BLAW Exam 3
technical barriers to trade
A technical regulation is a mandatory law/regulation affecting a product's characteristics, such as performance, design, construction, chemical composition, materials, packaging, or labeling before can import
Most Favored Nation (MFN) Trade
Agreement to treat products(or services) from that country with lowest tariff rates that it gives to similarproducts imported from its other MFN trading partners.▪ In U.S., MFN granted by Congress.▪ According to WTO, all member nations are entitled to MFN status.▪ In US called Normal Trade Relations or NTR
In which of the following areas is the GATT principle of nondiscrimination evident? Normal trade relations National treatment Elimination of quotas and quantitative restrictions All of the answers
All of the answers
Which of the following are included in the dutiable assists? All of these are correct Engineering, development. and artwork performed by a foreign firm Tools, dies, and molds provided by the importer to the foreign manufacturer of imported goods Raw materials provided by the importer and used in the foreign production of the imported goods
All of these are correct
tariff engineering
An importer is free to engineer his product in order to take advantage of the tariff laws, unless fraud (added molasses to sugar, crossed border, then processed to remove it - molasses was 'foreign substance ' so done to avoid tariff. Not anymore
Countries must rely on internationally accepted standards or recommendations for the protection of their plants, animals, and foodstuffs. The most notable are found in the _____. Japan's keiretsu Codex Alimentarius The Law on the Entry and Exit Animal and Plant Quarantine Agricultural Act of 1948
Codex Alimentarius
beyond unfair: extraordinary trade remedies
Imports that threaten national security - from Trade Expansion Act of 1962; vague powers to president if imports found to threaten national security 2. If balance of payments crisis - unsure if legal.
WTO trade in agriculture
Recognizes countries do not want to be dependent on imports for nation's food supply so has loophole allowing quotas on agricultural imports when necessary to protect government price support programs.
GATT Framework
Rules created by international agreement, becomeguiding principles of international trade law
Judicial review in Court of International Trade (NY).
Rules of Customs have effect of law and Courts give deference to these since affect a lot of importers and had chance to comment.
Judicial Review of Binding Rulings, (U.S. v Mead Corp case
U.S. agencies and courts must grant limited deference to U.S. Customs letters and informal rulings. Customs' doesn't always win! Pre-Importation Judicial review in emergency situations.
special 301
U.S. uses this law to assure that American-owned intellectual property rights (IPRs) are adequately protected in foreign countries. Each year USTR identifies countries. Worst offenders are tagged "priority foreign countries" which requires an investigation. USTR also maintains a "watch list."
mandatory
USTR determines that foreign country has denied US rights under a trade agreement or that its actions or policies are unjustifiable and burden or restrict US commerce. (Ex: tariffs over agreed rate, quotas)
Section 301 Trade Act 1974
USTR retaliates against foreign country
Goods may be refused entry into the U.S. by the Bureau of Customs and Border Protection due to: quarantine to protect the public health. lack of a commercial invoice. all of these are correct. embargoed country of origin.
all of these are correct.
In the United States, technical regulations and product standards can be set by: all of these are correct. The Department of Agriculture. The Food and Drug Administration. The Department of Transportation. The Consumer Product Safety Commission.
all of these are correct.
US Generalized System of Preferences
allows beneficiary developing countries to have goods enter US either duty-free or reduced tariff. 129 countries have GSP status. Can 'graduate' out if economy improves sufficiently. If a 'least developed beneficiary country" have even better benefits. US has rqmts on countries to get GSP status, and president can deny for political/economic reasons
advalorem
based on value of goods; Specific or flat - # units
The WTO Agreement on Agriculture (1995
began removing government intervention in farming sector. Cutting domestic subsidies and other direct payments to farmers, or payment as agricultural export subsidies; convert non-tariff barriers (quotas) into tariffs
You work for Home Goods and are purchasing and importing shower curtain sets for resale. The package includes a fabric curtain and a waterproof plastic liner. The tariff classification will be calculated on a percentage of content of fabric and plastic used based on the component of the shower set that is the cheapest to manufacturecalculated for a fabric curtain based on the value of the fabric shower curtain since most customers choose the curtain based on appearance calculated on the value of the plastic liner based on the essential character
calculated on the value of the plastic liner based on the essential character
Classification and coding of goods
categorizing goods based on description or characteristics or use. Each nation has its own official tariff schedule with tariff rate based on where goods originated.
GRI 1
classification by terms of the headings.
GRI 2
classification includes complete as well as incomplete article if it has the essential character.
using general rules of interpretation to ____________________________________________________
classify goods under HTS
civil fraud
clear and convincing evidence that importer knowingly made materially false stmts or omission (phony descriptions; understating values; altering origin, etc.) Penalty up to 100% value of goods; can reduce to 5-8 times loss of duty
In determining the description of an article under the tariff schedules, the courts rely on: common meaning. WTO definitions. scientific authorities and expert witnesses. common meaning and scientific authorities and expert witnesses.
common meaning and scientific authorities and expert witnesses.
negligent violations
failure to use rzble care, skill and competence; If duty was lost, then lesser of value of the goods or 2 x's loss of duty. 2x's duty or 20% value of goods. If no duty lost, then up to 20% the value of goods. Case: *** U.S. v. Golden Ship Trading (2001) case, page 331. Relying on assurances from the broker can still make the importer liable.
Might impose countervailing duty in the United States
file petition with both ITA and ITC. IF ITA finds a subsidy exists, and then ITC finds it caused material injury to domestic producers, the CVD order may be awarded.
