International Business Transactions Notes PDF

International Business Transactions Tests – Week 5, 8, 12 (Topics will be covered in class and must be on PowerPoints) Chapter 1 Transactional Transactional Aspects – most direct way international business gets done o Most common kinds of international business transactions:...

International Business Transactions Tests – Week 5, 8, 12 (Topics will be covered in class and must be on PowerPoints) Chapter 1 Transactional Transactional Aspects – most direct way international business gets done o Most common kinds of international business transactions: § Contracts for the sale of goods § The provision of services (including employment) § The licensing of intellectual property o It is possible/normal for the laws of more than one state to apply to different aspects of an international transaction o Many international transactions also occur within the framework of one or more treaties affecting the rights and duties of the parties Regulation Regulatory Aspects o Import regulations § Revenue Generation: Import duties or taxes help fund the state's treasury by imposing charges on imported goods. § Protection of Local Industry: Import restrictions can give local producers a competitive advantage by discouraging foreign imports. § Public Safety and Health: States may exclude unsafe or hazardous goods to protect the health and safety of citizens. § Cultural Preservation: By limiting the exposure of citizens to foreign goods or media, a state can protect its local culture and language. § Political Punishment: States may use import restrictions as a tool to punish other countries for undesirable policies, such as human rights violations or other political disagreements. o Export regulations § Revenue Generation: Similar to import regulations, states can levy taxes or duties on exported goods to increase government revenue. § International Relations: Export restrictions help avoid disputes with other countries that might feel overwhelmed by excess imports from the state. § National Security: Limiting the export of sensitive technologies or materials helps prevent their use by hostile states or terrorist organizations. § Capital Control: Export regulations can prevent capital flight by controlling the movement of money abroad. § Political Leverage: States may use export restrictions to punish foreign states for undesirable policies by withholding critical products or technologies. § Environmental and Consumer Protection: Export regulations may ensure that goods shipped abroad meet safety standards, protecting global consumers and the environment. o International Property Regulation – While the licensing of intellectual property is primarily a contractual matter, a crucial preliminary step is often the registration of patents or trademarks in foreign states § Purpose of Regulation: Protection of Intellectual Property: Registration helps ensure that intellectual property is protected within the foreign jurisdiction. Encouragement of Commerce and Innovation: By facilitating IP protection, registration encourages efficient commercial activity, supports the development and distribution of creative works, and fosters the spread of new technologies within the state's territory. § International Registration of Intellectual Property International registration of intellectual property is conceptually similar to domestic registration, but there are key differences that international business lawyers—regardless of their specialization—must be aware of: o Domestic vs. International Registration: While registration within a country is straightforward, operating across borders involves complexities due to different legal frameworks, treaties, and enforcement mechanisms in different states. o Protection Mechanisms: Registration is the first step, but to adequately protect intellectual property internationally, owners may need to pursue: § Litigation: Legal action in domestic or foreign courts to enforce IP rights. § Administrative Remedies: These can include processes within regulatory agencies, such as customs enforcement, to stop infringing products from entering the country. § Customs and Administrative Remedies In many countries, intellectual property owners can register their IP with agencies such as customs authorities. This allows for the automatic exclusion of counterfeit or infringing products from entering the country, without the need for litigation. However, IP enforcement mechanisms can vary by jurisdiction: o Administrative Litigation: In some countries, IP owners may seek remedies through "administrative litigation," which involves trials before administrative tribunals (rather than courts). This process is distinct from purely administrative procedures or formal litigation in a court of law. § Domestic vs. International Regulations Many types of regulatory laws that affect international business transactions are often rooted in domestic laws that are unique to specific countries. It is not necessary for international business lawyers to be  intimately familiar with all these regulations or every country's idiosyncratic rules. However, it is crucial to understand that: o Regulations Vary by Jurisdiction: Different countries have different rules that can impact the execution of international business transactions. o Awareness of Regulatory Possibilities: International business lawyers should be aware of the potential existence of such regulations so they can ask the right questions and take appropriate precautions for clients operating internationally. Litigation Aspects o For transactional or regulatory lawyers, one of the key responsibilities is avoiding the necessity of future litigation. This is crucial because: § Litigation can be costly, time-consuming, and unpredictable. § Preventing disputes upfront is much more efficient and beneficial for clients. o Unique Challenges in International Business Transactions: § Comity: Refers to the respect and mutual recognition of legal decisions made by foreign courts. Different legal systems may have conflicting views on enforcing foreign judgments. § Forum Non Conveniens: Allows a court to dismiss a case if another forum (usually another country's court) is more appropriate for hearing the case. § Conflict of Laws: Situations where the laws of different countries may apply to a dispute. § Choice of Law: Arise when determining which jurisdiction's laws will apply to an international dispute. o Alternative Dispute Resolution (ADR) in International Business o Arbitration – increasingly popular in international transactions as an alternative to domestic litigation. § International business parties often plan for arbitration almost as a matter of course, rather than leaving the resolution of disputes to a domestic court system. § Allows parties to resolve disputes in a neutral forum, typically involving: Arbitrators (usually experts in the field of the dispute) Confidentiality Enforceable awards (since many countries have signed treaties like the New York Convention to recognize and enforce arbitral awards). o **Although international dispute resolution is a specialized area of law, it is critical for transactional lawyers to consider dispute resolution mechanisms early in the negotiation process. o For lawyers involved in international business transactions, it is essential to: § Plan for potential disputes from the outset of negotiations. § Include dispute resolution clauses in contracts (Ex: clauses specifying arbitration or mediation).  § Identify key areas of potential conflict (Ex: choice of law, forum selection) and mitigate them during contract drafting. § Consider prevention strategies: Thorough due diligence, clear contract terms, and careful negotiation can reduce the likelihood of disputes. International Treaties Overview o Nations have been entering treaties for centuries, and today, many states are bound by treaties regulating international trade and investment. o The U.S. is a party to nearly 10,000 treaties, which can be bilateral (between two countries) or multilateral (involving multiple countries). o These treaties are legally binding and represent reciprocal commitments between states, regardless of whether they are called conventions, agreements, charters, or protocols. Role of Lawyers in Treaty Negotiations o Private lawyers typically don't directly participate in treaty negotiations but assist governments by suggesting key issues, highlighting industry concerns, and drafting treaty language. Enforceability of Treaties o Private firms cannot usually enforce treaty obligations directly in domestic courts (U.S. courts). § See U.S. case Medellin v. Texas (2008) o Most treaties are enforceable only by governments (not private businesses) unless specific statutes create enforceable rights WTO Agreements and Business Impact o WTO Agreements – the most comprehensive international trade treaties § Regulate trade in goods, services, and intellectual property o While businesses cannot directly enforce these treaties, they help predict treatment in foreign markets. § Ex: a foreign airline can rely on a treaty ensuring access to airports in another country Lobbying and Political Pressure o When businesses are affected by treaty violations, they may lobby their home government to pursue action. o Ex: Chiquita Brands successfully lobbied the U.S. Trade Representative (USTR) to challenge the European Community's banana tariffs through the WTO. Private Lawyers’ Role in Disputes o Private lawyers assist in trade dispute resolution by preparing legal arguments and lobbying for government action. o They often work with the USTR or the European Commission on behalf of their clients. o Ex: WTO Dispute with Turkey § A U.S. toy manufacturer facing high import duties in Turkey might not be able to assert a claim directly but could lobby the U.S. government to invoke WTO dispute resolution on its behalf.  