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Inherent Defects in Basic WTO Rules with Special Reference to Article 17.6 of Agreement on Anti-Dumping

February 2, 2019

[Afshan Nazir is a law student, and she completed the Master of Laws programme from Maharashtra National Law University, Mumbai, India.]

 

Until 1994, international trade relations between countries were regulated by General Agreement on Tariffs and Trade 1947 (GATT 1947), which was replaced by the World Trade Organisation (WTO) in 1995 with a completely new setup for dispute settlement. Thereafter, the WTO started making rules and regulations in order to ensure free and fair international trade between WTO member countries. WTO emerged as the first organization in international trade history with its own ‘rule-oriented’ dispute settlement system (WTO DSS). The WTO DSS is praised by the western academia for its rule-oriented nature. It is believed that under the rule-oriented WTO DSS, less powerful countries (developing and least developed countries) get a chance of having their views accepted in the international trading sphere, which was unlikely to happen under the power-oriented negotiations that took place earlier under the GATT 1947. In order to determine the validity of the aforementioned argument, this article tries to analyse the standards of interpretation used by the WTO DSS to settle international disputes on anti-dumping between WTO member countries. To put it aptly, the current article attempts at analysing the standard of interpretation contained in the most unusual provision, Article 17.6 of the Agreement on Anti-Dumping, and emphasising on the need to universalise the ‘review mechanism’ provided thereunder. In other words, it suggests that the WTO membership, in order to ensure equality and free and fair trade among WTO members in the real sense, should make efforts to extend the deference principle, used to interpret the anti-dumping rules, to the provisions of other WTO agreements as well.

 

Article 17.6 of Anti-Dumping Agreement and Deference to National Governments

 

Article 17.6 of the Agreement on Anti-Dumping is just one of the instances of the inherent defects in the basic WTO rules. Article 3.1 of the WTO Dispute Settlement Understanding (WTO DSU) guides DSS panels and the appellate body to interpret the rules contained in the ‘covered agreements’ in accordance with the ‘customary rules of interpretation of public international law’. However, Article 17.6 of Agreement on Anti-Dumping contains a somewhat extraordinary provision with regard to the interpretation of the rules contained therein. Article 17.6 reads as under:

 

“In examining the matter referred to in paragraph 5:

(i) in its assignment of the facts of the matter the panel shall determine whether the authorities' establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion the evaluation shall not be overturned;

(ii) the panel shall interpret the relevant Provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.”

 

The aforementioned provision of the Agreement on Anti- Dumping clearly shows how, in a very crafty manner, special interpretive rules have been inserted in the important WTO agreements to ensure that WTO DSS shows deference to the determinations made by the national agencies of the state (complainant country) while deciding disputes involving issues of anti-dumping. Some of the available data shows that till date, most of the anti-dumping complaints have been made by the developed countries, particularly the US, and these interpretative rules have always given them the upper hand to misuse the provisions of the Agreement on Anti-Dumping against the goods imported from poor developing countries to give protection to their domestic markets.

 

Article 17.6 has its roots in the US administrative law of jurisprudence; it allows DSS panels to accept alternative interpretations of a provision of the agreement as long as it comes within the class of ‘permissible’ interpretations. However, the US administrative law of jurisprudence uses the term ‘reasonable’ instead of ‘permissible’. The reason behind this substitution is quite notable. According to many theorists in the field of international trade and the economy, this substitution was made in order to ensure the effectiveness of other WTO rules. In other words, if the scope of this interpretation provision had been extended to the rules contained in other WTO agreements as well, WTO would have lost its basic purpose. In the words of one of the revered scholars, it would have turned into a “Tower of Babel”.

 

The argument of the western academia is that the interpretation mechanism contained in Article 17.6 (ii) of the Agreement on Anti-Dumping should be followed in the cases involving issues of anti-dumping only because extending its ambit to other rules would render WTO DSS useless. To put it more aptly, they support deference to be shown to the interpretations of the national agencies of states as an exception and not as a general rule. Though this unanimous argument of the western academia seems to be well-reasoned, in practice, this unusual provision is, in a very subtle manner, used by the developed countries (mostly the US) as a protectionist measure to protect their domestic industries in the current era of free and fair trade.

 

The mistranslation of the exceptions to the general rules contained in the WTO agreements by the developed countries at WTO DSS has always placed developing countries at the receiving end. In practice, the exceptions, which have been carved out to accommodate the needs of poor developing countries, have turned out to be impediments to free and fair trade as advocated by the WTO.  This is why, commenting on the Uruguay Round, Nelson Mandela said:

 

“The developing countries were not able to ensure that the rules accommodated their realities… it was mainly the preoccupations and problems of the advanced industrial economies that shaped the agreement... Rules applied uniformly are not necessarily fair because of the different circumstances of members.”

 

Ha-Joon Chang argues that without using protectionist trade measures at the initial stages of economic development, it was unlikely for the US to achieve its current level of economic strength and might. And to keep their protectionist measures intact, western developed countries, during the eight-year-long Uruguay round of trade negotiations, have strove to keep special rules like Article 17.6 of the Agreement on Anti-Dumping in the important WTO agreements. The language incorporated in the basic WTO rules and the analysed article shows the imperial taste of their framers. This newly introduced neo-liberal project of global north (developed countries) implemented through WTO could be thus termed as a new form of colonialism (or neo-colonialism).

 

Conclusion

 

According to the revered Third World Approach to International Law scholars, the WTO rules and the rule-oriented DSS serve only to the critical interests of developed countries because, in the end, the WTO DSS determines and implements the defective rules present in the different WTO agreements. Therefore, it is better for the developing countries to urge other WTO members to make rule-oriented WTO DSS more development-friendly – as they tried in the 2003 Doha round of negotiations (fourth ministerial conference of the WTO) – by universalising the standards of review used in Article 17.6 of the Agreement on Anti-Dumping. In other words, developing countries should make efforts to urge the WTO membership to extend the deference principle, used to interpret the anti-dumping rules, to the provisions of other WTO agreements also as long as such interpretation falls within the permissible limits mentioned under Article 17.6. Only the determined global social movement can liberate the world from the newly introduced mutant form of colonialism. 

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