1 Laws Governing Access to Foreign Markets Chapter 10 © 2005 West Legal Studies in Business/Thomson Learning.

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Laws Governing Access to Foreign Markets

Laws Governing Access to Foreign Markets

Chapter 10

© 2005 West Legal Studies in Business/Thomson Learning

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Separate Agreements under the 1994 GATT Agreement

Separate Agreements under the 1994 GATT Agreement

• Technical barriers to trade (incl. product standards)

• Import licensing procedures

• Government procurement of goods

• Trade in services

• Trade in agricultural products

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Separate Agreements (cont.)Separate Agreements (cont.)

• Trade in textiles and apparel

• Trade related investment measures (TRIMS)

• Trade related intellectual property (TRIPS)

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GATT 1994 Agreement on Technical Barriers to TradeGATT 1994 Agreement on Technical Barriers to Trade

• Does not actually set standards but states standards must be applied NONDISCRIMINATORILY(national standards are a problem)

• Not create unnecessary obstacles to trade• Use international standards• Country should publish proposed

standards for comment and final standard (transparency)

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Technical Barriers to TradeTechnical Barriers to Trade

• Least restrictive trade principle

• Case example (predates 1994 agreement): Thailand’s cigarette import restrictions violate GATT

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The General Principle of Least Restrictive Trade

The General Principle of Least Restrictive Trade

• Balancing test

• Thailand: restrictions on Importation of Cigarettes 1990: The U.S. challenged Thailand's restrictions on imports of cigarettes. Thailand defended them on the basis that they were necessary to protect Thai peoples’ health from the additives in imported cigarettes.

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The General Principle of Least Restrictive Trade

The General Principle of Least Restrictive Trade

• The panel found the licensing system violated GATT and were more restrictive than necessary. Thailand was encouraged to bring its requirements in line with GATT.

• Why were they only recommended?

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International StandardsInternational Standards

• ISO 9000- certification makes selling in Europe much easier

• ISO 14000- environmental standards

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European Communities:Measures affecting Asbestos 2001

• The WTO found French retsrictions on asbestos a valid technical regulation.

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Government ProcurementGovernment Procurement

• GATT allows exception to national treatment allowing government to favor domestic supplier

• But the new Agreement on Government Procurement applies only to those countries that signed and applies to goods and services worth $185,000 or more (as of June 2003) and construction contracts over $7 million

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ExclusionsExclusions

• DOD

• DOE

• States that have specific exclusions e.g. N.Y. subway cars

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General Agreement on Trade in Services (GATS)

General Agreement on Trade in Services (GATS)

• U.S. has over 80% of GDP from services

• First attempt to open up services is very helpful to U.S.

• Overseen by Council for Trade in Services

• Agreement on financial services and telecommunications are separate

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Trade in Services: GATSTrade in Services: GATS

• Transparency• No local participation requirement• MFN• Nondiscrimination• No unreasonable restriction on transfer of

money• Exception: U.S. excluded transportation,

Japan excluded repair services and couriers

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GATS Agreement on Trade in Financial services

GATS Agreement on Trade in Financial services

• Banking

• Securities

• Insurance

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GATS Agreement on Basic Telecommunications

GATS Agreement on Basic Telecommunications

• Commitment to open telecommunications markets to foreign competitors

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Trade in Agriculture (1994)Trade in Agriculture (1994)

• Agreement will increase export opportunities

• Reduce government subsidies that distort market competition– Cut domestic programs that support higher

prices– Cut subsidies of exports of farm products– Convert quotas and non-tariff barriers

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ExceptionException

• Agreement on Application of Sanitary and Phytosanitary Measures: a country has the right to protect human , animal and plant life but may not be used to justify otherwise discriminatory conduct

• Codex Alimentarius: International standards for the protection of plants animals and foodstuffs

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EC Measures Concerning Meat and Meat products (hormones)

• WTO

• The Panel held that The EC’s ban on the sale of beef containing residues of growth hormones violates the Application of Sanitary and Phytosanitary Measures. The Panel decision was upheld by the WTO Appellate Body in 1998.

• What action has taken place since then?

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Trade in TextilesTrade in Textiles

• 1974 Multifiber agreement: contained quota limits by country and product

• 1994 GATT agreement on Textiles ends Quota system over 10 year period

• 2005 textiles will be covered by GATT’s regular rules on safeguards and unfair trade

• WTO Textile monitoring body

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• Illegal transshipment

• Countries try to avoid quotas by shipping to a 3rd country, relabeling the goods as origination from the 3rd country, and reshipping

Trade in TextilesTrade in Textiles

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TRIMS (investment) (1994)TRIMS (investment) (1994)

• Does not set broad rules

• Prohibits laws which condition a company’s right to import foreign goods on the volume of goods exported

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TRIPS (Intellectual Property -copyright, trademark, and patent)

• WTO countries agree to abide by intellectual property conventions

• domestic and foreign IPR (intellectual property rights) treated the same

• no conditions attached to patents• enforcement strengthened• bring laws into compliance• 2000, WTO Dispute Settlement process

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Info Tech. Agreement: 1996Info Tech. Agreement: 1996

• Elimination of tariff on computers by 2000 (with some extensions until 2005)

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Trade SanctionsTrade Sanctions

• Section 301 Trade Act 1974

• Basic 301: USTR retaliate against foreign country. It is discretionary and may be imposed when USTR finds unreasonable discrimination that burdens or restricts U.S trade

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Trade Sanctions (cont.)Trade Sanctions (cont.)

• Example: country does not let workers organize, forced labor, minimum age for child labor, minimum wage or hours, health and safety concerns

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Trade Sanctions: 301 SanctionsTrade Sanctions: 301 Sanctions

• Basic 301

• Special 301

• Telecommunications 301

• Super 301

• Initiated by petition by company or USTR (http://www.ita.doc.gov/301alert)

• WTO ruled 301 valid

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Trade SanctionsTrade Sanctions

• Special 301: by April 30 USTR must identify foreign countries which fail to protect intellectual property

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Trade SanctionsTrade Sanctions

• Telecommunication 301: identify foreign barriers to telecommunications firms and requires mandatory retaliation

• Case: Access to Japanese markets for U.S. cellular phones

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Trade SanctionsTrade Sanctions

• Super 301: USTR identifies priority trade practices which pose barriers to U.S. trade

• Priority countries with pervasive pattern of discrimination triggers investigation

• If no action, then retaliation• 2000 report focus on Brazil, India,

Europe, Japan, China, Korea

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Trade and Development Act of 2000

Trade and Development Act of 2000

• Requires review of list of products subject to retaliatory tariff 120 days and every 180 days

• Why called the “carousel law”

• Do you see any problems?

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IssuesIssues

• Criticism of unilateral trade actions?

• How to harmonize with GATT principles?

• Tension between commitment to multilateral negotiations and preservation of unilateral options? A realistic compromise?

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IssuesIssues

• What should the connection be between human rights or environmental issues and trade law and policy?

• First, what is a human rights violation? Can you agree?

• Second, what is the appropriate national, regional, international action? Is unilateral action ever appropriate? Military action?