China's aggressive legalism: China's first safeguard measure

Journal of World Trade

Volumn 36, Issue 6, 2002, Pages 1037-1060

  Jung, Youngjin ^a  

^a Ministry of Foreign Affairs and Trade of the Republic of Korea   (South Korea)

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EID: 30344439668     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: 10.54648/trad2003003     Document Type: Article

References (152)

1. The term "aggressive legalism" is taken from Saadia M. Pekkanen, Aggressive Legalism: The Rules of the WTO and Japan's Emerging Trade Strategy, World Economy (2001), 707-738.
2. China notified this to the WTO on 23 May 2002 (G/SG/N/6/CHN/1, G/SG/N/7/ CHN/1, G/SG/N/11/CHN/1).
3. Article 4 of the WTO Charter reads: "Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed [WTO] Agreements."
4. The White House, press release "A Proclamation", 5 March 2002, at (visited 19 July 2002).
5. As of this writing (cut-off date 30 July 2002), a single Panel was established to deal with the US steel safeguards pursuant to Article 9.1 of the DSU, following the requests presented by the EC on 3 June 2002 (DS248), Japan and Korea on 14 June 2002 (DS249, DS251), China, Switzerland and Norway on 24 June 2002 (DS252, DS253, DS254), New Zealand on 8 July 2002 (DS258), and Brazil on 22 July 2002 (DS259).
6. G/C/17, G/SG/46, 21 May 2002.
7. The literature on this matter is vast. See, e.g., John K. Fairbank, Edwin O. Reischauer and Albert M. Craig, East Asia: Tradition & Transformation (Boston: Houghton Mifflin, 1989), 980;
8. C. David Lee, Legal Reform in China: A Role For Nongovernmental Organizations, 25 Yale J. Int'l L. (2000), 363, 375.
9. See (visited 20 July 2002).
10. See Huan Xiang, "Strive to Build up New China's Science of International Law", in Selected Articles from Chinese Yearbook of International Law (Beijing: 1983), p. 3.
11. See also Qianjiang Kong, Enforcement of WTO Agreements in China, 35 J.W.T. 6 (December 2001), 1193-1196.
12. For a brief introduction of statutory scheme, see Lihu Chen, China's Safeguard Measures Under the New WTO Framework, 25 Fordham Int'l L. J. (2002), 1169.
13. Foreign Trade Law (China), available at , adopted at the 7th Session of the Standing Committee of the Eighth National People's Congress on 12 May 1994.
14. CCH, China Law for Foreign Business, para. 19-620.
15. Article 32 of Foreign Trade Law reads, "In the event referred to in Article 29 ... the authority or agency designated by the State Council shall conduct investigations and make determinations in accordance with relevant laws and administrative regulations."
16. Press release, WTO, "WTO Ministerial Conference Approves China's Accession" (10 November 2001), available at .
17. PRC Regulation on Safeguard Measures, People's Daily, 13 December 2001, available at .
18. The practice of GATT panels was summed up in the Panel Report, US - Tobacco, adopted 4 October 1994, BISD 41S/131, referring in footnote to Panel Report, US - Superfund, adopted 17 June 1987, BISD 34S/ 136, p. 160;
19. Panel Report, EEC - Parts and Components, adopted 16 May 1990, BISD 37S/132, pp. 198-199;
20. Panel Report, Thailand - Cigarettes, adopted 7 November 1990, BISD 37S/200, pp. 227-228;
21. Panel Report, US - Malt Beverages, adopted 19 June 1992, BISD 39S/ 206, pp. 281-282, 289-290;
22. Panel Report, United States - Denial of Most-Favoured Nation Treatment as to Non-Rubber Footwear from Brazil, adopted 19 June 1992, BISD 39S/128, p. 152.
23. However, David Palmeter questioned the applicability of this jurisprudence in the WTO because Article XVI:4 of the WTO Charter provides that each Member shall ensure the conformity of its laws, regulations and administrative procedures with its WTO obligations (David Palmeter, "A Few-Very Few-Kind Words for Section 301", in Philip Ruttley, Iain MacVay and Carol George (eds), The WTO and International Trade Regulation (London: Cameron May, 1998), pp. 128-129).
24. In US - 1916 Act, the AB did not rule on whether discretionary laws can be found to violate WTO rules (WT/DS136, 162/AB/R), but several WTO Panels took very different approaches; see (visited 21 July 2002).
