Trade Defence Research Articles

Man the Firewalls: Cyber Intrusions and Compliance Risks under U.S. Export Control Laws

An epidemic of foreign-based cyber attacks upon the computer networks of U.S. industry presents an array of compliance challenges and questions for companies involved in technologies subject to U.S. export controls. Is the loss or "exfiltration" of export-controlled technology by means of a cyber intrusion an "export" under U.S. export control laws, and could such an exfiltration constitute a violation of such laws? What, if any, obligations does a victimized company have to disclose a cyber attack to the government, and what factors should a company consider in weighing whether to make such a disclosure? Are government-mandated standards for cyber defenses emerging with which companies must now comply in implementing their information security programs? This article addresses these questions in the context of the International Traffic in Arms Regulations ("ITAR"), administered by the U.S. Department of State's Directorate of Defense Trade Controls, and the Export Administration Regulations, administered by the U.S. Department of Commerce's Bureau of Industry and Security.

The ‘TTIP-ing Point’: How the Transatlantic Trade and Investment Partnership Could Impact European Defence

The European Union and the United States are on the verge of agreeing to a transatlantic free trade agreement. The proposed Transatlantic Trade and Investment Partnership is aimed at boosting EU and US economic growth, but the negotiating partners have not excluded the defence sector from negotiations. Europe is at a tipping point regarding the rationale for its defence-industrial integration efforts. Any TTIP extending to the defence sector will raise questions about the nature of the European Defence Technological and Industrial Base, and, crucially, how it impacts the North Atlantic Treaty Organisation and the Common Security and Defence Policy.

Targeting the Environment: Exploring a New Trend in the EU's Trade Defence Investigations

The report argues that the European Union’s Trade Defence Instruments (TDI) increasingly target renewable energy sources, such as biodiesel, bioethanol and solar panels. In addition, the TDI measures on renewable energy sources affect an import value of about EUR 14 billion, which is almost 75 per cent of the import value all of the TDI measures currently in force. As a consequence of the new trend for the EU’s TDI policy to target renewable energy sources, there is an apparent contradiction between the EU’s TDI policy and the EU’s climate policy. The EU’s climate policy recognizes the need to empower the consumers and to increase competition in the EU’s renewable energy market, in order to raise the share of renewable energy sources to 20 per cent by 2020. The EU’s trade policy, through its TDI policy, is, however, moving in the opposite direction. Increasing the price of imported renewable energy sources and increasing the level of unpredictability for importers, user industries and consumers will, most likely, affect the availability of affordable renewable energy in the EU market to the detriment of the consumers and the environment.

A TECHNOLOGY VALUATION MODEL FOR THE DEFENSE R&D WITH INCOME APPROACH

Korea government initiated the Government's Defense Industrial Policy, "Defense Industry as a New Growth Engine for the Creative Economy", followed by establishing the defense industrial policy objectives and making efforts to reach them. Accordingly, the defense export dragged attention from the defense industry sector and as a result recorded nearly 0.8 billion dollars in 2011 which is doubled amount compared to year 2008. Considering that defense technology valuation is inevitable in defense trade, the defense technology valuation is going to be a key issue for the domestic defense R&D invested equipment including main battle tanks, armored vehicles, air trainers etc. This paper presents the defense R&D technology valuation model with the in-depth analysis of its theories and current status both domestic and abroad. Also, it provides relevant policy issues and directions in the near future. It should contribute to boosting the defense technology valuation fields and to formulating a concrete tool for analyzing defense R&D technology valuation in the near future.

EU Unilateral Trade Policy‐Making: What Role for Import‐Dependent Firms?

AbstractThis article looks at political mobilization and the influence of import‐dependent firms in the context of the European Union's (EU) trade defence instrument (TDI) policy. By looking at this increasingly relevant set of economic actors during (unilateral) TDI decision‐making, the article provides a much needed complement to the existing EU trade policy literature, which is dominated by analyses of the trade policy preferences and involvement of import‐competing and export‐dependent firms during multilateral and bilateral trade co‐operation. The article defines import‐dependent firms and theorizes the circumstances under which they are capable of lobbying and of wielding influence in EU TDI cases. The argument is discussed with case study evidence drawn from a series of recent EU TDI episodes.

