Legal Analyses written by Mike Meier,
Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.
1998 International Law
Update, Volume 4, Number 2 (February).
AVIATION
U.S. and Japan conclude
civil aviation agreement to open Japanese market to U.S. carriers
On January 31, 1998, the
U.S. and Japan concluded an aviation agreement which provides a new frame for
the 1952 Civil Air Transport Agreement between the two countries.
The carriers of
"incumbent" Japan routes and all-cargo carriers (deriving their
rights from the 1952 Agreement, here: United, Northwest, Federal Express) may
operate from any point in the U.S. to any point in Japan. For example, more flights can therefore
originate in Chicago/Midwest region. The
number of flights to Japan will become unlimited, and more cities will have
direct flights to Japan.
The Agreement provides new
opportunities for so-called "non-incumbent" carriers in the passenger
& cargo and all-cargo area by adding new flights to Japan. The total number of weekly flights will increase
from currently 46 to 136 in the year 2001.
This will favor, for example, American, Delta and Continental.
Also, U.S. and Japanese
carriers may engage in "code sharing" (putting the 2-letter code of
one airline on another's flight to expand networks and save costs).
The U.S. and Japan will
continue negotiations no later than January 1, 2001, to establish a fully
liberal aviation relationship.
[Japan is a very important
market for U.S. airlines, generating more than $10 billion in revenue annually
(1995 estimate). Also, Japanese tourists
spent more than $19 billion in the U.S. in 1996. The U.S. has fully liberal
aviation agreements with several Asian nations, including Brunei, Malaysia, New
Zealand, Singapore and Taiwan.]
Citation: General Accord of the Civil Air Transport
Agreement (U.S.-Japan), January 31, 1998.
The Agreement is available from the U.S. Department of State, Aviation
Office, Phone: (202) 647-5843 or 647-8001; a statement of Japanese Foreign
Minister Obuchi is available on the website of the Japanese Ministry of Foreign
Affairs, at www.mofa.go.jp/cs/civil.htm.
BIOETHICS
Nineteen Council of Europe
members sign Protocol to Oviedo Convention on bio-ethics that would add ban on
cloning of human genes set except as to isolated cells or tissue
On January 12, 1998, 19 of
the 40 Member States of the Council of Europe (Strasbourg) signed a Protocol on
the prohibition of human "cloning."
Several non-Members of the Council, including the U.S. and Canada, have
taken part in the drafting. The
signatories agree to incorporate that ban into their national laws.
The Protocol supplements
the Bio-Ethics Convention (The Oviedo Convention) that 22 Member States have
already signed. The Protocol bars any
human intervention that is intended to create a human being genetically
identical to another. The Protocol defines "genetically identical" as
"sharing with another the same nuclear gene set." (Article 1). It does, however, allow for the cloning of
isolated cells or tissue.
The signatories must now
implement the Protocol into national law by imposing sanctions for violations
of the cloning ban. This may include
fines, as well as the revocation of licenses for medical practitioners and laboratories. Notably, Germany and the UK did not sign the
Protocol. Germany claims that its existing prohibition on such genetic
experiments is more strict. The Council
of Europe is next planning to add a protocol specifically to prohibit the
misuse of human embryos.
Citation:
Additional Protocol to the Convention for the Protection of Human Rights and
Dignity of the Human Being with regard to the Application of Biology and
Medicine, on the Prohibition of Cloning Human Beings (Paris, January 12, 1998),
ETS No. 168), available at the website of the Council of Europe www.coe.fr.
CHOICE OF LAW
In securities fraud
litigation, Ninth Circuit sitting en banc reverses panel and enforces clauses
choosing English forum and law in securities contracts between U.S. investors
and Lloyd's of London despite U.S. statutory ban on advance waivers
In October 1994, Alan
Richards and 573 other plaintiffs (the "Names") sued Lloyd's of
London in California federal court. The suit alleged fraud under U.S.
securities laws, violation of the RICO statutes, breach of state "Blue
Sky" laws, common law fraud, and breach of fiduciary duty. The plaintiffs are newly‑recruited members
("Names") of various Lloyd's underwriting syndicates. The hundreds of millions of dollars in
investment contracts solicited by Lloyd's in the U.S. allegedly constituted
"securities" under U.S. law but Lloyd's had not registered them with
the S.E.C.