25. Panel Report, United States - Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/ DS202/R;
26. Appellate Body Report, United States - Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R ("Line Pipe").
27. In the Panel request, Korea challenged the regulation.
28. Chen, as note 10, above, at 1181.
29. See Patrick M. Norton and Kermit W. Almsteadt, China's New Anti-Dumping Rules: Battleground for New Protectionism?, 16 China Law & Practice 1 (February 2002).
30. USTR, National Trade Estimate Report on Foreign Trade Barriers (2002), at 50.
31. The Regulation does have a provision on "confidential information" in Articles 13 and 14. But, for instance, it misses out on how to deal with the situations in which the competent authorities find that a request for confidentiality is not warranted.
32. In the US, the "actual" investigation is entrusted with the International Trade Commission. In the EU, it is entrusted to Directorate B of the Directorate-General of the Commission
33. It is responsible for consultation, notice, and dispute consultation with foreign parties (e.g., Articles 5, 14, 18, 25, 33 of the Regulation). MOFTEC officially established the Import & Export Fair Trade Bureau ("the Bureau") on 30 October 2001. The Bureau will be responsible for China's anti-dumping, countervailing duty and safeguard investigation. The Bureau has eight divisions and 55 staff. The eight divisions are anti-dumping investigation division I, anti-dumping investigation division II, anti-dumping response division I, anti-dumping response division II, anti-subsidy and safeguard measures division, comprehensive division and general office (memo from Bae, Kim & Lee, Korea, on file with the author).
34. Article 6 of the Regulation
35. Id. But the Ministry of Agriculture co-operates with the Commission when the safeguard investigation concerns agricultural products.
36. The Council of Ministers is also empowered to apply safeguard measures pursuant to Article 17 of Regulation 3285/94, but in practice Community safeguard measures have always been enforced by the Commission (Ivo Van Bael and Jean-François Bellis, Anti-Dumping and Other Trade Protection Laws of the EC (3rd edn: 1996), p. 462.
37. One survey shows that the president has often denied import relief in 20 of 30 in which the International Trade Commission recommended relief and in the four cases in which the ITC was evenly split and that even in the 12 cases in which relief has been granted, the President has generally provided different relief than that recommended by the Commission (Harvey M. Applebaum and David R. Grace, "Section 201 of the Trade Act of 1974", in Harvey M. Applebaum and Lyn M. Schlitt (eds), The GATT, the WTO and the Uruguay Round Agreements Act (New York: Practising Law Institute, 1995), p. 534.
38. Korea's Steel and Iron Association, The Implication and Strategy for the China's Safeguard System, 21 May 2002 (Korean; on file with the author).
39. Id. In 1998, China took a big step forward in reducing output, eliminating redundant productivity and phasing out outdated equipment in six key industries, including textiles, metallurgy, sugar, petrochemicals, building materials and coal. In 2001, China embarked on the 10th Five-Year Plan for National Economic and Social Development (2001-05), which put economic restructuring high on the agenda; see (visited 20 July 2002).
40. Id.
41. Id.
42. Id.
43. US - Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/1, 13 March 2002.
44. US - Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/9, 26 March 2002. Then China requested the establishment of the Panel on 27 May 2002.
45. May 2002; at (visited 30 July 2002).
46. G/SG/49/Suppl.1 (30 May 2000);
47. G/SG/49/Suppl.2 (7 June 2002).
48. Article 21 of the Regulation. If a safeguard measure takes the form of quantitative restriction, it will be adopted and published by MOFTEC.
49. Public Notice year 2002 No. 29 by MOFTEC. The investigation started on 20 May 2002.
50. The Preliminary Determination, Recital 6. The Preliminary Determination is attached to Notice No. 30.
51. G/SG/N/6/CHN/1, G/SG/N/7/CHN/1, G/SG/N/11/CHN/1, 23 May 2002.
52. Regulation 3285/94 (with regard to non-market economies, refer to Regulation 519/94), Article 16(1): "Where a product is imported into the Community in such greatly increased quantities and/or such terms or conditions as to cause, or threaten to cause, serious injury to Community producers, the Commission, in order to safeguard the interests of the Community, may, acting at the request of a Member State or on its own initiative" (emphasis added).
53. Title V of Regulation 3285/94. See Van Bael and Bellis, as note 27, above, at 473.
54. USC § 2253.
55. In the US, the courts made clear that the President has discretionary authority in international trade disputes (Florsheim Shoe Co. v. United States, 744 F.2d 787, 795 (Fed. Cir. 1984). Later in Maple Leaf Fish Co., the court extended this view to include the ITC in escape clause actions (Maple Leaf Fish Co. v. United States, 762 F.2d 86 (Fed. Cir. 1985).
