INTERNATIONAL TRADE REGULATION
FINAL EXAMINATION
PROFESSOR HELEN E. HARTNELL
8 MAY 2003
INSTRUCTIONS
1. This is an open-book examination. You are permitted to refer to the
following written materials: casebook, class handouts, class notes, and
an outline prepared by you or your study group. Students whose native
language is not English may also use an English-foreign language
dictionary. USE DURING THE EXAMINATION OF ANY OTHER
MATERIALS IS PROHIBITED.
2. You have three (3)hours to complete this examination.
3. This exam consists of two (2) questions. Question 1 has multiple parts.
The suggested times correspond to the importance and point value of
each question. Thus, a question where I suggest 60 minutes would be
twice as important -- and thus worth twice as many points -- as a
question where I suggest only 30 minutes.
4. Please write your answers in the blue books provided to you. Write only
on the right hand side of the page and single-space your work if writing.
Your answers should be written in ink. Please write legibly. If you are
typing, please double-space your answers. No credit will be given for any
answers written on the exam itself.
5. Write your exam number on your exam envelope, at the top of this exam
question packet and your used blue book(s). Do not use your name,
student ID number or Social Security Number on any exam materials.
6. At the conclusion of the exam, return all exam materials to the exam
envelope and submit it to the proctor. Do not seal the envelope.
QUESTION 1 / Recommended Time: 135 Minutes
Vupsia (V) and Dazia (D) are both members of the World Trade Organization
(WTO). Vupsia is a large, developed country, while Dazia is a small, developing
country in Southeast Asia that is in transition from socialism to a market-based economy. Both countries produce catfish. Almost all Vupsian catfish
comes from "fish farms" where the fish are raised in ponds, while a small
portion of Vupsian catfish are wild and caught in rivers. Dazian catfish,
however, are almost entirely wild and caught in rivers at this time, though
Dazia is in the process of developing its catfish farming industry. There are
three Dazian companies that export catfish, and the Dazian government is
part-owner of all three.
All catfish are vertebrate bony fish that belong to the order Siluformes, to
which belong more than twenty different families of catfish around the world.
For example, the family of catfish found in Vupsia is Ictaluridae ("I" family),
whereas the family of catfish found in Dazia is Sisoridae ("S family"). Here is
what these two families of catfish (Siluformes) look like:
In the past ten years, Dazia's catfish exports to Vupsia have increased steadily.
Consumer demand for catfish in Vupsia has doubled in the past five years. Yet
despite the favorable market conditions for expansion, the Vupsian industry
has shrunk, in part due to Vupsian environmental regulations adopted in 1998
that make it more expensive to farm catfish, and in part because a parasite has
infested a substantial number of Vupsian catfish farms since 2000. Since
1998,15% of Vupsian catfish farmers have gone bankrupt, and more are laying
off workers and losing money.
The Vupsian government has taken a number of measures -- listed in detail
below -- which affect Dazian catfish exports to Vupsia. Dazia has challenged
each of these measures under the Dispute Settlement Understanding (DSU).
You are a junior attorney representing the Dazian government in this dispute.
Your assignment is to formulate the legal arguments you would make on behalf
of the Dazian government before the panel. In addition, please specify what
further information you need to develop your arguments, and why you need it.
(Please integrate the discussion of facts with your discussion of the legal issues
to which the facts are related. It is not necessary to write a separate section of
the answer listing the information you need.) Be sure that your arguments
refer to treaty language, as well as to decisions of previous panels and the
Appellate Body, where appropriate. You should also anticipate and reply to
arguments that you expect the Vupsian government to make. It would be wise
to answer the following six sub-questions in order (A-B-C-D-E-F), since they
are arranged chronologically.
A. During the Uruguay Round of tariff negotiations, Vupsia set its tariff rate
on all catfish at 10% per kilo. In late 2001, Vupsia introduced two
changes to its customs rules. First, it changed the basis of its tariff
classification from the general order (Siluformes) to the specific family of
catfish involved. Second, Vupsia reduced the tariff on some families of
catfish, but retained the tariff on others at the prior level. In particular,
the tariff on Ictaluridae ("I" family) catfish (such as is farmed in Vupsia)
was reduced to 0, while the tariff on Sisoridae ("S family") catfish (such
as is imported from Dazia) remains at 10%.
B. In early 2002, Vupsia passed a new law regulating the use of fish names.
The law limits the use of the word "catfish" to fish belonging to the "I
family" (Ictaluridae), which is the type of catfish produced in Vupsia.
