Question 1

(a) Examine and list five (5) Generalized System of Preferences (GSP) donors and all their respective GSP beneficiary countries. Interpret the purpose of GSP by listing three (3) observations.

(b) “Trade War with China will benefit the United States’ GSP beneficiary countries.” Do you agree? Appraise this statement by providing a discussion of your position.

(c) Assume you are the sourcing manager of an automotive manufacturing plant in China. You face tremendous pressure to supply enough airbags for final installation to meet the quality assurance test. As a result of the local shortage, you are forced to source airbags from overseas. You contacted all the credible suppliers and confirmed that suppliers are from Australia, Germany, Iran, and Vietnam.

(i) The HS code of the airbag is 87089500 with the description “Safety airbags with inflater system; parts thereof”. List the import tariffs applicable to this product when imported from each of the four-sourcing countries.

(ii) Recommend which country you would source from. List your assumptions to support your answers.

(iii) Rules of Origin (ROO) to import HS 87089500 is Change in Tariff Heading.
Explain what this means

Question 2

Country A is a member state of the World Trade Organisation (WTO). Country A trades regularly with Countries B, C, D and E, all of which are also member states of WTO. Recently, Country A is having the following trade issues with each of these countries:

(a) Between Country A and B: Country B is a major importer of red wine and brandy from Country A. Recently, Country B has imposed a new internal taxation system for alcoholic drinks.

• For all red wines, the taxation rate is 5%.

• For brandy, the taxation rate of 15% is applied to imported products, whereas
the taxation rate for domestic produced is only 2% to promote local brands.

(b) Between Country A and C: Country C is also a major importer of white wine from Country A. Recently, Country C has imposed a new internal taxation system for beverages.

• For all imported white wines from Country A, it faced additional imported tariff of 6%.

• For all white wines sold in the country, the internal taxation rate is 20%

• For “White Ocean”, the non-alcoholic energy drink that is made by a domestic brand of Country C, the taxation rate is 5%.

(c) Between Country A and D: Country D is a major importer of diesel fuel from Country A. Recently, Country D enacted a new environmental law to prevent air pollution.

The new law sets out new rules for establishing baseline figures for diesel fuel imported from other countries as imported diesel fuel is the major source of air pollution in Country D. The new law, however, does not apply to domestic diesel fuel.

(d) Between Country A and E: Country E is a major importer of commercial vehicle from Country A. Country E now wants to encourage the local manufacturers to produce more commercial electric vehicles (EV). Country E imposes a scheme to subsidise the local EV manufacturers.

Under the scheme, Country E provides subsidies to local manufacturers for producing commercial vehicles. In addition, there is a tax exemption for the sale of domestic vehicle, while the sale of foreign commercial EV is subject to
a tax rate of 5%. Distinguish the trade issues of Country A with Countries B, C, D and E.

In your answer, you should appraise whether Country A has a prima facie case, on the grounds of violating the principle of national treatment, to commence proceedings against Countries B, C, D and E for their respective trade measures under the WTO dispute settlement system. You should cite the relevant WTO law, WTO dispute settlement cases or other authoritative
sources to support your answer.