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CHAPTER 12
Imports, Customs and
Tariff Law
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Administration of Customs
and Tariff Laws
Customs divided into seven regions, then further divided into
districts.
Customs offices are located at ports of entry to U.S., (e.g.,
major seaports, airports, and border crossings).
Within each district are field import specialists who can seek
advice from national import specialists.
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Administration of Customs
and Tariff Laws
The Formal Entry: administrative process required to import
goods into the customs territory of a country.
Goods have officially “entered” when:
Arrived at U.S. port of entry.
Goods are permitted.
Delivery is authorized by Customs after inspection and release.
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Administration of Customs
and Tariff Laws
The Formal Entry (cont’d).
Estimated duties have been paid or customs bond posted.
Required Documentation: Documents must be filed within 5
days:
(1) An entry manifest or merchandise release form.
(2) U.S. Customs Entry Summary Form.
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Administration of Customs
and Tariff Laws
The Formal Entry (cont’d).
Required Documentation.
(3) Proof of the right to make entry (a bill of lading, air
waybill, or carrier’s certificate)
(4) The commercial invoice obtained from the seller.
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Administration of Customs
and Tariff Laws
The Formal Entry (cont’d).
Required Documentation.
6. Other documents required by special regulations (e.g.,
certificate of origin, quota visa, textile declaration).
The Commercial Invoice.
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Administration of Customs
and Tariff Laws
The Formal Entry (cont’d).
Payment of Duties.
Informed Entries: personal smaller shipments valued at $2,000
or less.
Electronic Entry Processing.
Remote Location Filing.
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Administration of Customs
and Tariff Laws
Liquidation and Protest.
Liquidation: final computation and payment of duty.
Time Limits on Liquidation: within one year of entry.
Protesting Liquidations: within 90 days.
Judicial review within 180 days (CIT in NYC).
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Administration of Customs
and Tariff Laws
Enforcement and Penalties.
Making Materially False Statements to Customs.
Negligent Violations.
See the U.S. v. Golden Ship Trading (2001) case. Relying on
assurances from the broker can still make the importer liable.
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Administration of Customs
and Tariff Laws
Enforcement and Penalties (cont’d).
Crimes: 2 years plus fine.
Smuggling of certain items will carry longer penalties.
Better to disclose before investigation.
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Administration of Customs
and Tariff Laws
Enforcement and Penalties (cont’d).
Aggravating and Mitigating Circumstances (p. 372).
Enforced and Informed Compliance.
Judicial Enforcement of Penalty Actions.
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Administration of Customs
and Tariff Laws
Binding Rulings.
Requesting one can help plan business strategy.
Should be submitted in writing.
Judicial Review.
Judicial review
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Administration of Customs
and Tariff Laws
Judicial Review (cont’d).
Judicial Review of Binding Rulings, see the U.S. v Mead Corp
case: U.S. agencies and courts must grant limited deference to
U.S. Customs letters and rulings.
Pre-Importation Judicial review in emergency situations.
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Dutiable Status of Goods
Tariffs, restraints on imports, and other import controls are
applied to goods according to the item’s dutiable status.
Harmonized Tariff Schedule of U.S. (HTSUS) – since 1989.
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Dutiable Status of Goods
Harmonized Tariff Schedule (cont’d).
Using the Harmonized Tariff Schedule.
The Classification of Goods.
See the Camel Manufacturing Co. v. United States case: tents
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Dutiable Status of Goods
The Classification of Goods (cont’d).
Understanding Tariff Descriptions.
Determining the Classification of Products: Questions of Law
and Fact.
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Dutiable Status of Goods
Using the General Rules of Interpretation.
GRI 1: classification by terms of the headings.
GRI 2: classification includes complete as well as incomplete
article if it has the essential character.
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
GRI 3: when goods could be classified under 2 headings. Go to
the most specific, if components go to essential character, when
can’t be classified by above go
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
GRI 4: If goods can not be classified based on above, one
should find heading for goods they are most like.
GRI 5: (a) cases (camera, music) should be entered with the
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
5(b) packing goods shall be classified with the goods, unless
containers have repetitive use.
GRI 6: subheadings at the same level are comparable.
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
Rule of Relative Specificity.
Classification by Essential Character.
Classification of Items Packaged for Ret
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
Classification of Items Packaged for Retail Sale as a Set.
See the Better Home Plastics Corp. v. United States (1996) case
: essential character, not relative specificity applies, and goods
are classified by shower liner not curtain.
Classifications at the Subheading Level.
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Dutiable Status of Goods
Tariff Engineering.
An importer is free to engineer his product in order to take
advantage of the tariff laws (Tariff engineering.
Customs Valuation.
Customs value (dutiable value) must be reported at time of
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Dutiable Status of Goods
Customs Valuation (cont’d).
Dutiable value equals transaction value or price actually paid
for goods when sold for export plus packing costs, selling
commission paid by buyer, value of an assist, royalty buyer is
responsible to pay, proceeds of any resale that accrues to buyer.
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Dutiable Status of Goods
Customs Valuation (cont’d).
Production Assists.
Other Methods of Calculating Dutiable Value.
Currency Exchange Rates.
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Dutiable Status of Goods
Rules of Origin.
Definitions and Purposes of Rules of Origin: administered by
U.S. Customs and Border Protection.
Types of Rules of Origin.
The General Rule in the United States: if an item is wholly
grown, produced, or manufactured in one country, then that
country is the country of origin.
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Dutiable Status of Goods
Substantial Transformation Test.
The “Name, Character, or Use” test.
See the Ferrostall Metals Corp. v. United States (1987) case.
Japanese steel that was galvanized in New Zealand was
substantially transformed to a New Zealand product, not subject
to voluntary restraints between U.S. and Japan.
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Dutiable Status of Goods
Substantial Transformation Test (cont’d).
North American Preferential Rules.
Other Trade Preference Rules.
Coming Changes in Rules of Origin?
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Dutiable Status of Goods
WTO Agreement on Rules of Origin: under development since
1995.
Special Rules of Origin for Textiles and Apparel.
Textiles and clothing present complicated trade issues because
companies move operations from country to country, raw
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Dutiable Status of Goods
Special Rules of Origin for Textiles and Apparel (cont’d).
Textiles are governed by special rules into U.S.
U.S. imports from Canada and Mexico are governed by separate
rules.
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Dutiable Status of Goods
Marketing and Labeling of Exports.
FTC- if label states “Made in USA” it means, “all or virtually
all of the materials, processing or component parts are made in
the U.S. and that their final assembly or processing took place
there”.
Only negligible foreign content- all or virtually all is a very
high standard.
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U.S. Trade Preferences for Developing Countries
Trade Preference: granting of preferential access or trade
advantage to imported goods not similar to other goods.
Encourages manufacturing in Caribbean
The goods are imported to U.S. at favorable tariff rates.
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U.S. Trade Preferences for Developing Countries
Generalized System of Preferences.
Beneficiaries are developing countries; goods enter at lower
tariff rate. In 1976 program- benefits 140 countries. In 1980’s 4
countries graduated: Hong Kong, Singapore, S.Korea & Taiwan.
GSP Rules of Origin-35% value added in GSP country.
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U.S. Trade Preferences for Developing Countries
Caribbean Basin Initiative.
CBI is collective name given to several laws that grant trade
preferences to aid the Caribbean countries. Now includes
footware, luggage, and watches.
Caribbean Rules of Origin.
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U.S. Trade Preferences for Developing Countries
Africa Growth and Opportunity Act.
Established to help with political freedom in forty-eight poor
countries in sub-Saharan Africa where per capita income is
$500/year.
AGOA broadens GSP for Africa and extends it to 2008.
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U.S. Trade Preferences for Developing Countries
U.S. – Andean Trade.
Andean Trade Program: U.S. program to promote economic
development in Andean countries while combating drug
trafficking and encouraging democracy.
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U.S. Trade Preferences for Developing Countries
CAFTA.
Central America-Dominican Republic Free Trade Agreement
with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua,
and the Dominican Republic.
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Other Customs Laws
Affecting U.S. Imports
Drawbacks: refund of duties already paid.
Most common is the manufacturing drawback.
Same-condition drawbacks are utilized when the imported goods
are not processed or manufactured, but are reexported in the
“same condition” as they were imported.
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Other Customs Laws
Affecting U.S. Imports
Foreign Trade Zones.
Goods may be imported without being subjected to tariffs until
goods are released into the stream of commerce
See the Nissan Motor Mfg. Corp. v. United States case:
machinery entering a foreign trade zone for assembly is not
merchandise (not duty free).
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Conclusion
Bureau of Customs and Border Protection is responsible for
securing our borders from:
terrorist threats; interdicting illegal immigration and
contraband; collecting tariff revenue; enforcing the customs and
tariff laws of the United States; and enforcing the export control
laws.
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Conclusion
Bureau lives in a tension between securing borders and allow
free flow of commerce into and out of the United States.
Tariff laws are intended to encourage and reward certain
business decisions.
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CHAPTER 10
Laws Governing Access
to Foreign Markets
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The General Principle of
Least Restrictive Trade
WTO mandates a balancing test: weigh protecting public against
restrictions on trade.
See the Thailand: Restrictions on Importation of Cigarettes case
(WTO 1990). Thailand's restrictions on imports of cigarettes
contravened GATT.
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Technical Barriers to Trade
A technical regulation is a MANDATORY law/regulation
affecting a product’s characteristics.
Standard is a VOLUNTARY guideline established by a private
or administrative body.
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Technical Barriers to Trade
Protection of Public Health,
Safety, or Welfare.
Product Testing, Inspections, and Certifications for Compliance
with Product Safety, Quality, and Technical Standards and
Regulations Sale.
Why Standards and Technical Regulations are Barriers to Trade.
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Technical Barriers to Trade
EU Standards and Technical Regulations.
EU efforts to reduce technical barriers to trade is critical
because of the multi-national brands and consolidation of the
euro.
The EU is attempting to increase its standardization through the
“CE Mark”.
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Technical Barriers to Trade
Japanese Standards and Technical Regulations.
Product standards in Japan are usually based on design
characteristics. U.S, in contrast, has standards of performance.
What does the “JIS” mark signify?
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Technical Barriers to Trade
Chinese Standards and Technical Regulations.
China is still socialist/communist and has a very bureaucratic
regulatory framework.
Laws are administered by AQSIQ.
Standardization Administrative of China 2001. Coordinate
development of standards.
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Technical Barriers to Trade
The WTO Agreement on
Technical Barriers to Trade (TBT).
One of Uruguay Round agreements 1994.
Harmonization, Equivalence, and Mutual Recognition.
Conformity of Assessments.
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Technical Barriers to Trade
The WTO Agreement on TBT (cont’d).
Harmonization, Equivalence, and Mutual Recognition.
TBT applies to all products, agricultural, industrial, and
consumer goods.
See the European Communities—Measures Affecting Asbestos
& Asbestos-Containing Products (2001) case. French
restrictions were valid under the TBT Agreement.
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Technical Barriers to Trade
International Organization
for Standardization (ISO).
International standardization makes design and building and
products cheaper and trade easier.
ISO 9000- certification makes selling in Europe much easier.
ISO 14000- environmental standards.
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Import Licensing Procedures
Article XI permits a country to use licensing in a
nondiscriminatory, MFN, and transparent fashion to regulate
some imports.
Example: a country may want to only allow importation of
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Import Licensing Procedures
GATT requires “transparency” (published materials available to
all countries).
WTO Agreement on Import Licensing Procedures.
Trade Facilitation.
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Government Procurement
GATT allows exception to national treatment allowing
government to favor domestic supplier.
WTO Agreement on Government Procurement applies only to
those countries that signed, and applies to goods and services
worth 130,000 SDR’s (US $197,000) and construction contracts
over 5 million SDR’s (US $7.6 million).
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Government Procurement
WTO Agreement on Government Procurement.
Agencies Excluded from the Procurement Rules: nearly 90 U.S.
agencies are excluded.
Procurement Rules.
Transparency in Procurement Procedures.
Procurement Rules: AGP reverses general WTO rules that allow
government agencies to favor domestic products.
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Government Procurement
Must be Transparency in Procurement Procedures.
Administering Government Procurement Rules in the United
States.
Responsibility rests with the President to revoke the waiver of
“Buy America Act.”
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Trade In Services
Trade in services includes professional services (e.g., law,
accounting, architecture, engineering, etc), health care,
insurance, travel, and many others.
According to WTO, exports of commercial services totaled $3.3
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Trade in Services
The WTO Agreement on Trade in Financial Services.
Signed by over 100 nations.
Promotes efficiency and reduces cost.
Provides consumers with greater choice.
