples.301 Such progressive and dynamic interpretation of the rights of indigenous peoples would have contributed to addressing the distributive justice gap created through the imposition of trade restrictions to protect EU consumer preferences which do not sufficiently take account of the detrimental impacts on the subsistence of vulnerable communities in third countries. Even if the effects of IEMEIs were to be found to have infringed these rights they could still be legitimately restricted on the basis of objectives of general ­ roportionality interest.302 While interference with such rights is subject to p

296 The procedural right to be heard as derived from international instruments is also considered below in Section III.E. 297 Charter Art 17. 298 Charter Art 16. 299 Case C-544/10 Deutsches Weintor eG v Land Rheinland-Pfalz, EU:C:2012:526, para 54. 300 Case C-398/13 Inuit II (n 45 above) paras 60–62. 301 S Vezzani, ‘The Inuit Tapiriit Kanatami II Case and the Protection of Indigenous Peoples’ Rights: A Missed Opportunity?’ (2016) 1(1) European Papers 307. 302 Case C-283/11 Sky Österreich GmbH v Österreichischer Rundfunk, Opinion of AG Bot, EU:C:2012:341.

194  Judicial Review of IEMEIs in the EU Legal System t­esting that should not affect the very substance of the rights, these rights are often balanced against other Charter rights such as the right to health,303 intellectual property rights,304 and the right to a high level of protection of consumers.305 Similarly, such rights may be balanced against the principle of a high level of environmental protection under the Charter, which ‘must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development’.306 The reference to sustainable development could be of interest here. This is especially so if the third country operators seeking to rely on the freedom to conduct business come from a developing country, which is engaged in substantive trade with the EU; sustainable development considerations may have to be given particular weight in the balancing exercise undertaken by the Court in order to ensure that environmental protection pursued by IEMEIs also allows for economic and social development.307 In this respect, sustainable development could be given an international meaning, possibly incorporating ‘transnational norms into the reasoning of the Court’.308 However, the principle of environmental protection under the Charter has not, as yet, played a central role in cases before the EU courts309 and it is unclear how it may affect the balancing exercise in relation to third country interests. Second, a different kind of third country rights that may be affected by IEMEIs relates to rights of local populations such as the right to health, the right to life or the right to food. Interference with these rights could arise when IEMEIs impose conditions for harvesting processes in third countries, such as in the Timber Regulation and the IUU Regulation, which may threaten the livelihood of disadvantaged people that depend on those economic ­activities.310 Such detrimental economic effects may also arise by the application of the Ship Recycling Regulation in relation to vulnerable migrant groups working in shipyards in third countries. While these regulations aim to protect the livelihoods of the third country actors that do comply with regulatory requirements and to improve the safety of economic activities in third countries, they can also detrimentally affect the job opportunities for vulnerable groups in

303 Deutsches Weintor (n 299 above). 304 Case C-70/10 Scarlet Extended SA v SABAM, EU:C:2011:771. 305 Case C-12/11 Denise McDonagh v Ryanair, EU:C:2013:43; X Groussot, GT Pétursson and J Pierce, ‘Weak Right, Strong Court – The Freedom to Conduct Business and the EU Charter of Fundamental Rights’ (2014) Lund University Legal Research Paper Series 1/2014. 306 Charter Art 37. 307 Especially given the commitment of the EU to promote sustainable development in its external action under Art 21 TEU, see Introduction to Part II. 308 Scotford (n 268 above) 193. 309 ibid 197; S Bogojević, ‘EU Human Rights Law and Environmental Protection: The Beginning of a Beautiful Friendship?’ in S Douglas-Scott and N Hatzis (eds), Research Handbook on EU Law and Human Rights (Edward Elgar, 2016). 310 MA Young, ‘Trade Measures to Address Environmental Concerns in Faraway Places: Jurisdictional Issues’ (2014) 23 Review of European, Comparative and International Environmental Law 302.

Grounds of Judicial Review  195 third countries. Furthermore, IEMEIs that create incentives that affect land use in third countries could possibly threaten food security in ways that infringe the right to food of third country populations. For example, the sustainability criteria for biofuels create incentives for additional use of land for the harvesting of biofuels in third countries in ways that could result in increased food prices. Also, deforestation caused by biofuels can affect the rights of local communities in different ways.311 Claims concerning infringement of these kinds of rights by third country actors would raise a myriad of complicated questions, including the difficulties of proving that the damage in the third country was caused by the EU measures, particularly in cases involving the EU’s non-contractual liability.312 In legality actions, it is unclear how the EU courts would balance environmental protection objectives pursued by IEMEIs with detrimental economic and social development impacts that may simultaneously arise in third countries in achieving a proportionate balance. This is partly due to conflicting internal and external rights affected by IEMEIs and partly due to the uncertain source of EU human rights obligations towards third country actors. In this respect, the Seals Regulation provides an interesting example where the effects of an EU measure on indigenous peoples’ rights were particularly recognised and protected in the form of an exception in the Seals Regulation,313 in line with a UN Declaration on the Rights of Indigenous People.314 Third country affected interests may become relevant when they incorporate rights recognised under international law, demonstrating that sources of rights extend beyond the EU Charter of Fundamental Rights. EU human rights obligations beyond EU borders may derive from human rights clauses included in cooperation agreements, or from international agreements.315 Enforceability of rights before the EU courts, however, may be restricted given the lack of direct effect of many international instruments in the EU legal order, as discussed in Section III.E below. Third, the invocability of fundamental rights in relation to IEMEIs could relate to social rights particularly relating to working conditions in third countries in relation to processes carried out in compliance with EU law. If EU policies encourage certain economic activities abroad without accompanying workers’ rights guarantees, the legitimacy of EU action can be called into question. The extent to which the EU courts can review such effects, however, depends on whether such protection is specifically provided as a matter of

311 On the negative impacts of biofuel cultivation see for example R Edwards and others, ‘Biofuels in the European Context: Facts and Uncertainties’ (European Commission Joint Research Centre, 2009). 312 See discussion of Mugraby (n 295 above) and Zaoui (n 295 above) in Bartels (n 40 above). 313 Seals Regulation (EC) 1007/2009 (n 39 above) Art 3(1). 314 UN Declaration on the Rights of Indigenous Peoples, 2 October 2007, A/RES/61/295. 315 Bartels (n 40 above).

196  Judicial Review of IEMEIs in the EU Legal System EU law. The source of fundamental rights protection and the legal design of the specific IEMEIs can influence their invocability before the EU courts depending on whether they are protected as a matter of EU law within IEMEIs or by reference to international instruments.316 For example, insufficient protection of labour rights could arise in relation to the production of sustainable biofuels abroad. However, while the Renewable Energy Directive includes references to International Labour Organization (ILO) conventions, on the basis of which reporting obligations are imposed on the EU Commission,317 compatibility with these instruments is not a condition for market access that could possibly bring it within the remit of the Court’s review. Thus, compliance by third countries with these conventions would be unlikely to be enforced through the EU courts. In contrast, for a ship recycling facility to be included in the European List, specific requirements under the Ship Recycling Regulation have to be met, also concerning worker safety.318 Non-compliance with such requirements is more likely to be the subject of review, as such rights are recognised and protected under an EU measure and compliance with them can be easily verified, for example in relation to whether workers wear protective equipment.319 When social rights are specifically protected in IEMEIs, it is more likely that the EU courts will review interferences with such rights more closely. However, it is notable that EU regulation does not usually impose mandatory labour rights deliberately, so as to avoid incompatibility with WTO obligations, which do not provide an exception on this basis. The effects of WTO law exceptions, or lack thereof, thus play an important role in enabling the adoption of IEMEIs pursuing environmental protection goals beyond EU borders, while constraining the adoption of EU measures protecting labour rights. Overall, review of EU measures on the basis of infringement of fundamental rights could provide a far-reaching basis on which to engage in closer review of EU action in ways that may accommodate different kinds of third country interests in the assessment of proportionality, thus contributing to addressing the accountability and justice gaps related to IEMEIs. Protection of fundamental rights is also demonstrative of the dual role of EU law in relation to IEMEI legitimacy, by enabling global regulatory power in order to protect EU fundamental rights abroad, but also by imposing conditions on this power that cannot ignore the fundamental rights of third country actors affected. However, such review by the CJEU could give rise to controversial questions that

316 This is further discussed below in relation to the right to be heard of indigenous communities under the UN Declaration on the Rights of Indigenous Peoples, see Section III.E below. 317 Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2009] OJ L140/16 (RED), Art 17(7). 318 For example, Ship Recycling Regulation (EU) 1257/2013 (n 11 above) Art 13(1). 319 ibid Art 13(1)(i).

Grounds of Judicial Review  197 relate to contradictions between protection of internal and external interests under the proportionality balancing exercise and thus restrict its disciplining potential. To conclude, the way in which proportionality is applied in reviewing EU measures is of varying strength, providing for consideration of third country interests in limited and qualified ways. EU law doctrine as applied to date would make it more likely that the EU courts will apply a deferential approach in reviewing the effects of IEMEIs. However, drawing on related contexts in environmental law, external action and other areas of global reach of EU law, this sub-section indicates different ways in which proportionality could function in more dynamic ways to reflect a better balance between enabling and constraining EU regulatory action beyond EU borders through IEMEIs. Proportionality could potentially allow some room for consideration of foreign individual affected interests, especially when these form part of the factual basis on which discretion has been exercised. In turn, a high intensity review approach could impose obligations on EU institutions to consider third country interests. Proportionality could also be relevant in relation to IEMEIs in terms of protecting fundamental rights of third country actors. The realisation of the legitimising potential of judicial review and proportionality in these ways has, however, not yet materialised, demonstrating the extent of the accountability and justice gaps related to IEMEIs. Given the difficulties of reconciling public policy objectives and the protection of third country interests under proportionality, a different ground for challenging the legality and interpretation of IEMEIs is international law. However, the possibilities for challenging EU measures on the basis of international law are limited, demonstrating the difficult interaction between the multiple legal orders that determine the legal functioning of IEMEIs. E.  International Law The analysis has so far examined the extent to which third country actors could challenge IEMEIs before the CJEU, largely on the basis of EU internal norms. This final sub-section examines the extent to which the interpretation and legality of IEMEIs could be challenged on the basis of international law, exploring the potential for judicial review to function as a transnational accountability mechanism through which EU commitments under international law could be enforced. The EU must respect international law in the exercise of its powers, including customary rules of international law and provisions of international conventions that are binding on it.320 Additionally, the EU adheres to



320 Poulsen

(n 133 above) para 9; ATAA (n 18 above) paras 101, 123.

198  Judicial Review of IEMEIs in the EU Legal System the ‘strict observance and development of international law’.321 Therefore, the CJEU has jurisdiction to review the compatibility of EU law on the basis of international law, both in actions for annulment under the heading of ‘infringement of the Treaties or any rule of law relating to its application’322 and in requests for a preliminary ruling. International law is pertinent to the review of IEMEIs as they often regulate policy areas that are also subject to parallel international regimes, and could provide ways for externally applicable regimes to IEMEIs to be integrated in the EU legal order. (i)  Relevance of International Law for IEMEIs in the EU Legal Order International law is relevant for the legality and legitimacy of IEMEIs in at least four ways. First, IEMEIs regulate policy areas that are also subject to international agreements and instruments. On the one hand, these include agreements applicable in the same policy field, which are often expressly referred to in IEMEIs. Such agreements include the Hong Kong Convention on ship ­recycling323 and the Basel Convention on hazardous waste324 – both relevant in relation to the Ship Recycling Regulation – and agreements under the auspices of the UN Framework Convention on Climate Change (UNFCCC)325 and under the ICAO, relevant to the regulation of aviation emissions.326 The legality of IEMEIs could potentially be challenged under these agreements. On the other hand, international agreements can be indirectly relevant to the subjectmatter of IEMEIs. These are also sometimes referred to in IEMEIs, an example being ILO Agreements, referred to in the sustainability criteria on biofuels327 and in the Ship Recycling Regulation.328 Such international agreements could potentially inform the interpretation of IEMEIs. Relevant international law, in both senses described above, could also be in the form of non-legally-binding­ instruments.329 Second, as discussed in Chapter one, IEMEIs often incorporate international standards in setting process standards.330 For example, the IUU Regulation

321 TEU Art 3(5). 322 TFEU Art 263(2). 323 Hong Kong International Convention on the Safe and Environmentally Sound Recycling of Ships, 19 May 2009 (not yet in force) SR/CONF/45. 324 Basel Convention on the Control of the Transboundary Movements of Hazardous Wastes and their Disposal, 22 March 1989, 1673 UNTS 57. 325 UN Framework Convention on Climate Change, 9 May 1992, 1771 UNTS 107 (UNFCCC). 326 Convention on International Civil Aviation, 7 December 1944, 15 UNTS 295. 327 RED (n 317 above) Art 17(7). 328 Ship Recycling Regulation (n 11 above) Art 13(1). 329 For example, the IUU Regulation (n 213 above) refers to the 2001 FAO Action Plan, Recital 4; the Ship Recycling Regulation (n 11 above) refers to IMO Guidelines, Recital 12; the RED (n 317 above) refers to FAO definitions of forests, Recital 69. 330 Chapter 1, Section III.A.(i).(a).

Grounds of Judicial Review  199 requires fishing states to have in place conservation and management measures in accordance with international law.331 In fact, in determining compliance with the Regulation’s requirements, the EU is required to determine whether the third country complies with its international obligations as a flag state, which is by no means straightforward.332 In a different way, the Ship Recycling Regulation requires waste treatment to take place in conditions that are broadly equivalent to international standards.333 In such situations, it is unclear whether the Commission’s determination as to whether the relevant third country actor complies with international standards would be amenable to judicial review before the CJEU. Third, international rules on jurisdiction under customary international law could be used to challenge the extraterritorial reach of EU standards.334 Fourth, WTO agreements and dispute settlement rulings could be relevant for the legality and interpretation of IEMEIs that incorporate traderestrictive standards and significantly affect the EU’s trade relations with third countries. The consistency of IEMEIs with international law, and their reviewability against its principles, within the EU legal order is important for their legitimacy as it could allow for interaction between the EU ‘home’ legal regime and international applicable legal frameworks, with international law becoming part of the home legal order in which IEMEIs are created and administered.335 Compatibility of IEMEIs with international law can serve a dual legitimising function. On the one hand, international law may enable IEMEIs. If EU unilateral standards are based on, or are in accordance with, international law then EU action may become less contentious as it avoids duplication of standards.336 On the other hand, international law can constrain the exercise of EU regulatory power beyond EU borders by imposing limits to its extension and guiding its application on the basis of norms to which third countries have agreed. The way in which the EU courts give legal effects to international law in the EU legal order affects which of these two roles prevails and can determine the legitimising effects deriving from overlapping legal regimes. The legal landscape to date is usually weighted in favour of enabling the exercise of EU power without sufficient constraints deriving from reviewing EU law on

331 IUU Regulation (n 213 above) Art 2(2)(b). 332 ER van der Marel, ‘An Opaque Blacklist: the Lack of Transparency in Identifying NonCooperating Countries under the EU IUU Regulation’ in L Martin, C Salonidis and C Hioureas (eds), Natural Resources and the Law of the Sea, Exploration, Allocation, Exploitation of Natural Resources in Areas under National Jurisdiction and Beyond (Juris, International Law Institute, 2017). 333 Ship Recycling Regulation (n 11 above) Art 15(5); Commission Guidance on Ship Recycling Facilities in third countries (n 145 above). 334 This was the case in ATAA (n 18 above) paras 103–106. 335 Differently from international law serving a legitimising function as a distinct legal frame, Chapter 2, Section III.A.(ii). 336 Scott, ‘Territorial Extension’ (n 128 above) 114.

200  Judicial Review of IEMEIs in the EU Legal System the basis of international law. This is partly because of the nature of international law and partly because of the approach of the EU courts in giving effect to it. International law may become relevant in reviewing EU law before the CJEU in two ways. On the one hand, the CJEU may review the legality of EU law on the basis of international law (Section E.(ii)). On the other hand, EU law could be interpreted in line with international law through the application of the principle of consistent interpretation (Section E.(iii)). The CJEU’s restrictive approach in reviewing the legality of EU legislation on the basis of international law demonstrates the complexities of the former approach in ways that may suggest that consistent interpretation could offer a preferable alternative avenue of accountability. (ii)  International Law as a Legality Benchmark The CJEU determines the applicability of international law as a benchmark against which the validity of EU acts can be reviewed on a case-by-case basis as a matter of EU law. The CJEU thus acts as a ‘“gatekeeper” to the entry and effect of international law in the EU legal order’.337 As the following discussion demonstrates, the CJEU’s approach tends to be restrictive in relation both to international agreements and customary international law as legality b ­ enchmarks. In relation to international agreements, three conditions govern their direct effect in the EU legal order, which determines the ability of an applicant to rely on them.338 First, the EU must be bound by those rules,339 which raises issues in cases where the Member States are bound but the EU is not,340 and excludes international instruments with no legally binding force. Second, the broad logic and nature of the international agreement should not preclude examination of the validity of an EU act by the CJEU.341 Third, the content of the rules in question must be unconditional and sufficiently precise.342 337 M Cremona and A Thies, ‘Introduction’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law: Constitutional Challenges (Hart, 2014) 2; J ­Wouters, J Odermatt and T Ramopoulos, ‘Worlds Apart? Comparing the Approaches of the European Court of Justice and the EU Legislature to International Law’ in M Cremona and A Thies (eds), The ­European Court of Justice and External Relations Law: Constitutional Challenges (Hart, 2014). 338 P Eeckhout, EU External Relations Law, 2nd edn (OUP, 2011) ch 9. 339 Cases 21-24/72 International Fruit Company NV and others v Produktschap voor Groenten en Fruit, EU:C:1972:115, para 7. 340 The EU courts may examine whether the EU has assumed powers previously exercised by the Member States, which was not the case in relation to the Convention on International Civil Aviation in ATAA (n 18 above) paras 57–72. On the limited scope of this ‘succession principle’ see Eeckhout, EU External Relations Law (n 338 above) 395–400. 341 Joined Cases C-120/06 P and C-121/06 P FIAMM and Others v Council and Commission EU:C:2008:476, para 110. 342 Case C-308/06 R (on the application of International Association of Independent Tanker Owners) (Intertanko) and Others v Secretary of State for Transport, EU:C:2008:312, para 45; ATAA (n 18 above) paras 52–54.

Grounds of Judicial Review  201 The CJEU is generally open to recognising international agreements for assessing the validity of EU acts.343 However, the Court’s approach in specific cases and in relation to specific agreements is more restrictive, focusing mostly on whether provisions create individual rights that may be invoked before the EU courts. This was particularly the case in Intertanko, where the ECJ remarkably held that the UN Convention on the Law of the Sea (UNCLOS)344 lacked direct effect for the purposes of review before the EU courts.345 The Court’s insistence on the fact that the provisions of UNCLOS do not confer rights on individuals, but rather are imposed only on ships and states was deemed to be formalistic and unduly restrictive.346 A more flexible approach, which would allow for examination of compatibility with international rules irrespective of direct effect and creation of individual rights, was endorsed by the ECJ in some cases like Biotech,347 which was a welcome development for some.348 However, the ECJ has returned to its more restrictive approach in determining whether to review EU law on the basis of international agreements in later cases, on the basis of whether they accord rights to individuals.349 For example, in ATTA the ECJ held that the provision of the Kyoto Protocol that identified the ICAO as the appropriate forum to address aviation emissions lacked direct effect because of its imprecise and conditional nature,350 such that it did not confer rights on individuals to rely on it in legal proceedings.351 This approach to international agreements also demonstrates the limited protection that they confer upon individuals within the EU legal order. Even in relation to the Aarhus Convention, an agreement specifically created to confer individual rights, the CJEU has consistently found provisions on access to justice to lack direct effect,352 thus avoiding direct review of compatibility of EU measures with such internationally agreed commitments.353 On the basis of CJEU case law, it is unlikely that international agreements relevant to the different IEMEIs, outlined at the beginning of this section, will have direct effect so that a third country actor would rely on them to challenge IEMEIs. This can be seen through a hypothetical scenario of ­challenging

343 Eeckhout, EU External Relations Law (n 338 above) 350–53. 344 UN Convention on the Law of the Sea, 10 December 1982, 1833 UNTS 3 (UNCLOS). 345 Intertanko (n 342 above). 346 Eeckhout, EU External Relations Law (n 338 above) 374. 347 Case C-377/98 Kingdom of the Netherlands v Parliament and Council, EU:C:2001:523. 348 F Martines, ‘Direct Effect of International Agreements of the European Union’ (2014) 25 ­European Journal of International Law 129; de Baere and Ryngaert (n 114 above). 349 Martines (n 348 above). 350 Kyoto Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, 2303 UNTS 148, Art 2(2). 351 ATAA (n 18 above) paras 77–78; de Baere and Ryngaert (n 114 above). 352 Slovak Brown Bear (n 77 above); Stichting Natuur en Milieu (n 77 above). Also, this was recently confirmed in Mellifera v Commission (n 78 above) para 85. 353 The Court’s restrictive approach has contributed to the ACCC finding the EU in breach of its obligations under the Convention, ACCC findings (Part II) (n 68 above) paras 78–80.

202  Judicial Review of IEMEIs in the EU Legal System ­ nilateral climate change action on the basis of the Paris Agreement.354 Even u if the Paris Agreement was found to be binding on the EU and its broad logic and nature did not preclude its direct effect, it is unlikely that relevant provisions would be sufficiently precise and unconditional given their general language. For example, it is unlikely that EU action could be challenged on the basis of not providing the necessary financial and technical assistance355 or for not taking ‘into consideration in the implementation of this Agreement the concerns of Parties with economies most affected by the impacts of response measures, particularly developing country Parties’, as required by the Agreement.356 In similar ways, other international agreements relevant to IEMEIs would most likely fail one of the conditions of direct effect. These limitations demonstrate the inability of international law to control unilateral EU action given its uncertain legal force within domestic legal systems, including how it is applied in the EU legal order by the CJEU. The lack of direct effect of some international agreements in the EU legal order is notable in relation to WTO law. The EU courts have consistently refused to recognise direct effect for WTO agreements and dispute settlement decisions.357 Apart from a narrowly construed implementation exception,358 the EU courts are reluctant to review the compatibility of EU measures with WTO agreements. This is mainly due to political reasons that aim to preserve the legislature’s freedom of negotiation under the WTO.359 While this approach might seem inconsistent with the CJEU’s approach in recognising free trade agreements, the specific modalities and structure of the WTO somehow warrant the CJEU’s reluctance to find direct effect of WTO law and consequently leaving it to political institutions to determine the EU’s obligations.360 In relation to WTO law, it is regrettable that the CJEU has not made a distinction between the direct effect of WTO agreements and WTO dispute rulings.361 The ECJ refuses to examine the compatibility of EU law with such decisions362 even if the specific measures have been the subject-matter of a

354 Paris Agreement (n 325 above). 355 ibid Arts 9, 10. 356 ibid Art 14(5). 357 International Fruit (n 339 above); Case C-149/96 Portugal v Council, EU:C:1999:574. 358 Case C-70/87 Fediol v Commission, EU:C:1989:254; Case C-69/89 Nakajima All Precision Co Ltd v Council, EU:C:1991:186; J Errico, ‘The WTO in the EU: Unwinding the Knot’ (2011) 44 Cornell International Law Journal 179. 359 Eeckhout, EU External Relations Law (n 338 above) 343–50; S Peers, ‘Fundamental Right or Political Whim? WTO Law and the European Court of Justice’ in G de Búrca and J Scott (eds), The EU and the WTO: Legal and Constitutional Aspects (Hart, 2001). 360 Eeckhout, EU External Relations Law (n 338 above) 375–78; P Eeckhout, ‘Judicial Enforcement of WTO Law in the European Union–Some Further Reflections’ (2002) 5 Journal of International Economic Law 91. 361 Eeckhout, EU External Relations Law (n 338 above) 378–81. 362 FIAMM (n 341 above) para 129.

Grounds of Judicial Review  203 WTO dispute.363 While this is to allow the possibility for WTO parties to negotiate compensation following a WTO decision, not finding direct effect even after expiry of a reasonable time, limits the effects of WTO law in constraining EU action.364 It is suggested that the EU courts should apply the principle of implementation in reviewing the compatibility of EU legislation with WTO law when seeking to comply with a WTO dispute ruling.365 However, the interpretation of this principle to date has been restricted to situations where EU legislation expressly refers to or implements WTO law.366 Even though there may be valid concerns about the abuse of WTO compatibility review by third countries, there seems to be a lacuna in the judicial protection of interests affected by EU legislation that has been found to be incompatible with WTO commitments. These interests can include both domestic and third country actors. At the very least, the CJEU could use the principle of consistent interpretation to interpret EU law in line with dispute settlement decisions as far as possible,367 as the EU courts have used it to apply WTO law.368 To date, however, even when WTO rulings are mentioned in cases, the Courts have not relied upon them, at least not explicitly.369 The CJEU’s restrictive approach to the recognition of WTO law and rulings in the EU legal order to a large extent relates to its reluctance to review compatibility with an external body of law and in its desire to maintain the ‘autonomy’ of the EU legal order.370 When this is relied upon to refuse to give effect to decisions by international adjudication systems to which the EU is a party, including WTO dispute rulings, there is a ‘clear and present danger that the autonomy of EU law is extended beyond its proper remit’.371 Lacking direct effect in the EU  legal order, WTO law may lose momentum, potentially undermining controls imposed on IEMEIs under the WTO framework, examined in Part III of the book. This demonstrates the need to examine the separate operation of the overlapping WTO regime in exploring the extent to which EU and WTO law work in combination to legitimise IEMEIs.

363 Peers (n 359 above). However, note that the EU has a good track record of compliance with WTO decisions, A Young, ‘Effective Multilateralism on Trial: EU Compliance with WTO Law’ in S Blavoukos and D Bourantonis (eds), The EU Presence in International Organizations (Routledge, 2010). 364 Eeckhout, EU External Relations Law (n 338 above); Peers (n 359 above). 365 Eeckhout, ‘Judicial Enforcement’ (n 360 above). 366 Fediol (n 358 above); Nakajima (n 358 above). 367 Peers (n 359 above) 118. 368 Case C-351/04 Ikea Wholesale v Commissioners of Customs & Excise, EU:C:2007:547. 369 P Eeckhout, ‘The Integration of Public International Law in EU Law: Analytical and Normative Questions’ in P Eeckhout and M López Escudero (eds), The European Union’s External Action in Times of Crisis (Hart, 2016) 201. 370 Wouters, Odermatt and Ramopoulos (n 337 above). See also Case C-351/04 Ikea Wholesale v Commissioners of Customs & Excise, Opinion of AG Leger, EU:C:2006:236. 371 Eeckhout, ‘Integration of Public International Law’ (n 369 above) 201.

204  Judicial Review of IEMEIs in the EU Legal System In determining the relevance of customary international law for reviewing the lawfulness of EU measures, the EU courts adopt a different, but similarly restrictive approach to finding direct effect of international agreements. In particular, the EU courts first examine and determine the existence of customary international law that is binding on the EU, and then examine under what circumstances these can be relied upon by individuals.372 In ATAA, where a number of customary rules on jurisdiction were sought to be used, the ECJ clarified that only those rules that could call into question the EU’s competence and those which are liable to affect rights which the individual derives from EU law or which create obligations under EU law with regard to him.373 Even when such conditions are met, the assessment of compatibility would be limited to whether EU institutions had committed a ‘manifest error of assessment’ in applying the relevant rules as they would never be found to be sufficiently precise.374 While this may be a standard administrative test in EU law, applying such a marginal scope of review has been called into question. A middle ground that would allow for full review in cases where sufficient precision is found, would have been preferable.375 In any case, given the broad approach to reviewing the permissible parameters of EU competence in ATAA, it is unlikely that the EU would be found to have overstepped jurisdictional boundaries in accordance with customary rules.376 (iii)  Principle of Consistent Interpretation Given the complexities, both legal and political, associated with reviewing the legality of EU law on the basis of international law, an alternative tool through which the EU courts could ‘integrate’ international law in the EU legal order is consistent interpretation of EU law in the light of relevant international law.377 Even when international law cannot be directly relied upon to challenge the validity of EU acts, the Courts can interpret EU measures so far as possible, in a manner consistent with international agreements,378 including WTO law.379 This approach was specifically recommended by the ACCC when reviewing the compatibility of EU law with the Aarhus Convention.380

372 ATAA (n 18 above). 373 ibid para 107. 374 ibid para 110. 375 de Baere and Ryngaert (n 114 above). 376 Section III.A above. 377 Eeckhout, ‘Integration of Public International Law’ (n 369 above). 378 Case C-61/94 Commission v Germany EU:C:1996:313, para 52; ATAA, Opinion of AG Kokott (n 119 above) para 163. 379 For example, Case C-53/96 Hermès International v FHT Marketing Choice BV, EU:C:1998:292. 380 The ACCC regretted that while the CJEU considers that national courts should interpret national law in accordance with Article 9(3) of the Convention, it does not consider itself bound by it in the same way. ACCC Findings, Part II (n 68 above) paras 82–83.

Grounds of Judicial Review  205 In the context of IEMEIs, EU measures on climate change should in principle be interpreted in line with relevant agreements adopted under the auspices of the UNFCCC. This would require EU climate measures imposing obligations on developing countries to be interpreted in line with the principle of CBDR, as embedded in such agreements.381 This could go a long way in operationalising an international principle of distributive justice in the EU legal order so as to address the distributive justice gap related to IEMEIs. However, international agreements do not usually provide clear directions on which to base consistent interpretation and in any case, consistent interpretation with international law is qualified by reference to ‘as far as possible’.382 Applying the principle of consistent interpretation can sometimes be challenging for the EU courts, because they would have to somehow determine the interpretation of relevant international agreements in order to interpret EU law in this light, which is not always clear or uniform at the international level. Consistent interpretation is not always practically possible. Furthermore, the CJEU usually requires international instruments to have legally binding force before this principle can be used. In Inuit II, the CJEU and the AG refused to interpret the right to be heard in light of Article 19 of the UN Declaration on the Rights of Indigenous People. This provides for participation rights of indigenous communities ‘before adopting and implementing legislative or administrative measures that may affect them.’383 The non-legally-binding UN Declaration could not grant consultation rights to the Inuit communities over and above those recognised under EU law.384 While both the CJEU and the AG referred to consultations of the Commission with indigenous communities, they clarified that these did not amount to rights amenable to judicial review.385 The CJEU could have adopted a broader approach to recognising legal effects of the UN Declaration through consistent interpretation, using Article  3(5) TEU which calls for strict observance of international law. This approach is also supported by the fact that the UN Declaration was explicitly mentioned in the Seals Regulation and therefore the legislator considered it relevant.386 In such a case, the CJEU could have engaged in a review of whether consultations were carried out in accordance with the requirements under Article 19 of the Declaration, for example the principle of good faith.387 Such review by the CJEU would have significantly contributed to addressing the participation and

381 UNFCCC (n 325 above), Art 3(1); Paris Agreement adopted under the UNFCCC, 12 December 2015, FCCC/CP/2015/L.9, Art 2(2). 382 For example, ATAA Opinion of AG Kokott (n 119 above) para 163. 383 Seals Regulation 1007/2009 (n 39 above) Recital 14. 384 T-526/10 Inuit II (n 45 above) para 112; Case C-398/13 Inuit II (n 45 above) paras 64–67. 385 T-526/10 Inuit II (n 45 above) para 114; Case C-398/13 Inuit II, Opinion of AG (n 148 above) 94. 386 However, the Regulation refers to the Declaration in general terms and not to the consultation rights under Article 19, Seals Regulation 1007/2009 (n 39 above) Recital 14. 387 UN Declaration (n 314 above) Art 19.

206  Judicial Review of IEMEIs in the EU Legal System representation gap as well as the distributive justice gap related to IEMEIs by recognising the participation rights of indigenous communities. Notably, in more recent case law, the ECJ interpreted an EU bilateral agreement consistently with international law, thereby determining the territorial and constitutional boundaries of EU external action. In Western Sahara, the validity of the EU’s fisheries agreement with Morocco was challenged on the basis of violating Article 3(5) TEU on the strict observance of international law.388 The ECJ interpreted the concept of ‘territory’ under the Agreement with Morocco in the light of relevant international law obligations and in accordance with ­Article 3(5) TEU.389 It held that the Agreement was not applicable to the territory of Western Sahara as this would have been contrary to the right of self-determination of the peoples of Western Sahara and other international law under UNCLOS and the UN Charter, to which the EU has committed as part of its own constitutional principles.390 Without annulling the EU act, the ECJ was able to employ international law in its reasoning when handling a politically sensitive situation and upholding the EU’s commitment to international law. Overall, consistent interpretation is promising and provides a less politically contentious method of relying on international law in challenging EU law before the EU courts. Through consistent interpretation, the CJEU can open up the EU legal order to international law in ways that are in line with that of the EU legislature in incorporating international law when adopting EU legislation.391 The explicit references to international agreements in IEMEIs indicate that these are relevant sources for the interpretation of IEMEIs. The expansion of consistent interpretation would thus be in line with the EU legislature’s choices and would reinforce the EU’s claim of respecting international law, by holding it to account through judicial review. However, it is unclear how far the CJEU would be willing to take this and whether it would be as creative in its interpretation as it was with giving effects to internal EU law,392 for example in recognising direct effect of directives.393 (iv)  Explaining the CJEU’s Approach and its Effect on the Legitimacy of IEMEIs While there is some integration of international law in the judicial system of the EU legal order, this is limited, particularly when the legality of EU legislation 388 Case C-266/16 Western Sahara Campaign UK v Commissioners for Her Majesty’s Revenue and Customs, Secretary of State for Environment, Food and Rural Affairs, EU:C:2018:118. 389 ibid paras 57–73. 390 ibid para 47. See on this J Larik, ‘A Line in the Sand: The Strict Observance of International Law in the Western Sahara Case’ (2 March 2018) Verfassungsblog on Matters Constitutional: https://­verfassungsblog.de/a-line-in-the-sand-the-strict-observance-of-international-law-in-thewestern-sahara-case/. 391 Wouters, Odermatt and Ramopoulos (n 337 above). 392 A Thies, ‘General Principles in the Development of EU External Relations Law’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law: Constitutional Challenges (Hart, 2014) 160. 393 Eeckhout, EU External Relations Law (n 338 above) 357.

Grounds of Judicial Review  207 is challenged on the basis of international agreements, customary international law and international litigation. This reveals three things that explain the approach of the CJEU and demonstrate the shortcomings as well as the potential for judicial review of IEMEIs on the basis of international law to enhance the legitimacy of IEMEIs. First, international law does not always provide a concrete basis with clear directions by which to interpret or invalidate EU law, given its often unclear legal status and the political compromises embedded in international law instruments that do not always provide clear direction. Second, review of EU law on the basis of international law involves political choices and discretion of EU institutions in conducting relations with third countries. The role of the judiciary in questioning the legality of such action is thus complex and potentially restrained in accordance with the principle of separation of powers in the EU. In such situations, alternative forms of accountability other than legal accountability may be more suited. Third, the reluctance of the EU courts to find direct effect of international law may be partly explained by the remedies available in the EU judicial system. Annulment of EU law by the Courts is a ‘nuclear’ solution that challenges EU political processes and is particularly contentious on the basis of international law, potentially for the benefit of third countries.394 Consistent interpretation of EU law in line with international law may provide a more appropriate and less controversial way of holding the legislature to account in relation to extraterritorial effects on the basis of international law. Particularly when IEMEIs explicitly refer to relevant international law instruments, the CJEU’s reliance on such instruments is seemingly less controversial and can contribute to addressing the legitimacy gaps related to IEMEIs in ways that respect legislative discretion while ensuring respect of international law in accordance with the EU’s constitutional requirements. To conclude, the relationship between international law and EU law is an area of EU doctrine that highlights that there are overlapping but imperfect frameworks governing the intersection of EU law with public international law. EU doctrine on the effects of international law in the EU legal order reveals a deficiency in EU law in dealing with measures like IEMEIs that are not contained within a single legal frame but raise issues at the intersection of EU  law and public international law. There is a mismatch in the dual role of EU  law in enabling and disciplining IEMEIs. While it justifies and facilitates their existence, it has not yet provided sufficient ways for disciplining the exercise of EU  power beyond EU borders, especially through the recognition of legal effects of international law in the EU legal order. The CJEU’s approach to review of EU law on the basis of international law shows how the combining of legal regimes in legitimising IEMEIs will not necessarily happen within discrete



394 Eeckhout

(n 338 above) 199.

