WTO and International Trade Agreements:

Under Pressure in Light of theGlobal Economic Downturn

WTO and International Trade Agreements:

Under Pressure in Light of theGlobal Economic Downturn

University of Chicago Law School, CLE Lunch & Learn

June 30, 2009

Mark Nguyen, PrincipalMDN Trade LLC

University of Chicago Law School, CLE Lunch & Learn

June 30, 2009

Mark Nguyen, PrincipalMDN Trade LLC

Global Protectionism on the Rise…

Global Protectionism on the Rise…

U.S. procurement barriers in the stimulus bill (2009 Economic Recovery Act); “10+2” customs and security requirements; House climate change bill

Chinese export restraints; security and testing requirements (e.g., CCC, Info Security, WAPI)

European standards/technical barriers on chemicals (Reach); materials content (RoHS); subsidies

Latin American import tariffs; licensing measures; VAT taxes

Overall rise in subsidies, antidumping (27%+ in 2008) and border measures

U.S. procurement barriers in the stimulus bill (2009 Economic Recovery Act); “10+2” customs and security requirements; House climate change bill

Chinese export restraints; security and testing requirements (e.g., CCC, Info Security, WAPI)

European standards/technical barriers on chemicals (Reach); materials content (RoHS); subsidies

Latin American import tariffs; licensing measures; VAT taxes

Overall rise in subsidies, antidumping (27%+ in 2008) and border measures

World Bank & WTO Studies on Protectionism

World Bank & WTO Studies on Protectionism

World Bank & WTO studies in March 2009 cite rise of protectionism, nearly 80 measures since 2008

Despite G-20 pledge in November 2008, 17 out of 20 have imposed 47 measures

Examples: U.S. and foreign auto subsidies; EU export subsidies; Russian auto tariffs; Ecuador tariffs on 600 goods; Indonesian limitations on 5 categories

Bank forecasts a 3-4% decline in global output; WTO a 9% decline in global trade in 2009

… a return to the 1930s?

World Bank & WTO studies in March 2009 cite rise of protectionism, nearly 80 measures since 2008

Despite G-20 pledge in November 2008, 17 out of 20 have imposed 47 measures

Examples: U.S. and foreign auto subsidies; EU export subsidies; Russian auto tariffs; Ecuador tariffs on 600 goods; Indonesian limitations on 5 categories

Bank forecasts a 3-4% decline in global output; WTO a 9% decline in global trade in 2009

… a return to the 1930s?

Barriers & RemediesBarriers & RemediesCountries Barriers Remedies

U.S., EU, Canada

Automotive bailouts and subsidies WTO SCM

U.S. Procurement; differential of 25% WTO GPA

Argentina Increase in VAT taxes on hi-tech goods

None

Ecuador Raised tariffs on 600 goods categories

WTO schedule

India Special additional duty (4%); anti-dumping measures; import bans

WTO AD; schedule

China Ban of certain raw material exports; technical standards; export subsidies

WTO SCM, TBT, Protocol

Malaysia Restrictions on foreign labor WTO GATS

Indonesia Restrictions of five goods categories WTO NT

Russia Raised tariffs on autos None

WTO/FTAs: Legal ObligationsWTO/FTAs: Legal Obligations

not necessarily,WTO/FTAs dispute settlement

mechanisms critical to enforcing obligations

WTO/FTAs as negotiating forums for reducing barriers and create disciplines

WTO/FTAs multilateral and bilateral committees/reviews monitor barriers

But still a global dilemma…

not necessarily,WTO/FTAs dispute settlement

mechanisms critical to enforcing obligations

WTO/FTAs as negotiating forums for reducing barriers and create disciplines

WTO/FTAs multilateral and bilateral committees/reviews monitor barriers

But still a global dilemma…

WTO/FTAs: Dispute SettlementWTO/FTAs: Dispute Settlement

WTO/FTAs dispute settlement mechanisms discourage barriers, and can be used to challenge inconsistent measures

Even the smallest countries have prevailed (e.g., US-Antigua/Barbuda online gaming)

Lengthy process; minimum of two years and compliance is recommended, not mandatory

WTO/FTAs dispute settlement mechanisms discourage barriers, and can be used to challenge inconsistent measures

Even the smallest countries have prevailed (e.g., US-Antigua/Barbuda online gaming)

Lengthy process; minimum of two years and compliance is recommended, not mandatory

WTO/FTAs: Negotiating ForumWTO/FTAs: Negotiating Forum

WTO/FTAs have been an active forum for negotiations on liberalization and disciplines

WTO Doha Round launched in 2001; stalled since breakdown of talks in August 2008

FTA activity slowing in U.S.; Panama & Korea (2007) and Colombia (2006) stalled indefinitely in Congress

U.S. to host APEC in 2011; Bogor 2010/2020 goals unlikely; FTAAP a bold new initiative?

