Abstract
This Chapter makes proposals to address the deficiencies in WTO rules that were addressed in Chap. 3. Three groups of proposals are put forth: (i) proposals relating to improving WTO trade remedies; (ii) proposals relating to improving WTO trade rules generally and (iii) proposals for adding competition rules to the WTO Agreement. At the outset, however, several general issues common to all proposals will be discussed. Lastly, a combination of the three types of rules will be examined with explanations of what different combinations would be necessary in order to solve all the problems. Most proposals draw inspiration either from the Trans-Pacific Partnership Agreement or the European Union rules. Some proposals are innovatory.
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Notes
- 1.
In China, NDRC (National Development and reform Commission) is a very powerful agency, the head of which is in a position higher than the minister of commerce, although they are supposed to be equal by law. In contrast, SOEs’ micro policies are set by SASAC (State-Owned Assets Supervision and Administration Commission of the State Council) regarding assets and profits of SOEs. Currently, it is not clear whether the independence of SOEs is going to be reduced or enhanced.
- 2.
See the Proposed Trans-Pacific Partnership Agreement (signed 2016), Chapter 17 on State Owned Enterprises and Designated Monopolies. It also has Chapter 16 on competition policy, which allows each Member’s national competition law to be applicable to all commercial activities.
- 3.
Chapter 29 of the TPP Agreement provides that GATT Article XX and GATS Article XIV are applicable to the Chapter 17, which is about SOEs.
- 4.
Luca Rubini, The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective (Oxford University Press, 2009), 23, 389.
- 5.
WTO Committee on Subsidies and Countervailing Measures, Subsidies: New and Full Notification Pursuant to Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures, G/SCM/N/155/CHN (G/SCM/N/186/CHN), 21 October 2011, para. 151.
- 6.
However, an empirical finding of Vietnam giving interest rate subsidies during economic crisis, found that many subsidies were used by enterprises in stock market speculation or real estates, rather than in production or expansion. Luca Rubini, The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective (Oxford University Press, 2009), 45.
- 7.
Michael J. Trebilcock and Robert Howse, The Regulation of International Trade, 3rd edition (Routledge, 2005), 282.
- 8.
Joaquin Almunia, 9th Global Forum on Competition, held in Paris, 18–19 Feb. 2010, available at https://www.oecd.org/daf/competition/abuse/9thoecdglobalforumoncompetition18-19february2010.htm
- 9.
The fundamental principles were laid down in 1957, as a necessary condition to achieving a common market in goods and services in the EU, and remain unchanged today in the new Lisbon Treaty. See George Bermann, Roger Goebel, William Davey and Eleanor Fox, Cases and Materials on European Union Law, 3rd edition (West Academic Publishing, 2010).
- 10.
“The Internalization of the Costs, Prices, and External Prices of Coal,” Unirule Institute of Economics (2008).
- 11.
State Council, “Notification Regarding Ensuring the Payment of Pension on Time for Retired Employees from Enterprises and SOEs” No. (2000) 8; “The Nature, Performance, and Reform of the State-owned Enterprises,” Unirule Institute of Economics (June 12, 2011), 78–83; Xuejin Zuo and Hangsheng Cheng, State-owned Enterprise Governance in China: An International Comparative Perspective (China: Social Science Academic Press, 2006), 1–14, and 40–49.
- 12.
Robert Howse, “Do the World Organization Disciplines on Domestic Subsidies Make Sense? The Case for Legalizing Some Subsidies”, in Kyle W. Bagwell and George A. Bermann (eds.) Law and Economics of Contingent Protection in International Trade (Cambridge University Press, 2009), 85–102.
- 13.
United Parcel Service of America Inc. v. Government of Canada (UPS v. Canada), UNCITRAL, Award on the Merits (24 May 2007), paras. 92 and 97; States should have stated reasons in advance rather than ex post. See Dissenting Opinion of Arbitrator (Separate Statement of Dean Ronald A. Cass), UPS v. Canada, para. 124, p. 40.
- 14.
Alan Sykes, “The Questionable Case for Subsidies Regulation: A Comparative Perspective,” Law and Economics Research Paper Series Paper No. 380.
- 15.
WTO Working Party on GATS Rules, “Communication from Chile: The Subsidies Issue,” S/WPGR/W/10, 2 April 1996, p 1; Report by the Chairperson on the Working Party on GATS Rules, Negotiations on Subsidies, S/WPGR/10, 30 June 2003, para. 15; Gary N. Horlick and Peggy A. Clarke, “WTO Subsidies Discipline During and After the Crisis,” 13(3) Journal of Int’l Economic Law (2010): 859–874, 873.
- 16.
There is no definition of “services” provided in GATS. In the case of China — Publications and Audiovisual Products, it was disputed whether films and sound recordings are services or goods. The Panel held that the measure affects both trade in goods and services, and hence it could be a violation of both GATT and GATS. See Panel Report, China — Publications and Audiovisual Products, WT/DS363/R, adopted 21 Dec. 2009, paras. 4.301–4.313.
- 17.
International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts, U.N. Doc. A/CN.4/L.602/Rev.1 (Jul. 26, 2001), art. 8; Michel Cartland, Gerard Depayre and Jan Woznowskl, “Is Something Going Wrong in the WTO Dispute Settlement?” 46 J. World Trade 979, 996–1001 (2012), 997.
- 18.
AB Report, US — Carbon Steel (India), WT/DS436/AB/R, para. 4.37.
- 19.
