European Yearbook of International Economic Law 2023

Table of Contents

1. Frontmatter

2. European and International (Public) Procurement and Competition Law

   1. Frontmatter

   2. Government Procurement Derogation Under Article III(8)(a) of the GATT: An Analysis of the Jurisprudence and Recommendations for Designing WTO-Consistent Industrial Policies

      Arnav Sharma, Ronjini Ray

      Abstract

      Article III:8(a) of the General Agreement on Tariffs and Trade 1994 (GATT) provides for a derogation from the national treatment principle with respect to government procurement. The language of GATT Article III:8(a) is vague and imprecise despite attempts by certain panels and the Appellate Body to interpret this provision. In the Turkey – Pharmaceutical Products dispute, GATT Article III:(8)(a) was interpreted in the context of Turkey’s drug insurance reimbursement scheme, where the arbitral panel’s observations shed some light on the government procurement derogation.

      This article critically examines the interpretation of GATT Article III:8(a) with a view to provide insights to policy makers. In this context, the article discusses the interpretation put forth by panels and the Appellate Body with respect to GATT Article III:8(a). Specifically, it critically examines the Panel Report and the arbitral award in the Turkey – Pharmaceutical Products. In this regard, the paper highlights the interpretation put forth by the arbitral panel that expands the scope of GATT Article III:8(a) to the extent that it identifies: (i) procurement may include non-governmental entities and (ii) “purchase” is only a subset of the types of transactions that may put into effect such government procurement. However, the arbitral panel fails to clarify the degree of governmental “control” required for a non-governmental entity to procure for governmental purposes. The authors argue that the arbitral panel set an unclear legal standard for identifying control, while relying on a narrow textual interpretation of the provision.

      The authors apply the interpretation put forth by the arbitral panel to a historical and a contemporary case study and, thereafter, offer some recommendations to policy makers to structure procurement policies that may benefit from the government procurement derogation under GATT Article III:8(a).

   3. Government Procurement Chapters in RTAs: Why the WTO Government Procurement Agreement Is Not Satisfactory?

      Antoine Comont, Van Anh Ly

      Abstract

      This paper examines the rationale and the relevance of government procurement provisions in Regional Trade Agreements (RTAs) among member states of the Government Procurement Agreement (GPA). Despite significant normative developments in the GPA since its establishment in 1979, the number of parties remains relatively low, with concerns about opening public procurement markets to international competition being a key factor. This study analyses public procurement commitments in 84 RTAs concluded among GPA member states over three periods, assessing quantitative and qualitative aspects such as thresholds, coverage, and procedures. The role of the European Union (EU) in plurilateral negotiations is emphasized, and the implications of including government procurement chapters in RTAs are discussed. The analysis reveals that the majority of RTAs among GPA member states include provisions related to public procurement, indicating the significance of regional commitments. Different trends are observed, with some agreements focusing on common markets and inclusive opportunities, while others expand coverage in strategic sectors. The influence of regional integration, particularly driven by the EU and the Asia-Pacific region, is evident in the accession of GPA members. Future research should explore the inclusion of public procurement commitments in RTAs within Africa and Latin America and their negotiation dynamics with non-geographically close states to understand the relevance of the GPA for these regions.

   4. Global Government Procurement Governance and the Covid-19 Pandemic

      Marcia Don Harpaz, Hadas Peled

      Abstract

      We question whether global government procurement governance broke down during the COVID-19 pandemic, by examining the consistency of state government procurement responses with international treaty obligations. Public procurement played a vital role in government responses to the pandemic, with states often bypassing standard domestic procurement rules and procedures to obtain urgently needed health-related supplies and vaccines. Through a comparison of common state procurement responses with the emergency-related provisions in five major international treaties, we find that states generally implemented their procurement under temporary emergency rules and regulations without breaching their international commitments. We argue that the global government procurement regime was largely able to accommodate state responses to the pandemic due to the high degree of national policy space built into it. Although the trend towards increased regulatory policy space in international economic treaties was evident prior to the pandemic, the pandemic reinforced the need for flexibility mechanisms that enable states to respond urgently to unexpected emergency situations such as the pandemic without violating their international obligations. Our findings suggest that regulatory policy space is essential to the resilience of the global government procurement order along with the maintenance of the basic norms/principles of competitive procurement. This case study contributes to the broader discussion of the resilience of the international economic legal order.

