U S LAW GLOBAL TRADE Dr Stuart

U. S. LAW & GLOBAL TRADE Dr. Stuart S. Malawer Dr. Malawer, J. D. Ph. D. (2015) 1

Outline of Topics. • • Extraterritoriality. – Notes: Multi- jurisdiction & Corporate Structure. – Branch v. Subsidiary. – Boycott & Corrupt Practices. – U. S. Taxation: Worldwide System & Tax Deferral. Exports & “Reexports”(Technology & Encryption) Import Relief & Controls. Retaliation (Section 301). Trade Sanctions. Trade Agreements (Constitutionality) “Fast Track Authority (TPA). ” Uruguay Agreements (1995) & Doha Negotiations. Dr. Malawer, J. D. Ph. D. (2015) 2

1. EXTRATERRITORIALITY. Dr. Malawer, J. D. Ph. D. (2015) 3

Extraterritoriality: Basic Dilemma • Potential Regulation by Two Governments – Often lawful under foreign law & unlawful under U. S. law. Can the U. S. & EU regulate the When does U. S. law apply? foreign branch or subsidiary? EU Applies -- U. S. Branch / Corporate Group U. S. Parent EU Subsidiary “Clash of competing legislation” as to foreign actors , foreign actions & foreign law. Dr. Malawer, J. D. Ph. D. (2015) 4

Note -Transnational Transactions & Multi-jurisdictional World. – Private Transactions & Transnational Regulation - EU U. S. Third Country Dr. Malawer, J. D. Ph. D. (2015) - ISSUE - • Global transactions occur in many countries, but each country has own rules, e. g. , antitrust, export controls, sanctions …. . Not much global regulation. 5

Note – Corporate Structure & Corporate Groups. Corporation (Separate Entity / Depends on Incorporation) [Provides limited liability of shareholders -Liability only on the corporation. Fosters capital formation. ] Shareholders (Equity Owners) Parent Corporation (As a shareholder limited liability -no liability for subsidiary) Subsidiary Corporation (Parent is shareholder / control of corporation) Note – In a General Partnership all partners are individually liable for partnership debts -- no limited liability. Different from corporate organization. Dr. Malawer, J. D. Ph. D. (2015) 6

Extraterritoriality: “Clash of Competing Antitrust Laws ” (Domestic Mergers) U. S. antitrust rules Merger impact on European & global markets (assets w / in those markets). Citicorp EU EU Regulation Merger European antitrust rules Travelers • Financial Services MCIWorld. Com - Sprint (2000) • Telecommunications & Internet Northrop Grumman – TRW (2002) • Defense industry GE-Honeywell (2001) Dr. Malawer, J. D. Ph. D. (2015) 7

Extraterritoriality – Mergers & Other Regulatory Issues. U. S. Antitrust & other regulatory rules for specific industries (e. g. FCC) World. Com E. U. Merger MCI • Industry specific & other regulations. • Recent Mergers or Proposals: • AOL-Time Warner • GE-Honeywell • Deutsche Telekom – Voice. Stream • NTTDo. Como – Verio Dr. Malawer, J. D. Ph. D. (2015) • Lucent – Alcatel. 8

Extraterritoriality (Transborder Mergers /Alliances) U. S. Competing Laws & Regulations U. K. AT&T BT Alliance U. K. Company U. S. Company Auto: Daimler-Benz / Chrysler (1998) Oil: BP - Amoco (1998) Aviation: American Airlines - British Airways Financial: Deutsche Bank - Bankers Trust; Credit Suisse – DLJ. Dr. Malawer, J. D. Ph. D. (2015) 9

Extraterritoriality --Corporate Governance. (Sarbanes –Oxley Act 2002) • SOX federalizes corporate governance (from state law) & applies extraterritorial – when have listed foreign firms. • Corp. Governance – Newer trade issue. From a state law issue, to a national issue, now a global trade & business issue (particularly U. S. - EU). U. S. Law EU U. S. (Auditor) [Selling shares in U. S. ] (Listed) • U. S. securities law requires registration • EU auditing firm auditing another EU firm listed in U. S. with oversight board (PCAOB) & may have penalties. • Enhanced financial disclosures. • Criminal penalties for fraud & white-collar crimes. • Personal liability of senior executives. • Oversight of public accounting firms. Dr. Malawer, J. D. Ph. D. (2015) 10