Definition of a Subsidy:
financial contribution from government that confers a benefit on a domestic firm and provides income, price support or financial contribution (Ex: not collecting a tax, providing grant or loan at favorable rate, furnishing goods or services other than general infrastructure, purchasing goods at higher price than in normal marketplace) in order to achieve a social or economic objective.
A 99% refund of duties and taxes paid on merchandise that is imported, subjected to manufacture or production, and then exported within five years is called a: manufacturing drawback. substitution drawback. re-export drawback. same condition drawback.
manufacturing drawback
Coming Changes in Rules of Origin
maybe moving to 'tariff shift.' If change results in different tariff rate, then same as 'substantial transformation.' (Maybe WTO change also.) Marketing and Labeling of Imports.
GATT/WTO Dispute-Settlement Procedures
mechanisms and procedures attempt to avoid retaliation or "trade wars."-- Have quasi-judicial process for resolving disputes when deadlocked - enter into trade consultations, then Dispute Resolution Body.-- Only a government can bring a "complaint" against another gov
The concept that runs throughout the GATT requires that the products of all nations be treated equally and without discrimination by importing nations. This is the principal behind: nullification and impairment. most-favored-nation trade. ad valorem tariffs. nontariff trade barriers.
most-favored-nation trade.
Transparency & Predictability of trade opportunities
nation's laws,court decisions, regulations, etc. affecting trade must be publicly availableand easy to find
equivalence
nations agree to accept foreign standards that are functionally equivalent to their own
mutual recognition
nations encouraged to make agreements recognizing certifications or conformity assessments of foreign inspection firms.
Multilateral Trade Negotiations
nations meet periodically to review, reduce tariffs and non-tariff barriers to trade. Ex: Kennedy Round, Tokyo Round, Uruguay Round; Doha Round (not too successful
harmonization
nations will attempt to bring their standards and technical regs into harmony with internationally accepted standards
transparency
need to be able know or determine what a country'srequirements are; what is tariff rate, licensing requirements, etc.
enforcement and penalties
negligence, gross negligence, civil fraud and criminal fraud (+ smuggling!). Must use reasonable care
All of the following are basic principles of GATT except: commitment to normal trade relations. elimination of import quotas. non-reciprocal tariff increases. non-discrimination against imported goods.
non-reciprocal tariff increases.
The government agency responsible for determining the dutiable status of goods is: U.S. Port of Entry Service. U.S. Duties & Tax Service. none of these are correct. U.S. Commerce Service.
none of these are correct.
WTO Reports as Legal Precedent
not intended to be definitive interpretation. Create 'legitimate expectations' but not binding.
global safeguards
not restricted to a particular WTO country but to a product or an industry. Ex: If increased imports of non-rubber footwear are causing serious injury to a domestic industry, the safeguards must be applied globally to all imports of non-rubber footwear (even if in a free trade agreement).
The phrase to describe when a foreign government's import regulations are not made readily available to the public or are hidden or disguised in bureaucratic rules or practices is: not transparent. unfair trade practices. bureaucratic procrastination. limited access.
not transparent
tariffs based on ______________
on ad valorem (value), specific, or compound rates. (Ex: goats—per head) International Trade Commission maintains it for US Once # and country of origin determined, then rate of duty can be applied. Will be "General," "Special" or Column 2 (Smoot Hawley - Cuba and North Korea)
Upstream subsidies
on raw materials or component parts for use in an exported product. Ex: Subsidy on coal could be subsidy on steel made in coal burning furnaces.
Four ways of providing int'l service
one country to another (ie cross-border supply), consumption abroad. Commercial presence, and presence of natural persons
If an importer legally modifies a product to take advantage of a lower tariff rate in a slightly different classification, this is called tariff engineering the rule of relative specificity fraud substantial transformation
tariff engineering
A law or regulation affecting a product's characteristics that must be met before a product can enter a country is a: product limitation. product standard. government procurement law. technical regulation.
technical regulation
When there are two possible classifications for goods (such as the Zeiss microscopes), the importer should decide based on the latest heading that occurs in the schedule the classification that results in the higher tariff rate the essential character of the goods the Rule of Relative specificity
the Rule of Relative specificity
GRI 3
when goods could be classified under 2 headings. Go to the most specific (Zeiss), if components go to essential character, when can't be classified by above go to the last in numerical order. (shower curtain - works because of plastic liner (. . . household article of plastic) not because of decorative curtain, down comforter keeps warm because of down fill, not because of cotton shell)
GATS principles similar to GATT principles
'market access', MFN, national treatment/ non-discrimination
safeguards against injury under US law
U.S. Escape Clause: Section 201 of the Trade Act of 1974.
GRI 5
(a) cases such as for cameras or musical instruments should be entered with the article normally sold and (b) packing goods are classified with the goods, unless containers have repetitive use.
GRI 4
If goods cannot be classified based on above, one should find heading for goods they are most like.
prohinited subsidies
'export subsidies' or 'import substitution subsidy'. If funds available specifically for products to be exported, then prohibited. Makes is less costly to export goods. If govt makes payment contingent upon recipient using or purchasing domestically made goods over imported goods, then is 'import substitution subsidy." Ex: See U.S.-Brazil Dispute over Cotton Subsidies.
gross negligence
- clear and convincing evidence that act or omission done with actual knowledge or reckless disregard of facts. About 2x's negligence violation penalty
Indirect Non-tariff Barriers.
