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LGST 2190 > Midterm 1: Trade > Flashcards

Midterm 1: Trade Flashcards

1
Q

Core Issue of the Air Services Agreement Case

A

Core issue revolved around Pan American Airlines’ (Pan Am) 1978 decision to resume flights from the U.S. West Coast to Paris via London with a change of gauge (transfer from a larger to a smaller aircraft) in London. France objected, citing the 1946 Agreement’s prohibition on gauge changes within the territories of the signatory states

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2
Q

Air Services Agreement Case Ruling

A

The Tribunal ruled that U.S. carriers were entitled to operate with a gauge change in London

U.S. Countermeasures of banning French flights to west coast through Montreal were allowed

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3
Q

SEC v. Goldman Sachs (Abacus case) summary

A

Allegations by the SEC that Goldman Sachs (GS) committed securities fraud in the structuring and marketing of a synthetic collateralized debt obligation (CDO), “Abacus 2007-AC1,” tied to subprime mortgages

GS’s alleged misrepresentation of the role of hedge fund Paulson & Co. in selecting the CDO’s underlying securities while betting against them which misled investors

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4
Q

SEC v. Goldman Sachs ruling and importance

A

Goldman Sachs ultimately settled the case (did not admit to fraud) in 2010, agreeing to pay $550 million—the largest SEC penalty at the time.

Importance: Precedence for accountability and increased investor protection

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5
Q

Soft Law

A

non‐binding agreements

“soft” international law does not require countries or individuals to change their conduct to comply with the international agreement, but it does identify standards that the signatories to that international agreement agree on as appropriate.

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6
Q

Extractive Industries Transparency Initiative (EITI)

A

Goal is to promote accountability and openness regarding resource/mineral extraction. Emphasized avoiding social/economic harm, transparency, accountability, and public data regarding mineral extraction

It operates on two main pillars: implementation and governance.

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7
Q

Requirements to join EITI

A
  • Demonstrating government commitment.
  • Ensuring the participation of companies and civil society.
  • Establishing a multi-stakeholder group to oversee the process.
  • Developing a comprehensive work plan for EITI implementation.
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8
Q

Why EITI Matters

A

The EITI addresses the “resource curse,” where resource-rich countries often experience corruption, poor governance, and economic instability. By requiring transparency in contracts, licensing, revenue collection, and allocation, the EITI fosters accountability, deters corruption, and enhances public financial management.

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9
Q

UN Guiding Principles

A

Soft law principles related to human rights

Three main principles:

  1. Protect: State Duty to Protect Human Rights
  2. Respect: Corporate Responsibility to Respect Human Rights
  3. Remedy: States must provide access to remedy for those harmed
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10
Q

UNGP Principle 3

A

States should:

Enforce laws requiring businesses to respect human rights.

Ensure corporate laws enable respect for human rights.

Provide guidance to businesses on respecting human rights.

Encourage or require businesses to communicate their human rights impacts.

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11
Q

UNGP Principle 8

A

States should ensure policy coherence across governmental bodies in line with their human rights obligations.

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12
Q

UNGP Principle 11

A

Businesses must avoid infringing on human rights and address adverse impacts linked to their activities.

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13
Q

UNGP Principle 12

A

Business responsibility applies to all internationally recognized human rights, including the International Bill of Human Rights and ILO principles.

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14
Q

UNGP Principle 15

A

Businesses should have policies and processes to meet their human rights responsibilities, including:
- A policy commitment.
- A human rights due diligence process.
- Remediation mechanisms.

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15
Q

UNGP Principle 25

A

States must provide access to effective judicial and non-judicial remedies for business-related human rights abuses.

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16
Q

UNGP Principle 29

A

Businesses should establish or participate in operational-level grievance mechanisms for affected individuals or communities.

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17
Q

What are the advantages of soft law vs. hard law?

A

Advantages:
- Flexibility
- Cooperation
- Participation
- Dialogue
- Speed of Implementation
- Reduces Political Resistance
- Overall Feasibility

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18
Q

Disadvantages of soft law vs. hard law?

A

Disadvantages:
- lack of enforcement
- ambiguity/uncertainty
- weak accountability
- Reduced incentive for binding agreements
- Dependence on good faith

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19
Q

US Gasoline Case Overview

A

adjudicated under the General Agreement on Tariffs and Trade (GATT)

Canada, the European Economic Community (EEC), and Mexico contested a tax imposed by the U.S. on imported petroleum products.

argued this tax violated GATT’s national treatment principle

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20
Q

US Gasoline Case Ruling

A
  • imported and domestic petroleum were “like products”
  • U.S. violated Article III of the GATT
  • Violated national treatment rules (article 3)
  • Clarified that the size of violations of GATT don’t matter. Enforced no matter what
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21
Q

Japan-Film Case Ruling/Importance

A

The WTO Panel rejected the U.S. claims. Failed to demonstrate a direct causal relationship between the Japanese government’s alleged measures and the restricted market access.

