International Trade Law- Outline 1 PDF

Preview

Summary

Download International Trade Law- Outline 1 PDF

Description

INTERNATIONAL TRADE Law 1 I. BACKGROUND  Instruments of Protection o Tariffs, duties, taxes on imports o Quotas, import bans, TRQs o Accession country-specific derogations o Unjustified regulations (TBT, SPS) o Subsidies – domestic and on exports o Trade Remedies  Types of Protection o Autonomous  Tariffs  Regulations o Negotiated  Tariff Bindings  TRQs o Contingent Measures (safety valve) – certain level must be must to be imposed  Anti-dumping duties  Countervailing duties  Safeguards A. TRADE & ECONOMIC POLICY  Facets of Trans-border Economic Law – Three Levels of Application: o (1) Domestic Public Law  e.g. Customs, imports/exports, taxes, tariffs, regulations, subsidies, etc. o (2) Private International Law  Private law of contract  e.g. CISG, EU Rome Regulation (affects economic actors participating in int’l trade) o (3) Public International Law  Regulates governments, only indirectly affects private actors  e.g. WTO, NAFTA, bilateral investment treaties, WIPO, UNFCCC  Arguments Against Trade o (1) Domestic Market Failures  Generally: theory of “second best”  Hands off in one market only if all others work properly  Critiques:  (1) domestic market failures should be corrected w/domestic policies aimed directly at the source of the problem  (2) Economists can’t diagnose market failure well enough to prescribe policy o (2) Distribution  Free trade is arguably positive sum, but still losers absent redistribution policies  Are distribution consequences a price we’re willing to pay for overall increase in wealth? o (3) Infant Industry  Government protects industries when they’re young, until they are strong enough to compete globally  Critiques: 1

 

 Will industries ever grow up if happily receiving gov’t support?  Can gov’t accurately choose industries to protect? o (4) Optimal Tariffs  Rationale: tariffs on imports   demand   imports   national wealth  Idea that there is an optimal point of tariffs for helping the economy  Critique: can gov’t identify and implement proper level of protection? Also, this makes the country internationally unpopular o (5) Strategic Trade Policy  Zero-sum theory: can increase wealth w/o liberalization by taking gain that would otherwise go to another country  Gov’ts use subsidies and tariffs to help own companies win race for market share where industry only has a small number of players  Again, critique is that it is hard for gov’t to know what industries it should benefit, and it’s globally frowned upon o (6) National Security  Sometimes other interests (national security) must outweigh interest in econ. Gain  Nation must be self-sufficient in certain key materials to defend itself in case of war  Must consider: what materials would be unavailable, how likely is it that they would actually be unavailable during war due to imports being cut off? Non-Economic Reasons Supporting Liberalized Trade o Politics:  global economic cooperation   risk of war or other conflict  i.e. economics as a peace tool Current Events o Brexit – Effect on WTO  UK entered as part of EU so Brexit raises two issues:  (1) Will UK still be a member of WTO after leaving EU? o No longer a schedule of commitments w/o EU membership o EU is a “common market” meaning free trade within and common external tariff o If not a part of the common market, UK must renegotiate all trade  (2) EU negotiations originally included UK, would EU have to renegotiate? o Those agreeing to EU trade agreements assumed they would also get UK benefits o Without the UK as a part, the deal actually changes dramatically o Because terms are changing, delicate balance negotiated in 1995 is no longer valid – EU must renegotiate as well

B. MODERN TRADE DEBATE  Globalization o Bhagwati’s article – p.35  Technology not globalization is responsible for decreased wages  Tech advances keep workers from ever reaching the rising part of the J curve, just go from one declining segment to another o Outsourcing  Blinder’s article – p.38  Offshoring will be a large, lengthy, and painful process  Need to focus on keeping US labor competitive through innovation and R&D, and by focusing on training/educating for jobs that can’t be offshored  Schumer and Robert’s article – p.41 2





Comparative advantage theory didn’t anticipate that factors of production would be able to cross borders  Three developments that led to changes in world economy o (1) political stability allows for freer flow of capital around the world o (2) Increased education in developing countries = cheaper but equally competent workforce o (3) Cheaper, better communications make it possible to do and transmit more work and to manage it from anywhere Panagariya’s article – p.43  Responds to 4 fallacious arguments used to oppose free trade  Responds to Schumer & Robert’s argument about comparative advantage

