Suppose that Canada is importing LED TV from China, Taiwan and Mexico while two domestic companies – 100% subsidiary companies of Korean producers – are producing LED TV. These two companies are hiring more than 3,000 workers, including all managing level
Question I. Suppose that Canada is importing LED TV from China, Taiwan and Mexico while two domestic companies – 100% subsidiary companies of Korean producers – are producing LED TV. These two companies are hiring more than 3,000 workers, including all managing level officials such as CEO and CFO. The domestic prices for 50-inch screen LED TVs in Canada are around $1,500. 1.1 The price for 50-inch screen LED TV from China is $1,200. Suppose further that the same Chinese LED TV producers charge $1,000 in their domestic market. On the other hand, the LED producers in China do not pay energy prices because they are still allocated under state planning systems. It can be shown that under an equivalent market economy situation in India, their domestic costs and prices are tantamount to $1,500 and $1,800, respectively. As special counsel to Trade Minister of Canada, what can you recommend to address import increase from China? 1.2 Suppose that LED TV producers in Taiwan have been heavily supported by its own government. The subsidy effect can be shown to lower the price by $500. Unlike other imported LED TVs, Canadian LED TV producers are competing with Taiwanese LED TVs primarily in the US market. As special counsel to Trade Minister of Canada, what can you recommend to address LED TVs exported from Taiwan? 1.3 Suppose that Korean subsidiary LED TV producers were sold to Canadian companies. Suppose further that importation of LED TVs was dramatically increased last year, accounting for 68% of the total market share and 1/3 of those imports are from Mexico. The prices of domestically produced LED TVs were precipitated and profits and employment for those domestic producers were substantially reduced. By the way, since two years ago, LED TV production in Canada has moved to Mexico that is a partner of North American Free Trade Agreement (NAFTA). Indeed, 70% of LED TVs imported from Mexico last year were manufactured by subsidiaries of Canadian companies. As special counsel to Trade Minister of Canada, what can you recommend to address problems for domestic LED TV industry? Understanding the International Trade Law Final Exam 2019 2/3 Question II. In Peru-Additional Duty on Imports of Certain Agricultural Products (DS457), Peru and Guatemala concluded the FTA that included explicitly WTO-inconsistent arrangements for agricultural importation. Peru tried to defend its measure by arguing that as a result of the mutual concessions, Guatemala agreed with Peru to modify the WTO obligations by the specific FTA provisions. The panel in this case ruled that since the FTA was not yet entered into force, the relevant provisions of the FTA were not legally binding on the parties. So, it rejected the Peru’s defense argument and found that the FTA provisions could not justify the violation of the WTO obligations. Suppose that the Peru-Guatemala FTA actually entered into force. Then what do you think of the Peru’s defense for its WTO-inconsistent FTA commitments? Understanding the International Trade Law Final Exam 2019 3/3 Question III. Suppose that the Korean government decided to join international efforts to protect sea turtles that are mostly endangered species. It has been widely known that shrimp trawlers are the most serious danger to sea turtle population by causing numerous incidental killing during the harvesting process. On the other hand, sea turtles have rarely been observed in the ocean surrounding Korea. But due to global warming problem in recent years, there are more incidents to spot sea turtles such as loggerhead and hawksbill in the East Sea. Despite such occurrence of sea turtles in the Korean ocean, the coastal areas of the Korean peninsula are not the normal habitat for sea turtles. The Korean government enacted the Marine Mammal Conservation Act (MMCA), primarily benchmarking the US Endangered Species Act disputed in the US-Shrimp case, that prohibits importation of fishery products produced by methods different from the method certified as environment-safe pursuant to MMCA. After MMCA was introduced, importing shrimp and shrimp products from China were mostly banned because Chinese shrimp trawlers did not use turtle excluder device (TED) that was mandated under MMCA to be certified as environment-safe for shrimp harvesting. The Chinese government has merely promoted, but not required, the use of TED because shrimp trawlers using TED are typically less efficient to catch shrimps and it is also very difficult to monitor and enforce the use of TED in such long coastal areas. But the Chinese government believes that Chinese fishermen rarely kill sea turtles based on their cultural and religious belief to treat sea turtles as sacred animals. Although sea turtles are indeed cooked in some limited parts of the country, the Chinese fishermen normally try to protect and rescue sea turtles in a belief that they would protect their lives from terrible sea accidents. The Earth Island Institute, a famous international environment NGO, found that the Chinese shrimp trawlers caused on average 15% of unnatural death of sea turtles and the pollution of seas, especially in the area of sea turtle habitats, accounted for 85% of sea turtle death in China. Can the measure adopted by the Korean government be justified under GATT Article XX?