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When Daniel Price left the Office of the U.S. Trade Representative in 1992, he understood globalization from the inside out. Washington law firms were buzzing about the new internal market in Europe. But Price saw a broader order — and a new practice area — emerging from the Uruguay Round of trade talks, the North American Free Trade Agreement, and bilateral investment treaties. “No one that I talked to was thinking about the impact of these new rules,” he says. “I saw the opportunity to do something different — to serve private stakeholders dealing with the challenges of globalization.” The initial and unlikely taker for Price’s vision was the midsize Atlanta-based firm now known as Powell Goldstein. But in 1995, the Uruguay talks begat the World Trade Organization, and by the end of the Clinton years, everyone was thinking global. In 2001 the firm now called WilmerHale recruited Clinton USTR Charlene Barshefsky and her general counsel, Robert Novick, to build a trade law group along similar lines. The next year, the Price group migrated to Sidley Austin, in search of a platform commensurate with Price’s ambitions. Today, only Wilmer and Sidley can boast that the majority of their trade practices arise out of WTO rather than domestic law. And for law firms in 2006, the WTO is a sweet place to be. In June, proceedings open in a massive dispute in which the United States and the European Community accuse each other of propping up the Boeing Co. and Airbus S.A.S. with tens of billions of dollars in government money. In a pair of cases that are even more emotionally charged, the WTO is set to rule on Europe’s attempts to block American exports of hormone-fed beef and genetically modified food. Wilmer and Sidley are the common thread between jumbo jets and frankenfoods, among other WTO controversies. In the aircraft dogfight, it’s Wilmer for Boeing versus Sidley for Airbus. In the culture clashes over natural food, both firms line up on the American side against European government lawyers. Wilmer rides herd for 800,000 cattle ranchers, while Sidley assists the Biotechnology Industry Association. In last year’s most consequential WTO battle, it was Sidley for Brazilian sugar growers versus Wilmer for European beet and sugar interests. And then there are the clients that the firms help to set the level of trade subsidies without litigation. In negotiating transitional arrangements for Chinese fabrics, Sidley represents the U.S. textile importers, and Wilmer a major Chinese textile exporter. At the same time, these two law firms speak for American exporters in the ongoing Doha round of trade talks — Sidley for the National Foreign Trade Council, and Wilmer for the Business Roundtable. WTO lawyers work in a world without national loyalties, and for that matter without borders. “I’ve worked for South American countries out of Brussels, and I’ve worked for Asian countries out of Brussels,” says Wilmer’s Marco Bronckers. “It’s pretty much decentralized.” Although nations are nominally the disputants at the WTO, the real parties in interest are often private. And increasingly, corporate interests hire law firm lawyers to litigate before WTO panels or to help clients advance their agenda in the global trade talks. In the contest for WTO work, the advantage goes to American law firms, partly because American clients understand the role that they can play. Sidley and Wilmer, which have a significant head start on the competition, foresee dramatic growth. But the trade system suffers from weak enforcement, and weaker public support. If WTO litigation is ever to take off, it must first survive the test provided by the unwieldy aircraft case and the politically explosive issue of biotechnology. World trade law is not all about bolts of cloth and bars of pig iron, and it is no longer confined to the club of rich countries. The treaty system grew out of the General Agreement on Tariffs and Trade, founded in 1948 to progressively open up trade in a widening circle of nations. The current Doha round of talks — named after the Persian Gulf capital where they began in 2001 — seeks an agreement on further trade liberalization by all 148 WTO members, it is hoped before July 2007. Global trade practice is expanding as the law implicates ever more economic sectors and players. “The WTO covers every aspect of international economic affairs,” says Price, “not only goods, but also services and intellectual property. For sophisticated companies, it’s impossible to ignore as they structure investments or address regulatory problems.” In addition to their manufacturing clients, Wilmer speaks in the Doha talks for the Coalition of Service Industries, and Sidley for the Securities Industry