BUSINESS LAWBUSINESS LAWCOURSECOURSE

SEMESTER I ACADEMIC YEAR 2010/2011SEMESTER I ACADEMIC YEAR 2010/2011

INSTRUCTOR : INSTRUCTOR : TRIYANA YOHANES, SH.,MHUMTRIYANA YOHANES, SH.,MHUMECONOMIC FACULTY OF UAJYECONOMIC FACULTY OF UAJY

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DEFINITION OF BUSINESS LAWDEFINITION OF BUSINESS LAW

1. BUSINESS LAW is the general field of law relating to business organizations, business structures and business transaction

2. BUSINESS LAW encompasses the law governing contracts, sales, commercial paper, agency and employment laws, business organizations, property and bailments

3. BUSINESS LAW = COMMERCIAL LAW is the body of law that governs business and commercial transactions. It is often considered to be branch of civil law and deal with issues of both private and public law

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Bussines Law = Economic LawBussines Law = Economic Law

Economic Law comprises :

International Economic Law National/domestic Economic Law

such as Indonesian Economic law

DEFINITION OF INTERNATIONAL DEFINITION OF INTERNATIONAL ECONOMIC LAWECONOMIC LAW

JOHN H. JACKSON : JOHN H. JACKSON : International Economic Law could be difined as International Economic Law could be difined as including all legal subjects which have both an including all legal subjects which have both an international and an economic component. international and an economic component.

INTERNATIONAL ECONOMIC LAW COMPRISES :INTERNATIONAL ECONOMIC LAW COMPRISES :- INTERNATIONAL PUBLIC LAW AND - INTERNATIONAL PUBLIC LAW AND - INTERNATIONAL PRIVATE LAW- INTERNATIONAL PRIVATE LAWIN THE FIELD OF ECONOMIC RELATIONS.IN THE FIELD OF ECONOMIC RELATIONS.

Others Definition of IELOthers Definition of IELLouis HenkinLouis HenkinInternational Economic Law could be defined as all of International Economic Law could be defined as all of the international law and international agreements the international law and international agreements governing economic transactions that cross state governing economic transactions that cross state boundaries or otherwise have implications for more boundaries or otherwise have implications for more than one state, such as those involving movements of than one state, such as those involving movements of goods, funds, persons, intangibles technology, vessels goods, funds, persons, intangibles technology, vessels or aircraft.or aircraft.

VERLOREN VAN THEMAATVERLOREN VAN THEMAAT : :International Economic Law can be described in overall International Economic Law can be described in overall terms as the total range of norms (directly or inderectly terms as the total range of norms (directly or inderectly based on treaties) of public international law with based on treaties) of public international law with regard to transnational economic relations. regard to transnational economic relations.

The History of International The History of International Economic LawEconomic Law

VERLOREN VAN THEMAAT :VERLOREN VAN THEMAAT : Internasional Economic Law has developed since the Internasional Economic Law has developed since the twelfth century.twelfth century.

Treaty between the United Kingdom and Burgundy of Treaty between the United Kingdom and Burgundy of 17 August 1417 contained some basic principles of 17 August 1417 contained some basic principles of international trade such as The Most-Favoured-Nation international trade such as The Most-Favoured-Nation (MFN) principle. (MFN) principle. Others princiles were adopted in international trade Others princiles were adopted in international trade in that era were in that era were recyprocityrecyprocity, , cabotage dan freedom of cabotage dan freedom of navigation. navigation.

JG. STARKE :JG. STARKE :

The Development of regulation governing international The Development of regulation governing international economic relations indicate that a new branch of economic relations indicate that a new branch of International law has emerged, that is, International International law has emerged, that is, International Economic Law.Economic Law.

The examples of the instruments of law governing The examples of the instruments of law governing those economic relations :those economic relations :- Agreement on the World Bank, IMF & GATTAgreement on the World Bank, IMF & GATT- Treaty on European UnionsTreaty on European Unions- ICSID ConventionICSID Convention- UN GA Resolutions of 1974 on the Establishment of UN GA Resolutions of 1974 on the Establishment of

the New International Economic Orderthe New International Economic Order

International Economic Law as International Economic Law as body of rules andbody of rules and

as branch of International Law as branch of International Law

As a body of rules has emerged/developed As a body of rules has emerged/developed since twelfth century (before the World War since twelfth century (before the World War II)II)

As a branch of International International As a branch of International International Law, International Economic Law was Law, International Economic Law was recognized after the World War II.recognized after the World War II.

SUBJECTS OF THE INTERNATIONALSUBJECTS OF THE INTERNATIONAL ECONOMIC LAW ECONOMIC LAW

1.1. States (the main subject)States (the main subject)

2.2. International Economic Organizations (IBRD, International Economic Organizations (IBRD, IMF, WTO, ECOSOC, dll)IMF, WTO, ECOSOC, dll)

3.3. Private companies (TNC)Private companies (TNC)

THE MATERIAL ‘SOURCES’ OF THE MATERIAL ‘SOURCES’ OF INTERNATIONAL ECONOMIC LAWINTERNATIONAL ECONOMIC LAW

(Actual materials from which an (Actual materials from which an international lawyer determines the rule international lawyer determines the rule

applicable to a given situation)applicable to a given situation) These materials fall into five principal categories of These materials fall into five principal categories of forms : forms : 1.1. Custom Custom 2.2. TreatiesTreaties3.3. Decisions of judicial or arbitral tribunalDecisions of judicial or arbitral tribunal4.4. Juristic WorksJuristic Works5.5. Decisions or determinations of the organs of Decisions or determinations of the organs of

international institutions.international institutions.In the field of international relations.In the field of international relations.