   5. Embracing Multiple Values in Government Procurement Under Trade Agreements: Assessing the Contribution of the EU-Japan EPA

      Takemasa Sekine

      Abstract

      Government procurement is gaining strategic importance, not only for economic affluence but also for promoting non-economic values such as the environment, labour standards, human rights, and national security. The assessment of horizontal policies within international rules varies depending on legal instruments, including the Agreement on Government Procurement (GPA) and specific rules in preferential trade agreements (PTAs) concerning government procurement. Among these, the EU-Japan Economic Partnership Agreement (EPA) stands out as a leading agreement in advancing rules related to horizontal policies. While the EPA does not revolutionise the management of government procurement and horizontal policies, some additional provisions in the Agreement could have significant implications. Specifically, due to the introduction of the chapter on trade and sustainable development, non-trade experts can now engage in a more reliable assessment of government procurement practices. At the same time, there is still room for improvement in the EPA. It would be preferable to include provisions that encourage the incorporation of horizontal policies. However, the rules governing the relationship between government procurement and horizontal policies do not necessarily have to be embodied in the agreement’s provisions. They can be developed through soft laws such as guidelines and information sharing on best practices. One significant advantage of the EPA is its capacity to gradually improve the rules in a flexible and efficient manner.

   6. The In-State Exception in Swiss Public Procurement Law: A Largely Unregulated Regulation

      Rika Koch, Caroline Lehner

      Abstract

      The revised Swiss Federal Act on Public Procurement, entered into force 2021, led to the codification of what is commonly referred to as “In-State” procurement: Article 10 III b excludes certain purchasing arrangements between legally separate public entities from the scope of the public procurement law. So while public procurement is usually subject to national as well as international rules on non-discrimination, competition and transparency, In-State procurement is exempted from these rules and can be awarded by public entities at their free discretion.

      EU law includes a similar concept, commonly referred to as “non-institutionalised exception”. However, while the 2014/24/EU Directive enumerates specific conditions that must be met to rely on this exception, the Swiss In-State provision merely states that the services in question should not be “offered in competition with private tenderers”.

      This article sheds light on the various criteria proposed to implement In-State procurement in practice. It then proposes an alternative, novel interpretative approach, analysing the categories of activities of public entities and their relation to the market to answer the question, whether they can be procured based on the In-State exception.

   7. Harnessing Interim Measures to Combat Digital Dominance in the EU

      Tamta Margvelashvili, Solomon Bagashvili

      Abstract

      Rapid growth of the digital economy brings significant challenges for competition law enforcement. The increased market power of digital platforms is a major topical concern of the European Commission. Traditional ex-post antitrust interventions have proven insufficient in addressing the consequences of dominance in the realm of the digital economy. Since timely rectification of market failures is of crucial importance, this article presents a perspective of reviving interim measures (IMs) as a solid instrument to ensure apt intervention in digital markets, even in circumstances when the law is unclear.

      Empowered by the Commission’s use of IMs in the Broadcom case, we argue that IMs are an adequate tool for tackling the unique characteristics of digital platforms such as tipping, economies of scale and scope, and network effects. We emphasize that the primary goal of antitrust enforcement should be to generate value and ensure its equitable distribution among all market participants. By introducing IMs in cases of abuse of dominance of digital platforms, consumer welfare can be enhanced, and a more competitive environment can be fostered. Yet, it is crucial to subject IMs’ substantive barrier to thorough scrutiny to ensure their practical effectiveness in pursuing these objectives.

   8. State Aid and Subsidy Control in EU’s PTAs: Variable Geometry and Intensity of Commitments

      Marios Tokas

      Abstract

      The European Union (EU) has emerged as a leading force in the realm of Preferential Trade Agreements (PTAs). An examination of the subsidy control provisions within these agreements reveals that the EU consistently employs a progressive and intensifying approach to regulatory harmonization in alignment with EU state aid law. The level of harmonization varies, contingent upon the geographical proximity and extent of economic integration among the participating parties. This harmonization strategy encompasses procedural, institutional, and substantive elements, all aimed at preventing regulatory divergence that might otherwise facilitate distortive practices in both subsidy provision and control. In contrast, other prominent global trade powers do not pursue such an ambitious path, as their subsidy control provisions closely resemble the multilateral rules established by the World Trade Organization (WTO). This chapter elucidates the manner in which these provisions evolve among PTA partners and assesses the practical implications of this divergent approach. In essence, the EU’s ambitious agenda has effectively disseminated its state aid laws to its PTA counterparts, while contemporaneously, innovative legal paradigms in the domain of subsidy control are gaining momentum within the multilateral sphere.

