THE WTO — U.S. & QATAR — What’s the Future?

 

The U.S. Secretary of Commerce has again spuriously attacked the WTO for the way it has reviewed U.S. antidumping and countervailing duty cases. (We have lost most of our cases for years that have been reviewed by the WTO’s dispute resolution system.) Every major country has agreed that the WTO reviews were fair and our excessive reliance on trade remedy actions within the United States as protectionism. Unfortunately, the USTR is now staffed by lawyers that have litigated these ill-informed cases for decades.

On the same day Wilbur Ross was again knocking the WTO, the small country of Qatar filed a broad action against the Persian Gulf states that imposed an economic boycott on it. Potentially allowing the responding states to raise the unique ‘national security defense.’ And giving the WTO not only the opportunity to rule on the national security exception for the first time but also on the use of economic boycotts in international relations under global trade law.

Nothing can be more glaring than the largest economic and political power turning on its own creation and one of the smallest states turning to it to save itself.

My point is who is threatening the WTO and who is relying upon it? This is a very awkward situation for the United States and the global community. The role of the U.S. and the Trump administration in global trade and diplomacy is at stake as well as the role of the WTO in protecting the global rules of conduct.

That’s what is going on. We’ll see ………….

 

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Technology, Antitrust, Trade, Taxes …. Laws Need an Update?

Good piece by Steve Pearlstein of George Mason (Schar School) in the Washington Post today on tech companies and antitrust.

It’s clear to me that U.S. antitrust enforcement is behind the curve concerning global tech companies. Current economic theories of antitrust focus on price competition and protecting the consumer. Not sure how well that is working out.

The EU is clearly now in the lead on antitrust enforcement (Google case).

Two additional thoughts.

One, the impact of globalization, not only technology, on antitrust needs to be much better understood.

Two, there is a critical inconsistency in economic theory concerning antitrust and trade remedies.

Current antitrust laws emphasis is on protecting, so it says, the consumer. But trade law (antidumping and subsidies) aim at protecting U.S. producers. This goes back to the late 19th century.

My conclusion. Really need a more global and consistent assessment of U.S. economic legislation dealing with both antitrust and trade remedies (and I would add tax law) in today’s high-tech and interconnected markets.

Is Amazon Getting too Big?” Washington Post (July 30, 2017).
Competition Authorities Need a Digital Upgrade.” Financial Times (July 31, 2017).

 

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Reaction to Trump’s Foreign Policies & Rise of City and State Foreign Policies — More than Just Resistance , a Global Development.

Time Warner 

More on the emerging new federalism and foreign affairs as a reaction to President Trump’s foreign policies concerning such areas as trade, climate immigration, among other areas. This nascent development more than just resistance. It represents significant developments concerning newer manifestations of federalism to match the 21st century reality of an interconnected world on all levels.

The role of states and cities in the U.S. as to foreign affairs and trade is certainly not well defined in and under the U.S. Constitution. Especially in its 21st century context and in light of empirical practices over the years.

By the way this resurgence of local actors in the global system is not just limited to the United States. Subnational units worldwide are bypassing ineffective central governments to better engage the global system for the benefit of their citizens to promote better trade, investment, and economic development.

More on the emerging new federalism as a reaction to President Trump’s foreign policies as to trade, climate and immigration. This is more than just resistance. It represents significant developments concerning newer manifestations of federalism to match the 21st century reality.

By the way this resurgence of local actors in the global system is not just limited to the United States. Subnational units worldwide are bypassing ineffective central governments to better engage the globl system for the benefit of their citizens to promote better trade, investment and economic development.

Some interesting developments just the last few days:

  • Canadian and Mexican officials are meeting directly with governors of U.S. states at the National Governors Association meeting to discuss trade and NAFTA. They want to gain political allies and the governors want to gain export sales and promote economic development. 
  • More than 200 cities and states are holding meetings and local summits in support of the Paris Climate Agreement. Some here and perhaps some abroad.
  • The U.S. Dept. of Justice (Attorney General) has called for possible legal action against sanctuary cities, e.g., for failing to turn over local information concerning immigrants to the federal government.
  • The Congressional Research Service has released a surprisingly poorly drafted report questioning the authority of states to do anything in the area of international trade or foreign relations. (Failing to cite the definitive Supreme Court case addressing implied preemption and foreign trade.)

