Legal Analyses written by Mike Meier,
Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.
1998
International Law Update, Volume 4, Number 12 (December).
CORRUPT
BUSINESS PRACTICES
U.S.
enacts legislation to implement Organization for Economic Cooperation and
Development's Anti-Bribery Convention; Council of Europe adopts similar but
broader Convention
On
November 10, 1998, the U.S. Congress passed legislation that incorporates into
domestic U.S. law the OECD Convention on Combatting Bribery of Foreign Public
Officials in International Business Transactions [see 1997 International Law
Update 138]. The purpose of the OECD Convention is to make bribery in international
business transactions a prosecutable offense. So far, thirty-four countries
have signed the OECD Convention.
The
"International Anti-Bribery and Fair Competition Act of 1998"
(Public Law 105-366) amends the Foreign Corrupt Practices Act of 1977 to ensure
that U.S. law complies with the Convention. For example, the new law amends the
Securities Exchange Act of 1934 by banning the bribery of issuers of securities
[Section 2]. The law also amends the Foreign Corrupt Practices Act by
forbidding American companies to try to influence foreign officials by cash or
other benefits [Section 3].
The
law provides for “alternative jurisdiction” over acts outside the U.S. and
imposes sanctions on any U.S. person who takes part in such activity outside
the U.S. The prohibitions also apply to foreign persons or entities while
present or acting within the jurisdiction of the U.S. [Section 4].
In a
related matter, the Council of Europe has adopted a Criminal Law Convention on
Corruption that will be open for signature by its forty member states on
January 27, 1999. The Corruption Convention is broader in scope than the OECD
Convention. It makes a crime out of “corrupt practices” such as domestic and
international bribery, trading in influence, and money laundering of related
illegal proceeds.
The
Council's Convention applies to the private sector as well as to civil
servants, judges, and members of Parliament. The “Group of States against
Corruption” (GRECO) will monitor compliance with this Convention. GRECO
currently includes Cyprus, Estonia, Ireland, Romania, Spain, and Sweden.
Citation: U.S. Department of State Press Statement (October
22, 1998); Pub.L. 105-366 [S. 2375] (November 10, 1998), 112 Stat. 3302. [The
Council of Europe press release (November 4, 1998) is available on the
Council’s website at www.coe.fr].
ENVIRONMENTAL
LAW
D.C.
Circuit rejects challenges to new EPA gasoline rule that was issued after WTO
decision
In
the following case, several Petitioners challenged the Environmental
Protection Agency's “gasoline rule.” Based on the Clean Air Act Amendments of
1990, it regulated emissions from conventional gasoline for motor vehicles. The
rule and the underlying law aimed to reduce air pollution in certain urban
areas with high ozone levels by requiring the use of “reformulated” gasoline.
To prevent the transfer of pollutants from reformulated gasoline to conventional
gasoline, 42 U.S.C. Section 7545(k)(8) required that the gasoline of both
domestic and foreign suppliers remain as clean as it was in 1990.
To
this end, EPA would compare today’s pollutants in the suppliers’ gasoline with
its 1990 levels. If a particular supplier could not come up with enough data on
the 1990 pollutant level of its gasoline (and most foreign suppliers could
not), the EPA would use a statutory baseline representing the average pollutant
level for gasoline in 1990. In practice, the statutory baseline applied to
virtually all foreign refiners. Domestic refiners, however, had sufficient data
to establish an individual baseline.
In
1995, the WTO found that the EPA rule violated the GATT trading rules [see 1997
International Law Update 116, 1996 International Law Update 46 & 56]. Two
years later, the EPA issued a revised Rule. It allows foreign refiners to
either accept the statutory baseline or to petition the EPA to set an
individual baseline based upon certain conditions [see 62 Federal Register
45533 (1997), 40 C.F.R. Part 80].
The
Petitioners made two main arguments. They first contended that the EPA has
exceeded its authority by letting foreign refiners ask for an individual
baseline that may result in worse air quality. They also urged that the EPA
should not let foreign refiners choose either the individual or the statutory
baseline. In their view, EPA should instead assign a baseline unless a particular
refiner produces satisfactory data to the contrary.
The
U.S. Court of Appeals for the District of Columbia Circuit denies the petition
for review. In the Court’s view, the Petitioners have mistakenly assumed that
the sole purpose of the reformulated gasoline program is to reduce air pollution.
In fact, the EPA may take other important factors into account in proclaiming a
rule.