-- Japanese Large-Scale Retail Stores Law (now repealed).-- Import Licensing Schemes and Customs Procedures as Trade Barriers
dutiable status 3 things
-- the classification and coding of the article (what it is) -- the customs value of the article ('transaction value') -- the country of origin of the article
Scope and Coverage of GATT 1986-1994 - Uruguay round
123 countries; cut tariffs; bound or capped rates on most products to current rate; eliminated many non-tariff barriers. Expanded to trade in services. Created WTO; creating binding dispute settlement process.
free trade areas
2 or more countries enter into agreement that reduces or eliminates tariffs, removes trade barriers. Ex: NAFTA
exports of commerical services totaled what
4 trillion
africa growth and opportunity act
48 sub-Saharan Africa countries. Eligible products duty-free
Other Customs Laws Affecting U.S. Imports Drawbacks
: refund of duties already paid if goods are re-exported or destroyed. Most common is the manufacturing drawback. Goods imported, then used for manufacture or production, then exported. Up to 99% of tariffs can be refunded. Same-condition drawbacks are utilized when the imported goods are not processed or manufactured, but are re-exported in the "same condition" as they were imported
You are a retailer in the U.S. and plan to import holiday goods from a manufacturer located in Mexico. When looking at the HTSUS after determining the classification, you would find the applicable tariff rate in Column 1 - Special Column 2 None of these - you would use the tariff rates published and adopted by Mexico Column 1 - General
???
Which of the following is an example of a specific or flat tariff? A 15% tariff on the value of a shipment of t-shirts A $10 tariff on each barrel of petroleum A 20% discount on the value of peaches delivered in October, November, or December None of the above
A $10 tariff on each barrel of petroleum
Sanitary and Phytosanitary Measures: Food, Animal, and Plant Safety
A country has the right to protect human, animal and plant life from infestations, contaminants, pesticides, toxins, harmful chemicals, or disease carrying organisms. Ex: Medflies in papaya.However, cannot be used to justify otherwise discriminatory conduct No more trade-restrictive than required, based on risk assessment, fair and reasonable inspections. Ex: if require short shelf for dairy products, could be discriminating against imports whose shelf-life expires during time to import
Under the WTO's dispute-settlement procedures, who can bring a complaint for nullification and impairment? A corporation A group of corporations within an industry A government All of the above
A government
Tariff Concessions, Bound rates and Tariff Schedules
Article II of GATT calls for member nations to cooperate in lowering tariffs. Tariff bindings are capped at agreed rate (Bound rate) and published in country's schedule of concessions
GATT escape clause
Article XlX- allows temporary escape from previous promises such as tariff concessions when market disruption (1) as a result of unforeseen developments (2) due to effect of tariff concession or obligation under trade agreement (3) increased quantities of imported product (4) are causing or threaten to cause serious injury to domestic producers of like or directly competitive products. -many countries have provisions that parallel this -Ex: US lowered tariffs on fur hats (so fashionable!! 1950's) Fickle fashion change and so glut of fur in domestic market, harming US producers.
trade remedies under US law: trade assistance to firms
Assistance centers help develop business recovery plans such as improving production capabilities, marketing, computer systems, website development, standards certification. Department of Commerce administers. Firm must provide matching funds.
quantitative restrictions
Balance of Payments Exception and Developing Countries. See the India—Quantitative Restrictions on Imports of Agricultural, Textile, & Industrial Products (1999) case. U.S. challenged India's restrictions, and WTO panel found they were not necessary
Section 301 refers to a law that permits the U.S. to retaliate unilaterally I. against other countries that violate GATT II. against countries that are unfair in restricting the import of U.S. goods or services Both I and II II only Neither I nor II I Only
Both I and II
Tariffs are computed: I.As a percentage of value (ad valorem).II.On the basis of physical units (specific). I only. II only. Both I and II. Neither I nor II.
Both I and II.
Conclusion ch 12
Bureau of Customs and Border Protection is responsible for securing our borders from: -terrorist threats; interdicting illegal immigration and contraband; collecting tariff revenue; enforcing the customs and tariff laws of the United States; and enforcing the export control laws. 2. Bureau lives in a tension between securing borders and allow free flow of commerce into and out of the United States. 3. Tariff laws are intended to encourage and reward certain business decisions.
trade remedies under US law: president options
Can make temporary 'positive adjustment' if greater economic and social benefits than costs. Give time for industry to regain competitive position, such as retooling, modernizing. Usually 4 years, can be extended to 8 yrs. Can impose tariff increases (up to 50%), tariff-rate quotas, absolute quotas, auctioned quotas, or grant Trade Adjustment Assistance.
self-report violations
Can reduce penalties. 'Enforced compliance" - Customs investigates and finds; 'informed compliance' - importer does. Responsibility on importer to comply with laws - no ignorance excuses.
Tariff # is broken down in US
Chapter: First 2 digits Heading: First 4 digits Subheading: First 6 digits Tariff item: First 8 digits Statistical break: First 10 digits *GENERAL NOTES at end of each section extremely important also
countries requiring licenses for service
Countries (and States) can continue to require license (CPA, attorney, MD, etc) to ensure quality of service but cannot be overly burdensome just to restrict trade. Also must be based on objective criteria such as education, experience or ability.
customs valuation
Customs value (dutiable value) reported at time of entry. - Dutiable value equals transaction value or price actually paid for goods when sold for export plus packing costs, selling commission paid by buyer, value of an assist, royalty buyer is responsible to pay, proceeds of any resale that accrues to buyer. International transportation charges NOT included in value.
