Introduction

The WTO established a rule-oriented dispute settlement system (DSS) to resolve disputes between member states. There is today a consensus that the WTO DSS has worked well; it is seen to have worked to the advantage of both developed and developing countries. Equally there is agreement that there is much room for improvement. Keeping this sentiment in view the Doha Ministerial Declaration agreed ‘to negotiations on improvements and clarifications of the Dispute Settlement Understanding’. The review of DSS, yet to be concluded, has seen a large number of proposals from developing countries. Among them India has been relatively active in advancing proposals of reform of Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). It has relied on its reasonably extensive experience with the WTO DSS to advance these proposals; India has to date been complainant in 18 cases, respondent in 20 cases and a third party in 51 cases. The Indian proposals, advanced together with a number of other developing countries, have pertained to, among others, the term of appointment of Appellate Body (AB) members, litigation costs, special and differential treatment, compliance with decisions of the dispute settlement body (DSB), and the issue of amicus curiae briefs. China has had, as compared with India, a more limited experience with the WTO DSS as it acceded to WTO only in 2001; it has to date been complainant in 7 cases, respondent in 17 cases and third party in 62 cases.

The rise of China and India in the twenty-first century has attracted a great deal of international attention. Even in his recent State of the Union Address, President Bush of the United States specifically named India and China as the strong challengers to the American competitiveness in the world economy. Indeed, the two nations share many similarities, such as being giant developing countries with long glorious civilizations and colonial histories; but at the same time they have equally many differences, particularly on their completely different political, social and legal systems.

Despite the sharp discrepancies, the unsettled territory dispute and the recent international political uneasiness, the tide of globalization has more and more rung the two giants on the arena of international competition. The trade between China and India between 2000 and 2004 rose by more than 350 percent to record nearly US$14 billion and the governments' joint efforts are expected to push the trading volume to reach US$20 billion in 2008 and US$30 billion in 2010. The two countries have also agreed in 2006 to set up six joint task forces to explore the feasibility of a China–India Regional Trade Agreement. In the course of trade development, the concerns with the competition of the two countries have also been raised. For example, in the period of 1995–June 2005, India initiated 412 anti-dumping petitions, of which 81 were made against imports from China. Since 2000, China has also initiated at least two anti-dumping investigations against products from India.

The rise of China and India as global economic powers has now become conventional wisdom. A recent Financial Times report, quoting the International Monetary Fund (IMF), observes that “the striking thing about the global economy [in 2007] is how little it relies on the U.S. as the main engine of growth. For the first time in 2007, China's rapidly expanding economy has provided the largest contribution to global growth, while half of the world's expansion over the past year has come from three countries: China, India and Russia.” And the implication is this phenomenon's lasting impact on the evolving international economic order. As Martin Wolf notes, “[t]he economic rise of Asia's giants is … the most important story of our age. It heralds the end, in the not too distant future, of as much as five centuries of domination by the Europeans and their colonial offshoots.”

In June 2006, an international symposium was held at the Faculty of Law, National University of Singapore, to study the resurgence of China and India as world powers from the perspective of international economic law and development.

Introduction

India–China trade in the near future is likely to take place against the backdrop of an emerging, uncertain network of Asian Free Trade Agreements (FTAs). This chapter takes a look at the contemporary history of regional trade negotiations. It traces the influence of a third party; namely, ASEAN's efforts to build links to the rest of Asia through a complex network of FTAs. That influence suggests a disturbing possibility – the exportation of a tariff acceleration device developed during the ASEAN–China negotiations to the rest of Asia. The ASEAN–China FTA contains a tariff acceleration clause and similar devices which would allow separate bilateral deals between China and the individual ASEAN nations to be cut beneath the larger umbrella of the China–ASEAN FTA.

These devices are significant because ASEAN has become something of a common medium for India and the ‘Plus 3’ nations to join in the build-up of a regional network of Asia-wide FTAs. In the near to medium term, the Plus 3 are unlikely to have bilateral agreements between themselves. There is no evidence that China, Japan and South Korea will be aiming for FTAs between themselves anytime soon. Instead, they appear content to trade with each other on preferential terms through their individual FTAs with ASEAN and the ASEAN nations instead. If these become as heavily bilateralized as the China–ASEAN FTA, the result could be an ‘MFN black hole’ in intra-Asian trade liberalization.

International disputes are often blights to international relations between disputing nations. It is especially true if the disputes, which relate to the vital interests such as sovereignty of states and international peace and security, are not settled in a reasonable manner. The hanging disputes will not only impact on the relations of disputing parties, but also have a bearing on the interests of the region concerned or the whole world. Against this backdrop, it goes without saying how important the dispute settlement mechanism is vis-à-vis dispute settlement. This becomes more prominent when the bilateral relationship between the disputing parties is fragile and intense. Settlement of disputes plays an important role when both parties intend to maintain their relationship at a certain level. In other words, the function of the dispute settlement mechanism is simply to maintain the relationship between the disputing parties.

The past thirty years since China opened its doors to the outside world witnessed constant disputes between China and other countries (especially the United States), ranging from territorial disputes, to political disputes and to trade disputes. As the nation rises as an emerging economic giant, a resurgence of nationalism across the globe and muscle-flexing by China can be expected, and thus more disputes are likely to occur between the country and the rest of the world.

Introduction

Corporate governance reform has become a topic of considerable debate both in the US and in many emerging markets. Indeed, the discussion is important because these reforms may have potentially long-standing effects upon the global allocation of capital, and in understanding the ways in which governance norms are communicated across markets and nations in an ever-globalizing world. In this chapter we examine the corporate governance reform efforts of the world's two biggest and fastest growing emerging markets, the People's Republic of China (PRC or China) and India. In the process we find that our understanding of how and why corporate governance reform comes about, where it leads, and what value it has can vary significantly, but still shares some commonalities that are of considerable theoretical and practical importance.

The inquiry commenced in this chapter is inspired by certain key facts. First, China and India are growing at a remarkable and unprecedented pace and seem to have survived the 2008–9 Global Financial Crisis better than most other economies. Second, China and India are not Western countries, but have been heavily influenced by “globalized” Anglo-American notions of corporate law, corporate governance norms, and securities regulation. Third, China and India are presently two of the most popular destinations for foreign capital in the world – whether via foreign direct investment (FDI) in essentially private (or pre-public) transactions or public capital markets transactions.