On January 26, 2022, an arbitration decision was issued on the level of retaliation China is entitled to take for the findings of the Appellate Body that the United States hadn’t brought its countervailing duty determinations on China into conformity with WTO obligations as construed by the Appellate Body. See UNITED STATES – COUNTERVAILING DUTY MEASURES ON CERTAIN PRODUCTS FROM CHINA, RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES, DECISION BY THE ARBITRATOR, WT/DS437/ARB,
26 January 2022. China sought retaliation rights of $2.4 billion/year. The U.S. had argued for a cap of $120 million/year. The arbitrator concluded retaliation rights were $645.121 million/year. Id at 12.
The original request for consultations was made on May 25, 2012 with a series of panel and Appellate Body reports issued between 2014 and 2019 (original dispute and Art. 21.5 proceedings). The original findings covered a range of issues including a string of issues relating to whether state-owned enterprises were public bodies. See summary of key findings, DS437, United States – Countervailing Duty Measures on Certain Products from China, https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds437_e.htm.
The press releases from China and the United States state their respective positions – with China claiming the U.S. violates its WTO obligations and needs to bring itself into compliance, and with the U.S. noting that the underlying decisions reflect the problems with the Appellate Body that the U.S. has long identified and point to the need for reform of both the rules and dispute settlement. See Ministry of Commerce of the People’s Republic of China, Press Release on the Issuance of the WTO Arbitration Award in the Dispute United States — Countervailing Duty Measures on Certain Products from China (Recourse to Article 22.6 of the DSU by the United States), http://wto.mofcom.gov.cn/article/newsupdates/202201/20220103240040.shtml; Statement from USTR Spokesperson Adam Hodge on the WTO Arbitration Award Announcement in United States – Countervailing Duty Measures on Certain Products from China, January 26, 2022, https://ustr.gov/about-us/policy- offices/press-office/press-releases/2022/january/statement-ustr-spokesperson-adam-hodge-wto-arbitration- award-announcement-united-states (“The deeply disappointing decision today by the WTO arbitrator reflects erroneous Appellate Body interpretations that damage the ability of WTO Members to defend our workers and businesses from China’s trade-distorting subsidies. Today’s decision reinforces the need to reform WTO rules and dispute settlement, which have been used to shield China’s non-market economic practices and undermine fair, market-oriented competition. The Biden Administration will continue to use all our tools to stand up for the interests of America’s workers,”). businesses, farmers and producers, and strengthen our middle class.
There have been many who have written about the problems of the Appellate Body in its construction of the Subsidies Agreement. See, e.g., Cartland, Michael, Depayre, Gérard &Woznowski, Jan. “Is Something Going Wrong in the WTO Dispute Settlement?” Journal of World Trade 46, no. 5 (2012): 979–1016; Dukgeun Ahn, Why Reform is Needed: WTO ‘Public Body’ Jurisprudence, 12 Global Policy, Supplement 3 at 61-70 ( April 2021)(and articles referenced therein).
USTR Lighthizer during the Trump Administration released in 2020 USTR’s Report on the Appellate Body of the WTO reviewing in great detail the concerns with the operation of the dispute settlement system. The concern about the Appellate Body interpretations preventing the U.S. and other Members from addressing the distortions including subsidies flowing from the Chinese economic system was a major focus in discussing the problems on “public body”. The Biden Administration and Congress have similar ongoing concerns which requires revisions to both the scope of the subsidies agreement and a revamp of the dispute settlement system.
Because of the extent of analysis presented by USTR, below are copied pages 82 – 89 of the 2020 USTR report.
“A. The Appellate Body’s Erroneous Interpretation of ‘Public Body’ Threatens the Ability of WTO Members to Counteract Trade-Distorting Subsidies Provided through SOEs, Undermining the Interests of All Market-Oriented Actors
“• The Appellate Body has adopted an erroneous interpretation of the term ‘public body’ that is not found in the agreed text and is not consistent with the ordinary meaning of that term.
“• The Appellate Body’s narrow interpretation favors non-market economies operating through SOEs over market economies and undermines the ability of WTO Members to counteract subsidies by non-market economies.
