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Strategic Trade Policy in Context: Canada- Caricom
The Global Trading System and Trade Agreements
International Law and Domestic LawMultilateral, regional and bilateral agreementsFundamental Trade Principles
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International and Domestic Law
NationalLegal Rules
NationalLegal Rules
State A State B
International Legal Rules
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What is international law?
Law that regulates interactions of state
states are sovereign and legally equal
Largely consensualno central authority or binding enforcement in most cases
Generally dependent on domestic legal systems for implementation
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Sources of International Law
Customary international lawevolves into legal norm from • state practice plus • “opinio juris” – practice regarded as legally
binding
Treaty law – by far the more important
May be vague and aspirational or Very specific
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Interaction of International and Domestic Law
Depends on national constitutional lawTwo conceptual models
1. Dualism• International and domestic law regulate
distinct subject matter• Neither affects the other• If conflict
– which system prevails will depend on the forum in which conflict adjudicated – domestic or international
• Many domestic systems work on dualist model – including Canada’s
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Interaction of International and Domestic Law
Dualist ModelFor international law to have domestic effect must by transformed into domestic law•Implementing legislation•Preserves sovereignty
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Interaction of International and Domestic Law
Two conceptual models (continued)2. Monism (Adoptionist/Incorporationist)
• International and domestic constitute one system
• If conflict - international rules prevail• International law ipso facto incorporated
in domestic law without any action by domestic law makers
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Negotiation and Implementation of Treaties in Canadian Law
Federal executive (Governor in Council) has exclusive treaty making power
Typically seeks approval of provinces in advance if a matter within provincial jurisdiction – meaning that implementation will require provincial action
Treaty performance requires legislative implementation (dualist model)
Implementation by federal or provincial legislatures based on division of legislative powers in ss. 91 and 92 of the Constitution Act, 1867
Where is conflict between domestic law and treaty – domestic law prevails in Canada
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Modes of Treaty Implementation in Canada
Enactment of legislation that tracks obligations in treatyincorporates actual text of treaty by reference (often attached as a schedule)Delegates implementation to executive branch
No legislation – existing law already conforms
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Why have international trade rules?
Temptation to protectionProtect local firmsAvoid costs of adjustmentDevelopment and industrial policy goalsRevenue from tariffs
WTO and other international trade rules impose “disciplines” on governments
In the interests of increasing global welfare
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Function of International Trade Rules – the basic rules for international trade
Promoting Free TradeLimit ability of states to impose barriers to trade (e.g. tariffs)Impose basic principles on how states regulate trade(e.g. National Treatment and Most Favoured Nation)Address unfair trading and how states may deal with it(e.g. dumping and subsidizing exports)Enhance predictability of national regimes
• Limits on barriers to trade• Transparency requirements
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Function of International Trade Rules – the basic rules for international trade
Preserve “policy space” to allow states to address non-trade interests (e.g. health, environment)Acknowledge different conditions in developing countries (e.g. special and differential treatment, transition periods)
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International trade law at the Multilateral Level
1947 General Agreement on Tariffs and Trade
Failure to achieve “International Trade Organization”
1947-94 8 GATT Rounds of GATT Negotiations
1995 – World Trade OrganizationFounded at the end of the Uruguay Round
2001 – Doha Development Round
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Doha Development RoundNegotiation Agenda
•Agriculture•Non-Agricultural Market Access (NAMA)•WTO Rules(Subsidies, Countervailing Duties and Dumping, RTAs)•Services
•Intellectual Property•Dispute Settlement Understanding•Trade and Environment•Trade Facilitation•Trade and Investment•Trade and Competition Policy
Other Elements of Work Programme•Uruguay Round Implementation•Review of Special and Differential Treatment Provisions•Trade, Debt and Finance•Technical Cooperation and Assistance - Capacity Building
•Small Economies•Trade and Transfer of Technology•E-Commerce•TRIPS and Biodiversity•Least Developed Countries
Regional Trade AgreementsGATT/WTO Context
Cornerstone of the multilateral trading system is most favoured nation treatment (MFN)
Preferences accorded under RTAs are inconsistent with GATT MFN
GATT Article XXIV permits the formation of a customs union or a free trade area if certain conditions met
Duties and other regulations of commerce in each constituent territory relating to the trade of non-parties are not higher or more restrictive
• based on weighted average tariff rates and customs duties and assessment of other measures
Notice to WTOFree trade area defined as area in which “duties and other restrictive regulations of commerce” are “eliminated on substantially all the trade between the constituent territories”
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Regional Trade Agreements
Why negotiate RTAs?Go beyond multilateral commitments in the WTO to reap greater economic gains from liberalization
Deeper tariff cuts, additional issues addressedMore customized obligationsLess complex negotiating dynamic But power relations more significant and some issues can only be
dealt with at multilateral level
Avoid being left outProtect market access to trading partners as they negotiate RTAs with others
Political alliancesStagnation of Doha Round
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Regional Trade Agreements and the WTO
In principle, WTO rules balance Support for MFNWith permitting substantial liberalization among parties to RTAs
In practice, no effective compliance mechanismRTA Notifications examined by a working party of WTO Member representatives - reports to Committee on Regional Trade Agreements relating to compliance with GATTStandards for RTAs not applied rigorouslySeldom subject of dispute settlement
• Turkey – Textiles one of the only cases
GATS Art. V creates similar regime for trade in servicesNew rules for RTA’s on Doha Round Agenda
Enhanced concerns about effects of RTAs
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Spaghetti Bowl of RTAs
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