Dual Principles Concerning U. S. Extraterritorial Legislation: “Effects Principle” & “Principle of Reasonableness” U. S. Effect w/in U. S. Extraterritorial Application of U. S. “Effects Principle” Law (e. g. antitrust, mergers, alliances and contracts) World Act outside of U. S. (by foreign actor) S. malawer @ 2002 “Effects Principle” now qualified by “Reasonableness Principle” (both international & U. S. law) Dr. Malawer, J. D. Ph. D. (2015) 11

2. EXPORT & “REEXPORT” CONTROLS. U. S. Department of Justice United States Attorney Western District of Virginia THE GUILTY PLEA OF ITT CORPORATION FOR ILLEGALLY TRANSFERRING CLASSIFIED AND EXPORT CONTROLLED NIGHT VISION TECHNOLOGY TO FOREIGN COUNTRIES -- $100 Million Fine -March 27, 2007 Dr. Malawer, J. D. Ph. D. (2015) 12

Export Control’s Legislation. • Export Administration Act & related acts (1979), (1985), (1988) provide for a range of export controls. • Basic Law -- Export Administration Act of 1979 (foreign policy & national security controls). Applies to both goods & technology. • Note -- This law reaches foreign technology sold by U. S. subsidiaries abroad. (Extraterritoriality). • Possible violations of Economic Espionage Act of 1996 if involves transfer of a trade secret to a foreign government. Dr. Malawer, J. D. Ph. D. (2015) 13

Export & “Reexport” Controls. E. g. , Chinese Satellite / Missile Technology U. S. * Export controls govern both goods & technology Export ‘Foreign Origin’ ‘U. S. origin’ For. Co. EU Subsidiary Reexport Russia Dr. Malawer, J. D. Ph. D. (2015) 14

COMPUTER EXPORTS & U. S. CONTROLS --The Case of IBM & Russian Sales -- IBM / Parent Criminal violation by IBM Subsidiary (1998) P/S Sales & Installation Contract IBM Russian Sub. Russian Corp. Offshore production ? Seller Buyer Dr. Malawer, J. D. Ph. D. (2015) 15

Network Associates, Inc. U. S. Parent ‘Encourages’ offshore development (Contract or P/S Marketing or Production also? Alliance) Dutch Subsidiary Swiss Corp. (Cnlab Software) Software European Sales Europe Malawer @1998 Dr. Malawer, J. D. Ph. D. (2015) [Foreign origin or publicly available program code] 16

U. S. EXTRATERRITORIAL: LEGISLATION -- Unrelated Firm, Branch v. Subsidiary - • • • Antitrust (also unrelated firms) Securities legislation (also unrelated firms) Taxation (branches / subsidiaries) Commercial Corruption (not foreign subsidiaries) Foreign Boycotts (foreign subsidiaries) Note: Branch v. Subsidiary – Branch is part of U. S. firm. – Foreign subsidiary is incorporated in foreign country. (It is a foreign corporation. ) – Foreign subsidiary has controlling equity ownership by U. S. parent. – U. S. Taxation: No tax on foreign subsidiary until repatriated. Tax on branch (maybe tax credit). Dr. Malawer, J. D. Ph. D. (2015) 17

Foreign Branch & Foreign Subsidiary: Extraterritorial Application of U. S. Law. U. S. Corporation U. S. Parent Corporation Maybe. Yes. Equity Ownership. Foreign Subsidiary Separate corporate entity. Incorporated in foreign country. Dr. Malawer, J. D. Ph. D. (2015) Foreign Branch Part of corporation. No separate ownership or entity. 18

Antiboycott & Corrupt Practices: Extraterritorial Application – Foreign Subsidiaries. Antiboycott Law Corrupt Practices Law U. S. Law. U. S. Parent Corp. Yes No Foreign Subsidiary • Applicable to branch. Dr. Malawer, J. D. Ph. D. (2015) 19