However, "S family" (Sisoridae) catfish, which is the type imported from
Dazia, can no longer be called "catfish" when offered for sale in Vupsia,
but must be called "river mud shark" instead. "Catfish" is the name that
has historically been used by Vupsian consumers to designate fish
belonging to the Siluformes order. The name "river mud shark" is
unfamiliar to Vupsian consumers, though not to ichthyologists (i.e., fish
scientists) or to residents of Dazia.
C. In mid-2002, the Vupsian Catfish Growers Association (VCGA) filed a
petition seeking safeguard measures with Vupsia's International Trade
Commission (ITC). The Vupsian Safeguard Act (VSA) permits the ITC to
impose safeguard measures upon a showing that "increased imports
have injured the domestic industry producing like products." The ITC
granted the VCGA's petition, and imposed a tariff of 100% per kilo on
catfish imports from Dazia and other Southeast Asian catfish exporters.
D. In January 2003, the Vupsian government banned the importation of all
catfish (Siluformes) caught in rivers. Vupsia based its ban on three
scientific studies that had been provided by the Vupsian Catfish Growers
Association (VCGA). These reports were based on scientific findings of
reputable research institutions in Vupsia. One of the three reports
presented data showing that catfish caught in rivers contained heavy
metals, such as lead and mercury. These substances are known to
present a danger to human health, though there is no general consensus
on what constitutes a "safe" or "dangerous" level of heavy metals. The
other two reports also presented data showing that river catfish from
some countries (including Dazia) contained trace amounts of heavy
metals, but concluded that river catfish did not present a danger to
human health.
E. In March 2003, Vupsia imposed countervailing duties on all catfish
imports from Dazia, on the basis of findings by Vupsia's International
Trade Commission (ITC) that the Dazian government had illegally
subsidized Dazia's catfish industry. In particular, the ITC found that
the following Dazian measures were illegal subsidies: (1) The Dazian
government provides free inland transportation for catfish caught in the
rivers of its northern provinces, which are far from the ports from which
export shipments are made. (2) Soon after Dazia elected its first
democratic government in 1995, the government-owned banks made
commercial loans to many Dazian citizens, who for the first time were
faced with the need to purchase equipment or make other investments
necessary to earn a living in a market economy. During the 2000
election, a reform party campaigned on a promise to forgive all such
debts, if elected. That party was elected and did, in fact, forgive such
debts in 2001.
F. In April 2003, Vupsia established a free trade agreement (FTA) with its
neighbor to the south, Bruzia. The Vupsia-Bruzia FTA covers trade in
industrial products and fish, but excludes other agricultural products
from its scope. The FTA also contains some common environmental
rules and enforcement procedures. Vupsia does not impose any tariffs
on catfish imported from Bruzia. In addition, Vupsia has exempted
Bruzian catfish imports from the import ban on river catfish (described
in Question 1 (D) above).
QUESTION 2 / Recommended Time: 45 Minutes
Cukor Co. is a limited liability company incorporated in the United States.
Cukor owns a patent on a new medical instrument used to treat adult diabetes,
which it calls the "Gizmo". The Gizmo patent application was issued in 1992
and will expire in 2012. In 2002, Cukor finally received all the necessary U.S.
governmental approvals required to use the Gizmo to treat adult patients.
Cukor also owns the registered Gizmo trademark in the U.S.
Owing to the epidemic of obesity in the U.S. and the related rise in "Type 2"
diabetes, there is a very large demand for Cukor's Gizmos. Cukor has made a
huge investment in bringing Gizmos to market. Once the necessary approvals
were obtained in 2002, Cukor built a new factory in California to manufacture
Gizmos. The factory is now up and running, though not yet operating at full
capacity. At this time, Cukor cannot produce Gizmos fast enough to meet the
rising demand.
Alongside the rise in adult diabetes, there has also been a rise in Type 2
diabetes among children in the U.S. However, the Gizmo has not yet been
tested or approved for use with children. Assume for purposes of this question
that U.S. patent law creates a research exception that allows infringing goods
to be used in connection with testing new applications of existing technology.
Assume further that the Surgeon General of the U.S., who is the nation's chief
public health representative, has decided that the Gizmo should be tested
immediately to see if it is safe or can be safely adapted for use with children.
Since Cukor is unable to produce enough Gizmos to meet all demands for its
product, the Surgeon General is allowing cheap infringing Gizmos to be
imported into the U.S. from Hungary.
Cukor is upset about the actions taken by the Surgeon General and wants to
know whether the government's actions are justified, and whether there is any
action that can be taken under international or U.S. law to stop them. Please
advise Cukor. To the extent your analysis relies upon the TRIPs Agreement,
please focus on Article 30 and not on Article 31.
End of Exam