By Sungjoon Cho [originally posted on the International Economic Law and Policy Blog on June 18, 2020]

This is what Alan Beattie seems to argue (“WTO Still Has Ability to Affect Rulings and Regulation Elsewhere”). He stated that:

“WTO laws and rulings are regularly cited in investment tribunals, bilateral trade disputes and even the European Court of Justice. Despite its reservations about WTO dispute settlement, for example, the US referred to WTO rulings in its groundbreaking action against Guatemala for labour rights violations under the Central America Free Trade Agreement.”

True, the WTO case law may not be “binding” to parties other than immediate disputants in a given case. However, such legal technicality does not exhaust the description of the normative gravitational force field from the WTO law. For another example, in formulating a recent AD/CVD measure against China over certain fibre glass fabrics from a “Chinese subsidiary located in Egypt,” the European Commission relied heavily on the WTO trade remedy law. This incorporation, by reference, of the WTO norms into the domestic law seems to have settled in a pattern beyond a mere dimension of isolated anecdotes. In this regard, Joost was nicely quoted in Beattie’s article. (“If WTO dispute settlement becomes more difficult to use, you could see more of what the EU is doing at the moment against what it perceives as Chinese subsidies in Egypt — using WTO subsidies rules in EU anti-subsidy investigations, leading to EU tariffs, rather than filing a WTO complaint.”)

Finally, who could have ever imagined that a senior U.S. politician would praise the WTO law? In a recent Bloomberg op-ed, Senator Chuck Glassley stated that “the WTO’s expansion of global trade has actually enabled the U.S. to respond to the pandemic” as “global value chains, facilitated by WTO rules” empowered the U.S. automakers to globally source components necessary to manufacture ventilators.

After all, the WTO law may be “stickier” than many would believe.

By Sungjoon Cho [originally posted on the International Economic Law and Policy Blog on December 12, 2019]

Upon the Appellate Body having being paralyzed, the European Commission has promptly moved to secure its trade interests by arming itself with the retaliatory power, also creating the position of “Chief Trade Enforcement Officer.”  The Commission’s proposal is reminiscent of Nicolas Lamp’s earlier post on the threat of unilateral retaliation to keep the WTO dispute settlement system alive.

As far as the WTO is concerned, the proposal allows the Commission to impose penalty tariffs on a WTO member that lost at a panel stage but refuses to comply with the appellate arbitration mechanism under DSU Article 25 and instead appeal “into the void” to prevent the panel report from being adopted.  Interestingly, the Commission justifies (pdf) such unilateral retaliation as a “countermeasure” under the “Draft Articles on Responsibility of States for Internationally Wrongful Acts.”  This is what the Commission argues in this regard:

[W]here the responsible party fails to cooperate in good faith in the dispute settlement procedures, thereby preventing the injured party from completing such procedures, the possibility to resort to countermeasures in accordance with the requirements of general public international law necessarily revives. The International Law Commission notes that the revival of that possibility arises when one Party “fails to implement the dispute settlement procedures in good faith” or “where a State party fails to cooperate in the establishment of the relevant tribunal”.

Would this kind of “threat” from a big trading bloc induce other WTO members into buying the proposed appellate arbitration mechanism?  What about the United States?  Obviously, a retaliatory measure may invite another one, and that’s what a trade war is all about.

By Sungjoon Cho [originally posted on the International Economic Law and Policy Blog on October 2, 2019]

At long last, the Article 22.6 Report (PDF) of the Arbitrator on the Boeing-Airbus dispute is out.  Note that this dispute concerns an original dispute in which the United States (on behalf of Boeing) sued the European Union for the latter’s subsidies on Airbus. Another report in a parallel case in which the EU (on behalf of Airbus) sued the United States for the latter’s subsidies on Boeing will be released in the near future.

This report reads like an accounting paper full of numbers and formulas. Obviously, the Arbitrator took great pains in computing the reasonable volume of Boeing’s lost sales (counterfactual deliveries).  Note that Boeing and Airbus constitute a near duopoly in the global market when it comes to a large civilian aircraft, which is the subject of this dispute. (more…)