International Trade Law || Atty.

Higuit || Ople Notes The International Monetary Fund and the World Bank at a Glance International Monetary Fund oversees the international monetary system promotes exchange stability and orderly exchange relations among its member countries assists all members--both industrial and developing countries--that find themselves in temporary balance of payments difficulties by providing shortto medium-term credits supplements the currency reserves of its members through the allocation of SDRs (special drawing rights); to date SDR 21.4 billion has been issued to member countries in proportion to their quotas draws its financial resources principally from the quota subscriptions of its member countries has at its disposal fully paid-in quotas now totaling SDR 145 billion (about $215 billion) has a staff of 2,300 drawn from 182 member countries World Bank seeks to promote the economic development of the world's poorer countries assists developing countries through long-term financing of development projects and programs provides to the poorest developing countries whose per capita GNP is less than $865 a year special financial assistance through the International Development Association (IDA) encourages private enterprises in developing countries through its affiliate, the International Finance Corporation (IFC) acquires most of its financial resources by borrowing on the international bond market has an authorized capital of $184 billion, of which members pay in about 10 percent has a staff of 7,000 drawn from 180 member countries

What is Special Drawing Rights (SDR)? The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to around SDR 204 billion (equivalent to about $310 billion, converted using the rate of August 20, 2012) The value of the SDR was initially defined as equivalent to 0.888671 grams of fine goldwhich, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar. The U.S. dollarequivalent of the SDR is posted daily on the IMFs website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.

World Trade Organization Accession Process Membership WTO has 157 members and 27 governments. Countries negotiating membership observers. The purpose of observer status is enable these countries to follow discussions on matters of direct to them. About two thirds of the WTOs members are developing countries.

Accession Process
observer
After examination by the working party, bilateral talks begin between the applicant and individual countries. Upon completion of the bilateral talks, the working party finalizes the terms of accession, through a report.
The application and report is presented to WTO General Council or Ministerial Conference. 2/3 majority vote of WTO members is needed in order for applicant to sign the protocol and accede to the organization.

are WTO to interest

Country submits memorandum application to the WTO working party.

International Trade Law || Atty. Higuit || Ople Notes Objectives: The promotion of the free flow of trade To act as a permanent forum for trade negotiations To enforce a dispute settlement procedure ASEAN The ASEAN Vision 2020, adopted by the ASEAN Leaders on the 30th Anniversary of ASEAN, agreed on a shared vision of ASEAN as a concert of Southeast Asian nations, outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies. Feb. 1967 - Treaty of Amity and Cooperation (TAC) : Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations; The rights of every state to lead its national existence free from external interference, subversion, and coercion; Non-interference in the internal affairs of one another; Settlement of differences or disputes by peaceful manner; Renunciation of the threat or use of force; and Effective cooperation among ASEAN members Purpose/Objectives: To accelerate economic growth, social progress and cultural development in the region and; To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter. Principles: Enhance peace, security stability Political, security, economic, socio-cultural cooperation Preserve as nuclear weapons free zone Peace with the world, harmonious environment Single market and production base Alleviate poverty, narrow development gap Strengthen democracy, protect and promote human rights Respond to common threats Promote sustainable development Develop human resources ASEAN Political-Security Community peaceful processes in the settlement of intra-regional differences and it has the following components: political development, shaping and sharing of norms, conflict prevention, conflict resolution, post-conflict peace building, and implementing mechanisms ASEAN Economic Community - creating a stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities in year 2020; ASEAN Socio-Cultural Community - envisages a community of caring societies and founded on a

International Trade Law || Atty. Higuit || Ople Notes common regional identity, with cooperation focused on social development aimed at raising the standard of living of disadvantaged groups and the rural population, and shall seek the active involvement of all sectors of society, in particular women, youth, and local communities SOURCES OF ITL International Economic Law regulates the international economic order or economic relations among nations. International Trade Law is the rules and customs for handling transactions of goods and services between two or more nations, or between private companies across national boundaries. Article 38 (1) The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: (a) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; (b) international custom, as evidence of a general practice accepted as law; (c) the general principles of law recognized by civilized nations; (d) subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law International Conventions/Treaties General Agreement on Tariffs and Trade (GATT) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Trade-Related Investment Measures (TRIMS) Charter of Economic Rights and Duties of States (CERDS) The UN General Assembly adopted Resolution 3281 (XXIX) containing the Charter of Economic Rights and Duties of States on 12 December 1974. Customary Law lex mercatoria a set of general principles, and customary rules spontaneously referred to or elaborated in the framework of international trade, without reference to a particular national system of law pacta sunt servanda - treaty obligations must be fulfilled in good faith Sovereign Equality States are by their nature certainly not equal as regards power, territory and the like. But as members of the community of nations they are, in principle, equal whatever differences between them may otherwise exist. Economic Sovereignty "having control over the economic activities of both juridical and natural persons conducting business within ones country, whether nationals of that country or foreigners Permanent Sovereignty over Natural Resources (PSNR) Paragraphs 1 & 2 of the 1962 UN General Assembly Resolution on the PSNR state: 1. The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the state concerned; 2. The exploration, development and disposition of such resources, as well as the import of the foreign capital required for these purposes, should be in conformity with the rules and conditions which the peoples and nations freely consider to be necessary or desirable with regard to the authorization, restriction or prohibition of such activities. General Principles Most Favored Nation Clause (MFN) - any special treatment given to a product from one trading partner must be made available for like products originating from or destined for other contracting partners Generalized System of Preferences (GSP) - a system of exemption from the most favored nation principle (MFN) for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries.

