International Trade policy Law

International Trade policy Law

Question One

WWI could adopt the voluntary export restraint (VER) as a measure to protect its domestic market from AAA imports. Although GATT does not support it, this option often applies although it’s a threat to developing countries. Voluntary export restraint (VER) would be beneficial for WWI as AAA currently exports 35 units of Widgets to the U.S. market. The trade compares weakly with only five units of widgets shipped by WWI to Japore. Ideally, WWI may lose the market for widgets to Japore, but this represents only a small portion compared to the domestic market exploited by AAA. VER would be the best option for WWI to protect its local market from AAA exports.

The company could opt to evoke the U.S. trade Act of 1974 that provides for the undertake a safeguard action on imports to the U.S. The firm must prevail upon the president to make such a judgement on the basis that import pf widgets from the Japore are hurting the local economy. The challenge with this decision is that WWWI still controls a large domestic market share for widgets; AAA sold 35 units compared to 100 units sold by WWI in 2019.

The company can consider countervailing action under the United States Tariff Act of 1930. Under this legislation, WWI may petition the government to stop widget imports from Japore because AAA benefits from local subsidies. In this regard, AAA enjoys an unfair advantage in trade in the U.S. Authorities in the U.S. must confirm the extent of dumping and the degree of injury to the local economy.

The firm could challenge the action as to challenging the WTO rules due to the unfair advantage the country enjoys at home. The firm could petition the WTO to allow for fair trade by requesting the Japore government to stop subsidies and health insurance. Retracting subsidies may be a challenge because they comprise aspects of local laws based on national policy.

Question Two

The interpretation of ‘like products’ under GATT is critical to a decision regarding the preference of products. The definition of like products fall under the WTO, GATT, Most Favoured Nation and National Treatment article III. Products that differ under the WTO/GATT agreements must comply to non-discrimination in the national economy. The question is whether a foreign product found to be ‘like’ a domestic product should receive similar treatment. The definition of likeness by the trade bodies is however subject to myriad ambiguities and occasions case-by-case judgement.

There are different criteria for assessing the likeness of a product that may determine its acceptance in a foreign market. At the outset, the physical features of a product define the ‘likeness’. In this connection, the widgets may not show marked tangible difference and maybe categorized under ‘likeness’ in the U.S. economy. WWI must adopt the process and production methods because these give AAA unfair advantage in trade in the US. A raft of institutional measures ensures that AAA experiences comparatively low costs of production. Japore has a policy of providing health universal health insurance. Besides, the country offers subsidies that enhance the competitiveness of AAA in the U.S. market. Consequently, the company can afford to sell its widgets at a lower price, thus subjecting WWI to unfair competition. WWI dies not to enjoy these benefits and must pay for the health insurance of her workers and doesn’t enjoy any subsidies. In this regard, the company prices its widgets at a higher price. The difference in the process of production offers an undue advantage for AAA’s products. WWI must use the likeness definition to bar AAA from accessing the U.S. market. Although WWI claims tat her widgets are superior based on a secret ingredient, invoking the likeness definition due to physical characteristics will protect the company’s domestic market and enhance its profitability.

Question Three

The Most Favored Nation (MFN) is a policy of multilateral trading developed after WWII. It replaces the challenges of power-based policies that ensure that trading rights do not depend on the economic strength or political clout of trade partners. Under GATS, MFN extends to any measure affecting trade-in services in sectors falling under the agreement. This clause applies regardless of the existence of any prior agreements.

National Treatment is a clause enshrined under the International law of GATS that has mainly applied to intellectual property. The law requires equal treatment of both local and foreign traders. In this regard, a country that seeks to offer benefits to her citizens must also extend the favour to citizens of other countries who reside in the state. By extension, both imported and exported products must receive equal treatment, especially after the entry of foreign products into the country. However, the rule only applies once the product has entered the domestic market. Countries that charge import duty, therefore, do not violate the provisions of the National treatment.

The GATS guidelines on MFN differ from the GATT provisions based on the concept of reciprocity. GATT provides for a reciprocal arrangement where privileges extended to a trading partner under MFN should apply to the group that initiates the negotiation. The MFN status is offered to an international trade partner to ensure fair treatment of all the trade partners under the WTO. A country that confers MFN status to another state must provide privileges and concessions in the agreements. The conferring country must also extend immunity consistent with the provisions guiding the operationalization of GATT. Legislations for MFN under GATS do not require a reciprocal action from the participating nations and focuses on the fair treatment of traders within the national boundaries.

Question Five

Serious Injury

GATT defines serious injury as a significant aggregate impairment in the position of the domestic market. The metrics of measuring the harm must be objective to ascertain the connection between impairs and injury. The threat of serious injury applies to an imminent threat to the domestic economy. The determination of this threat shall proceed based on facts rather than allegations or conjecture. One of the ways of determining risk to a domestic economy is the rate and amount of imports in both absolute and relative terms. The assessment must demonstrate an adverse impact of the imports on local sales, production, profits and losses, and employment, among other economic impacts.

Some of the injuries experienced a domestic economy may arise from other factors other than the presence of the exports in question. The determination of injury must, therefore, demonstrate a causal link between increased exports and the occurrence of serious injury. This process rules out the presence of other factors apart from increased import into the country occasioning the damage. The actual imports don’t have to cause injury but the harm to the economy.

