"WTO-Plus" obligations and their implications for the World Trade Organization legal system: An appraisal of the China Accession Protocol

Journal of World Trade

Volumn 37, Issue 3, 2003, Pages 483-522

  Qin, Julia Ya ^a  

^a WAYNE STATE UNIVERSITY   (United States)

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EID: 37749026034     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: 10.54648/trad2003025     Document Type: Article

References (181)

1. WTO, Protocol on the Accession of the People's Republic of China, WT/L/432 (10 November 2001), available at .
2. WTO, Report of the Working Party on the Accession of China, WT/ MIN(01)/3 (10 November 2001) ("WPR"), available at .
3. All texts of the WTO Agreements are available at .
4. Except that the Plurilateral Trade Agreements in Annex 4 of the WTO Agreement apply only to Members that have separately accepted them. See WTO Agreement Article 11:3.
5. See GATT Article II:1 and GATS Article II:1.
6. Article II:2 of the WTO Agreement.
7. See Article X of the WTO Agreement.
8. The amending procedures for the WTO agreements "are probably at least as difficult as those that existed under the GATT (largely copied from the GATT, with the possible exception of certain non-substantive procedural amendments). Under the GATT, it was perceived ... that amendment was virtually impossible ...". John H. Jackson, The Jurisprudence of GATT and the WTO: Insights on treaty law and economic relations (Cambridge: Cambridge University Press, 2000), p. 185.
9. Both the GATT and the GATS permit a Member to modify or withdraw a concession or a commitment in its Schedules after a period of three years, provided that the modifying Member shall, at the request of affected Members, enter into negotiations with a view to reaching an agreement on any necessary compensatory adjustments so as to maintain a general level of reciprocal and mutually advantageous concessions and commitments no less favourable than that provided for in the Schedules prior to the negotiation. See GATT Article XXVIII:1 and GATS Article XXI. Additionally, tariff bindings on goods can be renegotiated at any time under GATT Articles XXVIII:4 (special circumstances), XXVIII:5 (reserved re-negotiation rights), XVIII:7 (developing countries), and XXIV:6 (compensatory renegotiations due to formation of a customs union or free trade area). Also, specific market access obligations are subject to change in a new round of multilateral trade negotiations.
10. See, generally, Ernst-Ulrich Petersmann, "International Trade Law and the GATT/WTO Dispute Settlement System 1948-1996: An Introduction", in Ernst-Ulrich Petersmann (ed.), International Trade Law and the GATT/ WTO Dispute Settlement System (London: Kluwer Law International, 1997), pp. 10-15.
11. See, generally, John H. Jackson, The World Trading System: Law and Policy of International Economic Relations, 2nd edn (Cambridge, MA: MIT Press, 1997), pp. 39-41.
12. Pursuant to GATT Article XXXIII, a qualifying government may accede to the GATT "on terms to be agreed between such government and the CONTRACTING PARTIES". Although most of the GATT protocols of accession had similar texts, some contained special provisions. For example, the protocols of accession of Poland, Romania and Hungary each set out special rules catering to the centrally-planned economic system of the countries. See Basic Instruments and Selected Documents ("BISD"), 15S/46, 18S/5, and 20S/3. The accession protocols of Switzerland, the Philippines, Thailand, Egypt and Costa Rica contained special reservations.
13. See GATT, Analytical Index, Guide to GATT Law and Practice, 6th edn (Geneva: GATT, 1994) (hereinafter "Analytical Index"), Article XXXIII, p. 948.
14. The Tokyo Round produced nine side agreements or "codes" that were stand-alone treaties and only obligated those that signed and accepted them. As Jackson notes, "the development of side codes, or stand-alone ancillary treaties, to enlarge and elaborate the GATT rules, posed technical, legal and administrative difficulties" for the world trading system, and the complexity in the relationship between the codes and the GATT would "hurt those countries that cannot devote additional governmental expertise to GATT representation", "give rise to a variety of legal disputes among GATT parties" and "contribute to the belief that the richer nations can control and can manipulate the GATT system for their own advantage". Jackson, as note 11 above, at 71-72.
15. Article XVI:5 of the WTO Agreement provides: "No reservations may be made in respect of any provision of this Agreement. Reservations in respect of any of the provisions of the Multilateral Trade Agreements may only be made to the extent provided for in those Agreements."
16. GATT 1994 incorporates the provisions of GATT 1947, as amended, and the GATT protocols of accession, but expressly excludes the Protocol of Provisional Application and the "grandfather clause" of the protocols of accession. See Article 1 of GATT 1994.
17. The WTO Secretariat observed, "Perhaps the most striking thing about WTO Article XII is its brevity. It gives no guidance on the 'terms to be agreed', these being left to negotiations between the WTO Members and the applicant. Nor does it lay down any procedures to be used for negotiating these terms, these being left to the individual Working Parties to agree. In this, it follows closely the corresponding Article XXXIII of GATT 1947." WTO Secretariat, Technical Note on the Accession Process, WT/ACC/7/Rev.2, 1 November 2000 (hereinafter "Secretariat Note"), p. 8.