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Trade in Services
The WTO Agreement on Trade in Financial Services.
WTO Agreement on Trade in Financial Services.
WTO Agreement on Basic Telecommunications.
Opened telecommunication markets to foreign competitors.
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18
19
Trade in Agriculture
WTO: agricultural exports over $1.34 trillion worldwide (2008).
Some Agricultural Trade Issues in the EU and Japan.
EU Common Agricultural Policy.
Japanese Rice: A Trade Dilemma.
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19
20
Trade in Agriculture
The WTO Agreement on Agriculture (1995): began removing
government intervention in farming sector.
Domestic Support Programs.
Agricultural Export Subsidies.
Making Export Markets Accessible.
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20
21
Trade in Agriculture
Sanitary and Phytosanitary Measures: Food, Animal, and Plant
Safety.
A country has the right to protect human, animal and plant life
but cannot be used to justify otherwise discriminatory conduct.
Codex Alimentarius: International standards for the protection
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21
22
Trade in Agriculture
Sanitary and Phytosanitary Measures: Food, Animal, and Plant
Safety (cont’d).
EC Measures Concerning Meat and Meat Products (Hormones)
(1997). EC’s ban on sale of beef containing residual growth
hormones violated Agreement on Sanitary and Phytosanitary
Measures.
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22
23
Trade in Textiles and Clothing
History of Textile Import Regulation and Deregulation.
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 &unfair trade.
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24
What about 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 Textiles and Clothing
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25
Other WTO “Trade
Related” Agreements
Trade-Related Investment Measures.
Trade-Related Aspects of Intellectual Property Rights (TRIPS).
WTO countries agree to abide by intellectual property
conventions.
Domestic and foreign IPR (intellectual property rights) treated
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26
Other WTO “Trade
Related” Agreements
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
(cont’d).
Members are bringing their laws into compliance with TRIPS.
Information Technology Agreement.
1996 WTO ITA: calls for elimination of all tariffs on
computers, telecommunications, software, scientific instruments
by 2005.
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27
Trade Sanctions and Section 301: Threat of Retaliation
Section 301 Trade Act 1974.
See the United States—Sections 301-310 of the Trade Act of
1974.
Basic Section 301.
USTR retaliates against foreign country.
Discretionary and may be imposed when USTR finds
unreasonable discrimination that burdens or restricts U.S trade.
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28
Trade Sanctions and Section 301: Threat of Retaliation
Basic Section 301 (cont’d).
Section 301 Procedures.
Sanctions and Retaliatory Measures.
The Carousel Law: Rotating Products Subject to Retaliation.
U.S. Trade Development Act (2000) amends section 301 by
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29
Trade Sanctions and Section 301: Threat of Retaliation
The Carousel Law: Rotating Products Subject to Retaliation
(cont’d).
. . . periodically review list of products subject to retaliatory
action and revise them 120 days after inception, and every 180
days thereafter.
EU and some American importers object to the law.
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30
Trade Sanctions and Section 301: Threat of Retaliation
Special 301.
U.S. uses this law to assure that American-owned intellectual
property rights (IPRs) are adequately protected in foreign
countries.
Each year USTR identifies countries.
Worst offenders are tagged “priority foreign countries” which
requires an investigation. USTR also maintains a “watch list.”
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31
Conclusion
The WTO is moving the global economy to more free and fair
trade.
But, there are many countries still dealing with political
instability, corruption, communism, Marxism, that find it
difficult to open to free trade.
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31
CHAPTER 11
Regulating Import Competition
and Unfair Trade
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1
2
GATT Escape Clause:
Article XlX- allows escape from previous promises.
Many countries have provisions in national law that parallel
Safeguards Against Injury
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2
3
GATT Escape Clause:
See the Argentina Safeguard Measures on Imports of Footwear
(WTO 1999) case: Argentina failed to show that increased
imports were the cause of serious harm to domestic footwear.
Safeguards Against Injury
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3
4
WTO Agreement on Safeguards.
Provides details lacking in the escape clause and sets out
procedural steps for countries to use it.
Administrative investigation and hearing.
Must find increased imports are the actual cause of the
Safeguards Against Injury
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5
WTO Agreement on Safeguards (cont’d).
Global Safeguards.
Limits on Use of Safeguards.
May not exceed 4 years.
Voluntary restraint agreements no longer permitted.
Safeguards Against Injury
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5
6
WTO Agreement on Safeguards (cont’d).
The WTO Committee on Safeguards: countries must notify the
WTO Committee on Safeguards when taking action.
Safeguards Against Injury
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6
7
Safeguards Against Injury Under U.S. Law.
U.S. Escape Clause: Section 201 of The Trade Act of 1974.
Does not follow the GATT guidelines.
U.S. law
Safeguards Against Injury
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8
Safeguards Against Injury Under U.S. Law (cont’d).
U.S. Escape Clause: Section 201 of The Trade Act of 1974.
WHAT? “article being imported in such increased quantities as
to be a SUBSTANTIAL cause of SERIOUS INJURY or threat
thereof to domestic industry producing an article LIKE or
DIRECTLY COMPETITIVE with the imported article”
Safeguards Against Injury
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8
9
Safeguards Against Injury Under U.S. Law (cont’d).
U.S. Standard for Import Relief.
ITC Safeguard Investigations: public notice in the Federal
Register.
Must have “substantial cause of serious injury” and apply the
Safeguards Against Injury
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9
10
Safeguards Against Injury Under U.S. Law (cont’d).
See the Heavyweight Motorcycles & Engines & Power-Train
Subassemblies (ITC, 1983) case: incremental duties must be
imposed.
Safeguards Against Injury
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10
11
Available Remedies Under U.S. Law.
President’s options:
Temporary: 4-8 yrs.
50% tariff increase.
Tariff rate quotas.
Absolute quotas.
Auctioned import license quotas.
Trade Adjustment Assistance.
Safeguards Against Injury
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11
12
Available Remedies Under U.S. Law (cont’d).
Market Disruption from Chinese Imports.
Imports from China are subject to special rules not applicable to
other WTO countries.
U.S. and China agreed that safeguards would apply until 2013.
Relief if ITC finds “market disruption.”
Safeguards Against Injury
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12
13
Trade Adjustment Assistance.
Petitions are filed with Department of Labor by workers, state
workforce, or union.
Direct cash payments to workers.
Job retraining for workers and relocation.
Help for companies as well.
Trade Assistance to Firms.
Safeguards Against Injury
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13
14
Unfair Import Laws: Dumping
and Antidumping Duties
Dumping:
The unfair trade practice of selling products in a foreign
country for less than the price charged for the same or
comparable goods in the producer’s home market.
The Economics of Dumping.
Price discrimination.
Purpose to drive out competition.
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15
Unfair Import Laws: Dumping
and Antidumping Duties
WTO Antidumping Agreement.
Calculating the Dumping Margin.
Dumping is at less than normal value, or less than “fair value.”
Calculating the Export Price.
Price at which a product is sold to an unaffiliated buyer in the
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15
16
Unfair Import Laws: Dumping
and Antidumping Duties
WTO Antidumping Agreement (cont’d).
Adjustments to Normal Value and Export Price.
Market Viability and Constructed Value.
Sales Below Cost.
Level-of-Trade Problem.
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16
17
Unfair Import Laws: Dumping
and Antidumping Duties
The Material Injury Requirement.
Antidumping duties are only applied after a finding of ‘material
injury.’ Factors:
(1) Volume of the dumped imports.
(2) Effect of the imports on prices in the domestic market for
like products and
(3) Impact on domestic industry.
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17
18
Unfair Import Laws: Dumping
and Antidumping Duties
WTO Dispute Settlement in Dumping Cases.
Disputes taken to the WTO Dispute Settlement Panel.
Panel must accept the “facts” as found by the ITA/ITC in their
investigation.
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18
19
Unfair Import Laws: Dumping
and Antidumping Duties
Dumping and Non-Market Economy Countries in Transition.
Market-Oriented Exporters.
See the Bulk Aspirin from the People’s Republic of China (ITA,
2000) case: The ITC found injury to US producers of aspirin
but the ITA cut the antidumping duties to zero. Rhodia testified
that without the duties its business disappeared. Rhodia closed
its U.S. plant and moved to China.
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19
20
Unfair Import Laws: Subsidies and Countervailing Duties
WTO Agreement on Subsidies and Countervailing Measures
(1994).
Definition of a Subsidy: government confers a benefit on a
domestic firm and provides income, price support or financial
contribution (not collecting a tax, providing grant or loan at
favorable rate) in order to achieve a social or economic
objective.
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20
21
Unfair Import Laws: Subsidies and Countervailing Duties
WTO Agreement on Subsidies and Countervailing Measures
(1994).
WTO Rules Apply to Specific Subsidies.
Prohibited Subsidies: export subsidies or import substitution
subsidy.
U.S.-Brazil Dispute over Cotton Subsidies.
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21
22
Unfair Import Laws: Subsidies and Countervailing Duties
Actionable (Adverse Effect) Subsidies.
Domestic subsidies which give unfair competitive advantage to
domestic firms.
Actionable at WTO if:
Cause injury to domestic industry, OR
Cause nullification and impairment of rights, OR cause “serious
prejudice.” (Presumed if subsidy exceeds 5% of value.)
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22
23
Unfair Import Laws: Subsidies and Countervailing Duties
Actionable (Adverse Effect) Subsidies.
Upstream Subsidies: granted for raw materials.
WTO Subsidy Dispute Settlement.
Countervailing Duty Actions.
Countervailing Duty Actions in the United States.
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23
24
Unfair Import Laws: Subsidies and Countervailing Duties
Subsidies and State-Owned Enterprises.
Presents several problems when enterprises are owned by
countries without a market economy.
In 2007, the Department of Commerce began applying the
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24
25
Unfair Import Laws: Subsidies and Countervailing Duties
Subsidies and State-Owned Enterprises (cont’d).
Exports from Newly Privatized Enterprises.
See the U.S. Countervailing Measures Concerning Certain
products from the EC (“European Steel”) (2002) case. Panel
found U.S. violated WTO Agreement on Subsidies and
Countervailing Measures.
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25
26
Countervailing Duties and Antidumping duties may be reviewed
by the CIT (both final determinations and negative injury).
Limited review in Escape Clause.
Judicial Review in
International Trade Cases
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26
27
Conclusion
Complex interrelated international and national regulations.
Businesses will face these issue at home and abroad.
What role WTO will play in the future?
Role of politics- reflections?
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27
CHAPTER 8
National Lawmaking Powers and the Regulation of U.S. Trade
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1
2
The Separation of Powers
Drafters of U.S. Constitution places power to regulate
international commerce in hands of federal government.
The Executive-Legislative Debate.
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2
3
The Separation of Powers
Presidential or Executive Power.
Separation of powers and checks and balances leaves the
President having to work with Congress.
What if they aren’t cooperating?
Consequences?
What is the alternative?
Role of business in this process?
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3
4
The Separation of Powers
Presidential or Executive Power (cont’d).
Power to Negotiate Treaties.
Power to appoint ambassadors.
Is the Commander in Chief.
Inherent Presidential Powe
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4
5
The Separation of Powers
Presidential or Executive Power (cont’d).
Inherent Presidential Power and Its Limitations.
See the Youngstown Sheet & Tube v. Sawyer case (1952).
President’s seizure of private property during wartime was not
justified based on Presidential powers.
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5
6
The Treaty Power
Domestic Law Effect of U.S. Treaties.
Treaties are self-executing, non-self-executing, or executory.
Equal Dignity Rule.
An act of Congress can override an inconsistent prior treaty.
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6
7
The Treaty Power
Domestic Law Effect of U.S. Treaties.
Equal Dignity Rule (cont’d).
Statutes and treaties are of equal dignity.
Example of Treaties under U.S. Law: FCN Treaties (Friendship,
Commerce and Navigation).
See the Macnamara v. Korean Air Lines case (1988). Was
KAL’s discriminatory treatment intentional?
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7
8
Executive Agreements
Sole Executive Agreements and President’s Inherent Power.
International agreements between the President and a foreign
country, entered into without resort to the treaty process.
Binding, and have the effect of law.
Two types: sole executive agreements and congressional-
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8
9
Executive Agreements
Sole Executive Agreements and President’s Inherent Power
(cont’d).
See the Dole v. Carter case (1977). President did not exceed his
powers. This was not a treaty but an executive agreement made
pursuant to the President’s constitutionally inherent executive
authority.
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9
10
U.S. Trade and Tariff Legislation
Smoot-Hawley Tariff Act of 1930.
Raised tariffs so high, there was international retaliation. Some
say it exacerbated the Great Depression.
The Reciprocal Trade Agreements Act of 1934.
