Unit 1 - Background & Issues

We shall spend our first class talking about what might be termed broader framework and background issues, so that you later have a better understanding of the significance of more technical portions of the law.  Consider the following in general and specifically while reading:

Does it matter, and why, when you look at the traditional division of economies into three sectors (agriculture, industry and services), which shares of country economies differ widely?  Which countries look alike or different in terms of the relative importance typically of goods versus services in the economy?  What is the relative composition, for example, of the economies in the United States, Germany, Mexico, Indonesia, India, Brazil, Japan and China, and how do you think that would be reflected in their trade law stances?  What is trade law about, import-export law affecting manufactured goods and ag products, provision of services internationally, and how does trade in goods versus services differ?  What about e-books as IP embodiment, are they goods, services, or sui generis creatures when downloaded internationally (not to mention digital media generally)?

Where does intellectual property and licensing fit as the digital economy grows internationally? Do you know what is a manufacturing supply chain, and the concept of intermediate versus final goods (like an lcd screen as a part, versus installed on your laptop computer)?  What about pharmaceuticals, which can be compounded from a mixture of chemicals?  Are goods in international commerce typically final (finished) goods, or are they more likely intermediate goods headed for assembly elsewhere into final goods?  Meanwhile, are we now more focused on the sale and provision of services or goods, either domestically or internationally?  These are all more economic than legal concepts, except it is difficult to understand legal regulation without some grasp of the markets it addresses.

Is “free trade” for the benefit of producers or consumers, and why?  How do you think the distinctions work in practice?  We say “producers,” but what do you think is the position of management versus labor as unions seem to be making a comeback post-Pandemic (think Harley Davidson off-shoring production and the recently completed NAFTA 1.0-USMCA dance)?  That represents the economic perspective in a developed or industrialized country, but how and where do national security and international relations' political concerns fit in the broader picture?  Meanwhile, Great Power competition seems to be making a comeback (think Ukraine and Taiwan), even while the developing world still wonders how to feed their growing populations?  How to reconcile national security, international relations and similar concerns with economics as a political matter?

Should all countries theoretically have the same rights and obligations as a matter of trade law, and why?  Bear in mind there is a tradition of special and differentiated obligations for “developing countries” in trade law since the 1970s, ignoring for the moment the question of where to draw the line on what constitutes a “developing” economy (as with US administrations challenging the developing country designation for China)?  Are the rules the same for the richer and the poorer economies (aka industrialized versus developing versus least developed countries, or employing the World Bank terminology lower, lower middle, upper middle and high income economies)?  How do you pidgeonhole unevenly developed economies (think Western China versus Shanghai or Beijing, Greenville-Spartanburg versus old school Appalachia, or Jakarta versus Papua)?

What motivates discussions of multilateral trade liberalization (WTO) versus (originally bilateral, now increasingly regional) free trade areas (FTAs)?  (Ask yourself the classic law school question about making distinctions, namely who cares?)  What basic legal differences and areas of law do you think are emphasized under one as opposed to another?  Think international investment law now for off-shored production and service facilities for goods, and immigration law now when you think about delivery of services via commercial establishments.  Think of all those international law firms’ London and Singapore offices, are there not enough competent local lawyers, wherever?  What does it mean when trade discussions turn to re-shoring, friend-shoring, or near-shoring in the name of global supply chain "resiliency"?

Does “free trade” assume a specific form of economic organization, or more to the point what is the proper role of the state?  Current arguments on the economic side are about “state capitalism” versus liberal or “free market capitalism” in terms of the Chinese versus US economic models, ever since the Trump Administration challenged the provision of subsidies to state enterprises in China.  And if the WTO does not dictate currently any specific form of (domestic) economy, to what extent is it legitimate for trade law to reach domestic policy questions?  For example, subsidies may encourage the development of specific industries (for example, US subsidies for electric vehicles in the recent IRA legislation).  The GATT/WTO agreements contain specific rules outlawing “export subsidies” aiming at selling goods outside any country, but what is ultimately an export subsidy as a matter of law?  Can and should some form of competition policy accompany international trade law and policy?  FYI, these kinds of behind-the-border regulatory questions were surfaced originally in 1996 as “Singapore Issues” (because the ministerial meeting was held in Singapore), but were largely excluded from discussion post-1994 Uruguay Round.  Developing countries objected at the point when the Doha Development Round’s agenda was set formally in the early 2000s, at which point they fell off the agenda.

