International Trade Law
Introduction
covers various scope of activities related with agreement for sales of goods, the terms of goods carriage, quantity and quality, insurance, and intellectual property issue.
Breaking out international trade law phrase into parts, ?inter? is Latin for between, ?national? is nations, ?trade? is the exchange of goods, services, and technology for profit, and ?law? is the regulation of conduct. Therefore it can be defined as the regulation of the conduct of parties involved in the exchange of goods, services and technology between nations.
Commonly international trade law can be described into two, that?s ?public? and ?private?.
Public international trade law is the regulation of conduct within nations about commerce. Here, ?States? is used to refer to the national governments rather than the ?governments? itself, because some governments will change and the new one will not be recognized internationally.
While, private international trade law is the regulation of conduct which happened between private traders in different States. It generally does not include the trade activities of individual consumers, but there has been a shift in perception.
Modern development have make the public and private international trade law has less meaning, where, for an example a World Trade Organization (WTO) agreement is public issue but it is also can be translates into private issues such as tariffs, dumping and taxes. In old times, the division also did not reflect the reality of it existence since it is masked by the government?s involvement. They used the regulation of immunity to protect their own trading position.
Sources of International Trade Law
Agreements between States
It?s known as treaties between States and the closest international equivalent to legislation in domestic legal systems. Treaties involved more than one State, means between two States, or multiple meaning between many States. Multiple treaties are developed mostly through international organizations such as the United Nations (UN).
Previously decided cases and academic writings
When a doctrine have uncertainty which was not written but if it is consistent with the objective of interpretation to previous decisions, it can be taken into account. Previous arbitral awards and judicial decisions will be considered by arbitrators and national courts. Besides, leading academics writings is also considered as importance since it is a form of expert commentary of the state on which the law was used in a certain area.
Agreement between traders
The traders should be free to contract on their own conditions and to decide how disputes between them should be settled and according to what law. This principled is considered very important in the international trade. However, the application must be somewhat restricted because any contract of sale, regardless of its terms, cannot exist independently without national law. Therefore, the way governing law is to see whether a breach has occurred and determining the parties? risks.
The course of past dealings between traders can also result in terms of becoming part of the agreement between them, besides, the contractual terms agreed. These past dealings can be applied to the contractual relationship despite their not being incorporated into it in written form. If there is an agreement of contract was made over the telephone with no reference to the standard conditions, it is shown that it was in the reasonable contemplation of the parties that the contract content has the standard conditions in the same way as in the other contracts, which contracts form a course of dealings between the parties.
Domestic law
If particular issue cannot be settled by the international organization, where there is no generally recognized practice or principle, or do not have a specific term in the trade contract, domestic law will be applicable. For example in Clark King & Co Pty Ltd v Australian Wheat Board (1978), (Sanson, 2002) where wheat growers argued that the monopoly of the Wheat Board was no reliable. The state laws of procedure may apply to regulate this conduct since the State court has the power to order a freeze on the sale of goods, this can be used notwithstanding the fact that the sale is ruled by an international organization.
Dominant commercial organizations
Multinational companies normally, who have a significant hold on the market for a particular product, commodity or service, will have a large say in how the market operates and under what conditions. This company can determined the regulation in the industry, and it is difficult to handle in an economic environment where the businesses aim to maximize profits for those with power not to abuse it.
One example of dominant company is in English case which involving the petroleum giant, Esso. The case of Esso v Marlin (1976), (Sanson, 2002) involved the granting of a license by Esso for the running of a petrol station to Marlin. In this case, Esso has stipulated in the agreement delivery of set amounts of petrol at set intervals so that the petrol station would have to have a certain level of turnover in order to be able to accept the next fixed quantity delivery. Esso was able to determine such an agreement as a result of the huge power imbalance between the parties. From the negotiations, Marlin believed that the petrol station would have a one way street system for a vehicle to go in and out of the petrol station. Anyway, the local authority decided against the one way street system after the contract had been signed. This meant the petrol station will face less profit. Where as Esso refused to renegotiate and the contract was breached with out consideration that the petrol station willing to work hard. The court held decided that where a significant change occurs such as changes in building plans the terms of the contract are to be set aside.
