This paper assesses key issues in the dispute over the United States’ claim that for certain grains China exceeded its limits on domestic support under the Agreement on Agriculture (AoA) during 2012–2015. The panel first determined that the base years for the reference price in calculating China's market price support were 1996–1998, rather than 1986–1988 as stipulated in the AoA, and that production in the geographic regions where the support programs operated, not the smaller quantities purchased at administered prices, constituted eligible production. The panel then found China had exceeded its limits in each of the four years for wheat, Indica rice, and Japonica rice. The possibility was left open that a government can determine eligible production by setting maximum purchases at support prices in its regulatory framework. China used this option to claim that its programs for 2020 implemented the recommendations and rulings of the DSB. We argue that use of outdated fixed external reference prices to measure the price gap and to define eligible production by limits on purchases, distance calculation under the AoA from economic support measurement. The measurement issues compound the discord among Members over levels of agricultural support.

The US complaint about Chinese tariff-rate quotas (TRQs) on certain grain products helps illustrate several key issues in US–China trade relations and the effectiveness of WTO disputes. First, do international obligations based on transparency and fairness work in relation to an authoritarian country not known for the rule of law domestically? Second, can there be a disconnect between the legal aspects of a dispute and the underlying economic interests, with a DSB ruling sometimes not leading to improved trade flows? And third, given the bilateral trade war and ‘phase one’ trade deal between the United States and China, has the WTO been superseded in this trade relationship? This paper summarizes the facts and law of the China–TRQs dispute, and examines each of these questions in that context.

Typically, the WTO Arbitrator, when charged with evaluating the permissible level of countermeasures (suspension of concessions), has chosen a counterfactual state of the world where the challenged (illegal) measure has not been adopted at all. The Arbitrator then would calculate the trade lost because of the adopted (illegal) measure, and thus, decide on the level of permissible countermeasures. In US–Washing Machines (Article 22.6-US), deviating from this custom, the Arbitrator adopted a different counterfactual, assuming that the complainant had adopted a different, ‘reasonable’ measure. The Arbitrator then evaluated the trade lost based on the distance between the adopted (illegal) and the ‘reasonable’ measure and calculated the level of countermeasures. In this paper, we explain the multitude of perils facing dispute settlement if this approach is adopted in future disputes. We also advance a few thoughts on rethinking the workings of the Arbitrator when measuring the level of permissible countermeasures, since similar slippery slopes risk being reproduced in future cases.

The United States and Canada have a long-standing series of disputes over softwood lumber that until now have focused on alleged subsidies and countervailing duties (CVDs). The United States changed things up this time around and the US Department of Commerce (USDOC) found dumping after applying the Differential Pricing Methodology to softwood lumber from Canada. The panel found that the USDOC erroneously aggregated export price differences when applying the differential pricing methodology (DPM), but departed from the WTO Appellate Body's previous ruling in US–Washing Machines regarding the use of zeroing and the inclusion of differential prices under Article 2.4.2 of the Anti-Dumping Agreement. To date, the United States and Canada have not been able to resolve the long-standing softwood lumber dispute, and this time the focus shifts from subsidies and countervailing duties to anti-dumping duties. It remains to be seen what happens in this specific dispute on appeal – if, and when, the WTO Appellate Body starts to function again. It will also be interesting to see whether this panel decision encourages parties to argue for, and future panels to permit departures from, Appellate Body rulings with which they disagree.

‘The US won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory’, tweeted President Trump on 3 October 2019. The United States (US) won not only the highest amount of retaliation ever adjudicated in the history of the WTO but also an ongoing right to retaliate on an annual basis until such time as the EU had complied by either removing the subsidies it granted Airbus or somehow neutralizing their adverse effects on Boeing. In light of the facts of the case, this ruling has two major shortcomings. First, in sharp contrast with the statutory language and practice until now, the Arbitrator effectively introduced a permanent liability rule into the WTO system through the backdoor. Second, given the way the decision and the associated award has been written, it is simply impossible for the EU to comply because (a) the contested subsidies are no longer in existence and (b) no guidance has been provided on how the EU might go about removing their adverse effects on Boeing if it sought to achieve compliance. Thus, in all likelihood, the EU is saddled with a ruling that obligates it to cough up an annual sum of $7.5 billion USD for an indefinite time period.

The March 2019 release of the Appellate Body's compliance report in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) marks yet another chapter in the ongoing Boeing–Airbus dispute. While raising numerous new and old subsidy issues, this paper focuses on one specific aspect, the evaluation of the financial contributions and benefits associated with the Department of Defense (DOD) R&D procurement contracts. The paper describes the differing views taken by the panels compared to the Appellate Body. It highlights two issues that led to an extremely lengthy proceeding: (1) the black or white nature of the decision regarding the characterization of contracts which have features of both purchases of services and joint ventures; and (2) the difficulty in demonstrating a financial contribution flowing from payments for R&D for military systems to Boeing's civil aircraft production. It concludes that this case represents a failure of the WTO dispute settlement system and underscores flaws in the ASCM in that after fifteen years of litigation, no determination was made as to whether or not the DOD R&D contracts examined here constituted impermissible subsidies.