Lloyd's is an insurance
market in which more than three hundred Underwriting Agencies or syndicates
compete for underwriting business. Under
the Lloyd's Act of 1871-1982, Lloyd's administers and regulates the competition
for underwriting business in the Lloyd's market. A Managing Agent controls each Underwriting
Agency and is accountable for the financial status of its agency. The Managing Agent must bring in not only
underwriting business from brokers but also the capital needed to insure the
risks.
The Names provide this
capital. By a series of agreements, the
Names become Members of the Society of Lloyd's.
Names must produce evidence of financial means, and must deposit an
irrevocable letter of credit in favor of Lloyd's. To become a Name, one must travel to England
to acknowledge the attendant risks of participating in a syndicate and sign a
General Undertaking. Among other things,
the Undertaking contains clauses choosing English law as applicable to disputes
and the English courts as the only forum for their resolution (the Choice
Clauses).
Plaintiffs complained that
Lloyd's Managing Agents had concealed their exposure to pre‑existing high
liability claims such as those based on asbestos and toxic waste matters. As part of the alleged fraud, the Names'
listed the Choice Clauses.
After Lloyd's failed to
answer the complaint, the Names moved for a default judgment. Lloyd's then countered with a motion for
dismissal on grounds of improper venue, forum non conveniens, and res
judicata. In April 1995, the district
court dismissed the complaint, holding that the remedies available in the
English courts were enough to protect American investors.
A panel of the U.S. Court
of Appeals for the Ninth Circuit reversed, holding that the Choice Clauses
constituted an impermissible prospective waiver of rights and remedies
guaranteed by the Securities Acts of 1933 and 1934. [Richards v. Lloyd's of London, 107 F.3d 1422
(9th Cir. 1997), 1997 International Law Update 39]. Upon rehearing en banc, however, the Ninth
Circuit votes 8 to 3 to have the former opinion withdrawn and affirms the
district court.
The Names made three main
contentions. They argued (1) that the
anti-waiver provisions of the federal securities laws invalidated the Choice
Clauses; (2) that the Choice Clauses are void because they violate the strong
U.S. public policy of sustaining an investor's remedies under federal and state
securities law and RICO and (3) that defendants had inserted the Choice Clauses
as part of their scheme to deceive investors.
The Securities Act of 1933
(the "'33 Act") provides at 15 U.S.C. § 77n that: "Any
condition, stipulation, or provision binding any person acquiring any security
to waive compliance with any provision of this subchapter or of the rules and
regulations of the Commission shall be void." The 1934 S.E.C. Act contains a substantially
similar provision in 15 U.S.C. § 78cc(a).
Assuming without deciding
that the investments here constituted unregistered "securities," the
majority rejected the applicability of the statutes to void the Choice
Clauses. It mainly relies upon Bremen v.
Zapata Off-Shore Co., 407 U.S. 1 (1972) and Scherk v. Alberto-Culver Co., 417
U.S. 506 (1974).
The majority concludes that
Bremen applies to international securities contracts. "Indeed, were we to
find that Bremen did not apply, the reach of United States securities laws
would be unbounded. The Names simply prove too much when they assert that
'Bremen 's judicially-created policy analysis under federal common law is not
controlling when Congress has expressed its will in a statute.' This assertion, if true, expands the reach of
federal securities law to any and all such transactions, no matter how remote
from the United States." [slip op., 3]
The majority next rules
that the instant arrangements constituted "international"
contracts. Plaintiffs disparaged the
visits to England as a legally insignificant ritual and stressed the extensive
nature of defendants' solicitations within the U.S. The majority disagrees.
"Lloyd's insistence that individuals travel to England to become a Name
does not strike us as mere ritual.
Lloyd's likely requires this precisely so that those who choose to be
the Names understand that English law governs the transaction. Entering into the Lloyd's market in the
manner described is plainly an international transaction." [slip op., 4]
Turning to Scherk, the
majority sees it as applying Bremen to international securities contracts. The former echoes Bremen's point that
choice-of-forum clauses and their implicit choice-of-law effect are almost indispensable
to the effectiveness of international contractual dealings. Their vital role is
to provide the orderliness and predictability needed for the stability of
international business arrangements.
Citing Bremen, the
plaintiffs claimed unenforceability (1) because the Choice Clauses came about
via fraud or overreaching and (2) because they collided with a strong public
policy of the forum.
Addressing (2), the
majority rely upon Scherk as upholding a similar choice clause. It stresses
that U.S. litigants cannot parochially expect that they can count upon American
law
to govern all international
transactions. This is particularly true where the U.S. party has solemnly
agreed otherwise.
