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Renewable Energy and Government Support: Time to ‘Green’ the SCM Agreement?

Published online by Cambridge University Press:  27 October 2014

SHERZOD SHADIKHODJAEV
SHERZOD SHADIKHODJAEV*
Affiliation:
Associate Professor, KDI School of Public Policy and Management, Republic of Korea
*
*Email: [email protected].
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Abstract

Many governments provide subsidies to shift from ‘dirty’ but cheap fossil fuels to ‘clean’ but expensive renewable energy. Recently, public incentives in the renewable energy sector have been challenged through both dispute settlement procedures of the World Trade Organization and domestic countervailing duty investigations. One may expect that trade frictions in this field will intensify over time. This article argues that the Agreement on Subsidies and Countervailing Measures – a multilateral trade treaty on subsidization and anti-subsidy measures – should be revised to give more policy space to national authorities in implementing their low-carbon programmes. The Appellate Body made a few climate-friendly interpretations in Canada–Renewable Energy/Canada–Feed-In Tariff Program. It is now members’ turn to carry out meaningful rule-making reforms. This article explores some ways to ‘green’ the existing disciplines.

Type
Review Article
Information
World Trade Review , Volume 14 , Issue 3 , July 2015 , pp. 479 - 506
Copyright
Copyright © Sherzod Shadikhodjaev 2014 

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References

1 Article 2.1(a)(iv) of the Kyoto Protocol to the UNFCCC.

2 United Nations General Assembly Resolution, ‘International Year of Sustainable Energy for All’, 69th Plenary Meeting, 20 December 2010, A/RES/65/151, 16 February 2011.

3 International Centre for Trade and Sustainable Development (ICTSD), ‘Fostering Low Carbon Growth: The Case for a Sustainable Energy Trade Agreement’, 2011, at 38; Farah, Paolo D. and Cima, Elena, ‘Energy Trade and the WTO: Implications for Renewable Energy and the OPEC Cartel’, 16 Journal of International Economic Law 707 (2013)Google Scholar, at 716.

4 The ‘peace clause’ or ‘due restraint’ under Article 13 of the Agreement on Agriculture – that prevented anti-subsidy actions under the SCM Agreement in the agricultural sector – remained in effect until 31 December 2003. See also Wouters, Jan and Coppens, Dominic, ‘An Overview of the Agreement on Subsidies and Countervailing Measures – Including a Discussion of the Agreement on Agriculture’, in Bagwell, Kyle W., Bermann, George A., and Mavroidis, Petros C. (eds.), Law and Economics of Contingent Protection in International Trade (New York: Cambridge University Press, 2010), 7–84Google Scholar at 79–81.

5 ICTSD, ‘Fostering Low Carbon Growth’, supra note 3, at 1.

6 G-20 Leaders’ Statement, ‘Energy Security and Climate Change’, The Pittsburgh Summit, 24–25 September 2009, para. 29.

7 OECD, ‘Fossil Fuel Subsidies: Billions Up in Smoke?’, OECD Insights, 11 February 2013, http://oecdinsights.org/2013/02/11/fossil-fuel-subsidies-billions-up-in-smoke (accessed 6 January 2014).

8 IEA, World Energy Outlook 2011, 2011, at 510.

9 OECD, Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels 2013, OECD Publishing, 2012Google Scholar, at 3.

10 Ibid., at 16.

11 Ibid.

12 Ibid., at 37–38.

13 REN21 [Renewable Energy Policy Network for the 21st Century], Renewables 2013 Global Status Report, 2013, at 65 and 79.

14 See IEA, World Energy Outlook 2012, 2012, at 234.

15 Heymi Bahar, Jagoda Egeland, and Ronald Steenblik, ‘Domestic Incentive Measures for Renewable Energy with Possible Trade Implications’, OECD Trade and Environment Working Paper 2013/01, 2013, at 10–11.

