Following a review of the cases filed at the World Trade Organization (WTO) since its inception, an international trade lawyer is urging domestic companies, workers and communities that depend on trade remedies to use the WTO’s Director-General selection process and upcoming Appellate Body (AB) openings as reasons to communicate with the Administration and members of Congress about the importance of restoring neutrality at the WTO on the role of such remedies.
“Since the WTO’s inception in 1995 many more nations have found themselves needing trade remedies to address import problems that arise,” said Terence Stewart, managing partner in the Washington, DC-based international trade law firm of Stewart and Stewart. Stewart has just completed a review of the semiannual reports on cases initiated, orders in place and the other information WTO members provide the WTO Secretariat.
“What’s unfortunate is that the WTO itself often characterizes the use of trade remedies as a problem and the decline in the use of trade remedies as being a positive,” Stewart said, adding that “The seeming institutional bias against the use of legitimate rights within the WTO should be addressed by WTO members and by the next Director-General.”
The widening use of trade remedies is not in itself a cause of concern but rather a good sign for the multilateral trading system, Stewart said.
“Initiating trade remedy cases with the WTO is not a sign of protectionism in the sense of something that undermines the international trading system,” Stewart said. “Rather trade remedies are an integral part of the trading system and can help member nations expand their liberalization.”
Stewart’s review shows that historically and more recently the primary trade action used by WTO members is the antidumping remedy.
From 1995-2012, WTO members, not including Russia, reported 4,209 antidumping investigations initiated with the number initiated in any given years ranging from 155 to 371. During the same time there were only 301 countervailing duty actions initiated by WTO members, a low of 6 and a high of 41 in a given year. There were also 254 global safeguard actions initiated, a low of 2 and a high of 34 in a given year.
“Antidumping actions have been 88.3 percent of the total cases brought by WTO members,” Stewart said. Countervailing duty initiations were 6.3 percent and global safeguard were 5.3 percent of the total.
Stewart’s compilations show 46 WTO members, if the EU’s 27 members are treated as one, initiated 1 or more antidumping investigations since 1995. While the US, EU, Canada and Australia remain major users of the antidumping remedy, in the WTO’s 18-year existence they accounted for 1,328 initiations, or 31.6 percent of all antidumping cases. If cases initiated by Japan, New Zealand, Israel and individual members of the EU prior to their joining the EU, are added in the total for developed countries is 1,467 or 34 percent of total initiations. Add in Ukraine and the total would be 1,507 initiations, or 35.8 percent.
“Developing countries within the WTO accounted for roughly two thirds of antidumping initiations since the WTO was created,” Stewart said.
Cases were brought against 101 countries, including individual members of the EU, as well as 90 cases brought against the EU as an entity. Some countries have faced a large number of cases, either reflecting their large presence in the trading system or ongoing major differences between their economic system and that of most trading nations within the system.
“China has faced more cases than anyone else – 914 in the first 18 years, or 21.7 percent of total antidumping cases,” Stewart said. “This reflects both China’s status as the world’s largest exporter and the significant ongoing differences between their economic system and that of many of the WTO members.”
When it comes to countervailing duty investigations, the historic users continue to dominate the cases brought. Of the 301 cases, the United States initiated 119, the European Union 67, Canada 33 and Australia 14 – 233 or 77.4 percent, according to Stewart. If the EU’s 27 members are treated as one, 21 have brought one or more cases since 1995 with greater activity starting to arise later in the period from developing countries like Argentina, Brazil, Chile, China, Egypt, India, Mexico, Pakistan, Peru, South Africa, Turkey and Venezuela.
“In terms of countries against which countervailing duty cases are brought, China has been a major target, particularly since 2004, with 62 of the 301 cases or 20.6 percent,” Stewart said. “India has also been involved in a large number of cases, 55 in total or 18.3 percent, since the WTO was created.”
Over the last 18 years, the vast majority of global safeguard cases have been brought by developing countries.
“Since safeguard investigations don’t require the demonstration of an unfair trade practice--dumping or actionable subsidization—they can be less burdensome to handle,” Stewart said.
Less summary information about them is available from the WTO Secretariat but in 2011-2012 records show 36 global safeguard cases were initiated, 3 by Russia, 1 by Israel, 2 by Ukraine, the rest by developing countries – Indonesia filed 11, Egypt brought 5, Thailand, Turkey and India filed 2 each, and 1 each was initiated by Brazil, Chile, Costa Rica, Jordan, Morocco, South Africa, Viet Nam, and Malaysia.
“For many industries, their workers and the communities in which they live and work, an indispensable element of increased trade liberalization is a functioning system of trade remedy laws ensuring distortions in the market can be reasonably addressed and that when an industry is in trouble, options exist to preserve the jobs and investment that undergird communities around the world,” Stewart said.
However, broader use of trade remedies has led to friction and less than desirable conduct by members of the WTO itself, Stewart said.
“Trade remedies should be pursued in a manner consistent with international obligations and should be challenged when they are not,” Stewart said. “While there are learning curve issues for new users, technical assistance from established users and challenges where appropriate will help new users bring their systems into conformance.
“A more serious problem exists where any member, whether on a one-off basis or as a matter of practice uses trade remedies for purposes of retaliation against trading partners use of WTO rights,” Stewart said. “There should be a zero tolerance approach for such actions.”
Many immediately think solely of China when retaliation is discussed. The problem is more widespread, according to Stewart.
“China actions have been particularly troublesome, but by no means is China the only country where the timing of actions and public pronouncements support conclusions that cases are being initiated to demonstrate displeasure with other actions of a trading partner,’ Stewart said. “Both the U.S. and the EU have brought WTO challenges to Chinese antidumping and countervailing duty actions on products where concerns were present that the cases were about retaliation.”
Stewart’s review also included the WTO’s AB decisions.
“The AB and its separate secretariat is entrusted with helping members resolve disputes and identifying actions that are inconsistent with clear WTO obligations. It is not their proper role to create obligations or rights not contained in the documents or to bring a bias against users of trade remedies,” Stewart said. “A review of the AB decisions over the first 18 years of the WTO does not give a reader confidence that the AB adheres to such a role in a number of decisions.”
The WTO as an institution has an obligation to respect all rights and obligations members have agreed to and not to denigrate rights some individually may not like, Stewart said. “The next Director-General should ensure that an environment of neutrality is restored. And most importantly, the AB needs to rethink its approach to reviewing trade remedy matters.”
To effect that change, Stewart recommends those with a stake in trade remedies in the U.S. contact the Administration and Congress. “All governments should insist on neutrality by the staff of the WTO,” Stewart said.
Statistics mention in this release can be found in the WTO statistics database.