Trade & Customs 2015: Roundtable

Who’s Who Legal brings together Richard Luff of Van Bael & Bellis, David Christy of Perkins Coie, Daniel Crosby of King & Spalding and Warren Maruyama of Hogan Lovells to discuss the key issues facing trade and customs lawyers and their clients in the industry today.


Reports suggest that a number of law firms have diversified their trade and customs practices to contend with an ever-changing marketplace. Does your practice conform to this or do you favour a more focused approach?

Richard Luff: At Van Bael & Bellis, we have always adapted our trade and customs practices according to client demand. For instance, the slowdown in the number of trade cases initiated by the EU during the last couple of years has gradually led part of our large group of multilingual trade specialists to expand the scope of their work by assisting clients in anti-dumping, countervailing and safeguards proceedings initiated by Brazil, Pakistan, Egypt, India, Morocco, Canada, Ukraine, Russia and even Australia.

Our strong multi-jurisdictional experience in dealing with trade remedy cases around the globe is also giving our firm strong leverage in offering legal advice in these other jurisdictions, in an array of trade and customs-related areas such as export control, customs and origin disputes, and regional negotiations.

Finally, our multi-jurisdictional approach is also expanding in the field of WTO where, in addition to a number of cases involving the application of EU trade remedy rules, Van Bael & Bellis has also been assisting governments of, for example, Japan, Chinese Taipei and the Dominican Republic in recent WTO disputes involving third country jurisdictions as well as other trade issues. 

David Christy: In our view, the concept of diversifying across trade areas is sound as it can help sustain a group when one area of practice is slow. However, a trade group that advises sophisticated multinationals must have deep expertise in each specific area that it markets. I would distinguish between a group composed of lawyers who dabble in various areas of trade law and a group that combines lawyers who are experts in different areas of trade law. Perkins Coie takes the latter approach. We have lawyers who focus on trade remedies, trade policy, WTO and FTAs, customs, export controls and CFIUS. We have significant experience and bench strength in each area. Where a client’s issues cut across several of these complex fields, we assemble a team of experts with specialised experience who also work closely together with a view toward advancing the client’s overall objectives. 

Daniel Crosby: King & Spalding as a firm has chosen the path of specialisation and global collaboration instead of diversification into new areas – we do not offer all practices to all clients. Rather, our trade practice reflects the firm’s global strategy of specialising in the areas where we add the most value to our clients’ performance. For our WTO and international trade group, this means global customs and trade remedy work, global market access and regulatory work, multilateral and regional trade negotiations, and export controls. We have chosen not to diversify outside of these substantive areas, but rather to build on our strengths and to add depth of talent and expertise.

Within our specialised area work has grown geographically; for example, with trade remedy work in steel and petrochemicals in Asia, Europe and the Middle East; with services market access work throughout the Middle East and Africa; and with health-related regulation of food, beverages and consumer products in Latin America. This work requires collaboration with King & Spalding’s specialised lawyers outside of the trade group within our network of over 900 lawyers in 18 offices worldwide. In 2015 we formed a strategic partnership with DTB Associates, a leading consultancy focusing on agriculture, plant and animal health, biotechnology, food safety and fisheries to focus our services in these specific areas.

Have there been any significant regulatory changes that have affected the practice of trade or customs law over the last 12 months in your jurisdiction? And are there any important developments to take note of in the immediate future? 

Richard Luff: Leaving aside important changes in the decision making process in EU trade remedy proceedings that have resulted in a shift of power from the member states to the EU Commission but with limited impact on the day-to-day trade practice as a whole, the main regulatory change that has arguably had an effect on our work concerns a relatively recent modification to the existing EC anti-dumping rules: the EC-Fasteners WTO dispute led the EU to change its legislation in September 2012 to allow automatic individual treatment to non-state controlled exporting producers in non-market economy countries. This change has encouraged an increasing number of exporting producers from NMEs to cooperate in trade defence proceedings under the hope that individual dumping margins would be calculated for them.

The big question mark that is now at the centre of all trade practitioners’ attention is whether the EU will grant automatic market economy status for China after the special rules concerning the calculation of normal value contained in China’s accession protocol to the WTO expire in December 2016. Any changes in the current rules would most likely lead to a large number of reviews and potentially a significant amount of additional work for practitioners. 