18. The WTO Secretariat, in consultation with WTO Members, has drawn up a set of procedures to be followed in the accession negotiations. See the Secretariat Note, id., pp. 2, 8-9 (citing WT/ACC/1, 4, 5, 8 and 9). Although not legally binding, the procedures serve as a practical guide for WTO accessions and have helped to unify the accession processes.
19. The 16 countries are Ecuador, Mongolia, Bulgaria, Panama, Kyrgyzstan, Latvia, Estonia, Jordan, Georgia, Croatia, Albania, Oman, Lithuania, Moldova, China, and Chinese Taipei. Information on all WTO accessions since 1995 is available at .
20. See the Secretariat Note, Annex 2, as note 16 above, pp. 71-72, setting out the text common to all 12 protocols of accession concluded by then, in which the integration language appears in para. 2 of Part I. The four accession protocols concluded after the Secretariat Note all contain the same integration language as the first 12 protocols.
21. See WT/ACC/LTU/54 (Lithuania), WT/ACC/MOL/40 (Moldova), WT/L/432 (China), and WT/L/433 (Chinese Taipei), available at .
22. See the Secretariat Note, Annex 3, id., pp. 75-135, reproducing the commitments undertaken in the accessions of the 12 governments; the accession protocols of Lithuania, Moldova and Chinese Taipei, as note 19 above; and the accession working party reports for Lithuania, WT/ACC/LTU/ 52, Moldova, WT/ACC/MOL/37, and Chinese Taipei, WT/MIN(01)/4.
23. The Secretariat Note, as note 16 above, pp. 22, 73-74, based on an analysis of the accession protocols of 12 governments, including ten transition economies, that had acceded to the WTO before China.
24. See ibid., p. 6.
25. Of the 15 acceding Members (not counting China), 14 undertook to accede or initiate negotiations for accession to the Agreement on Government Procurement. Ten of these Members also undertook to accede to the Civil Aircraft Agreement. See the Secretariat Note, as note 16 above, pp. 122-124, 126-127, and the respective working party reports for Lithuania (paras 140, 157), Moldova (paras 150, 153) and Chinese Taipei (paras 166, 223), as note 20 above.
26. All ten transition economies (excluding China) plus Chinese Taipei made such commitments. See the Secretariat Note, as note 16 above, pp. 75-78, and the respective working party reports for Lithuania (para. 19), Moldova (para. 30), and Taipei (para. 155), as note 16 above.
27. See the Secretariat Note, as note 16 above, pp. 6-7 (summarizing Members' comments on the terms of accession during the Ministerial Conferences in Singapore in December 1996 and in Geneva in May 1998).
28. Id.
29. The Working Party Report has a total of 343 paragraphs. See WPR para. 342 (enumerating 143 paragraphs to be incorporated into the Protocol) and Section 1.2 of the Protocol (incorporating WPR para. 342).
30. These sections include: Administration of the Trade Regime (Section 2); Non-discrimination (Section 3); Special Trade Arrangements (Section 4); Right to Trade (Section 5); State Trading (Section 6); Non-Tariff Measures (Section 7); Import and Export Licensing (Section 8); Price Control (Section 9); Subsidies (Section 10); Taxes and Charges Levied on Imports and Exports (Section 11); Agriculture (Section 12); Technical Barriers to Trade (Section 13); Sanitary and Phytosanitary Measures (Section 14); Price Comparability in Determining Subsidies and Dumping (Section 15); Transitional Product-Specific Safeguard Mechanism (Section 16); Reservations by WTO Members (Section 17); and Transitional Review Mechanism (Section 18).
31. E.g., Section 11 of the Protocol requires China to ensure that customs fees or charges, and internal taxes and charges, applied or administered by national or sub-national authorities "shall be in conformity with the GATT 1994". Section 13.2 of the Protocol requires China to "bring into conformity with the TBT Agreement all technical regulations, standards and conformity assessment procedures" upon accession.
32. E.g., China undertakes to eliminate all export subsidies upon accession, thereby foregoing the right it may otherwise enjoy under Article 27.2(b) of the Agreement on Subsidies and Countervailing Measures (the SCM Agreement), which permits developing country Members to delay such elimination until 1 January 2003. See Section 10.3 of the Protocol. Additionally, China has undertaken not to invoke Articles 27.8, 27.9 and 27.13 of the SCM Agreement, which grant certain special treatment to developing country Members. See WPR paras 171-174, which were incorporated into the Protocol.
33. See the Protocol, Sections 10.2 (specificity test), 15 (dumping and subsidies) and 16 (product-specific safeguards); and WPR, para. 242 (transitional textile safeguard mechanism), which was incorporated into the Protocol.
