The Vietnam War: Take II

The United States pulled out of an intractable, expensive and highly destructive war in Vietnam in 1975. For decades thereafter, relations between the two countries was nonexistent. But then ever so slowly came the thawing. Trade was a big part of The Great Thaw. Since time immemorial, whether the war involved companies or countries, real peace came only after the warring parties had established strong and deep trade ties between them. Trade has a way of creating new relationships and new memories.

Such has been the experience of Vietnam and the United States. Despite the bitter memories of mass bombings and torture cells deep in the jungle, the two countries forged a path to peace. In 2007, Vietnam joined the World Trade Organization with the aid and support of the United States. Vietnam's accession signaled the renewal of its ties with the international community. But just as important, it signaled a new relationship with the United States. The bonds of that new relationship are now being tested. Just a few weeks ago, Vietnam filed its first ever dispute in the WTO. Against whom? The United States.

In United States — Anti-dumping Measures on Certain Shrimp from Viet Nam (DS404), the two countries once again face off on some heated issues. The U.S. believes Vietnam is "dumping" large quantities of shrimp into the U.S. market. In trade law, dumping occurs when the exporting country sells its products into the domestic market either for less than the cost of production or less than the price sold at home. It is an unfair trade practice, and most countries have laws against such a practice. Vietnam, however, takes issue with the way the United States has calculated the so-called "dumping margin" -- an additional charge the U.S. imposes on Vietnamese shrimp to raise the price to more accurately reflect its normal value (i.e., it's "fair price"). The U.S. dumping methodology has long been under attack, indeed the WTO previously ruled the complicated "zeroing" method in dispute violated U.S. WTO obligations.

In this war, as in the last, Vietnam is likely to win an unexpected victory. What will this mean for relations between the two countries? Thankfully, in a sign of how far we have come since 1975, it is likely to have no effect. Trade = Peace

Times They Are A Changing: Developing Countries in the WTO

A few weeks ago, I strode into my law school classroom brimming with hope and optimism. "Brazil is about to retaliate against a U.S. trade measure!" I excitedly reported to my students. Luckily, this was a class on trade and development law, and so my students were equally struck by the news (it wouldn't have gone over so well in say . . . my contracts class!) Brazil poised to retaliate against the United States for an unfair trade action? Unheard of.

As Harvard Professor Robert Z. Lawrence notes, “Traditionally, retaliation in trade has been the preserve of the largest developed countries, which have market power.” To put it bluntly, there has always been an unspoken rule of trade law: Only rich countries get to retaliate against another's violation of trade rules. "Retaliation" in trade parlance simply means that one country receives approval from the WTO to take countermeasures against another for violation of the rules. The most common countermeasure is for the prevailing country to impose more duties on the exports of the losing country. But retaliation comes at some cost for poor countries--either economic or political.

For developing countries who desperately need the exports of more advanced countries, raising duties on these products simply punishes their own citizens who are forced to pay more for the goods (or risk not having them). Moreover, rich countries have an array of subtle and not-so-subtle means of coercion at their disposal to prevent developing countries from raising trade claims in the first place. Much of North-South trade is characterized by "voluntary" concessions--namely, rich countries provide poor ones preferential access to their markets on a non-reciprocal and voluntary basis. One example of this is the U.S.-created African Growth and Opportunity Act (AGOA), which allows duty-free and quota-free imports of some African goods into the U.S. market. But what would happen if Uganda, which is AGOA-certified, were to successfully raise a claim against the U.S. in the WTO? There goes its AGOA benefits. It is perhaps not surprising under the circumstances that no African country has raised a dispute in the WTO.

Developing countries have long faced the frustrating dilemma of a right without a remedy in trade disputes. But suddenly, things are changing. In 2002, Brazil successfully brought action in the WTO against U.S. subsidies to its cotton industry, which averaged $4.9 billion per year. After various appeals, Brazil was finally authorized by the WTO to retaliate against the United States to the tune of $830 million. Perhaps more importantly, Brazil threatened (with WTO support) to suspend intellectual property protection on things like U.S.-manufactured seeds and pharmaceuticals. Suddenly, Washington was taking note.

Just this week, Brazil and the United States announced a settlement of their now eight year old dispute. Brazil will postpone retaliation, and the United States in turn will modify its cotton subsidy program and establish a temporary assistance fund for the Brazilian cotton industry. Brazil's success has demonstrated that the trade rules are not exclusively the purview of the largest developed countries.

My students and I can only wonder what this will mean for the future of world trade.

