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Henry Gao
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It is interesting as it addressed both the issue of developing country status in general and under the SG Agreement. The parties did not agreed not to raise the issue before the Panel. Instead they went into quite some depth in debating on the issue.
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Hi Marc, You are right that there has been no challenge of developing country status per se, but the issue has arisen in several cases. In China's first WTO case, US-Steel Safeguards, for example, China claimed that it should enjoy the higher de minimus level in the Safeguards Agreement as it is a developing country. The US challenged China's self-designation and there were some interesting discussions on the issue in the case.
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You are right Brett. This is as close as it can get without using the actual words "bad faith". china's strategy, as shown in Amb. Zhang's statement, is emphasising that the EU and US have broken their "promises", a word which appeared 6 times in the statement. Here are some nice sound bites that drive the point home: "More importantly though, this dispute is really about a fundamental principle in international law: pacta sunt servanda, or “agreements must be kept”. China brought this matter to dispute settlement with the objective to establish that promises made must be respected, and treaty terms struck must be honored." "Apparently for the European Union, the expiry of Section 15(a)(ii) means nothing; the promise it undertook 16 years ago means nothing." There's also another issue worth pondering, even though is was not raised in the statement. What kind of example are the US and EU setting for China? Bending the very rules that they tailor-made for China just for some short-term benefits? Wait until the moment when China becomes the No. 1 World Power.
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Thanks. I've put my replies as a separate comment to make it easier to read.
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Thanks for the clarifications Anonymous. You raised some important issues and it is good that the Qatari complaints provide an opportunity to examine them in detail: 1. Art. 9: I agree that the same principle might provide an argument for applying similar approach to the parallel situation of multiple respondents. However, I think there could also be a strong argument against applying the same principle, because both 9.1 and 9.3 refer to complaint on "the same matter", i.e., the same measure by one Respondent. In the current case, however, no matter how similar the trade measures by UAE, Bahrain and Saudi Arabia, they are still measures by three different Members. This might make it difficult to apply Art. 9.3. 2. Art. 4.11: I agree that merely stating that "the first sentence of Article 4.11 of the DSU shall not apply" does not, by itself, precludes other Members from seeking to join the consultations. Instead, the Complainant has to make sure that the request for consultations is brought under Art. XXIII rather than Art. XXII. This is exactly what Qatar has done in the 2 sentences preceding this statement. Thus, I think Qatar's statement on Art. 4.11 is, in a way, trying to put a big sign "for invitees only" in case any "persona non grata" is trying to gatecrash into the consultation room. I also have slight reservations on your point that " Article 4 conditions 3rd party participation in consultations on agreement of the Member receiving the request -- not on the wishes of the Member that issued the request." Assuming "request" refers to "request for consultations", you are basically saying that 3rd party participation is up to the Respondent, or "the Member receiving the consultation request", rather than the Complainant, or "the Member that issued the request". I agree that the Respondent may deny another Member to participate as 3rd party. This rarely happens but has happened in the China - VAT on Integrated Circuits case, as I discussed in my paper (https://ssrn.com/abstract=1095803) in 2007. However, I do not agree that the Complainant has no role to play here. Instead, as I mentioned earlier, the Complainant can shut the door completely by simply making the consultation request under Art. XXIII, as Qatar has done here. In other words, there are two doors to other Member's participation as 3rd parties in consultations, the first guarded by the Complainant, and the second guarded by the Respondent. Only when both doors are open can a WTO Member join the consultation as a 3rd party. But if the Complainant shuts the first door with Art. XXIII, there's no way that such Member may proceed to the second door.
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Sure Simon. It is Administrative Regulations on Market Access of New-energy Automobile Manufacturers and Products. I can only find the Chinese version at http://www.miit.gov.cn/n1146295/n1146557/n1146624/c5462995/content.html. But the FT has reported on this at https://www.ft.com/content/adb80896-1462-11e7-80f4-13e067d5072c?mhq5j=e1. Also, the EU Chamber of Commerce in China has analyzed the new rule in its recent publication at http://www.europeanchamber.com.cn/en/china-manufacturing-2025.
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The new regulations on new energy cars seem to make tech transfer a requirement for the approval, and this is probably why the US is stepping up the efforts now.