Association. Indeed, the general counsel of one investment house credits Sidley with putting financial market access high on the Doha agenda by lobbying national officials from around the world. Last year Sidley helped Anheuser-Busch Cos. obtain a WTO ruling on IP rights to the use of geographical names, protecting Budweiser from a challenge by the Czech brewer based in the town of Ceske Budejovice (Budweis in German). In a losing cause, it defended the U.S. horse-racing lobby against an effort by Antigua to loosen U.S. restrictions on online gambling. GOING GLOBAL Another factor fueling law firm growth is the greater participation of developing nations in the WTO system. Increasingly, parties persuade their nation to use Geneva as a court of appeal after local authorities rule that they have “dumped” goods on the American or European market at unfairly low prices. Thus, after the U.S. International Trade Commission and the U.S. Department of Commerce found that Grupo Cementos de Chihuahua S.A. de C.V. and Cemex S.A. de C.V. dumped cement on the American market, the Mexican cement mixers, represented by White & Case and Greenberg Traurig, asked the WTO to rule otherwise. But sometimes private interests have no domestic remedy, because at issue is something perfectly legal under domestic law, like agricultural subsidies. Then complainants go straight to the WTO. For instance, Sidley won antisubsidy rulings last year on behalf of the Association of Brazilian Cotton Industry against the United States, and the Association of Brazilian Sugar Industry against the European Community. Europe has since backed down on sugar, and Brazil’s impact may herald more WTO activity by private interests in the developing world. The orbit of countries will only expand, with Russia, Ukraine, Vietnam, and Saudi Arabia on the verge of joining the organization. Law firms occasionally represent nations directly, with one example being White & Case for Costa Rica in the battle over European banana tariffs. But it’s more common for private interests to retain law firms, according to Gregory Shaffer, a professor at the University of Wisconsin Law School and author of Defending Interests: Public-Private Partnerships in WTO Litigation. In such cases, the private party typically assists its nation in developing strategy and writing briefs in cooperation with government lawyers. Sometimes the private party generates the case, maintains full control, and pays all the bills. THE D.C. ADVANTAGE The best Continental and British trade groups freely admit that U.S. firms dominate the WTO practice. Among major British firms, Freshfields Bruckhaus Deringer partner Michael Schuette says, “only we and Herbert Smith have a bit of a trade practice, and they’re totally dwarfed by the American groups.” Clifford Chance and Linklaters experimented with a trade group in the late 1990s, only to abandon the idea. Among Continental firms that excel in trade law, like Belgium’s Vermulst Verhaeghe Graafsma and France’s Gide Loyrette Nouel, EU trade remedies law remains dominant. “We have always conceived of our WTO practice as an extension of our EU trade practice,” says Jean-Fran�ois Bellis of Belgium’s Van Bael & Bellis. “Some of our Brussels trade disputes have a second life in Geneva.” Most Magic Circle and Wall Street firms spurn trade law in Europe because it often commands low fees or conflicts with more lucrative work. Schuette says that Freshfields had to turn away Boeing in the Boeing/Airbus dispute to avoid a conflict with Freshfields’ finance work for Airbus. The going rate for routine trade law advice in Brussels is $300-$350 per hour, as compared with $500-$550 per hour for antitrust. Furthermore, governments often demand 20 percent discounts, and developing nation clients tend to be cost-conscious. Increasingly, clients outside the United States and Europe turn for their trade law needs to small law firms in their home nations. For now, only a few clients are willing to pay a premium for international trade work in Europe. With the field cleared of London or Wall Street law firms, trade law groups based in Washington, D.C., trounce their Brussels rivals. D.C. trade law groups benefit from a broader domestic practice and deeper relations with the nations, multinationals, and coalitions who need trade advice. Antidumping litigation is more active in the United States, and other facets of D.C. practice, like hearings on most-favored-nation status, have no equivalent in Europe. Most importantly, U.S. trade associations are in the habit of consulting outside lawyers on trade talks; European industry federations historically look to in-house lawyers and lobbyists. In the biotechnology disputes, for example, no known private interests have hired lawyers to back up the