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Important Research Achievements
[2012] WTO and the Greater China: Economic Integration and Dispute Resolution WTO and the Greater China: Economic Integration and Dispute Resolution
  • Leiden, Netherlands/Boston, MA: Martinus Nijhoff. 2012.

Abstract

This book illustrates how the constitutional feature of the WTO – allowing separate customs territories to become a Member – brings about the coexistence of China, Taiwan, Hong Kong and Macau in the WTO. It examines the economic integration and the dispute settlement systems within Greater China. It explores their interactions within the multilateral WTO framework, their practices under the new genre of FTA, and their policies in adopting trade defence measures against each other. This book offers a good case study on the impact of WTO membership upon domestic reform and how it contributes to regional integration. It also provides a comprehensive analysis on the existing provisions in the WTO agreements pertaining to judicial review.

 

The constitutional feature of the World Trade Organisation (the WTO) - that it does not limit its membership to sovereign states - allows Taiwan, albeit as a separate customs territory, to accede to it and thus creates an unusual legal landscape in the international trading system, where both Taiwan and China enjoy full membership. This peculiarity is further intensified when China’s two separate-customs-territory Members – Hong Kong, China and Macau, China – are added to the picture. The interactions among the four WTO Members of China, Taiwan, Hong Kong, China and Macau, China are unique.

As Hong Kong and Macau became Contracting Parties to the General Agreement on Tariffs and Trade through the sponsorship of the United Kingdom in 1986 and of Portugal in 1991 respectively and participated in and accepted the result of the Uruguay Round negotiations, they are among the founding Members of the WTO when this new organisation came into being in 1995. China and Taiwan acceded to the WTO at the Doha Ministerial Conference, where China’s accession process was finalised on 10 November 2001 and Taiwan’s one day later. Consequently, China became the 143rd Member of the WTO on 11 December 2001, while Taiwan, as a separate customs territory became the 144th Member on 1 January 2002.

In view of this unique legal landscape within the WTO, this work thus aims to examine the integration of the Greater China and interaction between these four Members at different fora: multilaterally; bilaterally or domestically. It also locates the subject matter in a broader context where the role of judges in external trade will be explored. It will use the interactions between these four WTO Members as an example to illustrate how dispute resolution mechanisms at different for a contribute to judicial settlement in trade disputes.

This work stresses the importance of the WTO

disciplines in regulating these integration processes and the role of dispute settlement mechanism in resolving trade disputes arising therefrom. This work argues that effective judicial review can help to ensure rational decision-making in foreign trade relations. It also helps to preserve the economic autonomy of Hong Kong and Macau. Besides, effective judicial review ensures the compliance to the WTO rules both in Taiwan and in China. In addition, an independent and impartial judicial review is an essential vehicle to protect the right to trade as prescribed in China’s Accession Protocol. Above all, the WTO Dispute Settlement Mechanism is crucial in resolving trade disputes between the four WTO members of the Greater China. Judicial governance in the foreign trade relations is thus indispensible. A well-functioning dispute settlement mechanism is a central element for the economic integration in the Greater China that eventually contributes to their mutual understanding and mutual trust.

This work argues that the WTO constitutionalism may contribute to judicial settlement of trade disputes arising from these legal and economic integration processes. WTO membership may be perceived as a pre-commitment to the four WTO Members of the Greater China. The WTO accession is a pre-commitment

to China for widening and deepening economic and legal reforms, and thus for promotion of rule of law in China. The WTO accession is a pre-commitment to Taiwan for the progressive liberalisation of cross-strait trade in order to enhance economic and legal integration, to contribute to mutual understanding, and therefore, to ensure peace and security across the Taiwan Strait. The WTO memberships of Hong Kong, China and Macau, China are also pre-commitments of these two separatecustoms- territory Members for them to observe free trade rules/policies and thus to maintain their economic autonomy. Their memberships are also China’s precommitments to these two SARs in relation to their legal and economic autonomy to participate in the international trading system. Secondly, the right to trade prescribed in China’s accession protocol, free-port status and free trade policies dictated by the HKBL and the MABL together effective judicial review may gradual sustain a constitutionalism in its minimum form.

Through the lens of third party participation, this work finds that Taiwan tends to participate as a third party in complaints brought about by/against China. Taiwan may stand in line with China; it may argue against China; it may also act as a passive observer without making clear its position. China has also participated in the complaint brought about by Taiwan, namely, the EC – IT Products, where China takes the same position as Taiwan does as China has the same trade interests on information technology products into

the EU’s market. This work also explores the dispute settlement mechanisms provided by the ECFA and other bilateral agreements concluded between Taiwan and China. This work finds that the dispute settlement mechanisms are rather primitive and diplomatic in nature, which is insufficient to safeguard the rights and obligations of both Parties and to provide security and predictability for individual economic actors therein. This work also analyses trade defence measures imposed by Taiwan and China against each other and explores the effectiveness of domestic judicial review on these trade defence measures. It finds that only limited affected parties resort to domestic judicial review which offers little protection.

