Fundamentals of Trade Law
A WTO member can possibly justify a trade measure restricting a foreign good based on a national security concern under what article of the GATT 1994?
A WTO member can possibly justify a trade measure restricting a foreign good based on a national security concern under Article XXI of the GATT 1994. However, the language of Article XXI is narrower than many people assume and a member relying on Article XXI bears the burden of proving that the government measure in question satisfies that language in every respect.
If a WTO member establishes that a foreign company is "dumping" a particular product in its market, what type of special tariffs can that WTO member impose on that product?
A WTO member is entitled to impose anti-dumping tariffs on a product that is being "dumped" into its market by a foreign company.
Countervailing tariffs may be imposed by a WTO member to counter what?
A WTO member may impose countervailing tariffs on a foreign product in order to counter a prohibited or actionable subsidy that benefitted the foreign producer.
What is a "de jure" export subsidy?
A de jure export subsidy provided by a WTO member to a domestic company or industry that is contingent on that company or industry's export performance and furthermore this contingency is set forth in a law or other measure of that WTO member.
From the perspective of liberal economic theory, why is a government subsidy provided to a particular domestic company or industry harmful?
A government subsidy provided to a particular company or industry typically shields that company or industry from competition by permitting it to sell its products at a lower price than it otherwise could. Liberal economic theory maintains that consumers usually are encouraged to purchase the subsidized domestic product even when they otherwise would have preferred to purchase the foreign competing product, and consequently the domestic company or industry is discouraged from entering another industry where it could possess a "comparative advantage" and obtain the highest possible profits. Moreover, the provision of a subsidy by one country tends to cause all of the other countries with an interest in the relevant industry to provide similar subsidies just in order to be competitive in the international marketplace. The ensuing subsidy spiral causes all such countries to spend funds that do not create any real value for consumers, thereby causing all of these countries to waste precious government resources. In sum, from the perspective of liberal economic theory, subsidies are a wasteful expenditure of government funds and they distort international trade in the subsidized products.
Liberal economic theory underlies the WTO Agreements, and liberal economists agree that governments must intervene in the private market when a "market failure" occurs. List at least two examples of "market failures"
According to liberal economic theory, examples of market failures in a market economy include (1) monopolies and oligopolies; (2) infant industries; (3) the unavailability of sources of credit; (4) the unavailability of insurance facilities; (5) weak government institutions; (6) extreme income inequality; (7) goods and services with negative externalities; and (8) goods and services with positive externalities. A product with a negative externality is a product that imposes a cost on society for which the producer of the product is not charged. A product with a positive externality is a product that provides a benefit to society for which the producer cannot charge.
According to the WTO Dispute Settlement Understanding, how long should it take for a case to be concluded, if it is appealed to the WTO Appellate Body?
According to the WTO Dispute Settlement Understanding, it should take approximately one year for a case to be concluded, if the case is appealed to the WTO Appellate Body. However, the average duration of a case today (if appealed to the Appellate Body) is two years.
What economist developed the theory of absolute advantage and what is this theory?
Adam Smith proposed the theory of absolute advantage, which maintains that each nation should produce all of those products that it produces more efficiently than any other country. In Smith's theory, each country compares its efficiency rate regarding any particular product with other countries' efficiency rates regarding that product.
Briefly explain what an "absolute quota" is.
An absolute quota is a maximum quantity of a particular foreign product that may be imported into a country in a given year.
Name five countries that are "developing countries" in the WTO.
Approximately 107 Members of the WTO are developing countries. Five examples of such countries are Mexico, Indonesia, India, Brazil, and Paraguay.
Article 5.1 of the SPS Agreement requires WTO members to do what?
Article 5.1 of the SPS Agreement requires a country to conduct a "risk assessment" regarding the harm that a product in question could pose to humans, animals, and/or plants before restricting the entry of that product into its territory
If a WTO member imposes a tariff on a product that exceeds its bound tariff for that product, what article of the GATT 1994 has it violated?
Article II of the GATT 1994.
What Article of the GATT 1994 prohibits quantitative restrictions on imports and exports?
Article XI prohibits quantitative restrictions on imports and exports.
What Article in GATS sets forth the major exceptions to WTO members' GATS obligations?
Article XIV of the GATS sets forth the major exceptions to WTO members' GATS obligations.
What economist developed the theory of comparative advantage and what is this theory?