Rules of Origin of goods. Purposes are
Determine tariff rate, preferential tariffs or increased rates ▪ if any antidumping or countervailing duties apply ▪ if any quota, embargo, or other trade restriction ▪ any applicable government procurement rules ▪ must affix proper country or origin to product for labeling laws ▪ to collect statistical info
WTO Dispute Settlement in Dumping Cases
Disputes taken to the WTO Dispute Settlement Panel; must accept the "facts" as found by the ITA/ITC in their investigation.
required documentation
Documents must be filed within 10 days: (1) An entry manifest or merchandise release form. (2) U.S. Customs Entry Summary Form. (3) Proof of the right to make entry (a bill of lading, air waybill, or carrier's certificate) (4) The commercial invoice obtained from the seller; is required if goods for resale or commercial use; in English; signed by Seller + other rqmts. (5) Packing slips to identify the contents of cartons. (6) Other documents required by special regulations (e.g., certificate of origin, quota visa, textile declaration).
Under normal trade relations, when a nation extends some privilege or right to one of its trading partners, that privilege automatically becomes applicable to all other trading partners. True False
True
US escape clause: sec 201
Does not follow the GATT guidelines precisely, but similar. U.S. calls safeguards "positive adjustments to import competition" or import relief ▪ Two problems with US law: Does not require "unforeseen development" and determining a "serious injury" differs. Result: US has lost a few disputes. ▪ US: "article being imported in such increased quantities as to be a SUBSTANTIAL cause of SERIOUS INJURY or threat thereof to domestic industry producing an article LIKE or DIRECTLY COMPETITIVE with the imported article." ▪ Note: Generally, WTO requires show is 'THE CAUSE' not just 'a substantial cause.' ▪ 'Serious injury' factors include idling of facilities; can't operate at profit; unemployment or underemployment; decline in sales; growing inventories; inability to generate capital (modernization or R & D); increase in imports ▪ Private companies, workers, trade associations, Congress or president may petition the International Trade Commission for import relief ▪ ITC gives public notice in the Federal Register, investigates, holds public hearings. Prepares detailed economic analysis of affected market and recommends remedy to president (only 11 ITC safeguard investigations between 2003 and 2016.) ▪ President can grant relief (such as increase tariffs, adjustment assistance, tariff-rate or import quotas) after Int'l Trade Comm'n makes determination.
2 problems with US law
Does not require "unforeseen development" and determining a "serious injury" differs. Result: US has lost a few disputes.
EC Measures Concerning Meat and Meat Products (Hormones) (1997).
EC's ban on sale of beef containing residual growth hormones violated Agreement on Sanitary and Phytosanitary Measures.
EU standards and tech regulations
EU efforts to reduce technical barriers to trade is critical because of the multi- national brands and consolidation of the euro. b.The EU is attempting to increase its standardization through the "CE Mark" - requires testing by independent lab and then can sell product in EU
reasons for dumping
Economics or unfair/predatory? Excess production capacity & want to sell cheap to cover costs & avoid layoffs May lack name recognition, market power, brand loyalty in foreign market so need to sell cheaper Price discrimination and purpose to drive out competition.
nontariff barriers to trade
Embargoes, Quotas, licensing schemes. Ex:cannot import beef with hormones, or food with preservativesMay appear as legitimate rul
Chinese Standards and Technical Regulations.
Enormous and complex bureaucratic regulatory framework. b. Laws are administered by General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). c. Compulsory testing, inspections, certifications, accreditation of testing labs d. Chinese inspectors visit foreign plants to see if meet quality and safety rqmts e. Product imports must have China Compulsory Certification Mark (CCC).
Essential character
Ex: Classification of items packaged for retail sale as a Set. Better Home Plastics Corp. v. United States (1996) case, page 316: Shower curtain set essential character, not relative specificity applies; goods are classified by shower liner not curtain. -- Only consider classifications at the Subheading Level after determine the heading
WTO agreement on safeguards
Expands & provides details lacking in the escape clause and sets out procedural steps for countries to use it. Prior to temporary relief (i.e. increasing tariffs), must first have ▪ Administrative investigation & hearing (In US by International Trade Commission) ▪ Must find legal requirements (above) to impose safeguards have been met and that increased imports are the actual cause of the domestic industry's decline. ex: argentina safeguard measures on imports of footwear
Agricultural products, in general, have few barriers to trade placed upon them. True False
False
Foreign Trade Zones are free ports provided by the import trading companies to stimulate international trade by allowing the receipt of imports to be duty free. True False
False
If goods are manufactured or produced in the U.S., Customs requires them to be marked "Made in the U.S.A." True False
False
In the United States v. Golden Ship Trading Co case, Wu imported t-shirts that were mostly manufactured in China but finished in the Dominican Republic. Wu was found not liable for penalties because she demonstrated that she exercised due care in verifying the merchandise was manufactured in the Dominican Republic. True False
False
Only customs brokers are allowed to enter goods into the customs territory of the United States. True False
False
The Flammable Fabrics Act is an example of a technical regulation that is in violation of the principles of GATT/WTO. True False
False
Under the Harmonized Tariff Schedule, all members of the WTO charge the same rate of duty upon the import of the same or similar products. False True
False
government procurement
GATT allows exception to nat'l treatment--government can favor domestic suppliers. 2. However, WTO Agreement on Government Procurement applies only to those countries that signed, and applies to large-scale goods and services worth 130,000 SDR's (US $200,000) and construction contracts over 5 million SDR's (US $7.7 million). Requires fair, open, and nondiscriminatory procurement practices; uniform procedures. AGP reverses general WTO rules that allow government agencies to favor domestic products. 3. In US, have "Buy American Act"
GATT and US Law
GATT does not provide individual rights and remediesto private parties, but GATT agreements are used as basis for interpretingU.S. Trade statutes. If US business thinks foreign company or govt actingunfairly, can seek redress through admin agency or courts, but not WTO
2 WTO provisions
GATT escape clause WTO agreement on safeguards
_________ quotas are imposed on a particular product regardless of origin, while ________ quotas spread the total limit across several specific countries. Absolute; qualified Global; specified Absolute; allocated Global; allocated
Global; allocated
Many countries grant preferential tariff treatment to select countries to help those countries' economic development. For example, the United States grants preferential tariff treatment to: Haiti and many sub-Saharan African nations. the EU. China. all Asian nations.