U. S. Corporate Taxation: Multinational Global Corporations -- Worldwide System & Tax Deferral [Extraterritoriality & Related Problems. ] General Rule -- U. S. taxes foreign income of corporations. This involves issues of double taxation, foreign tax credits, tax treaties and tax havens. Also involves issue of transfer-pricing as to where to take corporate profits. U. S. Firm U. S. WORLDWIDE TAX SYSTEM For. Buyer U. S. taxes foreign source income. EXPORT TAX DEFERRAL & EXPORT SUBSIDY U. S. Parent Export sales income U. S. Firm For. Subsidiary No U. S. income tax on foreign subsidiary’s income until repatriated back to U. S. Foreign income No U. S. income tax (deferral) on foreign sales / export income of U. S. firm. Problem of the DISC and FSC legislation. WTO decisions against this. * Obama proposal to change tax deferral on foreign income / transfer pricing. Considering temporary reduction of repatriation of overseas income to help spur domestic growth and employment. In addition to this cross-border tax evasion and tax havens are major concerns. The new policy for greater information exchange via OECD provisions is supported by the G-20 to limit tax evasion that utilizes bank secrecy laws. The OECD produces both model conventions and proposals for national standards – a dual approach --- creating international obligations & “harmonizing” national legislation. Dr. Malawer, J. D. Ph. D. (2015) 20

3. IMPORT RELIEF LEGISLATION. Dr. Malawer, J. D. Ph. D. (2015) 21

“Unfair” & “Fair” Import Relief. “Unfair” A/D CVD 337 1337 “Fair” 301 201 406 22 232(B) 204 Dr. Malawer, J. D. Ph. D. (2015) 22

Import Relief: “Trigger Mechanism. ” • • • A/D. Dumping. (sale in the U. S. for LTFV -- less than FMV & material injury) CVD. Subsidies. (foreign export subsidy & material injury) 337 (unfair acts of importation or competition– violation of patents & trademarks) *Procedural Note -- Injury / ITC; Wrongful Act / ITA. Remedy Note – Remedy is generally a tariff surcharge. • • • 201 “Escape Clause. ” (substantial cause of serious injury) 406. (market disruption) (communist). 22 “Agriculture. ” (materially interfere w/ USDA) 301. Retaliation. (USTR: unfair or illegal foreign trade practices). Market access. – Special 301 (Intellectual Property Rights). – Section 1376 (telecom). 232 b (Commerce: impair national security). Dr. Malawer, J. D. Ph. D. (2015) 23

Antidumping (LTFV) [Private party price discrimination. ] (Sales Price less than FMV in foreign country. ) German Firm U. S. (Unfair Practice) Sales Price in U. S. (Lower in the U. S. ) Remedy – ADD (tariff surcharge) equal to margin of dumping Sales Price in Germany (Higher in Germany) • Predatory price discrimination with intent to gain market share. • Statute protects domestic manufacturers, not consumers. • Traditional economists concerned about monopoly. Dr. Malawer, J. D. Ph. D. (2015) 24

Countervailing Duty (Export Subsidies) German Gov’t [Foreign Government Export Subsidy] U. S. (Unfair Practice) German Firm Sale to the U. S. Remedy – CVD (tariff surcharge) equal to amount of subsidy. Dr. Malawer, J. D. Ph. D. (2015) Gov’t Subsidy REMEDY NOTE The remedy for Dumping and Subsidies are tariff surcharges – ADD or CVD. To be equal to the margin of dumping or amount of subsidy. 25

Escape Clause (Safeguard) (§ 201) U. S. Foreign Firm “Fair Import” (Nothing Wrong) General WTO Note. Remedy – Tariff surcharge or quotas. (Surge is a Substantial Cause of Serious Injury to Domestic Industry caused by imports. ) The WTO agreements on Dumping, Subsidies and Safeguards provides rules when trade remedies (tariff surcharges) may be levied. National laws mirror WTO obligations. With the DSU a system of multilateral review is established of national measures. Dr. Malawer, J. D. Ph. D. (2015) WTO Litigation Note. Two methods of litigation over foreign restriction – U. S. can contest foreign act directly in WTO or it can apply own measures and have them attacked in WTO. In either case the WTO will then review the contested foreign restriction. 26

