Volume XVIII, No. 2 THE FLORIDA BAR Winter 2002-2003 The...

Volume XVIII, No. 2

��

��

01/03

THE FLORIDA BAR Winter 2002-2003

• The Florida Bar Website: www.flabar.org • International Law Section Website: www.lex-fl.org •

��

Child Status ProtectionLaw & EmploymentBased Petitions ........... 8

Once Again a Success forthe 4th Annual Florida-Canada Forum… ....... 10

IFTTA Update ............... 11

TIAOJIE: China AmidstChanges ..................... 12

2003 Section Calendar 19

Vive La Médiation! ....... 20

Trade AgreementsUpdate ....................... 21

International TaxBriefs .......................... 22

Brussels & LondonProgram ..................... 23

The Means of Production:A Study of the Effects of International Tradeby United States Multinational Corporations

on the Labor Force of Less-Developed andDeveloping Countries

by Dolores Calderón López, St. Thomas University School of Law,Third-Place Writing Contest Winner

IntroductionThe February 2002 protests at the con-

vening of the World Economic Forum inNew York City1 seemed tame in comparisonto the 1999 protests in Seattle during theconvening of the World Trade Organization(“WTO”). Indeed, in Seattle, fifty thousandprotesters successfully disrupted the con-ference, thwarting the negotiation of a fur-ther trade round,2 while a mere two thou-sand rallied in New York,3 perhaps due tothe shift of national focus in the aftermathof September 11th.

However, this recent resurgence of pro-tests continues to tarnish the image ofglobalization.4 This paper will attempt toseparate myth from fact by focusing onthe effects of international trade bymulti-national corporations (“MNC”) onthe labor force of developing and less-de-veloped countries.

To begin, MNCs5 are corporations withbusiness operations in several nation-states.6 Control of the MNC is vested in aparent corporation, typically located in adeveloped country.7 Corporate operationsare highly centralized in the parent, withvery little autonomy given to the subsidiar-ies.8 Such centralization includes decisionsregarding “production and pricing policies,choice of technology, appointment of keypersonnel, and determination of markets.”9

In turn, the subsidiaries, which are locatedin developing (“DC”) and less-developedcountries (“LDC”), repatriate profits to theparent.10 It is this structure and the effectsthereof that are the root of controversy.Hence, this paper will focus on the MNCgenerally and on United States MNCs spe-cifically.11 Further, the focus shall be on theproblems to the labor force of LDCs and DCsbecause of the level of attention given tothese issues during the recent protests.

In evaluating the legal relationship be-tween United States-based MNCs andLDCs/DCs, the focus will be primarily onthe General Agreement on Tariffs andTrade (“GATT”) and the World Trade Orga-nization (“WTO”). The reason for this nar-row selection is that much of the contro-versy stems from the execution of thistreaty. As such, this paper does not seek toimply that international trade is limitedonly to arrangements subject to GATT.

The first part (“Delimitation of the Prob-lem”) of this paper is devoted to explainingthe labor problem through direct examples.The second part (“Conflicting Claims”) dis-cusses the conflict between the goals of theMNCs and the needs of the LDCs/DCs. Inthe third part (“Past Trends and Condition-ing Factors”), there is summation of theWTO/GATT. The final part (“Recommenda-

continued...

�

Brussels&

LondonProgram

March 30 -April 4, 2003

See page 23 fordetails!

2

tions”) suggests improvementswithin the existing legal structurethat would facilitate a positive reso-lution to the labor problem.

Delimitation of the ProblemFar from the air-conditioned,

OSHA12-complying offices and facto-ries of the average American em-ployee, hundreds of people labor dayand night for pennies a day or underthreat of death, making shoes andclothes for Americans to wear. UnitedStates MNCs profit and their citizensbenefit from forced labor, child laborand the sweatshop conditions of less-developed and developing countries.

Child Labor“The International Labor Organi-

zation (ILO) . . . defines child laboras the employment of children underthe age of fifteen.”13 Under this defi-nition, although “[e]xact figures onthe number of working children inany particular category of work orsector of activity are not known be-cause the problem is frequently un-reported, denied, or undetected inboth developed and developing coun-tries[,]”14 child labor is rampantthroughout parts of Asia, Africa andLatin America.15

In spite of the unavailability of ex-act figures, worldwide estimatesplace the employment of childrenunder fourteen at 250 million, ofwhich “[n]inety-five percent . . . areemployed in developing countries.”16

Children are employed in lieu of

adults because the former will acceptlower wages while making few de-mands on employers.17 The resultsare that children are open to exploi-tation by being underpaid, workingin dangerous conditions,18 sacrificingeducation, and taking jobs away fromtheir adult counterparts.19

Working ConditionsCollective investigations by nu-

merous non-governmental organiza-tions (“NGOs”) have documented theexistence of deplorable working con-ditions for laborers in LDCs and DCs.Por ejemplo, such problems permeatethe export-processing zones of someLDCs and DCs. “[E]xport[P]rocessing [Z]ones [“EPZs”] arefenced-in industrial estates special-izing in manufacturing for exports.”20

MNCs contract with EPZs for numer-ous reasons. They include reducedhost-country governmental regula-tions, long-term tax breaks, high-technology communications servicesand infrastructure, subsidized utili-ties, “unlimited duty-free imports ofraw and intermediate inputs andcapital goods needed for produc-tion.”21 In addition, there is the ben-efit of cheap labor. The use thereof isinnocuous per se. However, the con-ditions under which some laborerswork is reminiscent of laborers dur-ing the industrialization period ofUnited States history.

The Beximco Factory is a casestudy. The factory is a contractor fora United States MNC located in theEPZ of Dhaka, Bangladesh.22 TheNational Labor Committee in Sup-port of Worker and Human Rightsdocuments that on average, the typi-cal Beximco

Factory laborer works a weeklyshift of eighty-seven hours due tostrict production schedules that al-low only limited, timed bathroombreaks.23 For their efforts, these la-borers are paid forty to seventy per-cent below the minimum wage for theregion.24 In addition, they are oftencheated out of their legal overtimepay of sixty-six cents per hour.25 TheMNC who receives the end productis none other than Wal-Mart.26

“Just Do It!!!”27

The practices of the Wal-MartCorporation28 are not isolated, how-ever. In fact, NGOs have discoveredsimilar operations involving otherhousehold names such as Nike.29 In-terviews with laborers in Nike’s In-donesian30 factories revealed condi-tions similar to the Beximco Factory.In addition, refusal to work the req-uisite hours invokes verbal abuse orsometime acts of public humiliationby supervisors.31 Three refusals towork overtime results in termina-tion.32 This strict hour requirementis an attempt to meet the high dailyquota set by Nike.33 Further, inad-equate lighting, ventilation and sani-tation facilities are common to manyEPZs.34

In reaction to criticism regardingsuch working conditions, Nikeamended its Code of Conduct35 inMarch 1997.36 Additional provisionsinclude a ceiling of sixty hours perwork week for each laborer. The re-vised Code kept the requirement ofcompliance with legally-imposedbenefits such as menstrual leave.37

These two provisions are not mereguidelines. The terms precedingthese applicable Code sections statetheir binding nature.38 Therefore, theactual working conditions violateNike’s own Code of Conduct.

The Limitations in Addressingthe Labor Problem-Unionizationin LDCs and DCs

In some countries, such asBangladesh, unionization is prob-lematic because such activities arerestricted by law.39 In fact, only oneunion is allowed for each companyand only a few union officials are im-mune from involuntary transfers toanother plant.40 Further, Bangladeshexcludes EPZs from coverage underlabor and industrial relations lawsaltogether.41 In countries withoutsuch restrictions, some NGOs help

Means of Productionfrom preceding page

The International Law Quarterly is prepared and published by the International Law Sectionof The Florida Bar.

Laurence D. Gore, Ft. Lauderdale .................................................................................ChairDavid S. Willig, Miami ........................................................................................... Chair-ElectLucius Smedja, Miami ..............................................................................................SecretaryJohn H. Rooney, Jr., Miami ..................................................................................... TreasurerFrancesca Russo-Di Staulo, Miami ............................................................ Newsletter EditorAngela Froelich, Tallahassee ............................................................. Program AdministratorLynn M. Brady, Tallahassee ......................................................................................... Layout

Articles between 10 and 20 pages involving the various disciplines affecting internationaltrade and commerce may be submitted on computer disk with accompanying hard copy, oron typewritten, double-spaced 8 ½” x 11" paper (with the use of endnotes, rather than foot-notes.) Please contact Francesca R. Di Staulo for submissions to the Quarterly and for anyquestions you may have concerning the Quarterly.

3continued, page 4

EPZ workers organize unions.42

For example, in one of Indonesia’sNike Factories, the Social Informa-tion and Legal Guidance Foundationuses theatre to teach the workershow to organize a union, which inter-estingly, Nike expressly supports.43

In fact, Nike’s Revised Code of Con-duct contains the statement that itis committed to seeking partnersthat “recognize the dignity of the in-dividual, the rights of free associa-tion and collective bargaining.”44

However, this particular code sectionis not binding.

Further, the factory allows unionsto form but it employs other tacticsthat negate the efficacy of such orga-nizations through strong-arm and in-direct tactics, such as hiring gang-sters to “break up strikes or threatenworkers who are perceived to be‘troublemakers,’” and/or continuallytransferring suspected organizers todifferent jobs within the factory todiscourage unity.45 Other unionmembers are simply terminated us-ing trivial mistakes as a pretext.

Worst still, some host countriesstay their EPZs from their laborlaws altogether.46 Further, in coun-tries that do not extend such exclu-sion to MNCs, limited resources pre-clude effective inspection andenforcement of such labor laws, dueto the rapid growth of businesswithin the EPZs.47

Conflicting ClaimsLDC/DC Government Perspec-tive-Marketing Comparative Ad-vantage

Problematic to resolution of thenegative effects to labor is the finan-cially depressed state of the econo-mies of LDCs and DCs. The formerare desperate for funds in order tosurvive. The latter need funding inorder to continue their develop-ment.48 This dynamic is consistentwith the dictates of David Ricardoand Adam Smith’s comparative ad-vantage theory, the theoretical foun-dation for trade.49

Summarized, the theory holdsthat “Countries that produce certaingoods and services more efficientlythan other countries have a compara-tive advantage and can provide thosegoods and services [to] the needycountries in exchange for a differentset of goods and services that the

needy country has a comparative ad-vantage for producing.”50

In practice, the large populationcoupled with high unemploymentrates gives LDCs and DCs a com-parative advantage in labor, typicallyunskilled labor.51 Hence, such coun-tries attract industry which are un-skilled labor-intensive, such as tex-tiles,52 sporting equipment, andshoes.53 Indeed, the recent prosper-ity of some countries can be directlytraced to expansion of such activitieswithin their EPZs. Further, the highunemployment rates in some LDCscoupled with their typically highpopulation growth rates compel theindigent laborer to accept harshworking conditions in exchange formeager wages. However lowly thesewages in LDCs/DCs may seem byAmerican standards, on average,these wages are often higher thanthose offered by local industry withinthe LDC/DC.54

For these reasons, it is not surpris-ing that these countries aggressivelycompete with each other to attractEPZ investment. For example, theHonduran EPZ55 website boasts of its“ample supply of trainable and pro-ductive labor” at forty-four cents perhour.56 Further, in theory, the LDC/DC is able to graduate to a higherdevelopment status through the ini-tial marketing of their unskilled la-bor.

That is, eventually, such develop-ing countries could switch from la-bor-intensive to capital-intensivemeans of production, borrowing fromthe technology of their foreign inves-tors.57 Therefore, on its face, theproblem seems unavoidable, e.g. inorder to gain foreign investment,LDCs and DCs must market theirunskilled labor. The harsh workingconditions appear to be the price paidin the short-run for the acquisition oftechnological knowledge in the long-run.

In practice, generally, LDCs/DCsincreased technological importshave neither resulted in increasedproductivity nor in increased de-mand for skilled labor.58 This is prob-lematic since it provides a disincen-tive for skill acquisition and/oreducation for the unskilled laborer.59

Further, given the large supply ofunskilled laborers, wages remain atlow levels.60 These factors, in turn,decrease the leverage of a potential

union, due to the MNC’s ability tohire replacements in the short runand relocate facilities to anothercountry in the long run. As such, theLDC/DCs are forced, by this imbal-ance of power, to remain at themercy of the MNC’s imposition ofthe terms of investment.

Another problem is that, given thebenefits derived from the employ-ment of cheap labor, transferring US-like working conditions to MNCs inLDCs and DCs could hurt such coun-tries. For example, improved work-ing conditions would increase thecost of labor, thereby necessitatingthe MNC’s immediate change to capi-tal-intensive instead of labor-inten-sive means of production in order toreduce costs.61 Unfortunately, itseems that the quality of theemployee’s life is not valued in finan-cial terms because such value is in-herently unquantifiable, and onlyquantifiable costs and benefits factorinto business decisions.

NGOs-Toward a UniversalisticHuman Rights Perspective

There are numerous non-govern-mental, non-profit organizationsworking to improve the working livesof others and a discussion of each oneis beyond the scope of this paper.However, there are a few notable or-ganizations. For example, theRugmark Foundation holds agree-ments with certain rug manufactur-ers, providing “incentives to manu-facturers of hand-knotted carpetsand … certification of carpets so thatbuyers can avoid merchandise madeby children under [fourteen].”62 Fur-ther, in response to the criticism ofMNC activities during the 1960s and1970s, some developed nationsformed the Organization for Eco-nomic Cooperation and Development(OECD) Guidelines for MultinationalEnterprises.63 However, not only arethe ‘rules’ merely guidelines, but theenforcement mechanism is weak,since dispute resolution merely re-sults in clarifying the same non-obligatory guidelines.64

Past Trends In Decisionand Their ConditioningFactorsWTO/GATT History

The General Agreement on Tariffsand Trade “[GATT] system [ ] devel-

4

oped through a series of trade nego-tiations, or rounds,”65 the first ofwhich occurred in 1947. The WorldTrade Organization (“WTO”) did notform until 1995,66 as a result of theUruguay Round.67 After the WTO’sestablishment, the GATT agreementessentially merged into the WTOagreements, which includes the Gen-eral Agreement on Trade in Servicesand Trade-Related Aspects of Intel-lectual Property.68

More than 140 countries are cur-rently members69 of the WTO.70

Among its duties, the WTO is respon-sible for administering the tradeagreements, overseeing trade nego-tiations, settling trade disputes,71

and reviewing national trade poli-cies.72

At the beginning of the WTO/GATT system, the high tariffs exist-ing at the time helped prompt theneed for the GATT. In fact, the pas-sage of the Smoot-Hawley Act of1930, protected “domestic producersby safeguarding the home market fortheir goods by erecting tariff walls toimports[.]”73 This act helped cause “asharp decline in the US share of in-ternational trade from 13.8% in 1929to 9.9% in 1933.”74 To address thisproblem, the first round of negotia-tions which resulted in the GeneralAgreement on Tariffs and Trade in1947 focused almost exclusively onreducing tariffs.75 Currently, the fourguiding principles of the WTO/GATTare:

(1) the unconditional most-favorednation obligation that prohibitsWTO Members from discriminat-ing against or giving preferences toany other Member, regardless ofwhether the latter has made anytrade concessions to the former; (2)the national treatment obligationwhich requires that imports betreated the same as the domesticlike product insofar as taxes andother domestic regulations are con-cerned; (2) binding commitments toreduce tariffs on imports; and (4)the elimination of quotas on im-ports.76

The treaty also includes special pro-visions for developing countries, per-mitting trade actions which contra-

dict these promulgations of GATT.77

In spite of this concession, the WTO’sstated goal “is to help producers ofgoods and services, exporters, andimporters, conduct their business.”78

The problem is that one means ofproduction, laborers, are excludedfrom this stated goal. This omissionis also apparent in the investmentreport(s), discussion paper(s), etc. is-sued by the WTO.79 Critics argue thatthis omission is intentional.

