Legal Analyses written by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.

Legal Analyses written by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.

1999 International Law Update, Volume 5, Number 5 (May).

CONSTITUTIONAL LAW

New Swiss Constitution continues supremacy of federal and international law, abandons gold standard for currency

On April 18, 1999, the Swiss public voted in a referendum to approve the new Swiss Constitution (Bundesverfassung) which will replace the current one that has been in place for 125 years. A total of 59.2% voted in favor of the new Constitution, 40.8% voted against.

The new Constitution systematically catalogues fundamental rights and freedoms. It spells out previously unwritten guarantees such as the right to life and personal liberty, as well as freedom of opinion, science and art. It also abandons the requirement that the government back the Swiss currency with gold.

The new Constitution, however, will continue the previous prac­tice of constitutional review. All federal laws, federal decrees and international treaties continue to be binding for the Swiss High Court (Bundesgericht)(Article 166 Massgebendes Recht). Article 166 is an exception to the general constitutional rule that the "higher standard" prevails (Vorrang der hoeherrangigen Norm) (see Article 1, para. 1).

In Swiss practice, this exception includes the general rules of international law as well as unilateral acts of international organizations.

Citation: The new Swiss Constitution and related information (in German and French) is available on the website of the Swiss Parlia­ment (Bundesversammlung) at www.parliament.ch.

CRIMINAL LAW

In investigation of U.S. antitrust activities with international implications, Third Circuit holds that only evidence of joint U.S.-foreign prosecution implicates Fifth Amendment protection abroad

This case focuses on the impact on the Fifth Amendment privilege of United States v. Balsys, 524 U.S. 666 (1998) [see 1998 Int'l Law Update 81]. The appellants in this case are immunized witnesses who have refused to testify before a grand jury. Because this case involves the international aspects of an antitrust investigation, they alleged that foreign governments may prosecute them and that their case thus falls within the alleged Balsys "test."

In 1997, a special grand jury in New Jersey started looking into anti-competitive activities in the artificial sausage-casings industry. Among the targets of the investigation were certain employees of one of the companies involved. The employees testified pursuant to a subpoena and to an immunity order from the district court.

While they did tell about their U.S. business, the employees refused to testify about events that related to foreign markets or that took place outside the U.S. The appellants pointed to the various antitrust agreements that the U.S. has concluded with other countries. In particular, they noted that the U.S. Antitrust Division had searched for evidence in Canada, Spain, the United Kingdom, Germany, Mexico and other countries.

The district court held the appellants in contempt and the U.S. Court of Appeals for the Third Circuit affirms. The Third Circuit finds that the Supreme Court's opinion does not amount to a "test" for when possible foreign prosecution invokes Fifth Amendment protection. It held that the prospect of purely foreign prosecution lay outside the scope of the Fifth Amendment.

In Balsys, the Government sought the testimony of an individual who had served in the Lithuanian Army during the Second World War. He refused to testify, alleging fear of prosecution in Lithuania, Israel and Germany. The Supreme Court ruled that the fear of foreign prosecution, without a showing of joint action with the U.S., was not enough to invoke Fifth Amendment protection. The mere fact that the government contacts foreign nationals or requests documents from foreign countries does not amount to "joint prosecution" within the meaning of Balsys.

"...[T]he fact that other nations have enacted criminal antitrust laws does not dictate a conclusion that nations are acting in concert through a system of complementary substantive offenses, particularly where a number of the nations in which appellants claim they face prosecution in fact do not criminalize price fixing, have never had a successful criminal antitrust investigation or have never utilized the criminal antitrust provisions, or enforce antitrust violations through administrative proceedings."

"The authorities that appellants cite ... may indicate that such a case might present itself to us at some point in the future, but we view appellants' argument as urging a 'what if' scenario rather than a true case of an ongoing or imminent international 'cooperative prosecution' that would warrant our viewing foreign activity as part of a domestic prosecution." [Slip op. 16-17]

The joint international efforts noted by the Appellants fail to meet that standard.

Citation: In Re: Impounded, No. 98-6498 (3rd Cir. May 13, 1999).

