Sunday, September 2, 2012

China, U.S. and the e-payment dispute

I had earlier blogged about the China -Measures affecting electronic payment system here. Apart from both sides claiming victory at the WTO, it was almost certain that an appeal was imminent. However, news of China not preferring an appeal in this case started trickling in here and here. This seems surprising since complicated issues were involved and normally countries exhaust al remedies, including an appeal before calling it a day.See a detailed analysis of the dispute here and here.

Some observations:

1. What motivated China not to appeal in this case? Were the findings more a victory for China and chances of it being overruled in appeal were high? Are there other bigger battles at the WTO that China seeks to pursue?

2. With the U.S. too not preferring an appeal, the WTO panel decision would have to be complied with.

3. Is China contemplating an "innovative" compliance strategy? Would this lead to more adjudication on what constitutes compliance, like the Airbus-Boeing dispute.

4. Is it a political decision not to appeal in this matter? After all decisions in international trade and disputes are not taken purely on legal considerations - the political economy of a dispute has a bearing.

For now, there are no nightmare scenarios of a China-U.S. trade war as predicted here. A lull before the storm?

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