16 See ibid., at 28–37.

17 REN21, Renewables 2013 Global Status Report, supra note 13, at 68.

18 Ibid.

19 See Bahar et al., ‘Domestic Incentive Measures’, supra note 15, at 24–28.

20 See ibid., at 37–41.

21 See ibid., at 11 and 44–50.

22 Ibid., at 21.

23 G-20 Leaders’ Statement, supra note 6, para. 29; G20 Leaders Declaration, Los Cabos, 18–19 June 2012, para. 74.

24 See the APEC Leaders’ Declarations (2009–2011), http://www.apec.org.

25 IEA, World Energy Outlook 2011, supra note 8, at 523.

26 International Monetary Fund, ‘Energy Subsidy Reform: Lessons and Implications’, 2013, http://www.imf.org/external/np/pp/eng/2013/012813.pdf  (accessed 25 December 2013), at 23–25.

27 Here, we have general subsidy rules in mind. In fact, accession commitments of a few countries (Saudi Arabia, Russia etc.) specifically deal with some energy issues, but even they do not seem to adequately address all possible negative aspects of fossil fuel policies.

28 See e.g. WTO, Trade in Natural Resources, World Trade Report, 2010Google Scholar, at 174; Pogoretskyy, Vitaliy, ‘Energy Dual Pricing in International Trade: Subsidies and Anti-dumping Perspectives’, in Selivanova, Yulia (ed.), Regulation of Energy in International Trade Law: WTO, NAFTA and Energy Charter (Alphen aan den Rijn: Kluwer Law International, 2011), 181–228Google Scholar at 199–214.

29 WTO, ‘Lamy Calls for Dialogue on Trade and Energy in the WTO’, 29 April 2013, http://www.wto.org/english/news_e/sppl_e/sppl279_e.htm (accessed 20 December 2013).

30 For the subsidy pass-through issue, see Shadikhodjaev, Sherzod, ‘How to Pass a Pass-Through Test: The Case of Input Subsidies’, 15 Journal of International Economic Law 621 (2012)CrossRefGoogle Scholar.

31 For instance, in a countervailing duty case on Korean imports of certain refrigerators, the US investigators determined that the Green Technology Research and Development Programme – Korea's government scheme for promotion of 27 core technologies relating to green growth, reduction of greenhouse gas emissions and/or renewable energy utilization – conferred a countervailable benefit to certain Korean producers of refrigerators. This example seems to fit both situations (subsidy pass-through and broad green subsidies), as the programme at issue covered renewable energy technologies (e.g. bioenergy technologies or solar cells) and other types of green technologies (e.g. waste recycling or green information technology) that could have been used in the production of refrigerators (the downstream product). But this investigation did not target renewable energy goods per se, though it considered the renewable energy programme above. See US Department of Commerce, ‘Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Bottom Mount Combination Refrigerator-Freezers from the Republic of Korea’ [C-580–866], 16 March 2012, at 26–28, 71–74; United Nations Environment Programme, ‘Overview of the Republic of Korea's National Strategy for Green Growth’, 2010, http://www.unep.org/PDF/PressReleases/201004_unep_national_strategy.pdf  (accessed 7 January 2014), at 36–37.

32 WTO, ‘Disputes by Agreement: Subsidies and Countervailing Measures’, http://www.wto.org/english/tratop_e/dispu_e/dispu_agreements_index_e.htm?id=A20 (accessed 27 January 2014).

33 See consultation requests to be found at the WTO dispute settlement database, ibid.

34 The following discussion on Canada–Renewable Energy/Canada–Feed-In Tariff Program is largely drawn from this author's extensive analysis of these disputes. See Shadikhodjaev, Sherzod, ‘First WTO Judicial Review of Climate Change Subsidy Issues’, 107 American Journal of International Law 864 (2013)Google Scholar.

35 WTO Panel Reports, Canada – Certain Measures Affecting the Renewable Energy Generation Sector/Canada – Measures Relating to the Feed-in Tariff Program, WT/DS412/R, WT/DS426/R, adopted 24 May 2013, para. 7.65.

36 WTO Appellate Body Reports, Canada – Certain Measures Affecting the Renewable Energy Generation Sector/Canada – Measures Relating to the Feed-in Tariff Program, WT/DS412/AB/R, WT/DS426/AB/R, adopted 24 May 2013, paras. 1.3–4.

37 Ibid., paras. 5.119–121 and 5.131–132.

38 Ibid., paras. 5.170–174.

39 Ibid., paras. 5.175–177 and 5.186.

40 Ibid., para. 5.178.

41 Ibid., para. 5.188, emphasis original.

42 Ibid., paras. 5.223–246.

43 Shadikhodjaev, ‘First WTO Judicial Review of Climate Change Subsidy Issues’, supra note 34, at 877.

44 See BNA International Trade Daily, ‘International Trade Actions Complicate Global Market for Renewable Energy Businesses, Particularly Solar Sector’, 15 February 2013.

