WTO Compliance Research Articles

Intellectual Property Rights in Saudi Arabia and Their Compatibility with the World Trade Organization

This paper aims to review Saudi Arabia’s IPR system and analyze to what extent it complies with the WTO/TRIPS. The research looks into the history and the present legal system of IPR in Saudi Arabia. It also identifies the enforcement systems, and issues concerning compliance with international standards. With a comparative analysis method, the research assesses Saudi Arabia in comparison with the WTO guidelines and its neighboring countries regarding improving IPR protection. This research identifies progress in legislative and institutional development and gaps in enforcement efficiency and digital IP protection. The paper discusses measures to improve Saudi Arabia’s IPR system to support innovation-based development and increase WTO compliance.

Climate Equivalence and International Trade

AbstractThis article examines a significant question in navigating trade and climate tension: how to recognize another country as having equivalent climate regulations. Such equivalence forms a core component of many proposed models of so-called climate clubs. Establishing equivalence between distinct national climate regulation regimes poses a unique challenge that draws upon both trade and environmental international cooperation. Drawing on existing proposals, I examine prospects for country-based cooperation through three models: ETS-linking, benchmarking of shared methods and minimum standards, and benchmarking of outcome duties. The analysis concludes that all models necessitate some trade-offs between the goals of rigorous oversight of climate objectives, inclusivity, and WTO compliance. Benchmarking of shared methods and minimum standards seems most feasible, and would provide a deeper level of integration between trade and climate cooperation, but necessitates a shift in how countries, particularly the EU, oversee regulatory compliance.

Environmental Taxation and International Trade: Challenges and WTO Compliance

Environmental Taxation and International Trade: Challenges and WTO Compliance

China–Broiler Products (Article 21.5 – United States) – can the sum of the parts be less than the whole?

AbstractThis article explores economic and legal issues in the WTO dispute China–Broiler Products (Article 21.5–United States). In 2011, the US initiated a dispute against the conduct and results of China's 2009 trade remedy investigation into US broiler products (chickens). The Panel Report found that China had acted inconsistently with its WTO obligations. On the basis of a redetermination, China continued to impose duties and the United States initiated WTO compliance proceedings. The compliance Panel Report, circulated in 2018, concluded that China had failed to comply with its WTO obligations when allocating costs to construct US domestic prices for broiler products. However, China was found to have acted consistently with its WTO obligations with respect to two claims which raise some interesting legal questions. Ultimately, after almost a decade of litigation, China removed the antidumping and countervailing duties on US broiler products in 2018.

A WTO Safe Harbour for the Dolphins: The Second Compliance Proceedings in the US–Tuna II (Mexico) case

AbstractSubsequent to the 2016 modifications concerning the strengthening of the administrative requirements on dolphin-safety outside the ETP fishery zone, the second WTO compliance proceedings have finally found the US Dolphin-Safe labelling scheme compatible with the multilateral trade system. We provide an overview of the long-running US–Mexico dispute and assess the final findings of the WTO adjudicators attempting to determine the effects of the multilateral litigation on the involved non-trade values and the real winners of the case. We find an improvement in dolphin protection, though more could be achieved through a qualification of the US measure under the principle of sustainable development also contemplated in the Preamble of the WTO Agreement, as well as an enhancement on consumer information, since declaration of dolphin-safety may now be better monitored and enforced through the new discipline for non-Eastern Tropical Pacific Ocean tuna products. However, we also observe that with no change to the appearance of the label or an informational campaign, the improved credibility of the label may hardly be passed-through to the average consumer. Furthermore, despite an increase in the stringency of the regulation for their competitors, Mexican producers do not gain greater access to the US and instead have been diversifying towards other markets. We then highlight that the Appellate Body missed an opportunity to reinforce the transparency of the system by supporting the first-ever decision to grant partially open panel meetings.

