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Rethinking the Alternative Benchmark Regime in WTO Anti-Subsidy Law

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Book cover The Use of Alternative Benchmarks in Anti-Subsidy Law

Part of the book series: European Yearbook of International Economic Law ((EYIELMONO,volume 4))

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Abstract

In the light of current legality deficits and, in particular, the WTO’s crumbling legitimacy, rethinking the alternative benchmark regime in WTO anti-subsidy law is essential. The study will contribute hereto in this chapter by presenting a reform proposal for WTO anti-subsidy law that addresses the most pressing substantive issues in the use of alternative benchmark methodologies in NMES (Sect. 6.1). Consequently, it deals with the question of implementation (Sect. 6.2) and concludes with a draft reform proposal for an alternative benchmark regime for NMES in general WTO anti-subsidy law (Sect. 6.3).

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Notes

  1. 1.

    See Sect. 5.2.2.2.

  2. 2.

    http://www.oxforddictionaries.com/definition/english/distorted (last visited 1 January 2018).

  3. 3.

    Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), at para. 444; emphasised by the WTO Appellate Body in Appellate Body Report, US – Countervailing Measures (China), at para. 4.59.

  4. 4.

    Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), at para. 444 et seq.

  5. 5.

    Appellate Body Report, US – Softwood Lumber IV, at para. 87.

  6. 6.

    Just see Sykes, 89 Columbia Law Review (1989), 199; Tarullo, 100 Harvard Law Review (1987), 546.

  7. 7.

    Consentient Firestone, 8 Journal of Comparative Business and Capital Market Law (1986), 75, at 87.

  8. 8.

    See Sect. 2.4.2.4.2.

  9. 9.

    See Sect. 2.3.3.1.

  10. 10.

    See Sect. 2.2.1.

  11. 11.

    See Sect. 2.2.1; Zheng, 19 Minnesota Journal of International Law (2010), 1, at 35 et seq., according to whom the WTO Appellate Body concluded on a perfect market model in the understanding of Ricardo, i.e. without externalities.

  12. 12.

    E.g. Committee on Subsidies and Countervailing Measures, G/SCM/M/22, at para. 2 et seq.; Committee on Subsidies and Countervailing Measures, G/SCM/M/24, at para. 20 et seq.; Wu (2015), at 3 et seq., available at http://e15initiative.org/wp-content/uploads/2015/07/E15_Industrial-Policy_Wu_FINAL.pdf.

  13. 13.

    Committee on Subsidies and Countervailing Measures, G/SCM/M/24, at para. 37.

  14. 14.

    Committee on Subsidies and Countervailing Measures, G/SCM/M/24, at para. 42.

  15. 15.

    See e.g. the statement of the representative of Panama, Committee on Subsidies and Countervailing Measures, G/SCM/M/22, at para. 5.

  16. 16.

    See the statements of the representatives of Mexico, Pakistan and India, Committee on Subsidies and Countervailing Measures, G/SCM/M/22, at para. 4, 7 and 9.

  17. 17.

    For the parallel discussion on Articles 8 and 9 ASCM, see Sect. 6.1.4.1.1.1.

  18. 18.

    Sykes also argues for a useful anti-subsidy law having to be capable of distinguishing “undesirable from desirable subsidies”, see Sykes, Stanford Law and Economics Olin Working Paper No. 380 (2009), 1, at 23. Especially in situations of economic crisis, subsidies may constitute a legitimate instrument of state regulatory policy. Furthermore, non-protectionist subsidies serve the WTO objectives by protecting market access commitments and must thus be exempt from disciplines on subsidies. As a consequence, a useful anti-subsidy law must be designed to be able to distinguish between gross and net subsidisation, see Sykes, Stanford Law and Economics Olin Working Paper No. 380 (2009), 1, at 23 et seq. According to Sykes, the “utility of any system of disciplines that ignores the myriad of potentially offsetting government measures is questionable”, see Sykes, Stanford Law and Economics Olin Working Paper No. 380 (2009), 1, at 25.

  19. 19.

    For the Appellate Body’s reasoning on Article 14(d) ASCM see Sect. 3.1.2.1, on Article 14(b) ASCM see Sect. 3.1.2.2.

  20. 20.

    Appellate Body Report, US – Softwood Lumber IV, at para. 100; Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), at para. 442.

  21. 21.

    Haber, Price Determination, at 53.

  22. 22.

    Appellate Body Report, US – Softwood Lumber IV, at para. 100; Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), at para. 442.

  23. 23.

    OECD Glossary of Statistical Terms, (2008) available online at http://www.oecd-ilibrary.org/economics/oecd-glossary-of-statistical-terms_9789264055087-en, at 325.

  24. 24.