Haiti and many sub-Saharan African nations.
methods to minimize barriers
Harmonization, Equivalence & Mutual Recognition
International Convention for imports
Harmonized Commodity Description and Coding System, developed by WTO so will be very similar globally. Has 22 sections & 99 chapters (simple to complex goods), then Headings & Sub-headings
WTO Antidumping Agreement - GATT 1994.
Has "material injury" requirement. Antidumping duties are only applied after a finding of 'material injury' to a domestic industry producing 'like products' after an investigation determines amount and extent. Considers volume of dumped import, effect on prices of like products, impact on domestic industry.
"Rule of Relative Specificity"
If 2 or more classifications fit, then use more specific description -- Zeiss case for microscopes
international organization for standardization (ISO)
In Geneva; non-profit; Non-binding. International standardization makes design and building and products cheaper and trade easier. ISO 9000 - Product QUALITY standard; ISO certification makes selling in Europe much easier. ISO 14000- environmental standards; requires firm to establish management system for setting environmental objectives, complying with laws, improve environmental performance
crimes
Includes false or fraudulent customs docs, destroying invoices, false statement to Customs, smuggling, conspiracy, money laundering, etc. Can be 2 - 20 years jail plus fine.
Codex Alimentarius
International standards for the protection of plants animals and foodstuffs. Ex: radiation used to preserve food; hormones in beef; labeling formula
Licenses, Elimination of Quotas, Tariffication and other non-tariffbarriers
Licenses for legitimate purposes are ok but not for protectionism. Should not be discretionary by government but based on requirements that can be determined and followed. GATT permits tariffs to regulate imports but not quotas or other quantitative restrictions. Ex: for public morals, health, animal or plant life or health, national treasures, conservation (maybe), etc
liquidation and protest
Liquidation: final computation and payment of duty. Time Limits on Liquidation: within one year of entry. Protesting Liquidations: within 90 days but only if Customs changed. Judicial review of protests - have to pay duties first and appeal within 180 days (Court of International Trade in NYC).
Name, Character, or Use
Look / test to see if product changed in "Name, Character, or Use"
Making Materially False Statements to Customs or Omissions
Material: if it refers to identity, quality, value, source or country of origin of the merchandise, or affects duty, or right to be imported.
discretionary
May be imposed when USTR finds foreign actions regarding trade are unreasonable or discriminatory and burden or restricts U.S commerce. Might not actually be a violation of an international agreement.
limits on use of safeguards
May not exceed 4 years (unless extended to 8). ▪ Not more restrictive than necessary to prevent injury ▪ must be gradually lifted when conditions warrant ▪ Tariffs are preferred safeguard over quotas
records
Must keep books and records for five years—expensive fines if don't!
Actionable (Adverse Effect) Subsidies
Not automatically prohibited. Domestic subsidies which give unfair competitive advantage to domestic firms. Actionable at WTO if cause material injury to domestic industry, OR Cause nullification and impairment of rights such as under trade agreement, OR cause "serious prejudice" to interests of complaining country (Presumed if subsidy exceeds 5% of value.)
WTO agreement on technical barriers to trade (TBT)
One of Uruguay Round agreements 1994 governing use of technical regulations, product standards, testing and certifications by WTO member countries. 2. Agmt does not contain standards, nor mandate product performance, design or safety. 3. Agmt prohibits use of regs or standards to discriminate against foreign goods imports.
trade remedies under US law: trade adjustment assistance
Petitions are filed with Department of Labor by workers, state workforce, or union. Once workers certified as eligible can receive benefits. Includes direct cash payments to workers, Job search, retraining for workers and relocation, and help for companies as well.
Japanese Standards and Technical Regulations.
