COBIBCL Midterms PDF

INTERNATIONAL BUSINESS AGREEMENTS Thomas Elliot A. Mondez Department of Commercial Law De La Salle University PART I: INTRODUCTION TO PUBLIC INTERNATIONAL LAW Module 1: History of International Law and its Significance to International Commerce HISTORY OF INTERNATIONAL LAW The Leviathan of Thomas Hobbes – a monster of biblical proportions that has sovereign control over a given territory. There is no such thing as a global Leviathan – sovereign entities transact outside their borders with no governing rules-based order. International law developed because of interactions concerning warfare and commerce. HISTORY OF INTERNATIONAL LAW  Basic structures of human civilizations (from tribes to towns) need basic rules- based systems to govern internal transactions, which normally pertain to the management of scarce resources (trade and enforcement through brute force).  Rules-based systems can come from any form of structured governance or belief systems - basic political organizations or religions.  When these basis structures expand or interact with other structures of similar or greater power, they could no longer impose their internal rules-based systems on the others. This is true because not all human organizations have the same moral and economic values. HISTORY OF INTERNATIONAL LAW Early Manifestations of International Law Greek City-States agreed to become part of a common federal system (Amphictyonic League). How was this made possible? The establishment of a common Greek language as lingua franca and the emergence of Greek philosophy as a unifying ideology over local religious beliefs. Roman Republic/Empire: Roman concept of jus gentium, or law which natural reasons establishes for all men and women, versus jus civile, which is peculiar to a state or people. Canon Law: Roman Catholic Church filled the power vacuum caused by the fall of Rome by establishing a legal religious order in Christian Europe. BUT WERE THESE EARLY FORMS OF AN INTERNATIONAL LEGAL ORDER TRULY 'INTERNATIONAL LAW'?  No. Greeks did not extend their rules to outsiders. Romans were selective in applying jus gentium.  The Catholic Church had to rely on feudal lords and struggled to remain effective when Latin died a slow death as Europe's Lingua Franca.  These early manifestations of global legal orders were actually just extended municipal laws that governed a larger sovereign collective. WHAT DO WE CONSIDER AS INTERNATIONAL LAW? Traditional Definition: -A branch of public law which regulates the relations of States and of other entities which have been granted international personality. -A body of customary and conventional rules which are considered legally binding by civilized States in their intercourse with each other. Modern Definition: -Deals with the conduct of States and international organizations, their relations with each other and, in certain circumstances, their relations with persons, natural or juridical. EARLY MANIFESTATIONS OF INTERNATIONAL LAW The concept of a nation-state: Peace of Westphalia – collective term for the 1648 treaties of Peace Treaty of Münster and the Peace Treaty of Osnabrück. The first international “treaty” of its scale – over a hundred delegates representing warring sides, nations, and principalities. Established the concept of the nation- state/Westphalian system. Recognized state sovereignty with its own borders (summum imperium), laid the foundations for modern-day international law. Ended the Thirty Years War which ravaged the Holy Roman Empire (HRE, modern-day Germany). Habsburgs (Austria, Spain, plus Catholic allies) vs. the Protestants (HRE principalities, Sweden, Denmark) plus France. EARLY MANIFESTATIONS OF INTERNATIONAL LAW Hugo Grotius (1583-1645), the “father” of international law, author of De Jure Bellie ac Pacis or On the Law of War and Peace. Summum imperium or the concept of sovereign power as the supreme right of governing, which cannot be made void by human will. However, if a sovereign power encounters other sovereign powers, no one holds a superior right to govern since summum imperium only applies within one's territory. International relations as a system of mutual legal restraints based on natural law and custom. EARLY MANIFESTATIONS OF INTERNATIONAL LAW Basis: Natural Law: Natural law is a universal principle of right and wrong discovered by every individual. Since the individuals comprise of a state, the state also becomes bound to natural law. Positivist School: States agree to be bound by it (jus voluntarium). Grotian or Eclectic School: For Hugo Grotius, states ought to be bound by natural law by virtue of both jus gentium, taking inspiration from the Bible and the principles of morality and divine justice, and pacta sunt servanda, or on the basis of observance of commitments. It is thus a combination of natural law and the positivist school. Pacta sunt servanda – Latin term meaning that agreements must be kept/treaties must be complied with. EARLY INTERNATIONAL AGREEMENTS RELATED TO COMMERCE Treaty of Tordesillas (June 7, 1494) Spain (Castile) and Portugal signed the Treaty of Tordesillas which practically divided the entire world between the two naval superpowers of the early Age of Exploration. Initially, the demarcation line was found over 500 kilometers west of the Cape Verde Islands in the Atlantic Ocean, drawn from the Arctic to the Antarctic Pole. In 1506, the Pope acknowledged the relocation of the demarcation line around 1,500 kilometers to the west, allowing Portugal to claim the eastern portion of Brazil. The said Treaty was entered into in view of the discovery of Christopher Colombus of the Western Hemisphere. EARLY INTERNATIONAL AGREEMENTS RELATED TO COMMERCE The Treaty of Zaragoza (April 22, 1529) established an antimeridian line along the Pacific Ocean to finally settle the dispute between Portugal and Spain. The Treaty of Zaragoza did not divide the world into two equal hemispheres of 180 degrees. Portugal got 191 degrees and Spain was awarded 169 degrees, give or take. EARLY INTERNATIONAL AGREEMENTS RELATED TO COMMERCE  It appears that the Treaties of Tordesillas and Zaragoza were meant to regulate the spheres of influence of the two primary maritime powers – Spain and Portugal – over the Western Hemisphere. But the true catalyst for this rivalry is their race to access Asian markets.  European traders could only access the rich Asian markets via land through the Silk Road. This was blocked by the dominant Muslim land powers since the Middle East, North Africa, and Eastern Europe were under the sphere of influence of the Ottoman Empire.  The inaccessibility of the Silk Road and the sheer distance of the Iberian Peninsula from the Asian mainland forced Portugal and Spain to find a maritime route to Asia.  Vasco de Gama sailed south along the African coast of the Atlantic Ocean. He discovered that the Atlantic connects to the Indian Ocean at the southern tip of the African continent. In turn, the Indian Ocean can be used to reach the Asia Pacific region via the Strait of Malacca. EARLY INTERNATIONAL AGREEMENTS RELATED TO COMMERCE  Christopher Columbus set sail westward hoping to find a western route to Asia. He accidentally discovered the lands in the Western Hemisphere.  Trade-wise, the Treaty of Tordesillas appeared to heavily favor the Portuguese. It practically gave them the entire Eastern Hemisphere as their sphere of influence. More importantly, the maritime routes in the Eastern Hemisphere allowed them to bypass the Ottomans to reach Asia.  However, Spain turned out to be the winning party in the Treaty of Tordesillas. While Magellan eventually proved that the Asia-Pacific can be accessed by sailing west (through the Pacific Ocean), this route was too long and perilous compared to the eastern route. But what both Kingdoms failed to account for was the sheer size of the lands in the Western Hemisphere.  The Treaty of Tordesillas allowed Spain to dominate the Western Hemisphere and take advantage of its natural resources. This is also the reason why most of the Americas speak Spanish instead of Portuguese (except Brazil, the eastern portion of which lies within the Portuguese side of the Treaty of Tordesillas).  One of the main targets of the two Kingdoms was the Moluccas or Spice Islands. This is an early maritime dispute in the Asia-Pacific region since both laid claim over the Moluccas.  Note: The world is round. This is a fact known to most navigators before the successful circumnavigation of Sebastian del Cano and the crew of the Victoria (not Magellan!). EARLY INTERNATIONAL AGREEMENTS RELATED TO COMMERCE Declaration of Paris (1856): Declaration Respecting Maritime Law. - First modern multilateral treaty that became open for accession for all states. Signaled the rising importance of commerce as an integral component of international law. However, this agreement was made in the context of naval conflicts as part of the resolution of the Crimean War. Before the Crimean War, England and France had different rules with respect to the capture of goods carried by enemy vessels in the high seas as 'fair game', regardless of the nationality of the ship. France and England were allies with the Ottoman Empire against Russia. They decided to harmonize rules on capture of goods in enemy vessels. Privateering or the commissioning of private vessels to engage in hostility against enemy ships, and allowing them to seize the ships, its cargo, and its crew, was abolished. Enemy goods in neutral vessels were also no longer allowed to be seized. Likewise, neutral goods on enemy vessels should not be seized.  Peace of Westphalia (1648): Ended the Thirty Years War, allowed the nation-state to emerge as the primary subject of international law.  Peace of Utrecht (1713-15): Ended the War of the Spanish Succession, preventing the French Bourbons from gaining control over Spain, which would have upset the balance of power in Europe. It also emphasized the prominence of the nation-state over the ruling monarchs.  Congress of Vienna (1814-1815): Restored the balance of power in Europe after Napoleon's first exile in Elba. STRENGTHENING  League of Nations (1919): First attempt to create a world government to INTERNATIONALISM prevent a world war from ever happening again. It spectacularly failed.  Charter of the United Nations (1945): First successful international organization with almost universal representation. Apart from peace- keeping (UN Security Council), the UN is also engaged in regulating commerce by encouraging economic and trade agreements. THEORIES ON INTERNATIONAL RELATIONS Do these theories affect the way States engage in commerce? 1. Realist Theory – States are in constant struggle for power. Each State acts in pursuit of their individual interests. 