Regarding dispute resolution between China and Hong Kong and Macau, this work approach this issue under two frameworks: the constitutional/national law framework and the WTO/CEPA framework. Under the constitutional/national law framework, this work examines vertical and horizontal interaction between China and its two SARs. Emphasis is actually placed on the interaction between the NPCSC and the CFI of the HKSAR. This work sees a danger of undermining the legal and economic autonomy of the two SARs by the NPCSC through the interpretation of the two Basic Laws. Under the WTO/CEPA framework, this work briefly recalls the trade policy and practice of Hong Kong and Macau in the GATT and WTO. It then explores the nature of the CEPA under the WTO rules and examines existent trade dispute mechanisms in both the WTO and the CEPAs. This work argues that it is unlikely that China, Hong Kong or Macau to refer to the WTO Dispute Settlement Mechanism. At the same time, the dispute settlement mechanism as set out for in the two CEPAs does not offer adequate judicial protection as well. Whereas the preference of China, Hong Kong and Macau not to internationalise or judicialised their trade disputes, such approach may prejudice the rights and interests of individual economic actors.

With respect to dispute resolution between Taiwan and Hong Kong and Macau, this work finds the same tendency not to refer to the WTO Dispute Settlement Mechanism. It also illustrates how China may affect policy making or trade negotiation between Taiwan and Hong Kong and Macau. It argues that private parties prefer to refer to domestic courts and arbitral procedures to resolve their disputes given the attitude of their governments to avoid intergovernmental confrontation. After examining domestic legal framework and jurisprudence in relation to the mutual recognition of arbitration awards and civil judgments, this work finds that the ideas of ‘sovereign interests’ ‘national security’, and ‘public order’ play a key role in granting their recognition and enforcement.

The way ahead of the four WTO Members of the Greater China would be closer economic interdependence. But the persisting question remains: can the institution sustain such interdependence? So far, Taiwan and China has concluded the ECFA and a number of bilateral agreements. China has also concluded the CEPAs and seven supplements with Hong Kong and Macau. Spurred by the ECFA, Hong Kong and Macau may soon conclude a bilateral agreement with Taiwan. These bilateral agreements would contribute to legal and economic integration in the Greater China, but at the same time bring about numerous disputes. The WTO discipline and the scrutiny of the CRTA should come into play with a view to ensure these bilateral agreements WTO-compatible. Dispute settlement mechanisms provided in these bilateral agreements need to evolve so as to provide effective judicial protection both for the Parties and those individual economic actors in the Greater China. Domestic courts are strongly encouraged to review external trade measures and protect rights and interests of private parties. They should also ensure the faithful implementation of WTO rules in the Greater China. Above all, the WTO Dispute Settlement Mechanism has to remain intact should the four WTO Members of the Greater China decide to avail of this mechanism. It is the key to ensure that China would implement its WTO obligation to ‘provide an independent and impartial judicial review’.

 

Contents

 

     Acknowlegement      xiii
     List of Acronyms and Abbreviations       xv 
     Table of Legislation     xvii
     Table of Cases    xxix
     Chapter I            Introduction        1
     Chapter II           Effective Judicial Review in External Trade Relations 
                               in the Greater China
     29
     Chapter III          WTO Constitutionalism and its Contribution to Judicial Settlement 
                               of Trade Disputes in the Greater China
     49
     Chapter IV          Domestic Judicial Review in WTO Agreements      65
     Chapter  V          Judging Judges: China's WTO Obligation to Provide An Independent
                               and Impartial Judicial Review
     91
     Chapter VI          Twenty Years After Liberalisation: Is it Time for Taiwan’s
                               Courts to Face with Cross-Strait Trade?
   127
     Chapter VII         Trade Dispute Resolution Between China and Taiwan:
                               An indirect Approach through Third Party Participation
   159
     Chapter VIII       One Country, Two Systems, and Three Memberships: Trade Dispute 
                               Resolution Between China and Hong Kong and Macau
   233
     Chapter IX          Neither National Nor International: Trade Dispute Resolution
                               between Taiwan and Hong Kong and Macau
   261
     Chapter X          Conclusion and the Way Forward    291
     Bibliography    295
     Index    303

 


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