ITIL = IEL

International Trade Law

International Trade & • Universal – WTO law
Investment Law • Regional – EU/EC, NAFTA, EFTA…
International Investment Law
Piotr Szwedo
= International Economic Law

What is this course NOT about? Whom is this course dedicated to?

International Trade Law ≠ EU administration

International Commercial Law International trade lawyers – Eastern
CISG markets
UNCITRAL rules International arbitrators

Exam rules Books & materials

PPP’s in pdf form+ articles + course outline – to be sent by
e-mail
„Understanding the WTO” www.wto.org
Learning by understanding Andrew Newcombe,
Newcombe, Lluís Paradell „Law and practice of
investment treaties: standards of treatment”
treatment”
Document package Sergey Ripinsky,
Ripinsky, Kevin Williams „Damages in International
Investment Law”
Law”
Essay Thomas Pollan „Legal framework for the admission of FDIFDI””
R. Doak Bishop, James Crawford, Michael Reisman „Foreign
Investment Disputes. Cases, Materials and Commentary”
Commentary”
Rett R. Ludwikowski „Handel międzynarodowy”
Bernard Hoekman,
Hoekman, Michał M. Kostecki „Ekonomia
światowego systemu handlu : WTO - zasady i mechanizmy
negocjacji”
Marek Jeżewski, „Międzynarodowe prawo inwestycyjne”

1
Historical Introduction to WTO legal
Pre--GATT Period
Pre
system
Post I WW protectionism
• Reconstruction
• Custom wars between colonial powers
Black Thursday – 24 October 1929
• Economic bubble – shares purchased
on credits secured on those shares
• Value overestimated – panic in resale
• Changes in banking system –
supervision by public authorities
• Banks’ credit capacity:
capacity: assets/
assets/credits

Pre
Pre--GATT Period Pre--GATT Period
Pre
Monetary policy Trade largely restricted to currency
• Currency devaluation in order to help blocs (British Empire)
the balance of payments • No inter-
inter-block trade and capital flow
• Increase of product’s competetiveness • No foreign investment
• Inflation at home
Economic restrictions as reasons for
• Demand reduction the WWII?
• Decline of national income
Post war idea of economic liberalism
• Increase of unimployement
• Reduction of foreign trade

Pre
Pre--GATT Period Bretton Woods Conference
International Bank of
Reconstruction and Development,
future World Bank

United Nations Monetary and Financial

Conference, (Bretton Woods
Conference), Mount Washington
Hotel, NH, 1944

2
 IBRD/WB International Monetary Fund
Post--war reconstruction
Post
Aid political stability
Foster peace

International Monetary Fund ITO Charter negotiations

Convertibility of currencies Negotiations in London, Lake Success
Foreign exchange market system (NY), Geneva, Havana,
• Keynes’ idea of „„Bancor
Bancor”” backed by - conceptualization of the International
value expressed in weight of glod Trade Organization (Havana Charter)
• US opposition to lost of monetary 1947-1948
sovereignty
Currencies defined in relation to gold or US
$ convertible to gold
„Gold window
window”” closed by Nixon
administration – US demanded by France
and Switzerland,
Switzerland, to fulfil the promise to pay

ITO Charter ITO Charter

Scope Lack of approval by the U.S.
Trade Congress
Demand of employment • “involvement in internal matters”
Labor standards • exception clauses, lack of transparent applicability,
Reference to the International Court of grandfather clauses
Justice – advisory opinions (art. 96) • Truman’s resignation in efforts of ratification
• GATT - Protocol of Provisional Application (1948) –
de facto international organization

3
 GATT trade rounds Uruguay Round 1986-
1986-1994
Geneva 1947 – tariffs (23 states) Launch - Punta del Este (1986), agenda covering virtually
Annecy 1949 – tariffs (13 states) every outstanding trade policy issue: services, intellectual
property, agriculture, textiles, previewed for 4 years
Torquay (UK) 1951 – tariffs (38 states)
Geneva 1956 – tariffs (26 states)
Dillon Round (Geneva) 1960-
1960-1961 – tariffs (26
states)
Kennedy Round (Geneva) 1964-1964-1967 – tariffs
and antidumping measures (62 states)
Tokyo Round 1973-
1973-1979, tariffs, non-
non-tariff
measures, “framework agreements” – codes:
plurilateral/multilateral agreements (102 states)

Uruguay Round 1986-

1986-1994 Doha Round – 2001
• Montreal 1988 – half –way point, deadlock,
clarification of agenda
• Brussels 1990 – consensus on dispute
settlement system and Trade Policy Review
Mechanism; lack of agreement on agriculture
• Draft of “Final Act” – Geneva 1991
• 1992 – “Blair House Accord” – US
US--EU deal on
agriculture
• 1993 – successful Quad negotiations on
“market access”
• 15 April 1994 – Marrakech Agreement

Doha Round – 2001 Doha Round – 2001-

Subjects
Agriculture: market access and subsidies
Cotton
Services
TRIPS and public health
TRIPS and biological diversity
Government procurement
Trade and environment
Trade barriers and PPM’s
2001-?
Ministerial Conferences
Cancun (2003)
Hong Kong (2005)
Geneva (2006, 2008)
• US, China and India disagreement over special
safeguard mechanism – special tariffs on
agricultural goods in case of an import surge or
price fall – lack of understanding on threshold
• US 55--year programme on agriculturas subsidies
• Hampered agreement on cotton and bananas
with African countries
2009 – road map for the farm talks

4
 Doha Round – 2001-
2001-? Institutional framework of the WTO

Ministerlial Conferences General Council

The highest authority Deal
ealss with the day to day issues
Meetings every 2 years Report
eportss to the Ministerial
States represented by ministers Conference
Competence to take measures on Acts as
• General Council
any matter • Dispute Settlement Body
• Trade Policy Review Body

Councils reporting to the General

Director General, Secretariat
Council
Consist of all WTO members
Council for Trade in Goods
• Agriculture Committee
• Market Access Committee
• Subsidies Committee
• Textiles Monitoring Body
• Anti
Anti--Dumping Committee …
Council for Trade in Services
Council for Trade-
Trade-Related Aspects of
Intellectual Property Rights