Nor is English law gravely
inadequate to address and remedy plaintiffs' claims. "The Names have recourse against both
the Member and Managing Agents for fraud, breach of fiduciary duty, or
negligent misrepresentation. Indeed,
English courts have already awarded substantial judgments to some of the other
Names." [slip op., 7] The majority concludes that, whatever may be the
situation as to the contracts as a whole, plaintiffs have shown no fraud
specifically directed at including the Choice Clauses.
Three judges file a
thoughtful dissent. "The majority espouses a reasonable foreign policy,
but one which emanates from the wrong branch of government. Congress has already explicitly resolved the
question at hand. In the Securities Act
of 1933 and the Securities Exchange Act of 1934 (the "Acts"),
Congress expressly provided that investors cannot contractually agree to
disregard United States securities law.
Thus, in applying the 'reasonableness' policy-weighing approach of
Bremen, the majority displaces Congress' specific statutory directive. Furthermore, even assuming that the Bremen
analysis applies here, the circumstances surrounding this dispute compel the
conclusion that enforcement of the choice clauses would be unreasonable."
[slip op., 8]
In the dissenters' view,
Congress did more than merely lay the foundation for a generalized "strong
public policy" inference, it specifically voided these Choice Clauses in
the securities area. "Courts should not employ amorphous public policy to
emasculate plain statutory language." [slip op., 9] The dissenters also point out that plaintiffs
ultimately cannot obtain the unfettered protection of the U.S. securities law
without having to prove at some point that these arrangements actually
constituted "securities."
Moreover, plaintiffs do not rely on some evanescent and passing brush
between defendants and the U.S.
"Lloyd's recruited the plaintiffs, residents of the United States,
in the United States, often using United States brokerage firms and recruiters,
and availed itself of the United States mails to disseminate information about
becoming a Name." [slip op., 10]
Plaintiffs' one contact with England was their committee meeting in
London that the new Names attended.
Finally, the majority
seriously overstates the adequacy of English remedies vis-a-vis the U.S.
statutes. "For instance, English law recognizes no remedy for the failure
to register securities as required by section 12(1) of the Securities Act of
1933. Nor is there any English remedy
against Lloyd's for negligent misrepresentation as provided by section 12(2) of
the Securities Act of 1933, because the 1982 Lloyd's Act expressly immunizes
Lloyd's from any claim for 'negligence or other tort' unless bad faith was
involved. Third, no 'controlling person'
liability exists in England, whereas section 15 of the Securities Act of 1933
and section 20(a) of the 1934 Securities Exchange Act impose such
liability. Thus, the choice clauses
should not be enforced, because they afford a level of protection far lower
than the remedies the Acts provide." [slip op., 11]
Citation:
Richards v. Lloyd's of London, Nos.
95-55747, 95-56467 (9th Cir. February 3, 1998) (en banc).
CRIMINAL LAW
In challenge to conviction
for hostage taking under U.S. law, Second Circuit finds that underlying Hostage
Taking Convention is within President's treaty power and Congress had rational
basis for making corresponding federal law
Chen De Yian appealed his
conviction for violating the Act for the Prevention and Punishment of the Crime
of Hostage Taking (HTA) [Pub.L. No. 98-473, Title II, § 2002(a), 98 Stat. 2186
(1984)] and for related offenses. The
hostage-taking had allegedly occurred in New York. Chen argued, among other things, that the HTA
did not properly implement the Hostage Taking Convention into U.S. law, and
that the lower court had improperly applied it to a domestic hostage taking.
The U.S. Court of Appeals
for the Second Circuit, however, affirms the conviction. The HTA implemented
the 1979 International Convention Against the Taking of Hostages [TIAS No.
11,081]. The Convention obliges all parties
such as the U.S., to take "effective measures for the prevention,
prosecution and punishment of all acts of taking hostages as manifestations of
international terrorism."
Among other arguments, Chen
claimed that the Hostage-Taking Convention regulated domestic matters and was
therefore beyond the reach of the Executive's constitutional treaty power. The Second Circuit disagrees.
"Contrary to what was
once suggested, the Constitution does not require that an international
agreement deal only with 'matters of international concern.' The references in
the Constitution presumably incorporate the concept of a treaty and of other
agreements in international law.