2. Institutionalist Theory – The relations of States are a product of their interaction not only among themselves but also as members of various institutions and hierarchical structures. 3. Neoliberalist Theory – States are geared towards gains and profit, which determines how State relations develop. 4. Democratic Theory – Democratic States are generally hesitant to go to war with other democratic States. 5. Hegemonic Stability Theory – A global system is likely to be stable when controlled by a hegemon. INTERNATIONAL BUSINESS AGREEMENTS Module 2: Subjects of International Law and Sources of International Law SUBJECTS OF INTERNATIONAL LAW  Subjects are entities endowed with rights and obligations who have international personality. Objects are those who indirectly have rights under, or are beneficiaries of international law through subjects of international law.  Traditional View: States are the only proper subjects of international law since they are the ultimate representatives of all other entities, including individuals, within their respective territorial jurisdictions.  Contemporary View: Apart from States, the following may also have legal personality in international law: international organizations and administrative bodies such as the UN and World Health Organization (WHO), belligerent communities (e.g. Hamas government of Gaza/West Palestine, local rebel groups like the NPA, ISIL/ISIS, etc.), and even individuals in a limited capacity.  Individuals may have legal personality in international human rights disputes and, pertinent to our course, in trade and investment issues.  However, please note that International Business Agreements are entered into by States. WHAT ARE THE ELEMENTS OF STATEHOOD? Government – an aggregate of institutions forming the national Permanent Population or People – a government. Temporary absence of community held together by a Defined Territory – a fixed portion of government or foreign occupation common bond of law; must be the planet's land area occupied by do not terminate the existence of a sufficient in number and must have the inhabitants. state. It must be capable of the ability to perpetuate themselves. maintaining law and order within its jurisdiction. Capacity to enter into relations with other states or Sovereignty – independence from outside control. THEORIES ON STATE RECOGNITION Declaratory Theory: recognition by mere declaration depending upon its possession of the required elements and not upon recognition by other states. Statehood is based on fact, rather than discretion. Constitutive Theory: recognition is what constitutes a state, although states may decide to recognize an entity as a state even if it does not have all of the elements of statehood. Recognition is a political act and a matter of policy. THE CASE OF TAIWAN  The One-China Policy is followed by Manila, Washignton, and other governments in the world.  The Republic of China (Taipei-based) ceased to represent China in the UN when world governments officially recognized the People's Republic of China as the official representative of the Chinese State.  This was part of Richard Nixon and Henry Kissinger's US pivot to China when they tried to court Beijing as an ally against the Soviet Union.  A Taiwan Relations Act was hastily passed into law by the US Congress to maintain "nongovernmental" relations with Taiwan. A Mutual Defense Treaty between the US and the Republic of China (Taipei) was abrogated. TAIWAN RELATIONS ACT  Allowed economic and legal relationships to continue despite the de-recognition of the Taipei government as the official Chinese State.  Pertinent laws governing contracts and the capacity of Taiwan to sue and be sued in US courts were maintained.  Vague with respect to America's defense commitments (if any).  Only relevant section related to defense is a provision allowing the US to sell arms to Taiwan.  The Philippines does not have an embassy or a diplomatic delegation in Taiwan, pursuant to our One-China policy. However, we do have a Manila Economic and Cultural Office (MECO) in Taiwan, which practically serves as our unofficial embassy. SOURCES OF INTERNATIONAL LAW Primary Sources: 1. International Treaties and Conventions: Bilateral and multilateral treaties acquire binding force through voluntary decision of sovereign states. Treaties may create, crystallize, or codify obligations. A treaty may create a new obligation between states, crystallize an existing state practice or emerging custom as a formal legal obligation, or compile existing obligations through codification. Examples: United Nations Convention on the Law of the Sea (UNCLOS), Apostille Convention, Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. SOURCES OF INTERNATIONAL LAW 2. Customary law: based on: (1) the behavior of states and (2) the belief that it is obligatory (opinio juris). It is formed through constant and uniform usage, accepted as law. Examples: principle of non-refoulement, immunity to a visiting head of state. 3. Generally accepted principles of international law: rules derived from natural law that are found in most legal systems. Examples: the concept of estoppel, pacta sunt servanda, res judicata, and reparations for violations of obligations. SOURCES OF INTERNATIONAL LAW Secondary Sources: 1. Judicial decisions: generally refers to international tribunals, the ICJ being the most prominent. Its binding effect is limited by Article 59 of the Statute of the ICJ to that of the State parties of the particular case only. 2. Writings of highly qualified publicists: learned scholars who are acknowledged authorities in their respective fields. Other Sources: 1. Soft Law – Mere guidelines for conduct. A Resolution of the World Health Assembly (WHA) is considered as a mere soft law and is thus not binding to the Philippines (Pharmaceutical and Health Care Association of the Philippines v. Duque, 2007). 2. Lex Mercatoria - Customary rules and procedures developed within merchant communities to support trade in medieval Europe, without the assistance of government. These rules may have already been codified in international conventions or may have ripened into customary law. INTERNATIONAL BUSINESS AGREEMENTS Module 3: Issues on Jurisdiction JURISDICTION Jurisdiction is the power or authority exercised by a State over land, persons, property, transactions, and events. As an aspect of sovereignty, jurisdiction gives the State the prerogative to carry out executive, legislative, and judicial actions in the course of its self-rule. Types of Jurisdiction: 1. Prescriptive Jurisdiction – The ability of the State to define its own laws with respect to any matter it chooses. This is tied with sovereignty so it is generally unlimited. 2. Enforcement Jurisdiction –The ability of the State to enforce the laws it has created. It is limited by several factors including nationality and territory. Enforcement jurisdiction cannot exist without prescriptive jurisdiction. JUDICIAL JURISDICTION Which local courts have jurisdiction over a specific case under litigation? Generally speaking: 1. Civil Cases – resolved based on the principles of Private International Law (Conflicts of Law) since it usually involves individuals transacting in their private capacity. 2. Criminal Cases – resolved based on Public International Law since it involves the enforcement of a State's penal laws. TERRITORIAL PRINCIPLE The State may exercise jurisdiction within its territory only. Generally, a State has criminal jurisdiction over offenses committed within its territory. The exceptions are: continuing offenses, acts prejudicial to the national security or vital interests of the State, and universal crimes. What is the territory of the State? 1. Land Area 2. Internal Waters 3. Territorial Sea (12 Nautical Miles) 4. Air Space (Land Area/Internal Waters plus Territorial Sea) 5. Flag aircrafts and ships. TERRITORIAL PRINCIPLE Areas with limited application of the territorial principle: 1. Contiguous Zone (24 nm) - limited to enforcement of customs, sanitary and immigration rules. 2. Exclusive Economic Zone – limited to enforcement of sovereign economic rights over economic resources of the sea, seabed, and subsoil; other States have freedom of navigation and may lay submarine cables (e.g. for internet), pipelines, and other lawful uses. Subjective Territoriality – enables a State to take jurisdiction over an act which began in its territory (continuing crime). Objective Territoriality – enables a State to take jurisdiction over an act which ended in its territory. TERRITORIALITY PRINCIPLE For cases involving violations of the Expanded Anti-Human Trafficking Act: - The State shall exercise jurisdiction even if committed outside the country, if the offense, being a continuing offense, was either commenced in the Philippines or committed in another country (provided that the suspect is a Filipino citizen, permanent Philippine resident, or has committed the act against a Filipino citizen). - If the offender is already being prosecuted abroad, he or she cannot be prosecuted here unless an approval from the Secretary of Justice is obtained. NATIONALITY PRINCIPLE The State has jurisdiction over its nationals anywhere in the world. A citizen is entitled to the protection of the State wherever he or she may be, and thus, is bound to it by its duty of obedience and allegiance. It generally applies to civil matters. Article 15 of the New Civil Code provides that laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. States are free to determine who are their nationals. The Philippines follows jus sanguinis or citizenship by blood, regardless of the place of birth. The United States uses jus soli to determine Amercian citizenship, regardless of the nationality of the parents. PROTECTIVE PRINCIPLE Posits that a State has jurisdiction over acts committed abroad by nationals or foreigners which are prejudicial to its national security, territorial integrity, political independence, or any other vital interests. Attorney General v. Adolf Eichmann (1961, District Court of Jerusalem, Israel): Eichmann was an Austrian Nazi official who was Head of Section for Jewish Affairs in the implementation of the' Final Solution', causing the deaths of millions of Jews in World War II. He was captured by Israeli forces in Argentina. He contested the jurisdiction of the Jerusalem court, but was nonetheless convicted since Israel applied the protective principle. PROTECTIVE PRINCIPLE Somchai Liangsiriprasert v. Government of the United States (1991, Hong Kong Court of Appeal [under UK]): Somchai was a Thai drug dealer importing heroin to other countries. The overt acts of conspiracy to traffic in drugs were committed in Thailand. The US Drug Enforcement Agency (DEA) had an agent pose