Legal 4900 test 1

Ways to Regulate Imports

Tariffs or import duties Nontariff Barriers Embargoes Quotas Indirect nontariff barriers Transparency

What are Technical Barriers to trade?

They are technical regulations and standards that apply to imported foreign products that also may apply equally to domestic products.

U.S. Federal Agencies Affecting Trade

U.S. Department of Commerce U.S. Trade Representative (USTR) International Trade Commission ("ITC") U.S. Court of International Trade ("CIT")

reciprocity

U.S. would reduce a tariff if the other nation would do the same

A Zero-Quota

a complete ban on the import of a product by permitting zero quantities to be imported

Subsidy

a financial contribution or benefit conferred by a government to a domestic firm or industry to achieve some economic or social objective

Technical Regulation

a law or regulation affecting a product's characteristics - such as performance, design, chemical composition, construction, materials, packaging or labeling - that must be met before a product can be sold in that country. - mandatory, imposed by government regulations

Quotas

a quantitative restriction on goods, based on either the value of goods or on weight, or percentage share of the domestic market

self-executing

a treaty that has domestic law effect, i.e. no further legislative action is required by a domestic law-making body (such as Congress) to be binding --legal rights and remedies are in full force

A product standard or standard

a voluntary guideline for product characteristics established by a recognized private or administrative body. - although these may be "voluntary" the product may not be accepted by consumers if it does not comply with the standard.

The Smoot-Hawley Tariff Act of 1930

(President Hoover - Republican) 1. U.S. Congress used this Act to impose the highest tariff levels in U.S. history

Normalization of U.S. Trade Relations with China

- 1947 China was an original party to GATT 1947 - 1950 China withdrew from GATT after the communist takeover - 1951 China lost its normal trade status with the United States, Result: prohibitively high import duties on Chinese goods - 1974-1980 China's human rights record was closely monitored under the Jackson-Vanik Amendment, - 1980 China's emigration policies improved and since that time it has received annual waivers from the Jackson-Vanik Amendment, granting temporary normal trade status to Chinese goods entering the U.S. - 1989 China's trade status was called into question after the Chinese government used military force to stop pro-democracy demonstrations at Tiananmen Square - 1990s U.S. relations with China improved - 2000 Congress granted permanent normal trade status to China, effective on China's admission to the WTO in December 2001

U.S. Material Injury Requirement

- Antidumping duties are only applied where the International Trade Commission finds that an industry in the US is "materially injured" by reason of the dumped imports. - Material Injury is injury that is "not inconsequential, immaterial or unimportant"

Who can file a petition for relief with the ITC?

- Any firm, trade association, union or group of workers, or Congress, or the president, or the commission itself may initiate a petition

safeguard Remedies under U.S. law

- Any relief granted by the president must be temporary (4 years w/ extension to 8) - Any relief must also be designed to allow firms sufficient time to regain their competitive position in the market - Note re: remedies under U.S. law: relief should only be to the extent necessary to: retool, modernize, streamline, recapitalize, improve quality, or take actions to better meet new competitive market conditions

Omnibus Trade and Competitiveness Act (1988)

1. Extended the President's authority to negotiate trade agreements, including the expansion of the U.S. Canada agreement to include Mexico

Issues Affecting U.S.-China Trade

1. General On-Going issues - China's human rights record has not improved (including the suppression of religious and other freedoms in Tibet) - it does not treat prisoners humanely; broad use of the death penalty - population control policies (one-child policy) - use of forced prison labor and the Chinese army to manufacture goods - violation of U.S. import quotas on textiles - intellectual property (patent, trademark and copyright) violations - support for North Korea - export of nuclear technology and military hardware - lack of freedom of expression / internet control - value of the yuan/RMB 2. Taiwan/Chinese Taipei Issues "One China" policy - The U.S. supports a free and independent Taiwan/Chinese Taipei - China views Taiwan as a "renegade province" that is part of China - Note: the U.S. insisted that Taiwan/Chinese Taipei be granted admission into the WTO simultaneously with China

Trade Reform Act of 1974

1. Replaced most provisions of the 1962 law 2. Delegated even more authority to the President

GATT/WTO Dispute Settlement

1. The goal is that one nation will not take unilateral retaliatory action against another nation in a trade dispute, but that parties will rely on GATT dispute settlement procedures to avert a trade war. 2. Quasi-judicial procedures for resolving trade disputes when countries become deadlocked 3. Jurisdiction: Only a government can bring a GATT complaint against another government 4. Precedential value? The official word is "no" for future panels but, as a practical matter, WTO Appellate Body reports do often cite to prior reports for their precedential value.

