Dr. Malawer Trade Law & Global Technology [ New Developments in WTO & U.S. Law ] Dr. Stuart S. Malawer

Dr. Malawer OUTLINE WTO Agreements. –“ Information Technology Agreement” (1997) ITA2 Note--”EU Tariff Case” –“Basic Telecommunications Agreement” (1998) “Domain Names” (1999) Arbitration. U.S. Law Developments. –Section 1377 (telecom) –Export / Re-export Computer exports Encryption software Trade Sanctions –IPR. Special 301 (IPR) Sections 337 (Patent) Electronic Commerce

Dr. Malawer INFORMATION TECHNOLOGY AGREEMENT (1997).

Dr. Malawer Information Technology Agreement. Negotiated & concluded under the auspices of the WTO at first Ministerial Conference in Singapore on December 13, 1996 (after the Uruguay Round). Was a product primarily of private sector lobbying. Agreement effective on July 1, Concerns primarily reduced import duties. Tariff reductions commenced on that date and reduced to “0” by year 2000.

Dr. Malawer ITA -- Con’t Opened markets in 43 countries and covers over 93% of world trade in information technology. Global information technology sales market is $500 billion. U.S. exports account for 1/4 of global technology trade. Represents 1.8 million U.S. technology jobs.

Dr. Malawer ITA -- Con’t ITA intended to improve U.S. market access and to be subject to continued negotiations. The ITA covered U.S. exports of computers, semiconductors & telecommunications products. ITA didn’t cover personal electronics.

Dr. Malawer ITA – II: Completed December Expanded coverage of products. Scientific & analytical equipment Global positioning systems Printed circuit boards ITA -- Con’t

Dr. Malawer ITA -- Con’t ITA - II accelerated tariff reductions for products covered by ITA-I. Note -- U.S. won a panel decision in the EU Tariff Reclassification Case before the WTO (March 1998), but was reversed (in June 1998) by the AB (first time ever). Concerns prior tariff reductions. Largest case ever brought at that time by the U.S. in terms of total value of trade involved ($5 billion in total European sales annually).

Dr. Malawer BASIC TELECOMMUNICATIONS AGREEMENT (1998).

Dr. Malawer Basic Telecommunications Services Agreement. Agreement concluded under the WTO on Feb and became effective Feb Was part of Uruguay Round negotiations on services, but was not concluded until subsequently. Concerns primarily “national treatment” for services and direct investment.

Dr. Malawer Basic Telecom -- Con’t Note -- International trade in telecommunications is defined as the sale of equipment or services that cross national borders. This agreement involves the trade of services and is a part of the GATS.

Dr. Malawer Basic Telecom -- Con’t Most importantly, a new paradigm is emerging because of global competition: from bilateral relations (usually involving state monopolies) to a multilateral trade framework (between private companies). Telecom is important not only because of the amount of telecom trade or the size of the industry, but because it is a driver of change in other industries. Impacts on both globalization & regional integration.

Dr. Malawer Basic Telecom -- Con’t Most OECD country commitments came into effect immediately. Others are phased in Note -- All WTO members must provide MFN treatment immediately. Agreement represents a change of profound importance. Monopolies and closed markets are replaced by open markets, deregulation & competition. Agreement complements the previous ITA.

Dr. Malawer Basic Telecom -- Con’t Commitments were from countries accounting for 95% of global telecommunications revenues. Countries making market access offers represent 99% of the global market. Countries permitting foreign investment represent 97% of the global market. Countries adopting the regulatory principles represent 94% of the global market.

Dr. Malawer Basic Telecom -- Con’t Three types of commitments: –Market Access (into local, long-distance & int’l service via any means of network technology either through facilities basis or resale) –National Treatment (direct investment in companies) –Procompetitive regulatory principles (based upon 1996 U.S. Telecommunications Act & requires establishment of independent regulatory bodies)

Dr. Malawer Basic Telecom -- Con’t In 1998, telecommunications is a $1Trillion global industry. (ITU estimate) In 1996, $100 billion cross-border trade in communications (equipment & services). Industry will double or triple over next ten years. U.S. companies are most competitive.

Dr. Malawer Source: ITU 1997

Dr. Malawer Source: ITU 1997

Dr. Malawer Basic Telecom -- Con’t FCC has adopted new rules to implement WTO obligations. Note -- International Telecommunications Union (ITU)is interested in seeing how it can facilitate the success of the WTO’s agreement and actions.

Dr. Malawer U.S. LAW DEVELOPMENTS.

Dr. Malawer U.S. LAW DEVELOPMENTS Section 1377 of the Telecommunications Trade Act of 1988 (Omnibus Act). Requires annual review of market access restrictions and identification of ‘priority countries’ that could lead to ‘retaliation’ by USTR. (Form of “Special 301.”) Violations of agreements or other practices USTR has identified Mexico, Japan, Korea & Taiwan. Dispute with Mexico on connection charges. –Telecom issues are often now trade disputes.

Dr. Malawer U.S. LAW -- Con’t Export & Reexport Controls: Basic Law -- Export Administration Act of 1979 (foreign policy & national security controls). Applies to both goods & technology. Note -- This law reaches foreign technology sold by U.S. subsidiaries abroad. (Extraterritoriality) Computer Exports -- Continued review of controls concerning supercomputers. For example, investigations concerning IBM European exports to Russian companies. Encryption software -- Current proposal of allowing export of encryption software up to a 56-bit key length is not satisfactory to the ITAA since it is too easily broken.

Dr. Malawer U.S. LAW -- Con’t Trade Sanctions (general legislation): International Emergency Economic Powers Act (IEEPA) Trading with the Enemy Act Iran & Libya Sanctions Act 1996 (D’Amato Sanctions) Helms-Burton Legislation (Cuba) Iraq Sanctions Act 1990 Nuclear Proliferation (1994) (India / Pakistan). Syrian Sanctions (2003).

Dr. Malawer Intellectual Property Rights. Special 301 (lack of IPR protection abroad viewed as a trade barrier). Added by 1988 trade legislation to 1974 Trade Act. Requires a “priority watch list.” Section 337 of Tariff Act of Declares unlawful “unfair acts of importation.” –Specific language applies to class of intellectual property rights (patent, trademark, registered mask work of semiconductor chip product) as to imports. No injury standard for this group (compared to non-IPR imports). –Different (lower) standard as to violation than patent laws generally in the U.S. –GATT panel in 1988 found this to violate “national treatment principle.” Art. III (4) U.S. LAW -- Con’t

Dr. Malawer General Research Sources. World Telecommunications Development Report (2002) (annual report by the International Telecommunications Union). Overview and Compilation of U.S. Trade Statutes (Committee of Ways & Means, 2001). Summary and copies of trade laws Trade Policy Agenda & 2003 Annual Report (2002) (annual report by the USTR). Contains summary of U.S. trade enforcement activities. National Trade Estimate Report of Foreign Trade Barriers (annual report by USTR concerning foreign trade barriers).