International Trade Organizations
Malaysia Government Organization
i)Ministry of International Trade and Industry (MITI)
The Ministry of Commerce and Industry was established in April 1956 and situated in Government Office, Jalan Raja. The Ministry was then renamed the Ministry of Trade and Industry in February 1972. On 27 October 1990, the Ministry was separated into two Ministries which are:
i)Ministry of International Trade and Industry (MITI); and
ii)Ministry of Domestic Trade and Consumer Affairs (KPDN).
Functions
?To plan, formulate and implement policies on industrial development, international trade and investment.
?To encourage foreign and domestic investment.
?To promote Malaysia?s exports of manufacturing products and services by strengthening bilateral, multilateral and regional trade relations and cooperation.
?To enhance national productivity and competitiveness in the manufacturing sector.
(http://www.miti.gov.my)
ii)Malaysia External Trade Development Corporation (MATRADE),
Malaysia External Trade Development Corporation is Malaysia’s national trade promotion agency. Established in March 1993, MATRADE’s primary role is to assist Malaysian exporters to develop and expand their export markets. Assisted by a network of 39 overseas offices located in major commercial cities around the world, MATRADE provides a wide range of services and assistance to both Malaysian exporters and foreign importers who are sourcing for trade related information.
Functions
?To promote, assist and develop Malaysia’s external trade with particular emphasis on the export of manufactured and semi-manufactured products and services.
?To formulate and implement export marketing strategies and trade promotion activities to promote Malaysia’s export.
?To undertake commercial intelligence and market research and create a comprehensive database of information for the improvement and development of Malaysia’s trade.
?To organise training programmes to improve the international marketing skills of Malaysian exporters.
?To enhance and protect Malaysia’s international trade interest abroad.
?To promote, facilitate and assist in the services areas related to trade.
(http://www.matrade.gov.my)
Intergovernmental Organizations
Intergovernmental organizations was created by two or more States to make agreements in common interests as an entity separate from its members. An organization is formed with an objectives, functions and structure for it members benefits. The world organizations exist currently such as European Union and the United Nation, while other types of economic organization such as North American Free Trade Association (NAFTA). These organizations was an arrangement between States involved to agree to reduce or eliminate tariffs.
European Union (EU)
The European Economic Community (EEC) was created in 1965 by the Treaty of Rome (1957), with the aim to establish a common market with the alignment of economic and social policies, to promote harmony, stability, and an increased standard of living. The EEC was then referred to as the European Community (EC) and in 1993 was changed to the European Union (EU) under the Treaty on European Union (TEU), also known as the Maastricht Treaty. The EU is the most cohesive and comprehensive trading bloc in the world. It has made significant achievements in the removal of internal tariffs and quotas, free movement of persons, services and capital, the customs union, rules on competition, dumping practices and social policy. The EU competition rules are of great importance both to countries wishing to sell goods into the EU and to companies wishing to manufacture goods within the EU, (Sanson, 2002).
ASEAN
The Association of Southeast Asian Nations (ASEAN) is a regional economic group formed by the 1967 Bangkok Declaration. The Foreign Ministers of ASEAN Members States meet annually in a different member state each year. A Secretariat was formed in 1976 to co-ordinates administration, and various committees have been established in areas such as banking, finance, food, trade, and transport. Rather than focusing on tariff reduction, ASEAN Member States have created preferential tariffs for goods originating in other Member States, negotiated bilaterally or multilaterally. This applies to commodities such as rice and crude oil. The governments of Member States undertake joint development of industrial projects that are then afforded monopoly production rights in ASEAN Member States, and high tariff preferences. ASEAN has also encouraged private business entities to form clubs to reduce trade barriers between Member States in areas of industry and commerce. The current focus is the creation of the ASEAN Free Trade Area (AFTA). The AFTA agreement involves the founding members of AFTA, with implementation currently taking place, for reductions in import duties on 85% of goods in an inclusion list in 2000, 90% in 2001, and 100% by 2002. In late 2000, however, a protocol was agreed which allows ASEAN members to suspend tariff reduction commitments in the face of real difficulties, to allow some flexibility, with newer members having more time to comply, (Sanson, 2002).