“The
petitioners do not direct our attention to anything in the text or structure of
the statute to indicate that Congress intended to preclude the EPA from
considering the effects a proposed rule might have upon the price and supply of
gasoline and the treaty obligations of the United States. ... [T]herefore, we
must defer to the agency’s construction if it is reasonable. ... [W]e think the
agency’s interpretation is permissible. Section 7545(k)(8) specifically allows
foreign refiners that produced dirtier than average gasoline in 1990 to
continue importing gasoline of that quality, presumably in order to prevent the
disruption that might ensue were those refiners forced to choose between
producing cleaner gasoline than they did in 1990 or quitting the U.S. market.
The agency, following the lead of the Congress, similarly sought to prevent its
rule from disrupting the market."
"In
the particular circumstances of this case our usual reluctance to infer from
congressional silence an intention to preclude the agency from considering
factors other than those listed in a statute is bolstered by the decision of
the WTO lurking in the background. ‘Since the days of Chief Justice Marshall,
the Supreme Court has consistently held that congressional statutes must be
construed wherever possible in a manner that will not require the United States
‘to violate the law of nations.’” [Slip op. 21-23]
Citation: George E. Warren Corp. v. U.S. Environmental
Protection Agency, No. 97-1651 (D.C. Cir. November 3, 1998).
HUMAN
RIGHTS
European
Court of Human Rights unanimously rules that issuance of national security
certificate by Northern Ireland's Secretary of State that conclusively barred
litigation of discrimination claims violated Convention rights of two
Catholic firms
Patrick
and Gerard Tinnelly are Catholics and officers of a demolition company trading
as Tinnelly & Sons (Tinnelly) in Northern Ireland. When Northern Ireland
Electricity Services (NIE) asked for bids in 1984 on the razing of a power
station at Ballylumford, Tinnelly put in the lowest bid. This plus Tinnelly's
approved business record led NIE officials to recommend its acceptance.
Instead,
NIE rejected the Tinnelly bid in June 1985 without giving reasons and awarded
the contract to McWilliams Demolition, Ltd. of Glasgow. NIE later declined for
"security reasons" to let McWilliams subcontract to Tinnelly to
remove asbestos at this project. McWilliams reported to Tinnelly that the local
unions would refuse to work along side of "IRA sympathizers."
Tinnelly
filed a complaint with the Fair Employment Agency for Northern Ireland (FEA)
alleging that sectarian pressure by the trade unions underlay NIE's award. The
Fair Employment (Northern Ireland) Act of 1976 set up the agency to
investigate and decide charges of job discrimination. Section 42 provides for a
"national security" and "public safety" exception, made
conclusive by a certificate from the Secretary of State. NIE next persuaded the
Secretary of State for Northern Ireland to issue a § 42 certificate in October
1987.
Four
members of the McElduff family are self-employed joiners who are Catholics with
no criminal records. In 1990, the Department of the Environment for Northern
Ireland (DOE) had awarded them a contract to build premises subject to a
security clearance. Without explanation, DOE later turned down their
clearance. The McElduffs went to the Fair Employment Tribunal with a religious
discrimination claim. The Secretary of State, however, again issued a § 42
certificate that thwarted the Tribunal from investigating or deciding the
McElduffs' charges.
On
requests for discovery of the factual grounds for the § 42 actions, the
Secretary produced some items but withheld several others because they might
reveal the extent of the government's knowledge about suspected terrorists.
There were indications that the Royal Ulster Constabulary (RUC) had provided
security information to the agencies concerned. Resort to the local courts was
also unsuccessful on grounds of the unimpeachability of the Secretary's
certificate in light of the truncated information that the government made
available to the court.
During
1992, both Tinnelly and the McElduffs (applicants) filed complaints against the
United Kingdom with the European Commission on Human Rights. After due
consideration, the Commission found admissible the charges that the U.K.
government had violated Article 6 (1) of the European Convention on Human
Rights (ECHR). In relevant part, the Article states: "In the determination
of his civil rights and obligations, ... everyone is entitled to a fair and
public hearing ... by an independent and impartial tribunal established by
law."
