Posts By Terence P. Stewart

The European Union’s February 18, 2022 request for consultations with China over China’s “anti-suit injunctions” in intellectual property disputes and its failure to publish decisions and respond to EU inquiries

The European Union has been pursuing a series of new disputes since the start of 2022. Three are listed in the WTO list of disputes. See DS610 China — Measures Concerning Trade in Goods and Services (27 January 2022); DS609 Egypt — Registration requirements relating to the importation of certain products (26 January 2022); DS608 Russian Federation — Measures Concerning the Exportation of Wood Products (20 January 2022)(replaced by a request for consultations filed on February 17, 2022).

On Friday, February 18, 2022, the European Union filed a second request for consultations with China and its fourth request this year, this one addressing China’s use of anti-suit injunctions to prevent parties seeking redress from intellectual property infringement by Chinese firms from seeking redress in non-Chinese jurisdictions. Chinese courts can impose penalties of 1 million RMB per day for violating anti-suit injunctions. In addition, many of the court decisions issuing the anti-suit injunctions are not publicly available. China has taken the position it is not obligated to publish the decisions or to provide them when requested by a WTO Member.

The EU reviews in its request for consultations four decisions affecting EU companies all involving patents in the high tech sector (e.g., patents relevant to aspects of 3G, 4G or 5G telecommunications). See EU Request for Consultations, Geneva, 18 February 2022. Because of the importance of the dispute, the full request for consultations is included below.


The European Commission’s press release on the request is copied below and reviews what the European Commission sees as important about the consultation request. See European Commission
Directorate-General for Trade, Press release, EU challenges China at the WTO to defend its high-tech sector, Brussels, 18 February 2022,

“The European Union is filing today a case against China at the World Trade Organization (WTO) for restricting EU companies from going to a foreign court to protect and use their patents.

“China severely restricts EU companies with rights to key technologies (such as 3G, 4G and 5G) from protecting these rights when their patents are used illegally or without appropriate compensation by, for example, Chinese mobile phone manufacturers. The patent holders that do go to court outside China often face significant fines in China, putting them under pressure to settle for licensing fees below market rates. 

“This Chinese policy is extremely damaging to innovation and growth in Europe, effectively depriving European technology companies of the possibility to exercise and enforce the rights that give them a technological edge.

“Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade, said: ‘We must protect the EU’s vibrant high-tech industry, an engine for innovation that ensures our leading role in developing future innovative technologies. EU companies have a right to seek justice on fair terms when their technology is used illegally. That is why we are launching WTO consultations today.’

“Since August 2020, Chinese courts have been issuing decisions – known as “anti-suit injunctions” – to exert pressure on EU companies with high-tech patents and to prevent them from rightfully protecting their technologies. Chinese courts also use the threat of heavy fines to deter European companies from going to foreign courts.

“This has left European high-tech companies at a significant disadvantage when fighting for their rights. Chinese manufacturers request these anti-suit injunctions to benefit from cheaper or even free access to European technology.

“The EU has raised this issue with China on a number of occasions in an attempt to find a solution, to no avail. As the Chinese actions are, according to the EU, inconsistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the EU has requested consultations at the WTO.

Next steps

“The dispute settlement consultations that the EU has requested are the first step in WTO dispute settlement proceedings. If they do not lead to a satisfactory solution within 60 days, the EU can request the WTO to set up a panel to rule on the matter.


“The patents concerned by this case are standard-essential patents (SEPs). SEPs are patents that are essential in order to manufacture goods that meet a certain international standard. Because the use of the technologies protected by these patents is mandatory for the production of, for example, a mobile phone, patent owners have committed to licensing these patents to manufacturers under fair, reasonable, and non-discriminatory (FRAND) terms. A mobile phone manufacturer should, therefore, obtain a license (subject to a license fee negotiated with the patent holder) for these patents. If a manufacturer does not obtain a licence, and/or refuses to pay, a patent holder can enforce these patents and get a court to stop the sales of the products incorporating that unlicensed technology.

“In August 2020, China’s Supreme People’s Court decided that Chinese courts can prohibit patent holders from going to a non-Chinese court to enforce their patents by putting in place an ‘anti-suit injunction’. The Supreme People’s Court also decided that violation of the order can be sanctioned with a €130,000 daily fine. Since then, Chinese courts have adopted four such anti-suit injunctions against foreign patent holders.”


The EU has been a strong backer of the WTO’s dispute settlement system. Launching four new disputes in the first two months of 2022 shows the EU’s continued intent to utilize the WTO dispute settlement system.

On the specific request for consultations filed last Friday with China, both the EU and China are parties to the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) that was agreed to by some WTO Members for handling further review of panel decisions while the Appellate Body is not operational. Thus, there will not be an appeal into the wind by either China or the EU from whatever decision flows from the dispute if a panel is sought later this year.

On the substance of the request for consultations, China has demonstrated an unwillingness to comply with full transparency obligations at the WTO which is reflected in several of the issues raised by the EU (lack of public release of certain judicial decisions; failure to provide such information when requested by the EU). China’s failure to comply with transparency obligations is a major issue for trading partners in many areas of the WTO’s work.

More importantly, the actions of China in authorizing anti-suit injunctions is a major challenge to the proper functioning of intellectual property rights which should draw participation requests from many other WTO Members. China has been viewed by many as permitting/encouraging/supporting intellectual property theft — a view hotly denied by China. Letting Chinese courts prevent other courts around the world from evaluating patent infringement by Chinese companies or setting licensing fees is not consistent with WTO obligations and could obviously lead to abuse by the Chinese courts and substantial harm to innovative companies around the world.

The EU’s request for consultation is a very important first step in ensuring that China conforms to its obligations under the TRIPS Agreement. The fact that resolution will take years will permit Chinese companies to weaken intellectual property protection for years for innovative companies in other countries.

The EU – AU Summit and the promise of a resolution to the WTO pandemic response package

The sixth European Union – African Union summit took place last week in Brussels on February 17-18. The summit covered a broad array of topics including access to vaccines. It followed an event on vaccine equity in Africa hosted by BioNTech and the kENUP Foundation on the 16th which announced the schedule for shipping facilities to several African countries to produce mRNA vaccines in the second half of 2022. See February 16, 2022:  Building Vaccine Capacity in Africa – Exciting News from BioNTech,

The Summit was an effort to have the two Unions form a new partnership, and for the EU to be the partner of choice for countries in Africa. The joint declaration from the summit is included below and reviews the broad areas of discussion and agreed actions to be taken by the two Unions following the Summit.


The discussion of the COVID-19 pandemic and the ongoing discussion on the WTO’s consideration of a response to the pandemic (both trade and intellectual property) was one of the important issues at the summit. The joint declaration discussion of the issue is copied below.

“The immediate challenge is to ensure a fair and equitable access to vaccines. Together we will support local and regional mechanisms for procurement, as well as allocation and deployment of medical products. The EU reaffirms its commitment to provide at least 450 million of vaccine doses to Africa, in coordination with the Africa Vaccine Acquisition Task Team (AVATT) platform, by mid-2022. Contributing to this and complementing the actions of the AVATT, Team Europe has provided more than USD 3 billion (i.e. the equivalent of 400 million vaccine doses) to the Covax Facility and to vaccination on the African continent.

“Team Europe will mobilise EUR 425 million to ramp up the pace of vaccination, and in coordination with the Africa CDC, to support the efficient distribution of doses and the training of medical teams and the capacity of analysis and sequencing. We will also contribute in this context to the fight against health-related disinformation.

“Learning from the current health crisis, we are committed to supporting the full-fledged African health sovereignty, in order for the continent to respond to future public health emergencies. To this end, we support a common agenda for manufacturing vaccines, medicines, diagnostics, therapeutics and health products in Africa, including investment in production capacities, voluntary technology transfers as well as strengthening of the regulatory framework to enable equitable access to vaccines, diagnostics and therapeutics.

“The African Union and the European Union underlined the urgency of the WTOs contribution to the fight against the pandemic and to the recovery of the global economy, and commit to engage constructively towards an agreement on a comprehensive WTO response to the pandemic, which includes trade related, as well as intellectual property related aspects.”

The European Commission’s President Ursula von der Leyen statement at the press conference on February 18 provided the timeline for reaching agreement with the African Union on the WTO response package to the COVID-19 pandemic, including finding an acceptable path forward on intellectual property. The EU and AU will be meeting in the Spring to find a mutually acceptable solution. President von der Leyen’s comments at the press conference on this topic are copied below.

“And finally, from the health of our planet, to the health of our people. Europe is Africa’s number one
partner in the fight against COVID-19. And we will do even more. We are on the right track to reach
our goal to share at least 450 million vaccine doses by this summer. And indeed, together, we are
building up mRNA manufacturing capacity across Africa. I will not go in detail because we have
discussed that in the press conference this morning.

“But important is that we had a very good, intense, constructive discussion on the question of TRIPS
waiver and compulsory licencing. We share the same goal. We have different ways to reach that goal.
There must be a bridge between those two ways. And therefore, we have decided that the two
Commissions – the African Union Commission and the European Union Commission – will work
together. We will organise a College-to-College meeting here in Brussels, in spring. And at that time,
at the latest, we have to deliver a solution. This will be accompanied by the WTO, Director-General
Ngozi. And therefore, I always like it when a task is clear and defined. The task is set for the two
Commissions. The frame is clear, the goal is clear, we have to deliver.”

Statement by President von der Leyen at the joint press conference following the 6th European Union-African Union Summit, Brussels, 18 February 2022,

The European Union has been working for most of the last year on moving towards significant vaccine production capacity being built in Africa. President von der Leyen’s statements at the start of the EU-AU Summit and her statement at the Vaccine Equity for Africa event on February 16 provide significant detail on actions the EU is taking to help Africa develop vaccine manufacturing capacity as well as address the build up of health care infrastructure on the continent. See Opening speech by President von der Leyen at the 6th European Union-African Union Summit, Brussels, 17 February 2022,; Statement by President von der Leyen at the‘Vaccine Equity for Africa’ launch event, co-organised by BioNTech SE and the kENUP Foundation, 16 February 2022,

Parts of the February 16 speech are copied below.

“This year already, at least two of these container factories will move to Africa. To Rwanda and to Senegal, where I visited last week the Institut Pasteur de Dakar. Close cooperation is ongoing with South Africa’s Biovac Institute. And with our partners in Ghana. We are advancing in record time. Commercial production is set to begin in 2023. 

“The ‘Vaccine Equity for Africa’ project is only possible thanks to teamwork. Starting with Africa’s declared ambition to build its own vaccine production capacity. Teaming up with a European innovation champion such as BioNTech. Supported by the European Union and the African Union. Governments in Europe and Africa. And the UN system. This is how we emerge from the pandemic and build a stronger future for Africa and Europe.

“The initiative is first and foremost about vaccine equity. Vaccines from the new factories will be sold at not-for-profit prices, exclusively to African countries. They will be made in Africa, for Africa, with world-class technology.

“At the same time, this initiative can advance public health and industry, well beyond the pandemic. We know the mRNA technology is revolutionary. It holds promises for the fight against other diseases, like malaria and tuberculosis. BioNTech factories can be adjusted within weeks to make different vaccines. It could thus be an African-made solution to diseases that currently kill millions.

“This project is part of a larger ambition. By 2040, the African Union wants that 60% of the vaccines used on the continent are manufactured on the continent. The European Union fully supports that goal. Together with our Member States and financial institutions, we have committed over one billion euros in financing. To strengthen regulatory frameworks, and transfer skills and know-how. Because regional capacities are the cornerstone of global public health.

“And the project goes even beyond public health. Building this technological capacity in Ghana, Rwanda, Senegal and South Africa – countries that are regional leaders in innovation – will strengthen the innovation ecosystem on the entire continent.”

Documents from the European Council and European Commission at the conclusion of the Summit provide the EU’s view of the healthcare portion of the summit and EU actions. See European Council, Council of the European Union, First technology transfer of mRNA vaccines: Working together to build new solutions, 18 February 2022, (“In the margins of the European Union-African Union Summit, the World Health Organisation (WHO) announced the first six countries that will receive the technology needed for the production of mRNA vaccines on the African continent. Egypt, Kenya, Nigeria, Senegal, South Africa and Tunisia all applied and have been selected as recipients. The announcement was made at a ceremony hosted by the European Council, France, South Africa and the WHO in the presence of the following leaders: Charles Michel, President of the European Council, Ursula von der Leyen, President of the European Commission. President Macron, President Ramaphosa, President Sall, President Kenyatta, President Buhari, President Saïed and  President al-Sisi.”); European Commission, EU-Africa: Global Gateway Investment Package – Health, factsheet, 9 February 2022,

While vaccines and health issues were just one of a number of important topics reviewed during the Summit, it has been the focus of this post simply because the outcome and promised meeting in the Spring between the two Unions offers the hope of a resolution to the WTO’s ongoing negotiations on a pandemic response package — one that covers various trade actions as well as what, if any, actions are needed on intellectual property rights during a pandemic. While the member states of the EU and the AU are not the only parties with strong positions in the ongoing discussions at the WTO, it would seem likely that if the EU and AU are able to reach agreement on a package that will likely form the basis of a final resolution in Geneva.

With the WTO apparently discussing dates in June 2022 for rescheduling the 12th Ministerial Conference, the ability of the EU and AU countries to find a mutually agreeable solution to the intellectual property component of the pandemic response package could permit an agreed package to be accepted by WTO Members at the Ministerial Conference. See Inside U.S. Trade’s World Trade Online, World Trade Organization now eyeing June for 12th ministerial, February 18, 2022, The announcement last week of the Spring effort to reach agreement may also help facilitate movement on fisheries subsidies at the WTO — a negotiation that has been ongoing for more than 20 years.

In short, the EU-AU Summit while covering a lot of ground on issues of importance to both Unions may also have created a path to forward movement at the WTO on the response to the pandemic and more ahead of the 12th Ministerial Conference.

Actions by the US, EU, Quad (US, Japan, India, Australia), China and others should ensure that there are more than adequate vaccines available in 2022 to vaccinate all countries against COVID-19. Efforts by the WHO, GAVI, the U.S., EU and others are also likely to significantly increase the ability of countries in Africa to vaccinate their populations. Thus, the real benefit of resolving the WTO pandemic response at the 12th Ministerial will not be responding to COVID-19 but rather adopting rules and policies that will make the world more responsive to future pandemics.

We wish the EU and AU well in their upcoming negotiations.

Building Vaccine Capacity in Africa – Exciting News from BioNTech

BioNTech which has partnered with Pfizer in producing an mRNA vaccine to address COVID-19, issued a press release today (February 16, 2022) from Mainz, Germany outlining its development of modular mRNA manufacturing facilities and their intended deployment in Africa. See BioNTech, Press Release, BioNTech introduces first modular mRNA manufacturing facility to promote scalable vaccine production in Africa, 16 February 2022, Part of the press release is copied below.

” BioNTech SE (Nasdaq: BNTX, “BioNTech”) has taken a next step to improve vaccine supply in Africa. The
company has introduced its approach to establishing scalable vaccine production by developing and delivering turnkey mRNA manufacturing facilities based on a container solution. At a high-level meeting at BioNTech’s new manufacturing facility in Marburg and at the invitation of kENUP Foundation, the company presented the container solution named ‘BioNTainer’ to key partners.

“Attendees included President Macky Sall of Senegal, President Nana Akufo-Addo of Ghana, President Paul Kagame of Rwanda, Tedros Adhanom Ghebreyesus, Director General of the World Health Organization, John Nkengasong, Director of the Africa Centers for Disease Control and Prevention
(Africa CDC), and Svenja Schulze, the Federal Minister of Economic Cooperation and Development of Germany. Together with BioNTech’s Co-Founders Prof. Ugur Sahin, CEO, and Prof. Özlem Türeci, CMO, and COO Dr. Sierk Poetting, they jointly discussed the infrastructure, regulatory and technological requirements to establish an end-to-end manufacturing network for mRNA-based vaccines in Africa.

“The manufacturing solution consists of one drug substance and one formulation module, each called a BioNTainer. Each module is built of six ISO sized containers (2.6m x 2.4m x 12m). This allows for mRNA vaccine production in bulk (mRNA manufacturing and formulation), while fill-and-finish will be taken over by local partners. Each BioNTainer is a clean room which BioNTech equips with state-of-the-art manufacturing solutions. Together, two modules require 800 sqm of space and offer an estimated initial capacity of for example up to 50 million doses of the Pfizer-BioNTech COVID-19 vaccine each year. The BioNTainer will be equipped to manufacture a range of mRNA-based vaccines targeted to the needs of the African Union member states, for example the Pfizer-BioNTech COVID-19 vaccine and BioNTech’s investigational malaria and tuberculosis vaccines, if they are successfully developed, approved or authorized by regulatory authorities.

“The capacity can be scaled up by adding further modules and sites to the manufacturing network on the African continent. One of the most critical parts of the manufacturing process is quality control, which includes all necessary tests for each finished vaccine batch. In partnership with local quality control testing labs, BioNTech will help to ensure the identity, composition, strength, purity, absence of product- and process-related impurities, as well as the absence of microbiological contamination of each produced batch.

“The establishment of the first mRNA manufacturing facility by BioNTech in the African Union is expected to start in mid-2022. The first BioNTainer is expected to arrive in Africa in the second half of 2022. Manufacturing in the first BioNTainer is planned to commence approximately 12 months after the delivery of the modules to its final location in Africa. BioNTech expects to ship BioNTainers to Rwanda, Senegal and potentially South Africa in close coordination with the respective country and the African Union. BioNTech will be responsible for the delivery and installation of the modules, while local organizations, authorities and governments will ensure the needed infrastructure. Partners in Ghana and South Africa could support the manufacturing with fill-and-finish capacities. BioNTech will work closely with local authorities to ensure compliance to relevant regulatory procedures of the national regulatory agencies in each partner country, and also coordinate where appropriate with relevant continental and international agencies, including WHO, Africa CDC, the African Medicines Agency (AMA), and the African Union Development Agency (AUDA-NEPAD).

“BioNTech will initially staff and operate the facilities to support the safe and rapid initiation of the production of mRNA-based vaccine doses under stringent good manufacturing processes (“GMP”) to prepare for the transfer of know-how to local partners to enable independent operation. Vaccines
manufactured in these facilities are expected to be dedicated to domestic use and export to other member states of the African Union at a not-for-profit price.”

While the announcement by BioNTech will not address the short-term 2022 production and distribution needs of COVID-19 vaccines to low and lower-middle income countries (WHO is urging the world to obtain 70% vaccination rates in all countries by summer 2022), the announcement adds to the momentum of creating manufacturing of vaccines (for COVID-19 and other needs) in Africa. See Carnegie Endowment for International Peace, Is there Any COVID-19 Vaccine Production in Africa?, September 13, 2021,,have%20faced%20severe%20supply%20shortages (“Efforts are being made to ramp up production of COVID-19 vaccines on the African continent. As of September 2021, there are at least twelve COVID-19production facilities set up or in the pipeline across six African countries (see figure). African COVID-19 vaccine manufacturing in the coming year could range from Pfizer-BioNTech and Johnson & Johnson vaccines to Russia’s Sputnik V and China’s Sinovac vaccines. In South Africa, the U.S. International Development Finance Corporation, along with European partners, announced a 600 million euro ($710 million)financing package for Aspen Pharmacare. Aspen’s facility has already produced millions of doses and will ‘fill-and-finish’ (i.e. package imported vaccine substance) around 500 million Johnson & Johnson doses by the end of 2022. South Africa’s Biovac Institute has also agreed to accelerate fill-and-finish Pfizer vaccine manufacturing in Cape Town from 2022. In Senegal, the government—with Pfizer support from the United States and Europe—is building a $200million COVID-19 vaccine manufacturing facility with the Fondation Institut Pasteur de Dakar. This facility would represent the first on the continent to actually manufacture the substance of vaccines in parallel with fill-and-finish. Starting in November 2021, the Egyptian government will
produce Chinese Sinovac at a new Vacsera facility outside Cairo, with a planned capacity of
1 billion vaccines annually. And with two agreements for drug substance manufacturing and fill-and-finish of Russia’s Sputnik V vaccine, Egypt may soon join Senegal in reducing Africa’s dependency on vaccine imports.”)

The BioNTech press release contains eleven quotes from government and business officials, including EC President Ursula von der Leyen, the Presidents of Senegal, Rwanda, Ghana and the African Union, the WHO Director-General, the Chancellor of the Republic of Germany and others. The full press release is attached below.


The announcement by BioNTech is both exciting and important longer term for greater vaccine equity for various purposes. As noted in one of the many news articles on the announcement, Pfizer and BioNTech have also pledged to supply up to two billion COVID-19 vaccine doses to low-income countries during 2022. See Wall Street Journal, BioNTech Unveils Mobile Covid-29 Vaccine Factories for Developing World, February 16, 2022,; see also Reuters, BioNTech to ship mRNA vaccine factory kits to Africa, February 16, 2022,; Fortune, Pfizer partner BioNTech unveils container-based COVID vaccine factories that could start manufacturing doses in Africa this year, February 16, 2022, It is those efforts at getting doses produced in the front half of 2022 to low income and lower-middle income countries that will be most important in meeting the immediate goal of dramatically increasing vaccine rates in Africa and in other countries with current low vaccination rates.