5
 Multilateralism v. regionalism and
Member driven organization
the WTO legal system
Principle of one state – one vote, in practice ITO failure – turn towards regional
consensus organizations – world of regional trade islands
General rule of simple majority
2/3 – waiver, new members, GATT amendments,
acceptance of custom unions and free trade areas
“in formation”
Unanimity – amendments to several articles I, IX
and XXX
¾ Confirmation of Interpretations of WTO legal
texts by Ministerial Conference or General Council
(annexes); possibility to leave the organization by
the non-
non-accepting states

Multilateralism v. regionalism and Multilateralism v. regionalism and

the WTO legal system the WTO legal system
GATT as a “Swiss cheese” American policy of • Guatemala
bilateral FTA’s (+ • Honduras
Complementariness of NAFTA) • Israel
regionalization or a move towards • Jordan
“trade fortresses”? • Australia • Mexico
• Bahrain • Morocco
• Canada • Nicaragua
• Chile • Oman
• Costa Rica • Peru
• Dominican Republic • Singapore
• El Salvador

Multilateralism v. regionalism and

the WTO legal system
Art. XXIV GATT and the
Trade agreements as
Understanding of Interpretation treaties of international
(1994)
Free Trade Area – elimination of customs
public law
and other trade barriers
Customs Union – FTA + common custom
and trade policy
Interim agreements (max. 10 years)

6
WTO – a self-
self-contained regime?
Self – contained regimes in the
Fragmentation Report by ILC
• rules of responsibility
• rules regulating special subject matter (one or
several treaties) e.g. treaty on protection of a
particular river
• principles regulating certain problem area e.g.
humanitarian
humanitaria n law
Applicability of VCLT?
Art. 3.2 DSU: „The dispute settlement system of
the WTO is a central element in providing
security and predictability to the multilateral
trading system. The Members recognize that it
serves to preserve the rights and obligations of
Members under the covered agreements, and to
clarify the existing provisions of those
agreements in accordance with customary rules
of interpretation of public international law […].”
Binding on non-
non-parties?
Panels and AB practice
Place of WTO agreements within
the EU legal system
• Uruguay Round: changes in WTO law
• 1999, Portugal v. Council – ECJ uphold
its conclusions
“negotiability” in WTO law: party loosing a
dispute may negotiate compensation
instead of complying
lack of reciprocity – e.g. USA denied direct
effect; possibility of diversified application
of WTO law
WTO – a self
self--contained regime?
• ILC Draft on State Responsibility
General Assembly in a resolution “took
note” of the Articles
Binding?
Practice of the panels and AB
Place of WTO agreements within
the EU legal system
• Conflicts between trade liberalization
WTO law and preferential/protective
regulations of EU law
• Direct effect – possibility of invoking
by private parties of WTO law in order
to show the inconsistency of EU law or
decisions based on this law
• 1972 International Fruit Company –
GATT 1947 not invocable due to its
vague character, lack of effective
dispute settlement system
Place of WTO agreements within
the EU legal system
• Exceptions
Fediol III – interpretation EU law directly
referring to WTO law
Nakajima – EU legislation implementing
WTO law
• Kuilwijk: "one of its [the ECJ's] most
seriously criticized doctrines ever”;
GATT is not significantly different in
nature and structure from the other
international agreements to which the
ECJ has granted direct effect
7
Place of WTO agreements within
the EU legal system
• TRIPS
2006 Polish Supreme Administrative Court (NSA) –
direct applicability in of art. 33: “ The term of
protection available shall not end before the
expiration of a period of twenty years counted from
the filing date”
The GATT
2007 – Genericos: art. 33 TRIPS lacking direct
effect but EC law does not oppose to direct
applicability of this provision within domestic legal
Trade in Goods
systems
• International consensus around lack of direct
effect of WTO law within domestic legal
systems – United States; exception - Chile

GATT Non--discrimination
Non
• Terminology Most-Favored-
Most- Favored-Nation clause and National
CONTRACTING PARTIES, Contracting Treatment clause = principle of non-
non-
Parties discrimination and equal treatment
Concession/schedules Exceptions:
• Art. XXIV – custom unions and free trade areas
• General Systems of Preferences
• Grandfather clauses – e.g. Commonwealth states
• Waivers – XXV para V.
Exceptional circumstances
2/3 majority

GATT & Trade of Energy and GATT & Trade of Energy and
Petroleum Petroleum
Tariffs applied on energy and petroleum
usually very low, excise taxes
Rather dictates of energy policy than a
classical trade policy
“Gentlemen’s agreement” not to bring
petroleum issues in GATT context
Petroleum disputes: US/environmental
issues, e.g. US-
US-gasoline, discrimination of
important gasoline

8
 GATT & Trade of Energy and GATT & Trade of Energy and
Petroleum Petroleum
Organization of Trade Petroleum Production quotas and their influence on
Countries (OPEC) and art. XI of GATT: world petroleum prices; Lautenberg’s
“No prohibitions or restrictions other Report: export restrictions and price fixing
than duties, taxes or other charges,
“Unprocessed goods”, no obligation to
whether made effective through quotas,
import or export licenses or other extract the natural resources
measures, shall be instituted or
maintained by any contracting party on
the importation of any product of the
territory of any other contracting party
or on the exportation or sale for export
of any product destined for the territory
of any other contracting party”.

GATT & Trade of Energy and

GATT & Water
Petroleum
Natural resources exception - XX (g) of GATT:
“[s]ubject to the requirement that such measures
are not applied in a manner which would constitute
a means of arbitrary or unjustifiable discrimination
between countries where the same conditions
prevail, or a disguised restriction on international
trade, nothing in this Agreement shall be construed
to prevent the adoption or enforcement by any
contracting party of measures: […]
(g) relating to the conservation of exhaustible
natural resources if such measures are made
effective in conjunction with restrictions on
domestic production or consumption
A. Broome: Market stability and conservation are
not necessarily mutually exclusive objectives

GATT & Water GATT & Water

GATT art. XI Water = commodity (good)
good) =
No prohibitions or restrictions other than
duties, taxes or other charges, whether product?
product?
made effective through quotas, import or • Involvment of human activity?
activity?
export licences or other measures, shall
be instituted or maintained by any • Tariff schedules “Waters, including
contracting party on the importation of natural or artificial mineral waters and
any product of the territory of any other […] Other water”
contracting party or on the exportation or
sale for export of any product destined for Bottled water = bulk water?
water?
the territory of any other contracting
party.