208  Judicial Review of IEMEIs in the EU Legal System legal orders. While in some respects the legitimising effects of EU and WTO law for IEMEIs are determined by how WTO law is incorporated within the home legal order, their combining also occurs through their separate operation as overlapping frames that may have complementary combined effects. IV. CONCLUSION

In summary, this chapter has demonstrated different opportunities (as well as their limitations) for third country actors to judicially challenge IEMEIs in the EU legal order. While third country affected interests are afforded some legal protection when IEMEIs adversely affect individual rights of due process, there are also important limitations on third country actors’ ability to challenge IEMEIs in the EU legal order. These relate both to restrictions of standing requirements and to limitations in the scope and intensity of grounds of review. Notably, these limitations are not always attributed to the nationality or place of residence/registration of the applicant but to the ways in which interests are affected by EU regulatory action as well as to the discretion accorded to the EU regulator. In terms of judicial review as a significant accountability method, EU law provides for access by third country actors to its sophisticated judicial system when they are directly legally affected by EU measures, albeit restricted in cases where third country actors are affected by IEMEIs in indirect ways. The  restrictive interpretation of standing rules may have detrimental effects on the possibilities for affected interests, including third country actors, to access the EU judicial system. This raises significant questions as to whether judicial review by the CJEU functions as a transnational accountability avenue at the disposal of third country actors and demonstrates the extent of the procedural justice and accountability gaps, given that in most cases third country actors wishing to challenge IEMEIs will not have access to the EU courts. Additionally, even in those limited cases where third country actors do have access, the extent to which the arguments at their disposal and the remedies available are sufficient effectively to hold EU institutions to account is questionable. This is partly due to the CJEU’s light review of competence and its deferential review of proportionality of EU measures. The Court’s reluctance to review the compatibility of EU measures with international law is also telling about the limits of review of IEMEIs. To date, the CJEU’s approach has failed to deal with distributive justice concerns, particularly in the context of individual rights of third country actors affected by IEMEIs, due to the unclear legal picture concerning the extraterritorial application of human rights obligations and the reluctance to review the compatibility of EU law in light of international law obligations. Overall, the ways in which EU law deals with IEMEI legitimacy gaps, as examined in Part II of the book, demonstrate the dual legitimising function of

Conclusion  209 EU law. The enabling character of EU law is seen particularly in the broad competences of the EU in adopting unilateral measures with extraterritorial effect, the EU’s external action values that set a policy direction of the EU that provides justification for expanding its own values abroad, and the broad discretion accorded to EU institutions in weighing different interests and reaching complex policy decisions. The potentially constraining character of EU law is seen, inter alia, in relation to administrative law requirements that promote due process in the implementation of IEMEIs in respect of individual third country actors and in the review of how discretionary power is exercised in some instances, especially in light of potential infringement of fundamental rights and in relation to ensuring that EU action is not disproportionate to the aim pursued. When EU law doctrine is informed by the EU’s external action constitutional values, discussed in the Introduction to Part II, and by the theoretical legitimacy framework developed in Chapter two, EU law bears unfulfilled potential to further hold the exercise of EU global regulatory power to account in relation to the effects of IEMEIs on third country interests. To conclude, while the EU may have an extensive constitutional basis on which it seeks to conduct its external action in a legitimate manner, in practice it is difficult to achieve a balanced approach that takes accounts of different kinds of interests situated inside and outside of EU borders and to effectively promote and uphold the different kinds of values that the EU has committed to. This is partly due to the inherent practical and political complexities of accommodating different stakeholders within a single legal system. The EU already faces such limitations in addressing internal interests. Accommodating foreign interests adds a further layer of complexity and potentially creates a conflict of interests in achieving balanced and legitimate policies. The shortcomings of the EU legal order in filling the legitimacy gaps related to IEMEIs could be compensated for by legal rules and procedures under external legal regimes that also determine the legal functioning of IEMEIs. In particular, the WTO legal system requires consideration of third country trading partners’ interests as well as providing a forum of interaction between the EU and third countries. WTO law, similarly to EU law, also presents a dual role both in according discretion to regulating countries to pursue non-trade objectives, thus enabling adoption of IEMEIs, as well as in imposing procedural and substantive requirements in the adoption and implementation of trade-restrictive measures that can discipline IEMEIs. The legitimising potential of WTO law in relation to IEMEIs is examined in the following part of the book.

210

Part III

IEMEIs in the WTO Legal Order

212

Introduction: The Legitimising Function of WTO Law for IEMEIs I. INTRODUCTION

A

s explained in Chapter two on legitimacy, there is no s­ traightforward ­institutionalised or established accountability relationship in the c­ ontext of IEMEIs given that they are unilaterally created within the EU legal order while affecting interests situated beyond the EU. Part III of the book examines the extent to which the WTO regime, as an external legal system that governs the trade relations of the EU with the rest of the world, creates such a relationship; ­particularly, through obligations that require the EU to consider the extraterritorial effects of its trade-related measures and face consequences for failure to duly consider such effects, as well as by providing a forum for consultation between the EU and third countries. The WTO system is recognised as an important regime that may legitimise global governance from different perspectives, enabling on the one hand, global administrative law, and on the other hand, transnational experimentalist governance to occur across borders and across legal regimes.1 From a global administrative law perspective, the WTO system could provide mechanisms for ‘adequate standards of transparency, participation, reasoned decision, and legality, and by providing effective review’.2 From an experimentalist governance perspective, WTO law imposes ‘other-regarding procedural requirements and deliberative constraints’ on unilateral regulation in ways that render it more reflexive and cooperative and can strengthen its claim to legitimacy.3 The legitimising function of WTO law on domestic action can thus take many forms and materialise through different transnational regulatory processes. Part III of the book analyses the operation and potential of the WTO as a global organisation with a developed dispute settlement system (DSS) to remedy global power inequalities and legally control the regulatory activity of large markets such as the EU and its effects on actors beyond its jurisdiction. International courts such as the WTO DSS ‘have a distinctive opportunity

1 Chapter 2, Section IV.C. 2 B Kingsbury, N Krisch and RB Stewart, ‘The Emergence of Global Administrative Law’ (2005) Law and Contemporary Problems 15, 17. 3 J Zeitlin, Extending Experimentalist Governance? The European Union and Transnational Regulation (OUP, 2015) 14.

214  Introduction: The Legitimising Function of WTO Law for IEMEIs to define states’ duties towards foreign stakeholders, as well as to oversee the implementation of such other-regarding duties’.4 They can thus play a significant role in bridging the external accountability gap created through increasing global interdependence,5 and ‘remedy the disregard’ of affected interests and concerns in global regulatory governance.6 The analysis of WTO law offered in this book does not provide a comprehensive study of the compatibility of each IEMEI with relevant WTO agreements. It builds on and expands existing literature not only by analysing the permissibility of process-based measures under WTO law and their review by the dispute settlement bodies,7 but also by examining the operation of ‘soft law’ procedures of notification and consultation within the WTO regime. It also explores the interaction of WTO law with the ‘home’ legal system of EU law from which IEMEIs originate, discussing the combined l­egitimising effects of these overlapping legal systems for the exercise of EU global regulatory power. The analysis of IEMEIs under WTO law in Part III of the book, similar to that in Part II on EU law, demonstrates its dual role in relation to the legitimacy of IEMEIs. On the one hand, WTO law enables the existence of IEMEIs by recognising rights of regulating jurisdictions to adopt unilateral measures to address environmental protection and climate change concerns. On the other hand, WTO law provides requirements that ‘discipline’8 the adoption, formulation and application of IEMEIs and may thus constrain the exercise of EU global regulatory power through IEMEIs. The greatest danger with WTO law disciplining domestic regulatory power lies potentially in excessively constraining the regulatory autonomy of states and prioritising trade interests over non-trade goals such as environmental protection. Nonetheless, WTO compatibility usually enables the extraterritorial reach of EU regulatory g­ overnance9 and facilitates the unilateral extension of EU regulatory standards

4 E Benvenisti and SS Agon, ‘The Law of Strangers: The Form and Substance of Other-Regarding International Adjudication’, GlobalTrust Working Paper 08/2017, 5: http://globaltrust.tau.ac.il/ publications. 5 M Weimer, ‘Reconciling Regulatory Space with External Accountability through WTO Adjudication – Trade, Environment and Development’ (2017) 30 Leiden Journal of International Law 901. 6 RB Stewart, ‘Remedying Disregard in Global Regulatory Governance: Accountability, Participation, and Responsiveness’ (2014) 108 American Journal of International Law 211. 7 R Howse and D Regan, ‘The Product/Process Distinction – An Illusory Basis for Disciplining ‘Unilateralism’ in Trade Policy’ (2000) 11 European Journal of International Law 249; DH Regan, ‘How to think about PPMs (and climate change)’ in T Cottier, O Nartova and SZ Bigdeli (eds), International Trade Regulation and the Mitigation of Climate Change: World Trade Forum (CUP, 2009); S Charnovitz, ‘The Law of Environmental “PPMs” in the WTO: Debunking the Myth of Illegality’ (2002) 27 Yale Journal of International Law 59; L Ankersmit, J Lawrence and G Davies, ‘Diverging EU and WTO Perspectives on Extraterritorial Process Regulation’ (2012) 21 Minnesota Journal of International Law Online 14; B Cooreman, Global Environmental Protection Through Trade, A Systematic Approach to Extraterritoriality (Edward Elgar, 2017). 8 Charnovitz (n 7 above); Howse and Regan (n 7 above). 9 G Shaffer, ‘How the World Trade Organization Shapes Regulatory Governance’ (2015) 9 ­Regulation and Governance 1.

Introduction   215 to third countries,10 by adopting a deferential approach towards the domestic policies of developed WTO members that emerge as global standard setters.11 Part III of the book identifies the dual role of WTO law and in doing so demonstrates both its potential to perform a legitimising function, but also the limitations of this potential to address the many legitimacy concerns raised by IEMEIs that extend beyond purely trade-related impacts and relate to social and developmental concerns of third countries. The analysis examines the extent to which WTO law provides mechanisms of external accountability, holding the EU to account in relation to the effects of its unilateral policies on third country actors, primarily through the operation of the dispute settlement bodies (legal accountability), while also drawing attention to other WTO procedures (political and reputational accountability). Additionally, the analysis explores the extent to which WTO law creates consultation and participation opportunities where third country affected actors may be able to voice their opinions on proposed EU policies in ways that can contribute to filling the participation and representation gap related to IEMEIs. In assessing the operation of WTO law in relation to IEMEIs, the analysis also evaluates the extent to which WTO law contributes to addressing the distributive justice gap by requiring due consideration of the interests of developing countries and vulnerable communities in third countries. In examining the legitimising potential of WTO law, Part III of the book adopts the following structure. This introductory chapter sets out how WTO law provides a relevant legal frame for legitimising IEMEIs, possibly with potential to address the special circumstances of developing countries affected by IEMEIs, while also acknowledging inherent limitations given its trade liberalisation agenda. Chapters five and six then examine relevant WTO legal rules that impose obligations on WTO Members, both in the form of substantive provisions (Chapter five) and in the form of exceptions (Chapter six), which require regulating jurisdictions to consider the impacts of their measures on other WTO members. The analysis mostly focuses on trade in goods under the General ­Agreement on Tariffs and Trade (GATT),12 under which most IEMEIs would clearly fall. The General Agreement on Trade in Services (GATS)13 and the Agreement on Technical Barriers to Trade (TBT Agreement)14 are also discussed, where relevant. These chapters identify relevant obligations and exceptions, examine issues of compatibility, and draw out the influence of WTO norms on IEMEIs. These three inter-related aspects of the analysis seek to identify the function and effects of WTO law in legitimising IEMEIs, 10 A Bradford, ‘The Brussels Effect’ (2012) 107 Northwestern University Law Review 1; BM Araujo, ‘The “Ordinariness” of the EU’s Foreign Policy Power: The Use of WTO Litigation as a Means to Export EU Norms, Values and Interests’ (2015) 4 Global Journal of Comparative Law 143. 11 Weimer (n 5 above). 12 General Agreement on Tariffs and Trade 1994, 1867 UNTS 187 (GATT). 13 General Agreement on Trade in Services, 1869 UNTS 183 (GATS). 14 Agreement on Technical Barriers to Trade, 1868 UNTS 120 (TBT Agreement).

216  Introduction: The Legitimising Function of WTO Law for IEMEIs both by exploring whether specific WTO norms are appropriate to fulfil such a function as well as whether there may be unrealised legitimising potential in how particular norms are being applied. The analysis thus assesses an ex ante influence of WTO law on IEMEIs, which may have already performed some legitimising function, as well as an ex post function of WTO law and particularly the DSS in ‘disciplining’ EU action when it insufficiently considers effects on third c­ ountries. Chapter seven explores an under-examined ‘hidden world’ of WTO law,15 largely outside the dispute settlement system, through which WTO notification obligations and procedures create a forum for interaction among WTO Members’ government officials on new or pressing trade issues, particularly under the TBT Agreement. These interactions could provide complementary avenues for filling the accountability and participation gaps related to IEMEIs. II.  WTO LAW AS A RELEVANT LEGAL FRAME FOR LEGITIMISING IEMEIs

The WTO legal regime is pertinent for legitimising IEMEIs, because its structure and broad coverage provide a forum to which many countries have access, including developing countries often affected by IEMEIs. The WTO could offer a ‘glimmer of hope’ by ‘extending accountability to powerful states’ including the EU,16 particularly through the WTO DSS.17 Notably, the WTO system primarily provides for consideration and involvement of third country government interests, while the private interests of economic operators18 and, to a lesser extent, individuals and civil society are also indirectly ‘involved’,19 including in the WTO DSS.20 In fact, some WTO Members have adopted legislation that enables private companies to petition their governments to initiate ­international dispute settlement procedures.21 While the WTO DSS is confined 15 A Lang and J Scott, ‘The Hidden World of WTO Governance’ (2009) 20 European Journal of International Law 575. 16 RO Keohane, ‘Global Governance and Democratic Accountability’ in D Held and M ­Koenig-Archibugi (eds), Taming Globalization: Frontiers of Governance (Polity Press, 2003). 17 J Scott, ‘European Regulation of GMOs: Thinking about Judicial Review in the WTO’ (2004) 57 Current Legal Problems 117. 18 K Kulovesi, The WTO Dispute Settlement System: Challenges of the Environment, Legitimacy and Fragmentation (Kluwer Law International, 2011) ch 6. 19 P Van den Bossche and W Zdouc, The Law and Policy of the World Trade Organization: Text, Cases and Materials, 3rd edn (CUP, 2013) 177. 20 Understanding on Rules and Procedures Governing the Settlement of Disputes, 1869 UNTS 401 (DSU), Art 13; Appellate Body (AB) Report on US – Import Prohibition of Certain Shrimp and Shrimp Products (US–Shrimp), WT/DS58/AB/R, adopted 12 October 1998, para 104; Kulovesi (n 18 above) ch 6. 21 For example, see Section 301 of the Trade Act of 1974 (US) and Regulation (EU) 2015/1843 laying down Union procedures in the field of the common commercial policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization [2015] OJ L272/1.

WTO Law as a Relevant Legal Frame for Legitimising IEMEIs  217 to state disputes, private interests are never far from the surface.22 Therefore, the WTO system can provide avenues for legal control to different kinds of third  country actors affected by IEMEIs. The appropriateness and potential of WTO law to provide mechanisms for filling the legitimacy gaps related to IEMEIs, however, are not straightforward or without contention. A.  The De Facto Legitimising Function of WTO Law and its Limitations WTO law is not designed as a bespoke legal regime to capture IEMEIs and their effects. In fact, there is no such regime, reflecting the hybrid nature of IEMEIs, caught in between legal regimes. Nonetheless, WTO law requirements influence the formulation and application of IEMEIs in relation to third countries in significant ways that could in effect also be serving a partial legitimising ­function. The WTO legal regime has become a common forum where trade and environmental interests are often reconciled, specifically in the DSS. Despite being a regime that promotes trade liberalisation, it accommodates the regulatory discretion of WTO Members to pursue non-trade interests through traderestrictive measures such as IEMEIs, while also accommodating the trade interests of countries affected by such measures. By its operation, particularly in trade and environment linkage disputes,23 WTO law has developed parameters within which external environmental governance can lawfully take place.24 The operation of WTO law exerts significant influence on EU environmental action. This influence takes many forms. It can amount to a ‘regulatory chill’ whereby the EU avoids seeking to impose specific kinds of standards25 or using specific kinds of regulatory techniques26 in its unilateral measures, s­howing how WTO law sometimes excessively constrains the regulatory autonomy 22 For an examination of public–private partnerships in WTO litigation and their broader implications for the WTO system and international governance more generally, see GC Shaffer, Defending Interests, Public–Private Partnerships in WTO Litigation (Brookings Institution Press, 2003). 23 For a constructive and critical account of the ‘trade and’ linkage literature, see AT Lang, ‘Reflecting on “Linkage”: Cognitive and Institutional Change in the international Trading System’ (2007) 70 The Modern Law Review 523. 24 S Harrell, ‘Beyond Reach – An Analysis of the European Union’s Chemical Regulation Program under World Trade Organization Agreements’ (2006) 24 Wisconsin International Law Journal 471. 25 Such as labour standards: EB Lydgate, ‘Biofuels, Sustainability, and Trade-Related Regulatory Chill’ (2012) 15(1) Journal of International Economic Law 157. 26 For example, the proposed ship recycling fund raised significant WTO compatibility issues and was rejected: Parliament, Impact Assessment of a Substantive Amendment to the Proposal for a Regulation on Ship Recycling, ‘Financing the Environmentally Sound Recycling and Treatment of Ships’ (February 2013). WTO compatibility has been identified as important for the design of the financial instrument and has likely influenced the ‘inaction’ of the Commission on this issue for the time being pending further analysis as to the compatibility of the proposed ship recycling licence with international and EU legal rules. See Report from the Commission to the European Parliament and the Council on the feasibility of a financial instrument that would facilitate safe and sound ship recycling COM(2017) 420 final.

218  Introduction: The Legitimising Function of WTO Law for IEMEIs of its members and how it may have delegitimising effects. At the same time, however, in complying with WTO law obligations, the EU has been employing novel regulatory techniques, such as flexibility and contingency clauses, giving rise to innovative transnational governance.27 For example, the combination of public and private regulation in the EU Timber Regulation28 would not occur ‘if it were not for the trade facilitated by WTO rules, on the one hand, and the constraints WTO rules impose, on the other’.29 Furthermore, WTO law, as part of a transnational legal order that transcends and penetrates state boundaries, is a pertinent external body of law that influences the internal regulatory practices and policy-making of the EU, requiring consideration of trade-restrictive effects on third countries and that due process safeguards be in place.30 Through different procedural and substantive obligations, WTO law can embody a conceptual framework of ‘other-regardingness’ in international governance.31 Overall, the WTO’s significant influence on EU regulatory behaviour could in effect contribute to filling some of the IEMEI legitimacy gaps through various obligations that require consideration of third country impacts in the legal design and application of domestic measures as well as through deliberative procedures among WTO Members. Nonetheless, the legitimising scope and function of WTO law is inherently constrained given its trade liberalisation agenda.32 While WTO law may capture trade-restrictive effects of IEMEIs, it fails to take adequate account of other kinds of effects, of a social and developmental nature. The relevance of WTO law in legitimising IEMEIs is in some respects clearly visible, given that IEMEIs operate in a trade context whereby a powerful trading bloc is imposing regulatory requirements on other countries. However, at the same time WTO law as a trade liberalisation regime that raises its own internal legitimacy concerns, is not a panacea for the legitimacy of IEMEIs and has been extensively criticised for engaging with environmental protection and other non-trade issues.33 ­Furthermore, the WTO legal system, and particularly the operation of the dispute settlement bodies, is currently under threat given US opposition to the appointment of members of the Appellate Body (AB), which is currently functioning with only four members. Thus, due to a ‘paralysed’ AB, the ­

27 Chapter 1, Section III.B. 28 Regulation (EU) 995/2010 laying down the obligations of operators who place timber and timber products on the market [2010] OJ L295/23. 29 Shaffer (n 9 above) 6. 30 ibid; G de Búrca and J Scott, ‘The Impact of the WTO on EU Decision-Making’ in G de Búrca and J Scott (eds), The EU and the WTO: Legal and Constitutional Aspects (Hart, 2001). 31 Benvenisti and Agon (n 4 above). 32 However, trade liberalisation can mean different things ‘over time and across cultures’: Lang (n 23 above) 526. 33 For example, PM Nichols, ‘Trade Without Values’ (1995) 90 Northwestern University Law Review 658; AT Guzman, ‘Global Governance and the WTO’ (2004) 45 Harvard International Law Journal 303.

WTO Law as a Relevant Legal Frame for Legitimising IEMEIs  219 l­egitimate ­authority and any disciplining effects of AB reports may be s­ eriously contested in the coming years.34 Part III of the book proceeds on the premise that despite inherent limitations, WTO law can contribute to filling some of the IEMEI legitimacy gaps. This is by requiring consideration of, at least, trade effects on third countries in the legal design and implementation of IEMEIs, possibly acting in combination with the ‘home’ EU legal order in legitimising IEMEIs. B.  The Legitimising Potential of WTO Law in Relation to Developing Countries While the WTO regime may not be an ideal frame for providing legitimising mechanisms, it is a relevant regime that could contribute to filling IEMEI legitimacy gaps, including in relation to the effects of IEMEIs on countries at different stages of economic development. The focus on developing countries is justified in the discussion of the legitimacy of IEMEIs, given that they often promote environmental protection in developing countries in ways that could detrimentally affect their economies or the livelihoods of vulnerable communities in developing countries. The structure and nature of the WTO as a global institution with diverse membership can provide the opportunity to balance different kinds of legitimate interests between WTO Members and provide a voice for developing countries. The following discussion identifies the legitimising potential of WTO law in providing a forum where developing countries, often affected by IEMEIs, are represented and have access. It also demonstrates how WTO law could fulfil a greater legitimising potential, beyond addressing purely trade effects, through interpretation of WTO provisions in line with international principles on sustainable development and the special circumstances of developing countries. As Weimer argues, the debate is not one confined to trade and environment, but it is deeply entrenched with developmental concerns of developing countries and vulnerable communities.35 This section argues that the operation and interpretation of WTO law can and should develop so as to provide due consideration of the interests and concerns of developing countries while respecting the rights of other states to regulate for important policy objectives such as environmental protection. First, WTO law provides developing countries with access to adjudicative procedures under the WTO DSS,36 thus going some way to level the playing-field

34 Appellate Body Chair Ujal Singh Bhati, ‘Appellate Body chair calls for “constructive dialogue” on addressing dispute settlement concerns’, 3 May 2018: https://www.wto.org/english/news_e/ news18_e/ab_07may18_e.htm. 35 Weimer (n 5 above). 36 See also Chapter 7 for the WTO as a forum outside the dispute settlement system.

220  Introduction: The Legitimising Function of WTO Law for IEMEIs among developed and developing countries, under the WTO’s auspices.37 It could thus contribute to filling the procedural justice gap related to IEMEIs. Unlike access to the EU courts, where EU Member States have privileged access while third countries have to satisfy more stringent standing requirements,38 all WTO Members formally have equal access to the WTO DSS.39 In practice, however, developing countries may face particular difficulties in initiating a dispute due to the high costs of litigation and legal capacity constraints.40 Access to the DSS by developing countries has been somewhat enhanced through the Advisory Centre on WTO Law (ACWL), which has played a significant role in ‘levelling the playing field and contributing to the WTO’s legitimation’.41 Despite initial fears that the WTO DSS would function as a ‘tool for industrialised nations’, developing countries have used it in many instances,42 even more than developed countries.43 However, developing countries could still be in a disadvantaged position to identify potential WTO incompatibility of EU measures, which often relates to difficulties for developing countries to obtain information about new measures. This informational asymmetry also plays a role in their chances of succeeding in a dispute, especially when the burden of proof is placed upon them. To this effect, WTO transparency obligations, discussed in Chapter seven, could contribute to enhancing their informational power.44 Second, WTO law could potentially contribute to addressing the distributive justice gap related to IEMEIs. The development agenda, as expressed in the international principles of sustainable development and Common But Differentiated Responsibilities (CBDR) could influence the interpretation of WTO provisions over time. These principles could place the WTO’s trade liberalisation agenda within a context that recognises social development and environmental protection as integral parts of economic welfare.45 On the one hand, CBDR provides direction as to the allocation of responsibility in protecting global public goods, as in the case of the fight against climate change. On the other hand, sustainable

37 PS Berman, ‘From International Law to Law and Globalization’ (2005) 43 Columbia Journal of Transnational Law 485. 38 Chapter 4, Section II.A. 39 For example, GATT, Arts XXII, XXIII. See also DSU, Art 6(1). 40 ML Busch and E Reinhardt, ‘Developing Countries and GATT/WTO Dispute Settlement’ in GA Bermann and PC Mavroidis (eds), WTO Law and Developing Countries (CUP, 2007). 41 Shaffer (n 9 above) 11. 42 Berman (n 37 above). 43 This is not the case with least-developed countries, ibid; Van den Bossche and Zdouc (n 19 above) 299. 44 P Low, ‘Is the WTO Doing Enough for Developing Countries?’ in GA Bermann and PC Mavroidis (eds), WTO Law and Developing Countries (CUP, 2007); P Mavroidis and EN Wijkström, ‘Moving Out of the Shadows: Bringing Transparency to Standards and Regulations in the WTO’s TBT Committee’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 45 E Reid, Balancing Human Rights, Environmental Protection and International Trade: Lessons from the EU Experience (Hart, 2015) ch 9.

WTO Law as a Relevant Legal Frame for Legitimising IEMEIs  221 development provides a concept through which economic and non-economic interests may be reconciled,46 comprising the three inter-connected pillars of economic development, social development and environmental protection.47 Both these principles could influence the assessment of IEMEIs under WTO law when they impact developing countries, in ways that may serve a greater legitimising potential. There are two alternative and inter-related bases that would justify and support interpretation of WTO provisions in light of these principles. The bases used to rely on these principles could affect the legitimising potential of WTO law towards developing countries and demonstrate the fragmented interaction between the different international regimes relevant for IEMEIs. Firstly, the interpretation of WTO provisions could be directly influenced by sustainable development and CBDR as embedded in non-WTO international law ­instruments,48 given that WTO law is not meant to operate in ‘clinical ­isolation’ from the rest of international law.49 In fact, WTO agreements could be interpreted in light of Multilateral Environmental Agreements (MEAs), in line with the principle of mutual supportiveness.50 Relying on these principles as part of international law, however, is not straightforward because the relationship between WTO law and non-WTO international norms is not settled. Arguably, the CBDR principle is relevant for climate-change-related measures given that it is included in the UNFCCC,51 which may be considered ‘applicable in the relations between the parties’ under the Vienna Convention on the Law of Treaties (VCLT).52 However, if the international instrument incorporating CBDR is not binding on all members of the WTO,53 or on all parties to the dispute,54 its applicability in this manner would be constrained. For example,

46 ibid. 47 World Summit on Sustainable Development, ‘Political Declaration’ (4 September 2002) UN Doc A/CONF.199/20, Resolution 1, Art 5. 48 MA Young, Trading Fish, Saving Fish: The Interaction Between Regimes in International Law (CUP, 2011) 189 (non-WTO law includes ‘treaties, other rules of international law, standards, guidelines and other materials produced by international bodies outside of the WTO’). 49 AB Report on US – Standards for Reformulated and Conventional Gasoline (US–Gasoline), WT/DS2/AB/R, adopted 29 April 1996, 17. 50 R Pavoni, ‘Mutual Supportiveness as a Principle of Interpretation and Law-Making: A Watershed for the “WTO-and-Competing-Regimes” Debate?’ (2010) 21 European Journal of International Law 649. 51 UN Framework Convention on Climate Change, 9 May 1992, 1771 UNTS 107 (UNFCCC), Art 3(2). 52 Vienna Convention on the Law of Treaties 23 May 1969, 1115 UNTS 331 (VCLT), Art 31(3)(c); M Hertel, ‘Climate-Change-Related Trade Measures and Article XX: Defining Discrimination in Light of the Principle of Common but Differentiated Responsibilities’ (2011) 45 Journal of World Trade 653. 53 This was left open in Panel Report on EC – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R (EC–Biotech), adopted 29 September 2006. 54 Contrast the approach of the Panel in EC–Biotech and the approach of the AB in US–Shrimp (n 20 above).

222  Introduction: The Legitimising Function of WTO Law for IEMEIs a scenario could arise whereby CBDR obligations, as incorporated in the Paris Agreement on climate change, can become relevant given that most countries in the world are parties to this agreement. However, in the event of US withdrawal from the Paris Agreement,55 if a narrow interpretation of the relevance of international agreements is adopted, such obligations would not be relevant in a dispute involving the US after withdrawal.56 Both CBDR and sustainable development can also be relevant in relation to non-climate-change-related measures as general principles of international law or through their inclusion in the Rio Declaration on Environment and Development, although this is not a legally binding instrument.57 The uncertain meaning and status of the principles of sustainable development and CBDR in international law58 would­ complicate reliance on them to guide interpretation of WTO norms and it is unlikely that WTO bodies would adjudicate on their international status.59 Nonetheless, sustainable development and CBDR elements could indirectly influence the interpretation of WTO norms, but not necessarily on the basis of non-WTO law. Secondly, interpretation of WTO provisions to accommodate the special needs of developing countries could be based on references to sustainable ­development and the special needs of developing countries within WTO constitutive instruments. The Parties to the WTO Agreement have recognised that trade relations are to be conducted while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the ­environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.60

This passage incorporates sustainable development as a WTO objective, while recognising both environmental protection and developmental needs of d ­ ifferent 55 United States Communication regarding intention to withdraw from the Paris Agreement, 4 August 2017: https://www.state.gov/r/pa/prs/ps/2017/08/273050.htm. 56 At least, not as these obligations stem from the Paris Agreement. Depending on the type of withdrawal procedure, the US may still be bound by the UNFCCC, see Paris Agreement adopted under the UNFCCC, 12 December 2015, FCCC/CP/2015/L.9, Art 28. 57 Rio Declaration on Environment and Development (12 August 1992) UN Doc A/CONF.151/26 vol 1, Principles 6, 7, 3. The AB referred to the Declaration in US–Shrimp (n 20 above) para 168. The AB also referred to Principle 7 on CBDR in AB Report on US – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia (US–Shrimp (21.5)), DS/58/AB/RW, adopted 22 October 2001, para 9. 58 M Jacobs, ‘Sustainable Development as a Contested Concept’ in A Dobson (ed), Fairness and Futurity: Essays on Environmental Sustainability and Social Justice (OUP, 2011); CD Stone, ‘Common but Differentiated Responsibilities in International Law’ (2004) 98 American Journal of International Law 276. 59 Given their reluctance to determine the status of the precautionary principle in EC–Biotech (n 53 above). 60 Marrakesh Agreement Establishing the World Trade Organization, 1867 UNTS 154 (1994), Paragraph 1 of the Preamble; P Larbprasertporn, ‘The Interaction between WTO Law and the Principle of Common But Differentiated Responsibilities in the Case of Climate-Related Border Tax Adjustments’ (2014) 6 Goettingen Journal of International Law 145.

Conclusion  223 countries. Such references to sustainable development61 ‘must add colour, texture and shading’ to interpretation of WTO law provisions.62 Because these references to sustainable development and the special needs of developing countries are internal to the WTO,63 and reflect the intentions of the negotiators,64 drawing on such language is less contentious than directly relying on non-WTO international instruments. These references could serve as a ‘semi-constitutional basis’ that can provide the normative basis for WTO law to incorporate and reconcile different conflicting values and interests.65 In any case, these internal references would strengthen the case for relying on international instruments that have elaborated on relevant international principles. Irrespective of the avenue through which CBDR and sustainable development elements, in relation to the special needs of developing countries, would find their way onto the interpretative pallet of the dispute settlement bodies, they could influence the interpretation of WTO provisions in different ways, which indicate how the WTO could be serving a greater legitimising f­unction. They could influence the interpretation of substantive obligations such as the ­Most-Favoured-Nation (MFN) principle by allowing for the differential treatment of developing countries.66 Additionally, they could influence the interpretation of exceptions to WTO obligations and specifically the chapeau of Article  XX GATT.67 Furthermore, these principles can influence the interpretation of WTO special and differential treatment provisions. In relation to IEMEIs, several provisions that require WTO Members to take into account the interests of developing countries when formulating and applying specific kinds of measures, could bear significant legitimising potential.68 However, the legal status of provisions on the special and differential treatment of developing ­countries is uncertain and possibly restricted, as further discussed in Chapter five. III. CONCLUSION

Overall, by its operation, the WTO legal regime exerts significant influence on EU environmental governance that may also indirectly serve a legitimising factor for IEMEIs. However, its trade liberalisation agenda raises concerns as to the appropriateness of the WTO to constrain the regulatory autonomy of 61 The AB also mentioned the Decision of Ministers at Marrakesh to establish a permanent Committee on Trade and Environment, AB Report, US–Shrimp (n 20 above) para 154. 62 AB Report, US–Shrimp (n 20 above) para 153. 63 Pavoni (n 50 above). 64 AB Report, US–Shrimp (n 20 above) para 153. 65 Similarly to the external action values of the EU examined in Introduction to Part II. 66 Chapter 5, Section II.B.(iv). 67 Chapter 6, Section III. 68 The most relevant special and differential treatment provisions for IEMEIs are discussed in Chapter 5, Section III.B.(v) on the TBT Agreement.

224  Introduction: The Legitimising Function of WTO Law for IEMEIs states, and exhibits its limitations for addressing non-trade effects of IEMEIs. Its legitimising potential could be greater when the trade liberalisation agenda is informed by the principle of sustainable development and the need to address the special needs of developing countries. The following two chapters explore the extent to which the operation of WTO law, and the DSS in particular, has to date incorporated obligations on the EU to take into account the effects of its unilateral measures on third ­country actors in ways that sufficiently contribute to addressing the accountability and justice gaps related to IEMEIs. It also identifies shortcomings and untapped potential for WTO law to develop further in reconciling the regulatory autonomy of its members with the need to take due account of detrimental effects on third countries, particularly those countries at different stages of development with different priorities and capacities to adapt to strict environmental regulatory standards.

5 WTO Influence and Legal Control of IEMEIs: Substantive Obligations I. INTRODUCTION

W

TO rules often influence the legal design and implementation of IEMEIs. They can thus demarcate the boundaries within which EU  regulatory power can be lawfully exercised as well as provide benchmarks for the review of IEMEIs in the WTO Dispute Settlement System (DSS). This chapter and the next do not aim to provide a comprehensive study of WTO compatibility issues that each individual IEMEI may raise. As explained in Chapter two, legality is not the guiding norm for assessing the legitimacy of the EU’s global regulatory power in this book. Instead, the analysis explores the function and potential of WTO law primarily to fill the external accountability gap related to IEMEIs, and to some extent the justice gap, through rules that require the EU to consider effects of its measures on third countries, and by p ­ roviding a review system for holding the EU to account in relation to such effects. In this way, it determines how WTO rules ex ante influence the formulation of domestic measures and how the WTO DSS could provide ex post control by providing opportunities for third country affected actors to challenge the legality of IEMEIs and hold the EU to account. Chapter five examines the legitimising functions of substantive obligations in both enabling and constraining IEMEIs, both of which are important for the legal control and legitimacy of IEMEIs. IEMEIs can raise questions in relation to trade in goods under GATT, or services under GATS, or sometimes both. For example, the Aviation Directive could raise questions both in relation to trade in goods – goods transferred by air, and in relation to the provision of services – transfer of goods or people. As trade-related measures, IEMEIs could give rise to compatibility questions under different kinds of WTO substantive obligations to which the EU and its Member States have committed. For e­xample, certain IEMEIs could amount to quantitative restrictions under Article XI GATT;1 others could possibly raise issues of compatibility with the freedom 1 The requirement for a catch certificate for imported fish products under Article 12 of the IUU Regulation could possibly amount to a quantitative restriction: H Baumüller, Combating Illegal Fishing in the EU: Interaction with WTO Rules’ Clatham House Briefing Paper EERG

226  WTO Influence and Legal Control of IEMEIs: Substantive Obligations of transit under Article V GATT;2 and economic instruments could possibly raise issues of compatibility as taxes under Article III:2 GATT.3 This chapter focuses on the key non-discrimination obligations of national treatment and most-favoured-nation (MFN) as applied to internal regulatory measures on the provision of goods and measures affecting the supply of services. It examines how these influence the formulation of IEMEIs and require consideration of third country impacts. The  chapter also explores how certain IEMEIs could possibly fall within the scope of the Agreement on Technical Barriers to Trade (TBT), and be subject to additional, more detailed obligations that require consideration of third country impacts when formulating and applying technical barriers to trade. Generally, WTO substantive obligations require the EU to take into account how domestic policies affect third country actors compared to domestic actors and compared to actors from other third countries. Additionally, how a measure affects third country actors can expose the EU to legal consequences under the WTO DSS. Notably, even if IEMEIs fail to comply with WTO substantive obligations discussed in this chapter, the EU could justify such trade-restrictive measures under exceptions, as discussed in Chapter six. II. IEMEIs AND NON-DISCRIMINATION

WTO non-discrimination obligations require the EU to consider the impacts of its measures on third countries in different ways that could contribute to filling the accountability gap related to IEMEIs. National treatment obligations require regulatory measures to accord ‘like’ imported products no less favourable treatment than domestic products, thus prohibiting discrimination between domestic and foreign products or services.4 With this requirement, WTO law mandates equal treatment between domestic and foreign economic operators, a requirement that does not exist under EU law,5 and which can go a long way to taking sufficient account of the interests of third country actors.6

BP 2010/02; B Cooreman, Global Environmental Protection Through Trade, A Systematic Approach to Extraterritoriality (Edward Elgar, 2017) 203. 2 This could be the case with the inclusion of global aviation emissions in the EU ETS, J Meltzer, ‘Climate Change and Trade – The EU Aviation Directive and the WTO’ (2012) 13 Journal of International Economic Law 111; L Bartels, ‘The WTO Legality of the Application of the EU’s Emission Trading System to Aviation’ (2012) 23(2) European Journal of International Law 429. 3 This could be the case with the inclusion of global aviation emissions in the EU ETS, Meltzer (n 2 above). 4 GATT, Art III:4; GATS, Art XVII; TBT Agreement, Arts 2.1, 5.1.1. 5 As discussed in Chapter 4. 6 Benvenisti and Agon identify national treatment as a requirement of other-regardingness: E  Benvenisti and SS Agon, ‘The Law of Strangers: The Form and Substance of Other-Regarding International Adjudication’, GlobalTrust Working Paper 08/2017: http://globaltrust.tau.ac.il/ publications.

IEMEIs and Non-Discrimination  227 MFN ­obligations prohibit discrimination between ‘like’ products from different ­countries.7 Even if IEMEIs do not formally discriminate against imported ­products or between products originating from different countries, they could give rise to de facto discrimination, whereby even origin-neutral measures may have a disparate impact on imports or on products from specific countries.8 Therefore WTO law requires the EU to take into account the impacts of its measures on third countries when formulating and implementing IEMEIs in significant ways. However, the extent to which these obligations are interpreted so as to require due consideration of third country interests in ways that fill the legitimacy gaps and sufficiently discipline the exercise of EU global power requires further investigation. Non-discrimination obligations can serve a dual role in relation to IEMEI legitimacy. They enable the adoption of non-discriminatory IEMEIs, but also constrain IEMEIs when they give rise to discriminatory effects, by requiring measures to be justified under exceptions or to be modified accordingly. ­Generally, the EU takes extra care to design IEMEIs in a non-discriminatory way, thus demonstrating that WTO law exerts some legitimising function ex ante by requiring the EU to treat operators from other countries equally. However, some IEMEIs could still raise questions under non-discrimination obligations. This is partly because most IEMEIs incorporate requirements relating to process and production methods (PPMs) which often raise compatibility questions under non-discrimination obligations. Additionally, the legal nature of IEMEIs as unilateral measures that incorporate trade restrictions on the basis of conduct abroad makes it challenging for the EU to ensure that they are not de facto discriminatory, especially in discriminating between different third countries. A.  IEMEIs as Non-Product-Related Process and Production Methods Measures IEMEIs are likely to fall under the category of PPM-based measures as they often embody restrictions ‘somehow based on the use or non-use by producers of particular processes or production methods’.9 This categorisation can affect the likelihood that they will infringe non-discrimination obligations and change 7 GATT, Art I:1; GATS, Art II:1; TBT Agreement, Arts 2.1, 5.1.1. 8 De facto discrimination is covered both by MFN and national treatment, AB Report on Japan – Taxes on Alcoholic Beverages (Japan–Alcoholic Beverages), WT/DS8/AB/R, WT/DS10/AB/R, WT/DSI1/AB/R, adopted 4 October 1996 (national treatment); AB Report on Canada – Certain Measures Affecting the Automotive Industry (Canada–Autos), WT/DS139/AB/R, WT/DS142/AB/R, adopted 31 May 2000, para 78 (MFN under GATT); AB Report on EC – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras (EC–Bananas III), WT/DS27/AB/R, adopted 19 September 1997, para 234 (MFN under GATS). 9 DH Regan, ‘How to think about PPMs (and climate change)’ in T Cottier, O Nartova and SZ  Bigdeli (eds), International Trade Regulation and the Mitigation of Climate Change: World Trade Forum (CUP, 2009) 102.

