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Comparative & International Trade

Spring 2001

Professor Robert Heilferty

Final Exam Review Outline by

Christopher S. Lee

 

 

U.S. Constitution & Regulation of Int’l Economic Affairs

1.      Presidential powers

2.      Congressional Powers

a.      Colors trade issues

b.      Monitors delegated powers

c.       Hearings, appropriations, “fast track” process

3.      Treaties v. Executive Agreements

4.      Int’l Agreements not self-executing in U.S. system

5.      Judicial Review

a.      Congress delegates; sets Standard of Review for Executive

b.      Court generally cannot overturn Executive Rulings

 

The Legal Structure of the GATT/WTO System

1.      Evolving Institution

2.      Classifications – Before and after Uruguay Round

 

Dispute Settlement

1.      GATT/WTO Framework

a.       Articles XXII and XXIII

                                                              i.      Nullification or Impairment

1.      Nullification – Nullifying gains through reasonable expectation from original tariff treatment

2.      Impairment – Impairing benefit

                                                             ii.      Violation v. Non-Violation

                                                            iii.      Remedies and Suspension of Concessions

b.      Dispute Settlement Understanding – Producers & Process

                                                               i.      Consultations

                                                             ii.      Conciliation, Good Offices and Mediation

                                                            iii.      Establishment of Panels/Selection of Panelists

                                                           iv.      Terms of Reference

                                                             v.      Rules of Procedure

                                                           vi.      Appellate Body

                                                          vii.      Implementation

c.       Current Issues

                                                               i.      Standard of Review

                                                             ii.      Implementation (Banana Dispute) – Enforcing Judgment

                                                            iii.      Role of Appellate Body

2.      NAFTA Dispute Settlement System

 

The Rule of Non-Discrimination:  The MFN and National Treatment Principles (EXAM Issue)

1.      MFN Principle

a.       GATT/WTO Framework

                                                              i.      Like Product Concept - all like products should be treated alike on the basis of their performance in use, regardless of their origin or methods used in their production.

1.      Japan:  SPF Lumber

2.      Spain:  Unroasted Coffee

                                                             ii.      Scope:  Not just Tariffs, but Procedures

1.      U.S. Footwear

                                                            iii.      Exceptions

1.      GSP Schemes

2.      Article XXIV

a.       Free Trade Agreements

b.      Customs Unions

b.      Application of MFN in U.S. Law

2.      The National Treatment Principle – Imported and domestic products should be treated the same

a.       Import v. Domestic Products

b.      Article III and Policy – Italian Agriculture Machinery

c.       Article XX Exception

                                                               i.      Section 337 Case

                                                             ii.      U.S. Violated National treatment

                                                         iii.      Affirmative defense under Article XX procedures

d.      Like Product Analysis

                                                               i.      Japan Liquor Taxes (Appellate Body Report)

                                                             ii.      Settlement Issues

                                                         iii.      Appellate Body Treaty Interpreting Public International Law

                                                           iv.      Interpretation

1.      Narrow .v Broad View

2.      Case-by-Case analysis

3.      Accordion Analogy

 

Tariffs and Customs Laws

1.      Relevance of Tariffs – Goal to reduce trade barriers

a.       Governments

                                                              i.      Remedies

                                                            ii.      Budget

                                                          iii.      Pay as you go

                                                          iv.      Corporate Effect

                                                            v.      Offsets Competitive Advantage

                                                          vi.      Affects domestic policy choices

                                                        vii.      Protects certain industries

                                                      viii.      Revenue implications

b.      Corporations

                                                               i.      Tariff Management

                                                             ii.      Limit Liability

                                                         iii.      Raises prices of goods

                                                          iv.      Duty Liability = Duty Rate (Classification) x Value (valuation)