C. TRADE AGREEMENTS IN NATIONAL LEGAL SYSTEMS  National Law & International Law o Vertically  National law affects how international law is created/accepted/applied internationally o Horizontally  Gov’t A and Gov’t B must find international policies in line w/own domestic laws  Can also be domestic laws within international reach  Monism vs. Dualism o Monism  All law, whether international or national, has to be understood as one body of law  Seen as fairly idealistic o Dualism  Idea within public international law that there is international law that has some regulations for countries but these are different from a country’s regulations over its own citizens  More common view (US view)  Most of the traditional or customary international law regulates how governments interact internationally or with international actors  Direct Effect vs. Indirect Effect o Direct Effect  Means that WTO bodies would apply WTO law within judicial bodies (direct effect can also be called direct applicability)  If WTO has direct effect, then it can be applied/enforced within domestic courts  WTO does NOT have direct effect in the US o Indirect Effect  Not able to use WTO as a reason court must decide in a certain way  Court instead can interpret US laws in a way to make it consistent w/WTO law as much as possible  More like persuasive authority (compared to binding authority)  US Constitution & Law o Note: Relationship b/w national and int’l laws comes down to constitutional law in each country o Supremacy Clause – Art. IV, ¶ 2  Constitution and US law are the supreme laws of the land  Also includes treaties – but only those the Supreme Court finds as self-executing  Self-executing meaning it has a specific set of laws  Result: non-self-executing treating are not the supreme law of the land 3





If multiple laws/treaties on the same topic, where all are supreme, the most recent is binding – last here in time rule  Note: treaty no longer law of the land if Congress passed something different o Ratification of Treaties  Art II treaties  Ratified by the President after the consultation of the Senate  Executive Agreements (more common)  President can do “Sole Executive Agreements” w/other countries w/o Congressional approval/authority  Can also have EAs that the President makes, which are then approved by Congress (Congressional-Executive Agreement: both houses must approve) o WTO Adoption in the US  Passed as Uruguay Round Agreement Act (URAA)  Determined how/when WTO would apply (authorized President to enter WTO)  Decided WTO would not have direct effect o Interpreting Federal Law  Indirect Effect – use WTO to interpret and apply federal law  Note: can have parallel litigation with different law applied in each; WTO case applies WTO law, US case applies US law (if direct effect this wouldn’t be true)  If court applies WTO law through indirect effect, the outcome would be same o Charming Betty Doctrine (US)  If you can interpret federal law to make it consistent with international law, then the court should do so  Could interpret US law when WTO judicial decision has already looked at the same issue/case and found it to be a violation o Treaties and Subnational Law  US Supremacy Clause  Self-executing treaties  Non-self-executing treaties  Implementing legislation  URAA  Medellin v. Texas decision o Treaties and State law  Goes back to Supremacy Clause  Treaties > state law, at least for self-executing treaties  With non-self-executing treaties, the Supremacy Clause does NOT apply and court can’t use treaty to strike down a state law  WTO is non-self-executing so can’t be used to strike down state law  Note: GATT was potentially self-executing; were times when it was used  Medellin v. Texas  Court seemed to suggest that absent a federal law enforcing it, the federal government cannot force a state to uphold a treaty  There is a procedural right to bring this case b/c individuals have private right to action in state courts (unlike w/federal court); but can’t win absent federal law; otherwise imposing the treaty Other Countries o EU – Direct Effect of Treaties  Kupferberg – EU states must honor treaties; direct effect in general to treaties 4







Nakajima – Direct effect of GATT anti-dumping rules b/c of commission implementing legislation  Portugal v. Council – ECJ omits to provide direct effect for WTO, would otherwise be forcing EU to comply w/WTO law when US doesn’t have to (doesn’t want EU to be at a disadvantage vis à vis the US) o Costa Rica – Treaties have direct effect and are superior to national law on same subject o Brazil – Direct applicability of GATT national treatment Entering Into Trade Agreements – United States o Role of President and USTR negotiators  Initiated by Congress, giving President the go-ahead to negotiate  President brings back agreement to Congress to vote on o Review by the House  Note: other agreements are reviewed only by the Senate  Congress has delegated authority to lower tariffs to the President  By 1960s when trade agreements started to include more than tariffs, mere delegation was not enough  Because the agreements involved more than tariffs, they would be adopted by passing a law, which is hard to do  To get countries to rely on us enough to agree, they need to know that the agreement will actually go through  Rationale for fast track o Fast Track  How it works  Legislation initiated by Congress  Int’l agreement written by President w/consultation of Congress  Sent back to Congress to vote on yes/no within a certain period of time, without the option to amend or edit  Note: TPA (Trade Promotion Authority) is new name for Fast Track  Why have fast track?  Idea that President will view agreement from perspective of how it will help/hurt country as a whole  Push-back to Fast Track  Seen as unconstitutional/undemocratic o Gives too much power to the executive o Congress should be able to amend  Most recent movement to pass fast-track was narrowly decided o Usually promoted by Republicans, opposed by Democrats Office of the Trade Representative and TPP o TTP = Trans-Pacific Partnership  Can it be renegotiated?  Technically yes it can be, as all trade agreements can  However, it is incredibly difficult to renegotiate trade agreements o USDR website shows terms of agreement and current debates o Very pro-trade agreement, makes claims not entirely accurate in context o Numerous chapters, a lot going on