British economist David Ricardo developed this theory. He maintained that each nation in a trading system should produce that one product that it can produce more efficiently than it can produce any other product. In Ricardo's theory, each country compares its efficiency rates regarding different products. (This was a refinement of Adam Smith's theory of absolute advantage, which maintained that each nation should produce all of those products that it produces more efficiently than any other country. In Smith's theory, each country compares its efficiency rate regarding any particular product with other countries' efficiency rates regarding that product.)
Explain which party in the Brazil - Aircraft case in the WTO prevailed and why.
Canada prevailed in the Brazil - Aircraft case in the WTO, because even though Brazil was not required to abolish its export subsidy programs until 2003 (a date since extended to 2008 for developing countries), the WTO Appellate Body held that a developing country such as Brazil could not create a new export subsidy program - such as Brazil's PROEX Program - during the phase-out period.
In what year did China become a Member of the WTO?
China became a member of the WTO in 2001.
Give at least two examples of exceptions to the MFN Principle in the WTO.
Examples of exceptions to the MFN Principle in the WTO include (1) preferential trade treatment given by a developed country to the least developed and/or developing countries; (2) preferential trade treatment provided to fellow members of a free trade agreement or customs union; and (3) explicit waivers of the MFN obligation granted to a particular WTO Member by the other WTO Members (e.g., the waiver of the MFN obligation that the other WTO Members granted to the U.S. with respect to Cuba).
True or False: Minimum environmental standards were incorporated into the WTO rules in 2007.
False To date, minimum environmental standards have not been incorporated into the WTO rules.
True or False: A directly competitive or substitutable (DCS) product is by definition a "like product" with respect to the National Treatment Principle embodied in Article III of the GATT 1994.
False.
True or False: In the case of China - Trading and Distribution Services in the WTO, the WTO Appellate Body affirmed the panel's holding that China could rely on the public morals exception contained in Article XIV (a) of the GATS to justify its requirement that foreign media products which the Chinese Government had approved for sale in China must enter China through one of a few designated ports of entry.
False. The WTO Appellate Body reversed this holding of the panel.
True or False: In the case of Indonesia - Automobiles in the WTO, the U.S. was able to show that Indonesia's local content rules were causing the U.S. automobile industry to suffer "adverse effects".
False. The WTO panel in this case found that the GM vehicles in question were all manufactured in Mexico, so that the U.S. could not demonstrate that GM was suffering adverse effects on account of Indonesia's local content rules.
True or False: The developed countries constitute a majority of the WTO members today.
False. The developed countries constitute a minority of the WTO members today.
How can Hong Kong, a province of China, be a member of the WTO?
Hong Kong is a member of the WTO because it possesses an autonomous customs administration capable of collecting tariffs and imposing other import and export restrictions on foreign goods, and the Agreement Establishing the WTO states that any entity that possesses an autonomous customs administration can be a WTO Member.
If a losing party in a WTO dispute case refuses to either change its offending government measure or compensate the prevailing party, what can the prevailing party do?
If the losing party in a WTO dispute case refuses to either change its offending government measure or compensate the prevailing party, the prevailing party can obtain authorization from the original WTO panel in the case to utilize its own trade polices to harm the losing party in an amount equal to the amount that the losing party is benefited by its WTO-inconsistent measure. Unfortunately, a prevailing WTO Member that has a small market often finds it difficult to enact a trade policy that encourages the losing party to remedy its WTO-inconsistent measure.
What three paragraphs of Article III of the GATT 1994 most often are at issue in a WTO dispute case involving Article III?
In a case involving Article III of the GATT 1994, paragraphs 1, 2, and 4 of that article most often are at issue.
In the U.S. - Steel Safeguards case that China brought against the U.S. in the WTO, which party prevailed and why?
In the U.S. - Steel Safeguards case, China prevailed because the U.S. could not prove that its imports of various types of steel from China had increased in recent years or that the harm which certain U.S. steel producers were suffering was attributable to imports of "like" Chinese steel products.
Explain how a WTO member can terminate its membership in the WTO.
It can give the other WTO members 6 months' advance notice of its decision to terminate its membership in the WTO.
The developing countries often argue that the problem with the WTO Agreements is that these Agreements were based on the concept of a "single undertaking." Explain the phrase "single undertaking."