Introduced Most Favored Nation status (now known as Normal
Trade Relations).
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10
11
U.S. Trade and Tariff Legislation
The Reciprocal Trade Agreements Act of 1934 (cont’d).
See the Star-Kist Foods, Inc. v. United States case.
Congressional delegation to President was constitutional, and
guided decisions based on purpose of the act
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11
12
U.S. Trade and Tariff Legislation
More Recent U.S. Trade Legislation.
Trade Expansion Act of 1962: created office of the U.S. Trade
Representative.
Trade Reform Act of 1974: gave more power to the President.
Trade Agreements of 1979.
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12
13
U.S. Trade and Tariff Legislation
More Recent U.S. Trade Legislation.
Omnibus Trade and Competitiveness Act of 1988 (NAFTA).
Caribbean Basin Economic Recovery Act of 1983,
The Andean Trade Program and Drug Eradication Act of 2002,
and
The African Growth & Opportunity Act of 2000.
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13
14
Trade Agreements
General Agreement on Tariffs and Trade (GATT) (1974 and
1994).
Presidential Authority for GATT Multilateral Trade
Negotiations.
Trade Promotion Authority.
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14
15
Trade Agreements
Trade Promotion Authority.
Expanded Powers.
Trading with the Enemy Act.
International Emergency Economic Powers Act (IEEPA) 1977-
basis of economic sanctions.
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15
16
Federal-State Relations
The Supremacy Clause (federal preemption).
Burma, Human Rights, and Federal Preemption.
Economic Sanctions Against Burma.
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16
17
Federal-State Relations
The Import-Export clause.
The Commerce clause.
Commerce Clause and Multiple Taxation. See the Japan Line,
Ltd. v. County of Los Angeles (1979) case. Ad valorem
property tax on containers used exclusively in foreign
commerce violates the Commerce Clause.
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Federal-State Relations
The Commerce Clause (cont’d).
State Income Taxation of Multinational Corporations.
State Restrictions on Exports.
State Restrictions on Imports.
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U.S. Department of Commerce.
Includes control of exports as well as International Trade
Administration or ITA, Bureau of Industry and Security.
U.S. Department of Homeland Security.
Border and Transportation Security.
Impact of Homeland Security on American Importers and
Federal Agencies
Affecting Trade
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United States Trade Representative.
Carries out all bilateral and multilateral trade negotiations on
behalf of U.S.
International Trade Commission.
Federal Agencies
Affecting Trade
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21
U.S. Court of International Trade.
Exclusive jurisdiction over all civil actions against U.S.,
involving revenue from imports, tariffs, embargoes or
quantitative restriction (except for health and safety) and
enforcement of customs laws.
Federal Agencies
Affecting Trade
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21
Conclusion
President has limited powers.
But President has broad powers during time of war.
Presidents rely on delegations of power from Congress.
22
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22
BA177: Legal Environment of World Cultures
Chapter 11: Regulating Import Competition and Unfair Trade
Kemp lecture
Double edged sword of import competition
Competing national political interests
Protectionism vs. free trade
“International rules serve as a check on these competing
national political interests.”
Safeguards Against Injury
= “emergency actions used to protect a domestic industry that
produces a like or competing product from increasing volumes
of imported goods.” Like tariffs, quotas, etc.
GATT Escape Clause from 1947 allows temporary corrective
action to correct an industry when 1. unforeseen development,
2. due to tariff obligation, 3. increased amounts of imported
product and 4. threatens “serious injury to domestic” producers
of the product.
WTO Agreement on Safeguards – U.S. does by ITC
investigation.
Global safeguards means restrictions on product, not based on
the nation of import.
Temporary and restrictions
Trade compensation to affected nation may be imposed.
WTO Committee on Safeguards
U.S. Safeguards Against Injury
Section 201 of 1974 Trade Act
Standard for relief similar to GATT
ITC safeguard investigation more detailed than GATT –
substantial cause
Remedies are time to retool, modernize, etc.
Heavyweight Motorcycles, pp.344-345
Employees may get trade adjustment assistance if
lot of workers laid off,
Decrease in sales or production, and
Import competition contributed substantially
Dumping and Antidumping Duties
“Selling products in foreign country for less tan the price
charged for the same…goods in the producer’s home market.”
National laws and GATT “permit the importing country to
impose antidumping duties on dumped products to offset the
unfair low price and to prevent injury to a domestic product.
Dumper is trying to get monopoly power and will raise prices
after drives competition out of business.
GATT 1994 and WTO 1994 Antidumping Agreement
U.S. has ITA and ITC determine whether there is dumping, what
the dumping margin is, defining like product, calculating export
price, etc.
Material injury requirement
Chilean Salmon case
Subsidies and Countervailing Duties
Governments pay nationals to “help” due to some governmental
policy. Result is damaging to free trade in the subsidized
product.
WTO Agreement on Subsidies and U.S. law
“There must be a financial contribution from government that
confers a benefit.”
Specific subsidies only = financial aid to select companies or
industries (eg, wheat)
Actionable subsidies must be either prohibited or actionable, the
latter not being per se illegal and needing to show “serious
prejudice.”
Dispute settlement through WTO or U.S. procedures.
European Steel case. Was U.S. law really different from WTO
law?
Chapter Summary
Right of nation to protect domestic industries
WTO allows global safeguards, ones that apply to industry
without regard to country
In U.S. ITC and ITA determine whether safeguards are
appropriate.
Trade adjustment assistance for workers
Dumping is unfair trade practice of selling goods in foreign
country for less than sell same goods in own country.
Subsidy is government financial contribution to domestic
industry. Illegal ones include export, import and adverse
effects subsidies.
Countervailing duties can now be applied to non-market
economies, especially Chinese products.
WTO decisions have caused U.S. to change some of its unfair
trade law.
Problems
5. Smith-Corona v. Brother typewriter case
6. American winemakers v. French and Italian wine makers.
Ignore the question and explain from the text what the U.S.
would have to show to prevail. Compare U.S. law and WTO
law.
CHAPTER 9
GATT Law and the World Trade Organization: Basic Principles
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2
Introduction to
Trade Regulation
Trade barrier is any impediment to trade in services or goods.
Import trade barrier is any impediment, direct or indirect, to the
entrance or sale of imported goods or services.
What are some of the Reasons for Regulating Imports?
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3
Introduction to
Trade Regulation
Tariffs.
Non-tariff Barriers to Trade.
Embargoes.
Quotas.
Auctioned Quotas.
Tariff-Rate Quotas.
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4
Introduction to
Trade Regulation
Indirect Non-tariff Barriers.
Japanese Large-Scale Retail Stores Law (now repealed).
Import Licensing Schemes and Customs Procedures as Trade
Barriers.
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5
Introduction to
Trade Regulation
Transparency.
Impact of Trade Barriers on Managerial Decisions.
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6
Multilateral trade negotiations- reduce tariffs and nontariff
barriers (NTB).
Nondiscrimination and unconditional MFN.
National Treatment.
Eliminate quotas and NTB (convert NTB to tariffs and then
reduce), transparency very critical.
The General Agreement
on Tariffs and Trade
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7
GATT Framework.
Rules created by international agreement, become guiding
principles of international trade law.
GATT and U.S. Law.
GATT does not provide individual rights and remedies to
The General Agreement
on Tariffs and Trade
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8
GATT and U.S. Law (cont’d).
GATT Agreements as a Basis for Interpreting U.S. Trade
Statutes.
Scope and Coverage of GATT 1947.
Scope and Coverage of GATT 1994.
The General Agreement
on Tariffs and Trade
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9
WTO replaced GATT in 1995.
WTO is an umbrella organization that sets rules of international
trade and dispute resolution.
Overseen by the Ministerial Conference which appoints the
Director-General.
World Trade Organization
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9
10
Ex. 9.1 Structure of the WTO
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11
GATT/WTO
Dispute-Settlement Procedures
WTO Dispute-Settlement Procedures.
Dispute mechanisms and procedures attempt to avoid retaliation
or “trade wars.”
Have quasi-judicial process for resolving disputes when
deadlocked.
Only a government can bring a “complaint” against another
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12
GATT/WTO
Dispute-Settlement Procedures
WTO Dispute-Settlement Procedures (cont’d).
See the European Communities-Regime for the Importation,
Sale, and Distribution of Bananas case (1997). U.S. could call
for the convening of a WTO panel to question European
Community import barriers.
WTO Reports as Legal Precedent.
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13
GATT 1994: Major
Principles of Trade Law
GATT reinforces five principles:
Multilateral trade negotiations.
Predictability of trade opportunities.
Non-discrimination and unconditional MFN.
National treatment.
Elimination of quotas and other non-tariff barriers.
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GATT 1994: Major
Principles of Trade Law
Multilateral Trade Negotiations.
The Kennedy Round.
The Tokyo Round.
The Uruguay Round.
The Doha Round (failure of two meetings in Seattle 1999, and
Cancun 2003).
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GATT 1994: Major
Principles of Trade Law
Tarrification.
Process by which quotas, licensing schemes, and other non-
tariff barriers to trade are “converted” to tariffs.
Tariff Concessions, Bound Rates, and Tariff Schedules.
Article II of GATT calls for member nations to cooperate in
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GATT 1994: Major
Principles of Trade Law
Tariff Concessions, Bound Rates, and Tariff Schedules (cont’d).
Tariff bindings are capped at agreed rate and published in tariff
schedules.
See the GATT European Economic Community---Import Regime
for Bananas (1995). EEC had deprived complaining Latin
American countries of benefits under bound tariff schedules.
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Nondiscrimination, MFN, and
National Treatment
Most Favored Nation (MFN) Trade.
Agreement to treat products (or services) from that country with
lowest tariff rates that it gives to similar products imported
from its other MFN trading partners.
In U.S., MFN granted by Congress.
According to WTO, all member nations are entitled to MFN
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Nondiscrimination, MFN, and
National Treatment
Most Favored Nation (cont’d).
Unconditional MFN: if a member extends privilege to another
member then that privilege automatically is extended to all
members.
Exceptions to MFN Trading Status.
New Terminology: MFN is now Normal Trade Relations or
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Nondiscrimination, MFN, and
National Treatment
Most Favored Nation (cont’d).
NTR Status and Jackson-Vanik: Remnant of the Cold War.
Normalization of U.S. Trade Relations with Russia.
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Nondiscrimination, MFN, and
National Treatment
Most Favored Nation (cont’d).
Normalization of U.S. Trade relations with China.
1994 Clinton delinked human rights and trade for China’s
annual renewal of MFN.
2000 Congress granted permanent normal trade status to China
effective upon China’s admission to WTO.
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Nondiscrimination, MFN, and
National Treatment
Most Favored Nation (cont’d).
Issues Affecting U.S.-China Trade.
North Korea.
Tibet.
Chinese corporate espionage against U.S.
U.S. is pressuring China to allow its currency (yuan) to rise, but
this could trigger ‘currency wars.’
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National Treatment
National Treatment provisions in GATT are intended to ensure
that imported products will not be subject to discriminatory
treatment under the laws of the importing nation.
See the Japan Taxes on Alcoholic Beverages- 1996 WTO.
Japan’s tax policy violated GATT provisions regarding national
treatment.
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23
GATT and the
Elimination of Quotas
GATT permits tariffs to regulate imports but not quotas or other
quantitative restrictions.
Quantitative Restrictions: Balance of Payments Exception and
Developing Countries.
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GATT and the
Elimination of Quotas
Quantitative Restrictions: Balance of Payments Exception and
Developing Countries.
See the India—Quantitative Restrictions on Imports of
Agricultural, Textile, & Industrial Products (1999) case. U.S.
challenged India’s restrictions, and WTO panel found they were
not necessary.
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Conclusion
Trade is often a political football in the United States and other
countries.
When U.S. approved GATT agreement also passed a bill to
review WTO every 6 months.
Fears of “multilateralism”- why is that a “dirty word” to some?
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26
Conclusion
Conflict between international and national law.
Law vs. politics.
What is the appropriate connection between human rights and
trade? European and Japanese model vs. United States’
historical approach?
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Conclusion
Should labor and environmental issues be linked to trade?
Furthers whose agenda?
Is it protectionism in disguise?
Conflict between the developing and developed world?