as a drug importer to arrange a deal with Somchai to bring heroin to the US. He had to travel to Hong Kong in furtherance of the deal. He was promptly arrested by Hong Kong officials pursuant to an extradition treaty between the US and the UK. The Hong Kong Court of Appeal took cognizance of the case despite the overt acts of conspiracy to traffic in illegal drugs being done outside its jurisdiction. It was held that the Hong Kong courts have jurisdiction and could apply Hong Kong legislation on illegal drugs because of the potential threat of the drug trade to the UK colony. PROTECTIVE PRINCIPLE Revised Penal Code – Philippine courts have jurisdiction over: 1. Offenses committed on board a Philippine ship or airship; 2. Forgery and counterfeiting of Philippine coins or currency notes; 3. Introduction into the Philippines of forged or counterfeit coins or notes; 4. Offenses committed by public officers or employees in the exercise of their official functions; and, 5. Crimes against national security and the law of nations. PROTECTIVE PRINCIPLE Effects Doctrine – Where the effects of an act are felt within the territory of the State, it may take jurisdiction over the matter. Application: Philippine Competition Act (Republic Act No. 10667) Section 3 of the said law provides that it is applicable to international trade having direct or substantial, and reasonably foreseeable effects in trade, industry, or commerce in the Philippines, including those that result from acts done outside the Philippines. PRINCIPLE OF UNIVERSALITY A State has jurisdiction over offenses considered as universal crimes regardless of where committed and who committed them (see Eichmann case). Universal crimes are those which threaten the international community as a whole and are considered as criminal offenses in all countries, such as piracy, genocide, hijacking, terrorism, war crimes, and the like. Take note that the International Criminal Court (ICC) may also acquire jurisdiction. Act of State Doctrine – A State should not inquire into the legal validity of the public acts of another State done within the territory of the latter. EXEMPTIONS Underhill v. Hernandez (US Case, 1897): Underhill filed a case for FROM damages against Hernandez, a Venezuelan military commander, for allegedly being assaulted, coerced, and detained by Hernandez. The JURISDICTION court refused to inquire into the acts of Hernandez since his government was recognized by the US. Hence, the Act of State Doctrine applies. 9th Circuit (1988): Republic 2nd Circuit (1989): Republic of the Philippines v. of the Philippines v. Ferdinand Marcos, Sr. - Ferdinand Marcos, Sr. [Case involving the [Injunction case to prevent Racketeer Influenced and the transfer or Corrupt Organization Act encumbrance of properties Act of State Doctrine or RICO.] Act of State allegedly acquired through Conflicting Rulings of the Doctrine applied. It was illegal means.] Act of State US Court of Appeals: ruled that taking Doctrine NOT considered. cognizance of the case There must be a distinction would interfere with US between Acts of State and foreign policy (and even purely private acts. The cause embarassment to it) injunction was granted to. preserve the status quo. EXEMPTIONS FROM JURISDICTION  Diplomatic Immunity – Part of customary international law to uphold their dignity as the representatives of their respective States and to allow them free and unhampered exercise of their functions.  Immunity of the UN, its Organs, Specialized Agencies and Other International Organizations and its Officers. Liang v. People (2001): Slander committed by an official of the Asian EXEMPTIONS Development Bank (ADB) is not covered by the immunity afforded to the ADB via its agreement with the Republic of the Philippines. FROM Westfall v. Locsin, et. al. (2024): Westfall applied as a technical consultant JURISDICTION in the ADB. He was not selected and said that the statements made by the ADB Screening Committee in their Panel Notes and Interview Report were defamatory and damaged his reputation. It was held that the subject acts were done by the Committee members in their official capacity, which is covered by the immunity granted to ADB officials. Foreign merchant vessels exercising the right of innocent passage through our territorial sea or arriving under duress: Note that the Philippines follow the English Rule (law of the coastal state applies for all offenses committed in the vessel, except if the peace of the port was not compromised), not the French Rule (flag State of the ship has jurisdiction). Foreign armies passing through or stationed in the territory with the permission of the State. EXEMPTIONS Tubb and Tedrow v. Griess (1947): The Philippine Supreme Court denied the petition for the issuance of a writ of habeas corpus filed by 2 US Citizens who FROM were apprehended by the US Army for misappropriating US military property. It was held that it is a settled principle of international law that a foreign army JURISDICTION allowed to march through or stationed in another country is exempt from civil and criminal jurisdiction. Warships and other public vessels of another State operated for non- commercial purposes: Includes crewmembers on shore duty. However, they are not immune if they are on furlough or off-duty. International Business Agreements Module 4: The President as Architect of our Foreign Policy T H O M A S E L L I OT A. M O N D E Z D E PA R T M E N T O F C O M M E R C I A L L AW D E L A S A L L E U N I V E R SI T Y The Architect of Our Foreign Policy "In our system of government, the President, being the head of state, is regarded as the sole organ and authority in external relations and is the country’s sole representative with foreign nations. As the chief architect of foreign policy, the President acts as the country’s mouthpiece with respect to international affairs. Hence, the President is vested with the authority to deal with foreign states and governments, extend or withhold recognition, maintain diplomatic relations, enter into treaties, and otherwise transact the business of foreign relations. In the realm of treaty-making, the President has the sole authority to negotiate with other states." -Pimentel v. Executive Secretary (2005) Treaty-Making Power of the President May also be gleaned from: ◦ The commander-in-chief powers of the president, which allows visits by military personnel and ships (port calls). ◦ Also implied from the fact that the President is the head of state and government. ◦ The president has the power to deport aliens. ◦ Extra-Constitutional power – as head of the political party (party discipline in voting and lobbying). ◦ Power to send peace-keeping forces in compliance with UN Security Council resolution ◦ Residual Powers of the President (Marcos v Manglapus). Treaty-Making Power of the President Primarily contained in Art. VII of the Constitution, specifically: ◦ Section 1 – Executive power is vested in the president ◦ Section 16 – Power to appoint ambassadors ◦ Section 17 – Power of control over all executive departments ◦ Section 20 – Power to contract foreign loans with concurrence of the Monetary Board ◦ Section 21 – Two-thirds vote of Senate for concurrence (qualification of the executive’s treaty-making power) Note: A common misconception is that the Senate ratifies a treaty. It is the President who ratifies a treaty. The Senate concurs to the ratification of the President. Hence, the proper term is that the Senate gives its concurrence. Pimentel v. Executive Secretary (2005) - The Senate cannot compel the President via mandamus to transmit the Rome Statute of the ICC for its concurrence. It is within the President's prerogative to do so, and it is within her (PGMA) prerogative to change her mind. Key Jurisprudence Abbas v. Carague (1989) - Treaties are equal to domestic laws; hence, a treaty may amend a domestic law if passed subsequently, or vice versa. Pangilinan v. Cayetano (2021) - The President need not secure the concurrence of the Senate to withdraw from the Rome Statute of the ICC. Treaties v. Executive Agreements In general, if an agreement is permanent and original (it creates new national policy), it requires a treaty and consequently, Senate concurrence. If it is an implementation of an existing treaty, it does not need the concurrence of the Senate. This is because that agreement is administrative in character. Executive agreements do not require Congressional concurrence, and usually pertains to economic relations, and are mere implementations of treaties. These are temporary in nature and are adjustments of detail. Treaties v. Executive Agreements Executive Agreements fall into two classes: (1) agreements made purely as executive acts affecting external relations and independent of or without legislative authorization, which may be termed as presidential agreements and (2) agreements entered into pursuant to acts of Congress, which have been designated as Congressional-Executive Agreements (these have been defined as either statutes or joint resolutions with the status of law). The President may enter into executive agreements pursuant to a treaty itself, if a treaty provides that an implementing agreement may be conceived through executive agreements. The following factors must be considered: The form (Joint Resolution or Republic Act) if it is through an act of Congress The temporal aspect (prior or subsequent authorization) if in pursuance of an act of Congress The nature of the agreement (temporary or permanent, a mere implementation of an existing treaty) The subject matter of the agreement (money matters/economic details or national policy) Bayan: The Visiting Forces Agreement (VFA) between the United States and the Philippines is a treaty, not an executive agreement. It is inconsequential whether the United States Bayan v. Zamora treats the VFA only as an executive agreement because, under international law, an executive agreement is as binding as a (2000) treaty. Nomenclature is of no moment as stated in the Vienna Convention. & Saguisag: The Enhanced Defense Cooperation Agreement Saguigsag et al. (EDCA) between the Philippines and the US is an executive v. Ochoa, et. al. agreement. It is consistent with the treaties governing the Mutual Defense Treaty and the VFA between the US and the (2016) Philippines. International agreements involving political issues or changes of national policy and those involving international arrangements of a permanent character usually take the form of treaties. But international agreements embodying adjustments of detail carrying out well- established national policies and traditions and those involving arrangements of a more or less temporary nature usually take the form of Commissioner executive agreements