After
briefing and oral argument, the European Court of Human Rights unanimously
holds that the Secretary of State's issuance of § 42 certificates in both
cases "constituted a disproportionate restriction on the applicants'
right of access to a court or tribunal. [The Court] finds that there has been a
breach of Article 6 s 1 of the Convention." [1177]
The
Strasbourg tribunal first points out that the Convention does allow governments
a certain "margin of appreciation" in their efforts to protect
national security and public safety on the one hand while allowing a degree of
procedural fairness on the other. "[The Court] must be satisfied that the
limitations applied do not restrict or reduce the access left to the individual
in such a way or to such an extent that the very essence of the right is
impaired. Furthermore, a limitation will not be compatible with Article 6 s 1
if it does not pursue a legitimate aim and if there is not a reasonable
relationship of proportionality between the means employed and the aim sought
to be achieved." [1175]
The
Court disagrees with the U.K.'s positions upholding the § 42 prerogatives of
the Secretary of State. "The Court would observe that such a complaint can
properly be submitted for an independent judicial determination even if national
security considerations are present and constitute a highly material aspect of
the case. The right guaranteed to an applicant under Article 6 s 1 of the
Convention to submit a dispute to a court or tribunal in order to have a
determination on questions of both fact and law cannot be displaced by the ipse
dixit of the executive." [1177]
The
Court decisively spurns the U.K.'s argument that § 42 procedures strike a
fair balance between the needs of public safety and procedural justice.
"The introduction of a procedure, regardless of the framework used, which
would allow an adjudicator or tribunal fully satisfying the Article 6 s 1
requirements of independence and impartiality to examine in complete cognisance
of all relevant evidence, documentary or other, the merits of the submissions
of both sides, may indeed serve to enhance public confidence. The Court
observes in addition that [the Northern Ireland High Court judge] was unable
under the present arrangements to dispel his own doubts about certain
disturbing features of the Tinnelly case since he ... was precluded from having
cognisance of all relevant material in the possession of NIE." [1177]
Pursuant
to Article 50 of the ECHR, the Court awards damages for the discriminations
suffered by applicants. For their losses of opportunity, the Court gives the
U.K. ninety days to compensate Tinnelly with 15,000 pounds and the McElduffs
with 10,000 pounds.
Citation: Tinnelly & Sons, Ltd. v. United Kingdom, 37
I.L.M. 1152 (1998) [Unrevised text of opinion is also on the Web at http://www.dhcourt.coe/fr/eng/recent.htm.
Page cites are those of I.L.M.]
JURISDICTION
(PRESCRIPTIVE)
Eleventh
Circuit rules that applying federal statute prohibiting export of cocaine from
U.S. to convict Canadian
citizen engaged in a Canadian conspi-racy is valid under the "objective
territorial principle" of international jurisdiction
William
MacAllister was a Canadian citizen living in Montreal, Canada. He and Paul
LaRue conspired with others to export cocaine from the U.S. to Montreal. To do
so, they contacted John Burns, a DEA Special Agent, posing as a middle-level
supplier of cocaine who operated out of Jacksonville, Florida. The Agent was to
get hold of 5,000 kilos of cocaine. On October 9, 1992, MacAllister assured
Burns over the phone that he had $5,000,000 in purchase money.
In
the Fall of 1992, MacAllister and LaRue met with Agent Burns and undercover
agent Ed Dickey at a Montreal bar. By March 1993, Burns had reduced the amount
of the down payment he required in return for delivery of less cocaine.
Ashley
Castenada, one of LaRue's cronies, then went to Jacksonville, verified the
quality of Burns' cocaine and gave $600,000 as down payment. After a final
planning meeting with Burns in Canada, Burns and LaRue drove to Burlington,
Vermont where authorities arrested LaRue and Castenada.
They
later shipped the two conspirators to Jacksonville for trial on charges of
unlawfully exporting cocaine. Upon a request from the U.S., Canada extradited
MacAllister for trial in Florida. Upon his conviction, defendant unsuccessfully
moved to dismiss the indictment for lack of subject matter jurisdiction. He
claimed that 21 U.S.C. § 963 did not apply extraterritorially to a Canadian
citizen involved in a Canadian conspi-racy.
Defendant
then filed an appeal. In a per curiam opinion, the U.S. Court of Appeals for
the Eleventh Circuit affirms.
The
Court first points out that the courts often have to divine from general
language whether Congress impliedly intended a criminal statute to reach
foreign activities. "Under this rule, the district court properly
concluded that drug smuggling is an offense where extraterritorial application
is inferred. ... Logic dictates that Congress would not have passed a drug
conspiracy statute that prohibits international drug smuggling activities,
while simultaneously undermining the statute by limiting its extraterritorial
application." [Slip op. 2]
This
outcome is not at war with international law principles of extraterritoriality.