ECONOMIC SANCTIONS

EU implements various sanctions against Yugoslavia, including the oil embargo agreed to by NATO

The European Union (EU) has taken several restrictive measures against the Federal Republic of Yugoslavia (Yugoslavia). On April 23, 1999, the Council issued a Common Position (1999/273/CFSP) to bar the supply and sale of petroleum and petroleum products to Yugoslavia.

This ban does not apply, however, to sales or supplies for verified humanitarian purposes, in particular for the needs of internally displaced persons and returnees. The Council has requested the EU-Associated Countries of Central and Eastern Europe and Cyprus, as well as the EFTA Members of the EEA, to follow this Common Position.

On May 10, 1999, the Council issued a Common Position (1999/318/CFSP) with additional restrictive measures. It prohibits the issuance of visas to President Milosevic, his family, all Ministers and Senior Officials of Yugoslavia and Serbia, as well as to supporters of Milosevic. The Common Position also continues the freeze on funds held abroad by the Yugoslav and Serbian Governments, and extends it to individuals associated with Milosevic and Government companies.

Next, the Common Position bans any private export finance to Yugoslavia and Serbia or companies controlled by these countries. It bans all flights between the EU and Yugoslavia. Finally, it forbids the export of any goods, services, technology or equipment that would assist Yugoslavia in repairing damage caused by air strikes.

In a related matter, the Council has issued an implementing decision with the names of the individuals to whom the EU will not issue visas. (1999/319/CFSP). Also here, the Council has asked the associated countries to follow this Common Position.

Citation: 1999 O.J. of the European Communities (L 108) 1, 27 April 1999 [petroleum supply] & (L 123) 1-13 [additional measures].

EXTRADITION

British Columbia Supreme Court declines to free U.S. fugitives from extradition arrest on U.S. bankruptcy fraud charges merely because Canadian government was late in issuing surrender order

The United States asked Canada to extradite several fugitives' on 14 charges of fraudulently concealing property from a trustee in bankruptcy. The U.S. Justice Department had filed the charges in the U.S. Bankruptcy Court in the State of Utah.

Canadian authorities arrested the fugitives in British Columbia on February 3, 1995. The lower court released them on bail on February 7th. The order of surrender made by the Minister of Justice fell one day outside the time period prescribed by the Canadian Extradition Act, R.S.C. 1985, c. E‑23.

There had been seven adjournments and a total of twenty court appearances. Some, but not all, of the delay had resulted from the fugitives' changes in counsel.

The fugitives then filed for an order of discharge under § 28 of the Extradition Act. It provides that where the Minister has not made an order of surrender before the time period set forth in the Act had run out, a superior court judge may, on application by a fugitive, and on proof that the Minister has received reasonable notice, order the fugitive to be discharged out of custody. A government showing of sufficient cause for being out of time may avoid the discharge.

The British Columbia Supreme Court dismisses the application. "With respect, I do not agree with counsel for the United States' argument that the function of an extradition hearing is as narrow as he suggests and that 'certain protections guaranteed by the Canadian Charter of Rights and Freedoms' are 'ordinary technical rules.' The Supreme Court of Canada has stated clearly that while courts must give a liberal interpretation to extradition treaties, the liberty of an individual must be protected. Moreover, treaty obligations aside, the Charter which applies to extradition hearings is the supreme law of the land." [448]

In the Court's view, however, the Minister had missed the limitation period by one day as a result of mere inadvertence and there is no showing of prejudice to the fugitives. Section 28 of the Extradition Act is permissive in that a judge "may" grant an order for discharge. On this record, the United States had shown sufficient cause against the discharge.

Citation: United States v. Davis, 132 C.C.C. 3d 442 (B.C.S.C. 1999).

GENOCIDE

German Federal Supreme Court upholds its jurisdiction to prosecute Serb national for genocide based on his role in "ethnic cleansing" that occurred in Bosnia and Herzegovina

On April 30, 1999, the German Federal Supreme Court (Bundesgerichtshof, BGH) issued a important decision on Genocide. The issue is whether German courts have jurisdiction to prosecute for the wilful acts of murder, torture and expulsion that a Serb national committed in Bosnia and Herzegovina in 1992 during the so-called "ethnic cleansing" against Bosnian Muslims.