“The WTO agreements discipline certain subsidies provided ‘by a government or any public body,’ but the Appellate Body has adopted a narrow interpretation of public body that requires an entity to possess, exercise or be vested with government authority, in order for it to constitute a public body. That requirement is not found in the agreed text, nor is it consistent with the ordinary meaning of the term ‘public body.’ The Appellate Body’s narrow interpretation of public body fails to capture a potentially vast number of government- controlled entities, such as state-owned enterprises (SOEs), that are owned or controlled by foreign governments, and therefore undermines the ability of Members to counteract subsidies that are injuring their workers and businesses. The WTO was created by and for market economies, but the Appellate Body’s public body interpretation favors non-market economies at the expense of market economies and has given rise to confusion among WTO panels and WTO Members.
“1. Interpreted Correctly, the Term “Public Body” Means Any Entity Controlled by the Government
“Article 1.1(a)(1) of the SCM Agreement provides, in relevant part, that ‘a subsidy shall be deemed to exist if … there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as ‘government’).’
“The Subsidies Agreement does not define the term ‘public body,’ but definitions of the words ‘public’ and ‘body’ shed light on the ordinary meaning of the term ‘public body’ in Article 1.1(a)(1). By definition, the noun ‘body’ refers to a group of persons or an entity (as opposed to, for example, the ‘material frame’ of persons). This definition in the sense of ‘an aggregate of individuals’ is: ‘an artificial person created by legal authority; a corporation; an officially constituted organization, an assembly, an institution, a society.’196 Turning to the adjective ‘public,’ the relevant definition that pertains to a ‘body’ as a group of individuals is the first: ‘of or pertaining to the people as a whole; belonging to, affecting, or concerning the community or nation.’197
“Thus, the ordinary meaning of the composite term ‘public body’ according to dictionary definitions would be ‘an artificial person created by legal authority; a corporation; an officially constituted organization’ that is ‘of or pertaining to the people as a whole; belonging to, affecting, or concerning the community or nation.’ These definitions point towards ownership by the community as one meaning of the term ‘public body.’ If an entity ‘belongs to’ or is ‘of’ the community, it also follows that the community can make decisions for, or control, that entity.
“Contrary to the Appellate Body’s interpretation, nothing in these dictionary definitions restricts the meaning of the term ‘public body’ to an entity vested with, or exercising, government authority. Had the drafters of the SCM Agreement intended to convey that meaning, they might have chosen any number of other terms. For example, the drafters might have used ‘governmental body,’ ‘public agency,’ ‘governmental agency,’ or ‘governmental authority.’
“These terms would have, through their ordinary meaning, more clearly conveyed the sense of exercising governmental authority. That they were not chosen sheds light on the different concept captured by the term that was chosen, ‘public body.’
“The ordinary meaning of the terms of a treaty must be understood ‘in their context.’198 Reading the term ‘public body’ in context supports the conclusion that a ‘public body’ is an entity controlled by the government such that the government can use that entity’s resources as its own.
“In Article 1.1(a)(1) of the SCM Agreement, the term ‘public body’ is part of the disjunctive phrase ‘by a government or any public body within the territory of a Member.’ The SCM Agreement thus uses two different terms – ‘a government’ on the one hand and ‘any public body’ on the other hand – to identify the two types of entities that can provide a financial contribution. As a contextual matter, the use of the distinct terms ‘a government’ and ‘any public body’ together this way indicates that the terms have distinct and different meanings.
“Treaty interpretation should give meaning and effect to all terms of a treaty. As the Appellate Body has recognized, provisions of the WTO Agreement should not be interpreted in such a manner that whole clauses or paragraphs of a treaty would be reduced to redundancy or inutility.199 Accordingly, the term ‘public body’ should not be interpreted in a manner that would render it redundant with the word ‘government.’
“The term ‘government,’ as the panel in US – Anti-Dumping and Countervailing Duties (China) found, means, among other things: ‘The governing power in a State; the body or successive bodies of people governing a State; the State as an agent; an administration, a ministry.’200 In Canada – Dairy, the Appellate Body explained that ‘[t]he essence of ‘government’ is . . . that it enjoys the effective power to ‘regulate’, ‘control’ or ‘supervise’ individuals, or otherwise ‘restrain’ their conduct, through the exercise of lawful authority.’201 The Appellate Body further explained that a ‘‘government agency’ is, in our view, an entity which exercises powers vested in it by a ‘government’ for the purpose of performing functions of a ‘governmental’ character, that is, to ‘regulate’, ‘restrain’, ‘supervise’ or ‘control’ the conduct of private citizens.’202
“The term ‘public body,’ therefore, should be interpreted as meaning something other than an entity that performs ‘functions of a ‘governmental’ character, that is, to ‘regulate’, ‘restrain’, ‘supervise’ or ‘control’ the conduct of private citizens.’203 Otherwise, a ‘public body’ is ‘a government,’ or a part of ‘a government,’ and there is no reason for the term ‘public body’ to have been included in Article 1.1(a)(1) of the SCM Agreement.