Could include lobbying Congress or using tools like Section 301 of the 1930 Tariff Act Impact of Lobbyist registration Laws on International Business Lawyers o Foreign Agents Registration Act (FARA): Requires individuals or firms acting on behalf of foreign governments or political entities in the U.S. to register and disclose certain information o Lawyers representing foreign governments in a political or quasi-political capacity must register under FARA. § Lawyers must file a registration form with the DOJ within 10 days of agreeing to represent a foreign government. o Disclosure: Every six months, lawyers must report details about: § The agreement with the foreign government, § The income received for their services, § Expenditures made on behalf of the client. o Publicly available / DOJ can inspect the records o Failure to register – Federal crime punishable by fines and imprisonment (18 U.S.C. § 951). § Exceptions: FARA does not restrict a lawyer’s ability to lobby the U.S. government or to publish propaganda on behalf of a foreign state. o Lobbying Disclosure Act (LDA) § Applies to: Lobbyists working on behalf of foreign firms (private, non-governmental entities). Lawyers involved in lobbying U.S. government agencies (but not judicial proceedings) on behalf of foreign clients § Registration: Lawyers must file a registration form with the Secretary of the Senate and Clerk of the House of Representatives within 45 days of entering into a lobbying agreement. § Periodic reporting: Like FARA, periodic reports are required Must detail activities and financial aspects of lobbying efforts. Actors Regulating International Business Transactions The Supremacy Clause (U.S. Constitution) o The Supremacy Clause in the U.S. Constitution says that U.S. federal laws and treaties made by the U.S. government are the most important laws in the country. o This means that state laws (laws from individual U.S. states) cannot interfere with the country’s ability to make decisions about foreign business. o If a state law goes against U.S. federal law, federal law wins. This is important because international business often involves federal laws and treaties that affect businesses. U.S. Federal Agencies o Department of Commerce (Bureau of Industry and Security): § Regulates businesses that are involved in exporting goods (sending goods from the U.S. to other countries).  Ensure U.S. companies are following rules when they sell goods to foreign countries o Patent and Trademark Office: § This office helps protect intellectual property (ideas and inventions) when companies do business internationally. Issues patents and trademarks for products that are sold around the world o Securities and Exchange Commission (SEC): § Makes sure that companies involved in international stock trading (buying and selling company shares) follow the law. o Office of the U.S. Trade Representative (USTR): § This office helps create trade policies and negotiates treaties with other countries. § Part of the President's Office and works on important international trade issues. § The USTR doesn't directly regulate businesses but helps the U.S. government set rules and represent the U.S. in international trade talks and disputes. State Government in the U.S. o State governments may: § Set rules for businesses within their own state (like business licenses or state taxes). § Can affect international business indirectly Ex: when a state makes rules about goods that come from other countries Foreign Countries o Countries like Australia, Canada, Japan, and most of Europe have similar, but slightly different, complex systems for regulating business compared to the U.S. o Some less economically developed countries have simpler systems, which can make trade laws less predictable and give more discretion to government officials. o Regardless of the system, all countries have customs and tax agencies to control imports and exports, and many are starting to develop more advanced regulatory systems like those in the U.S. International Organizations o World Trade Organization (WTO): § This group helps countries resolve trade disputes and sets rules for how countries should trade with each other. o Other Global Organizations: § Some organizations focus on specific areas, like the environment or intellectual property, and may set rules for international business. o Non-Governmental Organizations (NGOs): § These are private groups that are not part of any government but can help set standards for things like fair trade or ethical business practices. § Ex: ICC also sponsors a popular dispute resolution body International Court of Arbitration and other ADR bodies o Intergovernmental Organization (IGO) § An organization of which only sovereign states are formally members 9  o Supra National Entity \ International Trading Blocs The European Union o Sovereign Entity: The EU is a political and economic union of 27 European countries (as of 2020). § Covers nearly all of Europe, excluding countries like Norway, Switzerland, and some Balkan states. o Major Institutions: (see more in depth below) § Council of Ministers: Represents the governments of EU member states. § European Commission: Proposes and enacts laws and regulations. § European Parliament: Has a role in the legislative process. § Court of Justice: Resolves disputes about EU law. o Customs Union: EU members trade freely with each other, without customs duties or legal barriers. § They also impose uniform tariffs on imports from outside the union. o Common Market: The EU functions as a single market. § Meaning goods, services, and capital can move freely across borders within the union § Allows for easier access to a large, integrated market of over 500 million people o Free Movement of Workers: People can live and work in any EU member state with few restrictions. § Benefits businesses looking to expand within the EU o Cross-Border Investment: EU members cannot block or impose restrictions on investment from other member states. o Has common laws covering a wide range of areas, including trade, employment, competition, and environmental protection. § Manages the euro (€) as a common currency for most of its members o Why the EU Matters for International Business:  §Legal and Regulatory Influence: If a U.S. company is doing business in Europe, the EU's trade laws, tax regulations, and labor laws will apply. o Evolution from a free trade area, through customs union, to common (internal market) § Aiming at economic union EU Governance and Structure o Governed by a separation of powers between several key institutions. § These powers are outlined in a series of treaties that define the role of each body and its authority. § Each body has a distinct role in proposing, amending, and enforcing laws that affect trade, investment, labor, and other business-related matters. § U.S. companies doing business in the EU need to be aware of these processes, as EU regulations can significantly impact cross-border transactions. Especially in areas like trade policy, competition law, and consumer protection § Brussels Effect – explains how and under what conditions one jurisdiction’s standards can extend beyond its borders Even though market size plays an important role, jurisdictions also need the capacity to create and enforce robust regulations effectively. o The four primary bodies are: § Council of Ministers Location: Brussels, Belgium Roles: Both executive and legislative functions. o Executive: Though it has some direct powers, most are delegated to the European Commission. o Legislative: The Council works with the European Parliament to adopt laws proposed by the Commission. Composition: Ministers appointed by each EU member state, who represent their home country’s interests. § European Commission Location: Brussels, Belgium Roles: o Executive Power: Coordinates with the Council as the main executive body. o Legislative Power: Proposes legislation for adoption by the Council and Parliament. This power is exclusive, meaning only the Commission can introduce new laws. o Enforcement: The Commission ensures that EU laws are followed by member states. If a country is non-compliant, the Commission can take legal action before the Court of Justice of the EU. Composition: Commissioners are delegated by each EU member state to act on behalf of the EU, not their own countries. § European Parliament  Location: Strasbourg, France (main sessions), Brussels, Belgium (smaller meetings). Role: o Legislative: The Parliament amends, rejects, or adopts laws proposed by the Commission, in coordination with the Council of Ministers. o Elected by citizens of EU member states, making it the only EU institution directly elected by the population. o It can request specific legislation from the Commission, but the Commission is not required to comply. § Court of Justice of the European Union (CJEU) Role: Decides disputes related to EU law, not national laws of member states. Includes two main organs: o General Court: Handles claims by private organizations or individuals challenging acts of the EU and its agencies. o European Court of Justice (ECJ): Handles appeals and higher- level legal issues. Ensures that EU laws are interpreted and applied consistently across all member states. EU Legislation o EU Regulation § Binding: Once adopted, EU regulations are directly binding on all member states. Meaning that they apply automatically without needing to