The defendant in this case is a Bosnian Serb from the region of Doboj. He led a para-military group that cooperated with Serb authorities in terrorist acts against Muslims in the course of ethnic cleansing. Allegedly, defendant personally took part in murders and other unspeakable crimes. In this instance, the prosecution at the International Criminal Tribunal for the Former Yugoslavia (ICTY) declined to pursue the case.

German authorities charged and convicted him of 11 counts of genocide as well as many related charges. The State Supreme Court in Dusseldorf (Oberlandesgericht Duesseldorf) affirmed on September 26, 1997, that the acts of the defendant were particularly severe and that the life sentence was appropriate.

The Third Criminal Senate of the Court (3. Strafsenat des Bundesgerichtshofes) affirms the result of the State Supreme Court decision but narrows it to one charge of genocide. The State Supreme Court properly assumed that German courts have jurisdiction over crimes of genocide (see Section 220a of the German Criminal Code StGB). Under the Convention on the Prevention and Punishment of the Crime of Genocide (7 December 1948) [78 U.N.T.S. 277], to which Germany is a party, all countries must prosecute crimes of genocide. The jurisdiction of German courts extends to the crime of premeditated murder if defendant committed the murder in the course of carrying out genocide.

For German courts to have jurisdiction over international crimes of genocide there must be "legitimate points of contact" (legitimierende Anknuepfungspunkte) between the crime or criminal and the German state. Here, the Court points out that the defendant had lived in Germany from May 1969 to the beginning of 1992. His wife and daughter still reside there. Finally, defendant had voluntarily surrendered to German authorities.

Citation: [German] Bundesgerichtshof, Urteil vom 30. April 1999 - 3StR 215/98. [A press release on this case (Number 39/1999) is available on the Court's website www.uni-karlsruhe.de/~bgh.]

HUMAN RIGHTS

China issues law that purports to entitle citizens and foreigners alike to file administrative appeals from government infringement of their rights

According to the Chinese Embassy in Washington, D.C., the following new Chinese Law is a "major breakthrough" for China in protecting the system of justice, as well as the rights and interests of the Chinese people.

The new Chinese Law on Administrative Appeals, adopted on April 29, 1999, grants certain rights against government infringement. The Law applies not only to Chinese citizens, but also to foreigners and foreign organizations located in China.

The Law has seven Chapters and 43 articles. Chinese citizens may bring administrative appeals if they believe that the state has violated their rights. The administrative remedies allow citizens to complain even to the State Council [highest executive authority in China]. They may also bring lawsuits.

The Law also grants some protection to foreigners and foreign organizations. Citizens as well as foreign nationals and organizations may appeal against "illegal" government documents if they infringe on legitimate rights and interests, except those signed by the Premier, Ministers, and Provincial Governors. The national or local legislatures would review such documents. By Presidential Decree signed by President Jiang Zemin, the Law will enter into effect on October 1, 1999.

Citation: Newsletter Embassy of the People's Republic of China, No. 99-9 (May 5, 1999).

JUDICIAL ASSISTANCE

In case of German company's request for evidence under 28 U.S.C. § 1782 for use in Spanish court action, Third Circuit holds that Section 1782 incorporates Federal Rules of Civil Procedure and declines to order discovery of documents in unredacted form

The following case is a continuation of a German company's earlier request for discovery of documents under 28 U.S.C. § 1782 for use in a Spanish proceeding(see 1998 Int'l Law Update 79).

Bayer AG (Germany) holds U.S. and Spanish patents for a certain antibiotic. It brought a patent infringement action against a U.S. company, Barr Laboratories, Inc. It also filed suit against Betachem, Inc., another U.S. company, that was planning to buy the antibiotic in Spain and sell it in the U.S.

Bayer sued the Spanish manufacturers in the Spanish courts. In the previous action, the U.S. Court of Appeals for the Third Circuit had ordered production of those materials. Bayer then planned to use them in the Spanish litigation.

