Tag Archive | "international trade"

Presidents Putin and Obama (CBS)

Critical Analysis: Welcoming Russia to the WTO

Presidents Putin and Obama (CBS)

By the end of the summer, Russia will become the newest member of the World Trade Organization (WTO) after nearly twenty years of negotiations.  This presents tremendous opportunities for American businesses, exporters, and innovators. Russia is the 7th largest economy in the world and trade between the United States and Russia is far from realizing its full potential. U.S. exports to Russia totaled almost $9 billion last year, and some studies indicate this could double within 5 years of Russia joining the WTO. Furthermore, when it does become a member, Russia will “be required—for the first time ever—to establish predictable tariff rates, ensure transparency in the publication and enactment of laws, and adhere to an enforceable mechanism for resolving disputes.” This means added protections for American agricultural exports and intellectual property rights. Ever hear of pirated DVDs you can buy for a dollar on the streets of Moscow? This will, sadly, become a thing of the past.

This all sounds too easy. And it is. First, both countries, in order to take advantage of the WTO agreement, must grant each other Permanent Normal Trade Relations (PNTR). Second, the U.S. Congress must lift trade restrictions contained in the 1974 Jackson-Vanik law. This targeted the former Soviet Union for blocking Jewish citizens from emigrating during the Cold War. Since this law prevents favorable trade relations with American businesses, the U.S. cannot grant Russia PNTR without also lifting Jackson-Vanik. In other words, unless the U.S. lifts Jackson-Vanik, the rules of the WTO will not apply between the two countries. If the rules of the WTO do not apply, American business will not benefit from the advantages that come with Russia’s WTO membership. IPR protections will not apply nor the lower tariff rates on U.S. products. And, to make matters worse, American business will have to sit and watch Chinese, Japanese, Canadian, and European businesses cash in on the freshly opened Russian market.

As if this could not become any more complicated, members of Congress are concerned that lifting Jackson-Vanik excuses Russia’s uninspiring human rights record. In Jackson-Vanik’s stead, many Congressmen on both sides of the aisle, including Senate top dogs John McCain and Joe Lieberman, support a new bill named after the late Russian lawyer, Sergei Magnitsky. Beaten to death while in prison, he was arrested after exposing massive tax fraud by officials within the Russia Interior Ministry. This bill would block individuals involved in human rights abuses in Russia from traveling to, studying in, or living in the United States. Congressmen want to make sure that if we grant PNTR to Russia (along with lifting Jackson-Vanik), we also communicate our disgust with how they treat their own citizens, their support of the Assad regime in Syria, and so on.

Recently, Secretary of State Hillary Clinton reassured us that granting PNTR is not a gift to Russia, as some may feel. Instead, “it is a smart, strategic investment in one of the fastest growing markets for U.S. goods and services. It’s also an investment in the more open and prosperous Russia that we want to see develop.” The Obama Administration, as well as Russian President Vladimir Putin, share this view.

The situation is compelling: creating jobs through international trade on the one hand versus supporting human rights on the other. Congress, of course, wants to have their cake and eat it too. After all, why can’t we, after engaging in some hard-nosed politics, bring both hands together? Perhaps, in 2012, engaging in trade with a fast-growing and modernizing Russia is the best option to foster human rights protections. Or perhaps, that is just a convenient excuse to put our wallets before our values.

Michael Cox is a rising 3L, a Candidacy Editor on the Denver Journal of International Law and Policy, and a Senior Staff Editor for The View From Above

Posted in DJILP Online, DJILP Staff, Featured Articles, Michael CoxComments (0)

State Department at Foggy Bottom (Wikipedia)

The United States Announces Updated Model Bilateral Investment Treaty

State Department at Foggy Bottom (Wikipedia)

On April 20, 2012, the U.S. Department of State and the Office of the United States Trade Representative announced the posting of a revised Model Bilateral Investment Treaty (BIT).  The new document, 42 pages in length, updates the 2004 Model BIT.  Additional background materials can be found here and here.

A BIT provides binding legal rules for the treatment of one country’s investors by a foreign jurisdiction and aims to protect the interests of the overseas investor.  Their general aims are to protect the interests of a country’s investors when making investments in countries where investors’ rights may not be sufficiently protected by existing treaties or international agreements.  BITs cover topics such as fair and equitable treatment of foreign investors compared to domestic investors, issues of compensation if/when expropriations take place, questions concerning management personnel, and can be helpful when they address funds transfers (possibly stipulating market rates), and may also include a stipulation concerning the form of dispute resolution to be used.  BITs can promote transparency and are generally seen as supporting the development of international law standards.

According to the State Department press release: “[t]he Administration made several important changes to the BIT text so as to enhance transparency and public participation; sharpen the disciplines that address preferential treatment to state-owned enterprises, including the distortions created by certain indigenous innovation policies; and strengthen protections relating to labor and the environment.”

Here is a link to the USTR page on the 40 current US BITs.  Some non-U.S. BITs are here and additional investment treaty information, including other model BITs is here.  BITs for OAS countries can be found here.

And, to relate this to indigenous peoples, the Chevron / Ecuador dispute is currently under review by the Permanent Court of Arbitration in The Hague.  There is debate over whether it is appropriate for a case that has been fully litigated in a domestic court to then be subject to a BIT arbitration clause.  So, for another column . . . how do/should domestic court decisions interact with decisions of international tribunals? This was also one of the questions raised during the ASIL 2012 Annual Meeting’s program, “Confronting Complexity.”

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University of Denver Sturm College of Law