International law knows no limitations on the purpose or subject matter
of international agreements, other than that they may not conflict with a
peremptory norm of international law.
States may enter into an agreement on any matter of concern to them, and
international law does not look beyond their motives or purposes in doing
so. Thus, the United States may make an
agreement on any subject suggested by its national interests in relations with
other nations. Restatement (Third) of the Foreign Relations Law ... § 302 ..."
[slip op. 11-12].
The Convention addresses
the treatment of foreign nationals while they are on local soil, which is an
important matter among nations. No
matter what the potential outer limits of the Executive's treaty power may be,
the Convention comes within its bounds.
Chen's Equal Protection
challenge also failed to persuade the Court.
The Hostage Taking Act covers all aliens involved in hostage-taking
incidents. The Act and the Convention address
an international matter -- hostage taking as a form of international
terrorism. Even though Congress employed
the classification of alienage to proscribe conduct that may not always
directly relate to terrorism, Congress could have rationally concluded that hostage
takings within U.S. jurisdiction are likely enough to involve matters
implicating foreign policy or immigration.
Therefore, the Act meets the rational-basis standard.
Citation:
United States v. Wang Kun Lue, No. 96-1314 (2d Cir. December 31, 1997).
JUDICIAL ASSISTANCE
In case involving request
of Philippine government for transfer of frozen Marcos assets to it, Swiss High
Court requires that Philippine courts first determine under procedural
standards of International Covenant on Civil and Political Rights whether these
are indeed Marcos' ill-gotten goods
On January 15, 1998,
Switzerland's highest court (schweizerisches Bundesgericht) published an
opinion on whether it should return the $400 million in frozen assets of the
late Philippine dictator Ferdinand Marcos to the Philippine government. [Several cases are pending in U.S. courts
where victims of human rights abuses in the Philippines are seeking
compensation out of these assets, see 1998 International Law Update 2].
In April 1986, the
Philippine government requested the Swiss Police Agency (BAP) to provide
international legal assistance in recovering funds and property that Marcos and
his affiliates had allegedly improperly acquired while holding public
office. The diverted funds allegedly include
emergency assistance from international organizations and governments, Japanese
war reparations, as well as income from government monopolies. The Philippines requested Switzerland to find
those assets located in Switzerland.
Three Swiss Cantons had frozen accounts allegedly belonging to Marcos and his family.
Ferdinand Marcos died in
1989, and his widow Imelda and related foundations (hereinafter Marcos)
continued the litigation on his behalf.
In 1995, the Philippines, through the “Presidential Commission on Good
Government (PCGG),” submitted an additional request for mutual assistance,
requesting that Swiss authorities transfer the currently frozen assets into an
escrow account until a Philippine court had looked into the matter. Marcos objected.
BAP's Department for
international judicial assistance, joined by the Philippines, finally brought
the issue before the Swiss High Court, seeking an immediate return of the
assets to the Philippines. Under the
Swiss Law on International Judicial Assistance in Criminal Matters
[Bundesgesetz über internationale Rechtshilfe in Strafsachen vom 20. März 1981,
SR 351.1 (IRSG)], as well as previous related court decisions, the assets at
issue are possibly the proceeds of criminal acts under the IRSG. Thus, Swiss authorities should return them to
the Philippines as the party entitled to them (see Article 74a, paragraph 1,
IRSG). The IRSG allows for the return of
assets frozen in Switzerland at any stage of the "foreign proceeding"
as long as the foreign state has handed down a legally binding decision (see
Article 74a, paragraph 3, IRSG). If
third parties oppose the return, however, the Swiss government must put off the
return until it can clear up the legal situation (see Article 74, paragraph 4,
IRSG).
Consequently, the issues in
this case are (1) whether the Philippine state has made a legally binding
decision about the assets or whether the court can waive that requirement and
(2) whether third parties have claimed the assets so that the court has to
retain them in Switzerland [13].
The law is unclear as to
the requirement of a legally binding foreign decision and there have been
conflicting decisions. For example, some
foreign (Anglo-American) courts do not have jurisdiction over assets located
abroad. Therefore, in one case, the
court had to return the assets to the accused person (Fall Pemex). In this case, officials and commentators have
supported the return of the assets based on political necessity and
international comity.
