GATT and WTO

Technical Regulation

A law affecting a products characteristics such as its performance, design, chemical composition, materials, packaging, or labeling - that must be "met before product can be imported or sold in a country " *technical barriers to trade: technical regulations and standards that apply to imported foreign products, even if they apply equally to domestic products

safeguards

a remedy for unfair trade practices due to an: - unforeseen sudden increase in imports -provides domestic industry with temporary relief to prove: 1. imports are a substantial cause of 2. serious injury or threat of serious injury 3. to a domestic industry that is producing a like product *if SG is issued, domestic industry has a 2 year period to make their product better and something people want (modernize, cut cost, more efficient, able to compete) investigation must show increase in imports is the actual cause of the domestic industry's decline (bad management can't be reason) *Escape Clause: allows a country to have temporary tariff relief

dumping margin

a sale that is less than fair value export price (price charged in the US) is less than the normal value (price charged in the exporting country) normal value - export price *if the dumping margin in less than 2%of the product value , no dumping duties may be imposed

a tariff concession

each country's promise to reduce tariffs on imports of a given item in return for tariff concessions from other countries

tariff

a tax imposed on goods by the country of importation

trade barriers

any impediment to trade in goods or services

generally available benefits rule

benefits available to all companies and industries within an economy are not counter available subsidies

non-tariff barriers

examples: 1) embargos : no goods can be exported from a certain country 2) Quotas: limit amount of goods that can be imported into the country 3) boycotts: no goods from that country can be imported 4) laws and regulations that may restrict the importation of goods. such as obtaining a certain license that may take a long time to get

General Agreement on Tariffs and Trade "GATT"

goal: expand trade and promote growth through the reduction and elimination of trade barriers in the form of quotas, restrictive regulations and high tariffs that limit imports

an assist

goods, services, intellectual property furnished by importer to foreign producer for use in producing merchandise for import and sale in the US

substantial transformation

if not wholly grown, the country of origin is that which the article last under went a substantial transformation. *occurs when the articles looses its identity and becomes a new article - use the name, character, or use test

measures inconsistent with national treatment

if the imported and domestic product are: 1) like products and 2) the taxes applied to the imported product are "in excess" of those applied to the domestic product

global tariff

imposed on a particular classification of goods w/o regard to the country of origin of the goods

countervailing duty

is a specific tariff, levered in addition to the normal tariff, imposed on imports of subsidized goods for the purpose of offsetting the subsidy

Article XX(b)

justifies restrictions if necessary to protect human, animals, or plant life and health *if necessary there are no alternative measures

Publication and Administration of Trade Regulations aka Transparency

laws and regulations affecting trade in goods and services must be made public, so companies understand in advance and have time to be able to comply with the new law

material injury

look at: 1. volume of dumped imports - have dumped imports increased significantly 2. effect of the imports on prices in the domestic market for the like products - have prices beed significantly undercut/ depressed? 3. impact on the domestic industry - sales, profits, market shares, productivity, wages, unemployment, growing inventory

Most Favored Nation

members will not give any import advantage or favor to products coming from one member over the goods of another member foreign nation vs. foreign nation

Settling WTO disputes

1) consultation between plaintiff country and d country 2) request WTO dispute settlement body - panel consisting of 3 reps not involved in dispute -panel prepares report with whether country is in compliance with TRIPS greement 3) either country can appeal to the WTO Appelate Body

2 general types of rules or origin

1) non- preferential rules of origin: applicable to imports from developed countries that receive normal tariff treatment 2) preferential rules of origin: applicable to goods traded within a free trade area or customs union, or that receive preferential treatment under trade preference programs for developing countries

adverse subsidy

1. causes material injury to a domestic industry of a like product in the complaining country AND is actionable if: -it's specific THEN - serious prejudice - violates the TRADE agreement -is 5% of the product value

violation of national treatment

1. issue @ measure must be technical regulation 2. imported and domestic product must be like products 3. treatment accorded to imported products must be less favorable than that accorded to like domestic products *determination of like products: nature and extent of competitive relationship and regulating concerns that underlie a measure

predatory pricing/ dumping test

1. sells product below marginal cost/ fair value causing 2. material injury or a threat of a material injury to 3. a domestic injury from a like product

serious injury

1. significant idling(doing nothing) of productive facilities 2. inability to operate at a reasonable profit 3. unemployment/ under employment 4. decline in sales 5. growing inventory 6. downward trend in production, profit, wages, productivity, or employment 7. difficulty raising capital (no one wants to invest) 8.an actual increase in imports or in market share held by imports

Elimination of trade barriers

no prohibitions other than duties, taxes, or other charges shall be instituted or maintained. Nations must first "convert" their non-tariff barriers to tariffs (through a process called tariffication) and then engage in negotiations to reduce the tariff rates.

subsidy

1.a financial contribution made by a govt 2. that confers a benefit on a specific domestic enterprise or industry Two types: a) prohibited subsidy b)adverse subsidy

Transaction Value

= price paid + packing and container + selling commission by buyer + any assist + any royalty or license + proceeds of any subsequent resale that accuses to the seller

dutiable value

= transaction value X Rate of duty

Least Restrictive Trade

principle states that WTO members, in setting otherwise valid restrictions on trade shall make them no more onerous than necessary to achieve the goal. * may not be a trade barrier in disguise look at: necessity of protecting the public vs. restrictions on free trade

examples of technical barriers

prior approval: must undergo testing and inspection by an approved lab, receive a certification of compliance with technical standards, and then receive prior regulatory approval before sale. Prior certification: need to undergo inspection and certification

prohibited subsidy

prohibited subsidy are impermissible per se and banned under all conditions - harmful effects presumed - no proof necessary two types: 1. export subsidy: made available to domestic firms upon export of their products example tax credit for every unit exported tax breaks for exporting 2. import subsidies: contingent on its recipient using or purchasing domestically made goods over imported goods

dutiable status of goods

refers to the legal status of imported goods @ the time of entry for purpose of compliance with the tariff and customs laws. determined by: 1. the classification and coding of the article 2. the customs value of the article 3. the country of origin of the article

anti- dumping duties

special import tariffs assessed in addition to normal tariffs imposed for the purpose of offsetting the unfairly low price of dumped goods WTO allows when: 1. dumping threats or causes a "material injury" to a domestic industry producing "like products" 2. and only after an investigation determines the amount of the dumping and the extent of material injury

country of origin

the country in which the article was wholly obtained - where the article was wholly and completely produced or manufactured entirely from raw materials originating in that country

bound rate

the max. rate a country may charge on an item

dumping

the selling of goods in a foreign country for less than the price charged for "like or comparable" products in the exporters or producer's home market -unfair bc export price discrimination - prohibited by GATT

World Trade Organization "WTO"

-administer the GATT and provides mechanism for settling trade disputes among other countries a) open world trading system will promote general economic development and fair competition b) transparency -requires all laws, regulations, and judicial decisions regarding trade be published or be made publicly available to both foreign and domestic businesses c) national treatment d) most favored nation - all member countries must grant eachother equal treatment and not grant special trade advantages to some members w/o granting them to all ex. lower custom duty rates

like products for dumping

-identical physical characteristics -produced by same or different firms -made of same or similar materials - equal in commercial value -use is same purpose

National Treatment

Members will not discriminate in favor of domestically produced goods and against imported goods or treat the two differently under their internal tax laws, regulations, and other national laws domestic vs. foreign