World Trade Organization Rules Research Articles

Modern Industrial Policy and the World Trade Organization

This article surveys the economics of industrial policy as it relates to the World Trade Organization (WTO). Motivated by concern that the modern use of industrial policy is emerging in ways that threaten cooperation in the international trading system, the article begins with the basic historical economic framework for tying industrial policy to underlying market failures. It then introduces the dominant economic understanding of the role played by the WTO, examining the WTO's rules on subsidies (and thus industrial policy), the unease with the evolution of the trading system's subsidy rules, gaps in knowledge, and important data and measurement shortcomings. The main part of the article examines four areas in which modern industrial policy operates differently and has become especially important for the trading system: China, supply chain resilience, supply chain responsiveness, and climate change. The article identifies the evidence to date, open questions, and potential paths forward for economic research to help inform policymakers’ efforts to restore international economic cooperation in trade and industrial policy.

Experimentation at the WTO lab: towards a better ‘Interface’ to accommodate State-owned enterprises

Abstract This article advocates for a more inclusive and adaptable interface mechanism at the World Trade Organization (WTO), specifically tailored to address the nuanced dynamics of State-Owned Enterprises (SOEs). It revisits the foundational ‘Interface Theory’ by John H. Jackson, a cornerstone in shaping initial WTO rules for non-market economies. Drawing upon the critiques of David Kennedy, this article identifies three key limitations inherent in the existing interface theory. It then delves into a critical examination of the regulations pertaining to SOEs within the frameworks of the Trans-Pacific Partnership / the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, arguing that these models inadequately address the complexity of state participation in the economy, with a particular focus on non-market economies like China. This article suggests leveraging the WTO as a global policy laboratory, a forum for the exploration and discussion of varied national strategies concerning SOE management. It posits China’s mixed-ownership reform as an exemplary starting point for such experimental endeavours.

Border carbon adjustment compliance and the WTO: the interactional evolution of law

Abstract International law and its understanding can evolve outside of treaties, but little is known about the elements that can explain these changes. This paper looks at the debate on border carbon adjustment (BCA) compatibility with the World Trade Organization (WTO) and argues that international law depends on the actors’ perceptions, which can change over time. It applies an interactional international law framework to explain how a policy that was once deemed incompatible with WTO rules is now considered ‘WTO-compliant’ by the European Union. A discourse network analysis is conducted based on debates from the WTO and the literature over 24 years. Results show that since 2012, the legal literature has increasingly been more confident that BCA could be WTO-compatible, despite the absence of significant changes in WTO case law during the same period. This increase in support was sustained by an expanded practice of legality and a perceived lack of legality of applicable WTO rules. This research offers new insights into the dynamics of international law. It provides new methodological avenues for scholars seeking to trace the evolution of law and legal understanding through formal and informal processes.

Protecting Protectionism in the WTO

The Inflation Reduction Act of 2022 (IRA), as part of the largest in-vestment the United States has made to mitigate climate change to date, amended the United States Internal Revenue Code to reduce the cost of shifting toward renewable energy. Specifically, the IRA expands tax credits available to taxpayers who invest in or produce clean energy and provides a new consumer tax credit for electric vehicles. However, the IRA has come under fire from U.S. trading partners because some of these tax credits contain local content requirements (LCRs)— that is, the Act requires beneficiaries to source products or materials domesti-cally in order to receive the full benefit. Several foreign governments have claimed that the IRA’s use of LCRs violates World Trade Organiza-tion (WTO) agreements to which the U.S. is a party. If another member of the WTO lodges a formal complaint with the WTO and the U.S. re-ceives an adverse ruling, the U.S. could be ordered to repeal the IRA or face sanctions, which would severely hamper U.S. and global efforts to meet emissions goals. Moreover, LCRs could be a very useful tool for countries other than the U.S. to use to facilitate the growth of prosper-ous new renewable energy industries, something essential to sustaina-bly avoiding climate catastrophe. This Note reviews the WTO rules which the IRA may violate and finds that the IRA would not pass muster under prevailing interpretations of WTO agreements. However, evi-dence in the relevant WTO agreements support an alternative that would allow the IRA to survive. This Note proposes such an interpreta-tion and argues that it would be prudent for the WTO to adopt it in light of the current climate crisis.

