European Union (EU) anti-dumping duties imposed on Chinese leather footwear imports led to a challenge before the WTO Dispute Settlement body. The Panel ruled that the EU's presumption that Chinese exporters are subject to economy-wide non-market-economy anti-dumping duties was inconsistent with WTO obligations. The EU declined to appeal this outcome and subsequently changed its anti-dumping regulation in response. This dispute also illustrates the rapidly changing structure of global manufacturing and how these changes can scramble the traditional political economy of import restrictions. In addition, the case highlights how EU members' positions on trade remedy actions can depend importantly on national production patterns and firms' responses to economic pressures from globalization and the further development of global supply chains.

The legal-economic implications of how WTO members apply an import-restricting safeguard measure become more complex in light of the increasing web of trade concessions undertaken through their preferential trade agreements (PTAs) in addition to their WTO commitments. This paper examines a number of complex issues that arose in the WTO litigation between five new PTA partners through the Dominican Republic–Safeguard Measures disputes. First, we highlight the difficulties in assessing the extent to which safeguards imposed following a PTA are the result of PTA concessions relative to developments that pre-date or are otherwise unrelated to the PTA. Second, we examine how the WTO Panel resolved a number of previously unanswered questions in the WTO's safeguards jurisprudence that arose in these cases. We suggest that the Panel rightly foreclosed a number of potentially dubious practices that WTO members might otherwise have pursued when using safeguards to circumvent trade concessions. Third, we identify how safeguard-related provisions within a PTA may give rise to constraints that subsequently affect how a country may apply safeguards available under the WTO Agreements, and we describe some implications for PTA design and negotiation. Finally, we analyze the broader implications that arise from the interplay of PTAs, safeguards, and dispute settlement in light of the availability of both relatively substitutable policy instruments and dispute resolution forums.

In July 2009, Chinese steel producers of grain oriented electrical steel filed anti-dumping (AD) and countervailing duty (CVD) cases against US and Russian producers. The US challenged the duties for a variety a reasons, many of which involved deficiencies in the producers' application to China's investigating authority, the Ministry of Commerce of the People's Republic of China (MOFCOM). The US also challenged certain aspects of MOFCOM's injury analysis. The Panel and Appellate Body ruled in favor of the US on virtually every issue. Given the deficiencies in the application and China's handling of the case, the Panel and AB decisions were justified. In a larger sense, however, we believe China may well emerge as the ‘winner’ in this dispute as this case establishes important standards for allegations and evidence in applications, standards that other countries (including the US) likely have failed to meet when they have imposed AD and CVD orders on the largest target country, China.

Despite many legal rulings to clarify the WTO inconsistency of zeroing practices, in practically all aspects of antidumping proceedings, the United States declined to categorically rectify the illegal antidumping duties based on zeroing calculation methods. This dispute is merely example of a number of disputes where the US government had to exhaust the whole process for proper implementation of the WTO rulings under its domestic legal system. The US approach is starkly contrasted with the position taken by the European Union that categorically terminates zeroing practices pursuant to the WTO rulings. While the WTO system indeed recognizes individual Member's peculiar regulatory systems and policies during implementation phases, the current situation in which WTO Members must individually resort to the dispute settlement system in order to rectify the US zeroing practices raises a serious concern regarding the legitimacy and integrity of the WTO dispute settlement system. Maybe it is time for WTO Members to agree on better implementation mechanisms before more Members try to develop overly burdensome and complicated regulatory processes for compliance.

This paper provides limited comments on portions of the Appellate Body (AB) judgment. With respect to the existence of a subsidy under contracts with NASA and DOD, we find the discussion of whether Boeing has received a financial contribution to be a distraction from the core issue – whether the mix of monetary compensation, access to government personnel and facilities, and IP rights ‘overcompensated’ Boeing for the services it rendered (or whether the government paid more for those services than they were worth to the government). The panel's analysis of this core issue, which focused on whether Boeing was the principal beneficiary of the contracts, is flawed, but the alternative approach of the AB is equally flawed. The analogy between an R&D joint venture and equity infusion is dubious, and the existence of a benefit simply does not turn on how one dimension of the contract (the allocation of the resulting intellectual property rights (IP)) is specified. We also argue that even a contract that confers a ‘benefit’ (or economic rent) on Boeing could still be an efficient arrangement for the allocation of cost and prospective revenues between the two partners. With respect to adverse effects, we argue that the panel and AB failed to develop an adequate counterfactual with respect to product developments; that is, it is not implausible that if Boeing had not received a subsidy and would accordingly have developed the 787 later, Airbus would also have delayed the development of the A350. To determine the existence of adverse effects, the panel and AB should have considered the profit (or sales) of Airbus relative to what would have happened in this counterfactual world. Finally, we observe that the analysis of lost sales and ‘price suppression’ fails to consider the specific features of competition in the aircraft industry. Unlike what happens in the market with posted prices, when contracts are individually negotiated, whether the outcome of competition is affected by a subsidy depends on the relative cost position of the bidders. When Boeing is the lowest cost bidder, the only effect of the subsidy is to increase its rent, with no effect on sales or prices for Airbus.

