Ch 10 Laws Governing Access to Foreign Markets

Technical Regulation

a mandatory law/regulation affecting a product's characteristics, such as its design, construction, chemical composition, materials, packaging or labeling - that must be met before a product can be imported or sold in a particular country.

U.S. Buy American Act

(enacted in 1933 during the Great Depression) - while subject to some exceptions, the Act requires federal agencies to purchase goods of U.S. origin rather than foreign-made goods.

Product Standard

a guideline for product characteristics established by a recognized private or industry organization or association

1994 Agreement on Government Procurement ("AGP) (amended in 2014)

- Governs most large-scale government procurement - The AGP brought about many changes in procurement practices in the U.S. and other countries - AGP reverses the general WTO rules that previously permitted government agencies to favor domestic products - It brings the principles of MFN trade, nondiscrimination, and transparency to government procurement - According to Congress, the responsibility for implementing the AGP lies with the president (who may waive the requirements of the Buy American Act for suppliers from any country that is party to the AGP and complies with the AGP's terms in its own procurement practices). USTR complies annual list of AGP 'violators'

International Organization for Standardization ("ISO"), a non-governmental organization comprising the national standards institutes of 163 countries!

- International standardization makes design and building and products cheaper and trade easier - While voluntary and not legally binding, ISO Standards (covering goods, services , manufacturing and technology in many industries) have been accepted by businesses and entire industries worldwide and are legally enforceable in countries where they have been incorporated into a treaty or national law - ISO 9000 (1987 - ensuring product quality through the product design and manufacturing process - certification makes selling in Europe much easier - ISO 14000- environmental standards

Provisions of the Agreement on Technical Barriers toTrade (TBT)

- Nondiscrimination in application of technical standards, without regard to the national origin of the products - Preference for performance standards over design or descriptive characteristics - Preference for internationally accepted technical standards such as the International Standards Organization("ISO")

WTO Agreement on Technical Barriers to Trade ("TBT")

- One of the 1994 Uruguay Round Agreements - It governs the use of technical regulations, product standards, testing, and certifications by WTO members - Primary goal is to minimize technical barriers to trade through (i) Harmonization, (ii) Equivalence, and (iii) Mutual Recognition

1995 WTO Agreement on Trade-Related Aspects or Intellectual Property Rights ("TRIPS")

- Requires every WTO country to abide by the most important international IP conventions - Calls on countries to grant greater protections to inventors, authors, and trademark owners - Countries must publish all laws, regulations, and administrative rulings that pertain to the availability, application, protection, and enforcement of IPRs

Opinions of the European Court of Justice reflect EU's effort to reduce technical barriers:

- Sale of liquor made in France and sold in Germany: Court ruled that an EU member could not prohibit the sale of a product produced in another EU country when that product had already met the technical specifications of the producing country - Court struck down Germany's "beer purity" law which had kept out foreign beers containing preservatives and beers not made from wheat, barley, hops and yeast (i.e., no rice or other grains permitted) - Long running dispute prohibiting the import of beef containing growth hormones (U.S. beef was kept out of European markets). The EU and the United States eventually concluded an agreement in 2009 to grant a quota for hormone beef imports

WTO General Agreement on Trade in Services ("GATS")

- Went into effect in January 1995 as a result of the Uruguay Round negotiations. - Includes areas such as global communications, travel, tourism, professional services, health care, transportation, and distribution, finance and banking, insurance, computer and IT services, research and development, advertising, market research, entertainment, repair and maintenance, education, environment engineering, and waste management - The treaty was created to extend the multilateral trading system to the service sector, and designed to apply in the same way that GATT applies to trade in goods. - All members of the WTO are parties to the General Agreement on Trade in Services.

The 1994 Agreement on Agriculture: three main objectives

1. Cutting domestic subsidies and other direct payments to farmers that distort markets by causing overproduction and suppressing prices while protecting the incomes of farmers 2. Cutting programs that subsidize exports of farm products (aka "agricultural export subsidies") 3. Assuring greater market access for imported farm products by converting quotas and other nontariff barriers into graduated tariffs - Agricultural Trade Issues in the EU and Japan; Indian and French farmer protests and pushback - Expenditures for agricultural subsidies and price supports ...constitute one-third of the total annual budget of the European Union - U.S. "Farm Bill" funding (renewed every five years)

The General Principle of"Least Restrictive Trade""Least Restrictive Trade

GATT "Least Restrictive Trade" Principle: - WTO member countries, in setting otherwise valid restrictions on trade shall make them no more onerous [burdensome] than necessary to achieve the goals for they are imposed...they may not be trade barrier in "disguise." - WTO Appellate Body has stated that it utilizes a 'balancing' test: nations must weigh protecting public against restrictions on free trade

Government Procurement

Governments are among the largest business customers in the world! GATT contains an exception to its 'national treatment 'provision that permits government agencies to favor their domestic suppliers (such as defense and military contractors) and may also require that the purchased product contain a certain proportion of domestically made component parts or domestic materials

Introduction

National governments play a key role in: - Protecting public health, safety, and welfare - Promoting economic well-being of their people - Setting standards for occupational health and safety - Preventing the spread of human disease - Protecting plant, animal, and marine life - Assuring viable farms and agricultural base that feeds a nation - Protecting air, water, and natural resources (including public utilities)

U.S. Section 301 of the Trade Act of 1974

primary statute that permits the U.S. Trade Representative to take retaliatory action such as placing certain nations that do not provide adequate IP protection on a "watch list"; grants broad discretionary power to the president to retaliate against any foreign country whose acts or policies are found to be unreasonable or discriminatory and burdens or restricts U.S. commerce."

Transparency

refers to the extent to which government regulations are made readily available to the public, including foreign firms (i.e., Is the regulation made available only to certain select firms? Is it based on the arbitrary 'whim' of a government employee? Are changes announced in advance and the public put on notice?) - Foreign companies and importers are often excluded from the standards/changing process and have no input or visibility on the change process.