“WTO / DSU & U.S. Trade Enforcement — U.S. – China Trade Disputes — More Aggressive Enforcement.”

Posted on March 29, 2012 by Stuart Malawer

I gave the keynote address last week at the College of William and Mary Law School’s conference on emerging issues in international trade.  The presentation was on the WTO dispute resolution system and U.S. – China litigation 2001-2012. It is clear that President Obama’s actions in the WTO concerning China have been even more aggressive than those of President’s Bush’s administration. Attached is the outline of the presentation. “WTO / DSU & U.S. Trade Enforcement — U.S. – China Trade Disputes.” (March 2012). You might want to contact the law school for the presentations of the other 9 or 10 people. The program was really outstanding.
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U.S. – China Trade Friction and Recent U.S. Actions … What’s the Assessment?

Posted on March 26, 2012 by Stuart Malawer

China is warning of increased trade tension during this Presidential election season. It is now considering reciprocal trade actions to combat a string of recent U.S. actions it considers more aggressive and targeted against China.
China points to the following four items:
… The recent filing of the Rare Earth case by the U.S. in the WTO;
… The preliminary decision of the U.S. Dept. of Commerce imposing countervailing duties on imports of solar panels from China (case brought by SolarWorld Industries America);
… The new U.S. legislation allowing countervailing duties on imports from nonmarket economies (China);
… The establishment of the International Trade Enforcement Center (ITEC),
What’s my assessment? Here it is:
… A trade war between China and the U.S. is not very likely.
… The Rare Earth case in the WTO is not easy to win. GATT Article XX(g) allows for trade measures to conserve natural resources.
… The SolarWorld Industries case is highly dependent on the facts. The Chinese government payments may not be too unlike those made by the U.S. government to solar panel manufacturers in the United States.
… There is a great hurdle to argue successfully that subsidies ought to be allowed against  goods coming from nonmarket economies. Provisions of GATT article VI and China’s accession agreement tend to be contrary to that view.
… The establishment of ITEC is fair enough. But along with Section 301 procedures that are still in place, they raise potentially difficult issues concerning the WTO restrictions on unilateral trade actions in non-trade remedy cases (those focusing on foreign market access.)
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Obama, Bush & China Litigation in the WTO — Increased Focus & Frequency.

Posted on March 21, 2012 by Stuart Malawer

The following are two interesting charts comparing the Bush and Obama administrations in bringing cases against China in the WTO. They indicate the increased rate and focus of the Obama administration in filing such cases. There is also one chart of the Clinton, Bush and Obama administrations filing WTO cases generally.  This one shows a significant decline in filing cases since President Clinton’s administration. Does this show a greater acceptance of the WTO rules by member countries? Malawer, “Three Charts Concerning China Cases in the WTO and More (1993-2012). (March 21, 2012).

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New WTO Case on China Export Restrictions (Rare Earth Minerals), New Legislation and ITA Action — WTO and Trade Focus of U.S. on China.

Posted on March 16, 2012 by Stuart Malawer

The U.S. along with Japan and the EU filed disputes against China concerning China’s export restrictions on various rare earths and other minerals. This case follows a recent AB decision in January 2012 against China’s export restrictions on nine raw minerals.

The Obama administration argues that is has brought twice as many trade cases against China than the Bush administration.  This new case clearly indicates a continuing and more aggressive trade policy by the U.S. against China that makes the WTO / DSU a central forum in U.S. – China trade relations.

Other trade issues with China that will likely see action in the near future are auto parts, cars, solar panels and anti-subsidy laws. New legislation was recently passed by the Congress and signed by the President allowing countervailing duties despite the non-market status of China and this is retroactive. (The International Trade Administration recently imposed preliminary countervailing duties on Chinese solar panel imports because of Chinese subsidies.)

I’ve just completed a revised chart of China trade litigation in the WTO (2001 – 2012) and new ones on Obama and Bush litigation against China in the WTO and of the Clinton-Bush-Obama WTO filings generally. Malawer, Chart — China WTO Trade Litigation (March 16, 2012) and Malawer, “Three Charts — Obama & Bush China WTO Litigation and Total WTO Filings by U.S.” (March 2012).

The above indicates that the Obama administration brought 6 cases against China in almost four years while the Bush administration brought 7 in eight years. But what is most astonishing is that the Obama administration brought a total of only eight cases in the WTO while the Bush administration brought a total of 33 cases. Thus, a much more directed focus on China by the Obama administration.

It is interesting to note that the filing of new WTO disputes by all countries for last year (2011) were at its lowest (8). “New WTO Disputes.” (WTO 2012).

“U.S., Japan and EU File Disputes Against China.” WTO News (March 13, 2012). “U.S. Challenges Restraints on Rare Earths.” USTR News (March 13, 2012). “Video — Obama Announces WTO Case Over Rare Earths.” CNN (March 13, 2012) (Obama video and CNN report on rare earth case).