In US–COOL, the Appellate Body (AB) of the World Trade Organization (WTO) found that the US measure imposing country of origin labelling (COOL) requirements on livestock of domestic, foreign, and mixed origin was in violation of the obligation to avoid discrimination embedded in Article 2.1 of the WTO Agreement on Technical Barriers to Trade (TBT). We argue that the AB could not and should not have reached this decision based on the information available to it. The AB adopted an erroneous methodology: under its view, the consistency of a measure coming under the purview of the TBT can be examined under Article 2.1 irrespective of its evaluation under Article 2.2 thereby making the two obligations distinct. The AB also failed to address the central question raised by this dispute: Does there exist an alternative to COOL that is less trade restrictive? We argue that the over-arching issue in this case should have been to determine what, if anything, the TBT Agreement did to alter or enhance the obligation of non-discrimination that was already embedded in the arsenal of the multilateral trading rules. Unless the AB asks this question in subsequent case law pertaining to the TBT, we risk seeing repetitions of similar mistakes in the future.

The AB Report in US–Clove Cigarettes confirmed the Panel's conclusions that imported clove cigarettes were ‘like’ US menthol cigarettes, and accorded ‘less favourable treatment’ for the purpose of national treatment under Article 2.1 TBT, but it employed significantly different logic. The AB's reasoning extends earlier GATT jurisprudence into the TBT, applying competition-oriented analysis to the question of product definition, while reserving consideration of regulatory purpose to the comparison of treatment. We consider this emphasis from the perspectives of legal and economic indeterminacy, which we find run in parallel to each other. In the particular questions of the appeal, the AB's decisions are sensible from both perspectives, but ultimately do not add significantly to determinacy. We find it impossible to ignore regulatory purpose in discrimination cases, and we provide a novel economic model for analysing regulatory utility in this respect. In our view, there is not much economic difference in analysing regulatory purpose separately from more observable market considerations, but this sequencing does add political logic, analytical focus and formal transparency, all of which may enhance the legitimacy of WTO dispute settlement rulings, although ideally, further specification from the WTO Membership regarding the methodological content of the national treatment discipline would be preferred.

This case sheds light on the question whether WTO members, when exploiting their natural resources, can give priority to the needs of their domestic market as opposed to the needs of other WTO Members. From the ruling of the Appellate Body, and the unappealed part of the panel decision, one can conclude that a WTO Member normally must ensure an evenhanded distribution of the natural resources that it decides to mine or harvest amongst the WTO membership. The only difference arises where a Member's citizens or industries face a crisis because of a temporary shortage of an essential product. For those who share an international outlook on the world, this is an acceptable, and even a desirable outcome. The ruling potentially has far-reaching implications for international trade, not only in minerals and metals, but for agricultural and energy goods as well. However, in reaching this laudable result, circumscribing the use of export restrictions, the Appellate Body also made a highly regrettable finding. It ruled that China, because of the wording of its Accession Protocol, was not allowed to invoke a public policy justification for certain of its export restrictions (notably: its export duties, on which it had assumed additional commitments). The underlying assumption that sovereign states can sign away their rights to pursue public policies, such as environmental protection, which are generally admitted amongst the WTO membership, is deplorable.

This paper provides a legal–economic analysis of the unappealed WTO Panel Report in China – Certain Measures Affecting Electronic Payment Services (WT/DS413/R). The core issue was whether China's measures that resulted in there being only one dominant supplier of electronic payment services (EPS) in China violated the specific commitments made by China under the GATS. The panel ruled that the measures did not violate China's market access commitments because there were no explicit limitations on the entry of foreign suppliers, but that the measures were inconsistent with China's national treatment commitments in that they modified the conditions of competition in favour of domestic suppliers. This case illustrates the complexity in interpreting WTO Members’ commitments under the GATS.