We will first look at the world trading system as it has evolved under the General Agreement on Tariffs and Trade (GATT) and the establishment ot a permanent international institution known as the World Trade Organization (WTO).

2. Delivered by:
Yose Rizal Damuri (Head of Department of Economics Centre
For Strategis and International Studies), ASEAN Economic Community:
Maintaining Momentum, The Jakarta Post Outlook 2016
“ASEAN members need to have
champions and leaders that
can maintain momentum
towards integration.”
Motivation Letter Towards Global
Integration

3. Stay Informed!
• www.kluwerlaw.com – Kluwer Law International, Journal of
World Trade
• www.wto.org – World Trade Organization
• www.law.harvard.edu/library/ref/ils_ref/world_trade.htm.
– Harvard Law School, WTO documents and press releases
• www.ita.doc.gov – U.S. International Trade Administration
• www.nafta-sec-alena.org – NAFTA secretariat
• www.jus.uio.no/lm/international.economic law/itl.html –
International Trade Law Mentor
• www.europa.eu.int – The European Union Online
• www.lib.berkeley.edu/GSSI/eu.html - European Union
Internet Resources – University of California, Berkeley

4. Covering International and Governmental
Regulation of International Trade
• World trade system under the GATT
• The establishment of a permanent international
institution known as WTO
• Primary purpose of WTO
• WTO and the agreements it has been
empowered to enforce
• Strong regional trading blocks
• European Union and NAFTA as two of the more
successful attempts at regional trade integration.

5. World Trading System
• Multilateral trading
Trading overseas
• Initial aim
To expand free trade through the reduction of tariffs
worldwide
• Requirement
When countries agree to open their markets, they are
required to bind their commitments

6. GATT
(General Agreement on Tariffs and Trade)
• A multilateral agreement regulating international trade
• Purpose (according to its preamble): "substantial reduction
of tariffs and other trade barriers and the elimination of
preferences, on a reciprocal and mutually advantageous
basis."
• It was negotiated during the United Nations Conference on
Trade and Employment
• It was signed by 23 nations in Geneva on October 30, 1947
and took effect on January 1, 1948.
• It lasted until the signature by 123 nations in Marrakesh on
April 14, 1994 of the Uruguay Round Agreements, which
established the World Trade Organization (WTO) on
January 1, 1995.

7. GATT’s Round
(Nine Rounds)
Name Start Subject Covered Achievement
Geneva,
Switzerland
April 1947
(7 months)
Tariffs Signing of GATT,
45,000 tariff
concessions
affecting $10 billion
of trade
Annecy,
France
April 1949
(5 months)
Tariffs Countries exchanged
some 5,000 tariff
concessions
Torquay,
England
September 1950
(8 months)
Tariffs Countries exchanged
some 8,700 tariff
concessions, cutting
the 1948 tariff levels
by 25%

8. GATT’s Round
(Nine Rounds)
Name Start Subject Covered Achievement
Geneva II,
Switzerland
January 1956
(5 months)
Tariffs, admission
of Japan
$2.5 billion in tariff
reductions
Dillon,
U.S.
September 1960
(11 months)
Tariffs Tariff concessions
worth $4.9 billion of
world trade
Kennedy,
U.S.
May 1964
(37 months)
Tariffs, Anti-
Dumping
concessions worth
$40 billion of world
trade
Tokyo,
Japan
September 1973
(74 months)
Tariffs, non-tariff
measures,
"framework"
agreements
Tariff reductions
worth more than
$300 billion
achieved

9. GATT’s Round
(Nine Rounds)
Name Start Subject Covered Achievement
Uruguay September 1986
(87 months)
Tariffs, non-tariff
measures, rules,
services,
intellectual
property, dispute
settlement, textiles,
agriculture,
creation of WTO,
etc.
The round led to the
creation of WTO, and
extended the range of
trade negotiations,
leading to major
reductions in tariffs
(about 40%) and
agricultural subsidies,
an agreement to allow
full access for
textiles and clothing
from developing
countries, and an
extension of
intellectual property
rights.