The "objective territorial principle" comes into play, in the
Court's view, if the defendant's conduct brought about some adverse effect in
the U.S. or, in a conspiracy case such as this, if any conspirator committed an
overt act here.
"In
the present case, MacAllister was a part of a conspiracy that intended to
participate in and take advantage of the drug trade between the United States
and Canada. Coconspirators committed acts in furtherance of the conspiracy
within the territorial boundaries of the United States. This conduct has a
detrimental effect on our nation. We conclude that extraterritorial application
is permitted under the objective territorial principle of international
law." [Slip op. 3]
Citation: United States v. MacAllister, No. 97-2144 (11th
Cir. November 16, 1998).
JURISDICTION
(SUBJECT MATTER)
Applying
French data protection laws, Second Circuit reverses dismissal on international
comity grounds in dispute over French commercial mailing list, noting that
Court must determine its jurisdiction before it engages in international comity
analysis
Filetech
S.A. is a French company that sells marketing lists which it generates from
sources such as the list of telephone subscribers of France Telecom S.A. France
Telecom was previously government-owned and had controlled all French telephone
facilities. In accordance with EU directives, it incorporated itself, leaving
the French government as the majority shareholder. Through its subsidiary,
Filetech U.S.A., Inc., Filetech planned to do business in the U.S. Apparently,
it has so far done nothing apart from the incorporation.
Under
the French 1978 Data Processing and Individual Rights Law (Data Processing
Act), French residents may block the use of their names on commercial mailing
lists by getting on the "Orange List." Filetech sought access to the
Orange List, citing a recommendation by the French Data Processing and
Individual Rights National Commission (La Commission Nationale de l’Information
et des Libertes) (CNIL). CNIL opined that France Telecom should mark the Orange
List individuals in its directory. Otherwise simple reliance on standard
French telephone directories to derive mailing lists will violate French law
demanding notice to the Orange List. France Telecom was able, of course, to
sell its own subscriber list without the Orange List individuals.
Filetech
figured out a low cost way to copy France Telecom’s electronic subscriber
directory. Aware that the first three minutes of electronic access to France
Telecom’s subscriber list are free to individual users, Filetech programmed its
computers to copy names from the France Telecom database in three-minute
intervals. Filetech could not, however, purge its list of those on the “Orange
List.”
Several
French lawsuits have arisen out of Filetech’s desire for free access the French
Telecom lists. In May 1996, the Criminal Court of Nanterre (Tribunal de Grande
Instance de Nanterre) acquitted Filetech and its CEO of charges that they had
violated privacy rights by including Orange List individuals in their mailing
lists. It held that the privacy provisions of the French Postal and
Telecommunications Code violated the EC Treaty. The Court of Appeals of
Versailles reversed, and an appeal is currently pending before the French
Supreme Court. The government is investigating France Telecom to find out
whether it exploits its subscriber list in anti-competitive ways.
In
1995, Filetech sued France Telecom in New York district court, alleging that
defendant was engaged in conduct that violated the Sherman Antitrust Act [15
U.S.C. § 1]. The district court established two points. First it held that a
party seeking the dismissal of a Sherman Act case on the ground of
international comity must first show that a true conflict exists between the
Sherman Act and relevant foreign law.
Secondly,
the court ruled that, once the court decides the existence of legal conflict,
comity analysis in the Second Circuit looks to the same factors described by
the Ninth Circuit in the Timberlane cases and in § 403(2) of the Restatement
(Third) of the Foreign Relations Law of the United States. The court found a
possible conflict and then dismissed the complaint based on international
comity.
The
U.S. Court of Appeals for the Second Circuit vacates and remands. The Court
insists that the lower court first has to determine whether it has
jurisdiction. The Court points out unresolved questions as to its jurisdiction
over France Telecom under the Foreign Sovereign Immunities Act (FSIA) [28
U.S.C. §1602], the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) [15
U.S.C. § 6a], and case law governing Sherman Act jurisdiction.
Most
importantly, Filetech claimed that France Telecom markets its databases in the
U.S. through the internet and other means. France Telecom countered that the
total revenue from the U.S. sale of French mailing lists was $3,500 in 1993,
and $0 in 1994.