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The Regulation of International Economic The Regulation of International Economic Relations Before the World War IIARelations Before the World War IIA

Influenced by the economic theory, which prevailed in those era, such as :– Mercantilism– The 19th Century liberalism– The protectionism in the early of the 20th

Century

The Regulation of International The Regulation of International Economic Relations Before the World Economic Relations Before the World

War IIAWar IIAMercantilism (1500 – 1850)Mercantilism (1500 – 1850) The theory and system of political economy The theory and system of political economy

prevailing in Europe after the decline of prevailing in Europe after the decline of feudalism, based on national policies of feudalism, based on national policies of accumulating bullion, establishing colonies and accumulating bullion, establishing colonies and merchant marine, and developing industry and merchant marine, and developing industry and mining to attain a favorable balance of trade.mining to attain a favorable balance of trade.

Protectionsm policies were applied by States in Protectionsm policies were applied by States in their international trade policies for the purpose their international trade policies for the purpose to protect local/domestic industries. to protect local/domestic industries.

The Regulation of International The Regulation of International Economic Relations Before the World Economic Relations Before the World

War IIAWar IIALiberalism by the 19Liberalism by the 19thth Century Century Influenced by the Adam Smith’s theory of Influenced by the Adam Smith’s theory of

liberalism economic theoryliberalism economic theory Also known as classical liberalism Also known as classical liberalism Maximum role of market and competitive forces in Maximum role of market and competitive forces in

economyeconomy To supports and promotes laissez-faire To supports and promotes laissez-faire

economomics and private property in the means of economomics and private property in the means of productsproducts

The State’s role is limited in the economics The State’s role is limited in the economics activities activities

No barriers to the international trade No barriers to the international trade

The Regulation of International The Regulation of International Economic Relations Before the World Economic Relations Before the World

War IIAWar IIAProtectionism by the 20Protectionism by the 20thth Century Century In the early of the 20In the early of the 20thth Century, for the purpose of Century, for the purpose of

protecting their national/domestic economics, most protecting their national/domestic economics, most States in the World applyed protective policy in States in the World applyed protective policy in their international tradetheir international trade

There were plenty of trade barriers to international There were plenty of trade barriers to international trade, which caused international economics trade, which caused international economics relations hampered relations hampered

Before and during the World War II there were no Before and during the World War II there were no international economic cooperationsinternational economic cooperations

The World greatest economic depression The World greatest economic depression happened happened

Regulation of the International Economic Regulation of the International Economic

Realations after the World War IIRealations after the World War II In the end of the World War II, some big Countries (Allies In the end of the World War II, some big Countries (Allies

States), Such as the US, Canada, the USSR, the UK, etc, States), Such as the US, Canada, the USSR, the UK, etc, held an international Diplomatic Conference in Bretton held an international Diplomatic Conference in Bretton Woods, NH, USA, for the purpose of overcoming the World Woods, NH, USA, for the purpose of overcoming the World Economics depression.Economics depression.

The Result of the International Conference were The Result of the International Conference were establishment of the International Bank for Reconstruction establishment of the International Bank for Reconstruction and Development (the World Bank) and the International and Development (the World Bank) and the International Monetary FundMonetary Fund

Later, together with the Later, together with the General Agreement on Tariffs and General Agreement on Tariffs and Trade, 1947Trade, 1947, the World Bank and & , the World Bank and & IMF, establised the IMF, establised the Bretton Woods Economic Institutions.Bretton Woods Economic Institutions.

The purposes :The purposes :1.1. Raising the World’s Economic prosperity,Raising the World’s Economic prosperity,2.2. Creating Stabilization of the Internasional Monetary system,Creating Stabilization of the Internasional Monetary system,3.3. Liberalization of the international tradeLiberalization of the international trade

The International Bank for Reconstruction and The International Bank for Reconstruction and Development (World Bank)Development (World Bank)

Established in 1944, based on Articels of Agreement Established in 1944, based on Articels of Agreement

of the IBRD, entried into force at December, of the IBRD, entried into force at December, 27th,1945.27th,1945.

Together with the International Development Agency Together with the International Development Agency and The International Finance Corporation and The International Finance Corporation established the World Bank Groups.established the World Bank Groups.

Is subsidiary organ of the United NationsIs subsidiary organ of the United Nations Membership : States members of the IMF are the Membership : States members of the IMF are the

members of the World Bank members of the World Bank Headquarters : Washington DC Headquarters : Washington DC

The World BankThe World Bank

Tujuan Bank Dunia (Pasal 1 Articles of Agreement):Tujuan Bank Dunia (Pasal 1 Articles of Agreement): 1.1. Membantu pembangunan negara anggotaMembantu pembangunan negara anggota2.2. Memajukan penanaman modal asingMemajukan penanaman modal asing3.3. Memberi pinjaman keuangan utk tujuan produktifMemberi pinjaman keuangan utk tujuan produktif4.4. Memajukan perdagangan internasional dan Memajukan perdagangan internasional dan

memelihara neraca pembayaranmemelihara neraca pembayaran5.5. Mengelola pinjaman utk proyek mendesak & Mengelola pinjaman utk proyek mendesak &

bermanfaatbermanfaat6.6. Melakukan kegiatan lain dgn memperhatikan Melakukan kegiatan lain dgn memperhatikan

akibat-akibat penanaman modal internasional pada akibat-akibat penanaman modal internasional pada kondisi bisnis di negara-negara anggota.kondisi bisnis di negara-negara anggota.

