INT’L TRADE LAW

INTRODUCTIONProf David K. Linnan

USC LAW # 665

Unit One

ADMIN ICOURSE PAGE AT

http://www.lfip.org/laws665s05/index.htm

READING ASSIGNMENTS IN BOOK, POSTED ON COURSE MATERIALS LINK WITH PARALLEL DOC CITES

ADMIN IIYOU MUST SIGN UP FOR LISTSERV

laws665 (INSTRUCTIONS AT CLASS ADMINISTRATION LINK ON COURSE PAGE), SEE

http://www.lfip.org/laws665s05/admin.htm

INDONESIANS WILL JOIN US IN EARLY FEBRUARY 2005 & PROJECTS

ECONOMIC ACTIVITYWHAT DOES THE BELOW MAP TELL YOU

ABOUT COUNTRIES AND ECONOMIC ACTIVITY AS AN UNDERLYING REALITY OF INT’L ECONOMIC LAW?

http://www.lfip.org/laws666spring05/index.htm

IEL CONCEPTSWHAT & WHY IS INTERNATIONAL

ECONOMIC LAW?

IFIs and monetary law

International trade law

ULTIMATE PROB OF STRONG MIXING OF ECONOMIC CONCERNS/ISSUES

PIL CONCEPTSWHAT ARE PUBLIC INT’L LAW CONCEPTS BEHIND

INT’L TRADE LAW

Idea of no obligation to even trade internationally because of sovereignty over borders

Idea of no rights of establishment in terms of foreign investment (make versus import/export)

Parallel in idea of monetary sovereignty, but that is other part of IEL

TREATY CONCEPTPUBLIC INT’L LAW ASPECTs IN NUTSHELL

Sources of law in treaty, customary law, general principles of law

IEL on trade law side is largely treaty law, specifically GATT/WTO since 1947 (history later), plus modern regional agreements & FTAs

INTEGRATIONWHAT ARE ECONOMIC AS OPPOSED TO

LEGAL CONCEPTS BEHIND INT’L TRADE LAW?

Issues of economic versus political integration, examples:

USEUNAFTAAPEC

TRADE MODELSKEY ECONOMIC MODELS FOR INT’L TRADE

LAW PURPOSES

Multilateral trading system (GATT/WTO)

Regional or bilateral economic arrangements (integration), traditionally customs unions now FTAs like EU or NAFTA

Further behind cooperative mechanisms like APEC

ECON CHANGESWHAT IS HIDDEN ECONOMIC PICTURE & HOW

DOES IT DIFFER BETWEEN ECONOMIES?

1. Goods versus services

2. Changing nature of economies at different levels of development

3. Does IEL under trade branch track these changes? So what?

4. Changing patterns of production (intra-industry trade)

GATT/WTO HISTORYGATT/WTO HISTORY

Idea immediate post-WW II of economic & political causes of the war (1930s economic crisis, rise of fascism as indirect result of trade wars, etc.)

General Agreement on Tariffs & Trade 1947 temporary protocol as part of still-born post-WW II remake of int’l law system

Int’l monetary system mostly made through with Bretton Woods institutions (IMF, World Bank), but ITO effectively cratered leaving only 1947 GATT

GATT/WTO PRINGATT ORGANIZING PRINCIPLES & ASSUMPTIONS

Most Favored Nations (MFN, all WTO member foreigners get same deal)

National Treatment (foreigners get same deal as locals)

Negotiated Tariff Concessions (incremental rounds practice)

Hidden assumptions on market based economies (were in failed ITO Havana Charter, matter in Cold War idea of non-market economies or Socialists out so China & Russia only now, could be discriminated against)

GATT/WTO ASSUMPGATT ORGANIZING PRINCIPLES &

ASSUMPTIONS CONT’D

Unanimity rules essentially made dispute resolution voluntary

As a result GATT was more an economic diplomacy forum than a legal system in normal sense

However, not atypical for public int’l law

GATT TIMEGATT ORGANIZING PRINCIPLES & ASSUMPTIONS

CONT’D

Repetitive round structure for next 35 years

Over time, movement from tariff barriers to non-tariff barriers (NTB) to tarification (meaning converting quota or other NTBs to a reducable number for subsequent rounds, etc.