II. THE WTO A. WTO HISTORY, STRUCTURE, AND FUTURE  20th Century History of World Trading System o League of Nations 5





 1923 Customs Convention  1929 Prohibitions Convention  Interwar planning o Bretton Woods Institutions – 1944  Triad formed: World Bank, IMF, and ITO (Int’l Trade Organization)  ITO never came to fruition, only GATT a few years later  UN Economic & Social Council – US retreats from joining ITO o ITO – Why didn’t US join?  Traditional US reticence about joining IOs – protectionist, sovereignist  ITO never even officially submitted to the Senate as a treaty or to Congress as a Congressional-Executive Agreement  Still had GATT  Note: Other countries didn’t go forward without the US Creation of General Agreement on Tariffs and Trade (GATT) o Mutual agreement as a part of 1947 Conference  US participating pursuant to 1945 trade negotiating authority  Originally this authority was only used for bilateral treaties but was applied to multilateral treaties for the sake of US being able to approve GATT o 1947 negotiations were the first trade round  Each round tried to liberalize more  1994 round ultimately created the WTO o GATT created based on draft of ITO GATT 1947 – Doc. #13 o PPA (???)  Part I accepted  Part II accepted in part – only to extent not inconsistent w/domestic law  If country had domestic law inconsistent w/GATT, could keep dom. law  Grandfathering – protected by Part II not being completely accepted  US can sign on with Presidential Proclamation o Later: 1979 Tokyo Round Agreements – added to GATT 1947  GATT “à la carte” – not obligations  US needed approval of Congress  Could choose to accept additions or not o Role of Consensus  Makes it easy for 1 or 2 countries to block  Also makes agreements more binding  Took until Uruguay Round to have full consensus o Why does GATT survive?  Good leadership  Stays away from the UN – avoids added bureaucracy  Insularity, security – used to be hard to get reports until published 2x/year  8 Rounds  Contributed to liberalization  Got governments who would have otherwise likely cut off tariffs anyway get something in return for these liberalized moves  Success of world market  Note: GATT 1947 never intended to be an IO (b/c supposed to be part of ITO) but worked very well absent the ITO o Why bring in a new system?  By 1980s it was clear that GATT had weaknesses 6

    



Needed coverage of broader topics (e.g. IP, services) Weakness of GATT à la carte (Tokyo Round) Dispute Settlement – needed better system b/c disputes are unavoidable Organization envy – many world organizations, only int’l trade realm didn’t have one Other theories for why have a WTO:  Domestic Commitment Theory (political economy)  Human Rights – commit gov’t to address human rights  Avoid recriminations b/w governments  Trying to fend off local organizations demanding protectionism Creation of WTO o Uruguay Round – 8th and final GATT Round  Establishes the WTO as an organization  Extensive trade liberalization  GATT 1947 replaced by GATT 1994  Expands body of WTO laws  Agreements on trade in goods  Agreement on trade in services (GATS)  Trade-related intellectual property (TRIPS)  Single dispute settlement system – replaced broken GATT system  Improves decision-making – consensus but also other bodies o WTO Agreement (Doc. #5)  Marrakesh Agreement (Doc. #13)  Covered Agreements – sup. p.101  Annex 1: Goods, Services, IP  Annex 2: Dispute Resolutions – rules/procedures  Annex 3: Trade Policy Review Mechanism  Annex 4: Plurilateral Trade Agreements  Hierarchy (see p.104-105)  Note: no explicit hierarchy laid out b/w goods and services  Consensus – carries over from GATT tradition  Reassuring for all members; US b/c still has final say, developing countries b/c can’t be overpowered  Ambiguities  Most ambiguities are about the meaning of WTO law, sometimes application  Appellate Body must decide meaning  Note: Preamble can be of particular use o WTO Committees Chart – see p.97  (1) Ministerial Committee  Meets at least every two years  Consists of the leaders of WTO members  (2) General Council  Consists of all WTO members  Same membership also meets as Dispute Settlement Body (DSB) and the Trade Policy Review Body  (3) Councils  Different councils for each broad area of trade, etc.  There are also committees w/even smaller coverage  Note: also informal groups (HODs) o WTO is member-driven 7