Panel Report, US Countervailing Measures (China), WT/DS437/R, adopted 14 July 2014, para. 7.74.
- 20.
AB Report, US — Carbon Steel (India), WT/DS436/AB/R, para. 4.29.
- 21.
Ibid.
- 22.
Article 2 of the SCM Agreement.
- 23.
Para.10.2, Part I of the Protocol of China Accession to the WTO.
- 24.
An export restriction on one good will tend to diminish imports generally and will stimulate other exports, equivalent to import tariff and export subsidy. However, it doesn’t meet the “specificity” requirement in the SCM Agreement. See Merit E. Janow and Robert W. Staiger, “US-Export Restraints: United States---Measures Treating Export Restraints as Subsidies,” 2(S1) World Trade Review, 201–235 (Jan. 2003).
- 25.
The Tokyo Round of Multilateral Trade Negotiations, Report by the Director-General (Geneva: GATT, 1979), 181.
- 26.
John H. Jackson, The World Trading System: Law and Policy of International Economic Relations, 2nd edition (Cambridge, MA: MIT Press, 1997).
- 27.
John H. Jackson, Restructuring the GATT System (1990), 84–7.
- 28.
For a detailed discussion of whether regulation can be a subsidy and detailed analysis of elements of the SCM Agreement, as well as the distinction between regulatory measures and financial assistance. See Luca Rubini, The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective (Oxford University Press, 2009), 94, 142–198. See also Panel Report, US — Export Restraints , paras. 8.65 and 8.73.
- 29.
In order to constitute a state aid, the use of “state resources” is required, which are budgetary consequences for the government. Therefore, regulatory measures are not state aids within the EU rules. See Article 107.1 of TFEU.
- 30.
For a list of cases, see Luca Rubini, The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective (Oxford University Press, 2009), 152.
- 31.
Id., at 164.
- 32.
Id., at 172.
- 33.
See the U.S. Sherman Act, section 2; Article 106 is about the public undertakings granted special or exclusive rights and Article 37 is about state monopolies of a commercial character. See Articles 106 of TFEU (ex Article 86 TEC, ex article 90 Treaty of Rome) and 37 of TFEU. Other practices may be found in the proposed TPP Agreement about non-commercial assistance as elaborated in its Article 17.6, which excludes tax advantages and regulatory advantages.
- 34.
Douglas Irwin, Petros Mavroidis and Alan Sykes, The Genesis of the GATT (Cambridge University Press, 2008), 157–161.
- 35.
Article 31.1 of the Vienna Convention.
- 36.
“Interpretation pursuant to the customary rules codified in Article 31 of the Vienna Convention is ultimately a holistic exercise that should not be mechanically subdivided into rigid components.” See AB Report, European Communities–Customs Classification of Frozen Boneless Chicken Cuts (EC-Chicken Cuts), WT/DS269/AB/R, Sept. 12, 2005, para. 176.
- 37.
Article 32 of the Vienna Convention.
- 38.
Article 17.4 of the TPP Agreement.
- 39.
GATT Panel Report, Canada – Provincial Liquor Boards (US), DS17/R, Feb. 18, 1992, BISD 39S/27, p. 8; Robert Howse, “State Trading Enterprises and Multilateral Trade Rules: The Canadian Experience,” in State Trading in the Twenty-First Century, eds., Thomas Cottier and Petros C. Mavroidis (1998), 187–8.
- 40.
WTO Report of the Working Party on the Accession of Viet Nam, Accession of Viet Nam: Report of the Working Party on the Accession of Viet Nam, WT/ACC/VNM/48, 27 Oct. 2006, para. 78.
- 41.
Id., para. 79.
- 42.
Robert Howse, State Trading Enterprises and Multilateral Trade Rules: The Canadian Experience, in State Trading in the Twenty-First Century, eds., Thomas Cottier and Petros C. Mavroidis (University of Michigan Press, 1998), 187.
- 43.
Ibid.
- 44.
Id., at 102.
- 45.
Article 17.6(2) of the TPP Agreement.
- 46.
George Bermann, Roger Goebel, William Davey and Eleanor Fox, Cases and Materials on European Union Law, 3rd edition (West Academic Publishing, 2010), 1043–44.
- 47.
Article 107.1 of TFEU.
- 48.
For the same reason explained in Sect. 3.2, I would not propose to eliminate giving monopolies or exclusive rights to SOEs under the competition rules proposals.
- 49.
Panel Report, Canada-Wheat Exports and Grains Imports, WT/DS276/R.
- 50.
Deutsche post case (EC law case); and Canada Post Service case (NAFTA case); R. Richard Geddes, “Anticompetitive Behavior in Postal Services,” in Competing with the Government, Anticompetitive Behavior and Public Enterprises, eds., Richard R. Geddes (Hoover Institution Press, 2004), 100 and 106.
- 51.
Jacques H.J. Bourgeois, “EC Rules on State Monopolies and Public Undertakings: Any Relevance for the WTO?” in State Trading in the Twenty-First Century, eds., Thomas Cottier and Petros C. Mavroidis (1998), 161–180, 173.
- 52.
Robert Howse, “State Trading Enterprises and Multilateral Trade Rules: The Canadian Experience,” in State Trading in the Twenty-First Century, eds., Thomas Cottier and Petros C. Mavroidis (1998), 189–90.
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Wu, Y. (2019). Proposals to the WTO Rules to Address the Problems. In: Reforming WTO Rules on State-Owned Enterprises. Springer, Singapore. https://doi.org/10.1007/978-981-13-3561-7_4
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