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
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
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)