Modernization of the EU’s Trade Defence Instruments and the Law of Unintended Consequences

This article discusses the proposal issued by the European Commission (Commission) on 10 April 2013, for the modernization of the EU's trade defence instruments (TDI). Considering the time that has lapsed since the last TDI review, a modernization aimed at increasing transparency and bringing the application of TDI in line with modern day realities and the WTO Agreements as interpreted in WTO disputes certainly seems opportune. However, the Commission's proposal seems to be a missed opportunity. On the one hand, it champions protectionism by giving primacy to ex officio investigations and the abolition of the lesser duty rule in anti-subsidy investigations and when 'structural raw material distortions' exist, on the other hand, it fails to adequately address administrative transparency, an area in which the EU system has been lacking and compares unfavourably with other traditional TDI users such as the United States (US) and Canada. As many WTO members have patterned their TDI after those of the EU, the butterfly effect will almost certainly come back to haunt EU exporters.

The Battle Against Unfair Trade in the EU Trade Policy: A Discourse Analysis of Trade Protection

The European Union considers Trade Defence Instruments (i.e., anti-dumping, countervailing duties and safeguards) as a cornerstone of the EU trade policy in the battle against ‘unfair competition from across the globe’. At the same time, the rationale behind these instruments, or the fight against ‘unfair trade practices’, remains somehow woolly. In this article, we argue that it is crucial to unpack the different meanings bestowed on the concept of unfair trade. An interpretative perspective is therefore adopted in order to highlight the complexity behind this notion. The analysis is based on a systematic analysis of the debates revolving around the issue of Trade Defence Instruments held within the European Parliament during the current legislative session. First, we show that a specific storyline on unfair trade can be considered dominant. Second, we expose the ‘kaleidoscopic’ reality behind unfair trade, showing that this notion is a floating signifier. Against this backcloth, the article puts forward the argument that the institutionalisation of Trade Defence Instruments precisely relies on this character of unfair trade as a floating signifier.

The Comitology Reform in the EU: Potential Effects on Trade Defence Instruments

The reform of the EU comitology system, enacted with Regulation 182/11, had the effect of extending the general principles regulating the Commission's exercise of implementing powers to the trade defence instruments' (TDIs) procedures, which, before the reform, were regulated by an autonomous discipline. This article offers an overview of the modifications brought about to TDI's comitology by Reg. 182/11 and identifies the possible consequences of the new discipline. The analysis benefited from the results of an empirical simulation, consisting in the application of the new voting methodology to past procedures of TDIs. The authors conclude, among the others, that the new system will likely reduce the usual political interferences in the Commission activities regarding TDIs, and it will settle a number of shortcomings of the old system.

Anti-Dumping as Insurance Policy: What the 'Grey Area' Measures Tell Us

A general argument in support of trade remedies is that they act as an insurance policy that allows countries to take on deeper commitments in trade negotiations than they would otherwise be willing to make. This paper reviews both the negotiating history of major trade liberalization initiatives and the largely unexploited history of the use of so-called “grey area” measures in the pre-WTO era to manage pressures on domestic economies emanating from international trade to shed light on the extent to which this argument holds true. The negotiating history makes clear that across-the-board liberalization in the absence of perfect knowledge about the possible consequences in terms of trade pressures depends on the availability of contingent protection. Economic theory demonstrates that such an insurance role is welfare enhancing. The history of use of grey area measures in the pre-WTO period as successive waves of trade liberalizing initiatives were being implemented to manage excessive pressures in a context where the trade flows were not characterized as “unfair” but simply disruptive makes clear that that they were clear substitutes for trade remedies. This history provides the linchpin that allows the identification of the on-going use of trade remedies as an implicit continuation of the management of transient trade pressures. While the use of trade remedies may be defended as welfare enhancing on these grounds, with the individual instances of application of measures analogous to claims on a pre-existing insurance policy, the paper concludes that the design of trade defense laws and the emphasis on “unfair” trade in their justification, makes them ill-suited for this role.