2.      The Harmonized Tariff Schedule (HTS) – See chart; Defn below

3.      Classification – Rollerblade v. U.S.

4.      Valuation

a.       GATT Customs Valuation Code

b.      U.S. Valuation Rules – Transaction Value

5.      Rule of Origin – Generally NOT Important

6.      Types of Tariffs

a.       Ad Valorem

                                                               i.      Most Common

                                                             ii.      Latin for “according to the value”

                                                            iii.      Charges incurred in the movement or clearance of freight, when such charges are based on the value of the cargo itself.

b.      Mixed

7.      Methods of Importation

a.       Entry for Consumption

b.      Alternative Forms of Entry – Cost Effective Methods of Import

                                                               i.      In Bond Transport

                                                             ii.      Foreign Trade Zones – Nissan case

                                                            iii.      Temporary Import Bond Procedures

                                                           iv.      Bonded Warehouse

                                                             v.      Personal (Tourist) Exemption

c.       Drawback

8.      Penalties

 

Customs Unions and Free Trade Areas

1.      GATT/WTO Framework

a.       Article XXIV/1994 Understanding

                                                               i.      Major exception to MFN Principle – General Knowledge

1.      Customs Unions – Elimination of tariffs

2.      Free Trade Areas

a.       Elimination of tariffs within area

b.      Maintained tariffs outside area

                                                             ii.      Legal Criteria

1.      Formulation “within reasonable period of time”

2.      “Substantially all trade”

a.       May exclude some items

b.      Ambiguous

c.       Difficult to Quantify

d.      Substantial v. Reasonable

3.      “Not on the whole…more restrictive”

                                                            iii.      Review of Regional Trade Agreements

                                                           iv.      Snapback Option

1.      Temporary reduction in tariffs

2.      Then snaps back at certain time

3.      Generally within 10 years; unless otherwise decided

4.      Parties propose or provide schedule

2.      The U.S. Experience

a.       Free trade Agreements

                                                               i.      U.S.-Israel

                                                             ii.      U.S. Canada – FTA and NAFTA

                                                            iii.      FTAA – Working group discussions

b.      Dispute Settlement

                                                               i.      NAFTA Chapter 19

                                                             ii.      American Coalition for Competitive Trade – Constitutional Challenge

 

Relief from Fairly Priced Imports:  Escape Clauses, Safeguards and Adjustment Policies

1.      Introduction to Remedial Aspect of International Trade Laws

a.       Fair v. Unfair Competition

b.      Economic Adjustment Goal

c.       Pragmatic/Political Argument

2.      Safeguards in the GATT/WTO System

a.       Article XIX & 1994 GATT Agreement on Safeguards

                                                               i.      Increased Imports (Relative or Absolute) – Basic Components

                                                             ii.      Serious injury or threat of injury to producers of like or directly competitive

                                                         iii.      Causation – Lamb Meat Report; Safeguard measure applied on MFN basis

                                                          iv.      Selectivity

                                                             v.      Compensation – Raises Cost of Remedy

3.      U.S. Safeguard Provisions

a.       Escape Clause:  201 (Trade Act of 1974)

b.      Other Import Restraints

                                                               i.      Agriculture Imports:  s.22 (Agriculture Adjustment Act); only applies to non-WTO countries

                                                             ii.      Communist Imports:  s.406 (Trade Act of 1974)

                                                            iii.      National Security Import Restraints:  s.232 (Trade Expansion Act of 1962)

c.       Trade Adjustment Assistance

 

Relief from Unfairly Priced Imports:  Antidumping Duties (AD)

1.      Dumping Defined

a.      International Price Discrimination

b.      Sales below Cost

2.      AD Provisions in GATT/WTO System

a.       Article VI

b.      UR Agreement on Dumping

3.      AD Provisions in U.S. Law

a.      Exam Process

                                                              i.      Issues

                                                            ii.      Skip Specifics

                                                          iii.      Information Intensive

b.      History

c.       AD Analysis and Procedures

                                                              i.      Petition/Initiation

                                                            ii.      “Like Product”