Upon remand, Betachem produced the requested documents but in redacted form. Bayer then sought production of the unredacted versions to (1) impeach the credibility of a witness in the Spanish proceeding, and (2) to discover additional information about a drug master file.

The district court found that the requested information was cumulative and that the redacted documents satisfied the aims of discovery. The Third Circuit agrees with the district court. Although the scope of discovery under Fed.R.Civ.P. 26(b)(1)&(2) is broad, this right is not unlimited.

"In summary, section 1782, entitled 'Assistance to foreign and international tribunals and to litigation before such tribunals,' incorporates by reference the scope of discovery permitted by the Federal Rules of Civil Procedure. See 28 U.S.C. § 1782. Rule 26 of the Federal Rules of Civil Procedure expressly grants a district judge the authority to deny discovery when the information sought is 'unreasonably cumulative.' Fed.R.Civ.P. 26. Although the information already obtained may not be in the form most desired by Bayer, we cannot say that the District Court abused its discretion by denying Bayer's request for certain unredacted documents." [Slip op. 9-10].

Citation: Bayer AG, In re Application for an Order permitting Bayer AG to take discovery, pursuant to Federal Rules of Civil Procedure, of Betachem, Inc., for use in an action pending in First Instance Court No. 25 of Barcelona, Spain, No. 98-6427 (3rd Cir. April 12, 1999).

JURISDICTION (Choice-of-Forum Clauses)

French Supreme Court rules that, in international cases, party invoking choice-of-forum clause in bill of lading need only designate nation, not specific court, but that shipper's acceptance of clause does not bind consignee without its consent

Elite Precision Machinery ("the shipper") sent Adapt, its consignee, an item of machinery hauled on board the ship Fed He in Hong Kong. China Ocean Shipping company (COSCO) owned the vessel and issued the bill of lading.

When the machine arrived at Marseilles in a damaged condition the Insurance Company of North America and Cigna France indemnified Adapt. Based on subrogation, Cigna Insurance Company of Europe (CICE) later sued Societe Intramar (the handler of the shipment) and COSCO for damages before the Marseilles Commercial Court.

COSCO, however, challenged the territorial competence of the French court based on a clause in the bill of lading that purported to confer jurisdiction on the Chinese courts. After hearing arguments, the Court of Appeal upheld the jurisdictional objection and dismissed the case.

In the Cour de Cassation (French Supreme Court), CICE argued that COSCO failed to comply with Article 75 of the New Code of Civil Procedure when, in its formal objection to jurisdiction, it neglected to specify the proper court that would have jurisdiction over this matter. The Cour de Cassation holds that, in relying on later submissions suggesting that certain Chinese admiralty courts could hear the case, the Court of Appeal had breached Article 75.

The highest court decides, however, that Article 75's demands do not apply in the international context. All a defendant in litigation of this type needs to do to indicate the country whose courts would have jurisdiction, presuming that its laws provide guidance as to which particular courts can handle the case. Any dispute about this is for the trial court.

It appears in the record here that China has six admiralty courts. One of them is in Canton, a port where COSCO does business and to which the Fed He is linked. Thus, the appeal based on Article 75 is without merit.

A second branch of the appeal, however, is successful. The Court of Appeal held that the shipper's acceptance of the bill of lading bound the consignee of the goods and its insurers to the jurisdiction clause selecting Chinese Courts. On the contrary, the Cour de Cassation finds a violation of Article 1134 of the Civil Code which requires that the consignee itself accept the clause.

The Court quashes the judgment of the Aix-en-Provence Court of Appeal, and restores the parties to the position they were in before that judgment. It then refers them to the Grenoble Court of Appeal for decision.

Citation: Insurance Co. of North America, Inc. v. Societe Intramar, [1999] Int. Lit. Proc. 315 (Cour de Cassation).