Product standards in Japan are usually based on design characteristics. U.S, in contrast has standards of performance. b. "JIS" mark signifies an on-site inspection of manufacturer; not as widely used
WTO general agreement on trade in services
Since Uruguay round have WTO General Agreement on Trade in Services (1994) which includes professional services (e.g., law, accounting, architecture, engineering, health care, insurance, travel, and many others
technical barriers to trade- standard
Standard is usually a voluntary guideline established by a private or administrative body but consumers look for compliance with them. (sometimes mandatory also) 3. Purposes are protection of Public Health, Safety, or Welfare; promote uniformity. 4.Product Testing, Inspections, and Certifications - to insure compliance with Product Safety, Quality, and Technical Standards and Regulations
WTO Agreement on Subsidies and Countervailing Measures (1994)
Subsidies in original 1947 GATT and 1994 SCM clarifies. Ex: agricultural products, busses, lumber, steel, aircraft, paper, washing machines, salmon, wines, footwear & many others
main provisions of the TBT agreement
TBT applies to all products, agricultural, industrial, and consumer goods. See list page 270-271. Nondiscrimination, no unnecessary barriers to trade, consider scientific and technical info in making standards, use performance abilities of products rather than design rqmts, use int'lly accepted standards if exist, harmonization, equivalence, publish proposed standards and allow written comments; give time before adopting; testing and inspection not discriminatory; mutual recognition of conformity assessments; ensure state/local govt complies with agreement; use WTO dispute resolution process.See Clove cigarette case -US prohibited flavored cigarettes except for menthol which was preferred in US
dutiable status of goods
Tariffs, restraints on imports, and other import controls are applied to goods according to the item's dutiable status
Thailand - Restrictions on Importation of Cigarettes
Thailand's restrictions on imports of cigarettes contravened GATT. Required license for US cigarettes, but could not get. Said US had additives that made more addictive.
The U.S. law granting trade preferences to imports from the island nations of the Caribbean and Central America is called: The Caribbean Basin Economic Recovery Act. The Caribbean GSP Act. The Lome Convention. The Latin American Free Trade Act.
The Caribbean Basin Economic Recovery Act.
The first multilateral, legally enforceable agreement to establish rules for international trade in services was: General Agreement of Section 301. The General Agreement on Trade in Services. Trade in Services Act of 1947. The General Agreement on Employment and Independent Contractors Act of 1947.
The General Agreement on Trade in Services.
rules of origin of goods is admin'd by
U.S. Customs and Border Protection, and severe penalties for willfully misstating country of origin or procuring false certificate
Dumping
The unfair trade practice of selling products in a foreign country for less than the price charged for the same or comparable goods in the producer's home market. Sales below cost not automatically dumping but suggests could be happening. Are prices artificially low? Prohibited since original 1947 GATT.
Enforcement and Judicial Review
Trade Facilitation and Trade Enforcement Act of 2016 permits U.S. Customs and Border Protection to investigate if importer made materially false claims about imports or evaded antidumping duties such as circumventing (sending goods through another country) Court of International Trade reviews ITA and ITC administrative decisions and appeals from CBP.
An imported item substantially transformed in the United States by the importer before being sold to the ultimate purchaser need not be marked with a foreign country of origin. False True
True
Assume Article X is manufactured in Country Y. It is shipped to Country Z where it is substantially transformed before being imported into the United States for resale. For the purposes of imposing import duties under U.S. law, Article X will be considered a product of Country Z. False True
True
For smaller commercial shipments that are mailed into the U.S., the U.S. Postal Service letter carrier acts as an agent for the U.S. Bureau of Customs and Border Protection for purposes of collecting import duties. True False
True
Tariff concessions under GATT are recorded in tariff schedules, which are detailed product-by-product listings of all tariff obligations for that nation. True False
True
Tariffication is the process in which quotes, licensing schemes, and other nontariff barriers to trade are "converted" to tariffs. True False
True
The principle of least-restrictive trade means that otherwise valid restrictions on trade can be no more restrictive than necessary to achieve the goals for which they were imposed. True False
True
The symbol of an approved product in Japan is the government-authorized Japan Industrial Standards Mark. True False
True
Under GATT, an exception from the national treatment provision is granted to allow governments to favor domestic suppliers in some situations. True False
True
Ferrostaal Metals Corp case, page 321
Unpainted Steel Sheets from Japan but hot-galvanized in New Zealand. Customs said origin was Japan, but plaintiff showed character changed in NZ so origin was there.
factors for dumping
Volume of the dumped imports. (2) Effect of the imports on prices in the domestic market for like products and (3) Impact on domestic industry.
Trade-Related Aspects of Intellectual Property Rights (TRIPS).
WTO countries agree to abide by intellectual property conventions. Domestic and foreign IPR (intellectual property rights) treated the same, and enforcement strengthened. Members are bringing their laws into compliance with TRIPS. (US had to change our patent law to comply with time frames in TRIPS.
general principles of least restrictive trade
WTO mandates a balancing test: weigh protecting public against restrictions on trade. 2. Restrictions should be no more onerous than necessary. 3. Can protect citizens to extent deem necessary but by methods that do not unduly burden int'l trade or unfair or discriminatory
World Trade Organization
WTO replaced GATT in 1995 -- WTO is an umbrella organization that sets rules of international trade and dispute resolution.2. Organization of the WTO -- Overseen by the Ministerial Conference which appoints the Director-General
Which of the following statements regarding the 1994 Agreement on Technical Barriers to Trade is false? Whenever possible, product requirements should be based on the design and descriptive characteristics of a product, rather that its performance. Proposed standards must be published and made available to foreign countries. Disputes between countries may be referred to the WTO for negotiation and settlement. All technical regulations shall be applied on a nondiscriminatory basis, without regard to the national origin of the products.
Whenever possible, product requirements should be based on the design and descriptive characteristics of a product, rather that its performance.