45 In November 2012, China and India initiated trade remedy investigations on imports of some renewable energy goods, but the focus of this analysis is on traditional users of the countervailing mechanism. In 1995–2012, the United States (119 cases) and the European Union (67) were ranked No. 1 and No. 2, respectively, among the Top-5 initiators of countervailing duty investigations, followed by Canada (33), Australia (15) and South Africa (13). See BNA International Trade Daily, ‘International Trade Actions’, supra 44; WTO, ‘Countervailing Initiations: by Reporting Member’, http://www.wto.org/english/tratop_e/scm_e/scm_e.htm (accessed 12 January 2014).

46 US DOC, ‘Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People's Republic of China: Final Affirmative Countervailing Duty Determination and Final Affirmative Critical Circumstances Determination’ [C-570–980], 77 FR 63788, 17 October 2012.

47 US DOC, ‘Utility Scale Wind Towers From the People's Republic of China: Final Affirmative Countervailing Duty Determination’ [C-570–982], 77 FR 75978, 26 December 2012.

48 See Decision Memoranda for final determinations on both cases, available at http://enforcement.trade.gov/frn/summary/prc/prc-fr.htm (accessed 5 December 2013).

49 BNA International Trade Daily, ‘SolarWorld Industries Brings New AD/CVD Cases to Close Alleged Loophole’, 3 January 2014.

50 Commission Decision of 20 December 2012 Terminating the Anti-subsidy Proceeding Concerning Imports of Bioethanol Originating in the United States of America and Terminating the Registration of Such Imports Imposed by Regulation (EU) No. 771/2012, OJ 2012  L 352/70.

51 Commission Regulation (EU) No. 1198/2013 of 25 November 2013 Terminating the Anti-subsidy Proceeding Concerning Imports of Biodiesel Originating in Argentina and Indonesia and Repealing Regulation (EU) No. 330/2013 Making Such Imports Subject to Registration, OJ 2013  L 315/67.

52 Council Regulation (EC) No. 598/2009 of 7 July 2009 Imposing a Definitive Countervailing Duty and Collecting Definitively the Provisional Duty Imposed on Imports of Biodiesel Originating in the United States of America, OJ 2009  L 179/1; and corresponding Commission Regulation (EC) No. 194/2009 of 11 March 2009 on a Provisional Countervailing Duty, OJ 2009  L 67/50.

53 Council Implementing Regulation (EU) No. 443/2011 of 5 May 2011 Extending the Definitive Countervailing Duty Imposed by Regulation (EC) No. 598/2009 on Imports of Biodiesel Originating in the United States of America to Imports of Biodiesel Consigned from Canada, Whether Declared as Originating in Canada or not, and Extending the Definitive Countervailing Duty Imposed by Regulation (EC) No. 598/2009 to Imports of Biodiesel in a Blend Containing by Weight 20% or Less of Biodiesel Originating in the United States of America, and Terminating the Investigation in Respect of Imports Consigned from Singapore, OJ 2011 L 122/1.

54 Council Implementing Regulation (EU) No. 1239/2013 of 2 December 2013 Imposing a Definitive Countervailing Duty on Imports of Crystalline Silicon Photovoltaic Modules and Key Components (i.e. Cells) Originating in or Consigned from the People's Republic of China, OJ 2013 L 325/66; Commission Implementing Decision of 4 December 2013 Confirming the Acceptance of an Undertaking Offered in Connection with the Anti-dumping and Anti-subsidy Proceedings Concerning Imports of Crystalline Silicon Photovoltaic Modules and Key Components (i.e. Cells) Originating in or Consigned from the People's Republic of China for the Period of Application of Definitive Measures (2013/707/EU), OJ 2013   L 325/214.

55 European Commission, ‘EU Imposes Definitive Measures on Chinese Solar Panels, Confirms Undertaking with Chinese Solar Panel Exporters’, 2 December 2013, http://europa.eu/rapid/press-release_IP-13-1190_en.htm (accessed 10 December 2013).

