29-6-10 introduction to intl commercial law

8/13/2019 29-6-10 Introduction to Intl Commercial Law

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Introduction to

International Commercial Law

(Trade and Investment)

Dr. Markus W. Gehring, MA (Cantab), LL.M. (Yale), Dr. jur.(Hamburg)

Vice-Dean Research and Jean Monnet Chair ad personam

in Sustainable Development Law
http://www.cor.eu.int/home.htm


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Introduction to International Trade Law

Lecture Outline:

1. GATT/International trade history

2. The World Trade Organization

3. The Institution

4. Key conceptsTariffs, Most Favourite Nation andNational Treatment

5. Dispute Settlement6. ReformTrade negotiations


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- one of the oldest areas governed by international

rules

- multi-layered trading system: bilateral, regional,

intra-regional and global- provisional set of rules

- originally 23 contracting parties

- enacted 1 January 1948

- terminated 31 December 1995- negotiated eight multilateral trade "rounds"

- reduced tariffs, attempted to reduce other

trade barriers

- converted intl trade to a rules-based system

1. The General Agreement on Tariffs and Trade

(GATT) / International trade history


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- Objectives ?

- Main functions:

implementation, administration and operation

of the covered agreements;negotiation of trade agreements;

settlement of trade disputes;

review of trade policies;

fostering coherence in policy making- Pillar structure: GATT, GATS, TRIPS and

horizontal agreements: DSU, TPRM and

plurilateral agreements

2. The World Trade Organization


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3. The Institution


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-Tariffs (reciprocal and mutually

advantageous basis)

- Actual value tariffs- Tariff schedules (Art. II GATT)

- Tariffication of other barriers to trade

- Brussels Convention on Tariff

Classification- Harmonized system of customs

classification

4. Key Concepts - Tariffs


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- Art. III GATT prohibits discrimination of

foreign producers vis--vis domesticproducers

- Early GATT jurisprudence: a formally

origin neutral taxation can violate

Art. III:2 GATT- Centrality of likeness

- Non-fiscal measures (Art III:4 GATT)

- Relationship with Art. XX GATT

4. Key ConceptsNational Treatment


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- Integrated dispute settlement system

based on Articles XXII and XXIII GATT

and the DSU

- Function of the DSB- Coverage: goods, services and intellectual

property

- Procedures: strict time-limits

- Adoption of panel reports: negativeconsensus principle

- Appellate Body Review

- Non-compliance with recommendations

5. Dispute Settlement


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- Consultation phase

- Panels (Art. 6-8 DSU)

- Panel process (Art. 12 DSU)- Panels time periods (Appendix 3)

- Appeals Process (Art. 17 pp. DSU)

- Adoption of reports

- Compliance- (Cross)retaliation

5. Dispute Settlement


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- Ministerial Conference between Green

rooms and NGO scrutiny

- Consensus decision making (Art. XIWTO)

- Panels time periods (Appendix 3)

- Trade negotiation committee

- Doha-Round: Agriculture as the mostcontested issue (initially also competition

and investment)

- Draft Hong Kong Ministerial Declaration

6. Trade negotiations


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Trade Related Investment Measures (TRIMS)

Physical and Portfolio Investment

Bilateral Investment Treaties (BITs)

Multilateral Attempts- OECD - MIA

- WTO

- New EU Competence?

2. Investment


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Investment Law

An Emerging Network of Intl Investment Agreements (IIAs):

Current intl legal framework governing foreigninvestment is a vast network of over 2500 IIAs.

In 2005, 1,891 (75.8 %) in force, + 232 otherIAs with investment provisions, + otherregionals.

While other treaties and norms intersect andinteract, IIAs are the primary publicinternational law instruments that governforeign investment.

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Investment law

In most IIAs, foreign investors enforce these rights through investor-statearbitration provisions under which the state provides its general consent toarbitrate claims under the IIA.

