International Business Law Final Exam

GATT 1994 Agreement on Safeguards

"Products imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products" Countries should notify WTO Safeguards committee

Fast Track Negotiating Authority

(Trade Reform Act of 1974) President notifies Congress, Congress authorizes President to conduct negotiations, agreement submitted to Congress within specified time,Congress must vote to accept or reject within a specified time period (usually 60 or 90 days)

Dumping outlawed by GATT

1994 Antidumping Agreement GATT says dumping is at less than normal value US states dumping is a sale at less than "fair value" Normal value - export price = dumping margin Antidumping Duties = Dumping margin Smith Corona Case: Adjustments in normal value were made by the ITA for rebates in home country, direct advertising expenses, and differences in physical characteristics of typewriter (accessories of ribbons and text); upheld by U.S. Court of Appeals

Myanmar, Human Rights and Preemption

1996 MA. Sought to ban business with Myanmar by law 1997, Federal Executive order placing restrictions on investing in Myanmar Crosby v. National Foreign Trade Council U.S. Supreme Court struck down Mass. law on basis of preemption (2000). Federal statute is more flexible, and the state law would undermine President's ability to negotiate. Also, there is "need to speak with one voice.

What does NAFTA do?

After 5 years (1993-98) 65% of the tariffs eliminated Remainder phased out over 10-15 years By 2008 tariffs and nontariff barriers should be eliminated But some backsliding on commitments - trucking example

Chevron in Ecuador

Aguinda v. Texaco case: based on Forum non conveniens, case was tried in Ecuador, per the arguments by Texaco, trying to avoid larger damages in the U.S. Case in Ecuador: It was ironic that the judgment was even higher, at $27 billion initially, lowered later to $18 billion, and later lowered more. Chevron charged corruption by the judge in Ecuador and did not pay the judgment. Ecuador has sought collection and seizure of Chevron assets in Canada and Argentina Corruption charges against both the judge in Ecuador and the lawyer for Ecuador, Mr. Donzinger of Patton Boggs. Donzinger has been convicted and fined for corruption and paying a ghostwriter to write the judge's opinion. Patton Boggs went bankrupt and had to merge with another firm.

Regulation of US Trade

Allocation of power between Congress to regulate commerce with foreign nations and among states(Art.1) and President (Art. 2).

Trail Smelter Arbitration

Arbitration brought under a convention between the U.S. and Canada Smelter in B.C. operated by Canadian company emitted sulphur dioxide fumes that created damage in state of WA. Arbitration ruled that smelter should refrain from creating such damage.

Argentina - Safeguard Measures on Imports on Footwear

Argentina had not shown that increased imports were the cause of serious harm to domestic footwear; capacity utilization and productivity were ignored Serious injury that is "sudden and recent" must be shown, not over past five years Cannot impose safeguards just on non-MERCOSUR countries Injury must be the result of unforeseen developments

Calls for International Solutions- GLOBAL

Basel Convention on Trans-boundary Waste Convention Int. Trade in Endangered Species Montreal Protocol Climate Control Convention

Brother Industries v. U.S.

Brother had a typewriter plant in TN. British-owned Smith Corona exported low-price typewriters produced in Singapore, and Brother, as a U.S. manufacturer, brought a complaint to the ITA ITA denied Brother standing, since it was a foreign-owned assembler whose product was developed in Japan. Court of International Trade reverses the ITA as erecting an onerous and unwarranted barrier to the petition. BIUSA is a U.S. manufacturer, considering capital investment, employment levels, and value added, and can bring a complaint to the ITA. Consumers paid the price of antidumping duties for 14 years.

National Constraints on Exports

Circle of Poison Pesticides exported to Mexico (26 banned in U.S.), then pesticide-treated products imported to the U.S. Pesticide residues on produce Health hazard to farmworkers 80% of pesticides used in Third World countries National Ag Chemicals Assn blocked regulation of such pesticide exports

Sanctions

Cuban Assets Control Regulation of 1963 - to isolate Cuba politically and economically, and banned travel Helms-Burton Act: Toughened sanctions on Cuba; harmed relations with countries that did business with Cuba - Canada, Mexico, and European Union Effectiveness: Complaints sanctions have harmed the poor in Iraq; Argument that economic engagement promotes freedom; and that targets merely turn to alternative sources

Customs Union and Free Trade Area

Customs Union has common external tariff FTA does not EU is a customs union, NAFTA is not But NAFTA does more than just lower tariffs

Made in USA Foundation v. U.S.