56. See Michael H. Stein and Alan Wm Wolff, "Booklet 5, Relief From Import Competition Under the 'Escape Clause': Section 201 of the Trade Act of 1974", in Charles R. Johnstone (ed.), Law & Practice of United States Regulation of International Trade (1993), pp. 69-70.
57. Also in the EU, judicial review is very limited. See Van Bael and Bellis, as note 27, above, at 464-465.
58. One of the WTO official languages.
59. In Korea - Dairy (see note 59, below), the European Communities, the complainant, did not rely on any reports by the Korean investigating authority. Then, during the Panel proceedings, to rebut certain EC claims Korea had submitted the "Investigation Report on Industrial Injury by the Office of Administration and Investigation", which was the primary report generated by its investigating authority during its safeguard investigation. In reaching its findings under Safeguards Agreement Article 4.2, the Panel had then relied upon statements and reasoning contained in the above-mentioned report, which was later upheld by the Appellate Body.
60. The provisions such as Article 2, 3, 4, and 5, which relates to the prerequisites for application of safeguard measures is routinely invoked in WTO litigations.
61. Almost at the same time, Hungary also announced the imposition of its provisional safeguard measure virtually on the same ground (G/SG/N/6/HUN/ 1, G/SG/N/7/HUN/1, G/SG/N/11/HUN/1, 23 May 2002).
62. China suggested 5.3 million tons as its global quota, but it is suggested that this amount falls short of the one averaged during the past three years. See note 29, above.
63. Article 4.1(c) of SA
64. Investigation No. TA-201-73, USITC Pub. 3479 (December 2001).
65. Id., at 30.
66. US - Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia (US - Lamb), WT/DS177, 178/AB/R, paras 92-94.
67. Report of the Panel on Canada - Imposition of Countervailing Duties on Imports of Manufacturing Beef from EEC, dated 13 October 1987, not adopted, SCM/85, paras 2.2., 5.11-5.12.
68. Report of the Panel on US - Definition of Industry Concerning Wine and Grape Products, adopted by the Committee on Subsidies and Countervailing Measures on 28 April 1992, SCM/71, BISD 39S/436, paras 4.2-4.3, 4.5-4.6.
69. Report of the Panel on New Zealand - Imports of Electrical Transformers from Finland, adopted on 18 July 1985, BISD 32S/55, para. 4.6.
70. Line Pipe, para. 80.
71. EC - Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001, para. 88.
72. US - Lamb, para. 94.
73. In 1984 Steel, the Commission defined separate like products for plate and sheet/strip due to difference in production processes, uses, and thickness (USITC Pub. 1553, at 20). In 2001 Steel, the Commission put emphasis on the fact that there have been a number of technological changes in the steel industry since the 1984 Steel case, such as the advent of the continuous casting process for the production (USITC Pub. 3479, at 45).
74. Argentina - Safeguard Measures on Imports of Footwear (Argentina - Footwear), WT/DS121/AB/R, para. 92;
75. Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products (Korea - Dairy), WT/DS98/AB/R, para. 85.
76. Now it is customary that countries applying safeguard measures set up a separate section that analyses this requirement. In the US safeguard measure of March 2002 in response to a request from the USTR, the ITC made an added effort to elaborate on the circumstances in which unforeseen developments have arisen (Re: Steel, Inv. No. TA-201-73, ITC, 4 February 2002). But most complaining countries including the EU indicated that the US failed to demonstrate that this requirement exists (The European Commission, "A Letter to the WTO", 7 March 2002; see (visited 22 July, 2002)).
77. G/SG/N/6/CHN/1, G/SG/N/7/CHN/1, G/SG/N/11/CHN/1, 23 May 2002.
78. Commission Regulation (EC) No. 560/2002 of 27 March 2002, imposing provisional safeguard measures against imports of certain steel products, recital 12.
79. Argentina - Footwear, para. 91;
80. Korea - Dairy, para. 84.
81. "The term 'foreseen developments' should be interpreted to mean developments occurring after the negotiation of the relevant tariff concession which it would not be reasonable to expect that the negotiators of the country making the concession could and should have foreseen at the time when the concession was negotiated" (emphasis added), reprinted in WTO, GATT Analytical Index: Guide to GATT Law and Practice (GATT Analytical Index) (1955), at 517.
82. Id.
83. Id.
84. Kenneth W. Dam, The GATT: Law and International Economic Organization (Chicago: University of Chicago Press, 1970), at p. 102.
