Transcript Document

Lecture 7
TRADE IN GOODS
Topics covered:
• The World Trade Organization
• The General Agreement on
Tariffs and Trade of 1994
• Multilateral Trade Agreements
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JUDGE JUDY READY TO RULE--
Case: Nissho Iwai American Corp. v. Nike (specialty case):
+Court
+Facts
+Legal Significance
+Parties
+Rational
+Issue
+Result
A. THE WORLD TRADE ORGANIZATION
1.
The WTO Agreement
a.
b.
Came into effect January 1, 1995
Establishes a legal framework to administer
various trade pacts.
1) Originally the trade pacts negotiated under the old
General Agreement on Tariffs and Trade
organization, including the General Agreement on
Tariffs and Trade of 1947 (GATT 1947 - now
slightly revised and renamed GATT 1994).
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A. THE WORLD TRADE ORGANIZATION
2. Structure of the WTO
a. The main organs of the WTO are:
1) Ministerial Conference: the WTO's
supervisory and policy making
organ.
2) General Council:
a) Also functions as the WTO's:
i. Dispute Settlement Body.
ii. Trade Policy Review Body.
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A. THE WORLD TRADE ORGANIZATION
2.
Structure of the WTO (cont.)
a.
The main organs of the WTO are: (cont.)
3) Council for Trade in Goods.
4) Council for Trade in Services.
5) Council for Trade-Related Aspects of Intellectual
Property Rights.
b.
Other: Secretariat headed by a Director-General.
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B. THE GATT 1994
1.
Purpose of the GATT Rules: to progressively
liberalize world trade.
a.
This is done by giving WTO member states:
1) Equal access to markets
2) Reciprocity in trade concessions.
3) Transparent and stable trading conditions.
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B. THE GATT 1994
2.
The Principles Underlying the GATT Rules
a.
Nondiscrimination: International trade should
be conducted without discrimination.
1) The basic "principle" of GATT.
a) Given expression in the articles as the "mostfavored-nation" rule and the "national treatment"
rule.
2) The Most Favored Nation Rule: Requires each
contracting party to apply its tariff rules equally
to all other parties.
a) General exceptions to the MFN rule.
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B. THE GATT 1994
a)
General exceptions to the MFN rule. (cont.)
i.
Contracting states may take actions to counter dumping
and subsidization.
ii. Contracting states may join together to create customs
unions and free trade areas.
iii. Contracting states may restrict imports to protect public
health, safety, welfare and national security.
b)
Special exceptions for developing member states.
i.
ii.
Generalized System of Preferences allows developed
countries to grant preferential treatment to developing
countries, and to do so on a nonreciprocal bases.
South-South Preferences allows developing countries
exchange tariff preferences among themselves without
extending the same preferences to developed countries.
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B. THE GATT 1994
2.
The Principles Underlying the GATT Rules (cont.)
a. Nondiscrimination: International trade should be
conducted without discrimination. (cont.)
3) The National Treatment Rule: Requires a country
to treat products equally with its own domestic
products once they are inside its borders.
a) Definition: "national treatment" by a state means
according to the nationals of another state treatment
equivalent to that which the state accords to its own
nationals.
i. Interpretation: Products must be treated equally visà-vis their "content"; they may not be discriminated
against because of the way in which they were made.
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B. THE GATT 1994
3)
The National Treatment Rule: (cont.)
b)
Exceptions:
i.
Member states may maintain preferences that existed at
the time they became signatories of the GATT.
ii. Member states may discriminate in the procurement of
goods by government agencies.
iii. Member states may discriminate in the payment of
subsidies to domestic producers.
iv. Member states may discriminate in the screening of
domestically produced movies.
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JUDGE JUDY READY TO RULE--
Case: Japan –Taxes on Alcoholic Beverages:
+Court
+Facts
+Legal Significance
+Parties
+Rational
+Issue
+Result
B. THE GATT 1994
2.
The Principles Underlying the GATT Rules (cont.)
b. Protection Through Tariffs: WTO member
states may only protect their domestic
industries through the use of tariffs.
1) May not use quotas or other quantitative
restrictions which block the function of the price
mechanism (Art. XI).
2) Tariffs may only be collected "at the time or
point of importation" (Art. II).
a) Purpose: To ensure that internal taxes are not
disguised as tariffs.
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B. THE GATT 1994
2.
The Principles Underlying the GATT Rules
(cont.)
c. Transparency: Governments of WTO
member states must disclose to the
public, and to other governments, the
rules, regulations and practices they
follow in their domestic trade
systems.
d.
Simplification: The members are
obliged to work toward simplifying
their import and export formalities.
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JUDGE JUDY READY TO RULE--
Case: Measures Affecting Importation of Salmon:
+Court
+Facts
+Legal Significance
+Parties
+Rational
+Issue
+Result
B. THE GATT 1994
3.
Temporary and Permanent Exceptions to
the GATT Rules
a.
The Escape Clause (or GATT "safety valve"):
Allows a WTO member state to avoid,
temporarily, its GATT 1994 obligations when
there is a surge in the number of imports
coming from other member states that threatens
a domestic industry.
1) An injured member may impose emergency,
restrictive trade measures.
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the
GATT Rules (cont.)
a.
The Escape Clause (cont.)
2) Prerequisites:
a) It must determine that a domestic industry is
threatened.
b) It must notify the WTO of its planned action.
c) It must consult with the affected exporting
member state to arrange for compensation.
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the
GATT Rules (cont.)
a.
The Escape Clause (cont.)
3) If a notifying country fails to negotiate, the
injured exporting state is authorized to
"retaliate."
a) The injured state may withhold "substantially
equivalent concessions" in order to restore the
previous balance of trade between the two
countries.
4) Procedures for engaging in consultations and for
withholding concessions are set out in the
Safeguards Agreement.
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the
GATT Rules (cont.)
b. Permanent Exceptions: GATT 1994 allows
WTO member states to implement certain
public policies that are in conflict with its
general goal of liberalizing trade.
1) General Exceptions: A WTO member state may
implement certain public policies contrary to its
GATT obligations so long as this is not done as
"a means or or unjustifiable discrimination" or
as "a disguised restriction on international
trade." (GATT Art. XX)
a) A state may take measures contrary to GATT
which:
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the
GATT Rules (cont.)
b.
Permanent Exceptions: (cont.)
1) General Exceptions: (cont.)
a) A state may take measures contrary to GATT which:
i. Are necessary to protect public morals.
ii. Are necessary to protect human, animal, or plant life,
or health.
iii. Relate to the importation or exportation of gold or
silver.
iv. Are necessary to secure compliance with laws or
regulations which are not inconsistent with the General
Agreement.
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the
GATT Rules (cont.)
b.
Permanent Exceptions: (cont.)
1) General Exceptions: (cont.)
a) A state may take measures contrary to GATT which:
v. Relate to the products of prison labor.
vi. Protect national treasures of artistic, historic, or
archaeological value.
vii. Relate to the conservation of exhaustible natural
resources.
viii.Are undertaken in accordance with an
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the
GATT Rules (cont.)
b.
Permanent Exceptions: (cont.)
1) General Exceptions: (cont.)
a) A state may take measures contrary to GATT which:
ix. Involve restrictions on exports of domestic materials
needed by a domestic processing industry during a
period when the domestic price is held below world
prices as part of a governmental stabilization plan.
x. Are essential to acquiring products in short supply.
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B. THE GATT 1994
3.
Temporary and Permanent Exceptions to the GATT
Rules (cont.)
b. Permanent Exceptions: (cont.)
2) Security Exceptions: GATT Art. XXI allows WTO
member states to avoid any obligation which is
either:
a) Contrary to an essential security interest, or
b) In conflict with duties imposed by the United Nations
Charter for the maintenance of international peace
and security.
3) Note: Most of the exceptions listed in of Articles
XX and XXI may be invoked only if they are
"necessary" or "essential" to the member state.
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JUDGE JUDY READY TO RULE--
Case: U.S. v. Elkins:
+Court
+Facts
+Parties
+Rational
+Issue
+Result
+Legal Significance
C. MULTILATERAL TRADE AGREEMENTS
1.
Antidumping Code.
a.
b.
Formal name: Agreement on Implementation of
Article VI of GATT 1994.
Dumping defined: the introduction into the
commerce of another country of a product at
less than its normal value.
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C. MULTILATERAL TRADE AGREEMENTS
1.
Antidumping Code. (cont.)
c. Scope of Antidumping Code:
1) Dumping is not forbidden.
2) States may take antidumping
measures to counter dumping -- but
only if:
a) They conduct an investigation.
b) They determine that the dumped
products cause or threaten to
cause material injury to, or
materially retard the
establishment of, a domestic
industry within the importing
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country.
C. MULTILATERAL TRADE AGREEMENTS
2.
Agreement on Subsidies and Countervailing
Measures (SCM Agreement) specifies the
actions a WTO member state may take to
counterbalance an improper subsidy.
a.
b.
Subsidy defined: a financial contribution made
by a government or other public body that
confers a benefit on an enterprise, group of
enterprises, or an industry.
Only "specific subsidies" are subject to the
"disciplines" of the SCM Agreement.
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C. MULTILATERAL TRADE AGREEMENTS
2.
Agreement on Subsidies and
Countervailing Measures (SCM
Agreement) (cont.)
b.
Only "specific subsidies" are subject to the
"disciplines" of the SCM Agreement. (cont.)
1) Specific subsidies are subsidies that target:
a) A specific enterprise or industry.
b) A group of enterprises or industries.
c) Enterprises in a particular region.
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C. MULTILATERAL TRADE AGREEMENTS
2.
Agreement on Subsidies and Countervailing
Measures (SCM Agreement) (cont.)
c.
Categories of Specific Subsidies.
1) Prohibited subsidies ("red" subsidies) are
subsidies that either:
a) Depend upon export performance, or
b) Are contingent upon the use of domestic instead
of imported goods.
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C. MULTILATERAL TRADE AGREEMENTS
2.
Agreement on Subsidies and Countervailing
Measures (SCM Agreement) (cont.)
c.
Categories of Specific Subsidies. (cont.)
2) Actionable subsidies ("yellow" subsidies) are
subsidies that are trade distorting because, in the
way they are used, they:
a) Injure a domestic industry of another member state.
b) Nullify or impair benefits due another member state
under GATT 1994.
c) Cause or threaten to cause "serious prejudice" to the
interests of another member state.
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C. MULTILATERAL TRADE AGREEMENTS
2.
Agreement on Subsidies and Countervailing Measures
(SCM Agreement) (cont.)
c. Categories of Specific Subsidies. (cont.)
3) Nonactionable subsidies ("green" subsidies) are
subsidies that either:
a) Are not nonspecific.
b) Are infrastructural subsidies that involve government
funding to:
i. Assist (but not fully cover) the cost of business research
activities.
ii. Aid disadvantaged regions.
iii. Help existing facilities adapt to new environmental
requirements.
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C. MULTILATERAL TRADE AGREEMENTS
2.
Agreement on Subsidies and Countervailing
Measures (SCM Agreement) (cont.)
d.
Actions an injured state may take:
1) Do nothing.
2) Request consultations with the subsidizing state.
3) Ask the WTO to authorize it to impose
countervailing duties.
4) Independently impose countervailing duties.
a) Must follow the same procedures used for
imposing antidumping duties.
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Attorneys Fees Clause