Did the NAFTA agreement passed by 234 to 200 in the House and 61 to 38 in the Senate in accord with the Fast Track provisions (majority required violate the Treaty clause (Art. II, sec. 2) of the U.S. Constitution requiring 2/3 Senate vote? No, the President had "the authority to negotiate and conclude NAFTA pursuant to his executive authority and pursuant to the statutory authority granted to him by Congress." Constitution does not make treaties the exclusive means of agreement. Congress has power through the Commerce Clause (Gibbons v. Ogden) to regulate foreign commerce and delegate to the President the power to negotiate

Beer case: Commission v. Fed. Rep. of Germany

Does Germany's strict law on additives which limits the importation of certain beer into Germany violate the Treaty of Rome's commitment to the free movement of goods? Yes, the law is not justified on the basis of health or protection of health (Art. 36) and violates Art. 30.

B-West Imports v. U.S.

Does the revocation of the exemption for China and Pres. Clinton's ban of import of munitions and arms from China constitute a violation of due process and takings clause of the 5th Amendment to the U.S. Constitution? No, under the AECA (Arms Export Control Act) the President has great latitude to prohibit the import of controlled items, and control includes revoking licenses to import.

When is an agreement not a treaty?

Dole v. Carter President Carter made an agreement to return regalia to Hungary. Issue: Did the President exceed his Constitutionally granted authority by entering into a treaty with Hungary without the advice and consent of the Senate? No. This was not a treaty but an executive agreement made pursuant to the President's Constitutional inherent executive authority.

Problems with Controls: Dresser Industries Case

Dresser France had a contract to supply compressors for construction of Euro-Soviet pipeline. Dresser Inc. had licensed the technology to Dresser France. Commerce Department denied an export license to Dresser France, but French government ordered compliance with the contract. Commerce later vacated its order since the controls on oil and gas technology had been rescinded by the U.S. government.

Dumping

Dumping is the selling of products in a foreign country for less than the price charged in producer's home market Price discrimination: pricing below costs of production is an antitrust violation Purpose: to drive out competition

EU vs. US

EU takes a more structural approach US takes the behavioral or conduct approach EU concerned about protecting competitors or producers US more concerned about protecting consumers EU takes a more regulatory approach US emphasizes litigation more

Conduct Approach

Economic Goal -- Efficiency Competition Exists With Few Competitors Few Entry Barriers Collusion Is Difficult to Enforce Large Firms Lead to Lower Costs and Higher Profits

EC - Measures Affecting Asbestos

Facts: France banned chrysotile asbestos as more dangerous than other asbestos to human health, with discriminatory impact on Canada. Holding and Rationale: WTO Appellate Body held the ban was allowed by Article XX(b) of GATT, and that "controlled use" was not a reasonably available alternative.

Arizona v. United States

Facts: AZ passed a law making it a misdemeanor under state law for any person to violate the federal alien-registration laws; for an unauthorized alien to seek work in AZ; and to arrest without a warrant any person they believe could be removed from the U.S. A federal district court enjoined the statute as unconstitutional. Holding and Rationale: Supreme Court upholds the district court, ruling the AZ law is pre-empted by federal law. The federal government has the power to establish a uniform rule of naturalization, and has inherent power over foreign relations. Its power is extensive and complex, as to registration, denial of public benefits, removal, and asylum. The AZ law is a criminal prohibition, where only civil penalties are allowed under federal law, and is an obstacle to the federal plan and enforcement. Crosby v. National Foreign Trade Council is precedent

Hartford Fire Insurance Co. v. California

Facts: Boycott by insurers, reinsurers, and brokers of commercial general liability insurers that would make certain insurance unavailable, especially pollution insurance. District court denied jurisdiction due to "international comity," but reversed by Appeals Court. Holding: Uphold Appeals Court and assert jurisdiction Rationale: Souter says "no conflict exists where a person subject to regulation by two states can comply with the laws of both...." No conflict exists with British law; no requirement to act in fashion prohibited under U.S. law Dissent by Scalia: Subject-matter jurisdiction exists, but not an extraterritorial reach of the Sherman Act. Prescriptive comity rules here, and U.S. jurisdiction fails the reasonableness test.

Thailand - Restrictions on Cigarettes

Facts: Cigarette imports from US restricted as more dangerous than Thai cigarettes. Questions: (1) Are the products "like"? (2) Are less restrictive alternatives available? Holding: Yes, this is discrimination between like products. Yes, less restrictive alternatives are available. Rationale: The health impact of all cigarettes is similar. Advertising bans or restrictions on all cigarettes are a less restrictive alternative.

Arias v. Dyncorp

Facts: Citizens of Ecuador brought an ACTA and TVPA action against a US contractor that had sprayed pesticides to eradicate heroin and cocaine farms in Colombia. The fumigant was very harmful to human health, crops, and animals, leading nearby citizens to flee their homes. Holding and Rationale: Federal district court denied the defendant's motion to dismiss ATCA claims. There was no congressional authorization of using spray that would drift into Ecuador, so Congress did not override customary international law, which requires that the purpose be clearly expressed. Spraying was state action done under color of law, since it was a joint activity entwined with State Department policies.