34. The special anti-dumping provisions will expire 15 years after the date of China's accession, the special product-specific safeguard will expire 12 years after the accession, and the transitional textile safeguard mechanism will expire on 1 January 2009. Id.
35. It is unclear what legal effect of such provisions of the accession protocols may have on the interpretation of relevant WTO provisions. For significance of WTO accession working party reports in interpretation of WTO agreements, see Michael Lennard, Navigating by the Stars: Interpreting the WTO Agreements, 5 J.I.E.L. 17 (2002), 26.
36. For year 2001 China ranked as the sixth largest exporter and importer in world merchandise trade, after the United States, Germany, Japan, France, and United Kingdom (and was the fourth largest importer and exporter when EU was counted as one unit). The value of its exports accounted for 4.3 percent, and its imports 3.8 percent, of the world total. For world trade in commercial services in 2001, China ranked as the 12th largest in exportation and 10th largest in importation. Source: WTO Statistics: International Trade Statistics 2002, available at .
37. See WPR, paras 339, 341, regarding China's intention to accede to the Agreement on Government Procurement ("GPA") and the steps China agreed to take to comply with the GPA before its accession. China has become an observer to the GPA after its accession to the WTO. See also WPR, para. 240 for China's limited commitment regarding trade in civil aircraft. All these paragraphs were incorporated into the Protocol.
38. Meinhard Hilf, Power, Rules and Principles - Which Orientation for WTO/GATT Law?, 4 J.I.E.L. (2001) 111, at 119, indicating that transparency as a broad concept could refer to at least three different contexts: the internal legal regime of WTO Members, the procedures conducted by WTO institutions, and the WTO dispute settlement process.
39. See e.g., GATT Article X; GATS Article III; TRIPs Article 63; Agreement on Technical Barriers to Trade (the TBT Agreement) Articles 2 and 10; Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement) Article 7 and Annex B; the SCM Agreement, Part VII; Agreement on Safeguards, Article 12; and Agreement on Trade-Related Investment Measures (TRIMs) Article 6.
40. See Section 2(C) of the Protocol and WPR paras 324-336, of which paras 331-334, 336 were incorporated into the Protocol. Additionally, Section 6.1 of the Protocol requires China to ensure that the import purchasing procedures of state trading enterprises are fully transparent.
41. See Section 2(C) of the Protocol and WPR para. 334.
42. See the TBT Agreement, Article 2.9.
43. See the SPS Agreement, Annex B, section 5.
44. Section 2(C)(2) of the Protocol.
45. GATS Article III:4.
46. TRIPs Article 63.3.
47. Section 2(C)(3) of the Protocol.
48. A major source of the problem lies in the diffusion of rulemaking power in China. At the national level, more than 20 government bodies have power to make laws, regulations or rules, including the National People's Congress and its Standing Committee, the State Council, and the ministries, commissions and other departments of the State Council. At the local level, the provincial people's congresses and their standing committees and the provincial governments have the power to issue local regulations and rules. See WPR para. 66 for a brief account of the rulemaking structure of China.
49. As of the time of this writing, it is unclear whether any single government agency in China has been given the responsibility to co-ordinate all the translations required and where and how such translations may be made available to all WTO Members in a systematic and timely manner.
50. According to a recent report by the United States Trade Representative, China has lagged behind in its obligation to provide translations, "in large part because of the extraordinary number of laws and regulations issued during the last year". United States Trade Representative, 2002 Report to Congress on China's WTO Compliance (11 December 2002), p. 48, available at .
51. See GATT Article X, GATS Article VI, and TRIPs Article 41. In addition, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the AD Agreement) and the SCM Agreement obligate Members to provide the opportunity for judicial review of administrative decisions on antidumping and countervailing duty matters.
52. See the AD Agreement, Article 13;
53. and the SCM Agreement, Article 23.
54. See GATS Article VI:2(b) (A Member is not required to "institute such tribunals or procedures where this would be inconsistent with its constitutional structure or the nature of its legal system");
55. GATT Article X:2(c) (Members are not required to eliminate or substitute existing procedures that "in fact provide for an objective and impartial review of administrative action even though such procedures are not fully or formally independent of the agencies entrusted with administrative enforcement");
56. and TRIPs Article 41.5 (TRIPs "does not create any obligation to put in place a judicial system for the enforcement of intellectual property rights distinct from that for the enforcement of law in general, nor does it affect the capacity of Members to enforce their law in general").
57. GATT Article X:2(b) provides that the reviewing tribunals "shall be independent of the agencies entrusted with administrative enforcement and their decisions shall be implemented by, and shall govern the practice of, such agencies unless an appeal is lodged with a court or tribunal of superior jurisdiction within the time prescribed for appeals to be lodged by importers; provided that the central administration of such agency may take steps to obtain a review of the matter in another proceeding if there is good cause to believe that the decision is inconsistent with established principles of law or the actual facts."