56 Shadikhodjaev, ‘First WTO Judicial Review of Climate Change Subsidy Issues’, supra note 34, at 877.

57 WTO, Trade in Natural Resources, supra note 28, at 13; Thomas L. Brewer, ‘International Technology Diffusion in a Sustainable Energy Trade Agreement: Issues and Options for Institutional Architectures’, ICTSD, 2012, at 9; See also Alan O. Sykes, ‘The Economics of WTO Rules on Subsidies and Countervailing Measures’, Olin Working Paper No. 186, University of Chicago Law & Economics, 2003.

58 See section 3.1 of this article.

59 James Bacchus, ‘The Case for Clean Subsidies’, 13 November 2012, Harvard Business Review Blog Network, http://blogs.hbr.org/2012/11/the-case-for-clean-subsidies (accessed 9 January 2014).

60 Rubini, Luca, ‘Ain't Wastin’ Time No More: Subsidies for Renewable Energy, The SCM Agreement, Policy Space, and Law Reform’, 15 Journal of International Economic Law 525 (2012)Google Scholar, at 531.

61 See Article IX:3-4 of the WTO Agreement.

62 For instance, there are several less trade-distortive alternatives to local content requirements that would deliver better results: measures to improve the business climate, infrastructure investments, strengthening of capacity building through training programmes and others. See Hufbauer, Gary Clyde, Schott, Jeffrey J., Cimino, Cathleen, Vieiro, Martin and Wada, Erika, Local Content Requirements: A Global Problem (Washington, DC: Peterson Institute for International Economics, 2013)Google Scholar, at 17–34.

63 See the list of waivers in WTO, ‘WTO Analytical Index’, http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_04_e.htm#tableD (accessed 20 December 2013).

64 See e.g. Bacchus, ‘The Case for Clean Subsidies’, supra note 59; Rubini, ‘Ain't Wastin’ Time No More ’, supra note 60, at 578.

65 Article 8.2 of the SCM Agreement, chapeau.

66 Article 8.2(c) of the SCM Agreement.

67 Article 8.2(a) of the SCM Agreement.

68 Articles 8.3–5 and 9 of the SCM Agreement.

69 See US DOC, ‘Review and Operation of the WTO Subsidies Agreement’, Report to the Congress, 1999, http://enforcement.trade.gov/esel/reports/scm0699/scm-0699.htm (accessed 25 December 2013).

70 Footnote 35 to Article 10 of the SCM Agreement states that even if multilateral or countervailing duty procedures are invoked with respect to subsidies not notified under Article 8, these subsidies should nevertheless be treated as non-actionable if they conform to this category's standards.

71 See Wolfrum, Rüdiger, Stoll, Peter-Tobias, and Koebele, Michael (eds.), WTO – Trade Remedies (Leiden/Boston: Martinus Nijhoff Publishers, 2008)Google Scholar, at 552; Robert Howse, ‘Climate Mitigation Subsidies and the WTO Legal Framework: A Policy Analysis’, International Institute for Sustainable Development, 2010, at 21.

72 Most of the developed countries and some developing countries supported the renewal of the green light clause pointing to the need to safeguard the balance of rights and obligations under the subsidy rules and to the lack of experience with the application of that clause. But most of the developing countries and a handful of developed countries opposed the extension. The developing country opponents argued that Article 8 was tailored specifically to developed countries, and asked for some flexibility under other subsidy rules in return for their acceptance of the extension. See WTO, Committee on Subsidies and Countervailing Measures, Minutes of the Regular Meeting Held on 1–2 November 1999, G/SCM/M/24, 26 April 2000, paras. 20–53, as summarized in Wolfrum et al. (eds.), WTO – Trade Remedies, supra note 71, at 551–552.

73 Earlier academic papers have also called for a renewed shelter for certain ‘good’ subsidies including renewable energy subsidies. For an illustrative list of these papers, see Rubini, ‘Ain't Wastin’ Time No More ’, supra note 60, at 571 (n. 165).

74 WTO, Committee on Trade and Environment – Special Session – Report by the Chairman, Ambassador Manuel A. J. Teehankee, to the Trade Negotiations Committee, TN/TE/20, 21 April 2011.