Many of the least developed and developing countries argue that they should not be required to comply with the same WTO Agreements with which the developed countries are required to comply. In this context, the phrase "a single undertaking" refers to the fact that all WTO Members must comply with the same WTO Agreements, although some of these Agreements contain certain extensions of time and/or other "special and differential treatment" for the least developed and developing countries.
Describe briefly how Maslow's hierarchy of human psychological needs may be related to development economics.
Maslow's hierarchy of human psychological needs provides that a human being first and foremost is concerned with satisfying his or her basic physical needs, such as warmth, food, and shelter. According to Maslow, only after a human being's physical needs have been met will he or she even perceive the need to develop social ties with other human beings. Next, after his or her physical and social needs have been met, Maslow posited that a human being will perceive the need to acquire self-esteem or professional success in his or her society. Finally, Maslow argued, once all of the above-described needs have been met, a human being then perceives the need to express his or her "true inner self" or "self-actualize." Development economics maintains that each nation follows a very similar series of economic stages. These stages are (1) an agricultural economy (where people provide value by working with their physical bodies); an industrial economy (where people provide value by working with others in a factory or office where they make products or provide services and where capital machinery often enhances their manual labor; and a post-industrial or information economy (where media companies are the new "captains of industry" and a high percentage of people are employed in some type of information, media, or cultural industry).
Can a WTO panel or the Appellate Body rewrite a member's laws, if it determines that that member's laws are in violation of one or more of the WTO Agreements?
No. A WTO panel or the WTO Appellate Body is empowered only to order a WTO member to adjust a law so as to make it consistent with the member's WTO obligations.
How do the WTO rules define a "developing country"?
None of the WTO Agreements defines a "developing country". Unless a country meets the U.N. definition of a least developed country (LDC), whenever a country joins the WTO, it is entitled to designate itself as either a "developed country" or a "developing country". At the same time, members of the Organization of Economic Cooperation and Development (OECD) are strongly encouraged to designate themselves as "developed" countries in the WTO.
On a day-to-day basis, how does the General Council of the WTO make decisions?
On a day-to-day basis, the WTO Members, acting as the General Council of the WTO, make decisions by consensus. That is, all members of the WTO agree to any decision.
What paragraph of Article III of the GATT 1994 concerns non-fiscal measures?
Paragraph 4 of Article III of the GATT 1994 concerns non-fiscal measures.
What major U.S. periodical publishing company complained to the U.S. Government about Canada's treatment of foreign periodicals and convinced the U.S. to bring a case against Canada in the WTO?
Sports Illustrated is the U.S. periodical publishing company which had convinced the U.S. Government to bring a case against Canada in the WTO challenging Canada's measures regarding the periodical industry.
True or False: A government subsidy to a particular industry benefits consumers of the products or serves which that industry offers
TRUE: A government subsidy benefits the domestic company or industry receiving the subsidy as well as consumers, who likely will pay a lower price for the product in question. On the other hand, a subsidy harms the government of the country providing a subsidy, in that the subsidy diminishes the governments coffers, and it harms taxpayers, who ultimately have to pay for the subsidy, usually through increased taxes
True or False: The General Agreement on Tariffs and Trade (GATT) became effective in 1947.
TRUE: The GATT became effective in 1947 following the end of World War II in 1945, along with the U.N. and several other multilateral organizations.
In the EC - Hormones case in the WTO, what principle did the EC argue supported its position that it did not need to produce any scientific evidence to support its import ban on hormone-fed beef?
The EC argued that the precautionary principle supported its position that it did not need to produce any scientific evidence to support its ban on hormone-fed beef.
What WTO Agreement was at issue in the case of Mexico-Telecoms in the WTO?
The General Agreement on Trade in Services (the GATS) was at issue in this case.
Define the Most Favored Nation Principle in the WTO and explain where it is located in the GATT 1994.
The Most Favored Nation Principle provides that a WTO Member should provide each fellow WTO Member with trade treatment no less favorable than the trade treatment that it provides to any other WTO or non-WTO Member. This principle is found in Article I of the GATT 1994.
What agency of the U.S. Government is responsible for negotiating and enforcing trade agreements with other countries?
The Office of the U.S. Trade Representative is responsible for negotiating and enforcing trade agreements with other countries.
The Agreement on Trade-Related Intellectual Property Rights (the TRIPS Agreement) requires a WTO Member to protect a foreigner's copyright for how long?