58. See TRIPs Article 41.4.
59. Cf., TRIPs Article 41.3 ("Decisions on the merits of a case shall preferably be in writing and reasoned") (emphasis added).
60. See as note 50 above.
61. In principle, to the extent there is a conflict between a provision of the Protocol and that of the Multilateral Trade Agreements, the provision of the Protocol should prevail, since the application of the Multilateral Trade Agreements to China is based on the terms of the Protocol pursuant to Article XII of the WTO Agreement. It is unclear, however, whether the principle of lex specialis should apply when the Protocol provides a different but less specific provision than the existing WTO provisions addressing the same subject matter. See Lennard, as note 33 above, at 70-72, discussing the use of lex specialis in WTO dispute settlement decisions.
62. See, e.g., GATS Article 1 ("This Agreement applies to measures by Members affecting trade in services. ... For the purposes of this Agreement: 'measures by Members' means measures taken by: (i) central, regional or local governments and authorities; and (ii) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities");
63. SCM Agreement, Article 1 (defining government subsidies subject to its disciplines as including those by "any public body within the territory of a Member").
64. GATT Article X:2(a)
65. GATT Article XXIV:12,
66. and GATS Article I:3(a).
67. See J. Jackson, W. Davey and A. Sykes, Legal Problems of International Economic Relations: Cases, Materials and Text, 4th edn (West, 2002), p. 242.
68. Ibid.
69. See also Analytical Index, Article XXIV, pp. 771-774.
70. See text at note 21 above.
71. Ten of the 15 acceding Members (excluding China) made undertakings to eliminate or nullify measures taken by sub-central authorities that were in conflict with the WTO Agreement or otherwise ensure uniform application of the WTO Agreement throughout their customs territories. See the Secretariat Note, as note 16 above, pp. 80-82,
72. and the respective working party reports for Lithuania (para. 29),
73. Moldova (para. 48),
74. and Taipei (para. 15),
75. as note 20 above.
76. See Vienna Convention on the Law of Treaties, Article 27 ("A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty."), 8 Int'l Legal Materials (1969), 679.
77. See Understanding on the Interpretation of Article XXIV of the General Agreement on Tariffs and Trade 1994, Section 14 (re Article XXIV:12), which provides: "The provisions of Article XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding may be invoked in respect of measures affecting its observance taken by regional or local governments or authorities within the territory of a Member. When the Dispute Settlement Body has ruled that a provision of GATT 1994 has not been observed, the responsible Member shall take such reasonable measures as may be available to it to ensure its observance. The provisions relating to compensation and suspension of concessions or other obligations apply in cases where it has not been possible to secure such observance."
78. Section 2(A)(3) of the Protocol.
79. WPR, para. 70, which was incorporated into the Protocol.
80. Section 2(A)(2) of the Protocol.
81. Section 2(A)(4) of the Protocol.
82. WPR, para. 75, which was incorporated into the Protocol.
83. See TRIMs Article 2.
84. See TRIMs, Annex, Article 1.
85. See GATS Articles XVI:1 and XVII:1.
86. See TRIPs Articles 1 and 3.
87. See TRIPs Article 3.1.
88. The Protocol (including the incorporated paragraphs of the Working Party Report) contains the following national treatment provisions: Sections 2(B)(3) (enterprises within special economic areas); Section 3 (Nondiscrimination); Section 5 (Right to trade); Section 7(2) (Non-tariff measures); Section 8(2) (Import and export licensing); Section 11(4) (Taxes an charges levied on imports and exports); Section 13(4)(a) (Technical barriers to trade); WPR paras 18 and 19 (general national treatment commitments), and paras 22 and 23 (full compliance with the principle of non-discrimination between domestically produced and imported products, and commitment to repeal or modify specific legislation inconsistent with GATT Article III).
89. E.g., the Protocol, Section 2(B)(3) (confirming that WTO provisions on non-discrimination and national treatment shall be fully observed in providing preferential arrangements for enterprises within special economic areas); Section 7(2) (applying non-tariff measures in strict conformity with GATT Article III); Section 13(4)(a) (ensuring the same technical standards apply to both imported and domestic products); and WPR paras 22 and 23 (full compliance with the principle of non-discrimination between domestically produced and imported products).
90. The term "foreign-funded enterprise" is not defined in the Protocol. Under Chinese law, foreign-invested enterprises (FIEs) in the form of Sino-foreign equity joint venture, Sino-foreign co-operative joint venture (if registered as a limited liability company), wholly foreign-owned enterprise, foreign holding company or foreign-invested share company are Chinese legal persons. General information regarding FIEs is available at the official website of the Ministry of Foreign Trade and Economic Co-operation of China, at .
