The WTO and its Rules

Brexit and its Implications for

the United States
Prof. Jennifer Hillman
Georgetown University Law Center
 Trump Administration Actions on Trade
1. Safeguard Actions—Solar Panels and Washing Machines—January 2018
a. Solar Panels-President imposes tariffs on $8.5 billion in imports
b. Washers-President imposes 50% tariff on $1.8 billion in imports
Response: China 178.6% AD on sorghum; Korea files WTO dispute
2. Steel and Aluminum-Section 232-National Security
a. Self-initiated investigation -April 20 and 27, 2017
b. Commerce releases report -February 16, 2018
c. President announces tariffs (25% on steel; 10% alum)-March 1, 2018, in
effect for most countries March 23, 2018; in effect for Canada, Mexico, EU on June
1, 2018; quotas in lieu of tariffs on South Korea, Argentina and Brazil, Australia
exempt
Response: WTO challenges filed by China, India, EU, Canada, Mexico, Norway,
Russia, Switzerland
Retaliatory duties imposed by: China, Canada, EU, Mexico, Turkey
 Trump Administration Actions on Trade (con’t)
3. Section 301-China-Unfair trade practices for technology transfer,
intellectual property, subsidized investments in Made in China 2025
a. Investigation self-initiated August 18, 2017
b. USTR releases results on March 22, 2018
c. Revised list of products ($46.3 billion)for 25% tariffs released
d. Tariffs on $34 billion in imports go into effect July 6, 2018
e. Trump asks for more tariffs on additional $200 billion in
imports
Response: China challenged US tariffs at the WTO; China imposed
retaliatory tariffs on $34 billion in US exports
 Trump Trade Actions –are they legal?
• Domestic Law
a. Section 201—safeguards—solar panels and washers
b. Section 232—threat to national security—steel and aluminum,
pending on cars and uranium
c. Section 301—unreasonable or discriminatory and burdens US
Commerce—forced technology transfer, theft of trade secrets, subsidies
and directed investment in Made in China 2025,
• International Law
A. World Trade Organization rules
B. Rules of other free-trade agreements (NAFTA, KORUS, DR-
CAFTA)
The WTO within the world of International Economic Organizations
World Bank
Mandate: evolved from
facilitator of
- post-war
reconstruction and
development to worldwide
poverty alleviation and the
promotion of long term
economic development
Members: 189 countries
Staff: 11,897 (from 170
countries)
International Monetary World Trade
Fund Organization
Mandate: evolved from Mandate: forum for the
maintaining par value fixed negotiation of trade
exchange rates to liberalizing agreements,
promotion of international provides transparency of
monetary cooperation, trade rules, and forum for
macroeconomic trade dispute resolution
surveillance, orderly
correction of BOP issues
Members: 189 countries Members: 164 countries
Staff: 2,400 Staff: 634
Characteristics of the WTO
• Contract—members are committing to provide specified
levels of access to their markets and to specific rules related
to trade in goods, services, and to IPR and standards
• Member-driven institution—members negotiate directly
with each other
• Single undertaking—if agree to certain aspects of WTO
rules, must agree to all of them (but schedules and much
else differ by member)
• Consensus based decision making
Key WTO Rules
• Most-Favored Nation (MFN) Article I of GATT—cannot discriminate
between members of the WTO in terms of tariffs or regulations
• Tariff Bindings—Article II of the GATT—cannot charge tariffs in excess of
the rates bound in your tariff schedule. US bound its tariffs on steel at
0% and its tariffs on aluminum at 0-5.6%
• Services—permit trade in services only if specified in your General
Agreement on Trade in Services (GATS) schedule.
• IPR—must provide protection consistent with other international
agreements for patents, copyrights, trademarks, trade secrets, industrial
designs and geographical indications
• Regulations and standards –based on science and transparent
Exceptions to the Rules
• Article XX—General exceptions for measure necessary to protect human,
animal or plant life, exhaustible natural resources, public morals, etc.
• Article XXI—Security Exceptions
(b) nothing prevents any WTO member from taking any action which
it considers necessary for the protection of its essential security interests
-relating to nuclear materials
-relating to traffic in arms, ammunition and implements of war
-taking in a time of war or other emergency in international relations
 WTO Dispute Settlement System
• More significant volume of cases than other international tribunals
• In its first 22 years, WTO Dispute Settlement Body has seen:
• 542 complaints filed (nearly 25 per year on average)
• 186 panel reports issued (159 standard, 27 Article 21.5
reports)—nearly 11 per year
- 120 Appellate Body Reports (101 standard, 19 Art.
21.5)
- 78 arbitrations (reasonable time, compliance, $)
• GATT dispute settlement averaged 6.38 disputes per year, with
many un-adopted reports (300 disputes in 47 years)
• ICJ averages less than 1.5 judgments per year (48 judgments and
23 advisory opinions in 50 years)
Main Players in WTO Dispute Settlement Process
• The Parties – WTO Members only
• Representation by private counsel
• The Dispute Settlement Body (DSB)
• The Panel – ad hoc; 3 panelists
• The Appellate Body – 7 members, appointed for 4 year term subject
to reappointment for 4 more years
• WTO Secretariat – Rules, Legal Affairs, Appellate Body
Main Stages of WTO Dispute Settlement
1. Consultation phase—government measures
2. Panel establishment
3. Panel procedures and report
4. Appellate Body review
5. Adoption of reports by the DSB
6. Implementation
7. Compliance review (Art 21.5)
8. Retaliation
Options for Losing Parties
1. Compliance-
• Bring measure into compliance; left to sovereignty
of country how to do so
• Must be done in “reasonable period of time”,
maximum of 15 months
2. Pay compensation
3. Permit/suffer retaliation
Brexit: The UK’s decision to withdraw
from the European Union (EU)
 Basic Elements of Brexit
(1) a Withdrawal Agreement to arrange the terms of the
"divorce,” including citizens' rights, financial
contributions by the U.K. to the EU, and the Irish border;
(2) a transition deal to cover the relationship between the
UK and the EU immediately after the withdrawal; and
(3) a framework for a future relationship which will outline
the final terms of post-transition EU-UK relations
(4) new or revised agreements for third parties like US with
both the UK and the EU
Timelines
The Northern Ireland Issue
Border crossing in the 1980s Border crossing now
Source: IrishNews.com Source: The Guardian
Lessons Learned from study of Brexit
• Depth and breadth of EU law embedded in
the UK makes unwinding relationship
between UK and EU very difficult and
very time consuming
• There is a gap between the UK’s ambitions
and the EU negotiation agenda.
• UK must replace/renegotiate/extend more
than 700 EU international agreements
implicating arrangements with more than
150 countries.
• Seemingly simple affairs like WTO tariff
schedules are not simple or easy
• Loss of access to EU agencies will be a
major problem for UK
• Stipulations from High Court and
Supreme Court—invocation of Article 50
is:
a) irrevocable, and b) unconditional.
UK’s Post-Brexit
Scenario