The Significance of Trade Dispute - Essay Example

? Trade Dispute Introduction It is difficult to over the significance of this trade conflict between the globe's two largest national economies, which together account for about one-third of total world production. Japan depends on U.S. markets to accept about 30 percent of its exports and on American products, which constitute nearly 25 percent of its imports. (Davey, 51) Japan's notoriously inefficient retailing system suppresses imports. Most retailers are small shopkeepers who must rely upon an extensive network of wholesalers to supply the goods they sell. However, these wholesalers are usually affiliated with manufacturers, who can legally prohibit retailers from selling the products of competitors. Furthermore, because retailing licenses are required and existing merchants can block the granting of new ones, it is difficult to establish large chain stores that would be less reliant upon existing wholesalers and more prices competitive. The system was criticized because the GATT consensus decision-making rules meant that a party could prevent the dispute settlement process from starting and, even if the process was allowed to go forward, a losing party could prevent formal adoption of a decision against it (and losing parties did so more frequently over time). (Robert, 89) Without adoption, the report remained in limbo; it expressed the view of three experts but had no status in GATT. Thus, the dispute remained unresolved. As a result, there was a perception that the GATT system was not adequate. (Busch, and Reinhardt, 163) Moreover, it was believed that cases that should have been resolved in the system were never even brought to it because of this perceived shortcoming. In the Uruguay Round trade negotiations, the United States in particular wanted to improve and strengthen the dispute settlement system. Traditionally, the United States had supported a more judicial-like system in GATT, whereas major powers such as the European Communities and Japan preferred a system that stressed the negotiated settlement of disputes. (Davey, 51) Copyright or Patent Dispute in Trade When a company files for a patent, they file for a right to own that product or idea thus excluding anyone else from marketing it as his or her own or producing the same product. In other words, it gives the owner exclusive rights to the idea or product. A patent is filed with the U.S. Patent and Trademark Office in Washington D.C. Patents is considered intellectual property rights and is protected by state and federal laws. If the patent is granted, it is usually granted for a period of time, making the product fair game after the period ends. The Federal Patent Statute of 1952, which was enacted by Congress, is “intended to provide an incentive for inventors to invent and make their inventions public and to protect patented inventions from infringement” (Cheeseman, 323). As with all cases, the loser can appeal the case. In the case of Vonage, if they were to appeal this case, they would do so through the U.S. Court of Appeals. In the patent infringement case of Vonage versus Sprint, a jury trial was held in the Kansas City, Kansas U.S. District Court, the city of Sprint’s headquarters. Federal courts are the ones that hear patent cases, not state courts. These courts also have exclusive jurisdiction. Exclusive jurisdiction occurs when only one court holds jurisdiction in the case, in this case it was Kansas City. The Vonage case was considered a civil trial, not a criminal trial because it occurred between two businesses and was not between a business and the government. If the case had been filed by the government, it would have been a criminal case. (Robert, 22) There are many differences between civil and criminal cases. In both cases, civil and criminal, a jury decides the verdict, however with a civil case; the jury does not need to reach a unanimous vote as it does with a criminal trial. With a civil trial the “judgment for plaintiff requires specific jury vote” which is only a majority of the jurors and not all of them (Cheeseman, 124). As far as proving a case, a criminal in a criminal trial is convicted “beyond a reasonable doubt,” as the old saying goes since jail time is involved. For a civil trial, there simply just must be enough evidence to support the claims. Once the jury has given the verdict, the court process stops there in Federal Court. The company can however; file an appeal which would take the case to Appellate Court and the process would begin all over again. Instead of filing for an appeal, which Vonage was considering, they decided it would be more beneficial to enter into an agreement with Sprint under their VOP (Voice over Packet). Vonage also lost a similar battle with Verizon earlier this year and is hopeful that they can reach a similar agreement with them as well to avoid any further lawsuits and keep the company out of court. Perhaps the use of Alternative Dispute Resolution could have been used in order to avoid court but for now, Vonage continues to pull themselves out of debt and work out contract negotiations with Sprint in the hopes of doing the same with Verizon. Distributional Trade Issues In the United States, the distributional dilemma of trade has been raised by industry groups ranging from corn growers to steel producers, triggering protectionist actions under American anti-dumping statutes that other countries see as violations of free trade. Even more significant are issues in which the distributional dilemma is intertwined with value