As reviewed in a number of earlier posts, the progress being made in vaccine equity to address COVID-19 in 2022 will not be dependent on the outcome of the ongoing WTO consideration of whether TRIPS obligations should be waived for COVID-19 vaccines. Rather progress is dependent on expanded production, moving product to needed countries, work in countries to ensure the ability to distribute vaccines received and expanded funding of COVAX. See, e.g., January 30, 2022:  Recent National Public Radio story, “Africa may have reached the pandemic’s holy grail,” raises interesting questions on a country’s age distribution and ability to get past the pandemic stage with lower vaccination rates,; January 23, 2022:  COVID-19 Omicron variant – hopeful signs of peaking in the U.S. and Europe; supply disruptions continue from zero tolerance policy in China,; January 11, 2022:  WTO efforts to address the COVID-19 pandemic — the January 10, 2022 General Council meeting and some current developments of interest,

USTR’s 2021 Report to Congress on China’s WTO Compliance — a recognition that all of China’s distortions to competition cannot be dealt with within the WTO

China’s retreat over the last 15 years from reforms to move its economy to a market-based one has led the United States, first under the Trump Administration and now under the Biden Administration, to view some actions outside of the WTO as necessary to deal with the many distortions in trade being experienced by China’s practices. The U.S. position is made clear in today’s (February 16, 2022) report from the U.S. Trade Representative, 2021 Report to Congress on China’s WTO Compliance,’s%20WTO%20Compliance.pdf. As stated in the USTR press release on the Report,

“WASHINGTON – The Office of the United States Trade Representative today released its annual “2021 Report to Congress on China’s WTO Compliance,” laying out the Biden Administration’s assessment of China’s membership in the World Trade Organization.

“’China has not moved to embrace the market-oriented principles on which the WTO and its rules are based, despite the representations that it made when it joined 20 years ago,’ said Ambassador Katherine Tai. ‘China has instead retained and expanded its state-led, non-market approach to the economy and trade. It is clear that in pursuing that approach, China’s policies and practices challenge the premise of the WTO’s rules and cause serious harm to workers and businesses around the world, particularly in industries targeted by China’s industrial plans.’

“The Biden Administration is pursuing a multi-faceted approach to address the harm caused by China’s trade and economic policies through both bilateral engagement with China and the use of trade tools to protect American workers and businesses.  The Administration’s strategy also includes enhanced engagement with allies and partners in order to build broad support for solutions to the many unique problems posed by China and defending our shared interests.”

Indeed, as reviewed in prior posts, former Deputy Director-General of the WTO Alan Wolff has articulated that the WTO is premised on economies converging to a market-based structure. Coexistence of fundamentally different economic systems – the path China is insisting on – is simply incompatible with WTO principles. See, e.g., January 16, 2022:  Is it time for a new approach to bilateral trade with China? (and posts cited therein on DDG Wolff’s comments).

The frustrations with the many distortions caused by China’s economic system and the inability of the WTO to effectively address the distortions has led at least one former senior trade official to opine about the desirability of market economies withdrawing from the WTO and establishing a new organization. See July 25, 2020:  A new WTO without China?  The July 20, 2020 Les Echos opinion piece by Mogens Peter Carl, a former EC Director General for Trade and then Environment,

The challenges also led the Trump Administration to take aggressive action under Section 232 of the Trade Expansion Act of 1962 (steel and aluminum global excess capacity driven largely by China) and Section 301 of the Trade Act of 1974 (various practices of China).

Moreover, part of the U.S. concern about problems with the WTO dispute settlement system was the effect of problems on the U.S. ability to address Chinese market distortions. See, e.g., August 9, 2020:  USTR Lighthizer on WTO dispute settlement – answers to Congressional questions from June 17 hearings, (“‘Appellate Body overreaching has unfairly taken away U.S. rights and advantaged China. Through a series of deeply flawed reports, the Appellate Body has eroded the U.S. ability under WTO rules to counteract economic distortions caused by China’s non-market practices that harm our workers and businesses. For example, the Appellate Body’s erroneous interpretation of ‘public body’ threatens the ability of WTO Members to counteract trade-distorting subsidies provided through state-owned enterprises, favoring non-market economies at the expense of market economies.”).

While the Biden Administration has expressed support for the WTO and is pursuing reforms within the WTO with like-minded countries, the consensus system of the WTO basically limits the realistic ability of WTO Members to address the principal concerns flowing from the Chinese economic model,

Thus, the USTR 2021 report released today is not surprising in articulating working within WTO where possible but working outside of the WTO where needed.

Below is the Executive Summary of the Report (pages 2-4).

“In Part One of this report, we provide an assessment of China’s WTO membership, including the unique and very serious challenges that China’s state-led, non-market approach to the economy and trade continue to pose for the multilateral trading system. In Part Two, we review the effectiveness of the various strategies that have been pursued over the years to address the unique problems posed by China. In Part Three, we emphasize the critical need for new and more effective strategies – including taking actions outside the WTO where necessary – to address those problems. Finally, in Part Four, we catalogue the numerous problematic policies and practices that currently stem from China’s state-led, non-market approach to the economy and trade. (emphasis added)


“Part One explains that when China acceded to the WTO, it voluntarily agreed to embrace the WTO’s open, market-oriented approach and to embed it in China’s trading system and institutions. China also agreed to take on the obligations set forth in existing WTO rules, while also making numerous China-specific commitments. As we previously documented, and as remains true today, China’s record of compliance with these terms has been poor.

“After 20 years of WTO membership, China still embraces a state-led, non-market approach to the economy and trade, despite other WTO members’ expectations – and China’s own representations – that China would transform its economy and pursue the open, market-oriented policies endorsed by the WTO. In fact, China’s embrace of a state-led, non-market approach to the economy and trade has increased rather than decreased over time, and the mercantilism that it generates has harmed and disadvantaged U.S. companies and workers, often severely.

“China also has a long record of violating, disregarding and evading WTO rules to achieve its industrial policy objectives. In this report, as in our prior reports, we identify and explain numerous unfair, non-market and distortive trade policies and practices used by China in pursuit of its industrial policy objectives. We also describe how China has sought to frustrate WTO oversight mechanisms, such as through its poor record of adhering to its WTO transparency obligations.


“As we explain below in Part Two, for nearly two decades following China’s accession to the WTO, a variety of bilateral and multilateral efforts were pursued by the United States and other WTO members to address the unique challenges presented by China’s WTO membership. However, even though these efforts were persistent, they did not result in meaningful changes in China’s state-led, non-market approach to the economy and trade.

“For many years, the United States pursued a dual track approach in an effort to resolve the many concerns that have arisen in our trade relationship with China. One track involved using high-level bilateral dialogues, and the other track focused on enforcement at the WTO.

“The United States approached its bilateral dialogues with China in good faith and put a great deal of effort into them. These dialogues were intended to push China toward complying with and internalizing WTO rules and norms and making other market-oriented changes. However, they only achieved isolated, incremental progress. At times, the United States did secure broad commitments from China for fundamental shifts in the direction of Chinese policies and practices, but these commitments were unenforceable and China repeatedly failed to follow through on them. Over time, moreover, commitments from China became more difficult to secure.

“Meanwhile, at the WTO, the United States brought 27 cases against China, often in collaboration with like-minded WTO members. We secured victories in every case that was decided. Still, even when China changed the specific practices that we had challenged, it did not typically change the underlying policies, and meaningful reforms by China remained elusive.

“In 2017, the previous Administration launched an investigation into China’s acts, policies and practices relating to technology transfer, intellectual property and innovation under Section 301 of the Trade Act of 1974. The findings made in this investigation led to substantial U.S. tariffs on imports from China as well as corresponding retaliation by China. Against this backdrop of rising tensions, in January 2020, the two sides signed what is commonly referred to as the ‘Phase One Agreement.’ This Agreement included commitments from China to improve market access for the agriculture and financial services sectors, along with commitments relating to intellectual property and technology transfer and a commitment by China to increase its purchases of U.S. goods and services.

“Many of the commitments in the Phase One Agreement reflected changes that China had already been planning or pursuing for its own benefit or that otherwise served China’s interests, such as the changes involving intellectual property protection and the opening up of more financial services sectors. Other commitments to which China agreed reflected a calculation, as it saw them as appeasing U.S. priorities of the prior Administration, as evidenced by the attention paid to the agriculture sector in the Phase One Agreement and the novel commitments relating to China’s purchases of U.S. goods and services ostensibly as a means to reduce the bilateral trade deficit.

“Given these dynamics, and given China’s interest in a more stable relationship with the United States, China followed through in implementing some provisions of the Phase One Agreement. At the same time, China has not yet implemented some of the more significant commitments that it made in the Phase One Agreement, such as commitments in the area of agricultural biotechnology and the required risk assessment that China is to conduct relating to the use of ractopamine in cattle and swine. China has also fallen far short of implementing its commitments to purchase U.S. goods and services in 2020 and 2021.

“The reality is that this Agreement did not meaningfully address the more fundamental concerns that the United States has with China’s state-led, non-market policies and practices and their harmful impact on the U.S. economy and U.S. workers and businesses. China’s government continues to employ a wide array of interventionist industrial policies and supporting measures, which provide substantial government guidance, massive financial resources and favorable regulatory support to Chinese industries across the economy, often in pursuit of specific targets for capacity and production levels and market shares. In furtherance of its industrial policy objectives, China has also limited market access for imported goods and services and restricted the ability of foreign manufacturers and services suppliers to do business in China. It has also used various, often illicit, means to secure foreign intellectual property and technology to further its industrial policy objectives.

“The principal beneficiaries of these non-market policies and practices are China’s state-owned and state-invested enterprises and numerous nominally private domestic companies that are attempting to move up the economic value chain in industries across the economy. The benefits that Chinese industries receive largely come at the expense of China’s trading partners and their workers and businesses. As a result, markets all over the world are less efficient than they should be, and the playing field is heavily skewed against foreign businesses that seek to compete against Chinese enterprises, whether in China, in the United States or globally.

“The industrial policies that flow from China’s non-market economic system have systematically distorted critical sectors of the global economy such as steel, aluminum, solar and fisheries, devastating markets in the United States and other countries. At the same time, as is their design, China’s industrial policies are increasingly responsible for displacing companies in new, emerging sectors of the global economy, as the Chinese government and the Chinese Communist Party powerfully intervene in these sectors on behalf of Chinese companies. Companies in economies disciplined by the market cannot effectively compete with both Chinese companies and the Chinese state.


“In Part Three, we explain that, in recent years, it became evident to the United States – and to an increasing number of U.S. trading partners − that new strategies were needed to deal with the many problems posed by China’s state-led, non-market approach to the economy and trade, including solutions independent of the WTO. We also emphasize that these strategies needed to be based on a realistic assessment of China’s economic and trade regime and need to be calibrated not only for the near-term but also for the longer term. Accordingly, as explained below, the United States is now pursuing a multi-faceted strategic approach that accounts for the current realities in the U.S.-China trade relationship and the many challenges that China poses for the United States and other trading partners, both now and likely in the future. (Emphasis added)

“The U.S. Trade Representative announced the initial steps of the United States’ strategic approach in October 2021. This approach includes several components, which we have begun to implement.

“First, the United States is continuing to pursue bilateral engagement with China and is seeking to find areas where some progress can be achieved. China is an important trading partner, and every avenue for obtaining real change in its economic and trade regime must be utilized. Currently, we are engaging China on the United States’ most fundamental concerns with China’s state-led, non-market approach to the economy and trade, which includes China’s industrial policies. At the same time, the United States is working to hold China accountable for its existing commitments, including under the Phase One Agreement. If China fully implements the Phase One Agreement, it will help establish a more solid foundation for bilateral engagement on more significant outstanding issues.

“Second, it is clear that domestic trade tools – including updated or new domestic trade tools reflecting today’s realities – will be necessary to secure a more level playing field for U.S. workers and businesses. The United States therefore is exploring how best to use and improve domestic trade tools to achieve that end.

“Finally, it is equally critical for the United States to work more intensely and broadly with allies and like-minded partners in order to build support for solutions to the many significant problems that China’s state-led, non-market approach to the economy and trade has created for the global trading system. This work is taking place in bilateral, regional and multilateral fora, including the WTO.


“Part Four discusses specific problematic Chinese policies and practices in more detail. These policies and practices are grouped into sections on non-tariff measures, intellectual property rights, agriculture, services and transparency.”

In Part Three of the Report, there is a section on “Changing Global Perspectives” which outlines the U.S. understanding of where trading partners are moving in terms of concerns with the Chinese economic model. The section (pages 20-22) is copied below.

“Over the last few years, as changes have taken place in how the United States and U.S. stakeholders view the United States’ trade relationship with China, it has become apparent that the views of other countries have also been evolving toward the U.S. view. More and more trading partners appear to accept that China’s state-led, non-market approach to the economy and trade has been severely harming their workers and businesses. While each trading partner is impacted differently by China, there is also a growing consensus that this situation will not change unless new strategies are pursued.

“While the WTO remains a strong focus for many of the United States’ trading partners, there is a growing awareness that it may be necessary to pursue some solutions outside the WTO in order to avoid the severe harm that will likely continue to result from China’s state-led, non-market economic and trade regime. For example, some of the United States’ trading partners are now exploring possible new domestic trade tools to address the challenges posed by China’s state-led trade regime. These and other like-minded trading partners have also begun working with the United States ― sometimes confidentially ― in pursuit of new joint strategies to address China’s harmful non-market policies and practices, including China’s increasing use of economic coercion. At the same time, still other trading partners appear to be replicating certain of China’s unfair trade practices, or at least accepting them as a result of China’s tactics to coerce or entice countries to acquiesce to its practices. Consequently, addressing these practices in China could have the additional benefit of dissuading these countries from following China’s example. (emphasis added)

“Meanwhile, many of China’s trading partners are increasingly skeptical of China’s rhetoric. For example, China often touts its strong commitment to win-win outcomes in international trade matters, but its actions plainly belie its words. Through state-led industrial plans like Made in China 2025, which targets 10 strategic emerging sectors, China pursues a zero-sum approach. It first seeks to develop and dominate its domestic markets. Once China develops, acquires or steals new technologies and Chinese enterprises become capable of producing the same quality products in those industries as the foreign competition, the state suppresses the foreign competition domestically and then supports Chinese enterprises as they “go out” and seek dominant positions in global markets. Based on the world’s past experiences with industries like steel, aluminum, solar panels and fisheries, a new wave of severe and persistent non-market excess capacity can be expected in industries like those targeted by Made in China 2025, to the detriment of China’s trading partners.

“It has also not gone unnoticed among China’s trading partners ― particularly the democratic market economies ― that China’s leadership appears confident in its state-led, non-market approach to the economy and trade and feels no need to conform to global norms. China’s leadership demonstrates confidence in its ability to quiet dissenting voices, as if China’s continued rise is inevitable and cannot be held back. Indeed, it has become increasingly evident that China’s leadership is seeking to establish new global norms that better reflect and support China’s interests, providing an attractive alternative for other authoritarian regimes around the world.

“China has also regularly used its economic clout in a coercive way if it perceives that a foreign company or a foreign country has spoken or acted in a way that undermines China’s economic and trade interests. This economic coercion can mute international objections to China’s non-market policies and practices, even when China flouts the WTO’s rules-based international trading system. In recent years, China has increasingly expanded its use of economic coercion to take on foreign governments whose policies or practices are perceived to undermine not only China’s economic and trade interests but also China’s political interests. China’s coercive economic measures have taken a variety of forms, including, for example, import restrictions, export restrictions, restrictions on bilateral investment, regulatory actions, state-led and state-encouraged boycotts, and travel bans. Many countries have been subjected to this economic coercion. One prominent example currently involves Australia, where China has taken formal and informal measures restricting imports of Australian products like meat, barley, wine, coal, cotton, logs and lobster, apparently because of various legitimate actions taken by the Australian government, such as calling for an independent investigation of the origins of the coronavirus pandemic and enacting a law that prohibits political contributions from foreign sources.

“In sum, the reality confronting the United States and other market economies ― especially the democratic market economies ― is not simply that China has a different economic system from ours. China plainly does not hold the same core values that we hold, and its state-led, non-market approach to the economy and trade conflicts in significant and harmful ways with our market-oriented approaches, to the detriment of our workers and businesses.”


It has been clear for some time that the trading system has been unable to address many of the major distortions caused by the state-led, non-market economy of a major country like China. While WTO reform may address some issues, it is unlikely that WTO reform will be achieved for years. The 20 year effort to complete negotiations on a fisheries subsidy agreement (still not completed) demonstrates just how broken the WTO negotiating function is and how protracted efforts at reform will likely be.

Efforts at plurilateral agreements open to all WTO Members are addressing a number of important issues, though not with regard to major distortions caused by state-led, non-market economies.

Bilateral and plurilateral agreements can be useful for the participants. However, the success of such agreements depends on the willingness of participants to honor commitments undertaken or the effectiveness of enforcement provisions in the agreements. The bilateral Phase I Agreement between the U.S. and China is comparable to China’s accession to the WTO in that many commitments undertaken have not been implemented and to date have proven largely unenforceable.

The road ahead for democratic, market economies is unclear. But the problems with WTO compatibility of the Chinese economic model and the challenges in achieving meaningful WTO reform will likely lead to a much larger role for non-WTO solutions in the future. That will of necessity reduce the relevance of the WTO over time.

Dispute Settlement Reform at the WTO — What Needs to Precede Negotiations?

Many WTO Members seek a restoration of a two-tier dispute settlement process with binding results. Over the last 20+ years, the United States has raised concerns about the dispute settlement system and whether panels and the Appellate Body were abiding by the limitations contained in the Dispute Settlement Understanding. As has been widely reported and reviewed, this led to the blockage by the United States of new appointments to the Appellate Body which led to the effective shut down of the second tier review in early December 2019.

The U.S., during the Trump Administration, went to great lengths at Dispute Settlement Body meetings to lay out the deep concerns the U.S. had with what had happened to dispute settlement, culminating in February 2020 with the release of a report from the U.S. Trade Representative’s Office entitled Report on the Appellate Body of the World Trade Organization (

With no functioning Appellate Body, some WTO Members agreed to a temporary arbitration approach that looks similar to the Appellate Body. Called the Multi-party interim appeal arbitration arrangement (MPIA), the MPIA in 2021 covered over 50 WTO Members including the EU and its Member States; Australia; Benin; Brazil; Canada; China; Chile; Colombia; Costa Rica; Ecuador; Guatemala; Hong Kong SAR; Iceland; Macao SAR; Mexico; Montenegro; New Zealand; Nicaragua; Norway; Pakistan; Peru; Singapore; Switzerland; Ukraine; and Uruguay. Most WTO Members, including the U.S., Japan, Korea, India, Indonesia, Malaysia, the Russian Federation and many others are not parties to the MPIA.

This has led to various actions being taken after a panel report is released — adopting panel reports as is; pursuing any agreed arbitration process between the parties to the dispute, using the MPIA (where both parties are parties to the MPIA), appealing panel reports despite the current inability of the matter to heard on appeal (delaying a final resolution). As of February 14, 2022, some 24 panel reports have been appealed with no final resolution possible prior to a solution. Other reports have been adopted without further action, some have led to bilateral solutions, etc.

Prior to the Appellate Body becoming inoperable for lack of Appellate Body members, there was much discussion on a possible solution to the impasse including a process headed by Amb. David Walker. For the United States, the problem with the approach of other Members was a failure to address the underlying causes of the system having gone off the tracks in so many disputes. For the United States, restating existing obligations contained in the DSU was an insufficient solution as the Appellate Body had felt at liberty to deviate from existing obligations despite clear directions.

As noted, the Biden Administration (still without a Deputy USTR in Geneva because of Senate inaction) has continued the blockage of new appointments to the Appellate Body. USTR Katherine Tai has spoken some on dispute settlement. Her words suggest an alignment with prior Administrations that the system is in need of reform. The question for WTO Members is what approach is needed to address underlying U.S. concerns and ensure that the dispute settlement system moving forward is limited to the parameters established by the Members and supports the negotiation function of the WTO instead of supplanting it.

The Trump Administration had argued consistently that WTO Members needed to engage in an examination of why the system had deviated from the DSU as a necessary prelude to any examination of possible solutions. While many Members talk about being willing to address U.S. concerns, there has been little apparent interest among Members in engaging in the type of review of why the AB deviated so significantly from its limited role, why Members accepted this deviation and many other questions that need to be addressed to have Members reach a common understanding on what needs to be done to have a system of dispute settlement that comports to the limits agreed to by Members.

Last week, the Centre for Trade and Investment Law (CTIL), the Indian Institute of Foreign Trade (IIFT), New Delhi, the Centre for Alternative Dispute Resolution (CADR), Rajiv and the Gandhi National University of Law (RGNUL), Punjab organized a conference on February 10 and 11 entitled “Conference on
‘Dispute Settlement in International Trade Agreements: Prospective Pathways”. One of the last speakers on the second day was Ambassador Dennis Shea, the Trump Administration’s Deputy U.S. Trade Representative and Permanent Representative to the WTO. Amb. Shea provided his recap of the problems with the WTO’s dispute settlement system and identified a series of questions WTO Members need to address if there is to be hope of a resolution to the current impasse at the WTO on dispute settlement. His comments can be found on his Linkedin page,, and are copied below.

“Good evening, everyone. Let me begin by thanking Professor Nedumpara, the Centre for Trade and
Investment Law, and the Rajiv Gandhi National University of Law for this opportunity to share some
thoughts about the World Trade Organization and WTO dispute settlement.

“When the Professor reached out to see if I would be available to be with you this evening, albeit virtually, I jumped at the opportunity. I suppose you can say I began my WTO journey in India. On one of my earliest days as the newly-minted US Ambassador to the WTO, I found myself in New Delhi, a participant in a WTO mini-Ministerial conference hosted by the Indian government. As you can imagine, there was great interest among the assembled to see and meet the person whom the Trump Administration was sending to Geneva. It was also something of a ‘hot seat’ experience as I was peppered with questions about the U.S. position blocking new appointments to the WTO’s Appellate Body. In retrospect, I suppose it was a good warm-up for my subsequent service in Geneva.