U.S. v. Zhi Yong Guo (Compliance and Enforcement)

Facts: Defendant bribed a friend and CA citizen to purchase 3 controlled thermal imaging cameras, then later came to L.A. to buy more. Defendant was convicted of IEEPA violation and appealed, saying that compliance was impossible because the regulations were too vague. Holding and Rationale: 9th Circuit Court of Appeals ruled that complexity is not the same as vagueness, and the statute does not fail because it has a complex regulatory scheme and must be read with two regulations. Fair notice was given to the defendant, and scienter is also required that the defendant must know that he needed a license and failed to get one. License is for national security, regional stability, and to prevent terrorism.

U.S. v. Chmielewski (export licensing)

Facts: Defendant was paid off to falsely state the value of slot machines sent to a South African customer, in order to help it escape a tariff duty, resulting in a loss of $1.4 million in revenue to South Africa, and was convicted of crime of making false statements. Defendant argued there was insufficient evidence and the harm occurred outside the U.S. Holding and Rationale: Conviction is affirmed. The scheme to defraud the South African government would have failed it not for the false statement. Defendant intended the false statements, on which customs officials rely for inspection purposes and statistical base for trade negotiations. Crime is against the U.S. and harm to South Africa may increase the sentence.

U.S. v. Mandel

Facts: Defendants charged with illegally shipping high tech equipment without a license, based only on application returned as inadequate. Equipment had been controlled for national security reasons by the Secretary of Commerce, and the defendant challenged the decision to place the product on the controlled list. Holding by the 9th Circuit Appeals Court: District Court order for government to turn over the records is reversed. Rationale: Secretary's decision to place an item on the controlled list and whether there is foreign availability are unreviewable political questions.

National Farmers' Union and Scretariat general du gouvernement

Facts: Due to fear of BSE, widespread in the UK, the UK was banned from shipping any bovine products Question: Does this violate free movement of goods? Holding: Yes Rationale: Inspection standards are a less drastic alternative

European Communities - Asbestos Case

Facts: France banned imports of asbestos chrystoline fibers from Canada. Canada defended the fibers as not dangerous and requested a WTO dispute settlement. Questions: (1) Is is a valid technical regulation? (2) Is the Canadian asbestos product treated differently than "like" domestic products? (3) Is "controlled use" a less restrictive measure? Holding: Yes on technical regulation; No on like products; No on less restrictive measure. Rationale: The law imposes objective features on "all products," must not contain asbestos fibers, so all are treated alike. The panel did not exceed its discretion regarding the danger of all asbestos products as health risks under Article XX. The efficacy of "controlled use" is yet to be demonstrated.

Freedom to Travel Campaign v. Newcomb

Facts: Freedom to Travel Campaign challenges regulations under Trading with the Enemy Act restricting travel to Cuba on bases of (1) lacks sufficient foreign policy reasons and (2) failure to define "educational activities" renders the law void for vagueness. Question: Does the law fail on those two counts? Holding: 9th Circuit Court Upholds the Law. Rationale: Freedom to travel internationally enjoys more limited liberty interest than interstate travel. Restricting flow of currency to Cuba is a rational and important reason for ban. Foreign policy is entrusted to political branches. Regulation cures any vagueness defects.

Schneider Electronics v. EC Commission

Facts: French electronics company acquires Legrand, which the commission accuses of creating an anticompetitive dominant position Question: Was procedural due process provided by the EC Commission? Holding: No, defective procedures were present Rationale: Objections not clear especially on products in sectoral markets; no chance for parties to take corrective measures (divestitures)

U.S. v. ALCOA

Facts: Group of aluminum producers from various countries formed an alliance, creating a cartel that kept prices high. Holding: Violates section 1 of Sherman Act Rationale: Government may impose liability for conduct outside its borders that has consequences inside its borders. Intent was to set up a quota system for imports. The alliance has the same effect as price fixing (horizontal agreement to fix prices).

Pulp Mills on River Uruguay (Argentina v. Uruguay)

Facts: ICJ case with Argentina alleging that Uruguay had begun construction of paper mill on river before concluding negotiations with Argentina under 1975 statute, leading to environmental damage; procedural and substantive violations. Holding and Rationale: Contrary to Agentina's claims, the two are severable, and Uruguay had no substantive violations, so claim for reparations and dismantling the mill is denied.