Exporting U.S. lessons in Favor-able Labor Conditions

The labor conditions of less-devel-oped and developing countries arecondemnable, but not novel. In fact,these same conditions once formedthe backbone of everyday workinglife in newly industrialized America;long working hours for adults minusovertime, vacation pay, sick leave,health benefits, worker’s compensa-tion and restrictions on child laborwere the norm. It was not until theformation of unions that safety stan-dards and minimum wage standardswere implemented.80

Key legislation, in turn, such asthe National Industrial RecoveryAct of 1933, the Wagner Act of1935, the Fair Labor Standards Actof 1938, the Occupational Safetyand Health Act, and Title VII of theCivil Rights Act of 1964 aided theformation and strength of theseunions.81 Therefore, America’s his-torical example suggests that apro-labor legal structure is neces-sary to promote and enforce nego-tiations between unions and indus-try. Indeed, it would be difficult toimagine how American labor rightscould have been enforced withoutthe intervention of the federal gov-ernment generally and the Na-tional Labor Relations Board inparticular.

Relatedly, the recognition byAmerican unions and NGOs of the‘sweatshop’ issue could only emergefrom comparison to American laborstandards. However, such recogni-tion is neither paternalistic nor im-perialistic. Rather, it is humanitarianin nature.82 As such, it is part andparcel of a larger movement con-cerned with improving the lives ofall. In addition, the InternationalLabor Organization has worked formany years to promote labor rightsin the international arena.

The ILOThe International Labor Organi-

zation83 (“ILO”), formed in 1919,84

predates the United Nations. TheILO structure is tripartite, with de-cisions made by a committee com-posed of representatives from labor,management and government.85 Theprincipal work of the ILO consists ofconventions, which nation-statesadopt individually.86 Such adoptionmandates that the adopting nation-state submit regular reports87 to theILO, delineating steps taken to effec-tuate the adopted convention.88

To date, forty-three nation-stateshave adopted all of the fundamentalconventions, such as: the Conventionon Forced Labour, the Convention onFreedom of Association, the Conven-tion on Discrimination, the Conven-tion on Child Labour, etc.89 Due to theILO’s pro-labor stance, every ILOconvention is important and shouldbe adopted universally. However, adiscussion of each convention is be-yond the scope of this paper. There-fore, only some of the key conven-tions merit mention.

First, articles 2, 3 and 4 of TheFreedom of Association and Protec-tion of the Right to Organise Conven-tion binds the adopting members toallow the formation of ‘associations’generally and negates the adoptinggovernments from creating legal hin-drances to the creation of such enti-ties.90 Articles 1 and 2 of The Rightto Organise and Collective Bargain-ing Convention, 1950 delineates theright to form unions explicitly whileprotecting both the union and unionmembers after such formation.

The Minimum Age Convention,1973 protects children by requiringthat adopting nation-states set aminimum working age of “not lessthan 15 years” for developed coun-tries and age fourteen for LDCs/DCs.91 The convention also stipulatesthat such employment should notendanger the child’s health nor inter-fere with the child’s education or vo-cational training.92

However, in spite of the reportingrequirement, the enforcementmechanism is weak.93 The ILO can-not impose penalties upon a non-complying nation-state.94 Despitethis limitation, the only defense in in-ternational law to the obligation toobey customary law is that of persis-tent objection to the law in question,


5

and adoption of the ILO conventionsnegates the efficacy of raising this de-fense. The United States’ failure toadopt most of the ILO conventions isdue to their argument that suchadoptions are unnecessary becauseU.S. domestic law already guaran-tees such rights to their citizenry andthat the conventions “raise signifi-cant problems under a federal formof government.”95 Therefore, the US’slack of adoption is not based on ob-jection to the principles ipso facto.

RecommendationsThere is more than one avenue for

resolving the labor problem. Ideally,all three resolutions delineated be-low should be adopted. The first op-tion is to add a harmonized clauseaddressing labor within the GATT.The second option is for the UnitedStates to adopt all the fundamentalconventions of the ILO. A last optionis for MNCs to create individual Cor-porate Codes of Conduct reflectingthe core rights of the fundamentalconventions of the ILO. Each optionwill be discussed further.

Harmonization of Labor Stan-dards within NAFTA/GATT

In the next round of negotiations,a new set of provisions should beadded which ties the major GATTbenefits of most-favoured nation, na-tional treatment, tariff and quota re-duction to the laborer conditions96 ofeach member country. Such laborconditions would reflect the promul-gations set forth in the ILO’s funda-mental conventions discussed previ-ously. This new section would betermed, the “Anti-Social Dumping”code, modeled on GATT’s currentAnti-Dumping Code; the Anti-SocialDumping Code would effectively pre-vent MNCs from seeking lower work-ing conditions in host countries.97

Under this proposed clause,98 a mem-ber country which failed to adhere tothese proposed basic labor standardswould suffer by suspension of GATTbenefits. Further, such provisioncould not be negated by the develop-ment status of the affected country.99

Of course, the affected country wouldnot be without recourse, since itcould bring its cause before the Dis-pute Settlement Body.100 Incorpora-tion of such a clause within the GATTframework should not be abandoned,but should be actively pursued.

Conventions and CodesIt is further recommended that

the United States formally adopt theILO’s fundamental conventions,thereby publicly acknowledging itsacceptance of these basic standards.Such adoption would help pressureMNCs into developing CorporateCodes of Conduct which reflect theprinciples of the fundamental con-ventions. These actions would attractpublic scrutiny through the media. Inthis way, an MNC would be publiclypressured to conform to these stan-dards or risk negative publicity.

ConclusionIn conclusion, the rally cries heard

and seen during recent protests havesince died out, but the ‘sweatshop’issue has not. Some MNCs continueto profit from the exploitation of la-borers in LDCs/DCs. These condi-tions are more than simply harmfulto the particular laborers involved.On a macroeconomic level, their con-tinuance hinders the developmentalprogress of the LDCs/DCs. Addition-ally, the WTO’s failure to address thisissue within the GATT frameworkacts as a seal of approval upon suchactions. Further, the ILO’s weak en-forcement mechanism cannot cur-rently overcome this failure. How-ever, both bodies offer the greatesthope for resolving the problem. Tothis end, the recommendations aboveshould be adopted. Such adoption,reflecting the interaction betweenMNCs, international organizations,host country governments, theUnited States and NGOs wouldlikely snowball into a pro-labormovement, improving the lives andfuture of our under-developed neigh-bors.

Endnotes1 Shaun Troetel, et. al., Dozens Arrested

at World Economic Forum Protests (visitedJune 11, 2002) http://www.cnn.com/2002 /US/02/02/world.forum/index.html.

2 HUMAN RIGHTS, NEW PERSPECTIVES, NEW

REALITIES 210-11 (Adamantia Pollis & PeterSchwab, eds., 2000).

3 Shaun Troetel, et. al., Dozens Arrestedat World Economic Forum Protests (visitedJune 11, 2002) http://www.cnn.com/2002 /US/02/02/world.forum/index.html.

4 HUMAN RIGHTS, NEW PERSPECTIVES, NEW

REALITIES (Adamantia Pollis & Peter Schwab,eds., 2000). One definition of globalization is:“the emergence of a world economy in whichinternational financial transactions; stock,bond, and futures markets exchanges; andcurrency mobility are supplemented by a

worldwide labor market and global productionfacilities.” Id. at 257 (emphasis added).

5 Authorities vary upon the distinctionbetween multinational and transnational cor-porations. See RESEARCH AND POLICY COMMIT-TEE, COMMITTEE FOR ECONOMIC DEVELOPMENT,TRANSNATIONAL CORPORATIONS AND DEVELOPING

COUNTRIES 15 (Committee for Economic Devel-opment, 1981) (stating that only the latterrefers to entities with a parent in one countryand subsidiaries in foreign countries. For thepurposes of this paper, both terms will be as-sumed to define the same entity). But see A.LEROY BENNETT, HISTORICAL DICTIONARY of theUNITED NATIONS (1995) stating that the UnitedNations also prefers usuage of “transnationalcorporation” to denote multinational corpora-tion as defined in this paper. Id. at 122.

6 EDMUND JAN OSMANCZYK, THE

ENCYLOPEDIA OF THE UNITED NATIONS AND INTER-NATIONAL RELATIONS, (2nd ed. 1990) (also knownas World Corporation, Global Corporation, In-ternational Corporation, Multinational Com-pany and Transnational Corporation, Multi-national Enterprise, TransnationalEnterprise).

7 Glossary database, at http://dragon.acadiau.ca/-dagora/HRlP/Glossary/mnc2.htm 4 Id. at http://dragon.acadiau.ca/-dagora/HRlP/Glossary/mnc2.htm (thisinternet database glossary offers a definitionof the entity superior to that available in mostdictionaries or encyclopedias).

8 Id. at http://dragon.acadiau.ca/~dagora/HRIP/Glossary/mnc2.htm.

9 RESEARCH AND POLICY COMMITTEE, COM-MITTEE FOR ECONOMIC DEVELOPMENT,TRANSNATIONAL CORPORATIONS AND DEVELOPING

COUNTRIES 14 (Committee for Economic Devel-opment, 1981).

10 Id at http://dragon.acadiau.ca/-dagora/HRlP/Glossary/mnc2.htm.

11 For the purposes of acronym reduction,the term “MNC” will be used to denote “USMNC” throughout this paper.

12 Occupational Safety and Health Act.13 Matthew C. Bazzano, Child Labor:

What the United States and its Corporationscan do to Eliminate its Use, 18 HAMLINE J. PUB.L. & POL’Y 200, 201 (1996).

14 Joan M. Smith, North American FreeTrade and the Exploitation of Working Chil-dren, 4 TEMP. POL. & CIV. RTS. L. REV. 57, 63(1994).

15 Matthew C. Bazzano, Child Labor:What the United States and its Corporationscan do to Eliminate its Use, 18 HAMLINE J. PUB.L. & POL’Y 200, 203 (1996).

16 Christopher M. Kern, Child Labor: TheInternational Law and Corporate Impact, 27SYRACUSE J. INT’L L. & COM. 177, 177 & n. 4,n.5 (2000) citing International Labour Orga-nization, Child Labor: Targeting the Intoler-able 7 (1996) & Bureau of Int’l Labor, U.S.Dept. of Labor, By the Sweat and Toil of Chil-dren: The Use of Child Labor in AmericanImports 2 (1994).

17 Matthew C. Bazzano, Child Labor:What the United States and its Corporationscan do to Eliminate its Use, 18 HAMLINE J. PUB.L. & POL’Y 200, 206- (1996).

18 See Joan M. Smith, North AmericanFree Trade and the Exploitation of WorkingChildren, 4 TEMP. POL. & CIV. RTS. L. REV. 57,106-07 (1994) stating that “[i]n México, anunderage worker was killed in a glass-crush-ing machine in a widely publicized industrial

continued...

6

accident at a subsidiary of United States Cor-poration.” Id. at 106-07.

19 Matthew C. Bazzano, Child Labor:What the United States and its Corporationscan do to Eliminate its Use, 18 HAMLINE J. PUB.L. & POL’Y 200, 203, 206-07 (1996).20 See Dorsati Madani, A Review of the Roleand Impact of Export Processing Zones athttp: //ideas.uqam .ca/ideas/data/Papers/wopwobaie2238.html.

21 Id. at http://ideas.uqam.ca/ideas/data/Papers/wopwobaie2238.html.

22 National Labor Committee in Supportof Worker and Human Rights, Wal-Mart’sShirts of Misery at http://www.nlcnet.org/WALMART/bangwal.html.

23 Id. at http://www.nlcnet.org/WALMART/bangwal.html.



26 Id. at http://www.nlcnet.or g/WALMART/bangwal.html.

27 The slogan was part of a past advertis-ing campaign of NIKE, Incorporated (empha-sis added).

28 See United Nations Centre onTransnational Corporations, World Invest-ment Report 2000: Cross-border Mergers andAcquisitions, UNCTAC/WIR/2000 (2000),stating that in 1998, Wal-Mart ranked four-teenth among the top 100 MNCs based in de-veloped countries in terms of foreign assetsheld.

29 Timothy Connor, Like Cutting BambooNike and Indonesian Workers’ Rights to Free-dom of Association (September 2000) at http://www .caa.org.au/campaigns/nike/associa-tion/report.html (The author interviewedworkers from three NIKE factories in Indo-nesia as part of his research for a Ph.D thesissupervised by the University of Newcastle,Australia). Id. at http:/ /www .caa.org.au/cam-paigns/nike/association/report.html 23; Seealso Christopher L. Erickson, The AmericanExperience with Labor Standards and TradeAgreements, 3 J. SMALL & EMERGING BUS. L.41 (1999) (notes that Disney, The Gap andcelebrity Kathie Lee Gifford have also beenexposed for profiting from sweatshop labor).

30 See Ana T. Romero, Export ProcessingZones: Addressing the Social and Labour Is-sues 4 (1995) (stating that as of December1994, Indonesia employed 95,000 workerswithin 145 enterprises located in its only EPZ.Id. at 28. (pagination my own), (this unpub-lished unpaginated paper was prepared forinclusion in the 1996 World Labour Report ofthe International Labour Organization. Inspite of the fact that the report never materi-alized, parts of the paper were used by theILO in its public relations efforts for its pub-lication, Tripartite Declaration of PrinciplesConcerning Multinational Enterprises andSocial Policy in EPZs. Id. at n.1.

31 Timothy Connor, Like Cutting BambooNike and Indonesian Workers’ Rights to Free-dom of Association (September 2000) at http://www .caa.org.au/campaigns/nike/association/report.html.

32 Id. at http://www .caa.org.au/cam-paigns/nike/association/report.html.

33 Id.34 See Ana T. Romero, Export Processing

Zones: Addressing the Social and Labour Is-sues 16 (1995) (unpublished unpaginated pa-per) (pagination my own).

35 Nike introduces New Code of Conduct(March 1997) at http:/ /www .caa.org.au/cam-paigns/nike/codes.html.

36 See Lisa G. Baltazar, GovernmentSanctions and Private Initiatives: Striking aNew Balance for U.S. Enforcement of Inter-nationally-Recognized Workers’ Rights, 29COLUM. HUM. RTS. L. REV. 687, 718 (1998) dis-cussing other MNCs’ internally-imposed codesof conduct and the need for an external moni-toring system for compliance therewith. Id. at718-21.

37 Community Aid Abroad Australia, Nikeintroduces new Code of Conduct (March 1997)at http:/ /www .caa.org.au/campaigns/nike/codes.html.

