International Trade Law as Set of Rules and Regulations - Essay Example

International Trade Law Subject Name Institution Actual words: 2837 Introduction International trade law is set rules and regulations that govern on how the world economies engage in trade as it is stipulated by established world trade governing bodies. These trade governing bodies include World Trade Organisation (WTO), General Agreement on Tariffs and Trade (GATT), (Lester, Mercurio, Davies and Leitner, 2008). The international trade law ensures that all the trade agreements are not violated by member states. This is to ensure that trade in the international arena is done in a smooth way. International trade law ensures that the issues that arise during the world trade are solved in the best way possible so as to promote harmony (Bossche, 2008). The international trade law brings out how problems that arise during the world trade can be resolved without favouring any member. The law works with organizations such World Trade Organisation which has the membership of most the world countries. This ensures that all members benefit from organizations in terms of trade (Bossche, 2008). The law is also charged with the responsibility of promoting international relationship among the world countries engaged in trade. This done in terms of promoting common economic goals among member countries, especially those in the same geographical areas to ensure they mutually benefit (Lester, Mercurio, Davies and Leitner, 2008). The international trade law also ensures that there are limited or none protectionism barriers in individual countries since they limit the flow of international trade. The law also ensures that all issues are solved in the best way possible so as to promote fair and free trade. ITL also awards remedies to the aggrieved parties so as to ensure that matters are solved amicably (Lester et al, 2008). Question 1: What are possible legal issues that arose in the above scenario from the perspective of International Trade Law (ITL)? Identify and examine briefly statutory and judicial authorities that could be relevant to adequately deal with those issues. There are certain legal issues that arise from the scenario which can be resolved using international trade law and the other related laws. The issue include where Australia imposed a 30% to vehicles that cost above US$ 30,000 and 10 % to those who cost less than the stated amount. This taxing will highly increase the price of vehicles from Japan because 90% of the vehicle they sell to Australia fall in this area. This makes the vehicles from Japan expensive as compared to those produced domestically and yet they possess the same features and serve the purpose. The issue is that such a move is not supported by World Trade Organisation and International Trade Law because it works towards providing unfair competition in international trade. The international trade law discourages protectionism barriers because they are discriminatory in nature and bring problems among countries involved. Australia uses de facto type of tax where it sets a higher tax on imports and sets a low tax on domestic products (Trebilcock and Howse, 2005). Another legal issue arising from the scenario is where the Director of Animal and Plant Quarantine of Australia introducing a new policy in banana trading that appeared to a way of restricting trade in this country. The affects trade between Australia and Papua New Guinea because it sets strict conditions that should be met before importation. This policy increases the cost of producing the products making them expensive in the world trade, thus making them non-attractive to customers in Australia (Choi, 2009). The second part of the question is to determine and examine statutory, and all the facts can be used to resolve the legal issues identified above. To solve the first issue there is a dispute solving body that is set by the World Trade Organisation in relation to the international trade law (Chuah, 1998). The body is charged with responsibility of making sure that the issues that arise during international trade are solved in the best way possible without favouring any party. This is to ensure that the world trade is not hurt in any way and promote mutual beneficial relationship among the world countries (Trebilcock and Howse, 2005). Australia has labeled vehicles as like and according to GATT III is that directly competitive products attract similar taxes. These taxes must not be more than those levied of domestic products. This article calls for an equal competitive level for all the involved stakeholders. There is body called Most Favoured Nations (MFN), which discrimination on any countries because all countries are treated equally. Another body is the National Treatment (NT), which also discourages any discrimination on any products, because domestic and foreign products are accorded the same treatment, breaching of NT can lead to legal dispute. This is well explained in article 301 of the World Trade Organisation. Every dispute is settled by Dispute Settling Understanding (DSU) as stipulated in the World Trade Organisation in regards to international trade law. The DSU is made up of all member countries and Dispute Settlement Body (DSB). The major function of the Appellate body is to listen to any appeals raised by any member state (Trebilcock and Howse, 2005). To solve this dispute, there is a need to refer to a similar case of 1993 that involved Indonesia as the respondent and European Communities, United States and Japan as complainants. The issue was that Indonesia had adopted two programmes one in 1993 and another in 1996. There was a 1993 programme that passed that there will be tax reduction or exemption on all automotive products and all the related parts. Therefore, Japan can have a legal on Australia because it is acting against the World Trade Organisation guidelines and rules. Also, there is a need to refer to the 1996 National car programme that passed that there should luxury tax exemptions and import duty exemption to those vehicles that qualify to be of the luxury category (Chuah, 1998). The Panel’s findings were that according to the TRIMs agreement Article 2.1 which deals with local content