India - Quantitative Restrictions

Facts: Import licensing system on consumer goods; operated as virtual ban on most goods, except cameras and nail cutters. These quantitative restrictions under Art. XI of GATT damages US trade interests. Question: Is the restrictive licensing system allowed by Art. XVIII for balance of payments reasons? Holding: No Rationale: India's foreign exchange reserves were adequate and comfortable. Balance of payments measures must be eliminated when conditions no longer justify them.

Israel Aircraft Industries v. Sanwa Business Credit Corporation

Facts: Israel Aircraft Industries was acquiring Fairchild Aircraft, and Sanwa Credit, an American subsidiary of a Japanese Bank, would not facilitate the deal, since it was complying with the Arab Boycott. Israel Aircraft sued. Question: Is there a private right of action to enforce the anti-boycott law? Holding and Rationale: No, it might disrupt foreign policy negotiations by the government to allow private parties to enforce the law. No tortious interference exists either.

EU Commission v. Italian Republic

Facts: Italy required chocolate products manufactured with vegetable fats other than cocoa butter to be labeled "chocolate substitutes." Those products originated in the UK, Ireland, and Denmark Question: Does the Italian requirement violate Article 30? Holding: Yes Rationale: It interferes with the free movement of goods, goes beyond Directive 73/241, and a consumer label would suffice as a substitute.

Microsoft v. Commission of European Communities

Facts: Lower court had ordered that Microsoft provide interoperability to competitors and offer PC systems that do not bundle Media Player. Also ordered an independent monitor for compliance, to prevent Microsoft's dominance. Ruling: Holder of dominant position must license its product under three exceptions of indispensable to neighboring product, injury to competition, and preventing a new product meeting consumer demand. Upheld cessation of bundling of Media Player. Upheld most of ruling, but annulled two minor features.

Airtours v. EC Commission

Facts: Merger Task Force blocked the merger of two UK travel agencies due to "collective dominance" of short-haul travel vacations Question: Does the merger result in collective dominance? Holding: No (first time CFI overturns Competition Commission) Rationale: Common institutional investors (30-40%) among the travel agencies does not constitute dominance

Animal Science Products v. China Minmetals Corp.

Facts: Plaintiffs allege that Chinese producers and exporters of magnesite conspired to fix prices of exports to the U.S. Holding and Rationale: Sherman Act prohibits such conduct and there is extraterritorial jurisdiction due to (1) import trade or commerce exception, and (2) conduct has an effect on domestic commerce.

EC Commission v. Portuguese Republic

Facts: Portuguese law prohibited applying tinted film to windows of passenger and commercial vehicles, in order to fight crime and advance safety interest by allowing inspection of seat belt use. Holding: Violates Art. 28 EC, since it restricts the marketing of products in Portugal. No showing that the law is necessary to serve the two interests; less restrictive means might serve the same purposes; the law allows vehicles with pre-tinted windows to be sold, undermining reasons for the law. Portugal must pay court costs (loser pays provision).

Europemballage Corp. v. Commission of Euro Communities

Facts: Subsidiary of U.S. can company acquires 92% of a Dutch company, in breach of Article 82. Holding: Liability under objective territoriality Rationale: "The fact that the subsidiary has its own legal personality cannot rule out the possibility that its conduct can be imputed to the parent company,...especially when it follows the instructions of the parent."

Tetra Laval v. EC Commission

Facts: Swedish carton manufacturing company wants to expand into plastic bottle plug market by purchasing Sidel, a French company. EC task force blocks the merger, for fear Tetra Laval would leverage its dominance in carton packaging into dominance in PET technology market, reducing competition horizontally and vertically. Question: Does dominance occur? Holding: No Rationale: Little vertical leveraging, since Tetra Laval does not enjoy dominance in its market. Merger is also being restructured to divest some of the PET preforms activities. Market would remain highly competitive after the merger. "Manifest error in assessment" by EU Commission, and lack of evidence for its holding.

U.S.—Standards for Reformulated and Conventional Gasoline

Facts: U.S. created metro ozone "nonattainment areas" and required that all gasoline sold there be reformulated. The regulation relied on individual baselines (created by entity itself) or statutory baselines (created by the EPA), but required only statutory baselines for foreign refiners. Question: Does the rule for foreign refiners violate Article XX as arbitrary and unjustifiable discrimination? Holding: Yes, the rule violates Article XX, and the WTO Appellate Body recommends conformity with GATT obligations. Rationale: Administrative problems associated with enforcement and verification under the individual baselines are real but can be overcome and do not justify treating foreign refiners differently. U.S. considered costs of statutory baselines for its own refiners but not for foreign refiners. The resulting discrimination must have been foreseen and was not inadvertent.

