International Business with law
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Case study report
The fate of Taamail’s exports under Solia’s new Generalized System of
You are the members of the in-house legal team of Taamail Ltd., a very successful medium-sized company producing apparel articles and clothing accessories with 70% of your sales dedicated to exports. The company is based in Findonia, a state currently listed as a Least Developed Country (LDC) both by the World Bank and UNCTAD. Despite its LDC status, Findonia’s economy is growing fast and, according to economic forecasts by the World Bank and the International Monetary Fund, it is expected to soon exit the cohort of LDCs and join that of developing countries with emerging economies.
The Republic of Solia, a ‘Western’ developed country which absorbs 60% of your company’s exports, has recently modified via national legislation its Generalized System of Preferences (GSP): from January 2016 the GSP import tariffs for textile products will increase from 3% to 5% ad valorem, while for listed LDCs (currently including Findonia) the special tariff regime will keep customs flat at 0%. However, the recent Solia national ‘GSP Act’ contains a special ‘counter-terrorism action waiver’, providing that: “any GSP-eligible country which adopts and implements policies aimed at combatting national and international terrorist activities will enjoy duty-free imports on listed products, regardless of its economic status”. Among the listed products also in the GSP Act are textile and apparel articles.
For Solia’s textile market, Fugit Ltd. is your main competitor. Fugit is a textile producer based in Bodiland. Unlike Findonia, Bodiland is a developing country hosting several international terrorist cells and training camps in its Southern regions. As a response, its Parliament has recently adopted a new ‘International Terrorism Cooperation Act’, containing specific provisions which appear to be in line with Solia’s ‘terrorism action waiver’ of its ‘GSP Act’.
Until recently, the LDC status of Findonia has clearly boosted the competitiveness of Taamail’s products in Solia’s textiles market, especially against Fugit’s products. Yet the recent regulatory developments seem to reflect a complex scenario.
You are expected to circulate a briefing (3.000 words limit) at the next Taamail’s Board of Directors about:
1– An introduction to the relevant WTO regulatory context in this case;
2– a detailed description of possible impacts on Taamail’s business stemming from regulatory changes;
3– the legality of Solia’s GSP Act under WTO Law, according to a detailed analysis of the
relevant WTO case law; and
4– an institutional engagement strategy to get Taamail’s situation and claims heard by Findonia’s government and the WTO’s organs.