Summary International Business Law - The Hague University

WEEK 9 – GATT – Chapter 7

WTO  World Trade Organization
- Annex 1A  Agreements on Trade in Goods ( GATT)
- Annex 1B  General Agreement of Trade in Services (GATS)
- Annex 1C  Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)

Responsible for implementation of WTO, acting as a forum for trade negotiations, reviewing trade
policies and practices of WTO member states, and serving as a tribunal for disputes

Members:
- States
- Custom Territories (EU, ASEAN)

Purpose:
- Promotion and liberalisations of International Trade (LoIT)
- LoIT 

Principles:
- Direct effect (rules of WTO override national law)
- Protection through tariffs (on national industries)
o National industries (so not economic)
o No quotas / quantitative restrictions / taxes disguised as tariffs
- Non-discrimination (equality)
- Article 1 of GATT  non-discrimination principle (N-DP)
o MFN Rule (Most Favourite Nation Rule)
 Equal treatment of products from other MS that ask to be imported;
 Applications of MS tariff rules equally to all other members
 Non-discrimination at a country’s border
o NT Rule (National Treatment Rule)  Once imported goods are within the territory
of a state, that state must treat those goods no less favourably than it treats its own
domestic goods.
 Treatment of imported products from other MS equally
 Once they are inside its borders (on the local market)
 With respect to internal taxes (article 111.2)
o General Exceptions:  to protect public policy
 Necessary to protect public morals
 Necessary to protect human, animal =, or plant life/health
 Related to gold or silver
 Relate to the products of prison labour
 Protect national treasures of artistic, historic or archaeological value
 Relate to conservation of exhaustible natural resources
o Security exceptions:
 Protect essential security interests
o Other exceptions
 Escape clause (safeguards)
 Emergency & temporary measure
 Protects particular industry threatened by number of imports

Chapter 7, pp. 365-426, Chapter 5: Foreign Investment, Chapter 9 Intellectual Properties, Chapter 6 Money and
Banking, chapter on Taxation, Chapter 12: Financing

,GATT Policy: Regional (economic) Integration
- Purpose  Promotion and Liberalisations of international trade at regional level
- Means:
o Free Trade Area: Benelux, NAFTA, ASEAN, afCFTA
o Customs union: EU, Central American Common Market, CEMAC
- Brexit 

EU  Supranational, trias politica, all EU member states equal
USA view  no general agreements on trade, trade agreements with individual states. (EU is to
strong – divide policy)

Multilateral Trade Agreements
The regulatory agreements deal with:
- Customs valuation
o Evaluation of imported goods for tariffs’ purpose
o Evaluation method
- Preshipment inspection
o Checking of goods in the port of loading of developing countries
o Prevention of under-invoicing & fraud
- Technical Barriers to Trade (TBT Agreement)
o Technical regulations and standards
 Protection for the life and health of humans, animals, and plants, and the
environment
 Prevent deceptive practices
 Requirement; must NOT create unnecessary obstacles to trade
 May constitute exceptions to GATT’s N-DP
- Sanitary and phytosanitary measures (SPS Agreement)
o Protection for the life and health of humans, animals and plants, and the
environment
 May constitute exceptions to GATT’s N-DP
 Sanitary  hygiene, spread of pests and diseases and form risks arising from
toxins and contaminants
 Phytosanitary  produced food (animal and plant) (genetically enhanced)
- Antidumping
o Selling exported goods at prices below their normal value
o Not prohibited/when becomes prohibited?
- Safeguards
The Sectoral agreements:
- Agriculture
- Textiles and clothing
- Rules of Origin
o Laws, regulations, and administrative procedures
o Purpose: determine the country of origin of goods
o The agreement on rules of origin:
 Harmonisation of rules of origin
 Non discrimination rules:


Chapter 7, pp. 365-426, Chapter 5: Foreign Investment, Chapter 9 Intellectual Properties, Chapter 6 Money and
Banking, chapter on Taxation, Chapter 12: Financing

,  May be discriminatory
 May constitute exceptions to GATT’s Non-DP
Purpose:
- To avoid impediment of barrier to free import/export
- May be discriminatory

WTO Panel decision  makes the decision if something may be banned / discriminated

WEEK 10 – Chapter 5 – foreign Investment

Foreign Investment (FI)
- Ownership (one person)
- An enterprise
o 10% = of the controlling interest
o Not located in the owners’ home country

FI is regulated by Foreign Investment Law & Codes
- Bilateral Investment Treaties (BIT)
- Can promote and restrict investments through screening and regulating applications
o Level of regulation differ per country
 Open  minimal regulations
 Closed  strong regulations & Supervision
 Developing economies & economies going from closed to open tend to have
more regulations

Law & Codes National Foreign Investment Policies (Regulations)
Purpose:
- Promoting local productivity and technological development
- Encouraging local participation
- Minimizing foreign competition in economic areas already well served by local businesses

Screening of FI Applications:
Requirements:
- Register/apply with the designated government
o Financial plan, business plan, local involvement ect.
- Obtain governmental approval
o Government evaluation may look at contribution to local economy, opportunity for
technology transfer, impact on local markets ect.

FI limitations:
- The kinds of business forms
o Have/include local participation
o Obliged to fully disclose their activities to the public scrutiny
- Percentage of (foreign) equity or shares in local businesses
o May own up to certain percentage of equity
- The Economic sectors (Sectoral [sectorial] Limitation)
o Sectors exclusive for the state or its nationals


Chapter 7, pp. 365-426, Chapter 5: Foreign Investment, Chapter 9 Intellectual Properties, Chapter 6 Money and
Banking, chapter on Taxation, Chapter 12: Financing