1994 end of Uruguay Round WTO formation effective second birth of post WW II concept

1994 WTO SHIFTDISTINCTIVE WTO ASPECTS AS OF 1994 POST-

URUGUAY ROUND

For general WTO character see document at

http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm

Effort to “legalize” int’l trade law, in part by reversing the procedural presumptions on dispute resolution side so that a country could no longer effectively impede adoption of unfavorable dispute settlement reports

GATSDISTINCTIVE WTO ASPECTS CONT’D

Expansion from GATT focus solely on trade in goods to new focus to include trade in services under the General Agreement on Trade in Services (GATS)

As a structural matter, industrial country economies moving increasingly to services, so high economic interest in GATS

Using trade law as enforcement mechanism as for broader legal areas (intellectual property, TRIPs in Uruguay Round now pressure growing in environmental area)

CHANGING PLAYERSDISTINCTIVE WTO ASPECTS CONT’D

Traditionally, trade negotiations were moved by Big Three (US, Japan & EU), now developing country blocks too as they advance economically

Post-1980s the Socialist world has moved from state directed economies to market directed economies, so in change from 1940s GATT direction the former Communist world is now lining up to join the club (China before, now Russia, all major economies with China affecting trade in goods worldwide)

LEGALIZATION CONSEQDISTINCTIVE WTO ASPECTS CONT’D

As part of legalization trend, the dispute settlement reports are now rapidly developing a kind of interpretive caselaw for WTO treaty provisions

As a result, much focus now on exceptions to MFN or National Treatment kinds of obligations as interpretation counts

Still tension in shift from older economic diplomacy in non-binding GATT to legalized system under WTO, since issue is really what happens if a major player ignores a dispute settlement (e.g., if the Europeans rejected an unfavorable decision on GMO coverage or hormone beef what next)

DOHA ROUNDDISTINCTIVE WTO ASPECTS CONT’D

Now we are in the early stages of Doha Round, focused on items like trade in agricultural goods, “Singapore principles,” government procurement, trade in services

For general Doha background see WTO document at http://www.wto.org/english/tratop_e/dda_e/dda_e.htm

FTAsECONOMIC INTEGRATION’S LEGAL SIDE

Regional, expressly discriminatory and considered a sometimes alternative to multilateral trading system

Export-led development model & Asia (political economy)

NAFTA in North America, which may be extended further down into South America within 5 years

But note also things like Singapore-US FTA, so this is not just NAFTA

Bottomline, the clients demand it so the lawyers must learn how to function not only under the UCC but also the framework the clients see on business side

FTAs & ECON TENSIONANTI-GLOBALIZATION

If globalization is the business model behind free trade or trade liberalization, winners & losers plus social resistance too (WTO Seattle meeting cratered in protest)

In legal sense FTAs permit more addressing of social issues as with NAFTA environmental principles, tension re proper balance in Doha

REGIONAL TRADE AGMTSECONOMIC ARGUMENTS

1. Second best, but achievable

2. Pre-NAFTA idea was countries at similar level of development (but Mexico changed) & customs union tradition

3. What is difference between FTA & regional communities

TRADE LAW MODELSMODERN TRADE LAW NOW GOES BEYOND

GATT/WTO ALONE IN PRACTICE TO ENCOMPASS

1. Multilateral trading system (GATT/WTO)

2. Regional agreements & law like NAFTA or EU law, often including investment rights

3. FTAs, but again what is difference between FTA & regional communities

4. Changing emphasis beyond goods to include new areas like services & TRIPs, differences now in areas like investment & competition policy, changing trade & production patterns