The International Who’s Who of Trade & Customs Lawyers has brought together Patricia López Aufranc of Marval O’Farrell & Mairal, Jean-François Bellis of Van Bael & Bellis, Steve Orava of King & Spalding, Amy Porges of the Law Offices of Amelia Porges and Eric Emerson of Steptoe & Johnson to discuss levels and types of work, emerging regions of interest, the impact of free trade agreements and changes in the legal market in their jurisdictions.
Patricia López Aufranc
Marval O’Farrell & Mairal
Lawyers we spoke to noted a consistently high volume of work in the areas of anti-dumping and countervailing, with much of this still directed at China. Is this a trend you have noticed in your jurisdiction and is it set to continue for the foreseeable future?
Patricia López Aufranc: This is correct. Sometimes China is investigated together with other origins. We believe this trend is set to continue for the foreseeable future. This is coupled with the fact that unless international brands manufactured in China are involved, most often Chinese companies choose not to participate in the investigations. In addition, as regards Argentina, probably in many cases the lack of interest in participating in a long and time-demanding proceeding is due to the fact that Argentina is a small market for most Chinese products, compared to global exports.
Jean-François Bellis: To date, the EU has opened only four new anti-dumping cases during 2013. This is significantly fewer than in previous years. The reason seems to be the almost exclusive focus of the European Commission’s trade defence department on the solar panel AD and CVD investigations against China. We expect that now that the solar panel case is almost concluded, a number of cases that were put on hold will be initiated. It can be assumed that most of these new cases will be directed against China.
Steve Orava: We are also seeing a high volume of work in the trade remedy area targeting China. We expect this work to continue although imports from other low-cost and planned-economy countries are also being targeted (eg, Vietnam). We are also seeing consistent activity outside the United States targeting unfair trade from China as other countries seek to protect their domestic manufacturing sectors. Countries like Brazil and India are especially active, with many US exporters caught up in investigations that remain primarily targeted at China. Bilateral trade tensions and ongoing trade negotiations are providing an interesting and often highly political context for these investigations, with China particularly active in taking retaliatory action through the use of these instruments.
Amy Porges: There are far more anti-dumping and countervailing duty orders in place in the United States than in any other country, though China, India and Brazil are rapidly catching up. Annual reviews of these orders continue to generate a steady flow of work for practitioners. China is the largest subject of new investigations and orders. Under China’s WTO accession terms, any WTO government can calculate anti-dumping duties using prices or costs outside China (until December 2016), and can calculate countervailing duties using market benchmarks outside China. These special provisions make trade cases against Chinese exports easier and less costly to pursue, whether it is in the United States, India, Brazil or elsewhere.
Eric Emerson: We continue to see a large number of anti-dumping and countervailing duty actions directed against exports from China. However, while in previous years these cases were mostly initiated in the United States and the EU, developing countries such as India have recently become more active in initiating trade remedy proceedings against China. This trend is likely to continue, especially as China expands its trade volumes through its free trade agreements (FTAs), such as its FTA with ASEAN. At the same time, many industries have relocated from China to other South East Asian countries as a result of increasing labour costs and the strengthening of the RMB. As a consequence, we expect that future cases will likely target higher value-added exports from China, such as appliances and electronics, where China continues to have a competitive advantage.
We have heard reports of a significant increase in dispute work over the past year or so, notably in regards to customs valuation and classification, trade remedies and also World Trade Organization disputes. Have you noticed an increase in dispute work? What are the key reasons for this?
Patricia López Aufranc: There is a significant increase in claims against Argentina for violations of the WTO Agreement, on the grounds that it is imposing formal and de facto restrictions which conflict with WTO rules. Also, Argentina is bringing claims against other WTO members on trade barriers to its main products. As Argentina is facing balance of payment difficulties, trade-related disputes involving Argentina would most probably continue.
Jean-François Bellis: The firm has traditionally been handling a large volume of disputes work before the national courts, the European Court of Justice and the WTO. There has been an increase during the last year, most notably in WTO and customs disputes while the number of trade defence cases brought before the General Court has more or less remained stable. The main reason for the increase in WTO disputes is probably the more proactive role played by China in WTO disputes and the dissatisfaction caused by poor compliance with their WTO commitments by new members such as Russia and Ukraine.
Amy Porges: As the clouds of the global recession lift, clients have become more willing to invest in litigation and more willing to defend markets. At the peak of the global recession in 2008–09, domestic firms that might have been petitioners in trade remedy cases were hard-pressed, but imports were declining. As trade recovers, the demand for trade remedies increases. In the WTO, disputes are driven by the impact of market access barriers on exporting business. The recession led to enactment of protectionist measures; if the WTO’s Doha Round were successfully moving forward, governments might have been able to resolve problems by negotiation, but the Round’s continuing stasis leaves no option but to litigate. 2013 has seen an uptick in WTO panel work. As the panels’ decisions are appealed, 2014 will see a traffic jam at the WTO’s Appellate Body. Lawyers routinely assist complaining or defending governments in preparing written dispute submissions and sometimes in oral advocacy to a panel. The WTO also permits its member governments to submit views as interested third parties in disputes, and preparation of these submissions provides a steady flow of work for lawyers in this area.