Minimum Contacts

14th Amendment, Due Process Clause of the U.S. Constitution requires that a person (which includes companies) have minimum contacts to be subject to the jurisdiction of a U.S. court

Vienna Convention

97 countries have joined the Vienna Convention Covers: - when treaties enter into force; how they are interpreted, amended or terminated; the rights of the parties when it becomes impossible to continue to honoring a treaty; and the effect of a fundamental change of circumstances on treaty obligations.

Dayan v Mcdonalds Corp

Dayan failed to meet QSC standards, and McDonald's met all request that Dayan asked for. By not complying with QSC standards, McDonald's is allowed to pull it's name from the restaurants.

domestic industry

Defined as "producers as a whole" as opposed to just one firm within an industry

serious injury

Defined as a "significant overall impairment to the position of domestic industry" The threat of serious injury must be imminent

Indirect nontariff barriers

Laws, administrative regulations, industrial or commercial practices, or even social and cultural forces, that have the effect of limiting or discouraging the sale or purchase of foreign goods or services in a domestic market. These seem on their face to be neutral and non-discriminatory against foreign products, but which in their actual use and application make it difficult or costly to import foreign-made goods.

Alternative Dispute Resolution (ADR)

Mediation, Arbitration, litigation

First Flight v Pro Golf

Must perfect trademark rights under foreign laws for them to be valid and enforceable.

Gaskin vs Strumm Handel, BMBH

Read the contract! And the contract being in another language is not an excuse to not know what is in the contract.

Sovereign Immunity

courts of one country cannot hear cases brought against the government of another country and that courts cannot involve themselves in the internal affairs of a foreign country *Important Exceptions: commercial activity, certain violations of international law such as torture, terrorism & unlawful expropriation

Domestic Context

defendant must live in the state or have contacts with the state. Factors include: the burden on defendant, state's interest, plaintiff's interest, and efficient resolution Ask: Is it reasonable to require a defendant to be subject to a particular jurisdiction?

Global Quotas

imposed by an importing nation on a particular product regardless of its country of origin

"tariff concession"

is an agreement to reduce a tariff to a specified level

customary international law

it includes those commonly accepted rules of conduct that, through a consistent and long-standing practice, nations have followed out of a sense of binding obligation.

Private Law

laws applying to private parties in international transactions

Tariff-Rate Quotas

not really quotas, but are tariffs that increase according to the quantity of goods imported

Bilateral Quotas

placed on a particular product on the basis of its country of origin

Jackson-Vanik Amendment

prohibits the granting of NTR status to any nation whose government unreasonably restricts the rights of its citizens to emigrate.

GATT 1994 Agreement on Safeguards

provides that a member may apply a safeguard measure (e.g. increase tariffs) to a product only if that product "is being 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"

GATT Escape Clause: Article XIX of GATT 1947

provides the legal authority for member nations to safeguard its firms from injury. - Situation: if a nation reduces its tariffs, the result in typically increased imports which can cause a serious market disruption to a domestic industry - Article XIX authorizes a country to take temporary corrective action to adjust import levels of a certain product and thus safeguard domestic industry; i.e. it temporarily allows a country to escape from previous promises (tariff concessions) it may have made to lower tariffs on that product - The U.S. insisted on this provision

Auctioned Quotas

quotas sold to the highest bidder (allocate the right to import by price)

non-self-executing

requires some legislative act for it to become part of a country's domestic law.

Public International Law

rule . . . that has been accepted as such [law] by the international community Involves relationships between different countries and those norms that are regarded as binding, e.g. treaties, conventions, charters of international organizations e.g. UN

The Principle of Least Restrictive Trade

states that WTO member countries, in setting otherwise valid restrictions on trade, shall make them no more onerous than necessary to achieve the goals for which they were imposed.

Choice of Law Clauses

stipulates the country of jurisdiction whose law will apply in interpreting the contract or enforcing its terms

Tariffs or import duties

tax levied on goods by the country of importation

Forum Non Conveniens

the court may grant a change of venue for the convenience of the parties and witnesses in the interest of justice E.g. Union Carbide/Bhopal case Discretionary power of the court to refuse to hear a case, even thought it otherwise has proper jurisdiction and venue, because a court in another jurisdiction or location would be more convenient and justice would be better served.