David Christy: In the United States, Congress granted the president with trade promotion authority and, in doing so, revised portions of the trade remedy laws. In granting trade promotion authority, Congress gave a boost to TPP and TTIP, either of which would be the most significant trade agreement under US law since the establishment of the WTO and accompanying Uruguay Round Agreements Act.

In enacting changes to US trade remedy law, Congress made it easier for US petitioning industries to obtain anti-dumping and countervailing duty orders. Generally, the changes grant the Department of Commerce and International Trade Commission wider discretion to find dumping, subsidisation and material injury. Although it remains to be seen how these changes will affect trade remedy investigations, they should increase (and certainly will not decrease) the ability of US industries to obtain new anti-dumping and countervailing duty orders.

Congress is still considering new means of identifying and punishing duty evasion, changes many expected to be finalised last summer. As with the changes to US trade remedy law, the new evasion procedures would assist US petitioners by allowing the Department of Commerce and US Customs to more easily investigate and punish companies found to have evaded payment of anti-dumping or countervailing duties. Congress (and the Department of Commerce) also must decide whether (and, if so, how) to change US law and policy to remove non-market economy status for China in trade investigations, which China’s protocol of accession arguably requires no later than December 2016.

Daniel Crosby: A few weeks ago the European Court of Justice invalidated the “Safe Harbor” framework that facilitated the movement of personal data between the United States and the EU. Many of our clients are concerned about this special development which represents a trend in increased regulation and restriction of cross-border data flows. We are deeply involved in the international trade aspects of these developments, including the application of existing WTO disciplines on trade in services and the negotiation of clarified rules on cross-border data flows in free trade agreements, all in collaboration with King & Spalding’s substantive experts in data protection.

In addition, several countries in Asia, Latin America and Europe have recently introduced or passed legislation on the labelling and regulation of food, drinks and tobacco products. We support client engagement throughout the process of national debate from the perspective of international trade law and best regulatory practices. In many cases we prevent escalation through early intervention, but we now see several of these cases moving toward WTO dispute settlement. 

We have recently seen the end of BRIC double-digit growth. Which emerging markets are becoming the most promising sources of trade-related work? 

Richard Luff: The slowdown in growth of the BRIC countries does not appear to have had any impact on the amount of trade-related disputes. As far as EU investigations are concerned, China and India have continued to remain the main targets followed by Russia and all four BRIC countries are themselves also among the largest users of trade-related instruments.

We have seen a sizeable increase in trade work involving Middle East countries and we expect this trend to continue. The strong industrial diversification that is currently taking place, especially in the Arabian Peninsula, is generating a substantial increase in the number of trade remedy disputes. We have also been very active and expect a further increase in trade-related work in Mediterranean countries such as Turkey, Morocco and Egypt. The CIS countries should also continue to provide a steady amount of work in the foreseeable future.  

David Christy: The US trade bar has been very busy lately, especially given the new round of trade remedy proceedings targeting imports of steel. Asia and cases targeting Asian countries continue to be a good source of work. In addition, we have seen an uptick in trade matters involving the Middle East. 

Daniel Crosby: Many aspects of international trade practice are counter-cyclical. Therefore, economic slowdowns tend to increase trade protectionism, and lend to increases in trade remedy protection against unfair trade. For example, although BRIC economies have slowed, many national steel companies are continuing to produce, but have redirected their capacity from local consumption into global markets where major disruptions are leading to the initiation of anti-dumping, subsidies and safeguard investigations. Trade remedy activity has been particularly strong over the past 12 months with government and private sector clients in the Middle East, and we are working to implement trade remedy laws that have recently been adopted in the Arab Gulf. We also see a growing concern among our clients related to restrictions applied by Russia, in the food and agriculture sector and concerning “data localisation”.

Trade protectionism in emerging markets has also been extended to trade in services because many countries experiencing economic contraction are seeking to create local employment and to collect local taxes by supporting “national champions” in the computer, data and information technology sectors. In many cases, these services are subject to WTO rules, but government directly or indirectly invoke privacy or national security exceptions to justify their actions. 

Within the next decade the most prominent bilateral trade agreements will be significantly altered to those that prevail today. Can you anticipate what affects this will have on the legal marketplace? 