228  WTO Influence and Legal Control of IEMEIs: Substantive Obligations the dynamics of WTO adjudication, by shifting the focus to exceptions, and can also affect whether certain IEMEIs fall under the scope of the TBT ­Agreement.10 Process standards that have an impact on the physical characteristics of the product are not as problematic11 as non-product-related PPMs (NPR-PPMs)12 that stipulate characteristics of production methods that do not bear on the physical characteristics of the product.13 Most IEMEIs would fall within the definition of NPR-PPMs or ‘service supply methods’ (SSMs) in the context of services,14 although some raise novel questions as to what PPMs entail when they impose conditions relating to waste treatment or relating to legality under third country law.15 The classification of IEMEIs as NPR-PPMs has important implications as they are a ‘special’ category of measures within the WTO that are viewed with suspicion by exporting countries.16 This is because they raise issues of sovereignty in terms of the regulating state potentially overstepping the boundaries of its jurisdiction in regulating processes occurring on the territory of other countries.17 Because they may be indirectly forcing third countries to change their policies,18 they can potentially disturb the balance of rights and obligations among WTO members.19 The concept of NPR-PPMs thus captures some of the legitimacy concerns raised by IEMEIs. While a rigid distinction between product and process standards is not always useful or maintained in WTO law,20 it is still relevant in identifying the kinds of WTO requirements which apply to process measures and which aim to ensure that such measures are not misused in terms of engaging in protectionism.21 Incorporating NPR-PPMs could affect the determination of the legality of IEMEIs, both under substantive obligations and under exceptions. In relation to non-discrimination, the classification of NPR-PPMs affects the determination

10 Section III below. 11 Regan (n 9 above) 105. 12 S Charnovitz, ‘The Law of Environmental “PPMs” in the WTO: Debunking the Myth of Illegality’ 27 Yale Journal of International Law 59. 13 OECD, ‘Processes and Production Methods (PPMs): Conceptual Framework and Considerations on use of PPM-based trade measures’ OCDE/GD(97)137 (Paris, 1997). 14 NF Diebold, Non-Discrimination in International Trade in Services: ‘Likeness’ in WTO/GATS (CUP, 2010) ch 15. 15 ‘Legality’ under the EU Timber Regulation may not be considered a PPM: AD Mitchell and G Ayres, ‘Out of Crooked Timber: The Consistency of Australia’s Illegal Logging Prohibition Bill with the WTO Agreement’ (2012) 29 Environmental and Planning Law Journal 462. 16 E Vranes, Trade and the Environment: Fundamental Issues in International Law, WTO Law, and Legal Theory (OUP, 2009). 17 L Ankersmit, J Lawrence and G Davies, ‘Diverging EU and WTO Perspectives on Extraterritorial Process Regulation’ (2012) 21 Minnesota Journal of International Law Online 14. 18 Regan (n 9 above). 19 JH Jackson, ‘Comments on Shrimp/Turtle and the Product/Process Distinction’ (2000) 11 ­European Journal of International Law 303; Ankersmit, Lawrence and Davies (n 17 above). 20 R Howse and D Regan, ‘The Product/Process Distinction – An Illusory Basis for Disciplining “Unilateralism” in Trade Policy’ (2000) 11 European Journal of International Law 249. 21 Jackson (n 19 above).

IEMEIs and Non-Discrimination  229 of ‘likeness’ between products, in respect with which non-discrimination obligations are assessed. Conditions that differentiate products on the basis of processes that do not affect the end product do not usually make the products ‘unlike’ and are therefore more likely to give rise to violations of non-discrimination. In determining whether two products are ‘like’ there is some potential for process standards to be considered part of the ‘consumer’s tastes and habits’,22 which form part of the criteria for determining ‘likeness’.23 However, it is not clear whether consumer preferences would be altered by NPR-process standards to the extent required to outweigh all other indications of likeness.24 ­Nonetheless, if consumers have strong views against process standards to the extent of altering the competitive relationship between products or between services/service providers,25 then those products/services could be found to be ‘unlike’.26 The notion of ‘like’ in this way ‘limits the regulatory space available to construct consistent PPM measures’,27 without meaning that PPMs cannot be compatible with WTO law. Nonetheless this approach to ‘likeness’ affects how adjudication takes place as it means that the regulating state often needs to resort to exceptions to defend its measures.28 The burden of proof under exceptions lies with the regulating country, which may find it challenging to prove that measures which regulate processes partly taking place abroad and sometimes unilaterally seek to level the playing-field, do not engage in unlawful protectionism under the chapeau.29 Overall, it is relatively easy for a complaining party to establish a ‘prima facie’ case that NPR-PPMs violate substantive obligations,30 and thus the potential of WTO law to constrain the use of such standards through challenges to their legality may at first sight seem significant. However, the burden of proof re-shifts under some parts of WTO exceptions

22 AB Report on EC – Measures Affecting Asbestos and Asbestos-Containing Products (EC–Asbestos), WT/DS135/AB/R, adopted 5 April 2001, paras 117, 122; R Howse and E Tuerk, ‘The WTO Impact on Internal Regulations: A Case Study of the Canada–EC Asbestos Dispute’ in G de Búrca and J Scott (eds), The EU and the WTO Legal and Constitutional Issues (Hart, 2001) 288. 23 The criteria for determining likeness include physical characteristics, nature and quality, enduse and consumers’ tastes and habits, as well as tariff classification, Japan–Alcoholic Beverages (n 8 above) 20, 22; GATT Report by the Working Party on Border Tax Adjustments, L/3464 (20 November 1970). 24 BJ Condon, ‘Climate Change and Unresolved Issues in WTO Law’ (2009) 12 Journal of International Economic Law 895. 25 Diebold (n 14 above). 26 R Howse, ‘The Appellate Body Rulings in the Shrimp/Turtle Case: A New Legal Baseline for the Trade and Environment Debate’ (2002) 27 Columbia Journal of Environmental Law 491. 27 R Kruse, ‘Process and Production Methods and Burden of Proof: A Procedural Limitation on the Like Products Debate’ (2013) 16 International Trade and Business Law Review 377. 28 J Wiers, Trade and Environment in the EC and the WTO: A Legal Analysis (Europa Law Publishing, 2003) 277. 29 J Potts, ‘The Legality of PPMs Under the GATT: Challenges and Opportunities for Sustainable Trade Policy’ (International Institute for Sustainable Development, 2008): https://www.iisd.org/ pdf/2008/ppms_gatt.pdf. 30 ibid.

230  WTO Influence and Legal Control of IEMEIs: Substantive Obligations in ways that could benefit the regulating state.31 Having identified how the fact that most IEMEIs incorporate NPR-PPMs may influence WTO adjudication, the following sub-section examines how different features of IEMEIs could be in breach of non-discrimination obligations, beyond differentiation on the basis of NPR-PPMs. B.  IEMEIs and MFN Discrimination The unilateral nature of IEMEIs and the fact that they regulate processes and circumstances that partly take place abroad, make it challenging for the EU to ensure non-discrimination, especially between different countries in MFN terms. IEMEIs could also accord less favourable treatment to imported products in terms of national treatment under Article III:4 GATT32 and under Article XVII GATS, provided the EU has made specific commitments.33 However, this section focuses on the less litigated MFN principle in exploring the legitimising potential of WTO law. IEMEIs are sometimes more prone to give rise to de facto MFN discrimination against specific countries rather than national treatment. This is because while considerable effort is undertaken to ensure that IEMEIs do not discriminate in terms of protecting domestic industry, they may give rise to MFN discrimination in ways that the EU had not anticipated or that it has anticipated but could not have easily avoided. Addressing MFN issues towards specific countries would not be possible without at the same time discriminating against other countries in different ways. The analysis of MFN discrimination demonstrates how WTO substantive obligations may require the EU to take into account third country interests and serves as a test case for ­showing how different features of IEMEIs may be enabled or constrained by WTO rules. For the purposes of the current discussion, ‘likeness’ is assumed, while it is not certain that products would always be found to be ‘like’, especially in relation to IEMEIs that differentiate products based on legality, such as the EU Timber Regulation.34 If products are found to be ‘like’, then MFN discrimination under the GATT is probably established if the regulating state accords 31 Chapter 6, Section II.B. 32 For example, EU vessels and Member States are not subject to the same requirements under the IUU Regulation with the result that EU vessels and EU Member States are subject to less stringent requirements that may lead to de facto discrimination against imported fishing products, Baumüller (n 1 above). 33 For example, under the Aviation Directive, allowances are calculated on the basis of the whole flight to/from the EU and thus products and services from third countries may face additional costs depending on their origin. This could affect the conditions of competition for the provision of services under Article XVII:1 GATS, see Bartels (n 2 above). 34 D Geraets and B Natens, ‘Governing Through Trade in Compliance with WTO Law – A Case Study of the European Union Timber Regulation’ in Axel Marx and others (eds), Global Governance Through Trade, EU Policies and Approaches (Edward Elgar, 2015).

IEMEIs and Non-Discrimination  231 an ‘advantage’, in terms of according more favourable competitive opportunities, to products from some WTO Members.35 Under the GATS, a violation of the MFN principle would be found if the regulating state accords treatment less favourable to ‘like’ services/service providers from different WTO members, in terms of modifying the conditions of competition.36 MFN discrimination is likely, due to the interpretation of an advantage or most favoured treatment being accorded ‘unconditionally’ and immediately to all WTO Members under Article I:1 GATT or Article II:1 GATS. ‘Unconditionality’ has been interpreted by WTO panels in different ways.37 It has been found to mean an advantage not being attributed in a discriminatory fashion that somehow relates to origin,38 while possibly leaving the door open for a broader interpretation that either disallows any conditions,39 or at least any conditions unrelated to the product.40 Notably, in proving MFN discrimination, the complainant does not have to show actual trade effects or discriminatory intent on the part of the regulating state, but merely treatment that creates more favourable competitive opportunities for some but not all WTO Members.41 On the basis of this interpretation of MFN treatment, the following discussion explores features of IEMEIs in regulating market access as organised in Chapter one, with a view to showing the challenges of ensuring that IEMEIs do not give rise to MFN discrimination in third countries through insufficient onsideration of the specific circumstances of different countries.42 (i)  Regulating Conduct Abroad: Process Standards First, MFN discrimination could arise when IEMEIs regulate market access on the basis of regulatory standards set by the EU that prescribe conditions on conduct that takes place abroad, even if they are designed in a non-­discriminatory way. For example, even though the sustainability criteria for biofuels were developed with WTO compatibility in mind,43 the location of protected types 35 GATT, Art I:1; Panel Report on EC – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras (EC–Bananas III), WT/DS27/R/GTM, WT/DS27/R/HND, adopted 22 May 1997, para 7.239. 36 GATS, Art I:1; P Van den Bossche and W Zdouc, The Law and Policy of the World Trade Organization: Text, Cases and Materials, 3rd edn (CUP, 2013) 344. 37 No AB ruling on this point. For an overview of the Panel disputes, see ibid 329. 38 Panel Report on Canada – Certain Measures Affecting the Automotive Industry (Canada–Autos), WT/DS139/R, adopted 11 February 2000, paras 10.22–10.24. 39 D McRae, ‘MFN in the GATT and the WTO’ (2012) 7 Asian Journal of WTO and International Health Law and Policy 1, 15. 40 Panel Report on Indonesia – Certain Measures Affecting the Automobile Industry (Indonesia–Autos), WT/DS54/R; WT/DS55/R; WT/DS59/R; WT/DS64/R, adopted 23 July 1998; GATT Panel Report, Belgian Family Allowances, G/32, adopted on 7 November 1952. 41 Van den Bossche and Zdouc (n 36 above) 330. 42 On the basis of the mapping of IEMEIs in Chapter 1, Section III. The same features could also give rise to national treatment discrimination in some cases. 43 J Scott, ‘The Multi-Level Governance of Climate Change’ in P Craig and G de Burca (eds), The Evolution of EU Law (OUP, 2011) 832.

232  WTO Influence and Legal Control of IEMEIs: Substantive Obligations of land44 and the calculation of default values within specific contexts45 could give rise to de facto MFN discrimination.46 These elements could lead to violation of Article I:1 GATT as they accord advantages that are not unconditionally granted to other WTO Members47 and they often relate to the particular circumstances of the third countries.48 Also, the availability of a default value for emissions savings, which has important advantages over the actual value of savings calculated on an individual basis,49 could violate MFN treatment even if it is calculated in a non-discriminatory way. This is because it is only available for specific situations and might lead to discrimination against certain imported products.50 Default values have also been accused of being ‘context specific’, accommodating the circumstances of certain foreign producers but not others.51 This demonstrates that where the EU might otherwise infringe MFN requirements it may be required to adapt its measures to accommodate the different local circumstances of different countries. Additionally, some of the unilaterally-set requirements in the EU Ship Recycling Regulation could give rise to MFN discrimination.52 Depending on whether the focus is on ships – as carriers of valuable raw materials and ship recycling as a process of recovery of that material – or on ship recycling – as the provision of ship dismantling services – either the GATT or the GATS, or possibly both, would apply.53 Export restrictions are subject to MFN requirements under both agreements.54 Less favourable treatment could arise through the ban 44 Discrimination especially against Malaysia, Indonesia and South Africa, M Schaus and A Lendle, ‘The EU’s Renewable Energy Directive: Consistent with WTO Rules?’ (Graduate Institute of International and Development Studies, 2010): http://docplayer.net/25733003-Trade-law-clinicthe-eu-s-renewable-energy-directive-consistent-with-wto-rules.html. 45 EB Lydgate, ‘Biofuels, Sustainability, and Trade-Related Regulatory Chill’ (2012) 15(1) Journal of International Economic Law 157. 46 For similar reasons they could also give rise to NT discrimination. For example, the landuse criteria could lead to national treatment discrimination as they tend to protect specific types of ecosystems predominantly found outside the EU, such as biodiverse land in forested areas: see A  Mitchell and C Tran, ‘The Consistency of the EU Renewable Energy Directive with the WTO Agreements’ (2009) Georgetown Law Faculty Working Papers October/2009. 47 Potts (n 29 above). 48 Mitchell and Tran (n 46 above). 49 Schaus and Lendle (n 44 above). Similar arguments have been put forward by Argentina in a claim launched against the EU, EU and Certain Member States – Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry – Request for Consultations by Argentina, WT/DS459/1; G/L/1027; G/SCM/D97/1; G/TRIMS/D/36; G/TBT/D/44 (23 May 2013). 50 The list of default values seems to be discriminating against US corn-based ethanol and US/ Brazil soyabean biodiesel: Schaus and Lendle (n 44 above). On a similar basis NT could be argued. 51 For example, the default emissions saving value of soyabeans was arguably calculated on the basis of Brazilian soyabeans: Lydgate (n 45 above). 52 Regulation (EU) 1257/2013 on Ship Recycling [2013] OJ L330/1. 53 AB Report, EC–Bananas III (n 8 above) para 221. 54 M Grosz, Sustainable Waste Trade under WTO Law: Chances and Risks of the Legal Frameworks’ Regulation of Transboundary Movements of Wastes (Martinus Nijhoff, 2011); WJ Davey and J Pauwelyn, ‘MFN Unconditionality: A Legal Analysis of the Concept in View of its ­Evolution in the GATT/WTO Jurisprudence with Particular Reference to the Issue of “Like Product”’ in

IEMEIs and Non-Discrimination  233 of the ‘beaching’ method of dismantling, under the Ship Recycling Regulation,55 in accordance with Commission Guidance.56 Banning of beaching in practice means that ship recycling facilities (SRFs) in Europe, Turkey and China could be included in the ‘European List’ while excluding SRFs in South Asia, which operate on beaches.57 Unless ship recycling or SRFs operating on beaches are deemed to be ‘unlike’ SRFs not operating on beaches, on the basis of consumer preferences in light of the more severe health and environmental risks involved, then the ban could amount to a violation of the MFN principle.58 Such discrimination would likely be justified under exceptions to the GATT/GATS,59 as ‘beaching’ would likely not amount to the ‘same conditions’ under the chapeau,60 given that recycling in built structures usually poses lower risks to human health and the environment. Furthermore, despite the trade-restrictions outlined above, the Ship Recycling Regulation lifts the Basel ban, which prohibited ships from being exported to non-OECD countries for recycling, thus opening up trade possibilities and reducing disparities between OECD and non-OECD countries. Given that the introduction of the Ship Recycling Regulation effectively opens up trade with non-OECD countries, it is unlikely that its trade-restrictive effects will be challenged or found incompatible. Second, IEMEIs that require compliance with third country laws before products can be imported into the EU could also give rise to MFN discrimination. For example, the Timber Regulation could give rise to MFN discrimination because access to the EU market is determined by reference to the laws of third countries. This could give rise to situations where timber harvested in exactly the same manner is deemed legal in some countries and illegal in others.61 Therefore in such situations, an advantage granted to one Member is not immediately and unconditionally applied to another Member and it specifically relates to the situation in place abroad – the law of the third country or the geographical conditions.62 The IUU Regulation also regulates access to the EU market on the basis of third country law by requiring flag-states to have in place conservation and management measures in order for the EU to accept their catch certificates.63 T Cottier and PC Mavroidis (eds), Regulatory Barriers and the Principle of Non-Discrimination in World Trade Law (University of Michigan Press, 2000) 17. 55 MN Tsimplis, ‘Recycling of EU Ships: From Probition to Regulation?’ [2014] Lloyd’s Maritime and Commercial Law Quarterly 415. 56 Commission, ‘Requirements and procedure for inclusion of facilities located in third c­ ountries in the European List of ship recycling facilities – Technical guidance note under Regulation 1257/2013/EU on ship recycling’ (Communication) [2016] OJ C128/1, 10. 57 M Galley, Shipbreaking: Hazards and Liabilities (Springer International, 2014). 58 No account of the regulatory purpose is taken at this stage: AB Report, EC–Bananas III (n 8 above) para 241. 59 Chapter 6, Section II. 60 Chapter 6, Section III. 61 Mitchell and Ayres (n 15 above). 62 See Cooreman (n 1 above) 255. 63 Regulation (EC) 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing [2008] OJ L286/1 (IUU) Art 20.

234  WTO Influence and Legal Control of IEMEIs: Substantive Obligations Discriminatory effects on certain third countries could be discerned from the definition of IUU fishing under the Regulation, which does not accommodate the differences in types and numbers of species, different fishing practices in ­different aquatic areas and the difficulties faced by competent authorities of certain developing countries in implementing effective regimes.64 This approach may alter the competitive conditions of fish products from specific countries. Under Article I:2 GATT, an ‘advantage’ granted to some Members, in terms of access to the EU market favourably affecting competitive opportunities, is not immediately and unconditionally accorded to all Members. Rather such an ‘advantage’ is subject to conditions that do not relate to the final product and relate to third country circumstances, either in terms of the regulatory framework that has to be in place or in relation to whether the foreign competent authorities are able to verify their vessels’ catches. Given the discriminatory effects of the IUU Regulation particularly on developing countries, the EU may be required, under WTO law, to ensure that its application is carried out in a non-discriminatory and procedurally fair way under the chapeau of Article XX.65 (ii)  Regulating Conduct Abroad: Economic Instruments IEMEIs embodying economic incentive obligations can raise significant questions of compatibility under WTO law, which can have constraining effects on the EU’s global regulatory power. For example, potential WTO incompatibility has likely deterred the Commission from adopting a financial instrument to support the enforcement of the Ship Recycling Regulation.66 Furthermore, the threat of WTO adjudication regarding the unilateral inclusion of aviation ­emissions in the EU ETS partly influenced the EU’s decision to provisionally suspend the global coverage of the scheme. In particular, the requirement to surrender emission allowances for all flights arriving at or departing from EU airports and the system for calculating those allowances on the basis of the whole duration of the flight could give rise to unlawful discrimination. The Aviation Directive could be incompatible with the MFN obligations under Article I GATT or Article II:1 GATS. The cost of complying with the EU ETS would be passed on to the cost of the product or the service and thus lower costs imposed on products or services originating from countries that are located closer to the EU would constitute an ‘­advantage’. This  advantage is not immediately and unconditionally accorded to all other WTO Members, as it is dependent on the departure location and the j­ourney

64 KM Shajahan, ‘The European Union Regulation on IUU Fishing, Impact on Developing ­Countries’ (2012) 47 Economic and Political Weekly 81. 65 Chapter 6, Section III. 66 Report from the Commission to the European Parliament and the Council on the feasibility of a financial instrument that would facilitate safe and sound ship recycling COM(2017) 420 final.

IEMEIs and Non-Discrimination  235 undertaken to arrive in the EU. The calculation of emissions allowances could also give rise to questions of compatibility with the national treatment principle.67 The likely incompatibility of the Aviation Directive with nondiscrimination obligations would put pressure on the EU in a dispute to justify its unilateral action on global aviation emissions under exceptions to the WTO. The threat of WTO adjudication thus partly contributed to constraining the extension of EU global regulatory power in this instance, at least for the time being. (iii)  Compliance with IEMEIs: ‘Contingent Unilateralism’, Flexibility and Equivalence Third, flexibility clauses regarding compliance with IEMEIs, while crucial in justifying trade-restrictive measures under exceptions and particularly the requirements of the chapeau under Article XX GATT, as discussed in detail in Chapter six,68 could sometimes give rise to MFN discrimination. For example, the clause in the Aviation Directive which allows for exclusion from the scheme of flights from third countries that have adopted equivalent measures to address the climate change impact of flights,69 could give rise to MFN discrimination.70 This is because it makes the surrendering of allowances conditional upon the regulatory regime of the third country from which the flight originates.71 It thus indirectly requires the third country to adopt particular measures.72 Violation of MFN treatment in this way could add impetus to the cooperative and flexible nature of the implementation of the Directive through third country equivalent measures73 as well as possibly prompt the EU to incentivise foreign airlines to address aviation emissions irrespective of third country government policies. The IUU Regulation also provides for supplementary routes to compliance through the use of Regional Fisheries Management Organization (RFMO) certification instead of specific catch certificates for compliance with the EU standards. However, by providing the option for the use of RFMO certification,74 the EU is deemed to discriminate against those countries that are not parties to existing RFMO certification schemes. Such discrimination is more likely if the EU does not seek to conclude bilateral or multilateral agreements with those

67 Meltzer (n 2 above). 68 Chapter 6, Section III. 69 Consolidated Version of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32, Art 25(a). 70 Meltzer (n 2 above); Bartels (n 2 above). 71 This would be problematic if airlines took steps to reduce their emissions but the third country had not addressed aviation emissions, Meltzer (n 2 above), cf Bartels (n 2 above). 72 As in Belgian Family Allowances (n 40 above). 73 Chapter 6. 74 IUU Regulation (n 63 above) Art 13.

236  WTO Influence and Legal Control of IEMEIs: Substantive Obligations third countries, thus incentivising the EU to seek to establish agreements also with such countries.75 In a similar way, MFN obligations could influence the conclusion of Voluntary Partnership Agreements (VPA) as an alternative route to compliance with the EU Timber Regulation. The use of VPAs seems unlikely to be challenged under the WTO since VPA partners voluntarily agree with the EU, while non-VPA countries do not have an interest in challenging them as they are not subject to the licensing regime. However, reluctance to conclude VPAs with certain countries could raise issues in terms of less favourable treatment contrary to the MFN principle and may thus urge the EU to equally seek to conclude VPAs with different third countries. (iv)  MFN and Differential Treatment of Developing Countries In examining how the MFN principle would apply to IEMEIs, it is also legally relevant to consider how it would be applied to differential treatment of developing countries. Non-discrimination in MFN terms could be interpreted to allow for differential treatment of developing compared to developed countries as well as between different developing countries, thus contributing to filling the substantive justice gap related to IEMEIs. Such an approach was partly adopted by the Appellate Body (AB) in EC–Tariff Preferences, which opted for a ‘­negative’ interpretation of discrimination, albeit within the context of the GATT Enabling Clause,76 that allowed different treatment among different developing countries without giving rise to MFN discrimination.77 Such differentiation still requires ‘identical treatment’ of all similarly situated developing countries and differentiation to occur in accordance with an objective ­standard.78 Notably, the AB closely reviewed the EU’s decision-making processes and imposed due process requirements for identifying whether a developing country qualified to receive special preferences.79 Differentiation was deemed lawful in this case because it would benefit developing countries by responding positively to their special needs.80 The possibility for the MFN principle to allow for differential treatment could urge the EU to consider common but differentiated responsibilities (CBDR) as relevant and applicable to its unilateral action and could a­ uthorise 75 Baumüller (n 1 above). 76 The Enabling Clause accommodated for the EU’s Generalised System of Preferences, which applies preferential tariff treatment to developing countries: G Marín Durán and E Morgera, ­Environmental Integration in the EU’s External Relations: Beyond Multilateral Dimensions (Hart, 2012) 145. 77 AB Report on EC – Conditions for the Granting of Tariff Preferences to Developing ­Countries (EC–Tariff Preferences), WT/DS246/AB/R, adopted 7 October 2004, para 152; J Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (2015) 17 Cambridge Yearbook of ­European Legal Studies 92. 78 EC-Tariff Preferences (n 77 above) paras 173, 183. 79 Benvenisti and Agon (n 6 above) 18–19. 80 Scott, ‘Geographical Scope’ (n 77 above) 113.

IEMEIs and Non-Discrimination  237 it to ­differentiate towards developing countries for their benefit.81 Such an ­interpretation of the MFN principle could also be relevant in differentiating between different developing countries when they are influenced by IEMEIs in different ways. This could particularly inform the design of IEMEIs that are meant to regulate activities occurring at different intensities in countries at d ­ ifferent stages of development. This was the case with the Aviation Directive, under which the EU was initially reluctant to differentiate between different countries. One of the Commission’s proposals on the revision of the ­Aviation Directive put forward an exemption for flights to and from developing countries whose activities account for less than one per cent of total revenue tonne-kilometres of international civil aviation activities.82 It is unclear whether this would have been considered contrary to the MFN principle, and if so, whether it could be justified.83 The UNFCCC framework could provide guidance as to the objective standard to be applied to differentiate between developed and developing countries in relation to unilateral climate change measures.84 It  remains to be seen whether WTO bodies would interpret the MFN principle as allowing for such differentiation outside of the context of the Enabling Clause. If the MFN principle failed to provide for such differentiation it could have de-legitimising effects. Overall, it is challenging for the EU to ensure equal treatment among different countries, particularly because IEMEIs regulate access to the EU market on the basis of processes taking place in different parts of the world under different local conditions. The MFN principle requires equal treatment, which goes some way toward requiring consideration of third country interests and holding the EU to account in relation to third country effects. However, at the same time, if not interpreted flexibly, the MFN principle may prevent the EU from differentiating when it would be legitimate for it to do so, in situations where its measures detrimentally affect developing countries. If found to violate substantive obligations under the GATT/GATS, the EU will be required to justify its action specifically with regard to the impacts of its measure on different third country actors and the contribution of its measure to the legitimate objective pursued. As discussed in Chapter six, the requirements of justification can provide promising accountability mechanisms

81 Cooreman considers that the MFN interpretation adopted in EC–Tariff Preferences described above would not pose a problem in the WTO in the context of differentiating on the basis of CBDR in relation to the Aviation Directive, Cooreman (n 1 above) 240–41. 82 Proposal for a Directive amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in view of the implementation by 2020 of an international agreement applying a single global, market-based measure to international aviation emissions, COM/2013/0722 final, Recital 10. This proposal was not adopted. 83 This particular proposal limited the option for this exemption to developing countries that were also beneficiaries of the EU’s GSP, which would likely have been deemed an arbitrary distinction. See Cooreman (n 1 above) 243–44. 84 Scott, ‘Geographical Scope’ (n 77 above) 114.

238  WTO Influence and Legal Control of IEMEIs: Substantive Obligations and play a critical role in determining the balance between the enabling and constraining functions of law as well as the balance of rights among different WTO members. III. IEMEIs AND THE AGREEMENT ON TECHNICAL BARRIERS TO TRADE

While some IEMEIs clearly fall under the GATT/GATS, it is not as clear whether specific IEMEIs are also captured by the ‘different and additional ­obligations’ of the TBT Agreement,85 which could potentially further legitimise IEMEIs by contributing to filling the accountability and justice gaps related to IEMEIs through the imposition of far-reaching ‘other-regarding’ obligations. As ­demonstrated in this section, it is unclear whether NPR-PPM measures fall under the scope of the TBT Agreement and how far its substantive obligations serve a disciplining function regarding the adoption of technical regulations by developed countries. A.  Scope of the TBT Agreement The nature of IEMEIs as NPR-PPMs, discussed in Section II.A above, creates uncertainty as to whether they would amount to measures to which the TBT Agreement applies. According to Annex 1 TBT, the Agreement applies to technical regulations and standards relating to products or (their) related production and process methods, as well as to conformity assessment procedures (CAPs). It is not specified whether PPMs must be ‘related’ in the sense of being physically connected to the product, and there is thus considerable debate as to whether NPR-PPMs fall within the scope of the TBT Agreement.86 While it is suggested that PPMs are covered even if they do not leave physical traces in the product,87 conflicting opinions exist,88 and the TBT Agreement has not been applied to such a measure yet. In EC–Seal Products, the AB held that restrictions on the basis of how seals are hunted did not amount to product characteristics, without, however, considering whether they amounted to PPMs covered by the TBT Agreement.89 Additionally, in US–Tuna II, while the Panel clarified that issues 85 AB Report, EC–Asbestos (n 22 above) para 80. 86 Van den Bossche and Zdouc (n 36 above) 854. 87 Vranes (n 16 above). 88 A Green, ‘Climate Change, Regulatory Policy and the WTO: How Constraining Are Trade Rules?’ (2005) 8 Journal of International Economic Law 143. 89 AB Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products (EC–Seal Products), WT/DS400/AB/R, WT/DS401/AB/R adopted 18 June 2014; PI Levy and DH  Regan, ‘EC–Seal Products: Seals and Sensibilities (TBT Aspects of the Panel and Appellate Body Reports)’ (2015) 14 World Trade Review 337. On the contrary, the reasoning of the AB in relation to product characteristics ‘related to’ product could imply that NPR-PPMs could be ‘related to’

IEMEIs and the Agreement on Technical Barriers to Trade   239 listed in the second sentence of Annex 1 of the TBT Agreement – terminology, symbols, packaging, marking or labelling requirements – do not need to concern product characteristics or PPMs,90 it did not consider the issue of NPR-PPMs that do not fall within that list, thus leaving the question open.91 Depending on the interpretation of Annex 1, at least three examples of IEMEIs examined in this book could qualify as technical barriers to trade. The sustainability criteria for biofuels would likely qualify as technical regulations92 and not voluntary standards;93 the requirements for treatment of WEEE94 could qualify as technical regulations or standards, although the fact that they regulate exports could raise questions as to whether specific TBT provisions apply to them.95 Additionally, the requirement to provide a catch certificate with every consignment of fish products under the IUU Regulation could also be considered a technical regulation.96 If recognised as technical regulations or standards under the TBT, IEMEIs could be subject to substantive obligations that require the regulating country to take into account third country impacts in additional, and potentially more far-reaching, ways than under the GATT/GATS. B.  Substantive Obligations under the TBT Agreement The TBT Agreement offers different kinds of mechanisms for disciplining IEMEIs that incorporate technical barriers to trade. The object and purpose of the TBT Agreement, similarly to the GATT,97 is to maintain a balance between

product characteristics under the TBT Agreement: G Marceau, ‘A Comment on the Appellate Body Report in EC-Seal Products in the Context of the Trade and Environment Debate’ (2014) 23 Review of European, Comparative and International Environmental Law 318, 328. 90 Note the absence of ‘related’. 91 Panel Report on US – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US–Tuna II), WT/DS381/R, adopted 15 September 2011. 92 For a discussion of why they would qualify as technical regulations and not as standards, despite their seemingly ‘voluntary’ nature on the basis of the AB’s approach in US-Tuna II, see F Smith and M Cardwell, ‘Contemporary Problems of Climate Change and the TBT Agreement: Moving Beyond Eco-Labelling’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 93 On the importance of the distinction between technical regulations and standards under the TBT Agreement, see G Mayeda, ‘The TBT Agreement and Developing Countries’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 94 Directive 2012/19/EC on waste electrical and electronic equipment (WEEE) [2012] OJ L197/38, Arts 8, 10. 95 The MFN and national treatment obligations under Article 2.1 TBT apply only to imports, while it is unclear whether the rest of Article 2 is confined to imports. As there is no explicit reference, arguably Article 2.2 and Article 2.4 apply to export restrictions. 96 Shajahan (n 64 above); M Tsamenyi and others, ‘The European Council Regulation on Illegal, Unreported and Unregulated Fishing: An International Fisheries Law Perspective’ (2010) 25 The International Journal of Marine and Coastal Law 5. 97 AB Report on US – Measures Affecting the Production and Sale of Clove Cigarettes (US–Clove Cigarettes), WT/DS406/AB/R, adopted 4 April 2012, para 96.

240  WTO Influence and Legal Control of IEMEIs: Substantive Obligations trade liberalisation and the rights of Members to regulate.98 However, the TBT Agreement does not have general exceptions based on which regulating­ countries can justify a violation of substantive obligations. Members are instead allowed to pursue legitimate objectives by operation of the Preamble99 and on the basis of a list of non-exhaustive legitimate objectives explicitly included in the TBT Agreement.100 This is assessed as part of Members’ substantive ­obligations,101 which in turn affects the structure of adjudication as the burden of proof lies with the complaining party throughout. The TBT Agreement may thus have a different legitimising character in enabling and constraining IEMEIs. Furthermore, the TBT Agreement contains additional substantive obligations on non-discriminatory measures, including obligations requiring Members to base their technical regulations on international standards, detailed obligations on the administration of technical regulations and, lastly, obligations to respect the special and differential circumstances of developing countries. These additional obligations could potentially function towards further disciplining the operation of IEMEIs. (i)  Non-Discrimination under the TBT Agreement The TBT Agreement, similarly to the GATT, requires consideration of third  country impacts in the form of national treatment and the MFN ­principle.102 After determining whether a measure is a technical regulation under Annex 1.1 and whether the products at issue are ‘like products’, the WTO bodies examine whether ‘less favourable treatment’ arises. In particular, proving de facto discrimination requires first showing that the technical regulation modifies the conditions of competition in the market of the regulating Member to the detriment of the group of imported products or products from specific countries.103 Additionally, given that the TBT Agreement does not provide for exceptions, it also has to be shown that the detrimental impact on imports does not exclusively stem from a ‘legitimate regulatory distinction’.104 Determining what constitutes a legitimate regulatory distinction requires looking at the ‘design, architecture, revealing structure, operation and application of the technical regulation and whether it is even-handed’.105 98 ibid para 174. 99 TBT Agreement, Recital 6. 100 TBT Agreement, Art 2.2. 101 For this reason, the analysis of TBT substantive obligations is informed by the interpretation of GATT exceptions discussed in Chapter 6. 102 TBT Agreement, Arts 2.1, 5.1.1. 103 AB Report, US–Clove Cigarettes (n 97 above) para 179. 104 AB Report, US–Clove Cigarettes (n 97 above) paras 174, 182, 215. 105 AB Report, US–Clove Cigarettes (n 97 above) para 182; AB Report on US – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US–Tuna II), WT/DS381/ AB/R, adopted 13 June 2012, para 225.

IEMEIs and the Agreement on Technical Barriers to Trade   241 The  requirement of even-handedness in particular enables examination of whether the legitimate regulatory distinction reflects any discrimination in the way in which regulatory requirements are imposed in the particular context. Its interpretation seems to go beyond understandings of protectionism to capture unequal treatment that may stem from a legitimate objective.106 For example, in US–Clove Cigarettes, the AB found that by limiting the prohibition to clove cigarettes – predominantly coming from Indonesia – and not covering menthol cigarettes – predominantly produced in the US – the US measure disproportionately affected foreign p ­ roducers in violation of Article 2.1 TBT.107 In US–Tuna II, the AB also found that the US eco-labelling requirement imposed on Mexico was discriminatory given that it did not equally apply to all tuna fisheries, thus holding the US to account for failing to treat Mexico even-handedly with fishing fleets supplying the United States’ and other countries’ tuna producers.108 As Agon and Benvenisti put it, the even-handedness test read into the TBT Agreement seems to convey an idea closer to equal concern and respect for all affected stakeholders, requiring sovereigns not merely to abstain from inefficient protectionism, but to positively pay regard to the interests of foreign constituencies.109

In the context of IEMEIs, this additional test under Article 2.1 TBT can contribute to constraining the EU’s global regulatory power by requiring that it treats all foreign producers even-handedly and takes into account the interests of third country actors when designing IEMEIs. However, when compared with the review of compatibility with the chapeau of Article XX GATT in US–Shrimp in particular, the requirement of even-handedness under Article 2.1 TBT fails to go as far in requiring due consideration of third country interests.110 (ii)  Beyond Discrimination: Unnecessary Obstacles to Trade Furthermore, the TBT Agreement imposes additional obligations on WTO members regarding the use of non-discriminatory technical requirements, which could further discipline IEMEIs. The TBT Agreement requires Members to ensure that technical regulations do not have the effect of imposing unnecessary obstacles to trade and thus requires that such regulations are not more trade-restrictive than necessary to fulfil a legitimate objective, taking account of

106 R Howse and PI Levy, ‘The TBT Panels: US–Cloves, US–Tuna, US–COOL’ (2013) 12 World Trade Review 327, 344. 107 ibid. 108 AB Report, US–Tuna II (n 105 above) para 292; M Weimer, ‘Reconciling Regulatory Space with External Accountability through WTO Adjudication – Trade, Environment and Development’ (2017) 30 Leiden Journal of International Law 901. 109 Benvenisti and Agon (n 6 above) 13. 110 Weimer (n 108 above).

