Book Recommendation: The Uprising
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Privatization as a cure for preemption?

Today's paper reports that the Senate is privatizing its dining room to get around budget losses, and now countries may be privatizing other entities to get around WTO rules. According to Inside U.S. Trade:

The European Union, in recently released comments on a Food and Drug Administration (FDA) inquiry on how third parties can be used to increase food safety, has said that if the FDA recognizes and relies on certifications that firms live up to private-sector standards, it could violate the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) in the World Trade Organization (WTO).

The EU in undated comments explained that though compliance with voluntary standards may lead to compliance with legal federal requirements, private-sector standards often go beyond what is required by federal governments. For instance, some private-sector standards ban the use of certain legally approved pesticides.

Private sector standards, the EU said, are frequently aimed “at ensuring compliance with legal requirements, but in many cases the provisions go beyond what is legally prescribed to cover issues of labor and social rights, production methods or environmental protection and sustainability."

And some developing countries are upset with the U.S. for its reliance on private, third party certifications across a variety of products, which they claim are difficult to keep current with. Public Citizen is generally skeptical of third party certifications, just as we're skeptical of most privatized regulation. But the EU's commentary shows that this issue cuts many ways: what if private sector standards are higher than the publicly enforced standards? What if countries start privatizing regulation in an attempt to get through a loophole in onerous WTO product standard rules? (That's partially what is at issue here: a disagreement about whether private standard setting agencies fall under WTO jurisdiction.)

And there's more from IUT. At ongoing government procurement negotiations at the WTO, countries are struggling how to address so-called “indicative criteria” that define whether government entities have been privatized:

Indicative criteria are an important issue because if government control or influence has been effectively eliminated over a particular entity, a GPA party that removes such an entity from its list of commitments generally owes no compensation. This became an issue when Japan attempted to de-list a railroad entity with the argument that it had been privatized, and the railroad’s status fell under dispute by GPA parties that lacked previously established criteria by which to judge Japan’s move.

Could a country that wanted to scale back its WTO procurement market access commitments do so by feigning some sort of mass privatization or partial privatization? Would progressives support privatization in that instance? Anyway, this is probably too much wonking out for a Monday morning, so I'll go back to my coffee.

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