                                                          iii.      “Fair Value” Analysis

1.      Export Price – Formerly U.S. Price

2.      Normal Value – Formerly market value

a.      Viability – Third Country Sales

b.      Sales below the cost of production

c.       Constructed Value

                                                          iv.      Suspension Agreements

                                                            v.      AD Orders, Assessment, Liquidation

                                                          vi.      Circumvention

                                                        vii.      Nonmarket Economies

                                                      viii.      Application of facts available

                                                          ix.      Sunset Provision

d.      Injury Analysis – Must Find

e.       Byrd Amendment – Receipts go to harmed producers

4.      Policy Issues – AD Law v. Competition Policy

a.       Antitrust – Remedy for Consumers

b.      Antidumping – Remedy for Domestic Producers

5.      Judicial Review

 

Relief from Unfairly Subsidized Imports:  Counterveiling Duties (On board Explanation)

1.      Types of Subsidies

a.       Export Subsidies – Illustrative List – Bad Thing

b.      Domestic Subsidies – TESTED

2.      Remedies from Unfair Subsidies

a.       GATT/WTO Provisions

                                                               i.      Article VI (authorization for CV measures)

                                                             ii.      Article XVI (reporting requirements; constraints on export subsidies)

                                                            iii.      1994 Agreement on Subsidies and CV Measures

1.      Subsidy = Financial Contribution + Benefit Conferred

2.      Traffic light analysis

b.      U.S. CV Duty Law

                                                               i.      Benefit Conferred – Benefit to recipient v. Cost to Gov’t

                                                             ii.      Specificity

1.      Applicable to Domestic Subsidies

2.      De jure v. de facto (by law)

                                                            iii.      Valuation – Recurring v. Non-recurring

                                                           iv.      Current Issues:  Privatization (Delverde case)

c.       Subsidy Enforcement Actions – WTO may challenge prohibited subsidies granted by other members

 

Trade and Developing Countries

1.      The GATT/WTO Framework

a.       Philosophical Questions

b.      Enabling Clause does not call for special benefits

2.      Generalized System of Preferences (GSP) in International Trade

a.       UNCTAD Conference

                                                               i.      Identified need to assist developing countries

                                                             ii.      Recognized need for exception to MFN principle

b.      GSP

                                                               i.      1971, MFN waiver

                                                             ii.      1979 “enabling clause”

                                                            iii.      1994 Decision on Measures in Favor of Least Developed Countries

3.      GSP and the U.S. Law – EXAM

a.      Title V of 1974 Act - KEYS

                                                              i.      Designating beneficiary developing countries (BDC’s)

                                                           ii.      Eligible Articles

                                                         iii.      Graduation Issue – Country

                                                          iv.      “Competitive Need” formula – Product

b.      Trade and Development Act of 2000

c.       International Labor v. Bush Cases

                                                              i.      Not every case is justiciable

                                                             ii.      CIT v. Federal Court Review – Non justiciable claim

 

International Trade and the Environment

1.      The GATT/WTO Framework

a.       Treatment of Environmental Issues

                                                               i.      GATT 1947 – Old method

1.      Preamble

2.      Article XX Exceptions

                                                             ii.      Uruguay Round Agreements

1.      WTO Preamble

2.      Agreement on Sanitary/Phytosanitary (plant) Measures

a.       Mad Cow

b.      Foot & Mouth

c.       Potato Fungus

3.      SCM Agreement (green light for subsidies for environmental equipment, currently lapsed)

b.      Analytical Framework

                                                               i.      Inconsistent with relevant trade rules/principles – such as non-discrimination between like products, Art I & III

                                                             ii.      Article XX as a defense to justify inconsistency

1.      2-tiered approach

a.       Provisional justification by reason of characterization of measure under Article XX (a-j);

b.      Further appraisal of the same measure under the introductory clauses or “chapeau” of XX