A waiver of this
requirement necessarily depends on the facts of the particular case [21]. For example, a proper legal proceeding should
authorize the foreign government's appropriation of the assets. Sometimes, it is obvious that the assets are
criminal proceeds (for example, in the case of the painting of Piero della
Francesca that someone had stolen in France and later sold in
Switzerland). If it is uncertain whether
the assets are criminal proceeds, however, then a legal proceeding in the
requesting country must rule on this point and request the return (BGE 123 II
269 E. 4b S. 274 ff.).
Switzerland is obviously
unwilling to provide a safe haven for criminal proceeds. The prosecutor's office in Zürich has
indicated that it is in Switzerland's interest to return the assets as soon as
possible. While there is hardly any
doubt that most of the proceeds are the result of illegal activities, a small
part of the assets may have been of lawful origin. Here, an escrow agreement would allegedly
preserve the rights of third parties because it requires a subsequent legal
determination of where the assets should go.
The Swiss Court, however,
cannot be sure that the legal proceedings will meet Swiss legal standards
[Article 2 IRSG] [23-26]. Therefore, if
the Philippines provide an assurance that the Philippine proceeding comply with
Article 14 of the International Covenant on Civil and Political Rights (ICCPR)
[December 16, 1966, 999 UNTS 171], the assets will be made available to the
Philippines [23-29]
Moreover, the High Court is
anxious to protect any third party claims to these assets. For example, about 10,000 people have sued
Marcos in federal court in Hawaii for human rights violations. The judgment for
a total of $1,964,005,859.90 includes an injunction directed at two Swiss banks
[see 1998 International Law Update 2].
While victims of human rights violations should obtain compensation,
neither the ICCPR nor the UN Convention on Against Torture and Other Cruel,
Inhuman or Degrading Treatment or Punishment [G.A. Res. 39/46, December 10,
1984; reprinted in 23 I.L.M. 1027 (1984), as modified, 24 I.L.M. 535 (1985)]
provide for "preferred" satisfaction of their claims.
The subsequent Philippine
proceeding is capable of compensating victims.
Since there have been cases of corruption and improper judgments in the
Philippine judicial system, however, the High Court requires that the
Philippines keep the Swiss authorities informed about the progress of its proceedings
[29-44].
The High Court therefore
decides that (1) the Philippines must assure that a court proceeding that meets
the standard of ICCPR Article 14 will determine the distribution of the assets;
(2) the Philippines must inform the Swiss authorities (a) about all
developments in the court proceeding, and (b) about any measures taken to
compensate victims of human rights abuses under the Marcos regime [48-49].
Finally, the Philippines must declare whether or not they accept these
conditions [47].
Citation:
Urteil des schweizerischen Bundesgerichts 1A87/1997/err; (dated December 10,
1997; published January 15, 1998); see also The Washington Post, January 16,
1998, page A16.]
JURISDICTION (PRESCRIPTIVE)
British Columbia Supreme
Court upholds prescriptive jurisdiction of provincial Trade Practices Act as
extending to protection of U.S. residents defrauded by B.C. company from within
Province
The Director of Trade
Practices brought an (apparently civil) enforcement proceeding in the
provincial courts under the British Columbia Trade Practice Act, against Ideal
Credit Referral Services, Ltd. (Ideal) a B.C. corporation operating from within
the province. The Director focussed on a
dubious loan program that defendants were running.
Ideal would place advertisements
in sundry American publications that promised "Guaranteed Results" in
aiding the applicants to obtain consumer and business loans. Dealing through their local B.C.
telemarketers on an "800" line, Ideal would first charge the loan
applicants a "processing fee" of upwards of $300. Once it had gotten commitment agreements from
the applicants, Ideal would refer their files to one of two financial services
companies in Arizona. The Arizona
companies would then levy an additional fee of $15 for a credit check. In the vast majority of cases, however, the
companies refused to lend any money to the applicants.
The defendants
preliminarily moved to quash the charges. They argued that the Trade Practice
Act did not apply extraterritorially to protect deceived consumers who lived in
the United States. In response, the
Director sought an interim injunction against defendants' scheme. The chambers judge ruled for defendants,
however, and dismissed the Director's request for an injunction.
The Director appealed to
the B.C. Supreme Court. That Court
allows the appeal and remands the interim injunction issue for disposition on
the merits.
In two places, the
legislature had inserted the phrase "consumers in the Province," just
before the last reading. In the Court's view, this language meant only that the
deceptive or unconscionable conduct has to take place within the Province. It need not originate in, happen totally
within, or be confined to, British Columbia.
