Download INTERNATIONAL TRADE REGULATION

INTERNATIONAL TRADE
REGULATION
• Topics for Discussion
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General Discussion on GATT
GATT Principles
World Trade Organization Agreements
WTO Dispute Resolution System
United State’s Approach to Dispute Resolution
Criticism of WTO
Regional Expansion
General Discussion of GATT
• General Agreement on Trade and Tariff
– Originated in 1947 to reduce tariffs among
trading nations involving “goods”
– Effective is establishing “binding amounts”
among trading nations
– Uruguay Round expanded into non-tariff areas
such as services and intellectual property
GATT PRINCIPLES
• Three Basic Principles
• Most Favored Nation-requires member nations to of
the WTO to offer all member nations their most
favorable tariff rates
– Exceptions
» Countries can raise barriers to the importation of
goods from specific countries that are considered in
violation of GATT principles-illegal subsidies and
dumping of goods
» Formation of Free Trade Areas that do not apply to
goods from outside the regional group.
GENERAL PRINCIPLES
• General Principles-continued
– National Treatment-once a product, service, or
intellectual property right enter into a foreign
market they must be given the same treatment
given to domestically produced product service
or intellectual property.
– Transparency-prohibits a country from making
its import standards and requirement secret.
WTO AGREEMENT
• WTO Agreements
– Agreement on Technical Barriers to Tradetechnical specifications contained in documents
that specifies characteristics of a product such
as levels of quality, performance, safety or
dimensions. Standards may include
terminology, symbols, testing, packaging,
marking or labeling requirements.
WTO AGREEMENT
• WTO Agreement continued
– Agreement on the Application of Sanitary and
Phytosanitary Measures-promoting
international standards to import restrictions
aimed at protecting human, animal and plant
life and health. Promotions of international
measures to protect human and animal life.
• See Case on Oregon Natural Resource Council
WTO AGREEMENT
• WTO Agreement continued
– Customs Valuation Code-attempts to
standardize how countries challenge the value
of a good being imported
– Agreement on Pre-Shipment Inspectionpertains to a country’s right to pre-shipment
inspection
– Agreement on Import Licensing
– Country of Origin
DISPUTE RESOLUTION
SYSTEM
• Dispute Resolution Understanding
– Time Dimensions– Urgent matters resolved in three months
– Maximum use of time no more than 15 months
– Dispute Resolution Structure
• Mediation Body
• Dispute Resolution Panel-small tribunal who hears
case and makes report
• Dispute Resolution Body-issues decision
UNITED STATE’S APPROACH
• US Approach to Dispute Resolution
– US attempts to suspend tariff concession to EU
• Arbitration Panel found in favor of US in terms of
same sector, imported bananas treated differently
and violated national treatment principles.
– Antidumping Procedures
• Dumping-price discrimination when foreign
exporter sells goods below what it sells in home
country or below the cost of production.
» Lower price may constitute subsidy
U.S. APPROACH
• Antidumping Procedure
– Manufacturer complains to Department of
Commerce and requests a “countervailing
duty”.
• GATT Code on Subsidies and Countervailing Duties
• International Trade Commission investigates
whether the dumped good causes a material injury
– Factors considered are lost profits, unemployment in the
industry, lost sales, suppression of export prices
US APPROACH
• Antidumping Procedure
– Section 301 of Tariff Act authorizes Office of
US Trade Representative to retaliate
– Deadline to complete investigation is 18
months
– Countervailing Duty can be imposed
– Also, setoffs can be imposed in other industries
– Section 337 of Tariff Act provides relief for
gray market goods
CRITICISM OF WORLD
TRADE ORGANIZATION
• No Respect for Environmental Standards
• Lack of International Labor Standards
• Lack of Control of Movement of Production
to Developing Economies with Lower
Standards
• Lack of Providing for Food Safety Priority
over Trade
REGIONALIZATION
• North American Free Trade Agreement
– Aims at Reducing Trade Barriers Among
Mexico, Canada and United States
• Tariff Free Area in 15 years
– Goods Must Be Certified as Regional Goods
– Reduce Barriers in direct and indirect investments, free
flow of capital and dispute resolution system
– Committee System To Constantly Review Trade Areas
REGIONALIZATION
• Regionalization (Global)
– European Union-13 European Nations with
applications for entry from other nations
– MERCOSUR-Southern Common MarketArgentina, Brazil, Paraguay and Uruguay
– Andean Common Market-Bolivia, Venezuela,
Colombia, Ecuador and Peru
– African Economic Community-51 African
Natioins
REGIONALIZATION
• Regionalization
– COMESA-Common Market for Eastern and
Southern Africa
– Southern African Development CommunityAngola, Botswana, Lesotho, Malawi,
Mozambique, Namibia, Swaziland, Tanzania,
Zambia, Zimbabwe, Mauritius and South Africa
REGIONALIZATION
• Regionalization
– Asia Pacific Economic Cooperation Group-US,
Japan, Australia, Canada, South Korea, China
and Indonesia (Bogor Declaration)-to achieve
free and open trade and investment
– Central American Common Market-Guatemala,
El Salvador, Costa Rica, Nicaragua, Honduras
and Panama
REGIONALIZATION
• Regionalization
– Gulf Cooperation Council-Saudi Arabia,
Kuwait, Bahrain, Qatar, UAE and Oman
– Arab League--22 members-Algeria to Yemen
– Commonwealth of Independent States-former
Soviet Union Nations
– Association of Southeast Asian NationsIndonesia, Malaysia, Philipines, Singapore,
Thailand and Brunei, Myanmar, Laos and
Cambodia