9
 GATT & Water
Water projects
• Great Recycling and Northern Development
(GRAND) Canal of North America
GATT & Water
Natural resources exception - XX (g) of GATT:
“[s]ubject
“[s]ubject to the requirement that such measures are
not applied in a manner which would constitute a
means of arbitrary or unjustifiable discrimination
between countries where the same conditions prevail,
or a disguised restriction on international trade,
nothing in this Agreement shall be construed to
prevent the adoption or enforcement by any
contracting party of measures: […]
(b) necessary to protect human, animal or plant life
or health;
(g) relating to the conservation of exhaustible natural
resources if such measures are made effective in
conjunction with restrictions on domestic
production or consumption
GATT & Water
NAFTA & 1993 Joint Statement
• The NAFTA creates no rights to the natural water resources of
any Party to the Agreement.
• Unless water, in any form, has entered into commerce and
become a good or product, it is not covered by the provisions
of any trade agreement, including the NAFTA. And nothing in
the NAFTA would oblige any NAFTA Party to either exploit its
water for commercial use, or to begin exporting water in any
form. Water in its natural state in lakes, rivers, reservoirs,
aquifers, waterbasins and the like is not a good or product, is
not traded, and therefore is not and has never been subject to
the terms of any trade agreement.
• International rights and obligations respecting water in its
natural state are contained in separate treaties and
agreements negotiated for that purpose. Examples are the
United States-
States-Canada Boundary Waters Treaty of 1909 and
the 1944 Boundary Waters Treaty between Mexico and the
United States.
GATT & Water
Sun Belt Corporation
• Water shipment from BC to CA
• BC’s legislation on prohibition of water
export
• NAFTA Chapter 11 claim seems
abandoned
Nova Group
• Export of water from Lake Superior to
Asia – permit cancelled
GATT & Water
Boundry Waters Treaty Act of 1909
• International Joint Commission
Canadian International Boundary
Canadian
Waters Treaty Act in 2002
• Limited to waters on the Canadian
Canadian--US
border and does not apply to freshwater
in other parts of Canada
• Competence of provinces
GATT & Water
Art. 31 VCLT
• 1. A treaty shall be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their
context and in the light of its object and purpose.
• 2. The context for the purpose of the interpretation of a treaty shall
comprise, in addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the
parties in connexion with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in
connexion with the conclusion of the treaty and accepted by the other
parties as an instrument related to the treaty.
• 3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding the
interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation;
(c) any relevant rules of international law applicable in the relations between
the parties.
10
 GATT & Water GATT & Water
Pluralism in international trade law? Virtual water trade
• New Founland favorable to water trade • virtual
virtual--water content of a product (a
• Turkey and Israel water cooperation?
cooperation? commodity,, good or service) as "the
commodity "the
• Russia and its water assets volume of freshwater used to produce
the product,
product, measured at the place
where the product was actually
produced””
produced
• Water footprint as an ecolabel
Private standard
Public legal instrument

GATT & Water Trade in agricultural goods

Limits of commercialization and
privatization
Water and international investment
law
Private water management and
water services?

Trade & Agriculture Trade & Agriculture

Original GATT applicable with major Rules oriented on

loopholes – export subsidies
Uruguay Round – Agreement on
Agriculture – implementation period 6
year
years
s, still under implementation by
developing countries
Trade more market oriented
• Market access
• Elimination of quotas, replacement by
tariffs, “tariff-
“tariff-quotas”
• “Special safeguards”
safeguards”-- emergency
action in case of swiftly falling prices
• “Special treatment” to restrict import
on sensitive products e.g. Philippines,
Korea, Japan on rise, Israel on
sheepmeat

11
 Trade & Agriculture Trade & Agriculture

Domestic support Export subsidies

Problems with overproduction
Leads to dumping Prohibited unless on the list of commitments
Squeezes out imports – than systematical reduction required
Leads to export subsidies Allowed as food aid and aid for agricultural
Domestic support having direct effect on development for the LDC’s
production and trade – obligation to reduce
systematically as from 1995 Differentiation in developed and
“Green box” measures – permission to apply
freely e.g. research, disease control, developing countries status
infrastructure and food security, assistance to
restructure agriculture, environmental and Collapse of Doha Round negotiations in
regional assistance programmes
2008 due to agriculture issues
“Blue box” measures – in case of limiting of
production to encourage development, support on
a small scale (“de minimis”)

Trade in Textiles Trade in Textiles

1960’ system of import quotas
1974 Multifibre Arrengement – framework of
bilateral agreements, quotas in case of serious
damage from rapidly increasing import – conflicting
with the MFN, possibility to reduce import from a
certain partner
1995 Agreement on Textiles and Clothing –
elimination of quotas and possibility of
discrimination
2005 termination of ATC, return to GATT rules;
between 1995-
1995-2005 possibility to apply
“transitional safeguards” under strict conditions
under control of Textiles Monitoring Body

Non--Tariff Trade Instruments

Non Quotas
Elimination or transition to tariffs –
principle of free trade
Benefits to the importing and not
exporting countries
Less strict trade limitation
Limitation of corruption in allocation of
quotas