"The
district court 'looked only to the complaint' in making its determination. It
did so despite the factual issues regarding jurisdiction that were presented to
it. In these circumstances, the court should have looked outside the pleadings
to the submissions... Our rule is that, on a 'challenge [to] the district
court’s subject matter jurisdiction, the court may resolve disputed
jurisdictional fact issues by reference to evidence outside the pleadings, such
as affidavits.'" [Slip op. 33]
"The
Court generally agrees with the district court’s international comity analysis.
It notes, however, that “the district court found only that France Telecom had
‘asserted a substantial claim’ of true conflict. A 'substantial claim' is
insufficient; a conflict must be clearly demonstrated. Secondly, the court’s
true conflict determination was grounded in findings: (1) that if there were a
conflict, it would ‘go [] to the heart of the case’ including the propriety of
an injunction violative of French law; and (2) that it would be ‘more
appropriate’ for French law to be declared in French courts. These findings are
not enough to show any apparent conflict of laws. To date, there is nothing in
the record in the district court to justify the legal conclusion that compliance
with the regulatory laws of both France and the United States would be impossible.
In any event, the district court need not address the issue of international
comity unless it resolves the question of subject matter jurisdiction in
favor of Filetech.” [Slip op. 34-35]
Citation: Filetech S.A. v. France Telecom S.A., 157 F.3d
922 (2d Cir. October 6, 1998).
SOVEREIGN
IMMUNITY
In
action by U.S. contractor against Marshall Island agencies over repairs to
electric generator, Ninth Circuit adopts Second Circuit’s framework for FSIA
cases involving "commercial activity" and declines to examine
specific jurisdiction where general jurisdiction available under FSIA
Theo.
H. Davies & Co., Ltd., is a contractor based on Hawaii and doing business
as Pacific Machinery (PacMac). After a contract for overhauling an electric
generator went bad, PacMac sued the Marshall Islands and several of its
agencies (jointly “agencies”) that handle the generation of electricity.
Located
on Ebeye Island, Kwajalein Atoll, the disputed generator produced electricity
for the power plant and the desalinization facility. The agencies had bought
the generator from PacMac through a contractor, IBC, an Ohio corporation based
in Guam. During meetings in Guam and Hawaii, the parties had agreed to pay
PacMac for servicing the generator. Though PacMac finished the overhaul, the
agencies refused to pay the full contract price, claiming that the generator
allegedly did not perform as promised.
The
Hawaii district court dismissed PacMac’s case for lack of personal
jurisdiction. PacMac appealed. The U.S. Court of Appeals for the Ninth Circuit
reverses and remands.
The
issue is whether the instrumentalities of a foreign state had carried on
"commercial activity" that excepted them from immunity from suit
under the Foreign Sovereign Immunities Act (FSIA) [see 28 U.S.C. Section
1605(a)(2)]. In this respect, the Court adopts the five-part tests of the
Second Circuit for commercial cases involving foreign sovereign immunity:
1.
Does the conduct in issue qualify as “commercial activity”?
2.
Does that commercial activity bear the relation to the cause of action and to
U.S. as described by one of the three modes found in 28 U.S.C. Section
1605(a)(2), thus warranting the Court’s exercise of subject matter jurisdiction
under Section 1330(a) [jurisdiction over cases against foreign states]?
3.
Does congress’s grant of subject matter jurisdiction exceed the permissible
limits of the “judicial power” set forth in Article III of the Constitution?
4.
Was there subject matter jurisdiction under Section 1330(a) and proper service
under Section 1608 thereby making personal jurisdiction proper under Section
1330(b)?
5.
Does the exercise of personal jurisdiction under Section 1330(b) comply with
the due process clause?
The
first clause of § 1605(a)(2) authorizes general personal jurisdiction over a
foreign entity that engages in substantial commercial activity in the U.S. The
Court notes that transactions conducted through agents may support personal
jurisdiction. Here, the agencies’ three separate purchases of generators,
including the one at issue in this action, a well as the overhaul negotiations
with PacMac in Guam and Hawaii, constituted a consistent and substantial
pattern of business relations that warranted the exercise of personal
jurisdiction over them.
Citation:
Theo. H. Davies & Co., Ltd.
v. Republic of the Marshall Islands, No. 96-16876 (9th Cir. November 17,
1998).