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27
Ch11Glossary
Regulating Import Competition
1. actionable subsidy: a subsidy that is not automatically
prohibited but may still be “actionable” under WTO rules
because of its harmful effect; also called an “adverse effects”
subsidy
2. adverse effects subsidy: a subsidy that is not automatically
prohibited but may still be “actionable” under WTO rules
because of its harmful effect; also called an “actionable
subsidy”
3. antidumping laws: national laws that define dumping and
that set out the administrative procedures and remedies
available in dumping cases
4. countervailing duty: a special tariff, levied in addition to
the normal tariff, imposed on imports of subsidized goods for
the purpose of offsetting the subsidy
5. dumping: the unfair trade practice of selling products in a
foreign country for less than the price charged for the same or
comparable goods in the producer’s home market
6. dumping margin: the export price is less than the normal
value of the product in the home market
7. escape clause: a clause in GATT (1947) that permits a
country to temporarily “escape” from its tariff concessions or
from other trade agreement obligations under certain conditions.
8. export price: the price of the good when sold in or for
export to another country
9. export subsidy: a subsidy made available to domestic firms
upon the export of their product or made contingent on export
performance
10. global safeguards: the safeguards applicable to WTO
member countries
11. import competition: a condition that exists when producers
of domestic goods compete with producers of imported goods
largely due to lower employee costs, fewer government
restrictions, and/or greater production efficiencies of the
foreign firms
12. import relief: the measures taken by the government of the
domestic country in order to protect its producers and to
provide greater economic and social benefits than costs
13. import substitution subsidy: a government subsidy whose
payment is contingent on its recipient using or purchasing
domestically made goods over imported goods
14. like products: directly competitive products
15. market disruption: the increased importation of an article
so that it causes material injury, or a threat of material injury,
to a domestic industry
16. market viability: the condition that exists if the exporting
country’s home market has sufficient sales to warrant using its
normal price as a price comparison
17. market-oriented exporter: an exporting firm in an non-
market economy (NME) country that is not under government
control and that does business on competitive terms
18. market-oriented industry: an industry in which resources
and labor costs are procured at free-market prices in an
environment where there is little government involvement in
controlling production and capacity decisions, where prices are
set by markets, and where the producers are mostly privately
owned
19. material injury: an injury that is “not inconsequential,
immaterial, or unimportant”
20. non-market economy (NME): a country whose political and
economic system relies heavily on government central control,
rather than on free-market forces
21. normal value: the price at which a good is first sold for
consumption in the exporting or producing country
22. prohibited subsidy: a subsidy that is impermissible per se
and banned under all conditions
23. safeguard against injury: a legal action taken by a country
to protect a domestic industry by granting import relief or
adjusting imports
24. specific subsidy: a subsidy that is given to a select
company or limited number of companies, to a select industry or
group of industries, or to firms in a select geographical region
of a country
25. subsidy: a financial contribution — including any form of
income or price support —made by a government that confers a
benefit on a specific domestic enterprise or industry
26. surrogate normal value: the value of the factors of
production — including materials, labor, energy, capital costs
and depreciation, packaging, and other general expenses — in a
market economy country whose level of economic development
is comparable to that of the non-market economy (NME)
country and who is a significant producer of comparable
merchandise
27. trade adjustment assistance: the cash benefits, tax credits,
or vouchers that are available to workers to cover the expenses
of a job search, retraining and relocation, and health insurance
coverage
28. trade compensation: a country imposing a safeguard
compensates a supplying nation for the burden the safeguard
measure has imposed on it
29. unfair trade: use of exporting tactics for the purpose of
increasing market share while driving out competition for its
goods in the importing country
30. upstream subsidy: a subsidy bestowed on raw materials or
component parts (“inputs”) that are used in an exported product
Regulation of U.S. Trade
Chapter 8, Schaffer text
BA177 Kemp
U.S. Political System
Separation of Powers
Treaty Power
Executive Agreements
Trade and Tariff Legislation
International Trade Agreements
Federal-State Relations
Federal Agencies Affecting Trade
Separation of Powers
U.S. Constitution guides regulation of international relations.
U.S. has 50 states that gave up some of their sovereign powers
to a central federal government to make a strong nation. It has
worked so far. Compare to European Union (EU). Power to
regulate international commerce is in the hands of the federal
government.
Three overlapping yet separate powers: legislative, executive,
judicial. Executive-legislative debate is between president and
legislature.
It says Congress has power to regulate commerce with foreign
nations.
It says the president has power to make treaties and appoint
ambassadors. The president has inherent executive power,
treaty power, and powers delegated to the president by
Congress.
Youngstown Sheet & Tube (1952) case
Supreme Court said the presidential powers do not include
authority to nationalize U.S. steel mills. You have got to read
Justice Jackson’s concurring opinion, at least the part in the
text.
Treaty Power
President with 2/3 majority of Senate makes treaties.
Congress delegates power to make executive agreements,
international agreements that president makes without
congressional approval.
Domestic law effect of treaties depends on whether self-
executing (domestic law effect) or non-self-executing
(executory). Remember those classifications?
Executive Agreements
Congress delegates power to make executive agreements,
international agreements that president makes without
congressional approval. Two types: sole executive and
congressional-executive agreements.
Dole v. Carter (1977). Supreme Court decided that president
has power to return crown jewels to Hungary without
congressional approval = a sole executive agreement.
Trade and Tariff Legislation
President’s power to negotiate congressional-executive trade
agreements has increased.
Still trying to deal with isolationist legislation, the Smoot-
Hawley Tariff Act.
First step to reduce tariffs was in Reciprocal Trade Agreements
Act of 1934, giving president power to negotiate reduced tariffs
on product by product basis using reciprocity.
Most-favored-nation (MFN) trade was introduced. It is now
called normal trade relations (NTR). Dictates that lower tariff
will be applied to all other MFNs when one negotiates that with
U.S.
Trade Expansion Act of 1962 and others authorized president to
make across the board tariff reductions and created U.S. Trade
Representative (USTR). While there is still a strong
protectionist ideology in the U.S. it is much more open to tariff
free trade today.
Trade Reform Act of 1974 created broad presidential power and
fast-track approval process for trade agreements. U.S. was
becoming a world player at last.
International
Trade
Agreements
Free trade agreements seek to eliminate/reduce tariff and non-
tariff barriers to free trade. Usually multilateral.
General Agreement on Tariffs and Trade (1994) (GATT) and
World Trade Organization (1994) (WTO) are most influential
today.
GATT started in 1947 and has proceeded to develop through
multilateral trade negotiations called “rounds.” See next
chapter,
Text lists some of the objectives including reducing tariffs,
eliminating non-tariff barriers, recognizing human rights
including workers and children, protecting IP rights,
agricultural agreements….
Federal-
State Relations
See slide 2. International trade is a federal power.
Supremacy Clause in Art. 6 says federal law preempts
inconsistent state laws.
Import-Export Clause in Art. I, sec. 10 prohibits states from
taxing imports and exports. Federal government can’t tax
exports either.
Commerce Clause in Art. 1, sec. 8 and dormant commerce
clause (negative implication doctrine) prohibit states from
making laws that have a substantial impact on the free flow of
international and interstate commerce.
Japan Line v. LA County (1979) case. Supreme Court said LA
County value based (ad valorem) tax on containers in port was
unconstitutional under Commerce Clause. When and how can
California tax containers in California ports? See bottom left
side of page 267 for the criteria adopted.
Federal Agencies Affecting Trade
Department of Commerce has 12 bureaus: International Trade
Administration (ITA) is one.
U. S. Trade Representative (USTR) is part of president’s
cabinet and carries on trade negotiations.
International Trade Comission (ITC) shares duties with ITA to
investigate unfair trade practices.
U.S. Court of International Trade (CIT) is on level of federal
district court and within jurisdiction of Federal Circuit.
Case Problem # 1
ICJ decision that under Vienna Convention on consular
Relations U.S. courts could not hold Mexican citizens charged
with crimes committed in the U.S. without informing them of
their right to confer with the Mexican Consulate.
ICJ was created under the UN Charter. Are these treaties self-
executing? Or do they need legislation to make them have
domestic law effect?
Consider the practical effect of the decision. Might these
viewpoints be justification for the border states like Arizona
trying so hard to keep Mexicans in Mexico? How can these
issues be fixed?
Ch09Glossary
GATT Law and the World Trade Organization: Basic Principles
1. ad valorem tariff
a tariff computed as a percentage of value
2. allocated quotas
a quota applied to the products of several nations
3. auctioned quota
a quota that is sold to the highest bidder
4. bilateral quotas
a quota placed on a particular product on the basis of its country
of origin
5. embargo
a complete ban on trade with a certain foreign nation or a ban
on the sale or transfer of specific products
6. global quotas
a quota imposed by an importing nation on a particular product
regardless of its country of origin
7. most-favored-nation (MFN) trade
an arrangement in which the lower tariff rates that are
negotiated with one nation are automatically applied to similar
imported products from all nations who sign an MFN agreement
with each other — without any concession being requested in
return
8. national treatment
the GATT provisions that are intended to ensure that imported
products will not be subjected to discriminatory treatment under
the laws of the importing nation
9. non-tariff barrier
an impediment to trade other than tariffs
10. nondiscrimination
the principle that all nations should be treated equally and
without discrimination
11. normal trade relations
an arrangement in which the lower tariff rates that are
negotiated with one nation are automatically applied to similar
imported products from all nations who sign a most-favored-
nation (MFN) agreement with each other — without any
concession being requested in return; also formerly referred to
as most-favored-nation (MFN) trade
12. quota
a quantitative restriction on imports
13. tariff bindings
a concession in which the tariff on a product, a product
category, or a group of products is bound, or capped, at a
certain rate
14. tariff concession
a situation where one country promises another country or
countries not to levy a tariff on imports of a given product at a
level higher than agreed upon in return for tariff concessions
from those countries
15. tariff or import duty
a tax levied on goods by the country of importation
16. tariff schedules
the detailed product-by-product listings of all tariffs for a
country
17. tariff-rate quota
a tariff that increases according to the quantity of goods
imported
18. tariffication
the process by which quotas, licensing schemes, and other non-
tariff barriers to trade are “converted” to tariffs
19. trade barrier
an impediment to trade in goods or services
20. transparency
a foreign government’s import regulations are made readily
available to the public and not hidden or disguised in
bureaucratic rules or practices
Ch08Glossary
National Lawmaking Powers and the Regulation of U.S. Trade
1. Commerce Clause
a Constitutional provision that provides the federal government
with exclusive control over foreign commerce
2. Import-Export Clause
a Constitutional provision that prohibits the federal government
from taxing exports and prohibits the states from taxing either
imports or exports
3. Supremacy Clause
a Constitutional provision that allows a U.S. federal law to
prevail when it directly conflicts with a law of the state (or
local) government
4. bilateral
an agreement between two nations (or parties)
5. compact
a type of agreement [between or among nations]
6. congressional-executive agreements
an executive agreement that is based on authority granted by
Congress to the president or statute, or by treaty
7. convention
a treaty on matters of common concern, usually negotiated on a
regional or global basis and open to adoption by many nations
8. equal dignity rule
a rule based on the idea that statutes and treaties are of equal
dignity, meaning they are of equal legal importance
9. federal preemption
the legal doctrine that a federal rule will prevail over an
inconsistent state rule. The inconsistent state law will be void to
the extent it conflicts with the federal scheme
10. free trade agreement
a trade agreement in which tariffs and non-tariff barriers are
eliminated or reduced significantly, and that often contain
additional provisions on matters of mutual concern
11. inherent executive powers
the powers that are either expressly granted to the president in
the Constitution or found to be there by judicial interpretation
12. international agreement
the international agreements such as treaties and executive
agreements
13. international trade law
the body of public law used to determine the responsibilities
that nations have to one another in their trade relations
14. most-favored-nation (MFN) trade
an arrangement in which the lower tariff rates that are
negotiated with one nation are automatically applied to similar
imported products from all nations who sign an MFN agreement
with each other — without any concession being requested in
return
15. multilateral
an agreement between many nations (or parties)
16. multilateral trade negotiations
a type of negotiation in which countries make reciprocal tariff
concessions to each other
17. multiple taxation
the same service or property is subjected to the same or a
similar tax by the governmental authorities of more than one
nation.