International Trade Law || Atty. Higuit || Ople Notes National Treatment - prohibits discrimination between domestic and foreign products/services Reciprocity - favors, benefits, or penalties that are granted by one state (trading partner) to the citizens or legal entities of another (contracting partner), should be returned in kind Transparency - timely, reliable, clear and relevant public reporting on status, mandate, strategy, activities, operations and performance of trading parties in international trade agreements Judicial decisions and teachings of the most highly qualified publicists International Court of Justice (ICJ) - disputes between states World Trade Organization (WTO) dispute settlement reports - trade-related disputes between state members International Chamber of Commerce (ICC) International Court of Arbitration reports - business and commercial disputes among international organizations, private commercial entities or multinational companies Soft Law Quasi-legal instruments which do not have any legally binding force, or whose binding force is somewhat "weaker" than the binding force of traditional law, Non-binding agreements which nevertheless hold much potential for morphing into "hard law" in the future MULTILATERALISM an international political system international governance of the many and its central principle was opposition of bilateral discriminatory arrangements that were believed to enhance the leverage of the powerful over the weak and to increase international conflict. the practice of coordinating national policies in groups of three or more states 3 Components: 1. inter-governmental bargaining process Bargaining rounds 2. set of rules governing international trade relations multilateral rules to protect intellectual property Trade-Related Investment Measures (TRIMs), framework for international trade relations principle of reciprocity domestic safeguards 3. dispute settlement mechanism REGIONALISM The economic integration between two or more countries based on formal agreements Trading partners concerned grant each other conditions that are preferential in comparison with other countries Levels of Integration: Preferential trade zone free trade area customs unions common economic areas common market monetary union political union

International Trade Law || Atty. Higuit || Ople Notes

QUESTIONS AND ANSWERS ON THE CEPT Q1. What are CEPT concessions? Concessions granted under the CEPT refer to the lower tariff rates or customs duties that exporters from an ASEAN Member State have to face when exporting a product to another ASEAN Member Country. Q2. How are CEPT Concessions Exchanged ? In the CEPT these concessions are granted on a reciprocal basis. A Member Country is automatically eligible for concession if the tariff rate on a product it has included in the CEPT is at or below 20%. This means its exports of this product to any other Member Country will be levied the CEPT rate (which is lower than or equal to the MFN rate) set by those other countries. However, if the tariff rate on a product it has included in the CEPT is above 20%, then it is eligible for concessions only in those Member Countries that also impose a CEPT rate that is higher than 20%. Q3. What is the ASEAN Preferential Tariff Arrangement (PTA) ? The ASEAN PTA is an arrangement entered into by the ASEAN Member Countries in 1977 to offer preferential tariff treatment to products originating from ASEAN states. Under this arrangement an ASEAN-based importer will pay a lower tariff rate on a product if it originated from another ASEAN Member Country than if the same product were obtained from a non-ASEAN source. Q4. What is a Margin of Preference (MOP)? A MOP is a tariff preference and is one of the instruments for preferential trading arrangements under the ASEAN PTA since its initiation in 1977. All products originating from ASEAN which are under the PTA will be accorded preferential tariffs which will be a margin lower than the MFN tariff rates of the ASEAN Member Countries. MOPS are usually defined in terms of a percentage applied to the rate of an ASEAN country and is currently 50% for all PTA items. Q5. How is the CEPT different from the PTA? The CEPT scheme is the major instrument in moving ASEAN to its goal of a free trade area. Hence the CEPT requires that the tariff rates of those products included in the scheme ultimately be reduced to 0-5%. The ASEAN PTA does not require a reduction of tariffs of this magnitude. It only requires that whatever tariff rates are applied by an ASEAN country on imports from the rest of the world that a margin of preference be given to ASEAN partners. Concessions offered under the CEPT are on a reciprocal basis only while the concessions offered under the PTA is on an ASEAN MFN basis. The number of products included in the CEPT is also much larger than that covered in the PTA. The CEPT also includes provisions for the elimination of quantitative restrictions, non-tariff barriers and other cross- border measures. Q6. What are Rules of Origin? Rules of origin are defined as the Set f criteria used to determine the country or customs territory of origin of a good or service in international trade. It is a crucial component of any regional trading arrangement and would serve to prevent non-members of a free trade area from taking advantage of differential external tariff rates imposed by individual member countries. It would be used to determine the eligibility of a product to receive concessions. Rules of origin rest on the concept of "substantial transformation" so that origin is assigned to the country where the last substantial transformation occurred. Substantial transformation may be defined on the basis of a change in tariff heading, achieving a threshold proportion of value-added or on the basis of certain manufacturing processes. In AFTA, the rule of origin is based on value-added with the threshold level set at 40% of the value of the product. Q7. What are the basic documents which one needs to obtain more information about the CEPT Scheme for AFTA? The basic documents include the (i) Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area and its Interpretative Notes, (ii) the CEPT product lists and tariff reduction schedule, (iii) the legal enactment of each country and (iv) the CEPT Concessions Exchange Manual (CCEM). Q8. What are the CEPT Product Lists?