trade-offs and sovereignty concerns, each of which is judged differently by groups around the world. In past, in Seattle, the largest demonstrations were by U.S. labor organizations, which succeeded in pressuring President Clinton to endorse proposals that would include highly controversial provisions for labor standards in future WTO agreements. Previously, the preparatory committee had considered various proposals under a so-called social clause that would exempt from WTO benefits any exports produced by slave labor, child labor, workers prohibited from organizing and bargaining collectively through labor unions, or those denied a minimum wage or health and safety protection. (David and Petros, 133) Such proposals are unlikely to be accepted, however, because they seek agreement where none is possible: Not all nations share the values implied by these provisions, which would also affect different groups very differently. Human rights groups strongly support labor standards on value grounds. U.S. labor unions agree, not only standing in solidarity with workers facing exploitative conditions abroad, but also seeing their material interests threatened by imports produced cheaply because of lax labor standards. Multinational corporations oppose such restrictions, which would increase their labor costs, and many Third World governments line up with them, noting that cheap labor is the source of their comparative advantage. They accuse developed countries of hypocrisy in blocking trade based on cheap labor while advocating free trade for products using rich countries' comparative advantage in technology. (Reinhardt, 181) Poor countries see these proposals as self-interested protectionism, cultural imperialism, and violations of national sovereignty under the guise of humanitarianism. Trade inevitably poses such dilemmas. It is easy to see that some individuals, groups, and nations will differ with others on how to resolve them. The policy choices by nations concerning the institutions that embody these options reflect different theories and values, different power distributions, and different estimates of the effects of markets. Trust in trade-liberalizing institutions is likely to be greatest in those nations and among those groups with the greatest power to dominate them. As always, support for liberalization is the greatest in nations with the most productive industries, and with the highest weighting of trade benefits among its value priorities. Opposition is more likely from weaker states, from economies with more threatened industries, and from societies with a greater commitment to values other than aggregate growth. Conclusion It has been said that the Precautionary Principle is a statement of commonsense and it certainly has utility in balancing the competing concerns of economic development against limited environmental resources. The economics of globalization continue to place ever-increasing demands on resources while increasing the efficiency of their use. This essential paradox, together with well-organized opposition to trade liberalization from the environment lobby, has informed the search for balance between trade and environment policy. Furthermore, the precautionary principle has now entered the jurisprudence of the WTO's Dispute Settlement Body. It is no longer a remote concept exclusively located in the environmental law sphere. When two systems of law come into conflict, actually or potentially, there are three potential methods of dealing with the situation: • create some superior balancing mechanism; • determine that one legal system is superior to another, either wholly or in part; • modify either or both legal systems to bring them into harmony. The first option, the creation of a balancing mechanism, would be the most desirable solution in a perfect world. This is in effect the system that operates inside the European Union, where trade liberalization and environmental protection are both objectives of the Treaty of Rome. Any conflict between the two objectives can be resolved by the European Court of Justice, which has the power to rule on the appropriate balance between trade and environmental measures in any particular case. The creation of an equivalent system at a global level would require substantial reform of the entire system of international institutions, however, and is not a realistic prospect in the short term. The validity of trade measures in MEAs could be challenged under the WTO, and a WTO dispute panel would then rule on their compatibility with the MTS. Although panels have become steadily more aware of and more open to environmental arguments, they are nevertheless composed of international trade experts who reach decisions in accordance with a body of international trade law. Works Cited Busch, M.L. and E. Reinhardt : Bargaining in the shadow of the law : early settlement in GATT/WTO disputes. Fordham Int’l L.J., 24 (2000/2001), p. 158-172 Cheeseman, H. R. (2004). Business law: Legal, e-commerce, ethical and international environments (5th ed.). Upper Saddle River, NJ: Prentice-Hall. Davey, William J. “Dispute Settlement in GATT,” Fordham Journal of International Law 11(1), 1987, 51. David Palmeter and Petros C. Mavroidis, Dispute Settlement in the World Trade Organization: Practice and Procedure, The Hague: Kluwer Law International, 1999. Reinhardt, E.: Adjudication without enforcement in GATT disputes. Journal of Conflict Resolution, 45 (2001), p. 174-195 Robert E. Hudec, Enforcing International Trade Law, Salem, NH: Butterworth Legal Publishers, 1993. Read More