requirement the panel verdict was that the 1993 programme violated this article. The behind this verdict is because the programme can be defined as investment related to trade and; therefore, such a measure is discriminatory. The second issue is that this programme is inconsistent and not in line with national treatment obligation. Another panel finding in this case is that the panel found that Indonesia car programmes that would see imported vehicle taxed highly than the domestic ones. This violates GATT Article III and 2 which is the national treatment because this car programme stated that no imported would directly compete with domestic products. This programme was discriminatory and against the WTO guidelines. This programme was aimed at promoting domestic industry (Chuah, 1998). The panel also found that these programmes to be in violation of the GATT Article I:1, which is the most favoured nation treatment (MFN) because the programme accorded advantages in terms of duty and tax exemptions to imports from Korea, which made products from other countries uncompetitive due to different prices with those from competing countries. According to the WTO guidelines no member country should discriminate another member country in terms of taxation and duty (Barton et al, 2008). On solving the second legal issue, there is a need to use World Trade Organisation agreements such as SPS Agreement this is WTO Agreement on the Application of Sanitary and Phytosanitary Measures. Another measure is TBT Agreement, which is WTO Agreement on TBT1. These agreements ensure that no country can discriminate products from another country in terms of their conditions if they meet the WTO set standards. A country does not have a right to discriminate products from another country as long as they fall with the two set agreements (Jackson, Davey and Sykes, 2008). Question 2.1. Determine Whether Australia can adopt such a tax measure and policy. What grounds does Japan need to establish in order to obtain possible remedies? Analyse these by referring to the interpretation of ‘like products’ and ‘less favourable treatment’ by the Appellate Body. According to the World Trade Organisation agreement this tax measure is discriminatory and should not be adopted because it leads to an increase in the price. This increase in price makes the products uncompetitive with domestic products because they are cheap to customers. The legal issues in the world arena can be solved using the dispute settlement system set by the World Trade Organisation (Jackson, Davey and Sykes, 2008). The international trade law disputes settlement has been strengthened by creation of Appellate body, which acts as the super court to deal with trade matters. There is also the Panel that is also charged with solving trade issues among countries2. The decisions made by the Panel and Appellate bodies according to international law are enforced the moment they are passed. The member states of the World Trade Organisation have the last word as a formality through Dispute Settlement Body (DSB), but in practical terms the final decision lies with the Panel and Appellate bodies. The decisions of these bodies are made by binding and where necessary by trade sanctions to the members who do not fall the decisions (Jackson, Davey and Sykes, 2008). According to the WTO the term of like to some products is where some products receive duty and tax exemptions. This makes the products attract low prices than those which do not receive such exemptions. In the above Indonesia case the panel also found that Indonesia violated ASCM Article 5 (C) which deals with serious prejudice on any products from any member country. The panel found that duty and tax exemptions, which were provided in the 1996 National Car Programme, acted as subsidies and caused a serious prejudice because it led to a reduction price as provided in Article 6.3 (c) which makes like the imports from European community and not those from United States as provided in Article 5 (c), therefore, making such products uncompetitive due to differences in price (Jackson, Davey and Sykes, 2008). In analysing like products and less favoured products as explained in World Trade Organisation, there is a need to refer to article III part 4 of the GATT, which is the regulatory measure. The regulatory measure states that all requirements should not be hindrance to any member state to trade. In accordance with Less Favourable Treatment, the GATT requires that all the imported products be accorded the same treatment. The rules advocates for the provision of equal platform to enable all the imported products to compete in a fair way. This law discourages the like aspect where domestic products are accorded special treatment such subsidies. This because this makes domestic products cheap, thus making it uncompetitive to products from other countries (Bossche, 2008). In solving the second issue dealing with banana imports from Papua guinea, there is a need to refer a similar case DS 237 between Ecuador as the complainant and Turkey as the respondent. In the 2001 case, Ecuador requested to enter into consultation with Turkey in regards with importation procedures of banana. Ecuador claimed that Turkey through its ministry of Agriculture introduced a document named as Kontrol Belgesi. According to Ecuador this document as established under the communiqué for foreign trade standardization was published as per Annex 1. Ecuador had allegations that establishment of this procedure by the Turkish authorities was a great hindrance and a barrier to trade. The reason behind this is because the procedure was inconsistence as obliged to Turkey by GATT 1994 (Bossche, 2008). The agreements include application of sanitary and phytosanitary measures, import licensing procedures, agricultural agreement and GATS. Ecuador felt that the Turkish procedure was inconsistent with many articles of the WTO such as Article II, III, and VII found in the 1994 GATT, which discourage against any discrimination of goods from any country (Bossche, 2008). It also violates Articles 2.3 and Article 8 as related to application of sanitary and phytosanitary measures. The problems were solved through mutual consensus between the two