Roundtable: Trade & Customs 2010
Who's Who Legal has brought together four of the leading practitioners in the world to discuss levels of work, regulatory changes, up-and-coming jurisdictions and what the future has in store for trade and customs specialists.
Participants
Who’s Who Legal: What levels of activity are you noticing? How has trade and customs work been affected by the downturn? What areas of work are busy now?
Daniel Crosby: King & Spalding’s international trade practice has had a very active year so far, and our recent hiring reflects the firm’s confidence in the future of international trade practice generally. Since June we have hired three additional attorneys in Geneva who are all quite busy, and a fourth trade counsel started on 1 November. We intend to recruit two more trade/WTO specialist associates in Geneva during the coming year. We are especially pleased that Bruce Wilson has joined our trade group based in Washington, DC, after leading the legal division at the WTO for the past eight years. King & Spalding has expanded its trade group in order to service a sustained high level of WTO-related activity with both government and private sector clients.
We attribute a good deal of our increased activity over the past year to the global economic crisis. King & Spalding’s work in this connection concerns the use of WTO, trade and investment rules to help clients address market access and competition issues. The economic downturn has encouraged our corporate clients to seek ways to improve balance sheets, increase sales and to introduce or challenge measures that affect trade. Measures that were seen as nettlesome discrimination in good times are now worth addressing because profit margins are under pressure. King & Spalding’s success in this work is based on its culture of cooperation across offices and practice areas, our practical manner of helping clients understand how international trade rules can play an important role in achieving their corporate objectives.
Ed Sim: Traditional trade remedy (AD/CVD) work has been very slow in the US, although it is picking up in the EU and has remained quite active in India, Thailand and other Asian jurisdictions. The downturn adversely affected domestic industries, but proving that imports caused their economic difficulties, as required by the WTO and national law to initiate a trade remedy case, has been very difficult to establish. Appleton Luff’s geographic (going beyond the developed world) and intellectual (trade infrastructure support, WTO and FTA advisory matters) diversity of work has helped us thrive in the downturn.
Paulette Vander Schueren: Trade remedy work was somewhat slower in the EU in 2009 but has certainly picked up, becoming very lively in 2010, including the two first EU anti-subsidy investigations targeting Chinese products and the EU for the very first time carrying out an anti-dumping, safeguard and anti-subsidy investigation into the same product (modems from China). Trade and customs compliance may have been slower in 2009 but is definitely picking up and 2009 for us at Mayer Brown was still characterised by an upturn in customs litigation. Moreover, 2009 and 2010 have been busy in the customs field and in particular in the field of customs valuation. The EU’s negotiations of free-trade agreements was another issue of advice.
Samir Gandhi: The economic downturn has seen a tangible increase in the use of trade protectionist measures, and in the last year alone, India has initiated as many as 18 anti-dumping investigations. At the same time, as the Indian economy continues to grow, we are also seeing an increase in the number of investigations in which Indian companies are being subject to trade remedy measures in a number of other jurisdictions, including the European Communities, South America (Brazil, Argentina and Peru), North America (USA and Canada), South Africa, Ukraine and Russia. Naturally, trade remedies work, both before the Indian authorities and in foreign jurisdictions has seen maximum activity in the past year.
On the other hand, the slow pace of negotiations at the WTO has meant that trade policy-related work is limited to issues pertaining to bilateral trade relations and preparatory work for ongoing or proposed negotiations for free trade agreements. The conclusion of the India-ASEAN and the India-Japan free trade agreement has resulted in increased flow of FTA related trade advisory work.
Who’s Who Legal: Have there been any recent regulatory changes in your jurisdiction that have affected your practice? How zealous are regulatory authorities at present? Have you noted a shift in their approach or areas of concentration?
Ed Sim: The WTO’s minimum standards have prevented national governments from engaging in overt acts of protectionism. Instead we are seeing informal protectionism, such as China’s purported temporary export ban on rare earth minerals to Japan. We are also seeing new trade issues arise such as data sovereignty (eg, the disputes between Google and China and between RIM and various governments). The new FTAs under negotiation, such as the Trans-Pacific Partnership, are trying to cover these areas, but crafting rules and an operating system that will satisfy the private sector and national governments will be rather difficult.
Samir Gandhi: The Indian economy was quick to recover from the global economic downturn. The central government did take certain steps at the macroeconomic level to minimise the impact of the downturn, for instance by way of interest rate revision for commercial lending. The response of the other regulatory authorities was largely ad hoc and aimed at addressing sector-specific concerns. Such regulatory measures range from being protectionist (mandatory certification requirement for steel products) to promotional (various forms of assistance to enhance exports).
In terms of institutional set-up, the most notable development over the last year has been the constitution of the Indian anti-trust regulator; the Competition Commission of India. It will be interesting to see how the Competition Commission of India reconciles the seemingly protectionist objective and application of trade remedy measures (for instance anti-dumping) with the competition rules.