The (surprise) return of development policy space in the multilateral trading system: what the WTO Appellate Body blockage means for the developmental state

Since the establishment of the World Trade Organization (WTO) – which led to a dramatic expansion in the scope of global trade rules and made those rules legally binding on states – scholars have highlighted the constraints it has imposed on development policy space. By prohibiting many of the standard tools of the developmental state, the WTO’s rules have been seen as ‘kicking away the ladder’ for developing countries, preventing them from using the trade and industrial policies needed to catch up with more advanced economies. However, since 2019, the US has disabled the WTO’s enforcement mechanism by blocking judicial appointments to the Appellate Body. As a result, this article shows the trade and development landscape has now changed fundamentally: WTO rules – once a powerful constraint on development policy space – are no longer legally enforceable. The article analyzes two recent landmark disputes – Indonesian nickel export restrictions and Indian export subsidies provided through special economic zones – in which developing countries have successfully blocked WTO panel rulings that would force them to repeal developmentalist policies. Ironically, given that the US was originally the dominant force behind the WTO’s anti-developmentalist rules and its binding dispute settlement system, one important consequence of the US Appellate Body blockage has been the re-emergence of development policy space in the multilateral trading system.

The WTO Condemns Trump’s Tariffs on Steel and Aluminium, but Biden Condemns the WTO

Recently World Trade Organization (WTO) panels declared the illegitimacy of the tariff increases imposed in 2018 by the US government, based on national security grounds, on imports of steel and aluminium products. This paper addresses some of the key legal issues raised in the four controversial panel decisions, leaving some final reflections on the future of multilateral trade system. Given the unsettled nature of the terrain, we firstly focus on the WTO rules that are relevant to the tariffs imposed by Trump in 2018, before dwelling on the complainants’ arguments and panels’ findings. Two indications or conclusion can be drawn from the paper. First, the General Agreement on Tariffs and Trade (GATT) Article XXI doesn’t constitute a self-judging or non-justiciable provision, differently from what argued by the US Government. Second, the controversial reports will not resolve the ongoing conflict initiated by US against the WTO. In fact Biden, far from distancing himself from Trump’s measures, openly condemned the panel’s decisions through an official statement widely disseminated by the media. The practical significance of the recent condemnation of the US tariffs is even less evident when considering the persistent issue of the appointment of members to the WTO Appellate Body. If multilateralism continues to falter, the US may no longer be the only country winking at bilateralism, as evidenced by the recent rules adopted by the EU. Security Exceptions, Dispute Settlement Understanding, Antidumping Duties, WTO, international economics, European Union, GATT, escape clauses, multilateral trade system

Implementation of the EU's CBAM under the WTO Rules: Process, Relations, Responses

The European Union (EU), a global leader in carbon reduction measures, formally adopted its proposed Carbon Border Adjustment Mechanism (CBAM) in April 2023. However, it may not comply with existing WTO rules due to its design flaw. Thus, it may be viewed as a new trade barrier, which may result serious legal issues and trade disputes regarding the compatibility of CBAM with the trade rules of the General Agreement on Tariffs and Trade (GATT) under the World Trade Organization (WTO). In practice, however, the adoption and implement of CBAM has not been prevented by these conflicts. Therefore, this article attempts to explore this contradiction and evaluate the impact of CBAM on WTO rules. Eventually, this article concludes that CBAM as an attempt to put forward environmentally friendly trade rules may promote updating WTO rules under international consensus of carbon reduction. The focus of this article will be discussed by providing a systematic review of the process and content of CBAM, examining the relationship between the CBAM and WTO rules and analysing the responses to CBAM of other countries.

Results-based agri-environmental scheme design: Legal implications

Results-based agri-environmental schemes look set over the years ahead to form core components of agricultural policy both within the European Union and the United Kingdom. Their level of ambition, however, raises specific legal issues, four of which will be explored: first, the governance dimension when ‘setting the bar’ for the unlocking of payment; secondly, potential regulatory and contractual responses where there is a failure to meet the mandated outcome; thirdly, challenges for tenants who enjoy insufficient security of tenure to achieve long-term objectives and/or who are subject to clauses in their agreements or statutory provisions which have the effect of restricting the use of the land to ‘agriculture’ as traditionally understood; and, fourthly, compatibility with World Trade Organization rules. While results-based agri-environmental schemes may be more complex to translate into practice than those based upon prescribed actions, there is scope for the law in both its regulatory and contractual forms to be enlisted as a powerful ally in their realisation.

Can the World Trade Organization Act as a Bulwark Against Deglobalization?

ABSTRACTWhether existing multilateral trade commitments really deter larger trading nations from taking steps that further weaken cross‐border commercial ties is assessed here. Evidence from salient commercial policy episodes of recent years is combined with information on the actual leeway available to G‐20 members under extant World Trade Organization rules. The upshot is a bleak assessment of the capacity of the existing multilateral trade rule book to rein in any attempt by larger trading nations to “deglobalize” the world economy.