International Trade Law || Atty. Higuit || Ople Notes They are a compilation of products included in the CEPT Scheme either in the fast track, normal track or for temporary exclusion. The tariff reduction schedule for these products start from the year 1993 and ends in 2008. Q9. Are these CEPT Product Lists and their Tariff Reduction Schedule fixed? No, ASEAN Member Countries are allowed to increase the number of products in the Inclusions Lists (Fast and Normal Tracks) or quicken the pace of tariff reduction. The revision of the List can be done every three months in the ASEAN Senior Economic Officials Meetings (SEOM). Q10. What are the legal enactments under CEPT ? In order to implement tariff reductions contained in the Tariff Reduction Schedules, each ASEAN Member Country has to have a legal order to effect their tariff reductions each year. Q 11. What is the CEPT Concessions Exchange Manual (CCEM) ? The CEPT Concessions Exchange Manual contains information indicating the ASEAN Member Countries and their products that are eligible for tariff concessions. For example, the CCEM of Malaysia in 1994 will show the CEPT tariff rate of each product and the corresponding product(s) of other ASEAN Member Countries that are eligible for that tariff rate. Q12. How can an importer determine the tariff rate for a particular product brought in from other Member Countries? To determine the eligibility for concessions, the importer has to make sure that: a) The same product is in the Inclusion List of the exporting country; b) The tariff rate in the exporting country for the same product is at or below 20% level. However, if the tariff in the exporting country is above 20%, the concessions can only be given when the CEPT tariff rate of the importing country is also above 20%, regardless of whether there is a tariff reduction in that particular year or not; c) The imported product must have a CEPT Certificate of Origin (FORM D) to prove that the product has at least 40% ASEAN content. Q13. What is required in obtaining the certificate of origin under CEPT AFTA? The exporter has to file the application for the Certificate of Origin with the government agency issuing the Certificate of Origin in their country. Each country has a specific requirement for the application. One of the requirements is the description of the production process and an identification that the product contains over 40% of ASEAN content. Q14. Are import tariffs the only duties charged by the Customs Department? No, in most countries, there are additional domestic taxes, e.g., surcharges, sales taxes, value added taxes or luxury taxes. These are domestic taxes which are not discriminatory in nature. Their removal are not covered by the CEPT Scheme. Q15. Can indirect consignments be accepted under CEPT operation? No, the CEPT concessions are granted only to direct consignments. Direct consignments refer to products (a) that are transported without passing through the customs territory of a non-ASEAN country or (b) whose transport through the customs territory of a non-ASEAN country can be justified for geographical reason, and has not entered into trade or consumption there, or undergone any operation beyond unloading or reloading. Q16. Can PTA Products enjoy CEPT Concessions? PTA products can enjoy the CEPT concessions provided that the products are included in the inclusion list (normal or fast track) of the exporting and importing countries. The product must also have at least 40% ASEAN content. Q 17. Is it possible for a product appearing both in the PTA and CEPT lists to have a lower PTA rate than CEPT rate? It is possible for the PTA rate to be lower than the CEPT rate. The reason for this is that the PTA rate is based on a margin of preference over MFN rates. CEPT rates are based on tariff reduction schedules submitted by member countries. Ideally, CEPT rates should incorporate the MOPs granted under the PTA. However, suppose a member country undertakes a unilateral lowering of its MFN rate. This will automatically change the PTA rate but the same adjustment does not occur automatically for the CEPT rate.