be translated into national law § Supremacy: If a regulation conflicts with a national law in any EU member state, the regulation overrides the national law. Ex: If the EU adopts a regulation requiring all jet airplanes sold in the EU to have a noise reduction modification, it applies in every EU member state. o EU Directive § Binding on Member States: An EU directive sets out specific rules that each member state must adopt into its national law, but gives states flexibility in how to implement the directive. § Directives usually specify a deadline by which member states must adopt the required laws. § While directives have a uniform goal, the way they are implemented may vary slightly depending on each country's legal system. Ex: Might require member states to adopt certain environmental standards, but each state could choose its own method to enforce those standards. o EU Recommendations  § Non-binding: These are suggestions issued by the Council or Parliament. Do not have legal force and member states are free to adopt, modify, or ignore them Ex: The EU may issue a recommendation on best practices for labor rights, but each member state decides whether to implement them. o European Commission and European Parliament create laws that apply across the entire EU § Ex: Customs Duties – Knowing the duty rate in one country means the same rate applies throughout the EU § Ex: Product Regulations – If the EU passes a regulation requiring a specific modification (noise reduction on airplanes), U.S. lawyers can advise their clients that the modification is necessary for any sale or operation within the EU. Eliminates the need to check individual country regulations o Eurasian Economic Union (EAEU) § Formed by Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. § Common market § Unified customs laws, free movement of capital and labor, open foreign investment, and a potential common currency. § Focus: Economic integration among Central Asia and Eastern Europe. Other International Trade Blocs: o MERCOSUR (Southern Common Market): § Member states: Argentina, Brazil, Paraguay, Uruguay, and Venezuela. § Large economic bloc, with a combined GDP of about US$ 3.5 trillion. § Free trade agreements between members, though trade has fluctuated based on political and economic conditions. o Andean Community: § Member states: Bolivia, Colombia, Ecuador, and Peru. § Has a free trade agreement with MERCOSUR, removing customs duties between the two blocs. o Free Trade Areas (FTAs) § Agreements allowing goods to move duty-free between member states, but without a common external tariff for non-member imports. § Ex: Smalldonia and Ruritania under an FTA would allow free trade between them but still maintain different import duties on goods from outside the FTA. § Bilateral FTAs: Most FTAs are between two countries, with over 400 FTAs in force globally. Notable FTAs and Trade Agreements: o NAFTA/USMCA: § Originally between the U.S., Canada, and Mexico (NAFTA), replaced in 2019 by the USMCA. o Eurasian Economic Union o Trans-Pacific Partnership (TPP):  §Planned free trade area among 12 countries, including the U.S., Canada, and Japan. However, the U.S. withdrew in 2017, leaving the future uncertain. o ASEAN Free Trade Area: § Member countries: Indonesia, Malaysia, Philippines, Singapore, Thailand, and others. § Covers over 625 million people with a combined GDP of US$ 3 trillion. o African Continental Free Trade Area (AfCFTA): § Established in 2019, with the aim of covering all 55 African Union countries. Types of Trading Blocs and How They Differ 1. Free Trade Area (FTA): o Countries agree to trade among themselves duty-free (no import taxes) on goods originating within the area. o Each country maintains its own customs duties on goods coming from outside the area. o Ex: If goods are imported into one country and then re-exported to another, the importer pays or receives a refund for the duty difference. 2. Customs Union: o Like a Free Trade Area, but countries also agree to adopt a uniform external customs duty for goods coming from outside the union. o All member states charge the same customs duty on imports from outside the union, regardless of where the goods enter. o Ex: MERCOSUR is a customs union. 3. Common Market: o A customs union plus the free movement of labor (workers) and capital (investments) among member states. o Common markets often include harmonized economic regulations (competition, product standards, labor laws, and consumer protection). o Ex: EU is the largest common market in the world. Key Differences FTA vs. Customs Union: FTAs only remove internal tariffs but keep individual external tariffs, whereas customs unions also harmonize external tariffs. Customs Union vs. Common Market: Common markets go further by allowing the free movement of labor and capital, not just goods, and harmonizing broader economic regulations. Putting It All Together Most of these subjects relate to at least one of the four fundamental goals: o (1) the business firm wants to sell its products or provide its services to someone in a foreign country; o (2) the firm wishes to buy products or services from someone in a foreign country, or to bring in a foreign worker from his home country to provide services; o (3) the firm seeks to expand or move its production or service facilities to another state to reduce costs or taxes, to extend its global reach, or to increase its marketing opportunities; o (4) the firm wishes to reduce or end foreign or import competition that is harming it in some way. U-Chiquita bananas trade dispute - The "banana wars" is the culmination of a six-year trade quarrel between the US and the EU. The US complained that an EU scheme giving banana producers from former colonies in the Caribbean special access to European markets broke free trade rules.  - Only seven per cent of Europe's bananas come from the Caribbean, US multinationals which control the Latin American banana crop hold three-quarters of the EU market and the US itself does not export bananas to Europe. - Despite this, the US filed a complaint against the EU with the World Trade Organization (WTO) and, in 1997, won. The EU was instructed to alter its rules US-China 'trade war' during the previous Trump presidency - An economic conflict between China and the United States has been ongoing since January 2018, when U.S. President Donald Trump began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are longstanding unfair trade practices and intellectual property theft Practice Exercises 1) Where to Begin Research? a. Your client, a New York corporation specializing in hotels and resorts, wishes to open a new vacation resort in the city of Puerto Vallarta, a coastal city in Jalisco, Mexico. Mexico is a federal republic like the U.S. composed of thirty-one states, of which Jalisco is one. What are the different legal systems you should review to determine whether and how they may affect the client’s intended investment? (Hint: There are at least five). 2) Government and Nongovernment Regulators a. Try to classify each of the following as a governmental actor, intergovernmental organization (IGO), or nongovernmental organization (NGO): i. U.S. Trade Representative ii. United Nations iii. International Chamber of Commerce iv. ASEAN v. U.S. Department of Justice vi. Greenpeace vii. European Union viii. World Trade Organization b. Why does it matter to a business enterprise whether a set of rules or guidelines ostensibly applicable to the enterprise’s business activities is promulgated by a governmental actor, IGO, or NGO? Economic Integration – Elimination of barriers to trade, Introduction of common standards, duties, laws and regulations What needs to be eliminated? o Customs duties o Quantitative restrictions o Internal taxation that is discriminatory o Any other internal (national) laws, regulations and policies that benefit goods or services of one state over another Chapter 2 International Business Treaties Absolute advantage in production: In states of widespread poverty and high population density such as Bangladesh, China, and India, for example, wages are low, and so goods requiring intensive unskilled labor can be produced at lower costs than elsewhere. Because of these differences, states can benefit from importing goods that are produced abroad more efficiently. Theory of Comparative Advantage: suggests that countries should specialize in producing goods where they have the lowest opportunity cost, even if another country could produce the same goods more efficiently overall. o Ex: Country A is very efficient at producing computers but less efficient at producing wine. Country B, on the other hand, is better at producing wine but less efficient at producing computers. Even though Country A can produce both goods more efficiently (absolute advantage), both countries can benefit from trade if they specialize in what they produce most efficiently (lowest opportunity cost). By trading, both countries can consume more than they could if they tried to produce everything themselves. o Opportunity Cost: The value of what you give up when you choose one option over another Represents the lost potential gain that could have been made if a different decision had been taken. Ex: Opportunity Cost with $1000 § A person has $1000 and faces two choices: o Lend the money out at a guaranteed average return of 5% per year, earning $50 per year o Buy a television set for $1000, use it for five years, and then resell it for $400 § If the person lends the money, the annual return is 5%. Over five years, this results in $276 in compound interest (calculated as 5% interest compounded annually over