    Article 6.3(d) ASCM refers to an “increase in the world market share of the subsidizing Member”, whereas Article 6.4 ASCM mentions “a change in relative shares of the market”, which is then defined as “(a) there is an increase in the market share of the subsidized product; (b) the market share of the subsidized product remains constant in circumstances in which, in the absence of the subsidy, it would have declined; (c) the market share of the subsidized product declines, but at a slower rate than would have been the case in the absence of the subsidy”. The wording of Annex V para. 5 ASCM reads “changes in market shares”.

  25. 25.

    Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), at para. 444.

  26. 26.

    OECD Glossary of Statistical Terms, (2008) available online at http://www.oecd-ilibrary.org/economics/oecd-glossary-of-statistical-terms_9789264055087-en, at 324.

  27. 27.

    Greer in Peterson (ed.), 53, at 53.

  28. 28.

    OECD Glossary of Statistical Terms, (2008) available online at http://www.oecd-ilibrary.org/economics/oecd-glossary-of-statistical-terms_9789264055087-en, at 324.

  29. 29.

    Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), at para. 455.

  30. 30.

    See Sect. 6.1.4.1.1.

  31. 31.

    See Sect. 6.1.4.1.2.1.

  32. 32.

    As made clear by the wording of Article 14(d) ASCM, government purchases may also be subject to undue exertion of government influence. In these so-called monopsonistic situations the government operates as the only buyer of goods in a market, i.e. it creates and determines the market of demand and has the power to determine the price, see Blair/Harrison, Monopsony in Law and Economics, at 53. Problematic issues with regard to market power and its determination can, however, equally be found in monopolies. Thus, monopsonistic situations will not be addressed separately in the following discussion.

  33. 33.

    Detlof/Fridh, 63 Global Trade and Customs Journal (2007), 265, at 270.

  34. 34.

    Dwivedi, Microeconomics, at 346.

  35. 35.

    Dwivedi, Microeconomics, at 347.

  36. 36.

    See Sect. 4.2.4 for the case study example of EU investigations against China.

  37. 37.

    See Sect. 6.1.4.1.2.2.

  38. 38.

    Dwivedi, Microeconomics, at 347 et seq.

  39. 39.

    http://www.ictregulationtoolkit.org/en/toolkit/notes/PracticeNote/2880 (last visited 1 January 2018).

  40. 40.

    See Hausmann/Sidak, 74 Antitrust Law Journal (2007), 387.

  41. 41.

    Dwivedi, Microeconomics, at 348.

  42. 42.

    Opportunity costs are defined as the value of the next best alternative in a necessary decision between two alternatives so that only one alternative can be realised, see Baumol/Blinder, Microeconomics, at 41.

  43. 43.

    Van den Bergh/Camesasca, European Competition Law and Economics, at 26.

  44. 44.

    Dwivedi, Microeconomics, at 348.

  45. 45.

    Dwivedi, Microeconomics, at 348 et seq.

  46. 46.

    Marginal costs are defined as extra or additional cost that arises from an extra unit of production of a certain good, see Gans/King, Principles of Economics, at 288.

  47. 47.

    Haber, Price Determination, at 53.

  48. 48.

    Dwivedi, Microeconomics, at 349.

  49. 49.

    Dwivedi, Microeconomics, at 349.

  50. 50.

    McEachern, Microeconomics, at 110.

  51. 51.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1032; Mavroidis, The Regulation of International Trade, at 272.

  52. 52.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1032 et seq.

  53. 53.

    Mavroidis, The Regulation of International Trade, at 272.

  54. 54.

    Appellate Body Report, EC – Hormones, at para. 152 et seq.; Appellate Body Report, United States – Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, 4793, at para. 150.

  55. 55.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1042.

  56. 56.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1042.

  57. 57.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1033.

  58. 58.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1034.

  59. 59.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1034.

  60. 60.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1039.

  61. 61.

    Kazeki, 43 Journal of World Trade (2009), 1031, at 1043.

  62. 62.

    See Sect. 6.1.4.1.1.

  63. 63.

    Dwivedi, Microeconomics, at 348 et seq.

  64. 64.

    See Sect. 2.4.3.2.1.

  65. 65.

    See Sect. 2.4.3.2.2.2.

  66. 66.

    See Sect. 2.4.3.2.2.2.

  67. 67.

    Firestone, 8 Journal of Comparative Business and Capital Market Law (1986), 75, at 84.

  68. 68.

    Firestone, 8 Journal of Comparative Business and Capital Market Law (1986), 75, at 76.

  69. 69.

    Firestone, 8 Journal of Comparative Business and Capital Market Law (1986), 75, at 83.

  70. 70.

    Firestone, 8 Journal of Comparative Business and Capital Market Law (1986), 75, at 84.

  71. 71.

    Firestone, 8 Journal of Comparative Business and Capital Market Law (1986), 75, at 83.