Where there is evidence that other factors are causing the injury, the injury clause does not apply. Serious injury entails the overall impact on the domestic industry as determined by competent authorities.  The authorities must determine the extent of serious injury, including the impact of specific instances on prices. In their judgement, the authorities may infer to the damage a clause even where there is no evidence of a whole industry decline. In this regard, an evaluation if the injury may show positive results even when only a minority of businesses experience a loss.  The authority must determine that the observed trend poses a significant threat amounting to serious injury. The determination of serious injury, therefore, depends upon the discretion of a competent authority rather than a casual observation based on conjecture.

Question Six

The national Treatment clause under the WTO agreement defines the treatment of trade partners in export trade. Under these provisions, members must treat trade partners equally, including the imposition of tariff and non-tariff measures. Countries reducing import tariffs on products by five per cent, for instance, should not charge a five per cent domestic consumption tax on the same product. The clause seeks to level the ground for all trade partners under WTO such that local products do not enjoy a favourable treatment in comparison to imported products. Article III of GATT prohibits members from taking any actions that disadvantage imported goods in favour of those manufactured locally. The import of this provision is that local economies must not apply local taxations, and laws and regulations that adversely affect imported products in a manner that protects local products.

National treatment (NT) under the European Union derives from both WTO agreements and several other regional trade agreements (RTA) that the union has ratified.  The clauses operationalizing the NT in EU influence its economic partnership with her trade partners but collide with the WTO law. The EU RTAs are broader in scope and mostly cover marine transport and intellectual property. The lack of an express economic partnership between the European Union and Japan does not oblige the union to prioritize the National Treatment clause. Although the NT covers Japan under the WTO, the EU must refer to its laws that bind its trade partnership with other countries. The EU, in this regard, is not in breach of the NT clause.

The case against the EU by japan relates to the contents of the Technical barriers to Trade (TBT) that guides trade transactions of members under GATT.  In the preliminary section, however, countries can take actions to protect the domestic market. The EU, under this law, must prove that its decision justifies the reason why it fails to assign national treatment to goods arising from Japan. The technical regulations are not meant to impose unnecessary restrictions for entry of goods but must respond to a legitimate objective of national security and protection of human health among others. On this account, the EU may be found capable of violation of the National Treatment clause.

Question Seven

Developing countries have been very active in dispute resolution in WTO involving both the developed countries and other developing countries.  Since 1995, African countries have been complainants in more than a third of the disputes and respondents in approximately two-fifths of the cases. Developing countries face challenges arising from the process of dispute resolution in the WTO. The dispute process can take as long as two years and involves considerable legal processes. Smaller countries cannot participate in these processes to the end due to the scarcity of specialized personnel with a thorough understanding of the litigation intricacies. The experienced officers are often overwhelmed by the operationalization of WTO and have a challenge in attending to disputes. The WTO must revise the procedure for dispute resolution to ensure that developing countries fairly participate and obtain a reasonable verdict.

All WTO member states, apart from the United States and Mozambique, enjoy the same treatment. However, the legal technicalities of settling disputes are unfavourable for resource-strained developing countries. The settlement of conflicts involves great legalization, the precision of rules and delegations to hear arguments. The processes are not only expensive and are an administrative challenge. Developed countries, on the other hand, are endowed with more resources and are advantaged in participating in litigation of disputes. The WTO must consider the circumstances of developing countries and simplify the dispute resolution process. They must craft new laws that require smaller legal capacity and hasten the process to avoid the accumulation of fees.

The history of conflict resolution shows that developing countries have received less favourable concessions compared to their developed country counterparts. Because of limited resources, developing countries do not participate in cases even as third parties and are thus unfamiliar with the legal processes. Under the current framework, rich countries are more likely to compel developing countries to concede, therefore subjecting them to unfair treatment.

Question Eight

In a WTO dispute settlement process, a WTO member may challenge a defence by invoking article XX (b).  This article relates to the environmental responsibility of protecting dolphins, consumption of cigarettes, and reducing risks to human life. Besides, WTO members must also mitigate risks to animal and plant life arising from a collection of waste materials. As a response, the member may prove that he has undertaken the necessary measures to protect life and the environment. The member may also show that he has accomplished steps for the conservation of exhaustible natural resources.

The WTO provides leeway for members to circumvent the law under article XX as long as the member demonstrates the connection between the stated law and the measures he has taken. Paragraph (b) concerns the protection of human and animal and plant life. The process involves the determination of whether an activity qualifies for the protection of human, animal or plant life. This process has applied to the appeal body and touches contribution made regarding environmental measures to the policy. The company can prove that its impact on the environment is minimal compared to the higher participation it delivers through its processes. This appeal has succeeded previously for a tire retread company in Brazil where the company proved that its manufacturing model helped reduce pollution through minimizing of production volumes.

The member can also prove a relationship between the means and the end. In this regard, he can demonstrate that chosen for production or distribution reasonably relate to the end of environmental protection. The measures under article XX must derive from good faith and not as a disguise to restrict international trade. The report gives other members the right to invoke an exception while respecting the right of other members to engage in business under GATT. The panel could, therefore, evaluate the response based on the degree to which the member proves his action was necessary to protect human, plant and animal rights and the extent to which his means justified the end of environmental protection.