Chad P. Bown is senior fellow at the Peterson Institute for International Economics.
President Donald Trump and his Republican allies in Congress are proposing major reforms to the US corporate tax system that would slash the corporate income tax rate and replace lost revenues with a new destination-based cash flow tax (DBCFT). The new tax would include a border tax adjustment that would subject US imports to the tax and exempt US exports. A third and critical element of the plan is a provision allowing US producers to deduct domestic wage costs in a manner not available to foreign companies. A major economic concern with the border tax adjustment blueprint, which House Speaker Paul Ryan and House Ways and Means Committee Chair Kevin Brady support, is its potential to reduce US imports and promote US exports in a way that could violate international trade rules. Because of the size of the US economy, the trade distortions resulting from the tax would punish US trading partners, putting pressure on them to retaliate immediately. World Trade Organization (WTO) rules establish a framework for understanding how the policy response of trading partners to a US tax reform would proceed. The potential retaliatory costs to US exporters associated with elements of the Ryan-Brady blueprint could be large. If the reform is found to violate WTO rules by restricting US imports, trading partners could be authorized to retaliate by an estimated $220 billion annually. If the new US tax is found to implicitly subsidize exports, partners could be authorized to retaliate by an additional $165 billion annually. The United States would face some of the combined $385 billion in retaliation almost immediately upon implementing the tax, through the imposition of countervailing duties (CVDs) by trading partners. Whereas a country like the United States might typically have four or more years before facing the prospect of WTO-related retaliation in other cases, the scenario here may be very different.
The expected costs of US failure to consider its WTO obligations are so large that policymakers must take them into account as they draft the tax reform. If they do not, trading partner recourse to WTO-sanctioned trade retaliation may quickly create the need for additional US efforts to re-reform the tax code. The uncertainty created could counteract many of the otherwise positive anticipated effects of tax reform for economic growth. Most of these costs are likely avoidable if US policymakers address them at the design stage of tax reform and engage with key trading partners. Strong legal and economic arguments can probably be made that a DBCFT with a (nondiscriminatory) border tax adjustment is WTOconsistent. If, however, US policymakers are unwilling to address international concerns before legislating changes, independent “scoring” efforts should take into account the expected costs to the US economy of authorizable trading partner retaliation.
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International Economics PB17-11
Pessimism abounds in international economic law. The World Trade Organization (‘WTO’) faces an uncertain future following its Ministerial Conference in Nairobi in 2015. International investment law is under attack in countries around the world, while mega-regional agreements such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership are beset by world events, from the United States’ federal election to the unexpected Brexit outcome. Yet the appetite of numerous States to continue forging plurilateral trade and investment deals provides some cause for hope. Viewed alongside other institutional developments including consensus-building work at the United Nations Conference on Trade and Development and the United Nations Commission on International Trade Law, the potential arguably now exists for credible movement towards multilateral rules in investment law. While the WTO’s current negotiating stalemate highlights the difficulties in reaching agreement among 164 Members, international trade law offers lessons for working towards multilateralism in the international investment law field. Alongside informal discussions about a world investment court, mega-regionals provide a vehicle for future multilateral investment rules, particularly through the Comprehensive Economic and Trade Agreement between Canada and the European Union, and the Regional Comprehensive Economic Partnership currently under negotiation in Asia.
Keywords: international investment law, international trade law, international economic law, World Trade Organization, multilateralism, regionalism
Tania S.L. Voon
University of Melbourne – Melbourne Law School
Date Written: March 4, 2017
Voon, Tania S.L., Consolidating International Investment Law: The Mega-Regionals as a Pathway Towards Multilateral Rules (March 4, 2017). Forthcoming World Trade Review (2017).
30 Pages Posted: 8 Mar 2017, Available at SSRN: https://ssrn.com/abstract=2929145
Published on Sept 13, 2016
Roberto Azevêdo, Diretor-Geral da Organização Mundial do Comércio (OMC), compartilha um pouco de sua experiência como negociador internacional.
Diplomata brasileiro e engenheiro elétrico de formação, ele é o primeiro latino-americano a chefiar a OMC.
Desde que assumiu o cargo, em setembro de 2013, a organização fechou acordos importantes, como o Acordo de Facilitação do Comércio e a eliminação dos subsídios às exportações agrícolas.
World Trade Organization
5 April 2016
On 4 April, Brazil requested consultations with Indonesia and with Thailand under the WTO’s dispute settlement system. One case concerns Indonesia’s measures applied to bovine meat imported from Brazil; the other case concerns subsidies allegedly provided by Thailand to its sugar sector.
Publicado originalmente em: 29/03/2016
Brasília – DF, 25/03/2016. Presidenta Dilma Rousseff durante audiência concedida ao Embaixador Roberto Azevêdo, Diretor-Geral da Organização Mundial do Comércio-OMC. Foto: Roberto Stuckert Filho/PR
Em cerimônia realizada hoje, 29 de março, no Palácio do Planalto, a Presidenta Dilma Rousseff assinou a carta de ratificação, pelo Brasil, do Acordo de Facilitação do Comércio da Organização Mundial do Comércio (OMC). A assinatura fez-se na presença do Diretor-Geral da OMC, Embaixador Roberto Azevêdo, que realiza esta semana visita ao País.
O Brasil será o 72º país a ratificar o Acordo, o qual entrará em vigor após a entrega à OMC das cartas de ratificação de dois terços – 108 – dos 162 Membros da Organização.
O Acordo de Facilitação do Comércio, negociado com ativa participação do Brasil na IX Conferência Ministerial da OMC, em Bali, Indonésia, em dezembro de 2013, prevê a simplificação e a agilização dos trâmites para o comércio de bens entre os Membros, além de medidas de reforço de transparência, cooperação entre autoridades aduaneiras e assistência técnica para países em desenvolvimento.