PATENTS

Japanese Supreme Court issues opinion favorable to manufacturers of generic drugs, permitting limited manufacture and testing during term of patent protection under "experimental use exemption"

The appellant holds a patent for certain active substances used in pharmaceuticals. The appellee makes generic drugs that are basically identical to the appellant's in terms of components, dosages, and efficacy. The purpose is to collect data to accompany an application for the approval of manufacture under Section 14 of the Pharmaceutical Affairs Law (PAL) once the term of patent protection ends.

The appellant considered this a patent infringement, however, and sought an injunction and damages in the lower court. The appellee claimed that its use of the patented active substances is proper under Section 69(1) of the Patent Law as "the working of the patented invention for experiment and research."

The Osaka High Court did not find a patent infringement and declined to grant the injunction and damages (Case No. 1997(ne)1476, May 13, 1998).

In a brief opinion, the Supreme Court of Japan affirms the lower court decision. The manufacture and use by the appellee in view of production after the patent protection ends does not constitute patent infringement, because:

(1) The patent system seeks to encourage inventive activities by granting exclusive rights for a certain period. Thereafter, anyone should be able to freely use the inventions to benefit society.

(2) Under the PAL, the manufacture of pharmaceuticals requires prior approval by the Minister of Health and Welfare. To this end, the manufacturer must collect and provide certain data. This requirement also applies to generic drugs. Thus, a company planning to manufacture generic drugs that are identical to ones protected by patents must necessarily manufacture and use those drugs even though they are still covered by patent protection. These activities are permissible "experiments" under Section 69(1) of the Patent Law. Otherwise other parties could not use the invention for a substantial period of time after the patent protection expires. This would de facto extend the term of protection.

(3) A party may not, however, use patent-protected inventions beyond the testing and registration requirements set by PAL Section 14.

Citation: Ono Pharmaceuticals Co., Ltd. v. Kyoto Pharmaceutical Industries, Ltd., Case No. 1998(ju)153 (issued on April 16, 1999), The Second Petty Bench of the Supreme Court (Japan). [The English translation is courtesy of Dr. Shoichi Okuyama, Tokyo, and available on the internet at www.okuyama.com.]

SOVEREIGN IMMUNITY

Greek Court awards $30,000,000 in suit by individual plaintiffs against German state alleging that its occupation forces in 1944 had committed murders and property destruction in violation of Greek criminal statutes and jus cogens norms of international law

In November 1995, the Prefecture of Voiotia in Southern Greece and individual plaintiffs brought suit against the German state in the Court of First Instance of Leivadia. Plaintiffs sought damages for willful murders and property damage caused locally by German occupation forces in June 1944.

When the Greek Foreign Office sent the pleadings to the German Foreign Office, however, the latter sent it back. Germany claimed that the suit violated German sovereignty and refused to take part in the trial. The court later came in with a judgment for individual plaintiffs totaling about $30,000,000.

In examining its jurisdiction, the Court held that state immunity is not absolute in modern jurisprudence. Moreover, Article 43 of the Hague Convention Regulations of 1907 Respecting the Laws and Customs of War on Land recognizes that belligerent occupation of foreign lands does not work a transfer of sovereignty to the occupier.

The local criminal laws as well as international law that plaintiffs rely on here bind the occupying power. In addition, Article 46 of the Hague Regulations, which protects the rights to family honor, life and property, has become part of jus cogens.

Since the Nuremberg trials, breach of jus cogens rules amounts to an abuse of the legitimate powers of a sovereign state. In addition, a violating state tacitly waives immunity when it commits acts. For a national court to uphold immunity in such cases would constitute collaboration by that court in behavior vehemently condemned by the international community.

Finally, a nation that occupies another contravenes a superior norm of international law that protects territorial sovereignty. Therefore, it cannot rely on the lesser principle of state immunity to evade liability for injurious acts allegedly done during that occupation.

Although Greece had not ratified Hague Convention No. IV, plaintiffs could plead it against Germany because it formed part of customary international law that binds both countries.

The Court rules that the prefecture lacked standing pursuant to the European Charter on Local Self-Government. Nevertheless, the individual plaintiffs could recover damages; it was not necessary that the Greek government represent their interests. The Court of First Instance had taken evidence as to the allegations and had rejected property damage claims that plaintiffs were not able to substantiate or evaluate.