If you revisited trade disputes for the past few years from a US perspective, what do you think is going on, and why?  The underlying thrust of the Trump Administration’s arguments from a technical perspective was seemingly to revisit the Singapore Issues and special treatment for developing countries (meaning at what stage a country might lose that designation within trade law, particularly China).  The Trump Administration also seemingly favored a transition back to pre-1994 economic diplomacy as GATT model, as opposed to the “judicialization” of trade law rules via the WTO dispute resolution process under the 1994 WTO Agreement.  This seems a retreat towards negotiation and effectively away from mandatory adjudication in place since 1994 (people talked about the progressive judicialization of trade law in dispute resolution terms since the 1994 end of the Uruguay Round).  Smaller countries normally benefit disproportionally from rules and adjudication, but consider whether the US-China trade war understood as live negotiating exercise between bigger players has worked particularly well thus far?  And we have not yet even touched on technology export controls–  aka the potential technology war--, a source of both confusion and economic concern in trade law terms, for which legislation and legal structures have been developed progressively during both the Trump and Biden Administrations.

Both the Trump and Biden Administrations more broadly seemed to favor bilateral trade negotiations.  The difference was that Trump seemingly favored narrower bilateral negotiations as with the USMCA–  actually trilateral–  and Biden now seems to favor rather broader regional negotiations as with IPEF in Asia as economically dynamic region (although there is some confusion what the political concept for "trade law to benefit ordinary Americans" really translates into in concrete policy terms).  In practical terms, this has meant deemphasis of the multilateral trading system (meaning the WTO), and emphasizing country to country negotiations at the same time as most other players either emphasize for various reasons “super-regional” FTAs tending towards regional trading arrangements, or the multilateral trading system.  It is still early-days for the Biden Administration because IPEF negotiations have just begun, but IPEF so far seems not to be headed in the direction of a classic FTA, because at its heart it lacks market-access guarantees.  Meanwhile, the EU is gearing up to challenge domestic-only, climate-related subsidies as included in the IRA legislation under the Biden Administration (calling it protectionism, and in parallel a challenge to Western "unity" during the Ukraine conflict).  But does it really matter from a trade law perspective if President Trump had been reelected in November 2020, versus the idea that when the Biden Administration took office January 21, 2021, it essentially faced the same set of issues and choices?  The underlying issue is whether the visible pressures in international economics are driven by personalities, versus differing national interests and path determinism (a question about remaking international institutions designed in the immediate aftermath of World War II 75 years ago, for a very different world).

Lawyers believe as an article of faith that you have to understand your opponent-negotiating counterpart’s viewpoint in order to reach an acceptable outcome in any transaction or legal dispute, simply as a matter of tradecraft.  So what do you think-know-understand about the concept of “development,” given that the majority of countries involved in the international trading system were (and many remain) developing countries?  Meanwhile, the WTO round of trade negotiations referred to since the early 2000s as the “Doha Development Round” ground on unsuccessfully for fifteen years before it essentially died of old age (and changed circumstances).  What does that say about other countries’ national interests when the traditional country-level development strategy was referred to as “export-led development” premised on market access, which now faces issues when the topic of “sustainable development” intrudes (which comes to the fore more in international environmental law and policy, but how might climate change enter into the balance)?  There is something of an internal contradiction that "export-led development" strategies premised upon rapid industrialization, traditionally entailing higher carbon emissions, had been the preferred development policy advice of international financial institutions (think World Bank) at least since the 1990s.  Export-led development was how much of Asia pulled itself up by its bootstraps, economically speaking, no later than the 1990s.  Export-led development was itself premised on an ever more open multilateral trading system, hence developing countries' attachment to the WTO.

Finally, how does the brave new world of (increasingly rapidly developing) technology affect all this, meaning not only retail e-commerce, but also how internet-based domestic  and cross-border services delivery (as example, expanding telemedicine following the COVID-19 pandemic, so now reaching beyond factory work into the professions)?  Will artificial intelligence combined with factory robotics remake long-time assumptions about the geography of goods manufacturing?  If global supply chains are repatriated, the factories may come back but the same jobs may not.  What is the plan, faced with rapid technological change and economic pressures?  How does technology enter into the trade law mix and arguably interact to change traditional views about “free trade” versus “protectionism,” and even require a new understanding of the issues and interests at stake?

Modern trade law has a lot of balls in the air, meanwhile we are indeed building the airplane as we fly it.