The TRIPS Agreement requires a WTO Member to protect a foreigner's copyright for a minimum of fifty (50) years from either the death of the author or the last publication of the work (depending on which of these two events a Member uses as the commencement date for its protection of a copyright).
What agency of the U.S. Government is responsible for collecting customs duties (or tariffs)?
The U.S. Customs and Border Protection is responsible for collecting customs duties (or tariffs).
The WTO became operative on what date?
The WTO became operative on January 1, 1995
The WTO is located in what city?
The WTO is located in Geneva, Switzerland.
Explain what the acronym "SDT" stands for.
The acronym "SDT" stands for "Special and Differential Treatment". This term is used to describe any provision in the WTO Agreements that favors the developing countries
When a country raises the tariff rate on an imported product, which groups in that country benefit and which groups are harmed as a result?
The domestic industry that produces a "like product" typically benefits from an increased tariff rate imposed on a particular imported product, as foreign producers of that product usually add the cost of the tariff to the domestic price of those products. The government of the importing nation also benefits, because the tariff increase supplements its treasury. However, domestic consumers typically are harmed, because they usually have to pay a higher price for the imported foreign products and their welfare is reduced as a result. As there are many more consumers than members of the domestic industry (and the government is not going to share its increased revenues with consumers or it would not have imposed the tariff increase in the first place), the society as a whole typically suffers a decrease in economic welfare whenever a tariff rate on an imported product is increased.
What is the name for the tariff rate on a particular product which a WTO member guarantees that it will never exceed?
The name for this tariff rate is the member's bound tariff rate.
What is the name of the organization that the GATT 1947 signatories considered establishing after World War II, but the U.S. Congress refused to approve the Havana Charter that would have established it?
The name of this organization is the International Trade Organization.
Some commentators argue that the economic principle of "economies of scale" underlies several of the World Trade Organization Agreements. Provide a brief description of this principle
The principle of economies of scale refers to the fact that, in ayn industries, produces incur lower costs with each additional unit they produce. This principle suggests that companies would obtain the highest possible profits by specializing in such industries
Name the two extant plurilateral WTO Agreements.
The two extant plurilateral WTO Agreements are the Government Procurement Agreement and the Agreement on Civil Aircraft.
Name at least two exceptions to GATT 1994 violations under Article XX of the GATT 1994 and identify the correct paragraph of Article XX for each such exception.
There are 10 exceptions stated in Article XX of the GATT 1994. Two that are relied upon a great deal by the WTO members are paragraph (b), which encompasses measures necessary to protect human, animal or plant life or health, and paragraph (g), which encompasses measures relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.
How many members of the WTO are there today?
There are 159 members of the WTO today including the Lao People's Democratic Republic and Tajikistan, which joined the WTO in February and March 2013, respectively
Describe what it means for a company to produce a product more "efficiently" than any other company.
This means that the company can produce the same quality product for a lower cost.
True or False: The complainant and respondent in a WTO dispute case are countries, not companies.
True
True or False: Articles 30 and 31 of the TRIPS Agreement provide for exceptions to patent protection.
True.
True or False: British economist John Maynard Keynes advised the GATT 1947 negotiators that high tariffs had been one of the causes of World War II.
True.
True or False: In the case of Canada - Pharmaceuticals in the WTO, the WTO upheld Canada's regulatory review exception to patent protection as being consistent with the TRIPS Agreement.
True.
True or False: The General Agreement on Trade in Services (the GATS) permits each WTO member to decide for itself which service industries to liberalize
True.
True or False: In the EC - Biotech Products case in the WTO, the WTO panel never addressed the issue of whether a genetically-modified version of an agricultural product is "like" the non-genetically-modified version of the product or the issue of whether any particular genetically-modified product is safe for human consumption.
True. Although the WTO panel's decision in this case is very long, the panel only addressed procedural matters and never addressed either of these two substantive issues.
True or False: Brazil is considered a developing country in the WTO.
True. Most WTO members were permitted to designate themselves as either "developing" or "developed" in the WTO, and Brazil designated itself a "developing member".
Describe how the WTO dispute settlement system is more powerful than the GATT dispute settlement system.
Under the GATT 1947 dispute settlement system, even the losing party could veto the adoption of a dispute panel's decision. Under the WTO dispute settlement system, it is just the opposite - a dispute panel or Appellate Body's decision is automatically adopted by the WTO Members unless all of the WTO Members, including even the prevailing party in the dispute, vote against adoption of the decision.