The legislature did not
intend to confine the Act to cases where the deceptive practices led consumers
in the Province astray to the exclusion of consumers in other parts of Canada
or elsewhere. If so, it would have
included an all‑embracing measure that restrained the entire Act. Since legislators added the provisions in the
course of debate, the courts should properly read them as limited to their
exact purpose.
Citation:
Director of Trade Practices v. Ideal Credit Referral Services Ltd., 72 C.P.R.3d
289 (B.C.S.C., 1997).
TRADE
WTO Appellate Body issues
decision in EU-U.S. dispute concerning hormone-treated beef
On January 16, 1998, a WTO
Appellate Body made available its final report in the dispute between the EU
and the U.S. concerning beef from cattle treated with growth hormones. The U.S. had argued that the EU's nine-year
ban on such beef lacked convincing scientific justification. Last year, a WTO
Dispute Settlement Body had held that the EU ban conflicted with the Agreement
on Sanitary and Phytosanitary Measures (SPS Agreement) [see 1997 International
Law Update 120].
It is not exactly clear
whether the EU or the U.S. prevailed. In
their respective press releases, both the EU and the U.S. claim to have
prevailed in this case.
The Appellate Body reversed
two out of the three conclusions and modified several of the findings of the
previous report issued by the WTO Dispute Settlement Panel. It held that the EU may, on a scientific
basis, set a level of consumer protection that may be higher than international
health standards. The Appellate Body
found the EU ban not inconsistent with other EU policies.
The Appellate Body stated,
among other things, that:
- WTO Members have a
sovereign and autonomous right to set a level of sanitary protection for their
own consumers that exceeds international health standards, as long as the
sanitary measures are based on a scientific risk assessment (¶¶ 104 &
172-177).
- The risk assessment for
human health is not a quantitative scientific analysis, but must cover risk in
human societies as they actually exist (¶ 187).
- The EU prohibition on the
use of hormones in beef does not rest on a true risk assessment because the
scientific studies do not focus specifically on residues in meat of
hormone-treated cattle (¶¶ 200 & 250).
The Appellate Body,
however, concedes that "responsible and representative governments may act
in good faith on the basis of a divergent scientific view coming from qualified
and respected scientists. In this case,
the EU scientific reports do not support the SPS measures at issue (¶ 197).
In the words of the of the
Appellate Body, it: "(h) modifies the Panel's interpretation of the
relationship between Articles 3.1, 3.2 and 3.3 of the SPS Agreement, and
reverses the Panel's conclusion that the European Communities by maintaining,
without justification under Article 3.3, SPS measures which are not based on
existing international standards, acted inconsistently with Article 3.1 of
the SPS Agreement; ... (l) upholds the Panel's finding that the EC measures at issue
are inconsistent with the requirements of Article 5.1 of the SPS Agreement, but
modifies the Panel's interpretation by holding that Article 5.1, read in
conjunction with Article 2.2, requires that the results of the risk assessment
must sufficiently warrant the SPS measure at stake ..." [Part XIV of the
Report]
The EU has announced that
the Commission will consider how to implement its international obligations and
to conduct a risk assessment as outlined by the Appellate Body. The U.S. Trade Representative thereafter
issued a strongly worded rebuttal press release, objecting to a second EU risk
assessment.
Citation:
WTO Appellate Body, EC Measures Concerning Meat and Meat Products (Hormones)
WT/DS26/AB/R, WT/DS46/AB/R (January 16, 1998). The Report is available on the
WTO website www.wto.org. See also European Union News press release No. 4/98
(January 16, 1998); The Washington Post, January 16, 1998, page A16; U.S. Trade
Representative press release 98-02 (January 15, 1998) & 98-04 (January 20,
1998).
TRADE
U.S. Department of Commerce
revises its Control List for export of militarily sensitive Dual-Use Goods to
conform to Wassenaar List
The U.S. Department of
Commerce, Bureau of Export Administration, has issued an interim rule to
implement the so-called Wassenaar Arrangement List of Dual-Use items.
"Dual-use goods"
are those sensitive commercial goods that may also have military uses. For example, certain chemicals have
legitimate commercial uses but nations may also use them to make chemical
weapons or missile fuel. In 1996, 33
countries concluded the "Wassenaar Arrangement on Export Controls for
Conventional Arms and Dual-Use Goods and Technologies." It sought to prevent unauthorized transfers
of sensitive materials that governments can use for military purposes.