of Customs v. The case also identified the following as executive agreements: -Agreements with respect to the registration of trade-marks have been Eastern Sea concluded by the Executive with various countries under the Act of Congress of March 3, 1881. Trading (1961) -Postal conventions regulating the reciprocal treatment of mail matters, money orders, parcel post, etc., have been concluded by the Postmaster General with various countries under authorization by Congress beginning with the Act of February 20, 1792. -Ten executive agreements were concluded by the President pursuant to the McKinley Tariff Act of 1890 and nine such agreements were entered into under the Dingley Tariff Act 1897. Atty. Esmero filed a case for mandamus to compel President Duterte to act on the intrusion of Chinese vessels in the West Philippine Sea/South China Sea. The Supreme Court issued a Resolution denying outright the petition. The President is immune from suit during his incumbency, regardless of the nature of the suit filed against him. Petitioner named President Duterte as the sole respondent in this case. For this reason, this suit should be dismissed outright. Mandamus is used merely to compel action and to coerce the Esmero v. performance of a pre-existing duty; it does not lie to control discretion. Duterte (2021) The President is the guardian of the Philippine archipelago, including all the islands and waters embraced therein and all other territories over which it has sovereignty or jurisdiction. However, by constitutional fiat and the intrinsic nature of his office, the President is also the sole organ and authority in the external affairs of the country. Ultimately, the decision of how best to address our disputes with China (be it militarily, diplomatically, legally) rests on the political branches of government. Constitutional restrictions to the President's foreign affairs powers: a. The policy of freedom from nuclear weapons within Philippine territory; b. The fixing of tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts, which must be pursuant to the authority granted by Congress; c. The grant of any tax exemption, which must be pursuant to a law concurred in by a majority of all the Members of Congress; Esmero v. d. The contracting or guaranteeing, on behalf of the Philippines, of foreign loans that must be previously concurred in by the Monetary Duterte (2021) Board; e. The authorization of the presence of foreign military bases, troops, or facilities in the country must be in the form of a treaty duly concurred in by the Senate; and f. For agreements that do not tall under paragraph (e), the concurrence of the Senate is required, should the form of the government chosen be a treaty Bayan Muna assailed the constitutionality of the Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) in the Agreement Area in the South China Sea By and Among China National Offshore Oil Corporation (CNOOC) and Vietnam Oil and Gas Corporation (PETROVIETNAM) and Philippine National Oil Company (PNOC). Section 2, Article XII of the 1987 Philippine Constitution mandates that the exploration, development, and utilization of natural resources shall be under the full control and supervision of the State and the PNOC. The State may undertake such activities only through the following Bayan Muna v. modes: (1) Directly; Arroyo, et. al. (2) Co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations; (2023). (3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens; and (4) For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned corporations involving technical or financial assistance (Financial or Technical Assistance Agreement or FTAA). Service Contracts are also allowed per jurisprudence (La Bugal case). Is the JMSU covered by item 4? No. The JMSU is unconstitutional. The JMSU is neither an FTAA nor a service contract. First, it does not involve any financial or technical assistance between and among the PNOC, the CNOOC, and PETROVIETNAM. Second, the JMSU is not a service contract. In a service Bayan Muna v. contract, service and technology are furnished by the service contractor for which it shall be entitled to the stipulated service Arroyo, et. al. fee while financing is provided by the Government to which all petroleum produced shall belong. (2023). The President must also be the signatory in Service Contracts. In this case, it was only the president and CEO of PNOC who signed the JMSU. Furthermore, after the signing the Service Contract, the President must report such fact to Congress within 30 days to give the legislative branch the opportunity to register its objections, if any. International Business Agreements Module 5: The Vienna Convention and the Local Treaty-Making Process Thomas Elliot A. Mondez Department of Commercial Law De La Salle University What are the Rules Governing the Treaty- Making Process of the Philippine Government? 1. The 1987 Philippine Constitution – Article 7 provisions (President as architect of foreign policy), particularly Section 27 of the said Article (2/3rds concurrence by the Senate). 2. The Vienna Convention on the Law of Treaties 3. Executive Order No. 459 (s. 1997) - Providing for the Guidelines in the Negotiation of International Agreements and its Ratification What is a Treaty? Vienna Convention Definition: An international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation. E.O. No. 459: International agreements entered into by the Philippines which require legislative concurrence after executive ratification. This term may include compacts like conventions, declarations, covenants, and acts Full Powers: Who may represent a State? Vienna Convention E.O. No. 459 A person is considered as representing a State for The issuance of full powers shall be made by the the purpose of adopting or authenticating the President of the Philippines, although this text of a treaty or for the purpose of expressing function may be delegated to the Secretary of the consent of the State to be bound if: (1) he or Foreign Affairs. she produces appropriate full powers; or (2) based on practice or the intention of the States, Production of full powers is not required for: he or she is authorized to have full powers. -The Secretary of Foreign Affairs Production of full powers not necessary for: -Heads of Philippine diplomatic missions. -Heads of State, Heads of Government, and -Representative accredited by the Philippines to an Ministers of Foreign Affairs. international conference or to an international -Heads of diplomatic missions. organization or one of its organs. -Representatives accredited by the State to an international conference or to an international organization or one of its organs. The Process Step 1: Negotiation Foreign ministers conduct negotiations for bilateral treaties or multilateral treaties among a small number. For large multilateral treaties, diplomatic conferences are run like a legislative body. Of course, the negotiators must have the power to negotiate (appears with appropriate full powers or as recognized by practice of States that he/she is intended to have such full powers, unless if one is already a Head of State and/or Government or foreign minister for acts relating to the conclusion of treaty or if one is a head of a diplomatic mission for adopting the text of a treaty between the accrediting state and the state to which they are accredited, or if one is already an accredited representative to an international conference or organization as regards adopting the text). Step 2: Authentication of Text Negotiations end with the signing of the document, which serves as the authentication. The text is adopted by the consent of all the participants or, in case of an international conference, upon 2/3rds vote of those present and voting. Note: Per the Vienna Convention, authentication procedures may be provided by the text of the treaty or as agreed upon by the States. If there is no such procedure, the signing or even initialing by the representatives of the States should suffice. Step 3: Consent to be Bound Vienna Convention: May be through signature, exchange of instruments constituting a treaty, ratification, acceptance, approval , or accession, or any other means if so agreed. In the Philippines, ratification is governed by Sec 21, Article VII of the 1987 Constitution (concurrence of 2/3rds of Senate). Ratification is followed by either exchange of ratification in bilateral treaties or deposit of ratification in multilateral treaties. The Process If a State did not participate in the initial negotiation, it may nonetheless express consent to be bound by accession if the treaty allows it. Reservations on certain provisions of a treaty may be made by a State when it purports to exclude or to modify the legal effect of certain provisions of the treaty. Thus, treaties differ from statutes for the latter must necessarily apply to all. Reservations are possible if not prohibited by the treaty and if such are not incompatible with the object and purpose of the treaty. Moreover, reservations are only meant for multilateral treaties, since a reservation by one party in a bilateral one is tantamount to a rejection. The Process Entry into force - On the date agreed upon or if no date is indicated, once consent has been given. Vienna Convention: A treaty enters into force in such manner and upon such date as it may provide or as the negotiating States may agree. E.O. 459: See succeeding slides. Provisional Effect – A treaty or a part of the treaty is applied provisionally pending its entry into force if: - The treaty itself so provides; and, - The negotiating States have in some other manner so agreed. But if a State expresses its intention to no longer be a party, the provisional effect immediately ceases. E.O. 459: No treaty or executive agreement shall be given provisional effect unless it is shown that a pressing national interest will be upheld thereby. The Department of Foreign Affairs, in consultation with the concerned agencies, shall determine whether a treaty or an executive agreement, or any amendment thereto, shall be given provisional effect. The Domestic Procedure Recommending Agency obtains authority from the President President grants power to negotiate (either full powers or written authorization) Negotiation Process – may be participated to by various government agencies Authentication (signing of text) Department of Foreign Affairs - summarizes highlights and benefits of the text (those of national interest) Office of the President President – (1) Executive Agreements (process ends here = effective ratification), (2) Treaties are ratified by the president, then sends certified true copies to the DFA. DFA – may come up with a draft Senate resolution before transmitting to