91. See Section II.F below.
92. Section 5.1 of the Protocol. This right to trade does not apply to goods listed in Annex 2A of the Protocol, which continue to be subject to state trading in accordance with the Protocol.
93. Section 5.2 of the Protocol.
94. Section 8.2 of the Protocol.
95. In comparison, domestic wholesale and retailing services are included in China's Service Schedule, see Annex 9 to the Protocol, Schedule of Specific Commitments on Services, 4. Distribution Services: (B) Wholesale Trade Services, and (C) Retailing Services.
96. The format of this provision is highly unusual for a national treatment clause. Aside from the lack of a defined scope of application, the provision uses the term "same treatment", instead of the phrase "treatment no less favorable than ...". The "same treatment" standard may cause confusion as to whether the Chinese government can grant more favourable treatment to foreign persons than its own nationals, an issue that would not arise under the various national treatment clauses of the WTO agreements.
97. In fact, para. 17 of the Working Party Report states that the representative of China emphasized the importance of China's commitments on non-discrimination, but noted that "any commitment to provide nondiscriminatory treatment to Chinese enterprises, including foreign-funded enterprises, and foreign enterprises and individuals in China, would be subject to other provisions of the Draft Protocol and, in particular, would not prejudice China's rights under the GATS, China's Schedule of Specific Commitments or commitments undertaken in relation to trade related investment measures." Paragraph 17, however, was not incorporated into the Protocol and therefore is not legally binding.
98. It is interesting to note that since the early 1980s China has entered into more than 70 bilateral investment treaties, of which only a minority contain national treatment provisions. For a list of China's bilateral investment treaties, see ICSID, Bilateral Investment Treaties, China, available at .
99. See TRIMs, Annex.
100. Section 7(3) of the Protocol provides: "China shall, upon accession, comply with the TRIMs Agreement, without recourse to the provisions of Article 5 of the TRIMs Agreement. China shall eliminate and cease to enforce trade and foreign exchange balancing requirements, local content and export or performance requirements made effective through laws, regulations or other measures. Moreover, China will not enforce provisions of contracts imposing such requirements." Article 5 of the TRIMs provides developing country Members with a five-year transitional period to fully comply with its requirements.
101. The Working Party Report also contains a number of market access commitments of China on foreign investment in automobile industries, which were incorporated into the Protocol. See WPR paras 204-208. It appears that because such market access commitments on investment do not fit in the existing WTO framework for market access obligations (the Goods and Services Schedules annexed to GATT and GATS), they are set out in the Working Party Report on an ad hoc basis.
102. It is unclear whether this broad commitment on investment, no longer confined to its effect on trade in goods, can avail itself of the exceptions under the GATT, such as those of GATT Articles XX and XXI, as in the case of TRIMs. Article 3 of TRIMs explicitly provides: "All exceptions under GATT 1994 shall apply, as appropriate, to the provisions of this Agreement". In contrast, Section 7(3) of the Protocol merely states that this general obligation on investment is without prejudice to relevant provisions of the Protocol. The lack of a clearly defined relationship between China's investment commitment and the existing WTO agreements, especially the GATT, GATS and TRIMs, may give rise to issues of interpretation in future disputes over the scope of the commitment. See discussion in Section III.D.4 below.
103. For a general discussion on the effort to negotiate an investment code within the GATT framework during the Uruguay Round and the effort to negotiate a multilateral agreement on investment (MAI) within the OECD forum, see Michael J. Trebilcock and Robert Howse, The Regulation of International Trade, 2nd edn (London: Routledge, 1999), pp. 351-353, 357-365.
104. For Doha Round negotiation agenda relating to investment, see WTO, Trade and Investment, the Doha Mandate, at .
105. See Trebilcock and Howse, ibid., at 352.
106. The GATT experience with the accessions of several former NMEs (Yugoslavia, Poland, Romania, and Hungary) is generally regarded as unsuccessful. For a recount of the history of GATT and centrally planned economies, see Alexander Polouektov, Non-Market Economy Issues in the WTO Anti-dumping Law and Accession Negotiations - Revival of a Two-tier Membership?, 36 J.W.T. 1 (2002), 5-12.
107. See also Jackson, as note 11 above, at 325-332, for an introduction to the issues involved in integrating NMEs into the GATT system.
108. See note 18 above.
109. For a summary of the market economy commitments of a number of former centrally-planned economies in their WTO accessions, see Polouektov, as note 91 above, at 26-28.