This decision reinforced the principle that non-violation complaints under Article XXIII:1(b) require robust evidence, balancing the need to protect negotiated trade benefits with respecting sovereign regulatory autonomy.

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22
Q

Japan-Film Case Overview

A

U.S. alleged that Japan implemented a series of governmental measures that nullified or impaired the benefits expected from Japan’s tariff concessions, violating Article XXIII:1(b) of GATT.

U.S. claimed that Japan’s Ministry of International Trade and Industry (MITI) created barriers for foreign companies like Kodak to access Japanese distribution channels and effectively closed the market

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23
Q

What is a non-violation complaint (Japan-Film Case)

A

A non-violation remedy refers to a provision under Article XXIII:1(b) of GATT that allows a country to claim redress when another country’s actions, while not explicitly violating trade agreements, nullify or impair negotiated benefits.

24
Q

What is required to be proven for a non-violation claim to succeed

A
  1. A government measure exists.
  2. The measure nullifies or impairs a benefit arising from a trade agreement.
  3. The nullification or impairment results from the application of the measure, even if it does not violate any GATT rules.
25
Q

GATT Article 22

A

Allows consultation between states.

Serves as a precursor to formal dispute resolution, addressing both violations and broader trade impacts to preserve GATT obligations.

26
Q

GATT Article 23

A

Provides a framework for resolving disputes where a member’s trade benefits are nullified or impaired, whether through rule violations, non-violative measures, or other actions, using formal dispute settlement procedures.

27
Q

What are “legitimate expectations of benefits”?

A

“Legitimate expectations of benefits” refer to the advantages a country anticipates from trade concessions negotiated under GATT/WTO agreements.

US tried this argument in Japan-Film case but failed to prove so.

28
Q

GATT Article 1

A

Most favored nation.

Any advantage, favor, privilege ,or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded unconditionally to the like product

29
Q

The Spanish Coffee Case overview and ruling

A

Brazil challenged Spain’s tariff regime on unroasted coffee and said it violated MFN under Article 1 of the GATT

GATT Panel ruled in favor of Brazil

  • Despite organoleptic differences, the Panel concluded that all unroasted coffee types are “like products” due to shared end use (important) - also often blended
30
Q

Japan-SPF Lumber Case overview

A

Canada challenged Japan’s tariff regime on imports of spruce, pine, and fir (SPF) dimension lumber (alleged it violated MFN)

Canada claimed that all dimension lumber, regardless of species, shared the same end-use, making them like products

31
Q

Japan-SPF Lumber Case Ruling/Importance

A

The GATT Panel ruled in favor of Japan

The ruling reinforced the importance of the importing country’s tariff classification when assessing “like products” under GATT. It rejected the use of industry-specific standards (e.g., Canada’s “dimension lumber”) to define likeness.

  • underscored the complainant’s responsibility to provide evidence of discrimination in trade disputes
32
Q

History of GATT

A
  • 8 rounds total
  • The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation.
33
Q

World Trade Organization (WTO)

A

160ish members, accounting for over 97% of world trade

34
Q

Most Favored Nation (MFN)

A

MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong

35
Q

MFN Exceptions

A
  1. free trade agreement that applies only to goods traded within the group — discriminating against goods from outside
  2. not required to give equal treatment to non-WTO members
  3. countries can give developing countries special access to their markets.
  4. can raise barriers against products that are considered to be traded unfairly from specific countries.
  5. In services, countries are allowed, in limited circumstances, to discriminate.
36
Q

“Like Product” Checklist

A

Determining factors:

  1. tariff schedule classification. Japan – Dimension Lumber
  2. Other countries’ classifications. Spain – Coffee, Japan – Dimension Lumber
  3. End product / Use > make-up or characteristics. Spain – Coffee.
  4. Species, genetic origin? Japan – Dimension Lumber
  5. De facto discrimination: Canada – Auto Pact
37
Q

GATT Article III

A

National Treatment article

Ensures non-discrimination by requiring members to treat imported goods no less favorably than domestic goods regarding internal taxes, laws, and regulations, promoting fair competition.

38
Q

Korea–Beef Case Overview

A

Dispute brought by the United States and Australia against South Korea alleging their dual retail system violated MFN and National Treatment under article 3.

Dual Retail system:
1. Imported beef to be sold only in specialized imported beef stores with mandatory signage.
2. Domestic and imported beef to be displayed in separate sections in supermarkets and department stores.
3. Restrictions on resale and distribution of imported beef by small retailers and supermarkets.

39
Q

Korea–Beef Case Ruling

A

Violation of GATT Article III - National Treatment

measures led to a substantial reduction in commercial opportunities for imported beef, constituting “less favorable treatment” than for domestic beef.