European Community. This asymmetry is common and, from the viewpoint of European law firms, it’s a handicap. “U.S. companies work in partnership with the government,” says Olivier Prost of Gide Loyrette Nouel in Brussels. “In the E.C. it’s totally different. Companies still believe WTO is a political and not a legal matter.” Sidley and Wilmer each built their trade groups by recruiting government officials from nations around the world and completed the puzzle by acquiring a lateral trade group in Brussels. In 2002 Wilmer stole eight lawyers, headed by Marco Bronckers, from the Dutch firm Stibbe. The following year, Sidley nabbed four lawyers, led by Richard Weiner, from Hogan & Hartson. Now the Sidley trade group numbers more than 50 lawyers, including 10 in Brussels and 10 in Geneva. The Wilmer trade group counts more than 30 lawyers, among them six in Brussels and two in Berlin. Among U.S. firms, White & Case is a strong third player in the WTO niche. It boasts about 40 global trade lawyers — including six in Brussels, plus five in Geneva anchored by Brendan McGivern. White & Case counsels Saudi Arabian Oil Company on Saudi Arabia’s application to the WTO, as well as Tenaris S.A. and its Argentinian subsidiary Siderca S.A.I.C. on the complaint by Argentina and Mexico against America’s treatment of steel tube imports. Other firms with Washington-based trade practices that also have WTO practices and aim to ramp them up are Steptoe & Johnson; Akin Gump Strauss Hauer & Feld; Mayer, Brown, Rowe & Maw; Hogan & Hartson; Miller & Chevalier; and Greenberg Traurig. Sidley and White & Case are alone among U.S. law firms in fielding a sizable Geneva contingent. Wilmer’s Robert Novick is skeptical of Geneva’s potential for generating client work. “I’d sooner open a second China office,” he says. Price responds that Sidley already has three China offices. More to the point, he says, “The idea that you can parachute into Geneva on a Tuesday and not have an ongoing presence at [the] seat of negotiations is incorrect.” Michael Stepek recently moved from Winston & Strawn to Hogan & Hartson, in part to give Hogan trade capability in Geneva. “From this point on,” Stepek proclaims, “there are four corners to the trade system: D.C., Brussels, Beijing, and Geneva.” D.C., Brussels, and Beijing are the capitals of the world’s three great trading powers, and Geneva is where they interface with all other trade partners. Charlene Barshefsky’s crowning achievement in government was to negotiate China’s entry into the WTO, and China is the centerpiece of her strategy at Wilmer. Her deputy Novick estimates that in the past year 40 clients — ranging from Google and Cisco to U.S. perfume makers and fertilizer manufacturers — have sought Wilmer’s advice on Chinese market access. China advice represents 25 percent of Wilmer’s trade practice, Novick estimates, up from zero in 2001. For the moment, the China work is mostly market access counseling and domestic antidumping conflicts. China has so far brought only one complaint in the WTO itself; it was represented by Gide Loyrette in a successful challenge brought by eight nations to America’s steel subsidies in 2003. But Chinese conflicts are likely to eventually migrate from D.C. and Brussels to Geneva. “Over the long term,” says James Bacchus of Greenberg Traurig, “it’s only natural that as a major trader China will be involved in major WTO disputes.” Susan Esserman of Steptoe & Johnson agrees: “China is taking the measure of things, gaining experience.” The highlight of Daniel Price’s government service was to negotiate the investment dispute provisions of NAFTA. Now arbitration between states and investors takes up 30 percent of the Sidley group’s time. “There’s an artificial line between WTO and investor-state cases,” he says. “We’re the first group to identify this practice and conceptualize it as seamless.” The best example arises out of a Mexican tax on soft drinks: The United States claims that the tax is designed to protect Mexican sugar producers against goods made with high fructose corn syrup by U.S. exporters or firms with U.S. investors. Sidley is simultaneously hitting Mexico with an investment arbitration and a WTO action. It represents Archer Daniels Midland Co. in an investor-state action filed against Mexico under NAFTA. At the same time, it acts for the Corn Refiners Association (which includes ADM) in a WTO case filed by the United States against Mexico. These cases are two responses to the same problem under different international legal regimes. One seeks compensatory damages and the other seeks a rule change. A MATTER OF ANTITRUST Sidley also hopes to find common ground between trade and antitrust. It recently took on several antitrust laterals in Brussels, including Stephen