Sekarang Sekarang : memberi pinjaman untuk membiayai : memberi pinjaman untuk membiayai pembangunan Negara-Negara sedang berkembang pembangunan Negara-Negara sedang berkembang di bidang pendidikan, pertanian dan industri di bidang pendidikan, pertanian dan industri

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The World Bank The World Bank Article I of the Articles of Agreement of the World BankThe purposes of the Bank are:(i) To assist in the reconstruction and development of territories

of members by facilitating the investment of capital for productive purposes, including the restoration of economies destroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encouragement of the development of productive facilities and resources in less developed countries.

(ii) To promote private foreign investment by means of guarantees or participations in loans and other investments made by private investors; and when private capital is not available on reasonable terms, to supplement private investment by providing, on suitable conditions, finance for productive purposes out of its own capital, funds raised by it and its other resources.

(iii) ………

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The World BankThe World Bank The purposes of the Bank are:(iii) To promote the long-range balanced growth of international

trade and the maintenance of equilibrium in balances of payments by encouraging international investment for the development of the productive resources of members, thereby assisting in raising productivity, the standard of living and conditions of labor in their territories.

(iv) To arrange the loans made or guaranteed by it in relation to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first.

(v) To conduct its operations with due regard to the effect of international investment on business conditions in the territories of members and, in the immediate postwar years, to assist in bringing about a smooth transition from a wartime to a peacetime economy.

The Bank shall be guided in all its decisions by the purposes set forth above

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THE INTERNATIONAL THE INTERNATIONAL MONETARY FUNDMONETARY FUND

• Established in 1944 together with the World Bank

• Membership : is open to all states which accept the obligations of the Fund, are able and willing to carry out these obligations.

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1. To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems

2. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.

3. To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.

4. ……

Articles of Agreement of the International Monetary Fund Article I - PurposesThe purposes of the International Monetary Fund are:

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4. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.

5. To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.

6. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.

Articles of Agreement of the International Monetary Fund Article I - PurposesThe purposes of the International Monetary Fund are:

The Fund shall be guided in all its policies and decisions by the purposes set forth in this Article.

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The Resources of the IMF The Resources of the IMF

The resources of the IMF are derived from the subscriptions (quotas) that are members are required to pay, and

To lesser degree from its borrowings

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The SDRs of the IMF The SDRs of the IMF

• Special Drawing Rights (SDRs) is an international reserve asset created by IMF and allocated to its members to supplement existing reserve assets.

• The SDRs is also the unit account of the IMF.• The value of the unit (SDRs) is determined daily

on the basis of a basket of five currencies – the US dollar, the Deutsche mark, the Frech franc, the Japanese yen and the pound sterling.

FINANCIAL ASSITANCE PROVIDED BY THE IMF FINANCIAL ASSITANCE PROVIDED BY THE IMF

One principal functions of the IMF is to provide One principal functions of the IMF is to provide reserves to countries with liquidity or balance of reserves to countries with liquidity or balance of payments problem. payments problem.

Members may draw on its financial resources under its Members may draw on its financial resources under its “trances” policies, the Extended Fund Facility or other “trances” policies, the Extended Fund Facility or other special facilities to meet their balance of payments special facilities to meet their balance of payments needs.needs.

TRANCES POLICIES OF THE IMFTRANCES POLICIES OF THE IMF

A Members having balance of payments difficulties A Members having balance of payments difficulties may avail itself of the credit tranche policies.may avail itself of the credit tranche policies.

Credit is made available in four tranches, each Credit is made available in four tranches, each equivalent to 25% of a member’s quota.equivalent to 25% of a member’s quota.

Particularly after the first tranche, these borrowings Particularly after the first tranche, these borrowings are made pursuant to a stand-by or extended are made pursuant to a stand-by or extended arrangement negotiated between the IMF and the arrangement negotiated between the IMF and the member. member.

may draw on its financial resources under its “trances” may draw on its financial resources under its “trances” policies, the Extended Fund Facility or other special policies, the Extended Fund Facility or other special facilities to meet their balance of payments needs.facilities to meet their balance of payments needs.

The availability of these loans depend on the wether The availability of these loans depend on the wether the member meets certain performance criteria. the member meets certain performance criteria.

Repayment is normally expected in 3 to 5 yearsRepayment is normally expected in 3 to 5 years

THE IMF THE IMF Extended Fund FacilitiesExtended Fund Facilities

The IMF provides loans under the so-called The IMF provides loans under the so-called Extended Fund FacilityExtended Fund Facility

The facility is designed to provide assistance to The facility is designed to provide assistance to members to meet balance of payments needs members to meet balance of payments needs for longer period (4 to 10 years) and a larger for longer period (4 to 10 years) and a larger amount thans than under its credit tranced amount thans than under its credit tranced policies. policies.

Conditionality Doctrine of the IMFConditionality Doctrine of the IMF Members should be encouraged to adopt corrective Members should be encouraged to adopt corrective

measures, which could be supported by use of the measures, which could be supported by use of the Fund’s general resources in accordance with the Fund’s general resources in accordance with the Fund’s policies, at an early stage of their balance of Fund’s policies, at an early stage of their balance of payments difficulties or as a precaution against the payments difficulties or as a precaution against the emegence of such difficulties.emegence of such difficulties.

The Article IV consultations are among the The Article IV consultations are among the occasions on which the Fund would able to discuss occasions on which the Fund would able to discuss with members adjusment programs, including with members adjusment programs, including corrective measures, that would enable the Fund to corrective measures, that would enable the Fund to approve a stand-by arrangement (approve a stand-by arrangement (Letter of Intent).Letter of Intent).