Sovereignty

the supreme and absolute power that governs an independent state or nation

The World Trade Association (WTO)

- As of 1 January 1995 it replaced the original GATT organization - WTO is an umbrella organization that sets the rules by which nations regulate trade in manufactured goods, services, intellectual property, textiles and clothing, and agricultural products. - Role of the WTO is to facilitate international cooperation to open markets, provide a forum for future trade negotiations between members, and provide a forum for the settlement of trade disputes. - Headquarters in Geneva, Switzerland

International Criminal Court

- Based in The Hague - Jurisdiction: over "the most serious crimes of international concern," including genocide, crimes against humanity, war crimes, and "crime of aggression" ***Note that terrorism and drug trafficking are not within the court's jurisdiction - The U.S. and China have refused to join the treaty establishing the International Criminal Court. - The U.S. also maintains that the court's powers are inconsistent with the UN Charter. - As a compromise, the UN Security Council granted temporary immunity from prosecution for peacekeeping troops acting under UN authorization. - The U.S. has also entered into many bilateral agreements with other nations exempting U.S. military personnel from prosecution under the treaty.

Forum Selection Clauses

- Contractual agreement to set in advance the location where any disputes arising out of the contract will be heard - Eliminates forum shopping and makes the forum part of the basis for the agreement

Department of Homeland Security

- Created in 2003 - 4 areas: Border and Transportation Security; Emergency Preparedness and Response; Science and Technology; Information Analysis and Infrastructure Protection - primary mission: preventing terrorist attacks within the U.S.

GATT

- GATT was negotiated in 1947 to reduce tariffs and set rules to hold countries to the agreement; Original signatories - 23 countries, including the U.S. - 1986-1994 Uruguay Round a decade of multi-lateral negotiations, resulting in GATT 1994 - 1994 changes were made creating GATT 1994 - U.S. Congress approved the changes; became effective Jan. 1, 1995 -Features: - established broader rules for regulating trade in goods & services - created the World Trade Organization (WTO) - Signing countries are called "members" - As of Sept. 2011: 153 Members - Newest members: Ukraine (May 2008); Vietnam (Jan 2007); Cambodia 2004 - Note: Russia is not yet a member state

Border and Transportation Security

- Includes U.S. Customs and Border Protection (CBP): - preventing terrorists from entering the US.; - preventing illegal aliens from entering the U.S.; - stemming the flow of drugs and other contraband into the U.S.; - protecting agriculture by preventing the entry of pests and diseases; - preventing the illegal import of goods violating copyright, patent and trademark laws; - enforcing import & export laws, - collecting import duties.

Litigation

- Jurisdiction is the power of a court to hear and decide a case - The court must have subject matter jurisdiction over the issues litigated and personal jurisdiction over the defendants

What are the limits on the use of safeguards

- They are a temporary remedy (takes place in form of tariffs) to be used only until the problem is solved. - They may not exceed 4 years (with an extension to 8 years). - Restrictions must be lifted gradually as conditions warrant - Safeguards can only be imposed without discrimination (i.e. regardless of the country of origin) and only as is necessary - All safeguards in existence when the GATT 1994 agreement became effective were to be lifted by the end of 1999

unconditional-most-favored-nation trade (MFN trade) or normal trade relations (NTR)

- a lower tariff rate tariff negotiated with one nation would automatically be granted to like products imported from other nations that have a MFN agreement with the U.S. without any concession being requested in return

U.S. Department of Commerce

- broad authority over many international trade issues: - promoting export of U.S. goods & services - investigating and resolving complaints by U.S. firms that foreign markets are unfairly blocking access (market access) - administering U.S. unfair import laws - issuing export licenses for certain products - developing trade statistics

U.S. Trade Representative ("USTR")

- cabinet-level post reporting directly to the President - carried on all bi-lateral and multi-lateral trade negotiations - represents the U.S. at all WTO meetings - coordinates all trade policy

Embargoes

- can be a complete ban on trade with a certain foreign nation or a ban on the sale or transfer of specific products or technology - Generally reserved for political purposes; to implement foreign policy; to punish another country for some offensive conduct

U.S. Court of International Trade ("CIT")

- consists of nine judges who hear cases arising from U.S. trade or tariff laws - located in NYC - CIT also hears appeals from CBP re: duties assessed on goods - Appeals from the CIT go to the Court of Appeals for the Federal Circuit - Court has exclusive jurisdiction over civil actions commenced in the U.S. related to: - revenue from imports or tonnage - tariffs, duties, fees or other taxes on imported goods - embargoes or other quantitative restriction of imports for reasons other than protection of public health or safety - administration and enforcement of customs laws

Courts might set aside forum selection clauses if:

- it contravenes public policy - if the forum is seriously inconvenient - unequal bargaining power between the parties - counsel not consulted* - clause written in a foreign language* - change of circumstances e.g. forum becomes a hostile place

International Trade Commission ("ITC")

- prepare reports on international economic issues - investigates unfair trade practices - investigations can be highly political as they are related to the impact of imported goods on U.S. domestic industry - bipartisan agency - members are appointed by the President from both political parties and are subject to Senate confirmation.