85. See also Raj Bhala and Kevin Kennedy, World Trade Law (Charlottesville, VA: Lexis, 1998), p. 906.
86. Chile - Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/R, para. 7.139.
87. The three requirements needed to meet non-violation complaints are: (i) application of a measure by a WTO Member, (ii) a benefit accruing under the relevant agreement; and (iii) nullification or impairment of the benefit as the result of the application of the measure (see Youngjin Jung, Modelling a WTO Dispute Settlement Mechanism in an International Antitrust Agreement, 34 J.W.T. 1 (February 2000), 93-96.
88. In this regard, technically speaking, it appears that the examination of "unforeseen developments" has little to do with non-violation complaints. But since the protection of legitimate expectations is outgrowth of the doctrine of good faith, which pervades every legal system, it is convincingly suggested that, despite the decision otherwise rendered in India - Patent Protection (WT/DS50/AB/R), the jurisprudence on legitimate expectations can be applied in violation as well as non-violation complaints (Thomas Cottier and Krista N. Schefer, "Good Faith and the Protection of Legitimate Expectations in the WTO", in Marco Bronckers and Reinhard Quick (eds), New Directions in International Economic Law: Essays in Honour of John H. Jackson (London: Kluwer Law International, 2000), pp. 53-59. Particularly the languages used in Hatter's Fur are strikingly similar to those in non-violations complaints.
89. Japan - Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, para. 10.82
90. Article 6 of SA commands the existence of increased imports independently of other requirements.
91. The EU repeatedly emphasized that there is clear evidence of a causal link between the reduction in US imports and growth in Community imports. This can best be explained, the claim goes, by the fact that, for many steel producers, the US and the Community are their only viable export markets. It noted that given the weakness of other markets (notably Japan, South-east Asia and South America), it is very unlikely that a significant quantity has been, or will be, diverted to such markets. Then it went on to argue that producers in third countries suffer a difficult situation in their domestic markets, which are unable to absorb goods previously destined for the US, given the openness of the Community market, it may constitute the only opportunity for foreign producers to find an outlet for goods excluded from the US market (EU Regulation, recital 51).
92. According to the EU Commission's assessment, for many steel producers, the US and the Community are their only viable export markets (EU Regulation, recital 37).
93. Professor Jackson observes that one can almost conclude that an increase in imports can itself be an unforeseen development (John H. Jackson, World Trade and the Law of GATT (New York: Bobs-Merrill, 1969), p. 561).
94. Determination, recital 12.
95. Argentina - Footwear, paras 130-131.
96. Article 3 of SA.
97. Janet A. Nuzum, "The Agreement on Safeguards: US Law Leads Revitalization of the Escape Clause", in Terence P. Stewart (ed.), World Trade Organization (Washington, D.C.: American Bar Association, 1996), p. 408.
98. Bhala et al., as note 67, above, at 908.
99. Article 4.2(a) of the SA.
100. Determination, recital 16.
101. Argentina - Footwear, paras 136-137.
102. Korea - Dairy, para. 7.58.
103. US - Line Pipe, para. 170
104. US - Line Pipe, para. 217.
105. Argentina - Footwear, para. 145.
106. Article 6 of the SA. GATT XIX:2.
107. Bhala et al., as note 67, above, at 925.
108. GATT Analytical Index, at 524.
109. Notice 30, recital 5.
110. US - Definitive Safeguard Measures on Imports of Wheat Gluten From the European Communities, WT/DS166/AB/R, at 96.
111. See also Argentina - Footwear, paras. 111-113.
112. US - Line Pipe, paras 188-189.
113. US - Lamb, para. 181.
114. This has been done pursuant to section 311(a) of NAFTA Implementation Act.
115. ITC Pub. 3261, footnote 168.
116. US - Line Pipe, paras 194-195.
117. Id. paras 186-187.
118. GATT XXIX: 8(a)(i).
119. US - Line Pipe, para. 198.
120. BISD 4S, 1956, pp. 7-10.
121. Yuji Iwasawa, "WTO Dispute Settlement and Japan", in Marco Bronckers and Reinhard Quick (eds), New Direction in International Economic Law: Essays in Honour of John H. Jackson (London: Kluwer Law International, 2000), pp. 474-475.
122. I. Komatsu, Japan and the GATT Dispute-Settlement Rules and Procedures, 35 Japanese Annual of International Law 33 (1992), 35-37.
123. John H. Jackson, "Western View of Japanese International Law Practice For the Maintenance of the International Economic Order", in Nisuke Ando (ed.), Japan and International Law: Past, Present and Future (The Hague: Kluwer Law International, 1999), p. 213.