the Senate The Domestic Procedure – Senate Concurrence Office of the Senate President Office of the Secretary (Bills and Indexes Division) Included in the Order of Business (First Reading) Committee on Foreign Relations: conducts hearings; prepares committee report with accompanying resolution recommending concurrence or rejection; files committee report with the Bills and Indexes Division. Plenary: sponsorship speech; period of interpellation (debate); period of amendments (only the resolutions may be amended, not the treaty itself) Adoption on second reading Third reading (Two thirds vote of all 24 Senators) Enrolled copies are sent to the following offices: Office of the President, DFA (deposits copies with the UN in case of multilateral conventions); Exchange of instruments in case of bilateral agreements. Who determines whether an instrument is a treaty or an executive agreement? According to E.O. No. 459, the Department of Foreign Affairs shall determine the nature of the agreement. However, this is still subject to judicial review by the courts, as demonstrated in the cases involving the VFA and EDCA. Additional Notes on Treaties v. Executive Agreements The Supreme Court discussed the following in Saguisag v. Ochoa (2016) and Pangilinan v. Cayetano (2021): Treaties and executive agreements are equally binding on the Philippines. However, an executive agreement: (a) does not require legislative concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters. Executive agreements simply implement existing policies, and are thus entered into: (1) to adjust the details of a treaty; (2) pursuant to or upon confirmation by an act of the Legislature; or (3) in the exercise of the President's independent powers under the Constitution. The distinction between a treaty and an executive agreement is irrelevant for purposes of determining international rights and obligations. Additional Notes on Treaties v. Executive Agreements Executive agreements must remain traceable to an express or implied authorization under the Constitution, statutes, or treaties. Executive agreements cannot create new international obligations that are not expressly allowed or reasonably implied in the law they purport to implement. Treaties are, by their very nature, considered superior to executive agreements. Treaties are products of the acts of the Executive and the Senate unlike executive agreements, which are solely executive actions. Executive agreements that are inconsistent with either a law or a treaty are considered ineffective. The Philippines is a founding member of the WTO. The treaty was ratified under the Ramos administration and concurred to by the Senate. Those who dissented (Senators Wigberto Tañada and Nikki Coseteng, plus Cong. Joker Arroyo and other political allies) filed a petition with the Supreme Court against those who voted in favor of it as well as other national government officials, questioning the constitutionality of the treaty. Tañada v. The petitioners assailed the WTO Agreement for violating the mandate of the 1987 Constitution to "develop a self- Angara (1997) reliant and independent national economy effectively controlled by Filipinos... (to) give preference to qualified -The WTO Case Filipinos (and to) promote the preferential use of Filipino labor, domestic materials and locally produced goods." The Supreme Court simplified the issue: does the Philippine Constitution prohibit Philippine participation in worldwide trade liberalization and economic globalization? Held: No. The Constitution takes into account the realities of the outside world as it requires the pursuit of "a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality ad reciprocity"; and speaks of industries "which are competitive in both domestic and foreign markets" as well as of the protection of "Filipino enterprises against unfair foreign competition and trade practices." While the Constitution indeed mandates a bias in favor of Filipino goods, services, Tañada v. labor and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and trade Angara (1997) the Constitution takes into account the realities of the outside world as it requires the pursuit of "a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality ad reciprocity"; and speaks of industries "which are competitive in both domestic and foreign markets" as well as of the protection of "Filipino enterprises 30 practices that are unfair. In other words, the Constitution isolationist policy. against did not unfair intend foreign to pursue competition an practices." and trade - The WTO Unlike in the UN where major states have permanent seats and veto powers in the Security Council, in the WTO, decisions are made on the basis of sovereign equality, Case with each member's vote equal in weight to that of any other. There is no WTO equivalent of the UN Security Council. Hence, poor countries can protect their common interests more effectively through the WTO than through one-on-one negotiations with developed countries. Within the WTO, developing countries can form powerful blocs to push their economic agenda more decisively than outside the Organization. Re: Treaty-Making and Sovereignty: While sovereignty has traditionally been deemed absolute and all- encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the rest of the world. By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender some aspects of Tañada v. their state power in exchange for greater benefits granted by or derived from a convention or pact. Angara (1997) the Constitution takes into account the realities of the outside world as it requires the pursuit of "a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality ad reciprocity"; and speaks of industries "which are competitive in both domestic and foreign markets" as well as of the protection of "Filipino enterprises 30 against unfair foreign competition and trade practices." As aptly put by John F. Kennedy, "Today, no nation can build its destiny alone. The age of self-sufficient nationalism is over. The age of interdependence is - The WTO here." Case The underlying consideration in this partial surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity characterizes the Philippine commitments under WTO- GATT. INTERNATIONAL BUSINESS AGREEMENTS MODULE 6: INTRODUCTION TO INTERNATIONAL ECONOMIC LAW Thomas Elliot A. Mondez Department of Commercial Law De La Salle University 5/19/2024 1 HISTORY 1919 – The Treaty of Versailles was signed after World War I. Massive war reparations and harsh terms imposed on Germany. British economist John Meynard Keynes left the peace conference in protest, since he believed that the provisions of the Treaty will lead to Germany's economic collapse, which in turn will cause a domino effect in Europe. The predictions of Keynes were correct. Germany's economy collapsed, which allowed the radical Nazi party to take over. This will eventually bring Europe, and the rest of the world, back to another destructive global war just 20 years after World War I. HISTORY The Bretton Woods Agreement After D-Day in Normandy, but before the ultimate defeat of the Axis powers, the Allied Nations forged an agreement to create a new economic world order after World War II. The objective was to prevent another World War by ensuring that the mistakes of the Treaty of Versailles would not be repeated. The Bretton Woods Agreement created the blueprint for three economic institutions: the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD) - which is now popularly known as the World Bank, and the International Trade Organization (ITO). The ITO never materialized, but the World Trade Organization (WTO) was finally established half a century later in 1995. 5/19/2024 3 THE INTERNATIONAL MONETARY FUND (IMF) 1945: Articles of Agreement of the IMF Purpose: To ensure the stability of the international monetary system. It provides access to reserves for countries with liquidity problems (loans, not dole -outs). It was also created to address emergency situations to prevent another Great Depression. Funding: (1) Borrowings from its members; and, (2) interest paid by borrowers. How much can a country borrow/should contribute? There is a quota system and the amount is not fixed on a certain currency. Rather, the IMF employs the Special Drawing Rights (SDR) as the units of account. Voting rights is based on a country's IMF quota – what it is obliged to contribute to the fund. The US has the largest voting right. Unlike financing institutions such as the Asian Development Bank (ADB), the IMF does not fund government projects. Instead, financing is available when a country experiences a crisis. A crisis may either be triggered by domestic factors (economic mismanagement) or external factors such as natural calamities and global emergencies. IMF SPECIAL DRAWING RIGHTS (SDR) The SDR was introduced in 1969 as an alternate to the US Dollar and gold reserves to promote stability. The value of the SDR as the unit used in the IMF is currently based on a basket of five currencies, each with corresponding weights given to determine its prominence in determining the SDR value: US dollar, euro, Chinese yuan, Japanese yen, and British pound sterling. This is reviewed every 5 years. Only countries have access to SDR. Private parties and organizations cannot hold or use SDRs. SDRs can be used as a cheap line of credit and/or as a substitute reserve asset. The SDRs were first introduced when there was a shortage of US dollars in the early 70s. It also became popular when countries wanted to find an alternative to the US dollar as a currency reserve in the late 70s (and when the gold standard was abandoned due to volatility and to give the governments better flexibility to steer the economy). Currently, however, SDRs only account for a small percentage of global foreign exchange reserve assets. IMF SDR SDR allocations were increased in response to the 2007-2008 financial crisis. A substantial increase was also released in 2021 in response to the Covid-19 pandemic. The value of the SDR changes every day. As of May 13, 2024, it is at USD 1.44. A country may exchange their SDRs for actual currencies with another willing country (for US dollars, euro, yuan, yen, or British pounds). The IMF can help broker the exchange. THE WORLD BANK GROUP International Bank for Reconstruction and International Development Development (IBRD) - but Association (IDA) - part of International Finance now more popularly called the WB, together with the Corporation (IFC) as the World Bank (WB), IBRD. collectively with the IDA. International Center for the Multilateral Investment Settlement of Investment Guarantee Agency (MIGA) Disputes (ICSID) THE WORLD BANK (IBRD) The WB Articles of Agreement was signed in 1944 during the Bretton