Citation: Prefecture of Voiotia v. Federal Republic of Germany. Case No. 137/1997. Court of First Instance of Leivadia, Greece, October 30, 1997, as explicated by Ilias Bantekas, 92 Am.J. Int'l L. 765 (1998).

TRADE

U.S. Supreme Court vacates judgment granting clothing manufacturer customs exemption as to clothing imported from its Mexican plant on grounds that lower courts failed to give judicial deference to contrary customs regulation

Haggar Apparel Company (Haggar) asked for a refund for customs duties placed on garments it transported to the United States from its assembly plant in Mexico. If nothing was done other than assembly in Mexico, the attire would have been eligible for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C. § 1202. This provision pertains to articles assembled abroad and not otherwise improved except by an operation "incidental to the assembly process."

Haggar, however, also decided to "permapress" the garments so as to preserve their creases and minimize wrinkles. To do this, Haggar baked the chemically pretreated garments at the Mexican plant. The Customs Service, however, argued that the baking was a step added to assembly and denied a duty exemption. It relied upon 19 C.F.R. § 10.16(c)(4), its regulation that considers all permapressing operations to be an additional step in manufacture, rather than part of, or incidental to, the assembly process.

Haggar sued in the Court of International Trade (CIT). The CIT refused to look upon the regulation as controlling and ruled for Haggar. The U.S. Court of Appeals for the Federal Circuit affirmed [see 127 F.3d 1460], declining to analyze the regulation under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). After granting certiorari, the U.S. Supreme Court vacates and remands.

The Court makes two major points in its opinion. First, it rules that the lower courts should have applied a Chevron analysis to the case.

The statutes that authorized the Customs Service to issue classification regulations comport with the customary rule that the regulations put out by an administering agency justify judicial deference. Nothing in the regulation in question suggests that the agency meant the regulation to have some lesser force and effect.

Under the existing statutory regime, the Customs Service, within the Treasury Department, has the responsibility for setting duties that apply to imported goods under the Secretary of the Treasury's regulations. This regulation clearly controls in the adjudication of refund suits in the CIT.

The Court rejects Haggar's contention that § 1502(a) merely authorizes the establishment of uniform and consistent classification scheme throughout the country. On the contrary, one reason Congress authorized the issuance of customs regulations was to clarify the rights and obligations of importers.

The fact that the U.S. Trade Representative and the International Trade commission have certain duties to recommend and announce changes in the Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C. § 1202, makes no difference here.

"Particularly in light of the fact that the agency utilized the notice‑and‑comment rule­making process before issuing the regulations, the argument that they were not intended to be entitled to judicial deference implies a sufficient departure from conventional contemporary administrative practice that we ought not to adopt it absent a different statutory structure and more express language to this effect in the regulations themselves." [1398]

Nor does the fact that the CIT makes de novo determinations mean that deference to the agency's interpretations of the statutes is inappropriate. There is enough ambiguity in the present statutory scheme as well as in the historical practice in customs cases to convince the Court that judicial deference would not frustrate the intent of Congress.

The Court's second point is that courts must defer to agency regulations if they constitute a reasonable reading and realization of an ambiguous statute. "The customs regulations may not be disregarded. Application of the Chevron framework is the beginning of the legal analysis, and the Court of International Trade must, when appropriate, give regulations Chevron deference. (cit.) That court's expertise guides it in making complex determinations in a specialized area of the law; it is well positioned to evaluate customs regulations and their operation in light of the statutory mandate to determine if the preconditions for Chevron deference are present." [1394-95]

The Court, however, decides not to reach the issue of whether 19 C.F.R. § 10.16(c) actually does qualify for Chevron deference as a reasonable interpretation of the phrase "operations incidental to the assembly process" in the statute. The Courts below have not yet seen fit to apply Chevron deference. Moreover, Haggar can better present to the specialized courts its contentions that turn, to a large degree, on the nuances of its factory processes.

Two Justices would reach the latter issue and conclude that the provision clearly does merit Chevron deference. In their view, a simple reversal would be appropriate.