242  WTO Influence and Legal Control of IEMEIs: Substantive Obligations the risks that non-fulfilment would create.111 A list of non-exhaustive legitimate objectives, including environmental protection, is provided in this respect.112 Necessity requirements can hold the EU to account in relation to third country impacts by requiring specific justification as to the design and impacts of domestic policies on actors beyond EU borders,113 including over time.114 ­ ­Necessity under Article 2.2 TBT is interpreted similarly to necessity under ­Article XX GATT and is further discussed in Chapter six.115 Notably, Article 2.2 TBT bears great potential for holding regulating states to account in relation to third country impacts by requiring Members not to impose unnecessary obstacles to trade, irrespective of discrimination, thus going beyond the GATT obligations.116 This approach provides a powerful tool for developing countries to challenge measures that have detrimental effects on them but do not clearly have discriminatory effects.117 At least in principle, Article 2.2 TBT could enable WTO bodies to ‘probe the importance of the defendant country’s regulatory goal against the overall objective of WTO agreements of meaningfully integrating developing countries into the international trade system’.118 However, in practice, WTO bodies seem to adopt a deferential approach towards the regulatory autonomy of developed countries, both through the application of the ‘weighing-and-balancing’ and the ‘less traderestrictive measure’ tests of necessity, further discussed in Chapter six.119 (iii)  Detailed Obligations on the Administration of Technical Barriers: The Case of Conformity Assessment Procedures Generally, TBT obligations are usually formulated in more detailed ways that may indicate a greater disciplining potential for IEMEIs. This potential is illustrated in this sub-section by reference to the certification schemes for conformity with the sustainability criteria on biofuels, which could amount to CAPs120 as procedures that determine fulfilment of relevant requirements in technical 111 Including explicitly environmental protection, TBT Agreement, Arts 2.2, 5.1.2. See also Annex 3E. 112 The fact that the list in Article 2.2 is not exhaustive is shown, for example, by the invocation of public morals, which is not found in the text of Article 2.2: AB Report on US – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US–Gambling), WT/DS285/AB/R, adopted 7 April 2005. 113 Benvenisti and Agon identify this requirement as an embodiment of an ‘other-regarding obligation’, Benvenisti and Agon (n 6 above). 114 TBT Agreement, Art 2.3. 115 Chapter 6, Section II.B. 116 As interpreted in AB Report, US–Tuna II (n 105 above) paras 318–322; Mayeda (n 93 above) 377–79. 117 Mayeda (n 93 above). 118 Mayeda (n 93 above), 373. 119 Chapter 6, Section II.B. 120 Levy and Regan (n 89 above) 376.

IEMEIs and the Agreement on Technical Barriers to Trade   243 regulations or standards, such as the emissions-savings criteria.121 Beyond nondiscrimination, CAPs shall not be stricter or be applied more strictly than is necessary to give the importing Member adequate confidence that products conform to the applicable technical regulations or standards, taking account of the risks that non-conformity would create.122 To this end, the analysis on ‘necessity’ under exceptions is relevant in assessing whether such procedures go beyond what is necessary to achieve a legitimate objective, by assessing the contribution of the measure to the legitimate objective and by assessing possible less trade-restrictive alternatives.123 The TBT Agreement also imposes more stringent notification and transparency requirements, which can play a critical role in filling the participation and accountability gaps related to IEMEIs by creating transnational avenues for consultation with affected third countries and  avenues for political and peer accountability in a multilateral context. These are discussed in Chapter seven as requirements that partly operate outside the DSS.124 Furthermore, the TBT Agreement sets out detailed rules and principles regarding the timing, information requirements, confidentiality, sampling, spot checks and review of CAPs.125 Such requirements could contribute to filling the procedural justice gap related to IEMEIs. They can be relevant for the authorisation procedures of certification schemes for sustainable biofuels, which have been criticised for insufficient transparency and procedural failures. Argentina’s request for consultations on the EU’s scheme included allegations of violation of Articles 5.1 and 5.2 of the TBT Agreement.126 Although some applications for authorisation of certification schemes are not dealt with ‘as expeditiously as possible’ under Article 5.2.1, this might not provide enough evidence of a ‘systematic fault’ to amount to violation of this provision.127 CAPs have never been dealt with in a WTO dispute and there is thus little guidance as to how these provisions would be applied and how far a disciplining function would materialise in the context of IEMEIs. At least in principle, they provide significant potential for requiring the regulating jurisdiction to improve the administration of conformity procedures, which are particularly relevant for compliance mechanisms of IEMEIs. Oversight as to the procedural ­administration of unilateral

121 MA Echols, ‘Biofuels Certification and the Law of the World Trade Organization’ International Centre for Trade and Sustainable Development 2009: http://www.ictsd.org/themes/ climate-and-energy/research/biofuels-certification-and-the-law-of-the-world-trade. 122 TBT Agreement, Art 5.1.2; AE Appleton, ‘Conformity Assessment Procedures’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 123 Chapter 6, Section II.B. 124 Their operation may nonetheless be informed by disputes before the Dispute Settlement Bodies. 125 TBT Agreement, Art 5.2. 126 Argentina’s request for consultations (n 49 above). 127 Levy and Regan (n 89 above) 378.

244  WTO Influence and Legal Control of IEMEIs: Substantive Obligations measures may also occur under the chapeau of Article XX GATT as further discussed in Chapter six.128 (iv)  International Standards Beyond the aforementioned substantive obligations, the TBT Agreement requires WTO members to base their technical regulations on relevant international standards in order to contribute to the harmonisation of standards and alleviate the trade-restrictiveness of unilateral measures.129 However, this obligation is qualified; WTO Members are not required to base their technical regulations on international standards when these would be inappropriate or ineffective130 in achieving the specific legitimate objective.131 The obligation embodied in Article 2.4 TBT seems to fall somewhere in between a procedural obligation to simply take into account a relevant international standard and an obligation to adopt identical standards. Notably, this obligation applies irrespective of establishing discrimination or protectionism. In the context of IEMEIs, Article 2.4 TBT could, at least in principle, contribute to filling the accountability and participation gaps related to IEMEIs by incorporating international standards to which third countries have agreed and in the development of which they have participated. In practice, however, this is more complex and the potential for external accountability does not always materialise. It should be clarified that this obligation does not prevent WTO members from going further than international standards, as IEMEIs often do, and therefore its ­disciplining potential is ­inherently limited. Additionally, enforcing the obligation embodied in Article 2.4 TBT against a country that does not incorporate an international standard is not straightforward. The burden of proof is on the complaining party to demonstrate that international standards are appropriate and effective,132 which can be challenging, as the burden is thereby placed on the party with less information about the technical standard.133 Furthermore, requiring the incorporation of international standards can be problematic from a legitimacy perspective. This is partly due to the fact that developed country representatives and private interests are often involved in the creation of such international standards without ­developing 128 Chapter 6, Section III.C. 129 TBT Agreement Art 2.4. See also Art 5.4, Annex 3F. 130 On the interpretation inappropriate and ineffective, see AB Report on EC – Trade Description of Sardines (EC–Sardines), WT/DS231/AB/ R, adopted 26 September 2002, paras 284–291. 131 ‘Legitimate objectives’ are interpreted by way of Article 2.2 TB,T which contains a nonexhaustive list of legitimate objectives. See M Wagner, ‘International Standards’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013) 266. 132 AB Report, EC–Sardines (n 130 above) paras 269–283. See also Panel Report, US–Tuna II (n 91 above) para 7.628. 133 H Horn and JH Weiler, ‘European Communities – Trade Description of Sardines: Textualism and its Discontent’ (2005) 4 World Trade Review 248.

IEMEIs and the Agreement on Technical Barriers to Trade   245 countries being equally represented, largely due to capacity constraints.134 Incorporation of such international standards may therefore accentuate power inequalities between the developed and less developed WTO members.135 ­Notably, international standards may be relevant under Article 2.4 even if they were not adopted by consensus and thus they may apply to a WTO member that has not consented to them.136 The AB has sought to address such concerns by referring to a TBT Committee decision that develops certain principles to be followed when international standards are elaborated so as ‘to ensure transparency, openness, impartiality and consensus, effectiveness and relevance, coherence, and to address the concerns of developing countries’.137 The inclusion of such criteria in reviewing whether a particular standard qualifies as a ‘relevant international standard’ under Article 2.4 TBT goes some way to addressing legitimacy concerns about the use of international standards by requiring the possibility of participation by all WTO members in the development of the standards and addressing the concerns of developing countries. However, its application in practice may limit the reliance on relevant international standards even when these seem to address the concerns of developing countries, as was the case in US Tuna–II.138 (v)  Special and Differential Treatment of Developing Countries The TBT Agreement could also contribute to filling the accountability and justice gaps related to IEMEIs through provisions on special and differential treatment of developing countries. The extent to which special and differential treatment requirements impose concrete obligations on developed countries to respect the special needs of developing countries, and the role of the dispute settlement bodies in reviewing these provisions, are complicated by the ‘­peculiarly economic and political nature’ of determining the development needs of developing country members.139 The legal status of such provisions in the WTO system is generally uncertain.140 Nonetheless, these provisions 134 Wagner (n 131 above) 277; G Mayeda, ‘Developing Disharmony? The SPS and TBT Agreements and the Impact of Harmonization on Developing Countries’ (2004) 7 Journal of International Economic Law 737. 135 Wagner (n 131 above). 136 Panel Report EC – Trade Description of Sardines (EC–Sardines), WT/DS231/R, adopted 29 May 2002, para 7.90; AB Report, EC–Sardines (n 130 above) para 227. 137 AB Report, US–Tuna II (n 105 above) para 370. 138 The AIDCP ecolabel was not considered as a relevant international standard that should have been used by the US under Article 2.4 TBT primarily because the AIDCP was found not to be open to all WTO members at all stages of the standardisation development, AB Report, US–Tuna II (n 105 above) paras 381–386; Weimer (n 108 above). 139 In the context of the SCM Agreement, Panel Report, Brazil – Export Financing Programme for Aircraft WT/DS46/R, 14 April 1999, para 7.89. 140 E Kessie, ‘The Legal Status of Special and Differential Treatment Provisions under the WTO Agreements’ in GA Bermann and PC Mavroidis (eds), WTO Law and Developing Countries (CUP, 2007).

246  WTO Influence and Legal Control of IEMEIs: Substantive Obligations and their review in the DSS could play a significant role in filling the distributive justice gap related to IEMEIs by recognising the special needs of affected developing countries and requiring regulatory states to respect such needs. In the context of IEMEIs, two key provisions are examined, which in principle require regulating states to take into account the special needs of developing countries, but in practice have limited constraining effects. Among other things,141 Article 12.3 TBT requires Members, in the preparation of their measures, to take account of the special development, financial and trade needs of developing country Members, with a view to ensuring that such technical regulations, standards and conformity assessment procedures do not create unnecessary obstacles to exports from developing country Members.

Although this provision may at first sight seem expansive, it has been interpreted in a narrow sense. First, it does not create an obligation for regulating states not to create unnecessary obstacles to trade towards developing c­ ountries. Instead, the reference to ‘unnecessary obstacles’ in terms of Article 2.2 is simply to demonstrate ‘how and why’ the regulating state should consider these special needs ‘with a view’ to not creating unnecessary obstacles.142 Second, this provision does not require Members to incorporate such considerations in their final measures. As the Panel clarified in relation to the ‘equivalent provision’ in the Agreement on Sanitary and Phytosanitary Measures (SPS),143 the obligation to take into account developing country needs requires consideration of such needs ‘along with other factors before reaching a decision’, thus not ‘prescribing a specific result to be achieved.’144 This obligation could be understood as imposing a ‘burden to demonstrate that they have explored alternate remedies before imposing measures on products of a developing country, or that they have taken account of the interests of developing countries and least-developed countries.’145 This does not create an obligation on Members to ‘reach out and collect’ the affected country’s views during the ‘preparation and application’ of their measure,146 something that could have contributed to filling the participation and representation gap related to IEMEIs. It rather requires ­

141 See also TBT Agreement, Arts 12.1, 12.2. 142 Panel Report on US – Measures Concerning the Production and Sale of Clove Cigarettes, WT/DS406/R (US–Clove Cigarettes) adopted 2 September 2011, para 7.614. 143 Agreement on the Application of Sanitary and Phytosanitary Measures, 1867 UNTS 493 (SPS Agreement), Art 10(1). 144 Panel Report on EC – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R (EC–Biotech), adopted 29 September 2006) paras 7.1620–7.1621; Panel Report, US–Clove Cigarettes (n 142 above) paras 7.614–7.617. 145 M Irish, ‘Special and Differential Treatment, Trade and Sustainable Development’ (2011) 4(2) The Law and Development Review 72. 146 Panel Report on US – Certain Country of Origin Labelling Requirements (US–COOL), WT/DS386/R, adopted 18 November 2011, para 7.790.

IEMEIs and the Agreement on Technical Barriers to Trade   247 Members to give ‘active and meaningful consideration’ to the special needs of developing countries, without further specification.147 Such provisions could in principle contribute to filling the accountability and potentially the justice gap related to IEMEIs by requiring the EU to consider the interests of developing countries when formulating IEMEIs. However, based on the narrow interpretation described, it would be extremely difficult to prove that the EU had not considered effects on developing countries at all. This is particularly the case given that the EU Better Regulation Guidelines and the practice of Impact Assessments in the EU draw attention to the special needs of developing countries, albeit without necessarily substantively balancing these needs in assessing the proportionality of the proposed measure.148 The restrictive interpretation of this provision in effect renders it ‘unenforceable’ in the DSS149 in the sense of creating specific rights for developing countries,150 and it is thus of ‘limited value’ for them.151 In a different way, Article 12.4 TBT recognises the special needs of developing countries by enabling them to maintain lower standards than those recognised internationally. In particular, it provides that, ‘developing country Members should not be expected to use international standards as a basis for their technical regulations or standards … which are not appropriate to their development, financial and trade needs.’ Recalling Article 2.4 TBT that requires the use of international standards, Article 12.4 TBT ‘eases the impact of certain provisions whose full application would not be compatible with developing country members’ development, financial and trade needs’.152 In principle, this provision could require the EU to take into account the special needs of developing countries when designing IEMEIs that incorporate international standards. However, Article 12.4 seems to be limited to the adoption by developing countries of their technical regulations. It does not require developed countries to refrain from requiring compliance with international standards by developing countries when exporting­ products.153 The scope and application of Article 12.4 in the context of IEMEIs that incorporate international standards would therefore likely be limited. Nonetheless, an argument along the lines of Article 12.4 TBT might be worth making in certain instances. For example, in relation to the IUU R ­ egulation,

147 ibid. 148 Chapter 3, Section IV. 149 US–COOL (n 146 above) para 7.790. 150 Appleton (n 122 above). 151 Van den Bossche and Zdouc (n 36 above) 887. 152 JHH Weiler, S Cho and I Feichtner, ‘International and Regional Trade Law: The Law of World Trade Organization, Unit VIII: Technical Barriers to Trade (TBT)’ 7: http://jeanmonnetprogram. org/wp-content/uploads/Unit_VIII.-TBT.pdf. 153 T Cottier and M Panizzon, ‘Enhancing Market Access’ in S Biber-Klem and T Cottier (eds), Rights to plant Genetic Resources and Traditional Knowledge, Basic Issues and Perspectives (CABI Publishing, 2006) 375.

248  WTO Influence and Legal Control of IEMEIs: Substantive Obligations it  could be argued that excluding fish products of third countries that have not complied with international obligations on the conservation of marine resources under the Regulation may be problematic under Article 12.4 TBT. While the EU does not impose its own standards, it requires that catch certificates be accepted if the third country complies with international obligations on conservation of marine resources and defines IUU fishing on the basis of international definitions that may not be suited to the special needs of the developing countries affected. In this respect, developing country members should be free  to develop their own technical regulations according to their priorities and needs and not necessarily comply with externally imposed technical regulations.154 Overall, while the TBT Agreement could have legitimising effects by imposing additional substantive obligations on the EU in adopting IEMEIs that impose technical barriers to trade, this potential is significantly qualified given the ­uncertain scope of the TBT Agreement, which may not apply to NPR-PPMs, and the soft nature of the special and differential treatment provisions. The legitimising function of the TBT Agreement is further explored in Chapter  seven in relation to notification obligations and consultations procedures. IV. CONCLUSION

In summary, this chapter has examined how WTO substantive obligations may influence the formulation of IEMEIs in ways that require the EU to consider the impacts of its measures abroad, thus holding the EU to account in relation to trade-restrictive effects of IEMEIs on third countries. It has shown in particular, how both non-discrimination under the GATT/GATS and the TBT provisions of different kinds require the EU to take into account the interests of affected constituencies beyond its jurisdictional borders. While incompatibility with substantive obligations may make it seem like WTO law is weighted towards constraining IEMEIs in some respects, the EU can often justify trade-­restrictive IEMEIs under exceptions examined in Chapter six, rendering the balance between the enabling and constraining functions of WTO less clear-cut. The legitimising functions of WTO law in both enabling and constraining IEMEIs are further explored in the following chapter by examining WTO requirements on trade-restrictive measures that pursue legitimate objectives under exceptions, which are also relevant for the determination of compatibility with some substantive obligations under the TBT Agreement.



154 Shajahan

(n 64 above).

6 Justifying IEMEIs under Exceptions in the WTO I. INTRODUCTION

E

ven if IEMEIs were found to be incompatible with substantive obligations, the EU could rely on exceptions to the GATT or the GATS to lawfully pursue environmental protection goals through trade-restrictive measures. This is where trade and environmental protection concerns are often reconciled under WTO law. Exceptions capture the legal nature of IEMEIs and are particularly relevant for their legal analysis. As the AB has specified, ‘conditioning access to a Member’s domestic market on whether exporting Members comply with, or adopt, a policy or policies unilaterally prescribed by the importing Member may, to some degree, be a common aspect of measures falling within the scope’ of exceptions.1 The approach of WTO dispute settlement bodies towards unilateral process-based measures with extraterritorial reach, such as IEMEIs, has evolved considerably over time,2 from an initially restrictive approach,3 to a more accepting approach to unilateral measures that protect transboundary or global environmental problems, albeit subject to conditions4 that seek to exclude protectionist measures. Although there is no additional burden for justifying PPMs,5 the unilateral nature of IEMEIs, however relative, and the fact that they address concerns partly outside the territory of the regulating jurisdiction,6

1 AB Report on US – Import Prohibition of Certain Shrimp and Shrimp Products (US–Shrimp), WT/DS58/AB/R, adopted 12 October 1998, para 121. 2 For an overview of the case law see A Cosbey and PC Mavroidis, ‘Heavy Fuel: Trade and Environment in the GATT/WTO Case Law’ (2014) 23 Review of European, Comparative and International Environmental Law 288. 3 GATT Panel Report, US – Restrictions on Imports of Tuna, DS21/R, DS21/R, 3 September 1991, unadopted; GATT Panel Report, US – Restrictions on Imports of Tuna, DS29/R, 16 June 1994, unadopted. 4 E Vranes, Trade and the Environment: Fundamental Issues in International Law, WTO Law, and Legal Theory (OUP, 2009). 5 R Kruse, ‘Process and Production Methods and Burden of Proof: A Procedural Limitation on the Like Products Debate’ (2013) 16 International Trade and Business Law Review 377. 6 There has not been a dispute on a measure addressing concerns located entirely in a third country, which is seen as more problematic: MA Young, ‘Trade Measures to Address Environmental

250  Justifying IEMEIs under Exceptions in the WTO could mean that they require a higher degree of scrutiny.7 This could translate to a closer review of whether a measure is necessary under the exceptions (Section II), as well as whether it is overly restrictive and protectionist under the GATT Article XX chapeau (Section III). In relation to IEMEI legitimacy, the exceptions also distinctly demonstrate the dual role of WTO law. They provide the basis for the adoption of traderestrictive measures to pursue non-trade objectives and thus enable adoption of IEMEIs. The exceptions also have the greatest potential to discipline IEMEIs by controlling how these justifications are relied upon, thereby contributing to filling the accountability gap. This is through the requirements for a close connection between the means used and the specific ends pursued, particularly under necessity and through the chapeau, which seeks to maintain a balance between the rights and obligations of different Members by requiring that regulating states take into account the interests of third country affected actors in different substantive and procedural ways. Article XX GATT and the similar Article XIV GATS provide for different grounds on which the EU could seek to justify incompatible measures. This chapter mostly focuses on Article XX GATT, while the analysis is also relevant for pursuing legitimate objectives under the GATS8 and the TBT Agreement. Under Article XX, the regulating country has to first show that its measure seeks to achieve one of the legitimate grounds of the paragraphs of Article XX, often relating to the legal design of regulatory measures. Then it needs to demonstrate that its measure also complies with the chapeau, often relating to the manner of application of measures to third countries.9 The following analysis identifies the relevant exceptions under which IEMEIs may fit and examines the potential of WTO law to legitimise IEMEIs through reliance on such exceptions. II.  PURSUANCE OF LEGITIMATE OBJECTIVES THROUGH IEMEIs UNDER EXCEPTIONS

IEMEIs would prima facie fall within the scope of different grounds of exceptions under Article XX GATT, examined in Section II.A, thus enabling the EU to adopt IEMEIs. However, specific requirements regarding the contribution of Concerns in Faraway Places: Jurisdictional Issues’ (2014) 23 Review of European, Comparative and International Environmental Law 302; B Cooreman, ‘Addressing Environmental Concerns Through Trade: A Case for Extraterritoriality?’ (2016) 65 International and Comparative Law Quarterly 229. 7 E Benvenisti, ‘Sovereigns as Trustees of Humanity: On the Accountability of States to Foreign Stakeholders’ (2013) 107 American Journal of International Law 295. 8 AB Report on US – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US–Gambling), WT/DS285/AB/R, adopted 7 April 2005, para 291. 9 AB Report on US – Standards for Reformulated and Conventional Gasoline (US–Gasoline), WT/DS2/AB/R, adopted 29 April 1996, 22; AB Report, US–Shrimp (n 1 above) para 160. However, a rigid distinction is not always maintained, L Bartels, ‘The Chapeau of Article XX GATT: A New Interpretation’ (2014) University of Cambridge Faculty of Law Research Paper 40/2014.

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  251 regulatory measures to legitimate objectives, particularly necessity, examined in Section II.B, could potentially constrain IEMEI action. In any case, such requirements require the EU to explain and justify how it takes third country impacts into account in formulating and applying IEMEIs. A.  Relevant Grounds of Exceptions for IEMEIs Different IEMEIs could be justified on at least four grounds under Article XX GATT as measures: (1) necessary to protect human, animal or plant life or health (Article XX(b)); (2) relating to protection of exhaustible natural resources (Article XX(g)); (3) necessary to protect public morals (Article XX(a)); or (4) necessary to ensure compliance with laws compatible with WTO law (Article XX(d)). Depending on the ground used, there are different requirements for demonstrating that a measure sufficiently contributes to the specific objective. The ground used to justify a measure may also influence the assessment of the chapeau. (i)  Articles XX(b) and XX(g) GATT The first relevant ground is provided under Article XX(b) and concerns protection of human, animal or plant life or health. The range of policy goals that fall under this provision has been interpreted broadly10 and thus IEMEIs that address climate change,11 biodiversity, deforestation and environmental and worker safety, would likely fall under this ground. The second option relates to the conservation of exhaustible natural resources under Article XX(g). Some IEMEIs would likely fall under this provision given that the AB has adopted an ‘evolutionary’ interpretative approach in light of ‘contemporary concerns’ about environmental protection12 and aims such as the protection of living resources13 and clean air14 have been recognised as part of this ground. The relative unilateral and extraterritorial nature of IEMEIs can determine whether the EU can rely on these two grounds and may have indeed influenced their formulation. In terms of unilateralism, the pursuance of internationally recognised objectives can make IEMEIs less problematic under Article XX. The protection of sea turtles, recognised as endangered species internationally, contributed to the AB accepting the unilateral measure in US–Shrimp as

10 J Wiers, Trade and Environment in the EC and the WTO: A Legal Analysis (Europa Law Publishing, 2003) 184. 11 AB Report on Brazil – Measures Affecting Imports of Retreaded Tyres (Brazil–Tyres), WT/DS332/AB/R, adopted 17 December 2007, para 151. 12 AB Report, US–Shrimp (n 1 above) paras 129–130. 13 ibid. 14 AB Report, US–Gasoline (n 9 above).

252  Justifying IEMEIs under Exceptions in the WTO ­ rotecting ‘exhaustible natural resources’.15 WTO bodies may thus be more p ‘forgiving’ of measures adopted in pursuance of multilateral environmental agreements (MEAs).16 This allows for interaction of WTO law with subjectspecific international regimes and captures the intersection of IEMEIs between trade and environmental regimes in the international realm. The influence of WTO law in favouring the pursuance of internationally recognised concerns can be evidenced in the legal design of IEMEIs. IEMEIs usually address concerns recognised internationally and often incorporate international standards. All IEMEIs make some reference to international ­standards,17 while some go beyond international standards by extending requirements to non-parties to international regimes18 or by imposing more stringent requirements prior to the entry into force of the relevant agreement.19 Determining whether pursuing internationally recognised objectives shields the regulating jurisdiction from WTO incompatibility in specific disputes is uncertain and unpredictable. This is because WTO bodies have ‘considerable autonomy’ in identifying which international agreements are relevant and how.20 WTO jurisprudence suggests that international agreements could guide interpretation of WTO law,21 sometimes as legally relevant – potentially as applicable rules between the parties22 – and sometimes as factually relevant23 – potentially affecting the ordinary meaning of treaty provisions.24 Additionally, ­international 15 AB Report, US–Shrimp (n 1 above) paras 130–131. 16 J Scott, ‘International Trade and Environmental Governance: Relating Rules (and Standards) in the EU and the WTO’ (2004) 15 European Journal of International Law 307. 17 For example, Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2009] OJ L140/16 (RED) Arts 17(3)(b)(ii), 18(4). 18 For example, the IUU Regulation is adopted in accordance with international law: M Tsamenyi, Fairer Fishing?: The Impact on Developing Countries of the European Community Regulation on Illegal, Unreported, and Unregulated Fisheries (Commonwealth Secretariat, 2009). However, it also extends international measures to countries not parties to them: H Baumüller, Combating Illegal Fishing in the EU: Interaction with WTO Rules’: Clatham House Briefing Paper 2010/02. 19 This is the case with the EU Ship Recycling Regulation. More stringent measures are authorised by the Hong Kong International Convention on the Safe and Environmentally Sound Recycling of Ships, 19 May 2009 (not yet in force) SR/CONF/45, Art 1(2); Parliament and Council Regulation (EU) 1257/2013 on Ship Recycling [2013] OJ L330/1, Recital 6. 20 Scott, ‘International Trade’ (n 16 above). 21 On the different functions of non-WTO norms in WTO disputes see, MA Young, Trading Fish, Saving Fish: The Interaction Between Regimes in International Law (CUP, 2011), Trading Fish ch 5; L Bartels, ‘Applicable Law in WTO Dispute Settlement Proceedings’ (2001) 35 Journal of World Trade 499. 22 Vienna Convention on the Law of Treaties 23 May 1969, 1115 UNTS 331 (VCLT) Art 31(3)(c). 23 AB Report on US – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia (US–Shrimp (Article 21.5)), DS/58/AB/RW, adopted 22 October 2001, para 130; Panel Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products (EC–Seal Products), WT/DS400/R, WT/DS401/R, adopted 25 November 2013, para 7.295; K Kulovesi, The WTO Dispute Settlement System: Challenges of the Environment, Legitimacy and Fragmentation (Kluwer Law International, 2011) 148; Young, ‘Trade Measures to address Environmental Concerns’ (n 6 above). 24 VCLT (n 22 above) Art 31(1); Panel Report on EC – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R (EC–Biotech), adopted 29 September 2006.

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  253 agreements are usually considered relevant when they are binding on all parties to the dispute25 or potentially when binding on all WTO Members.26 An approach that would not require all WTO Members to be signatories to an agreement for it to be applied in a dispute may be welcomed in terms of not allowing specific states to veto the development of international law.27 However, relying on international agreements to justify trade-restrictive measures in a dispute involving a party not signatory to that agreement is politically challenging to justify.28 The uncertainty of this area of WTO law can lead to different results as to whether IEMEIs may be justified on the basis of international agreements. The likelihood of justifying IEMEIs on the basis of international agreements depends on the specific policy area and which states would be the parties of a specific dispute. In addition, the fact that IEMEIs incorporate internationally agreed objectives does not always necessarily lower the requirements under Article XX. The international agreement will not provide a complete defence when the regulatory approach of the unilateral measure is not provided in the international agreement.29 For example, while the enforcement measures under the IUU Regulation are supported by a variety of international instruments, the blacklisting of non-cooperating countries is rarely applied under international regimes and its application under the IUU Regulation may not be entirely justified, including under ‘necessity’.30 The use of Articles XX(b) and XX(g) could also be constrained because of the extraterritorial elements of IEMEIs, as these grounds may be embedded with territorial limitation.31 The AB in US–Shrimp implied that there is some kind of jurisdictional limitation to Article XX(g) while it found that there was a ‘sufficient nexus’ between the regulating state and the object of protection.32 What could constitute a ‘sufficient nexus’ remains open to interpretation33 and may vary, from physical presence or proximity of the regulatory object within the jurisdiction of the state,34 or a territorial link,35 to some kind of domestic 25 EC-Biotech (n 24 above). However, note the reference to the CBD in AB Report, US–Shrimp (n 1 above). 26 EC-Biotech (n 24 above), paras 7.67–7.71. 27 Young, ‘Trade Measures to address Environmental Concerns’ (n 6 above). 28 Scott, ‘International Trade’ (n 16 above) 346. 29 CITES did not provide for adoption of a trade measure to protect an endangered species through trade restrictions on another species, Panel Report on US – Import Prohibition of Certain Shrimp and Shrimp Products (US–Shrimp), WT/DS58/R, 15 May 1998, para 7.58; Kulovesi (n 23 above) 157. 30 B Cooreman, Global Environmental Protection Through Trade, A Systematic Approach to Extraterritoriality (Edward Elgar, 2017) 207–13. 31 There is no explicit reference in the provisions to that effect. 32 AB Report, US–Shrimp (n 1 above) para 133. For a discussion of this requirement in the WTO case law and its underlying aims see M Young, ‘Trade Measures to address Climate Change: ­Territory and Extraterritoriality’ in P Delimatsis (ed), Research Handbook on Climate Change and Trade Law (Edward Elgar, 2016) 338–43. 33 For a discussion of this see Cooreman (n 30 above) 184–89. 34 A Fishman and K Obidzinski, ‘European Union Timber Regulation: Is It Legal?’ (2014) 23 Review of European, Comparative and International Environmental Law 258. 35 Wiers (n 10 above) 295.

254  Justifying IEMEIs under Exceptions in the WTO effect especially in relation to transboundary or global problems.36 The adoption of measures that address concerns and environmental impacts located both within and outside the regulatory state is considered more acceptable, although it may require more extensive justification in demonstrating that those measures contribute to the objective pursued and that they do not infringe the chapeau.37 Some IEMEIs could be problematic especially when seeking to pursue regulatory objectives within the territory of third countries, such as the criteria on the origin of biofuels produced from raw material from specific types of land with high biodiversity value.38 However, IEMEIs are usually not purely extraterritorial or extra-jurisdictional in the sense of enforcement in third countries,39 and they would likely fulfil the ‘sufficient nexus’ requirement through a territorial connection between the regulated activity and the EU’s territory.40 In any case, more recent cases on IEMEI-type measures were not decided on jurisdictional grounds,41 demonstrating that the extraterritorial reach of unilateral measures is not the determining factor for the consistency of such measures with WTO law.42 It is thus unlikely that PPMs would be condemned on the basis of their extraterritorial reach. The interpretation of the territorial scope of WTO exceptions described in this sub-section largely enables the adoption of IEMEIs, as long as there is a territorial link, in similar ways to the interpretation of EU environmental competence by the EU courts.43 Beyond the territorial scope of these grounds, WTO law imposes additional requirements that may constrain IEMEIs through the contribution of regulatory measures to specific objectives under necessity (Section II.B) and the chapeau (Section III). (ii)  Article XX(a) GATT The issue of protecting extraterritorial concerns can still indirectly affect the approach of regulating states, which might seek to justify their measures on

36 This could include climate change, F Biermann, ‘The Rising Tide of Green Unilateralism in World Trade Law. Options for Reconciling the Emerging North–South Conflict’ (2001) 35 Journal of World Trade 421. 37 Cooreman, ‘Addressing Environmental Concerns through Trade’ (n 6 above); L Ankersmit, J Lawrence and G Davies, ‘Diverging EU and WTO Perspectives on Extraterritorial Process Regulation’ (2012) 21 Minnesota Journal of International Law Online 14. 38 RED (n 17 above) Art 17(c); J Scott, ‘The Multi-Level Governance of Climate Change’ in PCaGd Burca (ed), The Evolution of EU Law (OUP, 2011). 39 Vranes (n 4 above). 40 J Scott, ‘Extraterritoriality and Territorial Extension in EU Law’ (2014) 62 American Journal of Comparative Law 87. 41 Such as AB Report on US – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US–Tuna II), WT/DS381/AB/R, adopted 13 June 2012 and AB Report on EC – Measures Prohibiting the Importation and Marketing of Seal Products, (EC–Seal Products) WT/DS400/AB/R, WT/DS401/AB/R adopted 18 June 2014. 42 Young, ‘Trade Measures to address Climate Change’ (n 32 above) 338–41. 43 Case C-366/10 Air Transport Association of America and others v Secretary of State for Energy and Climate Change (ATAA), EU:C:2011:864. See Chapter 4, Section III.A.

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  255 different grounds that are less problematic in terms of territorial scope. The third ground of exception under Article XX potentially relevant for IEMEIs is provided under Article XX(a) on the protection of public morals.44 The EU’s approach, in defending the EU Seals Regulation under this ground rather than in terms of protecting seals under Article XX(b), could be due to a presumed reluctance to explain its interest in protecting seals hunted outside the EU.45 Focusing on the protection of public morals of EU citizens and on regulating the trade in seal products within the EU, the EU was able to place its concern within its territory and avoided the issue of extraterritoriality altogether.46 This ground of review is particularly relevant for animal welfare measures, which the EU increasingly extends beyond its own borders.47 The EU could seek to justify more policy measures on this basis in the future.48 This ground could potentially be used in relation to the Ship Recycling Regulation and the WEEE Directive, as waste trade can raise different kinds of ethical considerations.49 Exporting waste to third countries that have not contributed to its production entails responsibilities for the EU to ensure that waste treatment abroad does not impact on the safety of workers or the environment, and thus could justify extension of EU safety requirements in third country facilities. Moral concerns of EU consumers could also be raised in relation to ship recycling taking place in developing countries under substandard conditions resulting in deaths of workers, including children. Article XX(a) provides a potentially wide ground of justification given the leeway provided to Members to define and apply their own public morals according to ‘their own systems and scales of values’.50 Notably, while the EU would have to show a genuinely important moral concern in the EU,51 the AB’s review in EC–Seal Products was relatively light regarding the evidence required

44 See also Article XIV(a) GATS, which also includes public order. It has also been recognised as a legitimate purpose under Article 2.2 TBT, Panel Report, EC–Seal Products (n 23 above). 45 PI Levy and DH Regan, ‘EC – Seal Products: Seals and Sensibilities (TBT Aspects of the Panel and Appellate Body Reports)’ (2015) 14 World Trade Review 337. 46 Question 108 of Canada to the Panel; Young, ‘Trade Measures to address Environmental Concerns’ (n 6 above). 47 The extension abroad of the Animal Transport Regulation was confirmed in Case C-424/13 Zuchtvieh-Export GmbH v Stadt Kempten, EU:C:2015:259, while the extension abroad of the EU Cosmetics Regulation (EC) No 1223/2009 banning animal testing was confirmed in Case C-592/14 European Federation for Cosmetic Ingredients v Secretary of State for Business, Innovation and Skills and Attorney General, EU:C:2016:703. 48 NF Diebold, ‘The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole’ (2008) 11 Journal of International Economic Law 43. 49 M Grosz, Sustainable Waste Trade under WTO Law: Chances and Risks of the Legal Frameworks’ Regulation of Transboundary Movements of Wastes (Martinus Nijhoff, 2011). 50 Panel Report on US – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US–Gambling), WT/DS285/R, adopted 10 November 2004, para 6.461; AB Report, EC–Seal Products (n 41 above) para 5.199. See also Levy and Regan (n 45 above) 344. 51 R Howse, J Langille and K Sykes, ‘Sealing the Deal: The WTO’s Appellate Body Report in EC–Seal Products’ (2014) 18(12) American Society of International Law Insights.