110. Although private enterprises are the hallmark of market economies, the WTO system is not directly concerned with the form of ownership of traders; rather, it focuses on the behaviour of enterprises that are granted monopoly or exclusive rights by the government, be they owned by the government or private parties. See GATT Article XVII State Trading Enterprises, and GATS Article VIII Monopolies and Exclusive Service Suppliers. See also Will Martin and Christian Back, "The Importance of State Trading in China's Trade Regime", in Frederick M. Abbott (ed.), China in the World Trading System: Defining the Principles of Engagement, (The Hague: Kluwer Law International, 1998), p. 156 ("what matters under the GATT is not ownership, but the exclusivity that allows non-competitive behaviour",
111. citing B. Hoekman and M. Kostecki, The Political Economy of the World Trading System: from GATT to WTO (Oxford: Oxford University Press, 1995)).
112. Technically, there is a major difference between a confirmation that prices of all goods are currently determined by market forces and an undertaking to let market forces determine prices of all goods. The confirmation warrants the status of an economic reality but does not include an obligation to maintain that reality for the future.
113. In addition to Section 9 of the Protocol, the Working Party Report discussed pricing policies in paras 50-64, of which paras 60, 62 and 64 were incorporated into the Protocol. The additional rule commitments contained in the Working Party Report include that to publish the list of goods and services subject to state pricing and changes thereto, that not to use price controls for purposes of affording protection to domestic industries or service providers, and that to apply all price controls in a WTO-consistent manner.
114. The term "state-owned or state-invested enterprises" is not defined in the Protocol.
115. WPR, para. 46, which was incorporated into the Protocol. In addition, China confirmed in WPR para. 47, also incorporated into the Protocol, that laws and regulations relating to procurement by state enterprises would not be considered laws and regulations relating to government procurement and therefore their purchases and sales would be subject to GATT Article III and GATS Articles II, XVI and XVII.
116. See WPR, para. 80, indicating that the right to import and export goods in China was available only to 35,000 Chinese enterprises, and that although foreign-invested enterprises had the right to trade, such right was restricted to importation for production purposes and exportation according to the scope of its business.
117. Annex 2A contains a list of goods that are subject to state trading. Annex 2A1 lists 84 products in seven categories, including grain, vegetable oil, sugar, tobacco, processed oil, chemical fertilizer and cotton, the import of which is subject to state trading. Annex 2A2 lists 134 agricultural products and commodities, such as tea, grains, metals, coal, oil, silk, and cotton, the export of which is subject to state trading.
118. See Section II.D.2, above.
119. See WPR, paras 83, 84, 86.
120. Section 5.1 of the Protocol.
121. Section 5.1 of the Protocol.
122. Sections 6.1 and 6.2 of the Protocol.
123. See WPR paras 208-217, of which paras 210, 212, 213, 215, 217, contain specific commitments that were incorporated into the Protocol, including those regarding state trading in oil products and silk.
124. See para. A(i) of TPRM.
125. See Article VI:4 of the WTO Agreement.
126. See WTO, Trade Policy Reviews, at .
127. The 16 subsidiary bodies are: Council for Trade in Goods, Council for TRIPs, Council for Trade in Services, and Committees on Balance-of-Payments Restrictions, Market Access, Agriculture, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Subsidies and Countervailing Measures, Antidumping Measures, Customs Valuation, Rules of Origin, Import Licensing, TRIMs, Safeguards, and Trade in Financial Services. See footnote to Section 18.1 of the Protocol.
128. Under the current TPRM procedure, China should be reviewed every four years. The TPRM reviews on China, however, will be rendered redundant by the transitional reviews during the 10-year period. The Protocol contains no explanation as to the relationship between the transitional review mechanism and the TPRM.
129. If such recommendations are "decisions" of the General Council within the meaning of Article IX:1 of the WTO Agreement, they should have the same legal effect as other General Council decisions. See Article IX:1 of the WTO Agreement.
130. Para. A(i) of the TPRM.
131. See DSU, Article 1.1 and Appendix 1 Agreements Covered by the Understanding.
132. Although during the transitional review "China also can raise issues" relating to any reservations made by other WTO Members under Section 17 of the Protocol and the General Council may make recommendations to other Members in these aspects, the only mandatory provisions of the transitional review mechanism are those regarding China's implementation of its WTO obligations. See Sections 18.1 and 18.2 of the Protocol.
133. Section 18.3 of the Protocol expressly provides: "Consideration of issues pursuant to this Section shall be without prejudice to the rights and obligations of any Member, including China, under the WTO Agreement or any Plurilateral Trade Agreement, and shall not preclude or be a precondition to recourse to consultation or other provisions of the WTO Agreement or this Protocol."
134. The transitional review obligation was included in the China Protocol "mainly on the insistence of the United States, which wanted a means of ensuring WTO oversight of China's implementation efforts". BNA, WTO Reporter, 10 December 2002, Contentious WTO China Review Said Likely to End with Whimper, not Bang, available at .
135. See BNA, WTO Reporter, ibid., recounting the several controversies between China and other Members throughout the year over the various
136. See BNA, WTO Reporter, 11 December 2002, In First Transitional Review for China, WTO Offers Praise for Efforts, No Conclusions, available at .