International Trade Law || Atty. Higuit || Ople Notes

Q18. If the PTA rate is lower than the CEPT rate, which one applies for an importer? The importer should claim whichever rate is lower. If the PTA rate is lower- than the importer will have to claim the PTA concession by filing certificate of origin FORM C. If the CEPT rate is lower, then the importer has to file certificate of origin FORM D to claim that concession. Article XXVIII of the GATT In order to provide flexibility to members' commercial policies, a contracting party may renegotiate its tariff concession every three years, provided that compensating concessions are made to the other members primarily affected. Contracting parties are not obligated to participate in multilateral trade negotiations, but recognition is given that success of such negotiations depends on the widest possible participation by trading nations. LDC contracting parties are not obliged to reduce tariffs needed for economic development and revenue purposes. Doha Declaration set the broad objectives; the 2004 Frameworks narrowed down differences in interpreting the broad objectives and defined the shape of the final agreements, particularly in agriculture and non-agricultural market access; the 2005 Hong Kong Declaration narrowed the gaps further. TRADE TARIFFS - are taxes placed on imported goods - each country has separate regulations on trade tariffs FIVE MAIN TYPES OF TRADE TARIFFS - REVENUE TARIFFS A revenue tariff increases government funds. Example: Countries that do not grow bananas may create a tax on importing bananas. The government would then make money from businesses that import the fruit. - AD VALOREM TARIFFS An ad valorem tariff means that the tax applies to a percentage of the import's value. Example: A set number of centavos on every peso of value. - SPECIFIC TARIFFS A specific tariff means that the tax is not concerned with the estimated value of the imported goods, but is based on specific amount of the goods. This type may apply to the number of goods imported or to the weight, volume or other measurement of the goods - PROHIBITIVE TARIFFS A prohibitive tariff imposes very high taxes on goods which it keeps the item from being imported. A protective tariff is used to raise the price of imported goods as a protective measure against the competition from foreign markets. A higher tax allows a local company to compete with foreign competition. - PROTECTIVE TARIFFS A protective tariff is levied on imports to protect the domestic economy rather than to raise revenue. This can be advantageous as they can help foster the local economy. ANTI-DUMPING AGREEMENT (Article VI of GATT 1994) Anti-dumping measures are unilateral remedies which may be applied by a Member after an investigation and determination by that Member, in accordance with the provisions of the AD Agreement, that an imported product is dumped and that the dumped imports are causing material injury to a domestic industry producing the like product.

International Trade Law || Atty. Higuit || Ople Notes

A subsidy is assistance to a business or economic sector or producers. Most subsidies are set in place by the government for producers. Government gives subsidies as a result of continuous unprofitable operations or an increase in the prices of products or simply to encourage producers to hire more laborers. Under the agreement, a country can use the WTOs dispute-settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects. Or the country can launch its own investigation and ultimately charge extra duty (countervailing duty) on subsidized imports that are found to be hurting domestic producers. ASEAN FREE TRADE AGREEMENT ASEAN Member Countries have made significant progress in the lowering of intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA. CEPT shall apply to all manufactured products, - including capital goods, processed agricultural products and those products falling outside the definition of agricultural products, as set out in the Agreement, shall be in the CEPT Scheme. These products shall automatically be subject to the schedule of tariff reduction Agricultural products mean : (a)agricultural raw materials/unprocessed products covered under Chapters 1-24 of the Harmonised System (HS), and similar agricultural raw materials/unprocessed products in other related HS Headings; and (b)products which have undergone simple processing with minimal change in form from the original products. FTA: FTAs serve as exception to the most-favored nation (MFN) clause. By reason that some countries needs the substantial elimination of all trade barriers with respect to goods and substantial sectoral coverage with respect to services. In practice, MFN treatment means that a lower customs duty offered by one member of the World Trade Organization (WTO) to another country must be extended to all other members of the WTO. However, a country may enter into a free trade agreement granting more favourable treatment to the participating states than to the other WTO members if it observes certain conditions stipulated in the relevant provisions of the WTO agreements, to ensure the complementarity of the FTA with the WTO system. Entered by the Philippines: 1. ASEAN FTA 2. ASEAN China FTA 3. ASEAN Japan CEP 4. ASEAN Korea FTA TARIFF A tax imposed on import or export good, it adds to the cost of the goods and is one of the several trade policies that a country can enact. Why? Protecting Domestic Employment - Domestic Companies fire workers or shift production abroad to cut cost. Cheap foreign labor Lesser working regulations Lower standard of working environment Outcome is a cheaper products. Protecting Consumers Protecting Infant Industries - Government levy higher tariffs on imported goods in industries in which it wants to foster growth. National Security - Prevent the disruption of supplies that might lead to threatened our national defense. Retaliation - Set tariffs as a retaliation technique against a trading partner who has not played by the rules.