124. Up to 1988, it had lodged only four formal complaints at the GATT; French restrictions on VCRs that ended up with Japanese VER in the absence of a Panel ruling; US retaliation in semiconductors that also resulted in continuing VIE without panel ruling; a US Customs Court decision on Japan's border-tax adjustments as countervail subsidies and an EC anti-dumping regulation that led the panel rulings upholding Japan's claims respectively (Saadia M. Pekkanen, as note 1, above, at 709).
125. Japan imposed its first anti-dumping measures in the Ferro-Silico-manganese case. See, generally, Norio Komuro, "The New Asian Anti-Dumping Laws and Practice", in Philip Ruttley, Iaian MacVay and Ahmad Masa'deh (eds), Liberalisation and Protectionism in the World Trading System (London: Cameron May, 1999), pp. 54-82;
126. Norio Komura, Japan's First Anti-dumping Measures in the Ferro-silico-manganese Case, 27 J.W.T. 3 (June 1993), 5-30.
127. Mitsuo Matsushita and Thomas J. Schoenbaum, Japanese International Trade and Investment Law (Tokyo: 1989), p. 4.
128. Nicholas R. Lardy, Integrating China into the Global Economy (Washington, D.C.: Brookings Institution Press, 2002), pp. 63-105.
129. Many studies show that there is a positive correlation between country size and the optimal tariff rates, which is one of the representative proxies for measuring the effectiveness of retaliation in trade war (see, generally, H.G. Johnson, Optimum tariffs and retaliation, Rev. Econ. Stud. 21 (1954), 142-153;
130. Hiro Lee, Cooperation or Confrontation in US-Japan Trade?, J. Japanese and Int'l Economics 13 (1999), 119, 120).
131. China is the most frequently targeted country by foreign anti-dumping regulations. By the end of 2001, more than 450 anti-dumping cases were launched against 4,000 categories of Chinese products. On 31 December 1998, the US notified the WTO of 43 outstanding cases pertaining to China, 33 cases since 1990. The EU, the first country that imposed the anti-dumping measure against China in 1979, targeted China in more than 20 percent of its total anti-dumping measures. For more details about the figure, see Lei Yu, Rule of Law or Rule of Protectionism: Anti-Dumping Practices Toward China and the WTO Dispute Settlement System, 15 Column. J. Asian L. (2002) 293, 300-302.
132. Thomas Peele III, "US Trade Law Affecting China After China's Accession to the WTO", in James V. Feinerman and B. Thomas Peele III (eds), China After the WTO (New York: Law Institute, 2001), pp. 115-145.
133. See, generally, Lardy, as note 105, above, at 81-86.
134. Qinagiang Kong, Enforcement of WTO Agreements in China, 35 J.W.T. 6 (December 2001), 1181-1214, footnote 89.
135. See .
136. Norio Komuro, Japan's Safeguard Law and Practice, 35 J.W.T. 5 (October 2001), 935-937.
137. Komuro, ibid., at 933-935.
138. See (visited 20 July 2002).
139. Memo, 22 May 2002, Sidley & Austin LLP (on file with the author).
140. G/C/17, G/SG/46, 21 May 2002
141. See (visited 20 July 2002).
142. See (visited 20 July 2000).
143. For instance, affected Members are allowed to retaliate for the first three years that a safeguard measure is in effect only if that safeguard measure has been taken as a result of an absolute increase in imports and that such a measure conforms to the provisions of this Agreement (SA Article 3).
144. L.J. Schoppa, Bargaining With Japan: What American Pressure Can and Cannot Do (New York: Columbia University Press, 1997), pp. 308-309.
145. Edward J. Lincoln, Troubled Times: US-Japan Trade Relations in the 1990s (Washington, D.C.: Brookings Institution Press, 1999), p. 227.
146. Mark L. Clifford, China's Fading Free Trade Fever, Businessweek Online, 6 June 2002, 2002 WL 5146179.
147. For implementation difficulties for developing countries in general, see J. Michael Finger, Implementing the Uruguay Round Agreements: Problems for Developing Countries, 24 World Economy 9 (September 2001), 1097-1108.
148. See (visited 23 July 2002).
149. See Harold Hongju Koh, Transnational Legal Process, 75 Neb. L.Rev. 181 (1996);
150. Koh, Why Do Nations Obey International Law?, 106 Yale L. J. (1997), 2599;
151. Koh, The 1998 Frankel Lecture: Bringing International Law Home, 35 Hous. L. Rev. (1998), 623.
152. Professor Koh observes, citing H.L.A. Hart, that "a transnational legal process of interaction, interpretation, and internationalization of global norms can provide both 'secondary rules' and the 'rules of recognition'" (Harold Hongju Koh, Why Do Nations Obey International Law?, 106 Yale L. J. 8 (June 1997), 2599, 2659).