“Before I venture any further, I want to acknowledge the cordial relationship that I enjoyed with my Indian counterparts – most notably Ambassador Deepak and Ambassador Navnit – during my service at the WTO. Although we did not see eye-to-eye on many issues, we always maintained a friendly and open relationship, recognizing the strong bonds between our two countries. I would also like to extend my best wishes to Ambassador Bhatia, whom I understand will be speaking shortly. I suspect he may disagree with some of what I may say.

“I thought I’d spend my time highlighting the key elements of the U.S. critique of the Appellate Body and
offer some thoughts on the way forward. I use the term ‘U.S. critique’ intentionally. While in Geneva, I tried to convey to my colleagues that concerns about Appellate Body overreach were shared broadly
across the political spectrum in the United States and were not just Trump Administration or Republican
Party complaints. In all honesty, I don’t think this point registered fully.

“With the Biden Administration continuing to block Appellate Body appointments for more than a year, it
should now be crystal clear that this U.S. critique is deep-seated, broad-based, and bipartisan. In fact, during my service as WTO Ambassador, I never once received a telephone call, email, text, WhatsApp, or
other communication from anyone in the U.S. Congress, Democrat or Republican, complaining about the
positions I was taking vis-à-vis the Appellate Body on behalf of the United States. On the contrary, I was
often encouraged to keep it up.

“Let me also put all my cards on the table and say that I don’t believe the Appellate Body is ever coming
back, in current or modified form. There is simply no political energy in the United States for doing so, and of course, that matters in a consensus organization like the WTO. As the current U.S. Trade Representative Katherine Tai recently stated: ‘Reforming dispute settlement is not restoring the
Appellate Body for its own sake, or going back to the way it used to be. It is about revitalizing the agency
of Members to secure acceptable resolutions.’

“Of course, the WTO membership could conclude that, going forward, a bifurcated system of appellate
review is acceptable – with some members participating in the recently-created Multi-Party Interim
Appeal Arbitration Arrangement and others, like the United States and India, operating outside of it.
But, if the goal is a reformed dispute settlement system in which all members participate, then
understanding the U.S. critique of the Appellate Body is essential.

“Let me add that, as part of any re-examination of the WTO dispute settlement system, everything
should be on the table – both the appellate stage, if there is to be one, and the panel stage which has
received much less attention but merits scrutiny, particularly in light of the growing length of panel
proceedings. While engaged in this re-examination, there should be no red lines, just open minds. The
first step should be a discussion, not a negotiation.

“Was the Appellate Body designed to be an international court charged with creating a global common
law of trade? This question is at the heart of the U.S. critique and, from the U.S. perspective at least, the
answer is clearly and unambiguously ‘no.’

“The Appellate Body is not called a ‘court’ in the Dispute Settlement Understanding nor are its members
described as ‘judges.’ The DSU envisions Appellate Body members as part-time employees, not
necessarily based in Geneva, who would be reimbursed travel and per diem expenses when called upon
to hear an appeal from a panel report. Their function was straightforward and limited: to correct
egregious errors of law made by dispute settlement panels. The DSU explicitly prohibits the Appellate
Body from engaging in fact-finding – that’s the job of the panels – and from adding to or diminishing the
rights and obligations provided in the WTO agreements. The WTO membership created the dispute
settlement system – of which the Appellate Body was just a part – to help resolve disputes, not to create
a body of jurisprudence or impose new rules. The responsibility for issuing authoritative interpretations
of the WTO Agreement has always belonged to the WTO members themselves, acting through the
General Council or the Ministerial Conference.

“Because of the limited role of the Appellate Body, the DSU requires it to act quickly, completing work
within 60 days as a general rule but never beyond a 90-day deadline.

“Unfortunately, the Appellate Body – with the encouragement of some key WTO members and individual
Appellate Body members – soon morphed into something completely different.

“It began to regularly engage in fact-finding, adding unnecessary complexity and time to its work. It
began to insist that its reports were entitled to be treated as binding precedent and must be followed by
panels, absent ‘cogent reasons,’ a standard that appears in no WTO agreement. It routinely rendered
advisory opinions on issues not necessary to assist the Dispute Settlement Body in resolving a dispute. It
unilaterally declared that it had the authority to allow individuals formerly serving on the Appellate
Body, whose terms had expired, to continue to participate in and decide appeals, a practice that India
first objected to in 1996.

“And beginning in 2011, the Appellate Body routinely violated the 90-day rule for completing its reports,
and in many cases, did so without even consulting the parties to an appeal. In fact, some appeals took
more than one year to complete.

“For more than 20 years, across multiple Administrations, the United States – joined by other similarly concerned WTO members – repeatedly complained about these and other deviations from the clear text
of the DSU. We were obviously unsuccessful in effectuating change. During my tenure in Geneva, when I
asked my colleagues ‘why’ the Appellate Body felt free to break the rules – the famous ‘why’ question
as characterized by the media – I was usually greeted with silence.

“This silence is not surprising. It became clear to me that some WTO members saw the Appellate Body as
an independent international court and its members as judges who inherently have more authority to
make rules and create jurisprudence. The same members envisaged the body as the centerpiece – the
‘crown jewel’ – of the dispute settlement system, not just one component of that system.

“Some Appellate Body members also viewed themselves as ‘appellate judges’ serving on a ‘World Trade
Court’ and commissioned with broad authority to develop ‘a coherent and predictable body of
jurisprudence.’ We know all this because they said so.

“In an important 2020 speech at Washington, DC’s Georgetown University, former Appellate Body
member Tom Graham described the prevailing ethos of the Appellate Body characterized by three
specific attributes:

“First, an orthodoxy of viewpoint, about the role of the Appellate Body as a self-anointed
international court, with much broader authority to over-reach the rules and create judge-made
law than permitted by the WTO agreements, or intended by the negotiators who created them;

“Second, a mindset that declined to re-examine the premises by which the Appellate Body
expanded its role; and

“Third, a group-think that de-legitimized serious systemic criticisms, and those who espoused

“In his Georgetown speech, Mr. Graham also described the high degree of control exercised by Appellate
Body staff leadership; an over-emphasis on ‘collegiality’ that shaded into peer pressure to conform; an
excessive striving for consensus decisions coupled with a discouragement of dissents that led to
excessively long and unclear compromise reports; a sense of infallibility; and an undue adherence to
precedent – not only with respect to outcomes but also to reasoning, definitions, and obiter dicta that
had the effect of ‘baking in mistakes.’

“As far as I know, none of these critical Appellate Body ‘inside-the-tent’ operational issues has ever
seriously been discussed at the WTO’s Dispute Settlement Body, the General Council, or even among
informal groupings of WTO members.

“The effect of Appellate Body overreach and its accretion of power has been the diminution of the WTO’s
negotiating function. Why negotiate when you can achieve a desired outcome through litigation? Not
surprisingly, the last successful multilateral negotiation was the Trade Facilitation Agreement,
completed in 2013, and there have been no successful rounds of tariff negotiations since the WTO’s

“While in Geneva, I was often asked ‘what does the U.S. want?’ What the U.S. wanted was a deeper
discussion of why the Appellate Body felt free to depart from what WTO Members agreed to and why
the WTO membership allowed it to happen. It seems the current U.S. Administration is seeking the same
kind of deep-dive discussion, recognizing as we did that simply papering over the differences among
WTO members with a few word tweaks to the DSU or with a General Council decision that simply
repeats the words already in the DSU just won’t work as a durable solution.

“Going forward, there must be a shared understanding of the proper structure and role of the WTO
dispute settlement system and what we all want to get out of it.

“So how would we start such a discussion? Beyond engaging on the substantial critique that I just
outlined and what it might mean for any future system, let me suggest several questions. Some of these
questions may sound quite basic but are still essential to consider nonetheless:

“What is the purpose of dispute settlement at the WTO? What objectives are we trying to achieve? What
benefits do WTO Members hope to derive?

“Do we agree that dispute settlement should support the WTO’s negotiating and monitoring functions
and not act to undermine them?

“What attributes do we want WTO arbitrators to possess?

“Is the timeliness of decision-making important? If so, how can we expedite decision-making without
compromising fairness and quality?

“Do we even need a second-tier or appellate review at the WTO? If so, why? Has it been the shared
experience of WTO members over the past 25 years that the Appellate Body has demonstrated greater
expertise and competence than panel members?

“If a second tier is considered important, should a losing party at the panel level have an automatic right
to appeal? Or should the lane for these appeals be narrower – perhaps through a mechanism that
allows the WTO membership to set aside erroneous panel opinions in exceptional cases, as suggested by
former U.S. Trade Representative Bob Lighthizer?

“What other alternative appellate review structures are possible? For example, does it make sense to
expand the roster of first-tier panelists and enlist some of them for ‘appellate duty’ when the need
arises? Do we need a permanent and dedicated staff to assist the appellate reviewers or did that type
of structure contribute to the Appellate Body exceeding its intended role?

“And what is the appropriate relationship between the WTO membership, acting through the Dispute
Settlement Body, and the WTO arbitrators?

“Beyond these questions, there must be a shared understanding of the fundamental norms that underpin
the rules-based international trading system. After all, these norms – and the rules they inform and
buttress – are what the dispute settlement system is designed to protect.

“For the U.S., the fundamental norms of the WTO include openness, transparency, non-discrimination,
and market orientation grounded in the rule of law. It’s this last one – market orientation – that seems
to be now in dispute.

“As one of the main architects of the multilateral trading system, the United States has always believed
that adherence to market-based policies among trading parties was essential if the system is to work
effectively and fairly. We certainly held this belief when we joined the GATT and later when we signed
the Marrakesh Declaration with its commitment to ‘open, market-based policies.’ And the U.S. has
insisted in literally dozens of WTO accessions that the acceding party undertake domestic reforms to
reduce the role of the state in the economy and increase market orientation.

“As former WTO Deputy Director General Alan Wolff has explained: ‘The WTO is not simply about
coexistence; differences among members affecting trade which deviate from the principles governing
the WTO, its core values, are to be progressively overcome.’

“Not surprisingly, the People’s Republic of China does not believe that market orientation is a core value
of the WTO, arguing instead that market and non-market economies both belong in the organization on
an equal footing. But in 2001, when China acceded to the WTO, there was an expectation that its economy would further open up, liberalize, and embrace market principles.

“Regrettably, this future has not materialized. In fact, we have witnessed significant retrenchment, a
process that has been ongoing for well over a decade.

“Today, it’s as if one team is playing rugby and the rest of us are playing cricket.

“As I said in my final remarks at the WTO in 2020, China’s ‘state-led, non-market economic system is
incompatible with the WTO and its norms. To believe the WTO can manage this system’s trade disruptive
impact under current rules and through the dispute settlement process is fantasy.’

“In my mind, this is the most pressing issue facing the WTO – how to manage this fundamental
incompatibility. And to be completely candid, I’m not sure the WTO is equipped to do so.

“What I do know is that, at least from a U.S. perspective, reform of the WTO’s dispute settlement system
can only succeed if the market-orientation norm of the WTO is significantly reinforced, not only through
changes to the rules that effectively discipline non-market practices both also through a widespread
recognition throughout the membership that market orientation is a foundational principle or norm of
the international trading system.

“Thank you for listening. It’s been a privilege to have this opportunity to speak with you today.”


The EU and many other WTO Members are looking for reform efforts to include the restoration of a two-tier dispute settlement system. The objectives these Members have focus on timing and speed of process. One does not see from these Members a focus on the need for Member discussion of the types of questions that Amb. Shea has outlined above. If, as seems likely, the Biden Administration is supportive of reexamining the dispute settlement system to address the types of concerns Administrations of both parties have raised over the last two decades, pursuing negotiations before a full discussion of the core questions listed above will almost certainly lead to failure.

Similarly, resolving the dispute settlement challenge will not occur in isolation. There is the issue of correcting erroneous decisions of the past as well as the critical need to address the incompatibility of the market economy systems that have typified the GATT and now the WTO and the state controlled economic systems typified by China and others. Convergence of Member economic systems must be agreed and enforced. Coexistence plainly is not working. There are too many aspects of state-controlled economies which are not adequately addressed by the existing multilateral rules. It is not likely that mere modification of the rules or adoption of new rules will solve the incompatibility.

The challenge for the WTO is whether its diversity of Members and need for consensus makes any forward movement on these critical issues possible in the coming months and years. Let’s hope that Amb. Shea’s concern that the WTO may not be capable of meeting the challenge is not correct.

February 10, 2022 release of ILO report and subsequent U.S. State Department press release on forced labor and other human rights issues in Xinjiang Autonomous Region of China

My last post from February 11th on forced labor and U.S. law to stop imports from such labor did not include reference to a report released by the International Labor Organization on February 10, 2022 and the U.S. Department of State media note on the note. See February 11, 2022:  Stopping imports made in whole or in part from forced labor — U.S. law and the looming challenge on goods made from cotton and polysilicon,

The ILO press release on the report can be found here. ILO releases the 2022 report of the Committee of Experts on the Application of Conventions and Recommendations, Press release, 10 February 2022,–en/index.htm

The State Department media note can be found here (U.S. Department of State, media note, On the Release of the International Labor Organization’s Committee of Experts Report, February 10, 2022, and is copied below.

“The Department of State welcomes the issuance today of a report by a committee of the International Labor Organization (ILO) calling on the government of the People’s Republic of China (PRC) to review, repeal, and revise its laws and practices of employment discrimination against racial and religious minorities in Xinjiang.

“This report, produced by the ILO’s Committee of Experts on the Application of Conventions and Recommendations, expresses deep concern regarding the PRC’s policies and calls on the PRC government to take specific steps toward eliminating racial and religious discrimination in employment and occupation, and to amend national and regional policies utilizing vocational training and rehabilitation centers for ‘political re-education’ based on administrative detention.

“China joined the ILO in 1919 as one of the founding member states. The United States calls on the PRC to take the steps requested by the Committee of Experts.  We also reiterate our call for the PRC to end its genocide and crimes against humanity perpetrated against the predominantly Muslim Uyghurs and members of other ethnic and religious minority groups in Xinjiang, as well as its use of these groups for forced labor in Xinjiang and beyond. The State Department is committed to working with our international partners and allies to end forced labor and strengthen international action against the ongoing genocide and crimes against humanity in Xinjiang.

“The Committee’s report can be found here –—ed_norm/—relconf/documents/meetingdocument/wcms_836653.pdf .

“For more information on forced labor in the PRC’s Xinjiang Region, please see the linked July 2021 Fact Sheet on the topic:“.

The full title of the ILO report is International Labour Organization, Application of International
Labour Standards 2022, Report III (Part A), Report of the Committee of Experts on the Application of Conventions and Recommendations, International Labour Conference, 110th Session, 2022,—ed_norm/—relconf/documents/meetingdocument/wcms_836653.pdf. The volume is 870 pages in length and reviews compliance with various standards by individual countries. There are discussions on China at pages 431-433 (Minimum Age Convention, 1973 (No. 138) (ratification: 1999)); 433-434 (Worst Forms of Child Labour Convention, 1999 (No. 182) (ratification: 2002)); 514-521 (Discrimination (Employment and Occupation) Convention, 1958 (No. 111)(ratification: 2006)); and 683-689 (Employment Policy Convention, 1964 (No. 122) (ratification: 1997). It is the latter two sections that talk at length about claims made by the International Trade Union Confederation (ITUC) on practices against the Uyghurs in Xinjiang Autonomous Region, the government of China’s response to the claims, and the concerns of the Committee of Experts with requested actions. For example, looking just at the last section, pages 683-685 outlines the claims by the ITUC on employment practices.

“In its observations of 2020 and 2021, the ITUC alleges that the Government of China has been engaging in a widespread and systematic programme involving the extensive use of forced labour of the Uyghur and other Turkic and/or Muslim minorities for agriculture and industrial activities throughout the Xinjiang Uyghur Autonomous Region (Xinjiang), in violation of the right to freely chosen employment set out in Article 1(2) of the Convention. The ITUC maintains that some 13 million members of the ethnic and religious minorities in Xinjiang are targeted on the basis of their ethnicity and religion 684 Report of the Committee of Experts on the Application of Conventions and Recommendations Employment policy and promotion with a goal of social control and assimilation of their culture and identity. According to the ITUC, the Government refers to the programme in a context of ‘poverty alleviation’, ‘vocational training’, ‘reeducation through labour’ and ‘de-extremification’.

“The ITUC submits that a key feature of the programme is the use of forced or compulsory labour in or around ‘internment’ or ‘re-education’ camps housing some 1.8 million Uyghur and other Turkic and/or Muslim peoples in the region, as well as in or around prisons and workplaces across Xinjiang and other parts of the country.

“The ITUC indicates that, beginning in 2017, the Government has expanded its internment programme significantly, with some 39 internment camps having almost tripled in size. The ITUC submits that, in 2018, Government officials began referring to the camps as ‘vocational education and training centres’ and that in March 2019, the Governor of the Xinjiang Uyghur Autonomous Region described them as ‘boarding schools that provide job skills to trainees who are voluntarily admitted and allowed to leave the camps’. The ITUC indicates that life in ‘re-education centres’ or camps is characterized by extraordinary hardship, lack of freedom of movement, physical and psychological torture, compulsory vocational training and actual forced labour.

“The ITUC also refers to ‘centralized training centres’ that are no re-education camps but have
similar security features (e.g. high fences, security watchtowers and barbed wire) and provide similar
education programmes (legal regulations, Mandarin language courses, work discipline and military
drills). The ITUC adds that the re-education camps are central to an indoctrination programme focused
on separating and ‘cleansing’ ethnic and religious minorities from their culture, beliefs, and religion.
Reasons for internment may include persons having travelled abroad, applied for a passport,
communicated with people abroad or prayed regularly.

“The ITUC also alleges prison labour, mainly in cotton harvesting and the manufacture of textiles, apparel and footwear. It refers to research according to which, starting in 2017, the prison population of Uyghurs and other Muslim minorities increased dramatically, accounting for 21 per cent of all arrests in China in 2017. Charges typically included ‘terrorism’, ‘separatism’ and ‘religious extremism’.

“Finally, the ITUC alleges that at least 80,000 Uyghurs and other ethnic minorities workers were transferred from Xinjiang to factories in Eastern and Central China as part of a ‘labour transfer’ scheme
under the name ‘Xinjiang Aid’. This scheme would allow companies to: (1) open a satellite factory in
Xinjiang or (2) hire Uyghur workers for their factories located outside this region. The ITUC alleges that
the workers who are forced to leave the Uyghur Region are given no choice and, if they refuse, are
threatened with detention or the detention of their family. Outside Xinjiang, these workers live and work
in segregation, are required to attend Mandarin classes and are prevented from practicing their culture
or religion. According to the ITUC, state security officials ensure continuous physical and virtual
surveillance. Workers lack of freedom of movement, remaining confined to dormitories and required to
use supervised transport to and from the factory. They are subject to impossible production
expectations and long working hours. The ITUC adds that, where wages are paid, they are often subject
to deductions that reduce the salary to almost nothing. ITUC further adds that, without these coercively
arranged transfers, Uyghurs would not find jobs outside Xinjiang, as their physical appearance would
trigger police investigations.

“According to the ITUC’s allegations, to facilitate the implementation of these schemes, the Government offers incentives and tax exemptions to enterprises that train and employ detainees; subsidies are granted to encourage Chinese-owned companies to invest in and build factories near or within the internment camps; and compensation is provided to companies that facilitate the transfer and employment of Uyghur workers outside the Uyghur Region.

“In its 2021 observations, the ITUC supplements these observations with information, including testimonies from the Xinjiang Victims Database, a publicly accessible database which as of 3 September
2021 had allegedly recorded the experience of some 35,236 ethnic minority members forcibly interned
by the Government since 2017.”

The Government of China provides its views that the claims are false in each case and provides a review of what its actions are intended to accomplish (pages 685-687). However, the Committee of Experts expresses major concerns and seeks additional action/information from China (687-689 copied below).

“The Committee takes due note of the ITUC allegations, the response and additional information provided by the Government and the various employment and vocational training policies as articulated
in various recent ‘white papers’ referred to by the Government in its report and other legal and policy
documents referred to by United Nations human rights experts.

“The Committee recalls that the Convention’s objective of promoting full employment does not require ratifying States to guarantee work for all who are available for and seeking work, nor does it imply that everyone must be in employment at all times (2020 General Survey on promoting employment and decent work in a changing landscape, paragraph 54). The Convention does, however, require ratifying States to promote freedom to choose one’s employment and occupation, as well as equal access to opportunities for training and general education to prepare for jobs, without discrimination on the basis of race, colour, national origin, religion or other grounds of discrimination covered under Convention No. 111 or other international labour standards such as the Vocational Rehabilitation and Employment (Disabled Persons) Convention, (No. 159).

“In this context, the Committee notes that training facilities that house the Uyghur population and other Turkic and Muslim minorities separate them from the mainstream educational and vocational training, vocational guidance and placement services available to all other groups in the region throughout the country at large. Such separation may lead to active labour market policies in China being designed and implemented in a manner that generates coercion in the choice of employment and has a discriminatory effect on ethnic and religious minorities. Photographs of the facilities, equipped with guard towers and tall surrounding walls topped with barbed wire further reinforce the observation of segregation. The Committee has observed before that some workers from ethnic minorities face challenges in seeking to engage in the occupation of their choice because of indirect discrimination. For example, biased approaches towards the traditional occupations engaged in by certain ethnic groups, which are often perceived as outdated, unproductive or environmentally harmful, continue to pose serious challenges to the enjoyment of equality of opportunity and treatment in respect of occupation (general observation on Convention No. 111, 2019). The Committee addresses other aspects of the particular system for vocational training and education aimed at the deradicalization of ethnic and religious minorities in its comment on the application of the Discrimination (Employment and Occupation) Convention, 1958 (No. 111).