10. GATT’s Round
(Nine Rounds)
Name Start Subject Covered Achievement
Doha November 2001 Tariffs, non-tariff
measures,
agriculture, labor
standards,
environment,
competition,
investment,
transparency,
patents etc.
The round has not
yet concluded. Bali
Package signed on
the 7th December
2013.

11. GATT Principles
• The most-favored-nation principle
Members of the WTO offer all other members their most
favorable tariff rates.
• National treatment principle
Once a product, intellectual property right or service enters
a foreign market, it must receive the same treatment given
to domectically produced goods, services and intellectual
property rights even though it can be treated differently at
the time of importation.
• Transparency principle
Prohibits a country from making its import standards and
requirements secretive. It also precludes a country from
constantly changing import requirements without reason.

12. Case
George E. Warren Corp. v. U.S. Environmental Protection
Agency
A rule promulgated by the Environmental Protection
Agency (EPA) regulates emissions from conventional
gasoline for motor vehicles and changes the way importers
and foreign refiners of conventional gasoline sold in United
States had been treated under the prior rule. In 1994 the
EPA announced standards for setting individual baselines
under which domestic refiners, foreign refiners and
importers were all treated differently. Domestic refiners
were each required to establish an individual baseline
because the EPA determined they have adequate and
reliable data with which to do so. Each importer was
permitted to establish an individual baseline, but because
they generally lacked the data to do so, importers we in
practice assigned the statutory baseline.

13. Case: George E. Warren Corp. v. U.S. Environmental
Protection Agency
Case highlights:
•GATT’s national treatment principle requires that individuals
and firms of foreign countries are given the same
competitive opportunities, including market access, as are
available to domestic parties (anti-discrimination)
•International agreements prevail over conflicting national
statutory mandates
•Federal regulatory agencies may weigh different factors
(such as international commitments) when rendering to a
situation with international ramifications and a purely
domestic one.

14. WTO
(World Trade Organization)
• An organization for trade opening
• A forum for governments to negotiate trade agreements
• A place for them to settle trade disputes
• Operates a system of trade rules
• Essentially, the WTO is a place where member governments try to
sort out the trade problems they face with each other.
Fact File:
Location: Geneva, Switzerland
Established:1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 164 countries on 29 July 2016
Budget: 197 million Swiss francs for 2014
Secretariat staff: 634
Head: Roberto Azevêdo (Director-General)
Source:
https://www.wto.org/english/thewto_e/whatis_e/who_we_are_e.htm

15. Functions of WTO
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations
Source: https://www.wto.org/english/thewto_e/whatis_e/who_we_do_e.htm

16. WTO AGREEMENTS
• Agreement on The Application of Sanitary and
Phytosanitary Measures (SPS)
Promoting international standards for import restrictions aimed at
protecting human, animal and plant life, health.
• Customs Valuation Code
To standardize country challenges to the valuations placed on
goods being imported.
• Agreement on Preshipment Inspection
Pertains to an importing country’s right to preshipment
inspection.
• Agreement on Import Licensing Procedures
Based upon the principle that application procedures should be
mase as simple as possible. The work on developing uniform
Country of Origin Rules is ongoing and should be monitored in the
future.

17. Antidumping Procedures
The most common trade violation is the dumping of goods on
foreign markets.
•Dumping or price discrimination
When a foreign exporter sells goods below what it sells
them in its home country of below the cost of production. The lower
pricing may be the result of an illegal subsidy given to the exporter by
its home country.
•U.S. Tariff Act of 1930
Under it, a subsidy occurs when a foreign government
authority “provide a financial contribution, any form of income or
price support, makes a payment to a funding mechanism to provide a
financial contribution or entrusts or directs a private entity to make a
financial contribution.” U.S manufacturers can petition the
Department of Commerce (DOC) to place antidumping duties on such
imports.

