REGULATING

INTERNATIONAL
TRADE
Module 4
LEARNING OUTCOMES

After completing the module, the students can:

1. Understand World Trade Organization as an important regulating
body of International Trade.
2. Discuss the Five guiding principles of World Trade Organization
3. Identify the principles of International Trade.
4. Learn the Intellectual Property rights and the Patent Law.
International Trade Law

• It is the set of laws and agreements that govern commerce between

countries

• Create the rules that countries and businesses must follow in order to do
business across borders.

• Lawyers who work in the field helps to create international agreements.

They also educate businesses about what they need to do in order to
comply with rules and regulations for international trade.
International trade law is federal Law

• The U.S. government has exclusive authority to create international

trade regulations. Individual states can’t make their own agreements
without federal approval. Both the legislative and judicial branches of
the U.S. government have a role to play in the creation of international
trade laws.
• The U.S. Constitution affords Congress the authority to regulate
commerce with other countries.
• Article two of the U.S. Constitution gives the President the authority
to make treaties with the approval of the Senate. The President
appoints a U.S. Secretary of Commerce to oversee international trade
efforts on their behalf.
The General Agreement of Tariffs and Trade
• 1948 General Agreement on Tariffs and Trade (GATT).
- The earliest major international trade agreement involving a significant number of
countries. The Agreement prohibits economic activity that member nations see as
unfair.

TWO PROHIBITED PRACTICES.

1.) Dumping or lowering prices in one geographic area in order to push out a
competitor.
2.) Offering subsidies in order to disproportionately aid a certain economic sector.

*The establishment of the World Trade Organization in 1994 supersedes GATT.

World Trade Organization
• Established in 1994 and in operation since 1995.
• The World Trade Organization is a large and formal, international
organization that creates rules for international trade.
• The Agreement Establishing the World Trade Organization, Also
known as the Marrakesh Agreement, is the document that creates the
World Trade Organization.
• The World Trade Organization sits permanently in Geneva,
Switzerland with a staff of more than 600 members.
• Ministerial Conference – The highest body within the organization
which meets every two years.
Five guiding principles in the World
Trade Organization:
1. Non-discrimination
 All member countries must grant the same, favorable conditions for trade to
other member countries. They must apply uniform rules to every country in the
organization. Once a product is in the country, the standards must be the same as
they are for domestic products with regards to technology specifications and other
requirements.

2. Reciprocity
 Member states should work towards lowering barriers for trade in exchange for the
same concessions from other countries.
Five guiding principles in the World
Trade Organization:
3. Agreements are enforceable
 Member countries may raise disputes and have those disputes heard exclusively in the
jurisdiction of the World Trade Organization.
 

4. Transparency
 Countries must publish their trade regulations and make them accessible. They must also
respond to direct requests for information.
 

5. Safety
 It’s permissible to restrict trade for environmental safety, public health or plant and animal
safety.
Intellectual property rights

• A major facet of the World Trade Organization is the protection of

intellectual property rights internationally.
Intellectual Property Rights includes:
1. Copyrights
2. Trademarks
3. Patents
• Signatories to the World Trade Organization must recognize and
uphold intellectual property rights.
Dispute resolution

• When disputes arise regarding international trade law, the World Trade
Organization has a system for mediation. As many as 25 percent of disputes
resolve through the mediation process.
• For cases that don’t resolve through mediation, the disputing parties can
resolve their case through a formal tribunal
Regulation of International Trade

• Traditionally, trade was regulated through bilateral treaties between two

nations.
• After World War II, as free trade emerged as the dominant doctrine,
multilateral treaties like the GATT and World Trade Organization (WTO)
became the principal regime for regulating global trade.
Regulation of International Trade

• The WTO, created in 1995 as the successor to the General Agreement on Tariffs and
Trade (GATT), is an international organization charged with overseeing and adjudicating
international trade.

The WTO deals with the rules of trade between nations at a near-global level;
is responsible for negotiating and implementing new trade agreements;
and is in charge of policing member countries’ adherence to all the WTO agreements,
signed by the majority of the world’s trading nations and ratified in their parliaments.
Additionally, it is the WTO’s duty to review the national trade policies and to ensure the
coherence and transparency of trade policies through surveillance in global economic
policy making.
Regulation of International Trade

• Headquartered in Geneva, Switzerland, the WTO has more than 150

members, which represent more than 95% of total world trade.\
• It is governed by a ministerial conference, which meets every 2
years.