Steve Orava: As a consequence of the stalled multilateral Doha Round negotiations at the WTO, we are seeing a rapid increase in bilateral and regional trade negotiations as well as efforts to use dispute settlement to address key trade and investment-related concerns. The new WTO director general has injected new energy into the WTO negotiations, but we see no comprehensive resolution in sight and expect that WTO dispute settlement activity will continue to be active. The areas with the most activity include appeals of trade remedy determinations and cases addressing the conflict between member countries regulatory autonomy in the public health and environmental areas and international trade rights and obligations. Key decisions in this area are expected to include how the United States applies its countervailing duty laws to China and the WTO consistency of Australia’s “plain packaging” of tobacco products.
Eric Emerson: China remains an active user both of its trade remedy laws, and of its rights under the WTO Dispute Settlement Understanding. Regarding trade remedy proceedings in China, many observers have noted that China has tended to use its trade remedy proceedings in a more strategic manner in response to cases initiated against its own exports. In the WTO context, China continues to exercise its rights under the Dispute Settlement Understanding, particularly in order to challenge trade remedy proceedings in which it has been a respondent. To the extent that trade remedy cases continue to be filed against China around the world, we anticipate that both of these trends will continue.
Some of those we spoke to commented on a growing interest in African countries and are expecting a growth of work with this continent. Is this something you expect to see? What other emerging areas do you expect to see work from in the near future?
Patricia López Aufranc: We have not yet seen an increase of work in connection with Africa. The Argentine government has made Africa, especially oil producing countries such as Angola and Guinea Equatorial, one of its main foreign trade priorities. However, the efforts have not yet produced important enough results to notice an increase in work.
Jean-François Bellis: We have indeed seen an increasing use of the trade defence instruments by North African countries. We now regularly assist investigating authorities or domestic producers in those countries in preparing complaints and/or handling investigations.
Amy Porges: Trade with Africa may be rapidly growing, but from a low base. While trade generates a regular need for services in the customs law area, trade remedies only come into play when trade rises to the level that it might cause or threaten injury to domestic industry. US imports from Africa have not yet reached that level. As for other areas, notably the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the EU and the US are already creating intensified interest among European organisations seeking better knowledge of US trade and regulatory laws to shape their objectives and inform their TTIP advocacy.
Steve Orava: From an international trade perspective, we are seeing growth in virtually all geographies. Russia’s WTO accession, for example, has increased the focus on trade-related measures in Russia and the surrounding region. The Middle East continues to be strong due to the implications flowing from its competitive advantage in natural resources and the massive expansion of its petrochemical and other manufacturing capabilities in energy intensive sectors. Regional integration efforts in both these regions will also highlight a myriad of trade issues both within the region and those seeking market access from outside. With the Trans-Pacific Partnership (TPP) negotiations centered on key South East Asian countries, this area has also emerged as a focal point for trade and investment issues. The continued and vocal efforts of Brazil and other Latin American countries to protect their domestic industries, often in a discriminatory fashion, means that this area will also be subject to increasing scrutiny. Finally, in relation to Africa, we are not seeing more interest in the region in the trade area, although other areas of practice are seeing some growth. Any further developments in Africa will depend on the scope of political instability in key markets and other ongoing challenges to certainty and predictability in many of these countries.
Eric Emerson: Over the past decade, China has attempted to develop positive political and economic relationships with many countries throughout Africa. As a result, we have seen few trade remedy cases initiated against imports from Africa. Since China’s accession to the WTO, only one case has been initiated against an Africa country (South Africa), and we doubt that cases in this area will grow. In China, the likely targets for trade remedy proceedings will remain the United States, the EU, Korea, Japan, to some extent India, and some of the countries in the South East Asian region.
How is the increased number of freetrade agreements impacting on your work and this area of law?
Patricia López Aufranc: We have not seen a significant impact of freetrade agreements on our work. The Mercosur, of which Argentina is a member, has entered into free trade agreements with certain regions (such as Egypt, Israel and Central Africa) but the trade flow with these countries is not significant. The Mercosur is negotiating a freetrade agreement with the EU. In case an agreement is reached, the impact of such agreement could be large, since the EU is one of the main trading partners of the Mercosur.
Jean-François Bellis: The impact is currently limited. We see an increase in advisory work for companies that are interested in using FTA preferences. It is expected, however, that the increase in FTAs may eventually lead to a reduction in trade defence actions and that there may be a shift away from the WTO dispute settlement mechanism towards the dispute settlement provisions included in such FTAs. Also, the greater emphasis placed on non-tariff barriers and regulatory convergence may lead to disputes that are more concerned with issues of national treatment and less with tariffs. In sum, in case the EU-Japan FTA, the TTIP and TPP agreements all materialise, it will require a reorientation of the trade practice away from AD and CVD.