“In seeking to understand the term ‘public body’ in its context, it is also important to recall that the SCM Agreement is identifying those entities that may make ‘financial contributions.’ Those financial contributions are one part of a definition of ‘subsidy,’ and those subsidies are granted or maintained by WTO Members. A WTO Member can make the financial contribution underlying the subsidy directly through its ‘government’ (narrowly understood). However, it also can make that financial contribution through entities that it controls.
“Article 1.1(a)(1) of the SCM Agreement identifies a variety of actions that constitute financial contributions, including ‘a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees),’ foregoing or not collecting ‘government revenue,’ ‘provid[ing] goods or services other than general infrastructure, or purchas[ing] goods,’ and ‘mak[ing] payments to a funding mechanism.’ The ordinary meaning of a ‘financial contribution’ suggested by this list of actions is to convey value. In this ordinary sense, entities controlled by the government can convey value just as the government can, and the value conveyed can be precisely the same as that conveyed by the government.
“Consider, for example, a ‘direct transfer of funds’ by a government to a recipient in the form of a grant. Conveying value in this way is plainly a ‘financial contribution’ within the meaning of the SCM Agreement. If the government formed and controlled a legal entity (for example, a corporation whose shares are all owned by the government), and the entity provided the same grant to a recipient, the same financial contribution has occurred: the government has conveyed value. Whether the funds are provided directly by the government or by an entity controlled by the community through its government, it is a Member’s funds that are being used to make the financial contribution.
“There is no evident reason for the first transaction to fall within the scope of Article 1.1(a)(1) of the SCM Agreement and the second to fall outside the scope. Nor would the term ‘financial contribution’ suggest that a distinction should be drawn between those transactions based on whether the entity or corporation is ‘vested with or exercising governmental authority.’ Rather, the context supplied by ‘financial contribution’ suggests a different common concept between ‘government’ and ‘public body’ than that discerned by the Appellate Body. If a ‘financial contribution’ means to convey something of value, the concept sought to be captured by the SCM Agreement term is the use by a government of its resources, or resources it controls, to convey value to economic actors.
“2. The Appellate Body Has Interpreted the Term ‘Public Body’ Incorrectly
“In US – Anti-Dumping and Countervailing Duties (China) in 2011 and US – Carbon Steel (India) in 2014, the Appellate Body interpreted the term ‘public body’ in Article 1.1(a)(1) of the SCM Agreement incorrectly. The key issue before the Appellate Body in these disputes was whether a wholly or majority government-owned SOE is a ‘public body,’ such that WTO Members can take action to counteract any unfair subsidies the SOEs provide. The Appellate Body recognized that, based on its ordinary meaning, the term ‘public body’ encompassed a ‘rather broad range of potential meanings.’ Nonetheless, the Appellate Body set out a very limited interpretation of the term, concluding that a ‘public body’ ‘must be an entity that possesses, exercises or is vested with governmental authority,’ including because the entity has ‘the effective power to regulate, control or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority.’204 Under the Appellate Body’s interpretation, even where a government owns or controls an entity, that would not be sufficient to hold the government responsible for any injurious subsidies it provides.
“The Appellate Body’s ‘government authority’ test significantly limits the ability of governments to effectively combat unfairly subsidized imports and is nowhere reflected in the text of the SCM Agreement. If an entity has no regulatory or supervisory authority, but is nonetheless controlled by the government such that the government can use the entity’s resources as its own – making any transfer of economic resources by that entity a conveyance of the government’s own resources – it would be anomalous to conclude that the financial contribution cannot be deemed a subsidy under Article 1.1(a)(1). On the other hand, if an entity has the power to ‘regulate’ individuals or ‘otherwise restrain their conduct,’ but not the power to provide financial contributions of government resources, its regulatory powers are not relevant to the SCM Agreement. The Appellate Body’s interpretation therefore does not reflect the structure of either Article 1.1(a)(1) or of the SCM Agreement, and the failure of this interpretation to capture a
potentially vast number of government-controlled entities undermines the disciplines of the SCM Agreement.