“The Committee recalls that, while the Convention requires ratifying States to declare and pursue as a major goal an active policy designed to promote full, productive and freely chosen employment with the objective of stimulating economic growth and development and meeting manpower requirements, employment policy must also promote free choice of employment by enabling each worker to train for employment which can subsequently be freely chosen, in accordance with Article 1(2)(c) of the Convention.

“Article 1(2)(c) provides that the national employment policy shall aim to ensure that ‘there is freedom of choice of employment and the fullest possible opportunity for each worker to qualify for, and to use his skills and endowments in, a job for which he or she is well suited, irrespective of race, colour, sex, religion, political opinion, national extraction or social origin’. In its 2020 General Survey on promoting employment and decent work in a changing landscape, paragraphs 68–69, the Committee noted that ‘the objective of freely chosen employment consists of two elements. First, no person shall be compelled or forced to undertake work that has not been freely chosen or accepted or prevented from leaving work if he or she so wishes’. Second, all persons should have the opportunity to acquire qualifications and to use their skills and endowments free from any discrimination. Moreover, the Committee recalls that the prevention and prohibition of compulsory labour is a condition sine qua non of freedom of choice of employment (2020 General Survey, paragraph 70).

“The Committee notes the Government’s statement that the ITUC observations are based on individual statements and are unsubstantiated; however, it notes that the ITUC observations also append additional sources containing statistical data; references to first-hand testimonies, testimonies of eyewitnesses, family and relatives; research papers; and photographs of vocational training and education centres.

“The Committee also notes that, on 29 March 2021, a number of United Nations human rights experts (including Special Rapporteurs and thematic working groups mandated by the UN Human Rights Council) expressed serious concern with regard to the alleged detention and forced labour of Uyghur and other Turkic and/or Muslim minorities in Xinjiang. The UN experts indicate that Uyghur workers have been held in ‘re-education’ facilities, with many also forcibly transferred to work in factories in Xinjiang. They further indicate that Uyghur workers have allegedly been forcibly employed in low-skilled, labour-intensive industries, such as agribusiness, textile and garment, automotive and technological sectors.

“The Committee recognizes and welcomes the strong commitment of the Government to the eradication of poverty. However, it is the Committee’s firm view that poverty eradication and the realization of the right to work to that end encompasses not only job placement and job retention but also the conditions under which the Government executes such placement and retention. The Convention does not only require the Government to pursue full employment but also to ensure that its employment policies do not entail any direct or indirect discriminatory effect in relation to recruitment, conditions of work, opportunities for training and advancement, termination, or any other employment-related conditions, including discrimination in choice of occupation.

“The Committee is of the view that at the heart of the sustainable reduction of poverty lies the active enhancement of individual and collective capabilities, autonomy and agency that find their expression in the full recognition of the identity of ethnic minorities and their capability to freely and without any threat or fear choose rural or urban livelihoods and employment. The obligation under the Convention is not to guarantee job placement and retention for all individuals by any means available but to create the framework conditions for decent job creation and sustainable enterprises.

“The Committee takes due note of the view expressed in the Government’s report that ‘some forces recklessly sensationalize the so-called ‘forced labour’ issue in Xinjiang on various occasions’, adding that this is ‘nothing but a downright lie, a dirty trick with ulterior motives’. The Committee is bound to observe, however, that the employment situation of Uyghurs and other Muslim minorities in China provides numerous indications of coercive measures many of which arise from regulatory and policy documents.
The Government’s references to significant numbers of ‘surplus rural labour’ being ‘relocated’ to industrial and agricultural employment sites located inside and outside Xinjiang under ‘structured Employment policy and promotion conditions’ of ‘labour management’ in combination with a vocational training policy targeting deradicalization of ethnic and religious minorities and at least in part carried out in high-security and high-surveillance settings raise serious concerns as to the ability of ethnic and religious minorities to exercise freely chosen employment without discrimination. Various indicators suggest the presence of a ‘labour transfer policy’ using measures severely restricting the free choice of employment. These include government-led mobilization of rural households with local townships organizing transfers in accordance with labour export quotas; the relocation or transfer of workers under security escort; onsite management and retention of workers under strict surveillance; the threat of internment in vocational education and training centres if workers do not accept ‘government administration’; and
the inability of placed workers to freely change employers.

The Committee urges the Government to provide detailed updated information on the measures taken or envisaged to ensure that its national employment policy effectively promotes both productive and freely chosen employment, including free choice of occupation, and effectively prevents all forms of forced or compulsory labour. In addition, the Committee requests the Government to take immediate measures to ensure that the vocational training and education programmes that form part of its poverty alleviation activities focused in the Uyghur Autonomous Region are mainstreamed and delivered in publicly accessible institutions, so that all segments of the population may benefit from these services on an equal basis, with a view to enhancing their access to full, productive and freely chosen employment and decent work. Recalling that, under the Employment Promotion Law (2007) and the Vocational Education law (1996), workers have ‘the right to equal employment and to choose a job of their own initiative’ and to access vocational education and training, respectively, the Committee asks the Government to provide detailed information on the manner in which this right is effectively ensured, particularly for those belonging to the Uyghur minority and other Turkic and/or Muslim minorities. The Government is also requested to provide detailed information, including disaggregated statistical data, on the nature of the different vocational education and training courses offered, the types of courses in which Uyghur minorities have participated, and the numbers of participants in each course, as well as the impact of the education and training on their access to freely chosen and sustainable employment.

“Article 3 of the Convention. Consultation. The Committee requests the Government to indicate
the manner in which representatives of workers and employers organizations were consulted with
respect to the design, development, implementation, monitoring and review of the active labour
market measures being taken in the Uyghur Autonomous Region. In addition, and given the focus of
the active labour market measures on the Uyghur and other Turkic/Muslim minorities, the Committee
requests the Government to indicate the manner in which the representatives of these groups have
been consulted, as required under Article 3.

“The Committee is raising other matters in a request addressed directly to the Government.”

The ILO Report references a report from the UN Committee on the Elimination of Racial Discrimination. See United Nations, International Convention on the Elimination of All Forms of Racial Discrimination, Committee on the Elimination of Racial Discrimination, Concluding observations on the combined fourteenth to seventeenth periodic reports of China (including Hong Kong, China and Macao, China), CERD/C/CHN/CO/14-17, 19 September 2018, pages 7-8 (paras.40-42, copied below),

Xinjiang Uighur Autonomous Region

“40. The Committee notes the statements delivered by the State party delegation concerning the non-discriminatory enjoyment of freedoms and rights in the Xinjiang Uighur Autonomous Region. The Committee is, however, alarmed by:

“(a) Numerous reports of the detention of large numbers of ethnic Uighurs and other Muslim minorities, held incommunicado and often for long periods, without being charged or tried, under the pretext of countering religious extremism. The Committee regrets the lack of official data on how many people are in long-term detention or who have been forced to spend varying periods in political “re-education camps” for even non-threatening expressions of Muslim ethno-religious culture, such as a daily greeting. Estimates of the number of people detained range from tens of thousands to over a million. The Committee also notes that the delegation stated that vocational training centres exist for people who have committed minor offences without qualifying what that means;

“(b) Reports of mass surveillance disproportionately targeting ethnic Uighurs, such as frequent baseless police stops and the scanning of mobile phones at police checkpoint stations; additional reports have been received of the mandatory collection of extensive biometric data in the Xinjiang Uighur Autonomous Region, including DNA samples and iris scans, of large groups of Uighur residents;

“(c) Reports that all residents of the Xinjiang Uighur Autonomous Region are required to hand over their travel documents to police and apply for permission to leave the country, and that permission may not come for years. This restriction particularly affects those who wish to travel for religious purposes;

“(d) Reports that many Uighurs who had left China have allegedly been returned to the country against their will. There are fears for the current safety of those returned to China against their will.

“While acknowledging the State party’s denials, the Committee takes note of reports that Uighur language education has been banned in schools in the Hotan (Hetian) prefecture in the Xinjiang Uighur Autonomous Region (arts. 2 and 5).

“42. The Committee recommends that the State party:

(a) Halt the practice of detaining individuals who have not been lawfully charged, tried and convicted for a criminal offence in any extralegal detention facility;

(b) Immediately release individuals currently detained under these circumstances, and allow those wrongfully held to seek redress;

(c) Undertake prompt, thorough and impartial investigations into all allegations of racial, ethnic and ethno-religious profiling, holding those responsible accountable and providing effective remedies, including compensation and guarantees of non-repetition;

(d) Implement mandatory collection and analysis of data on the ethnicity of all individuals stopped by law enforcement, the reasons for and outcome of those stops, report publicly on the information collected at regular intervals and include it in its follow-up report;

(e) Ensure that all collection, retention and use of biometric data is regulated in law and in practice, is narrow in scope, transparent, necessary and proportionate to meeting a legitimate security goal, and is not based on any distinction, exclusion, restriction or preference based on race, colour, descent or national or ethnic origin;

(f) Eliminate travel restrictions that disproportionately affect members of ethnic minorities;

(g) Disclose the current location and status of Uighur students, refugees and asylum seekers who returned to China pursuant to a demand made by the State party in the past five years;

(h) Provide the number of persons held against their will in all extralegal detention facilities in the Xinjiang Uighur Autonomous Region in the past five years, together with the duration of their detention, the grounds for detention, the humanitarian conditions in the centres, the content of any training or political curriculum and activities, the rights that detainees have to challenge the illegality of their detention or appeal the detention, and any measures taken to ensure that their families are promptly notified of their detention.”

As China seems intent on pursuing its policies described above and in the other sections of the ILO Report against the Uyghurs and other minorities, there will remain increased global tensions including trade actions to address what others view as unacceptable actions towards the minorities.

Stopping imports made in whole or in part from forced labor — U.S. law and the looming challenge on goods made from cotton and polysilicon

In prior posts, I have reviewed the challenges to international trade from forced labor practices in a number of countries and actions by the United States in 2021 to increase the focus on forced labor in China’s Xinjiang Uyghur Autonomous Region. See December 19, 2021:  Forced labor and trade — U.S. Congress passes legislation to address China’s treatment of Uyghurs,; April 27, 2021:  WTO and forced labor in cotton — Commentary by Amb. Dennis Shea, former Deputy U.S. Trade Representative,; March 24, 2021:  When human rights violations create trade distortions — the case of China’s treatment of the Uyghurs in Xinjiang,; January 25, 2021:  Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?,; January 24, 2021:  Forced labor and child labor – a continued major distortion in international trade for some products,

U.S. legislation was signed into law on December 23, 2021, Pub. L 117-78, “To ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China do not enter the United States market, and for other purposes”. The legislation includes working with USMCA partners (Canada and Mexico) and developing a strategy for addressing imports with priority sectors including cotton, tomatoes and polysilicon. As reviewed in a Peterson Institute for International Economics policy paper,

“The Xinjiang economy is still peripheral, accounting for only 1.4 percent of China’s gross domestic product. However, it is a major producer of two products, cotton and polysilicon, that are key parts of global supply chains. Xinjiang accounts for nearly 20 percent of global cotton production, with
annual production greater than that of the entire United States.9 Its position in polysilicon—the material from which solar panels are built—is even more dominant, accounting for nearly half of global production.10 Its position in polysilicon stems not from a dominant position in the raw material (silicon
being among the most abundant minerals on Earth) but from the massive amounts of energy used in the refining process and Xinjiang’s low, albeit carbon intensive, energy costs.

“9 See the International Cotton Advisory Committee, (accessed on May 21, 2021).

“10 Dan Murtaugh, “Why It’s So Hard for the Solar Industry to Quit Xinjiang,” Bloomberg Green,
February 10, 2021,

PIIE Policy Brief, Cullen S. Hendrix and Marcus Noland, 21-14 Assessing Potential Economic Policy Responses to Genocide in Xinjiang at 5 (June 2021),

The complicating factor for U.S., Canadian, Mexican and other authorities attempting to prohibit imports of products made in part or in whole from forced labor is that multiple countries are involved in many value chains. Thus, while 85% of China’s cotton production comes from the Xinjiang Autonomous Region, China not only uses the cotton internally for producing products (clothing, towels, etc.) but also exports cotton and textile products to many countries for further manufacture and consumption or export.

For example, cotton is covered by Chapter 52 of the Harmonized System of tariff classifications. In 2020, according to data from the UN COMTRADE data base, China exported cotton products classified under HS Chapter 52 to Bangladesh ($1.69 billion), Vietnam ($1.5 billion), Philippines ($846 million), Nigeria ($815 million), Cambodia ($430 million), Hong Kong ($420 million), Pakistan ($369 million) and Indonesia ($298 million) among other countries. See Trend Economy, Annual International Trade Statistics by Country , China, Cotton, These countries, as well as China, utilize the cotton products covered by Chapter 52 for producing other interim and finished products covered by other HS Chapters. The products produced are consumed in country or exported. Looking at just one such chapter, Chapter 61, covering some clothing products, and looking at imports in 2021 into the United States of items listed as containing cotton in that Chapter, shows the following dollar values potentially involved (in large part for China and for some parts for other countries).

China$ 3,651,051,704
Vietnam$ 4,311,944,342
Bangladesh$ 1,880,676,205
Cambodia$ 1,536, 029,654
Indonesia$ 1,436,846,321
Pakistan$ 1,164,854,604
Philippines$ 193,641,125
Hong Kong$ 35,811,289
Nigeria$ 77,091
Subtotal$14,210,932,335 (57.74% of total)
All Countries$24,613,797,890

The individual 10-digit HTS categories covered above are shown in the enclosed data from the USITC data we for China for the years 2016-2021.


The same problems exist for polysilicon and solar products made from polysilicon. Indeed, actions were taken last summer in the U.S. banning such products from a particular company in China. See, e.g., New York Times, U.S. Bans Imports of Some Chinese Solar Materials Tied to Forced Labor, June 24, 2021 updated August 2, 2021, (“The White House announced steps on Thursday to crack down on forced labor in the supply chain for solar panels in the Chinese region of Xinjiang, including a ban on imports from a silicon producer there.”).

For both product groups, banning imports will present administrative challenges and will also pose challenges for purchasers looking for alternative sources of supply. It is critical for there to be adequate resources to implement the ban as well focus by purchasers on identifying alterative sources of supply.

The U.S.’s and other countries’ concerns with the Chinese practices involving the Uyghurs and other minorities in Xinjiang Autonomous Region are serious as the claims of genocide make clear. The increased use of Section 307 of the Tariff Act of 1930 by the U.S. Administration and efforts at coordination with trading partners are important steps to accompany increased diplomatic engagement to address the human rights challenges in China that have now been well documented.

While human rights violations don’t always carry with them trade implications, that is not the case where forced labor is the issue and the labor is engaged in producing products or services. While China’s actions against the Uyghurs and other minorities are the focus of the recent legislation, forced labor is a much broader trade problem in fact as recognized in the U.S., in Europe and elsewhere.


On February 8th, a WTO panel report was released to the public on a U.S. safeguard case on imports of large residential washers. A challenge to the U.S. action was filed at the WTO by Korea on May 18, 2018 after safeguard relief was provided by the U.S. beginning February 7, 2018. The panel process was complicated by COVID restrictions on in person meetings. The challenge was to the U.S. International Trade Commission’s affirmative serious injury determination and remedy recommendation from December 2017 and the President’s issuance of import relief in late January 2018. See USITC, Large Residential Washers, Inv. No. TA 201 076, USITC Pub. 4745 (December 2017); Presidential Documents, Proclamation 9694 of January 23, 2018 – To Facilitate Positive Adjustment to Competition from Imports of Large Residential Washers, 83 FR 3553 (25 January 2018). As noted in footnote 11 to the Panel Report, “We note that in its comments to the Descriptive Part of the Panel Report, Korea noted that the safeguard measure at issue was extended on 14 January 2021 for two additional years, through 7 February 2023. (Korea’s comments to the Descriptive Part of the Panel Report (referring to US notification to the WTO, G/SG/N/10/USA/8/Suppl.7)).” WT/DS546/R at 10 fn. 11.

The panel found a number of aspects of the USITC determination and Presidential action to be contrary to U.S. obligations. The violations by and large raise important questions about needed reforms to GATT 1994 Art. XIX and the Agreement on Safeguards to ensure a functioning safeguard remedy as well as the proper role of dispute settlement in such cases. At the same time, a large number of challenges by Korea were rejected by the panel through the correct application of burden of proof and standard of review of administrative findings. Thus, the U.S. will have to decide if it will appeal the panel report, agree to its adoption or seek some other form of resolution with Korea.

GATT Art. XIX:1(a)

The first “violation” of obligations found by the panel reflects prior Appellate Body findings that provisions of Article XIX permit safeguard actions only where there are unforeseen developments and the problems are from the effects of obligations incurred by Members. The panel, following earlier decisions, found that these factors had to be explained and justified in the USITC determination and not raised after the fact during the dispute. WT/DS546/R at part 7.2, page 13-19. The concluding paragraph states, “7.35. In light of the above, we find that the USITC acted inconsistently with Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards because its report does not contain a reasoned and adequate explanation on ‘unforeseen developments’ and the ‘obligations incurred’ by the United States, within the meaning of Article XIX:1(a) of the GATT 1994.”

In the USTR report on the Appellate Body of the World Trade Organization from February 2020, USTR flagged six particularly eggregious decision areas of the Appellate Body that reflected the range of problems of concern to the United States. The fifth area was “The Appellate Body’s Non-Text-Based Interpretation of Article XIX of the GATT 1994 and the Safeguards Agreement Undermines the Ability of WTO Members to Use Safeguards Measures”. Report at 110-114, The segment from the USTR Report is copied below.

E. The Appellate Body’s Non-Text-Based Interpretation of Article XIX of the GATT 1994 and the Safeguards Agreement Undermines the Ability of WTO Members to Use Safeguards Measures

“• WTO Members specifically reserved for themselves the right to impose safeguard measures to protect their industries from import surges that cause or threaten to cause serious injury.

“• The Appellate Body has diminished this right by inventing additional requirements for the imposition of safeguards that Members never agreed to.

“• For example, the Appellate Body has found that prior to taking a safeguard action, a Member’s competent authority must include in its report a demonstration of the existence of ‘unforeseen developments,’ despite the absence of any such requirement in the GATT 1994 or the Safeguards Agreement.

“• The Appellate Body has also departed from the WTO agreements in creating a high threshold for serious injury determinations under the Safeguards Agreement.

“• Through the imposition of new obligations, the Appellate Body has rendered legitimate
safeguard measures significantly more difficult to defend.

“Safeguard measures provide a crucial means for WTO Members to protect their industries from import surges (including surges that would destroy domestic industry). WTO Members specifically reserved for themselves the right to impose such measures and established rules for the application of such measures in the WTO Agreement on Safeguards (‘Safeguards Agreement’).

1.The GATT and the Safeguards Agreement Reflect the Agreed Rules for Safeguard Measures

“Article XIX:1(a) of the GATT 1947 provides as follows:

“If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.

“As with most obligations in GATT 1947, panels evaluated compliance with Article XIX by examining, after the fact, whether the conditions justified a contracting party’s decision to suspend an obligation or withdraw or modify a concession. Parties to the proceeding could rely on information and findings from their domestic proceedings, or introduce new evidence and make new arguments to defend their actions.

“The WTO Agreement incorporated Article XIX of the GATT 1947 substantively unchanged into the GATT 1994, but added the Safeguards Agreement to ‘establish[] rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994.”260 The Safeguards Agreement set out standards for determining when serious injury existed. The Safeguards Agreement also set forth a requirement that a Member apply a safeguard measure only after an investigation by the competent authorities of that Member ‘to determine whether increased imports have caused or are threatening to cause serious injury to a domestic industry under terms of the Agreement.’261 Article 3.1 provides that ‘[t]he competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law.’ The Safeguards Agreement does not mention ‘unforeseen developments’ or require the competent authorities to evaluate whether serious injury is ‘as a result of unforeseen developments’ for purposes of Article XIX of the GATT 1994.

2. The Appellate Body Has Created Additional Obligations for Imposing Safeguard Measures

“In 2001, in US – Lamb Meat, the Appellate Body proclaimed (1) that the WTO Member taking safeguard action must publicly demonstrate unforeseen developments as a matter of fact before applying a safeguard measure and (2) that the demonstration must have appeared in the report of the competent authorities.262 Neither of these determinations is based on the text of Article XIX. Indeed, the Appellate Body admitted that ‘Article XIX provides no express guidance’ on the issue of ‘when, where or how this demonstration should occur.’263 Undaunted, the Appellate Body based its new determination on ‘instructive guidance’ that it drew from its own findings in earlier safeguard disputes. The Appellate Body’s approach was erroneous. The Appellate Body took a statement from one of its earlier reports, that unforeseen developments are circumstances that ‘must be demonstrated as a matter of fact,’ and used this phrase in a different context to create an entirely new and additional obligation that is not in Article XIX or the Safeguards Agreement.

“The lack of ‘guidance’ on this issue in Article XIX and the absence of any reference to “unforeseen developments” in the Safeguards Agreement demonstrates that WTO Members have not consented to be bound by any particular approach. The United States and other Members have given the Appellate Body no authority to to use its own prior reports to create obligations that do not appear in the text that Members agreed to.