Economists and other commentators over the years have revealed a number of flaws in David Ricardo's theory of "comparative advantage." Name at least three such flaws.
1. Was not representative of the global economy then and isn't representative of it now; 2. assumes every country has a "natural" economic advantage when most do not; 3. no country is gonna produce only one good or service on the international marketplace. Some writers have criticized Ricardo's theory on the ground that it was based on a very simple economic model, utilizing only two countries and two products and hence it wasn't even representative of the global economy in the 1800s, when he first proposed his theory, let alone the global economy of today. In addition, other writers have emphasized that his theory assumes that every country has "natural" economic advantages, when in fact many, if not most, countries create their own economic advantages. Yet other commentators have pointed out that Ricardo's theory is unrealistic because no country is ever going to produce only one good or offer only one service in the international marketplace, as Ricardo proposed. In any case, today one could argue that Ricardo's theory of comparative advantage doesn't accurately reflect international trade patterns, because he assumed that factors of production would not cross national borders when they do today and he didn't take into account either development economics in general or the effect of intellectual property rights on economic development in particular.
True or False: China has not yet been sued by any other member of the WTO.
False.
True or False: There have been no cases in the WTO concerning the Agreement on Trade-Related Investment Measures (TRIMS).
False.
True or False: When attempting to justify a government measure under one of the exceptions set forth in Article XX of the GATT 1994, a WTO member must first satisfy all of the language contained in the "chapeau paragraph" of Article XX and then satisfy all of the language contained in the relevant paragraph.
False. (A WTO member attempting to justify a government measure under one of the exceptions set forth in Article XX of the GATT 1994 must first satisfy all of the language contained in the relevant paragraph and then satisfy all of the language contained in the "chapeau paragraph" of Article XX. The chapeau language only makes sense when considered in the context of a specific paragraph of Article XX.)
True or False: Vietnam is the newest member of the WTO.
False. (The Lao People's Democratic Republic and Tajikistan are the newest members of the WTO.)
True or False: The TRIPS Agreement requires all members of the WTO, when they enact a patent system, to issue patents for a minimum of 17 years from the issue date.
False. (The TRIPS Agreement requires all members of the WTO, when they enact a patent system, to issue patents for a minimum of 20 years from the date of patent application.)
True or False: In the U.S. Gasoline case in the WTO, the U.S. won because the U.S. has the right to improve the air quality in the U.S.
False. (The WTO Appellate Body held that, even though the U.S. otherwise could rely on paragraph (b) of Article XX of the GATT 1994 to justify its Clean Air Act, it could not satisfy the chapeau language of Article XX because it could have implemented a less trade-restrictive method of ensuring that the emission level of the gasoline sold by any foreign producer was no higher than it was in 1990.)
True or False: A customs union differs from a free trade agreement in that the former is simply an agreement between countries to provide each other with preferential trade treatment and the latter is an entity that enforces common trade policies vis-à-vis other countries.
False. A customs union, such as the EU, is a group of countries or "entity" that has agreed to treat trade matters identically vis-à-vis the outside world. For example, they all enforce a "common external tariff." A free trade agreement (FTA), such as the North American Free Trade Agreement or NAFTA, on the other hand, is simply an agreement between two or more countries in which the signatories agree to provide "favorable" or "preferential" trade treatment to each other.
True or False: A plurilateral WTO Agreement is a WTO Agreement that every member of the WTO must sign.
False. A plurilateral WTO Agreement is a WTO Agreement that WTO Members are free to decide whether to sign.
True or False: Approximately 66 of the WTO Members are developing countries.
False. Approximately 107 (or 67%) of the 159 WTO Members today are developing (or least developed) countries.
True or False: The U.S. initiated a dispute case against China in the WTO based on China's failure to enact intellectual property protection laws or regulations.
False. China enacted laws and regulations protecting intellectual property rights (IPR) prior to its accession to the WTO in 2001. The U.S., in 2007, initiated a dispute case against China in the WTO, alleging that China was violating its TRIPS commitments to the U.S. on the ground that China was not effectively enforcing its IPR laws and regulations.
True or False: China joined the WTO in 2003
False. China joined the WTO in 2001.
True or False: "Dumping" is the sale of a good in an importing country at a price that does not cover the foreign producer's costs of producing that good.