2.      See – Appellate Body Decisions on:

a.       Reformulated Gas

b.      Shrimp/Turtle

c.       EC:  Asbestos

                                                            iii.      Interpretative Issues

1.      Narrow Interpretation/chapeau (brimmed hat)

2.      Is the measure necessary?

3.      Extraterritorial application of Article XX exception

2.      U.S. Environmental Laws and International Trade Agreements

a.       Public Citizen v. Kantor

b.      No APA review to determine whether USTR required to prepare EIS for UR Agreements


CRS Overview of WTO

 

WTO Overview

1.      Permanent structure replacing GATT

2.      “Members” instead of “Contracting Parties”

3.      Principles

a.       Nondiscrimination

                                                               i.      MFN – Advantages given by one member for a product must be extended to a like product of all members

                                                             ii.      National Treatment – No discrimination against imported goods relative to domestic goods

b.      Open and Fair Application of Trade Barriers

                                                               i.      Tariffs bound (set) at maximum levels; and

                                                             ii.      May not be increased above negotiated levels

                                                            iii.      Quantitative quotas are not sanctioned

4.      Resolution and Dispute Process

a.       Consultations

b.      Panel Hearing

 

WTO Dispute Settlement

1.      Dispute Settlement Understanding (DSU) – WTO Rules and Procedures

2.      Dispute Settlement Body (DSB)

a.       Representatives from all WTO Members

b.      Administers all dispute proceedings

3.      Dispute Process

a.       Consultations between parties seeking mutually satisfactory solution

b.      Panel request by complaining party, if consultation fails

c.       Panel proceedings – No more than 15 months

d.      Panel report

e.       DSB adopts panel report

f.        Appeal, if any, triggers subsequent Appellate Report

g.       Losing party MUST comply

                                                               i.      Reasonable period of time; or

                                                             ii.      Grant compensation to prevailing party; or

                                                            iii.      Face retaliation later

4.      Right to Appeal

a.       Conducted by standing Appellate Body

b.      Issues of Law and Legal Interpretation

5.      WTO rulings apply to local and regional government measures

6.      All members obligated to ensure compliance at local/regional levels

7.      USTR represents U.S. in WTO disputes

 

 

 

 

Antidumping (AD) and Countervailing Duties (CVD)

1.      Provides relief to domestic industries injured by unfairly traded imports

2.      Applicable Trade Laws

a.       GATT 1994

b.      WTO Antidumping Agreement

c.       WTO Agreement on Subsidies and Countervailing Measures

d.      NAFTA Chapter 19

3.      AD and CVD may be self-initiated by Dept. of Commerce (DOC); or petitioned

a.       An “interested person”

b.      Firm

c.       Labor Union

d.      Trade or Business Association on behalf of affected domestic industry

4.      DOC must determine whether there is sufficient industry support to initiate case

5.      Process after Petition Accepted

a.       International Trade Commission (ITC) & DOC make preliminary and final determinations within specified deadlines.

b.      DOC determines whether imports are being sold at less than fair value; or whether foreign government subsidies exist.

c.       ITC determines whether imports are causing material injury to domestic industry.

d.      If exporting country is not a WTO member, no injury determination required for CVD case.

e.       Investigation may be suspended if mutually agreeable solution reached

f.        Duties imposed on goods in amount of net subsidy or dumping margin

6.      AD and CVD orders may be revoked based on certain reviews

a.       Subject to annual reviews upon request

b.      Reviews based on changed circumstances

c.       Mandated 5-year sunset reviews

7.      DOC and ITC decisions may be appealed to U.S. CIT

8.      WTO and GATT do not make AD illegal per se

9.      Subsidies and Countervailing Measures (SCM) Agreement prohibits

a.       Export subsidies

b.      Subsidies contingent on use of domestic over foreign goods

10.  Injurious domestic subsidies are actionable under WTO DSU

11.  U.S. private right of action for dumping incompatible with WTO AD rules

12.  “Change in Ownership” challenge of U.S. rules by EC – violates WTO rules

13.  Byrd Amendment

 