National Security (§ 232[b]). U. S. [ Impair National Security ] EU Imports (Fair) Dr. Malawer, J. D. Ph. D. (2015) 27

Retaliation (§ 301) [U. S. Restricts Foreign Imports in Retaliation] Basic Issue – Is § 301 contra to WTO? [USTR required to follow DSU? ] Japan U. S. Imports (Fair) U. S. Exports Counter-Restriction Foreign Market Access Restriction Operation of Statute -- “Unjustifiable” (mandatory) or “Unreasonable” (discretionary) Illegal -- Violates agreement Dr. Malawer, J. D. Ph. D. (2015) Discriminatory / Unfair 28

Special § 301 (Intellectual Property). China U. S. Imports (Fair) U. S. Exports USTR required to have annual reviews – leading to PFC & possible investigation. Same as Basic 301. U. S. Restricts Foreign Imports in retaliation. Foreign Market Access Restricted (“Unfair or Illegal foreign trade practice” as to Intellectual Property even if in compliance with WTO / TRIPS). Dr. Malawer, J. D. Ph. D. (2015) 29

Telecommunications (§ 1377). EU U. S. Imports (Fair) U. S. Exports USTR required to have annual reviews – leading to PFC & possible investigation. Same as Basic 301. U. S. Restricts Foreign Imports in retaliation. Foreign Market Access Restricted (“Unfair or Illegal foreign trade practice” as to Telecommunications. Dr. Malawer, J. D. Ph. D. (2015) 30

Illegal or Unfair Importation / IP (§ 1337). Major issue in ITC litigation today Issue – Is this consistent with National Treatment Principle? EU U. S. Remedy: Cease & Desist Order Imports (Unfair Import or Method of Competition) -Violation of Patents or Trademarks. Dr. Malawer, J. D. Ph. D. (2015) 31

• Section 337 of Tariff Act of 1930. Declares unlawful “unfair acts of importation. ” –Specific language applies to class of intellectual property rights (patent, trademark, registered mask work of semiconductor chip product) as to imports. No injury standard for this group (compared to non-IPR imports). –Different (lower) standard as to violation than patent laws generally in the U. S. –GATT panel in 1988 found this to violate “national treatment principle. ” Art. III (4) Dr. Malawer, J. D. Ph. D. (2015) 32

OTHER IMPORT LEGISLATION & IMPORT SANCTIONS. • • Sec. 204 of 1956 Agriculture Act. Adjustments to textile imports under former Multi. Fiber Agreement (MFA) & now the ATC. Various import restrictions authorized for violation of laws via international environmental conventions: – Marine Mammal Protection Act (1972). Importation ban when have incidental kills. – 1973 Endangered Species Act. Importation ban on specified species. • – Sec. 8 of Fisherman’s Protective Act (Pelly Amend. ) Import sanctions when practices diminishes int’l programs. – Note: • Trade sanctions are used as to imports for nontrade violations. • Sanctions often used for exports (but also imports). Sec. 122 of ‘ 74 Trade Act. Import restrictions for balance of payments. Dr. Malawer, J. D. Ph. D. (2015) 33

Note – “Gray Market” Imports back into the U. S. after first sale abroad by either goods shipped from the U. S. or manufactured abroad and sold first abroad – at a lower prices than sold in the U. S. First Sale / export abroad Upheld by S. Ct. Sold back to the U. S. consumer at a lower price than sold by U. S. retailer. Reexported to U. S. Produced & sold abroad Pending in S. Ct. Exported to U. S. Dr. Malawer, J. D. Ph. D. (2015) 34

4. UNILATERAL RETALIATION (Section 301). Dr. Malawer, J. D. Ph. D. (2015) 35

Section 301 Actions “Retaliation” • Section 301 • Super 301 • Special 301 • Section 1337 Dr. Malawer, J. D. Ph. D. (2015) 36

“Retaliation” (con’t). • Regular 301: USTR -- violation of trade agreements or unreasonable or unfair practices (dual investigation). • Super-301: USTR annually reviews to identify priority foreign country practices (PFC) & possible action. (Not renewed) • Special 301: Annual review of barriers in intellectual property rights to identify priority foreign country practices (PFC) & possible action. • Sec. 1377: Annual review of barriers in foreign telecommunication markets to identify priority foreign country practices (PFC) & possible action. Dr. Malawer, J. D. Ph. D. (2015) 37