“The Appellate Body’s interpretation stands in contrast to the approach taken by several WTO panels that interpreted the term ‘public body’ to be an entity controlled by the government. In Korea – Commercial Vessels, for example, the panel concluded that ‘an entity will constitute a ‘public body’ if it is controlled by the government (or other public bodies).’205 In reaching this conclusion, that panel rejected some of the very same arguments China advanced before the panel and the Appellate Body in US – Anti-Dumping and Countervailing Duties (China).
“In EC and certain member States – Large Civil Aircraft, the panel, addressing the status of a government- owned financial institution, explained that, ‘at the time of its 1992 investment in Aerospatiale, Credit Lyonnais was controlled by the French government and was a ‘public body’ for purposes of Article 1.1(a)(1) of the SCM Agreement.’206 Accordingly, the capital contribution made by Credit Lyonnais to Aerospatiale constituted a financial contribution by a public body.207
“In US – Anti-Dumping and Countervailing Duties (China), the panel concluded that ‘a ‘public body’, as that term is used in Article 1.1 of the SCM Agreement, is any entity controlled by a government.’ As noted above, however, in reversing the Panel, the Appellate Body adopted a narrow definition of a ‘public body.’
“During the meeting of the WTO Dispute Settlement Body at which the panel and Appellate Body reports in US – Anti-Dumping and Countervailing Duties (China) were adopted, seven WTO Members (Mexico, Turkey, the European Union, Canada, Australia, Japan and Argentina) joined the United States in raising concerns about the Appellate Body’s interpretation.208
“Commentators have also criticized the Appellate Body’s interpretation. For example, in an article in the Journal of World Trade, Michael Cartland, Gérard Depayre, and Jan Woznowski – each of whom participated in the Negotiating Group on subsidies and countervailing measures in the Uruguay Round – present a detailed discussion of the Appellate Body report in US – Anti-Dumping and Countervailing Duties (China) and raise a host of concerns with the Appellate Body’s interpretation of the term ‘public body,’ calling the analysis ‘internally contradictory’ and ‘disingenuous.’209
“3. The Appellate Body’s Non-Textual Interpretation Has Created Significant Uncertainty and Led Panels to Reach Absurd Results
“In US – Anti-Dumping and Countervailing Duties (China), the Appellate Body left open the possibility that ‘meaningful control’ over an entity could be sufficient to show that the entity ‘possesses, exercises or is vested with governmental authority,’ and in US – Carbon Steel (India), the Appellate Body appeared to confirm that an SOE’s authority over government resources could support a public body finding.
“However, the Appellate Body’s non-textual interpretation has created significant uncertainty as to the precise scope of Article 1.1(a)(1), and recent attempts by panels to apply the so-called ‘government authority’ test have only exacerbated the problem, confirming the fundamental errors in the Appellate Body’s approach.
“The panel’s findings in US – Pipes & Tubes CVD (Turkey), for example, illustrate the hazard
introduced by the Appellate Body’s approach to public body in US – Carbon Steel (India), and in
particular a suggestion in that report that there must be a demonstration that the government ‘in
fact exercised control over the [entity] and its conduct.’210 Citing to this report, the panel in Pipes & Tubes found that the ability of the government to intervene in an entity’s critical operations and key decisions was not relevant to a public body determination, and required evidence that the government had actually exercised that control with respect to the subsidization in question. Similarly, the panel found that the existence of commercial conduct could preclude a finding that an entity is a ‘public body,’ because it could reflect the absence of a governmental function on the part of the entity and therefore a lack of governmental authority.
“As the United States has explained, properly interpreted, the issue under Article 1.1(a)(1) is not whether the nature of the behavior or the conduct of the entity is governmental. Rather, the question is whether the entity engaging in the conduct is governmental or pertaining or belonging to the people, i.e., whether the entity is ‘a government or any public body.’ If the entity is governmental, or public, all of its activities are attributable to the government in question. Were this not the case, a government could shield its activities from the disciplines of the SCM Agreement simply by setting up an SOE and allowing it to engage in some commercial conduct, even where there is evidence that the government has the ability to intervene and control the entity whenever it chooses. This cannot be the case.
