Jim Whitney Economics 131
 
Trade complaints: guidelines

Economic criteria:
    1. Is there a market failure? No: dismiss complaint.  Yes: proceed to question 2
    2. What is the market failure specifically related to?
        2.1: Domestic production: implement a production remedy, such as a production tax or subsidy
        2.2: Domestic consumption: implement a consumption remedy, such as a consumption tax or subsidy
        2.3: Trade: implement a trade remedy, such as a trade-market tax, subsidy or quota.

Legal criteria (per U.S. law):
    1. Safeguard provision: (Section 201 of Trade Act of 1974): provides an "escape clause" from trade concessions resulting in "fair but injurious" competition, as indicated by (1) rising import volume or share; (2) domestic production "seriously injured or threatened"; and (3) imports "a cause which is important and not less than any other cause."
    2. Dumping (Title VII of Tariff Act of 1930): U.S. antidumping law provides protection against imports selling at "less than fair value (LTFV)," where fair value means either (1) the price or (2) the average total cost of production of the item--in the country of origin. LTFV imports must cause "material injury" to justify a remedy of anti-dumping duties.
    4. Foreign subsidies (Title VII of Tariff Act of 1930): The countervailing duties law provides for the levying of special additional duties to offset foreign subsidies on products imported into the United States. Subsidized imports must cause "material injury" to justify a remedy of countervailing duties.
    4. "Unfair trade practices" (Section 301 of Trade Act of 1974): Section 301 covers a wide range of "unfair trade practices," typically with the goal of trying to expand export opportunities for the U.S. A finding of unfair trade practices may result in a remedy of retaliation.
    5. Patent or trademark infringement (Section 337 of Tariff Act of 1930): Intellectual property is protected by declaring illegal any imports of items which infringe a valid U.S. patent, trademark, or copyright. The remedy is an import ban.
    6. National security (Section 232 of Trade Expansion Act of 1962): restricts imports of products which are deemed to threaten U.S. national security.
    7. Political and social objectives (various statutes): human rights, environmental protection, etc. Remedy: economic sanctions, including trade restrictions.

International agreement provisions (World Trade Organization)
    1. Quantitative restrictions:
            (1) Multi-Fiber Arrangement to be phased out over 10 years
            (2) Other VERs to be phased out within 4 years of start of World Trade Organization
    2. Subsidies: 3 categories:
            (1) prohibited subsidies (export; domestic content)
            (2) actionable subsidies ("demonstrably adverse effects")
            (3) nonactionable (R&D; disadvantaged regions; environmental controls)
    3. Technical barriers: cannot "create unnecessary barriers to trade"; individual standards acceptable to protect the environment and human, animal or plant life
    4. Government procurement: unresolved; to be extended to services and subordinate levels of government
    5. Antidumping provisions: unresolved; rules clarified and elaborated
    6. Extension of coverage:
    (1) Agriculture: QRs to be replaced with tariffs and then cut by avg. of 36%; volume of subisdized exports to be reduced by 21%; transitional food aid and agricultural support for LDC food importers
    (2) Services: nondiscrimination and most-favored nation (with exemptions in financial services) principles to be applied; unresolved for telecommunications, audiovisual and maritime services
    (3) Intellectual property: nondiscrimination; minimum standards and increased enforcement
    (4) Foreign investment: local content and foreign exchange provisions banned