As of December 2005, 135 IIAs claims had been brought before ICSID.Altogether by 2005, there were 229 known investment treaty arbitrations.Over two thirds of the claims were filed after 2001.

SD concerns were first raised in 4 controversial claims underChapter Eleven of the North American Free Trade Agreement(NAFTA):

-Ethyl v. Canada: export and interprovincial trade banprohibitions on MMT, a fuel additive;

- Azinian v. Mexico: cancellation of a municipal waste concession;

-Metalclad v. Mexico: closure of a hazardous waste site; and

-Methanex v. United States: Californian ban on the use of MTBE,another fuel additive.

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Trade Law and Sustainable Development

Lecture Outline:

1. Sustainable Development and Globalisation2. FoundationsTrade and Environment

3. FoundationsTrade and Development

4. Integrated Trade Law and Policy-Making

5. Sustainable Development in WTO Disputes6. Conclusion


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Building on the 1992 UN Conference on Environment and

Development (Rio Earth Summit)

Addressing economic interdependence in the 2002

Johannesburg World Summit on Sustainable Development. Globalization offers opportunities and challenges for sustainable

development. We recognize that globalization and interdependence are

offering new opportunities to trade, investment and capital flows and

advances in technology, including information technology, for the

growth of the world economy, development and the improvement ofliving standards around the world. At the same time, there remain

serious challenges, including serious financial crises, insecurity,

poverty, exclusion and inequality within and among societies.

1. Sustainable Development and Globalisation


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Physical links (impacts)

- Complex relationships

- Neither good nor bad (shades of grey)

Legal links

- Three distinct bodies of international law

- Areas of intersection and integration

Institutional links- WTO vis--vis MEA Secretariats and IGOs,

- UNEP, UNDP

- National and international NGOs

2. FoundationsRapid Evolution in Law and Policyon Trade, Environment & Development


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The trade perspective Economic growth through trade will solve all environmental

problems

The environment perspective The environment is threatened by the status quo

The development perspective Poverty needs first and foremost policy attention

2. FoundationsDifferent Perspectives


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2. FoundationsGlobal Environmental Management

Principal MEAs

Early Agreements- CITIES- UNCLOS- Basel Convention

- Montreal Protocol

Rio Agreements- CBD- Desertification

- Climate Change New Generation

- PICs- POPs

Trade Measures:- Trade ban- Protection provisions- Trade restrictions

- Trade prohibition 3. Part

- Cartagena Protocol: GMO traderestriction

- Kyoto Protocol: Trade links

New Generation- Trade restriction- Trade ban


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2. FoundationRelevant WTO Provisions

WTO Agreement

Trade in Goods

GATT

TBT SPS

Trade in Services

GATSTrade in IPRs

TRIPS

Preamble; Art. V. 2

Art. III, XX GATT

Art. 2.2, 2.6 TBT Art. 2.1, 5 SPS

Art. XIV GATS

Art. 7, 30 TRIPS

And Doha Negotiations


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Growing membership of developing

countries

New Development Theory

GATT: Article XVIII

GATT: Part IV

Enabling Clause The WTO Agreements

2. FoundationsTrade and Development


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4. Integrated Trade Law and Policy-Making

Development that can meet the needs of the present

without compromising the needs of future generations

(Brundtland Report)

Reconciliation of development and environmental

objectives (ICJ in Gabcikovo-Nagymaros Case)

Balance / integration / mutual support between economic

growth, social justice and environmental protection

objectives (WTO AB Report from US Shrimp Dispute)


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4. Integrated Trade Law and Policy-Making, cont.

An integrated agenda for the Doha Development Roundin the WTOand likely for future trade rounds as well

- Procedural integration through consultations in CTE &CTD, sustainability impact assessment (inc. human rights

impact assessment), transparency & participation, reformof dispute settlement procedures, etc.