18. non-self-executing treaty
a treaty that requires an act of Congress or of the president to
give it legal effect
19. normal trade relations
an arrangement in which the lower tariff rates that are
negotiated with one nation are automatically applied to similar
imported products from all nations who sign a most-favored-
nation (MFN) agreement with each other — without any
concession being requested in return; also formerly referred to
as most-favored-nation (MFN) trade
20. regional trade agreements
a multilateral trade agreement that encompass a geographical
region
21. self-executing treaty
a treaty that provides individuals with specific rights, which the
courts will enforce
22. sole executive agreements
an executive agreement where the president can negotiate and
put into legal effect on the basis of his inherent authority,
without congressional approval
23. trade agreement
an agreement between nations on matters involving trade,
tariffs, and related issues
24. trade promotion authority
CHAPTER 12Imports, Customs and Tariff Law© 2012 Ce.docx
CHAPTER 12Imports, Customs and Tariff Law© 2012 Ce.docx
CHAPTER 12Imports, Customs and Tariff Law© 2012 Ce.docx
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CHAPTER 12Imports, Customs and Tariff Law© 2012 Ce.docx

  • 1. CHAPTER 12 Imports, Customs and Tariff Law © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 2 Administration of Customs and Tariff Laws Customs divided into seven regions, then further divided into districts. Customs offices are located at ports of entry to U.S., (e.g., major seaports, airports, and border crossings). Within each district are field import specialists who can seek
  • 2. advice from national import specialists. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 3 Administration of Customs and Tariff Laws The Formal Entry: administrative process required to import goods into the customs territory of a country. Goods have officially “entered” when: Arrived at U.S. port of entry. Goods are permitted. Delivery is authorized by Customs after inspection and release. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3
  • 3. 4 Administration of Customs and Tariff Laws The Formal Entry (cont’d). Estimated duties have been paid or customs bond posted. Required Documentation: Documents must be filed within 5 days: (1) An entry manifest or merchandise release form. (2) U.S. Customs Entry Summary Form. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 5 Administration of Customs and Tariff Laws The Formal Entry (cont’d). Required Documentation. (3) Proof of the right to make entry (a bill of lading, air waybill, or carrier’s certificate) (4) The commercial invoice obtained from the seller.
  • 4. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 6 Administration of Customs and Tariff Laws The Formal Entry (cont’d). Required Documentation. 6. Other documents required by special regulations (e.g., certificate of origin, quota visa, textile declaration). The Commercial Invoice. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 7 Administration of Customs and Tariff Laws The Formal Entry (cont’d). Payment of Duties.
  • 5. Informed Entries: personal smaller shipments valued at $2,000 or less. Electronic Entry Processing. Remote Location Filing. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 8 Administration of Customs and Tariff Laws Liquidation and Protest. Liquidation: final computation and payment of duty. Time Limits on Liquidation: within one year of entry. Protesting Liquidations: within 90 days. Judicial review within 180 days (CIT in NYC). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 6. 8 9 Administration of Customs and Tariff Laws Enforcement and Penalties. Making Materially False Statements to Customs. Negligent Violations. See the U.S. v. Golden Ship Trading (2001) case. Relying on assurances from the broker can still make the importer liable. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 10 Administration of Customs and Tariff Laws Enforcement and Penalties (cont’d). Crimes: 2 years plus fine. Smuggling of certain items will carry longer penalties. Better to disclose before investigation.
  • 7. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 11 Administration of Customs and Tariff Laws Enforcement and Penalties (cont’d). Aggravating and Mitigating Circumstances (p. 372). Enforced and Informed Compliance. Judicial Enforcement of Penalty Actions. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 12 Administration of Customs and Tariff Laws
  • 8. Binding Rulings. Requesting one can help plan business strategy. Should be submitted in writing. Judicial Review. Judicial review © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 13 Administration of Customs and Tariff Laws Judicial Review (cont’d). Judicial Review of Binding Rulings, see the U.S. v Mead Corp case: U.S. agencies and courts must grant limited deference to U.S. Customs letters and rulings. Pre-Importation Judicial review in emergency situations.
  • 9. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 14 Dutiable Status of Goods Tariffs, restraints on imports, and other import controls are applied to goods according to the item’s dutiable status. Harmonized Tariff Schedule of U.S. (HTSUS) – since 1989. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 15 Dutiable Status of Goods Harmonized Tariff Schedule (cont’d). Using the Harmonized Tariff Schedule. The Classification of Goods. See the Camel Manufacturing Co. v. United States case: tents
  • 10. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 16 Dutiable Status of Goods The Classification of Goods (cont’d). Understanding Tariff Descriptions. Determining the Classification of Products: Questions of Law and Fact. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 17 Dutiable Status of Goods Using the General Rules of Interpretation. GRI 1: classification by terms of the headings.
  • 11. GRI 2: classification includes complete as well as incomplete article if it has the essential character. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 18 Dutiable Status of Goods Using the General Rules of Interpretation (cont’d). GRI 3: when goods could be classified under 2 headings. Go to the most specific, if components go to essential character, when can’t be classified by above go © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 19 Dutiable Status of Goods
  • 12. Using the General Rules of Interpretation (cont’d). GRI 4: If goods can not be classified based on above, one should find heading for goods they are most like. GRI 5: (a) cases (camera, music) should be entered with the © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 20 Dutiable Status of Goods Using the General Rules of Interpretation (cont’d). 5(b) packing goods shall be classified with the goods, unless containers have repetitive use. GRI 6: subheadings at the same level are comparable. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20
  • 13. 21 Dutiable Status of Goods Using the General Rules of Interpretation (cont’d). Rule of Relative Specificity. Classification by Essential Character. Classification of Items Packaged for Ret © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 22 Dutiable Status of Goods Using the General Rules of Interpretation (cont’d). Classification of Items Packaged for Retail Sale as a Set. See the Better Home Plastics Corp. v. United States (1996) case : essential character, not relative specificity applies, and goods are classified by shower liner not curtain. Classifications at the Subheading Level. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for
  • 14. classroom use. 22 23 Dutiable Status of Goods Tariff Engineering. An importer is free to engineer his product in order to take advantage of the tariff laws (Tariff engineering. Customs Valuation. Customs value (dutiable value) must be reported at time of © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 24 Dutiable Status of Goods Customs Valuation (cont’d). Dutiable value equals transaction value or price actually paid for goods when sold for export plus packing costs, selling commission paid by buyer, value of an assist, royalty buyer is responsible to pay, proceeds of any resale that accrues to buyer.
  • 15. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 25 Dutiable Status of Goods Customs Valuation (cont’d). Production Assists. Other Methods of Calculating Dutiable Value. Currency Exchange Rates. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25
  • 16. 26 Dutiable Status of Goods Rules of Origin. Definitions and Purposes of Rules of Origin: administered by U.S. Customs and Border Protection. Types of Rules of Origin. The General Rule in the United States: if an item is wholly grown, produced, or manufactured in one country, then that country is the country of origin. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 27 Dutiable Status of Goods Substantial Transformation Test. The “Name, Character, or Use” test. See the Ferrostall Metals Corp. v. United States (1987) case. Japanese steel that was galvanized in New Zealand was substantially transformed to a New Zealand product, not subject to voluntary restraints between U.S. and Japan.
  • 17. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 28 Dutiable Status of Goods Substantial Transformation Test (cont’d). North American Preferential Rules. Other Trade Preference Rules. Coming Changes in Rules of Origin? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 28 29 Dutiable Status of Goods WTO Agreement on Rules of Origin: under development since 1995. Special Rules of Origin for Textiles and Apparel. Textiles and clothing present complicated trade issues because companies move operations from country to country, raw
  • 18. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 29 30 Dutiable Status of Goods Special Rules of Origin for Textiles and Apparel (cont’d). Textiles are governed by special rules into U.S. U.S. imports from Canada and Mexico are governed by separate rules. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 30
  • 19. 31 Dutiable Status of Goods Marketing and Labeling of Exports. FTC- if label states “Made in USA” it means, “all or virtually all of the materials, processing or component parts are made in the U.S. and that their final assembly or processing took place there”. Only negligible foreign content- all or virtually all is a very high standard. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 31 32 U.S. Trade Preferences for Developing Countries Trade Preference: granting of preferential access or trade advantage to imported goods not similar to other goods. Encourages manufacturing in Caribbean The goods are imported to U.S. at favorable tariff rates.
  • 20. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 32 33 U.S. Trade Preferences for Developing Countries Generalized System of Preferences. Beneficiaries are developing countries; goods enter at lower tariff rate. In 1976 program- benefits 140 countries. In 1980’s 4 countries graduated: Hong Kong, Singapore, S.Korea & Taiwan. GSP Rules of Origin-35% value added in GSP country. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 33 34 U.S. Trade Preferences for Developing Countries Caribbean Basin Initiative. CBI is collective name given to several laws that grant trade preferences to aid the Caribbean countries. Now includes
  • 21. footware, luggage, and watches. Caribbean Rules of Origin. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 34 35 U.S. Trade Preferences for Developing Countries Africa Growth and Opportunity Act. Established to help with political freedom in forty-eight poor countries in sub-Saharan Africa where per capita income is $500/year. AGOA broadens GSP for Africa and extends it to 2008. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 35
  • 22. 36 U.S. Trade Preferences for Developing Countries U.S. – Andean Trade. Andean Trade Program: U.S. program to promote economic development in Andean countries while combating drug trafficking and encouraging democracy. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 36 37 U.S. Trade Preferences for Developing Countries CAFTA. Central America-Dominican Republic Free Trade Agreement with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for
  • 23. use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 37 38 Other Customs Laws Affecting U.S. Imports Drawbacks: refund of duties already paid. Most common is the manufacturing drawback. Same-condition drawbacks are utilized when the imported goods are not processed or manufactured, but are reexported in the “same condition” as they were imported. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 38 39 Other Customs Laws Affecting U.S. Imports Foreign Trade Zones. Goods may be imported without being subjected to tariffs until goods are released into the stream of commerce See the Nissan Motor Mfg. Corp. v. United States case: machinery entering a foreign trade zone for assembly is not
  • 24. merchandise (not duty free). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 39 Conclusion Bureau of Customs and Border Protection is responsible for securing our borders from: terrorist threats; interdicting illegal immigration and contraband; collecting tariff revenue; enforcing the customs and tariff laws of the United States; and enforcing the export control laws. 40 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 40 Conclusion
  • 25. Bureau lives in a tension between securing borders and allow free flow of commerce into and out of the United States. Tariff laws are intended to encourage and reward certain business decisions. 41 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 41 CHAPTER 10 Laws Governing Access to Foreign Markets © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2012 Cengage Learning. All Rights Reserved. May not be
  • 26. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 2 The General Principle of Least Restrictive Trade WTO mandates a balancing test: weigh protecting public against restrictions on trade. See the Thailand: Restrictions on Importation of Cigarettes case (WTO 1990). Thailand's restrictions on imports of cigarettes contravened GATT. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 3 Technical Barriers to Trade A technical regulation is a MANDATORY law/regulation affecting a product’s characteristics. Standard is a VOLUNTARY guideline established by a private or administrative body.
  • 27. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 4 Technical Barriers to Trade Protection of Public Health, Safety, or Welfare. Product Testing, Inspections, and Certifications for Compliance with Product Safety, Quality, and Technical Standards and Regulations Sale. Why Standards and Technical Regulations are Barriers to Trade. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 5 Technical Barriers to Trade EU Standards and Technical Regulations.
  • 28. EU efforts to reduce technical barriers to trade is critical because of the multi-national brands and consolidation of the euro. The EU is attempting to increase its standardization through the “CE Mark”. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 6 Technical Barriers to Trade Japanese Standards and Technical Regulations. Product standards in Japan are usually based on design characteristics. U.S, in contrast, has standards of performance. What does the “JIS” mark signify? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 29. 6 7 Technical Barriers to Trade Chinese Standards and Technical Regulations. China is still socialist/communist and has a very bureaucratic regulatory framework. Laws are administered by AQSIQ. Standardization Administrative of China 2001. Coordinate development of standards. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 8 Technical Barriers to Trade The WTO Agreement on Technical Barriers to Trade (TBT). One of Uruguay Round agreements 1994. Harmonization, Equivalence, and Mutual Recognition. Conformity of Assessments.
  • 30. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 9 Technical Barriers to Trade The WTO Agreement on TBT (cont’d). Harmonization, Equivalence, and Mutual Recognition. TBT applies to all products, agricultural, industrial, and consumer goods. See the European Communities—Measures Affecting Asbestos & Asbestos-Containing Products (2001) case. French restrictions were valid under the TBT Agreement. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9
  • 31. 10 Technical Barriers to Trade International Organization for Standardization (ISO). International standardization makes design and building and products cheaper and trade easier. ISO 9000- certification makes selling in Europe much easier. ISO 14000- environmental standards. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 11 Import Licensing Procedures Article XI permits a country to use licensing in a nondiscriminatory, MFN, and transparent fashion to regulate some imports. Example: a country may want to only allow importation of © 2012 Cengage Learning. All Rights Reserved. May not be
  • 32. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 12 Import Licensing Procedures GATT requires “transparency” (published materials available to all countries). WTO Agreement on Import Licensing Procedures. Trade Facilitation. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 13 Government Procurement GATT allows exception to national treatment allowing government to favor domestic supplier. WTO Agreement on Government Procurement applies only to those countries that signed, and applies to goods and services worth 130,000 SDR’s (US $197,000) and construction contracts over 5 million SDR’s (US $7.6 million).