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The Boeing Decision — Sub-National and Defense Measures Violate Global Trade Rules.

Posted on March 16, 2012 by Stuart Malawer

The WTO Appellate Body upheld some claims of the EU against the U.S. concerning subsidies to Boeing.
The USTR claimed this as a victory because of the smaller amount of subsidies found when compared to those found by the WTO in the U.S. case against the EU and its subsidies to Airbus.
To a great extent the USTR is correct. However,  the AB did find that state tax measures by Washington and some DOD and NASA research funding illegal as having adverse effects on Boeing.
This is interesting because this decision illustrates that sub-national units and defense measures can violate global trade rules. “Appellate Body Report of Boeing.” WTO News (March 12, 2012); “U.S. Victory in WTO Aircraft Dispute.” USTR News (March 12, 2012).
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U.S. Commerce Under Secretary Calls for More Trade with Brazil and Indonesia and More Trade Enforcement.

Posted on March 8, 2012 by Stuart Malawer

Francisco Sanchez, Under Secretary for International Trade, speaking in Dr. Malawer’s trade class at George Mason Univ. (School of Public Policy)(Feb. 27, 2012).

Francisco Sanchez, the U.S. Commerce Under Secretary for International Trade, called for more trade with Brazil and Indonesia. Among other topics he discussed was greater trade enforcement by the Obama administration. However, it’s interesting to note that his office does not self-initiate actions. It leaves commencement of such actions to the private sector.
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New WTO Case by U.S. Against India — More Aggressive U.S. Trade Enforcement Policy.

Posted on March 7, 2012 by Stuart Malawer

   

The U.S. filed a new WTO dispute against India concerning its agricultural restrictions (poultry imports). This is the fifth time the U.S. has brought a WTO action against India and the first time for the Obama administration.

This is a new part of the more aggressive trade enforcement policy of the U.S. The U.S. filed a similar suit against China recently concerning poultry imports.

Actions against India in the WTO have somewhat been under the public radar.  Actions against China have had a higher profile and priority since the Bush administration. This may be changing, somewhat.

 “U.S. Files Agricultural Dispute Against India.”  WTO News (March 6, 2012). “U.S. Takes India Ban on Poultry Imports to WTO.” Financial Times (March 7, 2012).

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Multinational Corporate Responsibility and the Alien Tort Statute — Overseas Torture & U.S. Courts.

Posted on March 4, 2012 by Stuart Malawer

Under the Alien Tort Statute should foreign plaintiffs be allowed to sue foreign corporations in American courts for torture when that action is done abroad in cooperation with a foreign government?
Should the multinationals, unlike private individuals, be allowed to escape American jurisdiction?
The general defense against allowing such suits is that a corporation is not subject to international law. Yet, individuals are in fact, in various situations, subject to customary international law. Pirates have for hundreds of years been subject to capture and jail. Corporations are considered juridical persons and have constitutional rights in the United States.
After hearing oral argument the Supreme Court raised the larger question and asked for briefs on whether anyone should be held liable under the statute — corporations or individuals. This is not a good sign.
Conservative jurists have shown great animosity towards anything international including the application of customary international law within the United States. Which has been applicable in the United States under the Supremacy Clause (Article VI) since the 1800’s.
As a matter of law and policy it seems clear that suits against foreign multinationals (and individuals) for overseas torture should proceed in the United States.
In the context of the global trading system which is  becoming dramatically more inter-connected, upholding jurisdiction under the Alien Tort Statute provides a viable means of enforcing corporate responsibility in an increasingly decentralized and balkanized global legal system.
“Corporate Abuse Abroad, A Path to Justice Here.” New York Times (March 3, 2012); “Justices to Consider Broader Question.” Washington Post (March 6, 2012).
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Trade News and Updates — Corp. Responsibility, Antidumping, Corruption, China Litigation, Price-Fixing, EU Carbon Tax, ITEC.