5. U. S. TRADE SANCTIONS. Dr. Malawer, J. D. Ph. D. (2015) 38

Trade Sanction Legislation: General Legislation – Peace & War. External Threat / Peace time. International Emergency Economics Powers Act (IEEPA) Time of war. Trading with the Enemy Act. Dr. Malawer, J. D. Ph. D. (2015) 39

Trade Sanctions Legislation: Basic Characteristics. • Trade sanctions only by delegation of authority by Congress. (Not within the President’s inherent authority. ) • Have general sanctions legislation and country specific: • General legislation includes IEEPA & Trading with the Enemy Act. • Country specific legislation: Syria, Iraq, Iran, Cuba …. • Trade sanctions take various forms: • Restrictions on exports from the U. S. (export controls). • Restrictions on imports into the U. S. • Restrictions on financial transactions from the U. S. and on U. S. firms. • Some trade restrictions enforce other statutes or treaties – environment. Dr. Malawer, J. D. Ph. D. (2015) 40

Trade Sanctions: Policy Issues. • Empirical issue of effectiveness. • Assessment in terms of impact on both corporate transactions and foreign policy objectives. • Need to consider unilateral v. multilateral sanctions as to issue of effectiveness. • “Cost-Benefit analysis. ” Hurting primarily ourselves because of ineffective sanctions? • Sanctions often impacts trade relations with our allies when U. S. tries to enforce extraterritorially. • Issue of using trade measures for non-trade issues (for foreign policy or national security reasons). • As to firms when impose sanctions they allow foreign firms to still compete – issue of competitiveness. • Raises issues of reliability of U. S. contractors. Dr. Malawer, J. D. Ph. D. (2015) 41

TRADE SANCTION LEGISLATION. • • • Various forms -- often involves an embargo (imports & exports), foreign investment restrictions (for political or security rationale). Have general sanctions legislation and country specific sanctions. General Sanctions : – Int’l Emergency Economic Powers Act (IEEPA): “extraordinary external threat. ” (peace time) – Trading with the Enemy Act (time of war). • Country specific Sanctions: – Iran & Libya Sanctions Act, 1996 (amended 2006). – Cuba -- Helms - Burton, 1996: Sue for confiscated property & denial of admission. (Codifies prior sanctions. ) – “Glenn Amendment” to Nuclear Proliferation Act, 1994. (Applied to India, Pakistan, 1998) – Syrian Sanctions Act. (2003). – Magnitsky Bill (2012). – Russian Sanctions / Crimea (2014). Dr. Malawer, J. D. Ph. D. (2015) 42

Trade Sanction Legislation. • • Country-specific sanctions: – Cuban Trade Embargo Sec. 620 a of 1961 For. Assist. Act. – Iraq Sanctions Act (1990). Trade embargo. Prohibition of almost all U. S. transactions. Note -- Various trade restrictions for nontrade reasons: – Exon-Florio (CFIUS). Pres. prohibit U. S. merger by foreign firm for national security. • DP World (2006). • CNOOC – UNOCAL (2005). • Huawei (2012). – Merchant Marine Act (Jones Act)(1920). Restrictions on foreign ships. – Int’l Religious Freedom Act (1998). Discretionary authority in the President. Dr. Malawer, J. D. Ph. D. (2015) 43

Seven Lessons from Economic Sanctions, Reconsidered (2007). • • Don’t bite off more than you can chew. – Careful of inflated expectations. Friends are more likely to comply than adversaries. – Closer trading partners comply. {What about greater integration into global economy and institutions? } Beware autocratic regimes. – Hard to bully a bully. Slam the hammer, don’t turn the screw. – Don’t do incremental. More is not necessary merrier. – Large coalitions not necessary. Choose the right tool. – Use companion measures (non-economic). Don’t be a cheapskate or a spendthrift. – Careful of self-inflicted costs. Generally – Look before you leap! Dr. Malawer, J. D. Ph. D. (2015) 44