  • 33. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 14 Government Procurement WTO Agreement on Government Procurement. Agencies Excluded from the Procurement Rules: nearly 90 U.S. agencies are excluded. Procurement Rules. Transparency in Procurement Procedures. Procurement Rules: AGP reverses general WTO rules that allow government agencies to favor domestic products. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 15
  • 34. Government Procurement Must be Transparency in Procurement Procedures. Administering Government Procurement Rules in the United States. Responsibility rests with the President to revoke the waiver of “Buy America Act.” © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 16 Trade In Services Trade in services includes professional services (e.g., law, accounting, architecture, engineering, etc), health care, insurance, travel, and many others. According to WTO, exports of commercial services totaled $3.3 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 35. 16 17 Trade in Services The WTO Agreement on Trade in Financial Services. Signed by over 100 nations. Promotes efficiency and reduces cost. Provides consumers with greater choice. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 18 Trade in Services The WTO Agreement on Trade in Financial Services. WTO Agreement on Trade in Financial Services. WTO Agreement on Basic Telecommunications. Opened telecommunication markets to foreign competitors. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for
  • 36. use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 19 Trade in Agriculture WTO: agricultural exports over $1.34 trillion worldwide (2008). Some Agricultural Trade Issues in the EU and Japan. EU Common Agricultural Policy. Japanese Rice: A Trade Dilemma. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 20 Trade in Agriculture The WTO Agreement on Agriculture (1995): began removing government intervention in farming sector. Domestic Support Programs. Agricultural Export Subsidies. Making Export Markets Accessible.
  • 37. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 21 Trade in Agriculture Sanitary and Phytosanitary Measures: Food, Animal, and Plant Safety. A country has the right to protect human, animal and plant life but cannot be used to justify otherwise discriminatory conduct. Codex Alimentarius: International standards for the protection © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 22 Trade in Agriculture Sanitary and Phytosanitary Measures: Food, Animal, and Plant Safety (cont’d).
  • 38. EC Measures Concerning Meat and Meat Products (Hormones) (1997). EC’s ban on sale of beef containing residual growth hormones violated Agreement on Sanitary and Phytosanitary Measures. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 23 Trade in Textiles and Clothing History of Textile Import Regulation and Deregulation. 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 &unfair trade. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 39. 23 24 What about 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 Textiles and Clothing © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 25 Other WTO “Trade Related” Agreements Trade-Related Investment Measures. Trade-Related Aspects of Intellectual Property Rights (TRIPS). WTO countries agree to abide by intellectual property conventions. Domestic and foreign IPR (intellectual property rights) treated © 2012 Cengage Learning. All Rights Reserved. May not be
  • 40. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25 26 Other WTO “Trade Related” Agreements Trade-Related Aspects of Intellectual Property Rights (TRIPS) (cont’d). Members are bringing their laws into compliance with TRIPS. Information Technology Agreement. 1996 WTO ITA: calls for elimination of all tariffs on computers, telecommunications, software, scientific instruments by 2005. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 27 Trade Sanctions and Section 301: Threat of Retaliation Section 301 Trade Act 1974. See the United States—Sections 301-310 of the Trade Act of
  • 41. 1974. Basic Section 301. USTR retaliates against foreign country. Discretionary and may be imposed when USTR finds unreasonable discrimination that burdens or restricts U.S trade. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 28 Trade Sanctions and Section 301: Threat of Retaliation Basic Section 301 (cont’d). Section 301 Procedures. Sanctions and Retaliatory Measures. The Carousel Law: Rotating Products Subject to Retaliation. U.S. Trade Development Act (2000) amends section 301 by © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 42. 28 29 Trade Sanctions and Section 301: Threat of Retaliation The Carousel Law: Rotating Products Subject to Retaliation (cont’d). . . . periodically review list of products subject to retaliatory action and revise them 120 days after inception, and every 180 days thereafter. EU and some American importers object to the law. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 29 30 Trade Sanctions and Section 301: Threat of Retaliation Special 301. U.S. uses this law to assure that American-owned intellectual property rights (IPRs) are adequately protected in foreign countries. Each year USTR identifies countries. Worst offenders are tagged “priority foreign countries” which requires an investigation. USTR also maintains a “watch list.”
  • 43. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 30 31 Conclusion The WTO is moving the global economy to more free and fair trade. But, there are many countries still dealing with political instability, corruption, communism, Marxism, that find it difficult to open to free trade. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 31
  • 44. CHAPTER 11 Regulating Import Competition and Unfair Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 2 GATT Escape Clause: Article XlX- allows escape from previous promises. Many countries have provisions in national law that parallel Safeguards Against Injury
  • 45. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 3 GATT Escape Clause: See the Argentina Safeguard Measures on Imports of Footwear (WTO 1999) case: Argentina failed to show that increased imports were the cause of serious harm to domestic footwear. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 4 WTO Agreement on Safeguards. Provides details lacking in the escape clause and sets out procedural steps for countries to use it. Administrative investigation and hearing. Must find increased imports are the actual cause of the
  • 46. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 5 WTO Agreement on Safeguards (cont’d). Global Safeguards. Limits on Use of Safeguards. May not exceed 4 years. Voluntary restraint agreements no longer permitted. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5
  • 47. 6 WTO Agreement on Safeguards (cont’d). The WTO Committee on Safeguards: countries must notify the WTO Committee on Safeguards when taking action. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 7 Safeguards Against Injury Under U.S. Law. U.S. Escape Clause: Section 201 of The Trade Act of 1974. Does not follow the GATT guidelines. U.S. law Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for
  • 48. classroom use. 7 8 Safeguards Against Injury Under U.S. Law (cont’d). U.S. Escape Clause: Section 201 of The Trade Act of 1974. WHAT? “article being imported in such increased quantities as to be a SUBSTANTIAL cause of SERIOUS INJURY or threat thereof to domestic industry producing an article LIKE or DIRECTLY COMPETITIVE with the imported article” Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 9 Safeguards Against Injury Under U.S. Law (cont’d). U.S. Standard for Import Relief. ITC Safeguard Investigations: public notice in the Federal Register. Must have “substantial cause of serious injury” and apply the
  • 49. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 10 Safeguards Against Injury Under U.S. Law (cont’d). See the Heavyweight Motorcycles & Engines & Power-Train Subassemblies (ITC, 1983) case: incremental duties must be imposed. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10
  • 50. 11 Available Remedies Under U.S. Law. President’s options: Temporary: 4-8 yrs. 50% tariff increase. Tariff rate quotas. Absolute quotas. Auctioned import license quotas. Trade Adjustment Assistance. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 12 Available Remedies Under U.S. Law (cont’d). Market Disruption from Chinese Imports. Imports from China are subject to special rules not applicable to other WTO countries. U.S. and China agreed that safeguards would apply until 2013. Relief if ITC finds “market disruption.”
  • 51. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 13 Trade Adjustment Assistance. Petitions are filed with Department of Labor by workers, state workforce, or union. Direct cash payments to workers. Job retraining for workers and relocation. Help for companies as well. Trade Assistance to Firms. Safeguards Against Injury © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for
  • 52. classroom use. 13 14 Unfair Import Laws: Dumping and Antidumping Duties Dumping: The unfair trade practice of selling products in a foreign country for less than the price charged for the same or comparable goods in the producer’s home market. The Economics of Dumping. Price discrimination. Purpose to drive out competition. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 15 Unfair Import Laws: Dumping and Antidumping Duties WTO Antidumping Agreement. Calculating the Dumping Margin. Dumping is at less than normal value, or less than “fair value.” Calculating the Export Price.
  • 53. Price at which a product is sold to an unaffiliated buyer in the © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 16 Unfair Import Laws: Dumping and Antidumping Duties WTO Antidumping Agreement (cont’d). Adjustments to Normal Value and Export Price. Market Viability and Constructed Value. Sales Below Cost. Level-of-Trade Problem. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16
  • 54. 17 Unfair Import Laws: Dumping and Antidumping Duties The Material Injury Requirement. Antidumping duties are only applied after a finding of ‘material injury.’ Factors: (1) Volume of the dumped imports. (2) Effect of the imports on prices in the domestic market for like products and (3) Impact on domestic industry. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 18 Unfair Import Laws: Dumping and Antidumping Duties WTO Dispute Settlement in Dumping Cases. Disputes taken to the WTO Dispute Settlement Panel. Panel must accept the “facts” as found by the ITA/ITC in their investigation.
  • 55. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 19 Unfair Import Laws: Dumping and Antidumping Duties Dumping and Non-Market Economy Countries in Transition. Market-Oriented Exporters. See the Bulk Aspirin from the People’s Republic of China (ITA, 2000) case: The ITC found injury to US producers of aspirin but the ITA cut the antidumping duties to zero. Rhodia testified that without the duties its business disappeared. Rhodia closed its U.S. plant and moved to China. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 20 Unfair Import Laws: Subsidies and Countervailing Duties WTO Agreement on Subsidies and Countervailing Measures
  • 56. (1994). Definition of a Subsidy: government confers a benefit on a domestic firm and provides income, price support or financial contribution (not collecting a tax, providing grant or loan at favorable rate) in order to achieve a social or economic objective. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 21 Unfair Import Laws: Subsidies and Countervailing Duties WTO Agreement on Subsidies and Countervailing Measures (1994). WTO Rules Apply to Specific Subsidies. Prohibited Subsidies: export subsidies or import substitution subsidy. U.S.-Brazil Dispute over Cotton Subsidies. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for
  • 57. classroom use. 21 22 Unfair Import Laws: Subsidies and Countervailing Duties Actionable (Adverse Effect) Subsidies. Domestic subsidies which give unfair competitive advantage to domestic firms. Actionable at WTO if: Cause injury to domestic industry, OR Cause nullification and impairment of rights, OR cause “serious prejudice.” (Presumed if subsidy exceeds 5% of value.) © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 23 Unfair Import Laws: Subsidies and Countervailing Duties Actionable (Adverse Effect) Subsidies. Upstream Subsidies: granted for raw materials. WTO Subsidy Dispute Settlement. Countervailing Duty Actions. Countervailing Duty Actions in the United States.
  • 58. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 24 Unfair Import Laws: Subsidies and Countervailing Duties Subsidies and State-Owned Enterprises. Presents several problems when enterprises are owned by countries without a market economy. In 2007, the Department of Commerce began applying the © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 25 Unfair Import Laws: Subsidies and Countervailing Duties Subsidies and State-Owned Enterprises (cont’d). Exports from Newly Privatized Enterprises. See the U.S. Countervailing Measures Concerning Certain
  • 59. products from the EC (“European Steel”) (2002) case. Panel found U.S. violated WTO Agreement on Subsidies and Countervailing Measures. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25 26 Countervailing Duties and Antidumping duties may be reviewed by the CIT (both final determinations and negative injury). Limited review in Escape Clause. Judicial Review in International Trade Cases © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26
  • 60. 27 Conclusion Complex interrelated international and national regulations. Businesses will face these issue at home and abroad. What role WTO will play in the future? Role of politics- reflections? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 CHAPTER 8 National Lawmaking Powers and the Regulation of U.S. Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 61. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 2 The Separation of Powers Drafters of U.S. Constitution places power to regulate international commerce in hands of federal government. The Executive-Legislative Debate. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 3 The Separation of Powers Presidential or Executive Power. Separation of powers and checks and balances leaves the President having to work with Congress. What if they aren’t cooperating? Consequences? What is the alternative?