Conditionality doctrine of the IMFConditionality doctrine of the IMF

- Requirements/Adjustments were made by the - Requirements/Adjustments were made by the borrowing state and appoved by the IMFborrowing state and appoved by the IMF

- Not intended to make interventions to the - Not intended to make interventions to the ekonomic, political, social system of the ekonomic, political, social system of the borrowing state member of the IMF.borrowing state member of the IMF.

THE GENERAL AGREEMENT ON TARIFF AND THE GENERAL AGREEMENT ON TARIFF AND TRADE 1947 (GATT 1947)TRADE 1947 (GATT 1947)

Came into force on 1 January 1948 Came into force on 1 January 1948 Was applied under the Protocol of Provisional Was applied under the Protocol of Provisional

Application, 1948.Application, 1948.

Until the year of 1994 GATT 1947 (before the Until the year of 1994 GATT 1947 (before the establishment of the WTO) had role as :establishment of the WTO) had role as :1.1. A body of regulation of the world tradeA body of regulation of the world trade2.2. A International Trade OrganizationA International Trade Organization3.3. World trade negotiation forumWorld trade negotiation forum4.4. Dispute settlement body Dispute settlement body

GATT 1947 promotted the world trade liberalization GATT 1947 promotted the world trade liberalization through reducing/abolishing all of the trade through reducing/abolishing all of the trade barriers, tariff and non-tarrif barriers. barriers, tariff and non-tarrif barriers.

Purposes of the GATT 1947 as stated in the Purposes of the GATT 1947 as stated in the

Preambule of the GATT 1947 :Preambule of the GATT 1947 :

1.1. Raising standards of livingRaising standards of living

2.2. Ensuring full employment and large and Ensuring full employment and large and steadily growing volume of real incomesteadily growing volume of real income

3.3. Developing the full use of the resources of Developing the full use of the resources of the worldthe world

4.4. Expanding the production and exchange of Expanding the production and exchange of goods goods

CRITICISM TO THE GATT 1947 AND THE CRITICISM TO THE GATT 1947 AND THE

BRETTON WOODS SYSTEMBRETTON WOODS SYSTEM Principles of classical of International Economic Principles of classical of International Economic

Law such as Law such as principle of freedomprinciple of freedom, , principle of principle of legal equality in the law of international tradelegal equality in the law of international trade, , principle of reciprocity were applied.principle of reciprocity were applied.

Had caused :Had caused :

- The big gap between Developed Countries and - The big gap between Developed Countries and

Developing Countries in the economic prosperityDeveloping Countries in the economic prosperity

- Dependency of the Developing Countries to - Dependency of the Developing Countries to

Developed Countries in economic relations Developed Countries in economic relations

MODIFICATION OF THE GATT 1947MODIFICATION OF THE GATT 1947

Amendment of the GATT in 1965 by additional of Part Amendment of the GATT in 1965 by additional of Part IV : Articles XXXVI to XXXVIII.IV : Articles XXXVI to XXXVIII.Contains among others :Contains among others : - Realization that majority members of the GATT - Realization that majority members of the GATT

are developing and less-developed countriesare developing and less-developed countries - Commitment of the Developed Countries - Commitment of the Developed Countries

members of the GATT to give assistance to the members of the GATT to give assistance to the developing countries membersdeveloping countries members

- Developing Countries members needs some - Developing Countries members needs some favorable treatments in the international trade favorable treatments in the international trade relations under the GATTrelations under the GATT

THE NEW INTERNATIONAL THE NEW INTERNATIONAL ECONOMIC ORDER (NIEO)ECONOMIC ORDER (NIEO)

The NIEO was an economic order concept The NIEO was an economic order concept proposed by Developing Countries.proposed by Developing Countries.

The Developing Countries want to replace the The Developing Countries want to replace the Bretton Economic System by the NIEO Bretton Economic System by the NIEO

The NIEO Principles were formulated in The NIEO Principles were formulated in the :the : The UN GA Resolution Number 3201 (S-VI), 1 May The UN GA Resolution Number 3201 (S-VI), 1 May

1974 : Res. on Establishment of the NIEO1974 : Res. on Establishment of the NIEO

The UN GA Resolution Number 3281 (XXIX), 12 The UN GA Resolution Number 3281 (XXIX), 12 December 1974 : Res. On the Charter of Economic December 1974 : Res. On the Charter of Economic Rights and Duties of States, Rights and Duties of States,

The UN GA Resolution Number 3202 (S-VI), 1 May The UN GA Resolution Number 3202 (S-VI), 1 May 1979 : Res. On the Programme of Action on the 1979 : Res. On the Programme of Action on the Establishment of the NIEOEstablishment of the NIEO

10 Basic Principles of the NIEO10 Basic Principles of the NIEO

1.1. Obligation among states to make economic Obligation among states to make economic cooperations cooperations

2.2. Developed Countries have obligation to provide Developed Countries have obligation to provide development assistance to the Developing development assistance to the Developing Countries.Countries.

3.3. The right of economic independence of the The right of economic independence of the Developing Countries,Developing Countries,

4.4. Every state has permanent sovereignty over natural Every state has permanent sovereignty over natural resources, economic prosperity and economic resources, economic prosperity and economic activities in it’s territory,activities in it’s territory,

5.5. Favorable special rights of developing countries in Favorable special rights of developing countries in the economic relations,the economic relations,

6. ….6. ….