“First, Article XIX does not require a ‘demonstration.’ As with other trade remedies covered by the GATT 1994, Article XIX merely specifies the conditions that justify an action. Thus, a need to ‘demonstrate’ that the conditions exist could arise only if and when another WTO Member challenges the action’s consistency with the relevant condition in Article XIX. By requiring a ‘demonstration’ before application of a safeguard measure, the Appellate Body’s approach appears to reverse the normal burden of proof in dispute settlement proceedings – that the complaining WTO Member bears the burden to show that serious injury was not ‘a result of unforeseen developments.’ The Appellate Body ignored this, and instead required that the WTO Member maintaining a safeguard measure bear the burden of demonstrating the existence of unforeseen developments before another WTO Member even challenged the safeguard measure.

“Second, the Appellate Body states that the ‘demonstration’ must be made by a WTO Member’s competent authorities, and in their published report, and not by any other official of the WTO Member or in any other manner. But Article XIX makes reference neither to competent authorities nor to published reports, two concepts that originate in the Safeguards Agreement, not in Article XIX. And, the Safeguards Agreement charges the competent authorities with the investigation of serious injury – not the other elements of Article XIX. For example, in Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, the Appellate Body correctly found that there is no obligation for the competent authorities to make findings justifying the type and extent of a safeguard measure. There is simply no textual basis for the Appellate Body’s conclusion in US – Lamb Meat that Article XIX requires the competent authorities to make any finding on unforeseen developments in their report.

“The Appellate Body supports its interpretation by claiming that any other approach would leave the means for complying with Article XIX ‘vague and uncertain’. This is simply not true. WTO Members take most measures without providing an advance demonstration of consistency with the WTO. A WTO Member challenging a safeguard measure must prove that a measure fails to meet one of the relevant requirements, and the Member applying that measure needs to demonstrate consistency only to the extent that the complaining WTO Member has proven its case. The same approach should apply to those elements of Article XIX, like unforeseen developments, that the Safeguards Agreement requires to be subject to the investigation and determination of the competent authorities. In any event, it is outside the mandate of the Appellate Body to elaborate on the text to satisfy the Appellate Body’s own sense of what is ‘clear’ or ‘certain.’ That is a task that WTO members reserved for themselves. Article 3.2 of the DSU is quite clear on this point.

“Other Members also have criticized the Appellate Body’s reasoning as well. As Korea explained in statements to the General Council, the Appellate Body’s reasoning left Members with ‘an ambiguous requirement to demonstrate the existence of ‘unforeseen developments’ [that was] not in line with the drafters’ intention.’ Korea also noted that the drafting history of the Safeguards Agreement demonstrated that ‘it would be unreasonable to conclude that the negotiators had left an essential requirement in Article XIX of GATT 1994 and had not included it in the new Agreement, which was meant to be the final embodiment of the rules on safeguards.’264

“The Appellate Body also strayed from the text of Article XIX and the Safeguards Agreement in US – Wheat Gluten in 2000, and US – Line Pipe in 2002. In these proceedings, the Appellate Body imposed a heightened threshold on the serious injury determinations by the competent authorities.

“Article 4.2(a) of the Safeguards Agreement provides for the competent authorities to conduct ‘an investigation to determine whether increased imports have caused or are threatening to cause serious injury to a domestic industry under the terms of this Agreement.’ It instructs them to ‘evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry,’ and lists several of these. Article 4.2(b) of the Safeguards Agreement then provides:

‘The determination referred to in subparagraph (a) shall not be made unless this investigation demonstrates, on the basis of objective evidence, the existence of the causal link between increased imports of the product concerned and serious injury or threat thereof. When factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to
increased imports.

“Relying on a negative obligation not to attribute injury from other causes to imports, the Appellate Body fashioned an affirmative requirement to analyze not only the nature of other factors, but to identify their ‘extent’ and then ‘separate and distinguish’ the effects of other factors from the effects of increased imports. The Appellate Body could even be understood to have suggested that the extent of injury from other factors should be mathematically ascertained so as to precisely separate and distinguish the injury.265 None of these additional requirements appear in the treaty text. The Appellate Body’s erroneous approach could also be understood to prevent an investigating authority from evaluating the injury caused by other factors and then examining whether that injury attenuates the causal link between the increased imports and serious injury. This would diminish the rights of WTO Members to take safeguard action in the circumstances set out in GATT 1994 Article XIX and the Safeguards Agreement.

3. The Appellate Body Has Made It All But Impossible for WTO Members to Impose Safeguard Measures

“A number of safeguard measures have been challenged at the WTO and, with one exception, all have been found to be WTO-inconsistent. 266 This is not surprising given the Appellate Body’s erroneous interpretations. The additional requirements invented by the Appellate Body raise the threshold for an affirmative finding that increased imports cause serious injury to a height that makes it all but impossible to impose safeguards. Under the Appellate Body’s erroneous approach, even if the imports are the most important cause of serious injury, a WTO Member may not apply a safeguard measure if its authorities did not mathematically determine and isolate the effects of other factors. These invented requirements seriously detract from WTO Members’ ability to protect themselves from unforeseen surges in imports, a right clearly reserved to them in Article XIX and the Safeguards Agreement.

“260 Agreement on Safeguards, Article 1.

“261 Agreement on Safeguards, Articles 3.1 and 4.2(a).

“262 US – Lamb (AB), para. 72 (2001).

“263 Id.

“264 Dispute Settlement Body, Minutes of the Meeting Held on January 12, 2000), WT/DSB/M/73 (4 February 2000); accord T. Raychaudhuri, The Unforeseen Developments Clause in Safeguards under the WTO: Confusions in Compliance, 11 Estey Ctr. J. Int’l Law and Trade Pol’y 302, 314 (‘The addition of such a requirement does not appear to be at all consistent with the intent of the negotiators in the Uruguay Round. In fact, a perusal of the negotiating history reveals that the draft version of the AS did contain the unforeseen developments clause. By mid1990, however, the clause was omitted from the draft, while other conditions of Article XIX were repeated almost verbatim.’).

“265 See US – Lamb (AB) (2001), para. 130 (‘[t]he words ‘factors of an objective and quantifiable nature’ imply, therefore, an evaluation of objective data which enables the measurement and quantification of these factors.’).”

While it is perhaps not surprising that the panel would follow the prior Appellate Body decisions on the issue of GATT 1994 Article XIX:1(as), the problem flagged by the U.S. and others remains present in the current decision. Moreover, the lack of inclusion of the requirement in the Agreement on Safeguards may simply reflect the reality experienced by the United States between 1962 and 1974 that the Art. XIX language was not administrable, and hence represent the desire of Members to have the Agreement on Safeguards be operational in fact.

Look for the U.S. to need a resolution of this issue (among others) before the Dispute Settlement problems are resolved. Resolution could occur through a revision to GATT 1994 Art. XIX or the Safeguard Agreement and/or meaningful reform of the dispute settlement system including panel reports.

Likeness of domestically produced parts and imported parts of LRWs

The domestic industry was defined by the USITC as consisting of washing machines and certain parts. Korea made various challenges to the domestic like product including challenging whether domestic parts were like imported parts since such parts were designed for particular models and hence not interchangeable. The panel viewed the Commission’s determination as violative of U.S. obligations under Art. 4.1(c) of the Safeguards Agreement since the Commission indicated the products didn’t compete and the Commission didn’t provide an adequate explanation for why the products were nonetheless “like”. See Panel Report at 23-27. Paras. 7.66 and 7.67 provided the summary of the panel’s finding.

“7.66. In the underlying investigation, the USITC specifically found that imported and domestically produced parts did not compete. We note that the United States alludes to different ways in which conditions of competition could manifest in the market, including situations where imports of LRW parts that do not directly compete with either domestic parts or finished products may nevertheless have an indirect impact on domestic producers of parts and finished products if they are assembled into finished products in domestic screwdriver operations that do not change the fundamental character of the parts. However, the USITC did not undertake any such analysis alluded by the United States as part of its likeness analysis.112

“7.67. Based on the foregoing, we find that the USITC did not find imported covered parts to be like domestically produced covered parts in a manner consistent with Article 4.1(c) of the Agreement on Safeguards in defining the domestic industry. Having reached this finding, we do not consider it necessary to make additional findings under Article 2.1 of the Agreement on Safeguards.

“112 See e.g. United States’ response to Panel question No. 67(a), paras. 1-2. The United States clarified that the USITC did not undertake an analysis of any indirect competition between domestically produced and imported parts as part of its likeness analysis because LG and Samsung, the two Korean producers, had not yet commenced production of LRWs at their planned US LRW production facilities as of the date of the USITC’s vote on injury. The United States explains that the USITC reasonably considered the likelihood of indirect competition from imports of covered parts in recommending safeguard remedy be imposed on parts. We also note that the United States suggests that the USITC found that domestic and imported covered parts competed as they “offer[ed] alternative ways of satisfying the same consumer demand in the marketplace”. (United States’ comments on Korea’s response to question No. 67, fn 12 (referring to USITC report, (Exhibit KOR-1), p. 17)). However, we recall that the USITC stated that covered parts did not compete. Moreover, at the cited section of the USITC report, the USITC stated that “[d]omestically produced and imported covered parts share the same general functionality when installed in LRWs” (emphasis added). This statement does not imply that covered parts competed in the market. As the USITC noted, covered parts may only be installed in specific LRW models. (USITC report, (Exhibit KOR-1), p. 16).”

While the finding can be viewed as a narrow one and one perhaps readily addressable by the USITC in future investigations, the finding of violation is questionable at best. Imported parts were used for repairs and potentially for downstream assembly. Domestically produced parts were used both in original equipment and for sale as repairs. The fact that the parts weren’t interchangeable for a given model doesn’t mean there wasn’t competition. The panel report mentions elsewhere serious price depression found by the Commission for LRWs. The same was likely the case for parts in the aftermarket. It is not uncommon for merchants to promote the total cost of equipment including costs of repairs if needed. Lower replacement costs for an imported part would likely put pressure on domestic replacement part prices. The USITC questionnaires that went to producers and importers may have captured some information on shipments/sales of parts. In any event, for panelists to construe the ITC description of a lack of competition in terms of use within a given model as undermining the appropriateness of parts being found to be like products ignores commercial reality. See also Panel Report at 26 fn. 110 (“We note that in its third-party statement, the European Union argued that because LRW parts are used to repair the respective LRW units, the market for LRW parts may constitute an ‘aftermarket’, while the market for LRW units would be the ‘primary market’. The European Union considered that it is possible that the interaction between the primary market (LRW units) and the aftermarket (LRW parts) form one ‘system market’, so that competition would take place between LRW systems. In its view, if one single domestic market exists for LRW units and parts, within that market, imported and domestic LRW parts would be ‘directly competitive’ with each other because competition would follow from the competition at the system level. (European Union’s third-party submission, paras. 34-40). We note that the USITC did not take such “system market” approach in the underlying investigation. Therefore, whether such approach would be consistent with Article 4.1(c) is not an issue in the matter before us.”).

As part of its attack on the U.S. like product findings, Korea separately argued that the USITC had included parts pursuant to its product line approach to analysis. The panel agreed with Korea (Panel Report at 27-30), but that issue would be irrelevant if a proper analysis had been performed on the like product issue on parts.

Other issues

The panel faulted the USITC for not explaining why it had excluded one domestic producer from profit and loss data and why the remaining data were sufficient. It also faulted the U.S. for not giving Korea sufficient time to consult on the safeguard remedy once the Administration had decided to include product from Korea in the relief. Regardless of the merits of the panel’s findings on these issues, neither should pose significant challenges to the U.S. in future cases.


Because the panel report contains several significant errors, including at least one of longstanding concern to the United States as reflected in the USTR Report on the Appellate Body of the World Trade Organization, it is possible that the United States will choose to file an appeal at the WTO and hence join the 24 other disputes where appeals have been filed where resolution is helpdup by the lack of a functioning Appellate Body (including a case where Korea has appealed (22 January 2021:  Notification of Appeal by Korea in DS553: Korea — Sunset Review of Anti-Dumping Duties on Stainless Steel Bars (WT/DS553/6)).

However, relief under the U.S. safeguard action is due to expire on February 7, 2023. Moreover, on many issues raised by Korea, the panel found no violation of obligation by the United States. In such circumstances, it is possible that the U.S. will agree to resolve the dispute by terminating the 201 relief sometime in the Spring.

My bet would be on the resolution option.

The WTO’s efforts to address the COVID-19 pandemic — will Members reach agreement by the end of February?

Throughout the current pandemic, the WTO has generated large amounts of information to help Members examine the response to the pandemic that would minimize disruptions and maximize availability of medical goods. See, e.g., WTO webpage and series of reports generated by the Secretariat (WTO, COVID-19 and world trade,; The WTO Secretariat provides periodic updates on reports as well as tracking import and export restrictions on medical goods and inputs. See, e.g., WTO news, WTO Secretariat updates members on COVID-19 reports and new tools, 28 January 2022,

With support from WTO Members, the WTO has worked with other multilateral organizations to promote a coordinated response. See, e.g., WTO press release, WHO, WIPO, WTO heads chart future cooperation on pandemic response, 1 February 2022,; WTO press release, International organizations discuss how to improve access to COVID vaccines, countermeasures, 22 December 2021, (IMF, World Bank, WHO, WTO); WTO-IMF COVID-19 Vaccine Trade Tracker, Last updated: 17 January 2022,

Most WTO Members view agreeing on a multilateral response to the pandemic as of critical importance. This includes both addressing a host of non intellectual property issues [“These include issues relating to trade facilitation, export restrictions, regulatory coherence, transparency and monitoring, scaling-up of production and distribution on essential goods, services and crisis preparedness and resiliency, and coordination with relevant stakeholders, including international organizations and the private sector.”] and resolving whether there should be a waiver from some TRIPS obligations as requested by India, South Africa and supported by others. The WTO Secretariat put out a briefing note on the issue of trade and health looking at the state of play as of 6 January 2022. See Trade and health: WTO response to the COVID-19 pandemic, 6 January 2022 (above quote is from the briefing note),

As I have reviewed in prior posts, the waiver of TRIPS obligations proposal from India and South Africa has been challenging for a number of Members to accept. See, e.g., WTO efforts to address the COVID-19 pandemic — the January 10, 2022 General Council meeting and some current developments of interest, The briefing note provides a good summary of the TRIPS waiver proposal and is copied below.

“TRIPS Council

“In parallel to the process facilitated by Ambassador Walker, members have been seeking convergence on how best to use the global intellectual property (IP) system to tackle COVID-19 in the context of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS).

“Waiver request

“Over the past year, members have engaged in discussions based on various texts. On 15-16 October 2020, India and South Africa introduced at the TRIPS Council document IP/C/W/669 requesting a waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of COVID-19. The proposal has since been co-sponsored by the delegations of Kenya, Eswatini, Mozambique, Pakistan, Bolivia, Venezuela, Mongolia, Zimbabwe, Egypt, the African Group, the LDC Group, the Maldives, Fiji, Namibia, Vanuatu, Indonesia and Jordan.

“Since the introduction of the document, discussions have taken place in various formal and informal TRIPS Council meetings. Delegations have exchanged views, asked questions, sought clarifications and provided replies, clarifications, and information on the waiver request. On 21 May 2021, the co-sponsors issued a revised proposal which was circulated in document IP/C/W/669/Rev.1 and on 29 September 2021 they circulated a summary of their interventions in document IP/C/W/684.

“In the course of discussions on the revised waiver proposal, delegations have held focused discussions on the topics of scope, both from the perspective of products and of IP rights, on duration, implementation and the protection of undisclosed information.

“All delegations remain committed to the common goal of providing timely and secure access to high-quality, safe, efficacious and affordable vaccines and medicines for all, but discussions have shown that disagreement persists on the fundamental question of whether a waiver is the appropriate and most effective way to address the shortage and inequitable distribution of and access to vaccines and other COVID-related products.

“EU proposal

“In addition, a proposal (IP/C/W/681) for a draft General Council declaration on the TRIPS Agreement and Public Health in the circumstances of a pandemic, issued by the European Union, has also been discussed in meetings since its circulation on 21 June 2021.

“The European Union proposal, which is backed by other developed country members, calls for limiting export restrictions, supporting the expansion of production, and facilitating the use of current compulsory licensing provisions in the TRIPS Agreement, particularly by clarifying that the requirement to negotiate with the right holder of the vaccine patent does not apply in urgent situations such as a pandemic, among other issues.

“While recognizing that intellectual property rights (IPRs) should not stand in the way of deploying and creating capacity, or of ensuring equitable access to vaccines and therapeutics, several developed and developing members have cautioned that this can be attained while maintaining IP as the basis for incentivizing investment in innovation, and for licensing technology transfer, so that members can effectively fight new strains of COVID-19 and any future diseases and pandemics. Some are particularly concerned that waiving IP rights might undermine the existing efforts and arrangements for large scale production of vaccines that rely, in part, on the IP system.  

“State of play

“Since the General Council held on 7 October 2021,  members have held intense contacts in various configurations. Some members have noted encouraging exchanges at small group discussions and bilateral meetings which have helped to identify points of convergence on how to provide a common IP response to COVID-19. Others have said that further conversations that move the TRIPS Council towards evidence-based and pragmatic solutions should guide their discussions at this critical juncture.

“At a meeting of the TRIPS Council on 18 November, members formally adopted an oral status report for the General Council on 22-23 November indicating that the TRIPS Council has not yet completed its consideration of the revised waiver request. The TRIPS Council will therefore continue its consideration, including through small-group consultations and informal open-ended meetings, and report back to the 12th Ministerial Conference (MC12) as stipulated in Article IX:3 of the Marrakesh Agreement. In addition, the TRIPS Council will also continue in the same manner its consideration of the other related proposals by members.

“This means the TRIPS Council remains in session so that it  can continue to provide a forum for delegations to provide transparency on their ongoing talks, and to adopt any elements or solutions they may have found.”

Despite the postponement of the 12th Ministerial Conference due to the increase in COVID cases from the omicron variant, WTO Members have indicated a desire to push ahead to resolve some matters, including the multilateral response to the pandemic. Last month, Director-General Ngozi Okonjo-Iweala urged WTO Members to push forward and seek a resolution on the WTO’s response to the pandemic by the end of February this year. See WTO press release, Members discuss way forward in dedicated meeting on WTO pandemic response, 27 January 2022, (“WTO members met on 27 January to discuss the WTO response to the COVID-19 pandemic. The informal meeting convened by the Chair of the General Council, Ambassador Dacio Castillo of Honduras, looked at issues related to cross-border trade flows and the proposal to waive certain intellectual property protections related to COVID-19 countermeasures. Director-General Ngozi Okonjo-Iweala called on members to move swiftly to try and reach a comprehensive outcome by the end of February.).

One week later according to press reports, Amb. Castillo called for a “strategic pause” in the formal negotiations on a WTO response to permit WTO Members to discuss their differences with each other outside of the full group format. See Inside U.S. Trade’s World Trade Online, General Council chair: WTO pandemic package talks need ‘strategic pause’, February 4, 2022,


The chances of a final resolution on a pandemic response package by the end of February seem remote if not nonexistent at the present time. The United States is reportedly not actively engaged and has raised some concerns with the export restraint portion of the package. There seems little likelihood that the EU and others supporting an approach other than TRIPS waiver will agree to a waiver, while those supporting a waiver don’t seem inclined to accept an alternative approach.

There are a number of reasons why a waiver is unlikely to be accepted. First, vaccine equity in 2021 had more to do with India’s failure to export the volumes of vaccines contracted with COVAX than any other single cause although slowness in shifting supplies from countries with surplus product was also an issue. In 2022, there will be sufficient supplies of vaccines for the entire world, and there have been major commitments by major countries to supply large volumes of doses to countries in need. UNICEF tracks capacity to produce COVID vaccines and shipments of vaccines. Around 11 billion doses were shipped globally (including in-country) in 2021 and projections for shipments in 2022 range from 16.8-20.9 billion doses. See COVID-19 Vaccine Market Dashboard, 5 February 2022, doses delivered collectively, 11.771 billion,; forecasted COVID-19 vaccine supply availability, 2022 (low estimate 16.8 billion doses; base estimate, 18.7 billion doses; high estimate 20.9 billion doses) (under capacity tab), A waiver of TRIPS obligations would be unlikely to change the quantity of vaccines available for shipment in 2022, so seems unnecessary to address vaccinating the world’s population in 2022.

Second, multilateral efforts and efforts of some pharmaceutical companies has resulted in a rapid expansion of production capacity around the world as the above figures confirm. Even where pharmaceutical companies have not licensed their vaccine technologies, there have been independent breakthroughs including on mRNA vaccines. See, e.g., Reuters, In world first, South Africa’s Afrigen makes mRNA COVID vaccine using Moderna data, February 4, 2022, (“CAPE TOWN, Feb 3 (Reuters) – South Africa’s Afrigen Biologics has used the publicly available sequence of Moderna Inc’s (MRNA.O) mRNA COVID-19 vaccine to make its own version of the shot, which could be tested in humans before the end of this year, Afrigen’s top executive said on Thursday. The vaccine candidate would be the first to be made based on a widely used vaccine without the assistance and approval of the developer. It is also the first mRNA vaccine designed, developed and produced at lab scale on the African continent.”).

Third, recent press articles indicate that some countries with very low vaccination rates have nonetheless developed significant antibodies in their populations due to prior waves of infections of COVID-19. With lower average age of populations, COVID-19 has had less severe consequences on their populations, such that there is a belief they are moving to an endemic situation with COVID-19. See my recent post, January 30, 2022:  Recent National Public Radio story, “Africa may have reached the pandemic’s holy grail,” raises interesting questions on a country’s age distribution and ability to get past the pandemic stage with lower vaccination rates,

All of the above suggests that the case for a waiver, at least at this time, is not strong, which will likely keep opposition of the EU and others strong.

