The Law of the WTO: China and the Future


of Free Trade

This 1,060-page book by Professor Guiguo Wang is recommended for those who want an in-depth analysis of  WTO trade law and makes good prescribed reading for students and researchers of WTO trade law. The book contains 15 chapters on the 
following topics:

Chapter 1                        From GATT to WTO

Chapter 2                         The basic principle s of MFN, national treatment and transparency

Chapter 3                         Regional arrangements

Chapter 4                         Trade in goods

Chapter 5                         Trade in services

Chapter 6                         Intellectual property protection under TRIPs

Chapter 7                         WTO dispute resolution

Chapter 8                         Agricultural trade

Chapter 9                         Subsidies and countervailing duties

Chapter 10                       Anti-dumping

Chapter 11                       Safeguards

Chapter 12                       Non-tariff barriers

Chapter 13                       Trade-related investment measures (‘TRIMs’)

Chapter 14                       Government procurement

Chapter 15                       Development law of the WTO

Each chapter typically starts with a discourse on the historical developments in that area, followed by China’s practice and implementation of WTO law in those areas. For example, chapter 1 begins with the background of free trade, taking the reader through the evolution of GATT from The Kennedy Round, The Tokyo Round and finally from GATT to WTO in The Uruguay Round from 1986 to 1993. The WTO legal framework and organisational structure is then discussed at length. The chapter ends with the impact of WTO membership on China, discussing the issues involved and the efforts made by China in conforming with WTO law. In particular, China had to amend and reform its investment regime and institute transparency of its laws to other WTO members.

Chapter 2 contains an excellent discourse on the meaning and legal effect of MFN and national treatment on WTO members. More importantly, chapter 2 (and the other chapters) contains useful analysis of leading cases such as the EC’s and Japan’s complaints against Canada’s motor vehicle tariffs through the grant of tax-free treatment to certain qualified imported vehicles, notably vehicles imported from the US, which was not accorded to ‘like’ products of other members. The case illustrated the meaning and effect of MFN treatment. With respect to national treatment of ‘like products’, the Panel in the EC-Asbestos case had to consider whether chrysolite asbestos fibres were ‘like products’ of polyvinyl alcohol, cellulose and glass (‘PCG’) fibres. The former was a carcinogenic material but not the latter, and both were classified under different tariffs. The Panel found that though both had similar physical properties, but because PCG had no carcinogenic matter which would influence consumers’ tastes and habits greatly, chrysolite asbestos fibres and PCG fibres are thus not ‘like products’ under GATT.

The legal framework of the free trade agreement between China and Hong Kong, commonly known as CEPA, was expounded at length in chapter 3. More interestingly, the question whether CEPA is WTO-compliant was examined. In particular, the non-application of anti-dumping, countervailing and safeguard measures under CEPA may violate WTO principles of non-discrimination and MFN treatment where it leads to market distortion. Another weakness in CEPA is its dispute resolution process – the resolution of disputes by a Joint Steering Committee comprising ‘senior representatives or officials’ from both sides – which will certainly guarantee that disputes take on a political dimension.

The issue of classification of goods took on practical significance in the case of EC-Computer Equipment where during the Uruguay Round, the EC classified automatic data processing machines under HS heading 84.71 and levied 2.5 per cent duty. In May 1995, the EC enacted a regulation defining LAN adapter cards as telecommunication apparatus under HS heading 85.17 and levied 3.6 per cent duty. The US claimed that during the Uruguay Round negotiations and thereafter, LAN adapter cards have always been treated as automatic data processing machines for tariff purposes. Thus the EC treatment of LAN adapter cards through the 1995 regulation was in violation of the schedule of tariff commitments under GATT. The issue whether effect should be given to the legitimate expectations of the parties during the negotiations was specifically addressed in a detailed analysis of the case both at first instance and the appellate level.

Chapter 4 also contains detailed discussions on the exceptions to the non-discrimination principles of WTO such as balance-of-payment exception, development assistance exception, and the general and security exceptions. The issues arising from these exceptions are explained and illustrated in cases such as the US-Shrimp case, the India-Quantitative Restrictions on Imports of Agriculture, Textile and Industrials Products case and the US-Gasoline case. The chapter ends with a short discussion of China’s foreign trade system and the changes that China has made to the system to bring it in line with WTO.

The General Agreement on Trade in Services (‘GATS’) was another milestone of the Uruguay Round. Chapter 5 traces the developments in the negotiations with respect to trade in services which culminated in the Uruguay Round. It sets out the scheme of GATS in terms of the specific commitments and limitations on market access restraints. The US-Gambling case provides an interesting illustration of when a country may inadvertently open a sector to foreign entry under GATS. On 13 March 2003, Antigua complained that certain measures of the US government prohibited the cross-border supply of gambling and betting services provided by Antigua, which Antigua alleged was inconsistent with the US’s commitments to the cross-border supply of services classified under subsector ‘10.D Other recreational services (except sporting)’. Antigua’s arguments were accepted by both the Panel and the Appellate Body, though for different reasons.

Both the chapters on TRIPs and TRIMs make interesting fodder for readers and provide a clear exposition of members’ WTO commitments thereunder, fully illustrated with the relevant cases. One big plus in the book is its wealth of WTO cases that bring out the significance of the members’ commitments, contained in well-crafted ‘WTO-language’, that is often not apparent to the layman.

Finally, the book provides an excellent source of reading on China’s WTO commitments in respect to trade in goods and trade in services, as well as China’s intellectual property protection regime and its shortcomings. Most chapters typically end with a short discussion on China’s position as regards its WTO commitments, for example, China’s commitment in agriculture, special safeguard mechanisms pertinent to China and China’s commitments on non-tariff measures were specifically discussed.

Overall, the book is worth looking at for research relating to WTO trade law; it also makes good prescribed reading material for lecturers and students alike.

Associate Professor Tan Lay Hong

Nanyang Business School

Nanyang Technological University