Thursday, June 21, 2012

China, WTO and dispute settlement

BloombergBusinessweek has a piece on China's engagement in the WTO's Dispute Settlement mechanism. These interesting graphics depict, according to the author, China's tit for tat policy of reverting to the dispute resolution process when taken to it.

The issue of the Chinese practice of engaging foreign lawyers seemed interesting in the above piece:

"U.S. lawyers in particular have helped China learn the ropes. Three Washington law firms—Sidley Austin, Steptoe & Johnson, and Hogan Lovells US—that have offices in Beijing are among the Chinese government’s favorites for helping it litigate at the WTO. “If it’s a really important or technical trade issue and they’re a first party, I’m not aware of a case where they didn’t hire a foreign lawyer and encourage or require them to team up with a local or Chinese lawyer,” says Daniel Crosby, a partner at King & Spalding in Geneva."
While China has engaged Foreign expertise,  do all developing countries have the werewithal to do this? It is often suggested that developing countries must develop their legal capacity to engage with the WTO dispute settlement. WTO legal rules are often complex  and engaging. They involve intricate questions of law and fact, often dragging on for years. Nevertheless, as suggested here WTO dispute resolution process in the context of international trade is a positive factor.
"For all its flaws, the WTO process works more quickly than many countries’ court systems. And, supporters say, it’s a big improvement on what existed before the WTO’s 1994 establishment. Before that, “there were two ways to settle trade disputes—a war, or power politics, where the bigger economy or the bigger power just did whatever it wanted,” says Fredrik Erixon, director of the European Center for International Political Economy, a Brussels-based think tank. The WTO, he says, “has had a profound impact.”
Thus, a country must develop national legal capabilities which consist of interdisciplinary teams to engage, in consonance with national developmental agendas, with the dispute settlement mechanism. The question whether China's "tit for tat" policy is worrisome or a justifiable use of the dispute resolution process is another issue.


Jayant Raghu Ram said...

Hi Mr. Srikar,

Just wanted to comment on your post. I agree with your observation that developing countries and LDCs too must take steps to improve their capacity to utilize the WTO DSM. With regard to LDCs, they should atleast develop some capacity to utilize the services of the ACWL which seem quite cost-effective and affordable.

Jan Bohanes and Fernanda Garza drive this point well in their article "Going Beyond Stereotypes: Participation of Developing Countries in WTO Dispute Settlement".

Also, the essays in Greg Shaffer and Ricardo Melendez-Ortiz's edited volume on developing country participation at the WTO DSM all more or less echo the same points.

From an Indian perspective, there are some points that I wish to put across. The Indian government should take more steps such as:
1. internship programmes for Indian students with the PMI at Geneva.[Brazil does this.]
2. Tying up local Indian law firms with foreign law firms when it comes to engaging with the WTO DSM. [China does this.] This would greatly improve institutional capacity in dealing with WTO law and the DSM.

3. International trade law courses focussing on WTO law, etc need to be encouraged in India.

Just a few points from my side for the moment...


Srikar said...

Yes Jayant. I agree with you that more efforts must be made to "institutionalise" capacity building in handling complex issues of international economic law and policy. They have to be both cross sectoral (trade policy experts, economists, data analytic specialists, trade lawyers, bureaucrats handling trade policy) as well as involve multiple strategies. Jan Bohanes' article does bring out the points. Thanks for your response.