Woods Conference. It eventually expanded to include the four other institutions to form the current WB Group. The WB was formerly just the IBRD, which had the original mandate to finance the reconstruction of Europe after World War II. The WB (and IBRD) was repurposed to have a global mandate of promoting economic growth and a trade equilibrium by facilitating the investment of capital. Loans are extended at conventional rates and are only extended to governments and government-backed private entities. Borrowers are middle -income and creditworthy low- income countries. Most of the projects funded by the WB are infrastructure projects, particularly those that are in-line with the UN Sustainable Development Goals. THE WORLD BANK (IDA) IDA financing is also available to countries experiencing relative poverty: (1) per capita income below the IDA cut-off rate (currently at USD 1,315.00); and/or (2) countries lacking creditworthiness to borrow from the IBRD. IDA terms are highly concessional: IDA credits carry little or no interest rates. The IDA also provides grants for development projects. Majority of IDA loans and grants are given to low-income African countries. INTERNATIONAL FINANCE CORPORATION (IFC) Unlike the WB (IBRD), it can extend loans to private enterprises even without a repayment guarantee from their domestic governments. The IFC is the private sector-focused institution in the WB Group. The IFC financial products allow companies to manage risk and broaden access to foreign and domestic capital markets. These financial products include loans, equity investments, advisory services, and asset management programs. MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA) -MIGA provides political risk insurance (guarantees) for projects in developing member countries. -The guarantees help protect foreign direct investors from political and non -commercial risks in developing countries. -It prevents disputes between the investor's country and the host country. -It ensures eligible projects from losses caused by: 1. Breach of contract; 2. Currency inconvertibility and trade restrictions; 3. Expropriation; 4. War and civil disturbance; and, 5. Non-honoring of financial obligations. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) The ICSID provides a platform where foreign investors and contracting States could settle their disputes. The ICSID was created pursuant to the Washington Convention on the Settlement of Investment Disputes between States and Nationals of other States (1966). The Philippines ratified this Convention in 1978. It is given jurisdiction over any legal dispute arising directly out of investment contracts between a contracting State and a national of another State. Both parties must give their consent to bring matters to the ICSID for dispute resolution. Once already given, they cannot unilaterally revoke their consent. Bilateral Investment Treaties (BIT) have gained popularity in the 21st Century. Usually, an ICSID dispute resolution clause is inserted in BITs. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) It maintains a list of individuals who can serve as panel members who can act as conciliators or arbitrators. Matters referred to the ICSID are resolved either through conciliation (parties themselves resolve their issues) or arbitration (panel resolves the issues based on the laws agreed upon by the parties, or, if not specified, based on the law of the contracting State involved in the dispute). Kompetenz-Kompetenz or Compétence de la Cométence doctrine: an arbitral body has the power to decide whether it has jurisdiction over the matter brought before it. FROM GATT TO WTO Timeline: June 26, 1945: The United Nations (UN) was established. According to the UN Charter, one of its purposes is to achieve international cooperation in solving international problems of an economic character. December 1945: The US Congress gave President Harry Truman the authority to negotiate a new multilateral agreement for the global reduction of tarif fs on trade in goods. 1946: UN Economic and Social Committee adopted a Resolution calling for a conference to draft the charter for the creation of the International Trade Organization (ITO). FROM GATT TO WTO 1947: UN Conference on Trade and Employment discussed the creation of the ITO (an organization) and the General Agreement on Tariffs and Trade (a multilateral agreement). The original GATT agreement was signed in 1947. It was intended to serve as a subsidiary agreement to the ITO and was thus given provisional ef fect while the ITO was still being negotiated. 1948: The Havana Charter was the product of a round of negotiations held in Cuba for the establishment of the ITO. It was signed by the representatives of the participating countries. However, the US Congress failed to ratify the Havana Charter, as it feared that the ITO may get involved in domestic economic issues. The failure of the US to ratify the ITO caused the rest of the world to abandon the Havana Charter (compare this to failure of the League of Nations). Meanwhile, the GATT, while not an of ficial organization, generally facilitated the gradual decrease of tarif f rates through multiple rounds of negotiations. FROM GATT TO WTO 1947-1979: The first seven GATT Rounds led to the reduction of worldwide tariff rates on manufactured goods and the fixing of trade standards. In the 1960s and 70s, States started to include discussions on non - tariff agreements (such as anti-dumping measures) to further liberalize and equalize trade. The GATT follows a trade without discrimination principle. This is evident in the following standard rules of world trade: M ost-Favored-Nation (MFN) P rinciple: once a country negotiates a tariff cut with some countries (like its allies or close trade partners), the same rate must be applied to all GATT signatories. However, there are exceptions to the MFN such as allowing developing countries to protect domestic producers and Free Trade Areas (FTA) based on geographic considerations. N ational Treatment Clause: A State must not unduly favor its local products to the detriment of foreign products. Unwarranted protectionist policies may come in the form of preferential tax treatment, subsidies, and the provision of free facilities to local producers. This only applies to "like products" (e.g. a domestic fruit and an imported fruit of the same kind). FROM GATT TO WTO 1994: Conclusion of the 8th (Uruguay) Round, which proposed the creation of a new institution similar to the failed ITO. The World Trade Organization (WTO) was established by the Marrakesh Agreement, which came into force in 1995. The principles of the GATT have been incorporated in the WTO. In 1947, at the start of the first GATT Round, the average global tariff rate was 22%. By the end of the Uruguay Round, the rate was down to just 5%. The latest (and current) Round, the Doha Development Round, commenced in 2001 and is under the WTO framework. 2013: Bali Package – The first trade agreement reached through the WTO that was approved by all its members. It lowered import tariffs and agricultural subsidies, allowing developing countries (relying on agricultural production) to tap the markets of developed nations. FROM GATT TO WTO What is the difference between the GATT and the WTO? The GATT is a set of rules agreed to by the contracting States. The WTO is an intergovernmental organization. The agreements entered into by WTO member States are called WTO Agreements. WTO Agreements are also more expansive since these instruments not only cover goods, but also trade in services and trade related to intellectual property issues. The Philippines joined the WTO in 1995. Not only States, but also customs territories having full autonomy of the conduct of their trade policies may join the WTO. Hence, Taiwan and Hong Kong (separate from China's membership) are members. I N T E R NAT IO NAL BUSI N E S S AGR E E M E N T S MODULE 7: ECONOMIC INTEGRATION PRINCIPLES Thomas Elliot A. Mondez Department of Commercial Law De La Salle University Tariffs and Customs  A tariff is a tax on imports or exports.  Purpose: to obtain revenues and to influence competition and trade.  Customs: restrictions on the import or export of goods. 1987 Philippine Constitution  Tarif f rates and similar duties can only be imposed by law: Sec. 24, Art. VI provides that all tariff bills shall originate exclusively from the House of Representatives.  The f ixing and adjustment of the specif ic rates may be done by the President: Sec. 28(2), Art. VI states that Congress, by law, may authorize the President to fix, within specific limits, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the national development program of the government. Tariffs and Customs Adjustments based on the Tariff and Customs Code of the Philippines:  In the interest of national economy, general welfare, or national security, the President may, upon recommendation of the National Economic Development Authority (NEDA), increase, reduce, or remove existing protective rates of duties, establish import quota, or ban imports of any commodity, and impose additional duties on all imports not exceeding 10% ad valorem, if necessary.  A public hearing must be conducted by the Tariff Commission before NEDA submits its recommendation to the President. Treaties and executive agreements may also be entered into by the Philippines to modify tariff rates. Economic Integration Free Trade Area Customs Union Common Market Single Market/Economic Monetary Union Political Union Union Free Trade Area A Free Trade Area (FTA) is a group of countries, usually geographic neighbors, who agree to lessen or remove tariff and non-tariff barriers on traded goods and services being traded within the FTA. Each State in an FTA is still allowed to independently trade with other countries outside the FTA. The treatment accorded to other World Trade Organization (WTO) members who are not in the FTA must still comply with the General Agreement on Tariffs and Trade (GATT) standards. Free Trade Area The Association of Southeast Asian Nations (ASEAN) has an ASEAN FTA (AFTA). 1992: Original AFTA agreement entered into by the Philippines, Malaysia, Indonesia, Thailand, Singapore, and Brunei. 1995: Vietnam agreed to become part of the AFTA. 1997: Laos and Myanmar joined the AFTA. 1999: Cambodia joined the AFTA. Free Trade Area Objectives of AFTA:  To increase ASEAN’s competitive edge as a production base geared for the world market.  Liberalization of trade in the region through the elimination of intra-regional tariffs and the elimination of non-tariff barriers. Common Effective Preferential Tariff (CEPT) Scheme  ASEAN Member States have common effective tariffs among themselves in AFTA, but the level of tariffs with non-ASEAN countries shall continue to be determined individually.  