256  Justifying IEMEIs under Exceptions in the WTO to demonstrate the existence of the specific public concern.52 The EU was not required to act consistently in protecting the specific moral concern internally, in relation to other animals.53 While the ruling is praised for accepting the regulatory differences of WTO Members,54 it has also been criticised for allowing the EU ‘to unilaterally disseminate its regulatory positions abroad’.55 The breadth of Article XX(a) as a ground of justification for IEMEIs should not be exaggerated. The EU has avoided pursuing general legitimate objectives that would be covered by this ground of justification. Specifically, the EU has not included labour standards as mandatory conditions in the sustainability criteria on ­biofuels as they would be crossing other countries’ ‘red lines’.56 In this way, fear of infringing WTO obligations tends to excessively limit the regulatory a­ utonomy of WTO Members in pursuing labour rights protection through unilateral measures. (iii)  Article XX(d) GATT The fourth ground of justification that could be used in justifying certain types of IEMEIs is found in Article XX(d), which provides for measures that are ­necessary to secure compliance with laws or regulations which are not inconsistent with WTO law. This ground could be relevant for the EU Timber Regulation, which prohibits placing on the market illegally harvested timber, and could be deemed necessary to ensure enforcement of third country timber laws.57 The Timber Regulation could contribute to the better enforcement of third country laws, even if the EU is not certain whether it will.58 However, Article XX(d) has not been used in such a context to date, so it is uncertain whether it would be allowed as such.59 The scope of Article XX(d) is limited ‘as the terms “laws or regulations” refer to rules that form part of the domestic legal system of a WTO Member and do not extend to the international obligations of another WTO Member’.60 While the AB was reluctant 52 It is not clear whether evidence should demonstrate consumer concern or whether regulatory concern is sufficient. 53 AB Report, EC–Seal Products (n 41 above) paras 5.200, 5.201. 54 RL Howse and J Langille, ‘Permitting Pluralism: The Seal Products Dispute and Why the WTO Should Permit Trade Restrictions Justified by Noninstrumental Moral Values’ (2012) 37 Yale Journal of International Law 367. 55 BM Araujo, ‘The “Ordinariness” of the EU’s Foreign Policy Power: The Use of WTO Litigation as a Means to Export EU Norms, Values and Interests’ (2015) 4 Global Journal of Comparative Law 143. 56 R Ackrill and A Kay, ‘EU Biofuels Sustainability Standards and Certification Systems – How to Seek WTO-Compatibility’ (2011) 62 Journal of Agricultural Economics 551. 57 H Brack, ‘Combating Illegal Logging: Interaction with WTO Rules’ Chatham House Briefing Paper 2013/01. 58 AB Report on Mexico – Tax Measures on Soft Drinks and Other Beverages (Mexico–Soft Drinks), WT/DS308/AB/R, adopted 6 March 2006, para 74. 59 D Geraets and B Natens, ‘The WTO Consistency of the European Union Timber Regulation’ (2013) KU Leuven Centre for Global Governance Studies Working Paper 120/2013. 60 Mexico-Soft Drinks (n 58 above) para 70.

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  257 to allow measures that would contribute to the enforcement of international obligations of another WTO Member, it is unclear whether it would allow measures that are intended to secure compliance with another Member’s own domestic legislation. In this case, the AB’s reservations about becoming ‘adjudicators of non-WTO disputes’ in determining compliance of a Member with an international agreement would not apply.61 Also, justifying such measures under Article XX(d) rather than Article XX(g) may increase the chances of satisfying the chapeau.62 In summary, there are several grounds on which the EU could justify IEMEIs and their unilateral and extraterritorial aspects would not necessarily render them incompatible. The availability of multiple grounds of exceptions provides the regulatory scope for states to adopt unilateral process-based measures to address legitimate objectives beyond their borders and thus largely enables the adoption of IEMEIs. The fact is, the EU can more easily justify unilateral measures that pursue environmental protection rather than other kinds of non-trade objectives, such as labour standards. While IEMEIs would clearly fall under the scope of different grounds of exceptions, whether they contribute to the relevant objective to the requisite degree is not always straightforward. The connection between the measures adopted and the achievement of these objectives could potentially discipline the use of IEMEIs and more clearly requires the EU to justify its action by demonstrating how it has considered the interests of third countries and the effectiveness of its measure to achieve the relevant objective. B.  Contribution of IEMEIs to the Regulatory Objective The degree of connection between the means used and the objective pursued often determines whether a measure satisfies one of the exceptions. However, it involves a nuanced analysis and the jurisprudence on this issue is complex. It is thus not always clear what is required under specific tests of interpretation. This section briefly considers the requirement of ‘relating to’ conservation of exhaustible natural resources under Article XX(g), which IEMEIs would most likely fulfil, before examining more extensively ‘necessity’ under the other relevant grounds. Notably, elements of the necessity test seem to have been applied under the chapeau and thus necessity could also be indirectly relevant when seeking to justify IEMEIs under Article XX(g).63 The potential of necessity is thus far-reaching in constraining the effects of trade-restrictive measures. 61 ibid. 62 Section III below. 63 US–Gasoline (n 9 above); AB Report, US–Shrimp (n 1 above) paras 156, 171; P Eeckhout, ‘The Scales of Trade – Reflections on the Growth and Functions of the WTO Adjudicative Branch’ (2010) 13 Journal of International Economic Law 3; Wiers (n 10 above) 336. See also AE Appleton, ‘GATT Article XX’s Chapeau: A Disguised “Necessary” Test?: The WTO Appellate Body’s Ruling in United States – Standards for Reformulated and Conventional Gasoline’ (1997) 6 Review of European Community and International Environmental Law 131.

258  Justifying IEMEIs under Exceptions in the WTO (i)  ‘Relating to’ and Even-Handedness Generally, it is relatively easy for a measure to ‘relate to’ the objective pursued under Article XX(g), which requires a genuine and close relationship between means and ends.64 If found to fall within Article XX(g), most IEMEIs would likely be justified on this basis. Notably, in assessing the relationship between the measure and the objective pursued, the AB in US–Shrimp assessed the genuineness of the US commitment to the policy by reference to the importance of protecting sea turtles, as internationally recognised by all parties to the dispute.65 An additional element of Article XX(g) is the requirement of even-handedness, which may be evolving into an obligation to take into account the interests of third countries when exercising global regulatory power in relation to exhaustible natural resources. In particular, Article XX(g) provides that measures have to be ‘made effective in conjunction with restrictions on domestic production or consumption’. Although this requirement does not require identical treatment of both imported and domestic products, it does require that they be treated even-handedly.66 In the dispute challenging China’s export restrictions on raw materials, the Panel found that this measure was not applied even-­ handedly because China did not apply similar limitations on domestic users and ­consumers.67 As the AB clarified, measures justified under Article XX(g) are only permitted when they ‘work together’ with restrictions on domestic production or consumption.68 The burden of conservation of exhaustible natural resources should therefore not be placed only on foreign actors. This requirement can go some way to addressing legitimacy concerns about the unilateral exercise of global regulatory power, discussed in Chapter two, concerning the risks of powerful states outsourcing their responsibilities to address environmental problems and climate change, and passing the costs onto others. For most IEMEIs considered in this book, this requirement would likely be satisfied, as the EU usually applies such measures to both imported and foreign products. The only IEMEI under consideration which does not apply to both domestic and foreign operators in the same manner is the IUU Regulation. However, EU nationals and EU fishing vessels are subject to largely comparable obligations and therefore the IUU Regulation would likely be deemed to ‘work together’ with the EU Common Fisheries Policy Control Regulation that applies to EU operators.69 64 AB Report, US–Shrimp (n 1 above) para 156. 65 ibid para 135. 66 US–Gasoline (n 9 above) 21. 67 Panel Report, China – Measures related to the exportation of various Raw Materials (China–Raw Materials), WT/DS394/R, WT/DS395/R, WT/DS398/R, adopted 5 July 2011, paras 7.465–7.567. 68 AB Report, China–Raw Materials, WT/DS394, 395, 398/AB/R, adopted 22 February 2012, para 360. 69 Regulation (EC) 1224/2009 of 20 November 2009 establishing a Community control system for ensuring compliance with the rules of the Common Fisheries Policy [2015] OJ L343/1.

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  259 While ‘working together’ with domestic restrictions may seem to be easily satisfied, the AB in China–Rare Earths also clarified that a measure that ‘would impose a significantly more onerous burden on foreign consumers or producers’ would be unlikely to satisfy Article XX(g).70 Thus, while respecting the sovereignty of states over their natural resources, the requirement of even-handedness imposes an obligation to consider the impacts of trade-restrictive measures on foreign actors dependent on trade in natural resources, and potentially encompasses a positive duty to respect the dependency of these actors in a world of limited resources.71 Overall, the requirements relating to regulatory contribution under Article XX(g) facilitate the adoption of IEMEIs by deferring to the discretion of the regulating jurisdiction to determine the contribution of the measure to the regulatory objective in broad terms, while additional requirements are imposed under the chapeau. (ii)  The Necessity Test Conversely, being ‘necessary’, under Article XX(a), (b) and (d), as well as under Article 2.2 TBT Agreement, is more demanding and intrusive,72 involving a complex assessment, which is sometimes also carried out in assessing the chapeau. Depending on the trade-restrictiveness of each measure, the level of contribution to the regulatory objective varies, from being indispensable, to lesser degrees of necessity.73 In any event, the contribution needs to be ‘material, not merely marginal or insignificant’.74 A measure that addresses an internationally recognised concern will more likely be justified as necessary.75 The varying interpretations of ‘necessity’ are usually analysed in two prevailing tests: the ‘weighing-and-balancing’ test and the ‘less restrictive alternative’ test. There is a considerable doctrinal debate about the appropriate interpretation of necessity and what the different interpretations involve. Irrespective of the interpretation adopted, necessity influences the EU’s approach to avoiding overly trade-restrictive measures and requires consideration of trade impacts on third countries. In this way, necessity contributes to filling the accountability gap by holding the EU to account in relation to traderestrictive impacts of IEMEIs. However, its legitimising function may be called

70 AB Report, China – Measures related to the Exportation of Rare Earths, Tungsten, and ­Molybdenum (China–Rare Earths), WT/DS431/AB/R, WT/DS432/AB/R, WT/DS433/AB/R, adopted 7 August 2014, para 5.134. 71 E Benvenisti and SS Agon, ‘The Law of Strangers: The Form and Substance of Other-Regarding International Adjudication’, GlobalTrust Working Paper 08/2017, 5: http://globaltrust.tau.ac.il/ publications. 72 Scott, ‘Multi-Level Governance’ (n 38 above). 73 AB Report on Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef (­Korea–Beef), WT/DS169/AB/R, adopted 11 December 2000, paras 160–161. 74 AB Report, Brazil–Tyres (n 11 above) para 210. 75 AB Report, Korea–Beef (n 73 above) para 162; Cooreman (n 30 above) ch 6.

260  Justifying IEMEIs under Exceptions in the WTO into question in relation to the appropriate level of intrusion into national sovereignty by the WTO dispute settlement bodies. The appropriate balance between enabling WTO Members to pursue non-trade values through IEMEIs and disciplining their effects is difficult to achieve. Assessing necessity involves an exercise of weighing-and-balancing of different factors, set out by the AB in Korea–Beef76 and further elaborated in later cases.77 It has also been incorporated in the interpretation of Article 2.2 TBT.78 Under the weighing-and-balancing test, WTO bodies are meant to assess the importance of common interests and values pursued,79 the contribution of specific measures to such objectives and their accompanying trade-restrictive impacts. This last element of trade-restrictiveness is usually assessed by examining whether reasonably available alternative measures, that are less trade restrictive, could have been used to achieve the objective.80 The relationship between the two tests is unclear. The AB has explained that the ‘weighing-and-balancing’ test is not at odds with the ‘less restrictive alternative’ test but rather ‘encapsulates’ the same considerations, and forms part of assessing whether a measure is ‘reasonably available’.81 Both tests recognise the right of Members to pursue their appropriate level of protection and thus respect their regulatory autonomy to pursue legitimate objectives to a level they deem appropriate.82 However, in the application of necessity to specific measures, WTO bodies have discretion in delimiting the regulatory boundaries. Usually the ‘less restrictive alternative’ test is associated with a more deferential approach and for this reason it is usually preferred by scholars.83 However, as this section demonstrates, both tests involve discretion on the part of the WTO dispute settlement bodies and some level of intrusion into national sovereignty,84 which could constrain EU regulatory power. The difference lies in having discretion about different things. The ‘weighing-and-balancing’ test seems more intrusive than it is in practice. The wording of this test indicates that the WTO dispute settlement bodies have discretion in assessing the relative importance of regulatory goals. This would involve a cost–benefit analysis that would substantially question the level of

76 AB Report, Korea–Beef (n 73 above) para 164. 77 AB Report, US–Gambling (n 8 above); AB Report on EC – Measures Affecting Asbestos and Asbestos-Containing Products (EC–Asbestos), WT/DS135/AB/R, adopted 5 April 2001. 78 AB Report, US–Tuna II (n 41 above) paras 318–323. 79 The more important the value the more likely to be necessary, AB Report, EC–Asbestos (n 77 above) para 172. 80 AB Report, US–Gambling (n 8 above) para 307. This also forms part of necessity under Article 2.2 TBTA, AB Report, US–Tuna II (n 41 above) para 320. 81 AB Report, Korea–Beef (n 73 above) para 166; AB Report, US–Gambling (n 8 above) para 307. 82 AB Report, US–Gambling (n 8 above) para 308; AB Report, EC–Asbestos (n 77 above) para 168; MM Du, ‘The Rise of National Regulatory Autonomy in the GATT/WTO Regime’ (2011) 14 Journal of International Economic Law 1075. 83 Eeckhout (n 63 above). 84 ibid.

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  261 protection sought by the regulating jurisdiction in light of the measure’s traderestrictive effects.85 For this reason, the ‘weighing-and-balancing’ test has usually been criticised in terms of the inappropriateness of the judicial branch of a trade organisation questioning the national sovereignty of states in pursuing legitimate objectives.86 However, the way in which the ‘weighing-and-balancing’ test has been applied in disputes has rightly respected the discretion of Members to choose their own level of protection.87 Rather, the balancing test is simply to ‘take into account’ the importance of the interests or values underlying the objective pursued by the measure, and not balance it against the contribution of the measure and its trade restrictiveness.88 Furthermore, the ‘less restrictive alternative’ test also involves discretion on the part of WTO dispute settlement bodies in ways that may constrain the regulating jurisdiction’s discretion. First, WTO bodies have discretion in identifying the intended level of protection sought by the regulating member. This is particularly because it is not always possible to measure the level of protection sought, especially when expressed in aspirational terms.89 Identifying the exact level of protection sought by the EU, which generally aims to achieve a high level of environmental protection, under specific measures, can be a daunting task for WTO bodies, that involves at least some level of discretion in ascertaining the level of protection sought. The ‘less restrictive alternative’ test is thus not as objective as it may initially seem. Second, assessing whether alternative measures are ‘reasonably available’ also involves discretion on the part of WTO bodies in ways that may constrain IEMEIs. Measures are reasonably available when they are practical and do not impose an undue burden on the regulating jurisdiction.90 In assessing undue burden, WTO bodies determine whether the alternative measure is too costly or whether additional costs are justifiable in achieving the level of protection sought.91 Although considerable administrative burdens and costs could mean that a measure is not reasonably available,92 the fact that a measure may be

85 Kulovesi (n 23 above) ch 6; Du (n 82 above). 86 Kulovesi (n 23 above); G Van Calster, ‘Faites Vos Jeux – Regulatory Autonomy and the World Trade Organisation after Brazil Tyres’ (2008) 20 Journal of Environmental Law 121. 87 AB Report Brazil–Tyres (n 11 above); AB Report, US–Gambling (n 8 above); DH Regan, ‘The Meaning of ‘Necessary’in GATT Article XX and GATS Article XIV: The Myth of Cost–Benefit Balancing’ (2007) 6 World Trade Review 347. In the context of Article 2.2 TBT, see AB Report, US–Tuna II (n 41 above); M Weimer, ‘Reconciling Regulatory Space with External Accountability through WTO Adjudication – Trade, Environment and Development’ (2017) 30 Leiden Journal of International Law 901; G Mayeda, ‘The TBT Agreement and Developing Countries’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 88 AB Report, Brazil–Tyres (n 11 above) para 210. 89 Eeckhout (n 63 above). 90 AB Report, US–Gambling (n 8 above) para 308. 91 AB Report, Korea–Beef (n 73 above); Eeckhout (n 63 above). 92 P Delimatsis, ‘Determining the Necessity of Domestic Regulations in Services The Best is Yet to Come’ (2008) 19 European Journal of International Law 365.

262  Justifying IEMEIs under Exceptions in the WTO more difficult, inconvenient or more expensive to implement does not necessarily render it unavailable.93 For example, in US–Gasoline, using foreign baselines was considered a reasonably available measure, despite difficulties of verification and enforcement.94 What constitutes reasonably available measures thus bears the potential to require consideration of third country interests in more demanding ways. Overall, while there is considerable debate about the suitability of one test over the other, both variations of the necessity test involve some level of intrusion into national sovereignty and could constrain IEMEIs to a comparable level, based on their application in WTO disputes. Despite scepticism as to the use of the weighing-and-balancing test, in the context of IEMEIs and external accountability, its application bears significant potential for requiring due consideration of third country affected interests, while its application by the WTO bodies respects the regulatory autonomy of Members. (iii)  Influence of Necessity on IEMEIs and EU Regulatory Processes The influence of necessity can be visibly recognised in the legal design of specific IEMEIs, such as the sustainability criteria for biofuels, demonstrating how WTO law ex ante influences the EU by requiring consideration of third country impacts. The non-mandatory nature of the sustainability criteria on biofuels, which do not effectively prohibit imports of non-sustainable biofuels, and their flexible nature indicate that they are not more trade-restrictive than necessary.95 However, in practice some aspects could still raise compatibility issues under necessity. For example, if the land on which biofuels are harvested loses the status described in the Directive for reasons unrelated to biofuels, there would probably be no justification for excluding them,96 although the EU could argue that it would be difficult to determine and maintain such a distinction. Furthermore, the targets for emissions savings could be challenged as more restrictive than necessary, especially if not based on solid scientific evidence and thus may be considered arbitrary.97 However, it would be difficult to find a reasonably available alternative that would be equally effective in addressing the objectives of the criteria.98 An important development in pursuing environmental protection goals that would contribute to finding IEMEIs provisionally necessary is that some measures’ contributions may not be obvious straight away but instead would 93 AB Report, Korea–Beef (n 73 above) para 181; ibid. 94 AB Report, US–Gasoline (n 9 above) 27. 95 Scott, ‘Multi-Level Governance’ (n 38 above) 832. 96 M Schaus and A Lendle, The EU's Renewable Energy Directive: Consistent with WTO Rules? (Graduate Institute of International and Development Studies, 2010). 97 AD Mitchell and G Ayres, ‘Out of Crooked Timber: The Consistency of Australia’s Illegal Logging Prohibition Bill with the WTO Agreement’ (2012) 29 Environmental and Planning Law Journal 462. 98 Schaus and Lendle (n 96 above).

Pursuance of Legitimate Objectives Through IEMEIs under Exceptions  263 contribute to the achievement of goals like mitigating climate change over time.99 In such situations, it would be enough to demonstrate that a measure is ‘apt to produce a material contribution to the achievement of its objective’,100 thus enabling IEMEIs to pursue such objectives and allowing the necessary regulatory space to adopt legitimate policies to address complex environmental problems. Furthermore, the AB has recognised that certain objectives may be achieved ‘only with a comprehensive policy comprising a multiplicity of interacting measures’.101 In this light, the EU Timber Regulation would likely be assessed as a ‘necessary component of a broader strategy’ within the Forest Law Enforcement, Governance and Trade (FLEGT) regime,102 thus lessening the requirement of its direct and measurable contribution to preventing deforestation. Apart from being an important legality benchmark, necessity influences the decision-making process of the regulating jurisdiction by requiring consideration of alternative, less trade-restrictive options as part of its policy-making practices. The WTO narrative can thus incorporate third country interests within the domestic legal order and can contribute to filling the accountability gap relating to IEMEIs. However, the actual influence of necessity on EU regulatory processes is variable, showing that the combined legitimising effects for IEMEIs are sometimes determined by how WTO law is incorporated in the EU ‘home’ legal order. What this comes down to is a requirement for the regulating country to show that it has given some consideration to the trade-restrictiveness of the proposed measure, which the EU usually does as part of its standard process in impact assessments (IAs). As discussed in Chapter three, assessing the trade-restrictive effects of measures and alternative options for pursuing regulatory objectives is specifically required for IAs.103 The EU often anticipates WTO incompatibility issues in advance and sometimes explicitly sets out how it would seek to justify WTO incompatibility in IAs on IEMEIs,104 in an effort to ensure that the external effects of its unilateral regulation will not be ‘undermined by adverse WTO rulings’.105 In such situations, the way in which the EU ‘manages’ WTO influence on its domestic regulatory processes facilitates the extension of its regulatory remit abroad rather than constraining it. However, there are also instances where the EU has opted for less trade-restrictive approaches in 99 AB Report, Brazil–Tyres (n 11 above) para 151. 100 ibid; Van Calster (n 86 above). 101 AB Report, Brazil–Tyres (n 11 above) para 151. 102 Brack (n 57 above). 103 Chapter 3, Section IV. 104 Commission, ‘Impact Assessment on the potential impact of a ban on products derive from Seal Species’ SEC(2008) 2290, 53; Commission, ‘Impact Assessment on Regulation determining the obligations of operators who make timber and timber products available on the Market’ SEC(2008) 2615, 35; Commission, ‘Impact Assessment of Proposal for Council Regulation establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing’ SEC(2007) 1336, 69. 105 Araujo (n 55 above).

264  Justifying IEMEIs under Exceptions in the WTO IEMEIs in an effort to avoid WTO incompatibility and alleviate trade-restrictive effects,106 which in some cases may undermine the effectiveness of IEMEIs in achieving regulatory objectives,107 but often lead to more widely accepted solutions internationally. (iv)  Necessity and Developing Countries In the context of IEMEIs, the appropriate level of intrusion to national sovereignty by the WTO dispute settlement bodies is complex to determine, given that IEMEIs are adopted supposedly for the benefit of the whole international community. In any event, it is questionable whether either the ‘weighing-andbalancing’ or the ‘less restrictive alternative’ test is suitable to incorporate the different kinds of interests affected by IEMEIs, beyond purely trade interests,108 especially the differences in priorities and capacities between developed and developing countries. The way in which the necessity test is applied in most cases demonstrates that more deference is given to the regulating country’s autonomy to pursue specific objectives without considering other countries’ development rights.109 The focus on trade interests thus can only go so far in legitimising IEMEIs and particularly in filling the distributive justice gap. While more intrusion by WTO bodies would promote trade liberalisation and restrict regulatory autonomy, when the complaining parties are developing countries the dispute implicates development issues. These could be addressed through more intensive review of the necessity of IEMEIs in relation to their effects in less developed countries if necessity were informed by sustainable development and the special needs of developing countries recognised in the principle of common but differentiated responsibilities (CBDR), as discussed in the Introduction to Part III. However, the way in which the necessity test is currently applied does not indicate due consideration of developing country interests. For example, assessing the reasonable availability of less restrictive alternative measures does not include assessment of the capacities and interests of developing countries as complaining parties. While developing country interests are considered when assessing what measures are reasonably available to them as regulating countries by examining the cost and required technological know-how,110 the interests of developing countries do not seem to be incorporated in this analysis when they are the complaining parties affected by measures.

106 IA on the Timber Regulation (n 104 above) 35. 107 Parliament, Impact Assessment of a Substantive Amendment to the Proposal for a R ­ egulation on Ship Recycling, ‘Financing the Environmentally Sound Recycling and Treatment of Ships’ (February 2013) 60. 108 Benvenisti (n 7 above). 109 Mayeda (n 87 above). 110 AB Report, Brazil–Tyres (n 11 above); F Morosini, ‘Trade and Climate Change: Unveiling the Principle of Common but Differentiated Responsibilities from the WTO Agreements’ (2010) 42 George Washington International Law Review 713.

IEMEIs under the Chapeau  265 The disciplining potential of necessity may also be qualified by difficulties relating to the adjudication process when challenging the necessity of a specific measure and may thus qualify its potential for filling the accountability and justice gaps related to IEMEIs by controlling EU regulatory power. In assessing less restrictive alternative measures, the burden of proof placed on the regulating state under exceptions re-shifts to the complaining party. The complainant has to put forward less trade-restrictive alternatives and show that they are reasonably available and it is then up to the regulating party to explain why its measure is still necessary.111 The structure of the burden of proof may create a power imbalance, as the complaining party, which is often a developing country, is in a disadvantaged position in terms of determining whether a different measure is reasonably available and whether it would meet the regulating jurisdiction’s intended level of protection. Overall, the requirements for showing contribution of regulatory measures to specific objectives, and especially ‘necessity’, can enhance the legitimacy of IEMEIs by requiring regulating jurisdictions to consider the effects of their measures on third countries. While this greatly influences EU regulatory approaches and serves some ex ante legitimising function, it gives rise to questions about the appropriateness of WTO dispute settlement bodies intruding into national sovereignty. In addition, this legitimising function may be confined because of the failures of the necessity test to accommodate developing country circumstances. Under exceptions, the Article XX chapeau can also serve legitimising functions for IEMEIs through additional requirements on unilateral measures with extraterritorial reach. III.  IEMEIs UNDER THE CHAPEAU

The final step in justifying trade-restrictive measures under exceptions relates to the chapeau, which has the greatest potential in disciplining IEMEIs. The chapeau aims to filter out protectionist measures, which would amount to abuse or misuse of the exceptions.112 It is intended to achieve a delicate line of equilibrium so as to safeguard the rights of WTO Members to invoke exceptions and the substantive rights of other Members,113 embodying an expression of the international principle of ‘good faith’.114 Its application is thus relevant in seeking to find a balance through which the EU is allowed to pursue non-trade objectives through IEMEIs, without unduly restricting trade and violating the rights of affected third countries.



111 AB

Report, US–Gambling (n 8 above) para 311; AB Report, US–Tuna II (n 41 above) para 323. Report, US–Shrimp (n 1 above) para 160; AB Report, Brazil–Tyres (n 11 above) para 215. 113 AB Report US–Shrimp (n 1 above) para 159. 114 ibid para 158. 112 AB

266  Justifying IEMEIs under Exceptions in the WTO In addition to falling within one of the grounds under Article XX, ­measures seeking to benefit from the exceptions must satisfy the requirements of the chapeau so that, ‘such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade’.115 A preliminary remark in relation to the application of the chapeau to IEMEIs relates to the prohibition of discrimination ‘between countries where the same conditions prevail’. The similarity of conditions is usually determined on the basis of the risks that the measure seeks to address and by reference to the purpose of the measure.116 This aspect of the chapeau is particularly difficult to assess in relation to IEMEIs such as the IUU Regulation and the EU Timber Regulation, which regulate legality on the basis of third country laws. It is not clear whether the same conditions prevail if harvesting of timber or fishing occurs in the same way, but it is deemed illegal only in some countries because of different legislation.117 This may depend on the ground on which the EU would rely in justifying such kinds of IEMEIs. For example, if the EU sought to justify the Timber Regulation under Article XX(g), any discrimination between third countries could be found to be arbitrary or unjustifiable as it does not promote the same standard of protection of exhaustible natural resources in all ­countries;118 whereas, if the EU relies on Article XX(d), then the circumstances in the different countries (the applicable law) would be different between countries and therefore the Regulation would likely not amount to discrimination between countries where the same conditions prevail. The following analysis assesses requirements of the chapeau relevant for justifying unilateral measures with extraterritorial reach, mainly focusing on the requirements of unjustifiable or arbitrary discrimination.119 In identifying the parameters of the chapeau, recalling why the unilateral NPR-PPM measure in the leading US–Shrimp case failed, illustrates potential constraints to IEMEIs in light of some similarities in their legal nature and the progressive reasoning employed by the WTO bodies in that case, which largely embodied an ‘otherregarding’ rationale. The dispute concerned a challenge against US legislation, which prohibited the import of shrimp harvested with technology posing a risk to sea turtles, identified as threatened species.120 The measure gave rise to unjustifiable discrimination, as it would force other countries to adopt ‘essentially the

115 Identical wording is found in Article XIV GATS and in the Preamble of the TBT Agreement. 116 Bartels, ‘The Chapeau of Article XX’ (n 9 above). 117 This may give rise to MFN discrimination although differentiation on the basis of other Members’ laws has not yet been adjudicated, Mitchell and Ayres (n 97 above). 118 The EU Timber Regulation does not require third countries to adopt requirements on legality of timber or provide indications as to the minimum content of third country legislation. 119 Disguised restrictions to trade would include the situations of such discrimination and would be based on similar considerations, AB Report, US–Gasoline (n 9 above) 25. 120 Section 609 of Public Law 101-162, 16 United States Code (USC) §1537.

IEMEIs under the Chapeau  267 same policy’ as that of the US.121 Additionally, it led to unjustifiable discrimination due to the failure of the US to engage in serious negotiations in good faith to agree on a consensual system of conservation.122 Furthermore, the rigidity of the certification process did not allow for consideration of different conditions that prevail in third countries and did not provide for any flexibility, thus giving rise to arbitrary discrimination.123 Finally, it failed to comply with due process requirements that were deemed important under the chapeau.124 The requirements stemming from US–Shrimp have significant legitimising potential for IEMEIs, as the AB ruling is seen as a ‘striking effort to promote forum state protection of the interests of affected foreign states’.125 However, requirements stemming from the chapeau in specific disputes may not be given similar weight in every dispute, given that ‘the location of the line of equilibrium, as expressed in the chapeau, is not fixed and unchanging’ but is rather assessed on a case-by-case basis.126 As Weimer demonstrates, the other-­regarding obligations developed in US–Shrimp were not equally applied in later cases such as US–Tuna II, where the United States’ rigid eco-labelling requirement was allowed as long as it was applied consistently.127 The chapeau’s influence on EU action can contribute to partly filling the gaps of accountability, participation and representation, and justice associated with IEMEIs, while the fluid nature of the chapeau may undermine its disciplining function, given the uncertainty surrounding the breadth and content of specific requirements and how they are applied in specific cases, as well as how IEMEIs respond to them. A.  Duty to Engage in Good Faith Negotiations The interpretation of the chapeau favours the use of cooperative solutions to international concerns, specifically to global or transboundary problems, and encourages the conclusion of multilateral cooperative arrangements.128 The chapeau could thus discipline the unilateral nature of IEMEIs by requiring the regulating state to engage in good faith negotiations to achieve a cooperative solution before resorting to a unilateral measure.129 This requirement may contribute to filling the accountability gap related to IEMEIs as well as the 121 AB Report, US–Shrimp (n 1 above) para 161. 122 ibid paras 167–169. 123 ibid para 177. 124 ibid para 181. 125 B Kingsbury, N Krisch and RB Stewart, ‘The Emergence of Global Administrative Law’ (2005) 68 Law and Contemporary Problems 15, 36. 126 AB Report, US–Shrimp (n 1 above) para 159. 127 Weimer (n 87 above) 919. 128 ibid para 168. 129 Panel Report, US–Shrimp (n 29 above) para 7.56; US–Shrimp (Article 21.5) (n 23 above) paras 115–134; Vranes (n 4 above) 133; Scott, ‘International Trade’ (n 16 above). See also AB Report US–Gasoline (n 9 above) 27.

268  Justifying IEMEIs under Exceptions in the WTO participation and representation gap at the formulation stage by providing the opportunity to third country actors to have a voice in the formulation of policies that affect them. In establishing this duty, the AB in US–Shrimp referred to non-WTO international law instruments that call for cooperative efforts and require states to refrain from using unilateral measures to address transnational environmental problems.130 As well as international instruments requiring cooperative efforts, a preference for multilateral solutions was identified as an internal standard, recognised in the WTO itself,131 and could thus apply under the chapeau even in the absence of reliance on international instruments.132 The requirement to engage in multilateral negotiations was also identified by the AB as necessary and appropriate in US–Gasoline. The AB stressed the need for ‘cooperative arrangements with both foreign refiners and the foreign governments concerned’, thus identifying the importance of providing both third country governments and private affected interests with opportunities to have a voice in the formulation of policies that affect them.133 The legitimising potential of the duty to negotiate as a mechanism to control unilateral action is not straightforward, as ‘the duty to cooperate is vastly under-specified’.134 It is unclear how and when it would be discharged. Cooperation is needed as far as possible,135 without requiring WTO Members to conclude an agreement, but rather to attempt to conclude a cooperative solution in good faith.136 This requirement may have arguably been downgraded in US–Gambling. In assessing necessity under the paragraphs of Article XX, the AB clarified that the duty to negotiate with a view to achieving a cooperative solution did not amount to a reasonably available alternative measure, as the results of negotiations would be uncertain.137 This could indicate that the duty to negotiate has been downgraded somewhat under the chapeau as well, or that negotiated efforts are inappropriate for assessing necessity. Nonetheless, the duty is still relevant in assessing the application of the chapeau and specifically unjustifiable discrimination, albeit not in all disputes.138 The interpretation of the duty indicates that it amounts to a duty of conduct rather than result.­ 130 AB Report, US–Shrimp (n 1 above) para 168. The AB referred to Article 5 of the Convention on Biological Diversity and to Principle 12 of the Rio Declaration. 131 ibid, the AB referred to the Report of the Committee on Trade and the Environmental at the Singapore Ministerial Conference. 132 R Pavoni, ‘Mutual Supportiveness as a Principle of Interpretation and Law-Making: A Watershed for the “WTO-and-Competing-Regimes” Debate?’ (2010) 21 European Journal of International Law 649. 133 AB Report US–Gasoline (n 9 above) 27; Benvenisti and Agon (n 71 above) 16–17. 134 Scott, ‘International Trade’ (n 16 above). 135 R Howse, ‘The Appellate Body Rulings in the Shrimp/Turtle Case: A New Legal Baseline for the Trade and Environment Debate’ (2002) 27 Columbia Journal of Environmental Law 491. 136 US–Shrimp (Article 21.5) (n 23 above) paras 123–124. 137 AB Report, US–Gambling (n 8 above) para 317. 138 Panel Report on Brazil – Measures Affecting Imports of Retreaded Tyres (Brazil–Tyres), WT/DS332/R, adopted 12 June 2007, para 7.262.

IEMEIs under the Chapeau  269 Assessing whether a state has fulfilled this procedural requirement is largely subjective. The following analysis draws out different aspects of uncertainty as to what the duty to negotiate a multilateral solution requires, what it could mean in practice, and how it may affect IEMEI legitimacy. First, it is unclear whether the requirement to engage in negotiations is to be assessed comparably, by examining whether the EU has engaged in negotiations with some but not other countries,139 or whether this requirement goes beyond discrimination and would condemn failure to engage in negotiations with any countries.140 In US–Shrimp, the fact that the US had engaged in negotiations with some countries but not others was important in finding that its conduct amounted to unjustifiable discrimination.141 In fact, in US–Shrimp(Article 21.5), the AB specified that it is a requirement to make a ‘comparable negotiating effort’ with all trading partners.142 Arguably however, this does not amount to a self-standing duty to negotiate.143 Second, the requirement of good faith negotiations could be relevant when adopting unilateral measures, to ensure that they are sufficiently flexible144 by consulting with the countries affected, thus contributing to the participation and representation gap related to IEMEIs, at the formulation stage. In this respect, in EC–Seal Products, the EU was required to be informed about relevant conditions of Inuit and indigenous communities which would be affected by its Regulation.145 The fact that the EU had not made ‘comparable efforts’ to facilitate access to the ban exception by Canadian Inuit as it did for Greenlandic Inuit determined its compatibility with the chapeau.146 While the chapeau does not go as far as requiring such consultations when formulating domestic measures, it does require good faith efforts to negotiate cooperative solutions and encourages consultations with affected interests. Third, the AB in US–Shrimp referred to an international agreement successfully concluded by the US with some countries as factual evidence in demonstrating that there were other reasonably available, less rigid routes that the US could have taken.147 The AB also noted the United States’ failure to pursue action in the relevant international regime.148 In examining compliance with the chapeau, the WTO bodies may thus look at the action of the regulating

139 This could be relevant for bilateral agreements on sustainable biofuels or for VPAs in the timber regime. 140 G de Búrca and J Scott, ‘The Impact of the WTO on EU Decision-Making’ in G de Búrca and J Scott (eds), The EU and the WTO: Legal and Constitutional Aspects (Hart, 2001) 20. 141 AB Report, US–Shrimp (n 1 above) para 172. 142 US–Shrimp (Article 21.5) (n 23 above) paras 122–123. 143 Howse (n 135 above). 144 Section III.B below. 145 Young, ‘Trade Measures to address Environmental Concerns’ (n 6 above). 146 AB Report, EC–Seal Products (n 41 above) paras 5.325–5.328, 5.337; ibid 314. 147 The Inter-American Convention, AB Report, US–Shrimp (n 1 above) paras 169, 171. 148 ibid para 171.

270  Justifying IEMEIs under Exceptions in the WTO jurisdiction within relevant international fora in assessing whether its unilateral action is justified. Because of the uncertainties of what the duty to negotiate requires, it is unclear how this duty would apply to IEMEIs and whether it can serve a legitimising function. For example, the fact that the EU has consistently made efforts to advance negotiations on aviation emissions in the ICAO would likely satisfy the requirement for attempting negotiations under the chapeau. However, it remains to be seen if the EU decides to resume application of the Aviation Directive to international flights post-2023 on the basis of a review of the ­operationalisation of the global-market-based mechanism agreed under ICAO,149 which could prompt third countries to challenge its legality before the WTO.150 The outcome of such a dispute could go either way. A WTO ruling could require the EU to defer to the ICAO as the relevant international organisation to regulate this issue.151 Alternatively, given the importance of climate change, as recognised in international agreements, and the EU’s efforts to achieve a multilateral solution, it could lawfully resume its unilateral action, particularly if the implementation of the global mechanism is not satisfactory. The latter approach would be in line with the WTO bodies’ approach in respecting the choices of WTO Members as to the appropriate level of protection. Requiring the EU to address aviation emissions through the ICAO’s market-based mechanism would amount to requiring the EU to lower its chosen level of protection, given the largely aspirational goals of the global mechanism and the fact that it is less demanding than the inclusion of aviation emissions in the EU ETS. However, in light of the remarkable international resistance to the EU’s unilateral action on this issue, political realities may indicate otherwise. The WTO’s role in assessing the cooperative efforts of its members is thus fraught with complexities. Apart from pursuing parallel cooperative solutions alongside unilateral action, IEMEIs also make explicit links to cooperative efforts in relation to compliance.152 For example, the Aviation Directive provides for conditional application in case an international agreement is reached,153 the EU Timber Regulation provides for the conclusion of bilateral VPAs,154 and the Renewable

149 Regulation (EU) 2017/2392 amending Directive 2003/97/EC to continue current limitations of scope for aviation activities and to prepare to implement a global market-based mechanism from 2021 [2017] OJ L350/7, Art 7(1). See Chapter 1, Section III.B. 150 C Ryngaert, ‘Whither Territoriality? The European Union’s Use of Territoriality to Set Norms with Universal Effects’ in Cedric Ryngaert, EJ Molenaar and S Nouwen (eds), What’s Wrong with International Law? (Brill, 2015). 151 Kyoto Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, 2303 UNTS 148, Art 2(2). The Directive was challenged before the EU courts on this basis, ATAA (n 43 above). 152 Chapter 1, Section III.B. 153 Consolidated Version of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32, Art 25a(2). 154 Regulation (EU) 995/2010 laying down the obligations of operators who place timber and timber products on the market [2010] OJ L295/23, Art 3.