12
Subsidies and countervailing duties
• Subsidies and countervailing duties
1979 GATT Subsidies Code (Agreement on
interpretation of art. VI, XVI and XXIII
GATT) – annex with examples of subsidies
• Procedures
Dispute settlement to seek withdrawal
State’s own procedure and charge of extra
(countervailing) duties
Subsidies and countervailing duties
Categories
• Prohibited subsidies
Export subsidies (in law or in fact) -
required to meet export targets - likely to
hurt other countries’
countries’ trade
Local production subsidies – to promote
domestic (instead of imported) goods
Subsidies and countervailing duties
• Examples of prohibited subsidies
Full or partial exemption specifically related
to exports, of direct taxes or social welfare
charges
The allowance of special deductions directly
related to exports or export performance
Subsidies and countervailing duties
• Definition
Brings benefit
Specific subsidies
• Available to certain enterprise, industry, group
of enterprises or
or group of industries
• Lack of objective criteria – discretionary power
of authorities in granting subsidies
• Possibility of receiving benefits by another
subjects purely theoretical
Domestic or export
Subsidies and countervailing duties
• Examples of prohibited subsidies
Provision by governments of direct subsidies
to a firm or an industry contingent upon
export performance
Currency retention schemes or any similar
practices which involve a bonus on exports
Internal transport and freight charges on
export shipments, provided or mandated by
governments, on terms more favourable
than for domestic shipments
Subsidies and countervailing duties
• Examples of prohibited subsidies
• The exemption or remission, in respect of the
production and distribution of exported products,
of indirect taxes
• The grant by governments (or special
institutions controlled by and/or acting under the
authority of governments) of export credits at
rates below those which they actually have to
pay for the funds so employed
• The provision by governments (or special
institutions controlled by governments) of export
credit guarantee or insurance programmes at
premium rates
13
Subsidies and countervailing duties
Dispute settlement
Handled in the dispute settlement
procedure under an accelerated procedure
No requirement of evidence of injury
Must be withdrawn immediately
Possibility to impose countervailing duties
Subsidies and countervailing duties
Non
Non--actionable subsidies – category
applied provisionally ending 31 December
1999; (wasted) possibility of extension by
consensus of SCM Committee
• Not specific subsidies
• Assistance for research activities
• Assistance for disadvantaged regions
• Assistance to promote adaptation to new
environmental requirements
Subsidies and countervailing duties
• Subsidies disputes
Foreign Sales Corporation
FSC – a company, registered abroad, selling
American goods
According to US tax law, not an income,
since generated abroad
Dividend received by the shareholders could
be deducted from their income
EC: export subsidy
Uphold by panel and Appellate Body
Subsidies and countervailing duties
Actionable subsidies
• Adverse effect on state’s interests – requirement
of evidence of injury
One country’s subsidies hurting a domestic
industry in an importing country
Subsidies hurting rival exporters from
another country when the two compete in
third markets
Domestic subsidies in one country hurting
exporters trying to compete in the
subsidizing country’s domestic market
• Subsidy or adverse effects to be removed
Subsidies and countervailing duties
• Countervailing duty – parallel to anti-
anti-
dumping duty
After a detailed investigation
Criteria determining an injury
Rules of duration and implementation
Possibility to raise export prices as an
alternative to duties
LDS’s and developing countries with less
than 1000$ per capita excepted from
disciplines on export subsidies – problem
largely discussed in Doha Round
Subsidies and countervailing duties
• Subsidies disputes
Foreign Sales Corporation
Authorization of $4 billion retaliation
Gradual implementation of counter-
counter-measures
2004 amendment voted and signed by US
President
Grandfather clause concerning the existing
contracts
Panel and AB reports confirming further violation
Further amendments, grandfather clause
repealed, retaliation terminated
FSC case – example of gradual implementation
14
Subsidies and countervailing duties Subsidies and countervailing duties

Subsidies disputes Subsidies disputes

• Brazil / Canada Aircraft • Brazil / Canada Aircraft
Embraer, Bombardier – duopoly on the
regional jets market
Brazil applied PROEX – financing program of
which allowed to grant credits with lower
than market rates
Successfully challenged by Canada as an
export subsidy, retaliation authorized

Subsidies and countervailing duties Dumping and anti-

anti-dumping
Subsidies disputes
• Brazil / Canada Aircraft
No need to apply retaliation, PROEX applied
in consistence with WTO law
Canadian loans and credit guarantees
challenged by Brazil
Panel and AB declares violation, retaliation
authorized
Probable mutual resignation of subsidies, no
need to retaliate
• EU/US „„Large
Large civil aircraft
aircraft”” –
Airbus/Boeing dispute.
dispute.
Both parties applied subsidies and requested rights
to impose countermeasures

Dumping and anti-

anti-dumping
Dumping – price lower than on the domestic
market
• Not every price discrimination leading to dumping,
e.g. in order to continue production
• Price lower than production costs - printers and
cartridges, compensation and demand, not dumping
Dumping – methods of calculation of “dumping
margin”
• Price on the domestic market
• Price charged on another markets
• Production costs + other expenses + normal profit
margins
• Not insignificantly small (less that 2%), not if volume
from one country is less than 3% of total import
Dumping and anti-
anti-dumping
Material injury, threat of material injury or material
retardation of the establishment of industry – to be
demonstrated on the domestic industry
• “material” – not inconsequential, immaterial or
unimportant
• Necessary investigation - evaluate all relevant
economic factors
• Support of domestic producers
Express support of industry producing at least
25% of like products
Support by domestic producers representing 50%
of industry
• All interested parties – right to give evidence
• Anti
Anti--dumping measure – expiration after 5 years
unless lead to injury or threat of injury

15
 Dumping and anti-
anti-dumping
Anti
Anti--dumping circumvention practices
• fictitious markets – low prices on markets
without demand
• screwdriver method – in case of antidumping
duties imposed, the relevant good is exported in
elements and assembled in the importing
country
Dumping and anti-
anti-dumping
Anti
Anti--dumping circumvention practices
• downstream product dumping or subsidizing –
e.g. countervailing duties on wheat – export of
pasta
• assembling of elements in third countries and
export to the importing country
• dumping in third countries in order to combat
competing exporters and producers

Dumping and anti-

anti-dumping
Anti--dumping disputes
Anti
Anti
Anti--dumping Act of 1916
Treble damages and/or imprisonment for
dumping practices
Panel + AB: inconsistent with art. 18 AD
agreement: “No specific action against
dumping of exports from another Member
can be taken except in accordance with the
provisions of GATT 1994, as interpreted by
this Agreement”
Only one case of application, chilling effect
EC claimed for retaliation in form of “mirror
legislation”, unauthorized, possible excess;
retaliation up to effective damage level
Dumping and anti-
anti-dumping
Anti--dumping disputes
Anti
Anti
Anti--dumping Act of 1916
Blocking Regulation 2238/2003, Japanese
Damage Recovery Law: lack of recognition of
American decisions, possibility to sue
American firms in European courts
Panel: blocking regulation out of their
jurisdiction; in case of excess US could bring
a case to WTO
Anti
Anti--Dumping Act derogated, but still
pending cases before Iowa courts: 30 million
damages against Tokyo Keikai Seisakusho
Retaliation not applied