Women in International Economic Law

There's a new global organization in international law.
It's Women in International Economic Law, or WIEL. It'll hold hold its 1st meeting from 1:30 to 3:00 p.m. next Tuesday, July 15, at the Institut de Hautes Etudes Internationales et du Developpement/Graduate Institute of International and Development Studies in Geneva, Switzerland, in conjunction with the inaugural meeting of the Society of International Economic Law.
Featured at WIEL's initial meeting will be Jennifer Hillman (above right), a Member of the WTO Appellate Body. She'll speak on the past, present and future of women in international economic law, after which the group will discuss its own objectives.
For details, contact Susan Franck (below right), Washington and Lee University School of Law, at frmailto:francks@wlu.edu, or Tracey Epps (above left), Faculty of Law, University of Otago, Dunedin, New Zealand, at tracey.epps@otago.ac.nz.

The Coming Revolution: Women in the WTO

International trade law is typically viewed as a “man’s domain,” but recent action by the World Trade Organization may help to change that perception. By June 1, 2008, three out of the seven judges on the WTO Appellate Body will be women—a truly astonishing feat considering the first woman, Merit E. Janow, was not appointed until 2003, fully 8 years after the Appellate Body came into existence. (That's in contrast with the International Criminal Court, which as detailed in this post today, has had women judges from its inception.)
Judges on the Appellate Body are appointed to four year terms, with possibility of renewal for one more term. The appointment process is an arduous one with candidates nominated by their countries and vetted by the organization before a final decision is made by the WTO’s selection committee. Usually, the process is not overly political, but this time around Taiwan (or Chinese Taipei as it is called in the WTO) objected to the slate of new judges. Apparently, the problem was with the first Chinese judge to be elected to the AB, whose impartiality Taiwan questioned. What effect will this transformation have on the WTO as an institution? It will be interesting to evaluate that question over time. Here is a brief bio of the new judges taken from the WTO’s website (photo credit) :
Lilia R. Bautista (left) was born in the Philippines on 16 August 1935 and was recently consultant to the Philippine Judicial Academy, which is the training school for Philippine justices, judges, and lawyers. Bautista was the Chairperson of the Securities and Exchange Commission of the Philippines, Senior Undersecretary and Special Trade Negotiator at the Department of Trade and Industry in Manil, and Philippine Permanent Representative in Geneva to the WTO (among others). Bautista earned her Bachelor of Laws Degree and a Masters Degree in Business Administration from the University of the Philippines. She was conferred the degree of Master of Laws by the University of Michigan as a Dewitt Fellow.
Jennifer A. Hillman (left) was born in the United States on 29 January 1957 and serves as a Fellow and Adjunct Professor of Law at the Georgetown University Law Center's Institute of International Economic Law. She has served as a member of the United States International Trade Commission, and the United States Trade Representative. Hillman has a Bachelor of Arts and Master of Education from Duke University, North Carolina, and a Juris Doctor degree from Harvard Law School in Cambridge, Massachusetts.
Yuejiao Zhang (right) was born in China on 25 October 1944 and is Professor of Law at Shantou University in China. She is an arbitrator on China's International Trade and Economic Arbitration Commission and practices law as a private attorney. She also serves as Vice-President of China's International Economic Law Society. Zhang served as a Board Director to the West African Development Bank from 2005 to 2007. Between 1998 and 2004, she held various senior positions at the Asian Development Bank (ADB), including as Assistant General Counsel, Co-Chair of the Appeal Committee, and Director-General of the ADB. Prior to this, she held several positions in government and academia in China. Zhang has a Bachelor of Arts from China High Education College, a Bachelor of Arts from Rennes University of France, and a Master of Laws from Georgetown University Law Center.

Treading a green road on trade

Check out the recent ASIL Insight by Julia Qin on the June 2007 "'green' decision" in Brazil – Measures Affecting Imports of Retreaded Tyres.
As Qin (left) explains, the European Communities had brought a challenge against a Brazilian law that bans importation of already-used-but-retreaded tires (right), based on the reasoning that the retreads have a shorter lifespan and so will find their way even sooner into waste heaps where they "create health and enivronmental hazards by providing breeding grounds for mosquite-borne diseases," and further "caus[e] tyre fires that are difficult to control." A panel of the World Trade Organization agreed, perhaps more so than Brazil wished: the panel "effectively directed" Brazil to extend the ban to imports of such tires from countries outside Europe; most notably, MERCOSUR neighbors that'd been permitted to sell the tires in Brazil.
In Qin's view the Brazil - Tyres decision could "become a milestone in WTO jurisprudence on trade and the environment" -- if, that is, it survives review by the WTO's Appellate Body.