IEMEIs under the Chapeau  271 Energy Directive includes the possibility to endeavour to conclude bilateral or international agreements on sustainable biofuels.155 These features demonstrate how the EU seeks to achieve WTO consistency in novel ways,156 which could nonetheless give rise to different kinds of legitimacy questions about its unilateral action. The ways in which IEMEIs provide for cooperation opportunities in their implementation provides evidence of cooperative efforts that function as an alternative to directly complying with EU requirements, rather than evidence of prior cooperative efforts informing their formulation. They may thus give rise to novel questions about their WTO permissibility as well as their legitimacy. While contingency features in IEMEIs demonstrate the willingness of the EU to adapt its measures to international agreements and may be seen as evidence of good faith,157 the application of unilateral trade-restrictive measures as ‘penalty defaults’ can be problematic. Using IEMEIs as leverage or bargaining chips to engage third countries in negotiations can be particularly problematic in relation to developing countries that may largely depend on exports to the EU market. This approach may blur the lines of good faith negotiations and instead incorporate a ‘carrot and stick’ approach to multilateralism that could raise legitimacy questions particularly towards developing countries.158 The duty to engage in good faith negotiations stemming from the chapeau is incapable of fully taking into account the asymmetries of political power at play and may be insufficient to control the use of EU global regulatory power, particularly towards less powerful states. The way in which the EU exercises the discretion inherent in the ‘contingent’ features of IEMEIs is thus insufficiently disciplined from the perspective of WTO law. Through the duty to engage in negotiations before resorting to unilateral measures, the ‘AB sought to narrow the gap between jurisdictional reach and practical problem-solving’.159 In principle, the duty could thus provide a useful way of assessing the appropriate level of governance for regulating transboundary or global environmental measures in light of stagnant international developments. However, assessing the relationship between unilateral and multilateral efforts is not straightforward and its determination by WTO bodies is politically problematic. Overall, by promoting international solutions and cooperation with third countries, the requirement to seek cooperative solutions may contribute to partly filling the participation and representation gap of IEMEIs. This requirement also potentially creates an accountability mechanism through which the 155 RED (n 17 above) Art 18(4). 156 On timber: J Zeitlin, Extending Experimentalist Governance? The European Union and Transnational Regulation (OUP, 2015) 164; biofuels: Ackrill and Kay (n 56 above); aviation: Cooreman, ‘Addressing Environmental Concerns through Trade’ (n 6 above). 157 Cooreman (n 30 above) 166–67. 158 BS Chimni, ‘WTO and Environment: Legitimisation of Unilateral Trade Sanctions’ (2002) Economic and Political Weekly 133. 159 Scott, ‘International Trade’ (n 16 above) 311.

272  Justifying IEMEIs under Exceptions in the WTO cooperative efforts of the EU may be subject to review by external adjudication. However, given its many qualifications and the uncertainty of whether it will be relevant in specific disputes, the requirement to engage in good faith negotiations, at least on its own, falls short of a workable and effective legal constraint to control the unilateral exercise of EU global regulatory power. The following sub-section examines additional requirements stemming from the chapeau, relating to the content and implementation of unilateral measures. B. Flexibility Unilateral process-based measures can be problematic under the chapeau because of exportation of domestic standards to third countries that can disturb the equilibrium between WTO members. For this reason, the AB in US–Shrimp stressed the need for such measures to be designed and applied flexibly to third countries. Flexibility has significantly influenced the formulation of IEMEIs, which avoid directly exporting EU standards in the sense of requiring third countries to adopt the exact same policies, thus demonstrating the disciplining effect already exerted by WTO law on EU unilateral policies. Nonetheless, IEMEIs could still, de facto, give rise to coercive effects on third country actors, raising questions as to how far flexibility requirements control unilateral action, particularly in relation to disciplining the effects of unilateral policies on developing countries. (i)  Flexibility Requirements Unjustified or arbitrary discrimination under the chapeau can be found ‘when the application of the measure at issue does not allow for any inquiry into the appropriateness of the regulatory program for the conditions prevailing in those exporting countries’.160 For this reason, the AB rejected the rigid and unbending measure in US–Shrimp, which did not take account of the different conditions and interests of exporting countries,161 and accepted the more flexible measure in US–Shrimp (Article 21.5).162 The interpretation of the chapeau in this way recognises that different conditions in different Members call for different treatment and thus requires the regulating country to ensure that its measure is flexible enough to accommodate such differences.163 This, however, can mean different things.

160 AB Report, US–Shrimp (n 1 above) para 165. 161 Morosini (n 110 above); Benvenisti (n 7 above). 162 US–Shrimp (Article 21.5) (n 23 above). 163 ibid para 164; SD Ladly, ‘Border Carbon Adjustments, WTO Law and the Principle of Common but Differentiated Responsibilities’ (2012) 12 International Environmental Agreements: Politics, Law and Economics 63.

IEMEIs under the Chapeau  273 One of the problems with the US measure was that it included countrybased restrictions, requiring certification of countries without allowing shrimp caught in compliant conditions from non-certified countries. Country-based restrictions are more likely to give rise to arbitrary or unjustifiable discrimination with the possible result that operators from countries that meet regulatory requirements may be excluded from the market.164 Conversely, batch-by-batch restrictions are in principle more flexible and do not undermine the multilateral nature of the trading system.165 The permissibility of country-based restrictions has not been conclusively settled in WTO law.166 In the context of IEMEIs, the EU usually avoids country-level restrictions, which are more problematic. However, some country-level elements are found in the IUU Regulation. Even though the Regulation requires certification on a batch-by-batch basis, it also contains country-based elements in determining whether third countries are eligible to issue catch certificates and their capacity to verify compliance,167 as well as in enforcement against non-cooperating countries through the blacklisting system.168 These elements can have coercive effects on third countries.169 However, these country-based restrictions are different from the measure in US–Shrimp. The problem with the US measure was that operators that adopted fishing practices that did not endanger turtles would still not be able to export if their country was not authorised. In relation to IUU requirements, it is unclear whether operators can comply with the Regulation if the flag-state is not cooperating. The IUU Regulation does not set out specific fishing techniques or requirements that the operator can comply with even if the state does not, as it requires fishing to occur in accordance with national laws, be reported to competent national authorities and take place in waters where relevant regulations apply. The fact that the EU is not exporting its own conservation measures, but rather refers to international standards would arguably make it less problematic.170 Nonetheless, through the ­blacklisting of non-­cooperating countries, the EU bans products from those countries and 164 R Howse and D Regan, ‘The Product/Process Distinction – An Illusory Basis for Disciplining “Unilateralism” in Trade Policy’ (2000) 11 European Journal of International Law 249. 165 J Scott, ‘On Kith and Kine (and Crustaceans): Trade and Environment in the EU and WTO: United States Restrictions on the Importation of Shrimp’ in J Weiler (ed), The EU, the WTO, and the NAFTA: Towards a Common Law of International Trade (OUP, 2001). 166 DH Regan, ‘How to think about PPMs (and climate change)’ in T Cottier, O Nartova and SZ Bigdeli (eds), International Trade Regulation and the Mitigation of Climate Change: World Trade Forum (CUP, 2009); S Charnovitz, ‘The Law of Environmental “PPMs” in the WTO: ­Debunking the Myth of Illegality’ (2002) 27 Yale Journal of International Law 59 (country-level PPMs are ­inherently problematic), Cooreman, ‘Addressing Environmental Concerns through Trade’ (n 6 above) (country-level PPMs are allowed only when incorporating internationally agreed ­standards); Howse (n 135 above); Scott, ‘Territorial Extension’ (n 40 above) 116 (country-level restrictions are allowed as long as they are flexible). 167 Regulation (EC) 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing [2008] OJ L286/1 (IUU Regulation) Art 20. 168 ibid Art 38. 169 Cooreman (n 30 above) 214. 170 IUU Regulation (n 167 above) Art 2.

274  Justifying IEMEIs under Exceptions in the WTO requires that they take ‘concrete measures’ to adjust their legislative framework before considering de-listing them.171 Therefore, while the EU enforces international standards, it does so in ways that can be coercive, contrary to the requirements of the chapeau. Apart from prohibiting rigid exportation of domestic standards abroad, the AB in US–Shrimp (Article 21.5), specified that ‘conditioning market access on the adoption of a programme comparable in effectiveness’ is acceptable under the chapeau.172 Accepting equivalent measures ‘allows the exporting Member to adopt a regulatory programme that is suitable to the specific conditions prevailing in its territory’.173 In this way, exporting countries are given ‘sufficient latitude with respect to the measures they may adopt to achieve the level of effectiveness required’.174 However, how much latitude and comparability are required in practice may not always be clear. IEMEIs are usually designed to apply flexibly to third countries and do not require adoption of essentially the same policies. Nonetheless, because of the economic power of the EU market, IEMEIs can have de facto coercive effects in influencing third country practices and policies,175 in which case the disciplining function of flexibility requirements is blurred. (ii)  Flexibility and Compliance Features of IEMEIs As explained in Chapter one, compliance with IEMEIs is often determined on the basis of different kinds of flexibility clauses, including equivalence, which provide evidence of the ex ante influence of WTO law on IEMEIs.176 For example, the Aviation Directive provides for recognition of equivalent measures by third country governments,177 which is likely to be ‘compatible with the spirit and letter of WTO law’ if applied in a flexible and non-discriminatory manner.178 The crucial issue is how the EU would assess third country measures as having an environmental effect ‘at least equivalent’ to that of the Directive and how ‘optimal interaction’ between EU and third country measures would be ensured.179 Notably, flexibility under the chapeau is assessed both by examining 171 ibid Art 34(1); Cooreman (n 30 above) 215–16. 172 US–Shrimp (Article 21.5) (n 23 above) para 144. Recognition of equivalent measures is also encouraged under TBT Agreement, Art 2.7. 173 US–Shrimp (Article 21.5) (n 23 above) para 144. 174 ibid. 175 Ankersmit, Lawrence and Davies (n 37 above). 176 Chapter 1, Section III.B.(iii). 177 Directive 2003/87/EC (n 153 above) Art 25(a). 178 Commentary by R Howse in L Bartels, ‘The Inclusion of Aviation in the EU ETS, WTO Law Considerations’ (2012) ICTSD Global Platform on Climate Change, Trade and Sustainable Energy, Issue Paper 6/2012. 179 Directive 2003/87/EC (n 153 above) Art 25(a); Directive 2008/101/EC amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] OJ L8/3, Recital 17; J Meltzer, ‘Climate Change and Trade – The EU Aviation Directive and the WTO’ (2012) 13 Journal of International Economic Law 111.

IEMEIs under the Chapeau  275 whether the operative provisions of measures apply identical standards to third countries, and by examining the actual implementation of such measures.180 The examination of the chapeau could thus involve assessment of how the EU would administer the interaction between the Directive and third country measures on aviation emissions to ensure that flexibility is not eliminated in practice. The way in which EU administrators exercise discretion may, thus, be subject to external review under the WTO system. Such review could potentially clash with judicial review of equivalence by the CJEU that may find that equivalence instead lowers the level of protection sought by EU legislation.181 Realistically, given the overwhelmingly negative reaction to the EU’s unilateral measure, any action taken by third countries would have likely been deemed equivalent to get the scheme running. As the application of the Aviation Directive to foreign flights is currently suspended, there is not sufficient information about how it would have been implemented in practice and what role WTO adjudication could have played in this context. Equivalence is also included in IEMEIs in different forms that avoid exportation of EU-set standards to third country facilities in a rigid manner. This can be seen in the export-related IEMEIs. The WEEE Directive requires treatment of waste in third countries to take place in equivalent conditions and the Commission is to set criteria for assessing such equivalence.182 Additionally, the Ship Recycling Regulation requires management of waste generated from ship recycling in third country facilities to take place in waste management facilities that operate under conditions ‘broadly equivalent to relevant international and EU standards’,183 requiring a ‘similar level of protection’.184 While these measures do not impose identical standards, their implementation largely relies on unilateral determination of equivalence by the EU Commission. In examining compliance with the chapeau, the WTO bodies could examine how the ship recycling guidance and the WEEE equivalent criteria are applied in practice to ensure that they genuinely allow for flexibility. Nonetheless, these flexibility provisions apply to individual third country facilities rather than to third country governments and therefore the WTO’s review of such practice may be less intrusive. A different kind of flexibility clause in IEMEIs consists of the possibility to comply through supplementary modes of compliance.185 For example, the use

180 AB Report, US–Shrimp (n 1 above) para 161. 181 Case C-362/14 Maximillian Schrems v Data Protection Commissioner EU:C:2015:650. See Chapter 4, Section III.D.(iv). 182 Directive 2012/19/EU on waste electrical and electronic equipment (WEEE) [2012] OJ L197/38, Art 10. 183 Ship Recycling Regulation (n 19 above) Art 15(5). 184 Commission, ‘Requirements and procedure for inclusion of facilities located in third countries in the European List of ship recycling facilities – Technical guidance note under Regulation (EU) No 1257/2013 on ship recycling’ (Communication) [2016] OJ C128/113. 185 Chapter 1, Section III.B.(ii).

276  Justifying IEMEIs under Exceptions in the WTO of voluntary certification schemes to verify compliance with the sustainability criteria for biofuels reduces the costs of compliance and allows for streamlining global standards,186 demonstrating the ex ante influence of WTO law in designing flexible measures. The implementation of supplementary modes of compliance can still be problematic, particularly regarding procedural failures in authorising certification schemes, which could also give rise to incompatibility with the chapeau as examined in Section III.C below. The above discussion demonstrates how the chapeau requires regulating jurisdictions to take into account third country circumstances by designing and applying unilateral measures in flexible ways, with the WTO dispute settlement bodies potentially having an oversight role, thus contributing to filling the accountability gap related to IEMEIs. The legitimising function of flexibility requirements, however, is inherently limited by focusing on trade effects and failing to sufficiently take into account the special circumstances of developing countries. (iii)  Flexibility and Developing Countries A broad interpretation of discrimination under the chapeau in terms of allowing for inquiry into the ‘appropriateness’ of measures for third countries would not only include situations when countries where the same conditions prevailed were treated differently, but also when countries where different conditions prevailed were treated in the same way.187 The same standards may not be appropriate for countries where the same conditions do not prevail. This could be the case as regards developed vis-à-vis developing countries,188 in line with sustainable development and CBDR, which can be relevant for the interpretation of WTO provisions as discussed in the Introduction to Part III. Such a reading of the chapeau could require the regulating country to consider whether the exporting country should be obliged to carry the same burden as the regulating developed country, especially in relation to climate change measures where historical contributions and different capacities justify differential obligations.189 Particularly when the dissimilar economic conditions affect the environmental conditions in the sense of the affected developing country lacking the necessary resources to attain the requisite environmental standard,190 the chapeau should take account

186 J Lin, ‘Environmental Regulation of Biofuels: Limits of the Meta-Standard Approach’ (2011) 5 Carbon and Climate Law Review 34. 187 M Hertel, ‘Climate-Change-Related Trade Measures and Article XX: Defining Discrimination in Light of the Principle of Common but Differentiated Responsibilities’ (2011) 45 Journal of World Trade 653. 188 P Low, ‘Is the WTO Doing Enough for Developing Countries?’ in GA Bermann and PC Mavroidis (eds), WTO Law and Developing Countries (CUP, 2007). 189 J Pauwelyn, ‘Recent Books on Trade and Environment: GATT Phantoms Still Haunt the WTO’ (2004) 15 European Journal of International Law 575. 190 Cooreman (n 30 above) 162.

IEMEIs under the Chapeau  277 of the different rights and priorities among developed and developing WTO Members. However, while the chapeau requires the regulating jurisdiction to take into account third country conditions in relation to the type of policy to be adopted, this does not go as far as requiring the measure to have different effects on third countries by requiring mitigation responsibilities to be distributed accordingly.191 The extent to which regulating jurisdictions would be required to consider conditions in developing countries could be of variable strength. The AB in US–Gasoline criticised the US for its omission to take account of the costs that foreign refiners would incur, as it did for domestic ones, and criticised its failure to consult with Venezuela in mitigating the administrative difficulties of implementing individual baselines.192 In this way, the AB recognised an ‘otherregarding’ obligation on the part of the regulating state to take into account the interests of affected third country actors.193 Such an obligation may become more demanding when foreign actors are situated in developing countries, as unnecessary costs could hinder their development. However, this obligation is relatively flexible, and it is unclear how far it would go in requiring substantial consideration of developing country interests. Even though the chapeau requires measures to ‘be designed in such a manner that there is sufficient flexibility to take into account the specific conditions prevailing in any exporting Member’,194 this does not amount to a requirement to address the conditions prevailing in every individual exporting country.195 In any event, requiring Members to accept third country equivalent measures, as discussed above, may not sufficiently accommodate developing country interests, as the regulating jurisdiction can still implicitly require the third country to regulate on a specific policy issue at a specific time, which in relation to developing countries can become overly burdensome and be incompatible with CBDR.196 On the basis of current doctrine, flexibility requirements would likely require acceptance of comparable measures without necessarily accommodating consideration of the different capacities and priorities of developing countries. For example, it is unclear whether WTO review would require the EU to accept measures taken by developing countries on aviation emissions that may achieve a lower standard of environmental protection that responds to their development needs and capacity constraints, and would be in line with the principle of CBDR.197 This demonstrates the limitations of WTO law to fill the distributive justice gap related to the effects of IEMEIs on developing countries. 191 Hertel (n 187 above). 192 AB Report, US–Gasoline (n 9 above) 27–29. 193 Benvenisti and Agon (n 71 above) 10. 194 US–Shrimp (Article 21.5) (n 23 above) para 149. 195 Chimni (n 158 above) 136. 196 Hertel (n 187 above). 197 NL Dobson and C Ryngaert, ‘Provocative Climate Protection: EU “Extraterritorial” Regulation of Maritime Emissions’ (2017) 66 International and Comparative Law Quarterly 295, 323.

278  Justifying IEMEIs under Exceptions in the WTO To conclude, the chapeau requires unilateral measures to be designed and applied flexibly by avoiding the imposition of a uniform standard, but rather allowing some room for differentiation, reflecting the different conditions in place in different parts of the world. To that effect, IEMEIs include novel features that avoid exporting the exact same standards and provide for flexible implementation in and enforcement against third countries, for which the EU can be held to account under the chapeau. To a certain extent, therefore, WTO law already exerts legal control over EU global regulatory power, which is often reflected in the legal design of IEMEIs. However, when IEMEIs effectively force third countries, and particularly developing countries, to address specific policy issues without sufficient consideration of the burdens imposed, IEMEIs can still be problematic in terms of maintaining the equilibrium among WTO Members, and in terms of legitimacy. Beyond flexibility requirements, the chapeau imposes due process requirements on how unilateral measures are applied to third countries, thus partly addressing the procedural justice gap related to IEMEIs. C.  Due Process Requirements The final aspect of the chapeau with potential to legitimise IEMEIs relates to requirements of basic fairness and due process, relevant for filling the procedural justice gap as well as contributing to the participation and representation gap at the implementation stage of IEMEIs. Due process requirements stemming from WTO law could be supplementary to procedural requirements in EU law, possibly having combined legitimising effects. The AB in US–Shrimp drew on Article X:3 GATT and stressed the need for rigorous compliance with fundamental requirements of due process in relation to measures seeking to be justified under exceptions.198 The AB condemned the ‘singularly informal and casual’199 procedure of certification of exporting countries, emphasising the failure to provide third countries with an opportunity to be heard and to hear arguments against them, the lack of a written decision and the lack of a formal legal procedure to review decisions.200 By focusing on procedural obligations, the AB ‘relocated the decision-making power back to the domestic level’ while imposing some constraints in the form of due consideration of the interests of third country affected actors.201

198 AB Report, US–Shrimp (n 1 above) para 182. 199 ibid para 181. 200 ibid para 183. 201 M Ioannidis, ‘Beyond the Standard of Review, Deference Criteria in WTO Law and the Case for a Procedural Approach’ in L Gruszczynski and W Werner (eds), Deference in International Courts and Tribunals: Standard of Review and Margin of Appreciation (Oxford University Press, 2014) 108. See also Benvenisti and Agon (n 71 above).

IEMEIs under the Chapeau  279 Due process requirements often influence the institutional architecture of regulating jurisdictions by influencing administrative practices domestically.202 Most IEMEIs include provisions that confer procedural rights at the implementation stage.203 This is sometimes directly linked to WTO influence on EU law. The IA on the IUU Regulation expressly links due process requirements of the Regulation to addressing requirements of compatibility with WTO law.204 Due process requirements stemming from WTO law thus exert legitimising influence on EU legislation by promoting procedural fairness that is reflected in the legal design of IEMEIs. When the specific measures do not provide for procedural rights, EU administrative law may provide for such due process requirements. The procedural requirements stemming from the chapeau largely mirror the right to be heard in EU law at the implementation stage,205 as well as other EU law principles on transparency.206 Their interpretation as part of the chapeau can not only influence the legal design of IEMEIs but also exert external pressure to uphold due process safeguards in the EU legal order towards third country actors, thus having combined legitimising effects. Despite the procedural requirements in place, EU procedures regarding implementation of IEMEIs are not always procedurally fair or ensured by general principles of EU law in effective ways. In EC–Seals, the AB drew attention to the ambiguous and vague nature of the criteria for satisfying the exception on indigenous communities (IC), and stressed the need both to constrain the broad discretion accorded to EU regulators in assessing the IC criteria and to apply transparent procedures in a fair and just way.207 The WTO dispute settlement bodies can thus play a role in reviewing the procedural fairness of the implementation procedures of IEMEIs. In the context of IEMEIs, due process irregularities have been raised about the authorisation procedure of voluntary certification schemes in relation to the sustainability criteria on biofuels, as discussed in Chapter five. In case a certification scheme is found not to comply with the sustainability criteria, then it will be informed of the decision, but there is no official procedure for hearing reasons for the decision or for challenging it. Also, there are no detailed rules on a timeline for a decision.208 The procedures of consultation and authorisation are generally not very transparent,209

202 G Shaffer, ‘How the World Trade Organization Shapes Regulatory Governance’ (2015) 9 ­Regulation and Governance 1. 203 Chapter 3, Section II.B. 204 IA on the IUU Regulation (n 104 above) 68. 205 Chapter 3, Section II.B. 206 Chapter 3, Sections V and VI. 207 AB Report EC–Seals (n 41 above) paras 5.324–5.328. 208 Commission, ‘Communication on voluntary schemes and default values in the EU biofuels and bioliquids sustainability scheme’ [2010] OJ C160/01. 209 M Gaebler, ‘Recognition of Private Sustainability Certification Systems for Public Regulation (Co-Regulation): Lessons Learned from the EU Renewable Energy Directive’ in C Schmitz-­Hoffmann and others (eds), Voluntary Standard Systems: A Contribution to Sustainable Development (Springer, 2014).

280  Justifying IEMEIs under Exceptions in the WTO and a request by environmental NGOs to have access to documents relating to the procedure of authorisation was denied by the Commission.210 This could indicate lack of transparency and procedural fairness towards third country actors as well. The fact that Argentina’s voluntary biofuels certification scheme was not authorised by the Commission prompted it to initiate a claim against the EU under the WTO.211 Similarly, the approval and denial of monitoring organisations, which can provide operators with a due diligence system for complying with the EU Timber Regulation,212 is to be carried out in a ‘fair and transparent’ way, without further specification.213 It is not clear, in advance, which verification methodology would meet regulatory approval and be considered as meeting the due diligence obligation,214 which could fall short of due process requirements in accordance with the rule of law. Furthermore, there is minimal information about how the negotiating procedures for VPAs under the FLEGT regime are to take place.215 For example, there is no mechanism to appeal against suspension of n ­ egotiations.216 The political nature of the VPA negotiating process may mean that due process requirements under EU administrative law would not necessarily apply, which makes due process requirements stemming from WTO law even more important in compensating for the shortcomings of EU law by acting in parallel to legitimise IEMEIs. The legitimising potential of WTO due process requirements is significant. However, the realisation of this potential may be constrained as a matter of WTO law, as a matter of EU law or as a matter of political reality. The combined legitimising effects of these two legal orders for IEMEIs thus lie both in their operation as separate, overlapping legal regimes, as well as in their combination as integrated bodies of law. First, it is unclear whether WTO bodies would engage in an extensive review of IEMEI implementation procedures and how they are applied to specific WTO Members, nor is it clear how much weight would be given to due process irregularities in a dispute. While due process issues were relevant in US–Shrimp, they may not be emphasised in every case. Also, it is unclear whether due process requirements have ‘a life of their own’ or whether they are dependent on discrimination.217 Second, WTO requirements 210 Case T-278/11 Clientearth and others v Commission, EU:T:2012:593. 211 EU and Certain Member States – Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry – Request for Consultations by Argentina, WT/DS459/1; G/L/1027; G/SCM/D97/1; G/TRIMS/D/36; G/TBT/D/44 (23 May 2013); F Smith and M Cardwell, ‘Contemporary Problems of Climate Change and the TBT Agreement: Moving Beyond Eco-Labelling’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013) 396. 212 Timber Regulation (n 154 above) Arts 4(2), 8(2). 213 ibid Art 8. 214 Fishman and Obidzinski (n 34 above). 215 ibid. 216 ibid. 217 de Búrca and Scott (n 140 above). Some due process requirements also apply under Article X:3 GATT and Article VI GATS. These could apply irrespective of discrimination, albeit in more general terms that might not be as constraining.

IEMEIs under the Chapeau  281 of due process do not indicate specific requirements or create new procedural rights for third country actors, if such rights are not already recognised under EU law. Third, while WTO due process requirements could impose external pressure on the EU institutions to ensure that such procedural safeguards are in place, their disciplining potential depends on how they are incorporated in the internal EU legal order,218 including the possibilities to challenge IEMEIs on this basis before the EU courts.219 Nonetheless, WTO law could provide a second layer of procedural fairness obligations, specifically owed to third country actors, and compensate for shortcomings of the EU legal system to ensure sufficient protection of procedural rights, especially when it is unclear whether EU law principles apply in specific situations. There is some scepticism about how far the application of global administrative procedures to domestic administration of developed jurisdictions, such as the EU, can control the exercise of regulatory power.220 Such standards are usually already applied in domestic processes and could easily be met by pointing to official procedures in place, which, however, may not necessarily create effective procedures for third country actors to voice their concerns. Compatibility with WTO legality requirements does not necessarily equate to legitimising effects on IEMEIs, demonstrating the challenge for multiple legal frames to effectively control transnational regulatory power, but also showing the need for overlapping legal regimes to work together. The challenge is for procedural obligations under WTO law not to become a pro-forma ‘checklist’ in the EU legal order so as to ensure that regulating jurisdictions ‘do more than cynically construct the trappings of due process … and listen, explain, respond and, where appropriate, revise’221 measures by taking into account third country affected interests. The combined legitimising effects of EU and WTO law for IEMEIs are thus sometimes determined by how WTO law requirements are incorporated into the EU legal order. Overall, the requirements of exceptions and the chapeau have significant potential for legitimising IEMEIs. They can contribute to filling the accountability gap by requiring consideration of the effects of regulatory measures on third countries and through incorporation of international law and efforts to achieve cooperative solutions. They have potential to also fill the participation and representation gap at the formulation stage, by requiring states to engage in negotiations before adopting unilateral measures, and at the implementation stage through due process requirements, which can also contribute to filling the procedural justice gap. This is by both enabling and constraining EU ­regulatory power in different ways. The extent to which the disciplining potential of the exceptions and chapeau is fulfilled, however, is not straightforward. 218 Chapter 3. 219 Chapter 4. 220 RB Stewart and MRS Badin, ‘The World Trade Organization: Multiple Dimensions of Global Administrative Law’ (2011) 9 International Journal of Constitutional Law 556. 221 de Búrca and Scott (n 140 above) 28.

282  Justifying IEMEIs under Exceptions in the WTO This is because WTO requirements may fail to capture the different kinds of third country interests affected by IEMEIs, particularly relating to the development needs and capacity constraints of developing countries, and because in practice they often facilitate the exercise of EU regulatory power through IEMEIs ‘by allowing sufficient latitude for the EU to act as it would wish’.222 IV. CONCLUSION

To conclude, as Chapters five and six have demonstrated, WTO norms and their enforcement in the WTO DSS exert significant ‘first-order influence’ on EU regulatory practices in terms of the EU complying with WTO obligations outside of a dispute.223 The external pressure exercised by the WTO DSS and the threat of bringing a dispute against the EU, are important in legally controlling the exercise of EU regulatory power. However, given the relative power of countries involved in WTO disputes, the EU’s involvement in shaping WTO rules and its experience in dealing with WTO disputes, the disciplining force of WTO norms and the DSS may be restricted in the sense of ‘second-order influence’ as a result of complying with a WTO ruling. This is partly because the aftermath of WTO rulings may be influenced by the ‘politics of power’, thus restraining the role of the rule of law in the WTO DSS.224 While WTO dispute rulings are binding,225 the remedies for non-compliance after a reasonable period226 may not be sufficient to coerce the EU to change its measures, especially in relation to developing countries. There are therefore weaknesses in the ‘disciplining’ effect of WTO law as a distinct legal regime in ‘sanctioning’ the EU in terms of ‘external accountability’.227 Accountability through the WTO in such cases could arguably still occur, not in the form of legal accountability, but in the form of political or reputational accountability. The disciplining effect of WTO law may also be called into question because of the effects of WTO rules and rulings within the EU legal order.228 In practice, the disciplining requirements of WTO law may be turned into enabling effects, with the EU sometimes arguably using WTO dispute settlement to instead

222 AR Young, ‘Less than You Might Think: The Impact of WTO Rules on EU Policies’ in O Costa and KE Jørgensen (eds), The Influence of International Institutions on the EU (Palgrave Macmillan, 2012). 223 ibid. 224 P Eeckhout, ‘Remedies and Compliance’ in Daniel Bethlehem and others (eds), The Oxford Handbook of International Trade Law (OUP, 2009) 439; Young, ‘Less than You Might Think’ (n 222 above). 225 JH Jackson, ‘International Law Status of WTO Dispute Settlement Reports: Obligation to Comply or Option to “Buy Out”?’ (2004) 98 The American Journal of International Law 109. 226 Dispute Settlement Understanding (DSU) Arts 22(1), 22(2). 227 RO Keohane, ‘Global Governance and Democratic Accountability’ in D Held and M ­Koenig-Archibugi (eds), Taming Globalization: Frontiers of Governance (Polity Press, 2003). 228 Chapter 4, Section III.E.

Conclusion  283 expand the remit of its regulatory authority.229 The combined legitimising effects of EU and WTO law for IEMEIs may thus also be controlled through the incorporation of WTO law within the EU as the ‘home’ legal order. As Benvenisti and Agon remark, By reading WTO commitments as requiring national regulators to take foreign interests into account, to balance such interests against domestic ones, to ensure that the burden imposed on domestic and foreign actors is evenhanded, and that the procedural due process rights of affected strangers are protected, WTO adjudicators have not only manifested their recognition of the changing interconnected economic scene in which states currently exercise their sovereignty; they have also expressed their recognition of the required shift in the conception of the sovereigns and their obligations towards others that this reality entails.

The WTO legal system, at least to a certain extent, embraces the legitimacy understanding developed in Chapter two and contributes to variously addressing the legitimacy gaps created through the unilateral exercise of EU global regulatory power. While recognising the existence of other-regarding obligations under WTO law and their review by the WTO DSS, this chapter has also shown how these obligations often fall short of sufficiently filling the legitimacy gaps in practice. This is partly due to the failure to protect the right to development of affected developing countries and partly due to the qualified constraining effect of WTO law on the EU. The EU, as a developed WTO Member very much familiar with WTO requirements, is capable of designing WTO-compliant measures while employing such compliance as an asset for further extending its regulatory power without always taking sufficient account of the interests of affected third country actors. Beyond the legitimising potential of WTO norms and the WTO DSS influencing and controlling IEMEIs by functioning as external accountability avenues, more ‘routine’ operations of the WTO legal system, involving notification and transparency of national measures, have additional legitimising potential. In this way WTO law may also serve a different kind of legitimising function by creating a forum for consultation on IEMEIs among WTO Members, partly operating outside the DSS, as examined next in Chapter seven.



229 Araujo

(n 55 above); Young, ‘Less than You Might Think’ (n 222 above).

7 The WTO as a Forum of Transparency and Consultation on IEMEIs I. INTRODUCTION

W

TO procedural rules and processes in WTO organs could serve a legitimising purpose by creating transnational accountability avenues and opportunities for consultation on the formulation, application and revision of IEMEIs. This chapter examines procedural obligations of reporting, transparency and notification under the GATT and the GATS, and emphasises the legitimising potential for IEMEIs of the additional far-reaching obligations under the TBT Agreement. The analysis focuses mostly on procedural obligations and processes outside the dispute settlement system (DSS), while drawing attention to relevant jurisprudence of the WTO DSS that provides guidance as to the application of procedural obligations. WTO agreements include a vast variety of reporting obligations that aim at increasing the transparency of regulatory measures in different ways. As S­ haffer summarises, ‘WTO members must report their compliance with different WTO commitments before a web of over 70 WTO councils, committees, working parties, and other groupings that involve over 1,000 meetings’.1 Advance reporting of regulatory action to those affected, including those situated beyond the borders of the regulating jurisdiction, is identified as an essential element of addressing the external accountability gap by transnational versions of legitimacy.2 Transparency can enhance accountability by requiring the regulator to justify its choices and by providing necessary i­nformation to

1 G Shaffer, ‘How the World Trade Organization Shapes Regulatory Governance’ (2015) 9 ­Regulation and Governance 1, 11. 2 Chapter 2, Section III.B.(ii); RO Keohane, ‘Global Governance and Democratic Accountability’ in D Held and M Koenig-Archibugi (eds), Taming Globalization: Frontiers of Governance (Polity Press, 2003); E Benvenisti, ‘Sovereigns as Trustees of Humanity: On the Accountability of States to Foreign Stakeholders’ (2013) 107 American Journal of International Law 295.

Ex Post Notification Obligations as Transnational Avenues  285 those affected.3 While EU law provides for some participation by and consultation with third country interests, including in WTO terms, in its domestic regulatory processes,4 the WTO provides a multilateral forum through which government representatives and industry actors are made aware of new EU  measures and have opportunities to express their concerns. In this way, WTO reporting and consultation procedures can be complementary to the ones within the EU legal order in filling the participation and representation gap related to IEMEIs and enhancing the due process of their implementation. Participation by and representation of third country actors in this context is understood in the sense of non-decisional participation, involving opportunities for third country actors to voice submissions and provide input.5 II.  EX POST NOTIFICATION OBLIGATIONS AS TRANSNATIONAL AVENUES OF ACCOUNTABILITY AND DUE PROCESS

All the WTO Agreements examined in this book impose publication and notification requirements that aim to enhance the transparency of adopted measures and could function as transnational mechanisms of accountability and due process in the context of IEMEIs. The GATS requires prompt publication of ‘any new, or any changes to existing, laws, regulations or administrative guidelines which significantly affect trade in services covered’ by the specific commitments of that Member to the GATS.6 The GATT also requires prompt publication in such a manner ‘as to enable governments and traders to become acquainted with them’.7 These obligations increase the transparency of measures and can enable WTO members to have access to relevant information.8 In the words of the AB, in interpreting Article X:2 GATT, which requires publication of trade-related measures before their enforcement, Article X:2, General Agreement, may be seen to embody a principle of fundamental importance – promoting full disclosure of governmental acts affecting Members and private persons and enterprises, whether of domestic or foreign nationality. The relevant policy principle is widely known as the principle of transparency and has obviously due process dimensions. The essential implication is that Members and 3 RW Grant and RO Keohane, ‘Accountability and Abuses of Power in World Politics’ (2005) 99 The American Political Science Review 29. 4 Chapter 3, Section IV. 5 As opposed to decisional participation which involves a right to vote and a formal role in making decisions: RB Stewart, ‘Remedying Disregard in Global Regulatory Governance: Accountability, Participation, and Responsiveness’ (2014) 108 American Journal of International Law 211. 6 GATS Art III:3; P Delimatsis, ‘Article III GATS: Transparency’ in Rd Wolfrum, P-T Stoll and C Feinäugle (eds), WTO: Trade in Services (Martinus Nijhoff, 2008). 7 GATT Art X:1; TBT Agreement Arts 2.11 and 5.8. 8 R Howse and K Nicolaidis, ‘Enhancing WTO legitimacy: Constitutionalization or Global Subsidiarity?’ (2003) 16 Governance 73.

286  The WTO as a Forum of Transparency and Consultation on IEMEIs other persons affected, or likely to be affected, by governmental measures imposing restraints, requirements and other burdens, should have a reasonable opportunity to acquire authentic information about such measures and accordingly to protect and adjust their activities or alternatively to seek modification of such m ­ easures.9

This progressive and remarkable interpretation of WTO publication requirements embodies requirements of due process and transparency as well as recognising the transnational effects of domestic policies that affect constituencies beyond the borders of the regulating jurisdiction, who are entitled to receive sufficient information about measures that affect them.10 Ex post notification and transparency obligations are also incorporated in the TBT Agreement in relation to the publication of adopted technical regulations and conformity assessment procedures (CAPs). In particular, the TBT Agreement requires Members to publish their adopted measures in order to enable interested parties to become acquainted with them.11 Notably, the TBT Agreement recognises the importance of the timing of such publication, requiring that Member allow a reasonable interval between the publication of requirements … and their entry into force in order to allow time for producers in exporting Members, and particularly in developing country Members, to adapt their products or methods of production to the requirements of the importing Member.12

The requirement for a ‘reasonable interval’ has been reviewed by the WTO DSS, which found that the US measure on tobacco should have been made public six, rather than three months, prior to its entry into force.13 The AB importantly noted that the burden is on the responding (regulating) party to demonstrate that derogation from the six-month rule would render its technical regulation ineffective in fulfilling the legitimate objective pursued.14 Such requirements can therefore enhance the due process of the implementation of IEMEIs, particularly in relation to developing countries. These reporting obligations are largely procedural, and failure to comply with them would likely not amount to incompatibility with WTO law in

9 AB Report, United States – Restrictions on Imports of Cotton and Man-made Fibre Underwear (US–Underwear), WT/DS24/AB/R, adopted 10 February 1997, 21. 10 E Benvenisti and SS Agon, ‘The Law of Strangers: The Form and Substance of Other-Regarding International Adjudication’, GlobalTrust Working Paper 08/2017, 19: http://globaltrust.tau.ac.il/ publications. 11 TBT Agreement Arts 2.11, 5.8. 12 TBT Agreement Arts 2.12, 5.9. 13 Panel Report on US – Measures Concerning the Production and Sale of Clove Cigarettes (US–Clove Cigarettes), WT/DS406/R, adopted 2 September 2011, para 7.595. The Appellate Body upheld this finding, AB Report on US – Measures Affecting the Production and Sale of Clove ­Cigarettes (US–Clove Cigarettes), WT/DS406/AB/R, adopted 4 April 2012, paras 294, 297. In relation to the six-month period it referred to a Doha Ministerial Decision that provided guidance as to the interpretation of Article 2.12 TBT. See Benvenisti and Agon (n 10 above) 20. 14 AB Report, US-Clove Cigarettes (n 13 above) para 289; Benvenisti and Agon (n 10 above) 20.