38 Id. at http://www .caa.org.au/cam-paigns/nike/codes.html.

39 Andrew K. Sutzman, Our Eroding In-dustrial Base: U.S. Labor Laws Comparedwith Labor Laws of Less Developed Nationsin Light of the Global Economy, 12 DICK. J.INT’L L. 135, 153 (1994).

40 Id. at 153.41 INSTITUTE FOR INTERNATIONAL ECONOMICS,

THE WTO AFTER SEATTLE, (Jeffrey J. Schott,ed. 2000).

42 Timothy Connor, Like Cutting BambooNike and Indonesian Workers ‘ Rights to Free-dom of Association (September 2000) at http://www.caa.org.au/campaigns/nike/association/report.html.

43 Id. at http:/ /www .caa.org.au/cam-paigns/nike/association/report.html.

44 Community Aid Abroad Australia, Nikeintroduces new Code of Conduct (March 1997)at http:/ /www .caa.org.au/campaigns/nike/codes.html.

45 Timothy Connor, Like Cutting BambooNike and Indonesian Workers ‘ Rights to Free-dom of Association (September 2000) at http://www.caa.org.au/campaigns/nike/association/report.html.

46 Ana T. Romero, Export ProcessingZones: Addressing the Social and Labour Is-sues 4 (1995) (unpublished unpaginated pa-per), (pagination my own).

47 Id. at 4-5. (pagination my own).48 Lisa G. Baltazar, Government Sanc-

tions and Private Initiatives: Striking a NewBalance for U.S. Enforcement of Internation-ally-Recognized Worker’s Rights, 29 COLUM.HUM. RTS. L. REV. 687, 695 (1998), For ex-ample, in relation to the Bangkok Declarationof the 1993 World Conference on HumanRights, Indonesia publicly declared theprioritization of “economic development overpolitical and civil rights and the need for in-ternational standards to be interpreted ac-cording to the culture, political system andlevel of economic development of particularcountries.” (emphasis added). Id.

49 Susan Tiefenbrun, Free Trade and Pro-tectionism: The Semiotics of Seattle, 17 ARIZ.L. REV. 257, 260 (2000).

50 Id. at 260-61.51 FRANK LONG, RESTRICTIVE BUSINESS PRAC-

TICES TRANSNATIONAL CORPORATIONS AND DEVEL-OPMENT: A SURVEY, 60 & n. 64 (M. Nijhoff 1981)

citing G.K.Helleiner, Manufactured Exportsfrom Less-Developed Countries and Multina-tional Firms, ECONOMIC JOURNAL, March 1973.

52 See Ana T. Romero, Export ProcessingZones: Addressing the Social and Labour Is-sues 11 (1995) (unpublished unpaginated pa-per) (stating that textiles and electronics em-ploy almost 96% of all EPZ workersworldwide, except for México and Togo). Id.at 11 (pagination my own).

53 FRANK LONG, RESTRICTIVE BUSINESS PRAC-TICES TRANSNATIONAL CORPORATIONS AND DEVEL-OPMENT: A SURVEY, 60 (M. Nijhoff 1981).

54 THE INTERNATIONAL DIVISION OF LABOUR

AND MULTINATIONAL COMPANIES: A SYMPOSIUM

ORGANISED BY THE EUROPEAN CENTRE FOR STUDY

AND INFORMATION ON MULTINATIONAL CORPORA-TIONS 79 (John Robinson & P.K.M. Tharakan,eds, Gower, 1981).

55 See http://www.ca-bc.com/zip_international/affecting_laws.html (used inter-changeably with the term ‘Free Trade Zones’in Honduras).

56 See Honduran EPZ website at http://w w w . c a - b c . c o m / z i p _ i n t e r n a t i o n a l /affecting_laws.html. See also India’s FaltaEPZ website boasting of overall 5.24% wageas a percentage of total export cost at http://www.fepz.com/glance.html.

57 Id. at 23. (the paper discusses thetheory in footnote 101 in the context of for-eign direct investment generally which in-cludes more than EPZ manufacturing, but isstill applicable to our overall analysis).

58 Id. at 23-24.59 Id. at 27.60 Id.61 See FRANK LONG, RESTRICTIVE BUSINESS

PRACTICES TRANSNATIONAL CORPORATIONS AND

DEVELOPMENT: A SURVEY, 104 (M. Nijhoff 1981),discussing the dispute between labor-inten-sive versus capital-intensive means of produc-tion in developing countries within the con-text of oligiopostic MNC’s operating in samesaid countries. Id. at 104.

62 Joan Louise Nix, Governments, NGOsWork to Reduce Child Labor, at http://www.citechco.net/usdhaka/usis/cljan26.htm.

63 Id. at 95.64 Id. at 95.65 The WTO in Brief: Part I, The Multi-

lateral Trading System-Past, Present andFuture at http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr01_e.

66 Cristina Baez, et. al, MultinationalEnterprises and Human Rights, 8 UNIV. MI-AMI INT’L & COMP. L. REV. 183, 195 (1999/2000).

67 The WTO in Brief: Part I, The Multi-lateral Trading System-Past, Present andFuture at http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr01_e.

68 Id. at 196.69 See Susan Tiefenbrun, Free Trade and

Protectionism: The Semiotics of Seattle, 17ARIZ. L.REV. 257, 277 & n. 153, n. 154 (2000)notes that “[t]wenty-nine of the world’s forty-eight least developed countries are WTOmembers. Although these nations do not en-gage in much international trading, member-ship in the world body assures the developingnations that wealthier nations will not treatthem less favorably than any other memberbody. They also receive benefits that wealthiercountries do not receive, including exemptionsfrom many WTO provisions, zero tariffs, tech-nical expertise, and technical assistance.” Id.


7

at 277.70 The WTO in Brief, WTO homepage at

h t t p : / / w w w . w t o . o r g / e n g l i s h /thewto_whatis_e/inbrief_e/inbr02_e.

71 JOHN H. JACKSON, ET. AL., 1995 DOCU-MENTS SUPPLEMENT to LEGAL PROBLEMS OF INTER-NATIONAL ECONOMIC RELATIONS iv (West Pub-lishing 3rd ed. 1995) (includes the functionsof the WTO from the Agreement establishingthe organization).

72 The WTO in Brief, WTO homepage athttp://www.wto.org/english/thewto_whatis_e/inbrief_e/inbr02_e.

73 The Transnational Political Econ-omy:A Framework for Analysis at http://www.jus.uio.no/lm/the.transnational.p o l i t i c a l . e c o n o m y . a . f r a m e w o r k .for.analysis.jarrod. citing to E.E. SCHATT-SCHNEIDER, POLITICS, PRESSURE, AND THE TARIFF:A STUDY IN FREE PRIVATE ENTERPRISE IN PRES-SURE POLITICS, AS SHOWN IN THE 1929-1930 RE-VISION OF THE TARIFF (Prentice-Hall, 1935) andCHARLES KINDLEBERGER, THE WORLD IN DEPRES-SION, 1929-1939 (Allen Lane and PenguinPress, 1973), (emphasis added).

74 Id. at http://www.jus.uio.no/lm/the . t ransnat i ona l .po l i t i ca l . e conomy .a.framework. for.analysis.jarrod.

75 Id. at http://www.jus.uio.no/lm/the.transnational.political.economy.a. framework.or.analysis.jarrod.

76 RAJ BHALA & KEVIN KENNEDY, WORLD

TRADE LAW, THE GATT-WTO SYSTEM, REGIONAL

ARRANGEMENTS, AND U.S. LAW 4 (Lexis LawPublishing, 1998).

77 Id. at 399.78 The WTO in Brief, WTO homepage at

http://www.wto.org/english/thewto_whatis _e/(emphasis added).

79 See generally The World Trade Orga-nization website at http://www.wto.org.

80 Terry Collingsworth, American LaborPolicy and the International Economy: Clari-fying Policies and Interests, 31 B.C. L. REV.31, 37-41 (1990).

81 Id. at 38-42.82 Id. at 55.83 See Lisa G. Baltazar, Government

Sanctions and Private Initiatives: Striking aNew Balance for U.S. Enforcement of Inter-nationally-Recognized Workers’ Rights, 29COLUM. HUM. RTS. L. REV. 687, 697-98, n. 49& n. 50 (1998) (stating that “[w]hile aggrievedworkers and unions may rely upon these in-ternational conventions [referring to the In-ternational Convenant on Economic, Socialand Cultural Rights and the InternationalCovenant on Civil and Political Rights] as abasis for a claim of a human rights violation,the [ ] labor provisions [of the covenants] serveprimarily as statements of principle and havelittle effect for aggrieved workers who have alabor rights claim. Instead, workers and tradeunions are likely to bring specific labor rightsclaims before the ILO”) citing to Lance Compa& Tashia Hinchliffe-Darricarrere, EnforcingInternational Labor Rights through CorporateCodes of Conduct, 33 COLUM. J. TRANSNAT’L L.663, 665 (1995). Id. at 697-98.

84 Joan M. Smith, North American FreeTrade and the Exploitation of Working Chil-dren, 4 TEMP. POL. & CIV. RTS. L. REV. 57, 92(1994).

85 Christopher L. Erickson & Daniel J.B.Mitchell, The American Experience with La-bor Standards and Trade Agreements, 3 J.

SMALL & EMERGING BUS. L. 41, 47 (1999).86 See generally Ratifications of the ILO

Fundamental Conventions (as of April 15,2001) at http://www.webfusion.ilo.org/pub-lic/db/stan..normes/appl/appl-ratif8conv.cfm?Lang for list of ratifications by adoptingnation-state and convention.

87 Handbook of Procedures Relating toInternational Labor Standards, available athttp://www.ilo.org/public/english/standards/norm/sources/handbook/hb5 note: reportsfrom each adopting country are required ateither first, second, or fifth year followingadoption of relevant convention in addition tonon-periodic reports on application of adoptedconvention. Id. at http://www.ilo.org/public/english/standards/norm/sources/hand-book/hb5http://www.ilo .org/public/english/standards/norm/sources/hand-book/hb5.

88 Explaination of the Regular System ofSupervision, International Labor Standards,at http://www.ilo.org/public/english/stan-dards/norm/enforced/supervis/regsys2.

89 Ratifications of the ILO FundamentalConventions (as of April 15, 2001) at http://w w w . w e b f u s i o n . i l o . o r g / p u b l i c / d b /s tan . .normes/app l/app l - ra t i f 8 conv .cfm?Lang.

90 Freedom of Association and Protectionof the Right to Organise Convention, 1948,July 9, 1948, art. 2, 3, 4, ILOLEX.

91 Minimum Age Convention, 1973, June26, 1973, art. 2, para. 3, 4, ILOLEX

92 Id. at art. 7, para(s) 1(a), (b).93 Christopher L. Erickson, The American

Experience with Labor Standards and TradeAgreements, 3 J. SMALL & EMERGING BUS. L.41, 48 (1999).

94 Id. at 48-49.95 See Joan M. Smith, North American

Free Trade and the Exploitation of WorkingChildren, 4 TEMP. POL. & CIV. RTS. L. REV. 57,92-93 (1994), stating that although the UnitedStates “withdrew its membership [from theILO] from 1977 to 1980,” the country is still amember. Id. at 92.

96 See Christopher L. Erickson, TheAmerican Experience with Labor Standardsand Trade Agreements, 3 J. SMALL & EMERG-ING BUS. L. 41 (1999) (stating that “[t]he origi-nal General Agreement on Tariffs and Trade[ ] permitted countries to restrict importsmade by prison labor, but was otherwise si-lent on labor standards”). Id. at 56; See alsoSarah H. Cleveland, Norm Internalizationand U.S. Economic Sanctions, 26 YALE J. INT’LL. 1, (2001) (stating that “…multilateral ef-forts to use international trade to encouragecompliance with labor and human rightsnorms have been consistently rejected by de-veloping countries, which criticize such effortsas protectionist and imperialist.”) Id. at 3.

97 JOHN H. JACKSON, ET. AL.., 1995 DOCU-MENTS SUPPLEMENT TO LEGAL PROBLEMS OF IN-

TERNATIONAL ECONOMIC RELATIONS 174 (WestPublishing, 3rd ed., 1995) (includes the currentAnti-Dumping Definition from Item 9 of theAgreement on Implementation of Article VIof the GATT)Article 2Determination of Dumping1.1 For the purpose of this Agreement, a prod-

uct is to be considered as being dumped,i.e. introduced into the commerce of an-other country at less than its normalvalue, if the export price of the productexported from one country to another isless than the comparable price, in the or-dinary course of trade, for the like prod-uct when destined for consumption in theexporting country).

98 See Katherine Van Wezel Stone, To theYukon and Beyond: Local Laborers in a Glo-bal Labor Market, 3 J. SMALL & EMERGING BUS.L. 93, 105 (1999) inclusion of a labor rightsclause was attempted at the 1996 WTO Min-isterial Conference in Singapore; the articlediscusses the resistance to such a clause bythe MNCs and the developing countries, thelatter fearing that such a clause was merelya guise for protectionism. Id. at 105.

99 RAJ BHALA & KEVIN KENNEDY, WORLD

TRADE LAW, THE GATT-WTO SYSTEM, REGIONAL

ARRANGEMENTS, AND U.S. LAW 433-34 (LexisLaw Publishing, 1998), discusses the loopholethrough which the anti-dumping provisioncan be held inapplicable to developing coun-tries such that the dumping margin could beset higher than that for developed countries.

100 See generally JAMES F. SMITH, INTERNA-TIONAL ECONOMICS LAW, THE WORLD TRADE OR-GANIZATION AND THE NAFTA 73-74 (Universityof Houston, 1999) citing to selected rea JOHN

H. JACKSON, ET. AL., LEGAL PROBLEMS OF INTER-NATIONAL RELATIONS (West Publishing, 3rd ed.,1995) which describes the Dispute SettlementBody as having “the sole authority to estab-lish panels, adopt panel and appellate reports,maintain surveillance of implementation ofrulings and recommendations, and authorizeretaliatory measures in cases of non-imple-mentation of recommendations.” Id. at 73-74;See also JOHN H. JACKSON, ET. AL., 1995 DOCU-MENTS SUPPLEMENT TO LEGAL PROBLEMS OF IN-TERNATIONAL ECONOMIC RELATIONS iv (West Pub-lishing, 3rd ed., 1995) describing and includingthe applicable sections relating to DisputeSettlement as WTO, articles III:3, IV:3,GATT, articles XXII-XXIII, Item 18, and Item33. Id. at iv.

Dolores Calderón López graduatedfrom St. Thomas University LawSchool in Miami, FL in May of 2001.Currently, she is serving as a judicialclerk to two administrative law judges.She sat for the bar in July 2002.

SACCANI LEGAL AND BUSINESS TRANSLATIONS

Zel R. Saccani, J.D.

1172 South Dixie Hwy. PMB 473 Tel: (305) 860-1462Coral Gables, FL 33146 Fax: (305) [email protected] Http://www.zeltran.com

8

Child Status Protection Law &Employment Based Petitions

by Larry S. Rifkin and Mayra L. Gonzalez

The on-going enactment of Con-gressional laws and INS regulationshas brought about some welcomechanges in immigration law, espe-cially in regard to “child” beneficia-ries. For years, child beneficiariessaw their child status dissipate dueto backlogs in INS and other agen-cies such as the Department of La-bor. The recently enacted Child Sta-tus Protection Act of 2002 howeverseeks to rectify this problem by inessence prolonging the time that achild remains a “child” for immigra-tion purposes.