five years). This would be the return on the $1000 if they had chosen to lend it. § If the person instead buys the television, the direct cost of owning it for five years is the difference between the $1000 spent and the $400 recovered from reselling it: o Direct cost = $1000 - $400 = $600 § However, the opportunity cost is not just the direct $600 loss from the television’s resale value. It also includes the $276 the person would have earned from lending the money (the foregone interest) § Therefore, the total opportunity cost of buying the television is the sum of the direct cost ($600) and the foregone interest ($276), which equals $876 The World Trade Organization Agreements o Uruguay Round – a series of negotiations that lasted 8 years  This round included a treaty establishing a supervisory institution for future trade negotiations – The World Trade Organization (WTO) – and a strong enforcement mechanism Revolving Disputes under GATT and Other Agreements § Stages: o Amicable negotiations (strict timetable) o Parties request appointment of a panel of the WTO’s Dispute Settlement Body o Panel Proceedings: § Review documents § Hearing § Report – panel’s report can only be blocked by a unanimous decision of the DSB If report is adopted as a decision – no damages are awarded (forward-looking decision) o Only recommendation on what parties should do Decisions can be appealed to a panel of the DSB’s Appellate Body o Decisions are final and binding UNLESS the entire DSB rejects it o **Currently, the AP cannot consider appeals because there is a vacancy on the U.S. side If a party does not follow the decision – the DSB can authorize the other state-party to retaliate by withdrawing equivalent trade concessions o The World Trade Organization Intergovernmental organization HQ – Geneva, Switzerland WTO provides a forum for states to negotiate new trade agreements and discuss the interpretation and enforcement of those currently in force § Consists of a ministerial conference composed of the representatives of each contracting party § Conference runs its daily business through 3 bodies: o General Council o Dispute Settlement Body o Trade Policy Review Body § Also has a secretariat composed of a Director-General and a number of other international civil servants who assist the WTO members in their negotiations and dispute resolution As of 2020, the WTO Agreements have 164 parties, including almost every major economy in the world  § Making it one of the world’s largest organizations by membership and economic impact § The states that are not yet apart of the WTO are mostly in the Middle East, Central Asia, and Africa General Agreement on Tariffs and Trade (GATT) o Now part of the WTO framework, governs customs duties (taxes) on imported goods between member countries o Tariff Bindings Every WTO member country has a schedule that lists the “concessions” they’ve made regarding the reduction of customs duties (taxes on imported goods) § These schedules are like a commitment or promise made by each country about how much they will lower customs duties on goods coming from other WTO members o The schedule specifies which goods are affected, what the reduced duty rate will be (typically a percentage of the value of the goods), and any other charges or duties that may apply to those goods § Bound Duty Rates: maximum customs duties that a country can impose on imported goods o GATT's facilitated free and fair trade by reducing tariffs and establishing rules to prevent discriminatory practices o Negotiation Rounds: Over time, GATT countries engaged in multiple rounds of negotiations to progressively reduce tariffs, which are taxes imposed on imports. o Nondiscrimination Principles: Most-Favored-Nation (MFN) Treatment: This principle ensures that a country cannot favor one trading partner over another. All member countries must be treated equally in terms of trade benefits. National Treatment (NT): This principle requires that once foreign products enter a country's market, they should not face discrimination compared to domestic products. § Ex: a country cannot impose stricter regulations on imported goods than on its own similar domestic goods. Nontariff Trade Barriers (NTBs): These refer to regulations or policies other than tariffs that can affect trade, such as quotas, import licenses, or health and safety standards. § GATT countries struggled to address NTBs because it's challenging to differentiate between measures designed to protect domestic industries and those genuinely aimed at protecting public interests like health and safety. Japan – Taxes on Alcoholic Beverages o A dispute between Japan and other WTO members (the European Communities [now the European Union], Canada, and the United States) over Japan’s Liquor Tax Law. o The case was brought before the WTO and was resolved in a Panel Report that addressed issues of how Japan applied taxes to alcoholic beverages, specifically in relation to GATT Article III. o The WTO dispute arose because Japan's Liquor Tax Law imposed different tax rates on various types of alcoholic beverages based on their alcohol content and type of liquor. The European Communities, Canada, and the United States filed complaints, claiming that Japan’s tax system violated international trade rules. Specifically, the complainants argued that Japan was discriminating against foreign products by taxing imported liquors at higher rates than domestic ones, which could distort trade. o Details of Japan’s Liquor Tax Law: Tax Rates: Japan’s tax system set different rates depending on the type of liquor and the alcohol content. Ex: Shochu, a liquor made in Japan, was taxed at ¥155,700 or ¥102,100 per kilolitre depending on the production process, at an alcohol strength of 25%. Ex: Vodka and whisky, although having comparable alcohol content, were taxed much more heavily: ¥367,300 for vodka and ¥908,620 for whisky per kilolitre. o Issue: The main concern was that vodka and whisky, which are not widely produced in Japan, were taxed at higher rates than shochu, which is a domestic product. o The WTO Panel that reviewed the case issued its report in July 1996, with the following key conclusions: First Conclusion § Shochu and vodka are like products o The Panel determined that shochu and vodka are essentially similar or like products in the sense that they both serve the same function (they are both alcoholic beverages). § Violation of Article III:2 (First Sentence): Japan’s differential tax rates on shochu and vodka violated the principle that like products should not be taxed more heavily when imported than domestic goods. Second Conclusion § Shochu, whisky, brandy, rum, gin, genever, and liqueurs are directly competitive or substitutable products o Meaning they could be used in place of one another and could compete in the same market. § Violation of Article III:2 (Second Sentence): Japan’s different tax rates for products like shochu, whisky, and other alcoholic beverages that are directly competitive or substitutable violated the rule that such products must be taxed equally, regardless of whether they are domestic or imported. o If the price of product A goes up in price à the demand for Product B goes up  o Japan was found to be in violation of its WTO obligations under the GATT, which sets out rules for ensuring that trade barriers, like taxes and tariffs, do not discriminate unfairly between domestic and foreign products. o Japan was required to bring its tax system into compliance with WTO rules, meaning it would have to adjust its tax rates to ensure that imported liquors were not discriminated against. Interpretation of Article III o National treatment – a principle that prohibits discrimination against imported products in favor of domestic products. o Purpose: avoid protectionism – preventing countries from using their domestic tax and regulatory measures to unfairly favor domestic products over imported products. Ensures that once goods have passed through customs, they should face equal competitive conditions in the domestic market, irrespective of whether they are imported or locally produced. o Countries are free to regulate domestically but must do so in a way that does not unfairly protect local industries at the expense of imports. o Ex: Japan Alcohol Shochu (a domestic Japanese liquor) and vodka (a foreign product) compete in the same market of “white spirits”. Even if vodka is taxed at a higher rate than shochu, both products are directly competitive or substitutable. The tax differential between these products could create an unfair competitive advantage for shochu and is an example of the kind of protectionism that Article III seeks to prevent. o Article III:1 lays out a general principle: it prohibits internal measures (like taxes or regulations) that protect domestic production by disadvantaging imported products. Article III:2, on the other hand, includes specific obligations related to how internal taxes and charges should be applied to imported products in comparison to domestic products. § First Sentence – deals with like domestic products § Second Sentence – applies to every other product, but still requires a relationship o The distinction is important because Article III:1 serves as a guiding principle that informs the interpretation of the specific rules in Article III:2 but does not directly govern the application of taxes or charges in every situation. o Framework for Interpreting Article III STEP 1 – determine whether the imported and domestic products are "like" products (they must be comparable enough to be considered in direct competition) STEP 2 – examine whether the tax on imported goods is