Daniel Crosby: A key change in US trade remedy practice was the Commerce Department’s 2007 decision to apply subsidies rules to imports from China. King & Spalding’s success in persuading the Department to reverse a 23-year policy not to apply subsidies rules to non-market economies was a watershed that has led to the general application of this new approach in the United States and now in the EU. King & Spalding has represented six industries in subsidies investigations of imports from China, most recently the aluminum extrusion industry in a case that is pending. King & Spalding also has led policy arguments for legislation requiring Commerce to investigate whether currency manipulation is a countervailable subsidy. We expect these changes to lead to an increase in subsidies investigations against Chinese products.
Who’s Who Legal: In which jurisdictions are you noticing a growing interest for trade and customs work? How has this affected the trade and customs practice at your firm? Has your firm set its sights on developing its practice in other locations?
Paulette Vander Schueren: Mayer Brown’s trade team has its members in the Americas, Asia and Europe but with an added focus on Latin America. This being said, because of the global footprint of our clients we have always assisted outside our own jurisdictions. The multiplication of the EU’s free trade agreements in Asia and Latin America also gives a new impetus and increased interests for trade and customs issues in the candidate FTA countries.
Daniel Crosby: Trade work has taken off, particularly in the Middle East, from North Africa through to the Gulf. We expect this trend to continue in the coming years as major capacity comes on stream in energy-based, trade-sensitive sectors like petrochemicals, plastics, metals, and fertilisers. Regional producers are confronting for the first time this year trade remedy investigations in export markets, and continue to face strong pressure from imports in national markets, creating new opportunities for both respondent and petitioner work. King & Spalding has leveraged its strong office presence and client base in the Gulf and long-standing trade policy relationships in the region to offer a broad range of services in representing producers and new trade associations in the region, in providing trade policy advice to governments, and in training trade remedy specialists in regional trade ministries.
WTO rules continue to gain global currency, and we increasingly receive mandates to ensure that that our clients obtain the full benefit of WTO rules, and of services commitments in particular. We have noticed an increasing sensitivity to WTO obligations - and potential WTO challenges - in Central and Eastern Europe, where we have applied WTO arguments to resolve market access issues in several sectors and to oppose the introduction of protectionist measures.
Samir Gandhi: Our interaction with law firms, business houses and regulators in foreign jurisdictions has traditionally been limited to such jurisdictions where Indian firms faced trade remedy-related investigations or against which India initiated such investigations. However, with the recent spurt in the signing of free trade agreements, our interactions with the FTA partner countries has increased manifold. Most notably our interaction with ASEAN member countries and Japan has increased after the signing of the India-ASEAN and India-Japan FTA.
Ed Sim: Trade issues increasingly involve the developing world. We have built our practice on the continued proliferation of trade issues in Africa, Asia and Latin America. In the past year, Appleton Luff lawyers have advised on the accession of Iraq and Afghanistan to the WTO, Brazilian telecom issues, developing country issues in the Doha Round, and African, Caribbean and Pacific nations’ trade negotiations with the EU. Because we are focused on trade and investment issues, we feel we can handle such complex matters.
Who’s Who Legal: How is the future looking for trade and customs practitioners? What particular challenges are in store?
Ed Sim: The customs and trade practice is going “back to the future”, with more practitioners heading to boutique practices. Trade practitioners primarily operated in boutiques until they moved into large multinational practices in the mid-1980s. Now, improvements in technology (allowing for online submissions, for example), the spread of legal talent around the world, and increasing concerns about costs and conflicts have motivated a shift back to the boutiques.
Large multinational firms will continue to service large matters, such as Airbus-Boeing. Yet regardless of where she practices, the trade practitioner will need the intellectual flexibility to handle diverse matters going beyond the standard customs and trade remedies matters (FTAs, climate change regulations, etc) and to work with counterparts around the world who may not necessarily be part of the same firm. We’re investing our time and resources to prepare for these changes.
Samir Gandhi: Smaller and specialised law firms have led the way in trade and customs law practice in India. It is likely to remain so for the foreseeable future because of their specialised skill sets. In order to offer the whole bouquet of services-trade remedies, trade policy and trade advisory the trade and customs law team at the economic laws practice comprises not only of trade lawyers but also of chartered accountants and economists.
The future of trade and customs practitioners looks promising. While trade remedies will remain the fulcrum of the practice area, newer practice areas such as trade and environment, trade and energy, trade and competition are likely to determine the next set of practice leaders.
Paulette Vander Schueren: Boutiques and multinational firms will continue to exist side-by-side with the trade practitioners being required to show expertise of course, but indeed having to show as well the flexbility and capability of tackling a wide span of trade and customs issues. Cooperation with in-house or outside practitioners in a cooperative spirit on global issues is important. Long-standing experience with a given client and their products goes a long way to doing global international trade work.
Daniel Crosby: Law firms are usually quite conservative when expanding in terms of geography and headcount. King & Spalding’s recent establishment in Geneva and our addition of several seasoned lawyers in Geneva and Washington, DC expresses our very positive view of the future for trade and customs practitioners.