Kinsella from Herbert Smith. Richard Weiner of Sidley in Brussels believes that the defense of European state aid under competition law should feed into his practice of maintaining trade subsidies on behalf of European heavy industry. “To us, it’s inconceivable that you would view trade law and competition and arbitration as separate items,” says Weiner. To others it’s quite conceivable. Despite Wilmer’s strength in arbitration, Novick says, “I don’t think it’s that related.” And although Van Bael & Bellis excels in antitrust, Bellis insists, “There is zero synergy between trade and competition law. Zero.” For now, Sidley’s overall trade strategy seems to be working. The group Price assembled at Powell Goldstein handled most of the WTO’s early subsidy cases, advising Embraer-Empresa Brasilera de Aeron�utica S.A. in Brazil’s long WTO battle with Bombardier Inc. and Canada over subsidization of the small aircraft industry. This experience helped to gain the attention of both Airbus and Brazilian agricultural interests, which are now among the group’s key clients. The massive subsidies that America and Europe award their farmers have always been an invitation to WTO litigation by the developing world. WTO agreements have permitted agricultural suits since January 2004 (when the so-called peace clause expired), but hostilities have escalated slowly. Last year Sidley opened fire on behalf of Brazilian sugar and cotton interests. Sidley partner Scott Andersen in Geneva says that eight major agricultural exporting countries have consulted with Sidley in the past year. Greenberg Traurig’s Bacchus says that a similar number of nations have consulted his firm, which has a strong client base in Latin America. These fence-sitters, who are considering filing suit against the United States or Europe, want progress in the Doha talks. If the developed world does not slash farm subsidies, the crop wars will begin in earnest. SERIOUS BEEFS Barring a farm war, the high-profile cases of 2006 concern jumbo aircraft and natural foods. Sidley and Wilmer declined comment on these cases. But both controversies pose a serious test for the international trade system — and, by extension, for the law firms that are betting on its expansion. As Boeing and Airbus go head-to-head with new airplanes, they say they’re hitting artificial headwinds. America contends that Airbus has received up to $40 billion in government subsidies, including $6 billion in various forms of support for the new double-decker on which Europe pins its aviation hopes, the A380. Europe retorts that Boeing has received $23 billion in government support, mostly from NASA and Department of Defense research grants. Looking forward, the two sides are grappling over the $3.2 billion tax break that Washington state has promised Boeing for production of its fuel-sipping 787 Dreamliner; and the $1.7 billion in launch aid from European governments that Airbus seeks for its answer to the Dreamliner, the A350. If the WTO finds the subsidies on one side impermissible, it could change the balance of power in aerospace. Meanwhile, America can’t sell hormone-fed beef or genetically altered seed corn in a continent where they are mocked as frankenfoods. In the case of E.C. Measures Concerning Biotechnology, the United States, Canada, and Argentina are challenging Europe’s ban on the approval of genetically modified organisms. Europe argues in the latest beef hormones case that because it now has a science-based system for assessing food risks, its ban of hormone-fed beef is now consistent with WTO rules, and America and Canada no longer have a right under WTO law to retaliate. It’s possible that these cases might be decided on narrow grounds. However, both serve up the opportunity for a WTO panel to judge the scientific basis of Europe’s resistance to genetic engineering. WTO litigation has its limits. While the system is well-suited to handling garden-variety commercial disputes, argues Robert Howse of the University of Michigan Law School, it struggles to resolve disputes with massive commercial stakes or a strong political-ethical component. That’s because WTO remedies are limited. Panels generally have the power only to guide prospective behavior, not to order compensation for past actions. The losing party can tweak its rules to avoid a penalty, often inspiring more litigation. Wilmer’s Bronckers, who is also a professor at Leiden University, has advocated for a system of compensatory damages. But America and Europe are unlikely to cede more power to the small countries who use the WTO as a weapon.
Michael D. Goldhaber is senior international correspondent for The American Lawyer , an ALM publication in which this article first appeared.

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