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Thanks for raising these interesting points, but I have some slightly different opinions: 1. DSU Art. 9.3: I'm not sure if it would apply to the Qatar case, as the clause refer to the situation where "more than one Member requests the establishment of a panel", which means that it is supposed to apply to cases with multiple complainants. I'm not sure if it would apply to cases with the same Complainant against multiple Respondents. 2. Art. 4.11: Thanks for pointing out that other WTO Members will be able to join the disputes. What I meant by "other WTO Members will not be able to join the disputes as 3rd parties" is that they won't be able to join the consultations. I agree that they might be able to join the dispute, but with two provisos: first, the case must proceed beyond the consultation stage. They wouldn't be able to join the bilateral consultations if the cases are settled. Second, even if they can join as third parties, that would be under DSU Art. 10, which is a totally different process versus Art. 4.11. I guess that's why Qatar specified this article in the first place.
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I agree that the ban will have an effect on the consumption of Korean services, but it is not a direct restriction because Chinese citzens can still book the hotel and tours from other non-Chinese websites such as Expedia.com and visit Korea. If China directly bans Chinese tourists from visiting certain places or staying at certain hotels in Korea, then it will be a Mode 2 violation. But that's not what China did here, they just banned the sale of tours in China by Chinese firms.
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Interesting thought Simon. If the US and China could reach a deal, why not do it in the WTO instead? This is what was suggested by Aaditya Mattoo a few years ago: https://piie.com/publications/working-papers/china-round-multilateral-trade-negotiations
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Dear Julia, you are right that Mode 2 applies to consumption of foreign services by one's own citizens/tourists abroad. However, what we have here is Chinese government asking Chinese travel agents in China to stop selling tour packages to Chinese citizens in China. Thus it is not covered by Mode 2.
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Thanks Julia. I did look into the two issues. The ban on packaged tours only apply for travel agents in China, not those in Korea. Thus, it wouldn't be under Mode 2. Moreover, most if not all the tour operators are Chinese firms, thus Mode 3 won't apply either. As to the boycott, the problem lies in proving that they are ordered by the government. Also, while the government did order the closedown of several Lotte stores, they cited fire safety reasons and it would be difficult to prove it's a trade sanction.
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Interesting post, Simon. I agree that the proper approach should be making alternative negotiation proposals to change the text of the WTO Agreements, rather than simply refusing to implement adverse decisions. Actually, upon closer examination, several of the proposals might backfire: 1. "Investing in efforts to educate other WTO members, particularly developing countries, about the importance of trade remedies in the international system and the economic contribution they make by reducing market distortions and enabling balanced economic growth" Is the report saying that the other WTO Members doesn't fully appreciate the value of trade remedies measures? Be careful of what you wish for, because it is definitely a bad idea to encourage other WTO Members to make more active use of trade remedies. 2. "Impressing on other WTO members that further expansion of WTO agreements and routine implementation of adverse decisions is at risk if the dispute settlement system is not effectively reformed to reduce overreach by panels and Appellate Body members;" Again the US would most likely shoot itself in the foot here as it was the US which has been calling for the WTO to expand its scope by trying to file cases on currency manipulation or internet censorship. 3. "Establishing an independent Commission of legal experts to determine whether a WTO panel or the Appellate Body has exceeded its authority or deviated from the applicable standard of review in making a decision adverse to the United States, and creating procedures for Congress to respond to Commission determinations with appropriate action regarding U.S. negotiating positions and membership in the WTO;" If such commission is indeed "independent", i.e., composing not just petitioner's lawyers but is more broadly representative of the full spectrum of the trade bar, then their determination might not be always favorable to US government position. It would add insult to injury when a domestic commission joins the WTO panel and AB in criticizing the US trade remedies regime.
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thanks simon for the correction. no wonder I couldn't find your comments on the blog!
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Fully agree with Anon. Similarly, the EU can continue to call China NME post 2016 but they are obliged to comply with WTO rules. Albania might not wish to sue the EU in WTO for fear of risking its potential EU bid, but China will not be afraid to do so. I think this is the main problem of O'Connor's argument. He's mixing two things up: the label and the substance. The EU can label China as an NME anytime they want, but post 2016 they have to change the substance of their AD law to avoid WTO violations. O'Connor is misleading people by confusing these two. Not sure if he did this intentionally or not.