D’Amato Sanctions (Iranian Sanctions): Foreign Joint Venture in Iranian Oil. Total, SA French Gazprom Petronas Russian Malaysia IRAN [Sanctions waived Summer 1998] Oil field development agreement Dr. Malawer, J. D. Ph. D. (2015) 45

Note: Export Promotion Legislation. • • • Export Enhancement Act (1988). Agricultural Export Sales (PL 480). President Obama’s proposals (2010). Dr. Malawer, J. D. Ph. D. (2015) 46

6. CONSTITUTION & TRADE. Dr. Malawer, J. D. Ph. D. (2015) 47

CONSTITUTIONAL ASPECTS OF TRADE AGREEMENTS. • • • The Congress has exclusive authority to regulate foreign commerce. The President has authority to negotiate international agreements. President has no inherent authority to affect tariff or other domestic laws. Since 1934 Congress has delegated authority to the President to negotiate trade agreements. President has authority to negotiate trade agreements without delegated authority if doesn’t impact on tariffs and domestic law. Newer Legal Issue – Does the inherent “Foreign Affairs” power of the President now include “Global Trade” especially as to newer trade issues (non-tariff issues). • National Intelligence Council – Trade & investment are the future strategic and geopolitical issues for the U. S. (2008, 2010, 2012). Dr. Malawer, J. D. Ph. D. (2015) 48

Three Judicial Doctrines & Foreign Affairs: Federalism, Separation of Powers & Judicial Review. President FEDERAL Delegation of Authority. Preemption. Congress Delegation under 1934 RTAA. “Fast Track "of 1970 s supplements delegation. STATES Courts Judicial Review. • Political question. • Ripeness. Exclusive congressional authority in foreign trade & shared authority in foreign policy. But what happens when trade becomes more important as a foreign policy issue? Dr. Malawer, J. D. Ph. D. (2015) 49

International Agreements & U. S. Law: Treaties & Executive Agreements – Process. President. Formal Treaty. Both Supreme Law of the Land [Article 6 – Supremacy Clause & Precedent. ] [Article 2 -- Exec. Auth. ] [House not involved. ] Senate. President. Executive Agreement. Statute & Agreement. Problem of Conflict -“Last in time prevails. ” ]Not in Constitution. ] [Both houses involved. ] Congress Dr. Malawer, J. D. Ph. D. (2015) 50

International Agreements & Customary International Law as Domestic U. S. Law. Formal Treaties Article VI of Constit. … Mo. v. Holland Executive Agreements Precedent … Pink Case, … Dames & Moore. Cust. International Law Precedent … Paquete Habana. Domestic Law. Dr. Malawer, J. D. Ph. D. (2015) 51

TRADE AGREEMENTS: Delegation of Authority, Implementation, “Fast Track” (TPA). Congress has ‘exclusive authority’ over foreign trade Congressional Authority Delegation of Authority (1979 / 1988 Trade Acts). Sets negotiating objectives. “Fast Track / TPA. ” President Concludes Trade Agreement Legislation implements trade agreements (URIAA) as domestic law Creates domestic law obligations & approves agreements ABC Corp Concludes WTO & Multilateral Agreements as international obligations (Executive Agreements). Implementing Legislation Domestic law XYZ Corp Dr. Malawer, J. D. Ph. D. (2015) 52

Dual Nature of Trade Agreements & Federal-State Relations. Trade Agreement (WTO) U. S. EU International Obligation Implementing Legislation. Federal State Domestic Law. Note on WTO & States. Ø WTO obligations apply to states. ØProblem is that state law may violate WTO obligations and create liability for the U. S. Corp. X in U. S. ØFederal authority is limited to consulting – may bring an action under implementing legislation. Dr. Malawer, J. D. Ph. D. (2015) 53