States have huge rights in the foreign affairs area. But they are limited by various powers of the federal government. These limitations are not well defined, especially not in today’s context. No Supreme Court case has broadly restricted the rights to states to engage in the global economy. Today they have trade missions, they tax international transactions, etc. For example, my home state of Virginia has recently completed MOUs concerning trade with a Baja California (a Mexican state) and Mexico City.

What can be said about these latest developments? As to the entire area of the relation of constitutional law to American foreign relations we need to go back to the writings of Louis Henkin and the more recent ones of Justice Breyer.     

New constitutional law is about to be made as a result of incoherent and isolationist polices of President Trump and reaction to it. These policies fly in the face of the real economic and national security interests of the United States and the international system. Local governments are paying the price for this folly. They and no one else can afford it. (Similar developments can be seen in countries overseas. For example, the City of London is negotiating with EU officials directly in Brussels as to financial aspects relating to London institutions under Brexit.)

Very simply this issue of national subunits engaging the global system and bypassing incompetent national leadership is evolving nationally and globally.  In the United States this will undoubtedly lead to very contentious legal and political battles over the new federalism in the courts, Congress, state houses, and city halls. Stay tuned …………….

 

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STEEL IMPORTS & NATIONAL SECURITY — REALLY.

     National Security and Steel Duties — Really. Imposition by the Trump administration of these duties on steel imports is a terribly idea. These type of duties don’t work, create trade distortions, endangers the WTO, and most importantly there is no real economic justification for them. This would be purely a domestic political and protectionist measure. The administration needs to stop this, now.

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GLOBAL CITIES & GLOBAL TRADE.

     The latest example of global cities bypassing central governments to conduct their own foreign policy and trade policy is the case of the City of London.

     London is sending its own delegation to Brussels to negotiate directly with the EU to establish a post-Brixit financial system to ensure the role of London in global finance. This is actually with the consent of Whitehall and EU officials in Brussels.

      To me this is the only the most recent example of global cities in the world and especially in the United States to engage in global commerce more forcefully. Especially since central governments seem to be incapable of developing meaningful policies for economic development and jobs that focus on trade, finance, investment and involving meaningful engagement with the global economic system.

      In the context of national sovereignty the older concern of sovereignty slipping and going to international organizations is receding in importance. It is now being raised as to the role of states and cities as they bypass central governments to formulate and negotiate their own foreign policies and trade policies directly with foreign governments. This is true as to countries that have a federal system of government as well as non-federal ones.

      National sub-divisions are finding it crucial to interact with the global systems directly, out of necessity since central governments have not been very good at this for a long time.

     Stay tuned …………..

 

London and Brussels.” Financial Times (July 3, 2017).

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Reaction to Trump’s Policies & Rise of the New Federalism.

[From my Op-Ed in this Sunday’s RICHMOND TIMES-DISPATCH (June (June 18, 2017) ……………………………..]

 

A new aggressive and proactive federalism seems to be evolving in the United States.

This newer federalism promotes global engagement and observation of international rules. This is remarkably different from the older version that supported states’ rights and segregation and was primarily based in the South.

Today, we see a rapidly evolving anti-Trump resistance in the widespread movement for “sanctuary cities” and the more recent “city-state climate coalition.” Virginia is one of the most recent members of that coalition.

These local actions by cities and states are in opposition to President Trump’s national policies relating to immigration enforcement, the rejection of the Paris Climate Accord, and a general contempt for a rules-based international order.

In particular, these policies relate to trade, climate change, immigration, multilateral alliances, and almost any international agreement that restricts the United States from taking unilateral actions. These historical changes have occurred under the claim by President Trump of protecting the United States and its national sovereignty.

 What else can be said?

This incipient development on city and state levels results from President Trump’s isolationist retreat from America’s engagement in the global system. This engagement has been a hallmark of U.S. foreign policy since before 1945. This incomprehensible retreat by the world’s most powerful nation has seemingly been done with little thought and even less collaboration with Trump’s key national security, military, and foreign policy advisers. Some advisers, however, have seemingly betrayed their own competence by recently declaring there is no longer a global community.