The rule revises the
Commerce Control List of restricted export goods to implement the Wassenaar
List of restricted goods. It also
imposes new reporting requirements on persons who export goods that are on the
Wassenaar List to non-member countries.
The effective date was
January 15, 1998.
Citation:
63 Federal Register 2452 (January 15, 1998).
TRADE
Seventy WTO Members draft
agreement on opening up their national markets to foreign providers of
financial services
On December 12, 1997, 70
WTO Member States, including the EU (counting as 15 countries) and the U.S.,
finished the WTO's financial services negotiations with a multilateral
agreement to open their markets for financial services.
The agreement covers 95% of
the global financial markets, as measured in revenue. In particular, the agreement will open up
global markets for securities, banking services and insurance. With this Agreement, the Member countries
made commitments to admit foreign financial service providers. For example, 35 countries will permit 100%
foreign ownership of bank branches or subsidiaries; 37 countries will permit
100% foreign ownership of securities branches or subsidiaries.
The Agreement will enter
into force on March 1, 1999, at the latest.
Citation:
World Trade Organization press release PRESS/86 (15 December 1997); The White
House Office of the Press Secretary press release (December 13, 1997); WTO
FOCUS Newsletter No. 25 (December 1997). The WTO provides an unofficial summary
at its website www.wto.org.
TRADE
Following WTO decision in
September 1996 disapproving of Japan's taxes on liquor imports, U.S. and Japan
settle liquor tax dispute
In 1996, a WTO dispute
settlement panel, as well as the Appellate Body, agreed with the U.S., Canada
and the EU that Japan's liquor tax system unfairly favored domestic distilled
spirits over imported ones. The WTO Dispute
Settlement Understanding provides that a losing party has a "reasonable
period of time" to comply when immediate compliance is impracticable.
Through the U.S. Trade
Representative, Japan has agreed to a settlement under which Japan will adjust
its excise tax for whisky and shochu (traditional Japanese spirit)
"A" by May 1, 1998, as well as shochu "B" by October 1,
2000. Japan will eliminate tariffs on
whisky, rum, gin, vodka, and liqueurs by April 1, 2002. Japan will keep the U.S. informed of any
regulatory changes regarding its domestic liquor industry.
[The EU and Japan had
reached a settlement early last year, see 1997 International Law Update 23].
Citation:
U.S. Trade Representative press release 97-106 (December 17, 1997).
- Several nations have
approved multilateral agreements to which the U.S. is party. In April 1997, the United States ratified the
Protocol on Environmental Protection to the Antarctic Treaty [Sen. Treaty Doc.
102-22] and the Chemical Weapons Convention [Sen. Treaty Doc. 103-21]. Venezuela ratified the Convention on the
Civil Aspects of International Child Abduction [TIAS 11670] in October 1996. In
the same month Ireland signed the Convention Abolishing the Requirement of
Legalization of Foreign Public Documents [TIAS 10072] and the following month,
Lithuania acceded to this Convention. In
addition, Australia, Colombia and Libya have become parties to the 1907
Convention for the Pacific Settlement of International Disputes [TS 536; 36
Stat. 2199]. Citation: 36 I.L.M.
1399-1401.
- Switzerland takes several
actions to address issues of Nazi assets deposited in that country and the
interests of needy Holocaust victims. On December 13, 1996, the Federal Assembly of
the Swiss Confederation issued a federal decree dealing with the historic and
legal investigation on the fate of assets deposited in Switzerland following
the advent of the National-Socialist Regime. It launched a broad investigation
by a commission of independent experts in various disciplines. It also provided
for criminal punishment of anyone who destroys relevant documents or makes them
less accessible to investigators. On
February 26, 1997, the Swiss Federal Council inaugurated a special fund in
favor of needy victims of the Holocaust/Shoah and their descendants. The fund
is to receive and distribute publicly and privately donated funds in
cooperation with the World Jewish Restitution Organization (WJRO), the State of
Israel and other organizations of Holocaust victims. Citation: 36 I.L.M. 1274-76; 36 I.L.M. 1276-78.
- EU to modify its
banana import regime pursuant to adverse WTO ruling. In a Panel Report released on September 9,
1997, a Dispute Settlement Panel of the WTO held that the EU banana regime
violated WTO obligations. The U.S. and
four other countries had brought the complaint, challenging the EU's favorable
treatment for ACP countries. The EU has
announced changes to its regulation of banana imports to bring it in line with
the WTO ruling. For example, the EU will
modify the tariff quota, abolish import restrictions that favored ACP
countries, and instead establish financial and technical assistance for ACP
countries. Citation: European
Union news press release No. 3/1998 (January 15, 1998).