Rights redux: the return of human rights at the WTO

The conventional wisdom is that human rights have long been off the negotiating agenda at the World Trade Organization (WTO). The failed attempt by Northern states to include a ‘social clause’ in WTO rules during the late 1990s and early 2000s is often cited as having foreclosed bringing human rights to bear in multilateral trade negotiations. This article challenges this traditional view, demonstrating that states are mobilizing human rights at the WTO to shape current global trade rulemaking. Moreover, in sharp contrast to the prevailing assumption that developed countries are the primary champions of human rights in the trade regime and developing countries the opponents, I show that developing countries have in fact become key protagonists in marshalling human rights at the WTO. To illustrate these claims, I examine how developing countries mobilize human rights norms, principles and discourse to shape global trade rulemaking in two of the most contentious issues in recent WTO negotiations: The use of public food stockholding for food security purposes and a TRIPS waiver to ensure access to COVID-19 vaccines.

Green tech race? The US Inflation Reduction Act and the EU Net Zero Industry Act

AbstractThe 2022 United States Inflation Reduction Act (IRA) is a significant and welcome climate law. It also includes trade‐distortive subsidies, including local‐content requirements prohibited under World Trade Organisation rules – the first time the US has done this and a blow to the international trading system that could trigger protectionism in other countries. The expected IRA green subsidies are of similar size to those available in the European Union, except in renewable energy production, where EU subsidies remain larger. However, there are important qualitative differences. In this article, we conduct a quantitative and qualitative comparison of the IRA with its preexisting European counterparts. We identify three main differences: European subsidies are less discriminatory, more focused on innovation rather than deployment and more fragmented than the IRA. Some IRA subsidies discriminate against foreign producers while EU subsidies do not. IRA clean‐tech subsidies are simpler, longer‐term and less fragmented, and they focus mainly on mass deployment of green technologies rather than innovation. We then examine the proposed EU reaction to IRA, the Net Zero Industry Act and discuss how it should be improved by the EU co‐legislators (the European Parliament and the EU Council) so as to become a useful building block towards a more comprehensive EU green industrial policy.

WTO Rules for Trade with Disputed Territories

ABSTRACT The legality of trade with territories over which sovereignty is disputed has recently come to the forefront of policy and academic discussions due to emerging case law and escalating territorial conflicts. While considerations shaping the debate on economic activities with disputed territories are typically informed by concerns of international law, little is known about international trade and customs rules applicable to these regimes. This article aims to fill this literature gap by inquiring into the rules that apply to trade with disputed territories under the relevant World Trade Organization (WTO) Agreements, in particular the General Agreement on Tariffs and Trade, the Agreement on Rules of Origin, and the Agreement on Technical Barriers to Trade. In a broader sense, it contributes to the understanding of interactions between the WTO and other self-containing regimes of international law, illustrating the challenges that arise from their different approaches to territories.

How are the precedents of trade policy rules made under the World Trade Organization?

AbstractUnder World Trade Organization (WTO) dispute settlement, consistent trade policy rules are established through precedents. This study examines how these precedents are created by citations, including how the kinds of cases involved in previous decisions affect the citation frequency. We investigate three determinants of citation, namely, legal, economic, and political factors. The empirical analysis shows that cases having the following characteristics are more frequently cited: violations of WTO rules found, many claims of WTO rule violations, many third‐party participants, and a heightened capacity of complainant country retaliation. These suggest that the case law on trade policy is not only generated through legal considerations but also reflects economically and politically sensitive cases, which the WTO may tend to follow in line with its previous decisions.

World Trade Organization rules hamper public food stockholding.

World Trade Organization rules hamper public food stockholding.

The Solution to the Russian Dilemma of WTO Membership in the Context of Agricultural Trade

The subject of this study is the legal and organizational issues of Russia's participation in the World Trade Organization (WTO). The analysis is conducted in the context of trade in agricultural products. The purpose of this article is to create an argumentative point supporting the view that Russia should continue being a member of the WTO. The methodology of the research is represented by general scientific methods, special scientific methods and methods of argumentation. The analysis considers the legal possibility of termination of membership in the WTO, the main misconceptions of supporters for withdrawal, the alleged consequences of withdrawal, as well as recommendations for further participation in the Organization. The issues examined in this study are of current interest in view of the increasing pressure of the supporters for withdrawal from the WTO in the context of the global economic and geopolitical challenges Russia is facing. Scientific novelty of the article is in the complex argumentation of the overall positive effect of Russia's participation in the WTO for international trade in agricultural products. The conclusions of the study underline the impossibility of Russia’s suspension or expulsion from the Organization, as well as the need for Russia to continue its membership and to build trade relations with foreign partners under the WTO rules.