higher than the tax on the domestic equivalent § If it is, then the tax measure is inconsistent with Article III Quantitative Restrictions o Import quotas: limits on the quantity of goods that can be imported into a country within a specific period, typically one year. They are a type of quantitative restriction Historically, countries used import quotas to protect domestic industries from foreign competition by restricting the amount of foreign goods entering the market. § Ex: In 1982, the United States imposed quotas on sugar imports from different countries to increase the price of domestically produced sugar by reducing competition from foreign sugar producers. o Tariff-Rate Quotas (TRQs): a hybrid system that combines elements of both quotas and tariffs. A specific quantity of a product can be imported at a lower tariff rate (or sometimes duty-free). § However, once that specified quantity is reached, additional imports of that product are subject to a higher tariff rate. Ex of TRQ: Suppose a country imposes a TRQ on electric fans. § The first 50,000 fans imported would be subject to a 3% tariff. Once that quota is reached, any additional fans would be taxed at a 12% tariff. TRQs can be adjusted § Ex: the country could set multiple tariff tiers, such as: o 3% tariff on the first 20,000 fans o 6% tariff on the next 20,000 fans o 15% tariff on any fans above 40,000 § This flexibility allows governments to tailor TRQs to manage import levels while adjusting tariff rates based on quantities. o GATT and the Use of Quantitative Restrictions Highly restrictive Article XI:1 of GATT – WTO Members are generally prohibited from imposing any quantitative restrictions (such as quotas) on imports or exports, except for duties, taxes, or charges. § Aims to promote free trade by minimizing the barriers to international trade. Exceptions § Countries may impose TRQs on agricultural or mined products as a means of managing supply or protecting domestic sectors. If quotas are applied, they must comply with the non-discriminatory principles of the WTO, ensuring that quotas are applied equally to all trading partners. § Must comply with the MFN principle Challenge to determining whether a specific restriction is genuinely a quantitative restriction (such as a quota) or whether it is a mere regulation meant to address legitimate concerns such as health or safety  § **Distinction is important because regulations may be permissible under the WTO rules, while quantitative restrictions are generally prohibited Lobsters from Canada o Dispute between Canada and the United States regarding the U.S. 1989 amendment to the Magnuson Fishery Conservation and Management Act Magnuson Fishery Conservation and Management Act – regulates the sale of lobsters based on size. § The amendment was part of broader efforts by the U.S. government to prevent overfishing and the depletion of lobster stocks, ensuring that lobsters had the chance to reproduce before being harvested. § ** The amendment extended to Canadian lobsters that were previously able to enter U.S. markets despite having smaller sizes (due to different size standards in Canadian waters) § 3 Main Goals of the 1989 Amendment o It was difficult to enforce the federal size requirements as fraudulent documents were used to mislabel sub-sized lobsters from Canada as meeting U.S. standards. o By prohibiting sub-sized lobsters from entering U.S. commerce, the measure aimed to prevent illegal trade and protect U.S. lobster stocks. o Many U.S. lobstermen felt it was unfair that they were required to comply with size restrictions while Canadian lobstermen were not, creating a competitive imbalance. Canada’s Response and GATT Legal Issue § Canada’s Challenge: argued that it violated Article XI of GATT, which prohibits quantitative restrictions on imports. o Canada claimed that the U.S. measure amounted to a restriction on the import of Canadian lobsters. § U.S. Response: the measure was not a quantitative restriction because it applied equally to domestic and imported lobsters (from Canada or elsewhere), ensuring that both would meet the same size standards. o Thus, the measure should be considered a matter of national treatment under Article III of GATT, which prohibits measures that treat imported products less favorably than domestic products in the internal market (after goods have crossed the border) § Including discriminatory taxes, regulations, and other restrictions. o Outcome Majority View: The Panel concluded that the U.S. measure fell under Article III because it applied internally to both domestic and imported lobsters, regulating their sale and marketing within the U.S. § The measures were not subject to Article XI because they were not a quantitative restriction at the border but rather internal market regulations.  § **Internal regulations are allowed under GATT o Lasting precedent – Countries saw that they could use internal regulations (protecting environment) to justify putting limits on trade The Panel did not rule on the national treatment issue (whether the measure discriminated against Canadian imports), which would have required a separate analysis. o Exceptions – Article XX Article XX of GATT provides certain exceptions to the broad prohibitions against discrimination and trade restrictions, allowing countries to take specific actions in the interest of public policy. Meant to protect important national interests, such as public health, environmental protection, or national security. Article XX(a): Measures necessary to protect public morals – This allows countries to adopt measures that protect public morals, such as laws related to prohibiting pornography or illegal substances. Article XX(b): Measures necessary to protect human, animal, or plant life or health – These permits countries to adopt policies for health or environmental protection, such as bans on hazardous chemicals or measures to control the spread of disease. Article XX(d): Measures necessary to secure compliance with laws or regulations – This provision allows measures to enforce domestic laws and regulations that are consistent with the GATT, such as ensuring compliance with labor standards or environmental laws. Article XX(g): Measures related to the conservation of exhaustible natural resources – Countries can adopt measures to protect natural resources like forests, fisheries, or wildlife, if these measures are made effective in conjunction with restrictions on domestic production or consumption. § As long as the restrictions aren’t arbitrary or unjustifiably discriminatory Article XX(h): Measures undertaken pursuant to Intergovernmental Commodity Agreements – Allows countries to take measures under intergovernmental commodity agreements (agreements on trade in raw materials like coffee or oil) if those agreements meet certain criteria and are not disapproved by the GATT contracting parties. § Ex: A country may be part of a global coffee agreement to regulate the amount of coffee that can be produced or traded to maintain stable prices. Article XX(i): Restrictions on Exports of Domestic Materials – Countries may place export restrictions on domestic materials to ensure sufficient supply for domestic industries during times of market instability, such as when a domestic industry needs a critical raw material at a price lower than the global market price. § The restrictions should only serve the goal of stabilizing prices and ensuring domestic needs.  o WTO Dispute: United States – Import Prohibition of Certain Shrimp and Shrimp Products (1998) Rule: Under the General Agreement on Tariffs and Trade, a nation may not implement measures to protect environmental resources in a manner that results in unjustifiable discrimination against other nations. Issue: U.S. had implemented a ban on imports of shrimp from countries that did not require shrimp fishing vessels to use turtle excluder devices (TEDs). § TEDs are devices designed to allow endangered sea turtles to escape from shrimp nets, which were a major cause of turtle deaths. The United States argued that the ban was justified under Article XX(b) (protection of animal life) and Article XX(g) (conservation of exhaustible natural resources), because the measure aimed to protect the sea turtle population, which is an exhaustible natural resource, and it sought to reduce the impact of shrimp fishing on turtle populations across international waters. o The Appellate Body of the WTO agreed that measures for the conservation of exhaustible natural resources (in this case, sea turtles) could fall under the scope of Article XX. However, the Appellate Body also found that the U.S. measure was unjustifiably discriminatory. § Criticized the U.S. policy for being too coercive – essentially pressuring other countries to adopt similar conservation measures, even if those countries had different circumstances or methods of fishing. The ruling suggested that the unilateral imposition of such trade restrictions on other countries was not justified under Article XX because it discriminated against them without allowing for enough flexibility or alternative solutions. o Security Exceptions – Article XXI Allows countries to take any action they deem necessary for the protection of their "essential security interests." The WTO Side Agreements o Aside from the revised GATT and Agreement establishing the WTO – Uruguay round resulted in 22 additional understandings and agreements binding on all WTO members, as well as give other optional agreements on liberalization of specific industries and trade modalities: Agreement on Technical Barriers to Trade (TBT Agreement) § States regulate product quality and technical