False. Dumping is the sale of a product in an importing country at a price that is less than the price which the producer charges for that same product in its own country.
True or False: In the case of Shrimp/Turtle II in the WTO, the WTO Appellate Body ordered the U.S. to amend Section 609 of the Endangered Species Act so as to make it consistent with the U.S.' GATT 1994 obligations.
False. Following the WTO Appellate Body's ruling in the case of Shrimp/Turtle I, the U.S. Congress amended Section 609 of the Endangered Species Act, and, in the case of Shrimp/Turtle II, the WTO Appellate Body held that Section 609, as amended, was consistent with the U.S.' GATT 1994 obligations.
True or False: The U.S. has always complied with any order of a WTO panel or the WTO Appellate Body.
False. For example, President Bush famously indicated that the U.S. would not comply with the WTO Appellate Body's ruling against the U.S. in the U.S. - Internet Gambling case.
True or False: In the WTO, a member which loses a trade dispute case can simply veto the enforcement of the WTO panel or Appellate Body decision.
False. In the GATT 1947 era, a losing party could veto enforcement of a GATT 1947 panel decision. Today, in the WTO, each WTO panel or Appellate Body decision is enforced unless 100% of the WTO members, including even the winning party, votes that the decision should not be enforced.
True or False: No nation's economy has actually declined since 1986; moreover, some of the developing countries' economies have actually grown at a substantially faster pace than the economies of the developed countries.
False. It is true that some of the developing countries have experienced faster economic growth than the developed countries. However, the economies of those nations whose populations together constitute "The Bottom Billion," as Paul Collier refers to these people in his book of the same name, actually declined absolutely during the 1990s.
True or False: During the Uruguay Round, it was the developing countries that promoted the adoption of the WTO Agreement on Trade-Related Investment Measures ("TRIMS").
False. It was the developed countries that proposed the adoption of the TRIMS Agreement during the Uruguay Round. The developing countries vehemently opposed the adoption of the TRIMS Agreement.
True or False: The GATT 1994 requires that all developed country Members of the WTO offer preferential tariff rates to all of the developing country Members.
False. Many developed countries, such as the U.S. and the EU, provide tariff-free treatment to many of the products imported from the developing countries. The Enabling Clause in the GATT 1994 clarifies that such programs do not violate the Most Favored Nation Principle. However, no developed country is required to offer preferential tariff rates to the developing country members in the WTO.
True or False: In the China - Intellectual Property Rights case in the WTO, the WTO Appellate Body held that China must protect a foreigner's copyright, even if the Chinese Government has banned the copyrighted work in question on the ground that it violates China's public morals.
False. Neither the U.S nor China appealed the panel's decision in this case to the WTO Appellate Body. However, the panel in this case ruled that China must protect a foreigner's copyright, even if the Chinese Government has banned the copyrighted work in question on the ground that it violates China's public morals.
True or False: The GATT 1994 and the General Agreement on Trade in Services (GATS) contain a different definition of "developing country."
False. None of the WTO Agreements defines a "developing country". Unless a country meets the U.N. definition of a least developed country (LDC), whenever a country joins the WTO, it is entitled to designate itself as either a "developed country" or a "developing country". At the same time, members of the Organization of Economic Cooperation and Development (OECD) are strongly encouraged to designate themselves as "developed" countries in the WTO.
True or False: In the case of Canada - Autos in the WTO, the WTO Appellate Body held that Canada's duty-free automobile program violated the commitments that Canada had made to open its automobile distribution service sector to foreign competition.
False. The Appellate Body held that Canada's duty-free automobile program affected only a product, not a service.
True or False: The National Treatment Principle prohibits a WTO member from treating foreign companies more favorably than domestic companies.
False. The National Treatment Principle prohibits a WTO member from treating domestic companies more favorably than foreign companies.
True or False: The Bureau of Customs and Border Protection is responsible for negotiating and enforcing the U.S.' trade agreements with other countries.
False. The Office of the U.S. Trade Representative is responsible for negotiating and enforcing trade agreements with other countries.
True or False: A government measure can violate both the SPS Agreement and the TBT Agreement.
False. The SPS Agreement concerns health and safety measures regarding an imported product, and the TBT Agreement concerns other non-tariff barriers to trade.
True or False: All but 3 members of the WTO have signed the TRIPS Agreement.
False. The TRIPS Agreement is a multilateral agreement, which means that every WTO member is required to sign it pursuant to the general "single undertaking requirement" of the WTO regime.