Arbitration

- the submission for determination of the disputed matter to private unofficial person(s) selected in a manner provided by law or agreement. Note: most arbitration agreements are binding. - Generally less expensive than litigation - Discovery is limited - Faster track than litigation - Rules of evidence are much more flexible - Ability to enforce an arbitration award - Forum may be more neutral - Select an expert to hear the dispute - Privacy - Less Adversarial - Right of appeal is very limited

International Court of Justice/World Court/ICJ

- to hear public international law disputes - formed in 1945 - 15 judges elected by the UN General Assembly - sits in The Hague a. Only states can be parties before the court - But may bring an action on behalf of an individual alleging some infringement of rights b. Decisions are binding only on the parties involved although there is some unofficial case precedent c. Nations must submit to jurisdiction to be brought before the court No compulsory process to force a state to come before the court Most communist countries have not submitted to jurisdiction d. Enforcement power of the court relies on the good faith of the parties

Mediation

- voluntary, nonbinding, conciliation process - It is successful only if the parties reach an agreement with the help of a mediator. - Private; no court records - Parties essentially retain control - can walk at any time - All rights of recourse at law are preserved - If an agreement is reached by the parties, that agreement becomes binding

GATT Scope and Coverage

. GATT does not provide individual rights and remedies to private parties - If a private firm or industry in the U.S. believes that its rights under GATT are being violated by a foreign company or government, then it may seek redress wither w/the appropriate federal administrative agency or before the courts on the basis of a U.S. statute, but not under GATT **GATT 1994 is much broader in scope and coverage than GATT 1947

Section 301 Procedures

1) Interested Party files a complaint (company, union, USTR) 2) Asks the USTR to conduct an investigation on the trade practice at issue 3) USTR has 45 days to decide to conduct and investigation - Petitions tend to be granted if an entire industry is affected - interested parties may submit their views in writing - if requested, a hearing is provided 4) If an investigation is commenced, the USTR must begin negotiations with the foreign government 5) If the petition claims that the foreign government has violated GATT and the dispute is not resolved within 150 days or within the time required in the agreement, the USTR must invoke formal WTO dispute settlement procedures 6) USTR must complete its investigation and determine whether to impose sanctions within 18 months of having initiated the investigation or within 30 days after conclusion of the WTO procedures, whichever is first. 7) When the WTO authorizes sanctions, Section 301 is used to carry them out under US law.

Dumping Factors considered by the ITC

1) Volume: Have the dumped imports increased significantly? 2) Effect of the imports on domestic prices: Have prices been undercut significantly? Have prices been depressed? Are domestic firms unable to raise process to cover increased costs? and 3) Impact on the domestic industry, including data on sales, profits, market share, productivity, wages, underemployment, growing inventories, and other measures of economic health. - A finding of material injury must be reviewed every 5 years if the antidumping order is still in effect

Bipartisian Trade Promotion Authority Act of 2002 (TPA)

1. "Fast-track" negotiating authority and approval of trade agreements - Original "Fast Track" act was the Trade Reform Act of 1974; expired in 1994 - TPA expired in 2005, but was automatically renewed through 2007 - now expired - Approval Process: - During negotiations, the president must consult with Congress about proposed changes in U.S. Trade laws - Congress can comment on the changes/negotiations before they are finalized - After the trade agreement is signed, then Congress can vote to ratify or not, but cannot make changes to the agreement; a simple majority is required to accept or reject the agreement

Trade Expansion Act of 1962

1. Authorized the President to negotiate across-the-board tariff reductions instead of using the tedious product-by-product system set up in 1934 2. Created the Office of the Special Trade Representative (now known as the U.S. Trade Representative) empowered to conduct trade negotiations on behalf of the U.S.

U.S. Canada Free Trade Agreement (1988)

1. Created a duty-free trade area between the U.S. and Canada

Personal Jurisdiction ("In Personam")

A person or company should not be able to be "hauled into court" in some distant state or country, unless there is some connection to that place

General Agreements on Tariffs and Trade (1994) "GATT Uruguay Round Agreement"

Established the WTO

GATT 1994: Major Principles of Trade Law

Five basic principles of trade law under GATT: 1. Multilateral Trade Negotiations 2. Predictability of trade opportunities 3. Nondiscrimination and Unconditional Most-Favored-Nation (MFN) Trade: members will not give any import advantage or favor to products coming from one member over the goods of another member Unconditional MFN Trade - requires when a nation extends some privilege or right to one of its trading partners that privilege automatically extends to all of its trading partners. Conditional MFN Trade - requires a trading partner give something in turn for a trading concession Note that MFN is now referred to as Normal Trade Relations (NTR) in the U.S. 4. National Treatment: members will not discriminate in favor of domestically produced goods and against imported goods, not treat the two differently under their internal tax laws, regulations, and other national laws 5. Elimination of Quotas and other Nontariff Barriers:

In re Union Carbide Corp Gas Plant Disaster

Forum non conveniens - Where a case is properly heard in more than one heard, it should be heard by the one that is most convenient - in this case, this is the court in India.