The CSPA is not an all-encompass-ing statute as it only protects se-lected beneficiaries, most notablychildren of American Citizens (Sec-tion 2) and children of asylum appli-cants (Section 4).

However, the statute is more in-clusive than originally thought. Sec-tion 3 of the CSPA impacts anotherpotentially large group of child ben-eficiaries—derivative applicants ofemployment-based petitions.1 Sec-tion 3 of the CSPA seeks to protectderivative children of employment-based petitions such as labor certifi-cations and EB applicants. Unlikethe more lucid instructions underSections 2 & 4, the guidelines for de-termining child status under Section3 have proved complex, confusing,and unpredictable. In fact, the StateDepartment-issued guidance andprocedures have acknowledged theunclear nature of Section 3 by stat-ing that the language is “extremelycomplicated” and adding that refine-ments in interpretation with addi-tional guidance will be forthcomingas needed. In addition, the State De-partment guidance & procedures in-struct posts to seek Advisory Opin-ions on cases falling within thisSection.

In the interim, practitioners mustparse through the language of Sec-tion 3 and abstract from it one of themany possible interpretations inhopes that it will eventually be sub-stantiated by the forthcoming inter-pretations and/or litigation.

Various factors lend to the confu-sion of Section 3, most notably thecircuitous language. In addition tothe somewhat convoluted languageof the Section, more confusing is therecently enacted INS interim regula-tion allowing for concurrent filing ofI-140 Petitions for ImmigrantWorker and I-485 Adjustment of Sta-tus applications. It would indeed ap-pear that Section 3 of the CSPA andthe interim regulations were writtenindependently of each other. Thisarticle seeks to briefly highlight thequestions arising from Section 3 ofthe CSPA and also the interplay be-tween Section 3 of the CSPA withconcurrent I-140/I-485 filing regula-tions.

Section 3 of the CSPA providesthat the age of an alien will be deter-mined on “…. the date on which animmigrant visa number becomesavailable for such alien….(or for thealien’s parent), but only if the alienhas sought to acquire the status of analien lawfully admitted for perma-nent residence within one year ofsuch availability, REDUCED by thenumber of days in the period duringwhich the applicable petition... waspending.” [emphasis added].

If however under Section 3 thechild beneficiary is determined to be21 or over the petition will automati-cally be converted to the appropriatecategory and the alien will be able toretain the original priority date is-sued upon receipt of the original pe-tition. The priority date on employ-ment based cases needing laborcertification would of course be thedate the labor certification was filed.

Immigrant Visa NumberBecomes Available

Although there are tenable inter-pretations as to when an immigrantvisa number becomes available, theDepartment of State interpretationsremoved some of the conjecture bydefining visa availability to requireboth a “current priority date and anapproved petition”. For employment

based purposes this should mean thedate the I-140 is approved and thepriority date current. Assuming em-ployment priority dates remain cur-rent then this date will be the datethe I-140 is approved.

Once this date is determined thenext step is to reduce the number ofdays in which the petition was pend-ing. The petition in this case wouldappear to refer only to the I-140, thusin cases where labor certification isrequired this would not take into ac-count the amount of time, in someregions years, that the Labor Certi-fication Petition was stagnant in theState Employment Agencies and De-partment of Labor. Perhaps forth-coming guidelines will determinewhether the time “petition was pend-ing” only refers to the I-140 and notthe labor certification. To be true tothe Congressional intent however itwould appear that the time the laborcertification was pending should in-deed be taken into account, especiallyin light of the unprecedented amountof time these applications linger inState and Region queues.

If the child applicant was under 21at the time the I-140 was approved,and assuming the priority date wascurrent on that date, then the childapplicant freezes his age at that timeand thus does not run the risk of los-ing his/her child status. The formulawill come into play when the childturns 21 after the I-140 is filed—inthat scenario the applicant will haveto await the length of time the I-140is adjudicated in order to determinewhether he/she qualifies. Oddly itwould appear that the longer the I-140 has been pending the morechances the child beneficiary has ofretaining child status, even if by thattime the child is well into adulthood.

While the unpredictability ofwhether a child applicant will be ableto benefit from this new law mayprove somewhat frustrating, it is arelative improvement to the “age-out” notices affixed to applicationswhich stood little chance of beingnoticed to expedite their cases.

9

One notable discrepancy neitherthe statute nor the State Departmentguidelines address is the issue of con-sular processing for children who arenot in the United States to adjust. 22CFR 42.83 provides that visa avail-ability for consular purposes is notdetermined until an interview is ac-tually scheduled. In many cases theinterview is not scheduled untilyears after visa availability. Thiswould mean that the requirement offiling within one year of visa avail-ability will be an impossibility andwould disqualify the child applicantfrom the benefits of the CSPA.

Another issue that has not beenaddressed is what happens in thesituations where the priority datesregress. Will the child’s age be frozendespite this change or will this timebe taken into account to the benefitof the child applicant?

Acquire Status of AlienLawfully Admitted for PRw/I 1 yr of availability

One prong of Section 3 is relativelyclear, and that is that in order for thisstatute to apply applicants must ac-quire status within one year of visaavailability. The Department of Stateinterpretations defines this as thedate of visa application, as it relatesto employment based (as well as fam-ily-based) cases it would mean thedate the adjustment is filed via FormI-485. Now with the concurrent filingoption the risk of the 1-year lapsingis non-existent as long as the concur-rent filing method is utilized.

However, the problem of consularprocessing as previously mentionedwould need to be clarified as mostchild applicants would not be able to“acquire status” within the one yearlimitation imposed by the new lawdue to the administrative backlogs inconsular visa processing.

Application to PendingCases

According to the State Depart-ment interpretation the CSPA ap-plies only in the following 3 sce-narios:

1) cases where petition OR visaapplication was filed on or after Au-gust 6, 2002-therefore CSPA does notapply to an I-485 filed on August 5 orbefore.

2) cases where the petition was

filed prior to August 6, 2002 but wasstill pending on that date-any pend-ing I-140 should be protected.

3) cases where the I-140 was ap-proved prior to August 6, 2002, butonly if final determination has notbeen made on the adjustment of sta-tus or visa application.

The interpretations provide cer-tain scenarios as to when a final de-termination has been made on theparticular case. For example, a 221gdenial will not be considered a finaldetermination. One interesting inter-pretation is that if an applicant hada petition approved before August 6,2002 and had never applied for a visaprior to August 6 because they hadaged out, that applicant will not beable to receive the benefits of Section3. However, this appears to contra-dict with the requirement in Section8 that no final determination hasbeen made on the application for animmigrant visa or adjustment of sta-tus. A literal interpretation providesthat as long as the principal memberhas not filed an adjustment petitionand as long as the one-year timewithin which to apply has not lapsed,these applicants should still be ableto benefit from this section. The in-terpretations however do note thatthese guidelines are preliminary andcould change after further inter-agency discussions.

The interpretations do not addresscases in the court system, which havebeen administratively closed and assuch may not have a final determi-nation.

Congressional IntentAs the intent of the CSPA is to re-

move the harsh penalties inflicted onchildren and their families due to theadministrative backlogs it wouldseem appropriate that the date of thechild determination should be at thetime the I-140 is filed and the prior-ity date is current. However, this de-termination should take into accountthe time lost while waiting for thepriority date to be current (should inthe future employment based peti-tions not be current), and in caseswhere labor certification is requiredthe priority date should be the datethe application for alien employmentcertification is filed. This places theonus on the petitioner to timely fileand provides more predictability.

Regardless of the shortcomings of

Section 3, the CSPA is a great steptowards remedying an incongruenceof immigration law: Where familyunification is a key impetus for theshaping of immigration law, the ad-ministrative backlogs have proventhe most pervasive impediment tofamily unification, by leaving be-hind a key member of the family—the child.

Endnote:1 Although Section 3 also provides pro-

tection for derivative children in all familybased petitions this article will only deal withthe employment-based petitions.

Larry Rifkin is Managing Partnerof Rifkin & Fox-Isicoff, P.A. and prac-tices exclusively in the area of immi-gration and nationality law in Mi-ami, Florida. He is a graduate ofRutgers College (B.A. 1977) and PaceUniversity School of Law (J.D. 1980).He is Co-Chair of the Florida Bar Im-migration and Nationality Law Com-mittee and is past Chair of the FloridaBar International Law Section andAILA South Florida Chapter.

Mayra Gonzalez is an Associatewith the firm of Rifkin & Fox-Isicoff,P.A. and is a graduate of Universityof Illinois College of Law (J.D. 2000)and University of Miami School ofLaw (LLM 2001).

Audiotape Available

Practice & ProcedureBefore the Court ofInternational Trade

(Course No. 10391)

Maximum Credit:4 hours / Ethics Credit: 1 hour

International Law CertificationCredit: 4 hours

$50 + tax (section members) /$65 + tax (non-section members)

To order, callThe Florida Bar at

850/561-5633.

10

Once Again a Success for the 4th AnnualFlorida-Canada Forum…

The 4th Annual Florida Canada Forum held in Que-bec City and Montréal from September 13 to 16 wasindeed a resounding success. Congratulation to the or-ganizing committees from Quebec, Florida andVersailles (France) Bars and to the 22 speakers! Over100 professionals attended 3 days of world-quality semi-nars and workshops. The first part of the symposiumtook place in Quebec City and the second one inMontreal. All that was completed by unforgettable fun!

The seminar began in Quebec City in the marvelousChateau Frontenac. The International Law Section ofthe Florida Bar honored the Versailles and Quebec or-ganizers with plaques and appropriate gifts (see thephotograph). The morning conferences focused on thechallenge of advising financially troubled businessesand the afternoon workshops analyzed business ethicsin the wake of the Enron scandal. Speakers from Floridaincluded: Francis Carter, Benjamin S.W Leclercq,Thomas F. Morante, Thomas Raleigh and LuciusSmejda. It was a great opportunity for all participantsto make valuable contacts while expanding their knowl-edge.

Saturday (September 14th) was dedicated to a guidedtour of the beautiful Ile d’Orléans near Quebec City.First, participants went to “The Domain Steinbach” totaste some delicacies and wines. Then, a sumptuouslunch was set in a terrace in the heart of Ile d’Orléans.Participants enjoyed a very tasty brunch before visit-ing the Montmorency waterfalls. This tour combineddiscoveries in the lovely Quebec region and network-ing with French and Canadian legal professionals.

On Monday (September 16th) conferences took placein Montréal. The morning focused on the InternationalCivil Law Notary Practice both in the United-States and

in Canada. The conferences contained presentations inFrench and in English and emphasized applicable lawsand procedures comparing notarial practice in the USand in Canada.

The afternoon was a presentation of the Interna-tional Financial Center (IFC) of Montréal held at thefamous Saint James Club. The IFC offers certain spe-cial banking privileges as well as partial on-shore taxhaven status. Tax and corporate practitioners took de-tailed notes! Valuable insights and perspectives wereexchanged regarding the extent in which IFC could behelpful for international financial institutions.

The International Law Section through the organiz-ers of this event would like to thank all of the 22 speak-ers and all of the participants who made this seminar agreat success. We are currently planning the next ma-jor exchange program in Saint Petersburg, Russia, incollaboration with the International Notaries and theBars of Russia, France, Canada, Belgium and other Eu-ropean states in May 2003.

We invite you to visit our website to get additionalinformation www. russia-florida-forum.com or to con-tact the organizing chairmen:

Maxim I. IstominTel: (850) 222-5198e-mail: [email protected]

Lucius SmejdaTel: (305) 358-9995e-mail: [email protected]

At the Workshop on “when and how should the legal advisors intervene?From left to right: Me. Pierre Gagnon (Quebec), Me. Benjamin S.WLeclercq (Florida – South Carolina), Bâtonnier Jean-Michel Reynaud(Versailles), Me. Thomas F. Morante (Florida).

From left to right: Bâtonnière Lise Malouin, President of the QuebecBar, Me. Yann Le Guillou, French Lawyer, Me.Thomas F. Raleigh, Co-Chair (Florida), Me Anne Demers, Director of the Quebec Bar, Me.Frédéric Landon, President of the Versailles Bar, Me. RachelleJourneault, President of the International Law Commitee, Me. LuciusSmejda, Co-Chair (Florida).

11

IFTTA Updateby John Downes, President of IFFTA

The Next CongressI am determined to ensure that

the planning for this congress takesplace in plenty of time so that we canincrease the attendance rate of ourmembers and attract new people toour organisation.

The venue is the Principality ofMonaco and the proposed dates are1-4 May 2003. The proposed formatis as follows:

THURSDAY 1 MAY:Arrive in MonacoRegistrationBoard of Directors’ MeetingWelcome Reception (Hosted by the

Minister of Tourism)

FRIDAY 2 MAY:Joint Sessions with UFTAAThemes:• Travel Agents, IATA and the Air-

lines• Travel Agents Legislation and

Codes of Conduct from Around theWorld: Establishing Best Practice

• Travel Agents, Tour Operators andthe new General Agreement onTrade in Service

• Travel Agency Litigation World-wide

Dinner Hosted by the Minister forTourism

SATURDAY 3 MAY:IFTTA SessionsThemes:• An Israeli Perspective on Travel

Law Issues under the Peace Ac-cords

• Deregulation of Tourism Servicesand the Need for a Standard No-menclature in the Light of the newGATS Regime

• Strict Liability in Travel Law: Isit Still Justified?

• Legislative Frameworks for Tour-ism Ministries and National Tour-ist Organisations

• Travel Litigation Worldwide 2002-2003

• Travel Advisories and Travel In-surance. Post September 11th an“vicissitudes of life”, role of Gov-ernment d Bali: Force Majeure,the IFTTA AGM and Elections,IFTTA Annual Dinner

SUNDAY 4 MAY:Tour of Monaco, Nice and envi-ronsDeparture for post conference toursDeparture Home

These are put forward for yourcomments and suggestions. The spe-cific Israeli item is to allow colleaguesto respond, if they wish, to my paperin Hungary. It is not intended to limitpresentations on the abundance ofIsraeli travel jurisprudence on othermatters.

We (Nicoll and I) propose to offera conference package (I am nervousabout using such terms in the contextof the PT Directive and this sentenceis not to be construed as such an un-dertaking!!!!) which will include he-licopter transfer from Nice Airport toMonaco, hotel accommodation andthe conference fee (which will includelunch on Friday and Saturday, coffeeand biscuits and the conference din-ners). We hope that by being linkedwith the UFTAA meeting (they ex-pect 80 of their members) we willenjoy economies of scale.

2. The International TravelLaw Centre

I have developed my ideas on thismatter but will have to ask for yourpatience. My university is undergo-ing a radical reconfiguration at themoment and it is not at all clear whatthe role of law will be in the new lookBusiness School. I have raised a lotof money for the university, have con-tributed to its international profile,am a member of the Board of Gover-nors etc. I have been there for 20

years. It is possible that I may decideto move. It will be a difficult decision.I have been in Dundee for 27 yearsand have many attachments here butI am not entirely happy with what isbeing proposed. In view of that, if Ido decide to go, I want to take thetravel law centre with me and tohook for a university that would pro-vide the necessary support, research-ers and IT support. I am willing totravel beyond Scotland to do so. Ithink that the plan I have for the cen-tre is exciting and I am determinedto make it work.

