HI5015: Legal Aspects of International Trade - Nissan Case

This report provides an in-depth analysis of the Nissan v. USA international trade case. It begins by outlining the background of the dispute, which involved Nissan importing machinery into the US and the subsequent imposition of custom duties. The report details the legal issues at stake, specifically concerning the interpretation of the Foreign Trade Zones Act and whether the machinery qualified for duty exemptions. It examines the arguments presented by both Nissan and the US government, including Nissan's reliance on a similar case (Hawaiian Independent Refinery v. United States) and the government's stance on the nature of the machinery's installation. The report then presents the court's decision, which rejected Nissan's petition, and the rationale behind the verdict. The report also discusses the limitations of the verdict, the impact on Nissan's business decisions, and its broader significance within the context of international law, including the protection of domestic industries and the evolution of customs regulations. The report concludes by highlighting the importance of carefully adhering to policy details.

Nissan Motor v. USA

Prosecutor’s Case
 The machinery imported into the US by Nissan was not considered to be
“merchandize” that could be exempted from being charged duties
 The “installing” of the machinery is what defies the policies guidelines
stated in the Foreign Trade Zones Act.
 Nissan paid Custom duties in the amount of $3 million after the
machinery had been installed at the warehouse in the subzone.
 The US government does not condone efforts made by other companies
to take advantage of the deferred duty payments at the trade zones

Nissan’s Defence
 Took reference from the Hawaiian Independent Refinery v. United States
to strengthen their claim
 Nissan executives believed that since all of their manufacturing was
being done within the boundaries of the subzone, so their machinery
was not applicable for duties

The Verdict
 The Court of International Trade rejected Nissan’s petition for a refund of
those duties on the basis of violation of the guidelines stated in the Act
 This affirmed verdict was passed because Nissan was seen to be
“installing” their machinery, which was not allowed in the Act to be
exempted from duties
 Relation to the Hawaiian case was not helpful for Nissan because the
crude oil that they produced did not leave the premises of the zone as it
was for the purposes of providing fuel to the other manufacturers in the
area
 Unlike this situation, Nissan was aiming to manufacture automobiles which
will indefinitely leave the premises of the zone to be consumed by

Limitations of the Verdict
 If organizations have to end up paying duties just because of a small
error in judgment of the policy, then the whole purpose of a free trade
zone is defeated
 Nissan did not anymore see any benefits of taking their manufacturing
process to the US because they still have to pay the Custom duties.
 Other nations will not be able to use this case as a precedent but only as
a reference point to strengthen their authority in the matter

Significance on International Law
 This case highlights the importance of protecting domestic industries
 After the Hawaiian case, the US customs developed new parameters
that will make taking unfair advantage of the trade zones obsolete
 This case will serve as a good example of what could happen if proper
attention is not paid to details of a policy

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