Public International Trade Laws - Report Example

International Trade Laws By The Dispute Aaland is aggrieved by the policies that have been set by its trading partner Ceeland. Since both of these countries are part of the World Trade Organization, we will have to consider the rules and regulations of this organization in a bid to come up with an acceptable solution for both the countries involved. World Trade Organization The world trade organization is a body that deals with trade regulations in majority of the nations around the world. Majority of nations around the world have subscribed to it. Its main role is to ensure that global trade is liberalized1. It provides a common platform where various countries can meet and negotiate mutually beneficial trade agreements. The same platform can be used to settle disputes in regards to trade agreements. The underlying principle of the WTO is negotiations. According to the WTO rules, negotiation is important when it comes to solving world problems. Delegates from the disputing countries are given the opportunity to face each other and talk about the issues between them. Most of the work that is undertaken by the organization is based on agreements that were established by a previous body known as 2General Agreement on Tariffs and Trade (GATT). In some scenarios where certain have had issues with certain trade barriers, the negotiations have been fruitful and these trade barriers have been lowered. This however does not only limit the functions of WTO to negotiations between countries. They also try to protect the interests of consumers in regards to trade agreements. Most of the documents that provide the framework for international commerce are signed and negotiated under close supervision by the World trade organization. Basically, these are contracts which ensure that governments maintain their limits in terms of trading agreements3.The WTO considered the governments to have the best interests of their citizens at hand. The citizens are the major stakeholders and these include the service producers and goods, importers and exporters of business. When the stakeholders are satisfied, the government is left with its duty to meet its various objectives. The organization has the function of ensuring that trade around the world flows smoothly. This is so long as there aren’t any side effects that may hinder the well-being of individuals and global economic development. The organization removes any obstacles that might restrict trade while giving organizations and governments the surety that trading policies around the globe are stable.it is the duty of the organization to make sure that all trading agreements are properly understood and interpreted by the members of the treaty. This makes the organization an important body as it has to resolve all trade disputes. Principles to the WTO trade agreements WTO agreements cover several activities that are undertaken by the various members. These are in various fields such as4 industrial standards, intellectual property, food sanitation regulations and safety of products globally. There are several principles that guide the operations of the organization. They tend to promote trade without discrimination. 1. Most favored nation According to the rules of the organization, a country cannot enter into special favors with one of the other member countries and ignore other countries. There has to be equality when dealing with matters pertaining to trade agreements globally. An example is where a country can decide to reduce the customs duty due to one country while the rest are left at the same level. According to the WTO regulations, the country should also do the same for the other countries. There is however certain cases that require special attention such as when the two countries are dealing in a product where only two of them are the interested. Another instance is reduction of tariffs for developing nations so that they can be able to access the markets of Developed nations; Even though there are these exceptions to the principle, they have to be established very carefully so that such allowances are not misused by other countries for their own personal benefit. 2. National treatment of foreigners and locals In cases where there is trade between various countries, there should be equal treatment of local goods and those that are imported from other countries that are subscribed to the WTO agreements . As long as the imported goods have successfully entered a particular country and are in the market, all the goods should be accorded similar treatment. This applies for other non-tangible services such as patents, trademarks and copyrights. This is one of the fundamental principles of the organization5. This is also referred to as the National treatment principle and states that as long as one is in a certain country; they should receive the same treatment like that given to the locals. However, the charging of custom duty cannot be seen as a violation of the principle. This is because the application of this principle is limited to goods that have already entered the market. 3. Freer trade: gradually through negotiation The most obvious way of encouraging trade is by reducing the trade barriers. This includes barriers such as custom duties and the abolishment of quotas and certain bans that limit the amount of goods to be traded. Other factors that are dealt with are the exchange rate policies and the issue of red tapes. One such move is the Doha Development Agenda that has the aim of reducing the tariffs that are charged on imported goods. A result of this is that the custom duties for industrial goods have gradually reduced to an average of 4%. The process of opening up the markets cannot be undertaken overnight. It has to be done gradually so that all the benefits of such a system are realized. The organization realizes that developing countries still have certain economic obligations and therefore they are allowed to take longer to fulfill their obligations to the organization 4. Predictability: through transparency and binding Businesses are most likely to operate in an environment where there is a guarantee that the custom duties will not change haphazardly. They