This is the Trade Law Exercise - Term Paper Example

?Introduction The compliance of Newland with the WTO law is one that has to move through specific laws in order to determine legitimacy. There are several legalities that Richland has to look into to prove the case of Newland, all which are specifically linked to the trade rules that have been established. Anti-dumping laws and measures are the main component that Newland should be aware of, specifically because of the problems which can arise in terms of trade with the products that are used. Defining the measures that can be taken for Newland and determining if they comply with the WTO law is the first step to ensuring that there are safety precautions taken legally for the company. Unfair Practices of Newland The WTO law that Newland first has to look into is based on the definition of unfair and what is considered as problematic to the company. Unfair trade is based on cartel agreements, price fixing and the abuse of a dominant position in the market. There are also specific rules that are based on dumping which Newland will need to look into. The dumping and subsidization that Newland is currently practicing doesn’t show that they are violating provisions of the WTO law and are practicing in compliance with what is expected in these terms. However, the problems with others in Richland lead to questionable actions that can be taken against Newland. Changing the operations then becomes necessary to keep offering products within Richland. Dumping and Newland Dumping is defined as bringing a product into another country at a lower value and price of the product. WTO doesn’t prohibit the practice of dumping in an organization; however, the problems with dumping becoming harmful to the domestic affairs to the community cause the WTO standards to change to ensure consistency and that specific regulation measures are taken. From this viewpoint, Newland isn’t breaking any laws, specifically in terms of dumping. They offer specific prices at a lower value to Richmond; however, this isn’t one that is considered illegal according to WTO practices. The problem that is arising is based on the domestic harm that is occurring. Richmond is now having difficulties with suppliers of the domestic product, which is causing the main conflict and has led to a loss of income and many businesses have lost their practice to Newland. The loss of business shows that there needs to be a different provision specifically for Richland because of the crisis with domestic products. While Newland technically isn’t breaking any laws with the anti-dumping measures, there are specific ways in which Richland can form against the large amount of profit that Newland is taking. The first way is through Article VI of GATT 1994. This states that if a specific company or individual files a grievance against the company, then it can be referred to in court. These specific actions against dumping may move into civil or criminal proceedings and penalty. However, since there are no other regulations with anti-dumping measures in the WTO law, this is dependent on a case by case basis. The only determinant is if the law suit is filed correctly and with the right type of grievances. However, under this same agreement, price undertakings and provisional measures are not the responsibility of WTO. The individual case that has to be created against Newland has to take calculations and measure to prove that dumping is being done, specifically in terms of price and the amount of products that are being sold. The calculation first implies that dumping is occurring, which compares the price to price value of Newland and other furniture manufacturers. Newland is known for carrying cheap furniture; however, the production isn’t inclusive of being outside of the price zone of other furniture zones and can’t be calculated. For Newland to be subjected to anti-dumping duties there would need to be proof that the furniture is below the regulation level for selling the furniture under priced. Determining whether the sale is in the ordinary course of trade and if it is comparable will help to define whether Newland has any dumping laws that are being broken. These particular calculations can’t be determined without investigating the other furniture stores in Richland and the prices that Newland has. The calculations to consider are not only important to determine because of the normal or below normal value. Even if this doesn’t apply to Newland, there are other cost saving elements that have been regarded and which may make Newland liable for anti-dumping regulations. Assistance from the Newland government for tax breaks, hiring unemployed individuals and using the electricity that is owned by the company are three monopoly areas that Newland takes advantage of to cut costs. These specific items are not available to other furniture stores and make it difficult to compete with the production and lower costs that Newland is able to supply. The different expectations in Richland which may hinder the pricing then allows Newland to remain ahead in the competition from pricing. The transaction price and the normal value, as considered in article 2.4 are the areas which may need to be examined. The negative effects with this, as well as the consideration that the amount of products have increased substantially, according to article 3, may cause Newland to be liable to anti-dumping regulations. The conditions and terms of the sale leave those in Richland at a disadvantage, meaning that Newland will have to alter prices because of the lack of resources which may be available to those in Richland. While these specific calculations will determine how effective the anti-dumping laws may be for Newland, there are also other aspects that work in favor of the company. The first is with the amount it takes to export the furniture. The main outlet and warehouse for Newland isn’t in Richland, meaning that shipping costs apply to moving the products. While there are areas that are saved, such as with the Newland governmental policies and the electricity that Newland has, there are also extra costs implied. The transportation is one that isn’t liable to those in Richland. There are also factors such as a higher amount of injury. According to Article 3.5, the likely hood of injury also implies higher costs and factors. If there are injurious effects which may take place, then Newland is liable for caring for this and the outcome. The use of transportation that is used when exporting and the factors which apply to caring for the employees all cause a higher amount of money required which is not applicable to furniture stores in Richland. From this perspective, Newland is responsible for extra elements because of the exporting practices. While Newland isn’t breaking the WTO law, the investigation and calculation will determine whether anti-dumping duties will be implied. The investigation can be conducted because it is from those that are in Richland. The investigation will include calculations of the different types