WTO/FTAs have been an active forum for negotiations on liberalization and disciplines

WTO Doha Round launched in 2001; stalled since breakdown of talks in August 2008

FTA activity slowing in U.S.; Panama & Korea (2007) and Colombia (2006) stalled indefinitely in Congress

U.S. to host APEC in 2011; Bogor 2010/2020 goals unlikely; FTAAP a bold new initiative?

WTO/FTAs: Monitoring Mechanisms

WTO/FTAs: Monitoring Mechanisms

WTO has numerous committees that meet regularly to review compliance (e.g., CTG, TBT, SPS, CTS, RTA, ITA)

WTO Trade Policy Review: comprehensive review every 2-5 years

FTAs have annual and periodic bilateral meetings to review compliance

Review bodies have little power except for increased transparency and pressure

WTO has numerous committees that meet regularly to review compliance (e.g., CTG, TBT, SPS, CTS, RTA, ITA)

WTO Trade Policy Review: comprehensive review every 2-5 years

FTAs have annual and periodic bilateral meetings to review compliance

Review bodies have little power except for increased transparency and pressure

US-China Trade FrictionsUS-China Trade Frictions

New WTO dispute launched: China-US/EC on raw materials/chemicals export restrictions

Existing dispute on China export subsidies; copyright/IPR protection; poultry

China “green dam” Internet filtering requirement July 1 (postponed), information security and WAPI telecoms standards

China currency legislation pending in Congress

New WTO dispute launched: China-US/EC on raw materials/chemicals export restrictions

Existing dispute on China export subsidies; copyright/IPR protection; poultry

China “green dam” Internet filtering requirement July 1 (postponed), information security and WAPI telecoms standards

China currency legislation pending in Congress

US-China DialogueUS-China Dialogue

Joint Commission on Commerce and Trade (JCCT) and Strategic Economic Dialogue (SED) continuing in the Obama Administration by Secretaries Geithner and Locke, USTR Kirk

China bowed to pressure on information security deadline (May 1) and green dam software (July 1); but barriers remain on IT and other products

Joint Commission on Commerce and Trade (JCCT) and Strategic Economic Dialogue (SED) continuing in the Obama Administration by Secretaries Geithner and Locke, USTR Kirk

China bowed to pressure on information security deadline (May 1) and green dam software (July 1); but barriers remain on IT and other products

U.S. Congress and Domestic BarriersU.S. Congress and Domestic Barriers

Many members of Congress reluctant to support free trade; some hostile

U.S. “Buy America” legislation on procurement has discriminatory effect toward non-GPA members like India, China, Brazil

House bill on climate change (June 26) includes restrictions on carbon-intensive imports

Obama Administration more pragmatic towards NAFTA, China, FTAs than expected

U.S. states imposing barriers and reluctant to support liberalization

Many members of Congress reluctant to support free trade; some hostile

U.S. “Buy America” legislation on procurement has discriminatory effect toward non-GPA members like India, China, Brazil

House bill on climate change (June 26) includes restrictions on carbon-intensive imports

Obama Administration more pragmatic towards NAFTA, China, FTAs than expected

U.S. states imposing barriers and reluctant to support liberalization

Prospects for Recovery. . . a New Trading Order?

Prospects for Recovery. . . a New Trading Order?

G-20 leadership and dialogue beyond G-8 countries

Obama administration pragmatic; launch of new trade initiatives?

Trade and climate change/environmental initiatives

Global recovery linked to trade liberalization, facilitation and growth after 2008-2009 downturn

Restart of Doha Round in 2009? Regional and bilateral initiatives?

G-20 leadership and dialogue beyond G-8 countries

Obama administration pragmatic; launch of new trade initiatives?

Trade and climate change/environmental initiatives

Global recovery linked to trade liberalization, facilitation and growth after 2008-2009 downturn

Restart of Doha Round in 2009? Regional and bilateral initiatives?

Thank You! Contact InfoThank You! Contact Info

Mark NguyenPrincipal, Global Regulatory Affairs

MDN Trade LLC424 S. Broadway #703Los Angeles, CA 90013mark@mdntrade.comTel: (310) 487-1457Fax: (213) 341-2417

Mark NguyenPrincipal, Global Regulatory Affairs

MDN Trade LLC424 S. Broadway #703Los Angeles, CA 90013mark@mdntrade.comTel: (310) 487-1457Fax: (213) 341-2417