Ex Ante Notification Obligations and Consultation Procedures  287 substantive terms in the same ways as procedural failings under the chapeau would.15 Nonetheless, they could still function as accountability avenues, albeit with seemingly fewer opportunities to sanction non-compliance,16 by providing a forum for consultation on IEMEIs. III.  EX ANTE NOTIFICATION OBLIGATIONS AND CONSULTATION PROCEDURES IN SPECIALISED WTO ORGANS: THE CASE OF THE TBT AGREEMENT AND THE TBT COMMITTEE

Beyond notification obligations on adopted measures, certain WTO Agreements require notification of draft regulations and provide consultation opportunities for the discussion of controversial trade-restrictive measures within specialised WTO organs, such as the TBT Committee, the SPS Committee and the Council for Trade in Services. This section examines provisions of the TBT Agreement that require Members to inform other WTO members of their draft legislation,17 as well as procedures for consultation under the auspices of the TBT Committee, as these would be the most relevant for IEMEIs examined in this book. The discussion refers particularly to the sustainability criteria for biofuels under the Renewable Energy Directive and to the WEEE Directive, as measures that may incorporate technical barriers to trade.18 TBT obligations bear great potential for legitimising the exercise of EU regulatory power by requiring the EU to deliberate with third countries within the auspices of the WTO. While the analysis below focuses on the TBT Agreement, the notification obligations under the GATT/GATS could arguably also prompt the EU to engage in consultation with third country representatives in other WTO organs, such as the Services Council, albeit to a lesser extent, and usually after legislation is already adopted. A.  TBT Obligations for Notification of Draft Measures Under Article 2.5 TBT, ‘a Member preparing, adopting or applying a technical regulation that may have significant effect on trade’ may be required by another Member to explain the justification for that measure.19 This is done with specific reference to obligations under the TBT Agreement and can thus assist developing countries with more limited capacities in i­dentifying

15 J Scott, ‘European Regulation of GMOs: Thinking about Judicial Review in the WTO’ (2004) 57 Current Legal Problems 117. 16 ibid. 17 Similar obligations and processes exist under the SPS Agreement. 18 On the applicability of the TBT Agreement to IEMEIs see Chapter 5, Section III.A. 19 TBT Agreement Art 2.5.

288  The WTO as a Forum of Transparency and Consultation on IEMEIs the legal grounds on which they could potentially challenge a measure.20 Provided that a WTO Member clearly requests justification of a measure under Article 2.5 TBT, failure to comply with this justification requirement could form the basis of incompatibility before the DSS, while the intensity of review as to how detailed the justification should be, is likely to be deferential to the regulating state.21 Furthermore, the TBT Agreement requires Members to notify other Members of their draft technical regulations, CAPs and standards. Members are required to provide such notification at an ‘early appropriate stage when amendments can still be introduced and comments taken into account’.22 They also have to allow other Members ‘to make comments in writing, discuss these comments upon request, and take these written comments and the results of these discussions into account.’23 These ex ante obligations create room for affected third countries to be involved at an early stage in the decision-making process and potentially urge regulating states to make amendments to their draft measures to take into account effects on third countries.24 At the very least, they create a ‘heads-up’ system of notification that can prompt exporting countries to raise their concerns about draft legislation.25 The potential of these obligations is significant in contributing to filling the accountability gap as well as the participation and representation gap related to IEMEIs, by increasing transparency and providing opportunities for input by third countries. However, their contribution is constrained by the scope and qualifications of TBT obligations, as well as by concerns regarding the effectiveness of participation within the notification process. First, the uncertain scope of the TBT Agreement could act as a barrier to these procedures, as it is not always clear what has to be notified. As discussed in Chapter five, it is uncertain whether NPR-PPMs would fall within the scope of the TBT Agreement.26 Given this uncertain scope, the EU has not notified

20 D Prévost, ‘Transparency Obligations under the TBT Agreement’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 21 In US–Clove Cigarettes, the Panel found that Indonesia had failed to make such a request under Article 2.5 TBT and in any case the US had justified its action in an earlier TBT Committee Meeting, Panel Report, US–Clove Cigarettes (n 13 above) para 7.462. See also M Wagner, ‘International Standards’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 22 TBT Agreement Arts 2.9.1, 5.6.1. 23 TBT Agreement Arts 2.9.4, 5.6.4. 24 Prévost (n 20 above); L Gruszczynski, ‘The REACH Regulation and the TBT Agreement: The Role of the TBT Committee in Regulatory Processes’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 25 P Mavroidis and EN Wijkström, ‘Moving Out of the Shadows: Bringing Transparency to Standards and Regulations in the WTO’s TBT Committee’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013); Prévost (n 20 above). 26 Chapter 5, Section III.A.

Ex Ante Notification Obligations and Consultation Procedures  289 the sustainability criteria for biofuels, as it asserts that they do not constitute technical regulations. Similarly, while the EU has notified other Members of the WEEE Directive, in its response to China’s comments it specified that some of the issues raised concerned provisions which do not qualify as technical regulations or CAPs.27 The EU’s response refers to the equivalent standards of treatment when WEEE is exported to third countries, without specifying whether the EU considers them covered by the TBT Agreement. Second, the notification requirement is only triggered when there is no relevant international standard or the proposed technical regulation is not in accordance with relevant international standards, and if the technical regulation may have a significant effect on trade of other Members.28 These qualifications accord considerable discretion to the regulating jurisdiction to determine whether it will notify. In the absence of jurisprudence on this issue, it is unclear when relevant international standards exist and when a technical regulation would be in accordance with such standards and therefore would not have to be notified. As for the requirement for ‘significant effects on trade’, no actual effects on trade have to be shown, which would bring more measures under the remit of the notification obligation.29 In any event, it is unclear what kinds of consequences would flow from a procedural failure to notify in time, especially given that the opportunity to contribute to the formulation of measures would be lost. Third, there is controversy as to how far these obligations provide effective opportunities for third countries to influence the formulation of internal measures. Although notification should happen at an ‘early appropriate stage’, the TBT Agreement does not specify what constitutes such a stage, while the TBT Committee recommends appropriate periods.30 Comments should be provided before ‘it’s too late’ to allow for amendments to the draft legislation.31 However, given that recommendations for the timing of notifications do not constitute binding deadlines, it is not clear whether sufficient time will in practice be given for comments to be made, replies to those comments to be returned, and potentially for incorporating amendments in the draft legislation. The timing of comments in relation to IEMEIs is particularly important in light of EU regulatory processes including impact assessments, which take place even earlier, before draft legislation is adopted. The complicated EU  decision-making processes, which involve the balancing of different kinds

27 Reply from the EC to the comments received from China on the notification G/TBT/N/EEC/248, Proposal for a Directive of the Parliament and of the Council on waste electrical and electronic equipment (WEEE) (Recast) (COM(2008) 810 final), 2 July 2009. 28 TBT Agreement Arts 2.9, 5.8. 29 Panel Report, US–Clove Cigarettes (n 13 above) para 7.531; Prévost (n 20 above). 30 TBT Committee, ‘Second Triennial Review of the Operation and Implementation of the Agreement on Technical Barriers to Trade’, G/TBT/9, 13 November 2000, para 13; Prévost (n 20 above). 31 Panel Report, US–Clove Cigarettes (n 13 above) para 7.536.

290  The WTO as a Forum of Transparency and Consultation on IEMEIs of domestic interests among industry, lobbying groups and institutional priorities, and the lengthy procedures involved in high-profile measures, make the timing of comments by third countries particularly crucial. Once the legal design of a draft measure has been agreed within the EU, it will be extremely difficult to re-open institutional negotiations internally in order to incorporate third country comments received from the TBT process. Instead, this opportunity to comment may sometimes become merely ‘a pro forma exercise’.32 Nonetheless, TBT notification obligations can significantly affect regulatory practices and the legal culture in the EU legal order,33 by prompting the EU legislator to anticipate the reactions of third countries within the WTO and incorporate third country interests and input within its own internal regulatory processes. The legitimising effects of WTO processes may therefore be determined through their incorporation in the ‘home’ legal system and particularly its administrative procedures on the adoption of new legislative measures.34 Furthermore, the effectiveness of participation through the TBT Committee may be undermined because the procedure for exchange of comments is not specified and there is no requirement for publication of replies to comments, despite WTO Members being encouraged to submit written replies to the TBT Committee.35 The recommendations of the TBT Committee, although not binding, can have significant effects on the practices of WTO Members and have been recognised by the AB as potentially constituting ‘subsequent agreement between parties’,36 to be taken into account in the interpretation of TBT provisions.37 However it is unlikely that this would force WTO Members to share comments. Instead, the commenting procedure is usually bilateral in nature.38 B.  Consultation on Specific Trade Concerns in the TBT Committee This bilateralism can sometimes be ‘multilateralised’ within broader procedures of the TBT Committee, which also provide opportunities for third country participation. The possibility to raise ‘specific trade concerns’ before the TBT Committee also provides for accountability and deliberation among 32 Prévost (n 20 above) 139. 33 Shaffer (n 1 above). 34 See, for discussion of incorporation of WTO issues in the EU’s impact assessment process, Chapter 3, Section IV. 35 TBT Committee, ‘Third Triennial Review of the Operation and Implementation of the Agreement on Technical Barriers to Trade’, G/TBT/13, 11 November 2003, para 26; Gruszczynski (n 24 above). 36 Vienna Convention on the Law of Treaties 23 May 1969, 1115 UNTS 331 (VCLT) Art 31(3)(c). 37 AB Report on US – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US–Tuna II), WT/DS381/AB/R, adopted 13 June 2012, paras 366–372. See Prévost (n 20 above). 38 Gruszczynski (n 24 above).

Ex Ante Notification Obligations and Consultation Procedures  291 WTO Members’ national representatives. WTO Members can raise specific trade concerns, often in response to notifications, which are then discussed in Committee Meetings. This mechanism complements the transparency obligations of notification and often provides concerned countries with information about draft measures.39 These procedures provide opportunities for affected countries to raise concerns and for regulating countries to respond and justify their measures in a multilateral setting.40 The sometimes-multilateral nature of this procedure is important for developing countries, especially when more than one country wants to raise similar concerns, as their voices are made more audible,41 whereas in the bilateral context many developing countries would lose their leverage.42 The involvement of developing countries in such procedures, however, is variable. While some accounts attest that developing countries are particularly active,43 smaller developing countries usually participate much less in Committee discussions, giving rise to ‘significant asymmetries in participation’.44 Also, even when developing countries participate, there is an important power and informational imbalance and the technical nature of discussions in the TBT Committee exacerbates the disadvantaged position of developing countries.45 The effectiveness of these processes is also called into question in relation to their actual impact on legislative initiatives. This is variable and depends on the political willingness of the regulating country to ‘listen’ to other countries’ concerns and incorporate them accordingly. For example, in relation to deliberation processes on the REACH Regulation,46 the TBT Committee played an important role as an ‘initial intermediary’, raising awareness about its external impacts and leading to some raised concerns being addressed in the ­Regulation.47 However, the effectiveness of these procedures was called into question as some issues, especially concerning special and differential treatment of developing countries, were not accommodated in the final version of REACH.48 Even if concerns raised by WTO Members within the TBT Committee are not addressed in the final version of the national measure, these

39 H Horn, PC Mavroidis and EN Wijkström, ‘In the Shadow of the DSU: Addressing Specific Trade Concerns in the WTO SPS and TBT Committees’ (2013) 47(4) Journal of World Trade 729. 40 Mavroidis and N Wijkström (n 25 above). 41 Gruszczynski (n 24 above). 42 However the majority of specific trade concerns are raised bilaterally, Horn, Mavroidis and Wijkström (n 39 above). 43 ibid. 44 Shaffer (n 1 above) 11. 45 G Mayeda, ‘The TBT Agreement and Developing Countries’ in T Epps and MJ Trebilcock (eds), Research Handbook on the WTO Agreement on Technical Barriers to Trade (Edward Elgar, 2013). 46 Regulation (EC) 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals [2006] OJ L396 (REACH). 47 Gruszczynski (n 24 above). 48 ibid.

292  The WTO as a Forum of Transparency and Consultation on IEMEIs processes can still perform some legitimising functions. These include raising awareness of external impacts of national measures and alerting regulating countries of the need to provide technical assistance to developing countries to facilitate their compliance.49 Furthermore, such discussions can remove uncertainties regarding the implementation of these measures,50 which can be beneficial both for the regulating state, in terms of the expectations it has from third countries, and for affected third countries in enhancing their compliance capacities.51 Generally, discussions in the TBT Committee provide a forum through which concerns are voiced and may open previously ‘hidden’ and ‘closed’ regulatory procedures. Concerns about the effectiveness of such procedures highlight the fact that on their own these procedures cannot ensure sufficient involvement and consideration of third country interests. This reinforces the need for domestic decision-making processes to also provide opportunities for consultation with affected third countries, acting in combination to legitimise IEMEIs. The limitations of WTO procedures become obvious in relation to policy issues which the EU refuses to discuss through the TBT channel, such as the sustainability criteria for biofuels under the EU’s Renewable Energy Directive. Even though this specific trade concern was raised in five TBT Committee Meetings and several WTO Members requested the EU to provide transparency and details of the scientific rationale for its choices under the Directive, the EU has been insisting that the TBT Committee is not the appropriate forum to discuss this issue and invites third countries for bilateral discussions instead. In 2018, following unsatisfactory bilateral discussions, several WTO Members raised new specific trade concerns regarding the proposed amendments to the Renewable Energy Directive,52 particularly the increase to 12  per  cent of renewable energy in transport and the gradual reduction of conventional ­biofuels.53 These WTO Members claim that the EU’s proposed amendments would amount to discrimination against palm oil produced in their countries, in favour of other vegetable oils and particularly those produced in the EU, amounting to a restriction that goes beyond what is necessary to achieve the legitimate objective pursued.54 The EU’s reply to these requests further 49 ibid; A Lang and J Scott, ‘The Hidden World of WTO Governance’ (2009) 20 European Journal of International Law 575. 50 Gruszczynski (n 24 above). 51 Lang and Scott (n 49 above). 52 Malaysia, Thailand, Indonesia, Colombia, Costa Rica and Guatemala expressed concern about the proposed amendments. 53 Proposal for a Directive on the promotion of the use of energy from renewable sources (recast) COM(2016) 767 final/2; Amendments adopted by the European Parliament on 17 January 2018 on the proposal for a directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast) P8_TA (2018)0009. 54 See for example, Statement by Malaysia to the Committee on Technical Barriers to Trade 20 and 21 June 2018, European Union – Amendments to the Directive 2009/28/EC, Renewable

Ex Ante Notification Obligations and Consultation Procedures  293 demonstrates its reluctance and unwillingness to consult and cooperate with third countries under the auspices of the WTO.55 In particular, the EU failed to indicate how the amendments would comply with specific WTO provisions, but rather confined its reply to clarifying that all conventional biofuels will be subject to a gradual reduction, and not only palm oil. Also, it stressed the fact that the criteria do not amount to a ban on trade but rather that non-sustainable biofuels will not count towards the renewable energy targets. As discussed in Chapter one, the trade-restrictive effects are nonetheless significant given the strong incentives associated with the use of sustainable biofuels. Therefore, more specific justification as to the WTO compatibility of EU choices is warranted. Furthermore, while the EU indicated that the proposed amendments were not final yet, pending internal legislative processes, it did not indicate whether and how the trade concerns expressed by these WTO members would be taken into account in the EU’s regulatory process. Overall, while the legitimising potential of deliberations in the TBT Committee is significant, it is inherently limited given that most IEMEIs would not qualify as technical regulations. The legitimising potential of TBT notification obligations and the processes of the TBT Committee is significant particularly in creating ex ante participation and representation avenues, thus going beyond notification obligations for adopted measures under GATT/GATS. The WTO could ‘enhance transnational inclusiveness in domestic rule-making processes’, but such inclusiveness is desirable at an ‘earlier’ stage of formulation of traderelated measures, whereby third countries can provide input in relation to measures with extraterritorial effect.56 While deliberation and iterative processes on adopted measures could enhance the implementation of existing measures, more consultation opportunities regarding measures in the pipeline would be welcomed in filling the accountability and participation gap related to IEMEIs. In this regard, while most notification obligations under the GATS apply after measures have been adopted, one notable exception is the requirement for WTO members to notify new or amended measures that significantly impact the use of public telecommunication networks, and to consult with members affected by them.57 In this context, the Council of Services may also provide a forum for multilateral consultation on potentially trade-restrictive measures, with the opportunity for affected parties to raise their concerns, as the US did in

Energy Directive, G/TBT/W/548; Statement by Colombia to the Committee on Technical Barriers to Trade 20 and 21 June 2018, European Union – Specific Trade Concern regarding Amendments to the Directive 2009/28/EC, Renewable Energy Directive, G/TBT/W/465, 21. 55 Statement by the European Union to the Committee on Technical Barriers to Trade 20 and 21 June 2018, European Union – Amendments to the Directive 2009/28/EC, Renewable Energy Directive, G/TBT/W/474. 56 Howse and Nicolaidis (n 8 above). 57 GATS, Annex on Telecommunications, Art 5(c).

294  The WTO as a Forum of Transparency and Consultation on IEMEIs relation to China’s circular on the use of virtual private networks.58 Therefore, depending on the specific policy field at issue, different WTO provisions may serve as other-regarding obligations to different extents. In conclusion, in enhancing the legitimacy of IEMEIs, WTO procedures of notification, reporting and consultation could contribute to an enhanced dialogue between regulating and affected countries, giving rise to ‘sustained deliberation’.59 WTO procedures of notification and consultation can ‘give rise to processes of justification, learning and persuasion’ while also creating transnational accountability avenues.60 They could urge closer cooperation between countries, which is crucial in relation to measures such as IEMEIs that are designed to have extraterritorial effects.61 The fact that discussions and activities within WTO committees and organs are undertaken within a framework of ‘binding norms susceptible to enforcement’62 can put additional pressure on the EU to consider third country impacts, and discipline its unilateral action within the WTO system. IV.  CONCLUSION TO PART III: IEMEIs UNDER WTO LAW

To conclude, Part III of the book has demonstrated that WTO law significantly influences the formulation of IEMEIs by requiring the EU to consider third country trade impacts so as to avoid WTO incompatibility. WTO law has thus been functioning as an external ‘destabilisation mechanism’ in experimentalist governance terms,63 which disciplines IEMEIs through different kinds of procedural and substantive other-regarding obligations.64 At the same time, the analysis has also demonstrated that WTO law provides considerable discretion about how the EU exercises regulatory power through IEMEIs. This is partly because WTO norms often defer to EU decision-making and discretion, which eventually determines and potentially undermines the extent of the disciplining effect of WTO law within the EU legal order. Additionally, WTO norms are sometimes ill-adapted to fill the different kinds of legitimacy gaps created by IEMEIs, particularly in addressing the interests of developing countries and non-trade impacts, and filling the substantive justice gap related to IEMEIs.

58 Communication from the United States, Measures adopted and under development by China relating to its cybersecurity law, S/C/W/372; Communication from the United States, Measures adopted and under development by China relating to its cybersecurity law, S/C/W/376. 59 Shaffer (n 1 above) 10. 60 ibid 11. 61 Lang and Scott (n 49 above). 62 ibid 595. 63 J Zeitlin, Extending Experimentalist Governance? The European Union and Transnational Regulation (OUP, 2015). 64 Benvenisti and Agon (n 10 above).

Conclusion to Part III: IEMEIs under WTO Law  295 The WTO legal framework has overall evolved in terms of allowing regulating states to adopt unilateral PPM measures to address conduct or circumstances partly taking place abroad. This shift is welcome as it allows for the unilateral creation of transnational environmental law through such measures, which is particularly useful in light of slow multilateral progress in addressing global environmental problems. However, this shift should not occur to the detriment of exporting countries, which are often developing countries, by allowing powerful WTO Members, like the EU, to extend their regulatory authority beyond EU borders without sufficient checks. Achieving the right balance between enabling the exercise of transnational regulatory power to pursue legitimate objectives and constraining the exercise of such power in order to protect the interests of other states, is not easy or straightforward for the WTO to achieve. As Jackson reflects, ‘the perpetual puzzle … of international economic institutions is … to give measured scope for legitimate national policy goals while preventing the use of these goals to promote particular interests at the expense of the greater common welfare’,65 which can mean different things for different countries. In fact, the WTO’s own legitimacy may depend on its ability to reconcile the right of states to regulate core domestic policies on the protection of public health and the environment with the need to pay due regard to the interests of third country actors affected by such internal policies.66 While WTO norms, adjudication, and consultation processes all have potential to create accountability avenues and hold EU power to account in relation to the extraterritorial impacts of IEMEIs, this potential is often unrealised or constrained. This is because of the uncertain scope of some WTO rules, the limitations of the WTO regime to force meaningful compliance with WTO rulings, and the realistic incentives for third countries that may prefer to comply with EU requirements and gain access to the EU market, rather than go through the long and expensive process of initiating a WTO dispute.67 The disciplining effect of WTO law is also called into question because of the notable ability of the EU to achieve WTO compatibility in ways that may facilitate its efforts to extend EU regulatory power abroad. This is particularly so when WTO obligations, especially those of a procedural nature, become a ‘box-ticking’ exercise for the EU rather than obligations requiring genuine efforts to consider third country affected interests. The way in which the EU translates WTO obligations into its internal decision-making and legal order

65 JH Jackson, World Trade and the Law of GATT (Bobbs-Merrill 1969) 788. 66 M Weimer, ‘Reconciling Regulatory Space with External Accountability through WTO Adjudication – Trade, Environment and Development’ (2017) 30 Leiden Journal of International Law 901. 67 D Geraets and B Natens, ‘Governing Through Trade in Compliance with WTO Law – A Case Study of the European Union Timber Regulation’ in A Marx et al (eds), Global Governance Through Trade, EU Policies and Approaches (Edward Elgar, 2015).

296  The WTO as a Forum of Transparency and Consultation on IEMEIs also affects the potential of WTO law to discipline IEMEIs and justifies the need to simultaneously examine IEMEIs within the EU legal order in assessing the extent to which multiple legal frames work in combination to legitimise IEMEIs. This shows that the combined legitimising effects of these two legal orders are determined by both the distinct operation of these overlapping regimes and how they are integrated into each other. Finally, some of the unrealised potential of the WTO regime to discipline EU regulatory power relates to concerns about the appropriateness of the WTO as a trade liberalisation organisation, intruding into national sovereignty of members and questioning their choices in pursuing legitimate objectives, such as environmental protection. While Part III of the book recognises the limitations for WTO law to provide the ideal solution for IEMEI legitimacy, it has focused on the opportunities for the WTO regime to contribute to filling different legitimacy gaps. This is because WTO law is a key legal site that controls EU regulatory power and captures the legally hybrid nature of IEMEIs at the intersection of trade and environmental law as well as public international and EU law. It thus provides a rich source of external legal requirements that partly fill and could further contribute to filling the legitimacy gaps relating to IEMEIs by controlling EU regulatory power together with the ‘home’ EU legal order.

Conclusion: Combining Legal Orders to Legitimise Global Regulatory Power

T

he book has developed an analytical framework for analysing the EU’s unilateral action through Internal Environmental Measures with Extraterritorial Implications (IEMEIs) as a legal phenomenon and for assessing their legitimacy as measures that operate across multiple legal regimes. It has tested this framework by examining the extent to which EU and WTO law, as key legal sites for controlling IEMEIs, provide appropriate mechanisms for legitimising IEMEIs by acting in combination. Given that IEMEIs operate at the intersection of multiple legal regimes and affect actors beyond the borders of the regulating jurisdiction, it is not clear whether systematic and institutionalised mechanisms are in place to ensure their legitimacy transnationally. In particular, the book identifies the emergence of three key legitimacy gaps related to IEMEIs: ‘an accountability gap’, ‘a ­participation and representation gap’ and a ‘justice gap’. An accountability gap emerges because the EU is not usually under an obligation to take into account the effects of its measures on third country actors and there are no clear mechanisms for holding the EU to account in relation to such effects. A  participation gap is created because IEMEIs are adopted within the EU legal order without sufficient opportunities for third country actors to voice their concerns about IEMEIs. Finally, a justice gap is potentially created due to insufficient protection of the procedural rights of affected third country actors and insufficient consideration of the needs and capacities of developing countries, and vulnerable groups therein, that are often on the receiving end of IEMEIs. The book has assessed the legitimising function and potential of EU and WTO law with a view to measuring the extent to which they fill these legitimacy gaps. In doing so, it has identified ways in which these regimes enable the adoption of IEMEIs as well as ways in which they constrain and discipline the unilateral exercise of EU regulatory power beyond EU borders. The legal analysis of IEMEIs through the lenses of EU and WTO law has identified both the extent of legitimacy gaps that exist in relation to IEMEIs and various ways in which these regimes could fulfil a greater legitimising function. This is by having combined legitimising effects for IEMEIs, as overlapping bodies of law as well as through greater integration between them.

298  Conclusion Currently both EU and WTO law are weighted towards enabling IEMEIs without always providing for sufficient checks on how global EU regulatory power is exercised. They both have potential to serve a more balanced legitimising role. The book does not suggest that the constraining function should prevail, as this would bring back the deadlocks and challenges of global collective action in addressing global environmental problems. While unilateral pursuance of global public goods through IEMEIs provides novel regulatory mechanisms for addressing pressing global environmental problems, their formulation and implementation need to reflect that regulatory ambition. Legitimacy concerns about IEMEIs are particularly poignant because they give rise to situations whereby one jurisdiction pursues internally, and arguably internationally, legitimate goals in ways that could detrimentally affect other kinds of legitimate interests of third countries. The EU is not a ‘hero’ that can be trusted to be acting in the interests of humanity. Making EU market access conditional on the basis of how processes take place abroad might be done both for altruistic reasons and to protect the competitive position of domestic industry. Legal mechanisms that can improve how decisions about global common problems are taken, through due consideration of third country impacts, can enhance the legitimacy of IEMEIs. In an attempt to fill international regulatory gaps, the exercise of EU regulatory power beyond EU borders through IEMEIs creates other kinds of gaps concerning their legitimacy. In looking for a combination of mechanisms to fill the legitimacy gaps related to IEMEIs, the different natures of the EU and of the WTO demonstrate both their complementary possibilities and shortcomings in legitimising IEMEIs. On the one hand, as an international organisation that is meant to protect and balance the interests of its members, the WTO imposes more obligations that require consideration of third country impacts, which can be enforced within the WTO dispute settlement system and which can go a long way toward filling the IEMEI legitimacy gaps. However, the legitimising effects of WTO law are also determined by how it is incorporated and integrated into the ‘home’ legal order of the EU, which can downgrade WTO disciplining effects. Furthermore, because of its trade liberalisation agenda, WTO does not sufficiently address the non-trade impacts of IEMEIs relating to the right to development of poorer countries, and raises questions about the appropriateness of such an organisation limiting the autonomy of regulating jurisdictions to pursue legitimate non-trade objectives. On the other hand, it is less controversial for EU law, as the source of the EU’s regulatory power, to impose constraints on IEMEIs, in the form of constitutional and administrative law requirements that determine the validity of the exercise of discretion by EU institutions. However, bearing in mind the EU’s current internal constitutional and economic crisis, there are inherent practical and political complexities for EU law to require consideration of third country impacts, particularly when they may conflict with internal interests. Usually any explicit requirements concerning foreign impacts are in the form of abstract

Conclusion  299 policy directions that should inform the EU’s global action in EU constitutional law. Nonetheless, EU administrative law provides a rich source of doctrines and procedures that govern the legality of EU action and which could control the exercise of EU global regulatory power. This is in line with the EU’s constitutional commitments on external action and can increase the external credibility of its action. In fact, EU decision-making practices enable and encourage input from third country actors to a large extent, and when compared with other major markets, like the US, the EU legal order is more open to and inclusive of third country interests than might be initially thought. Given the different kinds of shortcomings and limits of the respective roles of EU law and WTO law, these two regimes working in combination can serve a greater legitimising function in relation to IEMEIs. Currently, both regimes have some mechanisms in place that partly address the different legitimacy gaps created by IEMEIs, while they also bear unfulfilled potential to further contribute to the legitimisation of this phenomenon. Both regimes provide different kinds of mechanisms that can function as transnational accountability avenues and thus contribute to filling the accountability gap related to IEMEIs. For example, they require justification for EU regulatory action in different and complementary ways. This is particularly through the duty to provide reasons and the requirements of the EU ‘Better Regulation’ agenda for considering external impacts of EU measures under EU law, and also through requirements that demand consideration of the trade-restrictive effects of IEMEIs and justification of regulatory measures in pursuing legitimate non-trade objectives under WTO law. They both also promote transparency of decision-making in different ways, such as through ‘access to information’ rules under EU law and notification obligations under WTO agreements, which can contribute to holding the EU to account in relation to third country effects. Additionally, EU and WTO law provide access to judicial review, which can provide significant ways for controlling EU regulatory power and holding it to account in relation to third country impacts. Furthermore, both EU and WTO law provide some avenues for third country actors to express their views about the adoption of IEMEIs, thus contributing to filling the participation and representation gap at the formulation stage. In the EU legal order, foreign actors can express their concerns within soft law and political regulatory procedures, which, however, create lobbying opportunities that exclude certain kinds of third country interests. Also, the consideration of third country impacts within the EU is necessarily shaped by EU internal considerations about the division of powers between the EU and the Member States, which distract from third country impacts. Third country impacts are usually not substantially weighed in the assessment of proposed EU policies, which are often framed as necessary action at EU level, adopted also for the benefit of third countries. In the WTO system, the most promising avenues of consultation at the formulation stage, are provided under the TBT Agreement and are therefore available for limited types of IEMEIs. Also, the EU may refuse to discuss

300  Conclusion these under the auspices of the WTO due to the uncertain scope and political nature of these procedures. Therefore, while there are some avenues under both regimes for third country actors to express their views about IEMEIs, these usually fall short of enabling effective deliberation and dialogue between the EU regulator and third country affected interests. Providing opportunities for third countries to block EU regulatory action is not desirable, as it would bring back the deadlocks previously associated with collective action at the international level. However, input from third country actors at an early stage would enable EU institutions to be more aware of the factual situations that IEMEIs purport to regulate and would induce more formal, and possibly more genuine, acceptance of IEMEIs by third country actors that are required to comply with EU standards. Beyond the formulation stage of IEMEIs, both EU and WTO law impose legal requirements in relation to third country affected interests when IEMEIs are implemented and enforced. These due process requirements contribute to filling the procedural justice gap related to IEMEIs as well as possibly addressing the participation and representation gap at the implementation stage. Under EU law, third country actors benefit from procedural rights under general principles of EU law, such as the right to be heard in individual situations and a right to access information, which they can enforce before the EU courts to a certain extent. Under WTO law, due process requirements influence the design and implementation of IEMEIs in recognising and upholding the procedural rights of third country actors. The disciplining function of WTO law in this respect is also determined by how WTO requirements are incorporated in the ‘home’ legal order of the EU. The interaction between the two legal orders is important to ensure that WTO due process requirements do not become a formal ‘checklist’ within the EU legal order but rather create genuine requirements of procedural fairness that control EU action. Additionally, the EU and WTO regimes contribute to filling the procedural justice gap by providing access to judicial review. However, direct access to the EU courts is restricted for third country individuals, organisations and governments, in similar ways as it is restricted also for EU individuals and organisations, particularly due to strict standing requirements. Also, while the WTO dispute settlement system provides equal access for all countries, access is limited to third country governments, and it is more challenging in practice for developing countries. Nonetheless, both the EU judicial system and the WTO dispute settlement system can provide access to justice for third country affected interests and are sometimes used as complementary judicial review avenues. However, the extent to which EU and WTO law ensure substantive justice, as understood internationally, for third country actors is questionable. While both EU and WTO law recognise the special needs and circumstances of developing countries and the importance of sustainable development in their constitutional frameworks, they have not developed clear doctrine and

Conclusion  301 procedures that sufficiently address the distributive justice gap related to IEMEIs. This gap is particularly created when IEMEIs affect developing countries with different priorities and insufficient resources and capacities to adapt to EU standards, and whose special needs and circumstances may not be sufficiently considered in the formulation and implementation of IEMEIs. WTO law usually focuses on trade impacts and does not capture developmental and social effects. While it includes some provisions that require consideration of developing country circumstances, these do not go far enough in filling the distributive justice gap relating to IEMEIs. Similarly, while EU law recognises the need to consider the impacts of its policies on developing countries and engages in cooperation with developing countries in its bilateral and regional policies, the narrative of distributive justice, as understood internationally, has not sufficiently informed the application of EU doctrines within the EU legal order in relation to unilateral measures. For example, while some EU doctrines, such as protection of fundamental rights, could offer mechanisms for protection of the rights of vulnerable communities in developing countries, EU law has not yet clearly recognised EU human rights responsibilities towards third country populations affected by IEMEIs extraterritorially. Overall, currently the distributive justice gap seems to be the gap least addressed by these two legal regimes. Further research on the relationship of the EU with individual third countries and in relation to specific IEMEIs as case studies, could demonstrate how EU and international law may provide additional ways of addressing this gap, particularly through cooperative means. The analytical approach developed in this book for examining IEMEIs as measures that operate across multiple legal regimes, can be further explored through research on additional aspects of EU law, international law and third country law pertaining to specific policy areas covered by IEMEIs and concerning relations between the EU and specific third countries. This research, including through empirical methods, might further demonstrate the extent of the legitimacy gaps related to IEMEIs. Thus, researching IEMEIs through the lens of bespoke international regimes applicable in specific policy areas, for example in relation to maritime emissions under the IMO, and aviation emissions in the ICAO, could demonstrate how these regimes further enable or constrain EU global regulatory power in ways that contribute to filling the different kinds of IEMEI legitimacy gaps. Furthermore, researching IEMEIs through the lens of legal regimes in third countries which are on the receiving end of IEMEIs could reveal additional legitimising mechanisms as well as additional legitimacy gaps relating to implementation challenges and the effectiveness of EU efforts to galvanise environmental policy changes in third countries. To conclude, this book has developed a framework for analysing and assessing the exercise of regulatory power beyond established jurisdictional borders and across different legal frames through a combination of legitimising mechanisms. It has tested this approach in relation to the exercise of EU global

302  Conclusion regulatory power in the area of environmental protection through IEMEIs. In this respect, it examined the extent to which EU and WTO law, as key legal regimes that substantially determine the legal functioning of IEMEIs, provide appropriate mechanisms for legitimising this emerging legal phenomenon. While to some extent these two regimes respectively address the legitimacy gaps related to IEMEIs, they can further contribute to bolstering the legitimacy of IEMEIs by working in combination to require further consideration of third country affected interests.