of pricing that is used to save in cost for Newland as well as the way in which costs are more pertinent to Newland. This will be compared to the pricing and processes of the Richland furniture stores. If this reaches the lesser duty rule, then it can be assumed that there is injurious domestic dumping. This is dependent on article 9.3, which states that there is a dumping margin which has to be reached with all the margins created. For this to work effectively there needs to be an examination of all of the features which determine price (Bossche, 515-543: year). Countervailing Duties The second component that Newland will need to be aware of is the countervailing duties that may change the outlook of the procedure. The subsidies that Newland has are one of the areas that could lead to difficulties. Currently, Newland receives subsidies from the government if it hires individuals that are currently unemployed through a tax rebate. There is also a government agency that offers support to Newland to send their furniture abroad for sales and works as a training and support area for the company. According to Article VI, this creates an unfair component with the exports that are given. However, it has to be proven that the imports given are from subsidies and that the benefits Newland is receiving is based on the available subsidies. The areas of investigation that Newland will have to be applicable too include Article 1.1 and article 14. These define the government subsidies as one that benefits the company through providing more means in the marketplace and for exports. However, this is only applicable if this is a part of a financial contribution. Under this specific law, Newland would only be used to the tax benefits that are given. However, this is only if Newland is receiving the tax breaks from unemployed individuals. The information given to support the furniture sales doesn’t include financial contributions, which means the subsidy isn’t applicable to Newland. The only way in which this second benefit may be applicable to Newland is through Article 2, which states there needs to be specificity through the government subsidies. These are attribute to the performance of the exports and how applicable the government links and benefits are to the export process. The area in which Newland will need to consider outside of these begins with the concept of injury. Even though Newland doesn’t break specific articles, there are specifications under the anti-dumping agreement that relate to injury. This includes injury in terms of a loss of material production, threat to the domestic industry and material retardation in the domestic industry. Newland has established problems at all three levels of industry, specifically with taking over a large majority of the market and causing some of the businesses to lose their establishment. While Newland has an applicable case in these actions, Article 15 points out that this is under specific conditions of Richland. The amount of subsidization has to be above 1%, imports in the country have to be non – negotiable and conditions with the domestic products have to differ from transfers. According to this article, the only area in which Newland can be investigated is with the transfers used. There are benefits that Newland has in terms of electricity, government funding and other price breaks in the establishment, meaning that this is the main area that leads to harm of domestic imports. Which Duties can be Imposed The duties that can be imposed are limited to the extent of the investigations and calculations which are made. It is also dependent on changes which Newland can make with the changes that are made. A duty which may be imposed is based on the countervailing that has been taken, specifically with the tax benefits which are received by offering jobs to the unemployed. In this case, it is only applicable to how much Newland associates this with the export performance. It is also only dependent on how long the subsidy is in effect for, how much money is given and for what length of period as well as for the amount of time that the subsidies are causing injury to Richland. Unless it is proven that the tax benefits are providing injury to Richland, this specific duty is limited in how much is imposed. The other duty that may be applied with Newland is based on the injury which is being created in Richland. The duty imposed is for anti-dumping. This is applied only as long as the company provides injury to the domestic products, which is proven by the several calculations and multi-dimensional aspects from the company. This is periodically reviewed by different officials to determine if there is injury among those associated with anti-dumping. The anti-dumping duty is immediately terminated after five years if the authorities don’t terminate it before this time. There are also provisions which will be applied when linked to developing countries, specifically with measures that can be taken to stimulate the domestic product that is becoming problematic because of Newland. There are no other duties that can be imposed on Newland unless the investigation for dumping establishes and calculates that the pricing and other considerations are out of proportion with Newland. The duties that can be imposed are based on calculations as well as determinants by the court to see any applicable injuries that are occurring because of subsidies or pricing benefits that Newland has. However, these duties can’t be determined unless officials are able to provide proof of the subsidies, pricing benefits and other areas in which the exports could cause harm. More important, there has to be a specific link to the dumping acts which may be occurring as well as a regard to how this applies to the other businesses. There are no other laws that can be taken against Newland with the exports that are being provided in Richland and which are changing the amount of business that is applicable to those in the furniture industry. Conclusion The position of Newland is one that is questionable in terms of WTO laws. Technically, Newland isn’t breaking any of the laws by exporting goods to Richland. However, the injury to domestic products, specifically through materials being lost and goods that are not able to be sold make Newland responsible for the different applications to the organization. This is combined with countervailing duties that can be imposed on Newland because of the subsidies received from the government and the benefits from the electricity given by the company. The duties that are implied can be used to constrain the pricing options and the amount of exports; however, there will also be the need to find new ways to support domestic products with the exports that are coming into Richland because of the constraints on the duties implied, such as timing and the inability to prove if there is a direct relationship to the export performance. References Bossche, Peter Van den. 2005. The Law and Policy of the World Trade Organization. Cambridge University Press: UK. Read More