China Rare Earth Panel report out

The China Rare Earth panel report is out and is found here. I had blogged about it in 2012 when the panel was set up here.  

"In respect of findings concerning export duties and export quotas on various forms of rare earths, tungsten, and molybdenum, and restrictions on the trading rights of enterprises exporting rare earths and molybdenum, the Panel has found that the series of measures have operated to impose export duties and export quotas on various forms of rare earths, tungsten, and molybdenum, and restrictions on the trading rights of enterprises exporting rare earths and molybdenum (i.e. the prior export experience requirement, the export performance requirement, and the minimum registered capital requirement), that are inconsistent with China's WTO obligations. The Panel, therefore, recommends that the Dispute Settlement Body requests China to bring its measures into conformity with its WTO obligations such that the series of measures does not operate to bring about a WTO-inconsistent result."

Haven't read the voluminous Panel report of more than 200 pages. Many interesting questions including on the applicability of General Exceptions to obligations under the Accession Protocol of China. WHat impact would this have on other similar measures?

Will this lead to an appeal, compliance or status quo? We will have to wait and see...

More Appeals in the WTO

As per the annual report of the Appellate Body of the WTO, there is more work in store for the Appellate Body in 2014. 

And this is why...

"According to the Legal Affairs Division and the Rules Division, a large number of panels will continue to be active for the foreseeable future. Twenty-seven requests for consultations were received in 2012, the highest number since 2002. This led to the establishment of 11 panels in 2012, the highest number in five years. There are currently seven panels in composition, and six more panel requests are pending before the DSB.Third party participation continues to be high.Four new requests for consultations have been received in 2013, and four panels have already been established this year covering five disputes. Significantly, the compliance proceedings in the aircraft subsidy disputes between the United States and the European Union are also presently under way. Thus, a large number of panel proceedings are currently in progress or about to begin. Assuming: (1) that panel proceedings take, on average, one year from the time of 

establishment of the panel; (2) that the compliance panel proceedings in the aircraft subsidy disputes will take 1.5-2 years; and (3) that, based on the consistent practice of WTO Members involved in disputes since 1996, roughly two-thirds of all panel reports circulated will be appealed the Appellate Body can expect to receive up to a dozen appeals towards the end of 2013 and in 2014. Such an increase in the number of appeals, on top of the increased complexity and size of the average appeal, is likely to exacerbate the challenges confronting the WTO dispute settlement system in the near future."

More disputes at the WTO, more appeals, more international rule making, more predictability and more compliance? 

It's the question of national interest again...

Krugman recently wrote about the TPP being no big deal in the NYT. An interesting aspect of that piece was relating to what constitutes "national interest" that I allude to in this blog. Talking about intellectual property rights rules in the trade agreement, it said:

"Now, the corporations benefiting from enhanced control over intellectual property would often be American. But this doesn’t mean that the T.P.P. is in our national interest. What’s good for Big Pharma is by no means always good for America."

What is "national interest" then? What is good for business can sometimes be not good for the country of the business corporation. National interest could well be larger public interest? Consumer interest? Or just plain "public interest"?

Countering Krugman's analysis generally and also specifically on the "national interest" plank, a VoxEU piece argues:

"After dismissing the case for stronger intellectual property protection in the TPP, Krugman writes with a flourish, “What’s good for Big Pharma is by no means always good for America.” Not even the Pharmaceutical Manufacturers Association would claim that its interests always coincide with US interests. 

But what about the general coincidence of interests? America’s competitive strength resides in innovation. Innovation costs lots of money; not surprisingly, some 60% of the value of US shares – or about $14 trillion in 2013 – represents the capital value of ideas, not tangible property.¹ With this amount at stake, protection of intellectual property is clearly in the US national interest. From a global perspective, it’s worth asking how future innovation will be financed if good ideas – embodied in software, entertainment, electronics, and yes, pharmaceuticals – can be freely appropriated by rival firms based in foreign countries?"

An interesting debate on what constitutes "national interest" - what constitutes it, who are it's recipients and how should it be protected? I guess all trade deals will face this question. The issue is how the interests are balanced, who balances them and whose interests ultimately prevail. 

Dispute settlement - Contrasting yet similar experiences

A recent blogpost in the IELP blog got me thinking - Two contrasting yet similarly placed experiences with dispute settlement in the WTO

- Switzerland's role in dispute settlement 

- African countries role in dispute settlement

While the motivations and reasons for non-participation may be varied, it is interesting to see contrasting profiles having a similar engagement with the WTO's crown jewel.

Taking disputes to their logical end - Seeking retaliation in WTO disputes

This piece on "retaliation" in trade disputes in the WTO is found in the VoxEU. The piece talks about a pattern of how countries have sought compliance of WTO decisions. It also indicates the various types, strategies and means of seeking retaliation which includes cross retaliation to more commonly used retaliation methods.

"The purpose of this investigation was to identify key trends in the WTO dispute settlement system, in particular in the design of retaliation requests. Practice has demonstrated that additional effort is also put into the implementation of these measures once they are authorised. Nonetheless, the original retaliation request – the first opportunity for an offended member country to induce compensation or compliance – is an important tool, and analysing it helps understand countries’ behaviour and goals when pursuing WTO disputes."

It only shows that at times merely initiating a dispute and getting a decision is not the end of the game in WTO disputes. I had earlier blogged about cross retaliation here. Compliance and seeking retaliation is the next big battle.