are therefore able to plan for the future as they are guaranteed of certain factors that determine their long terms operations. Stability gives organizations the freedom to invest wisely and as such the consumers in the particular country can take advantage of competition by various firms in any particular industry. At times, there may be changes in the bindings and a country might have import rates that are lower than those agreed upon. However, this can only happen if there have been sufficient negotiations with their trading partners. It could also result in the country compensating their trading partners for any losses that they might have incurred. All the governments that are bound by the WTO have a duty to publicly disclose their policies and practices that are used and give the proper notifications to the organization 5. Promoting fair competition The set of rules that are put in place by the organization ensure that there is fair competition in business transactions all across the globe6. There are rules based on non-discrimination to ensure that all the trading conditions are fair. 6. Encouraging development and economic reforms In a way, the organisation helps to foster economic development particularly in developing countries. These countries are given the appropriate assistance by the developed countries and they are normally allocated extra time so as to implement decisions that have been agreed on by the trading organization. This is very important to the members of the organization given that majority of its current members belong to this group of countries. To promote the agenda of development, there is a provision that requires the developed countries to all free entry of goods that are from developing countries so as to promote their trading activities. This is expected to boost their economic standing and will enable them operate equally with other member countries in the near future. Benefits of open trade Each country in the world, however small, has some resources that it uses to produce services and goods7. These can be used in the local markets or traded with other countries for economic gain. According to research, a country will most likely prosper if it can concentrate all its efforts on a few commodities that it can produce well and then using these commodities to trade for other products. This is known as the theory of comparative advantage8. As such, conducive trade practices should allow for the free flow of goods and this will lead to better innovation and improvement in the lives of the people involved. However, the growth in the economy can have adverse effects on a country that had certain advantages when producing a particular product. An example is a developing country whose core driving factor to success was the availability of cheap labour. As the economy grows, the wage bill will increase and over the course of time it will lose its competitive advantage. Experience shows that this is not unexpected and the country can still proceed and be competitive due to other factors. Due to the existence of free trade among nations, there is always the underlying possibility that imports may affect the local industries. As such, the government can try to restrict such imports by use subsidies, complicated red tape measures and hiding behind certain objectives such as consumer and environmental protection so as to protect their local industries. It is the duty of the World Trade Organisation to ensure that such practices do not exist because not only does it interfere with international trade but this protection leads to collapse of these industries in the concerned countries9. This is because there will be an increase in producers of these products who will not have the competitive edge to supply producers with quality products. Ultimately such industries are closed and there are job cuts. It is the role of the organisation to ensure that such scenarios do not occur in reality. The General Agreement on Tariffs and Trade This was the predecessor of the world trade organisation as we know it today and existed between 1948 and 1994. This body was responsible for a massive increase in the level of trade across the globe. It emphasized the need to reduce tariffs by the member states and this is what resulted in increased trade between the member countries. It had become easier for countries to trade between each other. However, this increase in trade had its setbacks. Industries in member countries were facing heavy competition from external products from countries that had the comparative advantage when producing such products. This led to countries forming bilateral agreements to safeguard their home industries. Actions like these undermined the authority of GATT. Together with the increase in trade in services, which was not included in the regulations of GATT, there was a steady decline in the role of the organisation in regards to world trade.This led to a series of negotiations that resulted in the formation of the World Trade Organization. Overview of WTO agreements The organization’s agreements cover a wide area of products. These include: goods, services and intellectual property. Liberalization principles are clearly spelled out and any exception that is allowed is indicated10. There are also the commitments of the various countries’ to perform certain actions such as reduction of their tariffs and to keep their markets open and accessible by all member countries that are also part of the organization. Given that disagreements may arise, there is also a series of procedures that are used to settle any arising disputes. As earlier stated, developing countries are usually accorded special treatment so that they may also operate competitively. What is important is that these rules are not imposed on the member countries but are negotiated by the member countries themselves. An example is the preferential treatment given to developing countries. In return, they have to publicly state their policies and are required to forward reports on these policies to the secretariat on a regular basis. Dispute Settlement by the World Trade Organisation Countries that feel they have been aggrieved by the action of another