This paper analyzes the Australia – Anti-Dumping Measures on A4 Copy Paper panel report, the second recent WTO dispute to involve a challenge to Indonesia's paper industry. The Indonesian paper industry benefits from reduced-cost inputs because of the Indonesian government's influence and subsidies over the timber and pulp market. The report offers the first interpretation of ‘particular market situation’ under Article 2.2 of the WTO's Anti-Dumping Agreement. At the same time, it raises questions regarding the appropriateness of using anti-dumping measures to address what are fundamentally subsidy issues. While the panel ultimately found that Australia's measure was inconsistent with Article 2.2, the paper shows that the panel's interpretation of ‘particular market situation’ increases the relative attractiveness of using anti-dumping duties instead of countervailing measures. Two key points on the welfare implications of the decision can be made. The first relates to the motivations of the Australian paper industry and the imperfectly competitive market in which Australian Paper operates. The second is the importance of challenging subsidies rather than imposing anti-dumping duties where the subsidies in question have negative environmental effects.

US–Renewable Energy is the last in a series of WTO disputes involving subsidies schemes with local content requirements. Local content requirements (LCRs) are highly discriminatory and trade distortive instruments and therefore all cases concerning green energy have been found to violate WTO law. However, recent jurisprudence has developed a different definition of prohibited LCRs under the GATT and the SCM agreement, the latter allowing for some leeway to define origin of products under a government subsidy scheme. Depending how the subsidy scheme is framed, it will be able to be excused from the GATT's more stringent prohibition of LCRs, this raises question of consistency in the application of the LCRs prohibition. Moreover, we review a simple and robust approach that modern welfare economics suggests for framing discussions of subsidy policy. We apply this approach to the case of renewable energy subsidies and discuss some complexities with respect to local content requirements. In conclusion, this allows us to critically assess and review proposals to increase coherence between WTO subsidy policy and green energy promotion policies and submit proposals to achieve better suited WTO subsidy rules.

The Appellate Body (AB) report in Korea–Pneumatic Valves is among the most structurally complex of recent trade remedies reports. The AB weaves a complicated web to explicate the intricacies of the relationship among the relevant provisions on injury determination in anti-dumping disputes in the midst of a contentious and long-running series of disputes between two close regional trading powers. This Article first examines the Korean investigation and its significance in economic terms. Second, it analyzes the AB's conclusions on Article 6.2 of the Dispute Settlement Understanding regarding the panel request and the significance of the AB's treatment. Third, it studies the AB's comments on the panel's anti-dumping calculations where the AB amplifies its prior pronouncements on the elements of injury and causation. Finally, the Article situates this dispute in the broader political debates playing out both at the AB and between the two disputing parties.

The Korea–Radionuclides case addresses Korean SPS measures imposed on Japanese fishery products after the Fukushima Dai-ichi nuclear plant meltdown in 2011. Japan challenged these measures as more restrictive than necessary under the SPS Agreement. The panel agreed with Japan, but this ruling was largely reversed by the Appellate Body. Korea's victory at the Appellate Body was based on procedure. The panel accepted Korea's appropriate level of protection (ALOP), which included both quantitative and qualitative elements. However, the Appellate Body found that the panel only addressed the quantitative aspect of Korea's ALOP and reversed on that basis. The Appellate Body's ruling did not affirmatively find that Korea's SPS measures were legal under WTO rules. Instead, the Appellate Body found that panel had not sufficiently addressed Korea's arguments and, thereby, the panel could not determine that the SPS measures were more restrictive than necessary. The case highlights the need for the Appellate Body to be able to conduct its own factual analysis, a power it could be given if the dispute settlement system is reformed. Without independent fact-finding power, the Appellate Body cannot correct panels’ mistakes, and respondents can prevail based on panel error.

This article analyses economic and legal issues in the WTO dispute between Morocco and Turkey over hot-rolled steel. Over 2013–2014, the Moroccan government conducted an antidumping investigation against two Turkish steel producers. Morocco's investigation concluded that Turkish dumping was retarding the establishment of a new domestic industry; antidumping duties were imposed against both Turkish producers. Turkey filed a complaint at the WTO in 2016, asserting procedural and substantive violations. The Panel found that Morocco had acted inconsistently with a number of WTO obligations, including those regarding its injury investigation. Although Morocco initially appealed the Panel's decision, it withdrew its appeal after the antidumping duties expired in September 2019. This case is unusual and important in that it was the first antidumping case in which a country sought to use antidumping duties to protect a newly developing industry. The Panel may have missed an opportunity to explore the definition of an ‘unestablished’ industry for purposes of determining injury in an antidumping investigation.