Paquette v Habana

Peaceful fishing vessels are exempt from captures as prizes of war. The court is bound to take notice of international law, and that international law is a part of American Law.

Basic Section 301

Permits the USTR to take retaliatory trade action against other countries whose trade policies toward the U.S. are unreasonable or discriminatory - The mechanism was upheld by the WTO i.e. valid under GATT

Reciprocal Trade Agreements Act of 1934

President Roosevelt - Democrat) 1. Provided the President with the authority needed to lower tariffs and to encourage other countries to also lower tariffs 2. President was granted the authority to negotiate tariff reductions on a product-by-product basis with other countries on the basis of reciprocity This Act also introduced unconditional-most-favored-nation trade (MFN trade) or normal trade relations (NTR)

Reasons for Technical Barriers to Trade:

Protection of Public Health, Safety or Welfare, including: Product Testing, Inspections and Certifications for Compliance with Technical Standards and Regulations - In most countries, all products are subject to technical regulations or standards set by either government regulators or a private standard-setting group.

DIP SpA v Commune di Bassano del Grappa

The Italian law requiring the licensing of new retail stores by local committees is not invalid under the laws of the EU and the Treaty of Rome.

Countervailing Duty Actions--

a) An importing country may initiate its own administrative proceedings (similar to antidumping proceedings) to impose a countervailing duty (CVD) on the subsidized goods to eliminate their unfair price advantage Countervailing duty (CVD) is defined as a special tariff, imposed on imports of subsidized goods in an amount equal to the amount of the countervailable subsidy - Note: a CVD action may be brought at the same time as the WTO dispute settlement action, but only one form of relief is available - Note: Countries are expected to try to settle their differences at the WTO before initiating CVD proceedings b) CVD Actions in the United States

The standard for relief under U.S. law:

a) Relief can be granted when "an article is being imported into the U.S. in such increased quantities as to be a substantial cause [defined as a cause which is important and not less than any other cause] of serious injury or threat thereof to the domestic industry producing an article like or directly competitive with the imported article" b) The president may make an adjustment to imports (e.g. impose tariffs or quotas) only after an investigation by the U.S. International Trade Commission (ITC), including public hearings, AND, if, in the president's discretion, it will "facilitate efforts by the domestic industry to make a positive adjustment to import competition and provide greater economic and social benefits than costs"

Enforcement of Arbitration Awards

a) U.S. courts will enforce an arbitration award if: 1) the award is enforceable under the local law of the country where the award was made, 2) if the defendant was properly subject to the jurisdiction of the arbitral tribunal, 3) if the defendant was given notice of the proceeding and an opportunity to be heard, and 4) enforcement of the award is not contrary to public policy. b) U.S. courts will not enforce an arbitral award if: 1) the contract with the arbitration clause would be unlawful under applicable law, 2) if it is void for reasons of fraud or the incapacity of one of the parties, or 3) if the arbitration procedures violate the law where the arbitration took place.

International Context

advertising and/or any other deliberate entry into a forum might be sufficient to trigger the exercise of jurisdiction.

Nontariff Barriers

any impediment to trade other than tariffs

Import Barriers to Trade

any impediment, direct or indirect, to the entrance or sale of imported goods or services existing in the country of importation - may refer to laws or governmental regulations; or - nonlegal factors such that discourage the sale or purchase of imported products

Jus cogens

basic principle of international law. There are some fundamental rights and minimum standards of state behavior that are so widely held by the community of nations that no nation may derogate from them. **This is sometimes referred to as "the law of nations" or "peremptory norms" E.g. genocide, execution of the mentally ill or of juveniles, slavery.

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 - Viewed as a form of price discrimination causing injury to domestic competitors through artificially low prices against which domestic producers cannot compete at a profitable level. - Prohibited by the U.S. since 1916 and by GATT since 1947 - Dumping is often intended to drive competitors out of business freeing the dumping firms to later raise prices

Comity

the willingness of one court or dept of government to respect the rules or decisions of another or to grant it some privilege or favor

Direct nontariff barriers

those that specifically limit the import of goods or services. e.g. embargos, quotas