Counteracting SEP Abuse: In Search of a WTO-Consistent Approach

This article assesses risks of WTO inconsistencies of ‘stringent’ and ‘relaxed’ competition regimes that counteract standard essential patent (SEP) abuse with the provisions of the WTO TRIPS and TBT Agreements and provides recommendations on how such risks should be mitigated. First, China has pioneered introducing quite ‘stringent’ lex specialis to counteract SEP abuse. Such shifting of the balance between patent holder’s rights and obligations may breach TRIPS Article 28 not justified under TRIPS Articles 30, 31 or 40.2. Second, the EU and US are examples of a more ‘relaxed’ competition regime that employs general provisions of competition law elaborated in a body of case-law to counteract SEP abuse. It is assessed whether SEP abuse that deters technological innovation or negatively impacts cross-border trade may contravene TRIPS Articles 7, 8.2 and 40.3. Another red zone for WTO compliance emerges when SEPs are part of an international standard within the meaning of TBT Annex 1.2 and SEP abuse creates unnecessary obstacles to international trade in violation of TBT Article 4.1. This article advocates for balancing of SEP holder’s rights and obligations in a WTO-consistent manner.

A WTO Safe Harbour for the Dolphins: The Second Compliance Proceedings in the US – Tuna II (Mexico) Case

Subsequent to the 2016 modifications, concerning the strengthening of the administrative requirements on dolphin-safety outside the ETP fishery zone, the US Dolphin-Safe labelling scheme has finally been considered compatible with the multilateral trade system by the second WTO compliance proceedings. In the present work, we provide an overview of the long running US-Mexico dispute, and assess the final findings of the WTO adjudicators attempting to determine the effects of the multilateral litigation on the involved non-trade values and the real winners of the case. We find an improvement in dolphin protection, though more could be achieved through a qualification of the US measure under the principle of sustainable development also contemplated in the Preamble of the WTO Agreement, as well as an enhancement on consumer information, since declaration of dolphin-safety may now be better monitored and enforced through the new discipline for non-ETP tuna products. However, we also observe that with no change to the appearance of the label or an informational campaign, the improved credibility of the label may hardly be passed-through to the average consumer. Furthermore, it is underlined that, despite an increase in the stringency of the regulation for their competitors, Mexican producers do not gain greater access to the US and instead have been diversifying towards other markets. We then highlight that the Appellate Body missed an opportunity to reinforce the transparency of the system by supporting the first-ever decision to grant partially open panel meetings.

China – Broiler Products (Article 21.5 – United States) (DS427) – Can the Sum of the Parts Be Less Than the Whole?

This article explores economic and legal issues in the WTO dispute China – Broiler Products (Article 21.5 – United States) (DS427). In 2011, the US initiated a dispute against the conduct and results of China’s 2009 trade remedy investigation into US broiler products (chickens). The Panel Report found that China had acted inconsistently with its WTO obligations. On the basis of a redetermination, China continued to impose duties and the United States initiated WTO compliance proceedings. The compliance Panel Report, circulated in 2018, concluded that China had failed to comply with its WTO obligations when allocating costs to construct US domestic prices for broiler products. However, China was found to have acted consistently with its WTO obligations with respect to two claims which raise some interesting legal questions. Ultimately, after almost a decade of litigation, China removed the antidumping and countervailing duties on US broiler products in 2018.

The Legalization of the Non-Violation Concept in the GATT/WTO System

Article XXVIII:1(b) of the GATT refers to “any benefit … being nullified or impaired” by the application of any measure “whether or not it conflicts with the provisions of this Agreement”. This article suggests that the evolution of GATT/WTO law and practice relating to the non-violation concept is an interesting example of “legalization”, in the sense of indeterminately vague treaty terms being incrementally made more precise and sculpted into a workable legal test which is capable of being applied in the context of binding third-party adjudication. It begins by showing how GATT adjudicators transformed this indeterminately open-ended concept into a workable legal test, generally covering measures with a close nexus (in terms of timing, product coverage, and effects) to specific market access commitments (Section I). It then briefly reviews how the non-violation concept spread to regional trade agreements, taking the CUSFTA and NAFTA as examples. (Section II). Following a closer look at the key non-violation provisions in the text of the Uruguay Round Agreements (including the DSU, GATS, SCM Agreement, and TRIPS Agreement), it surveys the relevant WTO case law and shows that adjudicators have not strayed very far from the traditional legal standard developed under the GATT (Section III). It suggests that the traditional legal test aligns the non-violation concept to various concepts of general international law, and to GATT safeguards provisions and the close nexus test developed in the context of WTO compliance proceedings (Section IV). It concludes with an overall assessment (Section V).

