Does Listing Ukraine as a Priority Foreign Country Violate International Trade Agreements?

There’s an interesting discussion that shows the increasing overlap between the intellectual property law bar and the international trade bar about the U.S. government’s decision to identify Ukraine as a Priority Foreign Country (essentially a serial IP abuser), neatly captured by this piece at IP Watch:

As described more fully below, any sanction of Ukraine, including removal of General System of Preferences (GSP) benefits, would likely violate WTO rules. Indeed, the listing of Ukraine as a PFC, and the more general operation of “watch lists” threatening sanctions for intellectual property matters, could be challenged under the WTO even prior to any sanction actually going into effect. …

This framework for unilaterally sanctioning foreign countries for intellectual property matters pre-dates the World Trade Organization’s rules. Indeed, it was the lack of binding international trade adjudication, such as that created under the WTO, which was the primary justification for Congress’s enactment of the 301 unilateral adjudication in the 1980s. There has always been a serious question as to how the statutory program could continue after the WTO, and there has been one adjudication of the more general 301 program explained below. …

After the WTO accords went into effect, the U.S. did not dismantle the Section 301 or Special 301 programs, which became the subject of a trade dispute in the WTO in United States – Sections 301-310. In that case, a WTO panel held that Section 301 sanctions were only still legal under the DSU because of a “Statement of Administrative Action” pledging to “base any section 301 determination” on “panel or Appellate Body findings adopted by the DSB” and only sanction countries with “authority from the DSB to retaliate.”

There is much more at the link, and it treads a bit into specialized language, but we encourage our readers to read the whole thing.

At this time, Ukraine has not filed an action under WTO enforcement mechanisms, so this discussion is somewhat academic. Outside of the immediate legal context, it is hard to avoid the conclusion that this label is being applied politically; after all, Ukraine is the sole occupant of the list, excluding notorious pirate countries such as Russia, Armenia, China, and Venezuela. For various reasons, relations with those countries remain delicate, and so Washington is apparently applying pressure where it feels safe to do so.

Which is a shame, because not only is it bad diplomacy, it may be bad law too.

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