standards for many rea-sons, including consumer safety, product reliability, energy efficiency, conveying adequate information to consumers through product labeling requirements, etc. o Ex: Different countries use different voltage and socket types in their public electricity systems, and they may understandably seek to ensure that electrical products sold in the country have compatible voltage inputs and plugs. General Agreement on Trade in Services (GATS)  § Before 1994, the world trading system, governed by GATT, focused mainly on the movement of goods across borders. However, as the global economy became more interconnected and services began to play an increasingly important role in international trade, the Uruguay Round of trade negotiations (1986–1994) expanded the scope of the trading system to include services for the first time. § This expansion was formalized through the General Agreement on Trade in Services (GATS), which became part of the World Trade Organization (WTO) framework when the WTO was established in 1995. § Applies to: o International trade in services o Covering cross-border movement of services o Whether provided remotely (via the internet) or through the presence of foreign service providers in the host country § Article II (essentially MFN): WTO members must treat foreign service providers no less favorably than domestic providers § Article XVII – National Treatment: Foreign service providers should be treated the same as domestic ones once they are allowed access to a market § Positive List System: Each member state must explicitly list the service sectors they commit to liberalizing and the limitations they impose on foreign access. Agreement on Trade-Related Investment Measures (TRIMS) § Limits the availability of WTO members to disadvantage foreign investment within their territories through certain kinds of trade restrictions and discrimination o Limited scope o Low standards § Disputes are subject to the provisions of the general WTO dispute settlement process rather than having a separate arbitration process for investment disputes § National treatment – principally prohibits discrimination against foreign investment § **NO MFN CLAUSE Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) § Most comprehensive treaty concerning IP rights o Applies together with other international IP rights treaties § Covers: trademarks, patents, industrial designs, utility patents, trade secrets § Introduces minimum standards of protection and requirements concerning enforcement o Bilateral Investment Treaties  Limit restrictions that can be placed on foreign investment and protect investors against expropriation and other interference with the investment once it is established BITs focus more exclusively on investment-related issues BITS do not prohibit countries from enacting investment laws, but they require that investment laws not interfere with any rights in the treaty BITS feature the following protections: § National Treatment – foreign investors are to be treated the same as local investors § MFN Treatment – U.S. investors are treated as favorably as foreign investors from other countries § Protection against expropriation and other taking of or interference with the investment § Transferability of funds into and out of the country § Limits on performance requirements § The right to choose senior management regardless of nationality § Dispute settlement through arbitration Foreign Investment Treaties Foreign Investment: any movement of assets or business operations from an investor’s home country to a foreign country (AKA – host country) in hopes of making a profit o The investment could be passive, and may include as simple a transaction as purchasing stock in a foreign corporation or making a small loan to a foreign business § However, foreign investment usually refers to establishing an active business operation abroad International Investment Treaties - aim to protect investors while also allowing states to safeguard their interests o Investor protection: § Non-discrimination Treaties often include nationality and Most Favored Nation (MFN) requirements, meaning that host states should not discriminate against foreign investors compared to domestic ones or investors from other countries. Ex: a Model BIT published by the U.S. Trade Representative includes provisions to discourage host states from imposing costs on foreign investors that they do not impose on home companies § Minimum Standards of Treatment § Protection of Expropriation Treaties address both direct (formal transfer of title or seizure) and indirect (actions or policies that impair an investment) expropriation. The Hull formula: Requires prompt, adequate and effective compensation for expropriation § Dispute Resolution  International Arbitration o Safeguarding State Interests: § Right to Regulate Regulatory actions that are non-discriminatory and are designed and applied to protect legitimate public welfare objectives are not considered indirect expropriation, except in rare circumstances § Exceptions Article 24 of GATT allows states to introduce exceptions to the key MFN principles, among others, for regional trading arrangements § Differing Standards Some capital-importing states (often developing countries) are not interested in establishing high standards of protection for investors, while capital-exporting states would prefer those higher standards o Challenges § Defining "Investment": The definition of "investment" can be broad, which can lead to disputes. For instance, a hedging agreement concerning the price of crude oil was held to be an investment in Sri Lanka, which was considered a controversial outcome. § Indirect Expropriation: It can be difficult to differentiate between indirect expropriation and a legitimate exercise of state power to regulate. Factors considered include the economic impact of government action, interference with investment-backed expectations, and the nature of government action. Marvin Feldman v. Mexico (ICSID) (2002) o Rule: The North American Free Trade Agreement allows a foreign investor to sue a host country that discriminates against the foreign investor or expropriates its investment. o Issue: Does the North American Free Trade Agreement allow a foreign investor to sue a host country that discriminates against the foreign investor or expropriates its investment? o Outcome: NAFTA allows a foreign investor to bring a national- treatment claim if the host country treats domestic investors differently than foreign investors. § The court reasoned that Mexico's laws on cigarette exports were within its regulatory power and did not constitute expropriation since they were in place before CEMSA's investment. However, Mexico discriminated against CEMSA by denying it registration and rebates while favoring the Poblano Group, which was of Mexican nationality. § Effectiveness of BITs: Some studies suggest that Bilateral Investment Treaties (BITs) do not have a significant impact on foreign investment. This raises the  question of whether these treaties should be pursued if they potentially limit the ability of developing states to freely regulate their economies. § Balancing Investor Rights and Public Welfare: There's an ongoing policy discussion about the benefits of efficiency and fairness to investors versus harms or potential harms to democracy, workers’ rights, and the environment. Some are concerned about a “race to the bottom,” where states lower standards to attract investment. § Case-by-Case Determination: Many aspects of investment treaty interpretation, such as whether products are "like products" under the national treatment principle, are determined on a case-by-case basis, making the process unpredictable. The application of standards of treatment also requires assessment on a case-by-case basis Tippetts v. TAMS-AFFA Consulting Engineers of Iran, Iran-US Claims Tribunal (1984) o Rule: Under international law, a state is obligated to respect the property rights of foreign nationals and entities. If a state interferes with or deprives an entity of its property rights, the state is required to provide compensation for the loss. o Facts: TAMS, a U.S. engineering and architectural consulting firm, partnered with an Iranian engineering firm, Aziz Farmanfarmaian and Associates (AFFA), to create a joint venture known as TAMS-AFFA. This joint venture was established for the purpose of working on the Tehran International Airport (TIA) project under a contract with Iran’s Civil Aviation Organization (CAO), signed in March 1975. After the Iranian Revolution in 1979, political and economic relations between the U.S. and Iran deteriorated significantly. As a result, TAMS was unable to communicate with or receive payments from TAMS-AFFA. Eventually, the Iranian government enacted a law that led to new management being appointed to the TAMS-AFFA project, further complicating TAMS's involvement. TAMS claimed that Iran’s actions (or lack of action) deprived them of their rights to the joint venture, and as a result, they sought compensation under international law. o Issue: whether a U.S. company, Tippetts, Abbett, McCarthy, Stratton (TAMS), is entitled to compensation from Iran due to the deprivation of its property interests in an Iranian joint venture (TAMS-AFFA) after the Iranian Revolution. o Tribunal’s Findings: Held that TAMS was indeed entitled to compensation for the deprivation of its property interests in TAMS-AFFA starting from at least March 1980. This deprivation was due to the lack of communication and payments from TAMS-AFFA and the imposition of government-appointed management over the project. Noted