A Comparative Analysis of Reverse Majority Voting: The WTO's Dispute Settlement Mechanism, the EU Anti-Dumping Policy and the Reinforced SGP and Fiscal Compact

The reinforced Stability and Growth Pact entered into force in December 2011 with a new set of rules for economic and fiscal surveillance of the EU Member States. To strengthen the effective enforcement the SGP introduced the policy innovation of reverse qualified majority voting in the EU Council. Under reverse qualified majority voting the European Commission can impose a sanction on a Member State unless the Council votes against with a qualified majority within a specified period. This paper discusses the motivation and the impact of the new voting rule on EU Council decision-making and the Member States. It presents a comparative analysis of three cases where different types of reverse majority voting have been introduced, i.e. the dispute settlement mechanism of the World Trade Organisation, the EU trade defence policy and the reinforced SGP and Fiscal Compact. The comparison demonstrates that reverse majority voting considerably lowers the majority threshold to pass proposals rendering their adoption almost automatic in the EU Council of Ministers. As a result, the reverse majority rule increases the discretion of the executive relative to the legislative power. Moreover, evidence from the WTO’s dispute settlement and the EU’s antidumping policy suggests that the automaticity is also likely to change the balance between the rule- and political-based decision-making in the area of fiscal and budgetary EU policy. These findings chime with the growing role of majority-based decision-making in an enlarged EU of 27 Member States. However, the findings also highlight the potential trade-off between decision-making capacity and legitimacy particularly in an area considered to be traditionally part of the EU Member States’ national sovereignty.

Growth, Real Exchange Rates and Trade Protectionism Since the Financial Crisis

Existing evidence suggests that protectionist activity since the financial crisis has been muted, raising the question whether the historically well-documented relationship between growth, real exchange rates and trade protectionism has broken down. This paper re-visits this relationship for the time period since 2009. To this end, we use a novel and comprehensive dataset which considers a wide range of trade policies stretching beyond the traditionally considered tariff and trade defence measures. We find that the specter of protectionism has not been banished: Countries continue to pursue more trade-restrictive policies when they experience recessions and/or when their competitiveness deteriorates through an appreciation of the real exchange rate; and this finding holds for a wide array of contemporary trade policies, including JEL Classification: F13, F14

Non‐Legislative Rule Making after the Lisbon Treaty: Implementing the New System of Comitology and Delegated Acts

AbstractThe reform of comitology and the introduction of the new instrument of delegated acts in the Lisbon Treaty were followed by protracted negotiations on the implementation of both articles. This article examines the resultant system that has emerged for both types of non‐legislative instruments. In the area of implementing acts, a new regulation sets out important changes: a reduction in the number of procedures, the extension of the scope to trade defence measures and the replacement of a referral to the Council with a new appeal committee. With respect to delegated acts, the search for an overarching framework resulted in a Common Understanding. Our analysis not only demonstrates the need to go beyond the treaty provisions in understanding the nature of non‐legislative rule making in the EU, but also emphasises the importance of informal procedures and non‐binding agreements in fully assessing the nature of non‐legislative rule making in this area.

EU Initiative on Modernization of Trade Defence Instruments

EU Initiative on Modernization of Trade Defence Instruments

US and EU strategies for maritime transport security: A comparative perspective

In the second half of the 20th century, international maritime transport experienced a prosperous period characterised by the growing integration of markets, by the globalisation of international trade flows and by great advances in technologies. This scenario has been dramatically disrupted by terrorist attacks with strong implications also in terms of policy.The importance of maritime transport security is determined by the high vulnerability of this mode of transport to terrorist attacks, given the extremely diversified routes and the enormous volume and wide range of shipped goods, whose origin, description and ownership are not always perfectly traceable. In addition, any interruption of the maritime transport chain due to international hostile actions may greatly affect the global economy.For all the above mentioned reasons, maritime security regulation has been moved to the top of the policy agenda. Throughout the world, international organisations, governments, customs and the private sector have shifted their efforts towards managing the newly required security issues, trying at the same time to safeguard operational effectiveness. However, the heterogeneous regulatory schemes that have been introduced, have sometimes overlapped or even contradicted each other.The aim of this paper is twofold. Firstly, it will analyse and discuss the United States (US) and the European Union (EU) approaches on maritime transport and port security, in a comparative way. The need for enhancing security standards has apparently generated heterogeneous policies. In this respect, the prompt response of the US to the increased terrorist threat has resulted in a series of initiatives oriented towards maximisation of internal security while the EU has adopted a strategy aiming at balancing security needs with other targets (e.g. privacy safeguard and trade defence).Lastly, the efforts made by international organisations towards the development of a coordinated maritime transport security regulation worldwide will be considered alongside the possibility of identifying a competent international organisation which could act as regulatory authority for maritime security at international level.