The goal is to limit tariff rates for products included in the inclusion list to 0-5%. Vietnam, Cambodia, Laos, and Myanmar are given more time to reduce tariff rates. For the "ASEAN-6", there is already an effective complete free trade area with 0% tariffs for almost all products in the inclusion list.  Included products: All manufactured products, including capital goods and processed agricultural products, and those falling outside the definition of agricultural products are covered by the CEPT Scheme. Agricultural products are excluded from the CEPT Scheme. Free Trade Area Exclusions from the AFTA CEPT Scheme: 1. Unprocessed agricultural products. 2. General Exceptions: A Member State may exclude a product which it considers necessary for the protection of its national security, the protection of public morals, the protection of human, animal or plant life and health, and the protection of articles of artistic, historic or archaeological value. This is consistent with GATT rules. 3. Temporary Exclusions: Member States which are temporarily not ready to include certain sensitive products in the CEPT Scheme may exclude such products on a temporary basis, subject to periodic review. CEPT Local Content Requirement: Local content requirement of 40% - a product is considered as originating from ASEAN Member States if at least 40% of its contents originates from any Member State. Itt refers to both single country and cumulative ASEAN content Just like a FTA, but the members agree to deal with non- Customs members collectively. The AFTA is not a Customs Union since member states are free to negotiate with non- Union ASEAN states individually. One single external tariff for all goods and services imported from outside the customs union into any of its member countries. Aside from having a Customs Union as a collective, the European Union (EU) also has Customs Union agreements with Turkey, Andorra, and San Marino. The Eurasian Economic Union has a Customs Union among Russia and other former Soviet countries. South America has the Mercosur. There are also several countries forming Customs Unions in Africa. Common Market Apart from being a Customs Union, a Common Market allows free movement of services and capital within the territory of its member states. It is the first step towards achieving a Single Market. Tariffs and quotas are eliminated, but non-tariff barriers such as conflicting national administrative requirements on product standards remain. The European Economic Community, before being absorbed by the present-day European Union, was a Common Market. Single Market/Economic Union Free movement of goods, services, capital, and people. Unlike a common market, the fiscal and economic policies of the member states are harmonized. The European Union (EU) is a Single Market. Monetary Union Use of the same currency, same exchange rate, and same financial standards. Mere currency sharing is not enough. For instance, the countries in Oceania that use the Australian Dollar as their currency do not have a Monetary Union with Australia. The same is true for non-EU European countries using the Euro. Only 20 out of the 27 EU countries are part of the eurozone. The other 7 still use their local currencies, like Denmark. The UK was not part of the eurozone when it was still an EU member. Political Union A grouping with harmonized political institutions and policies. This could result in the merger of several States into one integral unit like the United States of America. The EU has elements of political union, with a European Parliament, a European Court of Justice, and the executive institutions of the EU headquartered in Brussels. INTERNATIONAL BUSINESS AGREEMENTS MODULE 8: THE ASEAN AND THE EU Thomas Elliot A. Mondez Department of Commercial Law De La Salle University THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS History: -The end of colonialism marked the beginning of the Cold War between the US and the Soviet Union. -Southeast Asia became a primary battleground between the communist forces and the Amercian-aligned "free world". 1954: The Southeast Asian Treaty Organization (SEATO) was established by the Southeast Asian Collective Defense Treaty signed in Manila. Despite its name, only two members were from Southeast Asia (Thailand and the Philippines). This was supposed to be the Asian counterpart of the North Atlantic Treaty Organization (NATO). It never took off and was disbanded in 1977. ASEAN HISTORY  1963: Attempt to form the MAPHILINDO – Declaration of the establishment of the MAPHILINDO (Malaysia, Philippines, and Indonesia) during the presidency of Diosdado Macapagal.  In a 1963 address, President Macapagal said that the MAPHILIINDO will remove the barriers that have been built artificially by centuries of colonialism to divide the peoples of the Malay race. This is also based on the objectives of Jose Rizal, President Quezon, President Quirino, Wenceslao Vinzons, among others, to unify the Malay race.  It did not prosper since there was a growing dispute over the State succession of the Federation of Malaya (formerly British Malaya) involving Indonesia and the Philippines. Both Manila and Jakarta claimed portions of the former British colonies. The MAPHILINDO was viewed as an attempt by Manila and Jakarta to prevent the formation of the modern Malaysian State.  It failed to materialize despite President Macapagal making it the pillar of his foreign policy. Diplomatic relations soured and military and economic conflicts were nearly triggered. ASEAN HISTORY August 8, 1967: Foreign ministers of Thailand, Malaysia, Indonesia, Singapore, and the Philippines signed the ASEAN Declaration (or Bangkok Declaration), which became the founding document of ASEAN. - Foreign Affairs Secretary Narciso Ramos was the signatory for the Philippines. He is the father of former President Fidel Ramos, who was still part of the military and was currently engaged in his tour of duty in Vietnam when the ASEAN Declaration was signed. - The ASEAN was a loose regional bloc. Efforts have been made to strengthen its organizational institutions. 2008: ASEAN Charter came into force. PURPOSES OF THE ASEAN Section 1 of the ASEAN Charter: 1. Maintain and enhance peace and security; 2. Enhance regional resilience by promoting greater political, security, economic, and socio-cultural cooperation; 3. Nuclear weapons-free Southeast Asia; 4. The peoples of the Member States to live in just, democratic, and harmonious societies; 5. Create a single market and production base which is stable, prosperous, highly competitive, and economically integrated with effective facilitation for trade and investment where there is free flow of goods, services and investment, facilitated movement of business persons, professionals, talents, and labor, and freer flow of capital; PURPOSES OF THE ASEAN 6. Allev iate pov erty and narrow the dev elopment gap within ASEAN; 7. Strengthen democracy, good gov ernance, rule of law, human rights, and fundamental freedoms; 8. Respond effectiv ely, in accordance with the principle of comprehensiv e security, to all forms of threats, transnational crimes, and transboundary challenges; 9. Promote sustainable dev elopment; 10. Closer cooperation in education, science, and technology; 11. Equitable access to opportunities for human dev elopment, social welfare, and justice; 12. Safe, secure, and drug-free env ironment; 13. People-oriented ASEAN to foster ASEAN integration and community building; 14. Promote ASEAN cultural identity; and, 15. ASEAN as the driv ing force in relations and cooperation with external partners in an open, transparent, and inclusiv e regional architecture. ASEAN PRINCIPLES Sec. 2 of the UN Charter (excluding redundancies with the aforementioned purposes) -Respect for the sovereignty and equality of all Member States. -Renunciation of aggression and of the threat of use of force. -Reliance on peaceful settlement of disputes. -Non-interference with internal affairs of Member States. -Respect the right of every Member State to lead its national existence free from foreign influence. -Consultation on matters of common interest. -Abstention from participating in any policy or activity, including the use of its territory, which threaten the sovereignty, territorial integrity, or political and economic stability of ASEAN Member States (Relate this to collective defense and collective external response). -Adherence to multilateral trade rules and ASEAN's rules-based regimes to implement economic commitments, progressive reduction of trade barriers, regional economic integration, and a market-driven economy. ASEAN LEGAL PERSONALITY AND MEMBERSHIP Legal Personality: The ASEAN itself is an intergov ernmental organization with legal personality (Article 3, ASEAN Charter). It is technically a subject of international law. Membership: Currently, there are 10 members – Malaysia, Indonesia, Singapore, Thailand, the Philippines, Brunei, Vietnam, Laos, Cambodia, and Myanmar. East Timor has observ er status and its membership is approved in principle, subject to compliance with the ASEAN roadmap for accession. Criteria for ASEAN Membership (Article 6): 1. Located in Southeast Asia; 2. Recognition by all existing ASEAN Member States; 3. Agreement to be bound by ASEAN Charter; and, 4. Ability and willingness to carry out the obligations of membership. EAST TIMOR ACCESSION ROADMAP  Readiness to comply with the duties and responsibilities of ASEAN Membership and with the provisions of the ASEAN Charter.  Ability to comply with, and implement, the ASEAN international agreements.  A dedicated diplomatic mission in Jakarta.  National implementing agencies for ASEAN sectoral meetings. English proficiency is a must.  Establish bilateral agreements with all ASEAN Member States for mutual recognition of passports.  Financial scheme to meet financial obligations of ASEAN membership.  Sufficient physical infrastructure and logistics to host ASEAN meetings since chairmanships are held in a rotating basis. ASEAN STRUCTURE 1. ASEAN Summit – Comprise of the Heads of State or Government of the Member States. It is the supreme policy-making body of ASEAN. The ASEAN Summit appoints the ASEAN Secretary-General. It meets twice a year in the country holding the chairmanship, although special meetings may be convened if necessary. 2. ASEAN Coordinating Council – Composed of the foreign affairs ministers of the Member States. It coordinates the periodic and special meetings of the ASEAN Summit. 