18. Antidumping Procedures
• GATT’s Code on Subsidies and Countervailing Duties
It allows such duties when the importing country can prove that
the subsidy would cause injury to a domestic industry.
• Antidumping duty
It is considered the last resort in protecting domestic industries
from unfair foreign competition.
• U.S. International Trade Commission (ITC)
ITC must be persuaded that dumping threatens to cause material
injury to U.S. industry:
1) Sales lost to imports at “less than fair value”
2) Suppression of export prices through underselling
3) Lost profits
4) Reduces product development abilities
5) Declining sales
6) Magnitude of dumping margin

19. Antidumping Relevant Regulation:
Section 301 and Section 337 on the Tariff Act
• Section 301
Provides a means to counter a broad range of unfair
foreign practices, including discriminatory rules of origin,
discriminatory government procurement, licensing
systems, quotas, exchange controls, restrictive business
practices. Discriminatory bilateral agreements, taxes that
discriminate against U.S. products, and discriminatory
product standards.
• Section 337
Provides for relieve to be given by the International Trade
Commission for “unfair methods of competition” in the
important or sale of imported goods. It is commonly used
to prevent the import of illegal pirated or counterfeited
grey market goods.

20. Future of Multilateral Trade Negotiations
• Millenium Round
It was preceded by weeks of protests and riots in Seattle,
December 1999 against the WTO, included public interest,
environmental, consumer and labor groups.
• Initial aim of Groups
1) Labor groups protested alleged dumping for foreign
products, a lack or international labor standards and the
movement of production to countries with lower
standards.
2) Environmental groups have accused the WTO for not
considering the environmental impacts of its decisions.
3) Consumer and public interest groups protested the WTO’s
failure to give safety priority over trade.

21. Future of Multilateral Trade Negotiations
“To suggest a path toward barrier-free world trade
that is compatible with the sustainable
development, environmental protection and respect
for human rights to which the international
community is nominally committed but which it
casts aside —or appears to— whenever they conflict
with expanded commerce.”
Source: Stephen L. Kass & Jean M. McCarroll, “Having It
All: Trade, Development, Environmental and Human Rights”, New
York Law Journal, (May 5, 2000)

22. Key Terms
• Agreement on Import Licensing
• Agreement on Preshipment Inspection
• Agreement on the Application of Sanitary and Phytosanitary
Measures (SPS)
• Agreement on Trade-Related Aspects of Intellectual Propery
Rights (TRIPS)
• Binding commitments
• Cease and desist order
• Code on Subsidies and Countervailing Duties
• Countervailing subsidy
• Countervailing duties
• Country of Origin Rules
• Customs Valuation Code

23. Key Terms
• Dispute Settlement Body
• Dumping
• Europe Agreement
• European Union (EU)
• General Agreement on Tariffs and Trade (GATT)
• General Agreement on Trade in Services (GATS)
• Impairment
• Millenium Round
• Most-favored-nation principle
• National treatment principle
• North American Free Trade Agreement (NAFTA)
• Partnership and Cooperation Agreement
• Regional Goods

24. Key Terms
• Snapback provision
• Subsidies
• Substantial Provisions
• Subsidies
• Substantial transformation
• Suspension
• Tariff Act on 1930
• Transparency Principle
• U.S. Trade Representative (USTR)
• Uruguay Round
• World Trade Organization (WTO)
• WTO Dispute Settlement Understanding (DSU)
• WTO Panels

25. Main References
• Larry A. Dimatteo, The Law of International
Business Transaction, 2003, USA: Thomson South
Western
• Yose Rizal Damuri, ASEAN Economic Community:
Maintaining Momentum, The Jakarta Post
Outlook 2016
• Stephen L. Kass & Jean M. McCarroll, “Having It
All: Trade, Development, Environmental and
Human Rights”, New York Law Journal, (May 5,
2000)
• www.wto.org