 

 

 

 

 

 

 

 

Recent Issues

1.      Canadian Patent protection term

2.      Korea measures affecting Imported Beef

3.      EC import safeguards on wheat gluten

4.      Clean Air Act Regulations on Gasoline

5.      DRAM Semiconductor Antidumping Duties

6.      Shrimp and Shrimp Product prohibitions

7.      U.K. Privatization Methodology

8.      EC Banana Imports – How, when and whether party has complied with WTO

9.      Australia & New Zealand Lamb Imports

10.  Korean Antidumping of Stainless Steel Imports

11.  Japanese hot-rolled steel products

12.  EC ban on cattle treated with growth hormones – Violated WTO agreement on the Application of Sanitary and Phytosanitary Measures

 


Terminology

 

Safeguard

1.      Also referred to as escape clause and Section 201

2.      Relief provides for temporary duties, quotas, or other restrictions on imports that are traded fairly but cause or threaten to cause serious injury to a domestic industry.

3.      Relief is intended to give the domestic industry the opportunity to adjust to the new competition and remain competitive.

4.      Authority for the safeguard relief is found in sections 201-204 of the Trade Act of 1974, as amended.

 

Dumping

1.      International Price Discrimination

2.      Sales below costs

 

Antidumping (AD)

1.      Relief to remedy the adverse price impact of imports sold on the U.S. market at unfairly low prices.

2.      Relief is in the form of extra duties on the dumped imports.

3.      The authority for AD relief is found in sections 731-739 of the Tariff Act of 1930, as amended.

 

Countervailing duty (CVD)

1.      Relief from the adverse price impact of imports that receive foreign government subsidies.

2.      Relief is in the form of extra duties on those imports.

3.      The authority for CVD relief is found in sections 701-709 of the Tariff Act of 1930, as amended.

 

Customs Union

1.      Elimination of tariffs

2.      A trade agreement by which a group of countries charges a common set of tariffs to the rest of the world while allowing free trade among themselves.

3.      Intermediate between free trade zones, which allow mutual free trade but lack a common tariff system, and common markets, which, in addition to the common tariffs, also allow free movement of resources such as capital and labor between members.

4.      Tariff barriers generally reduce the quantity of trade between nations.

5.      Reduction in trade protects certain domestic producers, but

6.      Also translates into higher costs for consumers on both sides.

 

Free Trade

1.      Policy by which a government does not discriminate against imports or interfere with exports.

2.      Theoretical case for free trade is based on the argument that the division of labor among countries leads to specialization, greater efficiency, and higher aggregate production.

3.      Protection of local industries may prove advantageous only to a small minority of the population, and disadvantageous to the rest.

4.      Other barriers hindering trade:

a.       Import quotas,

b.      Taxes, and

c.       Subsidies to domestic industries.

 

Free Trade Area

1.      Elimination of tariffs within a given area

2.      Maintained tariffs outside of given area

3.      Removes barriers to trade in industrial goods among themselves,

4.      Each nation maintains its own commercial policy toward countries outside the group.

 

The Harmonized Tariff Schedule (HTS) – See chart

1.      Import tariff schedule of the U.S.

2.      Duty rates for every classified product

3.      Trade control measures and regulations.

4.      Statutory

 

Generalized System of Preferences (GSP)

1.      U.S. provides preferential duty-free entry to products from beneficiary countries and territories

2.      Offer developing countries lower customs tariffs than those applied to the developed nations, giving their exports preferential access.

3.      Helps developing countries improve industries and economies

 

Court of International Trade

1.      Article III Court

2.      Name changed in Customs Courts Act of 1980

3.      Comprehensive system for judicial review of civil actions arising out of import transactions and federal statutes affecting international trade – Unfair Trade and Customs Disputes

4.      Ensures expeditious procedures,

5.      Avoids jurisdictional conflicts among federal courts, and

6.      Provides uniformity in the judicial decision-making process for import transactions as required under Article I, section 8, of the Constitution of the United States.