This atavistic retreat to isolationism is a rejection of the rules and institutions that have marked U.S. engagement in international relations since the end of World War II. That engagement had its earlier grounding in the United States’ participation in World War I and then in the 1930s under President Roosevelt’s Open Door Policy and his revamping of U.S. trade policies under Secretary of State Cordell Hull.

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Those policies espoused open trade, adhering to the most-favored-nation principle as a life-saving antidote to the competitive tariff hikes globally, which had led to the Great Depression. That principle was later multilateralised in the post-war international economic system. This system persists today, but it is under attack by the Trump administration. Most recently, this is seen in its refusal to sign the historic OECD treaty on multinational tax avoidance and bilateral tax treaties signed by 70 other countries recently.

With only a slight knowledge of U.S. diplomatic history, one can draw a straight line from President Woodrow Wilson’s plea to Congress to stay involved in the global system after the Great War (only to see the League of Nations, the Permanent Court of International Justice, and the Versailles Treaty defeated in the U.S. Senate) to President Trump’s nihilistic foreign policies today. Of course, nothing good came from the failure of President Wilson’s efforts. Twenty years later, German troops marched across Europe.

The resurgence of the states’ and cities’ roles in foreign affairs is reminiscent of the role states had under the Articles of Confederation immediately after the Revolutionary War in the 1780s. This is seen even going back to the Middle Ages, when states and cities were the central players in international trade, as part of the Hanseatic League within the Holy Roman Empire.

Today, it is the global city and cities of all sorts that are powering international engagement, innovation, and economic development. Cities, counties, and states are taking the lead in interfacing with the global economic system to promote local economic development and jobs.

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What we see today are unprecedented actions by the United States on the global stage causing more disorder and insecurity. Just witness the recent flare-up in relations with Qatar and growing Saudi-Iranian hostilities instigated by President Trump’s visit to Saudi Arabia. To many, these actions and policies evidence failed national leadership and bizarre foreign policies.

We are now encountering unprecedented actions on the sub-national level, among city and state governments as a reaction to failed national governance and as blowback to skewed populism. These actions have been powered by extensive and broad-based individual and corporate support.

These activities are growing in intensity. For example, state attorneys general have been energized in bringing judicial challenges to Trump’s policies, most notably to immigration. Canada has begun negotiating directly with the states and cities that are members of the new climate coalition. Cities and states are expanding their sister-city and sister-state relations abroad. Most recently Virginia, completed a memorandum of understanding with the Mexican state of Baja California to promote trade.

Whether the Trump administration and its Justice Department will attempt to block these grassroots political actions by resorting to the federal courts is another question. Of course, these courts have not been very favorable to the administration’s actions and its reliance on national security and the president’s foreign policy powers, under either the principles of the separation of powers or federalism.

Thus, the growing opposition of cities and states to President Trump’s failed foreign policies are spawning a new proactive federalism focusing on locally generated foreign policies. This is setting up a legally and politically historic battle over the new federalism.

 

Stuart S. Malawer, J.D., Ph.D., is the Distinguished Service Professor of Law and International Trade at George Mason University’s Schar School of Policy and Government. He is a former member of the board of directors of the Virginia Economic Development Partnership. He can be contacted at StuartMalawer@msn.com. His website is www.GlobalTradeRelations.net

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JUSTICE GORSUCH & INTERNATIONAL LAW — Not Clear.

 

JUSTICE GORSUCH, INTERNATIONAL LAW AND U.S. LAW — Justice Gorsuch displayed a somewhat confused & restricted approach to international & foreign law during his Senate confirmation.

There is a critical distinction between international law and foreign law. International law (both conventional and customary) are incorporated into US law as the supreme law of the land under Article VI of the U.S. Constitution. Judges need to know this (judicial notice).

Foreign law, considered a fact issue in the U.S., belongs to the world of comparative and conflict of law. This often needs expert testimony.

The big issue today is will the Supreme Court look at legal solutions by foreign courts as a means of understanding today’s global problems. Not in interpreting the Constitution itself but helping the court to fully assess the dimensions of the problem under consideration.

Justice Breyer is a leading advocate of this approach. A detailed assessment of Justice Gorsuch’s prior decisions would probably lead to a better understanding of his views in this contentious area. http://us-global-law.net/images/Article.Gorsuch_and_IL_Blog._May_23,_2017_.pdf … …

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