“If a government undertakes the activities described in Article 1.1(a)(1), there is a conveyance of value from a WTO Member to a recipient. There is an equivalent conveyance when there is an entity whose resources the WTO Member can control and use, and the entity engages in the same activities. The interpretation set out by the Appellate Body, however, allows WTO Members to evade their obligations under the SCM Agreement simply by establishing an entity that is private in form, but not in substance.
“The interpretation therefore significantly restricts the ability of WTO Members to counteract trade-distorting subsidies provided through SOEs, posing a significant threat to the interests of all market-oriented actors.
“The interpretation also fails to maintain the textual distinction in Article 1.1(a)(1) between a ‘public body’ and a ‘private body.’ Contrary to the panel’s application of the Appellate Body’s standard in US – Pipes & Tubes CVD (Turkey), focus on the specific conduct of an entity would be relevant when examining whether there was government entrustment or direction of a private body under Article 1.1(a)(1)(iv) of the SCM Agreement. That is, a private body may provide a subsidy if the government entrusts or direct the private body ‘to carry out one or more of the functions illustrated in (i) to (iii).’ The panel’s approach demonstrates the uncertainty introduced by the Appellate Body’s interpretation, which risks conflating the public body analysis with that of government entrustment and direction of a private entity, and renders the term ‘public body’ effectively meaningless.
“4. The Appellate Body Has Continued Its Incorrect Approach to ‘Public Body” in a Recent Appellate Report concerning the Imposition by the United States of Countervailing Duties on Subsidized Imports from China
“Although the Appellate Body recently had an opportunity to correct its flawed approach, it did not do so and, instead, stuck with an approach that has no basis in the text of the Subsidies Agreement. In US – Countervailing Measures (China) (21.5), all three members of the Division on appeal rejected China’s extremely narrow definition of ‘public body.’ However, two members of the Division reiterated the Appellate Body’s flawed approach. The third member dissented on this point, stating that ‘the majority has repeated an unclear and inaccurate statement of the criteria for determining whether an entity is a public body, and [the dissenting member] disagree[d] with the majority’s implication that a clearer articulation of the criteria is neither warranted nor necessary.’211
“The dissent continued that ‘the continuing lack of clarity as to what is a ‘public body’ represents an undue emphasis on ‘precedent’, which has locked in a flawed interpretation that has grown more confusing with each iteration, as litigants and Appellate Body Divisions repeated the original flaw while trying to navigate around it.’212
“The ‘original mistake’, as the dissent put it,213 was the Appellate Body’s attempt, in US – Anti-Dumping and Countervailing Duties (China) (DS379), to define the term ‘public body’ as ‘an entity that possesses, exercises or is vested with governmental authority,’ including because the entity has ‘the effective power to regulate, control or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority.”214 Under the Appellate Body’s interpretation, even where a government owns or controls an entity, that would not be sufficient to hold the government responsible for any injurious subsidies the entity provides.
“5. The Appellate Body’s Interpretation Limits the Ability of Investigating Authorities to Address Unfairly Subsidized Imports
“The Appellate Body’s ‘governmental authority’ test significantly limits the ability of governments to combat unfairly subsidized imports. The Appellate Body’s approach is nowhere reflected in the text of the Subsidies Agreement. If an entity has no regulatory or supervisory authority, but is nonetheless controlled by the government – making any transfer of economic resources by that entity a conveyance of the government’s own resources – it would make no sense to conclude that this transfer of public resources is not a financial contribution under Article 1.1(a)(1).
“On the other hand, if an entity has the power to ‘regulate’ individuals or ‘otherwise restrain their conduct,’ but not the power to provide financial contributions of government resources, its regulatory powers are not relevant to the Subsidies Agreement. The Appellate Body’s interpretation therefore does not reflect the structure of either Article 1.1(a)(1) or of the Subsidies Agreement.
“The failure of the Appellate Body’s interpretation to capture a potentially vast number of SOEs and other entities that are owned or controlled by foreign governments undermines the ability of Members to effectively counteract subsidies that are injuring their workers and businesses. The WTO was created by and for market economies, but the Appellate Body’s public body interpretation favors non-market economies at the expense of market economies.
