Global Trade Law Exam 2020 PDF

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Summary

Exam paper, 2 questions + first class answers
Topics:
- International trade law policy, left and right politics
- antidumping rules un the WTO...

Description

SCHOOL OF LAW MIDDLESEX UNIVERSITY EXAM ANSWER BOOKLET Academic Year 2019-20 – APRIL/MAY EXAM SESSION LAW 3915 Global Trade Law Dr Damjan Kukovec

Time allowed:

3 hours This exam paper does not require more than the initial time allocated to this exam to be completed. The extra time you have been provided with to account for the extra steps exams taken remotely require.

Instructions to candidates:

Do not forget to answer both questions in the template provided. The Exam accounts for 50% of your overall mark of this module.

Maximum word count:

1,200 words per question Text above 10% of the word count will not be graded

Candidates must submit this document via Turnitin WITHIN the exam time. This is an OPEN BOOK EXAM. However, Students MAY NOT CONSULT or DISCUSS THE CONTENT of this exam with ANY PERSON WHOMSOEVER. Save this document on your computer before uploading it via Turnitin

PART A – ANSWER QUESTION 1

Seen question 1 (50 % of your mark of the exam, 25% overall) “Discussing international trade law and policy in terms of left and right politics is outdated.” Discuss this statement, also using at least one example of a WTO doctrine or principle to develop your argument. Since the Second World War, a widespread development and promotion of international trade by the governments has been observed around the world, especially in developed Western countries. Many countries have decided to create a new stronger international trade network. As one of the most important results of negotiations between countries can be considered the creation of the General Agreement on Tariffs and Trade, or GATT (which was later replaced by the World Trade Organization, or WTO), the North American Free Trade Agreement, or NAFTA and of course the European Economic Community (the predecessor to the EU). Moreover, many bilateral trade agreements have been signed. Consequently, a significant number of tariffs imposed by the countries including the United States has been decreased. However, it is worth noting that across economically developed countries, political parties have usually taken a different approach to the issue of international trade policy. After the end of World War II, the political spectrum has been usually divided into left and right leaning parties according to what views they hold on certain political issues. Nevertheless, this traditional political arrangement on the issue of foreign trade policy apparently no longer plays an important role in current politics. Many developed countries, including the US, have started withdrawing from the international market regardless of the left or right political beliefs of their political leader. Historically, parties from the left political spectrum have represented the interests of labour and have mostly supported the application of protectionist measures and blocking the new trade agreements. They usually support the emergence of barriers to trade and express a negative view on the question of trade liberalization. For example, the American Democratic Party seeks to protect and promote domestic production and manufacturing. On the other hand, right-wing parties are seeking to expand and promote international trade representing the views of owners of capitals and businessmen. These parties, including Republican politicians, are known for their voting in behalf of free trade agreements. It can be argued that these right-wing ideas are in line with the freer trade principle, which is one of the most important WTO principles governing the global trading system. The freer trade principle is to be pursued by the liberalization of international trade by reducing barriers to trade, including custom duties or tariffs. Recently, however, it can be observed that the rightist parties are beginning to take protectionist and nationalist positions and such political behaviour can be considered contrary to the WTO freer trade principle.

A new backlash against the free trade policy and economic globalization can now be seen in developed countries. This fact can be supported by the argument that the current president of the United States Donald Trump in his significantly nationalist-oriented presidential campaign promised to put “America first“. Trump who is well-known for his rightist views, at the 2018 World Economic Forum in Davos asserted that large tariffs will be imposed on imported solar panels and also questioned the US support for China's joining the WTO. A very similar nationalistic approach was taken by proponents of the UK’s exit from the European Union when seeking to “take back control” from Brussels. The view of the denial of left-right political diversion on the international trade policy can be supported also by the very similar strategy taken by both Republican and Democratic representatives in the primary campaigns of the 2016 presidential election in the United States. Bernie Sanders, an advocate of the Democratic Party, in his campaign he promoted anti-globalisation measure through a proposal to terminate the Trans-Pacific Partnership treaty. However, as stated above, Trump representing Republicans also supports trade protection by politicizing current US international trade relations by boycotting Oreo cookies which are produced in Mexico. Trump’s anti-globalisation approach remained unchanged during the general election campaign when he strongly criticized the signing of NAFTA, an agreement with the main goal of eliminating of barriers to trade between the US, Canada and Mexico. Meanwhile, his Democratic opponent Hilary Clinton took the same position on this issue by calling the NAFTA agreement “unfair”. Therefore, after the 2016 US election, it is more obvious that an average voter will probably take the protectionist position to an international trade issue and will be less affected by the left-right division of the political parties. As the main reason for such voting behaviour may be considered the national populism attitude of the right leaning political parties. While the international trade has been interpreted to the voters in the shade of national populism, they seem to be less interested in the actual welfare effect of such measures upon the economy and material self-interest. On the other hand, regardless of the current political situation, it is worth mentioning the actual view of Americans on the meaning of “free trade,”. It has been shown by a poll by NBC and The Wall Street Journal in February 2017, that the public opinion very much depends on how the question is posed and on the situation when it is asked. In this poll, Americans were asked a question whether free trade between the United States and foreign countries has helped or hurt the United States. Surprisingly, 43 per cent of respondents said that free trade has helped. When the word “globalization” was used instead of „free trade,“ in a poll by CBS and The New York Times in July 2016, the results were significantly different while the globalization lost this poll decisively. Therefore, this may show the contradiction between the results of the national populism-driven electoral battles and the actual opinion of the voters on the issue of international trade law. In conclusion, it has been observed that both in the European and American political arrangement the parties on the left and right seem to take the same position on the global trade matters. Both left and right leaning parties use the global anxiety arguments and find in favour of creating the new barriers to global trade and this can be arguably seen as

contrary to the WTO principle of creating a freer trade. As such, the traditional left-right political divide may be considered as outdated and not anymore fit to describe the current electoral system as the national populism plays a significant role. Instead, a new electoral division on a matter of international trade may most likely develop, with one branch voting in favour of integration and pursuing global trade agreements and the second holding the protectionist view.