Steve Orava: The increased number of free trade agreements that have been concluded and are currently being negotiated requires heightened diligence in understanding the business of our clients and their commercial objectives. These agreements and negotiations were only achieved through the hard work of negotiators around the world, and the benefits can only be realised if affected companies take them into account in operating their businesses. Our role is to identify opportunities under these agreements and in the context of negotiations and pair them with the commercial objectives of our clients. In the best case, free trade agreements open new commercial opportunities, and our proactive work can bring first-mover opportunities to our clients. This requires greater dialogue and partnership with clients and demonstrating how we can add value to them. Although this has always been part of practising in this area, the complexity and number of agreements and negotiations requires increasing diligence to effectively navigate law, politics, and diplomacy for the benefit of clients.
Amy Porges: The Trans-Pacific Partnership (TPP) and the EU-US Transatlantic Trade and Investment Partnership (TTIP) are top-of-mind issues for clients and therefore for their legal advisers. Together, they will cover over half of world GDP. TPP will create new opportunities for clients to invest and provide services in markets across the Pacific, including NAFTA, Japan and new high-growth markets such as Vietnam. For TTIP, the key item will be regulatory harmonisation for goods and services, and US and EU stakeholders that work together to get standards and testing rules rationalised can capture large gains. We see interest from clients in using FTA negotiations to solve market access irritants and tackle new issues such as freeing cross-border data flows. These mega-regional agreements will attract further members – Korea, Mexico, Turkey and Canada have all been named as additional partners.
Eric Emerson: The explosion of bilateral and regional FTAs in the wake of the failure of the Doha Round of WTO negotiations is generating a substantial amount of interest from government, industry association and corporate clients. China has negotiated over 10 bilateral and regional free trade agreements, including FTAs with Hong Kong and Macau, and has several more under negotiation or active consideration. For example, in part as a reaction to the Trans-Pacific Partnership, China has announced its intention to negotiate a three-way FTA with South Korea and Japan. While China’s FTAs are generally more limited in scope than those negotiated by the United States, they nevertheless raise significant compliance issues for US and EU companies, most of which have supply chains that run through China. During the negotiation phase, we have also been working closely with relevant parties to help them develop successful negotiating positions.
We heard reports of firms building up their trade practices and of increased competition in the legal market. Have you seen this in your jurisdiction? What impact is it having?
Patricia López Aufranc: Our firm developed a trade practice independent from the competition practice around 2006, with lawyers devoting a significant amount of their time to trade related issues. This, coupled with the fact that we participated in some of the most important cases in recent years allowed us to acquire unparalleled experience. With respect to antidumping investigation, since there are about four to six dumping investigations per year, it is difficult to match the experience resulting from the early start. We have also had the opportunity to get involved in WTO cases. In recent times, as a response to trade restrictions and trade issues becoming an everyday concern of companies, several law firms have started to develop an international trade practice, generally by the same team that does competition law or stemming from those practices. We have found that in this area, an economic and finance background is of great help to analyse problems and find solutions. Our firm has professionals with unparalleled finance training, which is rare in this market.
Jean-François Bellis: The Brussels market for trade work is dominated by relatively few firms and individuals. Past experience has shown that it is very difficult to enter the market as a newcomer and that many of those that tried have withdrawn after a few years. We do not expect that this will change in the near future.
Steve Orava: We are not seeing growth across the board or any substantial increase in the already highly competitive trade area. We have seen some structural changes recently in the trade bar in the United States, with many experienced practitioners establishing or moving to boutique firms as well as other practices engaged in some consolidation. From King & Spalding’s perspective, we continue to grow our substantive and geographic diversity in order to be responsive to the needs of our clients across the world. For example, we have recently added senior trade capacity in London and Geneva.
Amy Porges: Trade firms may be expanding in Brazil and other jurisdictions that have had an upsurge of trade remedy investigations, but in the US, the trade law market has always been quite competitive, and increasingly so post-2008 as clients take a sharp look at their legal spending. There has been an increasing trend in which well-respected practitioners move their practices to lower-overhead platforms, including boutique or solo trade law or customs law firms. There are too many examples to list. The nature and scale of trade, customs and WTO practice lets them do this while delivering global-quality service.
Eric Emerson: The international trade practice has always been highly competitive, with a group of excellent lawyers from around the world pursuing sophisticated and increasingly cost-conscious clients. In this respect, the pressures that international trade lawyers face are not materially different from those faced by the rest of the profession. To meet this competition, we have continued to improve the quality and efficiency of our trade practice. For example, when we opened our office in China, I relocated to Beijing in order to give us “boots on the ground” in China, which has in turn allowed us to improve the quality of our representation of clients here and throughout the region. We have also responded to client requests for more flexible billing arrangements to provide greater certainly on the cost of these cases.