  • 62. Role of business in this process? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 4 The Separation of Powers Presidential or Executive Power (cont’d). Power to Negotiate Treaties. Power to appoint ambassadors. Is the Commander in Chief. Inherent Presidential Powe © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 5
  • 63. The Separation of Powers Presidential or Executive Power (cont’d). Inherent Presidential Power and Its Limitations. See the Youngstown Sheet & Tube v. Sawyer case (1952). President’s seizure of private property during wartime was not justified based on Presidential powers. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 6 The Treaty Power Domestic Law Effect of U.S. Treaties. Treaties are self-executing, non-self-executing, or executory. Equal Dignity Rule. An act of Congress can override an inconsistent prior treaty. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 64. 6 7 The Treaty Power Domestic Law Effect of U.S. Treaties. Equal Dignity Rule (cont’d). Statutes and treaties are of equal dignity. Example of Treaties under U.S. Law: FCN Treaties (Friendship, Commerce and Navigation). See the Macnamara v. Korean Air Lines case (1988). Was KAL’s discriminatory treatment intentional? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 8 Executive Agreements Sole Executive Agreements and President’s Inherent Power. International agreements between the President and a foreign country, entered into without resort to the treaty process. Binding, and have the effect of law. Two types: sole executive agreements and congressional-
  • 65. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 9 Executive Agreements Sole Executive Agreements and President’s Inherent Power (cont’d). See the Dole v. Carter case (1977). President did not exceed his powers. This was not a treaty but an executive agreement made pursuant to the President’s constitutionally inherent executive authority. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 10 U.S. Trade and Tariff Legislation
  • 66. Smoot-Hawley Tariff Act of 1930. Raised tariffs so high, there was international retaliation. Some say it exacerbated the Great Depression. The Reciprocal Trade Agreements Act of 1934. Introduced Most Favored Nation status (now known as Normal Trade Relations). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 11 U.S. Trade and Tariff Legislation The Reciprocal Trade Agreements Act of 1934 (cont’d). See the Star-Kist Foods, Inc. v. United States case. Congressional delegation to President was constitutional, and guided decisions based on purpose of the act © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11
  • 67. 12 U.S. Trade and Tariff Legislation More Recent U.S. Trade Legislation. Trade Expansion Act of 1962: created office of the U.S. Trade Representative. Trade Reform Act of 1974: gave more power to the President. Trade Agreements of 1979. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 13 U.S. Trade and Tariff Legislation More Recent U.S. Trade Legislation. Omnibus Trade and Competitiveness Act of 1988 (NAFTA). Caribbean Basin Economic Recovery Act of 1983, The Andean Trade Program and Drug Eradication Act of 2002, and The African Growth & Opportunity Act of 2000. © 2012 Cengage Learning. All Rights Reserved. May not be
  • 68. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 14 Trade Agreements General Agreement on Tariffs and Trade (GATT) (1974 and 1994). Presidential Authority for GATT Multilateral Trade Negotiations. Trade Promotion Authority. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 15 Trade Agreements Trade Promotion Authority. Expanded Powers. Trading with the Enemy Act. International Emergency Economic Powers Act (IEEPA) 1977- basis of economic sanctions.
  • 69. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 16 Federal-State Relations The Supremacy Clause (federal preemption). Burma, Human Rights, and Federal Preemption. Economic Sanctions Against Burma. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 17 Federal-State Relations The Import-Export clause. The Commerce clause.
  • 70. Commerce Clause and Multiple Taxation. See the Japan Line, Ltd. v. County of Los Angeles (1979) case. Ad valorem property tax on containers used exclusively in foreign commerce violates the Commerce Clause. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 18 Federal-State Relations The Commerce Clause (cont’d). State Income Taxation of Multinational Corporations. State Restrictions on Exports. State Restrictions on Imports. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18
  • 71. 19 U.S. Department of Commerce. Includes control of exports as well as International Trade Administration or ITA, Bureau of Industry and Security. U.S. Department of Homeland Security. Border and Transportation Security. Impact of Homeland Security on American Importers and Federal Agencies Affecting Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 20 United States Trade Representative. Carries out all bilateral and multilateral trade negotiations on behalf of U.S. International Trade Commission. Federal Agencies Affecting Trade © 2012 Cengage Learning. All Rights Reserved. May not be
  • 72. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 21 U.S. Court of International Trade. Exclusive jurisdiction over all civil actions against U.S., involving revenue from imports, tariffs, embargoes or quantitative restriction (except for health and safety) and enforcement of customs laws. Federal Agencies Affecting Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 Conclusion President has limited powers. But President has broad powers during time of war. Presidents rely on delegations of power from Congress. 22
  • 73. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 BA177: Legal Environment of World Cultures Chapter 11: Regulating Import Competition and Unfair Trade Kemp lecture Double edged sword of import competition Competing national political interests Protectionism vs. free trade “International rules serve as a check on these competing national political interests.” Safeguards Against Injury = “emergency actions used to protect a domestic industry that produces a like or competing product from increasing volumes of imported goods.” Like tariffs, quotas, etc. GATT Escape Clause from 1947 allows temporary corrective
  • 74. action to correct an industry when 1. unforeseen development, 2. due to tariff obligation, 3. increased amounts of imported product and 4. threatens “serious injury to domestic” producers of the product. WTO Agreement on Safeguards – U.S. does by ITC investigation. Global safeguards means restrictions on product, not based on the nation of import. Temporary and restrictions Trade compensation to affected nation may be imposed. WTO Committee on Safeguards U.S. Safeguards Against Injury Section 201 of 1974 Trade Act Standard for relief similar to GATT ITC safeguard investigation more detailed than GATT – substantial cause Remedies are time to retool, modernize, etc. Heavyweight Motorcycles, pp.344-345 Employees may get trade adjustment assistance if lot of workers laid off, Decrease in sales or production, and Import competition contributed substantially Dumping and Antidumping Duties “Selling products in foreign country for less tan the price charged for the same…goods in the producer’s home market.” National laws and GATT “permit the importing country to
  • 75. impose antidumping duties on dumped products to offset the unfair low price and to prevent injury to a domestic product. Dumper is trying to get monopoly power and will raise prices after drives competition out of business. GATT 1994 and WTO 1994 Antidumping Agreement U.S. has ITA and ITC determine whether there is dumping, what the dumping margin is, defining like product, calculating export price, etc. Material injury requirement Chilean Salmon case Subsidies and Countervailing Duties Governments pay nationals to “help” due to some governmental policy. Result is damaging to free trade in the subsidized product. WTO Agreement on Subsidies and U.S. law “There must be a financial contribution from government that confers a benefit.” Specific subsidies only = financial aid to select companies or industries (eg, wheat) Actionable subsidies must be either prohibited or actionable, the latter not being per se illegal and needing to show “serious prejudice.” Dispute settlement through WTO or U.S. procedures. European Steel case. Was U.S. law really different from WTO law?
  • 76. Chapter Summary Right of nation to protect domestic industries WTO allows global safeguards, ones that apply to industry without regard to country In U.S. ITC and ITA determine whether safeguards are appropriate. Trade adjustment assistance for workers Dumping is unfair trade practice of selling goods in foreign country for less than sell same goods in own country. Subsidy is government financial contribution to domestic industry. Illegal ones include export, import and adverse effects subsidies. Countervailing duties can now be applied to non-market economies, especially Chinese products. WTO decisions have caused U.S. to change some of its unfair trade law. Problems 5. Smith-Corona v. Brother typewriter case 6. American winemakers v. French and Italian wine makers. Ignore the question and explain from the text what the U.S. would have to show to prevail. Compare U.S. law and WTO law. CHAPTER 9 GATT Law and the World Trade Organization: Basic Principles
  • 77. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 2 Introduction to Trade Regulation Trade barrier is any impediment to trade in services or goods. Import trade barrier is any impediment, direct or indirect, to the entrance or sale of imported goods or services. What are some of the Reasons for Regulating Imports? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product
  • 78. or service or otherwise on a password-protected website for classroom use. 2 3 Introduction to Trade Regulation Tariffs. Non-tariff Barriers to Trade. Embargoes. Quotas. Auctioned Quotas. Tariff-Rate Quotas. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 4 Introduction to Trade Regulation Indirect Non-tariff Barriers. Japanese Large-Scale Retail Stores Law (now repealed). Import Licensing Schemes and Customs Procedures as Trade Barriers.
  • 79. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 5 Introduction to Trade Regulation Transparency. Impact of Trade Barriers on Managerial Decisions. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 6 Multilateral trade negotiations- reduce tariffs and nontariff barriers (NTB). Nondiscrimination and unconditional MFN. National Treatment.
  • 80. Eliminate quotas and NTB (convert NTB to tariffs and then reduce), transparency very critical. The General Agreement on Tariffs and Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 7 GATT Framework. Rules created by international agreement, become guiding principles of international trade law. GATT and U.S. Law. GATT does not provide individual rights and remedies to The General Agreement on Tariffs and Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
  • 81. 7 8 GATT and U.S. Law (cont’d). GATT Agreements as a Basis for Interpreting U.S. Trade Statutes. Scope and Coverage of GATT 1947. Scope and Coverage of GATT 1994. The General Agreement on Tariffs and Trade © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 9 WTO replaced GATT in 1995. WTO is an umbrella organization that sets rules of international trade and dispute resolution. Overseen by the Ministerial Conference which appoints the Director-General. World Trade Organization
  • 82. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 10 Ex. 9.1 Structure of the WTO © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 11 GATT/WTO Dispute-Settlement Procedures WTO Dispute-Settlement Procedures. Dispute mechanisms and procedures attempt to avoid retaliation or “trade wars.” Have quasi-judicial process for resolving disputes when deadlocked. Only a government can bring a “complaint” against another
  • 83. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 12 GATT/WTO Dispute-Settlement Procedures WTO Dispute-Settlement Procedures (cont’d). See the European Communities-Regime for the Importation, Sale, and Distribution of Bananas case (1997). U.S. could call for the convening of a WTO panel to question European Community import barriers. WTO Reports as Legal Precedent. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 13 GATT 1994: Major
  • 84. Principles of Trade Law GATT reinforces five principles: Multilateral trade negotiations. Predictability of trade opportunities. Non-discrimination and unconditional MFN. National treatment. Elimination of quotas and other non-tariff barriers. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 14 GATT 1994: Major Principles of Trade Law Multilateral Trade Negotiations. The Kennedy Round. The Tokyo Round. The Uruguay Round. The Doha Round (failure of two meetings in Seattle 1999, and Cancun 2003). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product
  • 85. or service or otherwise on a password-protected website for classroom use. 14 15 GATT 1994: Major Principles of Trade Law Tarrification. Process by which quotas, licensing schemes, and other non- tariff barriers to trade are “converted” to tariffs. Tariff Concessions, Bound Rates, and Tariff Schedules. Article II of GATT calls for member nations to cooperate in © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 16 GATT 1994: Major Principles of Trade Law Tariff Concessions, Bound Rates, and Tariff Schedules (cont’d). Tariff bindings are capped at agreed rate and published in tariff schedules. See the GATT European Economic Community---Import Regime for Bananas (1995). EEC had deprived complaining Latin
  • 86. American countries of benefits under bound tariff schedules. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 17 Nondiscrimination, MFN, and National Treatment Most Favored Nation (MFN) Trade. Agreement to treat products (or services) from that country with lowest tariff rates that it gives to similar products imported from its other MFN trading partners. In U.S., MFN granted by Congress. According to WTO, all member nations are entitled to MFN © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17
  • 87. 18 Nondiscrimination, MFN, and National Treatment Most Favored Nation (cont’d). Unconditional MFN: if a member extends privilege to another member then that privilege automatically is extended to all members. Exceptions to MFN Trading Status. New Terminology: MFN is now Normal Trade Relations or © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 19 Nondiscrimination, MFN, and National Treatment Most Favored Nation (cont’d). NTR Status and Jackson-Vanik: Remnant of the Cold War. Normalization of U.S. Trade Relations with Russia. © 2012 Cengage Learning. All Rights Reserved. May not be
  • 88. copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 20 Nondiscrimination, MFN, and National Treatment Most Favored Nation (cont’d). Normalization of U.S. Trade relations with China. 1994 Clinton delinked human rights and trade for China’s annual renewal of MFN. 2000 Congress granted permanent normal trade status to China effective upon China’s admission to WTO. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 21 Nondiscrimination, MFN, and National Treatment Most Favored Nation (cont’d). Issues Affecting U.S.-China Trade.
  • 89. North Korea. Tibet. Chinese corporate espionage against U.S. U.S. is pressuring China to allow its currency (yuan) to rise, but this could trigger ‘currency wars.’ © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 22 National Treatment National Treatment provisions in GATT are intended to ensure that imported products will not be subject to discriminatory treatment under the laws of the importing nation. See the Japan Taxes on Alcoholic Beverages- 1996 WTO. Japan’s tax policy violated GATT provisions regarding national treatment. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for
  • 90. classroom use. 22 23 GATT and the Elimination of Quotas GATT permits tariffs to regulate imports but not quotas or other quantitative restrictions. Quantitative Restrictions: Balance of Payments Exception and Developing Countries. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 24 GATT and the Elimination of Quotas Quantitative Restrictions: Balance of Payments Exception and Developing Countries. See the India—Quantitative Restrictions on Imports of Agricultural, Textile, & Industrial Products (1999) case. U.S. challenged India’s restrictions, and WTO panel found they were not necessary.
  • 91. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 25 Conclusion Trade is often a political football in the United States and other countries. When U.S. approved GATT agreement also passed a bill to review WTO every 6 months. Fears of “multilateralism”- why is that a “dirty word” to some? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25 26 Conclusion Conflict between international and national law. Law vs. politics.