that deprivation of property is not necessarily tied to the formal “taking” of the property (such as nationalization or confiscation), but rather to state interference that hindered the owner’s ability to exercise its property rights. § Here, the lack of communication and cessation of business operations effectively removed TAM’s ability to enjoy the benefits of their joint venture. Deprivation: the loss of use or enjoyment of the property  § The Tribunal emphasized that deprivation does not require a formal transfer of title or ownership (expropriation). International law recognizes that a state can violate property rights through measures that interfere with the use or enjoyment of property, even if legal title remains with the owner. Chapter 3 Protecting Intellectual Assets Across Borders IP is broadly divided into 4 categories: o Copyrights: Form of protection provided by law to the authors of "original works of authorship" (expression used in the U.S.), fixed in any tangible medium of expression. ‘The manner and medium of fixation are virtually unlimited. Creative expression may be captured in words, numbers, notes, sounds, pictures, or any other graphic or symbolic media. The subject matter of a copyright is extremely broad and includes literary, dramatic, musical, artistic, audiovisual, and architectural works. § Copyright protection is available to both published and unpublished works. o Patents: A right granted by government to the inventor, giving the inventor the power to stop others, for a limited period, from making, using or selling the invention without their permission. o Trademarks: Words, slogans, logos, and other identities to help consumers distinguish a producer’ goods or services from the similar goods or services of others § Help firms develop good will to cultivate customer loyalty and attract business by a strong reputation o Trade secrets: Valuable information that a business firm may need to survive and thrive § Ex: Information about actual and potential customers, product ingredients and recipes, manufacturing methods and selling techniques § To qualify as a trade secret, the information must be: Commercially valuable because it is secret Be known only to a limited group of persons Be subject to reasonable steps taken by the rightful holder of the information to keep it secret o Including: the use of confidentiality agreements for business partners and employees. § ** trade secrets typically don’t have patent protections because patent protection requires disclosure The Development of International Legal Protection for Intellectual Property – how countries began to recognize the need to protect the rights of creators (like authors and inventors) across borders. o Globalization and Technology § In the 19th century, new technologies like steamships and railroads made it easier to move goods (including books, maps, and inventions) across national borders. As the world became more connected, it became clear that works created in one country could easily be copied or reproduced in others.  o Need for Protection § European countries realized that authors, artists, and inventors should be able to protect their works not just in their own countries, but globally. This would prevent others from using their creations without permission, no matter where they were located. o International Treaties § To address this, countries started creating international agreements (treaties) to protect intellectual property (IP) rights. The goal was to prevent "free riding," where someone in another country would use or profit from someone else’s work without compensating the creator. § 1883: The first major international IP treaty was established, focusing on protecting industrial inventions (like patents and trademarks). § 1886: Another treaty protected artistic and literary works (like books and maps), driven by efforts from French writer Victor Hugo. o World Wars and Delays § Although these treaties grew and evolved over time, the two world wars slowed progress in international IP agreements. o Post-War Revival § After 1970, international IP treaties gained momentum again, with the creation of the Patent Cooperation Treaty and others addressing newer forms of IP. § Today, the World Intellectual Property Organization (WIPO) manages and oversees these treaties. The Major Intellectual Property Treaties **read her summary on what these treaties do for exam – why is IP law still so territorial? o IP Treaties Protect Countries, Not Individuals § Intellectual Property (IP) treaties are designed for countries to follow, not individual creators or businesses. § Only governments can directly enforce or invoke the protections these treaties promise. o Setting Minimum Standards § While the treaties are meant for countries, they also set minimum standards for IP protection. This means that, through these treaties, countries agree to protect things like patents, copyrights, or trademarks at a certain level. These standards make it easier for businesses to protect their intellectual property across multiple countries. o Benefits for Businesses § The more countries harmonize (align) their IP laws internationally, the easier it is for businesses to protect their IP in many countries. It also makes it more efficient to commercialize or sell products abroad. o Treaty Membership and Business Decisions  §A company can look at whether a country is part of an international IP treaty to predict how easily it will be able to register its IP there and what kind of protection it will get. o Limitations on Private Actors § Private businesses (like the owners of intellectual property) can’t usually use these treaties directly to challenge a foreign government if that country doesn’t fulfill its treaty obligations. However, countries in the treaty can pressure each other if one is not meeting its obligations, which still helps businesses by making the system more reliable. o Treaties Signal IP Protection § The fact that a country is part of an IP treaty signals to businesses that the country is likely to protect IP according to the standards set by the treaty. Even if the protection isn’t perfect, being part of the treaty gives companies a sense of the country’s commitment to IP rights. o How These Treaties Help International Trade § IP treaties are a big help for companies that depend on IP to do business internationally. § These treaties create a minimum level of protection that facilitates trade and investment across borders. While treaties set minimum protection levels, they don’t limit a country from offering better protection if it wants to. The TRIPS Agreement o Stands for Trade-Related Aspects of Intellectual Property Rights § Creates a global standard for IP protection that helps businesses know what to expect when they expand internationally. § Allows businesses to protect their ideas, inventions, and creations in multiple countries by following a single, unified set of rules. § The dispute resolution system (through the WTO) gives IP owners a way to enforce their rights internationally. o Broad Scope § Covers all major types of intellectual property, like copyrights, patents, trademarks, and trade secrets. It also includes specific protections for things like design patents, geographical indications (like the name "Champagne"), and semiconductor designs. o Parts of the TRIPS Agreement § Part I: Talks about general principles, such as: National Treatment: Countries must treat foreign IP holders the same as their own citizens. Most-Favored-Nation Treatment: If a country gives special treatment to one member, it must give the same to all members. § Part II: Sets out specific rules for each type of IP, including: What kinds of works or inventions can be protected.  Minimum periods of protection (e.g., how long copyrights or patents last). Rules about why a country might deny protection to an IP. Standards for IP licensing, especially if it affects competition. § Part III: Focuses on enforcement—how countries should handle IP violations, including: How to stop counterfeit goods from entering a country. Legal processes for resolving disputes over IP (both civil and criminal). Specific measures like customs procedures to prevent the import of fake products. Article 51: Countries must allow companies to apply for a suspension of imports if they suspect counterfeit or pirated goods are entering their market. § Part IV: Covers dispute resolution between WTO members. If one country isn’t meeting its TRIPS obligations, another country can take the issue to the WTO Dispute Settlement Body (DSB), which can make binding decisions. o Enforcement and Dispute Resolution § WTO Dispute Settlement: If a country is not following the TRIPS rules, other countries can use the WTO’s dispute resolution system to force that country to comply. § Private companies can’t directly use the WTO system, but if a country is violating TRIPS, companies can ask their own government to take action on their behalf. The Paris Convention o Established in 1883 to protect “industrial property” § Includes: patents, trademarks, and trade names (but not copyrights) o Goal was to create basic rules for protecting these types of intellectual property (IP) across different countries o Patent Protection § For inventions that are eligible for patents, the Paris Convention sets minimum protection standards. This means that each country must at least meet certain basic requirements for patent protection. § It also sets out procedures for granting patents and ensures that inventors are treated equally, regardless of their nationality. § One of the key features is that if an inventor applies for a patent in their home country, they can still file for patents in other countries without losing the ability to get protection there, as long as they apply within a certain timeframe. This is called the right of priority. o Trademark Protection § For trademarks, the Paris Convention gives a right of priority – if a company registers a trademark in one country, it can use that application date to claim priority in other countries.  § It also ensures that trademarks can’t be canceled based on uses that are unlikely to cause confusion for consumers. o No Copyright Protections § Does not cover copyrights which protects things like books, music, and films o Relationship with the TRIPS Agreement § If a country is part of the WTO, then by default, it must follow many of the important rules from the Paris Convention as part of its TRIPS commitments. So, joining the WTO automatically means that a country follows the Paris Convention's most important rules. § The Paris Convention has more member countries than the TRIPS Agreement, so sometimes it still applies even if the TRIPS Agreement does not Ex: between countries that are not both a part of the WTO but are still part of the Paris Convention The Berne Convention o The 1886 Berne Convention for the Protection of Literary and Artistic Works sets international rules for copyright protection of expressive works. o It covers a wide range of works, including: § Art and Entertainment – Novels, music, paintings, sculptures, and films. § Written Work Products – Reports, multimedia presentations, memoranda. § Technical and Creative Works – Illustrations, maps, schematics, architectural plans, engineering blueprints, and 3D models. o Sets detailed substantive (content-based) and procedural (process-based) standards for how works should be protected internationally. o Requires automatic protection of works once created, without the need for registration. o Guarantees that works will be protected in all member countries, regardless of the nationality of the creator. o TRIPS Agreement: Many of the important provisions of the Berne Convention are incorporated into the TRIPS Agreement (which governs intellectual property protection under the WTO). § Even countries that are not directly part of the Berne Convention must follow the Berne Convention's key provisions if they are WTO members, due to the incorporation of those provisions into the TRIPS Agreement. o Protection Duration § Length of Copyright Protection – the life of the author plus 50 years o National Treatment: Requires that each country treat foreign creators the same as its own citizens in terms of copyright protection. Other Important IP Treaties o WIPO – Intergovernmental organization created in 1967 under the United Nations system § HQ: Geneva. § Mission – promoting cooperation in IP, advancing the development of international law in this area, educating the public on IP, and facilitating global IP treaty systems. o WIPO Treaties:  § WIPO Patent Law Treaty § WIPO Trademark Law Treaty § Aim to simplify procedures for obtaining patent and trademark protections internationally Impact: they do not standardize the level of protection offered; rather they streamline the process, making it more predictable and accessible for applicants in state parties § WIPO Copyright Treaty (1996) Requires state parties to adopt specific protections for copyright, particularly in relation to computer programs and databases § WIPO Performances and Phonograms Treaty (2002) Extends copyright protection to live performances (such as music concerts or theater) and grants record labels and performers certain rights over the distribution of recorded performances o Regional Agreements (European Union) § Can also establish IP protection standards that go beyond those set by multilateral treaties, such as those administered by WIPO. o Bilateral Trade Agreements – TRIPS-plus provisions § Extend IP protections beyond the minimum standards established by the WTO’s TRIPS Agreement. § Ex: U.S. has included provisions in its free trade agreements (FTAs) that extend copyright protection from 50 years (the minimum required by the Berne Convention and TRIPS) to 70 years after the author's death. § MFN clause of the TRIPS Agreements mandates that if a WTO member grants better IP protection to one country, it must extend the same to all other WTO members General Treaty Principles o The Territorial Independence of IP rights § IP rights are only valid within the country that grants them. § Even if multiple countries grant the same rights (e.g., identical patents or copyrights), each right is separate and subject to the laws of the country where it is enforced. § IP law is a domestic matter, and international treaties like the Paris Convention and Berne Convention set standards but do not eliminate the territorial nature of IP protection. § Copyrights under the Berne Convention are protected globally without formalities, but the rights themselves are still governed by the laws of the individual countries where the protection is claimed. § Ex: Ruritania and Grand Fenwick have nearly identical copyright laws. Suppose both countries simultaneously grant copyrights to Wanda Warbler for her song "Fulsome Love." The validity of the copyright in each country is independent.  If Ruritania cancels Warbler’s copyright, it has no effect on the copyright in Grand Fenwick. Similarly, if Warbler transfers her copyright in Ruritania to someone else, it does not affect her copyright in Grand Fenwick. If a person in Grand Fenwick (like the artist Ynot) infringes Warbler's copyright by sampling her song, Warbler can sue for copyright infringement in Grand Fenwick. However, Warbler cannot sue for infringement in Ruritania unless the infringement also occurred within Ruritania’s jurisdiction. This illustrates the principle that IP rights are enforced separately in each country. § International treaties like the Paris Convention and the Berne Convention do not create IP rights They set minimum standards that states must adopt. These treaties require countries to recognize certain IP rights, but they do not eliminate the territoriality of IP law. o Nondiscrimination § Article 3 of the TRIPS Agreement articulates a general national treatment duty relating to all the Agreement’s IP commitments § Article 4 of the TRIPS Agreement: Regarding the protection of intellectual property, any advantage, favor, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. § MFN – if a WTO member grants any special treatment or concession (such as a reduction in tariffs, a more favorable IP law, or better protection of IP rights) to one country, it must extend the same treatment to all other WTO members. § Ex: If Country A gives Country B more favorable IP protection (e.g., longer copyright terms) than it gives to other countries, Country A is required to extend the same favorable protection to all other WTO members (like Country C, D, etc.), even if they didn’t negotiate for that specific benefit. § MFN focuses on ensuring that any advantage given to one country is automatically extended to all other countries in the WTO. § National Treatment ensures that within a country’s own borders, foreign nationals are treated the same as domestic nationals regarding IP protections. § Ex: If Country X's law allows foreign nationals to access a particular benefit (say, a special license or exemption) that its own nationals don’t get, then under National Treatment, Country X would need to extend that same benefit to its own nationals (or explain why it can’t). § However, under MFN, Country X could grant this special treatment to nationals of Country Y without extending it to everyone else, but the MFN clause means that if Country X grants that benefit to Country Y, it must extend the same benefit to every other WTO member that wants it. o Principles and Priority Rights – “grace period”  § When you file a patent or trademark application in one Paris Convention or WTO member country, you are granted the right of priority to file similar applications in other member countries. The key point is that the filing date in your first country is considered the effective filing date for your application in other member countries, but only for a limited time. § Priority lasts 12 months for patents and 6 months for trademarks from the filing date of your original application § Ex: You file a patent application in Country A on January 1, 2025. Under the right of priority, you can file similar patent applications in Country B, Country C, and any other Paris Convention or WTO member country by January 1, 2026. These subsequent filings will be treated as though they were filed on January 1, 2025, the same day you filed in Country A, even if the filings in Country B and C happen months later. International Utility Patent Protection o Patents are granted and enforced on a country-by-country basis, meaning a patent granted in one country doesn't automatically apply in another. o However, international treaties like the Paris Convention and the TRIPS Agreement aim to harmonize patent laws to some extent and ensure certain standards are met globally. o Paris Convention and TRIPS Agreement § Paris Convention: Sets some basic, minimum standards for patent law across member countries. Its provisions are quite general § TRIPS Agreement: More comprehensive and covers broader aspects of intellectual property law o Utility Patents § Granted for new inventions that are useful and non-obvious Meaning they involve some level of creativity or insight beyond what experts in the field would normally expect. § Ex: New pharmaceutical drug, an innovative mechanical device, or a novel semiconductor