I have discussed this with UFTAAand they are prepared to wait untilmatters are settled. In the interim, Ihave begun to supply them with ma-terials for their website. I expect thatall will be decided by the beginningof January.

3. The JournalGerry wants to get a new edition

out SOON. He still does not getenough material from members.Can I IMPLORE you, as Boardmembers to contribute an item tohim. It doesn’t have to be a longpiece. Even a note on recent casesor legislation would suffice. Per-haps addressing a theme (e.g. E-commerce and Travel Law in yourrespective jurisdictions). LikewiseI need material for the website. Ihave a whole host of UK materialfor Jason to put on the site and hewill do so soon, but I need shortitems or papers from you.

4. The Travel Law DisputeCentre

Larry has completed the firstcourse of training and it was ex-tremely successful. We need to takethis forward and I need your sugges-tions how. I would be most gratefulif Larry would put forward his pro-posal again so that we can expeditean agreement on IFTTA’s involve-ment.

12

TIAOJIE: China Amidst Changesby Kandel G. Eaton, Juris Doctor, Florida Coastal School of Law, 2001;

Certificate of Mediation, Indiana State University, 1999

The Clan MediationTradition

“Tiaojie,”1 translated as clan me-diation, has been a grass-roots tradi-tion in Chinese society for almost2600 years. Confucius (623-551 B.C.)taught that “li” embodied “five rela-tions”: ruler and subject, father andson, husband and wife, elder andyounger brother, and friend andfriend. “Li” was the basis for socialbehavior and the way Chinese ex-pressed their inner thoughts. He be-lieved that “there is a perfect har-mony between men and man andnature”.2

Based on these “guanxi,” relation-ships,3 the value of “jang” (yieldingor compromise) was the foundationof peace and social harmony.4 As timewent by, “jang” became the most com-mon identifiable characteristic of theChinese culture. There is an oppos-ing force of “li,” called “fa”. “Fa” is thesystem of laws and regulation whichcan impair harmony. As a dominantforce, private and individual rightsbecome secondary and creates con-flict and disharmony.5 The Chinesesay “it is better to die of starvationthan to become a thief; it is better tobe vexed to death than bring a law-suit.”6 This historically reflects theChinese fear of change and the legalattitude the Communists had to fightwith.

Tiaojie v. CommunismThe Chinese Communist Party

(CCP) overthrew Chiang Kai-shek in1949, after decades of politicalstruggle. Led by Chairman MaoZedong, “Communists have con-sciously opposed the use of [tiaojie].The old style was passive and yield-ing, the new style demands activ-ism.”7

Tiaojie was transformed in theSocialist transition of the fifties. Forthe first time codified as the Provi-sional General Rules for the Organi-zation, clan mediation became thePeople’s Mediation Committees(PMCs).8 Their main purpose under-mined “li.” PMCs were organized tocompensate for the lack of paid pa-

trolmen. Urban committees and ru-ral communes provided surveillanceand reduced the civil and minorcriminal case load. The “li” of “tiaojie”became the “fa” of the PMCs. Theywere held accountable by the localPeople’s Congress.9

“In China…the mediator is not…aneutral third person who…tries toserve…individual interests of theparties…she is an agent of societywho insists that harmony must bemaintained for the good of the socialorder …[and] what she thinks theyshould do to solve their dispute.”10

“Maoism proposes that conflictsnot be suppressed… disputants areencouraged to air their grievancesand register complaints…this edu-cates society as a whole and raisesconsciousness…a disruptive disputeis thus turned into a social good.”11

He waged a campaign to wipe out“tiaojie” by labeling it “unprincipledmediation.” Accusations of ignoringpolitics and favoring one party overthe other for whatever reason furtherdiminished its use.12 Centralizationof the party-state is the key focus.The “result” and “success” of a me-diation was made to be politicallycorrect. The richest citizenry usuallygot their way in the PMCs “prin-cipled” state-sponsored mediations.13

Maoism changed family struc-tures, from the ancient clans and lin-eage traditions to collectives, com-munes, and cadres. The citizenry hadno choice but to follow the CCP orsuffer at the hands of friends, fam-ily, and the military.14 “Tiaojie” andits traditions were forgotten and re-placed by the concepts of family andcommunity towards the good of theState. But the Rules that governedthe PMCs were not made to be en-forceable law.

Mao’s Cultural Revolution of 1966was an awakening to internationalrelations outside China. As PresidentNixon said to Chairman Mao in 1972:“Looking at the two great powers, theUnited States and China…we canfind common ground, despite our dif-ferences, to build a world structurein which both can be safe to developin our own ways on our own roads.”15

Chinese isolation was at an end. Hereconomic development would laterboom. The PMCs ceased as a focalpoint of CCP policy though there wasstill some waning interest. The cen-tralized structures of the PRC underMao had begun to fragment with hisage.

The post-Mao period was led byhis heir apparent Deng Xiaoping.Deng’s visionary “Four Moderniza-tions,” from 1979-82 repealed, legal-ized and codified a new civil rule oflaw in China. The Constitution of1982, called the mother law, “Mufa,”went into effect in late 1984. “Mufa”is the guideline that preempted allother Chinese laws, but is not en-forceable in and of itself. Enforceablelaws derived from it, called “zufas,”meaning children, and was thesource of government upheaval andrestructuring. New legislation en-forced the PRC’s status as a globalsuperpower. The by products of con-fusion and strife with layer uponlayer of bureaucracy was quieted byprivatization and individual wealth.The Middle Kingdom became an eco-nomic superpower. With nothingdone about the PMCs, they were leftto flounder.

Mediation is routinely criticizedby the supporters of other forms Al-ternative Dispute Resolution (ADR)because it prolongs the civil law sta-tus quo.16 The PMCs wers so blamedfor the delay of long needed struc-tural Chinese legal reforms. Proteststo these slow and unfair structuralchanges led to the TiananmenSquare massacre in 1989. Chinawants to negotiate about humanrights conditions, but only to protectits international reputation.

Tiananmen proved that the PMCshad finally lost its control of thepeople. The CCP has been losingsome of its control along with thePMCs. More recently, followers of theancient religion Falun Gong,17 werebranded evil cult outlaws and terror-ists, to justify police intervention tostop its dangerous spread. Residentsof the Xinjiang Province,18 andXizang, also known as Tibet,19 havemounted continual protests over

13

military rule and spiritual interfer-ence.

As of 1994, China was the world’slargest creditor. The CCP has beensaddled with heavy debt due to alltheir reforms. This has been China’sleading reason for private develop-ment with foreigners.

Power passed to Jiang Zemin af-ter Deng’s death in 1997. He has con-tinued Deng’s policies and was ini-tially thought by the CCP to be atransient leader.20 Zemin is the har-binger of Chinese global domination.His forte is technology. Armed withhis electrical engineering and com-puter background, he has lead Chinainto the digital age to build the infra-structure it needs to join the globalpaper-free society. He is a formidableinternational figurehead.

His many critics have been si-lenced by the routine visits of West-ern celebrities, businessmen, andscholars to China. Through himChina has gained global renown. Heholds frequent high profile foreignpolicy meetings and media inter-views. Zemin met with PresidentBush at his Texas ranch, to discussNorth Korea’s nuclear capability,with united, but with inconclusiveresults.

He has continued the growth ofChinese sponsored international dis-pute resolution organizations. Newerand bigger policies in “internationaltrade has established the growth ofnew arbitration commissions thatfollow and provide a cost effective ad-ditional alternative to formal adjudi-cation that is more rigorous thanpeople’s mediation…”21 It is neces-sary for “communications difficultiesduring the course of settling a dis-pute have in some cases served to ex-acerbate tensions between the par-ties, contributing to a breakdown inthe resolution process. This helps ex-plain the increased willingness ofChinese parties to turn disputes overto lawyers and other profession-als…”22

International business protocolshave helped to smooth and standard-ize global business functions to pro-mote economic growth through bet-ter technology. International ADRtechniques are coming of age to inte-grate most international businessrelations. Chinese arbitration,“zhongcai” has increased parallel toChina’s increased international trade

activities. The UN and treaty regimehave conditioned China’s participa-tion upon these legal changes.

By accommodating the economicboom with her legal system, China ismore aligned with the treaty regime.The“silk road,” has been chosen as thepreferred method international dis-pute resolution. From this accep-tance, China appears to have decidedthat the Western profit motive hastremendous benefits.

Foreigners have had two optionsto mediate their cases with China:the China International Economicand Trade Arbitration Commission(CIETAC) or the China Maritime Ar-bitration Commission (CMAC),which do both arbitration and media-tion cases. CIETAC created its Arbi-tration Rules in 1988, and the num-ber of cases has been increasing

exponentially. Since there is no for-mal international court, the choice ofresolution by business people hasbeen in China because of CIETAC.They handle the complex and valu-able cases, with enforceability, ofover one hundred countries. Themajor change from rules revisions in1994 and 1995 includes recognizedinternational standards. This hasbrought in more varied cases, notjust contract cases.

CIETAC arbitration is the bestmeans of dispute resolution in inter-national business,23 even thoughthey do not hold true mediations. Itworks like this: the General Secre-tary or the Deputy General Secretarycan act as mediators or the partiespick an arbitrator to mediate. Whenthe mediation succeeds, a concilia-tion agreement is signed and an ar-

The following attorneys are Board Certifiedin International Law:

��

Want to become Board Certified? Need more information?Contact Carol Vaught at The Florida Bar, 850/561-5600,

ext. 6798, or [email protected].

Chicago, ILJeremy Ross Page

Ft. LauderdalePeter Alan Quinter

MelbourneRobert E. Bickford

MiamiArturo J. Aballi, Jr.

Thomas BaurJohn Hobart FriedhoffEdward Martin Joffe

Andrew Joshua MarkusAlexander Reus

Thomas James SkolaTheodore Robert Walters

Roswell, GAPhilip Whitworth Engle

TampaJohn Charles Bierley

Richard Allen JacobsonSamuel Robert Mandelbaum

Voorhees, NJMark S. Guralnick

West Palm BeachGeorge C. J. Moore

Winter HavenLucius M. Dyal, Jr.

Miami LakesAlix Jean Marie Apollon

NaplesStanley Frazer Rose

OrlandoRobert Ryon HendryJames Ray LavigneJ. Brock McClane

Thomas L. Raleigh, III

Palm BeachRobin A. Abraham

Port CharlottePamella A. Seay

continued...

14

bitration tribunal makes an awardbased on the agreement. If the me-diation fails, the process continues asan arbitration. If the arbitration failsthen the case goes to an internationalcivil court or tribunal.

The needs of the parties to resolvetheir disputes has also led to the in-vention of a new form of mediation.“Joint Mediation” allows each foreignparty to apply for mediation in theirown country’s arbital organization,then CIETAC and the municipal or-ganization appoint mediators whohave equal authority to hear andsettle the dispute.24

The Beijing Mediation Centre wasa spinoff of CIETAC, which providesonly mediation for disputes. In 1995,twenty-three such Centres beenopened. Both parties still sign a con-ciliation agreement, but the media-tor decides on the dos and don’ts ofthe agreement before the case isclosed. If the mediation fails, themediator makes suggestions to theparties for settlement. This samemediator can also serve as an arbi-trator for future proceedings.25

These have been the fundamentaltools in Zemin’s arsenal and garneredChina’s entry into the World TradeOrganization (WTO). By late 1999, adeal was made for her membershipin 2001.26 The flux of rules, regula-tions, and opinions that comprisemodern-day China has finally en-joined the CCP to the treaty regime.They must abide by the arbitrationrules, as the newest member of theWTO. In 2000 China was the 7thleading exporter and 8th largest im-porter of merchandise trade - ex-ports: 249.2 billion dollars (3.9%share), imports: 225.1 billion dollars(3.4% share). For commercial ser-vices China was the 12th leading ex-porter and the 10th largest importer- exports: 29.7 billion dollars (2.1%share), imports: 34.8 billion dollars(2.5% share).27 For the Middle King-dom, this marks begins their con-tinuous participation in world eco-nomic affairs.28 New treaties,updated business methods and train-ing have allowed multinational cor-porations to open technology, re-search and development in Chinahave created a Chinese silicon val-

ley.29 Zemin has earned his exaltedstatus. China is poised to become thelargest economy, second only to theUSA, by 2020.30

His “modernizing” policies of thesocialist market economy and newlystringent population controls in an-ticipation of a fourth baby boom31

may be his undoing by a his newlydemocratized electorate.32 BecauseChina’s family unit remains so small,the PMCs as a social structure willlikely remain until there is popula-tion reform which allows freedom tomarry and reproduce without stateinterference.

Zemin, age 76, is expected to stepdown as leader of the CommunistParty in their November 2002 elec-tions, which are held every fiveyears. And next to step down asPresident in 2003 for a new genera-tion of politicians, led by his VicePresident Hu Jintao. Odds are slimthat Zemin would remain in power,but this is not necessarily so.33

Chinese Mediation InPerspective

A comparison of “panjue,”34 courtcases by jury verdict, to PMCs,35

shows the dramatic change in theChinese legal system since 1990. Ofthe 1,849,728 cases, 64.6% were“xieshang,” court sponsored media-tion, and 19.1% were “zhongcai,” ar-bitrated. There were 7,049,222 casesbefore the PMCs. By contrast, in1996, there were 2,714,665 cases,56.9% were “xieshang,” and 42.6%were “zhongcai.” There were6,016,983 cases before the PMCs. Insum, since 1990, the caseload for thePMCs has declined 10% or a millioncases, at an increasing rate. Thecaseloads in the new legal systemincreased those same million cases.

Both the PMCs and court media-tions have declined in favor of“panjue,” and “zhongcai,” due toadded legislation. As more rules andguidelines are implemented, it fol-lows that more change would be cre-ated in China. This fallacy reveals a“paper tiger” of supposed changes,that are imposed and misunderstoodby the Chinese.Dealing with thePMCS is just not a priority for thePRC.

The CCP wants the PMCs to closedown by themselves. But, of the onebillion plus population of China, ten

million mediators still exist. And al-though in swift decline, China willcontinue to have the oldest and larg-est ADR system in the world.36 Chi-nese mediation should be regardedas an ongoing, evolving process with-out a specific style, form or set of val-ues.37 All the recent changes firstlyreact to and directly affect “tiaojie.”Clan mediation in all its incarnationsreflects what changes have takenplace in China. No sufficient struc-tural changes can occur without thePMCs being affected first. “Tiaojie” isa cultural mechanism without whichany structural change in China couldnot occur.

Lack of action towards the PMCscomplicates other “guanxi,” which isgrowing sizably bewtween the“minjan xiehui,” civil associations,and trade groups, unions and othernon-governmental organizations.These groups have sprung up by thethousands as new parties in the newlegal system.38 Both mediation agree-ments and court orders have equalbinding force.39 Recent surveys showthat obeyance to either arrangementoccurs:• mostly to protect one’s reputation,• to a much lesser degree to perform

one’s moral duty,• and only lastly because of a legal

duty.40

“Panjue” will likely envelop the re-maining PMCs.41 “The Chinese arefully inclined to assert their rightswhen [such] institutions are avail-able...”42 The Chinese who can affordit favor the courts, corruption not-withstanding.