Richard Luff: Unlike traditional free trade agreements of the past which sought mainly to eliminate customs tariffs, today’s bilateral trade negotiations increasingly focus on non-tariff trade barriers. This trend is set to continue and even increase over the next decade. Intellectual property (IP) rights are seen as particularly important to industrialised nations, with countries such as the US exerting pressure to expand patent protection, particularly for pharmaceuticals. Bilateral trade negotiations for IP rights protection will also aim to further eliminate the ever-present threat posed by counterfeit goods. Environmental and product safety standards are another important area that will increasingly continue to receive attention, thereby impacting the legal marketplace. Countries conducting trade negotiations consider tough standards imposed on imports as a major threat that – even if it cannot be eliminated altogether – should at the very least be reduced. One way of doing so would be through enhanced dialogue with a view to international harmonisation of such standards, thereby leading to a worldwide ‘common market’, especially for those imports that are more frequently affected. 

David Christy: We expect the TPP and TTIP to expand the market for legal services. TPP, TTIP and other bilateral or plurilateral agreements change the conditions under which trade occurs. Many companies that will be affected by these changes already are seeking legal advice to understand how best to negotiate the new playing field. Assuming these agreements are concluded, which seems likely in the case of TPP, companies will need help understanding how the terms affect their operations and provide new opportunities for growth. In addition, dispute work may arise as the participants to the agreements struggle to implement obligations or disagree as to the scope or application of certain obligations.

With regard to the effect of these agreements on future FTA negotiations, when the United States agrees to a new FTA, that agreement becomes the benchmark for expectations in subsequent trade negotiations. Thus, USTR will use the results of key TTIP and TPP negotiating topics as a starting point for future trade agreements. 

Daniel Crosby: One of the most important developments in regional trade agreements is the introduction of specific rules to address regulatory issues, non-tariff barriers, and concerns related to “trade and” labour rights, the environment and other societal and health-related themes, including pharmaceutical patents and pricing. Our approach to client service in this marketplace remains anchored in specialisation and collaboration across substantive practice areas and geographies. In order to resolve issues for our clients under these 21st century agreements, we anticipate an increasing need to compose teams of trade practitioners with our regulatory lawyers across jurisdictions. This will require expertise in the law and practice of international organisations that develop underlying standards and rules including the World Health Organization, the World Intellectual Property Organization, the International Telecommunications Union, and even the UN Human Rights Council as more specific disciplines evolve in the area of business and human rights. 

Warren Maruyama: TPP is a historic agreement – by far the biggest and one of the most comprehensive FTAs in history – as long as Congress approves it. In the last two decades, US and EU FTAs have significantly expanded the scope of their FTAs to cover things like IPR, investment, pharmaceutical pricing and reimbursement, financial services, cross-border data flows, enforceable labour and environment rules, and e-commerce. While we don’t have the text yet, TPP appears to take this even further with state-owned enterprise, regulatory coherence, and WTO-plus SPS rules, including some form of enforcement. This trend can only continue. The Doha Round is dead in the water, and FTAs and plurilateral agreements have become the only avenue to deal with new issues. For lawyers, TPP and the other new FTAs should generate plenty of work. First, it’s not going to be easy to get Congress to approve the agreement. Second, there’s going to be a need to interpret and apply the new rules. TPP provides new grounds for legal challenges or diplomatic pressure for a lot of age-old trade problems like customs hassles, IPR theft, and SPS barriers. There’s also ISDS, which has mushroomed, since it’s an effective tool to challenge expropriations and abusive government regulations. Finally, TPP is likely to lead to major shifts in trade and investment flows – more deals, mergers and acquisitions, financing, and new supply arrangements, as companies try to take advantage of duty-free access to both the US and Japan. I expect the sourcing of some goods to shift from China, Taiwan, Hong Kong, Thailand, Philippines, and India to TPP suppliers in Vietnam, Singapore, Peru and Malaysia, particularly in sectors with traditionally high tariffs, such as textiles, footwear, apparel, etc. There will also be increasing pressure on the non-TPP economies (eg, Korea, Thailand, Philippines, Taiwan, Indonesia, China) to either join TPP or do big regional FTAs of their own, like RCEP.

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