Exceptions to Normal WTO Trade Rules
above principles generally apply totrade, but two main exceptions in which a country can get even better rates are trade preferences for developing countries or free trade areas and custom unions
Sec. 301
action can begin by private company filing complaint with USTR or USTR can initiate. Purpose of action is to end illegal practice, not compensate private company. 3.Criticized because allows unilateral action by US rather than use WTO, but law permits WTO dispute resolution process to occur prior to using Sec. 301
formal entry
administrative process required to import goods into the customs territory of a country. Goods have officially "entered" when 4 requirements met: Arrived at U.S. port of entry. Goods are permitted (ie no embargoes). Delivery is authorized by Customs after inspection and release. Estimated duties have been paid or customs bond posted
safeguards against injury
countries take legal action to protect domestic industry by granting import relief or adjusting imports. Normally can't just raise tariffs - violate GATT, but emergency measures ok
Countries A and B both produce coffee. Both countries belong to GATT. Country A imports coffee from B. Once B's coffee enters A's stream of commerce, under the national treatment provisions of GATT: country A cannot subject B's coffee to higher internal taxes or charges than its domestic coffee. country A may now charge higher internal taxes or charges on B's coffee in order to discourage coffee drinking since the goods have already passed the border. country A cannot subject B's coffee to any internal taxes or charges, even if it does so to domestic coffee. none of the answers are correct.
country A cannot subject B's coffee to higher internal taxes or charges than its domestic coffee.
Administration of Customs and Tariff Laws, customs divided
divided into seven regions, then further divided into districts. Offices are located at ports of entry to U.S., (e.g., major seaports, airports, and border crossings
prior certification
don't need regulatory approval before sale. Have labs test product and keep results available for review so still have have inspection and certification rqmt
unfair import laws
dumping and antidumping duties
U.S. Customs regulations specify many articles that are exempt from marking requirements. Some of these are: eggs, flowers, nuts, and bolts and products that cannot be marked without injury. products that cannot be marked without injury. products originating in Canada or Mexico. eggs, flowers, nuts, and bolts.
eggs, flowers, nuts, and bolts and products that cannot be marked without injury. (???)
importing
entering goods into customs territory of a country; go through entry process and 'clear customs'. In US, Bureau of Customs and Border Protection. VALUE x RATE = TARIFF
ISO 14000 refers to: European Union import regulations. a trade agreement between the U.S. and EU designed to reduce barriers to trade. guidelines in environmental management and labeling. standards used for assuring product quality through design and manufacturing process.
guidelines in environmental management and labeling.
Harmonized Tariff Schedule
has US tariff schedules. See the GATT European Economic Community---Import Regime for Bananas(1995). EEC had deprived complaining Latin American countries of benefitsunder bound tariff schedules
Unconditional MFN
if a member extends privilege to anothermember then that privilege automatically is extended to all members
general rule in the United States for non-preferential
if an item is wholly obtained (grown, produced, or manufactured) in one country, then that is the country of origin.
trade compensation
if impose safeguard tariffs on an item, then reduce tariffs on something else to offset the amount. Book example of bicycles from Taiwan. (Related to concept of reciprocal trade.)
FTC
if label states, "Made in USA" it means, "all or virtually all of the materials, processing or component parts are made in the U.S. and that their final assembly or processing took place there".
Preferential Rules
if made in US or Mexico or Canada (NAFTA), usually see if change caused a 'tariff-shift' or if certain percent of value added (regional trade agmts)
Substantial Transformation Test
if not wholly obtained, where did product undergo last substiantial transformation
payment of duties
importer is ultimately liable for payment of duties • 90% of time Customs Brokers are used, but importer still liable for information. • Can post bond to guarantee payment to speed up this step. • Customs Broker must have signed, written POA in order to act for importer.
Heavyweight Motorcycles & Engines & Power-Train Subassemblies (ITC, 1983) case
incremental duties were imposed also with tariff-rate quotas to give Harley Davidson time to adjust to be competitive with Japanese imports. US had been in recession which caused decline in sales of motorcycles, but ITC identified the one-year inventory of motorcycles on hand along with anticipated future imports as the greatest threat of injury. President Reagan added duties that decreased over 5 years but gave ability for smaller quantities from European manufacturers. Harley Davidson made changes and regained competitiveness as a result. Good example!
Customs Marking Rules
indelibly and permanently marked in English to show ultimate purchaser the name of country of origin. Some items can't be marked and are exempted (veggies, small items) but packaging must be labeled
material injury
injury is "not inconsequential, immaterial, or unimportant." Standard is less than "serious injury" standard for safeguard actions
national treatment
intended to ensure that imported products will not be subject to discriminatory treatment under the laws of the importing nation. Applies AFTER goods enter country.Ex: Japan Taxes on Alcoholic Beverages- 1996 WTO. Japan's tax policy violated GATT provisions regarding national treatment
who determines if dumping occurred
international trade administration (in dept of commerce) Sales at less than fair value occur when export price of product sold or to be sold in US is less than the normal value of a foreign like or similar product sold in exporter or producer's home country. (Not necessarily less that cost of production).
who determines whether dumping has caused, or threatens to cause, a material injury to US producers of like products
international trade commission
trade barrier
is any impediment to trade in services or goods.-- Import trade barrier is any impediment, direct or indirect, to the entranceor sale of imported goods or services.--Ex: tariffs/taxes; govt regs; national industrial standards
'Value-added' rule
look to see if significant value added to product due to process
nissan motor mfg corp v US
machinery entering a foreign trade zone for assembly is not merchandise (not duty free).