The Elephant Always Forgets: US Tax Reform and the WTO

The “Tax Cuts and Jobs ACT” (TCJA) enacted on December 22, 2017, includes several provisions that raise WTO compliance issues. At least one such provision, the Foreign-Derived Intangible Income (FDII) rule, is almost certain to draw a challenge in the WTO and is likely to lead to another US loss and resulting sanctions. This outcome would be another addition to the repeated losses suffered by the US for export subsidies from the 1970s to 2004, which led to the imposition of sanctions and the ultimate repeal of the offending regime. The important question for 2018 and beyond is whether the Trump administration and its Congressional allies will react to such a loss in a similar fashion as the Bush administration did in 2004, or whether it will defy the WTO, with potential far reaching consequences for the world trade order.

Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic

Special economic zones (SEZ), one of the most important instruments of industrial policy used in developing countries, often impose export share requirements (ESR). That is, firms located in SEZ are required to export more than a certain share of their output to enjoy a wide array of incentives – a practice prohibited by the World Trade Organization’s Agreement on Subsidies and Countervailing Measures. In this paper we exploit the staggered removal of ESR across products and over time in the SEZ of the Dominican Republic - a reform driven by external commitments to comply with WTO disciplines on subsidies - to evaluate how ESR effect export performance at the product- and firm-level. Using customs data on international trade transactions from the period 2006 to 2014, we find that making the Dominican SEZ regime WTO-compliant made SEZ more attractive locations for exporters to be based in. The reform, however, did not have a significant effect on the country’s exports nor on the share of export value originating from SEZ.

Risk and Regulatory Calibration: WTO Compliance Review of the US Dolphin–Safe Tuna Labeling Regime

AbstractIn a series of recent disputes arising under the TBT Agreement, the Appellate Body has interpreted Article 2.1 to provide that discriminatory and trade-distortive regulation could be permissible if based upon a ‘legitimate regulatory distinction’. In its recent compliance decision in the US–Tuna II dispute, the AB reaffirmed its view that regulatory distinctions embedded in the US dolphin-safe tuna-labeling regime were not legitimate because they were not sufficiently calibrated to the risks to dolphins associated with different tuna fishing conditions. This paper analyzes the AB's application of the notion of risk-based regulation in the US–Tuna II dispute and finds the AB's reasoning lacking in coherence. Although risk analysis and calibration can in principle play useful roles in TBT cases, the AB needs to provide more explicit and careful guidance to WTO members and to panels to avoid the kind of ad hoc decision-making exhibited throughout the US–Tuna II dispute.

WTO and Rule of Law in China: A View Based on Personal Experience

To celebrate the 15th anniversary of China’s WTO accession, this article reveals – through the lens of the author’s experience in government – a continuous thread of the rule of law, from WTO compliance assessments, dispute settlement, and research and education, thereby illustrating the significant impact that the WTO has had on China. To project the future direction and impact, this article concludes by introducing ongoing WTO training in China.

Risk and Regulatory Calibration: WTO Compliance Review of the U.S. Dolphin-Safe Tuna Labeling Regime

Risk and Regulatory Calibration: WTO Compliance Review of the U.S. Dolphin-Safe Tuna Labeling Regime

EU Regulatory Policy and World Trade

Divergent regulatory practices in WTO compliance and external trade effects – The regulatory policy of EU ‘legislative’ institutions – The (de)regulatory policy of the ECJ – Explaining diverging regulatory practices – Policies behind diverging regulatory practices – Different institutional interaction in diverging regulatory practices – Should all EU institutions care what the world thinks?

World Trade Organization sanctions, implementation, and retaliation

This is the first empirical paper to investigate the response of shareholders to the application of WTO-authorized trade retaliation. We compare shareholder gains stemming from illegal trade subsidies with the losses generated by subsequent WTO-authorized retaliatory measures. Results indicate that the average increase in share returns of U.S. firms receiving subsidies provided by the “Byrd Amendment” exceeded the share declines experienced by firms targeted with associated retaliatory tariffs. Our results also suggest that retaliatory threats have a smaller impact on targeted firms when there is less certainty that protection will actually be implemented. In general, we believe that the relatively subdued response toward retaliation diminished pressure on U.S. policymakers to strike down the Byrd Amendment, as was mandated by the WTO. Apathy toward retaliation along with associated delays in WTO compliance by the U.S. may reflect a potential weakness on the part of WTO-authorized retaliation in serving as an effective political counterweight to pro-antidumping forces in the U.S.