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I don't think this will happen, because post 2016, the burden of proof will be shifted back to the normal WTO rules, which means that the investigating authorities will have to prove the existence of NME before they can invoke any NME methodology. Thus, post 2016, the producers do not have to prove the MES at all. Thus, the question of what will happen if they cannot prove will never arise.
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Yes I think this has to be the case, because para (a) states that they can use either Chinese price or NME "based on the following rules". Then (i) & (ii) went on to elaborate the rules for Chinese price and NME respectively. Thus (ii) clearly corresponds to the NME and its expiration must mean the expiration of NME too.
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That's a very good initiative Simon. I think dissent should be allowed at panel stage but not the AB for the following reasons: 1. panels are ad hoc bodies, thus there is less of a need to maintain consistency among the panel members, while the AB is a permanent body and thus more need to maintain the coherence for institutional reasons; 2. As panel report is subject to appeal, dissent should be allowed to give the AB more choices of informed opinions. Moreover, if there is any problem with the dissent, the assumption is that the AB will be able to correct the problem. The AB, on the other hand, is the final adjudicator. Thus, these considerations do not apply and no dissent should be allowed.
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That's a very good point Julia. It's indeed a bit problematic to refer to the "right to export". However if we read this sentence together with the preceding sentences in the same paragraph (see below), I think we can reasonably assume that he meant "trading rights" when he used "right to export". Or is it simply a typo and he really wanted to write "right to import"? When China joined the WTO, it agreed to grant sweeping trading rights to American companies. Despite this commitment, numerous Chinese measures continue to reserve the right to import certain products to firms that are either designated by the Chinese government or partially owned by the Chinese government. The WTO panel ruled overwhelmingly in favor of the U.S. claim that American firms must be given the right to export books, newspapers, periodicals, theatrical films and audiovisual products (including DVDs and sound recordings) to China.
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That's a very good point Julia. It's indeed a bit problematic to refer to the "right to export". However if we read this sentence together with the preceding sentences in the same paragraph (see below), I think we can reasonably assume that he meant "trading rights" when he used "right to export" as he has been talking about trading rights all along. Or is it simply a typo and he really wanted to write "right to import"? When China joined the WTO, it agreed to grant sweeping trading rights to American companies. Despite this commitment, numerous Chinese measures continue to reserve the right to import certain products to firms that are either designated by the Chinese government or partially owned by the Chinese government. The WTO panel ruled overwhelmingly in favor of the U.S. claim that American firms must be given the right to export books, newspapers, periodicals, theatrical films and audiovisual products (including DVDs and sound recordings) to China.
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To make it even more interesting, Sony has included with the PC a note disclaiming any responsibility arising from the use of the software. Is this a reference to the IPR infringement claims by Sold Oaks? A copy of the disclaimer can be found on my blog at http://wtoandchina.blogspot.com/2009/07/green-dam-equipped-pc-shipped-by-sony.html.
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There's a host of legal issues arising from the software. In addition to the most obvious claims under WTO law and IP law, the mandatory installation of the software could also be challenged under China's anti-monopoly law, government procurement law, consumer protection law, product liability law, and even the Constitution. I think there are enough legal issues to fill a one-day workshop or even a well-paced two-day conference. Anyone interested in hosting such an event?
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Great. I shall read your paper then.
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Interesting post Colin. One quick thought: I wonder if you've excluded the cases the US and Canada brought against each other in your study? The reason is that, due to the “psychological baggage” that goes with the neighboring relationship as you mentioned, countries might deal with the trade disputes with their neighbors differently (for good or bad) than when dealing with disputes with a more remote trade partner. The fact that there is the NAFTA between the two countries further complicates the picture. Also the fact that some cases are actually related, such as the softwood lumber cases, should be taken into account.
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Hi Julia, Thanks for the reply. I agree that MFN does not focus on "companies", but strictly speaking the focus is not on "Members" either. The language used focuses instead on "products from Members". Thus, even if only one product from the US is treated better/worse than products from other Members, there is, legally speaking, a case for MFN violation. Last time I checked, the market share of Mac in China is only 0.25%, which is much smaller than the share in the US, but the market is still quite lucrative given 1), the larger population in China; and 2), the higher retail price in China. I don’t have the exact figures for the computer sales but I believe most of the computers sold in China are also manufactured/assembled in China. However there are some computers which are imported from abroad for various reasons (model not available in China, cheaper price, etc). There will be MFN and TRIMS issues for these products.
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