Citation: United States v. Haggar Apparel Company, 119 S.Ct. 1392 (1999).

TRADE

U.S.-EU banana dispute continues despite WTO arbitration; EU issues regulation to increase support to its ACP banana suppliers

Despite a WTO Dispute Settlement, as well as arbitration and dispute settlement attempts (see 1998 Int'l Law Update 23 & 123, 1999 Int'l Law Update 11), the U.S.-EU banana dispute continues.

The WTO Appellate Body Report of September 27, 1997 ordered the EU to conform their import regulations for bananas to GATT 1994 and GATS (WT/DS27/AB/R) by January 1, 1999. (see WTO Arbitration WT/DS27/15 of January 7, 1998).

The U.S. Trade Representative announced that, effective March 3, 1999, the U.S. Customs Service began "withholding liquidation" on imports from the EU valued at approximately $520 million. This step imposes contingent liability for 100% duties. At the same time, the Trade Representative issued a list of affected products. The U.S. stated that it would hold off on collecting the higher duties until the release of the WTO arbitrators' final decision.

On April 6, 1999, WTO arbitrators found that the EU had failed to implement a WTO-consistent banana regime and authorized the U.S. to impose 100 percent tariffs on European goods and to suspend tariff concessions at a value of $191.4 million per year (= the amount of "nullification and impairment" suffered by the U.S. as a result of the EU banana regime).

On April 9, 1999, the U.S. Trade Representative issued a final list of products on which the U.S. will impose 100 percent ad valorem duties as a result of the WTO arbitration. The Federal Register published the list on April 19, 1999.

In a related matter, on April 12, 1999, the WTO issued two connected Panel Reports regarding the banana regime that focus largely on procedural matters under Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

On April 22, 1999, the EU Council issued Regulation 856/1999 in another related matter to set up a support framework for traditional suppliers of bananas in the ACP countries (African, Caribbean and Pacific countries that receive beneficial EU treatment under the Lome Convention). This is intended to mitigate the adverse effects of the "new market conditions" for bananas (see the new EU banana regime, EU Regulations 1637/98 and 2362/98). For up to 10 years, the ACP countries will receive technical and financial assistance to improve their competitiveness in the banana sector, and to develop alternative crops.

Citation: U.S. Trade Representative press release 99-17 (March 3, 1999) [withholding liquidation]; U.S. Department of State Daily Press Briefing (March 4, 1999); U.S. Trade Representative press releases 99-31 (April 6, 1999) [WTO findings] & 99-35 (April 9, 1999) [final products list]; 64 Federal Register 19209 (April 19, 1999) [final products list]; 1999 O.J. of the European Communities (L 108) 2, 27 April 1999 [EU assistance for ACP banana suppliers]. WTO Decision by the Arbitrators ... (WT/DS27/ARB) (April 9, 1999); WTO Panel Reports ... Recourse to Article 21.5 (WT/DS27/RW/EEC & WT/DS27/RW/ECU) (April 12, 1999). The WTO decisions are available on the WTO website at www.wto.org.

- EU has decided to suspend beef imports from U.S. On April 28, 1999, the EU Commission decided to suspend imports of beef and bovine liver from the U.S. The Commission has stated that the purpose is to protect consumer health because an independent study by European scientists has found residues of certain growth hormones in such products from the U.S. The study is part of the EU risk assessment after the adverse decision of the WTO Appellate Body in January 1998, which held that the EU ban on hormone-treated beef lacked a scientific basis (see 1998 Int'l Law Update 20). The effective date is June 15, 1999. -- In a related decision, the Commission ordered the Member States to increase checks for hormone residues in such products imported from the U.S. -- In another related matter, because of the EU refusal to lift its ban on imports of U.S. meat, the U.S. is planning to suspend trade concessions to the EU worth about $202 million. Citation: The European Union Press Releases (No. 24/99, April 28, 1999 [suspension of beef imports from U.S.] & No. 25/99, May 5, 1999)[scientific report]. The report on the safe­ty of hormones will become available on the website of the Commission's Directorate-General 24 (food safety), at http://europa.eu.int/comm/-dg24/health/sc/scv/index_en.html; U.S. Trade Representative press release 99-43 (May 14, 1999).