Mediation appears to be the formof ADR in global play.43 Its decreas-ing use in China and increasing geo-metrically in the rest of the world.With digital technology involved,online ADR seems to bypass govern-mental structures and avoid the ju-dicial system. More participants en-courages the assignment ofjurisdiction which can impair accessto justice and parties’ rights.44

Just who is making these deci-sions is very important to know. Itwill redefine the entire rule of lawbased on the cost of dispute resolu-tion. Court cases typically can costtens of thousand of dollars, arbitra-tion in the thousands and mediationin the hundreds. International com-merce in the next years will showwho is and who is not a superpower.

TIAOJIEfrom preceding page

15

Mediation in the USA is defined as“a process by which a third partyseeks to help persons involved in adispute come to a mutually satisfac-tory resolution of their conflict”.45

This definition takes on a dualitywhen translated from the Chineseand can mean either mediation orconciliation.46 Conciliation is themore apt term. However, its effect isbest defined as coercion. There is novoluntary consent of the parties in-volved. The mediator makes all thedecisions about the purpose and re-sults of a mediation, and the onlymutuality is signing the agreementwith the mediator. This is very timeconsuming,47 because it takes a longtime to change behavior: “100% effortfor 1% hope.”48

Decentralization has been the ma-jor force that brought back the sup-pressed clan tradition and values of“tiaojie,” but its usefulness inpresent-day China is uncertain. Thereturn to “tiaojie” has coincided withthe necessity to establish a written,formalized justice system. The ex-pansion of the rule of law continuesto modify both China and her“guanxi” with other countries. Theinternal debate centers on what to dowith the remaining PMCs. Shouldthey exist as separate legal entitiesor not?

There are two schools of thoughttrying to discern the way: the Legal-ists vs. the Populists. The Populistsfeel that mediation was not a part ofthe legal system; it has always beenthere for the people. PMCs are needstate financial support to survive.One suggested form of relief was tostart charging for these free servicesby implementing the security con-tracts for a fee and charging for non-compliance. This has not been suc-cessful. Better management isthought to best cure the ills associ-ated with keeping the PMCs in tact.49

The Legalists want one uniformlegal system, to make the PMCsmore autonomous and limit its scope.They have succeeded in removingcriminal mediation from the PMCswith the “zufas” passed in 1989. LawProfessor Pittman B. Potter explainsthe problem goes beyond the mereexistence of the PMCs:

“On the one hand, the operation offormal law and legal institutions inChina requires adaptation to local

conditions. As well, the formalismthat underpins official legal normsin requires a mediating mecha-nism to prevent rigid application ofrules to the detriment of substan-tive fairness. Yet mechanisms foradaptation and mediation are notthemselves incorporated effectivelyinto the formal system...”50

PMC duties were codified to reignthem in, thus divesting their manyabuses of power. The new system isrife with procedural gaps.

The mediators who worked whenthe PMCs were in the glory days ofthe fifties have died and no is leftwith established expertise to take itsplace. With a court system in placethere is no need to overburden thePMCs with prevention or cases thatcan be resolved in a court. The newlaws reduced its jurisdiction so thePMCs can no longer, by law, reducecrime or the court’s dockets. With itsgrowing popularity, the new legalsystem has fared better than thePMCs, but its existing court struc-ture is still a work in progress. AsProfessor Potter further explains:

“The uncertainty in the relation-ship between the permitted scopeof taking bribes and engaging incorrupt conduct is heightened bythe formalism that pervades Chi-nese legal culture. This permitsjudges and legal and administra-tive officials to confine their deci-sion-making processes to formalis-tic references to statutoryprovisions without the require-ment of a detailed fact cum lawanalysis. Such a circumstance thenpermits decisions to be made withlittle explanation and insulatesthem from challenge. Whetherdriven by improper economic in-ducements or skilled persuasion,the legal or administrative decisionneed not be explained in detail andthe decision-maker need not ad-dress how the balance of interestsand arguments between the dispu-tants was handled. This in effectinsulates from scrutiny the judicialinvestigatory and analytic pro-cesses...”51

China does not yet have an inde-pendent judiciary. Her present de-pendence on the centralized author-ity of the CCP has raised myriadquestions of abuse and corruption.

The traditional v. new formal sys-tems conflicts have deeply Rootedproblems in both operations andcredibility. As the court system is in-creasingly relied on, rifts betweenthe extra-judicial v. judicial forms ofmediation now practiced haveemerged and lost its independence asa separate forum of ADR.

The courts are taking on creativeforms of mediation to bring thepeople’s cases to them, affirming theCCP’s political agenda. This onlyadds to the confusing nature of“panjue.” The establishment of Town-ship and Village Legal Service Of-fices (TVLSOs), whose guidelineswere implemented in 1991, providesbroader access to China’s legal sys-tem. State support ensures furiedgrowth of the legal system. As a re-sult, the PMCs have been displaced,not a part of the legal system.52

With mediation less popular thanthe new civil structures, the PMCScould help define China’s private law,as a method of ADR, to make themprofitable and efficient, a first in Chi-nese mediation. The USA model rec-ognizes profitable private law and toa growing, but much lesser extent,“xieshang.” However, due to highercase settlement rates, court media-tions have gained popularity. Theonly law the Chinese have everknown is public law.

Privatization is a high priority is-sue for the PRC, And could be thesolution: to break up the remainingPMCs monopoly and allow marketforces to determine what the needreally is. “Panjue,” is only decades oldin China, and the CCP has put out awidespread campaign to popularizeit. They propagandize the courts asthe conflict resolution method ofchoice for citizens to integrate theirnew civil and criminal laws into dailyChinese culture.

Future Prospects“Tiajoie” is the Chinese means to

global dominance. Its roots could de-volve from “fa” back into “li.” NewMediation Centres could merge fromthe remaining PMCs as local inter-national fora, so businesses could ex-pand outside existing urban areas.The PMCs have traditionally heldsingly political, prejudiced, and coer-cive positions favoring impunity, butcould easily be modified to WTOstandards, to develop all regions.

continued...

16

China has proven its militarymight as its own enforcers. The oldnotions of the PMCs dealt with, andthe Chinese future in “clans” of smallinternational businesses would fillthe gap in a needed informal conflictresolution system that is compatiblewith China’s new legal structureswould be filled.

International market forces havemade China’s dispute resolutiontechniques highly successful. Cau-tion and attention to detail areneeded as special and self-interestedgroups begin to saturate interna-tional relations. This is new and un-charted territory for all. Past rela-tionships in the UN should not beallowed to hold back the future po-tential of growth. The risk of not be-ing inclusive is economic and politi-cal destruction. The focus should beon “jang,” towards a clear agreedupon direction for the future.

Unilateral “one way or else” posi-tions should be denounced so eco-nomic expansion can continue on alllevels of government. It is unreason-able to place specific conditions oneconomic inclusion, when it is obvi-ous that a negative backlash of manyexcluded countries would ally in ter-rorist threat.

They can create undesirable fearand violence that could get lucky andascend to globally dominance if thereis no unity in the developed countriesto disband them while their threat isstill minimally serious. Terrorismremains because those countries sup-porting it have dictatorial govern-ments who exploit their people tokeep their personal power. The sys-tems and all political and legal sys-tems first priority should be to serveand adapt to the needs of theirpeople. These governments presentlyhave systems that do not serve theirpeople.

Terrorism will exist until the in-ternational regimes find ways forthose governments to serve and ex-ist for their populace, not vice versa.Until then it will be a threat to everyexisting government on Earth.China’s past influences drive her tosucceed globally. While certain mod-erate conditions on Human Rightsand level of per capita development

have met with limited success, it doesnot follow that this would work forthose countries surviving in extremeeconomic and humanitarian condi-tions.

As the 16th President of the UntiedStates said in his Gettysburg address“we here highly resolve that thesedead shall not have died in vain—that this nation, under God, shallhave a new birth of freedom—andthat government of the people, by thepeople, for the people, shall not per-ish from the earth.”53 China beganwith the cheapest form of politicaland legal system to sparing no ex-pense of people and natural re-sources to capitalize and create in-dustry, to pay for the increased costsof its new and expensive political andlegal system. She is leaning nearerand nearer to a democratic leader-ship, perhaps by necessity, perhapsto stay globally competitive. China isa model to other nations striving fortheir own productive economic place.

The major differences in the sys-tems of the PRC, USA and EU aremost visible in their respective mili-taries. The EU has moved to createits own Department of Defense andmilitary structure by 200354, the USAunder direct terrorist threat is revo-lutionizing its military55,while theChinese are redesigning its out-moded military on all fronts, sparingno expense to protect itself.56

Spy satellites and internationalthreats of global nuclear holocaustkeep military growth in check. Butthe bellwether of China’s mood hasbeen the evolution of Tiaojie intoPMCs and again into internationalADR. The subjects of these “guanxi”will reveal which future conflicts mayoccur across the globe as China be-comes more secure with her actionsand ambitions.

Civil unrest and protests, such asthe Tiananmen Square massacremay have brought the Chinese intomore confrontations with their gov-ernment. The CCP needs to increasetheir responsiveness to the needs oftheir people. If the CCP continues tobe unresponsive, all its imposedchanges will avalanche to pit the gov-ernment against its people.

Unresponsiveness stands out asthe main factor the rest of the worldhas used to assessed Chinese char-acter. Unchanged it will hinder herinternational status. The citizenry

appears to be freer to express them-selves as they become more aware oftheir legal rights. Perhaps thetheChinese are satisfied that their newlegal system and courts are working.But, it is an urban legend to assumethat one voice speaks for the entiretyof China.

The CCP, albeit still the biggestentity in China, tends to react vio-lently to insure its own devolving ex-istence, and has pitted the Chineseagainst each other, merely delayingattacks on themselves by the people.Communism is still very much alive.The CCP needs much reinventing toachieve actual, not superficial, cred-ibility in both municipal and interna-tional “guanxi,” to co-exist.

Few governments and organiza-tions believe the reports of improve-ment: routinized torture and lack ofindependence color the Chinese legaland social procedures still in use.57

China must show she means peace,and does not want to lose face, nowthat she is committed to the globaleconomic regime.

There are still some years to gountil the 2008 Summer Olympics inBeijing. And several possible sce-narios may could occur during theinterim. Chinese military could se-cretly launch a major offensive hid-den by the focus on internationalADR, to compensate her fears by oflost sovereignty. Breaking treatiesand making war on countries violat-ing her. Or, the CCP could continueits global adaptation for acceptanceby using her vast market as leveragein declarations of economic wars.China has the manufacturing capa-bilities to achieve both wars simul-taneously. Or hope and reason couldwin out over greed in the newstreams of commerce formed throughinternational ADR.

The highest priority, a humanright to co-exist served by govern-ment, preserving the future for all.Experience has taught China in thelong tradition of “tiaojie.” Wisdomand shared knowledge can be securein peaceable, if not harmonious“guanxi.” We are one global clan.

Endnotes:1 See Stanley B. Lubman, Dispute Reso-

lution in China After Deng Xiaoping and Me-diation Revisited, 11 COLUM. J. AS. L. 287(1997).

2 Robert Perkovich, A ComparativeAnalysis of Community Mediation in the


17

United States and the People’s Republic ofChina, 10 TEMPLE INT’L & COMP 313(1996).

3 Lubman, supra at note 1, at 238.4 Id. at 291. See also Fu Hualing, Under-

standing People’s Mediation in Post-MaoChina, 6 J. CHINESE L. 216 (1992).

5 Perkovich, supra at note 2, at 313.6 Jun Je, Mediation, Arbitration, and

Litigation: Dispute Resolution in The People’sRepublic of China, 15 UCLA PAC. BAS. L. J.122 (1996).

7 Hualing, supra at note 4, at 215.8 Ge, supra at note 6, at 213.9 Robert L. Worden, Andrea Matles

Savada, & Ronald E. Dolan, eds., China: ACountry Study (visited April 30, 1999) at<http://lcweb2.loc.gov/cgi-Bin/query/r?frd/cstdy:@field(DOCID+cn0356)> (July 1987).

10 James A. Schellenberg, Conflict Reso-lution Theory, Research, and Practice 184(1996).

11 Id.12 See Lubman, supra at note 1, at 233.13 See Id. at 292.14 Worden, supra at note 9.15 Dan Ewing, REALITY CHECK: 30

Years Later-Bush Following in Nixon’s Foot-steps (visited October 26, 2002) at <http://w w w . n i x o n c e n t e r . o r g / p u b l i c a t i o n s /Reality%20Check/02_19_02_Nixon30th.htm>(February 20, 2002).

16 Lubman, supra at note 1, at 370.17 B. A. Robinson, Falun Gong and Falun

Daufa, What it is, what it does, and why theChinese government is so terrified of it (vis-ited August 13, 2001) at <http://www.religioustolerance.org/faungong.htm>,p. 3, 7-9 (August 1, 2001).

18 Human Rights Watch Report 2001,China and Tibet, Human Rights Develop-ments (visited August 14, 2001) at <http://www.hrw.org/wr2kl/ asia/china.htm> p. 6.

19 Id. At 5-6.20 Jiang Zemin, President of the People’s

Republic of China: Biographic Profile (visitedOctober 4, 2000) at <http://www.chinaonline. com/refer/biographies/secure/REV-Zemin3.asp> (2000).

21 Lubman, supra at note 1, at 386-90.22 Pittman B. Potter, Guanxi and the PRC

Legal System: From Contradiction toComplementarity (visited October 4, 2000) athttp://www.chinaonline.com/commentaryanalysis/legal/currentnews/…/c0002 1599wilson-s.asp> p. 4 (February 9, 2000).

23 Beijing Concord International Consult-ing, Co., Ltd., Settlement of Disputes (visitedApril 24, 1999) at <http://www.bcic. com/english/tips/settlement.htm> (1999).

24 See Lubman, supra at note 1, at 304.25 Ge, supra at note 6, at 126.26 Id. At 2.27 WTO NEWS: 2001 PRESS RE-

LEASES, WTO successfully concludes nego-tiations on China’s entry (visited October 27,2002) <http://www.wto.org/ english/news_e/pres01_e/pr243_e.htm> (September17, 2001).

28 Lubman, supra at note 1, at 386-90.29 Bruce Einhorn, Ben Elgin, Cliff

Edwards, Linda Himelstein, and Otis Port,High Tech in China: Is it a threat to SiliconValley? (visited October 29, 2002) <http://www.businessweek.com/magazine/content /02_43/b3805001.htm> (October 28, 2002).

30 Wayne M. Morrison, CRS Issue Brief

for Congress #IB98014: China’s EconomicConditions (visited August 14, 2001) at<http://www.cine.org/ nle/inter-10.html>p.10 (September 21, 2000).

31 Worden, supra at note 11 (visited Au-gust14, 2001) at <http://lcweb2. loc.gov/cgi-b i n / q u e r y / D ? c s t d y : 1 : . / t e m p /~frdOFZs::>(July 1987).