137. WTO Appellate Body Report, European Communities - Customs Classification of Certain Computer Equipment, WTO/DS62, 67 and 68/AB/ R (adopted 22 June 1998), para. 109 ("while each Schedule represents the tariff commitments made by one Member, they represent a common agreement among all Members." (emphasis in original)).
138. Section 1.2 of the Protocol.
139. See DSU Article 3.8.
140. Note that DSU Article 3.7 cautions a Member to exercise its judgment as to whether a formal action would be "fruitful" before bringing a case.
141. In the context of discussing whether China should have the right to enjoy all the special treatment accorded to developing country WTO Members, para. 9 of the Working Party Report states "Some members of the Working Party indicated that because of the significant size, rapid growth and transitional nature of the Chinese economy, a pragmatic approach should be taken in determining China's need for recourse to transitional periods and other special provisions in the WTO Agreement available to developing country WTO Members." While the "significant size, rapid growth and transitional nature of the Chinese economy" were cited as reasons for not allowing China to enjoy a full special treatment accorded to developing country Members - such treatment is primarily in the form of reduced WTO disciplines - these factors were not given as the reasons for subjecting China to more stringent WTO disciplines.
142. As note 34 above.
143. For a thorough critique of unfair treatment of transition economy Members by other WTO Members in their anti-dumping practice, see Polouektov, as note 91 above.
144. See text at notes 93 and 94 above.
145. It should be noted that thanks to the Protocol, whether China develops and maintains a market economy is no longer a mere matter of domestic policy; instead, it has become a matter of China's international treaty obligations. The Protocol provisions on market economy represent a constitutional commitment of China to a market-based economic system. The implications of these obligations are profound for China.
146. It should also be in the interest of China, now it has joined the organization, to see that its plus obligations be equalized by new commitments of other Members. Having assumed sweeping rule obligations on investment, for instance, China might support the major investing country Members in calling for a multilateral investment agreement within the WTO. It is not yet clear where China stands on the negotiation of WTO multilateral rules on cross-border investment in the Doha Round.
147. The statement was made in the context of the discussion why a pragmatic approach should be taken in determining China's need for recourse to transitional periods and other provisions in the WTO Agreement that grant special treatment to developing country Members.
148. "Elimination of discriminatory treatment in international trade relations" is set out in the Preamble of the WTO Agreement as one of the objectives of the WTO.
149. The non-discrimination clauses of the WTO agreements generally require a Member to treat all other Members equally (MFN treatment) with respect to the specific matters identified in the clauses. See e.g., GATT Article I and GATS Article II. Since the WTO-plus obligations are obligations of China, not obligations of other Members, they do not in themselves give rise to the issue of how other Members treat China under those clauses. Note that under the MFN principle, China is obligated to comply with its WTO-plus obligations vis-à-vis all other Members.
150. "Unequal treatment is never called discriminatory when the reason for differential treatment is considered legitimate." Robert E. Hudec, Tiger Tiger, In the House: A Critical Appraisal of the Case Against Discriminatory Trade Measures, in Robert E. Hudec, Essays on the Nature of International Trade Law (London: Cameron May, 1999), p. 322.
151. See Section III.B above.
152. See Hilf, as note 36 above, at 114-115, suggesting the world trading system has gone through a triple jump, from a power-oriented system to a rule-oriented and then a rule-based and principle-oriented system, and citing the Singapore Ministerial Declaration that refers to the WTO system as a "rule-based system" (WT/MIN(96)DEC).
153. Mike Moore, the first WTO Director-General, depicted the rule of law as a "cornerstone" of the WTO, stating that "one of the essential functions of the WTO is to ensure that the rule of law, not force or power, presides over the conditions of international trade". Mike Moore, The WTO, Looking Ahead, 24 Fordham Int'l L.J. 1 (2000), 2-3.
154. See also Hilf, as note 36 above, at 120 (identifying rule of law as one of the WTO principles);
155. and J.H.H. Weiler, The Rule of Lawyers and the Ethos of Diplomats, Reflections on the Internal and External Legitimacy of WTO Dispute Settlement, 35 J.W.T. 2 (2001), 191 (suggesting the paradigm shift to the rule of law at the WTO will inevitably be accompanied by the culture of lawyers).
156. See Randall Peerenboom, Let One Hundred Flowers Bloom, One Hundred Schools Contend: Debating Rule of Law in China, 23 Mich. J. Int'l L. (Spring 2002), 478-479, identifying a list of elements constituting the core concept of rule of law for any legal system, which follows "the influential account" by Lon Fuller that laws "be general, public, prospective, clear, consistent, capable of being followed, stable and enforced".
157. Ibid., at 472
158. (citing Lon Fuller, The Morality of Law (1976)).