India's Foreign Trade and Socio-economic Development (Trio of WTO Compliance, Currency Depreciation and Global Crisis

It can be observed from the present literature and the data that India's exports as well as imports, measured in US Dollars, have steadily increased over the past 23 years. However, the rate of increase has fluctuated from year to year, a couple of times being negative. Trade balance has mostly been in the negative. Literature Review points out the several reasons for the trade movements, of which this paper attempts to consider the three major reasons viz India's complying with the WTO agreement and reducing its trade barriers and globalising in the true sense; depreciation of Rupee vis-a-vis US Dollar, thereby swelling the import bill while also raising the exports; and the recent global crisis namely the US sub-prime mortgage crisis, the European debt crisis. Japan too has been in a liquidity trap and perpetual recession for the past many years while UAE, our trading partners have had a political turmoil. Although the South-east Asian miracle countries achieved their goals by following the outward orientation model, going forward, various countries especially India, will need to choose between the ‘inward-looking’ approach to economic development and the ‘outward orientation’. Inward-looking approach is more likely to help India achieve the much- desired inclusive growth and uplift the masses at the bottom of the pyramid thereby reducing the sharp contrasts between the rich and poor leading India on a true ‘development path’, not just high growth trajectory. Needless to say, economic well-being is the stepping stone towards social development.

US Compliance with WTO Rulings on Zeroing in Anti-Dumping

AbstractThis paper reviews the WTO Appellate Body Reports on United States–Zeroing (EC) (Article 21.5 DSU – EC) (WT/DS294/AB/RW, 14 May 2009) and United States–Zeroing (Japan) (Article 21.5 DSU – Japan) (WT/DS322/AB/RW, 18 August 2009). The Appellate Body found that the United States had not brought its anti-dumping measures into compliance with the WTO Anti-Dumping Agreement as it continued to use zeroing in annual reviews of anti-dumping orders. We argue that this conclusion – based on a complicated discussion of what constitutes a ‘measure taken to comply’ – could have been reached through a much simpler and direct argument. Continued noncompliance by the United States generates costs to traders targeting the United States and the trading system more generally. We argue that from a broader WTO compliance perspective consideration should be given to stronger multilateral surveillance of anti-dumping practice by all WTO members and to more analysis and effective communication by economists regarding the costs of zeroing and anti-dumping practices more generally.

The Revenue Program Option in the 2008 U.S. Farm Bill: Evaluating Performance Characteristics of the ACRE Program

Had only a farm program like the new ACRE state revenue program existed instead of the authorized 1996–2008 programs for com, soybeans, and wheat, farm support expenditures would have occurred earlier but totaled less. In contrast, at the higher prices forecast for the three crops over the 2009–2012 crop years, spending per acre is expected to be higher for acres enrolled in the ACRE program than for acres enrolled in the traditional programs. These results reflect the different design features of the two programs: revenue versus price assistance and assistance levels that adjust with lagged market revenue versus fixed nominal support triggers. The design issues and policy questions raised for both domestic policy considerations and WTO compliance are discussed.

Open for Business? China's Telecommunications Service Market and the WTO

China joined the World Trade Organization (‘WTO’) in 2001 after almost 15 years of negotiations, making extensive commitments to open its markets to foreign investment and liberalise trade in goods and services. China represents a huge potential market for foreign telecommunications service providers; yet, in practice, foreign involvement in this market is extremely limited. This article identifies key commercial and legal barriers to foreign entry into China’s telecommunications service market, exploring areas of apparent non-compliance with WTO rules and China’s justifications for its current approach. This research provides a valuable case study of China’s WTO compliance, the significance of obligations contained in China’s Accession Protocol, and the meaning of Members’ WTO commitments more generally under the General Agreement on Trade in Services (‘GATS’). The article raises important considerations for China as it finalises its telecommunications law, which has been in the drafting stages for many years.