10 Basic principles of the NIEO10 Basic principles of the NIEO(continued ….)(continued ….)

1.1. Enhancing the developing countries’ participation in Enhancing the developing countries’ participation in the international economic relation, international the international economic relation, international monetary and the World financial sectormonetary and the World financial sector

2.2. Compensation over natural resources of the Compensation over natural resources of the occupied countries during the colonialist period, occupied countries during the colonialist period, which had been exploited by the colonialist countries,which had been exploited by the colonialist countries,

3.3. Cooperation in economics and technologies among Cooperation in economics and technologies among developing countries,developing countries,

4.4. Sustainable DevelopmentSustainable Development5.5. The common heritage of mankind priciples over the The common heritage of mankind priciples over the

international territoryinternational territory

The NIEO Controversy :The NIEO Controversy :

Developed Countries :Developed Countries :

- Denied the NIEO principles - Denied the NIEO principles

- The NIEO is dead- The NIEO is dead

Developing Countries :Developing Countries :

- The NIEO priciples needs a legal binding- The NIEO priciples needs a legal binding

- Long live the NIEO - Long live the NIEO

Some principles of the NIEO has became Some principles of the NIEO has became binding international law, such as binding international law, such as

- - principle of economic sovereignty principle of economic sovereignty

- principle of heritage of mankind- principle of heritage of mankind

- principle of Favorable treatment of the - principle of Favorable treatment of the

Developing Countries in the international Developing Countries in the international

economic relationseconomic relations

TRADE NEGOTIATIONS UNDER TRADE NEGOTIATIONS UNDER THE GATT 1947THE GATT 1947

1.1. Geneva Round : 1947Geneva Round : 19472.2. Annecy Round : 1949Annecy Round : 19493.3. Torquay Round : 1950Torquay Round : 19504.4. Geneva Round : 1956Geneva Round : 19565.5. Dillon Round : 1960 – 1961Dillon Round : 1960 – 19616.6. Kennedy Round : 1962 – 1967Kennedy Round : 1962 – 19677.7. Tokyo Round : 1973 – 1979Tokyo Round : 1973 – 19798.8. Uruquay Round : 1986 1994.Uruquay Round : 1986 1994.

Focus negotiations under the Geneva Round 1947 – Focus negotiations under the Geneva Round 1947 – Kennedy Round (1962 – 1970) were reducing tariff Kennedy Round (1962 – 1970) were reducing tariff barriers to trade.barriers to trade.

Tokyo Rounds 1973 – 1979Tokyo Rounds 1973 – 1979

Focus negotiations were reducing non tariff barriers to Focus negotiations were reducing non tariff barriers to trade. trade. The Negotiations resulted some Non Tariff Barriers The Negotiations resulted some Non Tariff Barriers Codes – NTB Codes :Codes – NTB Codes : Agreement on Implementation of Article VII of the Agreement on Implementation of Article VII of the GATT (Custom Valuation Code),GATT (Custom Valuation Code), Agreement on Government Procurement Agreement on Government Procurement (Government Procurement Code),(Government Procurement Code), Technical Barriers to Trade (Standard Code)Technical Barriers to Trade (Standard Code) Agreement on Implementation of Article VI, VII and Agreement on Implementation of Article VI, VII and XXIII GATT (Subsidies Code),XXIII GATT (Subsidies Code), Agreement on Implementation of Article VI Agreement on Implementation of Article VI (Antidumping Code).(Antidumping Code).

Uruguay RoundsUruguay Rounds( Started at Punta del Este - Uruguay 1986 and closed at ( Started at Punta del Este - Uruguay 1986 and closed at

Marrakesh – Marokko 1994)Marrakesh – Marokko 1994)

The Punta del Este Declaration stated : Negotiations The Punta del Este Declaration stated : Negotiations shall aim to develop understandings and arrangements :shall aim to develop understandings and arrangements :1.1. To enhance the surveillence in the GATT to enable To enhance the surveillence in the GATT to enable

regular monitoring of trade policies and practices of regular monitoring of trade policies and practices of contracting parties and their impact on the functioning contracting parties and their impact on the functioning of the multilateral system,of the multilateral system,

2.2. To improve the overall effectiveness and decision-To improve the overall effectiveness and decision-making of the GATT as an institution, including making of the GATT as an institution, including inter inter alia, alia, through involment of Ministers,through involment of Ministers,

3.3. To increase the contribution of the GATT to achieving To increase the contribution of the GATT to achieving greater coherence in global economic policy-making greater coherence in global economic policy-making through strengthening its relationship with other through strengthening its relationship with other international organizations responsible for monetary international organizations responsible for monetary and financial matters. and financial matters.

Outcomes of the Uruguay RoundOutcomes of the Uruguay Round

The Agreement on Establishment of the World The Agreement on Establishment of the World Trade OrganizationTrade Organization, with Annexes :, with Annexes :1. Annex IA1. Annex IA : Multilateral Agreement on Trade in : Multilateral Agreement on Trade in

Goods, comprises of :Goods, comprises of : GATT 1994 dan 12 agreements of trade in goods.GATT 1994 dan 12 agreements of trade in goods. Annex IBAnnex IB : General Agreement on Trade in Services : General Agreement on Trade in Services

(with annexes),(with annexes), Annex ICAnnex IC : Agreement on Trade Related Aspects of : Agreement on Trade Related Aspects of

Intellectual Property Rights,Intellectual Property Rights,2. Annex II2. Annex II : Understanding on Rules and Procedures : Understanding on Rules and Procedures

Governing Settlement Disputes,Governing Settlement Disputes,3. Annex III3. Annex III : Trade Policy Review Mechanism, : Trade Policy Review Mechanism,4. Annex IV4. Annex IV : Four Plurilateral Trade Agreements : Four Plurilateral Trade Agreements

THE WTOTHE WTO

The function of the GATT as international trade The function of the GATT as international trade

organization was replaced by The WTO.organization was replaced by The WTO. TheThe Secretariat of the GATT at Geneva become the Secretariat of the GATT at Geneva become the

Secretariat of the WTO.Secretariat of the WTO. WTO is a public international public organizations : WTO is a public international public organizations :

153 Countries become the members.153 Countries become the members. The WTOThe WTO is the only international body dealing with is the only international body dealing with

the rules of trade between nations.the rules of trade between nations. The World Trade OrganizationThe World Trade Organization ( (WTOWTO) is an ) is an

organization that intends to supervise and liberalize organization that intends to supervise and liberalize

international trade. international trade.

