Wednesday, September 7, 2011

Turkey Risks Expulsion from WTO

International trade expert Attorney Avigdor Dorot explained that Erdogan's announcement constitutes a violation of international law. "Turkey is a signatory to the Israel Free Trade Treaty and is a member in the World Trade Organization together with Israel. The WTO forbids member states from boycotting each other and Israel or Israeli companies affected by such a boycott can turn to WTO bodies and sue a country for illegal boycott."

Dorot noted that the fact that the suspension of trade applies only to defense ties does not interfere with the possibility of a lawsuit, explaining that civil suits can be filed, and have been filed, against defense bodies.

"If Israel proves that Turkey suddenly stopped buying Israeli goods because of a political directive, Israel or Israeli companies can turn to international bodies and claim there was a violation of world trade agreements."
The key here is 'private companies.' The US may be able to pressure the Israeli government to stand down, but it is less likely to be able to do so if the government is not the major stakeholder in the company. Additionally, if I were a shareholder in a publicly-held defense contractor (like Elbit Systems, for example, which is a major manufacturer of unmanned aerial vehicles, and which is publicly traded in the US), and I saw that (a) my company was being boycotted by Turkey and (b) management wasn't turning to the WTO, I would file a shareholders' derivative lawsuit demanding that management sue Turkey in the WTO. While that claim might get dismissed under the business judgment rule, it might not, and even if it is dismissed, directors would be wiser to file the complaint with the WTO than to defend my lawsuit.

Heh.posted by Carl in Jerusalem

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