159. See Section I.A.2 above.
160. See WTO Appellate Body Report, European Communities - Customs Classification of Certain Computer Equipment, as note 119 above, para. 109 (speaking of tariff negotiations as "a process of reciprocal demands and concessions, of 'give and take'").
161. The special trade remedy rules of the China Protocol are such an example. See Section I.C.(3) above. The special antidumping and antisubsidy rules and the special safeguard rules of the Protocol lower the standard of WTO disciplines in these areas and reflect the protectionist interests of the major importing countries.
162. The negotiations of China's accession, like in other WTO accessions, proceeded on both the multilateral and bilateral fronts. See Jeffrey Gertler, "The Process of China's Accession to the World Trade Organization", in Frederick Abbott (ed.), China in the World Trading System: Defining the Principles of Engagement (The Hague: Kluwer Law International, 1998), p. 68. While the multilateral negotiations at the Working Party worked on drafts of the Protocol and the Working Party Report, and bilateral negotiations between China and its major trading partners focused on market access commitments on goods and services, some of the major provisions of the Protocol were the product of the bilateral negotiations between China and United States. The final version of the Protocol copied, almost verbatim, the text of "Protocol language" of the US - China bilateral agreement concluded in November 1999. Source: USTR, Agreement on Market Access Between the People's Republic of China and the United States of America (15 November 1999).
163. See Section II.E above.
164. See TRIMs, Articles 1, 2 and 3.
165. See Section II.D.3 above, notes 82 and 83.
166. See Section II.B above.
167. See Section II.A.3 above.
168. See Section I.A.1 above.
169. See notes 7 and 8 above, and accompanying text.
170. See WTO Appellate Body Report, Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R (adopted 12 January 2000), para. 81, which reads in part, "In light of the interpretive principle of effectiveness, it is the duty of any treaty interpreter to 'read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously'." (quoting its own report in Argentina - Safeguard Measures on Imports of Footwear) (emphasis in original).
171. One commentator is of the view that the Appellate Body expressed the principle of effectiveness over-ambitiously, "since it does not recognize the possibility that disharmony between treaty provisions may exist inherently, however meticulous the interpretive approach". Lennard, as note 33 above, at 59.
172. See Article IX:2 of the WTO Agreement.
173. DSU, Article 3.2.
174. See Jackson, as note 8 above, at 186-187.
175. It should be noted that there is no inevitable "tradeoff" between the positive and negative effects of WTO-plus rules. An acceding country can always enhance the rule of law at home independent of WTO requirements, and liberalize its trade and investment regime unilaterally. In the case of China, massive market-oriented economic reforms had occurred during the two decades before its accession to the WTO.
176. See, e.g., Claude E. Barfield, Free Trade, Sovereignty, Democracy: The Future of the World Trade Organization, 2 Chi. J. Int'l L. (Fall 2001), 408, expressing the view that "the new 'judicialized' WTO dispute settlement system is substantively and politically unsustainable" and that "alternatives should be pursued that will reintroduce some of the former elements of 'diplomatic' flexibility that characterized the earlier GATT regime."
177. For comments and recommendations relating to reform of WTO accession practice with respect to transition economies, see Polouektov, as note 91 above, at 34-37.
178. As of December 2002, the following countries were in the process of negotiating their accessions to the WTO: Algeria, Andorra, Azerbaijan, Bahamas, Belarus, Bhutan, Bosnia and Herzegovina, Cambodia, Cape Verde, Kazakhstan, Laos, Lebanon, Nepal, Russia, Samoa, Saudi Arabia, Seychelles, Sudan, Tajikistan, Tonga, Ukraine, Uzbekistan, Vietnam, Yemen, and Yugoslavia. See WTO, List of applicants to become WTO Members, available at .
179. Under Article X of the WTO Agreement, to effect an amendment to Article XII would require: (i) a Member to submit a proposal for amendment to the Ministerial Conference, (ii) a decision by the Ministerial Conference taken by consensus to submit the proposed amendment to the Members for acceptance (if no consensus is reached, the Ministerial Conference will decide by a two-thirds majority of the Members whether to submit the proposal for acceptance by Members), and (iii) the acceptance of the proposed amendment by two-thirds of the Members. If the amendment is considered "of a nature that would alter the rights and obligations of the Members", it will take effect only for those Members that have accepted them. Otherwise the amendment so accepted will bind upon all Members. See Articles X:3 and X:4 of the WTO Agreement.
180. A decision to adopt the guidelines for accession practice may be made by the Ministerial Conference or the General Council by consensus or, if no consensus can be reached, by a majority of the votes cast. See Article IX:1 of the WTO Agreement.
181. Appendix 1 of the DSU notes "The applicability of this Understanding to the Plurilateral Trade Agreements shall be subject to the adoption of a decision by the parties to each agreement setting out the terms for the application of the Understanding to the individual agreement, including any special or additional rules or procedures for inclusion in Appendix 2, as notified to the DSB."