Consequences of the Narrow Textual Interpretation

The Panel and AB shrunk back into their comfort zone and conducted a rigid textual analysis on this matter. Hence, as in China – Publications and Audiovisual Products, China – Raw Materials is mostly criticized for applying a rigid textual interpretation and failing to take account of the broad context and the object and purpose of paragraph 11.3 of the AP and the WTO Agreement. Following China – Publications and Audiovisual Products, the Panel and AB emphasized that for GATT Art. XX to be an available exception to violation of paragraph 11.3, Art. XX or the GATT must be incorporated by reference into paragraph 11.3, like the introductory clause of paragraph 5.1.⁵⁰⁰ They cited Art. 3 of the TRIMs as an example, which provides that “all exceptions under GATT 1994 shall apply, as appropriate, to the provisions of this Agreement.”⁵⁰¹ It can be inferred that anything short of such clear textual link would render GATT exceptions unavailable.

In fact, Gu observes that there is a textual link in China – Raw Materials. Gu considers paragraph 1.2 of China’s AP gives the same effects to paragraph 11.3 as the introductory clause of paragraph 5.1 does to paragraph 5.1.⁵⁰² Gu explains that paragraph 1.2 states that China’s AP is an integral part of the WTO Agreement, and this denotes that while observing the obligations in paragraph 11.3 of its AP, China should also abide by the WTO

498 A detailed application of this approach is elaborated in the later part.

499 Qin, The Challenge of Interpreting “WTO-PLUS” Provisions, supra note 14.

500 China – Raw Materials AB Report, ¶¶ 303, 304.

501 Id. ¶ 303; TRIMS Agreement art. III.

502 Gu, supra note 47, at 21.

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Agreement.⁵⁰³ It seems that Gu advances that being an integral part of the WTO Agreements means AP should be applied along with the WTO Agreements. Hence, GATT Art. XX is applicable to paragraph 11.3. However, the WTO judiciary reads paragraph 1.2 differently.

The WTO judiciary considers paragraph 1.2 a confirmation that China’s AP is legally binding as the WTO Agreements, rather than a textual link between the AP and the WTO Agreements.⁵⁰⁴

This thesis finds the Panel and AB’s cross-reference questionable. In order to further support the textual linkage requirement, the Panel and AB made cross-reference to the introductory clause of paragraph 5.1 of China’s AP and paragraph 11.1 and 11.2 of China’s AP.

The Panel and AB put forth that for China to invoke GATT Art. XX in paragraph 11.3, there should be a clause similar to the introductory clause of paragraph 5.1 or a phrase similar to the phrase “in conformity with the GATT 1994” of paragraph 11.1 and 11.2. As illustrated in the prior part, this thesis has harbored doubts about the function of the introductory clause of paragraph 5.1. Likewise, this thesis is skeptical about function of the phrase “in conformity with the GATT 1994” in paragraph 11.1 and 11.2 of China’s AP. This thesis considers the Panel and AB conferred more meaning to the phrase than intended. The reason for inserting such phrase is to ensure that the basic rules in the GATT are still in full effect because the obligations under paragraph 11.1 and 11.2 are more stringent than the basic rules in the GATT.

The phrase “in conformity with the GATT 1994” clarifies the relationship between the WTO-plus obligations under paragraph 11.1 and 11.2 and the basic obligations under the GATT and confirms that China should obey obligations under both legal instruments. This thesis finds it far-fetched to read the phrase as incorporating GATT Art. XX defense in the AP, when its intended function is simply a confirmation.

503 Id.

504 China – Raw Materials Panel Report, ¶¶ 7.114-7.115.

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Also, the textual interpretation applied in China – Raw Materials produces several undesirable and unreasonable consequences. First, the denial of policy space enshrined in GATT Art. XX renders the export duties commitments under China’s AP the most “scared”

obligation under the WTO.⁵⁰⁵ GATT Art. XX is established to ensure that in pursuit of trade liberalization, WTO Members still remain freedom to pursue its public policy and other non-trade values. Thus, GATT Art. XX can excuse violation of the most fundamental principles, such as the most-favored nation treatment and national treatment. Even the pillars of the WTO rules can be trumped by non-trade concerns listed in GATT Art. XX, it is hard to see why GATT Art. XX cannot be an exception to the export duties commitments.⁵⁰⁶

Second, China – Raw Materials significantly disturbs the delicate balance between trade and non-trade interests. While pursuing trade liberalization is an upmost goal for the WTO, Members agree to sacrifice trade interests over fundamental non-trade values, which is manifested in, among others, the preamble of the WTO Agreement and Art. XX of the GATT.

For instance, the preamble of the WTO Agreement clearly sets out one of the WTO’s objectives is to protect and preserve the environment and achieve sustainable development.

These objectives are further codified in GATT Art. XX(b), protection of human, animal or plant life or health, and (g), conservation of exhaustible natural resources. Depriving China of its fundamental rights to protect the environment and preserve its natural resources is a serious destruction to the delicate balance struck by WTO Members.⁵⁰⁷

Third, rejecting the application of GATT Art. XX will create significant imbalance of rights and obligations between China and WTO Members and render China a second-class

505 Qin, The Predicament of China’s “WTO-Plus” Obligation to Eliminate Export Duties, supra note 423, at 240.

506 Id.; Baroncini, supra note 388, at 6.

507 Baroncini, supra note 388, at 17.

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Member of the WTO.⁵⁰⁸ As its entry fee, China assumes a great amount of WTO-plus obligations, such as the elimination of all export duties under paragraph 11.3. Thus, further denial China’s right to pursue non-trade interests enshrined in GATT Art. XX will aggravate the already “asymmetry” and create “a serious constitutional issue.”⁵⁰⁹ Moreover, in light of these two China cases, Russia places its export-duty commitments under Part V – Export Duties of its GATT Schedule and specified that it will comply with the export-duty commitments except for rights and obligations provided under the GATT.⁵¹⁰ As a result, China will be the only Member who is denied of its right to pursue non-trade values via export duties.