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Wednesday, December 7, 2016

Europe and Japan are rebelling against the American behavior in the WTO


The conflict within the WTO when the United States openly rebelled the European Union and Japan, clearly proves that the claims of the Americans on trade and economic dictatorship is not ready to tolerate even the closest allies. Yes, now all these have the same goal – China. But then nothing will prevent Washington from paying the same weapon against the EU, and Tokyo.

The EU, Brazil and Japan have unanimously accused the U.S. of attempting the destruction of the existing mechanisms of dispute settlement in the WTO. This happened after Washington vetoed the extension of the powers of the arbitrator, a South Korean Appellate body of the WTO Chan sunhwa.

“The real causes of the conflict affect the multi-billion dollar financial interests. The decisions taken by ORS only for the first 16 years of existence, were directly related to trade operations in the amount of at least $ 1 trillion dollars”

In practice, the powers of each of the seven arbitrators (does not compromise) will automatically be extended for a second term, and the American action has caused a real shock in international bureaucratic establishment. In EU speak directly about “aggressive behavior and sabotage of the accepted principles of debate” from the United States, which represents “an unprecedented step, which poses a serious threat to the independence and impartiality”.

However, everything once happens for the first time. Including the violation of the usual rules of conduct.

What is truth?

The formal motivation of Americans is quite interesting. They accuse the referee that during the consideration of the three cases (of course, affect the US) Chang sunhwa was interested in “abstract reasoning”, which supposedly has no place in the Bodies of the dispute resolution (DSB) of the WTO. It is clear that this is just an excuse, but the motivation is clearly visible is a fundamental difference in philosophy of law between the Anglo-Saxon model and all other legal systems.

The vast majority of countries in the world historically, it is believed that the purpose of any legal proceedings (in the ideal, of course, the case) is the search for truth (how can you not remember Pontus Pilate who asked given to him for trial Galilean prisoner to the perennial question of what is truth). In this case, philosophical, abstract reasoning is simply inevitable. Not so is the case in Anglo – Saxon- for them the trial is irrelevant to the search for truth has not, and is something like a sporting contest between the prosecution and the defence or the plaintiff and defendant, where the judge simply monitor the parties ‘ compliance with the rules of the game. These two models of justice are incompatible among themselves.

For political reasons, i.e. due to the current at the end of the Second world war global balance of power, international law (including in the trade) began to dominate the Anglo-American model, but as a General principle, it is nowhere specifically were fixed. Thus, alternative views are quite possible, and now it has manifested in the question of rejection of the world’s leading economies American discontent caused by the fact that the South Korean referee was trying to establish the truth.

Strictly speaking, the principles of dispute resolution in the WTO a predefined 22nd and the 23rd articles of the General agreement on trade and tariffs, on the basis of which was developed the Understanding on rules and procedures (DPP). Already on its basis created a dispute settlement Body (DSB), a special arbitration group of international experts and the Appellate body (AO). And it is crucial that another Anglo-Saxon “invention” – case law – in the LFS, the WTO is not valid. Thus, under the DPP formed multi-stage, sequential procedure, focused on removing differences between the member countries of the WTO regarding violations of the rules of the organization and not for commercial business disputes.

In the fall of 2014 the WTO Director-General Roberto azevêdo delivered a report in which has subjected to the dispute settlement procedure criticism, calling the situation a “state of emergency”. The fact is that over the years there has been a significant complication of the substance of the disputes, they are increasingly adopting multifaceted, complicated procedural side. Azevedo actually recognized the failure of ORS to solve its tasks – for example, to review incoming claims within 90 days, as provided by the regulations.

However, the international prestige of the AO has traditionally been very high, and now the Financial Times writes about “undermining the independence of the Appellate body of the WTO” that would inevitably affect the entire existing system of settlement of commercial disputes, qualifying the situation as “an example of aggressive U.S. behavior, not the example of the implementation of the established rules and norms”.

Today China, tomorrow Europe

Differences over the judges, again, only a formal reason for the conflict. Genuine the reasons affect the multi-billion dollar financial interests. The decisions taken by ORS only for the first 16 years of existence, were directly related to trade operations in the amount of at least $ 1 trillion dollars. Moreover, in one form or another in the system of dispute resolution was attended by two thirds of WTO members.

And in the near future JSC may consider important questions about the assignment to China the status of market economies. In principle, according to the Protocol of accession of China to WTO, it is agreed that after 15 years the market economy status of China will be granted automatically, unless, of course, Beijing will meet all the commitments (and he did), which took upon itself when joining. But there it was. Since then, the EU came up with five new standards of the market economy, who want to apply against Chinese exports. And in the US expect to pass the “Chinese question” for consideration by the JSC. That is why many perceive what is happening to Jang sunhwa as an attempt to exert political pressure on judges and to undermine the independence of the ORS.

It’s really a big problem. Not by chance in mid-may, the European Parliament adopted a special resolution against giving China market economy status, which the former Deputy Minister of foreign trade and chief negotiator on the accession of China to the WTO LUN Yuntu immediately called “a manifestation of anti-globalization, reflecting the significance of global forces of trade protectionism”. And stressed that “China cannot be a target for him”.

Actually the conversation is about whether it will continue if anti-dumping and antisubsidies investigations into WTO procedures to use in relation to the PRC’s “non-standard” measures. That is, to assess whether the cost and price of Chinese products in the market, as it would be easier for a rich buyer. Opportunities for manipulation baggy, and not by accident the Chinese side lose more often in the LFS, both as defendant and plaintiff. Disgruntled Chinese call all this the “surrogate countries”. And I understand that in the case of giving China market economy status in the WTO, the situation may change dramatically (now the most relevant question of the export of Chinese steel products in the EU, which the newspaper VIEW already dismantled).

However, even with “non-market” status, China has lost trade disputes is not always. And according to the Ministry of Commerce of China, the United States themselves do not comply with issued in 2014 JSC decision that they have to cancel 15 of anti-dumping measures against Chinese products (total claims from the PRC have been filed against 22 types of products, such as solar panels and pipes for main pipelines). The output is a literal compliance with the rules of the mafia: can’t convince the judge, get the judge.

The main declared objective of the WTO is to promote international trade. Unfair protectionist measures (not to mention the discretionary sanctions) this trade kill. And it appears that Russia, having achieved membership in the WTO and focusing on achieving long-term results, should more actively play the role of stimulating transformations in it. For example, through the coordination of positions with the BRICS countries, primarily China is the same, which we clearly need to support. Otherwise, the dispute settlement mechanism within the WTO can become a tool of the trade war against Russia itself.

It is significant that the Europeans are confessing against China the same approach as the United States, and aiming for similar goals, within the framework of the judicial conflict openly rebelled against Washington. The idealist will say that all that is in opposition to the American mafia methods. But more likely what the EU understands that if the United States bend arbitration in the struggle with China today, tomorrow they will do exactly the same in the framework of the dispute with Europe.

We all need a mechanism for the rapid resolution of disputes based on the predictability and consistency of arbitral awards. And it’s time to take this seriously.

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