True or False: The Agreement on Trade-Related Intellectual Property Rights (the TRIPS Agreement) requires a WTO Member to protect a foreigner's trademark for a minimum of ten (10) years.
False. The TRIPS Agreement requires a WTO Member to protect a foreigner's trademark for a minimum of seven (7) years.
True or False: The Agreement on Trade-Related Intellectual Property Rights (the TRIPS Agreement) requires that all members of the WTO, when they enact a patent system, must issue patents that are valid for a minimum of 50 years from the date of patent application.
False. The TRIPS Agreement requires that all WTO Members must enact intellectual property protection (IPR) systems in which patents are valid for a minimum of 20 years from the date of patent application.
True or False: The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) had a predecessor agreement in the GATT era.
False. The TRIPS Agreement was first negotiated during the Uruguay Round that culminated in the creation of the WTO.
True or False: The U.S. can severely restrict the quantity of Cuban products entering the U.S. because Cuba is not yet a WTO member.
False. The U.S. enforces a trade embargo against Cuba pursuant to which Cuban products are banned from entry into the U.S. As Cuba is a WTO member, the U.S.' embargo against Cuba normally would violate the Most Favored Nation Principle contained in various WTO Agreements as well as the prohibition against import or export restrictions contained in Article XI of the GATT 1994. However, the U.S. obtained from its fellow WTO members a waiver of these obligations regarding Cuba
True or False: In the case of EC - Asbestos in the WTO, the WTO Appellate Body held that asbestos cement and fibro cement are "like products".
False. The WTO Appellate Body held that these two types of cement are not "like", so that France's less favorable treatment of asbestos cement (when compared with its treatment of fibro cement) did not violate Article III of the GATT 1994, paragraph 4.
True or False: At the Seattle ministerial meeting of the WTO, the developing countries left the meeting because they wanted to add minimum labor and environmental standards to the WTO rules and the developed countries refused to do so
False. The developing countries left the meeting because the U.S. Trade Representative suggested that perhaps it was time to consider adding minimum labor and environmental standards to the WTO rules.
True or False: The main issue being debated during the Doha Round of Multilateral Trade Negotiations (the "Doha Round") is the adoption of a cultural exemption to the WTO rules.
False. The main issue being debated in the Doha Round is how agricultural products should be encompassed within a free trade regime. The most controversial issue is the developing countries' insistence that the developed countries should abolish or significantly reduce the subsidies which they provide to their agricultural industries.
True or False: The main issue leading to the impasse in the Doha Round of Multilateral Trade Negotiations has been the developing countries' refusal to consider adding subsidy restrictions in the GATS.
False. The main issue leading to the impasse in the Doha Round is the proper treatment of agricultural goods within the WTO disciplines, especially the magnitude of subsidies that the Members should be permitted to provide to their agricultural industries.
True or False: Under Article XI of the GATT 1994, a WTO member has the right to exclude from entry any product that offends its public morals.
False. The public morals exception in the GATT 1994 is found in Article XX(a). Article XI of the GATT 1994 prohibits quantitative restrictions on imports or exports.
True or False: Adam Smith's theory of "absolute advantage" still provides the main economic rationale for the WTO Agreements.
False. The theory of "comparative advantage" provides the main economic rationale for the WTO Agreements. British economist David Ricardo proposed this theory in the 1800s (as a refinement to Adam Smith's theory of "absolute advantage").
True or False: The three "pillar agreements" in the WTO are the GATT 1994, the General Agreement on Trade in Services (the GATS), and the Agreement on Trade-Related Investment Measures (TRIMS).
False. The three "pillar agreements" in the WTO are the GATT 1994, the General Agreement on Trade in Services (the GATS), and the TRIPS Agreement.
True or False: There are 192 Members of the WTO today.
False. There are 159 Members of the WTO today.
True or False: The case of U.S. Internet Gambling in the WTO involved the TRIPS Agreement.
False. This case involved the General Agreement on Trade in Services (the GATS).
True or False: Minimum labor standards were incorporated into the WTO rules in 2003.
False. To date, minimum labor standards have not been incorporated into the WTO rules.
True or False: "Sufficient scientific evidence" in Article 2.2 of the SPS Agreement has been interpreted to mean that at least two scientists are willing to testify as to the danger of the product in question
False. You only need the testimony of one such scientist.