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OFFICE OF THE WTO SECRETARIAT - GENEVA SWISS

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STRUCTURE OF THE WTO

The WTO and The General Agreement The WTO and The General Agreement on Tariff and Tradeon Tariff and Trade

GATT 1947 is the origin of the WTO .GATT 1947 is the origin of the WTO . Under the WTO Agreement, the GATT 1947 Under the WTO Agreement, the GATT 1947

become one of the main agreement relating to become one of the main agreement relating to the trade in goodsthe trade in goods

The WTO apply the GATT principles to the The WTO apply the GATT principles to the international trade international trade

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The WTO Three Main Agreements The WTO Three Main Agreements Relating to the International Trade Relating to the International Trade

1. The General Agreement on Tariff and Trade, 1994

2. The General Agreement on Trade Related Aspects of Intellectual Property Rights, including Counterfeit Goods (TRIPS)

3. The General Agreement on Trade in Services (GATS)

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The General Agreement on Tariffs and Trade 1994 ("GATT 1994") shall consist of :

a) the provisions in the General Agreement on Tariffs and Trade, dated 30 October 1947,

b) the provisions of the legal instruments set forth below that have entered into force under the GATT 1947 before the date of entry into force of the WTO Agreement.

c) Some Understandings concerning with the interpretation and waiver of certain articles of the GATT 1994.

d) the Marrakesh Protocol to GATT 1994.

The General Agreement on Tariff and The General Agreement on Tariff and TradeTrade

Comprises of 38 articlesComprises of 38 articles

Important Articles :Important Articles :

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Article IArticle IGeneral Most-Favoured-Nation TreatmentGeneral Most-Favoured-Nation Treatment

1. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III, any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.

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Article IISchedules of Concessions

1. (a). Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement.

(b) …..

• Tariff binding principle

Article IIIArticle IIINational Treatment on Internal Taxation and RegulationNational Treatment on Internal Taxation and Regulation

1.1. The contracting parties recognize that internal taxes and The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or processing or use of products in specified amounts or proportions, should not be applied to imported or domestic proportions, should not be applied to imported or domestic products so as to afford protection to domestic production. products so as to afford protection to domestic production.

2.2. The products of the territory of any contracting party imported The products of the territory of any contracting party imported into the territory of any other contracting party shall not be into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or charges of any kind in excess of those applied, directly or indirectly, to like domestic products. ….. indirectly, to like domestic products. …..

4.4. The products of the territory of any contracting party imported The products of the territory of any contracting party imported into the territory of any other contracting party shall be into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. offering for sale, purchase, transportation, distribution or use.

Article VIArticle VIAnti-dumping and Countervailing DutiesAnti-dumping and Countervailing Duties

The contracting parties recognize that The contracting parties recognize that dumping, by which products of one country are dumping, by which products of one country are introduced into the commerce of another introduced into the commerce of another country at less than the normal value of the country at less than the normal value of the products, is to be condemned if it causes or products, is to be condemned if it causes or threatens material injury to an established threatens material injury to an established industry in the territory of a contracting party or industry in the territory of a contracting party or materially retards the establishment of a materially retards the establishment of a domestic industry. domestic industry.

In order to offset or prevent dumping, a In order to offset or prevent dumping, a contracting party may levy on any dumped contracting party may levy on any dumped product an anti-dumping duty not greater in product an anti-dumping duty not greater in amount than the margin of dumping in respect amount than the margin of dumping in respect of such product. of such product.

Article XArticle XPublication and Administration of Trade RegulationsPublication and Administration of Trade Regulations Laws, regulations, judicial decisions and administrative Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any rulings of general application, made effective by any contracting party, pertaining to the classification or the contracting party, pertaining to the classification or the valuation of products for customs purposes, or to rates valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing, distribution, transportation, insurance, warehousing, inspection, exhibition, processing, mixing or other use, inspection, exhibition, processing, mixing or other use, shall be published promptly in such a manner as to shall be published promptly in such a manner as to enable governments and traders to become acquainted enable governments and traders to become acquainted with them. with them. Agreements affecting international trade policy which are Agreements affecting international trade policy which are in force between the government or a governmental in force between the government or a governmental agency of any contracting party and the government or agency of any contracting party and the government or governmental agency of any other contracting party governmental agency of any other contracting party shall also be published. shall also be published.

Article XIArticle XIGeneral Elimination of Quantitative General Elimination of Quantitative

RestrictionsRestrictions

No prohibitions or restrictions other than duties, No prohibitions or restrictions other than duties, taxes or other charges, whether made effective taxes or other charges, whether made effective through quotas, import or export licences or through quotas, import or export licences or other measures, shall be instituted or other measures, shall be instituted or maintained by any contracting party on the maintained by any contracting party on the importation of any product of the territory of any importation of any product of the territory of any other contracting party or on the exportation or other contracting party or on the exportation or sale for export of any product destined for the sale for export of any product destined for the territory of any other contracting party. territory of any other contracting party.