32 Jiang, supra at note 20, at 2.33 Minxin Pei, China’s GovernanceCrisis

(visited October 27, 2002)<http://www.foreignaffairs.org/articles/pei0902.html> (Sept/Oct 2002).

34 Lubman, supra at note 1, at 310.35 Id. at 282.36 Ge, supra at note 6, at 124.37 Id. At 335.38 Potter, supra at note 22, at 1.39 Donald C. Clarke, Dispute Resolution

in China, 5 J. CHINESE L. 272 (1991).40 Lubman, supra at note 1, at 367-9.41 Hualing, supra at note 4, at 218 (quot-

ing James Seymour).42 Ge, supra at note 6, at 131-3.43 Reports on www.mediate.com claim 3

million hits and growing.44 Compiled from the 9 International

Arbitration bodies listed (visited October 28,2002) <http://www.interarb.com/vl/pages /International_bodies_forCommercial_Arbitration/>.

45 See Schellenberg, supra at note 10, at182.

46 Clarke, supra at note 38, at 288-9.47 Hualing, supra at note 4, at 236.48 See Id. At 239.

49 Lubman, supra at note 1, at 300-1.Also Hualing, supra at note 4, at 230-3.

50 Potter, supra at note 22, at 6.51 Id. at 5.52 Lubman, supra at note 1, at 281-2. Also

Hualing, supra at note 4, at 230-3.53 Biography of 16th President Abraham

Lincoln, Gettysburg Address (visited October29, 2002) <http://www. whitehouse.gov/history/presidents/ al16. html> (November19, 1863).

54 Colin Robinson, The European Union’sMilitary Capability (visited October 27, 2002)<http://orbat.com> (August 12, 2001).

55 Dr. Andrew Krepinevich, The Military-Technical Revolution: A Preliminary Assess-ment (visited October 28, 2002) <http://www.csbaonline.org> (2002).

56 Frank W Moore, China’s Military Ca-pabilities (visited October 27, 2002) <http://w w w . c o m w . o r g / c m p / f u l l t e x t /iddschina.html> (June 2000). But seealsoJohn Pomfret, China to Buy 8 More Rus-sian Submarines (visited October 29, 2002)<http://www.washingtonpost.com/ac2/wp-dyn?pagename=article& node=&c o n t e n t I d = A 3 8 4 9 6 - 2 0 0 2 J u n 2 4 & n o tFound=true> (June 24, 2002).

57 Human Rights in China (HRIC), Reporton the Implementation of the ConventionAgainst Torture in the People’s Republic ofChina: Impunity Continues Despite Changesin the Law (visited August 20, 2001) at< h t t p : / / w w w . h r c h i n a . o r g / r e p o r t s /cat2000.html> pp.3,7-8 (April 2000).

Alphabetical Glossary of Terms”

with Pinyin Mandarin tones from <http://www.chinawestexchange.com/Mandarin/Pinyin/Chart/x.htm>

ADR– Alternative Dispute Reso-lutionVarious procedures for dispute reso-lution including arbitration, media-tion, negotiation, mini-trials, etc.,other than litigation.

Chiang Kai-shek– Cheeong (as insong) Keye shuhkalso known as Chiang Chung-Cheng(1887-1975). Nationalist Leader ofChina from 1928-49. He helped over-throw Imperial China in 1912 to es-tablish, The PRC, The Republic ofChina. After being overthrown bycivil war in 1949, he formed a gov-ernment in exile on the island ofTaiwan where martial law reigneduntil his death.

CCP– Communist Party of ChinaUnopposed since 1949, will call itselfthe “Chinese Socialist Party” within5 years.The next 16th Central Partyelections will be in November 2002,held every 5 years. With over 60 mil-

lion members, it is just 5.1% ofChina.<http://ce.cei.gov.cn/frame_8.htm>

CIETAC– China International Eco-nomic and Trade Arbitration Com-mission was so named in 1998.Previously the Foreign Economic andTrade Arbitration Commission(FETAC) from 1980-98. The ForeignTrade Arbitration Commission(FTAC) began 1954.<http://www.cietac.org.cn/english/e_index.htm>E-mail: [email protected] Mediation Centres, started inBeijing (bay jing), were spun-off in1987 and only mediates disputes.

CMAC– China Maritime Arbitra-tion Commission<http://www.cmac.org.cn/EN-GLISH/E_index.htm>All three above groups are subordi-nate sections of:

continued...

18

China Council for the Promotion ofthe International Trade (CCPIC)<http://www.ccpit.org> Email:[email protected]

Deng Xiaoping– Dung Show (as inhow) - pingCredited with the birth of ModernChina (1904-1997).Communist Leader of China from1976-97.

EU– European UnionA community of 15 member countriesunited to form a superpower. Ex-pected to expand to 25 in the nearfuture. The Treaty of Amsterdam ef-fective since 5/1/99 governs.<http://eurpoa.eu.int/eur-lex>Formerly known as the EuropeanCommunity. The Treaty of Romesigned in 1957 created the first com-munity membership.

Fa– fahImpairs harmony using law, rulesand principles to control. The oppos-ing force of li.

Falun Gong– Fahloon (oo as ingood) Gone (past tense of “go”)Founded in 1992 by Li Hongzhi (LeeHong, as in song, jeuh), It mixesDoaism & Buddhism with Qigong(Cheegone, p.t. go), an ancientbreathing exercise system, and medi-tations.

Guanxi– GwahnseeThe group of the five traditional re-lationships upon which the Chinesebased social peace and harmony.IMPORTANTLY: includes today’sbusiness relations.

Jang– Jong (as in song)This “yielding or compromise” is thefoundation of social peace and har-mony.

Jiang Zemin– Johng (as in song)Zuhmeen, also known as Chiang Tse-min (1926-?)Credited with computerizing Chinaand her WTO membership. Commu-nist Leader of China since 1997holds four positions: General Secre-tary of the 15th Central Committee(CCP), Chairman of the 9th People’s

National Congress, State President,and Chairman of the State CentralMilitary Commission.

Li– LeeThe way the Chinese associatedwith one another for over 2,600years in various guanxi. The oppos-ing force of fa.

LegalistsThe conservative interventionist po-litical point of view.

Mao Zedong– Mow(as in how)Zuhdong (as in song)also known as Mao Tse Tung or MaoTze Dong (1893-1976). The first Com-munist Leader of China from 1949-76.

Minjan Xiehui– Meenjahn Tseeah-whooeecivil associations

Mufa– Moo (as in book)- fah“The Mother” The Chinese Constitu-tion of 1982 meant to serve as theguiding basis of all law in China, butnot enforceable law in and of itself.http://english.peopledaily.com.cn/constitution/constitution.html

Panjue– PanjuhLitigation by jury verdict.

PMCs– The People’s MediationCommitteesThe Communist incarnation of Con-fucian clan mediation.

PopulistsThe liberal free market political pointof view.

PRC– The People’s Republic ofChina.The superpower country of mainlandChina. Nicknamed the “Middle King-dom,” and “Silk Road”from 13-14th century trade routescreated by Marco Polo.< h t t p : / / w w w . c h i n a l e g a lchange.com>, Chinese <http://www.gov.cn>.

Tiaojie– TeeahawjeeuhConfucian “clan mediation” which inseveral incarnations has served asthe basis for dispute resolution inChina for millennia.

TVLSO– Township and Village

Legal ServicesCCP supported groups to encourageChinese citizens to assert their legalrights in the new court system, re-placing the PMCs.

USA– United States of America.The superpower country in NorthAmerica.<http://www.first.gov>

WTO– World Trade OrganizationUnited Nations arm through whichall global trade flows.<http://www.wto.org>

Xieshang– Tseeuhshong (as in song)court sponsored mediation.

Xinjiang Uygur Autonomous Re-gionSinjung Ooyeegoor (oo as in Sue)A Province in NW China, borders theformer Soviet Union, Pakistan,Afganistan, Tibet and India, has anactive separatist movement (Afganibases).Capital is Urumqi (Ooreemsee). Pop:17.2 million.

Xizang Autonomous RegionZeetsong (as in song)Also known as Tibet.The other three autonomous regionsare Mongolia, Guangxi (Goowantsee),and Ningxia (Neeoongtseeah).

Zhongcai– Jong(as in song) keyearbitration.

Zufa– Tzoo (as in book) fah“The children” a body of enforceablelegislation based on the new Consti-tution of 1982.

TABLE OF AUTHORITIES

BOOKSJames A. Schellenberg, ConflictResolution Theory, Research, andPractice (1996).

JOURNALSDonald C. Clarke, Dispute Resolutionin China,5 J. CHINESE L. 272 (1991).

Jun Ge, Mediation, Arbitration, andLitigation: Dispute Resolution in thePeople’s Republic of China,15 UCLA PAC. BAS. L.J. 122 (1996).

Fu Hualing, Understanding People’s


19

Mediation in Post-Mao China, 6 J.CHINESE L. 216 (1992).

Stanley B. Lubman, Dispute Resolu-tion in China After Deng Xiaopingand Mediation Revisited,11 COLUM. J. AS. L. 287 (1997).

Robert Perkovich, A ComparativeAnalysis of Community Mediation inthe United States and in the People’sRepublic of China, 10 TEMP. INT’L& COMP. L. J. 313 (1996).

ONLINEBeijing Concord International Con-sulting Co., Ltd., Settlement of Dis-putes (visited April 24, 1999)<http://www.bcic.com/english/tips/settlement.htm>.

Biography of 16th PresidentAbraham Lincoln, Gettysburg Ad-dress (visited October 29, 2002)<http://www. whitehouse.gov/his-tory/presidents/ al16.html> Novem-ber 19, 1863.

Bruce Einhorn, Ben Elgin, CliffEdwards, Linda Himelstein, and OtisPort, High Tech in China: Is it athreat to Silicon Valley? (visited Oc-tober 29, 2002) <http://www.businessweek. com/magazine/content /02_43/b3805001.htm> (Oc-tober 28, 2002).

Dan Ewing, REALITY CHECK: 30Years Later-Bush Following inNixon’s Footsteps(visited October 26,2002)<http://www.nixoncenter.org/publi-c a t i o n s / R e a l i t y % 2 0 C h e c k /02_19_02_Nixon30th.htm> February20, 2002.

Human Rights in China (HRIC), Re-port on Implementation of the Con-vention Against Torture in thePeople’s Republic of China: ImpunityContinues Despite Changes in theLaw (visited August 20, 2001)<http://www.hrichina.org/ reports/cat2000.html> April 2000.

Human Rights Watch Report 2001,China and Tibet, Human Rights De-velopments (visited August 14, 2001)<http://www.hrw.org/wr2k1/asia/china.html>.

Dr. Andrew Krepinevich, The Mili-tary-Technical Revolution: A Pre-

liminary Assessment (visited Octo-ber 28, 2002) <http://www.csbaonline.org> 2002.

Frank W Moore, China’s MilitaryCapabilities (visited October 27,2002)<http ://www.comw.org/cmp/fulltext/iddschina.html> June 2000.

Wayne M. Morrison, CRS Issue Brieffor Congress #IB98014:China’s Economic Conditions (visitedAugust 14, 2001)<http://www.cine.org/nle/inter-10.html> September 21, 2000.

Minxin Pei, China’s Governance Cri-sis (visited October 27, 2002) <http://www.foreignaffairs.org/articles/pei0902.html> September/October2002.

John Pomfret, China to Buy 8 MoreRussian Submarines(visited October 29, 2002)<http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A38496-002Jun24&notFound=true> June 24,2002.

Pittman B. Potter, Guanxi and thePRC Legal System: From Contradic-

tion to Complementarity (visited Oc-tober 4, 2000) <http://www.chinaonline.com/commentary_analysis/legal/currentnews/.../c00021599wilson-s.asp> February 9, 2000.

B.A. Robinson, Falun Gong andFalun Dafa, What it is, what it does,and why the Chinese government isso terrified of it (visited August 13,2001) http://www.religioustolerance.org/falungong.htm August 1, 2001.

Robert L. Worden, Andrea MatlesSavada, and Ronald E. Dolan, Eds.China: A Country Study(visited April 30, 1999) <http: //lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field_(DOCID+cn0356)>.

WTO NEWS: 2001 PRESS RE-LEASES, WTO successfully con-cludes negotiations on China’s entry(visited October 27, 2002)<http://www.wto.org/english/news_ e/pres01_e/pr243_e.htm>September 17, 2001.

Jiang Zemin, President of the People’sRepublic of China: Biographic Profile(visited October 4, 2000) <http: //www.chinaonline.com/refer/biogra-phies/secure/REV-Zemin3.asp>.

2003 Section Calendar

March 30 - April 4, 2003 Brussels/London Program

April 25, 2003 International Litigation UpdateHyatt Regency, Miami

May 1-4, 2003 IFTTA UpdateMonaco

May 3-11, 2003 Russian ForumSt. Petersburg, Russia

June 25, 2003 International Arbirtration Update- AND -

June 27, 2003 International Law SectionEXECUTIVE COUNCIL MEETING at The Florida Bar’s Annual Meeting,Orlando World Center Marriott, Orlando

20

Vive La Médiation!by Marcia S. Cohen, Esq., St. Petersburg, Florida

Mediation as a means of resolvingdisputes has crossed the Atlantic andis alive and thriving in Paris, the cityof love. The process differs in somerespects from mediation in theUnited States, but the result is thesame: the parties design their ownresolution with the assistance of atrained professional, and the conflictis at an end.

In 1995, the Paris Chamber ofCommerce and Industry created theParis Mediation and ArbitrationCenter to provide alternative disputeresolution to commercial enterprisesin an around Paris. In doing so, theChamber of Commerce had threegoals: to make mediation and arbi-tration more available as a quick, ef-fective and confidential means of re-solving disputes; to account for theneeds of all companies, especiallythose of small and medium size; andto offer its members the guarantee ofa solid structure composed of knownpartner entities, such as the ParisBar, the Paris Commercial Courts,the French Arbitration Association,the French National Committee ofthe International Chamber of Com-merce, and the Council of the Orderof Accountancy.

The Paris Mediation and Arbitra-tion Center (or CMAP) is the firstcenter in continental Europe dealingsolely with commercial mediation. Asof 2002, CMAP completes 100 media-tions per year. Mediation is typicallybegun with the request of one partyfor a dispute to be mediated. It is thejob of CMAP staff to convince the op-posing party to agree to mediate. 70%of the time, CMAP is successful indoing so.

After a unilateral request, CMAPsends a letter to the opposing partydescribing the organization and giv-ing the party 15 days to respond, orone month for a party in anothercountry. Though at least one of theparties must be French, manyCMAP cases are international dis-putes, many between U.S. andFrench companies. Often, there willbe no reply to CMAP’s first letter,so a CMAP staff member will tele-phone the firm, urging it to agree tomediate the conflict.

The mediator is chosen by an in-dependent commission headed by awell-known judge, and not by theparties. The mediator may be lawyer,a judge, an accountant, business ex-ecutive, or a member of another pro-fession. All CMAP mediators mustundergo 40 hours of training, butthere is no certification for media-tors. Currently, there are approxi-mately 130 names on CMAP’s media-tor roster. Continuing mediationtraining is desirable, but not neces-sary. Judicial mediation, or media-tion of court cases, is regulated by theBar, but commercial mediation,where the dispute has not been filedin the commercial court, is not. TheCivil Procedure Code does not yetdeal with commercial mediation, al-though CMAP officials see a need fora more formal definition, and per-haps regulation, of commercial me-diation.