1.) General council - which implements the conference’s policy

decisions and is responsible for
day-to-day administration.
2.) Director-general - who is appointed by the ministerial conference.
Regulation of International Trade

• The WTO operates on a “one country, one vote” system, but actual
votes have never been taken.
• Decisions are made by consensus, with relative market size as the
primary source of bargaining power.
• In reality, most WTO decisions are made through a process of
informal negotiations between small groups of countries, often
referred to as the “green room” negotiations (after the color of the
WTO director-general’s office in Geneva) or “mini-ministerial” when
they occur in other countries.
Regulation of International Trade

• The WTO oversees about 60 different agreements that have the

status of international legal texts. Member countries must sign and
ratify all WTO agreements on accession. Some of the most important
agreements concern agriculture, services, and intellectual-property
rights.
• Regional arrangements such as Mercosur in South America; the North
American Free Trade Agreement (NAFTA) between the United States,
Canada, and Mexico; ASEAN in Southeast Asia; and the European
Union (EU) between 27 independent states constitute a second
dimension of the international trade regulatory framework.
Regulation of International Trade

• The EU is an economic and political union of 27 member states.

Committed to regional integration.
• The EU was established by the Treaty of Maastricht on November 1,
1993, upon the foundations of the preexisting European Economic
Community. With almost 500 million citizens.
• The EU combined generates an estimated 30% share of the nominal
gross world-product.
Regulation of International Trade
• The EU has developed a single market through a standardized system of laws
that apply in all member states, ensuring the freedom of movement of people,
goods, services, and capital.
• It maintains common policies on trade, agriculture, fisheries, and regional
development.
• A common currency, the euro, has been adopted by 16 member states known as
the Eurozone.
• The EU has developed a limited role in foreign policy, having representation at
the WTO, G8 summits, and at the UN. It enacts legislation in justice and home
affairs, including the abolition of passport controls between many member states.
• Twenty-one EU countries are also members of NATO, those member states
outside NATO being Austria, Cyprus, Finland, Ireland, Malta, and Sweden.
Regulation of International Trade
• Mercosur
- is a regional trade agreement among Argentina, Brazil, Paraguay,
and Uruguay, founded in 1991 by the Treaty of Asunción, which was
later amended and updated by the 1994 Treaty of Ouro Preto. Its
purpose is to promote free trade and the fluid movement of goods,
people, and currency.
• Bolivia, Chile, Colombia, Ecuador, and Peru
- currently have associate-member status. Venezuela signed a
membership agreement on June 17, 2006, but before becoming a full
member, its entry has to be ratified by the Paraguayan and the
Brazilian parliaments.
Regulation of International Trade
• The NAFTA is an agreement signed by the governments of
the United States, Canada, and Mexico, creating a trilateral
trade bloc in North America. The agreement came into
force on January 1, 1994.
NAFTA has two supplements:
1. the North American Agreement on Environmental
Cooperation (NAAEC)
2. North American Agreement on Labor Cooperation
(NAALC).
• The Association of Southeast Asian Nations, commonly
abbreviated ASEAN, is a geopolitical and economic organization of
10 countries located in Southeast Asia, which was formed on
August 8, 1967, by Indonesia, Malaysia, the Philippines,
Singapore, and Thailand. Since then, membership has expanded
to include Brunei, Burma (Myanmar), Cambodia, Laos, and
Vietnam.
• Its
aims include the acceleration of economic growth, social
progress, cultural development among its members, and the
protection of the peace and stability of the region.
PATENTS
Types of Patents 
There are three types of patents. These three are: utility,
design, and plant. 
1. Utility - patents are what people think of when they think
“patents.” Utility patents are patents on useful items. These
are the patents one would get on an invention. Such a
patent covers the “usefulness of a product,” meaning that a
utility patent will protect the useful or functional aspects of
an invention.
PATENTS
Types of Patents 
2. Design
- patents are to the ornamental design of an object. A simple
way to approach design patents is to consider the “fins on the
car.” If you remember old 1950’s-era cars, many of them had big
fins on them. They served no purpose other than to look cool.
The fins did not make the cars faster, improve aerodynamics,
and did not serve any function. They were pure design. Design
patents are to protect these design elements. Functional parts of
the car, e.g. the engine, transmission, brakes, etc. would be
covered by utility patents instead.
 PATENTS
Types of Patents 
3. Plant
- Plant patents are to cover new types of flowering plants
that can be reproduced asexually. Flowers are plant sex
organs and contain both the male and female parts. Pollen is
basically “plant sperm.” (Something to keep in mind during
allergy season.) Plant patents thus apply to plants that are
engineered to reproduce without the use of pollen.
What is patentable?

