Volume 9, Issue 2 (Fall/Winter 2004)

This volume contains three articles and two comments on current international and comparative law issues. Available online at HeinOnline, Westlaw, or LexisNexis.

GATT Article XX and Proximity-of-Interest: Determining the Subject Matter of Paragraphs B and G. 9 UCLA J. Int’l L. & For. Aff. 137.

The interpretation of GATT Article XX has begun to play a critical role in defining the relationship among international trade law, international environmental law, and general international law. Different thresholds for provisional justification of trade measures under paragraphs XX(b) and XX(g) suggest that each paragraph should ad- dress different types of policies and measures. However, jurisprudence on paragraph XX(g) appears to make paragraph XX(b) somewhat redundant and raises the issue of whether paragraphs XX(b) and XX(g) have been interpreted in accordance with the rule of effective treaty interpretation. This article develops an analytical approach to take in deciding whether to address a trade measure under GATT paragraph XX(b) or XX(g), based on the proximity-of-interest between the country that applies trade restrictions and the environ- mental or health problem that is addressed. This paper proposes that the subject matter be assigned based on the location of the environ- mental concern, with domestic concerns addressed in XX(b) and transnational or global concerns under XX(g). An analysis of Article XX, applying the rules of treaty interpretation of the Vienna Convention, supports this interpretation. The adopted body of GATT and WTO jurisprudence also supports this interpretation, with the exception of one case.

At the Intersection of North American Free Trade and Same-Sex Marriage. 9 UCLA J. Int’l L. & For. Aff. 163.

Using same-sex marriage as a presently salient site of cultural struggle, this article asks whether the U.S. can expect economic integration with Canada-on the scale envisioned by the North American Free Trade Agreement (NAFTA)-without feeling the influence of Canadian culture. The author comes at this question from the United States side because, while much has been written from Canadian points of view as to whether it is possible to protect and maintain national differences in the face of economic integration with the United States, very little has been written about whether economic globalization in North America could mean that Canadian cultural norms will make their way, in some version or another, to U.S. soil. The author argues that recent legal, economic, social, and technological developments make it increasingly unlikely that the United States can continue to reject same-sex marriage (with very few exceptions) when Canada has already endorsed it. The article suggests that NAFTA is, in fact, an integrationist project, and concludes that the U.S. will not be able to maintain its historic stance of political and cultural isolation – at least vis-ei-vis Canada – in the face of economic globalization. This leads the author to ask whether international and comparative legal methods are able to account for norm harmonization and emerging relationships under regional trade agreements. The author suggests that the answer is “not entirely. ” Transnational economic integration may require a shift in the way we think about transnational relationships, economic globalization and the “nation-state.” In the end, the author argues for a transnationalization of methods to better understand these concepts and phenomena.

Rethinking Property Rights in Urban China. 9 UCLA J. Int’l L. & For. Aff. 227.

Urban redevelopment on a massive scale is forcing millions of Chinese homeowners to sell out to developers at government-set, be- low-market prices in a process that affords them very few legal rights. Private home ownership in cities has become the norm in recent years, but the state still owns all urban land. Since 1988, the government has fostered a private market in temporary land-use rights, but the laws governing this market protect the state interest in land while offering few protections for new land-use rights buyers or homeowners already in occupancy. Local governments have virtually unlimited discretion to approve redevelopment projects and delegate eminent domain-like powers to redevelopers. Chai qian, or “demolition and relocation,” emerged as the leading cause of public dissatisfaction with government in Chinese cities in 2003. This article is the first in English to explain the weak protection for urban property rights and the serious consequences this holds for China’s economic development and social stability. Property owners must be empowered to hold the government to a “public interest” test for forced sales and to demand market value compensation. China’s chai qian problems challenge economic models that urge transition countries to conduct economic reforms before at- tempting political reforms. Some economic reforms cannot succeed without laws that protect market participants. If China does not utilize law to mediate the inevitable conflicts over land use during this period of rapid economic development, it bodes ill for China’s broader ability to replace administrative diktat with the rule of law.

COMMENT: Rules of Engagement and Fratricide Prevention: Lessons from the Tarnak Farms Incident. 9 UCLA J. Int’l L. & For. Aff. 301.

“The secret rules of engagement/ are hard to endorse / When the appearance of conflict / meets the appearance of force . 1.. ” I On April 17, 2002, two American F-16 pilots mistakenly engaged a Canadian infantry company conducting training at Tarnak Farms, Afghanistan. The subsequent bombing killed four Canadian soldiers and seriously injured eight more. According to the Canadian and American investigation boards, pilot error was the primary cause of the accident. Specifically, the pilots did not follow the rules of engagement (ROE) in place at the time. However, evidence in the inquiries points to the pilots’ belief that they were justified in invoking their right to self-defense. Is it possible that it was the ROE them- selves that contributed to the fratricide? Faulty ROE have been identified as a proximate cause of fratricide and military mishaps in the past, specifically in Lebanon, Iraq, Somalia, and Vietnam. In this comment, I draw upon the lessons of previous military law scholars and apply those lessons to the Tarnak Farms bombing. Have we learned from our mistakes? I conclude that the ROE were deficient and may have contributed to the incident. Specifically, I find that the self-defense authorization provisions were ambiguous, that training on the ROE was lacking, that the ROE were not flexible enough to change with the mission, and that the ROE focused on a- fictional status-based/conduct-based dichotomy that should have been dis- carded long ago.

COMMENT: Transfer Pricing in the World of Services and Intangibles-A New Challenge to Preserving the Corporate Tax Base. 9 UCLA J. Int’l L. & For. Aff. 323.

This article traces the history of efforts by Congress and the Internal Revenue Service (IRS) to curb the abuses of corporate income shifting and the erosion of the corporate tax base. Specifically, the discussion focuses on Section 482 of the Internal Revenue Code (the Code), which operates to prevent multinational corporations from artificially reducing their tax burdens by applying non-arm’s length transfer prices to their intra-company transactions and lodging a dis- proportionate share of their consolidated income in low-tax countries. This problem has intensified with the emergence of globalization and the increased transfers of high-value intangibles and services between related corporate entities. The current literature acknowledges that the IRS specifically faces difficulties in identifying the exact point in time when a controlled corporate taxpayer has generated income through an intangible contribution or has incurred a specific taxable benefit by way of shared or received services. This article discusses in detail the most recent amendments to Section 482, which were filed in the Federal Register on September 5, 2003, with the intent to increase predictability and certainty for the corporate taxpayer and the IRS. It explores the potential administrative issues with the implementation of the new amendments and pro- vides a comparative analysis between the existing Regulations and their proposed counterparts. It further exposes the shortcomings of the existing arm’s length standard adopted by the Code and compares it to formulary apportionment, an alternative method proposed by le- gal commentators. Finally, the article suggests the adoption of a hybrid method combining the formulary apportionment and the arm’s length approach as a means of combating the erosion of the corporate tax base through income shifting.

Available online at HeinOnline, Westlaw, or LexisNexis.

%d bloggers like this: