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LAW 724 (17)
Chapter 2

Chapter 2 - Law 724.docx

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Department
Law and Business
Course
LAW 724
Professor
Alyssa Brierley
Semester
Fall

Description
Chapter 2: The World Trade Organization GATT and WTO do not • International agreements that provide free trade and prevent trade discrimination mandate free trade - Two main roles of the GATT: - 1) develop a code of rules governing trade relations - 2) provide a forum where countries could discuss trade problems and trade- related issues. Fundamental rules developed by GATT 1. Tariff/binding 1. Tariff/binding concession – A country that lowers a tariff is “bound” and cannot be concession rule raised -BINDING CONCESSION RULE: WHAT GOES DOWN WILL NOT COME UP 2. MFN rule: - requires tariffs to be applied equally to all member countries. 2. Most favored -Any Tariff negotiated between two member countries would be applied to all nation rule ==principles of non-discrimination and reciprocity—foundation of GATT o ANY NEGOTIATION SHOULD BE AVAILABLE TO ALL MEMBER COUNTRIES  Exception –  1)generalized system of preference  2) acceptance of free trade areas/ customs union(pg-25) o Free trade area – arrangement among 2+ countries that agree to remove all duties/ restrictions of commerce among them (Example: NAFTA: Canada, US, Mexico negotiated over a tariff) Customs union: all duties to member countries are removed, and common tariff applies to non-member countries o Generalized system of preference – special treatment given to developing countries; allows developed countries to give preferential treatment to developing countries without invoking MFN clause (e.g. reduce/removed tariffs) 3. National 3. National treatment – once a good/service is legally present in a country it must treatment rule receive the same treatment as domestic good/service (same tax/regulatory treatment)***treat foreigners and locals equally**** o Violation of National treatment rule: GATT upheld complaint that Canada violated national treatment rule made by USA. Canadian provincial liquor boards were discriminating against US products. US products were less favorable than Canadian alcoholic beverages.—taxes were levied on beer containers for imported beers, but not for domestic beer. o Treat American-canadian beer same o Imported beer only sold in 6 packs Domestic Approval of o Treaties must not only be signed but also ratified between participating membership (pg-30) countries.  Most countries wishing to ratify an international treaty must first pass domestic legislation providing for ratification of the treaty and provide for the adoption of treaty in their own domestic law Accession process for • Any country wishing to join WTO must go through the accession process: new members--WTO 1) Apply for membership describing the country’s institutional structure, trade and economic policies, issues affecting international trade 2) Fact finding by a working party, in talks with major trading partners - Negotiation between applicant country and individual countries will cover matters such as tariff rates, market commitment, policies on trade in goods/services -applicant commitment to set of ---bound---tariffs---cannot be raised, but can be lowered after accession -applicant country can formally join WTO once negotiations complete if 2/3 majority WTO members approve WTO is a bundle 1. Trade in goods 2. Trade in services 3. Intellectual property protection 4. Dispute agreement settlement 5. Review of members trade policies ****ACCEPT ALL OF IT OR NONE OF IT****  When can a country break the rule regarding bound concessions? ◦ Anti-dumping Countervailing subsidies - a duty imposed to offset subsidies by foreign governments ◦ Safeguard action - Domestic industry is threatened with injury or already suffering injury by surge in imports Non-tariff ◦ Potential measures that could be disguised methods to obstruct trade barriers -import licensing valuation of goods – pre-shipment inspections – rules of origin – investment measures Disguised to Valuation of Goods at Customs – must be fair, uniform and neutral – prevent arbitrary or obstruct trade fictitious customs values. Pre-shipment inspections – governments doing this must be non-discriminatory, transparent and protect confidentiality. Governments must develop guidelines for price verification and preventing unreasonable delay and conflicts of interest. There is also an independent review procedure to resolve disputes between an exporter and an inspection agency. Rules of Origin = criteria used to determine where a product was made. Rules of Origin agreement means that WTO members must ensure rules are transparent, administered in a consistent, uniform, impartial and reasonable manner and do not restrict, distort of disrupt international trade Rules on o Dumping – occurs when a foreign produc
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