U.S.—Import Prohibition of Certain Shrimp/Products

Facts: U.S. requires Turtle Excluder Devices and in 1989 required exporting nations to adopt programs to protect sea turtles to gain State Dept. certification. WTO Appellate Body initially held the requirement arbitrary discrimination under Article XX. State Dept. revised the guidelines to require TEDs "comparable in effectiveness." 16 nations were certified but not Malaysia, which challenged the new procedure. A WTO Dispute Settlement Body upheld the revised guidelines as not being discriminatory.

A. Ahlstrom Osakeyhtio v. Commission of Euro Communities

Facts: Wood pulp pricing case among producers from non-member countries of the EU. Holding: Concerted activity exists in violation of Article 81, and the EU has jurisdiction. Rationale: Territoriality depends not on where the agreement is formed but where it is implemented.

Transportation

Full access was to happen by 2000 for trucks and busses but did not Clinton delayed In the matter of Cross Border Trucking: U.S. closes border to Mexican trucking companies until Mexico adopts regulatory standards as tough as the U.S. (inspection too burdensome) Arbitral panel held restrictions are greater than necessary and violate NAFTA, but preserved right of U.S. to hold Mexican trucks to same safety and inspection standards U.S. argued that Mexico was not in "like circumstances" as Canadian trucking firms and standards were

Coexistence of GATT and regional trade areas

GATT Art. 24 states " the provisions of the Agreement shall not prevent...the formation of a customs union or free trade area" But there is a caution The purpose of a customs union or of a free trade area should be to facilitate trade between territories and not to raise barriers to the trade of other WTO trade countries

What is a subsidy?

Government confers a benefit on a domestic firm and provides income, price support or financial contribution (not collecting a tax, providing grant or loan at favorable rate) Some subsidies are permitted as part of government's responsibility to fund social programs and provide growth

Mergers

Horizontal Market Share, Trend to Concentration, and Entry Barriers are Key Factors Defenses: Pro-competitive, Global Market Share, Failing Company or Industry Vertical Foreclosure of Competition is Key May Avert Price Squeeze and Assure a Supply Conglomerate Entrenchment, Raising Entry Barriers, and Elimination of Potential Competition are Key

Per Se Violations

Horizontal Price Fixing Agreement Between Competitors to Fix Prices via Contract, Combination, or Conspiracy Automatically Illegal -- Do Not Have to Show Price is Unreasonable; Violates Free Market Principles and Misallocates Resources Horizontal Market Divisions Agreement Between Competitors to Divide Geographic Markets or Territories Automatically Illegal

Mechanics of Dumping Investigation

ITA determines amount of dumping ITC determines extent of injury You can win but still lose. How? Smith Corona case

Antiboycott Law

Illegal to comply with boycott imposed by a foreign country against a country that is friendly to the U.S. Briggs and Stratton v. Baldridge: U.S. company thought by saying it had no business with Israel it would not be violating the law. The court found the company had violated the law. It was not to supply info, even answer the survey. There is no restriction or taking of private property in violation of the 5th Amendment due to loss of future profits. Commercial speech can be limited to serve a substantial interest.

Executive Agreements

Presidents favor them, and most foreign agreements are executive in nature, not treaties. Sole Executive Agreements are based on the Inherent Power of President Congressional-Executive Agreements grant President delegated powers, via statute or resolution. Require majority of both houses, rather than 2/3 of the Senate, as with treaties Have same force of law as treaties

Japan Taxes on Alcoholic Beverages- 1996 WTO

Japan taxed vodka and other imported liquors 7 times higher than shochu (similar to vodka). This practice challenged. Held that Japan's practice violated national treatment provisions GATT Article III. U.S. had to go to arbitration. In 1997 Japan agreed to revise its system.

Bulk Aspirin Case on Producers from China

Jilin and Shandong are not state-controlled enterprises, and their dumping margins are therefore low. All others are state-controlled enterprises, posing difficulty in calculating dumping margins. Normal values are determined on the basis of Indian factor prices.

MacNamara v. Korean Air Lines

KAL dismissed MacNamara, a U.S. citizen and sales manager in Philadelphia, as part of restructuring, and he sued under the ADEA and Title VII for discrimination Does the FCN with Korea that allows foreign firms the right to give preference in hiring to foreign nationals, provide exemption from U.S. anti-discrimination laws? Yes, if it is an act that has a discriminatory impact, but not if it is intentional discrimination. Case is remanded to make that determination. Case is distinguished from Sumitomo decision, which was a U.S. subsidiary of a Japanese company and acts of discriminatory impact were also illegal and not excepted.