Dumping and anti-

anti-dumping Dumping and anti-
anti-dumping
Anti--dumping disputes
Anti Anti--dumping disputes
Anti
Byrd Amendment Byrd Amendment

Continued Dumping and Subsidy Offset Act

(CDSOA) – Byrd Amendment: distribution of
anti
anti--dumping duties among firms which
supported the petition
Panel: distribution is an unpreviewed
antidumping measure and a form of subsidy
EC, Japan and Canada authorized to apply
retaliation
Byrd amendment derogated

16
‘Escape clauses’ and exceptions Safeguards
GATT 1947, art. XIX („rebus sic standibus”)
Grandfather clauses • Serious Injury
• Rule older than GATT • Unforeseen developments
• Effect of an obligation (concession)
• A provision in an agreement, including • Increased export
the GATT but not the WTO,
WTO, that allows Infrequently used (61 times up to 1970’)
signatories to keep certain of their Rather bilateral negotiations resulting in Voluntary
previously existing laws that otherwise (export) Restraint Agreements; such solutions in
automobiles, steel, semiconductors sector; “gray
would violate the agreement area” out of GATT regulations
Elimination of VRA’s in WTO Safeguards Agreement
(art. 11) by 1999 – increase of safeguards

Safeguards
• Emergency action
Serious injury or threat of injury by domestic
industry producing products like or directly
competitive
• E.g. necessity to shut down industries; mass
dismissals
• Threat – clearly imminent
Result of surge in imports resulting from
unforeseen developments
• Absolute increase
• Relative increase – in a case of shrinking market
• Unforeseen = unexpected (not unforeseeable)
• A sole cause of “seriousness” of the injury
Safeguards
Investigation by competent authorities
pursuant to previously published
procedures
• Public announce
• All parties – right to provide evidence
• Safeguard measure to be in a public interest
Safeguards Committee – surveillance of
the operation of the agreement

Safeguards Free Trade in Services

Remedy
• To be applied to the extent necessary to prevent or
remedy serious injury
• In case of quotas – not below annual average level of
imports, unless clear justification is given that a
different level is necessary to prevent or remedy
serious injury
• Safeguard measure not to target particular country,
but no indication how quotas to be allocated
• Max. 4 years, exceptionally to 8 years; after 1 year to
be progressively liberalized
• Possibility to seek compensation by exporting
countries – consultation or retaliation, but in some
circumstances only after 3 years
• Developing countries shielded – safeguard action
applied only when providing more than 3% of export Fastest growing sector of global economy – 1/3 of
global employment and 20% of global trade

17
 Typology of services
• Based on MFN
Principle – applicability to all services
Possible exemptions schedules, former bilateral or Mode 1 – “cross-
“cross-border supply”, e.g.
multilateral agreements; no possibility of future adds to
the list international telephone calls, services via
List of exceptions (regulated by Annex on MFN internet
Exceptions) under review
• National treatment
Schedules with market-
market-access commitments
Market-access limitations e.g. through licenses
Market-
Exceptions – e.g. branches not allowed for foreign
commercial presence
No obligation of deregulation, but same standards of
quality without discrimination
Recognition of qualifications through agreements,
another members right to negotiate similar agreements

Typology of services Typology of services

• Mode 2 – “consumption abroad”,
provided in one state to consumers Mode 3 –
“commercial
from another state, e.g. tourism
presence”, foreign
company setting up
subsidiaries or
branches to provide
services in another
state, e.g. foreign
bank setting up
operations in a
country

Typology of services Annexes with rules for specific

sectors
Mode 4 –
“presence of Movement of natural persons
natural persons”
• Concerns only a temporal stay to
– individuals
provide services
traveling from
their own country • Not applicable to people seeking
to supply services permanent employment, conditions of
in another obtaining a citizenship, permanent
country, e.g. residence or permanent employment
consultants

18
 Annexes with rules for specific
Annexes with rules for specific
sectors
sectors
Financial services
Telecommunications
Wide latitude of • Method of providing
governments to take
prudential measures another services e.g.
Protection of investors electronic money
Protection of depositors and transfers
insurance policy holders
Ensure integrity and • Commitment of
stability of financial system
Exclusion from agreement government to provide
of services concerning access to
authority over the financial
system, e.g. central bank’s telecommunications
services
network

Annexes with rules for specific Annexes with rules for specific
sectors sectors
Air transport • Government services carved
carved--out
• Excluded from GATS
• GATS applicable to:
No obligation of privatization
aircraft repair and Not supplied commercially and no
maintenance competition with another suppliers
marketing of air
transport services Transparency and no discrimination
computer reservation between foreign suppliers
services
• Annex under review in
Doha Round
Negotiations,
possibility of bringing
another air services
under GATS

Trade and intellectual property

Doha Round Negotiations
protection
• Emergency safeguard measures – limitations
of market access in case of market disruption
• Government procurement
• Subsidies
• Domestic regulations – requirements to
operate in a market: procedures, technical
standards and licensing requirements
• By 1998 disciplines for the accountancy
sector
• Negotiations on all professional services
• 2003 – criteria on autonomous and unilateral
liberalization of services

19
 Agreement on Trade Related
Aspects of Intellectual Property
(TRIPS)
• Minimum degree of protection
guaranteed by member states
MFN
National treatment
Copyrights & TRIPS
Literary works (already in Berne
Convention)
Computer programs as literary
works
Outline of database protection
Rental rights – right of an author
to prohibit the commercial rental
of a works (computer programs,
films) to public
Right to prevent unauthorized
recording, reproduction or
broadcasting of live performances
(bootlegging) for no less than 50
years
Geographical indications
WTO agreements and WIPO
relations
• Agreements existing before WTO
Paris Convention on the Protection
of Industrial Property – patents,
industrial design
Berne Convention for the
protection of Literary and Artistic
Works – copyright
Cross
Cross--retaliation problem
• Some areas not covered by Paris
and Berne conventions or
standards inadequate, TRIPS adds
new or higher standards
Trademarks
TRIPS defines and identifies
elements that must be eligible,
individually or in combination, for
recognition as trademarks
Service marks also registrable
Availability of system of publication and
cancellation in connection with the
registration of trademarks and service
marks
Registration for at least 7 years with a
right of revewal
Prohibition of imposing special
requirements on use of trademarks
such as use of local marks
Geographical indications
Not only an indication of product’s origin
but of its special characteristics
State’s obligation to prevent misuse of
place names
Exceptions
• Indication registered already as a trademark
• Generic term, e.g. cheddar, type of cheese not
necessarly made in UK, similarly gouda, but EU
protects “Noord-
“Noord-Hollandse Gouda”
Special importance for wines and spirits
(art. 23)
• Prohibition to use indications “kind”, “style”,
“imitation”
20
 Industrial designs Patents