More Trade, More Protection: Insights and Implications of the Unending Contradiction

Despite the stance of the WTO and various RTAs, elements of trade protectionism remain prevalent. This could be understood by the divergence between countries’ national interests and international trade protocols, which was reverberated during the recent global financial crises. However, the contradiction has taken new turn following new protectionist instruments. Furthermore, the implication of these instruments on developing countries economy is prevalent. Thus, this study explores the likelihood to engage in trade protection and the implication on developing country, focussing on Africa. The study observes that in the first quarter of 2012 alone, the number of protective measures amounts to 67, with bail out and trade defence accounting for as much as 74%. Similarly, from 2009 to 2011, trade defence mechanisms and bailout accounted for 25% of the protective measures; while tariff and non-tariff are also frequently used, jointly constituting about 28.11%. The study reveals that a country’s level of economic development is not a fundamental determining factor with regards to its tendency to engage in trade protectionism. However, the study establishes among others that as a country’s institutional quality improves, the less the tendency of being involved in protectionism. Paradoxically, the more a country’s trade integration, the higher its tendency towards protectionism, which might be alluded to the fact that when a country trades more, it has more interest to protect as major complainants of trade cases are also major traders. The study reveals that a country’s per capita income growth was significantly and adversely affected by the contemporary protectionism. It impacts negatively on trade balance; however, such impact was essentially significant for African countries.

Slavery, Empire and Civilization: A Luso-Brazilian Defense of the Slave Trade in the Age of Revolutions

This article examines a defense of the slave trade mounted in the 1790s by the Luso-Brazilian Bishop Azeredo Coutinho. While Azeredo's defense has been interpreted as a function of his slave-owning family's interest, this article provides a broader analysis of Azeredo's writings on the slave trade and the Portuguese empire within the contexts of eighteenth-century Luso-Brazilian intellectual culture and transatlantic debates about empire, commerce and historical transformation. His writing on the imperial economy and the slave trade included both appeals to an eighteenth-century ideal of civilization as a process predicated upon the universality of humanity as well as defense of empire as the rational, just and necessary exploitation of the barbarous by the civilized.

Trade Defence Instruments in Vietnam: Reality and Solutions

Increasing international trade liberalization has dramatically dropped tariff and non-tariff barriers in the last decade in line with the commitments of WTO Members. Anti-dumping, anti-subsidy and safeguard measures, three pillars of trade defence instruments (TDIs), are considered as an effective means of protectionism for countries to reversely impose tariff barriers against their trading partners for the benefit of domestic industries. WTO accession and regional economic integration presented Vietnam with considerable potential and opportunities to expand and to intensify its trade relations with the world. At the same time, growing trade may also bring many challenges, including issues related to unfair trade practices and fierce competition to domestic industries from imported products. Therefore, it is necessary for Vietnam to make effective use of TDIs for the legitimate benefits of domestic industries. Against this backdrop, although Vietnam's legislation on anti-dumping, countervailing and safeguard measures had been sufficiently promulgated since 2004, there has been only one case on safeguard measure ending up with nonaffirmative result. The article aims at providing the general overview of the TDIs system in Vietnam and the application of the Vietnamese regulation on TDIs to explore the reasons for the inactiveness of TDIs in Vietnam before coming up with the recommendations for the better use of TDIs in the future.

Trade Defence Practice in Canada

Canada has historically been one of the major users of anti-dumping and anti-subsidy measures in international trade. This monograph provides an extensive and detailed review of Canadian practice under the Special Import Measures Act. It evaluates the performance and effectiveness of Canada's bifurcated administrative system, including the effectiveness of the public interest test; and discusses the issues posed for the continued use of these policy instruments given the trend towards made in the world production systems through the growing of global value chains, and the system friction being generated by the deep integration into the global system of production of China and other major developing economies.

Book Review: EU Anti-Dumping and Other Trade Defence Instruments,5th edn by Van Bael & Bellis (Wolters Kluwer, 2011)

Book Review: <i>EU Anti-Dumping and Other Trade Defence Instruments</i>,5th edn by Van Bael &amp; Bellis (Wolters Kluwer, 2011)

President Obama and British PM Cameron Announce Implementation of Defense Trade Treaty

President Obama and British PM Cameron Announce Implementation of Defense Trade Treaty