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Published in: Journal of Chinese Political Science 3/2022

18-01-2022 | Research Article

Is the WTO Dispute Settlement System a Disaster for the U.S.? An Evaluation of U.S. – China WTO Disputes

Authors: Xiaoling Li, Xiaowen Zhang

Published in: Journal of Chinese Political Science | Issue 3/2022

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Abstract

Since China’s accession to the World Trade Organization (WTO), the WTO dispute settlement system (DSS) has resolved an impressive number of US–China trade disputes. Over the past few years, however, as tensions between the two have escalated over several trade issues, the WTO has been pushed toward irrelevance since the Trump administration. Alleging that the WTO is “a disaster” and its adjudication is very unfair to the US, former President Trump made no effort to hide his criticism of the WTO and its DSS in particular. Is Trump right about the WTO DSS? Based on an examination of US–China WTO disputes and the WTO adjudicators’ highly contentious interpretations of the concept of “public body” under the Agreement on Subsidies and Countervailing Measures (the SCM Agreement) as an example, this article shows that the WTO DSS is not particularly unfair to the US. While the WTO adjudicators sometimes did not fully follow the positions advocated by the US, they have adhered to generally accepted rules of treaty interpretation and exercised great caution to remain balanced and flexible in reaching their conclusions, especially on ambiguous issues. Though not perfect, the WTO DSS works as it is intended to. Engaging in the reform of the WTO and its DSS, instead of abandoning or marginalizing the WTO, should be a wiser and more practical choice for the Biden administration.
Footnotes
1
In US – Countervailing Duty Investigation on DRAMS, the Appellate Body stated that the SCM Agreement “reflects a delicate balance between the Members that sought to impose more disciplines on the use of subsidies and those that sought to impose more disciplines on the application of countervailing measures.” See the Appellate Body report, US – Countervailing Duty Investigation on DRAMS, WT/DS296/AB/R, para.115.
 
2
According to the WTO Glossary, an investigating authority usually calculates the dumping margin by getting the average of the differences between the export prices and the home market prices of the product in question. When it chooses to disregard or put a value of zero on instances when the export price is higher than the home market price, the practice is called “zeroing.” Critics claim this practice artificially inflates dumping margins. See GLOSSARY TERM – Zeroing, assess https://​www.​wto.​org/​english/​thewto_​e/​glossary_​e/​zeroing_​e.​htm.
 
3
Those WTO cases are: DS358; DS387; DS414; DS419; DS427; DS440; DS 450; DS489, and 519.
 
4
Those WTO cases are: DS309; DS340; DS358 (also counted as a trade remedy case because it also concerns subsidies), and DS501.
 
5
Those WTO cases are: DS363; DS373; and DS413.
 
6
Those WTO cases are: DS362; 542.
 
7
Those WTO cases are: DS394; DS431; and DS508.
 
8
Those WTO cases are: DS511; DS517.
 
9
Those WTO cases are: DS340; DS358; DS363; DS373; DS387; DS394; DS419; DS431; DS450; DS501, DS508 and DS517.
 
10
Those WTO cases are: DS252; DS368; DS379; DS399; DS422; DS437; DS449; DS471; DS515; DS544; DS562 and DS 563.
 
11
Those WTO cases are: DS543; DS 565; DS 587.
 
12
United States – Certain Measures Affecting Imports of Poultry from China, DS392.
 
13
China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, DS363.
 
14
United States – Definitive Safeguard Measures on Imports of Certain Steel Products, DS252.
 
15
United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, DS 379.
 
16
United States –Anti-Dumping Measures on Shrimp and Diamond Sawblades from China, DS422.
 
17
United States – Countervailing and Anti-dumping Measures on Certain Products from China, DS449.
 
18
United States – Countervailing Duty Measures on Certain Products from China, DS437.
 
19
United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China, DS471.
 
20
According to a statistic, more than half (42 out of 73) of trade remedy disputes on which the WTO has issued decisions involved remedies imposed by the US between 1995 and 2016. See Terence P. Stewart and Elizabeth J. Drake, How the WTO Undermines U.S. Trade Remedy Enforcement. Access http://​s3-us-west-2.​amazonaws.​com/​aamweb/​uploads/​resources/​How%20​the%20​WTO%20​Undermines%20​U.​S.​%20​Trade%20​Remedy%20​Enforcement.​pdf.
 
21
Those WTO cases are: DS 264; DS294; DS322; DS344; DS350; DS382; DS383; DS402; DS422; DS464 and DS471.
 
22
Those are DS437 and DS449.
 
23
As the measure at issue in China – Intellectual Property Rights II (DS542) has been revised by China, the panel proceeding has been suspended since June 2019 at the request of the US. For this reason, this paper counts this case as a winning case for the US.
 
24
That is DS558.
 
25
In respect of such “right process,” Professor Franck provided some insights by stating that “decisions about distributive and other entitlements will be made by those duly authorized, in accordance with procedures which protect against corrupt, arbitrary, or idiosyncratic decision-making or decision-executing.” See Thomas M. Franck, Fairness in International Law and Institutions, Oxford University Press 1995, p. 7.
 
26
The SCM Agreement, Article 1.1.
 
27
Under Article 32 of the VCLT, negotiating history, as a supplementary means of interpretation, plays a subordinate role in the interpretation of treaties and is only to be used to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31 leaves the meaning ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable.
 
28
The Law of the People’s Republic of China on Commercial Banks, Article 34.
 
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Metadata
Title
Is the WTO Dispute Settlement System a Disaster for the U.S.? An Evaluation of U.S. – China WTO Disputes
Authors
Xiaoling Li
Xiaowen Zhang
Publication date
18-01-2022
Publisher
Springer Netherlands
Published in
Journal of Chinese Political Science / Issue 3/2022
Print ISSN: 1080-6954
Electronic ISSN: 1874-6357
DOI
https://doi.org/10.1007/s11366-021-09776-x

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