At least 10 years
of protection
Manufacture, sale
or importation
prohibited
Protection of
textile designs
effectively denied
as they change
frequently

Patents Patents
At least 20 years of protection Protection of integrated circuits layout
Object of protection in all fields of technology designs (topographies)
• Products • Washington Treaty on Intellectual Property in
• Processes Respect of Integrated Circuits, administered by
Governments right to refuse of issuing patent WIPO, adopted in 1989, not entered into force
• Reasons of public order or morality • 10 years of protection under TRIPS
• Diagnostic, therapeutic and surgical methods, plants
and animals (other than microorganisms), and
biological processes for the production of plants or
animals (other than microbiological processes)
• Plant varieties must be protectable by patents
• Governments allowed to issue compulsory licenses to
competitors when patent holders fails to supply the
product on the market

State’s obligation to enforce IP State’s obligation to enforce IP

rights under their laws rights under their laws
Penalties to deter further violations • Developing countries – technology
Procedures to be fair, equitable, not necessarily
complicated or costly
transfer in exchange of IP protection
Reasonable time limits • Transition arrengements
Right to appeal from an administrative decision or 1 year for developed countries
court’s ruling
Courts to have right to order disposal or destruction
5 years for developing countries
of pirated or counterfeit goods 10 years for LDC’s, extended to 2016 for
Willful trademark counterfeiting or copyright piracy pharmaceutical patents
on a commercial scale to be criminal offenses
IP right holders – assistance of custom authorities
to prevent imports of counterfeit and pirated goods

21
 China and TRIPS
China and TRIPS
Enforcement of TRIPS, art. 41.5: It is understood
that this Part does not create any obligation to put
in place a judicial system for the enforcement of
intellectual property rights distinct from that for the
enforcement of law in general. Evidence problems.
Material inconsistencies between Chinese law and
TRIPS
Panel: partially inconsistent
Perspectives on improvement
• Country differentiation
• Crossover point in economic development (e.g.
Lenovo, Galanz)
• Education
Russia and TRIPS
WTO member since 2012
1993 – party to Berne Convention on
copyrights
Russian Organization for Multimedia &
Digital Systems – copyright collective;
highly controversial allowing to services
such as allofmp3.com to provide files for
symbolic prices
US sanction – Russia’s entry to WTO
conditioned by closure of allofmp3.com
Closure in 2006, problems with payments
by using Visa and Mastercard
alltunes.com
China and TRIPS
1980’ WIPO member and party to Paris convention
on industrial property
China on US Special 301 Priority Watch List –
amendments of patent law and software copyrights
1992, after bilateral retaliations threats –
amendment of Chinese patent law and protection of
pharmaceutical patents; party to Bern Convention;
trademark protection
1995 – Action Plan on effective enforcement of IP
law: Copyright Authority and Patent Authority,
special powers to police and custom authorities;
closures of manufactories producing counterfeited
goods and pirate CD’s
2001 – China in WTO
Russia and TRIPS
IP protection and human rights
• Problems with the right to health: access to
medicines in the poor countries but keep to
maintain incentives for research
• Special declaration at the Doha Conference
(November 2001): exemptions on
pharmaceutical patent protection for LDC’s
until 2016
• Flexibilities in TRIPS – special waiver in 2003
for countries which are unable to produce
pharmaceuticals
• Right to food, plant patents, biotechnology
and food production in LDC’s
22
 Dispute settlement and law
Government procurement
enforcement through WTO
• States – biggest purchasers of goods – political
pressure to favor domestic producers
• Agreement on Government Procurement, 1981, Tokyo
Round
• Transparency in domestic regulations in order to avoid
discrimination
• Plurilateral – 41 states
• General rules (tendering procedures) and schedules
• Uruguay Round agreement
National and local government entities and procurement
by public utilities
Extended to services
• Binding on Poland as an EU member

Dispute settlement and law

Dispute Settlement Body (DSB)
enforcement through WTO
• GATT Composed of all WTO members
No fixed timetables Establishes the panels of experts to hear
Principle of consensus the case
Accepts or rejects panels and Appellate
• WTO Body’s reports
Principle of negative consensus – quasi-
quasi-
Monitors the implementation of
judicial nature of procedure
recommendation
Flexible timetables
Has a competence to authorize retaliation
Consultation as a permanent alternative
and a first step of procedure – priority is to
settle dispute, not to pass judgment

DSU - Procedure
• Consultations – 60
60--days, possibility of mediation by
Polish Panelists
Director General
• Appointment of a panel – 45 days
• Panelists – “well-
“well-qualified governmental and/or non
non--
governmental individuals, including
persons who have served on or presented a case to a
panel,
served as a representative of a Member or of a
contracting party to GATT 1947 or as a representative to
the Council or Committee of any covered agreement or
its predecessor agreement,
or in the Secretariat,
taught or published on international trade law or policy,
or
served as a senior trade policy official of a Member.
Not a citizen of a state-
state-party to a dispute or a third party
List in Secretariat
Wiesław Karsz

23
 DSU - Procedure DSU - Procedure
• Panel – 3 or exceptionally 5 members First draft of report: findings and
• Designed by parties or Director General conclusions – parties 2 weeks to comment
• Independence from their governments Interim report: parties 2 weeks for review,
• Paid from WTO budget panel may hold additional meetings with
• Written part of procedure: parties present their the 2 sides
arguments
• Oral hearing Final report circulating to the 2 sides and
• Rebuttals in 3 weeks to all WTO members; the panel
• Third parties participation: good training for the may suggest how the measure could be
developing countries (Brazil) made in conformity with the WTO law
• Considerable role of experts The report becomes DSB’s ruling within 60
days unless consensus rejects it