North American Free Trade Association (NAFTA)
The NAFTA addresses competition policy and monopoly concerns, recognizing that prevention of anti competitive conduct would further promote free trade relations. However, the NAFTA provisions in this regard are general, and vaguely drafted. This can be compared to the Structural Impediment Initiative discussions with Japan, and the specific undertakings of the US-EC anti-trust co-operation agreement of 1991. Similarly, in the area of anti-dumping, the United State managed to prevent Mexico?s efforts at incorporating into NAFTA a modification of the US anti-dumping and countervailing duty laws. As it stands, each country reserves the right to apply their own laws in this area to imported goods. The NAFTA involves a three stage dispute resolution process. The first stage is consultation, which is envisaged to be the primary means of settling disputes. If unsuccessful, the second stage involves a meeting of the Free Trade Commission to discuss the matter. If the problem remains unresolved, an arbitral panel of five expert members hears the matter, using a procedure similar to panel dispute resolution under GATT. If it is contended that the offending country has violated both its NAFTA obligations and its GATT obligations, the complaining party is able to choose either forum to resolve the dispute, (Sanson, 2002).
Non Government Organizations
It is include profit and non profit organizations. Profit organization such as transnational corporations and non profit organization include International Chamber of Commerce.
Agreements
GATT
GATT was a network of international trade agreements and working bodies and its legal obligations were described as provisional, to be applied only where they were consistent with US domestic legislation. After the world wars that had inflicted a serious and long-term economic injury to the world, there was a grave need to have an international trading regime based on mutual co-operation of all countries, developed and developing, rich and poor, and countries blessed with immense natural resources and deprived of them. With this driving force, negotiating countries ultimately agreed to the General Agreement on Tariffs and Trade (GATT), which contained a regime to liberalize trade designed to assure open access to global market and free movement of goods, based on the following cardinal rules, (Ansari, 2007):
1.?Negative Obligation? ? under which states agreed to refrain from certain actions such as unjustified regulatory requirements, which covered non-justified tariff and non-tariff barriers, subsidies, or prescriptive regulations.
2.?Most-favoured Nation Treatment? ? under which states were obliged for non-discrimination among imported products based on their national origin.
3.?National Treatment? ? under which states were duty bound not to discriminate locally manufactured goods with imported goods. Among them, it is noticeable that no state was authorized to resort to qualitative or quantitative trade barriers outside the GATT.
GATT had no formal institutional arrangements because it will be the role of International Trade Organization. Decision making was delegated to the Contracting Parties acting collectively.
Resolving International Disputes
The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) has proven to be an effective instrument in dealing with global commercial problems while providing an elevated degree of legal security in multilateral relations. The effectiveness is revealed both in the time taken to resolve legal disputes, relatively short given the amount of disputes, and in the execution of the States? decisions. This system bred innovations in the judicial logic in the mechanisms of international conflict resolution, attained legitimacy in the international realm and allowed for greater participation of the States, including developing States, in the system. Currently, it can be said that the interpretations of the DSB serve to limit public policies of commercial stimulus in the entire world and to avoid conflicts among States, fulfilling an important preventive function. The efficacy of the system was attained through the high rate of compliance with its decisions. In a few cases, there was an implementation of authorized commercial retaliation because the majority of cases resulted in spontaneous compliance, even by the great economic powers, who would rather endure minor losses yet guarantee the legitimacy of the system as a whole, (Varella, 2009).
Issues on Competition Law and Policy
Collusion, or conspiracy, is concerted action by traders designed to prevent others competitors engaging in competition. Conspiracy can be between traders at the same level in a market, such as between retailers, or it can be between traders at different levels of a market, such as between a retailer, wholesaler, manufacturer and supplier. Where certain corporations engage in concerted action over time, their association is described as a cartel. Cartels generally exist where the main competitors in a market or market segment are members, so that collectively they can increase the market price without fear of loss of demand for their products. Cartels are primarily motivated by profit, and the higher the price charged by the major competitors in a market, the greater profitability. Three examples of collusive practices are market splitting, boycotts and price fixing, (Sanson, 2002).
References
Essential International Trade Law, by Michelle Sanson, 2002
International Trade Law: Problems, Cases, and Materials? by Daniel C. K. Chow, Thomas J. Schoenbaum, 2001
The Official Portal Of Malaysia External Trade Development Corporation (MATRADE),
http://www.matrade.gov.my
Ministry of International Trade and Industry (MITI),
http://www.miti.gov.my