75 This list of products has been suggested for the purposes of a Sustainable Energy Trade Agreement – an initiative that was jointly launched in 2011 by the Global Green Growth Institute, the Peterson Institute for International Economics and the ICTSD as an alternative to the multilateral Doha negotiations on trade and environment. The main idea is to negotiate a treaty with the aim to lower trade barriers on sustainable (renewable) energy products and services. See Gary Hufbauer and Jisun Kim, ‘Issues and Considerations for Negotiating a Sustainable Energy Trade Agreement’, ICTSD, 2012, at 3–4.

76 Under the Kyoto Protocol to the UNFCCC, 37 industrialized countries and the European Community pledged, during the first commitment period, to reduce greenhouse gas emissions to an average of 5% against 1990 levels. During the second commitment period, a newly composed group of parties committed to reduce emissions by at least 18% below 1990 levels in the eight-year period from 2013 to 2020. UNFCCC, ‘Kyoto Protocol’, http://unfccc.int/kyoto_protocol/items/2830.php (accessed 24 January 2014).

77 Harmonization of trade and climate policies can be achieved both internally – where governments adopt WTO-consistent climate measures domestically – and externally – where the international community takes steps towards greening the WTO and making the global climate regime more ‘WTO-friendly’. The external harmonization contributes to better international-level coordination between the WTO system and the UNFCCC/Kyoto Protocol system. See Shadikhodjaev, Sherzod, Suh, Jeongmeen, Kim, Minsung, and Lee, Jaehyoung, Korea's Green Growth Policy and Multilateral Trade Rules: Harmonization Issues and Policy Implications (Seoul: Korea Institute for International Economic Policy, 2012)Google Scholar [in Korean], at 199–228. For an English summary, see Shadikhodjaev, Sherzod et al. , ‘Green Growth and WTO Rules: Harmonization from Korea's Perspective’, 3(25) World Economy Update (2013)Google Scholar, Korea Institute for International Economic Policy.

78 The ninth Ministerial Conference in Bali in December 2013 secured consensus on a due restraint regarding public stockholding for food security purposes – certain subsidies falling under the Agreement on Agriculture. This issue was a sticking point between some developing countries led by India and some developed countries led by the United States and could reach a last-minute breakthrough in the Bali meeting. See WTO, Ministerial Conference – Ninth Session – Bali, 3–6 December 2013 – Public Stockholding for Food Security Purposes – Ministerial Decision of 7 December 2013, WT/MIN(13)/38, WT/L/913, 11 December 2013.

79 WTO, ‘Azevêdo Welcomes Launch of Plurilateral Environmental Goods Negotiations’, 8 July 2014, http://www.wto.org/english/news_e/news14_e/envir_08jul14_e.htm (accessed 10 July 2014).

80 Ibid.

81 Ibid.

82 The APEC list includes some renewable energy products (see Hufbauer and Kim, ‘Issues and Considerations for Negotiating a Sustainable Energy Trade Agreement’, supra note 75, at 5), but one may expect that the EGA list – that will likely expand – will comprise more products related to renewables.

83 Article 11.9 of the SCM Agreement.

84 Articles 11.9, 27.10(a) and 27.11 of the SCM Agreement.

85 Article 27.10(b) of the SCM Agreement.

86 See e.g. US DOC, ‘Decision Memorandum for for the Final Determination in the Countervailing Duty Investigation of Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the People's Republic of China’, 9 October 2012, at 20 and 22; US DOC, ‘Decision Memorandum for the Final Determination on Countervailing Duty (CVD) Investigation: Utility Scale Wind Towers (Wind Towers) from the People's Republic of China (the PRC)’, 17 December 2012, at 26.

87 See e.g. Commission Decision of 20 December 2012, supra note 50, recitals 78, 143, 168, and 188.

88 The Chair text on anti-dumping and subsidy rules stipulates that WTO members have been ‘sharply divided’ on the need of such mandatory procedures for anti-dumping investigations. See WTO, Negotiating Group on Rules – New Draft Consolidated Chair Texts of the AD and SCM Agreements, TN/RL/W/236, 19 December 2008, at 18–19.

89 For an overview of views supporting and opposing the Article XX application within the SCM Agreement, see e.g. Rubini, ‘Ain't Wastin’ Time No More ’, supra note 60, at 562–564; Farah and Cima, ‘Energy Trade and the WTO’, supra note 3, at 726–728.