Explain the circumstances in which a WTO member is entitled to impose a safeguard tariff on a foreign product.
In most cases, a WTO member that enacts a safeguard tariff or other safeguard measure must compensate any WTO member that is negatively affected by its implementation of such a measure. A WTO member is entitled to impose a safeguard measure, including a safeguard tariff, on a foreign product with respect to which that WTO member has satisfied the criteria set forth in Article XIX of the GATT 1994 and the WTO Agreement on Safeguards (Safeguards Agreement). In general, Article XIX of the GATT 1994 and the Safeguards Agreement permit a WTO member to renege on a WTO commitment if it can prove that imports of a particular product have increased in recent years, this increase in imports is attributable to a WTO commitment which that member made, a domestic industry which produces a "like product" is suffering significant harm as a result of this import surge, and the WTO member did not foresee that its domestic industry would suffer such harm as a result of its WTO commitment.
In the case of India - Patent Protection in the WTO (otherwise known as the India - Mailbox System case), which party prevailed and why?
The U.S. and EC prevailed in this case. The panel and WTO Appellate Body ruled that India had not implemented a secure mailbox system for agricultural chemicals and pharmaceuticals as required, because it had merely instructed the Indian Patent Office to issue a regulation establishing such a system rather than had the Parliament amend the Patent Act to establish such a system.
In the Korea-Beef case in the WTO, which party prevailed and why?
The U.S. won this case. The U.S' primary claim in this case was that South Korea's requirements regarding the importation and sale of foreign beef (e.g., the requirement that retail shops must choose whether they wished to sell only domestic beef or only imported beef and the requirement that a supermarket owner selling both domestic and foreign beef must sell the two types of beef in different parts of the supermarket) violate the National Treatment Principle contained in Article III of the GATT 1994 (specifically paragraph 4 of this Article, as this was a non-fiscal measure of the South Korean Government). The panel and WTO Appellate Body found that the U.S. had substantiated this claim.
When deciding whether to adopt a panel or Appellate Body decision, what decision- making principle does the WTO Dispute Settlement Body employ?
The WTO Dispute Settlement Body employs the principle of "negative consensus." In the WTO context, this means that a panel or Appellate Body decision is adopted by the WTO members acting as the Dispute Settlement Body unless all of the WTO members (including the prevailing party) vote against adoption of the decision.
Describe briefly which groups are harmed and which groups are benefitted by a country's implementation of a quota on a foreign product.
The domestic industry usually benefits from a quota imposed on a foreign "like product", as the restriction on the quantity of the foreign product causes the price of that product to increase and then domestic consumers tend to purchase the domestic product. The government of the importing nation is harmed because it has to incur effort and cost to administer the quota program (and ultimately taxpayers have to pay that cost). In addition, domestic consumers are harmed, because they have to pay a higher price for the imported foreign product. Over time, the domestic producers of the "like product" also tend to increase their prices. As a result, consumers' welfare is reduced. As there are many more consumers than members of the domestic industry (and furthermore the government is harmed), the economic welfare of the entire society is reduced.
What are the four criteria for determining whether a foreign product and a domestic product are "like products" under Article III, paragraph 4 of the GATT 1994 (requiring that government non-fiscal measures respect the National Treatment Principle)?
These four criteria are (1) consumers' substitution of the products; (2) the products' end uses; (3) the products' characteristics; and (4) the products' tariff classification(s).
True or False: The case of U.S. - Section 211 of the Omnibus Appropriations in the WTO concerned the Havana Club trademark which the Castro Government in Cuba had appropriated from the Archebalda family.
True.
True or False: The WTO Appellate Body is not empowered to collect a fine from a WTO Member that has lost a WTO dispute case.
True. A WTO dispute panel or the WTO Appellate Body issues a decision and orders the losing party to bring its offending measure(s) into compliance with its WTO commitments. Then, if the losing party refuses to abolish or amend its offending measure(s), the dispute panel would quantify the economic harm that the prevailing party suffers on account of the government measure at issue in the losing party. Finally, if the losing party refuses to pay this amount to the prevailing party, the panel would authorize the prevailing party to utilize its own trade laws in a manner that would cause the losing party to suffer that same magnitude of economic harm.
True or False: There was a predecessor agreement to the GATT 1994 prior to the initiation of the WTO in 1995.
True. The predecessor agreement was the GATT 1947.