The WTO has served as a depository for information on the types of restrictions and has permitted Members to encourage limiting restrictions on access to critical medicines and inputs. It has also developed reports helpful to Members to understand existing barriers or restrictions as well as to do outreach to the private sector for a better understanding of bottlenecks in production and distribution ramp-ups. The WTO in conjunction with other multilateral organizations has helped generate information to better inform the needs of countries for assistance and develop more coordinated efforts at support.

The WTO Members may yet be able to reach agreement on a response to the pandemic that will not only help with the current pandemic but establish a common frame of reference of dealing with future pandemics in a more effective manner that promotes greater equity. It is just unlikely to happen in the next 23 days.

Recent National Public Radio story, “Africa may have reached the pandemic’s holy grail,” raises interesting questions on a country’s age distribution and ability to get past the pandemic stage with lower vaccination rates

Every country that has had large numbers of COVID-19 cases and deaths reported have shared the experience that older populations and those with certain health conditions have been the groups at greatest risk, along with front line health care workers Vaccinations and booster shots can significantly reduce the risk of hospitalization and death for these groups and for younger age groups as well.

The COVID-19 pandemic has raised important questions on vaccine equity. Low income and lower-middle income countries have generally had much poorer access to vaccines and to getting vaccines received administered, although the rate of vaccination varies within income groups as well as between income groups. See, e.g., January 23, 2022:  COVID-19 Omicron variant – hopeful signs of peaking in the U.S. and Europe; supply disruptions continue from zero tolerance policy in China,

Much focus has been on low income countries and lower-middle income countries, particularly in Africa, where vaccination rates trail dramatically all other countries and income groups.

On Friday, January 28, 2022, National Public Radio in the U.S. posted an article, “Africa may have reached the pandemic’s holy grail,” The following excerpt reviews that large portions of the population in countries like Malawi were infected by the first waves of the COVID-19 virus which built up immunity to the omicron variant. Despite any reinfections that have occurred, hospitalizations and deaths were very low despite very low vaccination rates. The population of many low income countries is much younger than higher income countries and thus infections were typically much less severe. A few excerpts from the NPR article follow.

“When the results of his study came in, Kondwani Jambo was stunned.

“He’s an immunologist in Malawi. And last year he had set out to determine just how many people in his country had been infected with the coronavirus since the pandemic began.

“Jambo, who works for the Malawi-Liverpool-Wellcome Trust Clinical Research Programme, knew the total number of cases was going to be higher than the official numbers. But his study revealed that the scale of spread was beyond anything he had anticipated — with a huge majority of Malawians infected long before the omicron variant emerged. ‘I was very shocked,’ he says.

“Most important, he says, the finding suggests that it has now been months since Malawi entered something akin to what many countries still struggling with massive omicron waves consider the holy grail: the endemic stage of the pandemic, in which the coronavirus becomes a more predictable seasonal bug like the flu or common cold.

“In fact, top scientists in Africa say Malawi is just one of many countries on the continent that appear to have already reached — if not quite endemicity — at least a substantially less threatening stage, as evidenced by both studies of the population’s prior exposure to the coronavirus and its experience with the omicron variant.”

With global vaccine production dramatically up from this time last year and with much larger quantities getting shipped to low income and lower-middle income countries, the above article suggests that omicron has not done serious damage to most countries at the low income range and that significantly increased vaccinations in 2022 should help ensure a safer future.

Looking at UN population data by age group and by median age shows an interesting correlation between median age and income level of country. The median age for low income countries in 2020 (est.) was 19.0 years; for low-middle income countries, 26.6 years; for upper-middle income countries, 35.4 years and for high income countries, 41.0 years. See United Nations Population Division Department of Economic and Social Affairs, World Population Prospects 2019.

Looking at breakdowns by age groups, the UN data show the following percent of population in the World Bank income groups.

Age GroupLow IncomeLower-Middle IncomeUpper-Middle IncomeHigh Income
0-14 41.3% 29.4% 20.4% 16.6%
15-49 48.2% 52.8% 50.5% 45.6%
50+ 10.5% 17.8% 29.1% 37.7%
60+ 5.2% 9.1% 15.8% 24.4%
65+ 3.3% 5.9% 10.8% 18.4%
75+ 1.0% 1.9% 3.6% 8.4%

Age distribution has been a silver lining in an otherwise challenging global situation these last two years.

The trade and investment restrictions flowing from censorship — a recent U.S. International Trade Commission Report and the implications for the ongoing Joint Statement Initiative on E-Commerce

Eighty-six WTO Members are engaged in the ongoing Joint Statement Initiative negotiations on e-commerce. See WTO, Joint Initiative on E-Commerce, (“As of January 2021, there are 86 WTO members participating in these discussions, accounting for over 90 per cent of global trade. As is the case for all the joint initiatives, participation in the e-commerce JI is open to all WTO members. The initiative is jointly co-convened by Ambassador George Mina (Australia), Ambassador YAMAZAKI Kazuyuki (Japan) and Ambassador Tan Hung Seng (Singapore).”). Among the 86 Members who are participating in the negotiations are China, Russia, Indonesia and Turkey as well as major developed countries from Europe, the U.S., Japan, Korea, Canada, Australia, and New Zealand. Not included in the list as of January last year were India and Vietnam. The lack of meaningful rules on e-commerce is a reflection of the challenges the WTO negotiating function has faced in moving forward with multilateral rules.

Reports from the WTO have been that the plurilateral negotiations on e-commerce have made good progress through the end of 2021. See WTO news release, E-commerce co-convenors welcome substantial progress in negotiations, 14 December 2021,; WTO Joint Statement Initiative on E-commerce, Statement by Ministers of Australia, Japan and Singapore, December 2021, The Joint Statement is copied below.

“The COVID-19 pandemic has highlighted the digital economy’s importance, accelerated the digital
transformation and heightened the need for global rules governing digital trade. As Co-convenors of the
Joint Statement Initiative on Electronic Commerce, we are committed to responding to this challenge. This
initiative will update the WTO rulebook in an area of critical importance to the global economy.

“We recognise the importance of the digital economy in post-COVID-19 economic recovery. The digital
economy offers enormous opportunities for developing Members and least-developed country (LDC)
Members, including by lowering the costs for businesses, particularly MSMEs, to access and participate in
global markets. WTO rules and commitments on digital trade can help unlock these opportunities.

“In this context, we will continue to drive negotiations towards a high standard and commercially meaningful outcome building on existing WTO agreements and frameworks. We will continue to promote inclusiveness and encourage the participation of as many WTO Members as possible in the negotiations, which were launched in our January 2019 Ministerial statement.

“We welcome the substantial progress made to date in the negotiations. We have achieved good
convergence in negotiating groups on eight articles – online consumer protection; electronic signatures and authentication; unsolicited commercial electronic messages; open government data; electronic contracts; transparency1; paperless trading; and open internet access. The outcomes already achieved in these areas will deliver important benefits including boosting consumer confidence and supporting businesses trading online.

“In addition, we have seen the consolidation of text proposals in other areas, including on customs duties on electronic transmissions, cross-border data flows, data localisation, source code, electronic transactions frameworks, cybersecurity, and electronic invoicing, as well as advanced discussions on market access. We will intensify negotiations in these areas from early 2022. We note that provisions that enable and promote the flow of data are key to high standard and commercially meaningful outcome.

“Participants in the initiative support the continuation of the multilateral e-commerce moratorium in
fostering certainty and predictability for businesses. The co-convenors consider it crucial that the initiative
makes permanent among participants the practice of not imposing customs duties on electronic

“”In light of the strong progress that has been achieved to date, the co-convenors will arrange the JSI work programme to secure convergence on the majority of issues by the end of 2022. We will identify
opportunities throughout 2022 for Ministers to provide guidance on key issues in the negotiations.
We look forward to working with all participating Members as we intensify the negotiations and work
towards a successful conclusion.

“The Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, Australia
“H.E. Mr HAYASHI Yoshimasa, Minister for Foreign Affairs, Japan
“H.E. Mr HAGIUDA Koichi, Minister of Economy, Trade and Industry, Japan
“H.E. Mr Gan Kim Yong, Minister for Trade and Industry, Singapore


“1 Subject to the final scope of provisions and architecture”

Absent from the topics being discussed (based on the joint statement) are rules around censorship, although some topics can indirectly affect censorship actions (localisation and free flow of data).

Censorship is a major problem for digital trade and service providers, a fact made clear by a recent study from the U.S. International Trade Commission in response to a request from the U.S. Senate Finance Committee. See U.S. International Trade Commission, Foreign Censorship, Part 1: Policies and Practices Affecting U.S. Businesses, Inv. No. 332-585, Publ. 5244 (December 2021), It is hard to understand how the U.S., EU countries and others can sign off on an e-commerce agreement that doesn’t address the enormous harmful trade effects from censorship.

Part of the Executive Summary of the USITC report (pages 7-13) is copied below and identifies the importance of addressing censorship practices. The countries focused on in the report are China, the Russian Federation, India, Indonesia, Turkey and Vietnam. However, as recognized in the report, censorship is practiced by many more WTO Members.

“Executive Summary

“This report identifies and describes various foreign government censorship policies and practices,
including examples that U.S. businesses consider impediments to trade and investment. It is the first of
two reports requested by the U.S. Senate Committee on Finance (Committee) in its letter to the U.S.
International Trade Commission (Commission) dated April 7, 2021. The Committee stated that censorship
and its impact on the flow of information and services are critical issues for the digital economy and
requested that this first report include detailed information on the following:

“1. Identification and descriptions of various foreign censorship practices, in particular any
examples that U.S. businesses consider to impede trade or investment in key foreign markets.
The description should include to the extent practicable:

“a. the evolution of censorship policies and practices over the past five years in key
foreign markets;

“b. any elements that entail extraterritorial censorship; and

:c. the roles of governmental and nongovernmental actors in implementation and
enforcement of the practices.

“In response to the Committee’s request, this report identifies and describes censorship and censorship enabling policies and practices and the evolution of these policies and practices over the past five years in
six key foreign markets: China (including Hong Kong), Russia, Turkey, Vietnam, India, and Indonesia. For
these key markets, the report also describes elements that entail extraterritorial censorship and the roles
of governmental and nongovernmental actors in implementation and enforcement of censorship policies
and practices.

“In preparing this report, the Commission relied on information provided by a review of relevant
literature, a public hearing, written submissions, interviews with representatives from industry,
academia, the U.S. government, and nongovernmental organizations (NGOs), and publicly available data.
The Commission held a public hearing on July 1, 2021, and participants included representatives of
academic institutions, NGOs, and trade associations. The Commission also received written submissions
for that hearing from a similar cross section of interested parties.

“Defining Censorship

“Censorship can be defined in various ways. For the purposes of this investigation, based on the request
letter from the Committee to the Commission dated January 4, 2021, censorship is defined as the
prohibition or suppression of speech or other forms of communication. This report addresses foreign
government censorship policies and practices, including laws, regulations, and other measures that either
directly target the suppression of speech or may be used to enable or facilitate its suppression. For
purposes of this report, we refer to these measures generally as “censorship-related policies and
practices” or simply “policies and practices.” This investigation focuses on foreign government
censorship-related policies and practices that impede trade and investment by U.S. businesses in key
markets.1 Industries commonly subject to censorship include digital and non-digital media (such as
newspapers, journals, and magazines); producers and distributors of audiovisual content (such as movies
and online video, television, books, and music); and social media and internet search providers, as well as
computer services more generally. The broad trend toward online publication and communication in the
global media and audiovisual services sectors and the heavy reliance on digital distribution for the crossborder provision of news, information, and audiovisual content imply that foreign censorship of the flow of information over digital platforms is having a significant impact on the digital economy. Given this and consistent with the Committee’s request, this report focuses on censorship in the online environment.

“This report in chapter 1 briefly describes how international human rights law has sought to distinguish
between measures that are and are not censorship and whether an instance of censorship may represent
a legitimate exception to freedom of expression. For example, international human rights law considers
such factors as whether a law provides clear direction and is not vague or ambiguous. However, it is
beyond the scope of this report to determine whether a given law may be appropriate or inappropriate
under international human rights law or other legal frameworks.

“Key Markets Where Foreign Censorship Affects U.S. Businesses

“In response to the Committee’s request for information about foreign censorship policies and practices in key markets, the Commission identified six markets: China, Russia, Turkey, Vietnam, India, and Indonesia.

“These six key markets were selected because they meet two broad criteria. First, governments in these
markets have introduced a wide range of censorship policies and practices, in particular with respect to
digital content, that involve restrictions on firms, including U.S. businesses. Second, for the digital and
media services most likely affected by censorship, demand in each of these markets is large enough to
represent a significant market opportunity for U.S. firms. In identifying key markets, the Commission
considered a range of potential foreign censorship policies and practices, noting that these may affect
U.S. businesses either by restricting their existing access or limiting new access to a foreign market.

“While the Commission relied on a variety of sources to inform its identification of key markets, an
important starting point was information from Freedom House, a well-known human rights advocacy
NGO, and its annual Freedom on the Net reports, which provide internet freedom scores related to
obstacles to access, limits on content, and violations of internet user rights, as well as data on
governments’ use of nine ‘key internet controls’ in regulating online platforms, content, and users. To
assist in identifying the key markets with relevant censorship policies and practices, the Commission also
reviewed data on the incidence of internet shutdowns, government requests for moderation of content,
legal guarantees of freedom of expression, and the degree of freedom afforded the press in various
countries around the world. To identify markets where demand is large enough to represent a significant
market opportunity for U.S. businesses, the Commission looked at indicators of demand for digital media
and audiovisual content. These included demographic indicators of consumer demand such as population
and gross domestic product (GDP) per capita, as well as indicators of the size of a market’s digital
economy, including the percentage of the population with access to the internet and the United Nations
Conference on Trade and Development Readiness for Frontier Technologies Index, which assesses
countries’ rate of adoption of important internet technologies.

“Overview of Censorship-Related Policies and Practices

“To get a full picture of foreign government censorship regimes in the key markets, it is useful to
understand the ‘who,’ ‘what,’ and ‘how’ of these policies and practices, as well as their evolution, and
the concepts of extraterritoriality and self-censorship. Many different governmental agencies and actors
have a role in censorship-related policies and practices in the key markets—the ‘who’ of censorship.
Also, governments in the key markets often require the cooperation of nongovernmental actors, such as
U.S. internet companies, to carry out censorship, given the growing importance of the internet for
communication and speech.

“Governments in the key markets censor a wide variety of content—the ‘what’ of censorship. This
content includes political, social, and national security-related topics as well as internet tools that can be
used to circumvent censorship (such as virtual private networks). For example, based on an empirical
analysis conducted by researchers at Harvard University’s Berkman Klein Center for Internet & Society, 26
of 45 countries engaged in state-sponsored filtering of internet content through technical means in
2015–17 and before.2 In particular, all of the key markets engaged in “pervasive” or “substantial” filtering
of political content as well as other topics (figure ES.1).

“Governments in the key markets operationalize censorship—the “how” of censorship—through policies
and practices that can be broadly grouped into two categories: those that directly target speech for
suppression and those that can in some circumstances operate to enable government censorship.

“Government policies and practices in the first category include laws that prohibit particular categories of
speech, as well as the premarket review of audiovisual and other creative works by censors. They also
include, in the online environment, government policies and practices that shut down the internet, block
entire websites, filter access to particular content on sites, or make it more difficult to access websites
(e.g., throttling).

“By contrast, censorship-enabling policies and practices facilitate governments’ ability to suppress speech.
Such measures may include, for example, internet intermediary rules, data localization or local presence
requirements, and foreign investment and market access restrictions. However, whether such measures
should be considered censorship enabling depends on context and the end to which such measures are
used. As detailed in chapters 3 and 4, in the key markets various measures work together, or may work
together, to facilitate government censorship. For example, broad definitions of prohibited content are
often combined with short deadlines for internet companies to identify and takedown prohibited content
and substantial penalties for noncompliance. Or, for example, internet intermediaries are required to
keep data and personnel in the jurisdiction, which can make it easier for governments to ensure
compliance with content prohibitions. In addition, whether a policy or practice should be considered
direct censorship or censorship enabling can be difficult to determine. This is particularly the case in the
key markets where, for example, the same law may combine direct elements (such as banning specific
categories of content) with censorship-enabling elements (such as data localization and local presence
requirements). Table ES.1 provides examples of different types of censorship-related policies and
practices (both direct censorship and censorship enabling) in the key markets. It also highlights some of
the industries particularly affected by these policies and practices. (See chapters 3 and 4 for details of the
examples listed in table ES.1.

“The evolution of censorship policies and practices in the past five years in the key markets has largely
been driven by the growing importance of the internet. U.S. internet companies report ever-growing
numbers of government requests for the takedown of online content. Moreover, governments are using
multiple levers—from data and personnel localization requirements to threats of retaliation—to pressure
compliance with censorship policies. Technological developments, such as the growing reliance on
artificial intelligence by governments and internet companies to identify and suppress large quantities of
online content, also present substantial challenges.

“Foreign governments’ censorship policies and practices may be augmented by extraterritoriality and self-censorship. Extraterritorial censorship occurs when governments seek to suppress speech outside of
their borders. In some cases, a law or policy will expressly state that its prohibition on certain content
applies to companies or persons outside the jurisdiction. A recent example of this would be the Hong
Kong National Security Law, which criminalizes broad categories of offenses (including speech in favor of
Hong Kong independence) and states that it applies regardless of where the crime is committed or who
commits it. In other cases, which arise most notably in China, economic coercion is used to advance
censorship goals even when the targeted speech is legal in the jurisdiction where it occurred. A well- known example involves the Houston Rockets of the National Basketball Association (NBA), whose
general manager posted images on Twitter supportive of Hong Kong independence. The Chinese
government responded by, among other actions, stopping the broadcast of NBA games on Chinese state-owned television stations for more than a year.

“Self-censorship involves censoring or suppressing one’s own speech to avoid offending government
censors or to facilitate market access. It is reportedly present in all of the key markets. Moreover, self-censorship can also occur extraterritorially; for example, movie studios reportedly have removed images
from the master version of films, rather than just the China-specific version, that they believe may offend
the Chinese government. Another example is Bloomberg reportedly not publishing a follow-up story on
the wealth of Chinese officials in order to protect its financial markets terminal business in China.
Additionally, in Turkey, almost two-thirds of Turkish citizens responding to a survey in 2018 reported that
the fear of being jailed for posting political views or opinions on the internet contributed to self-censorship in the country.”


Developing multilateral rules at the WTO or plurilaterally through the Joint Statement Initiative to address e-commerce is of great importance to global trade and prosperity. Failure to come to grips with rules on censorship would greatly reduce the utility of an agreement and permit those who engage in widespread censorship to deprive trading partners of the benefits of an e-commerce agreement. And this is just a reflection of challenges on the trade front, ignoring human rights and other international concerns.

WTO Arbitration Report on China’s challenge to U.S. countervailing duty investigations — while retaliation is much smaller than China sought, core problems with original Appellate Body decision flags challenge to restoring the Dispute Settlement binding process

On January 26, 2022, an arbitration decision was issued on the level of retaliation China is entitled to take for the findings of the Appellate Body that the United States hadn’t brought its countervailing duty determinations on China into conformity with WTO obligations as construed by the Appellate Body. See UNITED STATES – COUNTERVAILING DUTY MEASURES ON CERTAIN PRODUCTS FROM CHINA, RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES, DECISION BY THE ARBITRATOR, WT/DS437/ARB,
26 January 2022. China sought retaliation rights of $2.4 billion/year. The U.S. had argued for a cap of $120 million/year. The arbitrator concluded retaliation rights were $645.121 million/year. Id at 12.

The original request for consultations was made on May 25, 2012 with a series of panel and Appellate Body reports issued between 2014 and 2019 (original dispute and Art. 21.5 proceedings). The original findings covered a range of issues including a string of issues relating to whether state-owned enterprises were public bodies. See summary of key findings, DS437, United States – Countervailing Duty Measures on Certain Products from China,

The press releases from China and the United States state their respective positions – with China claiming the U.S. violates its WTO obligations and needs to bring itself into compliance, and with the U.S. noting that the underlying decisions reflect the problems with the Appellate Body that the U.S. has long identified and point to the need for reform of both the rules and dispute settlement. See Ministry of Commerce of the People’s Republic of China, Press Release on the Issuance of the WTO Arbitration Award in the Dispute United States — Countervailing Duty Measures on Certain Products from China (Recourse to Article 22.6 of the DSU by the United States),; Statement from USTR Spokesperson Adam Hodge on the WTO Arbitration Award Announcement in United States – Countervailing Duty Measures on Certain Products from China, January 26, 2022, (“The deeply disappointing decision today by the WTO arbitrator reflects erroneous Appellate Body interpretations that damage the ability of WTO Members to defend our workers and businesses from China’s trade-distorting subsidies. Today’s decision reinforces the need to reform WTO rules and dispute settlement, which have been used to shield China’s non-market economic practices and undermine fair, market-oriented competition. The Biden Administration will continue to use all our tools to stand up for the interests of America’s workers,”). businesses, farmers and producers, and strengthen our middle class. 

There have been many who have written about the problems of the Appellate Body in its construction of the Subsidies Agreement. See, e.g., Cartland, Michael, Depayre, Gérard &Woznowski, Jan. “Is Something Going Wrong in the WTO Dispute Settlement?” Journal of World Trade 46, no. 5 (2012): 979–1016; Dukgeun Ahn, Why Reform is Needed: WTO ‘Public Body’ Jurisprudence, 12 Global Policy, Supplement 3 at 61-70 ( April 2021)(and articles referenced therein).