   9. The EU Model for International Competition Cooperation: Fighting International Competition Restrictions Beyond the Extraterritorial Application of the EU Competition Law Regime

      Mareike Fröhlich

      Abstract

      The following contribution analyses the European Union (EU) rules and agreements with third countries regarding anti-competitive measures. It starts by giving a brief overview of the shortcomings of the extraterritorial application of national and European competition rules as well as different international initiatives for an international system of competition regulation. Since all of them have failed so far, countries have started to regulate cooperation in the control of restrictions on competition. In this field, the EU is one of the main players and tries to export its competition system beyond the borders of the EU. This model of cooperation will be analysed and categorized according to its forms, partners and content by examining the agreements which deal with competition law and policy. It is discussed to what extent the degree of integration of a contracting party is decisive, as the EU differentiates and intensifies the obligation to harmonise with EU competition and cooperation rules on this basis. Furthermore, the interplay with the principle of conditionality is also explained. Therefore, the contribution takes into account the differences in the provisions on notification, consultation, comity, dispute settlement and exchange of information. This analysis will be set in comparison to the approach of the US and will be followed by a conclusion with further proposals for a future-oriented European model of cooperation in competition matters.

   10. Climate Change and Competition: How Can European Competition Law Promote Sustainability?

       Sarah Legner

       Abstract

       Free competition generally promotes public welfare. The relationship between competition and environmental protection, however, contains conflicts. The combat against clime change has led to undertakings pursuing environmental goals by entering into anti-competitive agreements. Since competition authorities have repeatedly imposed fines on such sustainability initiatives, competition law has been accused of impeding the goal of sustainability. This creates the need to further investigate the intersection of sustainability and competition. This paper shows that current European competition law provides possibilities for a greater consideration of sustainability concerns. Focusing on the ban on cartels, cf. Article 101 Treaty on the Functioning of the European Union (TFEU), it presents different approaches for the integration of environmental considerations in antitrust analysis. This paper also aims to flesh out limits in this regard. Importantly, the goals of competition law, which are aimed at enhancing consumer welfare and providing free competition, must not be circumvented.

   11. Sustainable Public Procurement: A Knight Guarding the Global Green Recovery in the Post-Pandemic Era?

       Xinyan Zhao

       Abstract

       Countries face financial crises, high inflation rates, and public health issues in the post-pandemic era. In response, many major economies are pursuing economic recovery plans to help citizens overcome the economic and social problems created by the pandemic. Public procurement is an important way for governments to implement economic recovery plans. Some countries, like the European Union (EU) member states and the United States (U.S.), use sustainable public procurement (SPP) to drive economic recovery while balancing the need for sustainable development. This approach aims to ensure citizens’ well-being by protecting the environment, investing in public health and providing jobs for impoverished populations. As of today, the WTO’s plurilateral Agreement on Government Procurement (GPA), FTAs’ chapter on GP, and other international procurement instruments constitute the legal framework for global SPP. How did these international procurement rules emerge and evolve to date? What policy space do they give governments to engage in SPP? What are the implications of SPP for the global green recovery in the post-pandemic era? This chapter will answer these questions. After a short introduction, the remainder of the chapter is structured as follows. Section 2 will introduce the development of SPP rules. It shows how international procurement rules (including SPP rules) were created and how countries, taking the EU as an example, localize these international rules. Section 3 will use the EU as an example of how GPA countries can promote SPP when facing GPA and non-GPA countries, respectively. Section 4 will discuss the impact of these EU-style SPP rules on the green recovery in the post-pandemic era. First, this section shows that governments can use sustainable procurement rules to promote sustainable development in the post-pandemic era. Secondly, this section also points out the limitations of SPP, especially their absence in non-GPA countries’ procurement markets. These limitations considerably diminish government procurement’s contribution to global green recovery. However, this section argues that SPP policies adopted by GPA countries can still significantly green supply chains and develop circular economies. Section 5 provides recommendations to make up for the limitations of EU regulations on SPP. This chapter concludes that while SPP cannot ensure global green recovery in the post-pandemic era, GPA countries can improve their SPP policies to contribute to the green recovery as much as possible.

   12. The SOE’s Duopoly of Vietnam’s Telecommunications Industry: Ally of the Country’s Development But Enemy to International Competition Law?

       Hoang Thai Hy Nguyen, Thị Thuy Duong Tran

       Abstract

       Telecommunications services are among key services of every country. Their liberalization is encouraged by the World Trade Organization (WTO). The WTO members who commit to liberalize telecommunications services shall allow foreign service providers to access the domestic market in a non-discriminatory manner. In addition, they shall comply with the anti-competition commitments enshrined in the Annex on telecommunications services. However, in many countries, in particular developing ones, domestic telecommunications services providers are often partially state-owned enterprises (SOE), which holds critical infrastructure for these services within their territory. In some countries, the monopoly on telecommunications services is maintained, as demonstrated by the case Mexico-Telecommunication Services, in which finally Mexico had to adjust its measures that restricted the competition of U.S. service providers.