member state in terms of trading agreements can call for a consultation meeting with the other country. If there is no agreement within 30 days, the complainant state request for the formation of a panel to look into the matter. These consist of randomly selected members who listen to disputes from both sides before giving an appropriate verdict. This is first given to the conflicting parties before it is give to the other WTO member11. The maximum time frame within which a case must be solved is 1 year and in case of an appeal an extra 3 months is allowable. An example of a case that was solved by the body was a case involving Japan and the United States. There was a dispute between these two countries and the US was frustrated by Japan’s recalcitrance in regards to these negotiations. The United States threatened to impose extra duties on luxury vehicles that were imported from Japan. This action resulted in Japan filing a complaint with the world trade organisation and the United States relented and did not impose these measures. Another case is the Asbestos case. This involved Canada against France. France had banned the use and importation of asbestos based on health grounds. Canada, which exports asbestos, filed a complaint due to this act citing that it was aimed at curtailing its business practices. The WTO panel upheld the French ban. This was an indication that as long as there was proven evidence to support the action that has been taken, there were other concerns apart from simply making profits. These had to be taken into account by the organization. The settlement of disputes role that is played by the WTO enables countries to reasonably solve any pending matters and reconcile them as trading partners so that they can engage in business once more. The organisation has a structure that promotes participation by all the member countries. This is very important as the independent members get to understand the important role played by this body in terms of world trade12. The various operational structures are divided into councils and each of the members must participate in all the councils. This is in exclusion of the appellate body and the dispute settlement body that are restricted to only a few members at a time. Despite the trade that is under the regulations of WTO, there are new types of businesses that have emerged, one of which is electronic commerce. These are proving quite a challenge to regulation by the organization. Present day commerce involves the conducting of business transactions over electronic platforms. These include the internet, mobile devices and even the use of social media. In the past, most businesses were conducted on a close contact basis, but with the advent of new technology, this is no longer a necessity for business to take place. Electronic commerce has grown to be widely accepted as an integral part in doing business and is a core factor in our day to day transactions. As such this form of commerce has led to the proliferation of businesses conducting business on a global scale. Consumers can now access a large portfolio of products across various continents. Most companies nowadays have websites that display their product offerings to masses across the world. Interested consumers can order for their products of their choice, pay electronically then have the products delivered to a location of their choice. This has been made possible by technology through payment options like Paypal. This is a clear indication of how electronic commerce has drastically improved business transactions across the globe. The amount of transactions transmitted by the two leading nations in this form of business, the United Kingdom and China amounted to more $400 billion2. This shows the extent at which consumers have embraced electronic commerce; there is also an emerging trend where they would readily prefer such transactions to going to the stores personally. In a research carried out across the in London, 5, 000 respondents were asked whether they regularly randomly sampling the population13. An overwhelming 67% of those interviewed agreed that electronic commerce was part of their day to day activities and without it their lives would be chaotic. This presents an area that the World Trade Organization can use to collect data and use them formulate policies that guide world trade. In conclusion, the WTO plays a very major role in regards to international trade and it sets the outlines within which this trade must be conducted. It is essential that member states operate within the framework that has been set by this organization to ensure that trade goes on peacefully and any issues that arise are dealt with amicably. Advice to Aaland Aaland should seek redress due to the tariff that is set on the grain that is exported to Ceeland. According to the principles of World Trade Organization there should not be preferential treatment in terms of tariffs. If Ceeland is setting the custom tariffs then it should apply to all the countries that it imports to. However, given that Beeland is in an economic crisis, there can be exceptions that can be allowed. Given this scenario, Aaland should not complain of this treatment at all. In regards to the tax on furniture, Ceeland is justified to tax the furniture in an attempt to protect the environment. Aaland would be in a proper position to seek for help from the World trade organization if there were other companies selling furniture made from Hard Wood operating within the country and so was receiving favorable treatment.According to the WTO regulation, all goods should receive similar treatment once they get inside a country. Aaland cannot claim unfair treatment of their products since their products had not yet gained entry into the country. If there was a law requiring the furniture products to pay sales tax once they were in the market this could be reason enough to seek for advice from the WTO. Given this scenario, my advice to Aaland would be simply to look for alternative markets for their products because there was nothing wrong in the actions by Ceeland. They had acted within the WTO regulations. BIBLIOGRAPHY BETHLEHEM, D. L. 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