Big emerging countries at the WTO dispute settlement system (DSS)

Overview of disputes concerning BIC (Brazil, India, China)26 March 2015

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Contents

1. Participation of developing countries (“DCs”) at the WTO dispute settlement system (DSS) ..………………. 3

2. Disputes of interest to BIC: important place ..…………... 5

3. Country based approach: similarities and differences … 8

Conclusions ……………………………………………………. 11

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1. Participation of developing countries (“DCs”) at the WTO dispute settlement system (DSS)Apparent imbalance

Only around 26 DCs made use of a WTO judge or were brought before a WTO judge― DCs represent more than 2/3 from 160 WTO members

― Total absence of African countries except for South Africa but in defence, in 4 cases concerning trade remedies but without going before a judge

Latin America― Brazil (27/15/89) and Mexico (23/14/74) take the lead: particularly active users

― Followed by Argentina (20/22/53) and Chile (10/13/39), then by Guatemala (9/2/34) and Honduras (8/-/26)

Asia: South Korea (17/14/92) and Thailand (13/3/69) break away― Indonesia (9/12/13), Philippines (5/6/14) and Turkey (2/9/66): participate much

less actively Turkey last complaint in 2003, Philippines and Thailand - in 2008

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Conclusion:– ≈ 40 % of disputes concern DCs (respondents and complainants)

– ≈ 1/3 of which concern BIC

1. Participation of developing countries (“DCs”) at the WTO dispute settlement system (DSS)Apparent imbalance

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2. Disputes of interest to BIC: important placeGeneral overview of participation of BIC at WTO DSS

Balanced position― more respondents – after

China arrival

Small number of reports― Especially when BIC as

respondents small number of mutually

agreed solutions – abandon of complaints ?

China active as a third party:― Learning by doing

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2. Disputes of interest to BIC: important placeEvolution of participation in1995-2015 – BIC as complainants

Most active around Doha Ministerial (2000-2002)― Instrumentalization of DSS to influence on negotiations (systemic issues)

GSP, agricultural subsidies, safeguards on steel products…

After Cancun (2003) – discretion ( 1 complaint in 3 years)

After 2005 – steady level of complaints (1-3 per year, 5 in 2012)

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2. Disputes of interest to BIC: important placeEvolution of participation in1995-2015 – BIC as respondents

General tendency to reduction of the number of complaints until China joins WTO― 1997 peak is due to numerous complaints against the same measures

After 2001 – number of complaints against Brazil and India is rather low

2004 – first complaint against China (US), the peak of 7 complaints in 2012

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3. Country based approach: similarities and differencesActivism and success of Brazilian strategy

As complainant:

– Most litigious amongst BICs (27/15)– Complaints targeted at :

developed countries: US -10, EC – 7, Canada – 3 WTO incompatible regulations (systemic issues like agricultural subsidies) and trade

remedies (US)

As respondent:

– Same as complainant (US and EU as major complainants, AD measures and trade regulations like embargo on retreated tyres ) BUT

– the number of complaints is moderate (approx. 1/ year till 2001, after – 3 complaints only (2005, 2006 and 2013)

Results:

– 14 reports + 3 reports under article 21.5 DSU (implementation) all in favor of Brazil but one exception Canada - Aircraft (but Brazil won in cross claim) Brazilian complaints are well grounded, mobilization of human resources (private sector)…

– Brazil is a free trade player

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3. Country based approach: similarities and differencesA more fragile standing of India

Similarities with Brazil:

– active litigator (21 complaints compared to 27 Brazilian complaints) – same, or even more pronounced targeting of complaints: USA - 8 and EC – 7– under scrutiny: systemic issues (GSP, public health) and trade remedies (AD measures)

Differences with Brazil:

– stands often as respondent… complaints against India ≈ complaints by India (21/22)

– … mainly against EU (11 complaints, US - 4 complaints)– Indian measures challenged: trade measures in strategic sectors (patents, automobiles)

and trade policies altogether (quota policy, tariff policy)

Results of disputes are less favorable to India (≈ 15 reports):

– Complaints brought by India are not systematically successful or success is rather formal or mixed lost particularly important case US – Rules of Origin for Textiles (DS243) mitigated result in EU – Tariff Preferences (DS246) and US – Shrimp (DS58) disputes

– India systematically lose as respondent

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3. Country based approach: similarities and differencesA special case of China

The most active user of DSS (in 2011 - 2015):

– 4 cases (3 reports) as complainant – and 9 cases (5 reports) as respondent

Extremely defensive standing – 12 / 33

– all Chinese complaints are brought against US and EU– 2/3 of 33 complaints against China from these countries

China mainly wins as complainant and lose as respondent

– won in 7 from 8 cases (with reports) – mainly challenging US trade remedies – large scope of Chinese protectionist measures challenged : services, IP, goods etc. - all

sanctioned by the judge

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Conclusions

Classical liberal model of development by trade vs. Special and differential treatment – Ad hoc rules in favour of DCs = soft law = ineffective – complaints to dismantle the North's protectionist trade practices = success

≈ 12 cases : non tariff barriers (rules of origin, import licences) and safeguard measures in strategically important sectors such as textiles, steel, poultry, energy

Exceptions (2 cases): US – Rules of Origin for Textiles (DS 243) and US – Tyres (DS 399)

Brazil – a good student of the class– China and India are in a less comfortable position: the protectionist measures are

systematically sanctioned when challenged

EC - tariff preferences (DS 246): possibility of differentiation between developing countries acknowledged (e.g. if preferences are made available to all beneficiaries that share the same development, financial or trade need)

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ALGIERSBEIJING

BRUSSELSBUDAPEST

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HO CHI MINH CITYHONG KONG

ISTANBULKYIV

LONDONMOSCOW

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SHANGHAITUNIS

WARSAW

Gide Loyrette Nouel 4 Volodymyrska St.01001 KyivUkrainetel. +38 (044) 206 09 80 ukraine@gide.com - gide.com

Volodymyr MatenchukPh.D., Lawyer

tel. +380-(0)44-206-09-80volodymyr.matenchuk@gide.com

Gide Loyrette Nouel Vostok7 Petrovka St.107031 MoscowRussian Federationtel. +7 (495) 258 31 00 russia@gide.com - gide.com