       Vietnam also committed to liberalize telecommunications services when it joined the WTO. To fulfil its commitments, Vietnam has adjusted the legal framework to open the telecommunications services market. However, more than 15 years after Vietnam’s obtaining WTO membership, almost no foreign service provider can have a foothold in its market. This is due to the strong development of the two largest telecommunications service providers in Vietnam, VNPT (formerly part of the Ministry of Post and Telecommunications) and Viettel (owned by the Vietnamese military). Their duopoly does not allow any third service providers—whether they are foreign or national—to easily enter the market. Meanwhile, the EU—Vietnam Free Trade Agreement (EVFTA) was signed on 30 June 2019. This agreement provides for a greater liberalization of Vietnam’s telecommunication services market, in comparison with that in the WTO framework. But despite this FTA, telecommunication investors/providers from Europe will still face Vietnam’s legal framework that supports its SOEs’ duopoly in the country.

       In this context, one may raise the following questions: Is there a violation of WTO rules on telecommunications services market liberalization? Why do these SOEs have such special role? Are they enemies to international competition law? In order to answer to these questions, we will analyse three main issues: The compatibility of Vietnam’s legal framework with its WTO commitments related to telecommunication services liberalization and anti-competition restriction; The government’s intervention on prices as well as the role of Vietnamese competition law on SOEs; Solutions for Vietnam to comply with the WTO and the EVFTA commitments, which will soon come into effect and to limit risks for investors/providers from Europe in particular, WTO members in general in this field in Vietnam.

   13. Rocking the Contestability and Fairness Foundations: Multi-Level Governance and Trust Relations for Futureproofing the DMA’s Effectiveness

       Alba Ribera Martínez

       Abstract

       The Digital Markets Act (DMA) is aimed at setting out harmonised rules to ensure contestable and fair markets in the digital arena across the Union. The regulatory instrument is, thus, divided into two major objectives: ensuring that the impending fragmentation of the regulation of digital markets does not reproduce any further across the Member States as well as the pursuit of the ethereal concepts of contestability and fairness. Under the regulatory and economic lenses, contestability and fairness are not workable concepts to be incorporated directly by the European Commission in its enforcement of the DMA. As a response to that, the chapter proposes a set of metrics, considering different perspectives born into these concepts, to guide the Commission’s application of the regulatory framework and the Court of Justice’s futureproofing of its effectiveness. Within this same spirit, the chapter refers contestability and fairness back to the DMA’s broader legitimacy through the concepts of multi-level governance and the enhancement of trust between the intervening agents of the regulation.

3. Current Challenges, Developments and Events in European and International Economic Law

   1. Frontmatter

   2. The Protection of the EU’s Financial Interests in the Next Generation EU: From PIF Directive to RRF Regulation

      Nicola Ruccia

      Abstract

      This paper analyses the protection of the EU’s financial interests in the NGEU in order to circumscribe the perimeter of the competences of the actors involved and their respective extent.

      Firstly, it examines the protection of the EU’s financial interests in primary law as well as in the Recovery and Resilience Facility Regulation in order to establish the kind of competences concerned. Within this ambit, it shows the most important innovation to the legal framework of the topic apported from secondary law.

      Secondly, this paper defines the level playing field of the protection of the EU’s financial interest resulting from the NRRPs. It also examines the dimensions of this level playing field and determine to what extent, and with what regulatory results, the PIF Directive has been implemented in these regards by the Member States.

      Thirdly, it identifies the most significant shortcomings in the anti-fraud measures of the NRRPs and the consequences of these gaps on the implementation of the NRRPs themselves, both on the functioning of the internal market and on the EU considered as a whole.

      Finally, it observes the role of the Commission, the OLAF and the EPPO in the protection at issue.

   3. Food Commodification, WTO Rules and the Human Right to Food: Unresolved Issues

      Jorge Freddy Milian Gómez

      Abstract

      In ancient times, the great empires used food as a payment or offering to the gods, but it was not until the emergence of capitalism, as a social-economic formation, that food began to acquire the characteristics of a commodity. The World Trade Organisation (WTO) establishes world trade rules and focuses on organising fair, predictable, free trade between states. Foodstuffs do not escape the regulations of this organisation as tradable goods. In this sense, WTO rules on food increase the process of commodification and generate various harmful effects. In this respect, this process is one of the underlying causes of food disorders; it affects biodiversity and the environment and undermines cultural traditions, local food markets and the State’s food sovereignty. This contribution aims to assess the impact of WTO rules on food commodification; concerning the human right to food and the unresolved issues at the international level. In addition, the research combines an exegetical study of WTO legal instruments such as the SPS, TBT and Agreement on Agriculture. The study combines several research methods used in legal and social studies as the legal-doctrinal method, document analysis, historical method and, in a certain way, some legal-empirical research.