USTR Lighthizer during the Trump Administration released in 2020 USTR’s Report on the Appellate Body of the WTO reviewing in great detail the concerns with the operation of the dispute settlement system. The concern about the Appellate Body interpretations preventing the U.S. and other Members from addressing the distortions including subsidies flowing from the Chinese economic system was a major focus in discussing the problems on “public body”. The Biden Administration and Congress have similar ongoing concerns which requires revisions to both the scope of the subsidies agreement and a revamp of the dispute settlement system.

Because of the extent of analysis presented by USTR, below are copied pages 82 – 89 of the 2020 USTR report.

A. The Appellate Body’s Erroneous Interpretation of ‘Public Body’ Threatens the Ability of WTO Members to Counteract Trade-Distorting Subsidies Provided through SOEs, Undermining the Interests of All Market-Oriented Actors

“• The Appellate Body has adopted an erroneous interpretation of the term ‘public body’ that is not found in the agreed text and is not consistent with the ordinary meaning of that term.

“• The Appellate Body’s narrow interpretation favors non-market economies operating through SOEs over market economies and undermines the ability of WTO Members to counteract subsidies by non-market economies.

“The WTO agreements discipline certain subsidies provided ‘by a government or any public body,’ but the Appellate Body has adopted a narrow interpretation of public body that requires an entity to possess, exercise or be vested with government authority, in order for it to constitute a public body. That requirement is not found in the agreed text, nor is it consistent with the ordinary meaning of the term ‘public body.’ The Appellate Body’s narrow interpretation of public body fails to capture a potentially vast number of government-controlled entities, such as state-owned enterprises (SOEs), that are owned or controlled by foreign governments, and therefore undermines the ability of Members to counteract subsidies that are injuring their workers and businesses. The WTO was created by and for market economies, but the Appellate Body’s public body interpretation favors non-market economies at the expense of market economies and has given rise to confusion among WTO panels and WTO Members.

1. Interpreted Correctly, the Term “Public Body” Means Any Entity Controlled by the Government

“Article 1.1(a)(1) of the SCM Agreement provides, in relevant part, that ‘a subsidy shall be deemed to exist if … there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as ‘government’).’

“The Subsidies Agreement does not define the term ‘public body,’ but definitions of the words ‘public’ and ‘body’ shed light on the ordinary meaning of the term ‘public body’ in Article 1.1(a)(1). By definition, the noun ‘body’ refers to a group of persons or an entity (as opposed to, for example, the ‘material frame’ of persons). This definition in the sense of ‘an aggregate of individuals’ is: ‘an artificial person created by legal authority; a corporation; an officially constituted organization, an assembly, an institution, a society.’196 Turning to the adjective ‘public,’ the relevant definition that pertains to a ‘body’ as a group of individuals is the first: ‘of or pertaining to the people as a whole; belonging to, affecting, or concerning the community or nation.’197

“Thus, the ordinary meaning of the composite term ‘public body’ according to dictionary definitions would be ‘an artificial person created by legal authority; a corporation; an officially constituted organization’ that is ‘of or pertaining to the people as a whole; belonging to, affecting, or concerning the community or nation.’ These definitions point towards ownership by the community as one meaning of the term ‘public body.’ If an entity ‘belongs to’ or is ‘of’ the community, it also follows that the community can make decisions for, or control, that entity.

“Contrary to the Appellate Body’s interpretation, nothing in these dictionary definitions restricts the meaning of the term ‘public body’ to an entity vested with, or exercising, government authority. Had the drafters of the SCM Agreement intended to convey that meaning, they might have chosen any number of other terms. For example, the drafters might have used ‘governmental body,’ ‘public agency,’ ‘governmental agency,’ or ‘governmental authority.’

“These terms would have, through their ordinary meaning, more clearly conveyed the sense of exercising governmental authority. That they were not chosen sheds light on the different concept captured by the term that was chosen, ‘public body.’

“The ordinary meaning of the terms of a treaty must be understood ‘in their context.’198 Reading the term ‘public body’ in context supports the conclusion that a ‘public body’ is an entity controlled by the government such that the government can use that entity’s resources as its own.

“In Article 1.1(a)(1) of the SCM Agreement, the term ‘public body’ is part of the disjunctive phrase ‘by a government or any public body within the territory of a Member.’ The SCM Agreement thus uses two different terms – ‘a government’ on the one hand and ‘any public body’ on the other hand – to identify the two types of entities that can provide a financial contribution. As a contextual matter, the use of the distinct terms ‘a government’ and ‘any public body’ together this way indicates that the terms have distinct and different meanings.

“Treaty interpretation should give meaning and effect to all terms of a treaty. As the Appellate Body has recognized, provisions of the WTO Agreement should not be interpreted in such a manner that whole clauses or paragraphs of a treaty would be reduced to redundancy or inutility.199 Accordingly, the term ‘public body’ should not be interpreted in a manner that would render it redundant with the word ‘government.’

“The term ‘government,’ as the panel in US – Anti-Dumping and Countervailing Duties (China) found, means, among other things: ‘The governing power in a State; the body or successive bodies of people governing a State; the State as an agent; an administration, a ministry.’200 In Canada – Dairy, the Appellate Body explained that ‘[t]he essence of ‘government’ is . . . that it enjoys the effective power to ‘regulate’, ‘control’ or ‘supervise’ individuals, or otherwise ‘restrain’ their conduct, through the exercise of lawful authority.’201 The Appellate Body further explained that a ‘‘government agency’ is, in our view, an entity which exercises powers vested in it by a ‘government’ for the purpose of performing functions of a ‘governmental’ character, that is, to ‘regulate’, ‘restrain’, ‘supervise’ or ‘control’ the conduct of private citizens.’202

“The term ‘public body,’ therefore, should be interpreted as meaning something other than an entity that performs ‘functions of a ‘governmental’ character, that is, to ‘regulate’, ‘restrain’, ‘supervise’ or ‘control’ the conduct of private citizens.’203 Otherwise, a ‘public body’ is ‘a government,’ or a part of ‘a government,’ and there is no reason for the term ‘public body’ to have been included in Article 1.1(a)(1) of the SCM Agreement.

“In seeking to understand the term ‘public body’ in its context, it is also important to recall that the SCM Agreement is identifying those entities that may make ‘financial contributions.’ Those financial contributions are one part of a definition of ‘subsidy,’ and those subsidies are granted or maintained by WTO Members. A WTO Member can make the financial contribution underlying the subsidy directly through its ‘government’ (narrowly understood). However, it also can make that financial contribution through entities that it controls.

“Article 1.1(a)(1) of the SCM Agreement identifies a variety of actions that constitute financial contributions, including ‘a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees),’ foregoing or not collecting ‘government revenue,’ ‘provid[ing] goods or services other than general infrastructure, or purchas[ing] goods,’ and ‘mak[ing] payments to a funding mechanism.’ The ordinary meaning of a ‘financial contribution’ suggested by this list of actions is to convey value. In this ordinary sense, entities controlled by the government can convey value just as the government can, and the value conveyed can be precisely the same as that conveyed by the government.

“Consider, for example, a ‘direct transfer of funds’ by a government to a recipient in the form of a grant. Conveying value in this way is plainly a ‘financial contribution’ within the meaning of the SCM Agreement. If the government formed and controlled a legal entity (for example, a corporation whose shares are all owned by the government), and the entity provided the same grant to a recipient, the same financial contribution has occurred: the government has conveyed value. Whether the funds are provided directly by the government or by an entity controlled by the community through its government, it is a Member’s funds that are being used to make the financial contribution.

“There is no evident reason for the first transaction to fall within the scope of Article 1.1(a)(1) of the SCM Agreement and the second to fall outside the scope. Nor would the term ‘financial contribution’ suggest that a distinction should be drawn between those transactions based on whether the entity or corporation is ‘vested with or exercising governmental authority.’ Rather, the context supplied by ‘financial contribution’ suggests a different common concept between ‘government’ and ‘public body’ than that discerned by the Appellate Body. If a ‘financial contribution’ means to convey something of value, the concept sought to be captured by the SCM Agreement term is the use by a government of its resources, or resources it controls, to convey value to economic actors.

2. The Appellate Body Has Interpreted the Term ‘Public Body’ Incorrectly

“In US – Anti-Dumping and Countervailing Duties (China) in 2011 and US – Carbon Steel (India) in 2014, the Appellate Body interpreted the term ‘public body’ in Article 1.1(a)(1) of the SCM Agreement incorrectly. The key issue before the Appellate Body in these disputes was whether a wholly or majority government-owned SOE is a ‘public body,’ such that WTO Members can take action to counteract any unfair subsidies the SOEs provide. The Appellate Body recognized that, based on its ordinary meaning, the term ‘public body’ encompassed a ‘rather broad range of potential meanings.’ Nonetheless, the Appellate Body set out a very limited interpretation of the term, concluding that a ‘public body’ ‘must be an entity that possesses, exercises or is vested with governmental authority,’ including because the entity has ‘the effective power to regulate, control or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority.’204 Under the Appellate Body’s interpretation, even where a government owns or controls an entity, that would not be sufficient to hold the government responsible for any injurious subsidies it provides.

“The Appellate Body’s ‘government authority’ test significantly limits the ability of governments to effectively combat unfairly subsidized imports and is nowhere reflected in the text of the SCM Agreement. If an entity has no regulatory or supervisory authority, but is nonetheless controlled by the government such that the government can use the entity’s resources as its own – making any transfer of economic resources by that entity a conveyance of the government’s own resources – it would be anomalous to conclude that the financial contribution cannot be deemed a subsidy under Article 1.1(a)(1). On the other hand, if an entity has the power to ‘regulate’ individuals or ‘otherwise restrain their conduct,’ but not the power to provide financial contributions of government resources, its regulatory powers are not relevant to the SCM Agreement. The Appellate Body’s interpretation therefore does not reflect the structure of either Article 1.1(a)(1) or of the SCM Agreement, and the failure of this interpretation to capture a
potentially vast number of government-controlled entities undermines the disciplines of the SCM Agreement.

“The Appellate Body’s interpretation stands in contrast to the approach taken by several WTO panels that interpreted the term ‘public body’ to be an entity controlled by the government. In Korea – Commercial Vessels, for example, the panel concluded that ‘an entity will constitute a ‘public body’ if it is controlled by the government (or other public bodies).’205 In reaching this conclusion, that panel rejected some of the very same arguments China advanced before the panel and the Appellate Body in US – Anti-Dumping and Countervailing Duties (China).

“In EC and certain member States – Large Civil Aircraft, the panel, addressing the status of a government-owned financial institution, explained that, ‘at the time of its 1992 investment in Aerospatiale, Credit Lyonnais was controlled by the French government and was a ‘public body’ for purposes of Article 1.1(a)(1) of the SCM Agreement.’206 Accordingly, the capital contribution made by Credit Lyonnais to Aerospatiale constituted a financial contribution by a public body.207

“In US – Anti-Dumping and Countervailing Duties (China), the panel concluded that ‘a ‘public body’, as that term is used in Article 1.1 of the SCM Agreement, is any entity controlled by a government.’ As noted above, however, in reversing the Panel, the Appellate Body adopted a narrow definition of a ‘public body.’

“During the meeting of the WTO Dispute Settlement Body at which the panel and Appellate Body reports in US – Anti-Dumping and Countervailing Duties (China) were adopted, seven WTO Members (Mexico, Turkey, the European Union, Canada, Australia, Japan and Argentina) joined the United States in raising concerns about the Appellate Body’s interpretation.208

“Commentators have also criticized the Appellate Body’s interpretation. For example, in an article in the Journal of World Trade, Michael Cartland, Gérard Depayre, and Jan Woznowski – each of whom participated in the Negotiating Group on subsidies and countervailing measures in the Uruguay Round – present a detailed discussion of the Appellate Body report in US – Anti-Dumping and Countervailing Duties (China) and raise a host of concerns with the Appellate Body’s interpretation of the term ‘public body,’ calling the analysis ‘internally contradictory’ and ‘disingenuous.’209

3. The Appellate Body’s Non-Textual Interpretation Has Created Significant Uncertainty and Led Panels to Reach Absurd Results

“In US – Anti-Dumping and Countervailing Duties (China), the Appellate Body left open the possibility that ‘meaningful control’ over an entity could be sufficient to show that the entity ‘possesses, exercises or is vested with governmental authority,’ and in US – Carbon Steel (India), the Appellate Body appeared to confirm that an SOE’s authority over government resources could support a public body finding.

“However, the Appellate Body’s non-textual interpretation has created significant uncertainty as to the precise scope of Article 1.1(a)(1), and recent attempts by panels to apply the so-called ‘government authority’ test have only exacerbated the problem, confirming the fundamental errors in the Appellate Body’s approach.

“The panel’s findings in US – Pipes & Tubes CVD (Turkey), for example, illustrate the hazard
introduced by the Appellate Body’s approach to public body in US – Carbon Steel (India), and in
particular a suggestion in that report that there must be a demonstration that the government ‘in
fact exercised control over the [entity] and its conduct.’210 Citing to this report, the panel in Pipes & Tubes found that the ability of the government to intervene in an entity’s critical operations and key decisions was not relevant to a public body determination, and required evidence that the government had actually exercised that control with respect to the subsidization in question. Similarly, the panel found that the existence of commercial conduct could preclude a finding that an entity is a ‘public body,’ because it could reflect the absence of a governmental function on the part of the entity and therefore a lack of governmental authority.

“As the United States has explained, properly interpreted, the issue under Article 1.1(a)(1) is not whether the nature of the behavior or the conduct of the entity is governmental. Rather, the question is whether the entity engaging in the conduct is governmental or pertaining or belonging to the people, i.e., whether the entity is ‘a government or any public body.’ If the entity is governmental, or public, all of its activities are attributable to the government in question. Were this not the case, a government could shield its activities from the disciplines of the SCM Agreement simply by setting up an SOE and allowing it to engage in some commercial conduct, even where there is evidence that the government has the ability to intervene and control the entity whenever it chooses. This cannot be the case.

“If a government undertakes the activities described in Article 1.1(a)(1), there is a conveyance of value from a WTO Member to a recipient. There is an equivalent conveyance when there is an entity whose resources the WTO Member can control and use, and the entity engages in the same activities. The interpretation set out by the Appellate Body, however, allows WTO Members to evade their obligations under the SCM Agreement simply by establishing an entity that is private in form, but not in substance.

“The interpretation therefore significantly restricts the ability of WTO Members to counteract trade-distorting subsidies provided through SOEs, posing a significant threat to the interests of all market-oriented actors.

“The interpretation also fails to maintain the textual distinction in Article 1.1(a)(1) between a ‘public body’ and a ‘private body.’ Contrary to the panel’s application of the Appellate Body’s standard in US – Pipes & Tubes CVD (Turkey), focus on the specific conduct of an entity would be relevant when examining whether there was government entrustment or direction of a private body under Article 1.1(a)(1)(iv) of the SCM Agreement. That is, a private body may provide a subsidy if the government entrusts or direct the private body ‘to carry out one or more of the functions illustrated in (i) to (iii).’ The panel’s approach demonstrates the uncertainty introduced by the Appellate Body’s interpretation, which risks conflating the public body analysis with that of government entrustment and direction of a private entity, and renders the term ‘public body’ effectively meaningless.

4. The Appellate Body Has Continued Its Incorrect Approach to ‘Public Body” in a Recent Appellate Report concerning the Imposition by the United States of Countervailing Duties on Subsidized Imports from China

“Although the Appellate Body recently had an opportunity to correct its flawed approach, it did not do so and, instead, stuck with an approach that has no basis in the text of the Subsidies Agreement. In US – Countervailing Measures (China) (21.5), all three members of the Division on appeal rejected China’s extremely narrow definition of ‘public body.’ However, two members of the Division reiterated the Appellate Body’s flawed approach. The third member dissented on this point, stating that ‘the majority has repeated an unclear and inaccurate statement of the criteria for determining whether an entity is a public body, and [the dissenting member] disagree[d] with the majority’s implication that a clearer articulation of the criteria is neither warranted nor necessary.’211

“The dissent continued that ‘the continuing lack of clarity as to what is a ‘public body’ represents an undue emphasis on ‘precedent’, which has locked in a flawed interpretation that has grown more confusing with each iteration, as litigants and Appellate Body Divisions repeated the original flaw while trying to navigate around it.’212

“The ‘original mistake’, as the dissent put it,213 was the Appellate Body’s attempt, in US – Anti-Dumping and Countervailing Duties (China) (DS379), to define the term ‘public body’ as ‘an entity that possesses, exercises or is vested with governmental authority,’ including because the entity has ‘the effective power to regulate, control or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority.”214 Under the Appellate Body’s interpretation, even where a government owns or controls an entity, that would not be sufficient to hold the government responsible for any injurious subsidies the entity provides.

5. The Appellate Body’s Interpretation Limits the Ability of Investigating Authorities to Address Unfairly Subsidized Imports

“The Appellate Body’s ‘governmental authority’ test significantly limits the ability of governments to combat unfairly subsidized imports. The Appellate Body’s approach is nowhere reflected in the text of the Subsidies Agreement. If an entity has no regulatory or supervisory authority, but is nonetheless controlled by the government – making any transfer of economic resources by that entity a conveyance of the government’s own resources – it would make no sense to conclude that this transfer of public resources is not a financial contribution under Article 1.1(a)(1).

“On the other hand, if an entity has the power to ‘regulate’ individuals or ‘otherwise restrain their conduct,’ but not the power to provide financial contributions of government resources, its regulatory powers are not relevant to the Subsidies Agreement. The Appellate Body’s interpretation therefore does not reflect the structure of either Article 1.1(a)(1) or of the Subsidies Agreement.

“The failure of the Appellate Body’s interpretation to capture a potentially vast number of SOEs and other entities that are owned or controlled by foreign governments undermines the ability of Members to effectively counteract subsidies that are injuring their workers and businesses. The WTO was created by and for market economies, but the Appellate Body’s public body interpretation favors non-market economies at the expense of market economies.

“195 For example, this Report does not discuss the dispute US – Continued Dumping and Subsidy Offset Act Of 2000, in which the Appellate Body’s interpretation of the Subsidies Agreement in effect created a new category of prohibited subsidies that was neither negotiated nor agreed to by WTO Members; or other examples, such as US – Gambling, US – Cotton, US – FSC.

“196 The New Shorter Oxford English Dictionary at 253 (1993).

“197 Id. at 253.

“198 Vienna Convention on the Law of Treaties, Article 31.

“199 US – Offset Act (Byrd Amendment) (AB), para. 271 (2003). See also US – Gasoline (AB) at p. 23 (1996).

“200 US – Anti-Dumping and Countervailing Duties (China) (Panel), para. 8.57 (citing Shorter Oxford English Dictionary, L. Brown (ed.) (Claredon Press, 1993), Vol. I, p. 1123) (2011).

“201 Canada – Dairy (AB), para. 97 (1999).

“202 Id.

“203 Id.

“204 US – Anti-Dumping and Countervailing Duties (China) (AB), para. 290 (2011) (citing Canada – Dairy (AB), para. 97).

204 US – Anti-Dumping and Countervailing Duties (China) (AB), para. 290 (2011) (citing Canada – Dairy (AB), para. 97).

“205 Korea – Commercial Vessels (Panel), para. 7.50 (2005). See also id., paras. 7.172, 7.353, and 7.356 (2005)(finding that the Korean Development Bank and the Industrial Bank of Korea were public bodies because they were totally, or near totally, owned by the Government of Korea).

“206 EC – Large Civil Aircraft (Panel), para. 7.1359 (2011).

“207 Id.

“208 See Dispute Settlement Body, Minutes of the Meeting Held on March 25 2011, WT/DSB/M/294, paras. 103-127. See also Joint Statement of the Trilateral Meeting of the Trade Ministers of Japan, the United States and the European Union, para. 6 (January 14, 2020) (‘The Ministers observed that many subsidies are granted through State Enterprises and discussed the importance of ensuring that these subsidizing entities are captured by the term ‘public body.’ The Ministers agreed that the interpretation of ‘public body’ by the WTO Appellate Body in several reports undermines the effectiveness of WTO subsidy rules. To determine that an entity is a public body, it is not necessary to find that the entity “possesses, exercises or is vested with governmental authority.’).

“209 Cartland, Michael, Depayre, Gérard &Woznowski, Jan. “Is Something Going Wrong in the WTO Dispute Settlement?” Journal of World Trade 46, no. 5 (2012): 979–1016, at 996.

“210 US – Carbon Steel (India) (AB), para. 4.37 (2014) (first emphasis in original, second emphasis added).

“211 US – Countervailing Measures (China) (Article 21.5) (AB), para. 5.243 (2015) (separate opinion of one Division member).

“212 Id. at para. 5.244.

“213 Id. at para. 5.245.

“214 US – Anti-Dumping and Countervailing Duties (China) (AB), para. 2.90 (2015) (citing Canada – Dairy (AB), para. 97).’195 For example, this Report does not discuss the dispute US – Continued Dumping and Subsidy Offset Act Of 2000, in which the Appellate Body’s interpretation of the Subsidies Agreement in effect created a new category of prohibited subsidies that was neither negotiated nor agreed to by WTO Members; or other examples, such as US – Gambling, US – Cotton, US – FSC.”196 The New Shorter Oxford English Dictionary at 253 (1993).’197 Id. at 253.”