- Substantive integration in standards (TBT, SPS),agriculture, intellectual property rights, investment andother negotiations

Innovations in regional (integration) processes such as theEuropean Union, the SADC, the NAFTA / FTAA, Cotonou

Agreement, ASEAN or bilateral free trade agreements


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US - Shrimp Turtle Case

WTO Appellate Body: We believe [the objective of

sustainable development] must add colour, texture and

shading to our interpretation of the agreements annexed tothe WTO Agreement.

EC - Tariff Preferences Case

Appellate Body rejected EC arguments that its tariff

preferences were based on sustainable development

objectives.

5. Sustainable Development in WTO Disputes


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6. Conclusions

Recent WTO negotiations and cases reflect that the

objective of sustainable development has become an

integral part of the world trading system.

Legal arguments encompassing an integrateddevelopmental and environmental approach have been

made by the parties and accepted by the relevant trade

dispute settlement organs.

However, WTO dispute settlement organs will not lightlyaccept sustainable development as a trump card. A solid

legal understanding of the objective and its underlying

principles is required to make a successful sustainable

development argument in world trade law.


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Thank you.

Markus W. [email protected]

G


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Article I GATT 1994

General Most-Favoured-Nation Treatment1. With respect to customs duties and charges of any kind imposed on or in connection withimportation or exportation or imposed on the international transfer of payments for imports or

exports, and with respect to the method of levying such duties and charges, and with respect to allrules and formalities in connection with importation and exportation, and with respect to all mattersreferred to in paragraphs 2 and 4 of Article III, any advantage, favour, privilege or immunity grantedby any contracting party to any product originating in or destined for any other country shall beaccorded immediately and unconditionally to the like product originating in or destined for theterritories of all other contracting parties.

Article III GATT 1994

National Treatment on Internal Taxation and Regulation1. The contracting parties recognize that internal taxes and other internal charges, and laws,

regulations and requirements affecting the internal sale, offering for sale, purchase, transportation,distribution or use of products, and internal quantitative regulations requiring the mixture, processingor use of products in specified amounts or proportions, should not be applied to imported ordomestic products so as to afford protection to domestic production.

Article XX GATT 1994

General ExceptionsSubject to the requirement that such measures are not applied in a manner which would constitute ameans of arbitrary or unjustifiable discrimination between countries where the same conditionsprevail, or a disguised restriction on international trade, nothing in this Agreement shall be construedto prevent the adoption or enforcement by any contracting party of measures:(a) necessary to protect public morals;(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 effectivein conjunction with restrictions on domestic production or consumption;(h) undertaken in pursuance of obligations under any intergovernmental commodity agreement

which conforms to criteria submitted to the CONTRACTING PARTIES and not disapproved bythem or which is itself so submitted and not so disapproved;

Important GATT rules

I t t WTO l


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Important WTO rules

rticle II GATS

Most-Favoured-Nation Treatment

1. With respect to any measure covered by this Agreement, each Member shall accord immediatelyand unconditionally to services and service suppliers of any other Member treatment no lessfavourable than that it accords to like services and service suppliers of any other country.

rticle XIV GATS

General ExceptionsSubject to the requirement that such measures are not applied in a manner which would constitute ameans of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or

a disguised restriction on trade in services, nothing in this Agreement shall be construed to preventthe adoption or enforcement by any Member of measures:(a) necessary to protect public morals or to maintain public order;(b) necessary to protect human, animal or plant life or health;(c) necessary to secure compliance with laws or regulations which are not inconsistent with theprovisions of this Agreement including those relating to: (iii) safety;

rticle 3 DSU

General Provisions2. The dispute settlement system of the WTO is a central element in providing security andpredictability to the multilateral trading system. The Members recognize that it serves to preserve therights and obligations of Members under the covered agreements, and to clarify the existingprovisions of those agreements in accordance with customary rules of interpretation of publicinternational law. Recommendations and rulings of the DSB cannot add to or diminish the rights andobligations provided in the covered agreements.

29-6-10 introduction to intl commercial law

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