Posted on March 1, 2012 by Stuart Malawer
Corporate Responsibility for Violating International Human Rights Law — Pending S.Ct. Case.
The Supreme Court recently heard oral arguments involving corporate responsibility of a foreign corporation (Royal Dutch Shell) under the Alien Tort Statute for cooperating with foreign government (Nigeria) torture in contravention of human rights law. The Obama administration argues there is corporate responsibility of a corporation under international law. The defending oil company contends that corporations are not subject to international human rights restrictions, as to allow an alien to sue it in the United States under the statute. Conservative jurists are generally opposed to finding in favor of international law or international legal claims.” Court Wary of Torture Cases.” Wall Street Journal (2.29.12)
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Significant Global Decline in Anti-Dumping Investigations in 2011.
Director-General Pascal Lamy recently stated that unlike in previous global economic downturns, “there had been a significant decline in initiations of new (anti-dumping) investigations, from 213 in 2008 down to 153 in 2011.” “Significant Decline in Anti-Dumping Investigations.” WTO News (February 27, 2012).
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More on Foreign Corruption — “Compliance Defense”?
The U.S. Chamber of Commerce has been aggressive in trying to change the foreign corruption law (Foreign Corrupt Practices Act) to include a “compliance defense” in criminal proceedings. Others have argued that nothing should be done to make the U.S. less than a leader, as it is now, in the ethical conduct of international business. “Bribing Foreign Officials.” Washington Post (2.27.12).
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Foreign Corporate Corruption — 2 New Cases — 1 Won and 1 Lost by Justice Dept.
The U.S. Dept. of Justice recently experienced a defeat in one foreign bribery case (FCPA) concerning Gabon and a victory in another case (plea agreement) concerning Nigeria. The USDOJ has been very aggressive in pursuing commercial bribery of foreign officials, but its trial tactics might need to be improved a bit. “Bribery Case Falls Apart.” New York Times (Feb. 23, 2012) and “Foreign Bribery and Kickback Schemes.” US Dept. of Justice News (Feb. 23, 2012).
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U.S. and China Trade Litigation in the WTO — New Data.
Three new items concerning data relating to U.S. and China trade litigation in the WTO:
… Snapshot of U.S. in WTO Cases. (USTR December 2011).
… Malawer, “U.S. and WTO Litigation, 1995 – 2011.” (Chart).
… Malawer, “China WTO Litigation (2001-2012).” (Chart).
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Obama Trade Policies Criticized by Free-Trade Economist.
A free-trade economist and critic of President Obama’s trade policies lists his various grievances: the President’s criticism of outsourcing while promoting domestic manufacturing; the President’s rejectionist policies concerning Doha; the President promoting the Trans-Pacific Partnership in lieu of Doha and against China; the President has “surrendered to the manufacturing fetish. ”Obama Panders on Trade.” Financial Times (Feb. 7, 2012).
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Global Antitrust Price-Fixing — 2nd Largest Fine.
Two Japanese suppliers of auto electrical components agreed to plea guilty in an international antitrust price-fixing case and to pay the second largest criminal fine ever ($548m). Four executives have also agreed to serve prison time. “Yazaki Corp Plead Guilty to Price-Fixing.” U.S. DOJ News (January 30, 2012).
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WTO Rules Against China’s Export Restrictions (Raw Materials).
The WTO Appellate Body ruled in favor of the U.S. upholding most of the panel’s recommendation concerning the inconsistency of China’s restrictions on export of various raw materials. These restrictions include among other — export quotas, minimum export price, and licensing requirements. The AB viewed these restrictions as artificially increasing world prices and lowering prices for Chinese products. “U.S. Victory on Raw Material Export Restraints.” USTR Release (January 30, 2012). “AB Issues Report on Material Disputes.” WTO News (January 30, 2012).
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“Zeroing Methodology” in Antidumping Disputes — U.S. Agrees to Stop Using It.
The U.S. has agreed to stop using the “zeroing methodology” in antidumping disputes, in an agreement signed with the EU and Japan, that avoids WTO authorized sanctions. “Solution to Zeroing Disputes.” USTR News (Feb. 6, 2012).
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EU is Risking New Trade War — Carbon Tax on International Air Carriers.
The EU is risking a new trade war by its imposition of a carbon tax on foreign airlines flying into and out of Europe. This is viewed as a form of “Euro-imperialism.” “Europe’s Carbon Trade War.” Wall Street Journal (Feb. 8, 2012).
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The New Interagency Trade Enforcement Center (ITEC)
Steel workers are in support of President Obama’s budget proposals to put millions of dollars to support the new Interagency Trade Enforcement Center (ITEC). “USW Statement on Obama’s 2013 Trade Enforcement Budget.” USW Press Release (Feb. 12, 2012).
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Ex-Im Bank & Export Financing — Promoting Global Competition or Industrial Policy?

Posted on February 18, 2012 by Stuart Malawer
The Export – Import Bank was sued last year by various U.S. airlines (Boeing) to stop providing financing to foreign buyers of U.S. built airplanes.
Some economists argue that such financing increases the competitiveness of foreign airlines at the expense of U.S. carriers. This is also the usual line from the Wall Street Journal editorial board. It argues that this U.S. policy amounts to an industrial policy of picking winners (U.S. plane manufacturers) and losers (U.S. airlines).  That it’s some sort of corporate welfare at the expense of U.S. lenders of trade finance, which is financed by the U.S. taxpayer.
This is not true. The real answer is that U.S. carriers should increase the quality of  services if they really want to compete with service-oriented foreign carriers. U.S. government financing should not be curtailed because of  specious arguments. It’s pragmatic and good public policy to provide this type of export financing to help U.S. manufacturers to remain competitive in the global market, especially since our competitors provide this assistance.
In the long-run it is useful for trade  diplomacy to try to reduce national financing of this type and this should be done through the WTO, OECD and bilateral negotiations.
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