Trade Policy, Foreign Policy and Domestic Policy -- Problem. Trade policy today is central to foreign policy. It is also crucial to domestic policy. The U. S. Constitution gave the job of regulating trade exclusively to Congress under Article 1, Section 8, Clause 3. But this was late in the 18 th century when trade was barely more than setting customs duties. Not of great popular concern. The Constitution gave great powers to the President in foreign affairs and they grew even more greatly over the next two centuries. The problem is this. In the 21 st century trade has emerged as one of the most important foreign policy and domestic policy issues. (The trade and economic sanctions on Iran and Russia are recent examples. )Yet, the structural context of dealing with it seems to be dated. What needs to be done? Once trade was considered a bipartisan concern or even nonpartisan. We need to turn back to this attitude. Is this likely? Dr. Malawer, J. D. Ph. D. (2015) 54

7. “FAST TRACK AUTHORITY. ” Dr. Malawer, J. D. Ph. D. (2015) 55

History of “Fast Track (TPA). ” • • • First created during Ford Administration in the Trade Act of 1974. • To deal with a broader trade agenda (beyond tariffs) of the Tokyo Round of negotiations. Renewed by Congress almost continuously from 1975 - 1994. Congress denied new fast track authority to President Clinton in Fall 1997. (First time Congress denied such renewal. ) “Fast Track” (“Trade Promotion Authority”) was granted to President Bush in August 2002. (Was the reason for new steel tariffs to gain domestic support? ) Expired in Spring 2007. What is the impact of this on existing U. S. trade negotiations (TTP and TTIP)? General Question: Does the President really need “Fast Track” ? Dr. Malawer, J. D. Ph. D. (2015) 56

Procedural Aspects of “Fast Track. ” • • Expedited rules & procedures for Congressional consideration of trade agreements. Four essential features: – – Up or down vote, with no amendments on implementing legislation. Vote within fixed period. Consultations with Congress during negotiating process. Sets negotiating objectives. Dr. Malawer, J. D. Ph. D. (2015) 57

Juridical Aspects of Process. • • • “Fast Track” authorizes trade negotiations and delegates authority to the President. Resulting international agreement is an “Executive Agreement, ” not a formal treaty. Allows for a role for the House of Representatives in an international agreement (not provided in the formal treaty process). Dr. Malawer, J. D. Ph. D. (2015) 58

Juridical Aspects -- Con’t. • • • “Implementing Legislation” implements the trade agreements -- creates binding domestic law within the U. S. Resulting international agreements are binding as international law among states. Often will have additional provisions in a member state’s implementing legislation. Dr. Malawer, J. D. Ph. D. (2015) 59

8. URUGUAY ROUND AGREEMENTS (WTO) & DOHA Trade Negotiations. Dr. Malawer, J. D. Ph. D. (2015) 60

URUGUAY AGREEMENTS as ‘Executive Agreements’ • • • WTO (Constituent) Annex 1 A (Goods) • GATT 1994 • TRIMS • A/D • CVD • Safeguards • Agriculture • ATC • SPS Annex 1 B (Services / GATS) • • • Annex 1 C (Intellectual Property Rights / TRIPS) Annex 2 (Dispute Resolution / DSU) Plurilateral -- Gov’t Procurement. These agreements were concluded pursuant to “fast track” authority and then implemented by the URIAA. Dr. Malawer, J. D. Ph. D. (2015) 61

Trade Issues Negotiated at Uruguay Round & Subsequently. • • • Traditional Issues (Expanded). – Goods. – Agriculture. – A/D. – CVD. – Safeguards. Newer Issues. – Services. – Intellectual Property. – Institutional. • WTO. • DSU. • • Singapore Agreements (1997). – Financial Services. – Telecom. – Inform. Technology. Singapore Issues (1997 Ministerial) – Investment. – Competition rules (cartels). – Government procurement. Newer Issues (post-Uruguay). – Labor. – Environment. Even Newer – Corruption – Climate. Post-Financial Crisis (2008 / 2014). – Trade & financial architecture – Exchange rates. – Gov’t commodity cartels. – Food security / Safety / Land investment. – For. gov’t investment (SWF). – Enlarged RTA’s Dr. Malawer, J. D. Ph. D. (2015) 62