Cross Border Investments

Liberalize restrictions However still some restrictions (national security and particular industries) Investment Provisions MFN status, nondiscrimination, and national treatment Open Investment Policies Fair compensation for expropriation Arbitral tribunals

Mechanics of Export Control

License Extraterritorial Application - covers movement of U.S. origin commodities, data, or parts from one country to another, e.g., Israel sending U.S. technical data to S. Africa for bombs Licensing Review Process: Overlapping jurisdiction of U.S. agencies and interagency reviews Diversion - illegal placement of goods in hands of individual who would not be granted a license Deemed Export? Technology released to a foreign national in the U.S. Foreign Availability - may decontrol in the future, if same goods are available from another source

Italian Republic II

License requirement for extrajudicial debt recovery is inconsistent with obligation to ensure free movement of services since: License is valid only in territory where granted, with 103 territories Obligation exists to occupy premises Limits freedom to fix charges Cannot be done by those providing banking and credit services

Regulation of Products

Lobsters from Canada: Case brought before binational panel by Canada, arguing U.S. lobster regulation violated GATT. Minimum size requirement to protect lobster population affected imports of cold-water smaller lobsters from Canada Article XI: No qualitative restrictions on imports are allowed Article III: Internal or border measures must abide by national treatment Exceptions in Article XX: To protect human or animal health Result: Is restriction OK? Article III or Article XI? Minority View: What alternatives could the U.S. have used to protect lobsters?

Protection from Expropriation

Metalclad Corp. v. United Mexican States: U.S. firm was denied municipal permit for hazardous waste treatment plant, after assurances all permits had been obtained. Firm took measures to appease opponents Arbitral panel under World Bank held this was indirect expropriation - tantamount to expropriation Regulations were not transparent and procedures were unfair Since future profits could not be determined, damages were the actual investment City municipality lacked authority to regulate; only national government of Mexico could

U.S. v. Microsoft

Monopolistic Market Share -- 90 percent in Operating Systems Exclusionary Behavior Tying Arrangement -- Browser to OS Price Discrimination -- Giving Away Browser Remedies: Government Supervision, Open Source Code, Break Up the Company

Calls for International Solutions- REGIONAL

NAFTA side agreement EU and ASEAN Regional Marine Treaties on pollution

Basic Foundation for Export Controls

National Security Foreign Policy Resource Shortages and Inflation Protection

NAFTA Open Investment Policies

No requirements are allowed for local participation or ownership No requirements for profit repatriation No export requirements No domestic content requirements No requirements for transfer of technology No nationality requirements for senior management or directors

Spain/Canada Dispute

Piracy and International Custom Jurisdiction - Canada, EU, or World Court? Economic or Conservation Interest? Tragedy of the Commons International Law of the Sea - Enforcement? National Jurisdiction Over Contiguous Waters - 200 Miles Out to Sea Regional Restrictions by EU Subsidies by Governments to Support Industry

Maquiladora Plants

Preceded NAFTA Section 9802 allows tariff on assembled product, minus value of U.S. article or component parts, but must be "ready for assembly without further fabrication," welding, sewing, or gluing is OK Samsonite v. U.S.: U.S. Court of Appeals held that there was fabrication of metal strips into luggage frame, not merely assembly; different from General Instrument case, where wire underwent no basic change; note - permapressing of men's pants is fabrication not assembly, so lower tariff does not apply Social responsibility of plants?

Chas. Main v. Khuzestan

President Carter, as part of a deal to free hostages in Iran, issued an Executive Order under IEEPA suspending claims against Iran in US court. All claims were to be filed with the Iran- U.S. Claims Tribunal. Transferred Iranian assets back to Iran or to British Banks, harming U.S. contractor. Issue: Did the President have the power Under IEEPA to deprive an individual litigant of his day in U.S. court? Yes. The President has the authority under IEEPA to transfer blocked Iranian assets to the Tribunal. Broad and sweeping language in IEEPA and inherent power exists. Carter could extinguish claims of U.S. nationals for lump sum payments or arbitration, preventing Iran from invoking sovereign immunity or act of state defenses.

Youngstown Sheet & Tube v. Sawyer

President Truman seized the steel mills to keep them functioning during wartime and to circumvent a strike Did his act exceed constitutional powers? Holding and Rationale: Yes Not authorized by Congress to do so Does not fall under commander in chief power, only over army and navy, not over country as a whole

National Constraints on Exports

Prior Informed Consent (PIC) Applied to pesticides through FIFRA Applied to hazardous waste exports through RCRA Informed consent must be documented

Defenses to Horizontal Merger Cases

Product Market Is Broader Global Market Defense Economies of Scale and Efficiency Entry Barriers are Low Trend to Concentration is Downward Failing Company Defense Failing Industry Defense

Import-Export Clause Michelin Tire Corp. v. Wages:

Prohibits Congress from taxing exports and prohibits states from taxing imports or exports Michelin Tire Corp. v. Wages: Ad Valorem property tax by Georgia assessed on inventory on a nondiscriminatory basis was permitted, as it was imposed on all inventory to support cost of public services and did not interfere with federal regulation of international commerce Dept. of Revenue of State of Washington v. Association of Washington Stevedoring Cos. - Upheld a stevedoring tax on loading and unloading, as it applied to all businesses and was not a tariff.