TAXATION
In
tax dispute over undocumented payments from companies in former U.S.S.R. to
U.S. company held by Russian individual, Tax Court accepts that lack of
documentation is normal Russian business practice due to lack of free banking
system and developed structure of commercial law
After
Valeri Markovski emigrated from the U.S.S.R to the U.S. he formed
"American Valmar" in New York to sell U.S. goods to his home
country. Valmar often received funds from foreign customers without written
agreements or instructions as to their use. Valmar either held those funds in
interest-bearing accounts or in U.S. Treasury bills until disbursed, keeping
the earned interest for itself.
The
principal issue before the Tax Court was how to characterize these and other
amounts received from abroad for tax purposes. Valmar claimed that these
payments were not "gross income" because they constituted liabilities
to the customers.
According
to Valmar and its expert witness, it is normal practice for businesses in the
former Soviet Union to deposit funds with foreign companies without documentary
evidence. Since those businesses are unable to open foreign bank accounts, they
simply deposit funds with business partners until they finalize their
transactions. There is no private banking system in those countries and there
is widespread economic, political and social turmoil.
In
the former U.S.S.R., such deposits do not require much documentation because
of the embryonic nature of Soviet commercial law, and the absence of skilled
lawyers. Moreover, the enforcement of contractual obligations through legal
channels is shoddy due to corruption and the systemic hostility towards
entrepreneurial activity.
The
IRS did not challenge Valmar’s expert’s opinion and the Tax Court found
accordingly. The Tax Court, however, finds on the specific facts of this case
that at least some of these payments were income and that Valmar had received a
constructive dividend.
Citation:
American Valmar Int’l Ltd., Inc.
v. Commissioner of Internal Revenue, Tax Ct. Dkt. No. 11776-95 (U.S. Tax Court,
November 19, 1998).
WORLD
TRADE ORGANIZATION
In
U.S.-Japan dispute over Japanese import restrictions on American agricultural
products, World Trade Organization panel finds violations of Sanitary and
Phytosanitary Measures
In
October 1997, the U.S. brought a formal complaint before the WTO against Japan
because of long-standing Japanese import restrictions on U.S. agricultural
products under its quarantine measures. The U.S. claimed that the Japanese
quarantine and rigorously test each variety of a product, even if the same
tests yield the same results for all varieties. This thinly veiled protectionism,
in the U.S. view, violates the WTO Agreement on the Application of Sanitary and
Phytosanitary Measures (SPS Agreement).
For
example, the "codling moth" is a pest that can affect apples,
cherries, nectarines, walnuts and other produce. It is common in the U.S. but
non-existent in Japan. The Japanese Plant Protection Law of 1950 first
requires inspection for “quarantine pests” (those which exists only in parts of
Japan or not at all). Products that fail the inspection must be destroyed or
fumigated. The Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF)
may totally ban the import of particularly harmful “quarantine pests.” The
testing process takes at least two years.
On
October 27, 1998, the WTO Panel found that Japan has been acting inconsistently
with Articles 2.2 [sufficient scientific evidence for phytosanitary measures],
5.6 [measures not to be more trade-restrictive than required], and 7
[phytosanitary measures to be published] of the SPS Agreement. In particular,
the Panel held that Japan has (see Paragraph 9.1 of the Panel Report):
-
Violated Article 2.2 of the SPS Agreement by maintaining a varietal testing
requirement for apples, cherries, nectarines and walnuts with not enough of a
scientific basis.
-
Breached SPS Agreement, Article 5.6 by maintaining varietal testing
requirements that, taking into account technical and economic feasibility, are
more trade-restrictive than necessary to realize an appropriate level of
phytosanitary protection. [Here, Japan has a less trade-restrictive
alternative to control the entry of codling moths by setting a certain fumigant
concentration in the treatment of affected produce. Varietal differences would
not affect quarantine efficacy.]
-
Transgressed Article 7 of the SPS Agreement by not publishing its varietal
testing requirements. [The government only “made available” the testing
guidelines to interested parties.]
Because
of the complex scientific nature of the dispute, the Panel attached to its
Report the transcript of the joint meeting with experts.
Japan
has ninety days to seek review by the WTO Appellate Body.
Citation: WTO Report of the Panel, WT/DS76/R, Japan -
Measures Affecting Agricultural Products (27 October 1998). [The Report is
available on the WTO website www.wto.org].