ACCOMPLISHMENTS OF THE URUGUAY ROUND. • • Establishment of a permanent trade institution. WTO to negotiate trade rules & apply them. (Global trade to be a rulebased system – not governed by power. ) Providing the WTO with a firm legal basis & detailed constituent rules. (Cured the GATT “legal defects. ”) Integrated package of substantive rules. Further defined traditional trade issues: dumping, export subsidies, agriculture, procurement. Extended general GATT principles and disciplines to newer trade areas: investments, intellectual property, services. – For example, list of prohibited subsidies. Compulsory & binding dispute resolution. Dr. Malawer, J. D. Ph. D. (2015) 63

Two Basic Principles of the WTO. Most Favored Nation Principle. National Treatment Principle. Both principles based on the principle of nondiscrimination (as to different imports and domestic products). Dr. Malawer, J. D. Ph. D. (2015) 64

Doha Trade Rounds. • • “Doha Ministerial Declaration. ” (Nov. 14, 2001). – List issues as to “expanded negotiating agenda” and “other activities. ” – To determine whether the Singapore issues were to be part of further negotiations. – Separate declaration on drug patents & compulsory licensing for production in LDC’s. “Decision on Pharmaceutical Patents. ” (August 30, 2003). – Follows the Doha declaration on “compulsory licensing” as a public health exception to TRIPS and allows for export to other LDC’s. “July 31, 2004 Package” (After Cancun Ministerial). – Agriculture& cotton. • Domestic support, export subsidies, S&D treatment, market access. – S & D treatment principle. – No inclusion of “Singapore Issues” – (Investment, Competition & Government Procurement). Hong Kong Ministerial (2005) – inconclusive. July 2006 / 2009 – Trade negotiations suspended. Expiration of TPA / Fast Track in 2007 complicates trade negotiations. Bali Ministerial (December 2013) reaches some minimal agreements (Three Pillars). India rejects Bali but then agrees to it, mostly. (2014) Dr. Malawer, J. D. Ph. D. (2015) 65

Ministerial Meetings under WTO. • • Singapore (1996). Geneva (1998). Seattle (1999). Doha (2001). Cancun (2003). Hong Kong (2005). Geneva(2009). Bali (2012). Recent Problems – Global Financial Crisis & Global Trade National Treatment & Buy American. -- Under the GPA the NTP proscribes it. “Bailouts”& Subsidies. -- Bailouts to only U. S. firms may Depends if countries are parties. U. S. states may be bound if accepted GPA. violate national treatment and / or subsidies Dr. Malawer, J. D. Ph. D. (2015) 66

Sources for Global Trade Law. • • “Overview & Compilation of U. S. Trade Statutes” (annual, Ways & Means). “Summary of Statutory Provisions Related to Import Relief” (annual, USITC). “Trade Policy Agenda / Annual Report” (annual USTR). “National Trade Estimate” (annual USTR). Dr. Malawer, J. D. Ph. D. (2015) 67

Web Sites: Trade Law & Policy. • • Office of the United States. Trade Representative http: //www. ustr. gov U. S. International Trade Commission http: //www. usitc. gov World Trade Organization http: //www. wto. org International Trade Law Monitor http: //ra. irv. uit. no/trade_law/itlp/html • • Inside U. S. Trade (World Trade Online) http: //insidetrade. com International Trade & Investment (Commerce Dept. ) (http: //www. ita. doc. gov/legal Global Trade Law http: //www. Global. Trade-Law. com International Trade Relations. http: //www. International. Trade. Relations. c om Dr. Malawer, J. D. Ph. D. (2015) 68

Web Sites -- Con’t • • • Encryption Export Controls (Commerce Dept. ) http: //www. bxa. doc. gov/ encstart. htm International Telecommunications Union (ITU) http: //www. itu. ch Information Technology Industry Council (ITIC) http: //www. itic. org Information Technology Association of America (ITAA) http: //www. itaa. org Organization for Economic Cooperation & Development (OECD) http: //www. oecd. org • • • Economic Strategy Institute http: //www. econstrat. org Institute for International Economics http: //iie. com Asian Pacific Economic Cooperation (APEC) http: //www. apecsec. org. sg World Bank Group http: //www. worldbank. org International Monetary Fund http: //www. imf. org Berkeley Roundtable on the International Economy http: //www. brie. berkeley. edu/ brie Dr. Malawer, J. D. Ph. D. (2015) 69

Dr. Malawer, J. D. Ph. D. (2015) 70