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318

Index Aarhus Convention: access to justice: access to information, 157 acts and omissions contravening domestic environmental law, 157–62 administrative review procedure, 158–60 applicability, 156–57 internal review of acts or omissions, 158–59 public participation, 157 social accountability, 160 standing requirements, 157, 160–62 acts and omissions contravening domestic environmental law, 157–58 applicability, 158 internal reviews, 158–59 standing requirements, 158, 160–62 CJEU, 201 consistent interpretation, 204 EU commitment to, 161 public participation obligations, 122, 157 ‘additional activities’, 122–23 EU application of, 123–24 relevance for IEMEIs, 122 right of access to information, 141 Aarhus Convention Compliance Committee (ACCC): criticisms of standing requirements, 160–61 external oversight of EU action, 157 internal reviews, widening scope of, 161 findings, 160–61 accountability, 161 internal reviews, 160–62 violations of Convention by EU, 159, 160 role, 157 access to the EU market: Brussels effect, 22–23 de facto Brussels effect, 23 de jure Brussels effect, 23, 147 EU Timber Regulation: Access to the EU market by reference to third country law, 27 Due diligence obligation, 30 FLEGT licence, 38–39 MFN discrimination, 233

flexibility clauses, 36 IEMEIs regulation of, 22–23, 116, 139, 237 economic instruments, 33–35 process standards, 23–33 IUU Regulation, 233–34 WTO, 295 GATT, 234 access to information, see right of access to information access to justice by third country actors, 148, 150, 300 Aarhus Convention, see Aarhus Convention direct access to courts, 148–49 European Ombudsman, 150 preliminary reference procedure, 149 standing: access to justice for third country actors, 151–52 difficulties meeting criteria, 151 direct concern and affectedness, 153–55 Lisbon test for standing, 152–53 person to whom decision addressed, 151–52 rights-based approach to participation exception, 155–56 accountability, see good governance and accountability accountability gap, 56, 73–74, 90, 190, 297, 299 Aarhus Convention, 156–57, 158 competence, 164, 168 enforcement of procedural requirements, 169, 177 enhancing IEMEI legitimacy, 91–92, 137, 143, 146 formulation of IEMEIs, 115–16 good faith negotiations, 267–68 judicial review by CJEU, 146, 156–57, 158, 164, 168–69, 177, 178, 183–84, 190 necessity, 259–60 proportionality, 178, 183–84 TBT Agreement, 243 WTO, 263 advance reporting of regulatory action, 284–85, 288

320 Index dispute settlement system, 213–14, 276 GATT Chapeau, 267–68, 276, 281 non-discrimination obligations, 226 administrative law: duty to provide reasons, see duty to give reasons formulation and revision of EU measures, see impact assessments public participation, see public participation right of access to information, see right of access to information right to be heard, see right to be heard Air Transport for Association of America (ATAA) case, 111–12, 204 preliminary reference procedure, 149 territorial scope of IEMEIs, 164–68 annulment of IEMEIs, 148–49, 207 infringement of Treaties, 198 lack of opportunity to be heard, 169–70 aviation, see Aviation Directive; EU Emissions Trading System Aviation Directive: concerns regarding impact on third countries, 54–55 duty to negotiate, 270 equivalence, 42 EU Emissions Trading Scheme, 33, 37–38, 54 developing countries, 55, 84 flexibility clauses, 274 legality, 111, 149, 166 MFN discrimination, 234–35, 237 preliminary reference procedure, 149 territorial extension, 33 territorial scope of IEMEIs, 166 Better Regulation agenda: Impact Assessments, 124, 247 accountability, 125 consultations, 126, 127–28, 134 enhancing legitimacy, 124–25 participation and decision-making processes, 125 social impacts, 127 third country impacts, 126, 127–28, 174, 176, 190, 299 see also impact assessments biofuels sustainability, see sustainability of biofuels

Brussels effect, 22 de facto Brussels effect, 23 de jure Brussels effect, 23, 147 burden of proof, 220, 229–30, 240, 244, 265 certification schemes (private): legitimate expectations, 176 Regional Fisheries Management Organizations, 235–36 sustainable biofuels, 139, 142, 173, 176, 242, 243, 279–80 flexibility clauses, 275–76 timber, 40–42 Charter for Fundamental Rights of the EU (CFREU): extraterritorial application, 190–91, 193, 195 proportionality and balancing, 193–94 right of access to information, 140–41 right of review, 190 right to effective judicial protection, 156, 172 right to good administration, 116–17, 172 climate change: economic instruments, 33 process standards, 24–25 see also EU Emissions Trade System; Paris Agreement on Climate Change; UN Framework Convention on Climate Change coercive effects of IEMEIs, 15, 43, 53, 272, 273–74 common but differentiated responsibilities (CBDR), 55, 68 climate change, 68, 205 ‘taking the lead’, 84–85 UNFCCC, 221–22 differentiation of obligations, 83–84 distributive justice, 82–83 global public goods, promotion of, 220–21 incorporation within IEMEIs, 85 limitations, 83–84 third country impacts in IAs, 130–31 uncertainty concerning CBDR, 84–85 WTO law: flexibility, 277 MFN discrimination, 236–37 necessity principle, 264 sustainable development principles, 220–23, 276 common concern problems, 4 equal and transparent participation, 82 global public goods, promotion of, 67–69 justice and third country impacts, 93

Index  321 legality and rule of law, 66–67, 68–69 restriction of state sovereignty, 82 competition, 102, 130, 153–54, 230–31 IEMEIs protecting EU domestic operators, 18 see also most-favoured nation discrimination; non-discrimination compliance with IEMEIs, 35–36, 44 alternative/supplementary modes of compliance: bilateral agreements, 38–40 EU Timber Regulation, 38–40, 41–42 private certification and monitoring, 40–42 Renewable Energy Directive, 40–41 conditional application of EU measures: EU ETS, 36–38 contingent unilateralism, 35–36 MFN discrimination, 235–36 equivalence, 35–36 MFN discrimination, 235–36 equivalence with EU requirements country-level equivalence, 42 third-country economic operators, direct imposition on, 42–43 flexibility, 36, 42–43 MFN discrimination, 235–36 MFN discrimination, 235–36 Conformity Assessment Procedures (CAPs): TBT obligations, 242–43 consent, see state consent conservation of exhaustible natural resources, 251–54, 257 equal treatment and even-handedness, 258–59 necessity test, 259–60 influence of necessity, 262–64 less restrictive test, 261 measures reasonably available, 261–62 necessity and developing countries, 264–65 weighing and balancing test, 260–61 consistent interpretation principle, 204–6, 207 consultation, see transparency and consultation; public participation Convention on Access to Information, Public Participation in DecisionMaking and Access to Justice in Environmental Matters, see Aarhus Convention Court of Justice of the EU (CJEU): consistent interpretation principle, 204–6, 207

direct access, 148–49 direct effect of international law in EU, 200–2 customary international law, 204 WTO law in EU, 202–3 external action values of the EU, 111–12 interpretation of international law: CJEU approach, 206–7 consistent interpretation principle, 204–6 direct effect in EU, 200–2 direct effect of WTO law in EU, 202–3 judicial review of IEMEIs, grounds for: combined requirements, 172–73 competence challenges, 163–68 duty to give reasons, breach of, 171–72 essential procedural requirements and procedural fairness, 169–73 infringement of Treaties, 173–78 international law, challenges on basis of, 197–208 misuse of power, 163 proportionality, 178–97 public participation, breach of, 169–71 right to be heard, breach of, 169–71 preliminary reference procedure, 149 see also judicial review of IEMEIs decision-making processes (EU): IEMEI legitimacy gaps, 115–17, 144 legal safeguards: duty to provide reasons, see duty to give reasons public participation, see Aarhus Convention; public participation right of access to information, see right of access to information right to be heard, see right to be heard see also administrative law developing countries: conservation of exhaustible natural resources: necessity test, 264–65 differential treatment of: TBT Agreement, 245–48 EU Emissions Trading Scheme, 55, 84 IEMEIs under the chapeau, 272 flexibility, 276–78 MFN discrimination, 236–38 necessity test, 264–65 special and differential treatment, 245–48 TBT Agreement, 245–48

322 Index WTO law, 219–23 MFN discrimination, 236–38 WTO dispute settlement system, 219–20 see also common but differentiated responsibilities direct effect: Aarhus Convention, 159 direct effect of international agreements in EU, 200–2 lack of, 195, 202, 207 relevance of customary international law, 204 relevance of WTO law in EU, 202–3 Dispute Settlement Body (DSB), see World Trade Organization dispute settlement system (DSS), see World Trade Organization distributive justice, 54–55 applicability, 81 CBDR, 82–85 fairness, 85–86 international consensus, 82 justice, legitimacy as, 80–86 procedural justice, 78 substantive justice, 79 theories, 80–81 see also distributive justice gap distributive justice gap, 85, 126–27, 133, 146, 184, 193, 205–6, 264, 300–1 WTO law, 215, 220–21 dispute settlement systems, 245–46 limitations, 277 due diligence obligations: EU Timber Regulation, 30–31, 38–39, 154 monitoring organisations, 41–42, 280 due process, 71–72, 95, 116, 144, 172–73 decision-making, 88, 90, 104, 173, 236 enforcement of IEMEIs, 116, 121, 169 formulation of IEMEIs, 116 IEMEIs under the chapeau, 267, 278–82 implementation of IEMEIs, 116, 121, 285 justice gap, 77, 90, 300 participation and representation gap, 92 procedural justice theories, 77, 90 publication and notification obligations, 285–87 see also access to information; duty to give reasons; good governance and accountability duty to engage in good faith negotiations, 267–72 duty to give reasons: enforcement of IEMEIs, 139–40

EU decision-making processes, 138 formulation of IEMEIs, 138 implementation of IEMEIs, 138–39 judicial challenges, 171–72 ecological justice, 79–80 economic instruments to regulate conduct, 167 access to the EU market, 33 EU ETS allowances, 33–34 ship recycling fund, 34–35 WTO law: MFN discrimination, 234–35 enforcement of IEMEIs: due process, 116, 121, 169 duty to give reasons, 139–40 right to be heard, 120–21 environmental integration clauses, 13 environmental leadership, 4–5 EU, 11–12, 13–16 IEMEIs and, 16–20 environmental protection in the EU, 2–4 EU leadership role, 4–5 polycentric nature of environmental problems, 5–6 transboundary nature of environmental law, 4 environmental regulations with extraterritorial implications, see internal environmental measures with extraterritorial implications EU Commission: ship recycling facilities, 174–75 see also Better Regulation agenda; impact assessments EU Emissions Trade System (EU ETS), 1–2, 21, 54, 130–31, 270 conditional application of EU measures, 37–38 monitoring, reporting and verification system, 36–37 economic instrument to regulate conduct, as an, 33–34 MFN discrimination, 234 equivalence with EU requirements country-level equivalence, 42 territorial scope of IEMEIs, 65, 135, 166 EU external environmental action: assessing IEMEIs, 44–49 purpose of IEMEIs, 16–20 types, 12–16 see also external action values

Index  323 EU law, 45 constitutional norms and external action, 103–4 external action values, 105–6 lack of coherence of external action values, 108 TEU, 104–7 vagueness of external action values, 107 weaknesses of external action values, 108 external action values, 104–6 lack of coherence of external action values, 108 legal relevance for IEMEIs, 109–12 vagueness of external action values, 107 weaknesses of external action values, 108 dual function of EU law, 109–10 influence of, 13, 46–49 influence on WTO law, 13 legitimising IEMEIs, 94–96, 101–3 see also decision-making processes; judicial review of IEMEIs legitimacy concerns regarding IEMEIs: WTO law compared, 297–302 obligation to respect international law, 197–98 EU Timber Regulation (EUTR): access to EU markets: FLEGT licence, 38–39 mandatory market access conditions, 29, 30–31 MFN discrimination, 233 alternative/supplementary modes of compliance: bilateral agreements, 38–40 private certification and monitoring, 41–42 bilateral agreements, 38–40 direct concern and affectedness, 154 due diligence obligations, 30–31, 38–39, 154 incentive approach of IEMEIs: EU’s imposition of standards on third countries, 62–63, 130 limitations, 118 mandatory market access conditions, 29 due diligence obligations, 30–31 private certification and monitoring, 41–42 process standards: mandatory market access conditions, 29, 30–31 MFN discrimination, 233–34 restrictions on basis of third country or international law, 27

sovereignty, 27 third country impacts in IAs, 130 Voluntary Partnership Agreements, 38–40, 42, 62–63, 136, 154, 236, 270–71 see also Forest Law Enforcement, Governance and Trade; timber and timber products European Convention on Human Rights (ECHR): extraterritorial protection of rights, 191–92 European Ombudsman, 148, 150, 172 external action values of the EU, 104–6 applicability to IEMEIs, 109–11 CJEU, role of, 111–12 commitment to multilateralism, 110 constitutional norms and external action, 103–4 lack of coherence of external action values, 108 legal relevance for IEMEIs, 109–12 TEU, 104–7 vagueness of external action values, 107 weaknesses of external action values, 108 dual function of EU law, 109–10 Kadi case, 111–12 legal implications for IEMEIs, 107–9 applicability to IEMEIs, 109–11 external action values before CJEU, 111–12 fairness: Better Regulation Guidelines, 126, 137 decision-making processes, 69 distributive justice, 85–86 IEMEIs under the chapeau: due process requirements, 278–79 internal review procedures, 158 judicial review of IEMEIs: combined requirements, 172–73 duty to give reasons, breach of, 171–72 public participation, breach of, 169–71 right to be heard, breach of, 169–71 justice, legitimacy as, 77–79 equal treatment of participants in decision-making, 77–78 opportunities and rights, 78 safeguards, 78–79 transnational concepts, 78–79 legitimacy gaps, 55 justice gap, 90, 93–94 norm, as a, 88 procedural justice, 77–79, 88, 90, 93–94, 149, 163, 278–79, 300

324 Index right to be heard, 121 breach of, 169–71 rule of law, 58 substantive justice, 79, 149 WTO dispute settlement bodies, 279–81 flexibility: certification schemes, 42, 267, 275–76 duty to engage in good faith negotiations, 267–72 equivalence, 42–43 IEMEIs under the chapeau, 272 developing countries, 276–78 flexibility and compliance features, 274–76 flexibility requirements, 272–74 flexibility clauses, 65, 218 MFN discrimination, 235 types of flexibility clause, 274–76 Food and Agriculture Organization (FAO): third country impacts in IAs, 133 Forest Law Enforcement, Governance and Trade (FLEGT): bilateral agreements: alternative/supplementary modes of compliance, 38–39 influence on third countries, 30–31 process standards, 27 third country impacts in IAs, 133 Voluntary Partnership Agreements, 280 formulation of IEMEIs: due process requirements, 117–20, 138, 300 duty to give reasons, 138 right to be heard: applicability, 119 exclusion of right to be heard, 118–19 limitations of right to be heard, 117–20 limitations, 117–20 overlapping legal regimes, 45, 47 Voluntary Partnership Agreements, 39 General Agreement on Tariffs and Trade (GATT) and General Agreement on Trade in Services (GATS): Article XX’s chapeau, 265–67 due process requirements, 278–82 duty to engage in good faith negotiations, 267–72 flexibility, 272–78 flexibility and compliance features, 274–76 flexibility and developing countries, 276–78 flexibility requirements, 272–74

IEMEIs under GATT exceptions, 249–50, 251 conservation of exhaustible natural resources, 251–54 measures necessary to secure compliance with laws not inconsistent with WTO law, 256–57 protection of human, animal or plant life or health, 251–54 protection of public morals, 255–56 see also WTO exceptions IEMEI compatibility issues, 225–26 MFN discrimination, 230–31, 248 differential treatment of developing countries, 236–38 economic instruments, 234–35 flexibility, 235–36 process standards, 231–34 publication and notification obligations, 285–87 US–Shrimp case, 278 see also World Trade Organization General Agreement on Trade in Services (GATS), see General Agreement on Tariffs and Trade and General Agreement on Trade in Services Generalised System of Preferences (GSP): environmental integration clauses, 13 genetically modified organisms (GMO): Aarhus Regulation, 159 global public goods, promotion of, 298 CBDR, 220–21 legality and rule of law, 66–69 legitimacy and accountability, 91 see also common concern problems good faith, 59, 205 duty to engage in good faith negotiations, 265, 267–72 good governance and accountability, legitimacy as, 69–70, 72–73 accountability, 70–71 accountability mechanisms, 70–71 types of accountability, 71 accountability gap, 74 state/government and affected actors, discrepancy between: accountability gap, 74 justice gap, 74 participation and representation gap, 74 good governance mechanisms, 71–72 legitimising functions, 70–73 public participation, 72, 74

Index  325 ownership of outcomes, 72 transnational variations, 73–75 ‘affectedness’, 75–76 traditions and customs, 76–77 greenhouse gases (GHG) process standards, 24–25 see also EU Emissions Trade System grounds for judicial review, 162 competence, 163–64 choice of legal basis, 164 territorial scope of IEMEIs, 164–68 essential procedural requirements and procedural fairness: combined requirements, 172–73 duty to give reasons, breach of, 171–72 public participation, breach of, 169–71 right to be heard, breach of, 169–71 infringement of Treaties, 173–74 international law, challenges on basis of, 197–208 misuse of power, 163 proportionality grounds, see proportionality principle soft law, infringement of, 174 direct challenges, 174–75 equal treatment, 175–77 indirect challenges, 175–76 legal certainty principle, 175–77 legitimate expectations, 175–77 territorial scope of IEMEIs, 164–68 harmonisation of standards: certification schemes, 40–41 EU law, 183, 185 judicial review, 156 TBT Agreement, 244–45 Hong Kong Convention on Ship Recycling: process standards, 27–28, 31–32, 62, 128–29, 179–80, 198 human rights: balancing human rights and other rights, 109–10 distributive justice, 81 rule of law, 59, 95–96 EU recognition of responsibilities to third countries, 104–5, 189–90, 301 European Commission: impact in IAs, 189 extraterritorial protection, 107–8, 191–92, 208 constitutional values, 104–7 third country affected interests, 195–96, 301

illegal, unreported and unregulated fishing (IUU), 21, 26 see also IUU Regulation IEMEIs as NPR-PPMs: like products, 228–29 non-discrimination, 227–230 TBT Agreement, 238–39, 248, 288–89 IEMEI regulation of trade, 14–15, 21 compliance with IEMEIs, see compliance with IEMEIs economic instruments to regulate conduct, 33 EU ETS allowances, 33–34 MFN discrimination, 234–35 ship recycling fund, 34–35 incentive approach: sustainability of biofuels, 32 WEEE, 32 mandatory market access conditions: EU Timber Regulation, 29, 30–31 IUU Regulation, 29–30 Ship Recycling Regulation, 29, 31–32 MFN discrimination, 231–34 process standards to regulate conduct: incentive approach, 32–33 mandatory market access conditions, 29–32 MFN discrimination, 231–34 IEMEIs as a legal phenomenon, 44–49 impact assessment (IA) processes, 124 accountability, 125 discretion of EU Commission, 127 enhancing legitimacy, 124–25 participation and decision-making processes, 125 participation opportunities, 134–37 proportionality principle, 128 relevance and framing of third country impacts, 129–34 role, 128 subsidiarity principle, 128–29 third country impacts lack of clarity, 127–28 social impacts, 127 trade and investment, 126–27 implementation of IEMEIs: due process, 116, 121, 285 duty to give reasons, 138–39 IUU Regulation, 121 right to be heard, 121 ship recycling, 121

326 Index incentive approach of IEMEIs, 32–33 economic incentive instruments, 22–23, 234–35 EU’s imposition of standards on third countries, 1, 13, 15–16, 23, 43, 51–52, 235–36 Aviation Directive, 235 EU Timber Regulation, 62–63, 130 Impact Assessments, 131 IUU Regulation, 30 Ship Recycling Regulation, 28 VPAs, 39 land use in third countries, 194–95 sustainability of biofuels, 32, 194–95, 293 WEEE, 32 WTO regime, 235–36, 293, 295 indirect land use change (ILUC): process standards, 24–25 sustainability of biofuels, 131, 136 inter-regional agreements: EU’s imposition of standards, 13 internal environmental legislation with extraterritorial effects, see internal environmental measures with extraterritorial implications internal environmental measures with extraterritorial implications (IEMEIs) generally: contingent unilateralism, 21 MFN discrimination, 235–36 contribution, 15–16 definition, 1–2, 6–7 external measures compared, 2 global governance issues, 7–8 practical legitimacy, 94–96, 297–99 role, 1–2, 14 see also compliance with IEMEIs; IEMEI regulation of trade; prevalence of IEMEIs International Civil Aviation Organization (ICAO), 33–34, 37–38, 165, 198, 201, 270, 301 International Labour Organization (ILO), 196 sustainability of biofuels, 198 international law: CJEU interpretation: consistent interpretation principle, 204–6 direct effect in EU, 200–2 direct effect of WTO law in EU, 202–3 customary law as legality benchmark, 204 EU’s obligation to respect, 197–98

international agreements as legality benchmark: direct effect in EU, 200–2 direct effect of WTO law in EU, 202–3 relevance for IEMEIs, 199–200 incorporation of international standards, 198–99 international jurisdiction rules, 199 other agreements in same policy areas, 198 WTO agreements and dispute settlement, 199 see also General Agreement on Tariffs and Trade and General Agreement on Trade in Services; Technical Barriers to Trade Agreement; World Trade Organization International Maritime Organization (IMO), 301 conditional application of EU measures: monitoring, reporting and verification system, 36–37 IUU Regulation: access of vessels to EU ports, 29 compliance: MFN discrimination, 235–36 duty to give reasons: enforcement of IEMEIs, 139–40 implementation IEMEIs: due process and procedural safeguards, 121 non-cooperation by third countries, 29–30 preliminary reference procedure, 149 process standards: mandatory market access conditions, 29–30 MFN discrimination, 233–34 restrictions on basis of third country or international law, 26 third country impacts in IAs, 129–30, 131, 133–34 warning process, 30 see also illegal, unreported and unregulated fishing judicial review of IEMEIs, 145–46, 208–9 access to justice by third country actors, 148, 150 direct access to courts, 148–49 European Ombudsman, 150 preliminary reference procedure, 149 balancing enabling and constraining functions of EU, 146–47 CJEU, 146

Index  327 controlling mechanism over EU powers, 147 external action values of the EU, 111–12 grounds for, 162 competence, 163–68 essential procedural requirements and procedural fairness, 169–73 infringement of Treaties, 173–78 international law, challenges on basis of, 197–208 misuse of power, 163 proportionality, 178–97 see also grounds for judicial challenges standing: access to justice for third country actors, 151–52 difficulties meeting criteria, 151 direct concern and affectedness, 153–55 Lisbon test for standing, 152–53 person to whom decision addressed, 151–52 rights-based approach to participation exception, 155–56 WTO dispute settlement system compared, 148–49 see also Court of Justice of the EU jurisdiction, international rules on, 45–49 broad interpretation by CJEU, 167 effects-based jurisdiction, 64 extension of EU regulatory powers, 64–65 failure of, 64–66 importance to IEMEIs, 63–64 reasonableness rule, 64–65 territoriality principle, 63 justice, legitimacy as, 77 procedural justice and fairness, 77 equal treatment of participants in decision-making, 77–78 opportunities and rights, 78 safeguards, 78–79 transnational concepts, 78–79 substantive justice, 79 distributive justice, 80–86 ecological justice, 79–80 justice gap, see procedural justice gap legal control of IEMEIs in international law, 225–26 MFN discrimination, 230–31 compliance issues, 235–36 differential treatment of developing countries, 236–38

economic instruments to regulate conduct, 234–35 process standards to regulate conduct, 231–34 non-discrimination, 226–27 IEMEIs as NPR-PPM, 227–30 MFN discrimination, 230–38 substantive obligations under TBT Agreement, 240–41 substantive obligations under TBT Agreement, 239–40 conformity assessment procedures, 242–44 international standards, 244–45 non-discrimination, 240–41 special and differential treatment of developing countries, 245–48 unnecessary obstacles to trade, 241–42 TBT Agreement: scope, 238–39 substantive obligations, 239–48 legal features of IEMEIs, 20–21 compliance with IEMEIs, 35–44 regulating access to EU markets, 22–23 economic instruments to regulate conduct, 33–35 process standards to regulate conduct, 23–33 regulating trade, 29–33 types of process standard, 23–29 legality and rule of law, 69 CBDR, 68 common concern problems, 66–67, 68–69 global public goods, promotion of, 67–69 international importance, 61 jurisdiction rules, 63–66 state consent, 62–64 jurisdiction, international rules on: effects-based jurisdiction, 64 extension of EU regulatory powers, 64–65 failure of, 64–66 importance to IEMEIs, 63–64 reasonableness rule, 64–65 territoriality principle, 63 legality-based legitimacy, 60–61 legitimacy of IEMEIs, 57–58 international importance rule of law legitimacy, 59–61, 63–66 procedural aspects, 58–59 substantive aspects, 59, 66–69 varying interpretations, 58–59

328 Index legitimacy concerns, 50–51, 55–56, 86–87, 297–300 accountability, 88 definition of legitimacy, 52 ‘ecological imperialism’ and protectionism, 53–54 EU law and WTO law compared, 297–302 evaluating IEMEI legitimacy, 52–53 interests affected by IEMEIs, 87 nature of legitimacy gaps, 87 governance and accountability concerns, 55 outsourcing responsibilities, 54 violation of CBDR, 54–55 see also accountability gap, distributive justice gap; participation and representation gap; procedural justice gap legitimacy models, 56–57 due regard for affected interests, 88–89 accountability gap, 90, 91–92 justice gap, 90, 93–94 participation and representation gap, 90, 92–93 good governance and accountability, legitimacy as, 69–77 see also good governance and accountability justice, legitimacy as, 77–87 see also justice and legitimacy of IEMEIs legality and rule of law, legitimacy as, 57–69 see also legality and rule of law norms and mechanisms: accountability, 87–88 due process, 88 participation of effected interests, 88 procedural fairness, 88 substantive justice, 88 transparency, 88 proposals for a new legitimacy model, 86–87 enhancing IEMEI legitimacy, 90–94 evaluating IEMEI legitimacy, 87–90 practical legitimacy, 94–96 legitimacy theories, 73–77 like products: MFN discrimination, 226–27, 230–31 NPR-PPMs, 228–29 TBT Agreement, 240 locus standi, see standing mandatory market access conditions: EU Timber Regulation, 29 due diligence obligations, 30–31

IUU Regulation: access of vessels to EU ports, 29 non-cooperation by third countries, 29–30 warning process, 30 Ship Recycling Regulation, 29 approval of ship recycling facilities, 31 flag-state jurisdiction, 31 regulatory intervention at global level, 31–32 market access, see mandatory market access conditions monitoring, reporting and verification (MRV): conditional application of EU measures, 36–37 most-favoured nation (MFN) discrimination, 230–31 Aviation Directive, 234–35, 237 CBDR, 236–37 compliance with IEMEIs: contingent unilateralism, 235–36 equivalence, 235–36 flexibility, 235–36 contingent unilateralism, 235–36 developing countries, 236–38 economic instruments, 234–35 equivalence, 235–36 flexibility, 235–36 process standards, 231–34 WTO regime, 230–31, 248 differential treatment of developing countries, 236–38 economic instruments, 234–35 flexibility, 235–36 process standards, 231–34 multilateral environmental agreements (MEAs), 12–13, 19, 251–52 common concern, 4, 67 justice, 82 mutual supportiveness, 221 mutual supportiveness principle, 13, 221 necessity test: CJEU, 182 conservation of exhaustible natural resources, 257, 259–60 developing countries, 264–65 less restrictive test, 261 measures reasonably available, 261–62 weighing and balancing test, 260–61 influence on IEMEIs, 262–64

Index  329 non-discrimination obligations, 226–27 MFN discrimination, 230–36 process and production methods, 227–30 TBT Agreement, 240–41 see also most-favoured nation discrimination Paris Agreement on Climate Change (Paris Agreement), 84, 201–2 CBDR, 221–22 participation and representation gap, 297, 299–300 Aarhus Convention, 121–23 EU law, 56, 90, 92–93 Aarhus Convention, 121–23 good governance and accountability, 74–75 WTO law, 215, 246–47 due process requirements, 278, 281–82 duty to engage in good faith negotiations, 267–68, 269, 271–72 TBT Agreement, 288, 293 participation gap, see participation and representation gap polycentric nature of environmental problems, 5–6 prevalence of IEMEIs, reasons for, 11–12 avoiding EU competence conflicts, 19 competitive opportunities, 18 effectiveness, 18 public international law shortcomings, 17–18 private certification and monitoring: certification schemes (private): flexibility clauses, 275–76 genetically modified organisms, 159 legitimate expectations, 176 Regional Fisheries Management Organizations, 235–36 sustainable biofuels, 139, 142, 173, 176, 242, 243, 275–76, 279–80 timber, 40–42 EU Timber Regulation, 41–42 Regional Fisheries Management Organizations, 235–36 Renewable Energy Directive, 40–41 sustainable biofuels, 139, 142, 173, 176, 242, 243, 275–76, 279–80 procedural justice and fairness, 77 equal treatment of participants in decisionmaking, 77–78 opportunities and rights, 78

safeguards, 78–79 TBT Agreement, 243–44 transnational concepts, 78–79 see also access to information; duty to give reasons; right to be heard procedural justice gap, 56, 90, 93–94, 116–17, 144 access to information, 140 access to justice, 146, 156–57, 162 dispute settlement system, 219–20 due process requirements, 300 GATT chapeau, 278–82 judicial review of implementation and enforcement, 173 right to be heard, 120–22 TBT Agreement, 243–44 process and production methods (PPMs): IEMEIs and non-discrimination, 227–30 IEMEIs as NPR-PPMs, 228–30 likeness, 228–29 process standards to regulate conduct, 23–24 access to EU markets, 23–24 mandatory conditions, 29–32 non-mandatory conditions, 32–33 types of process standards, 24–29 export of EU-set process standards, 28–29 MFN discrimination, 231–34 regulation of trade: mandatory conditions, 29–32 non-mandatory conditions, 32–33 see also IEMEI regulation of trade types of process standards: compliance with EU-equivalent process standards, 25 compliance with standards set by the EU, 24–25 restrictions on basis of third country or international law, 26–28 WTO, 231–34 proportionality principle: extraterritorial protection of fundamental rights, 191–92 fundamental rights and proportionality, 190–91 extraterritorial protection of fundamental rights, 191–92 protection of third country fundamental rights, 192–97 grounds for judicial review of IEMEIs, 178 fundamental rights and proportionality, 190–97

330 Index relevance and applicability, 178–82 review of IEMEIs as EU measures, 182–90 Impact Assessments, 179–80, 187–89 impact of IEMEIs on third countries, 128 Kadi case, 172 protection of third country fundamental rights, 192–93, 196–97 economic rights, 193–94 freedom to pursue an economic activity, 193–94 right to property, 193 rights of local populations, 194–95 social rights, 195–96 relevance and applicability to IEMEIs, 178–79 IAs, 179–80 territorial scope of EU legislation, 180–81 versions of proportionality, 180 review of IEMEIs as EU measures: CJEU’s deferential approach, 182–86 more intense review, 186–90 precautionary principle, 188 public international law, 45–46, 60–61, 207 influence of, 46–47 MEAs, 12–13 rule of law, 66 shortcomings, 17–18 see also jurisdiction, international rules on public participation: Aarhus Convention: access to justice, 157 ‘additional activities’, 122–23 EU application of, 123–24 relevance for IEMEIs, 122 Better Regulation agenda, 125 CJEU: judicial review of IEMEIs, grounds for, 169–71 due regard for affected interests, 90, 92–93 good governance and accountability, 72, 74 grounds for judicial review: essential procedural requirements and procedural fairness, 169–71 Impact Assessment processes, 134–36 REACH, 136 judicial review of IEMEIs, grounds for, 169–71 norms of legitimacy, as a, 88 participation and representation gap, 297, 299–300 Aarhus Convention, 121–23

due process requirements, 278, 281–82 due regard for affected interests, 90, 92–93 duty to engage in good faith negotiations, 267–68, 269, 271–72 EU law, 56, 90, 74–75, 92–93, 121–23 good governance and accountability, 74–75 TBT Agreement, 288, 293 WTO law, 215, 246–47, 267–68, 269, 271–72, 278, 281–82, 288, 293 right to be heard, see right to be heard see also Aarhus Convention reasonableness test, 64–65 red cards: IUU Regulation, 30, 121 Regional Fisheries Management Organisations (RFMOs): compliance to IUU Regulation: MFN discrimination, 235–36 registration, evaluation, authorisation and restriction of chemicals (REACH), 134, 291–92 administration review procedure, 159 extended governance, 136 Impact Assessment processes, 136 information exchange mechanisms, 143 regulating conduct, see economic instruments to regulate conduct; process standards to regulate conduct Renewable Energy Directive: alternative/supplementary modes of compliance: private certification and monitoring, 40–41 process standards, 24–25 right of access to information: applicability: Aarhus Convention, 141–42 CFREU, 140–41 TFEU, 140–41 Transparency Convention, 141 CJEU: increased transparency, 142–43 exceptions, 142 information exchange mechanisms, 143 limitations, 143 see also Aarhus Convention right to good administration, 116–17, 172–73 right to be heard, 116–17 adoption of IEMEIs: recognition of right post-adoption, 121–22

Index  331 applicability: arbitrary nature, 119 legitimate interests, 119 general interests, 119 enforcement of IEMEIs, 120–21 exclusions, 118–19 formulation of IEMEIs: applicability, 119 exclusion of right to be heard, 118–19 limitations of right to be heard, 117–20 implementation IEMEIs, 121 due process and procedural safeguards, 121 judicial challenges, 169–71 limitations, 117, 119–20 formulation of IEMEIs, 117–20 legislative measures, 117–18 administrative measures, 118 EU Timber Regulation, 118 IUU Regulation, 118 WEEE, 118 rule of law: common concern problems, 66–67, 68–69 fairness, 58 global public goods, promotion of, 66–69 human rights, 59, 95–96 IEMEIs, legitimacy of, 59–61 procedural aspects, 58–59 public international law, 66 substantive aspects, 59 varying interpretations, 58–59 see also legality and rule of law Sanitary and Phytosanitary Measures (SPSs), 246 seal hunting, 76–77, 130, 153 EC–Seal Products case, 238–39, 255–56, 269, 279 Seals Regulation, 155, 164, 183, 193, 195, 205, 255 ship recycling, 21, 27–28 economic instruments to regulate conduct, 33 MFN discrimination, 234 ship recycling fund, 34–35 right to be heard, 118 enforcement of IEMEIs, 120–21 implementation IEMEIs, 121

ship recycling facilities (SRF), 126 EU Commission guidance, 174–75 European list of authorised facilities, 31, 121, 153, 159, 173, 196 duty to provide reasons for removal, 171 proportionate control of, 180 removal from, 169–70, 171, 177, 233 right to be heard, 118 risk assessment, 185–86 Ship Recycling Regulation, 28, 31, 196 technical requirements, 174 ship recycling fund, 34–35 Ship Recycling Regulation (SRR): approval of ship recycling facilities, 31 duty to give reasons: enforcement of IEMEIs, 139–40 flag-state jurisdiction, 31 process standards: mandatory market access conditions, 29, 31–32 MFN discrimination, 232–33 restrictions on basis of third country or international law, 27–28 regulatory intervention at global level, 31–32 ship recycling facilities, 28, 31, 196 ship recycling fund, 34–35 sovereignty, 73–75 common concern problems, 67, 82 environmental law and challenges to state sovereignty, 2–3 EU Timber Regulation, 27 infringement of third country state sovereignty, 34, 53, 82, 90, 228, 259–62, 265, 296 Aviation Directive, 166 equivalence, 42 special and differential treatment, 245–48 standing rules: access to justice for third country actors, 151 difficulties meeting criteria, 151 person to whom decision addressed, 151–52 direct concern and affectedness, 153–55 Lisbon test for standing, 152–53 rights-based approach to participation exception, 155–56 state consent to international environmental law, 61–63 lack of state consent, 63–66

332 Index subsidiarity principle, 125 impact of IEMEIs on third countries, 128–29 substantive justice, 79 distributive justice: applicability, 81 CBDR, 82–85 fairness, 85–86 international consensus, 82 theories, 80–81 ecological justice, 79–80 sustainability of biofuels, 20 certification schemes (private), 139, 142, 173, 176, 242, 243, 279–80 flexibility clauses, 275–76 incentive approach of IEMEIs, 32, 194–95, 293 indirect land use change, 131, 136 International Labour Organization, 198 process standards: compliance with standards set by the EU, 24–25 incentive approach, 32, 194–95, 293 MFN discrimination, 231–32 Technical Barriers to Trade (TBTs) Agreement, 238 additional obligations: excessively trade-restrictive, 241–42 legitimate objectives, 242 non-discrimination, 240–41 publication and notification obligations, 286, 287 notification of draft measures, 287–90 specific trade concerns, 290–94 purpose, 239–40 scope of TBT Agreement, 238–39 substantive obligations, 239–40 conformity assessment procedures, 242–44 developing countries, 245–48 international standards, 244–45 non-discrimination, 240–41 unnecessary obstacles to trade, 241–42 territorial scope of IEMEIs: judicial challenges to, 164–68 timber and timber products, 21, 27, 154 see also EU Timber Regulation transparency: EU model of governance, 116–17 WTO, 284–85 notification of TBT draft measures, 287–90

TBT obligations, 285–94 trade concerns, 290–94 Treaty on European Union (TEU): decision-making processes, 125, 142–43 EU external action values, 104–6, 109, 111–12 lack of coherence, 108 vagueness, 107 weaknesses, 108 observance of international law, 205–6 proportionality principle, 128 right to be heard, 170–71 Treaty on the Functioning of the European Union (TFEU): access to justice, 148–49 duty to give reasons, 138, 171 EU external action values, 108–9 grounds of judicial review, 163 challenges to competence, 164 essential procedural requirements, 169 participation rights, 118 proportionality principle, 178 right of access to information, 140–41 standing rules, see standing rules taking account of impacts on developing countries, 126 UN Convention on the Law of the Sea (UNCLOS), 201, 206 UN Framework Convention on Climate Change (UNFCCC), 33, 198, 205, 221–22, 237 Vienna Convention on the Law of Treaties (VCLT), 221–22 Voluntary Partnership Agreements (VPAs): bilateral agreements: EU Timber Regulation, 38–40, 42, 62–63, 136, 154, 236, 270–71 direct concern and affectedness, 154 Waste Electrical and Electronic Equipment (WEEE), 21 direct concern and affectedness, 154–55 equivalence with EU requirements, 32, 118–19, 275, 289 third-country economic operators, direct imposition on, 42–43 process standards: compliance with EU-equivalent process standards, 25, 32 incentive approach, 32

Index  333 TBT Agreement, 239 third country impacts in IAs, 129–30, 131, 132–33 World Trade Organization (WTO), 13, 46 CBDR, 220–21 MFN discrimination, 236–37 direct effect of WTO law in EU, 202–3 dispute settlement body: approach to IEMEIs, 249–50 dispute settlement system: developing countries, 219–20 environmental concerns, 13 EU judicial review compared, 148–49 EU’s impact on, 13 forum for developing countries, as a, 219–23 influence of, 46–49, 217–18 limitations, 218–19 interpretation, 221–22 legitimacy concerns regarding IEMEIs: EU law compared, 297–302 legitimising IEMEIs, 94–96, 216–17 influence of WTO law, 46–49, 217–19, 225–26 MFN discrimination, 230–31 CBDR, 236–37 contingent unilateralism, 235–36 developing countries, 236–38 economic instruments, 234–35 equivalence, 235–36 flexibility, 235–36 process standards, 231–34 non-discrimination obligations, 226–27 MFN discrimination, 230–36 process and production methods, 227–30 publication and notification obligations, 285–87 TBT Agreement, 244–45

see also General Agreement on Tariffs and Trade and General Agreement on Trade in Services; Technical Barriers to Trade (TBTs) Agreement WTO exceptions, 250–51 conservation of exhaustible natural resources, 251–54, 257 equal treatment and even-handedness, 258–59 influence of necessity, 262–64 less restrictive test, 261 measures reasonably available, 261–62 necessity and developing countries, 264–65 necessity test, 259–60 weighing and balancing test, 260–61 IEMEIs under the GATT chapeau, 265–67 due process requirements, 278–82 duty to engage in good faith negotiations, 267–72 flexibility, 272–78 flexibility and compliance features, 274–76 flexibility and developing countries, 276–78 flexibility requirements, 272–74 relevant grounds for IEMEIs, 251 conservation of exhaustible natural resources, 251–54 GATT, 251–57 protection of human, animal or plant life or health, 251–54 protection of public morals, 255–56 securing compliance with laws not inconsistent with WTO law, 256–57 yellow cards: IUU Regulation, 30, 121, 133, 139

334