All committees contain all members – compared to secretary-driven (like the UN General Assembly)  WTO members listed in Doc. #1  Special EU status  Majority of members are developing countries  Need not be a “state” to be a member (e.g. Hong Kong, EU, Macau, etc.)  i.e. there are members of the WTO who aren’t members of the UN  Art. XII: any state or separate customs territory may join the WTO  Accession process  New members don’t join for free – must negotiate a fee, etc.  Get the benefit of concessions that other countries offered up  Can’t benefit from concessions without offering up your own  Ex: China’s accessions – unequal accessions (gave up quite a bit), still wanted to join b/c worth it to jumpstart economy and so China could be in the room for major international trade decisions (also increases credibility) o WTO Law and Politics  Generally…  Trade = politics  Mixture of rules and institutions  Law formulation, application, and adjudication  Interface w/national governments is with Executive Branches (ex: President, USTR)  WTO Parliamentary meetings  Delicate chemistry – ministers and ambassadors in Geneva  Little judicial dialogue  WTO in World Governance – works with other IOs within global reach  United Nations (UNCITRAL, UNCTAD)  Bretton Woods Institutions (IMF, World Bank)  OECD – organization for economic/commercial development  Regional trade agreements  G8, G20 – informal IOs, organization of leaders rather than member states  The WTO and sovereignty  WTO is not a supra-nation in same way IOs like the ECJ are o WTO doesn’t have direct effect in many member states, like the US  Members still must tailor domestic policies around WTO requirements or risk consequences (e.g. sanctions)  Can also see WTO as an aspect of a member state’s sovereignty o Constitutional Features of the WTO  Higher law  WTO (or parts of it) usually not higher law within domestic legal system, but WTO Agreement itself is a higher law than the annexes – prevails if necessary  This is atypical for an IO, most don’t have one part that is higher law than other parts  Court with compulsory jurisdiction  By joining WTO, countries agree that WTO will have jurisdiction over relevant cases  Members must show up and litigate cases even if they don’t want or would rather move case to domestic court  WTO Tribunal is NOT a constitutional court  Doesn’t review the constitutionality of declarations or other agreements created by the WTO Council 8

 Only decides cases re: conflict b/w 2 or more member states WTO’s Three Branches  Executive – Secretariat o Current Director General: Robert Azevêdo  Legislative – Conference, Council o Decisions by consensus  Note: not everything has to be by consensus but almost all is b/c of GATT tradition  Judicial – Appellate Body o Withdrawal from the WTO – for the US  Every 5 years the President must submit a report to Congress detailing the benefits of WTO membership  Upon receipt of the report any Congressman may submit a resolution to withdraw Congressional approval for membership in WTO  This wouldn’t force President to withdraw but would give him the option – essentially a fast track for withdrawal  Could a President withdraw w/o Congress?  Probably yes, President generally believed to have power to withdraw from IOs and treaties Map of WTO Agreement (key provisions) – Doc. #5 o Art. II – Scope of WTO  WTO Agreement is binding on all parties  Internationally must enforce law, doesn’t necessarily mean it is binding in domestic courts  GATT 94 legally distinct from GATT 1947 o Art III – Functions of the WTO  Forum for negotiations, administering trade agreements, etc. o Art. IV – Structure of the WTO  Ministerial Conference, Dispute Settlement Body, General Council  Membership is same for all three  Decisions of all three through consensus o Art. V – Relations w/other Organizations o Art. VI – Secretariat o Art. VII – Budget and Contributions  Not all members pay equal percent of the budget  Financial decisions must pass with 2/3 majority o Art. VIII – Status of WTO (legal status) o Art. IX – Decision-Making  May officially interpret a rule with ¾ majority, but this has never been used  Waivers – basically done through consensus o Art. X...