Article XXGeneral Exceptions

Members of the WTO may take measures which are inconsistent with the WTO/GATT Law : a. necessary to protect public morals; b. necessary to protect human, animal or plant life or

health; c. relating to the importation or exportation of gold or

silver; d. Necessary to protect patents, trade marks and

copyrights, and the prevention of deceptive practices; e. relating to the products of prison labour; f. imposed for the protection of national treasures of

artistic, historic or archaeological value; g. relating to the conservation of exhaustible natural

resources

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Article Security Exceptions

Article XXIIConsultation

Article XXIIINullification or Impairment

Article XXIVTerritorial ApplicationFrontier TrafficCustoms Unions and Free-trade Areas

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THE GENERAL AGREEMENT ON TRADE THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) IN SERVICES (GATS) Comprises of 29 articlesComprises of 29 articles

• With 10 Annexes

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Some background (considerations) on the regulation of international trade in services under the WTO Agreement :1. the growing importance of trade in services for the growth and development of the world economy;2. Wishing to establish a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization and as a means of promoting the economic growth of all trading partners and the development of developing countries;3. ………

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Problems concerning with the gap between Developed Countries members and Developing

Countries Members of the WTO

Some developed Countries Members have advanced technologies, skilled labors, mastering informations, on the contrary some developing Countries Members have no good informations, lack of advanced technologies, poor in skilled labors.

Due to the lack of technology, skilled labors and informations, developing Countries Members will suffer of economic losses from the liberalization of trade in services

To respond the mentioned problem, the regulation of trade in services under the GATS contains some flexsibilities.

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Flexsibility of the GATS

Members are free in detemining sectors of services which will be liberalized under the GATS

Concerning with trade in services, some basic principles of the WTO Agreement may not be applied.

Liberalization in services sector done based on the offers and request system

Any contracting party may determine that some services in public sector are not subjects to the regulations under the GATS.

Monopoly by Domestic Company in trade of certain public services is permissible

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Important ArticlesImportant ArticlesArticle II

Most-Favoured-Nation Treatment1. With respect to any measure covered by this

Agreement, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country.

2. A Member may maintain a measure inconsistent with paragraph 1 provided that such a measure is listed in, and meets the conditions of, the Annex on Article II Exemptions.

3. …….

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Article III

Transparency

1. Each Member shall publish promptly and, except in emergency situations, at the latest by the time of their entry into force, all relevant measures of general application which pertain to or affect the operation of this Agreement. International agreements pertaining to or affecting trade in services to which a Member is a signatory shall also be published. ….

2. ……

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Article IVIncreasing Participation of Developing Countries1.The increasing participation of developing country

Members in world trade shall be facilitated through negotiated specific commitments, by different Members pursuant to Parts III and IV of this Agreement, relating to:(a). the strengthening of their domestic services capacity and its efficiency and competitiveness, inter alia through access to technology on a commercial basis;

(b). the improvement of their access to distribution channels and information networks; and

(c). the liberalization of market access in sectors and modes of supply of export interest to them.

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PROGRESSIVE LIBERALIZATIONArticle XIX

Negotiation of Specific Commitments

1. In pursuance of the objectives of this Agreement, Members shall enter into successive rounds of negotiations, beginning not later than five years from the date of entry into force of the WTO Agreement and periodically thereafter, with a view to achieving a progressively higher level of liberalization.

2. ….

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Indonesia ComitmentIndonesia Comitment

• At the Hokong Ministerial Conference, 2005, Indonesia has made comitment to liberalize somes sector of services, including construction, telecomunication, business, tourism, education, maritime transportation.

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AGREEMENT ON TRADE-RELATED ASPECTS OFINTELLECTUAL PROPERTY RIGHTS

Members,Desiring to reduce distortions and impediments to

international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade;

Recognizing, to this end, the need for new rules and disciplines concerning:(a) the applicability of the basic principles of GATT

1994 and of relevant international intellectual property agreements or conventions; (b) …..

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TRIPS AGREEMENT, 1994TRIPS AGREEMENT, 1994

Article 1 (1) : Members shall give effect to the provisions

of this Agreement. Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement.

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TRIPS AGREEMENT, 1994TRIPS AGREEMENT, 1994

Intellectual Property refers to :1. Copyright and Related Rights2. Trademarks3. Geographical Indications4. Industrial Designs5. Patents6. Layout-Design (Topographies) of Integrated

Circuits)7. Undisclosed Information

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OF INTELLECTUAL PROPERTY OF INTELLECTUAL PROPERTY RIGHTSRIGHTS

• Intellectual Property Rights refers to creations of the mind : inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.

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IPR is divided into two categories :

1. Copy rights

2. Industrial Property Rights, which includes :

a. patent

b. trade secrets

c. industrial design

c. layout-designs of integrated

circuits

e. trade mark

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TRIPS

Article 3

National Treatment

1. Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property, …

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TRIPS

Article 4

Most-Favoured-Nation Treatment

With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members.

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TRIPS

Article 7

Objectives

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.

TRIPS : ARTICLE 40TRIPS : ARTICLE 40CONTROL OF ANTI-COMPETITIVE PRACTICES IN LICENCINGCONTROL OF ANTI-COMPETITIVE PRACTICES IN LICENCING

1.1. Members agree that some licensing practices or conditions Members agree that some licensing practices or conditions pertaining to IPR which restrain competition may have pertaining to IPR which restrain competition may have adverse effects on trade and may impede the transfer and adverse effects on trade and may impede the transfer and dissemination of technologydissemination of technology

2.2. Nothing in this agreement shall prevent Members from Nothing in this agreement shall prevent Members from specifying in their national legislation licensing practices or specifying in their national legislation licensing practices or conditions that may in particular cases constitute an abuse of conditions that may in particular cases constitute an abuse of IPR having an adverse effect on competition in the relevant IPR having an adverse effect on competition in the relevant market.market.