DSU - Procedure DSU - Procedure

• Appeal Appeal
Appellate Body – a permanent “world trade court”
7 members – geographical differentiation
The Appellate Body shall comprise persons of
recognized authority, with demonstrated expertise
in law, international trade and the subject matter of
the covered agreements generally. They shall be
unaffiliated with any government. The Appellate
Body membership shall be broadly representative
of membership in the WTO.
Right to appeal – only parties, not third parties
Only legal analysis
Report in 60, max 90 days
DSB adopts report in 30 days David Unterhalter, Ujal Singh Bhatia, Peter Van den Bossche, Yuejiao
Zhang, Ricardo Ramírez-Hernández, Thomas R. Graham and Seung Wha
Chang

DSU - Procedure DSU procedure

procedure - retaliation
Implementation
• Reasonable period of time if not practicable –
possible arbitration
• Verification of measures - art. 21.5 DSU
• Negotiation on compensation if a country fails to
implement

24
 DSU procedure
procedure - retaliation
• Suspension of concessions”
• Amount – arbitration art. 22.6 DSU
• Cross
Cross--retaliation – arbitration
Lack of effective possibility to coerce on in
the same sector or agreement
Disproportion of economic potentials
DSU – Procedure,
Procedure, effectiveness
• Increasing number of cases as a prove
of states’ trust in the system and its
efficiency
• Transparency of panel system – role of
secretariat and experts
• ‘Sanction deficit’ and the enforcement
system
Private parties access to dispute
settlement system through
domestic procedures
DSU procedure
procedure - retaliation
• TRIPS as an object of retaliation and
difficulties of application
Rights incorporated in WIPO conventions
which forbid to conclude future treaties
breaching guaranteed rights
According to art. 41 VCLT modification of
rights inter partes
Goods produced as a result of cross-
cross-
retaliation may not be exported
Lack of an appropriate infrastructure to
produce counterfeited goods
Uncertainty as to the time of retaliation
DSU – Procedure,
Procedure, reforms?
Roster of permanent panelists
Appellate Body – more members, longer
term of office
Preventive retaliations
Retroactive calculation of retaliation
Possibility to sell the right to retaliate
Collective retaliation
Financial compensation
Private parties access to dispute
settlement system through
domestic procedures
• Lack of standing of private parties
before WTO dispute settlement system
• Result of weaknesses of the GATT
system
• Section 252 of 1962 Trade Expansion
Act – possibility to introduce trade
barriers investigations as a result of
private parties petitions
25
Section 301 of American Trade Act
Initiation
• Self
Self--initiation by USTR
• By petition of private party
Action
• Mandatory when violation or denial of US rights
unless WTO panel or AB found no violation
• Discretionary when no violation but “a policy or
practice is considered to be unreasonable if it is
unfair and inequitable”
EU law - TBR
Regulation 2641/84 (“New Commercial
Policy Instrument” – NCPI) as a response
to Section 301
• Possibility to bring petitions to DG Trade of
European Commission
• Every procedural step required an
accomplishment of a multilateral procedure
EU law - TBR
TBR in practice
• Petitions addressed by European or national
coalitions of producers in certain branch;
individual petitions by very important producers:
Philips, Volkswagen, Cerestar (food), Dornier
(aircrafts)
• Important volumes of trade lead to petitions,
e.g. USA, exception: China – rather diplomatic
solutions, but starts to change: IP case, but only
concerns “law in books” and not “law in action”
Section 301 of American Trade Act
“Special 301” – American “watch list” of
countries denying US IP rights
Case before WTO
• Findings of USTR independent of WTO panels
• USTR obliged to take action before the
authorization of DSB
• Panel: “statutory language” contrary to DSU but
the discretionary power of USTR limited by
“Statement of Administrative Action” adopted by
Congress, what provoked a “legalization”
• No appeal, both sides declared a success:
Section 301 remained on paper but its
application was limited
EU law - TBR
Regulation 3286/94 (Trade Barriers Regulation – TBR) for
WTO times - strictly linked and coordinated with DSU
• 'Obstacles to trade' shall be any trade practice adopted or
maintained by a third country in respect of which
international trade rules establish a right of action
• Court of First Instance: FICF case – American “selective
sanctions” not an obstacle to trade
• ‘Adverse trade effects' shall be those which an obstacle to
trade causes or threatens to cause, in respect of a product
or service, to Community enterprises on the market of any
third country, and which have a material impact on the
economy of the Community or of a region of the Community,
or on a sector of economic activity therein.
• Adverse trade effects linked with obstacles – lack of actio
popularis in TBR
• Community’s interest – Commissions important discretionary
power
• CFI – rules of due process must be respected
EU law - TBR
TBR in practice
• More cases as a result of self
self--initiation by
Commission, role of informal information
lower costs of procedure borne by
companies, however even in case of informal
procedures Commission requires economic
analysis
anonymity of petitioner; however similar
effect of “coalition” petitions
possible fast-
fast-track procedure, no minimum
deadlines imposed by TBR
In case of lack of consensus within
Commission on the launch of procedure TBR
gives more chance to take action
26
 EU law - TBR
TBR in practice
• Subject
Most of petitions related to goods –
discrimination
¼ cases IP – geographical indications,
indications, piracy
1 GATS case (USUS--gambling)
gambling)– also in WTO
very few such cases
• Time
TBR investigation: 5 months, max 7 months;
average: 9 months
Whole procedure: 2 ½ year, when WTO case
additional 23-
23-36 months (depends if appeal)
Accession to WTO
Accession to WTO - procedure
Working party - draft membership treaty
(protocol of accession) + future member’s
commitments – schedules
Acceptance of the General Council or
Ministerial Conference by 2/3 + (often)
ratification by the future member
Deceive negotiations within Quad (EU,
USA, Japan, Canada) or more recently
within G-
G-6 (Brazil, India, EU, USA, Japan
Australia)
EU law - TBR
TBR in practice
• Results
¾ cases – positive changes
45% only TBR investigation was enough, no
need of WTO procedure
Lack of changes when very important
interests in particular case (e.g. shipyards in
Korea) or need of a controversial legislative
changes (e.g. US internet gambling)
Accession to WTO - procedure
