RULES-BASED TRADE: THE BASIS FOR STRONG
AND SUSTAINABLE TRADE TIES AND THE BEST
ANTIDOTE TO PROTECTIONISM
University of International Business and
Economics
Beijing, China
9 December 2009
Timothy M. Reif
General Counsel
Office of the U.S. Trade Representative
Executive Office of the President
I. Introduction
Office of General Counsel,
Office of U.S. Trade Representative
 33 Attorneys
 Experienced
 Advice on Negotiating of New Trade Agreements
 Enforce Existing Trade Agreements
Office of General Counsel,
Office of U.S. Trade Representative
Reif as example
 1985 graduate of law school (Columbia Law School in New York City)
 Practiced international trade law since 1987 (22 years)
 Experience includes:
 USTR staff attorney
 U.S. House of Representatives - Committee
 U.S. International Trade Commission
 Private law firms
 17 years teaching at Princeton and Georgetown Universities,
mostly on dispute settlement
 Written many articles about international trade subjects,
especially about dispute settlement
 Took office February 2009. Focus on evolution of dispute settlement
system, role of system in advancing US-China trade relationship
II. Summary of Presentation
 Sustainability of increased global economic integration
depends on effective functioning of the international trading system
 Effective functioning of international trading system in turn depends
on rule of law
 Effective functioning of rule of law increasingly critical to commercial
development of societies internally (China, US), as well as externally
(WTO, bilateral trade agreements)
 Effective functioning of rule of law depends on
1) Consistency,
2) Adherence to written texts - end juridical adventurism
3) Effective transparency in development and application of laws
and measures
 In sum, rule of law is the glue that
holds the ever more integrated global
economy together
 WTO system of rules calls all WTO
Members to meet agreed standards, as
enumerated in rules. No more and no less
 Goal of this brief presentation is to illuminate
how that works
III. Design of the WTO Rules-Based Trading System
A. 4 Key Goals of System
Preamble to GATT states:
“Recognizing that their relations in the field of trade and economic endeavour
should be conducted with a view to raising standards of living, ensuring
full employment and a large and steadily growing volume of real income
and effective demand, developing the full use of the resources of the
world and expanding the production and exchange of goods.”
“Being desirous of contributing to these objectives by entering into reciprocal
and mutually advantageous arrangements directed to the substantial
reduction of tariffs and other barriers to trade and to the elimination of
discriminatory treatment in international commerce.”
 4 Key Goals of System
1)
2)
3)
4)
Raising Standards of Living
Ensuring Full Employment...Large and Steadily Growing Volume of
Real Income and Effective Demand
Developing Full Use of Resources
Expanding Production and Exchange of Goods
 These goals are also reiterated in the 1995 Marrakesh Agreement.
 Marrakesh Agreement adds a 5th goal: sustainable development
5) “while allowing for the optimal use of the world's
resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the
environment and to enhance the means for doing so in a
manner consistent with their respective needs and
concerns at different levels of economic development,”
 Not “Zero-Sum”: all can gain - one party’s gain does not have to come
at expense of another party IF rules are applied and followed
B. Means of Achieving 4 Goals — GATT/WTO Rules
1.
History



2.
3.
GATT established 1947, 23 Contracting Parties
WTO established 1995, 100+ Members
WTO in 2010, 150+ Members
Bind and Reduce tariffs and quotas under structure of WTO rules
4 Key Types of Rules
(A) Nondiscrimination
(1) Nondiscrimination among countries — “Most Favored Nation” (“MFN”), GATT
Article I, GATS Article II
(2) Nondiscrimination between domestic and imported products and services
“National Treatment” (“NT”), GATT Article III, GATS Article XVII
(B) Make trade related regulations more transparent




GATT Article X, GATS Articles III & VI
GATT dispute settlement decision: Italian Tractors (1958)
GATT/WTO negotiations: Uruguay Round Agriculture tariffication
SPS/TBT Agreements: notice and comment rulemaking, inquiry points
Logic:
 Transparent barriers are harder to sustain
 Transparency and due process in development and application of laws
and measures strengthens rules of law, reduces likelihood of disputes
(c) Fair Competition and Fair Trade
 Ensuring fair trade — fair rules of competition — among countries with
different economic policies
 Trade Remedies key: antidumping, countervailing (anti-subsidy),
safeguards
 GATT Article VI fundamental aspect of GATT rights and obligations as
established in 1947
 Article VI “condemns” injurious dumping
 Availability of trade remedies can permit a Member to undertake more
trade liberalizing commitments since can explain that there is recourse in
the case of injury
 Legitimate application of trade remedies enables a rules-based trading
system to function
 Misuse of remedies does not contribute to, detracts from, functioning of
system, undermines credibility of system, creates danger of
“protectionism”
(c) Fair Competition and Fair Trade
 Protection of Intellectual Property
 TRIPs
 GATT and GATS - distribution of articles
(d) Addressing Non-Tariff Barriers (NTBs)
 Next Frontier



Addressing NTBs has two major benefits
Opens markets
Reduces Export Platforms
IV. Operation of the Rules Based System
 Vigilance: proactively identifying problems and potential
problems to avoid them or allow early resolution

Note constructive role that this element plays in US-China trade
relationship
 Hard Dialogue: proactively resolving problems before they
fester into disputes

Note constructive role that this element plays in US-China trade
relationship
 Dispute Settlement: formal invocation of rules to address
disputes

Note constructive role that this element plays in US-China trade
relationship