- Five nations have joined
the Torture Convention. Between June and December of 1996, five
countries have become parties to the 1987 Convention against Torture and other
Cruel, Inhuman, or Degrading Treatment or Punishment [Sen. Treaty Doc.
100-20]. Iceland ratified the Convention
in October. June saw accessions by El
Salvador and Malawi while Azerbaijan acceded to the Convention in August and
Honduras did so in December. Citation: 36 I.L.M. 1669 (1997).
- U.S. and Canada issue
Salmon fishing agreement. On January
12, 1998, the U.S. and Canada issued a Salmon fishing agreement and related
documents such as a statement by Secretary Albright. -- The two countries
intend that the Pacific Salmon Treaty provide a framework for the conservation
and management of Pacific salmon stocks.
The parties, however, disagree on the interpretation and implementation
of its principles, and are therefore continuing negotiations. Citation:
U.S. Department of State Daily Briefing Index, January 12, 1998; U.S.
Department of State, Office of the Spokesman, Press Statement (January 12,
1998). A complete information package is
available from the Department's Press Office (Phone: (202) 647-4000).
- U.S. and Nicaragua
conclude bilateral intellectual property rights agreement. The U.S. and Nicaragua have concluded a
wide-ranging Bilateral Intellectual Property Rights Agreement. It grants protection to copyrights, patents,
trademarks, trade secrets, semiconductor layout designs, encrypted satellite
signals, and geographical indications.
The Agreement requires Nicaragua to provide a level of protection that
is higher than the WTO TRIPS Agreement.
Nicaragua has 18 months to enact those protections. Citation:
U.S. Trade Representative press release 97-109 (December 22, 1997).
- U.S. and Lithuania
sign bilateral investment treaty. On January 14, 1998, the U.S. Trade
Representative and the Lithuanian Foreign Minister signed a U.S.-Lithuania
Bilateral Investment Treaty (BIT). It guarantees the right to invest -- in most
sectors -- on terms no less favorable than those accorded to domestic or
third-country investors. In addition, it
would guaranty the free transfer of capital, profits and royalties, freedom
from undue burdens on trade and investment, access to international
arbitration, and internationally accepted standards for expropriation and
according compensation. -- The U.S. Senate has not yet given its advice and
consent to this treaty. Citation: U.S. Trade Representative press release 98-01
(January 14, 1998).
- Russia issues new
rates for import customs tariffs.
The Russian Federation has issued new combined rates of import customs
tariffs. They had been adopted in the
form of a "Resolution" by the Government on December 19, 1997. The Resolution does not change the customs
rates, but adds a minimum value (in ECU per 1 kg or per 1 piece) for each group
of selected food products. For example,
for beef and veal, the former rate was 15%.
The new rate remains at 15% but may not be less than 0.2 ECU/kg. The stated purpose is to avoid
under-evaluation of goods imported into Russia.
Russian importers of the affected goods have stated that it will lead to
increased custom tariffs payments. - The effective date of the tariff rates is
February 1, 1998. Citation:
Russian Federation, Resolution No. 1608 "On Partial Changes of
Types of Import Customs Duties approved by the Government of the Russian
Federation on December 27, 1996 (No. 1560)," Rossiyskaya Gazeta (January
6, 1998); information received from the U.S. Embassy Moscow via the U.S.
Department of Commerce, Russian Desk (Phone: (202) 482-4655). The document is also available on the
U.S.D.A. Foreign Agricultural Service's website at
www.fas.usda.gov/scriptsw/AttacheRep.
- WTO Telecom agreement
enters into force. On February 5,
1998, the WTO Agreement to liberalize international trade in basic
telecommunication services became effective [see 1997 International Law Update
36]. With that Agreement, 72 WTO members governments (accounting for almost 93%
of the telecom sector), including the U.S., had agreed to open their domestic
markets to foreign companies. It covers,
for example, telephones, data transmission, private leased circuit services,
fixed and mobile satellite systems, and pagers.
The exact improvements are outlined in "schedules," published
by the WTO, which reflect the commitments of each government. Citation:
WTO Press Release PRESS/87 (26 January 1998). More information is available at
the WTO website www.wto.org.