As provided above, a Member may adopt, consistenly with As provided above, a Member may adopt, consistenly with the other provisions of this agreement, appropriate measures the other provisions of this agreement, appropriate measures to prevent or control such practices, which may include for to prevent or control such practices, which may include for example exclusive grant-back conditions, conditions example exclusive grant-back conditions, conditions preventing challenges to validity and coercive package preventing challenges to validity and coercive package licensing, in the light of the relevant laws and regulation of the licensing, in the light of the relevant laws and regulation of the Member.Member.

3…..3…..

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ROLE OF THE WTO IN INTERNATIONAL TRADE

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.

The main objective of the WTO Agreements is to assist producers of goods and services, exporters, and importers in conducting their activities.

The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development.

The WTO also provides a legal and institutional framework for the implementation and monitoring of these agreements, as well as for settling disputes arising from their interpretation and application.

Indonesia and the WTO AgreementIndonesia and the WTO Agreement

Indonesia is a member of the WTO Indonesia is a member of the WTO

based on the based on the

Ratification on the WTO Agreement based on Ratification on the WTO Agreement based on the Law of RI Number 7, 1994 the Law of RI Number 7, 1994

The Consequence :The Consequence :

Indonesia has obligation to establish all of it’s Indonesia has obligation to establish all of it’s policy, laws and regulations in trade in policy, laws and regulations in trade in

accordance with the WTO Agreements. accordance with the WTO Agreements.

WTO TRADE POLICY REVIEW BODY WTO TRADE POLICY REVIEW BODY

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Implementation of the WTO in Implementation of the WTO in IndonesiaIndonesia

• Reform all of the trade policy, which didn’t in accordance with the WTO principles

• Abolishing some trade barriers which hamper the liberalization of the World Trade

• Enacted some laws as implementation of the WTO agreement :– Laws of Intellectual Property Right– Law of Invenstment, ect

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Indonesia and the Implementation of the WTO AgreementIndonesia and the Implementation of the WTO Agreement Concerning the implementation of the WTO Agreement,

Indonesia abolished most of the non-tariff barriers it committed to in Schedule XXI. Furthermore, the Government has also eliminated import surcharges since June 1996.

As a member of the WTO, Indonesia has implemented the WTO Valuation Agreement since 1 April 1997. Since that time, the determination of customs value for the imported goods is based on the provisions of the Agreement.

Moreover, Indonesia created the following instruments in the form of law and regulations, such as Custom Law No.10/1995; Ministerial Decree of Finance No. 690/KMK.05/1996; Circulated Letter of Customs Director General No.SE-11/BC/1997; Director General of Customs Decree No.KEP-14/BC/1997 and No.KEP-21/BC/1997. In line with the implementation of the Agreement, Indonesia also revised its import procedures to accommodate the new customs valuation system.

Since 2000, Indonesia has enacted some new laws on IPR and amended existing ones in compliance with WTO/TRIPS Agreements.

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THE REGULATION OF IPR IN INDONESIATHE REGULATION OF IPR IN INDONESIATHE INDONESIAN LAW OF IPRTHE INDONESIAN LAW OF IPR

1. Law Number 29, 2000 on Plant Variety2. Law Number 30, 2000 on Trade Secret3. Law Number 32, 2000 on Design Layout of

Integrated Circuit4. Law Number 31, 2000 on Industrial Design5. Law Number 14, 2001 on Patent6. Law Number 15, 2001 on Mark (Trade

Mark) 7. Law Number 19, 2002 on Copy Right

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Regulation on InvestmentRegulation on Investment

Indonesia in 1994, enacted the new law of envestment, i.e., Law of RI Number 25, 2007.

The new Indonesian Law of Investment apply somes basic principles of the WTO Agreement, such as the MFN and National Treatment principles (non-discrimination)

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Answer the following questions :Answer the following questions :

1. What is “business law” ? (Give a definition of “business law”).

2. What do you know about “International Economic Law” ?

3. What is the different between “law” (legal norms) and “morality” (the norms of morality) ?

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Exercise :Exercise :

Answer the following questions Answer the following questions 1. Give an explanation about the differences

between the World Bank and the IMF purposes.

2. What do you know about the “conditinality doctrine” of the IMF ?

3. What is the New International Economic Order (the NIEO) ? Is the NIEO accepted by all countries in the world ?

4. My a Member of the WTO give different treatment between imported product and domestic product, which are sold at it’s domestic market ?

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GROUPS’ ASSIGNMENTGROUPS’ ASSIGNMENT

• Read article VI of the GATT 1994• Discuss article VI of the GATT with all of the

members of your group• Write article, wich will give answers to the

following questions :– What does dumping mean ?– How does to determine dumping ?– Is dumping prihibited under the WTO/GATT Law ?– Is all dumping to be condemned ?– What is anti-dumping measures ?– Give an example of dispute concerning with dumping

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Article VIAnti-dumping and Countervailing Duties

The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another

(a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,

(b) in the absence of such domestic price, is less than either (i) the highest comparable price for the like product for export to any

third country in the ordinary course of trade, or (ii) the cost of production of the product in the country of origin plus a

reasonable addition for selling cost and profit. Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability. In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 1.