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Introduction to International Commercial Law (Trade and Investment)

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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 ... – PowerPoint PPT presentation

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Title: Introduction to International Commercial Law (Trade and Investment)


1
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

2
Introduction to International Trade Law
  • Lecture Outline
  • 1. GATT/International trade history
  • 2. The World Trade Organization
  • 3. The Institution
  • 4. Key concepts Tariffs, Most Favourite Nation
    and National Treatment
  • 5. Dispute Settlement
  • 6. Reform Trade negotiations

3
- 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
4
- 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
5
3. The Institution
6
-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
7
- Art. I GATT Any advantage, favour,
privilege, or immunity in negotiated
concessions extends to all WTO members. -
Unconditionally, like products, de facto
discrimination - Rationale of MFN - Important
exceptions Grandfathered preferences, Art.
XXIV creation of RTAs, Enabling clause,
waivers such as for the Cotonou Agreement.
4. Key Concepts Most Favoured Nation Principle
8
- Art. III GATT prohibits discrimination of
foreign producers vis-à-vis domestic producers
- Early GATT jurisprudence a formally origin
neutral taxation can violate Art. III2 GATT -
Centrality of likeness - Non-fiscal measures (Art
III4 GATT) - Relationship with Art. XX GATT
4. Key Concepts National Treatment
9
- 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 negative consensus principle -
Appellate Body Review - Non-compliance with
recommendations
5. Dispute Settlement
10
- 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
11
- Ministerial Conference ? between Green
rooms and NGO scrutiny - Consensus decision
making (Art. XI WTO) - Panels time periods
(Appendix 3) - Trade negotiation committee -
Doha-Round Agriculture as the most contested
issue (initially also competition and
investment) - Draft Hong Kong Ministerial
Declaration
6. Trade negotiations
12
2. Investment
  • Trade Related Investment Measures (TRIMS)
  • Physical and Portfolio Investment
  • Bilateral Investment Treaties (BITs)
  • Multilateral Attempts
  • - OECD - MIA
  • - WTO
  • - New EU Competence?

13
Investment Law
  • An Emerging Network of Intl Investment
    Agreements (IIAs)
  • Current intl legal framework governing foreign
    investment is a vast network of over 2500 IIAs.
  • In 2005, 1,891 (75.8 ) in force, 232 other IAs
    with investment provisions, other regionals.
  • While other treaties and norms intersect and
    interact, IIAs are the primary public
    international law instruments that govern foreign
    investment.

14
Investment law
  • IIAs seek to create favourable conditions or a
    stable framework for investment, for economic
    development, by impose binding obligations on
    States re treatment of foreign investment
  • (i) a wide asset-based definition of investment
  • (ii) guarantees of non-discrimination (national
    and most-favoured-nation treatment)
  • (iii) a minimum standard of treatment often
    expressed as fair and equitable treatment
    coupled with an obligation not to impose
    arbitrary or discriminatory measures
  • (iv) the right to transfer investments and
    profits out of the host state and
  • (v) compensation for measures tantamount to
    expropriation.
  • A smaller number of IIAs provide for rights of
    entry for foreign investment, prohibitions on
    performance requirements, and umbrella clauses
    under which a state agrees to observe its
    commitments to foreign investors.

15
Investment law
  • In most IIAs, foreign investors enforce these
    rights through investor-state arbitration
    provisions under which the state provides its
    general consent to arbitrate 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 under Chapter Eleven of the North American
    Free Trade Agreement (NAFTA)
  • - Ethyl v. Canada export and interprovincial
    trade ban prohibitions 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.

16
Trade Law and Sustainable Development
  • Lecture Outline
  • 1. Sustainable Development and Globalisation
  • 2. Foundations Trade and Environment
  • 3. Foundations Trade and Development
  • 4. Integrated Trade Law and Policy-Making
  • 5. Sustainable Development in WTO Disputes
  • 6. Conclusion

17
1. Sustainable Development and Globalisation
  • 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 of living 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.

18
2. Foundations Rapid Evolution in Law and
Policy on Trade, Environment Development
  • 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-à-vis MEA Secretariats and IGOs,
  • - UNEP, UNDP
  • - National and international NGOs

19
2. Foundations Different Perspectives
  • 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

20
2. Foundations Global Environmental Management
  • Trade Measures
  • - Trade ban
  • - Protection provisions
  • - Trade restrictions
  • - Trade prohibition 3. Part
  • - Cartagena Protocol GMO trade restriction
  • - Kyoto Protocol Trade links
  • New Generation
  • - Trade restriction
  • - Trade ban
  • Principal MEAs
  • Early Agreements
  • - CITIES
  • - UNCLOS
  • - Basel Convention
  • - Montreal Protocol
  • Rio Agreements
  • - CBD
  • - Desertification
  • - Climate Change
  • New Generation
  • - PICs
  • - POPs

21
2. Foundation Relevant WTO Provisions
  • 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
  • WTO Agreement
  • Trade in Goods
  • GATT
  • TBT
  • SPS
  • Trade in Services
  • GATS
  • Trade in IPRs
  • TRIPS
  • And Doha Negotiations

22
2. Foundations Trade and Development
  • Growing membership of developing countries
  • New Development Theory
  • GATT Article XVIII
  • GATT Part IV
  • Enabling Clause
  • The WTO Agreements

23
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)

24
4. Integrated Trade Law and Policy-Making, cont.
  • An integrated agenda for the Doha Development
    Round in the WTO and likely for future trade
    rounds as well
  • - Procedural integration through consultations
    in CTE CTD, sustainability impact assessment
    (inc. human rights impact assessment),
    transparency participation, reform of dispute
    settlement procedures, etc.
  • - Substantive integration in standards (TBT,
    SPS), agriculture, intellectual property rights,
    investment and other negotiations
  • Innovations in regional (integration) processes
    such as the European Union, the SADC, the NAFTA /
    FTAA, Cotonou Agreement, ASEAN or bilateral free
    trade agreements

25

5. Sustainable Development in WTO Disputes
  • 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 to the WTO Agreement.
  • EC - Tariff Preferences Case Appellate Body
    rejected EC arguments that its tariff preferences
    were based on sustainable development objectives.

26
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 integrated
    developmental 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
    lightly accept 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.

27
Thank you.
  • Markus W. Gehring
  • mwg24_at_cam.ac.uk

28
Important GATT rules
29
Important WTO rules
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