“195 For example, this Report does not discuss the dispute US – Continued Dumping and Subsidy Offset Act Of 2000, in which the Appellate Body’s interpretation of the Subsidies Agreement in effect created a new category of prohibited subsidies that was neither negotiated nor agreed to by WTO Members; or other examples, such as US – Gambling, US – Cotton, US – FSC.
“196 The New Shorter Oxford English Dictionary at 253 (1993).
“197 Id. at 253.
“198 Vienna Convention on the Law of Treaties, Article 31.
“199 US – Offset Act (Byrd Amendment) (AB), para. 271 (2003). See also US – Gasoline (AB) at p. 23 (1996).
“200 US – Anti-Dumping and Countervailing Duties (China) (Panel), para. 8.57 (citing Shorter Oxford English Dictionary, L. Brown (ed.) (Claredon Press, 1993), Vol. I, p. 1123) (2011).
“201 Canada – Dairy (AB), para. 97 (1999).
“202 Id.
“203 Id.
“204 US – Anti-Dumping and Countervailing Duties (China) (AB), para. 290 (2011) (citing Canada – Dairy (AB), para. 97).
204 US – Anti-Dumping and Countervailing Duties (China) (AB), para. 290 (2011) (citing Canada – Dairy (AB), para. 97).
“205 Korea – Commercial Vessels (Panel), para. 7.50 (2005). See also id., paras. 7.172, 7.353, and 7.356 (2005)(finding that the Korean Development Bank and the Industrial Bank of Korea were public bodies because they were totally, or near totally, owned by the Government of Korea).
“206 EC – Large Civil Aircraft (Panel), para. 7.1359 (2011). “207 Id.
“208 See Dispute Settlement Body, Minutes of the Meeting Held on March 25 2011, WT/DSB/M/294, paras. 103-127. See also Joint Statement of the Trilateral Meeting of the Trade Ministers of Japan, the United States and the European Union, para. 6 (January 14, 2020) (‘The Ministers observed that many subsidies are granted through State Enterprises and discussed the importance of ensuring that these subsidizing entities are captured by the term ‘public body.’ The Ministers agreed that the interpretation of ‘public body’ by the WTO Appellate Body in several reports undermines the effectiveness of WTO subsidy rules. To determine that an entity is a public body, it is not necessary to find that the entity “possesses, exercises or is vested with governmental authority.’).
“209 Cartland, Michael, Depayre, Gérard &Woznowski, Jan. “Is Something Going Wrong in the WTO Dispute Settlement?” Journal of World Trade 46, no. 5 (2012): 979–1016, at 996.
“210 US – Carbon Steel (India) (AB), para. 4.37 (2014) (first emphasis in original, second emphasis added). “211 US – Countervailing Measures (China) (Article 21.5) (AB), para. 5.243 (2015) (separate opinion of one
Division member). “212 Id. at para. 5.244. “213 Id. at para. 5.245.
“214 US – Anti-Dumping and Countervailing Duties (China) (AB), para. 2.90 (2015) (citing Canada – Dairy (AB), para. 97).’195 For example, this Report does not discuss the dispute US – Continued Dumping and Subsidy Offset Act Of 2000, in which the Appellate Body’s interpretation of the Subsidies Agreement in effect created a new category of prohibited subsidies that was neither negotiated nor agreed to by WTO Members; or other examples, such as US – Gambling, US – Cotton, US – FSC.”196 The New Shorter Oxford English Dictionary at 253 (1993).’197 Id. at 253.”
Observations
In prior posts I have reviewed the challenges for the relevance of the WTO if Members don’t work on convergence of economic systems versus coexistence. That China’s system is at odds with market economy principles has raised concerns in the U.S., EU, Japan, Canada, Australia and other WTO Members. The Appellate Body has compounded the problems for market economies in dealing with state-driven economies (non-market economies) by permitting a wide array of subsidy practices to be not addressable through the narrow interpretation of public body.
Such erroneous interpretations and the inability to achieve correction through negotiations have led to shutting down of the Appellate Body and have exacerbated the inability of Members to get balanced rules negotiated. A multilateral trading system which doesn’t achieve a level trading environment in fact cannot survive as the basis for global engagement.
While in Geneva there is much talk about reform of both the rules and the dispute settlement system, the path forward to achieving balance in fact is hard to discern.
Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.
To read the full commentary from Current Thoughts on Trade, please click here.