The Termination of the Grandfather Clause in China’s Accession Protocol and the Normal Value Construction After Fifteen Years of Accession
A complicated legal issue tests the wisdom of a treaty interpreter. The Appellate Body in recent years has called for a holistic interpretation of the law of the World Trade Organisation (“WTO”). Both the issue of whether Section 15(a) and (d) constitute a “grandfather” clause and, therefore, should be terminated after fifteen years of accession, and the issue of whether Article 22.214.171.124 of the Anti-dumping Agreement (“AD Agreement”) allows the use of foreign information to calculate producers’ production costs, deserve a holistic approach of interpretation, taking into account all the relevant provisions and covered agreements, protocols, etc. Bearing this in mind, this chapter tries to analyze the grandfather clause nature of Section 15(a) and (d) of China’s Accession Protocol and the legal consequences. Moreover, the chapter also tries to point out the differences in the governing scope of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”) and the AD Agreement. Further, this chapter also aims to show how State-Owned Enterprises (“SOEs”) and subsidies can be dealt with under the SCM Agreement separately in a manner without causing double remedies. The SOE issue can also be examined under commercial operation obligations under the GATT. In such a contextual background, the WTO anti-dumping rule for calculating production costs under Article 126.96.36.199 of the AD Agreement should be interpreted in a way that only resolves normal value calculation, while not addressing price distortion or subsidy issues. With such a clear distinction of the governing scope, this chapter argues that production costs calculation under Article 188.8.131.52 cannot be interpreted as permitting the use of surrogate costs from other countries so that the surrogate country methodology in Section 15 of China’s Accession Protocol as a grandfather clause would not be reincarnated and inserted back into the AD Agreement.