This paper presents a legal-economic analysis of the World Trade Organization's Article 22.6 arbitration report on the dispute over certain United States’ antidumping methodologies. The Arbitrator sought to quantify the damages suffered by China due to US non-compliance with an earlier ruling. The case covered 25 antidumping duty determinations for which at least one of three methodologies (weighted average-to-transaction; single rate presumption; and zeroing) was incorrectly applied. Damage calculations rely heavily on how the counterfactual is defined – what would have been the duty had it not been for the inconsistent measures? The Arbitrator deemed a zero-duty counterfactual to be appropriate, but the justifications were in our view weak and illustrate the danger of an Arbitrator essentially performing re-litigation of violations that may or may not have occurred in the administrative investigations. We conclude that the Arbitrator may have gone above and beyond its mandate in this determination.

The rise of China as a genuine world power, economically and militarily, constitutes the gravest challenge faced by the liberal international order constructed in the aftermath of the Great Depression and the Second World War. A major source of strain in the trade relations between China and the other core members of the liberal world trading system is its extensive use of state-owned enterprises as an instrument of general (domestic) economic policy. This paper builds on Ruggie's theory of embedded liberalism and the theory of economic policy to characterize the political and economic difficulties and opportunities in moving toward a new regime for dealing with subsidies. The conclusion sketches some goals such a regime should seek to embody.

This article reviews the Appellate Body Report in the Ukraine–Ammonium Nitrate dispute that focused on the impact of Russia's dual pricing in the natural gas market on the ammonium nitrate market. Interpreting the WTO Anti-Dumping Agreement (ADA), the Appellate Body rejected the possibility to reject input costs, which, though distorted, were duly reported in the company's records, and to replace them with a surrogate price which, for the Ukrainian authorities, was the (adjusted) export price of Russian natural gas at the German border. In this article, (a) we fully review the background of the dispute, showing the connections between natural gas and ammonium nitrate prices, and the impact on Russia's price regulation of the domestic market on them; (b) we then review the ADA and concur with the interpretation of the Appellate Body, essentially for systemic reasons; (c) for completeness, we also investigate whether econometrics could accurately determine the natural gas benchmark price in Russia and conclude in the negative; (d) since dual pricing gives an economic benefit to domestic ammonium nitrate producers, we finally test dual pricing under the WTO subsidy rules. The conclusion is that the current disciplines are not likely to apply to dual pricing and lead us to conclude that important distortions are currently left without regulation in the WTO.

This paper reviews the World Trade Organization (WTO) Panel Report Russia – Measures Concerning Traffic in Transit of April 2019. It constitutes the first attempt to disentangle the legal and political aspects related to the invoked essential security interests from the economic considerations underlying the measures imposed on the transit through Russia of goods exported from Ukraine to the Republic of Kazakhstan and Kyrgyzstan. One the one hand, the panel's interpretation of Article XXI of the GATT denies Members unilateral determination over security exceptions. It further enables a pathway for future WTO panels to review possible abuses of security exceptions – a growing concern due to the rising complexity of transnational economic relations. On the other hand, our economic analysis suggests a stricter assessment of Russia's transit restrictions was necessary. In particular, it argues that the panel adopted a circular assessment when considering the plausibility of whether Russia implemented its measures for the protection of its essential security interests at a time of emergency in international relations. Ultimately, although the panel's focus on finding a diplomatic and legal path forward failed economic scrutiny a legal assessment argues that the panel's findings fit the legal design of Article XXI:b of the GATT.

In India–Export Related Measures, the United States challenged a range of Indian measures as prohibited export-contingent subsidies, and a WTO panel largely agreed. This article examines the factors at play in the United States’ decision to bring the challenge. At the level of policy, the United States case reflects India's graduation from the protections afforded developing nations’ export-contingent subsidies under the Agreement on Subsidies and Countervailing Measures. A closer examination, however, shows that India ramped up its export-contingent subsidies just as the SCM Agreement required it to wind those subsidies down. Moreover, the expanded Indian subsidies led to increased import competition with the politically influential metals and pharmaceutical sectors in the United States, which pushed the US challenge. We reflect on the larger implications of the challenge for the future of trade rules on industrial policy. In particular, we note that the United States pursued a trade enforcement policy that would have the effect of increasing pharmaceutical prices in the United States, by reducing subsidies for imported generic drugs, at a time when the Trump administration allegedly was trying to reduce the price of prescription drugs. This disconnect suggests the need for both greater transparency in trade policy and greater governmental coordination on the connection between trade policy and other policy priorities.