WORLD
TRADE ORGANIZATION
At
APEC 1998 meeting, Japan agrees to revise its trade and investment related laws
to permit “free and open trade and investment”
An
Asia-Pacific Economic Cooperation (APEC) meeting took place November 14-18,
1998, in Kuala Lumpur, Malaysia. There Japan has agreed to further open its
market to foreign trade and investment. To this end, Japan has issued an
“Individual Action Plan” (IAP) listing the specific steps it is taking toward
market openness. The IAP is based on a Three-Year-Deregulation Program adopted
by the Japanese Cabinet on March 31, 1998. Among the legal changes underway in
Japan are:
-
Building Standards Law. Japan has amended the Building Standards Law in June
1998 to incorporate performance-based building regulations (for example for
plywood). The government will implement it fully over the next two years, thus
simplifying the pre-market procedure for foreign materials.
-
Government Procurement. Japan will publish post-award ceiling tender prices for
construction services.
-
Telecommunications. In April 1998, Japan revised the Telecommunications
Business Law and the Radio Law to accept foreign certifications and testing
results. In Spring 2000, the Japanese government will submit a bill to the Diet
(Parliament) implementing Long-run Incremental Cost Methodology (LRIC) for
interconnection rates.
-
Finance. Japan is making changes to the Securities Investment Trust Law, the
Securities and Exchange Law, the Bank Law, and others. These should liberalize
securities derivatives, to allow new investment-trust arrangements and to
promote market entry of securities companies. The current licensing system will
change into a registration process.
-
Investment. Japan has already relaxed the requirement of the foreign capital
ratio in foreign-affiliated companies eligible for loans. Since January 1998,
special low interest rates apply to companies that make their first full-scale
investment in Japan.
-
Energy. As of January 1998, the Japanese Government no longer makes gasoline
suppliers get a registration certificate for each new gas station.
- Customs.
Japan is upgrading the electronic Nippon Automated Cargo Clearance System
(NACCS) to speed up the grant of import permits to containerized sea cargoes.
-
Food. Japan will accept electronically submitted health certificates for meat
and meat products. The U.S. and New Zealand will join the network for
electronic submission of health certificates that Japan and Australia have been
operating since March 1998.
Citation: The Japanese “Individual Action Plan” (IAP) is
available on the website of the Japanese Ministry of Foreign Affairs (MOFA)
www.mofa.go.jp.
- U.S.
imposes sanctions on India and Pakistan because of their nuclear tests. The
Bureau of Export Administration (BXA) of the U.S. Department of Commerce has
issued an interim rule imposing sanctions on India and Pakistan for their
recent nuclear test explosions. Pursuant to Section 102(b)(2) of the Arms
Export Control Act, U.S. President Clinton had directed the agency to impose
sanctions on those two nations. Consequently, the BXA has revised the Export
Administration Regulations [15 C.F.R. Parts 742 and 744] and introduced a
policy of license denial for exports and re-exports of nuclear and missile
technology to those nations with only limited exceptions [Section 742.16]. The
BXA has also added certain Indian and Pakistani government institutions to the
“Entities List” that are be involved nuclear or missile activities. Items on
the so-called “Commerce Control List” that apply to nuclear and missile
technology must not be exported to those nations. The effective date of the
rule was November 19, 1998. Citation: 63 Federal Register 64322
(November 19, 1998).
- U.S.
and Andean nations sign trade and investment partnership agreement. On
October 30, 1998, the U.S. signed an agreement establishing a U.S.-Andean
Community Trade and Investment Council with Bolivia, Colombia, Ecuador, Peru,
and Venezuela. U.S. Trade Representative Charlene Barshefsky signed the
agreement on behalf of the U.S. The Council will consist of ministerial-level
representatives from the signatories and address issues such as the Free Trade
Area of the Americas (FTAA) negotiations, intellectual property rights, trade
issues under the Andean Trade Preference Act, and WTO matters. Citation:
U.S. Trade Representative press release 98-97 (October 30, 1998).
- Senate
has consented to presidential ratification of two WIPO treaties. On
October 21, 1998, the U.S. Senate gave its consent to the President's
ratification of the World Intellectual Property Organization (WIPO) Copyright
Treaty and the WIPO Performances and Phonograms Treaty (Treaty Doc. 105-17).
The Senate attached one reservation, two declarations, and three provisos. The
treaties should significantly advance the campaign against IP piracy throughout
the world. On October 8, implementing legislation passed both houses of
Congress. Citation: 15 Int'l Trade Rptr. 1845 (BNA, Nov. 4, 1998).
- U.S.