- EU joins in efforts to collect and destroy weapons in Albania. On May 10, 1999, the EU Council decided to join the efforts of the United Nations Department of Disarmament Affairs (DDA) and Development Programme (UNDP) to destroy weapons in Albania. The EU will provide EUR 500,000 to the pilot project "weapons in exchange for development in the Gramsh district of Albania." Citation: 1999 O.J. of the European Communities (L 123) 12, 13 May 1999.

- Japan Fair Trade Commission issues Cease and Desist Order against Microsoft. On December 14, 1998, the Japan Fair Trade Commission (JFTC) issued a cease and desist order against Microsoft Co. Ltd. (Japan) for its unfair trade practices in violation of Section 19 of the Antimonopoly Act. The JFTC ordered Microsoft to cease linking its wordprocessing software "Word," its spreadsheet software "Excel," and its personal information software "Outlook." In the JFTC's view, PC manufacturers should be able to install and bundle these items independently in their products. Citation: The Cease and Desist Order to Microsoft Co., Ltd. is available on the JFTC website www.jftc.admix.go.jp.

- China opening up to foreign lawyers. China is planning to lift the current restrictions on foreign lawyers within one year of acceding to the World Trade Organization (WTO). The new rules would allow foreign law firms to open more than one office in China. Currently, only 15 Chinese cities have government permission to have foreign law firms located there. Only 105 foreign law firms are doing business in only eight of those cities. Of those 105 foreign law firms, 26 are from Hong Kong. Citation: Newsletter Embassy of the People's Republic of China, No. 99-9 (May 5, 1999).

- EU agriculture ministers bar use of four antibiotics in animal feed. On December 14 last, 11 Ministers (with 4 abstentions) voted to preclude the use of certain antibiotics used in animal feed. They promote growth by aiding livestock to digest their food more rapidly. The prohibition applies to tylosin phosphate, spiramycin, virginiamycin and bacitracin zinc and took effect on January 1, 1999. The EC Commission had proposed the ban based on scientific evidence suggesting that consumption of meat so treated may transfer antimicrobial resistance to humans. U.S. agricultural officials contend that there is not enough evidence to support the ruling. The EU will consider whether to extend the ban to the importation of animals or products given these antibiotics. European makers of these drugs are likely to challenge the ban before the European Court of Justice. Citation: EC Regulation 2821/98, 1998 O.J. of the European Communities (L 351) 4; Int'l Trade Reporter 2132-33 (1998).

- "American Express" may not offer bonus miles for purchases on credit card in Germany. On February 23, 1999, the German High Court (Bundesgerichtshof, BGH) held that the travel and credit card company American Express may not offer "bonus miles" for purchases charged in Germany. The Court considered this incentive "misleading" and thus "anticompetitive." The German Agency Against Improper Competition (Zentrale zur Bekaempfung des unlauteren Wettbewerbs) had brought the action to prevent one of American Express' marketing campaigns. American Express had planned to offer one membership mile for each DM 10 charged to an American Express card. Once the total charges reach DM 7,500 (= 750 miles), they could be converted into airline tickets and hotel stays. American Express was planning to impose an annual charge of DM 70 from the second year on. With this, the Court affirmed the decision of the District Court Munich I. The District Court had opined that the customers could not clearly understand what they were to receive, and that the promised rewards encourage consumers to rack up charges on the credit card. This is contrary to the principles of German competition rules. The German High Court essentially agreed with the lower court and found that this "free addition" is unrelated to the credit card agreement between the company and its customers, and thus contravenes the German Competition Law (Wettbewerbsrecht). Finally, the German High Court stated that this decision does not contravene European freedom of services requirements because they allow exemptions for important reasons. Consumer protection is one of those exemptions. Citation: Bundesgerichtshof (BGH), Aktenzeichen ZR 117/96; 1999 Marketing Week (March 11, 1999).