Membership – a result of negotiations
(commitments)
Non
Non--members - observers
Not only states but also custom territories:
Chinese Taipei, EC (special status)
Accession application + memorandum –
description of state’s economy
Working party (open to all WTO members)
– negotiations + bilateral deals
Market access commitments covering
goods and services applicable to all WTO
members even when negotiated bilaterally
Accession to WTO - China
• GATT 1947 original member
• Withdrawal of membership after the communist
revolution
• Application for renewal of membership in 1986
• Negotiations frozen after Tiennanmen events in
1989, US economic sanctions imposed
• Acceleration of negotiations after establishment
of WTO: bilateral deals with USA (1999) and EU
(2000)
27
 Accession to WTO - China
• Draft protocol and schedules accepted by the
Ministerial Conference in Doha 2001
• Chinese market open for foreign goods and
services
• Acceptance of western “legalistic” rules, specially
in IP field
• Obligation of effective enforcement of IP law and
administrative sanctions for piracy and
counterfeit
• Several standards (pharmaceutical sector) going
further – TRIPS-
TRIPS-Plus
Accession to WTO – Saudi Arabia
• Changes in Saudi law
Foreign ownership in services such as retail and
distribution
Gradual lowering of trade barriers for foreign goods
Right to restrict import of goods for the reason of
protection
Opening of insurance sector for foreign operators
Saudi Aramco and Saudi Basic industries forced to
sell oil and petrochemicals at world market prices
Greater banking sector activity due to liberalization
Demonopolization of telecommunication sector
Competition in services sector
Accession to WTO – Ukraine
• Important changes
Some tariff reductions phased in over a
period of up to 2013
Average tariff bindings 10% for
agricultural goods and 5% for industrial
goods; highest: 50% for sugar, 30% for
sunflower seed oil
No mandatory minimum prices on
imported goods
No export subsidies in agriculture
All state owned enterprises will operate on
commercial basis
Accession to WTO – Saudi Arabia
• Negotiations 1993
1993--2005
• Large importer and an exporter of a
particular good: oil; rather no need
• Lack of transparency in Saudi law
• Law rooted in Shariat – prohibition of
interests
Accession to WTO – Ukraine
Negotiations 1993-
1993-2008
Competition to join before Russia –
possibility to block another candidatures
Important argument in EU talks
Step towards EU free trade agreement
Potential WTO disputes with Russia on
steel, sugar and dairy products
Financial crisis protectionist law and the
balance of payments
Accession to WTO – Russia
Largest economy remaining outside WTO,
negotiations since 1993;
1993; accessed 2012
Russian unilateral bans on trade and
another trade difficulties
• Georgia/wines
• Poland/meat,
• Georgia protest on Russian custom checkpoints
in South Ossetia and Abkhazia
28
Accession to WTO – Russia
• Dual energy pricing
Domestic prices regulated by government, export prices
regulated by market
Policy of providing affordable affordable heating and
electricity to residential customers regardless of ability to
pay
Favorable fuel rates to enterprises and government
agencies such as the military
Disproportion between domestic and export prices,
natural gas as 1:6, electricity 1:5, oil 1:4
Russian manufacturers – an unfair competitive
advantage; e.g. fertilizers – ¾ of final price
Actionable subsidy under SCM agreement? Specific
subsidy? Russia: available to all industries, a comparative
advantage
EU-
EU-Russia deal – systematical raise of domestic prices
Accession to WTO – Russia
Agriculture
• After collapse of Soviet Union, subsidies cuts and
trade liberalization
• Export subsidies provided by local governments
• Disputes with agricultural exporting countries
(USA, Canada, Australia) over level and
longevity of Russian support to agriculture
• 2003
2003--2006 quota on poultry and 2003-
2003-2010
tariff rate quota on beef and pork; violation of
“standstill principle”
Accession to WTO – Russia
• Services
Government protection to develop services
sector
Underdeveloped financial sector and services
Insurance sector – total foreign
capitalization: 15% allowed
Banking sector – foreign participation
restricted; lack of deposit insurance program
Telecommunications – monopoly of
Rostelcom on international communication
till 2010
Accession to WTO – Russia
Siberian over-
over-flight fees – EU airlines pay
more than Aeroflot – to be phased out by
1 January 2014
Railway fees for transit through Russia
IP protection
• Laws amended but not enforced
• Russia on USTR Special 301 Priority Watch List
• US demands on www closures e.g.
AllofMP3.com, losses ca. $ 2,1 billion in 2006
Accession to WTO – Russia
• Sanitary and Phytosanitary regulations
Procedures not scientifically based and
discriminatory
2002 ban on US poultry – avian influenza?
2005
2005--2007 ban on Polish meat
• Aircraft
Cut of defense expenses and lack of orders
from Eastern Block
20% tariff on imported aircraft
Pressure on Russia to sign Civil Aircraft
Agreement
Waivers for domestic airlines to fulfill their
needs without tariffs given to concrete
manufacturer – Airbus, US protests
Accession to WTO – Russia
• Pressure to sign Government Procurement
Agreement as many institutions are state-
state-owned
• High tariffs and excise taxes on cars and used
cars
• Import licenses on certain products:
pharmaceuticals, sugar, alcoholic beverages;
complicated procedures
29
 Accession to WTO – Russia Accession to WTO – Russia
Accession 23rd July 2012 Commitments on agricultural goods
• SPS agreement
Tariff reductions on • Bound tariffs on dairy
dairy,, beef
beef,, oilseeds,
oilseeds, pork
pork,, poultry…
poultry…

• Manufactured goods:
goods: Systematic subsidies reduction from 9 to 4.4
billion $
Aircrafts
Liberalization of services,
Automobiles
• banking and financial services – foreign ownership to be
Agricultural equipment raised from 15% to 50%
Medical equipments • Telecommunication – elimination of state’s monopoly
High-
High-tec instruments • Increase market access for professional services
(engineers
engineers,, lawyers,
lawyers, accountants,
accountants, health care
Consumer goods professionals))
professionals
Textiles • Distribution services – wholesale and retail services
• Foreign owned audio
audio--visual service suppliers

Accession to WTO - Russia

Commitments to meet the obligations
under the TRIPS
• Shutting down websites illegally distributing
music
• Fight optical disc piracy
• Strenghten border enforcement againts piracy
Commercial users of gas to be priced on
marked basis;
basis; housholds subsidized
Russia to access GPA within 4 years

30