   4. An Outlook of the European Union’s Strategy Regarding Geographical Indications

      Lise Bernard-Apéré

      Abstract

      The EU needs to define a strategy for gaining recognition for its geographical indications abroad. The EU has adopted a sui generis approach to geographical indications, while the “New World” has adopted a trademark framework. This duality of approaches leads to multilateral or plurilateral treaties that are unsatisfactory for the objectives of the European Union. This is why the only legal vehicle enabling it to have its products recognised satisfactorily is regional trade agreements.

      To secure protection for as many products as possible in as many countries as possible, the EU adopts a pragmatic approach whereby it chooses its trading partners. Some partners are chosen because the EU has room for manoeuvre to negotiate with these States, while other agreements are concluded, serving as a showcase for other States more reluctant to protect European geographical indications, to attract and convince them.

      The study of recent regional trade agreements shows that the EU remains uncompromising in its desire to protect its appellations, but that it remains flexible as regards the methods of protection and the choice of protected products. The result is eminently positive for the EU since the interconnection of trade allows these European products to be indirectly imposed on other states. Together, these agreements and protected products form a “geographical indications spider’s web”.

   5. Humanising European Investors: BITs Are Dead, Long Live the ECHR? A Look to RWE v. The Netherlands

      Agata Daszko

      Abstract

      With the phasing out of the established system regulating protection of intra-EU investments, EU investors now face the challenge of asserting their claims under alternative legal bases in front of domestic courts of EU Member States. This chapter explores the implications and consequences of this significant shift. Focusing on the post-Achmea reality, the article analyses the complexities faced by EU investors in navigating the intricate web of laws, regulations, and principles to safeguard their investments, examining the applicable legal frameworks and procedural complexities. The chapter’s main focus is on the protection of property against State measures amounting to deprivation or unlawful control or use. With that in mind, the chapter delves into the RWE v. The Netherlands saga which is playing out in multiple fora and jurisdictions. It provides an in-depth overview of the case proceedings before the District Court of The Hague, emphasizing the application of Article 1 First Protocol ECHR, which enshrines the right to property, providing a paradigmatic example of how EU investors are asserting their rights under the new reality. The chapter also points to ensuing shortcomings of the EU legal framework, at least as may be perceived by investors used to the ISDS system. Overall, the article sheds light on the challenges and opportunities faced by EU investors in asserting their claims before domestic courts. It concludes with an outlook on the future trajectory of intra-EU investment protection, considering various possible scenarios for both claimants and respondent states.

   6. The Theoretical Framework for International and Regional Unification and Harmonisation of the Public-Private Partnership Legislation Through Model Laws

      Shaimerden Chikanayev

      Abstract

      The problem of international unification of commercial law has been a recurring topic in legal scholarship for more than a century. There has been, however, a limited amount of scholarly work on international and regional unification and harmonisation of public-private partnership (PPP) legislation. This paper seeks to provide a theoretical framework for the legal problem of international and regional unification and harmonisation of PPP legislation by means of model laws. It starts by providing a brief overview of relevant legal concepts. It then advances the thesis that legal universalism is the main historical line in the development of commercial law, including PPP legislation, whereas the school of natural law is a philosophical foundation for any unification of law endeavour at the international and regional level. Finally, it outlines the status of the process of unification of the PPP legislation on a global and regional level, including key organisations and main unification instruments involved and used for these purposes. Its main aim is to provide a theoretical framework for much needed legal research on the topic of international and regional unification of the PPP legislation through model laws.

4. Book Review

   1. Frontmatter

   2. Joscha Müller, Reformhindernisse im internationalen Investitionsrecht Mohr Siebeck, 2020, ISBN 978-3-16-159090-0

      Markus P. Beham

      Abstract

      The title of this book, ‘barriers to reform in international investment law’, runs short of the ambitious task undertaken by Joscha Müller as his doctoral thesis at the University of Marburg. For at the centre of the monograph stand not just the usual ‘barriers’ in the political sense but rather technical legal issues relating to the investment treaties themselves that may arise from the on-going reform process of international investment law. To this, Müller adds possible solutions, constructive suggestions, and perhaps the one or other bold—yet perfectly justified—claim.