World Trade Organization Rules Before Investment Tribunals: Facilitating Cross-Fertilisation While Appreciating Particularities

Abstract The private organisation of production through global value chains has tightened the material connection between international trade and foreign investment while being simultaneously politicised by certain actors. This paper seeks to explore how the rules generated, interpreted, and applied in the World Trade Organization (WTO) have been received by arbitral tribunals deciding investment disputes. Three avenues make this reception possible: first, provisions in investment agreements rendering WTO law directly applicable to investment disputes; second, principles of interpretation allowing recourse to WTO rules as a tool for the interpretation of investment law; third, the authoritative value of WTO case law on points of general international law concerning the settlement of international (investment) disputes. These three avenues allow investment tribunals to build on the law and practice of the WTO with a view to facilitating the cross-fertilisation between the two fields, while appreciating the substantive, procedural and institutional particularities of investment law.

Trade policies in Central Asia after EAEU enlargement and after Russian WTO accession: regionalism and integration into the world economy revisited

ABSTRACT This paper revisits the question of choice between regionalism and multilateralism in trade relations of Central Asia introduced by Pomfret (2005). Our study is motivated by a significant restoration of economic links between the former Soviet republics following Russian accession to the World Trade Organization (WTO), the creation of the Eurasian Economic Union (EAEU), and the formation of new trade ties with Vietnam, Iran, and Serbia. Above all, there have been substantial commitments made by the three Central Asian republics of Tajikistan, Turkmenistan, and Uzbekistan toward a multilateral system under the WTO rules. To this end, we apply a multi-region gravity model with interdependent trade flows using bilateral trade data of Tajikistan and Uzbekistan to study the ex-ante effects of economic integration with various bilateral, plurilateral, and multilateral partners. Our findings indicate the existence of considerable gains if the aforementioned economies would ascend to the EAEU in comparison to integration with China or Iran. We also document the presence of shared economic links between Tajikistan, Central Asia, and Turkey.

Applications and Responses to RCEP Rules on Geographical Indications Protection in China

Regional Comprehensive Economic Partnership (RCEP) uses the World Trade Organization (WTO) rules as parent rules. Yet proble ms exist in the interpretation and application of intellectual property terms, which can easily cause controversy. The protection rules of the geographical indications (GI) are used as a magic weapon to promote Chinese high-quality agriculturalproducts to the world. But due to the left and right swaying of the legislators, they are chaotic and thus need to be improved urgently. In this case, China’s GI protection should focus on disputed solutions, balancing legislators’ initiatives and autonomy generated by geographical indication, and solving the historical problems of many departments overlapping management.

REVIEW ON THE IMPORTANCE OF TRANSPARENCY IN INTERNATIONAL TRADE BASED ON THE RULES OF THE WORLD TRADE ORGANIZATION

This study aims to obtain information and analyze the rules of the World Trade Organization (WTO) regarding the importance of transparency in international trade between WTO member countries, where supporting information and data are needed in the sustainability of trade transactions. In international trade between WTO member countries, there are various economic, political and social backgrounds from developed countries (developed countries), developing countries (developing countries), and less developed (least-developed countries). This background encourages the strengthening of transparency in trade in goods and services through a mechanism that is agreed upon and implemented jointly, so that it is expected that each WTO member country can provide and obtain reliable and up-to-date information and supporting data. The transparency mechanism has the main objective of providing smooth trade in goods and services and reducing obstacles related to obtaining the required information and data. However, in implementing transparency, WTO member countries are also often faced with challenges, such as in the case of the global crisis of the COVID-19 pandemic whose impact has been felt by all WTO member countries. All stakeholders, starting from the government, employers, workers, and so on, need to work together in carrying out compliance with the transparency mechanism as stipulated in the WTO rules to realize smooth international trade.

The African Union's Self-Financing-Mechanism: A Critical Analysis in terms of the World Trade Organisation's Rules and Regulations

The purpose of this paper is to critically analyse from a theoretical perspective the compatibility of the African Union's (AU's) self-financing mechanism (SFM) with the rules and regulations of the World Trade Organisation (WTO) Most-Favoured-Nation (MFN) principle, which forms an integral part of the anti-discrimination provisions. The AU consists of 55 African countries, most of them members of the WTO. The SFM agreed is in the form of a 0.2 per cent levy applied to all eligible goods imported from a non-AU member state into the territory of an AU member state. As most of the AU member states (AUMSs) are WTO members, they must adhere to all the rules and regulations of the WTO. It is against this backdrop that this paper analyses the AU SFM against the relevant WTO rules and regulations. Most importantly this paper will provide recommendations for the compatibility of the AUs SFM in terms of the existing WTO rules and principles, such as the operation of the Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, more commonly referred to as the Enabling Clause, given the WTOs general classification of all African countries as developing or least developed countries. The need for the AU to be self-sustainable financially in order for it to achieve its goals and objectives has most recently been reinforced.by the economic repercussions of the COVID-19 pandemic both locally and internationally.