Question

Together North Carolina, South Carolina, and Georgia produce a large amount of cotton each year. In an effort to protect their farmers from overseas competition, the governors of these three states met and agreed on a uniform 'inspection fee" to be imposed on all foreign cotton coming into their states through their ports. They vowed to do their best to get their state legislatures to adopt this fee as law. Would any legal problem arise with such a fee?

Answer 1

The inspection fee imposed by the three states is an example of trade barrier. This fee is hindering the overseas competition and dissuading them from entering the three states.

The trade barrier maybe illegal if it violates the international rules and agreements. The trade barrier regulation specifies and identifies illegal trade practices that may become actionable. The WTO agreement seeks to reduce trade restrictions on cross border trade and hence the trade barrier will become illegal if an EU exporter is unable to enter into a foreign market due to the fee. International agreements also contain rules for what can be done if these agreements are not complied with. A Dispute Settlement Body has been established in the WTO, which functions much like a court and the fee established by the states will be subject to dispute in this body.