WTO Agreement on Trade in Financial
opened commercial banking, securities, insurance industries to foreign competition
WTO Agreement on Basic Telecommunications
opened telecommunication markets to foreign competitors
informal entries
personal smaller shipments valued at $2,500 or less; U.S. Letter Carrier acts as Customs Agent in collecting duties • Electronic Entry Processing -- started Automated Commercial System; speeds up entry; Now large importers can file remotely if not at entry port.
GATT 1947
primarily lowering tariffs on goods,product-by-product
prior approval
prior to sale, products must be tested, inspected by approved lab, get certification of compliance and then regulatory approval
tariffication
process in which quotes, licenses, other non-tariff barriers converted to tariffs, which can then gradually be decreased
multilateral trade negotiations
reduce tariffs and nontariff barriers(NTB); Nondiscrimination and unconditional MFN; National Treatment;Eliminate quotas and NTB (convert NTB to tariffs and then reduce),transparency very critical
Trade-Related Investment Measures
reduces restrictions on foreign investment that might restrict cross-border trade in goods and services. Also restricts local content requirement since would be quantitative restriction in violation of GATT
carl zeiss case
surgical microscope with camera - even though use was surgical apparatus, it was still a compound optical microscope (Customs wins
buy american act
requires many fed'l agencies to buy goods of US origin. President can waive rqmts of AGP for suppliers of foreign countries that are parties to AGP
tariffs
same as duty on goods. $, tax levied on goods by country ofimportation.
custom unions
similar to above, but also removes restrictions on free movement of money, labor, other factors of production
Harmonized Tariff Schedule of U.S. (HTSUS)
since 1989
Foreign Trade Zones
special customs areas - Goods may be imported without being subjected to tariffs until goods are released into the stream of commerce. For US, zone must be within 60 miles of port of entry. Many advantages: can transport, store, package then re-export without taxes. Warehousing, manufacturing, cleaning, exhibiting, mixing, repackaging, testing, etc. NO retail sales. Can destroy damaged goods without paying tariffs on them. Cash flow benefits also (don't pay tariff until moved out of zone)
Countervailing Duty Actions
special tariff in addition to normal tariff, imposed on imports of subsidized goods for the purpose of offsetting the subsidy. Can also bring WTO dispute settlement action (but only get one remedy).
ISO 9000 refers to: a trade agreement established between the U.S. and the European Union that will significantly reduce barriers to trade. standards used for assuring product quality through product design and manufacturing process. a series of import regulations imposed by the European Union. Japanese trade restrictions against U.S. telecommunications companies that were eventually repealed.
standards used for assuring product quality through product design and manufacturing process.
GRI 6
subheadings at the same level are comparable.
WTO Rules Apply to Specific Subsidies
subsidy benefits particular industry or company. If neutral objective requirements, then not violation (i.e. tax reduction for equipment purchases)
To determine the dutiable status of goods, factors considered all EXCEPT the country of origin the classification and coding of the article the classification designation by the exporter the country of origin
the classification designation by the exporter
Liquidation of goods by the U.S. Bureau of Customs and Border Protection refers to: disposal of seized goods. the final assessment of applicable duties. sale of unclaimed goods. confiscation of goods not allowed for import to U.S.
the final assessment of applicable duties.
When a nation that belongs to WTO imposes a tariff or quota on imported products, it is supposed to do so within the guidelines established by GATT. If it does not do so within GATT's guidelines: the offending nation may suffer military retaliation by the other GATT members. the offending nation may be subject to a proceeding pursuant to the WTO's Dispute Settlement Understanding. the offending nation may end up in the World Court being sued for breach of its GATT contract. none of the above.
the offending nation may be subject to a proceeding pursuant to the WTO's Dispute Settlement Understanding.
All of the following indicate that a product has been substantially transformed except: the product has been manufactured in one country and shipped to an intermediary country before coming to the U.S. the product has been advanced in value. the product underwent a change in tariff classification. the product has a new name, character or use.
the product has been manufactured in one country and shipped to an intermediary country before coming to the U.S.
The principal use of an article refers to: the purpose for which it is to be imported. the use of the components once they are fully assembled. the use that is greater than any other single use of the article. the recommended use of an article by an exporter
the use that is greater than any other single use of the article.
binding rules from customs
their official position on specific item or transaction. Requesting one (in writing) can help plan business strategy.
Caribbean Basin Iniative
trade preference to goods imported from Caribbean. Same criteria as GSP but not annual review and don't graduate out. About 17 countries.
The establishment and giving notice of new technical standards for products well in advance to permit foreign manufacturer and importer response is referred to as: countervailing procedures. transparency non-discrimination. tariffication.
transparency
what always required
transparency US Dept of Commerce has collection of int'l stds
Countries use different methods to determine 'origin' of product. true false
true
Standards and Technical Regulations can be significant barriers to trade true false
true Ex: perishables could spoil before inspections, etc. completed. d.US - FDA for food (imported meat example) , CPSC (Chinese toys example)
remedy for dumping
usually antidumping duties ("AD') to offset unfairly low price of dumped goods
WTO mandates a balancing test
weigh protecting public against restrictions on trade.
classification of goods
• Start with 'common meaning' - Example: Camel Manufacturing Co. v. United States case: tents were not sporting goods but camping equipment. (This case not in book). •Example:A block or bar of chocolate is solid, so liquid, molten chocolate not included OTTER PRODUCTS CASE Can use common name; description of physical characteristics, component parts, article's use to find proper classification but must follow "General Rules"