Shrimp Case Holding

Question: Do the revised guidelines violate Article XX as discriminatory? Holding: No, DSB decision is upheld. Rationale: (1) Duty of the U.S. to pursue international cooperation and negotiation does not require it to allow a country to veto the guidelines, when other negotiations had succeeded. (2) Revised guidelines were more flexible and did not require a country to adopt procedures essentially the same as the U.S.

Chilean Salmon Case

Question: For purposes of determining the dumping margin, are premium and super-premium salmon considered "like products" The Court determines they are. There should also be deference to the ITA in its determination of the dumping margin.

Law-making within the EU

Regulations vs. directives Regulation used in agriculture and competition areas - blocked four mergers Directives to bring national laws into harmony with EU standards, e.g., environment and product liability Role of Council, Commission and Parliament Court of Justice review Imperial Tobacco v. European Parliament: Directive on tobacco advertising declared invalid on a number of grounds, including freedom of speech and property rights

Vertical Market Divisions

Restrictive Territorial Agreements Continental TV v. Sylvania: Rule of Reason Applies -- Promotion of Interbrand Competition May Justify the Arrangement Exclusive Dealing Arrangments Echostar v. DirectTV: Inducements by DirectTV to Circuit City and Best Buy to Sell Only its Sattellite Products Tying Arrangements Market Power in Tying Product (Uniqueness) and Substantial Amount of Commerce in Tied Product; Per Se if Both, Rule of Reason if One

EU Merger Regulation

Review by Commission's Merger Task Force - request information and on-site investigations Community dimension?(aggregate worldwide sale $6.25 billion, aggregate sales within EU $312 million) Is it compatible with Common Market? Combined market share does not exceed 25% Entry barriers and structure of market Competition from firms outside the EU Recent examples? GE/Honeywell

Court of Justice: case examples

Rewe (Cassis de Dijon): Does German law limiting the importation of certain alcoholic beverages amount to a quantitative restriction on imports in violation of Art. 30 & 37 of the Treaty of Rome? Yes, Germany's arguments were not sufficient to take precedence over the principle of free movement of goods. Minimum alcohol requirement (32%), to prevent tolerance of alcohol (public health), interferes with competition encouraged by lower alcohol content

Monopoly

Section 2, Sherman Act Violation Definition of Relevant Product Market DuPont Cellophane Case: Substitutes and Cross-elasticity of Demand Monopoly Power Exclusionary Behavior Aspen Skiing Co. v. Aspen Highlands: Discontinuation of 3-Area Ski Ticket Microsoft Case Attempts to Monopolize

IEEPA

Seize Foreign Assets held in U.S. Banks or foreign branches, and Embargoes (business, shipping, travel bans) Sanctions against Burma (Myanmar), Cuba, Iran, Iraq, Libya, North Korea, Sudan, Afghanistan, Angola, Yugoslavia Iraq - In 1990, to block Iraq from seizing Kuwait assets, froze assets of both countries, backed by international law and UN call for sanctions vs. Iraq Herman Chang v. U.S. - Upheld sanctions against Libya for terrorism, dismissing claim of taking without just compensation

Treaties of Friendship, Commerce, and Navigation

Self-executing Bilateral Treaties Allow establishment of foreign branches or subsidiaries, free flow of capital and technology, nondiscriminatory treatment of individuals and goods, right of travel and residence, payment of just compensation for takings, owning property, and MFN treatment

Equal Dignity Rule

Self-executing Treaties have same legal force as an Act of Congress In case of conflict, the last in time prevails. Latest treaty will override an inconsistent prior act of Congress, and Congress can override a prior inconsistent treaty through express intention.

Structural Approach

Social, Political, and Economic Purpose Competition Needs Many Competitors High Entry Barriers Collusion Likely in Concentrated Markets Concentrated Markets Lead to Higher Profits and Prices

Trade agreements and delegated power to the President to negotiate

Star-Kist v. United States: President lowered the tariff on imported tuna from 25% to 12.5%, by the Reciprocal Trade Agreements Act of 1934. Was a constitutional delegation of authority by Congress with a definite standard, i.e., can modify duties by no more than 50%.