7.      Application

a.       KEY:  Does the Court have Jurisdiction to hear the case?  Jurisdiction must be explicit.

b.      Process

                                                               i.      Independent Judgment Mode - based on Congressional Structure

                                                             ii.      If Congressional intent unclear, uses differential mode

1.      Was there reasonable interpretation?

2.      Defers to Action

 

Free Trade Zone

1.      Area within which goods may be landed, handled, manufactured or reconfigured, and re-exported without the intervention of the customs authorities.

2.      Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties.

3.      The primary purpose of a free-trade zone is to remove from a seaport, airport, or border those hindrances to trade caused by high tariffs and complex customs regulations.

 

Subsidies and Countervailing Measures (SCM)

1.      Multilateral disciplines regulating the provision of subsidies, and

2.      The use of countervailing measures to offset injury caused by subsidized imports.

 

 


Exam Review

 

3 Essays

Based on Topics Covered

 

Antidumping

1.      Relief to remedy the adverse price impact of imports sold on the U.S. market at unfairly low prices.

2.      Relief is in the form of extra duties on the dumped imports.

3.      The authority for AD relief is found in sections 731-739 of the Tariff Act of 1930, as amended.

4.      Analysis and Procedures

a.       Petition/Initiation

b.      “Like Product”

c.       “Fair Value” Analysis

                                                              i.      Export Price – Formerly U.S. Price

                                                            ii.      Normal Value – Formerly market value

1.      Viability – Third Country Sales

2.      Sales below the cost of production

3.      Constructed Value

d.      Suspension Agreements

e.       AD Orders, Assessment, Liquidation

f.        Circumvention

g.       Nonmarket Economies

h.       Application of facts available

i.         Sunset Provision

j.        Injury Analysis – Must Find

5.      Byrd Amendment – Receipts go to harmed producers

 

Countervailing Duties

1.      Relief from the adverse price impact of imports that receive foreign government subsidies.

2.      Relief is in the form of extra duties on those imports.

3.      The authority for CVD relief is found in sections 701-709 of the Tariff Act of 1930, as amended.

4.      Subsidies and Countervailing Measures (SCM) Agreement prohibits

a.       Export subsidies

b.      Subsidies contingent on use of domestic over foreign goods

 

Environment

1.      Inconsistent with relevant trade rules/principles – such as non-discrimination between like products, Art I & III

2.      Article XX as a defense to justify inconsistency

a.       2-tiered approach

                                                                           i.      Provisional justification by reason of characterization of measure under Article XX (a-j);

                                                                         ii.      Further appraisal of the same measure under the introductory clauses or “chapeau” of XX

 

Dispute Settlement

1.      Process

a.       Consultations

b.      Conciliation, Good Offices and Mediation

c.       Establishment of Panels/Selection of Panelists

d.      Terms of Reference

e.       Rules of Procedure

f.        Appellate Body

g.       Implementation

2.      Nullification – Nullifying gains through reasonable expectation from original tariff treatment

3.      Impairment – Impairing benefit

 

Developing Countries

1.      Generalized System of Preferences

a.       U.S. provides preferential duty-free entry to products from beneficiary countries and territories

b.      Offer developing countries lower customs tariffs than those applied to the developed nations, giving their exports preferential access.

c.       Helps developing countries improve industries and economies

2.      Title V of 1974 Act – KEYS

a.       Designating beneficiary developing countries (BDC’s)

b.      Eligible Articles

c.       Graduation Issue – Country

d.      “Competitive Need” formula – Product

 


 
HOME | ABOUT | LAW SCHOOL TIPS | COPYRIGHT NOTICE

   CHRISTOPHER S. LEE  2001