FINAL EXAMINATION
INTERNATIONAL TRADE REGULATION

GOLDEN GATE UNIVERSITY SCHOOL OF LAW
Visiting Associate Professor Helen Hartnell
May 8, 1998

PLEASE READ THE FOLLOWING INSTRUCTIONS:

1. This is a partially open-book examination. You are permitted to refer to: the Documents Supplement for the course (the "White Book"), the class handouts, your class notes, and your outline. Students whose native language is not English may also use an English-foreign language dictionary. YOU MAY NOT USE ANY OTHER MATERIALS.

2. WRITE YOUR EXAMINATION NUMBER ON THE TOP OF THIS PAGE, AS WELL AS ON EACH BLUE BOOK YOU USE.

3. This examination consists of four pages. Check now to be sure that you have all four pages.

4. WRITE ON ONLY ONE SIDE OF EACH BLUE BOOK PAGE; DO NOT SKIP LINES.

5. Your answers should be written in ink or typed. DO NOT USE PENCIL.

6. NUMBER YOUR BLUE BOOKS IF YOU USE MORE THAN ONE (E.G. "1 OF 2, 2 OF 2").

7. Write your answers in the blue books provided. You will not receive credit for answers which appear on this examination sheet but not in your blue book(s).

8. Questions may be answered in any order, but please label each answer clearly, and start the answer to each question at the top of a new page.

9. You have three hours to complete this examination, which consists of Parts A, B, and C. You must answer all questions under Parts A and B of this examination. Under Part C, however, you should only answer two out of the four questions. You are free to choose which two questions to answer under Part C.

10. Allocate your time wisely. The suggested times correspond to the importance (and point value) of each Part or question.

11. At the end of the exam, you must turn in this exam, your blue book(s), and all scratch paper used.

PART A (75 minutes)

Bozola and Vidalia are both members of the World Trade Organization (WTO). These two countries trade a wide variety of primary, semi-manufactured and finished products between themselves, as well as with other WTO and non-WTO countries.

After a period of political instability, the government of Bozola adopted a number of new measures into law, including the following:

1. Bozola imposed a 2% surcharge on ALL imports, wherever they originate. This surcharge is levied in addition to whatever duties are must be paid on these imports.

2. Bozola reduced its internal ad valorem tax on sales of gizmos from 3% to 1.5%, where the gizmo was imported from its neighboring country, Gregaria. However, the 3% tax is still charged on ALL other sales of gizmos, wherever they originate. A "gizmo" is a fictional manufactured object.

3. Bozola offers interest-free loans to any domestic purchaser of. gizmos which are manufactured in Bozola. No such subsidy is available for purchase of imported gizmos. The interest-free loan program offered by the Bozolan government is voluntary.

4. Bozola is one of the top five exporters of tea in the world. Vidalia, on the other hand, is a major exporter of coffee. Historically, these two countries' trade in coffee and tea have balanced each other out. Bozola has for many years imposed an internal tax on sales of tea, but never on sales of coffee. In early 1998, however, the Bozolan government imposed a new internal tax on sales of coffee. The tea tax is 5% ad valorem; the new coffee tax is 7% ad valorem.

You are legal advisor to the government of Vidalia, which is unhappy with the measures taken by Bozola, since they will affect Vidalian exports to that country. Your client wants to know how it should react to Bozola's actions. Write a memorandum in which you advise the Vidalian government how it should proceed, and analyze all procedural and substantive issues relevant to this case. Be sure to explain which source(s) of law you are relying on for your answer (e-g. GATT:Article, WTO Agreement:Article, DSU:Article). What additional facts would you ask your client to provide, and why?

PART B (75 minutes)

The U.S. bicycle industry is facing stiff competition from imports, particularly from Singapore. Three U.S. bicycle manufacturers have hired you to advise them in regard to this situation. These three companies traditionally accounted for 85% of all bikes sold in the U.S., but today their market share is only 50%. They are worried that further losses of market share to cheap imports from Singapore (and elsewhere) will drive them out of business. Your clients ask you to do everything possible to help them, and provide you with the following information:

1. Imports of bicycles from Singapore have doubled in the past three years, and the market share of these imports has risen from 10% to 30%. During that same period, your clients U.S. market share fell from 70% to 50%.

2. Bicycles manufactured in Singapore are sold in the U.S. at a price below the price at which such bicycles are sold in Japan and in Europe. Nearly all bicycles imported into the U.S. from Singapore are imported by Wheely Co., a joint venture between the largest Singapore bicycle manufacturer and Jock Mart, a U.S. discount sporting goods company.

3. The Singapore government has provided the following forms of assistance to the bicycle manufacturers in Singapore:

a. Interest-free loans for companies that locate production facilities in designated underdeveloped areas of the country;

b. Rebates on ocean freight charges for goods exported from Singapore;

c. Tax credit for workplace safety improvements;

d. Tax credit for licensed bicycle manufacturers.

4. Many of the bicycles imported from Singapore are nearly identical in design to those manufactured by your clients, and some bear trademarks that are similar to those used by your clients.

5. Over the past five years, your clients have lowered wages, reduced the size of their workforce, and cut their research and development (R & D) budgets in order to cover costs and stay competitive. The prices your clients charge for their bicycles have not kept up with inflation. All three of your clients are operating at below full capacity, but only two of them report that their profits have fallen since 1995.

Write a memorandum in which you outline the courses of action available under international and U.S. trade law. Identify the various types of actions and remedies that are available, and the advantages and disadvantages of each. Provide your client with an overview of your strategy for helping them, and an assessment of their chances of success. Be sure to explain which source(s) of law you are relying on for your answer (e.g. GATT:Article, U.S.C.5). What additional facts would you ask your client to provide, and why?

PART C (30 minutes total, or 15 minutes per question)

Answer any TWO of the following four questions. Do not answer more than two of the following questions. Read over each of the following four questions quickly, then decide which two of them you want to answer.

1. "As tariff barriers have dropped, the benefits of trade preferences have lost much of their value to developing countries." Explain this statement, and analyze the new approaches taken by the Uruguay Round agreements to the situation of developing countries in the world trading system. How effective are these new approaches likely to be?