PART B – ANSWER QUESTION 2

Seen question 2 (50% of your mark of the exam, 25% overall): What is the purpose of antidumping rules in the WTO? What conditions should a country investigate and prove before imposition of antidumping measures?

Dumping represents a specific trade practice which is commonly considered as unfair. This essay will explain the purpose of antidumping rules in the WTO and also the conditions to be met for the application of such rules. The purpose of antidumping rules Article VI of the GATT 1994 and Anti-Dumping Agreement provide the WTO rules on dumping. The definition of dumping is explained in Article 2.1 of the Anti-Dumping Agreement as bringing a product onto the market of another country at a price less than the ‘normal value’ of that product. However, WTO law does not ban dumping because of the reason that the prices of the commodities are generally not determined by governments, but by the private companies. As a result, WTO law does not control dumping itself. Instead, the activity of the WTO member states is controlled in response to dumping. WTO rules allow their members to impose regulations to secure their domestic production from the detrimental consequences of dumping. According to Article VI of the GATT 1994 and the Anti-Dumping Agreement, WTO Members are allowed to enforce anti-dumping measures in the situation when the three conditions are established. Firstly, there needs to be dumping. Secondly, the material injury has been suffered by the domestic economy producing the like product in the importing country. However, only a threat of this material injury may be sufficient. Thirdly, the causal link must be determined between the injury and the dumping. Articles 2 to 4 of the Anti-Dumping Agreement provide detailed conditions for establishing those requirements. Also, the Agreement implements the procedures which are to be applied during the anti-dumping investigation and during the enforcement of anti-dumping duties. The remedies to anti-dumping measures have been frequently granted to the WTO members and as a result, such measures are commonly the point of trade disputes between the states. For example, so far more than three thousand anti-dumping measures have been imposed by the WTO Members, while the largest number of anti-dumping measures was imposed by India with the number of 534 measures and the United States with 345 measures imposed. Therefore, it can be argued that the anti-dumping measures are used both by developing and developed countries. On the other hand, China and Korea are considered to be the biggest target of anti-dumping measures. Conditions for imposition anti-dumping measures If an export price of the product is less than the ‘normal value’ of that product, it will be considered as dumped. A difference between the normal value and the export price constitutes the margin of dumping. The anti-dumping duty applied cannot exceed the margin. The ‘normal value’ of a product is defined in Article 2.1 of the Anti-Dumping Agreement as a comparable price in the ordinary course of business of the like product in the domestic market of the exporter. If a country wants to investigate whether dumping has taken place, it must prove various requirements. Firstly, the normal value of a product must be established using the following factors. The sale of the product must be in the ordinary course of trade and the sale must be of the ‘like products,’ in other words the products must be identical as provided in Article 2.6 of the Anti-Dumping Agreement. Also, the

product must be determined to be consumed in the exporting country and finally, the prices of the like products must be comparable. However, an issue with determining the normal value may arise when the exporting country is a non-market economy with the prices controlled and fixed by the country’s government. In such situations when the normal value of the like product on the domestic market cannot be determined, the analogue country method can be used. For example, in the case of EC – Fasteners (China) (2011), the European Commission figured out the normal value of the fasteners of China’s export comparing with the price of the fasteners sold and produced in the analogue country India. In determining of the existence of dumping, the resulting normal value of the product will be then compared with the export price, which is normally the price at which the product is sold by the producer to the importer. The margin of dumping will be then established and according to Article 2.4 of the Anti-Dumping Agreement, the comparison must be fair. The second requirement for determining of dumping is that the domestic market producing the like product in the importing country must suffer material injury. The injury is defined in footnote 9 to Article 3 of the Anti-dumping Agreement as one of the three followings things. Firstly, a material injury to the domestic industry; or a threat of material injury to the domestic industry or finally a material retardation of the establishment of a domestic industry. Under the article 3.1, the establishment of injury will be based on the evidence and explanation of both on the volume of the dumped imports and their effect on the price of the like product on the domestic market and on the impact of the import of such product on the domestic market. However, a determination or threat of material injury cannot be based only on accusation and must not be too remote. Under the Article 3.7, the material injury must be based on facts and also must be imminent. The final requirement which the countries must satisfy before imposing the anti-dumping measures is the establishing of a causal link between the injury to the domestic industry and the dumped import. This requirement is established by Article 3.5 of the Anti-Dumping Agreement. The dumping does not have to be the only cause of the injury; however, it must constitute a substantial and genuine cause of material harm. The authorities who investigate the dumping have to investigate also all other contributing factors to the injury which may not be linked with dumping. Having established all of the factors above, the country will be finally able to initiate an anti-dumping investigation. The investigation itself then must be conducted according to the rules set out in the Anti-Dumping Agreement. In conclusion, the main purpose of the antidumping rule in the WTO is mainly the protection of the domestic industry while imposing anti-dumping duties on the exporting countries. By imposing the anti-dumping duty, as a result, the price of the product imported into the country will be increased. However, in order for the country to be able to establish the dumping, a number of various requirements must be satisfied.

I confirm that this is entirely my own work, and I did not receive any help or assistance from anyone at any point during this exam. ☒...