Chapter 10

Laws Governing Access to Free Markets

 

I.  The General Principle of Least Restrictive Trade

          Regulations are allowed, but must be enacted and implemented to cause the least disruption of trade

          WTO uses balancing test: need to protect people versus upholding free trade principles

          Thailand—Restriction on Importation of Cigarettes (GATT Dispute Settlement Panel 1990)

          Thailand had a state owned company that sold all cigarettes in Thailand.  It had imported none for years.  U.S. objected.  Panel looked at whether restrictions were to protect local industry or local health.  Panel ruled against Thailand, saying it had not adopted neutral regulation of cigarettes.

 

II. Technical Barriers to Trade

          A. Protection of public health, safety and welfare

                   1. Restrictions on sale and distribution: testing and inspections

          B. Why technical regulations and standards are barriers to trade

                   1. Technical barriers in the EU

                   2. Technical barriers in Japan

          C. International Organization for Standardization

          D. GATT 1994 Agreement on Technical Barriers to Trade

          EC—Measures Affecting Asbestos & Asbestos Containing Products, (WTO App Body 2001)

          Asbestos is natural product that is nearly fire proof and is a great insulator.  It also causes cancer.  Prior to 1997, Canadian companies mined and sold 40,000 tons of asbestos to France each year.  Although raw asbestos is very dangerous, it is safe when manufactured into products (e.g. fire proof bricks).  France enacted ban on import of asbestos, citing health concerns.  Canada objected.

          WTO ruled in favor of France.  France allowed less dangerous, but not perfectly safe substitutes.  Because of the difference in safety levels, they were not perfect substitutes and therefore France’s ban was legal.

 

III. Import Licensing Procedures

          A. GATT 1994 Agreement on Import Licensing Procedures

          B. Trade facilitation

 

IV. Government Procurement

          A. GATT 1994 Agreement on Government Procurement

                   1. Agencies excluded from the procurement rules

                   2. Transparency in procurement procedures

          B. Administering government procurement rules in US

                   1. Other procurement agreements

 

V. Trade in Services

          A. GATT 1994 General Agreement on Trade in Services

                   1. Recognition of licensing and professional qualifications

                   2. GATS Agreement on Trade in Financial Services

                   3. GATS Agreement on Basic Telecommunications

 

VI. Trade in Agriculture

          A. GATT 1994 Agreement on Agriculture

                   1. Domestic support programs

                   2. Agricultural export subsidies

                   3. Making export markets accessible

                   4. Food, animal, and plant safety

                   5. Codex Alimentarius

          EC Measures Concerning Meat and Meat Products (Hormones) (WTO 1997)

          EC banned import of meat grown with growth hormones.  European public opinion was against hormones, due to harmful use of illegal hormones.  Most US meat grown with hormones, so law kept US meat out.  US objected.

          Panel found this to be discriminatory, that the science did not support the restriction.  Real purpose was to protect Euro farmers.

 

VII. Trade in Textiles and Clothing

          A. GATT 1994 Agreement on Textiles and Clothing

         

VIII. Other WTO Trade Agreements

          A. Trade related investment measures

          B. Trade related aspects of intellectual property rights

          C. Information Technology Agreement

 

IX. Trade Sanctions and U.S. §301: The threat of retaliation

          A. Basic Section 301

                   1. Section 301 procedures

                   2. Sanctions and retaliatory measures

          B. Trade and Development Act of 2000: Carousel Law

          C. Special 301

          D. Telecoms 301

          E. Super 301

                   1. Assessing the impact of unilateral action

 

          US--§§301-310 of Trade Act of 1974 (WTO Panel 1999)

          Section 301 allows USTR to retaliate if a finding is made that foreign country is cheating on its WTO obligations.  Requires a finding by WTO to that effect.  EC argued that unilateral action of that kind is not allowed.  

          Panel said 301 is valid, but emphasized that it only is allowed if US follows WTO dispute settlement rules and then WTO panel authorizes retaliation.