40
Q

Three Requirements for a Violation of GATT Article 3 (National Treatment)

A
  1. imported and domestic products at issue are like products
  2. The measure at issue is a law, regulation, or requirement affecting their internal sale, offering for sale, etc.
  3. Imported products are being given less favorable treatment than “like” domestic products.
41
Q

Japan Alcoholic Beverages Case

A

Measure at issue: Japanese Liquor Tax Law that established a system of internal taxes applicable to all liquors at different tax rates depending on which category they fell within. The tax law at issue taxed shochu at a lower rate than the other products.

Ruling: all liquor types are a “like” product and the law violates GATT article III

42
Q

GATT Article 20 (XX)

A

Allows exceptions to trade rules for measures protecting public morals, health, natural resources, or other vital interests, provided they are not discriminatory or a disguised trade restriction.

43
Q

Shrimp-Turtle Case

A

complaint by India, Malaysia, Pakistan, and Thailand against the United States. U.S. prohibited the importation of shrimp harvested using methods harmful to sea turtles

Ruling: The U.S. applied Section 609 unevenly by granting certain countries a phase-in period while imposing abrupt restrictions on others.

44
Q

GATT Article 11 (XI)

A

Prohibits quantitative restrictions like quotas on imports or exports, ensuring trade flows freely, except under specific conditions like shortages or other permitted exceptions.

45
Q

Chapeau of Article XX

A

Shrimp-Turtle Case.

Unjustifiable or Arbitrary Discrimination or Disguised Restriction to Trade.

46
Q

Hormone-Treated Beef Case Overview

A

Long-standing trade dispute between the United States and the European Union (EU) over the EU’s ban on imports of beef treated with growth-promoting hormones.

United States argued that the EU’s ban violated the WTO’s Sanitary and Phytosanitary (SPS) Agreement, which requires food safety measures to be based on scientific evidence.

47
Q

Hormone-Treated Beef Case Ruling and Importance

A

WTO Panel ruled in favor of the U.S., stating that the EU failed to provide sufficient scientific justification for the ban

ban was found to discriminate against imported beef - exemptions domestically

U.S. takes retaliatory measures after EU doesn’t lift ban.

The ruling underscored the importance of scientific evidence in justifying food safety measures

48
Q

Sanitary and Phytosanitary (SPS) Agreement

A

Allows countries to set their own standards. But it also says regulations must be based on science. They should be applied only to the extent necessary to protect human, animal or plant life or health. And they should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.

49
Q

Committee on Foreign Investment in the United States (CFIUS)

A
  • 15 members of the executive branch
  • evaluates foreign investments to assess potential threats to U.S. national security.
  • grants discretion to the President
  • Fine under Article 21 of the GATT
50
Q

Article 21 of the GATT

A

allows nations to justify trade restrictions on national security grounds

51
Q

GATT Article XXIV (24)

A

Permits the formation of customs unions and free trade areas, allowing exceptions to trade rules if they facilitate trade among members without raising barriers for non-members.

52
Q

CFIUS Decision Making

A

Is there “credible evidence that leads the President to believe that the foreign interest exercising control might take action that threatens to impair the national security” or “critical infrastructure” of the United States

Broadcom/Qualcom example.

Usually dealing with China.

53
Q

Canada Automotive Case Summary

A

Issue: Canada’s duty-free treatment of imported vehicles under the Motor Vehicles Tariff Order of 1998 and SROs, tied to:
- Production-to-sales ratios (maintaining a specific ratio of Canadian production to sales).
- Canadian Value Added (CVA) requirements (a portion of production costs must involve Canadian inputs).

requirements, was challenged by the EU and Japan.

Allegation: These measures caused discrimination and provided export subsidies, violating WTO agreements. Unfairly benefitted US

54
Q

Canada Automotive Case Ruling

A

GATT Article I:1 (MFN Principle): Measures caused de facto discrimination, favoring certain manufacturers and violating the MFN principle.

Subsidies and Countervailing Measures (SCM) Agreement: Measures were found to be prohibited export subsidies (Article 3.1(a)), but domestic content requirements (Article 3.1(b)) were not proven.

GATS Articles II & XVII: Discrimination against services and service suppliers from other members was confirmed.

55
Q

GATT Article 20 - Requirements for Justification

A
  1. measure must fit within one of the exceptions listed in Article XX
  2. measure must comply with the “chapeau” (introductory clause) of Article XX, ensuring it:
  • Does not result in “arbitrary or unjustifiable discrimination between countries where the same conditions prevail.” (What US didn’t pass in the Shrimp-Turtle case)
  • Is not a “disguised restriction on international trade.”
56
Q

GATT XX Allows Following Exceptions

A

Measures must fall within one of the exceptions listed in Article XX, including:

(a): Protecting public morals.
(b): Protecting human, animal, or plant life or health.
(d): Securing compliance with domestic laws not inconsistent with GATT.
(g): Conserving exhaustible natural resources, provided measures apply equally to domestic production or consumption.
(h): Supporting international commodity agreements.
(j): Preventing shortages of essential products.

To justify a measure It must fit in one of the above categories and comply with XX Chapeau

LGST 2190 (3 decks)

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