  • 92. What is the appropriate connection between human rights and trade? European and Japanese model vs. United States’ historical approach? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 27 Conclusion Should labor and environmental issues be linked to trade? Furthers whose agenda? Is it protectionism in disguise? Conflict between the developing and developed world? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 Ch11Glossary
  • 93. Regulating Import Competition 1. actionable subsidy: a subsidy that is not automatically prohibited but may still be “actionable” under WTO rules because of its harmful effect; also called an “adverse effects” subsidy 2. adverse effects subsidy: a subsidy that is not automatically prohibited but may still be “actionable” under WTO rules because of its harmful effect; also called an “actionable subsidy” 3. antidumping laws: national laws that define dumping and that set out the administrative procedures and remedies available in dumping cases 4. countervailing duty: a special tariff, levied in addition to the normal tariff, imposed on imports of subsidized goods for the purpose of offsetting the subsidy 5. dumping: the unfair trade practice of selling products in a foreign country for less than the price charged for the same or comparable goods in the producer’s home market 6. dumping margin: the export price is less than the normal value of the product in the home market 7. escape clause: a clause in GATT (1947) that permits a country to temporarily “escape” from its tariff concessions or from other trade agreement obligations under certain conditions. 8. export price: the price of the good when sold in or for export to another country 9. export subsidy: a subsidy made available to domestic firms upon the export of their product or made contingent on export performance 10. global safeguards: the safeguards applicable to WTO member countries 11. import competition: a condition that exists when producers of domestic goods compete with producers of imported goods largely due to lower employee costs, fewer government restrictions, and/or greater production efficiencies of the
  • 94. foreign firms 12. import relief: the measures taken by the government of the domestic country in order to protect its producers and to provide greater economic and social benefits than costs 13. import substitution subsidy: a government subsidy whose payment is contingent on its recipient using or purchasing domestically made goods over imported goods 14. like products: directly competitive products 15. market disruption: the increased importation of an article so that it causes material injury, or a threat of material injury, to a domestic industry 16. market viability: the condition that exists if the exporting country’s home market has sufficient sales to warrant using its normal price as a price comparison 17. market-oriented exporter: an exporting firm in an non- market economy (NME) country that is not under government control and that does business on competitive terms 18. market-oriented industry: an industry in which resources and labor costs are procured at free-market prices in an environment where there is little government involvement in controlling production and capacity decisions, where prices are set by markets, and where the producers are mostly privately owned 19. material injury: an injury that is “not inconsequential, immaterial, or unimportant” 20. non-market economy (NME): a country whose political and economic system relies heavily on government central control, rather than on free-market forces 21. normal value: the price at which a good is first sold for consumption in the exporting or producing country 22. prohibited subsidy: a subsidy that is impermissible per se and banned under all conditions 23. safeguard against injury: a legal action taken by a country to protect a domestic industry by granting import relief or adjusting imports 24. specific subsidy: a subsidy that is given to a select
  • 95. company or limited number of companies, to a select industry or group of industries, or to firms in a select geographical region of a country 25. subsidy: a financial contribution — including any form of income or price support —made by a government that confers a benefit on a specific domestic enterprise or industry 26. surrogate normal value: the value of the factors of production — including materials, labor, energy, capital costs and depreciation, packaging, and other general expenses — in a market economy country whose level of economic development is comparable to that of the non-market economy (NME) country and who is a significant producer of comparable merchandise 27. trade adjustment assistance: the cash benefits, tax credits, or vouchers that are available to workers to cover the expenses of a job search, retraining and relocation, and health insurance coverage 28. trade compensation: a country imposing a safeguard compensates a supplying nation for the burden the safeguard measure has imposed on it 29. unfair trade: use of exporting tactics for the purpose of increasing market share while driving out competition for its goods in the importing country 30. upstream subsidy: a subsidy bestowed on raw materials or component parts (“inputs”) that are used in an exported product Regulation of U.S. Trade Chapter 8, Schaffer text BA177 Kemp
  • 96. U.S. Political System Separation of Powers Treaty Power Executive Agreements Trade and Tariff Legislation International Trade Agreements Federal-State Relations Federal Agencies Affecting Trade Separation of Powers U.S. Constitution guides regulation of international relations. U.S. has 50 states that gave up some of their sovereign powers to a central federal government to make a strong nation. It has worked so far. Compare to European Union (EU). Power to regulate international commerce is in the hands of the federal government. Three overlapping yet separate powers: legislative, executive, judicial. Executive-legislative debate is between president and legislature. It says Congress has power to regulate commerce with foreign nations. It says the president has power to make treaties and appoint ambassadors. The president has inherent executive power, treaty power, and powers delegated to the president by Congress. Youngstown Sheet & Tube (1952) case Supreme Court said the presidential powers do not include authority to nationalize U.S. steel mills. You have got to read
  • 97. Justice Jackson’s concurring opinion, at least the part in the text. Treaty Power President with 2/3 majority of Senate makes treaties. Congress delegates power to make executive agreements, international agreements that president makes without congressional approval. Domestic law effect of treaties depends on whether self- executing (domestic law effect) or non-self-executing (executory). Remember those classifications? Executive Agreements Congress delegates power to make executive agreements, international agreements that president makes without congressional approval. Two types: sole executive and congressional-executive agreements. Dole v. Carter (1977). Supreme Court decided that president has power to return crown jewels to Hungary without congressional approval = a sole executive agreement. Trade and Tariff Legislation President’s power to negotiate congressional-executive trade agreements has increased.
  • 98. Still trying to deal with isolationist legislation, the Smoot- Hawley Tariff Act. First step to reduce tariffs was in Reciprocal Trade Agreements Act of 1934, giving president power to negotiate reduced tariffs on product by product basis using reciprocity. Most-favored-nation (MFN) trade was introduced. It is now called normal trade relations (NTR). Dictates that lower tariff will be applied to all other MFNs when one negotiates that with U.S. Trade Expansion Act of 1962 and others authorized president to make across the board tariff reductions and created U.S. Trade Representative (USTR). While there is still a strong protectionist ideology in the U.S. it is much more open to tariff free trade today. Trade Reform Act of 1974 created broad presidential power and fast-track approval process for trade agreements. U.S. was becoming a world player at last. International Trade Agreements Free trade agreements seek to eliminate/reduce tariff and non- tariff barriers to free trade. Usually multilateral. General Agreement on Tariffs and Trade (1994) (GATT) and World Trade Organization (1994) (WTO) are most influential today. GATT started in 1947 and has proceeded to develop through multilateral trade negotiations called “rounds.” See next chapter, Text lists some of the objectives including reducing tariffs, eliminating non-tariff barriers, recognizing human rights
  • 99. including workers and children, protecting IP rights, agricultural agreements…. Federal- State Relations See slide 2. International trade is a federal power. Supremacy Clause in Art. 6 says federal law preempts inconsistent state laws. Import-Export Clause in Art. I, sec. 10 prohibits states from taxing imports and exports. Federal government can’t tax exports either. Commerce Clause in Art. 1, sec. 8 and dormant commerce clause (negative implication doctrine) prohibit states from making laws that have a substantial impact on the free flow of international and interstate commerce. Japan Line v. LA County (1979) case. Supreme Court said LA County value based (ad valorem) tax on containers in port was unconstitutional under Commerce Clause. When and how can California tax containers in California ports? See bottom left side of page 267 for the criteria adopted. Federal Agencies Affecting Trade Department of Commerce has 12 bureaus: International Trade Administration (ITA) is one. U. S. Trade Representative (USTR) is part of president’s cabinet and carries on trade negotiations.
  • 100. International Trade Comission (ITC) shares duties with ITA to investigate unfair trade practices. U.S. Court of International Trade (CIT) is on level of federal district court and within jurisdiction of Federal Circuit. Case Problem # 1 ICJ decision that under Vienna Convention on consular Relations U.S. courts could not hold Mexican citizens charged with crimes committed in the U.S. without informing them of their right to confer with the Mexican Consulate. ICJ was created under the UN Charter. Are these treaties self- executing? Or do they need legislation to make them have domestic law effect? Consider the practical effect of the decision. Might these viewpoints be justification for the border states like Arizona trying so hard to keep Mexicans in Mexico? How can these issues be fixed? Ch09Glossary GATT Law and the World Trade Organization: Basic Principles 1. ad valorem tariff a tariff computed as a percentage of value 2. allocated quotas a quota applied to the products of several nations 3. auctioned quota a quota that is sold to the highest bidder
  • 101. 4. bilateral quotas a quota placed on a particular product on the basis of its country of origin 5. embargo a complete ban on trade with a certain foreign nation or a ban on the sale or transfer of specific products 6. global quotas a quota imposed by an importing nation on a particular product regardless of its country of origin 7. most-favored-nation (MFN) trade an arrangement in which the lower tariff rates that are negotiated with one nation are automatically applied to similar imported products from all nations who sign an MFN agreement with each other — without any concession being requested in return 8. national treatment the GATT provisions that are intended to ensure that imported products will not be subjected to discriminatory treatment under the laws of the importing nation 9. non-tariff barrier an impediment to trade other than tariffs 10. nondiscrimination the principle that all nations should be treated equally and without discrimination 11. normal trade relations an arrangement in which the lower tariff rates that are negotiated with one nation are automatically applied to similar imported products from all nations who sign a most-favored- nation (MFN) agreement with each other — without any concession being requested in return; also formerly referred to as most-favored-nation (MFN) trade 12. quota a quantitative restriction on imports 13. tariff bindings a concession in which the tariff on a product, a product category, or a group of products is bound, or capped, at a
  • 102. certain rate 14. tariff concession a situation where one country promises another country or countries not to levy a tariff on imports of a given product at a level higher than agreed upon in return for tariff concessions from those countries 15. tariff or import duty a tax levied on goods by the country of importation 16. tariff schedules the detailed product-by-product listings of all tariffs for a country 17. tariff-rate quota a tariff that increases according to the quantity of goods imported 18. tariffication the process by which quotas, licensing schemes, and other non- tariff barriers to trade are “converted” to tariffs 19. trade barrier an impediment to trade in goods or services 20. transparency a foreign government’s import regulations are made readily available to the public and not hidden or disguised in bureaucratic rules or practices Ch08Glossary National Lawmaking Powers and the Regulation of U.S. Trade 1. Commerce Clause a Constitutional provision that provides the federal government with exclusive control over foreign commerce 2. Import-Export Clause a Constitutional provision that prohibits the federal government from taxing exports and prohibits the states from taxing either imports or exports 3. Supremacy Clause
  • 103. a Constitutional provision that allows a U.S. federal law to prevail when it directly conflicts with a law of the state (or local) government 4. bilateral an agreement between two nations (or parties) 5. compact a type of agreement [between or among nations] 6. congressional-executive agreements an executive agreement that is based on authority granted by Congress to the president or statute, or by treaty 7. convention a treaty on matters of common concern, usually negotiated on a regional or global basis and open to adoption by many nations 8. equal dignity rule a rule based on the idea that statutes and treaties are of equal dignity, meaning they are of equal legal importance 9. federal preemption the legal doctrine that a federal rule will prevail over an inconsistent state rule. The inconsistent state law will be void to the extent it conflicts with the federal scheme 10. free trade agreement a trade agreement in which tariffs and non-tariff barriers are eliminated or reduced significantly, and that often contain additional provisions on matters of mutual concern 11. inherent executive powers the powers that are either expressly granted to the president in the Constitution or found to be there by judicial interpretation 12. international agreement the international agreements such as treaties and executive agreements 13. international trade law the body of public law used to determine the responsibilities that nations have to one another in their trade relations 14. most-favored-nation (MFN) trade an arrangement in which the lower tariff rates that are negotiated with one nation are automatically applied to similar
  • 104. imported products from all nations who sign an MFN agreement with each other — without any concession being requested in return 15. multilateral an agreement between many nations (or parties) 16. multilateral trade negotiations a type of negotiation in which countries make reciprocal tariff concessions to each other 17. multiple taxation the same service or property is subjected to the same or a similar tax by the governmental authorities of more than one nation. 18. non-self-executing treaty a treaty that requires an act of Congress or of the president to give it legal effect 19. normal trade relations an arrangement in which the lower tariff rates that are negotiated with one nation are automatically applied to similar imported products from all nations who sign a most-favored- nation (MFN) agreement with each other — without any concession being requested in return; also formerly referred to as most-favored-nation (MFN) trade 20. regional trade agreements a multilateral trade agreement that encompass a geographical region 21. self-executing treaty a treaty that provides individuals with specific rights, which the courts will enforce 22. sole executive agreements an executive agreement where the president can negotiate and put into legal effect on the basis of his inherent authority, without congressional approval 23. trade agreement an agreement between nations on matters involving trade, tariffs, and related issues 24. trade promotion authority