Once mediation has begun, eitherparty has the right to end it at anytime, and there is no obligation toreach agreement, but after this simi-larity, the French process divergesfrom the U.S. model. Usually, thereare at least 2-3 mediation sessionstotaling 10-20 hours in duration.Most are concluded within twomonths, but there is a maximummediation period of six months. Ju-dicial mediations can be longer be-cause CMAP has found that the par-ties are more angry and stubbornafter a lawsuit has been filed.

In a judicial mediation, the judgewill issue an order designatingCMAP as the mediation organiza-tion, CMAP will then forward thenames of three mediators to thejudge for selection. Once the judgehas designated the CMAP mediator,the mediation process begins. Themediator then has three monthswithin which to complete the media-tion. On application to the court byone or more of the parties, this pe-riod can be extended an additionalthree months. Confidentiality rulesare similar to those in most U.S. ju-risdictions.

Most of the time, the parties arerepresented by counsel, but if onlyone party has a lawyer, CMAP will

attempt to convince the representedparty not to bring its attorney. If therepresented party insists on mediat-ing with counsel, CMAP will try toconvince the unrepresented party toretain counsel to equalize the bar-gaining power between the parties.CMAP has an excellent success rate;75% of its mediations settle the dis-pute. The eventual settlement agree-ment is prepared by CMAP.

CMAP also provides arbitrationservices, in which the resolution ofthe dispute by decision of an arbitra-tor is quicker and simpler than con-fiding the issues to a commercialcourt. Even after a demand for arbi-tration by a party, however, media-tion is offered first, and only after itis declined by the parties, is arbitra-tion undertaken. There is a clearpreference for a mediated settle-ment, rather than a resolution im-posed by an arbitrator.

CMAP is still underwritten by theChamber of Commerce, but it is nowan independent entity. Those usingis mediation or arbitration servicespay an administrative fee to CMAPin addition to the fee tot he mediatoror arbitrator. The mediation can takeplace in the elegant offices of CMAPon the avenue Franklin D. Roosevelt,just off the Champs Elysées, or in theoffices of the mediator or parties. Thesuccess of this commercial disputeresolution service is demonstrated bythe repeated use of its services bymany French companies. Perhaps itsunique approach to early interven-tion in disputes between businessenterprises can be a mode for a U.S.version. Further information aboutCMAP is available at its websitewww.mediationetarbitrage.com.

Marcia S. Cohen holds a Bachelorof Arts degree in Education fromRoosevelt University of Chicago, aMasters degree in Music Compositionfrom Northwestern University, andreceived her Juris Doctor degree fromStetson University College of Law in1984. Since becoming a member ofThe Florida Bar, she has practicedalmost exclusively in the area of la-bor and employment law and media-tion with a concentration in employ-

21

ment discrimination and sexual ha-rassment, and has the distinction ofhaving had a successful case beforethe U.S. Supreme Court. Ms. Cohenwas certified by the Florida SupremeCourt as a circuit civil mediator af-ter completing her AAA mediationtraining in December, 1989. She com-

pleted the Supreme Court CertifiedArbitration Training Program in Au-gust, 1995. The same year, she was cer-tified as a mediator in the U.S. Dis-trict Court for the Middle District ofFlorida, and has also served as anarbitrator with that federal court. Shehas been a contract mediator for the

Equal Employment Opportunity Com-mission since 1999, and has been ap-pointed to the mediation panel of theCentre de Médiation et d’Arbitrage deParis. Ms. Cohen is a member of theFlorida Academy of Professional Me-diators, Inc. You may contact Ms.Cohen at www.marciascohen.com.

Trade Agreements UpdateCourtesy of the Free Trade Area of the Americas

Committee of the International Law SectionNewly Signed Legislation to Spur Additional Trade Agreements

The Trade Act of 2002 (HR 3009) was signed into law by President Bush on August 6th, 2002. Among itsnotable points, it gives the President the Trade Promotion Authority (formerly “Fast Track”) power which hadexpired in 1994, and which should spur the United States to negotiate additional trade agreements. The Actalso renews the preferential market access to the American market under the Generalized System of Prefer-ences (GSP) for developing countries and the Andean Trade Preference Act for Bolivia, Colombia, Ecuador andPeru. The text of the 304 page Act is available for download at http://finance.senate.gov/leg/hr3009confrpt.pdf

Request for Public Comment on Free Trade Agreement with SingaporeThe United States Trade Representative seeks public comment on the draft copy of the environmental re-

view of the proposed US-Singapore Free Trade Agreement. Written comment must be submitted by Septem-ber 20th, 2002. The Federal Register notice, as well as the environmental review, is available for download athttp://www.ustr.gov

U.S. Proposes Greater Transparency in WTO Dispute Resolution PanelsThe United States recently submitted a proposal to the World Trade Organization for greater openness in

the operation of the dispute resolution process. Its proposal includes public access to hearings, the publicizingof briefs submitted by the parties, earlier public release of the panel reports, and the possibility of allowing forthe submission of amicus briefs. The press release is available at http://www.ustr.gov/releases/2002/08/02-82.htm

FTAA Conference Available on WebcastOn July 18th, 2002, the parties to the North American Free Trade Agreement (Canada, USA, Mexico) spon-

sored a one-day seminar on the Free Trade Area of the Americas in Merida, Mexico. The seminar includessubstantive discussion on Market Access issues, Agriculture, Services, Investment, Greater Trans- parencyand Increased Participation from sectors of Civil Society. Streaming video on the seminar is available on theInternet at http://www.ustr. gov/new/ftaa-merida.htm [Note: The video requires RealPlayer to view - Freecopies are available for download on the site].

Request for Public Comment on Andean Trade Preference EligibilityUSTR seeks public comment on eligibility criteria for the Andean countries (Bolivia, Colombia, Ecuador

and Peru) to qualify for preferential market access under the recently signed Trade Act of 2002. The Act setsout additional criteria (Title XXXI- “The Andean Trade Promotion and Drug Eradication Act”) for the afore-mentioned countries to qualify, in addition to the original criteria found under the Andean Trade PreferenceAct. Public comment must be received by September 16th, 2002. The official Federal Register notice (datedAugust 15th) can be viewed at http://www.ustr.gov

Request for Public Comment on WTO Steel PanelIn response to the President’s decision in March to impose safeguard measures on the import of certain

steel products, the European Union, together with several other countries, requested the establishment of adispute settlement panel to examine whether the US measures are consistent with its GATT and WTO obliga-tions. The USTR is accepting comments on the issues raised in the dispute, which must be submitted bySeptember 12th, 2002. The official Federal Register notice (dated August 13th) can be viewed at http://www.ustr.gov

22

International Tax Briefsby Laura A. Quigley

A Plethora of Proposed Legislation Affecting International TaxAfter September 11, 2001

This column covers selected currentinternational tax issues.

The 2002 Proposed Legislationseems to have two themes. First,American individuals and entities,directly or indirectly, must be forAmerica! Second, America musthelp the competitiveness of Ameri-can business.

Bill No.: H.R. 4880Sponsors: Rangel (D-NY),Gephardt (D-MO)Name: “To amend the InternalRevenue Code of 1986 toprevent the continued use ofrenouncing United Statescitizenship as a device foravoiding United States taxes”

This bill eliminates the ability toexpatriate on an informal basis. Be-fore an individual could avoid tax asa U.S. citizen, they must first do aformal renunciation of their citizen-ship.

“Tax Responsibilities of Expatria-tion” is added under new Section877A. Section 877A requires that allproperty of covered expatriates istreated as sold on the day before theexpatriation for its fair market valueand that the gain or loss will be takeninto account for the taxable year ofthe sale. Capital assets would begiven the preferential capital gainstax rate.

The bill exempts the first$600,000.00 ($1.2 million for a mar-ried couple) of appreciation from thistax. The bill further provides excep-tions for certain U.S. real propertyinterests and certain retirementplans.

An expatriation election can alsodefer the tax with interest until theproperty is sold. Special rules applyto interests in trusts and qualifiedtrusts.*

“Gifts and Bequests from Expa-triates” is also added under Chap-ter 13 A. This includes Section 2681imposing a tax on the receipt byU.S. citizens of gifts or bequests

from expatriates.This new tax does not apply where

the gift or bequest is otherwise sub-ject to U.S. estate or gift taxes. Fur-ther, any foreign estate or gift taxpaid on the gift or bequest would re-duce this U.S. tax.

Bill No.: H.R. 4993Sponsors: Doggett (D-TX)Name: “No Tax Breaks forCorporations RenouncingAmerica Act of 2002”

This bill amends the InternalRevenue Code of 1986 to preventcorporations from exploiting taxtreaties to evade taxation of UnitedStates income. This bill adds Sec-tion 894(d) to deny treaty benefitsfor certain deductible payments.Thus, a foreign entity cannot re-duce the withholding tax rate forthese foreign deductible paymentsunder the U.S. income tax treatywith that foreign country, unlesssuch entity is predominately ownedby individuals who are residents ofsuch foreign country.

Bill No. H.R. 3884Sponsors: Neal (D-MA)Name: “Corporate PatriotEnforcement Act of 2002”

This bill amends Section 7701 (a)of the Internal Revenue Code of1986 to treat the acquiring corpora-tion in a ‘corporate expatriationtransaction” as a domestic corpora-tion. A “corporate expatriationtransaction” is defined as a transac-tion in which a foreign corporationacquired, directly or indirectly, sub-stantially all of the properties of adomestic corporation or partnershipand immediately after the transac-tion, former ownere of the domesticcorporation/partnership hold morethan 80% of the foreign corporationstock. This 80% ownership require-ment is lowered to 50%, if the for-eign corporation does not have sub-stantial business activities in theforeign country of its creation or or-ganization and the stock of the cor-

poration is publicly traded with theprincipal market being in the UnitedStates.

Bill No. H.R. 3922Sponsors: Maloney (D-CT)Name: “Save America’s Jobs Actof 2002"

This bill includes the same amend-ment to Section 7701 (a) above. How-ever, this bill grants authority to theSecretary of Treasury to modify thecorporate tax rate for an acquiringcorporation treated as a domestic cor-poration under the bill.

Bill No. H. R. 456Sponsors: Maloney (D-CT)Name: “Providing forconsideration of the bill (H.R.3884) to amend the InternalRevenue Code of 1986 toprevent corporations fromavoiding the United Statesincome tax by reincorporatingin a foreign country”

Bill No.: H.R. 4756Sponsors: Johnson (R-CT)Name: “Uncle Sam Wants YouAct of 2002”

This bill also amends Section 7701(a) similar to that seen above underH.R. 3884, et. seq.

Bill No.: H.R. 4047 & 4151Sponsors: Houghton (R-NY)Names: “InternationalSimplification and Fairness forAmerican Competitiveness Actof 2002” & “Fairness,Simplification andCompetitiveness for AmericanBusiness Act of 2002”

These bills list a litany of provi-sions, such as increasing the de mini-mis exception under subpart F to $5million, extending the carryforwardperiod of the excess foreign taxcredit, (deleted under H.R. 4151), re-pealing the Foreign Personal Hold-ing Company and Foreign Invest-ment Company rules, repealing thespecial capital gains tax on aliens

23

present in the United States for 183days or more, repealing the withhold-ing tax on dividends from certain for-eign corporations.

Bill No.: S. 2339Sponsors: Kerry (D-MA)Name: “Tax Haven and AbusiveTax Shelter Reform Act of 2002”

This bill attacks tax abuses by dis-allowing tax benefits for transactionsthat lack substantial economic sub-stance and are created through theuse of identified tax havens. This billfurther imposes greater penalties onparties involved in tax avoidancestrategies.

If an underpayment is attributedto a lack of economic substance orlack of business purpose or othersimilar rules, a 40% penalty tax is im-posed under Section 6662, the accu-racy-related penalty. The thresholdfor the substantial understatement ofincome tax is changed to the lesser of$500,000.00 or the greater of 10% ofthe tax required to be shown on thereturn for the taxable year or$5,000.00.

A substantial promoter of a taxavoidance strategy will pay a penaltyof 100% of the gross income they de-rive or will derive from that taxavoidance strategy. A substantialpromoter is any promoter who offerstax avoidance strategies to morethan one potential participant andreceives a fee in excess of $500,000.00in the aggregate for the strategy.

A person who aids or assists in theunderstatement of tax liability in-volving tax shelters and who does notmaintain a list of investors in thattax shelter is subject to a a penaltyof 50% of the gross proceeds derivedor to be derived from each investor.For a person who fails to disclose areportable transaction, the penalty isthe greater of 5% (or 10% with alisted transaction) of any increase inFederal tax or $100,000.00.

Any person who transfers moneyor other property directly or indi-rectly to an identified tax haven andwho does not furnish information onthe transfer will pay a penalty of 20%of the amount of the transfer. Fur-ther, U.S. tax benefits are disallowedfor transactions that have no realbusiness purpose, and this bill im-poses new penalties on taxpayerswho fail to report an interest in anoverseas account.

Endnote: Proposed Legislation,“Current Status of Proposed Legisla-tion Affecting International TaxRules,” by David Benson, Esq.,Marjorie A. RoUinson, Esq. and PegO’Connor, Esq. Tax Management In-ternational Journal Vol. 31, No. 8,428, August 9, 2002.

Laura A. Quigley is Of Counsel to

the international business practicelaw firm of Hendry, Stoner, Sawicki& Brown, P.A. She practices tax, cor-porate and business law with an em-phasis on litigation implications. Inthese general legal areas, she has de-veloped niche areas in internationaltax, international estate planning,tax controversy and litigation/settle-ment tax.

Brussels & LondonProgram

March 30 - April 4, 2003

The International Law Section is planning a two-dayprogram in Brussels with the European Parliament anda two-day program in London with the British Parliament.

Departure from Miami would be Sunday March 30,2003 with arrival in Brussels on March 31st. There wewill be personally escorted, by a member of the EU Par-liament, to a behind the scenes tour of the European Par-liament facilities followed by meetings and dinner withseveral members of Parliament on Tuesday April 1st.Wednesday we will fly to London where on Thursday wewill have a lunch at the House of Commons, another per-sonally escorted tour, meetings with members. Thursday,dinner in House of Lord’s and additional meetings withParliament members.

Cost is projected at $1600.00 per person double occu-pancy and includes round-trip air (Miami-Brussels-Lon-don-Miami) first class hotels, transfers, and most meals.Registration would be an additional $100.00. The trip isvery limited to a maximum of 30 participants not includ-ing spouses or significant others. If you are interested,please contact Angela Froelich at [email protected] orLarry Gore at [email protected].

24

The Florida Bar650 Apalachee ParkwayTallahassee, FL 32399-2300

FIRST CLASSU.S. POSTAGE

PAIDTALLAHASSEE, FL

Permit No. 43

Volume XVIII, No. 2 THE FLORIDA BAR Winter 2002-2003 The...

Documents

Transcript of Volume XVIII, No. 2 THE FLORIDA BAR Winter 2002-2003 The...