  72. 72.

    Zheng, 34 Michigan Journal of International Law (2012), 151.

  73. 73.

    Zheng, 34 Michigan Journal of International Law (2012), 151, at 240 et seq.

  74. 74.

    Zheng, 34 Michigan Journal of International Law (2012), 151, at 160 et seq.

  75. 75.

    Zheng, 34 Michigan Journal of International Law (2012), 151, at 163 et seq.

  76. 76.

    Zheng, 34 Michigan Journal of International Law (2012), 151, at 176 et seq.

  77. 77.

    Zheng, 34 Michigan Journal of International Law (2012), 151, at 178.

  78. 78.

    Zheng, 34 Michigan Journal of International Law (2012), 151, at 202 et seq.

  79. 79.

    Polouektov, 36 Journal of World Trade (2002), 1, at 5 et seq.; Detlof/Fridh, 2 Global Trade and Customs Journal (2007), 265, at 268.

  80. 80.

    Appellate Body Report, US – Softwood Lumber IV, at para. 109.

  81. 81.

    See Article 12(1)(3) BASR regarding a cap in the imposition of provisional duties and Article 15(1)(5) BASR regarding a cap in the imposition of definitive duties.

  82. 82.

    See Sect. 6.1.4.1.3.2.1.3.

  83. 83.

    On the principles in general see Sect. 3.1.2.4.1. On the discussion of legality see Sect. 5.2.3.1.6.

  84. 84.

    Rawls, A Theory of Justice, at 118.

  85. 85.

    Schropp, Trade Policy Flexibility and Enforcement in the WTO, at 201.

  86. 86.

    Convinced of the power of authoritative interpretations as solution for long-standing problems at WTO level in the light of current deadlock of the Doha Round and unreliableness of the Appellate Body Ehlermann/Ehring, 8 Journal of International Economic Law (2005), 803, at 812.

  87. 87.

    Ehlermann/Ehring, 8 Journal of International Economic Law (2005), 803, at 818.

  88. 88.

    Pauwelyn, Conflict of Norms in Public International Law, at 41 and 43.

  89. 89.

    Pauwelyn, Conflict of Norms in Public International Law, at 43, footnote 65.

  90. 90.

    Doha Ministerial Declaration, WT/MIN(01)/DEC/1, 20 November 2001.

  91. 91.

    Doha Declaration, at para. 1.

  92. 92.

    Doha Declaration, at para. 2.

  93. 93.

    Coppens, WTO Disciplines on Subsidies and Countervailing Measures, at 37; on the shift from large negotiation rounds to smaller congregations in international law-making and respective reasons for this change see Pauwelyn et al., 25 European Journal of International Law (2014), 733.

  94. 94.

    Coppens, WTO Disciplines on Subsidies and Countervailing Measures, at 35.

  95. 95.

    Post-Bali Work Decision of 27 November 2014, WT/L/941, 28 November 2014.

  96. 96.

    Doha Declaration, at para. 28.

  97. 97.

    Doha Declaration, at para. 28.

  98. 98.

    Doha Declaration, at para. 28, 31.

  99. 99.

    New Draft Consolidated Chair Texts of the AD and SCM Agreements, TN/RL/W/236, 19 December 2008, at 37, 53 et seq.

  100. 100.

    Draft ASCM Chair Text, at 37.

  101. 101.

    Communication from the Chairman of the Negotiating Group on Rules, TN/RL/W/254, 21 April 2011, at 42.

  102. 102.

    Communication from the Chairman (2011), at 54.

  103. 103.

    Communication from the Chairman (2011), at 37.

  104. 104.

    Communication from the Chairman (2011), at 37 et seq.

  105. 105.

    Draft ASCM Chair Text, at 54.

  106. 106.

    See Kaplan/Francois, 21 Tulane Journal of International and Comparative Law (2013), 467, at 473 et seq.; Kelly, M. (2013), available at SSRN http://ssrn.com/abstract=2273938, 1, at 21 et seq.

  107. 107.

    See in particular Panel Report, US – Anti-Dumping and Countervailing Duties (China), at para. 12.39 et seq.

  108. 108.

    See Sect. 6.1.4.2.1.1.

  109. 109.

    Communication from the Chairman (2011), at 1.

  110. 110.

    Coppens, WTO Disciplines on Subsidies and Countervailing Measures, at 35.

  111. 111.

    Consentient Coppens, WTO Disciplines on Subsidies and Countervailing Measures, at 37.

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Müller, S. (2018). Rethinking the Alternative Benchmark Regime in WTO Anti-Subsidy Law. In: The Use of Alternative Benchmarks in Anti-Subsidy Law. European Yearbook of International Economic Law(), vol 4. Springer, Cham. https://doi.org/10.1007/978-3-319-77613-2_6

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