Senate consents to ratification of ten updated bilateral treaties
dealing with extradition. Having obtained Senate consent on October 21,
1998, the President is now free to ratify ten extradition treaties. These
include treaties with Argentina (Treaty Doc. 105-18), Austria (Treaty Doc.
105-50), Cyprus (Treaty Doc. 105-16), Eastern Caribbean States (Treaty Doc.
105-19); France (Treaty Doc. 105-13); India (Treaty Doc. 105-30); Poland
(Treaty Doc. 105-14); Trinidad and Tobago (Treaty Doc. 105-21); and Zimbabwe
(Treaty Doc. 105-33). In the case of Spain, the agreement was a "third
supplementary" treaty (Treaty Doc. 105-15). The Senate also approved a
protocol to the U.S.-Mexico treaty (Treaty Doc. 105-36). Citation: 15
Int'l Trade Rptr. 1845 (BNA, Nov. 4, 1998).
- EU
accedes to Canada-Sweden-Ukraine-U.S. Agreement for a Science and Technology
Center in Ukraine. The European Atomic Energy Community (EURATOM) and the
EC, acting as one party, acceded to the Agreement that in 1993 established a
Science and Technology Center in Ukraine, based on an Agreement among Canada,
Sweden, Ukraine and the U.S. Citation: Commission Regulation (EURATOM)
No 2387/98 ..., 1998 O.J. of the European Communities (L 297) 4, 6 November
1998. [The 1998 O.J. of the European Communities (L 225) 4, 12 August 1998
published the text of the Agreement, the Instrument of Accession and a
Declaration.]
- U.S.
Department of Commerce issues new Subsidy Regulations. On November 10,
1998, the U.S. Department of Commerce issued new Subsidy regulations to
strengthen U.S. countervailing duty law. The regulations implement
requirements of the Uruguay Round Agreements Act. They provide detailed
guidance on how the Department will analyze foreign subsidies and calculate the
amount of duties imposed on subsidized imports. Citation: U.S.
Department of Commerce, International Trade Administration, Office of Media
Affairs, ITA NewsBytes (November 10, 1998).
- EU
temporarily holds off application of new EU Data Protection Directive to U.S.
companies. The EU Directive on the protection of personal data (95/46/EC)
entered into force on October 25, 1998. [Editors’ Note: An EU directive
becomes effective only after the various Member States have implemented it into
national law. That process can take years even after the directive has
officially entered into force]. It establishes a framework for the protection
of privacy in international data transfer. The Directive bars the transfer of
personal data to non-EU countries when those countries fail to guarantee
continued protection of the data. The processing of certain sensitive personal
data, such as race, political beliefs, and health, requires the express consent
of the individual concerned, unless one of the exceptions, e.g., for
scientific research, applies. According to U.S. Commerce Secretary William M.
Daley, the EU has agreed to temporarily refrain from applying the EU data
protection directive to U.S. companies. Citation: U.S. Department of
Commerce, International Trade Administration, Office of Media Affairs, ITA
NewsBytes (October 26, 1998); The European Union Press Releases, No. 89/98
(October 23, 1998).
- U.S.
Treasury facilitates accounting for international loans. The International
Lending Supervision Act of 1983 (ILSA) [12 U.S.C. 3901] requires federal
agencies to issue regulations regarding the accounting for fees charged by
banks in connection with international loans. The U.S. Department of the
Treasury, Office of the Comptroller of the Currency, has revised the
regulations regarding international lending [12 C.F.R. Part 28]. In particular,
the amendment takes out the lengthy discussion of accounting for fees and
provides that such accounting for fees must conform to generally accepted
accounting principles (GAAP). The effective date is January 1, 1999. Citation:
63 Federal Register 57047 (October 26, 1998).
- U.S.
President's Executive Order is basis for USTR initiative to combat
international software piracy. U.S. President Clinton has issued Executive
Order 13103 in an effort to control software piracy. It specifically directs
executive agencies to ensure that they use only properly licensed software. The
U.S. Trade Representative (USTR) is taking this Executive Order as the basis
for a new initiative to combat international piracy of software. Over the next
twelve months, the USTR will work with foreign governments to aid them in
obeying modern intellectual property laws and in observing software licenses
in their government procurement. Citation: Executive Order 13103 of September
30, 1998, published
in
63 Federal Register 53273 (October 5, 1998). [See also U.S. Trade Representative
press release 98-88 (October 1, 1998)].