State Regulations

States may not enact laws that impose a substantial burden on foreign commerce Japan Line v. County of Los Angeles: Ad Valorem property tax on cargo containers that spent only 3 weeks out of the year in CA was ruled unconstitutional as multiple taxation of instrumentalities in foreign commerce. Cannot insure full apportionment of tax when one taxing authority is a foreign sovereign. Disputes over apportionment and retaliation by Japan may result.

Aguinda v. Texaco:

Suit in N.Y. federal district court by Ecuadoran citizens, injured by hazardous waste and harm to tropical rainforests by Texaco. Why might the U.S be an inconvenient forum? Is it in this case? Did the challenged activity take place entirely in Ecuador? (Sequiha v. Texaco), or did events in U.S. give rise to issue? Is the conduct "confined to specific real estate?" - local action doctrine Does the Alien Tort Statute limit suits only for official torture? With no international treaty, is there any international law by custom? Significance of Rio Declaration on Environment and Development? Business reaction - make sure decisions are NOT made in the U.S. but in the most forgiving jurisdictions.

Litigation against Polluters in Affected Country

Supreme Court of Austria: Case brought by real estate owner to prevent construction of nuclear power plant in Czechoslovakia; radioactive water vapor and thermal pollution as harms No treaty existed between the countries Is this an act of state or commercial activity? Could Austrian court imposed a restraining order and enforce penalties?

China and MFN

Temporary MFN granted in 1980 1989 Tiananmen Square massacre 1994 Clinton delinked human rights and trade for China's annual renewal of MFN 2000 Congress granted permanent normal trade status to China effective on China's admission to WTO China improved its human rights record, strengthened intellectual property laws, and trade was deemed ineffective political weapon

Toshiba-Konigsberg Sanctions

Toshiba shipped U.S. machinery to the Soviets, along with Norwegian components, that enabled silent submarines. Congress voted to seek damages from Japan and Norway. The Defense Department cancelled a laptop contract with Toshiba and the company was banned from doing business with the U.S. government for 3 years

What is the connection between trade law and foreign policy?

Trade law governs trade relations with foreign countries including export and import laws Trade law reflects not only economic policy (protecting industry, penetrating foreign markets, balance of payments) but foreign policy as well (human rights, environment, drug traffic, terrorism) Examples: Cuba, Soviet Grain embargo, China

Treaty Power

Treaties and Executive Agreements Treaties Require Advice and Consent of Senate - 2/3 Approval Multilateral and Bilateral Self-executing Treaties have "domestic law effect" while Executory Treaties require an Act of Congress or President for legal effect

President's Power

Treaty Power to appoint ambassadors Commander in chief Inherent executive Powers delegated by Congress

Extraterritoriality

U.S. : "effects test," controversial "Direct substantial and reasonably foreseeable effect on U.S. commerce or on business of person engaged in exporting goods from U.S. to foreign countries" EU- territorial jurisdiction, but an effects test too, difference? Blocking legislation? Implementation test

Steel Safeguard Protection Case

U.S. Action: Steel industry complains of serious injury caused by imported European and Japanese steel. Bush orders safeguard protection under sec. 201 for political reasons - to win votes of steelmakers in Ohio, W. Va. and PA. He also wants to win votes in Congress of legislators from those states to renew fast-track negotiating authority, so he can later reduce tariffs generally WTO Case: Europe filed a complaint with the WTO vs. Bush action, seeking authority to retaliate against tariff increase by the U.S. Europe wanted to raise trade barriers against citrus fruits from FL and motorcycles from Wisconsin, both swing states, to harm Bush politically. The WTO authorized the retaliation, and Bush rescinded the safeguard protection before the 4-year deadline, and claimed the steel industry had used the time already given to restructure its operations. Critique by Economists and Steel Users: The safeguard protection would raise prices and harm consumers of steel The steel industry's problems were long-standing and caused by its own inefficiency, not by imports. Imports had not been increasing during the time period when the steel industry had been suffering

MFN (NTR, PNTR)

Unconditional MFN- if a member extends privilege to another member, then that privilege automatically is extended to all members Exceptions- may deny MFN based on national security, foreign policy, or a government's denial of human rights to its citizens Term being changed to Normal Trade Relations, or Permanent Normal Trade Relations

Multilateral vs. Unilateral Controls?

Unilateral: U.S. has its laws to control exports just as many other countries do Multilateral: COCOM disbanded, now Wassenaar Arrangement (1996) which is much looser; no single-country veto All countries do not agree on control necessary

Rules of Origin are Central to NAFTA

Use tariff classification shift test rather than substantial transformation test to determine whether good is from one of the three countries (each component must have undergone a tariff classification change too); e.g., Canadian pastry made with European flour is a N. American product, but not if from a European mix Regional value content requirement: 60% for transaction value method; 50% for net cost method

US Escape Clause: Section 201 of Trade Act

WHAT? "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"