countries. Therefore, Papua New Guinea and Australia should solve the legal issue between them in the best way possible (Barton, Goldstein, Josling and Steinberg, 2008). A similar case to this one on Technical Barriers to Trade (TBT) and SPS is DS 279 that of European communities as the complainants and India as the respondent. In this case, European communities requested to enter into consultation with India in regards to TBT and SPS policies she had adopted, which European communities felt were a barrier to trade. European communities supported their case using Article 2 that states that all member countries must ensure that, in relation to the set technical regulations, there are no products from any other member country are discriminated and should be accorded as the same as those produce domestically. The article also requires that no country should adopt or introduce technical regulations that will act as an obstacle to products from any member state and as a hindrance to international trade. Therefore, no country should take the technical regulations as a way of trade restriction (Bossche, 2008). According to the World Trade Organisation rules is that any contracting parties should not introduced barriers to smooth running of international trade between or among countries. Barriers such as taxes and quantitative regulations should never be applied in the international with an aim of protecting domestic producers and products from competition from foreign products. Therefore, Australia should not introduce a tax on foreign products, which is high than that levied on domestic products that are of the same nature and serve the same purpose (Carr, 2005). 2.2. What are other issues that may also arise in evaluating legal issues and determining Australia’s obligation under ITL? Support your argument with special reference to relevant laws and judicial decisions. There are other issues that might arise in evaluating and solving the presented legal issues in this scenario. The issues include that there are multiple agreements that Australia could use for her defence against complainants. The first issue to arise in such a scenario is where there are exceptions to what is laid down as the norm. In this scenario, Australia can argue that there is free trade as provided in GATT XXIV that calls for discrimination from out the trading block. Australia can also argue that it is allowing domestic companies from developing countries to access the market. In such scenarios, Japan and Papua New Guinea cannot find the necessary remedies. Australia has an obligation of not discriminating against any products from any member country as it is stipulated in GATT and WTO guidelines so as to promote international trade. There are other issues such as lack of transparency and accountability, which are major problems facing dispute settling body (Jackson, Davey and Sykes, 2008). Question 3: Advise both Australia and Papua about their prospects of success in the WTO dispute settlement system. Australia will partly successed in the dispute settlement system due to exceptions, but in other areas it will be hard for Australia to achieve any success. Australia can achieve success by arguing with article 3, in her procedure to introduce the SPS policy where it can argue that its procedure is in line with the international set standards. This is because any policy that is related to international standards is seen as necessary in promoting international trade. Australia can argue the introduced measures are to protect the environment, human and plant life as required by 1994 GATT (Choi, 2009). She can also provide scientific prove to justify that these measures will result to a high sanitary or phytosanitary protect, which could not be achieved by the international set standards (Carr, 2005). Papua will find it hard to achieve success unless she provide scientific prove that the measures Australia is adopting are not necessary and not in line with the set international standards. She can also argue that these measures are acting as barriers to international trade3. She can also argue that Australia did not publish the measures before they came operational as required by the law of international trades. She can also argue that the TBT are unnecessary and are increasing expenses that will rise the prices in the international trade, which will make products from Papua uncompetitive in the international trade (Carr, 2005). In conclusion, the World Trade Organisation has acted as a unifying in the international trade where it ensures that International Trade Law is put in place, and there is no violation of the set laws and standards. The body also ensures that legal issues that arise during international trade are solved in the best ways possible. International trade law also acts as a direction to nations when conducting international and ensures agreements are reached. The law also helps punish nations which violate the set trade agreements. This is done through penalties and sanctions to such a nation. It also provides a direction in solving the legal issues that arise during trading. The law protects the weak nations against the powerful nations which could exploit such nations in the international trade. Bibliography Books Barton, John., et al. The Evolution of the Trade Regime: Politics, Law and Economics of the GATT and WTO. (Princeton, 2008) Bossche, Peter. The law and policy of the world trade organization: Text, Cases and Material. (Cambridge University Press, 2008) Carr, Indira. International Trade Law: Principles of law series. (Routledge, 2005) Choi, Won-Mog. Like products in the International Trade Law: Towards a consistent: GATT/WTO. (Oxford University Press, 2009) Chuah, Juan. Law of International Trade. (Sweet and Maxwel, 1998) Jackson, John, et al . Legal Problems of International Economic Relations, 2008 Documentary Supplement (American Casebooks). (West Group, 2008) Lester, Simon., et al. World Trade Law Text, Materials and Commentary. (Oxford: Hart Publishing, 2008) Trebilcock, Micheal., and Robert, Howse. The regulation of International Trade. (Routlege, 3RD Ed, 2005) Cases cited DS 237 Ecuador versus Turkey [2001] DS 279 European Communities versus India [2001] Read More