3. ASEAN Community Councils – Implements the policy directives of the ASEAN Summit. There are three councils: (a) ASEAN Political- Security Council, (b) ASEAN Economic Community Council, and © ASEAN Socio-Cultural Community Council. ASEAN STRUCTURE 4. ASEAN Sectoral Ministerial Bodies – These are administratively under the three ASEAN Community Councils, but they have more specific functions. For instance, the ASEAN Free Trade Area (AFTA) Council, a sectoral body, is under the Economic Community Council; the meetings of the ASEAN defense and law ministers are under the Political-Security Council; the meetings of the ASEAN health, culture, and education ministers are under the Socio-Cultural Community Council. 5. ASEAN Secretary-General and Secretariat – The Secretary-General serves as the chief administrative officer of the ASEAN. He or she is appointed to a non- renewable 5-year term. The nationality of the Secretary-General is rotated among the Member States. The Philippines had two Secretary-Generals: Narciso Reyes and Rodolfo Severino. The ASEAN Secretariat is based in Jakarta. 6. Committee of Permanent Representative to ASEAN – Each Member State has a permanent ambassador to the ASEAN. They are also based in Jakarta. ASEAN STRUCTURE 7. ASEAN National Secretariats – Each Member State has a national secretariat to organize the activities of the ASEAN at the national level. 8. ASEAN Human Rights Body – Promotes and protects human rights and fundamental freedoms. The body created is called the ASEAN Intergovernmental Commission on Human Rights. 9. ASEAN Foundation – Supports the Secretary-General and other ASEAN bodies by promoting greater awareness of the ASEAN identity, people-to-people interaction, and close collaboration among the business sector, civil society, academia, and other stakeholders. "THE ASEAN WAY"  Article 20(1): Decision-making in the ASEAN shall be based on consultation and consensus.  Sec-Gen. Rodolfo Severino: The Southeast Asians’ way of dealing with one another through manifestations of goodwill and the slow winning and giving of trust. This is the “slow-grind” style of Southeast Asians through consultation and consensus-building. THE EUROPEAN UNION History: - Endless cycle of Franco-German conflicts (Thirty Years War, War of the Spanish Succession, Napoleonic Wars, Franco- Prussian War, WWI, WWII). - 1948: The US Marshall Plan (named after US Secretary of State Geogre C. Marshall) - regarded as the most successful foreign aid program in history. The following were its objectives: - Reconstruct Europe after WWII to stimulate the US Economy and provide markets to US goods. - Prevent Western Europe from resorting to communism. Also, to prevent another Treaty of Versailles debacle by allowing extremist governments to gain power due to severe economic crisis. - Credited as one of the catalysts for the integration of Europe. It incentivized economic integration and promoted regional cooperation. 1949: Establishment of the North Atlantic Treaty Organization (NATO) as the Western alliance against communism and the Soviet Union, encouraging regional cooperation. 1951: Creation of the European Coal and Steel Community (ECSC), which integrated the management of coal and steel for six Western European countries: West Germany, France, Italy, EU HISTORY Belgium, Netherlands, and Luxembourg. In effect, it integrated the war-making capacity of France and West Germany. 1957: Treaties of Rome establishing the European Economic Community (EEC) and the European Atomic Energy Community (Euratom). 1958: European Parliamentary Assembly was convened. It will later on become the European Parliament. 1962: The first Common Agriculture Policy (CAP), with the members co-managing their food production. This is still marked with excess production and state subsidies, and continues to be a major issue not only in Europe, but also in world trade. 1965: The ECSC, EEC, and Euratom merges into one single community and the European Commission (administrative matters) and the European Council (executive/policy). EU HISTORY 1968: The Member States establishes a Free Trade Area (FTA) and Customs Union. 1973: First expansion- UK, Denmark, and Ireland become members. 1979:European Parliament members elected directly by European citizens. Previously, they were designated by their home parliaments. Political groupings are pan-European rather than national. 1981: Greece becomes a member. 1986: Spain and Portugal join. 1987: Single European Act (SEA) becomes effective, launches a 6-year plan to achieve a single market by harmonizing national economic regulations. 1989: Fall of the Berlin Wall. East Germany is reunited with West Germany and becomes part of the European Communities by 1990. 1992: Treaty of Maastricht – the European Communities EU HISTORY are now formally called the European Union (EU) 1993: Single Market and the 4-Freedoms take effect – freedom of movement of goods, services, capital, and labor. 1994: European Economic Area (EEA) is created, extending the single market to a larger geographic region (current 27 members of the EU plus Iceland, Norway, and Liechtenstein. Switzerland has access to the single market despite not being included in the EEA. 1995: Austria, Finland, and Sweden joins the EU. The Schengen Agreement also took effect in 1995. There are currently 26 Schengen Visa countries, including 4 non-EU members (Ireland, Norway, Liechtenstein, and Switzerland). 1999: Euro is launched as a single currency for some (but not all) EU members, limited to EU HISTORY commercial and financial transactions only. 2002: Euro notes and coins enter circulation. 2004: Massive expansion, integrating 10 new countries: Cyprus, Malta, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia (most of the former Iron Curtain countries). 2007: Bulgaria and Romania joins the EU. EU HISTORY 2013: Croatia joins the EU. 2016: UK voters vote to leave the EU (took effect in 2020) in a close poll (just 52% voted for Brexit). 2022: Russia launches a full-scale invasion of Ukraine, which applied for EU membership shortly thereafter. 2023: Finland joins NATO. 2024: Sweden joins NATO. This Phot o by U nknow n aut hor is licensed under CC BY-SA. 1. Not all countries in Europe are EU members. 2. Not all EU members are NATO members (Austria, Cyprus, Ireland, and Malta). 3. Not all NATO members are EU members (such as the UK, Turkey, and Norway). 4. Not all NATO members are in Europe (US and UNDERSTANDING 5. Canada). Not all EU members are part of the Eurozone (20 out PAN-EUROPEAN of 27 only). But some non-EU European countries use the euro as their currency. ORGANIZATIONS 6. Not all EU members are part of the Schengen Agreement (Ireland and Cyprus). But some non-EU European countries have agreements including them in the Schengen Area (Switzerland, Iceland, Liechtenstein, and Norway. Moreover, microstates such as Monaco and the Holy See (Vatican) are de facto part of the Schengen Area. ASEAN EU Single Market (with some areas under a FTA Monetary Union and partial Political Union) No compulsion to Integration was integrate except to necessary as a become lasting solution to economically centuries of competitive. warfare. Weak centralized Strong centralized institutions. institutions. "ASEAN Way" consensus decision- Bureaucracy allows political majority to ASEAN AND EU making. avoid stalemates. ASEAN AND EU ASEAN EU Continental and Archipelagic Primarily Continental Countries with different religions, Culturally "Western", predominantly government styles, languages, and Christian, highly advanced stages of economic development. economies (West) and relatively No dominant powers. developed economies (East). Limited Visa-free travel (14 days only) Dominated by Germany and France. Freedom to travel and work anywhere. 630 Million population and growing (89% increase since ASEAN-EU ASEAN relations established in 1977) Large and young workforce. GDP growth 5.1% average from 2005-2015 (4.4% from 2010-2022) 448 Million population (UK population already excluded, only grew by EU 11% since 1977) Aging population. GDP growth average is 1% from 2005-2015. The ASEAN Way The EU Way  Weak Jakarta administrativ e gov ernment allows  Strong Brussels administrativ e government is turning- countries with different policies and priorities to co- off some Member-States and European citizens. exist.  Highly efficient and productive. Offends their own  Gets nothing done but offends no one. citizens and foreigners alike.  Apolitical in terms of ideology (neither liberal nor  Very political in terms of progressiv e ideas, but with conserv ative, ASEAN Charter's emphasis on growing far-right mov ements due to excessiv e democracy is anathema to the traditionally liberal policies. despotic Southeast Asian systems.  Views Russia as an existential threat. China is  China is v iewed by some countries as a major v iewed both as threat and as an important trading threat, but not an existential threat. China is partner. respected as a major trading partner.  Integrated defense based on NATO.  Some are aligned with China, others with the US. No military alliance counterpart. WHICH REGIONAL BLOC HAS THE BETTER MODEL? International Business Agreements Module 9: International Environmental Law and its Effects on Doing Business THOMAS ELLIOT A. MONDEZ DEPARTMENT OF COMMERCIAL LAW DE LA SALLE UNIVERSITY What is International Environmental Law? u It is a branch of international law that regulates the interaction between States and the environment. Purpose: To control, reduce, and eliminate the existing causes of damage to the environment by prohibiting and preventing certain types of conduct that are harmful to the environment, and encouraging the conscientious use of the environment and its resources for the benefit of future generations. Correlation to International Commerce: Human economic activity is directly related to the extent of damage to the environment. International Environmental Law therefore regulates and limits the conduct of economic affairs permitted within States. Facts: A smelter processing zinc and lead was operated by a Canadian company in Trail, British Columbia. The smoke from the smelter caused damage to crops and forests in the State of Washington in the northwestern US. The farmers demanded for compensation for the damages caused by the smelter from the Candian company. After efforts to settle the matter failed, the farmers sought assistance from the US Federal Government. The US and Canada agreed to form an arbitral Trail Smelter tribunal to resolve the matter. Arbitration Held: 1. The farmers are entitled to monetary compensation. (1941) 2. The Canadian company had to regulate its smoke output. 3. Transboundary Harm: No State has the right to use or permit its territory to be used in a manner as to cause damage to another State. France conducted a series of above-ground nuclear weapons tests in French Polynes

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