90 Article 32.1 of the SCM Agreement reads: ’

No specific action against a subsidy of another Member can be taken except in accordance with the provisions of GATT 1994, as interpreted by this Agreement.56

56 This paragraph is not intended to preclude action under other relevant provisions of GATT 1994, where appropriate [emphasis added].

91 Articles 3 and 2.1 of the TRIMs Agreement.

92 See e.g. the preamble and Articles 2.2–2.4 of the SPS Agreement.

93 WTO Panel Report, United States – Certain Measures Affecting Imports of Poultry from China, WT/DS392/R, adopted 25 October 2010, paras. 7.471 and 7.481–482.

94 Article 2.6 of the Agreement on Preshipment Inspection.

95 Article 1.10 of the Agreement on Import Licensing Procedures.

96 WTO Appellate Body Report, United States – Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003, para. 262.

97 Ibid., para. 262 (emphasis original): ‘an action that is not “specific” within the meaning of … Article 32.1 of the SCM Agreement, but is nevertheless related to … subsidization, is not prohibited by … Article 32.1 of the SCM Agreement’.

98 WTO Appellate Body Report, United States – Measures Relating to Shrimp from Thailand/United States – Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties, WT/DS343/AB/R, WT/DS345/AB/R, adopted 1 August 2008, paras. 306–310 and 317–319.

99 See e.g. the preamble, Articles 2.2, 2.10, 5.4, 5.7, and paragraph L of the Code of Good Practice of the TBT Agreement.

100 See WTO Appellate Body Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, paras. 101, 109, and 179–181.

101 See Mavroidis, Petros C., ‘Driftin’ Too Far from Shore – Why the Test for Compliance with the TBT Agreement Developed by the WTO Appellate Body is Wrong, and What Should the AB Have Done Instead’, 12 World Trade Review 509 (2013)Google Scholar, at 524 (Articles 2.1 and 2.2 of the TBT Agreement ‘are a substitute for, and not a complement to, Articles III and XX GATT’.); Marceau, Gabrielle, ‘The New TBT Jurisprudence in US–Clove Cigarettes, WTO US–Tuna II, and US–COOL’, 8 Asian Journal of WTO and International Health Law and Policy 1 (2013)Google Scholar, at 10 and 12.

102 Articles 3.1 and 21.1 of the Agreement on Agriculture.

103 Articles 3.2 and 3.3 of the Agreement on Agriculture say that members shall not subsidize above the binding levels ‘[s]ubject to the provisions of Article 6’ (emphasis added) for domestic support and ‘[s]ubject to the provisions of paragraphs 2(b) and 4 of Article 9’ (emphasis added) for export subsidies. The specified provisions do not contain any textual link to Article XX, so they seem to preclude the latter's invocation.

104 The inapplicability of Article XX to the Agreement on Agriculture was also indicated in Cordon, Bradley J., ‘Climate Change and Unresolved Issues in WTO Law’, 12 Journal of International Economic Law 895 (2009)Google Scholar, at 905.

105 Articles XIV and XIV bis of the GATS.

106 Article 73 of the TRIPS Agreement.

107 See e.g. Articles 3.2, 8.1, or 27.2 of the TRIPS Agreement.

108 WTO Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R, adopted 20 April 2005, paras. 7.208 and 7.212.

109 See Article XXIII:2 of the Agreement on Government Procurement.

110 Paragraph 6 of the Protocol (2001) Amending the Annex to the Agreement on Trade in Civil Aircraft, TCA/4, 23 November 2001.

111 See paragraph 2 of the Ministerial Declaration on Information Technology Products, and paragraphs 1 and 2 of the Annex to the same Ministerial Declaration.

112 See WTO Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, paras. 213 and 215.

113 Ibid., paras. 218–223 and 233.

114 WTO Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R, adopted 22 February 2012, paras. 291, 293, and 303–304.

115 WTO Panel Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/R, WT/DS432/R, WT/DS433/R, issued 26 March 2014, paras. 7.54–117.

116 Ibid., paras. 7.118–138.

117 WTO Appellate Body Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19 November 1999, footnote 13 to para. 45.

118 We admit that reaching a consensus on the proposed change may not be easy as is evident from e.g. different positions of the parties on the Article XX issue in China–Raw Materials and China–Rare Earth. But we believe that the legislative modification of this kind would nevertheless make great sense because of its systemic implications as explained in the following sentences.