Chad Bown: “Will the Proposed US Border Tax Provoke WTO Retaliation from Trading Partners?”

trump mexico wto
March 2017
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.
Veja aqui o resto do excelente artigo de 10 páginas de Chad Bown no Peterson Institute for
International Economics PB17-11

Tania Voon: “Consolidating International Investment Law: The Mega-Regionals as a Pathway Towards Multilateral Rules Forthcoming World Trade Review (2017)”

mega-regional agreements

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:

Imagine inclusive trade

Published on Sept 27, 2016

SMEs are playing a greater role in international trade. Today’s world is dominated by digital innovation. Women still face constraints preventing them from reaping the benefits of trade.
The WTO Public Forum 2016 asks how trade can become truly inclusive, allowing small and medium enterprises; innovative businesses and women take full advantage of its potential.

World Trade Organization

World Trade Report 2016

Published on Oct 04, 2016

Reduced trade barriers, improved transportation links, information technology and the emergence of global value chains give small and medium-sized enterprises (SMEs) the potential to become successful global traders, according to the WTO’s flagship report. It was launched during the WTO Public Forum.

Download the report for free:…

World Trade Organization

DG Azevêdo kick-starts discussion on post-Nairobi work

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Director-General Roberto Azevêdo convened a meeting of all WTO members today (10 February) to discuss the future work of the organization. It was the first meeting of the full membership since the WTO’s Ministerial Conference in Nairobi.

The Director-General said:

Nairobi was the second consecutive WTO Ministerial Conference where we delivered important outcomes. We are establishing a strong record of delivery and should build on this success. In Nairobi Ministers gave us some specific guidance on our future work. They asked us to find ways to advance negotiations and so this is an urgent priority for the organization.

“In all of the exchanges I have had so far this year, I have been struck by the sense of optimism about the WTO. There is a clear desire to deliver more. It is important that we have a rich dialogue over the coming months about how we can move forward — and in doing so we must hear the views of all.

“I think members need to acknowledge their differences. The fact is that members don’t see eye-to-eye on some issues — and this is not likely to change in the short term. Faced with this situation, the worst thing we could do would be to allow these differences to seize-up WTO negotiations — and push activity towards other forums. We can’t allow multilateral cooperation to suffer, especially at a time when the world needs our contribution to help improve people’s lives and prospects around the world — particularly for the poorest.

“In my view, we need to accept the reality of the situation. We need to figure out how to work together — despite members’ different perspectives — for the benefit of all. We need to figure out how we can keep delivering for jobs, growth and development — to make as full a contribution as we can.”

Many delegations took the floor during the meeting, with many welcoming the results of the Nairobi Ministerial Conference, stressing the importance of implementing those outcomes, and expressing their willingness to engage in discussions on how to advance negotiations. The Director-General and some members also stressed that the preparatory process for Ministerial Conferences can be improved in order to maintain transparency and inclusivity throughout the process.

Fonte: OMC

Azevêdo welcomes optimism on the WTO in Davos

MDG : WTO candidates for the director general  : Roberto Carvalho de Azevedo


Attending the World Economic Forum in Davos, WTO Director-General Roberto Azevêdo welcomed the positive mood about the WTO’s work following the successful conclusion to negotiations at the Nairobi Ministerial Conference in December. “People are optimistic about the WTO, and excited to work more closely with the organization. This was clear throughout my exchanges with governments and businesses in Davos,” said the Director-General.

The Director-General took part in World Economic Forum sessions on the “Future of International Trade and Investment” and the “Future of Global Trade”, and held a series of meetings with private sector representatives, ministers and other high-level political leaders. He also attended an informal ministerial gathering on WTO issues hosted by the Swiss government on 23 January.

Speaking at this ministerial gathering, the Director-General said the success in Nairobi had confirmed that “the WTO is back on the map”. Building on the success of the previous Ministerial Conference in Bali, he said that these results would “provide a real boost to growth and development around the world — which is particularly vital given the continuing economic uncertainties”. He stressed that the organization should implement the outcomes agreed in Bali and Nairobi, and that WTO members should aim to continue delivering further concrete outcomes.

At the conclusion of this meeting, which was attended by over 20 ministers from a range of developed and developing countries, he noted the constructive and positive tone of the discussion which could potentially help to inform discussions among the full WTO membership in Geneva. The Director-General said:

“It is very welcome that members are already talking about how we can keep delivering in the future and I think that some important commonalities emerged from today’s conversation. First, there is an openness to talk about the pending issues of the DDA and other issues that members want to discuss — without prejudice to what the outcomes might be. We will need to see openness and flexibility on both substance and process if we are to make further progress.

“Second, this conversation must be inclusive. All members should have the opportunity to shape the debate. In addition, the private sector is very keen to get engaged. This is very welcome but again it should be inclusive — we should seek to hear from businesses of all sizes from both developed and developing countries, as well as from other areas of civil society.

“Third, I was pleased to hear from many ministers that they are ready to be more involved in discussions from this point on. Clearly, ensuring that the Geneva process has more frequent political guidance would be very constructive.

“Flexibility, openness, inclusiveness and political engagement will be key ingredients for success. I am very pleased that members are already engaging in a very positive way — and I look forward to continuing this conversation in Geneva.”

Fonte: WTO

Draft decision agreed on “non-violation” cases in intellectual property

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WTO members meeting as the TRIPS (trade-related aspects of intellectual property rights) Council agreed on 23 November on a draft ministerial decision on so-called non-violation disputes in the area of intellectual property. The decision is expected to be adopted at the Nairobi Ministerial Conference in December.

Under the draft decision, the TRIPS Council would be asked to continue its discussions on whether non-violation disputes should apply to intellectual property, and to make recommendations to the next Ministerial Conference to be held in 2017. In the meantime, WTO members would refrain from bringing such cases to the dispute settlement system.

WTO agreements allow members to bring cases against each other if they feel that another government’s action or a specific situation has deprived it of an expected benefit, even if no agreement has been violated.

But opinions differ among WTO members on whether such non-violation cases are feasible or desirable in intellectual property. The United States and Switzerland continue to argue that there is a place for non-violation complaints in TRIPS while most other members disagree. The TRIPS Agreement contains a temporary restraint (a “moratorium”) on bringing non-violation complaints to the WTO’s dispute settlement system. This has been extended several times recently, from one Ministerial Conference to the next.

The TRIPS Council has now proposed that ministers agree to a further extension of the moratorium until the Eleventh Ministerial Conference in 2017. During this period, discussions on the applicability of these types of disputes to the TRIPS Agreement should continue. A number of members emphasized that discussions on a permanent solution to this question should begin immediately after the Nairobi Ministerial Conference.

The draft decision on “TRIPS non-violation and situation complaints” for the Ministerial Conference says:

“We take note of the work done by the Council for Trade-Related Aspects of Intellectual Property Rights pursuant to our Decision of 7 December 2013 on “TRIPS Non-Violation and Situation Complaints” (WT/L/906), and direct it to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to our next Session, which we have decided to hold in 2017. It is agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement.”

Chairperson: Mr Abdul-Aziz Al Otaibi, Ambassador of the Kingdom of Saudi Arabia

Fonte: OMC