On 8 February 2017, President Chris Ward of the ILA (Australian Branch) joined an esteemed panel of speakers for an event hosted by the NSW Bar Association. The topic was the impact of Donald Trump on international law, whether in present or future.

The panellists included:

  • Professor Simon Jackman of University of Sydney’s United States Studies Centre;
  • Professor Vivienne Bath of University of Sydney’s China Studies Centre;
  • Dr Chris Ward, an international law barrister at 6 St James Hall Chambers; and
  • Tim Castle, Chair of UNCITRAL National Coordination Committee of Australia.

Appointment of Judges

President Trump’s nomination Justice Neil Gorsuch to the US Supreme Court has dominated media headlines. Yet what is less known is that Trump will be able to fill at least 117 judicial vacancies in the US federal courts, or the equivalent of one-third of the current bench. More spots may open up as much of the existing bench is rapidly ageing.

These appointments are important for two reasons. Firstly, in addition to many abortion rights and immigration cases, the majority of cases in international commercial law in the US is dealt with at the District and Circuit Court level Secondly, nominees for the Supreme Court often come from the Circuit Court. Thus, Trump’s judicial picks will have a significant impact on how the US interacts with and shapes international law, for many years into the future.

“America First­” v. American Isolationism

Simon Jackman argued that Trump’s policy of “America First” is not synonymous with the US government taking an isolationist approach. Rather, it may mean that the US will pivot to deal with the world on America’s terms, rather than follow those of the international community.

That said, isolationism in American electoral politics will probably grow, as the issue becomes increasingly partisan. Despite many Democrats favouring an isolationist policy under President George W Bush, the Republicans are now the party of isolationism. With recently elected Republicans taking their place this year, and the departure of the internationalist centre from the US Senate, which helped to fast-track the North American Free Trade Agreement (NAFTA) and North American Free Trade Agreement (NATO) in the late 1990s, the US may favour more isolationist policies.

US and China Trade Relations

According to Professor Vivienne Bath, President Trump’s rejection of the Trans Pacific Partnership (TPP) is a lost opportunity for the US. For many years NAFTA was the ideal model for multi-lateral economic trade agreements. The hope was that the TPP would become the model for the Regional Comprehensive Economic Agreement to follow a new framework.

Trump’s rejection of the TPP is an opportunity for China. Under President Obama’s administration, 21 cases were brought against China before the World Trade Organization (WTO) by the US, and China, along with South Korea, was excluded from the TPP. However, with Trump choosing to remove the US from the TPP, this leaves a gap that China would presumably fill if there is a free trade area created in the Asia-Pacific and beyond. This goes directly against Obama’s intention to exclude China in his pivot to Asia.

Obligations to International Law

Dr Chris Ward stated that in order to maintain the fabric of international law, states must not withdraw from treaties unless there are very serious reasons for doing so. Trump’s verbal attacks on numerous treaties, whether the Paris Climate Change Agreement or NATO, raise serious questions about the commitment of the Trump administration to these treaties, and the threat posed to international rule of law should the US choose to exit them.

Statements from President Trump indicate that there may in fact be a Brexit-like withdrawal of the US from international treaties. Trump has already rejected the TPP, and his heavy criticism of NAFTA could be a sign of future withdrawal, or at least lead to serious scrutiny that could radically alter it.

According to Dr Ward, treaties at risk include the Paris Agreement, the Iran Nuclear Agreement, NAFTA, NATO, the Japan-US Security Treaty, and maybe even the WTO. However, some of them may be retained if the international community can address the concerns underlying Trump’s disinclination toward them, such as equitable division of costs for NATO, which are disproportionately borne by the US at present.

That said, even if Trump tries to withdraw from these treaties, the withdrawal process is not simple or instantaneous. A notable exception is treaties entered into via executive order, such as the Iran Nuclear Agreement, which can be revoked in the same manner in which it was created. According to Article 50 of the Vienna Convention on the Law of Treaties, where a treaty is silent on withdrawal, it may be possible yet at least 12 months notice is required.

The biggest concern is the consolidated impact of withdrawal from multiple treaties at once, as the repercussions of this will be widely felt across the international community and raise serious concerns for the future of international law.

International Arbitration

Tim Castle reflected on how President Trump will change the US’ relationship with the United Nations and international arbitration regimes. The New York Convention was one of UNCITRAL’s key achievements, with over 156 parties having signed on.

Yet in future, the US may lose its seat at the table for developing these texts that provide international arbitration rules and guidelines, to be replaced by the European Union and China, amongst others. For example, the UNCITRAL Working Group II is examining the possibility of a convention for international commercial settlement agreements that arise from conciliation. Furthermore, the Swiss have proposed a new international convention for contract law, which would harmonise and unify contract law in international trade. In Trump’s America, the US may not be a prominent voice on the development of this law.

 

Taxation and Regulation

President Trump is seeking to reduce the company tax rate from 35% to 15%, although the Republican Party aims for approximately 20%. Ideally, a lower tax rate would increase the repatriation of US assets. However, it is unclear if Trump is seeking mandatory or voluntary repatriation, with the latter approach favoured under President Bush.

This could have significant effect on large US companies like Apple, which, according to the EU Commission, retains an immense part of its earnings in Ireland. If forced to repatriate its assets, Apple will need to pay a significant sum to cover the difference in tax. Given there are over $2 trillion of US assets overseas, Trump’s decision on this matter would have enormous impact in international finance and international tax law.

In regard to regulation, the review and potential repeal, of the Dodge-Frank Act could also have significant consequences. The Dodge-Frank Act is designed to restrict financial institutions from using speculative investments, which resulted in the 2007 Global Financial Crisis, requiring banks to hold significantly more capital than they used to. Although Australian banks generally are not active in the US, a repeal of Dodge-Frank could lower the compliance costs, and signal a return to the market conditions that caused the 2007 crisis.

Conclusion

The take-home message was that it takes a long time to build a reputation, but little to destroy one. This can be applied to either a career at the Bar, or in relation to a nation’s respect for international law. Clearly, President Trump is going to have a long-lasting impact on the future of international law.

Thanks to the NSW Bar Association for partnering with the ILA (Australian Branch) for this event.