Transcript 16. International Economic Law

16. International Economic Law
• The law governing international economic
relations is one of the important areas in which
international legal rules operate in practice. The
law of international economic relations includes
all economic transactions that cut across state
boundaries or have implications for more than one
of those involved in movement of goods, funds,
persons, intangibles, technology, vessels or aircraft
16.1
• Bretton woods system:
• The Bretton woods system views market
access and the reduction of barrirs to
international trade and monetory
transactions as the main instruements to
promote high level employment, increase
real income and to optimise the use of
production factors.
16.2
• These liberal principles conflict with the
sovereignty of states, as laid in Article 2 (1)
of the UN Charter and their freedom to
determine their economic policies and
priorities.
• Communist countries have refused to join
the Bretton Woods institutions because they
were founded on capitalist ideology.
16.3
• The influence of industrialised countries on
IMF & WB is because of the weighted
voting system reflecting the amount of
capital input into the organisation which
dispenses with the principle of sovereign
equality of states.
• There has a been global move towards
regionalisation of trade & financial issues.
16.4
WB
As set forth in Article 1 of its Agreement the
purposes of the WB are to assist in the
reconstruction and development of territories of
members, to promote private foreign investment
by means of guarantees or participation in loans
and other investments made by private investors,
to provide finance for productive purposes, to
promote the long term balanced growth of
international trade and maintenance of equilibrium
in balances of payment, to arrange lending policies
to give priority to the more useful and urgent
16.6
Membership requires being IMF member. The voting
system is the same as the IMF and the largest
shareholders enjoy priviledged position.
The WB is complemented by the International
Finance Corporation (IFC) which provides funds
for private enterprises and International
Development Assistance (IDA) which gives
concessionary loans to the poorest countries which
are unable to access them under normal market
conditions.
16.5
IMF
The rights and duties of member states are based
upon quotas which are supposed to reflect the
economic and financial position of members and
which also determine the level of financial
contribution to be made to the fund.
The members with the largest 5 quotas have the right
to appoint directors (the US, UK, GERMANY,
JAPAN AND FRANCE). The additional directors
may be appointed by other members under certain
conditions.
16.6
GATT/WTO
GATT was formulated to establish general
principles and rules regarding the
liberalisation of international trade on the
basis of a multilateral treaty by reducing
trade barriers and eliminating
discriminatory tendencies between states in
international commerce.
16.7
The most favoured-nation (MFN)
principle/clause is central to GATT. It
provides for non-discrimination among
trading partners by requiring all GATT
members to grant all other members of the
agreement treatment as favourable in
relation to a product as they may accord to
any other country.
16.8
Once a product passes through customs, it must be
treated as any other product of national origin.
This prevents the use of internal regulations to
discriminate the imported products.
If a country wants to protect its own producers it
must use custom duties not any other means. This
makes the system transparent and predictable.
The MFN principle does not also apply in the case of
the formation of the custom union, free trade area,
or if they offer developing countries preferential
treatment.
16.9
GATT prohibits the use of quantitative
restrictions e.g import/export quotas,
restrictive use of import or export licences,
or controls of payments concerning product
transactions as a form of protectionism.
Developing countries can be given
priviledge if they have balance of payments
problems.
16.10
The WTO came into effect in 1995 taking over
GATT. But there are 2 systems functioning as a
result of the failure by other members to concede
to the new WTO.
Membership to WTO is restricted to states and
customs territories. It covers issues relating to
goods-agriculture, textile and clothing, rules of
origin, anti-dumping measures, trade related
investment measures (TRIMS), import licencing
procedures, subsidies, reshipment inspection.
16.11
Services- there is a framework that applies to
all services except in the service of
government authority. Another framework
consists of other types of commitments in
national schedules. Thirdly, the individual
sector pertaining to financial,
telecommunication, air transport services,
maritime transport services and movement
of natural persons providing services.
16.12
Intellectual property rights- relates to protection and
enforcement of copyrights and related rights,
trademarks, geographical indications, industrial
designs, patents and undisclosed information.
The highest organ of the WTO is the Ministerial
conference, which meet every 2 years. It has the
General Council made of all members’
representatives and then other special councils to
deal with certain issues. It recognised that the
WTO has international legal personality.
16.13
Conclusion
The NIEO reflects the wide gap in living standards
between the north and the south and the desire of
developing countries to redress the international
ecosystem.
It is recognised that there is need to increase the flow
of finance to developing countries especially those
burdened by debt and to low income countries
depending on aid. The Charter on Economic
Rights and Duties of 1974 revealed fundamental
difference between the north and the south.
16.14
EXPROPRIATION AND STANDARD OF
COMPENSATION
The rules of compensation are comprised in
minimum international standard that
belongs to the core often traditional rules of
state responsibility for the treatment of
aliens.
16.15
According to western countries, the minimum
international standard contains 2 rules of
customary law concerning expropriation.
First, expropriation must be for public
purpose. Second such expropriation must be
followed by payment of compensation for
the full value of such property.
16.16
Communist countries tended to argue that there
shouldn’t be any compensation at all. Developing
countries tended to support this idea but some
choose to protect foreign investment.
Article 2 (2) of the 1974 Charter of Economic Rights
and Duties of States states that appropriate
compensation ought to be paid by the
expropriating state…taking into account its
relevant laws and regulations and all that the state
considers pertinent.
16.17
The problem then is the determination of the
property value. Read STARRET HOUSING
CORPORATION CARE CTR 21, 1989,
112 AT 201