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A Chinese Perspective on WTO ReformFree Pass or Constructive Response? Assessing China’s WTO Performance

A Chinese Perspective on WTO Reform: Free Pass or Constructive Response? Assessing China’s WTO... [The year 2022 marks the 21st anniversary of China’s accession to the World Trade Organization (WTO). It is a significant milestone for the Chinese economy as the nation continues to promote high-level opening up and takes the lead in upholding and helping build multilateral economic and trade rules. How much WTO obligations constrain China’s state behavior, however, is contested in the Western literature. While China’s remarkably good compliance record is widely acknowledged, some critics have argued that rather than strictly adhering to adverse rulings, China’s efforts to implement WTO decisions amount to paper compliance. For example, China makes use of the remedy gap in the WTO system to lag the implementation of Dispute Settlement Body (DSB) rulings wherever possible. This chapter points out that the criticism is hypocritical because the EU and the U.S. have followed the very same tactics for years, making use of the legal loopholes of WTO law. In practice, as WTO remedies are not retroactive and there is a time lag between a violation and the time when a decision of noncompliance is rendered and the implementation of countermeasures is authorized, an infringing member may conveniently or opportunistically reap the benefits of noncompliance for years without facing any trade consequences. This remedy gap gives respondents little reason to settle before the end of the adjudication process and may lead frustrated complaining states to subvert the DSU regime by acting outside the legal framework. However, the institutional origins of the free pass in WTO remedies lie in the fact that a member can ‘escape’ WTO discipline if it is willing to pay the “price” in terms of possible retaliation. Thus, weak remedies help to facilitate an efficient breach that reflects the overall effectiveness of the WTO and provides crucial space for political input and a further opportunity for the exercise of state sovereignty. In conclusion, while being criticized for tactics such as the free pass or paper compliance, China is following the same tactics that Western members have practiced for years rather than trying to circumvent the system. Additionally, the PRC’s compliance record with WTO DSB rulings against it is far better than that of the EU and U.S. Currently, China shares the wider view that the WTO is facing an “existential crisis” and continues to play a constructive role in taking advantage of the window of opportunity to rebuild the WTO’s authority in the global trade system.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Chinese Perspective on WTO ReformFree Pass or Constructive Response? Assessing China’s WTO Performance

Editors: Zhang, Lei; Tan, Xiaowen
Han, Yichou
A Chinese Perspective on WTO Reform — Mar 1, 2023
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Publisher
Springer Nature Singapore
Copyright
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023
ISBN
978-981-19-8229-3
Pages
115 –138
DOI
10.1007/978-981-19-8230-9_5
Publisher site
See Chapter on Publisher Site

Abstract

[The year 2022 marks the 21st anniversary of China’s accession to the World Trade Organization (WTO). It is a significant milestone for the Chinese economy as the nation continues to promote high-level opening up and takes the lead in upholding and helping build multilateral economic and trade rules. How much WTO obligations constrain China’s state behavior, however, is contested in the Western literature. While China’s remarkably good compliance record is widely acknowledged, some critics have argued that rather than strictly adhering to adverse rulings, China’s efforts to implement WTO decisions amount to paper compliance. For example, China makes use of the remedy gap in the WTO system to lag the implementation of Dispute Settlement Body (DSB) rulings wherever possible. This chapter points out that the criticism is hypocritical because the EU and the U.S. have followed the very same tactics for years, making use of the legal loopholes of WTO law. In practice, as WTO remedies are not retroactive and there is a time lag between a violation and the time when a decision of noncompliance is rendered and the implementation of countermeasures is authorized, an infringing member may conveniently or opportunistically reap the benefits of noncompliance for years without facing any trade consequences. This remedy gap gives respondents little reason to settle before the end of the adjudication process and may lead frustrated complaining states to subvert the DSU regime by acting outside the legal framework. However, the institutional origins of the free pass in WTO remedies lie in the fact that a member can ‘escape’ WTO discipline if it is willing to pay the “price” in terms of possible retaliation. Thus, weak remedies help to facilitate an efficient breach that reflects the overall effectiveness of the WTO and provides crucial space for political input and a further opportunity for the exercise of state sovereignty. In conclusion, while being criticized for tactics such as the free pass or paper compliance, China is following the same tactics that Western members have practiced for years rather than trying to circumvent the system. Additionally, the PRC’s compliance record with WTO DSB rulings against it is far better than that of the EU and U.S. Currently, China shares the wider view that the WTO is facing an “existential crisis” and continues to play a constructive role in taking advantage of the window of opportunity to rebuild the WTO’s authority in the global trade system.]

Published: Mar 1, 2023

Keywords: Free pass; Adverse WTO rulings; Compliance record; Western practices

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