When a product or process is new and useful, it is very

likely that it is patentable. To be patentable, an invention
must satisfy three basic elements. The invention must be:

1. New
2. useful
3. not obvious
 NEW

• The requirement of being “new” (also called the “novelty”

requirement) is the easiest for non-practitioners to understand
but is often the hardest part of the patent prosecution process.
• To
get a patent on an invention, the invention must actually be
new.
• In
practicing patent law, much of the process focuses on
explaining how and why the invention is different from what
came before is referred to as the “prior art.”
Useful

• Usefulness,
also referred to as the “utility requirement,” is—in
practice—one of the easier parts of the process.
• Necessity is the mother of invention.
• Inventions are almost always solutions to problems. The mere
fact that it’s a solution to an existing problem makes it useful.
Not Obvious

• Non-obviousness is a different problem from novelty.

• To some extent, all inventions are combinations of older inventions.
• This
is the idea that, as Isaac Newton said, “If I have seen further, it is by
standing on the shoulders of giants. The non-obviousness test is asking: Is the
combination that comprises the invention in question obvious?
• Anobviousness inquiry asks whether combining the two older inventions would
be obvious to “one skilled in the art.”
• One skilled in the art is similar to the “reasonable person” who appears
frequently in other areas of law, but in this case, the reasonably person is one
who works in or is skilled in the field of the invention.
What rights does a patent confer?

•A patent is not the right to make and use your invention.

• It is the inverse.
• It
is the right to prevent others from making, using, or importing the
invention claimed in the patent.
• If
a process is covered by a patent, then any product that uses that
patented process is infringing on that patent. The allegedly infringing
product is compared with the claims in the original patent to see if
the product used the patented process, thus infringing on the patent.
What rights does a patent confer?

•A patent is not the right to make and use your invention. It is

the inverse. It is the right to prevent others from making, using, or
importing the invention claimed in the patent.

•If a process is covered by a patent, then any product that uses

that patented process is infringing on that patent. The allegedly
infringing product is compared with the claims in the original patent
to see if the product used the patented process, thus infringing on
the patent.
 What rights does a patent confer?
•A common example that is applicable to teachers and students is of the dry-erase
marker and its evolution.
•The marker exists and someone holds a patent on it. Then, someone invented the
stackable cap, which is the cap on the dry-erase marker that allows the markers to connect
to one-another. That cap was an invention, and could itself have been patented. However,
holding the patent on the cap does not allow one to build the new dry-erase markers.
Someone else holds that patent. The patent on the cap hold prevents the original dry-erase
marker manufacturer from adding the improved cap to the marker.

•So, is an invention patentable? If it is new, useful, and not obvious, then the answer is
yes. A patent application may then be drafted and filed with the USPTO, a process that is
covered in other presentations. If one is granted a patent, one then has the right to keep
others from making, using, or importing one’s invention without one’s permission.
ANY QUESTION?
• Activity 1: Watch National Geographic film Illicit: The Dark Trade available in YouTube
• https://www.youtube.com/watch?v=3FljxI4tl_8.
• Submit a reaction paper not less than 500 words.

• Activity 2: Intellectual property is divided into 3 categories:

 Copyrights (©) protect original creations, such as books, video games, movies,
characters, and music. They give only the author “the right to copy.”
 Patents protect inventions, such as new pharmaceuticals and airplane designs, for
a period of time.
 Trademarks (™) protect the distinctive signs or logos used to distinguish different
products or services.

Investigate an intellectual property. Do a product search at home and list at

least 2 products that either has © or ™. Conduct a research and submit the
details.