International Trade Regulation

Dr. FANG Meng Mandy

Email: mengfang@cityu.edu.hk
Office: Li-6211
Aims
• Develop a critical understanding of the law and
policy of modern international trade
agreements, with an emphasis on the legal
regime of the World Trade Organization
(WTO), the successor to the General
Agreement on Tariffs and Trade (GATT).
• Analyze the complex intersections between the
regulation of international trade and domestic
regulatory authorities and the interface between
law, politics, and public policy that emerges in
international trade negotiation and dispute
settlement.
• Identify and search for an appropriate
understanding of the current issues in the rules-
based multilateral trading system.
Learning Outcomes:
• Identify, describe and synthesize the principles relating to
multilateral trading system;
• Apply the rules of international trade law to complex fact
patterns;
• Develop the skills to analyze, evaluate, and reflect critically
on current legal and economic problems of the international
trade system.
Teaching and Learning Methods:
• lectures will be used as the main teaching method;
• some interactive teaching methods will be used to increase
engagement with students.
Assessment:
• Class participation =20%;
• Examination （ Two Hours) = 80%.
Course content
• The history and institutions of the multilateral trading system;
• The Dispute settlement system of the WTO;
• Tariffs and non-tariff measures;
• Non-discrimination principle;
• General exceptions;
• Trade remedies;
• Technical Barriers to Trade (TBT) Agreement;
• The Agreement on the Application of Sanitary and Phytosanitary
Measures (SPS);
• Free trade agreements (FTAs)
 Recommended Materials for Learning
• Mitsuo Matsushita, Thomas Schoenbaum,
Petros Mavroidis and Michael Hahn, The World
Trade Organization: Law, Practice, and Policy
(3rd ed, Oxford University Press, 2015)
• Peter Van Den Bossche and Werner Zdouc, The
Law and Policy of the World Trade
Organization (4th ed, Cambridge University
Press, 2017)
• Andrew Guzman and Joost Pauwelyn,
International Trade Law (Kluwer, 2009)
• Simon Lester, Bryan Mercurio and Arwel
Davis, World Trade Law: Text, Materials and
Commentary (3rd, Hart Publishing, 2018)
 Journal of International Economic Law
 Journal of World Trade
 World Trade Review
 Virginia Journal of International Law

American Journal of International Law
 Journal of World Investment & Trade
 Legal Issues of Economic Integration
 The World Economy
 European Journal of International Law
• WTO official website: www.wto.org
• International Economic Law and Policy Blog: https://worldtradelaw.typepad.com/
• Brookings Institute (Trade Section): https://www.brookings.edu
/topic/global-trade/
• Peterson Institution for International Economics (Trade Policy):
https://www.piie.com/research/trade-investment/trade-policy
• Centre for Strategic & International Studies (Trade and International Business):
https://www.csis.org/topics/economics/trade-and-international-business
• Global Trade Alert: https://www.globaltradealert.org/reports
Podcasts
 Trade Talks
 Tradecraft
 Dollar & Sense
 Two Minutes in Trade
 The Trade Guys
 ECIPE Global Economy Podcast
 Trade Bites
 China Geopolitics
 The President’s Inbox
Increase in international trade

Goods (USD at current prices (billions))

Year 1948 195 1963 1973 1983 1993 2001 2005 2010 2015 2016 2018
3
World 59 81 157 582 1857 3782 619 10502 15302 16484 16032 19453
Exports 5

Worlds 62 86 165 596 1900 3845 641 10774 15420 16671 16222 19793
Imports 2
Trade to GDP ratio
What is traded and who trade?
Why trade?
(1)Economics
• It encourages economies to specialize and
produce in areas where they have a relative cost
advantage over others;
• It expands the markets local producers can
access;
• It diffuses new technologies and ideas,
increasing local workers’ and managers’
productivity;
• It gives consumers access to cheaper products;

(2)Peace and security

“By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in
Scotland, and very good wine too can be made of them at about thirty times the
expense for which at least equally good can be brought from foreign countries.
Would it be a reasonable law to prohibit the importation of all foreign wines,
merely to encourage the making of claret and burgundy in Scotland? …As long
as the one country has those advantages, and the other wants [lacks] them, it will
always be more advantageous for the latter, rather to buy of the former than to
make.”
Adam Smith, The Wealth of Nations

“Under a system of perfectly free commerce, each country naturally devotes its capital
and labour to such employments as are most beneficial to each.  This pursuit of
individual advantage is admirably connected with the universal good of the whole.  By
stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar
powers bestowed by nature, it distributes labour most effectively and most economically:
while, by increasing the general mass of productions, it diffuses general benefit, and
binds together by one common tie of interest and intercourse, the universal society of
nations throughout the civilized world.”
David Ricardo, Principles of Political Economy and Taxation
Arguments against free trade
• To generate government revenue from duties

• To protect national security and ensure self-sufficiency

• To protect domestic industries threatened by imports

• To protect Infant industry/establish a new industry

• To safeguard non-economic values

 The origins and history of developing
formal trade relationships

21November 1947, 57 nations

Since late 19th century,
Late 17th and 18th centuries signed the Havana Charter and
Numerous bilateral efforts
established an Interim
Bilateral Friendship, and liberalized trade talk
Commission for the
Commerce and Navigation through the League of
International Trade
(FCN)treaties Nations
Organization (ITO)
 ITO GATT

• ITO proved too ambitious

• US Congress refused to ratify
• GATT provisionally applied in the meantime as
of 1 January 1948
• Parallel negotiations leading to the General
Agreements on Tariffs and Trade (GATT)
1947
• 23 nations agreed on the GATT, which was
restricted to tariffs and related matters
• Intended as a temporary solution to be absorbed
by the ITO
 GATT WTO

Marrakesh Agreement Establishing the World

Trade Organization
concluded in 1994 and in force since 1 January
1995
 127 countries signed it
 An international organization established by
treaty with full legal personality
 The only multilateral body that creates,
regulates and manages the rules of trade
between nations
WTO Membership
• 164 Members not limited to nation states, but
customs territories (e.g., Taiwan, Hong
Kong, and Macau are all Members in their
own right)
• 99.95% of world trade
• 99.98% of the world GDP
• 99.35% of world’s population
 WTO Principles
Non-discrimination (with limited exceptions)

Reduction of trade barriers

Predictability and stability through binding trade commitments

Fair and undistorted competition

More beneficial treatment for developing countries

 WTO Functions

Implementation
Negotiation of
of trade
new trade rules
agreements

Dispute Trade policy

settlement review
WTO Agreements
WTO Governing Structure
The topic for next week:
The WTO Dispute Settlement – the Past, the Present, and the Future
 Question
Can developing countries be better off within the WTO framework than they would be
if there were no multilateral trading system?