In prior posts I have reviewed the challenges for the relevance of the WTO if Members don’t work on convergence of economic systems versus coexistence. That China’s system is at odds with market economy principles has raised concerns in the U.S., EU, Japan, Canada, Australia and other WTO Members. The Appellate Body has compounded the problems for market economies in dealing with state-driven economies (non-market economies) by permitting a wide array of subsidy practices to be not addressable through the narrow interpretation of public body.

Such erroneous interpretations and the inability to achieve correction through negotiations have led to shutting down of the Appellate Body and have exacerbated the inability of Members to get balanced rules negotiated. A multilateral trading system which doesn’t achieve a level trading environment in fact cannot survive as the basis for global engagement.

While in Geneva there is much talk about reform of both the rules and the dispute settlement system, the path forward to achieving balance in fact is hard to discern.

The European Union requests consultations with China at the WTO for restrictions on Lithuanian goods imposed by China

In a post on January 7, 2022, I reviewed the bullying and coercion being pursued by China against goods from Lithuania and the pressure on companies to stop using Lithuanian components. See January 7, 2022:  China’s “bullying” of Lithuania — a repeating story inconsistent with WTO rules, China’s actions followed actions by Lithuania to improve relations with Taiwan.

Today, January 27, 2022, the European Union filed a request for consultations at the WTO with China on the restrictions on trade with Lithuania and the efforts to restrict other countries from using Lithuanian components in their products. The request for consultations is embedded below.


The background section of the request for consultations reviews the myriad actions being taken to deprive Lithuanian and other goods including parts from Lithuania from accessing China’s market and restrictions on goods going to Lithuania.

“1. Background to the dispute

“Beginning in or around the final quarter of 2021, importers of products originating in Lithuania
and/or transiting through Lithuanian ports and/or with some other link to Lithuania began
encountering restrictions on securing customs clearance for their goods to enter Chinese territory.
Those restrictions include in particular: (i) error messages on the IT systems used to input data
necessary to secure customs clearance from the Chinese customs authorities; (ii) containers being
blocked in Chinese ports pending customs clearance; (iii) failures on the part of the Chinese
customs authorities to process requests for customs clearance in due time or at all. Those
restrictions are novel, numerous, recurrent, persisting and strongly correlated in temporal and
substantive terms, as well as in terms of the provenance of the goods.

“Commencing in or around the final quarter of 2021, entities established in Lithuania began
encountering difficulties relating to goods due to be exported from China to Lithuania. Those difficulties include failures on the part of the Chinese customs authorities to process requests for customs clearance for export in due time, or at all. Those restrictions have similar characteristics.

“Since August 2021, there have similarly been reports of entities established in Lithuania encountering difficulties in obtaining financial services from Chinese entities. Beginning in or around the final quarter of 2021, there have similarly been reports of shipments of products covered by SPS certificates issued by Lithuanian authorities being refused customs clearance by Chinese customs authorities.

“2. The measures at issue

“The measures at issue include the adoption, maintenance and application through its actions or omissions, in law and in fact, by China, of:

“import bans or import restrictions on the products at issue, from the EU;

“export bans or export restrictions on the products at issue from China to the EU;

“restrictions or prohibitions on the supply of services from the EU or by a service supplier from the EU in the territory of China or in respect of EU consumers of services provided by Chinese service suppliers.

“The means through which China imposes and administers these measures operate collectively but also separately, and affect the importation or exportation of goods or the supply of services from or to Lithuania, or showing a link to Lithuania for example through the presence of Lithuanian components.

“These measures predominantly concern goods or services from or destined for Lithuania or linked in various ways to Lithuania, but also have an effect on supply chains throughout the EU.

“The above-described complex of measures are inter-linked and show a targeted prohibition or restriction relating to trade in goods or services from or to Lithuania or linked to Lithuania which is intended to be generally applicable.

“These measures are attributable to China which, through actions of the Government, and/or through measures designed, promulgated, or applied by entities (including local government bodies, non-governmental bodies and state-owned enterprises) in Chinese territory acting as, under the authority of, or in concert with the Government, has encouraged, incentivised or otherwise instigated a coordinated policy designed to restrict trade from and with the EU, and more specifically, Lithuania, in a manner that is inconsistent with the terms of the covered agreements.

“In particular, the acts or omissions of the General Administration of Customs China resulting in the failure to take administrative actions or decisions necessary for customs clearance, has the effect of prohibiting or restricting importation.

“China also grants less favourable treatment for transit for products with a link to Lithuania as described above.

“Furthermore, it appears that Chinese State Trading Enterprises are not acting in conformity with the principle of non-discriminatory treatment in their purchases or sales involving either imports or exports from the EU with a link to Lithuania as described above.

“China arbitrarily or unjustifiably discriminates between the EU and other Members where identical or similar conditions prevail, including between China’s own territory and that of the EU, in applying sanitary and phytosanitary measures, and applies sanitary and phytosanitary measures in a manner which constitutes a disguised restriction on international trade, when goods with a link to Lithuania are involved.

“Moreover, China has put in place restrictions or treatment less favourable than that accorded to service suppliers from other Members or domestic service suppliers, in relation to the supply of services from the EU, by a service supplier from the EU in the territory of China, and as regards EU service consumers seeking services from Chinese service suppliers, when those services, suppliers or consumers had a link to Lithuania.”

The EU press release of today’s date ( on the matter is copied below.

“European Commission
“Directorate-General for Trade
“Press release
“Brussels, 27 January 2022
“EU refers China to WTO following its trade restrictions on Lithuania

“The EU has today launched a case at the World Trade Organization (WTO) against the People’s Republic of China over its discriminatory trade practices against Lithuania, which are also hitting other exports from the EU’s Single Market. These actions, which appear to be discriminatory and illegal under WTO rules, are harming exporters both in Lithuania and elsewhere in the EU, as they also target products with Lithuanian content exported from other EU countries. As attempts to resolve this bilaterally have failed, the EU has resorted to initiating dispute settlement proceedings against China. The WTO consultations initiated today are the first step in this process.

“Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: ‘Launching a WTO case is not a step we take lightly. However, after repeated failed attempts to resolve the issue bilaterally, we see no other way forward than to request WTO dispute settlement consultations with China. The EU is determined to act as one and act fast against measures in breach of WTO rules, which threaten the integrity of our Single Market. We are in parallel pursuing our diplomatic efforts to deescalate the situation.’

“Over the past weeks, the European Commission has built up evidence of the various types of Chinese restrictions. These include a refusal to clear Lithuanian goods through customs, rejection of import applications from Lithuania, and pressuring EU companies operating out of other EU Member States to remove Lithuanian inputs from their supply chains when exporting to China.

“To deal with such cases in future, the Commission is strengthening its toolbox of autonomous measures. Last month, the Commission adopted a proposal for an Anti-Coercion Instrument, which would give the EU more possibilities to react in the event of economic coercion. The proposal is currently being considered by the European Parliament and the Council of the EU.


“From December 2021, and without informing the EU or Lithuanian authorities, China began to heavily restrict or de facto block imports from and exports to Lithuania, or linked to Lithuania. The Commission has repeatedly raised the matter with the Chinese authorities.

“Next steps

“The first stage under WTO dispute settlement procedures is the ‘request for consultations’, under which the EU formally asks China for more information on its measures with a view to reaching a satisfactory solution. Should these consultations not lead to a positive outcome within 60 days, the EU may request the establishment of a panel to rule on the matter.”

As noted in my prior post, the United States has come out in support of Lithuania in comments from the Biden Administration. One can expect many WTO Members to seek to join the consultations supporting EU concerns. China’s use of trade restrictions and coercion in response to actions by trading partners it disagrees with has been a major problem for various countries. Actions against Australia reviewed in a prior post are just one other example. See December 22, 2020:  China’s trade war with Australia – unwarranted and at odds with China’s portrayal of itself as a strong supporter of the WTO,

As the EC press release makes clear, the EU is considering additional tools to broaden its capabilities to respond to coercive economic actions by trading partners. See Brussels, 8.12.2021, COM(2021) 775 final
on the protection of the Union and its Member States from economic coercion by third countries, As noted the proposed regulation is awaiting action by the European Council and European Parliament. The proposal is embedded below.


While major WTO Members like the EU and the U.S. can resort to or are working to have the internal authority to resort to unilateral actions to address coercion, the same is not true for most trading partners when facing such actions from countries like China. And unilateral actions by any WTO Member prior to authorization by the WTO is likely inconsistent with WTO obligations. Thus, such action shouldn’t be encouraged but is inevitable in circumstances like the Lithuania one covered in the present dispute where the actions taken follow a pattern of abuse of WTO obligations.

While Australia and the EU have pursued or are pursuing discrete WTO disputes against such coercion from China, a broader and more timely solution is obviously needed for such willful disregard of WTO obligations by a Member.

While China likes to state that it is a major defender of the multilateral trading system, its record belies that claim.

WTO negotiations on agriculture — slow if any progress to date

When the Uruguay Round was concluded, the Agreement on Agriculture included provision for periodic renewed negotiations to improve market access and address market distortions. See Agreement on Agriculture Art. 20. Negotiations started in 2000 and then were folded into the Doha Development Agenda in 2001. While there have been some important accomplishments — including an agreement for eliminating export subsidies at the Nairobi Ministerial in 2015 (EXPORT COMPETITION, MINISTERIAL DECISION OF 19 DECEMBER 2015, WT/MIN(15)/45, WT/L/980) — the divisions between Members has meant limited progress first during the Doha negotiations and in the years since 2008 in preparation for periodic Ministerial Conferences.

While eight topics are being pursued in ongoing negotiations, the current Chair of the negotiations, Ambassador Gloria ABRAHAM PERALTA (Costa Rica), has put out two texts in 2021, the latest of which from late November essentially calls for most topics to be the subject of ongoing negotiations aiming for resolution by the 13th Ministerial Conference (presumably December 2023 or later). The eight topics are public stockholding for food security purposes, domestic support, cotton, special safeguard mechanism, export prohibitions or restrictions, export competition, cotton and transparency (a cross-cutting issue). See COMMITTEE ON AGRICULTURE IN SPECIAL SESSION, REPORT BY THE CHAIRPERSON, H.E. MS GLORIA ABRAHAM PERALTA, TO THE TRADE NEGOTIATIONS COMMITTEE, 19 November 2021, TN/AG/50 (23 November 2021). Only Annex I presents a hoped for agreement on not blocking exports to the World Food Programme as doable by the now postponed 12th Ministerial Conference.

The latest draft, is much more limited than the July 2021 draft (COMMITTEE ON AGRICULTURE IN SPECIAL SESSION, DRAFT CHAIR TEXT ON AGRICULTURE, 29 July 2021, JOB/AG/215 (29 July 2021) reflecting widely divergent positions by Members on many of the proposed steps put forward by the Chair. The July document is 27 pages in length (20 of proposed text) and compares to a 16 page document in November (7 pages of text). Both pale in comparison to the text being considered during the Doha Development Agenda. See REVISED DRAFT MODALITIES FOR AGRICULTURE, TN/AG/W/4/Rev.4, 6 December 2008 (120 page document). On topic after topic, the Chair indicated that her discussions with delegations indicated an inability to come to closure quickly, hence proposals for work programs to go forward. See, e.g., TN/AG/50 at 4 (domestic support), para. 2.6 (“2.6. Taking into account the limited time left until MC12, and the persistent differences over how to discipline TDDS, it is clear that Members will be unable to achieve a substantive outcome at the Conference involving agreement on concrete modalities for the reduction of TDDS entitlements. I continue to believe, however, that MC12 can benefit all Members by delivering a useful step forward in the domestic support reform process that would set the direction for work after the Conference. I also believe that it is our collective duty to make every effort to find a way forward in this important area where an outcome is long overdue. I therefore suggest Members establish modalities by MC13 to substantially reduce trade-distorting domestic support by the date to be agreed upon by Members, coupled with some guiding principles and improved transparency requirements.”); at 5 (market access), para. 3.4 (“3.4. On the issue of applied tariff transparency, some Members remain concerned about logistical constraints or the implications of the proposed decision for possible legislative changes that it might necessitate. I sensed the reluctance of those Members to consider a definitive agreement at MC12, even on a ‘best endeavour’ or voluntary basis. Accordingly, I have proposed that Members’ work in this area continues in the Committee on Market Access, anchored by their sharing of current national practices when changing applied tariffs, and with a view to developing a non-exhaustive list of good practices for national customs authorities.”); at 5 (export competition), para. 4.2 (“4.2. Most of the discussions addressed the question of transparency, including a post-MC12 work programme and the possibility of encouraging Members to provide export data with the support of the Secretariat if deemed necessary.”); at 5-6 (export prohibitions or restrictions), paras. 4.5-5.8 (concerns of some re World Food Programme Annex, proposed work program on transparency); at 7 (cotton), para. 6.6 (“6.6. On the other hand, other Members considered that agreement on modalities for reductions by MC12 was out of reach in light of the short time left, the remaining strong divergence in positions, and the overall level of ambition for an agricultural package at MC12. The draft text therefore aims at finding a possible way forward reflecting Members’ commitment to continue the negotiations with a view to agreeing on modalities for the reduction of trade-distorting domestic support for cotton, in accordance with the mandate to address cotton ambitiously, expeditiously, and specifically, while also taking into account the overall context of the agriculture negotiations.”); at 7 (special safeguard mechanism), para. 7.1 (“7.1. Several developing Members attach importance to an outcome on SSM at MC12, especially in the wake of the COVID-19 pandemic. However, given the deep divergence among Members on some fundamental aspects of the SSM negotiations, including on the issue of linkage with market access, it has become apparent that a substantive outcome on SSM at MC12 – even in a limited or temporary setting – is increasingly unlikely. In these circumstances, and taking into consideration the current technical deficit in the SSM negotiations, my revised text proposes that Members engage in targeted thematic discussions post-MC12 to address this aspect – as my July draft text did as well. Technical elements of the SSG may inform these discussions to facilitate timely agreement on the numerous highly technical parameters of an SSM, including on scope, triggers and remedies. My draft revised text also proposes that the General Council makes recommendations on this matter to MC13 for the consideration of Ministers.”); at 8 (public stockholding for food security purposes), para. 8.6 (“8.6. My assessment that it would be extremely difficult to achieve a permanent solution at MC12 was not shared by some developing country Members, who insisted that I forward this issue to Ministers for their consideration and decision.6 Several Members strongly objected to this proposed course of action, notably due to the lack of detailed technical work on elements for a permanent solution and the absence of parallel progress on domestic support. Consequently, given the stalemate, my recommendation to Ministers is for the adoption of a work programme with a view to agreeing on a permanent solution by MC13. I also propose that the General Council regularly reviews progress in these negotiations. Given the importance attached to the PSH issue by several developing country Members, Ministers may, if they so wish, consider revisiting it, bearing in mind the significant divergent positions as outlined above, among the Membership.”).

Given the postponement of the 12th Ministerial Conference because of the COVID pandemic, some of the time pressures reflected in the documents from the Chair of the Agriculture Negotiations are reduced. Yesterday, January 24, 2022, there was an informal meeting of the Committee on Agriculture in Special Session. While there is no WTO press release on the meeting as of this post, press articles indicate that there was a split between agricultural exporting countries and others who were willing to work with the revised text and those calling for rejecting the revised text (India, the African Group, the African, Caribbean and Pacific Group and China). See, e.g., Inside U.S. Trade’s World Trade Online, WTO members debate fate of agricultural negotiating text, January 24, 2022, The United States has viewed agriculture negotiations as having potential to achieve short term agreement on transparency issues. The press reports indicate WTO Members are nowhere near a significant agriculture package for Ministers to consider whenever the 12th Ministerial occurs and obviously won’t achieve an early harvest ahead of the Ministerial.


Few topics are as important to as many WTO Members as the topic of agriculture. Despite the importance of the issue to populations around the world, governments have starkly different views of where WTO negotiations should go. India, South Africa and others have pushed for reducing obligations assumed during the Uruguay through proposals on public stockholding and special safeguard mechanisms. Major agricultural exporters have focused on market access liberalization and reduction of export and domestic subsidies. The U.S., EU and others have had concerns about the lack of transparency of many Members agricultural systems and the failure of timely and complete notifications. China, India and others have not wanted limits on special and differential treatment to developing countries and have not supported the level of differentiation between developing and least developed countries that is being proposed by the Chair.

The inability to move broad-based agricultural reform and liberalization forward at the WTO despite ongoing negotiations since 2000 is a good example of the breakdown of the WTO system to achieve results through negotiations. The 2008-2009 financial crisis and the ongoing COVID pandemic with resulting significant export prohibitions or restrictions of some agricultural products have not resulted in long term solutions or rules even on this limited issue. It is hard to see multilateral progress in the coming months or even years in the agriculture space on many of the present issues. This will place ongoing pressure on countries with agriculture export or import interests to explore regional or bilateral arrangements. It also undermines the ability of the world to meet UN sustainability goals.

Without a common vision of the goals for the WTO, WTO Members are likely to continue talk past each other rather than move forward together. These challenges are complicated by the different economic systems of major players, some of which are incompatible with the WTO system.

The concept that negotiations can go on for decades is plainly unacceptable if the WTO is to maintain relevance. Unfortunately, the path forward to relevance is unclear at best.

COVID-19 Omicron variant – hopeful signs of peaking in the U.S. and Europe; supply disruptions continue from zero tolerance policy in China

In a recent post, I reviewed vaccine equity issues around the COVID-19 pandemic and recent developments including a new low-cost vaccine being produced in India and available to be produced in many countries with no licensing costs. See January 11, 2022:  WTO efforts to address the COVID-19 pandemic — the January 10, 2022 General Council meeting and some current developments of interest,

The omicron variant has wreaked havoc in Europe and in the U.S., though there are signs of the huge surge in cases starting to ebb. See, e.g., European Centre for Disease Prevention and Control, COVID-19 situation update worldwide, as of week 2, updated 20 January 2022 (data for last two weeks of 2021 not available; huge surge from omicron reflected in curve; dark blue is Europe, light blue is the Americas). The following chart shows new cases worldwide.

COVID-19 situation update worldwide, as of week 2, updated 20 January 2022

Distribution of COVID-19 cases worldwide, as of week 2 2022
The ECDC data show the U.S. being the first country to record more than 10 million infections in a fourteen day period (10.586 million; weekly data from the ECDC actually show 12.52 million cases reported in the U.S. in the first two weeks of 2022). The huge surge in Europe in the last several months is spread across many countries. France has been particularly hard hit with new cases numbering in the hundreds of thousands per day for nearly every day in January (highest, 464,679 on January 19 with declines since then). See ECDC, Data on the daily number of new reported COVID-19 cases and deaths by EU/EEA country 20 January 2022,

In the United States, there is a note of optimism as the national number appears to be coming down. The decline is significant in some states where omicron was first identified but cases are still increasing in other parts of the country. See, e.g., NBC News, ‘An optimistic trend’: Covid cases are falling, but U.S. isn’t out of the woods yet, January 22, 2022, (“Cases are already falling in parts of the Northeast, Walensky said. ‘We are starting to see steep declines in areas that were first peaking, so areas of the Northeast — New York, Rhode Island, Connecticut — are really starting to come down.’ Shea said that cases in the rest of the country and deaths, which lag behind cases, are expected to trail shortly after. The big dropoff in cases in large states like New York can make the nationwide average look lower, even though cases are still rising in many states, but she expects all states to hit their peaks soon after Northeastern states.” 

Supply chain problems that have plagued the world for many months now and led to both shortages and large inflationary pressures may continue in part because of China’s zero-tolerance COVID policy has resulted in more shutdowns ahead of the approaching winter olympic games. See, e.g., New York Times, Supply Chain Woes Could Worsen as China Imposes New Covid Lockdowns, January 16, 2022, (“Companies are bracing for another round of potentially debilitating supply chain disruptions as China, home to about a third of global manufacturing, imposes sweeping lockdowns in an attempt to keep the Omicron variant at bay.”).

Many countries, including the U.S. and EU, are reviewing supply chain issues to improve resiliency and reduce risks. Both the U.S. and EU for example have been looking at legislation to bolster semiconductor chip manufacturing. See, e.g., World Economic Forum, ‘There’s no digital without chips’: New European Chips Act announced, 20 January 2022 (“European Commission President Ursula von der Leyen has announced a new European Chips Act”),; Reuters, U.S. House bill on China competitiveness, chip investment, coming soon – Pelosi, January 21, 2022,

While discussions continue around trade and health issues at the WTO including what, if any, temporary waiver from TRIPS obligations or other actions to improve vaccine production may be needed, data available on vaccine production and shipments continue to suggest that the issue is not necessary for a resolution to the COVID-19 pandemic. See, e.g., WTO-IMF COVID-19 Vaccine Trade Tracker, Last updated: 17 January 2021, (showing total supply to the end of December at 11.5 billion doses; exports of 4.4 billion doses, with rapidly increasing shipments to low income and lower-middle income countries in the last few months of 2021). Several tables from the latest WTO-IMF COVID-19 Vaccine Trade Tracker are copied below.

“3. Imports

“Imports are defined as the number of doses received from producing economies, mirroring the information provided in the exports section. This definition does not take into account imports of vaccine substances in bulk form to be used in ‘fill and finish’ sites.”

Income Group ImportsNumber of doses (million)Doses per 100 peoplePopulation (million)
Low income234.034.5678.4
Lower middle income1,482.149.52,994.7
Upper middle income1,748.559.72,930.4
High income935.675.41,241.6
Note: as of 31 December 2021

ContinentNumber of doses (million)Doses per 100 peoplePopulation (million)
South America682.7157.3434.0
North America460.577.7592.8
Note: as of 31 December 2021

With more vaccines being reviewed by the WHO and individual countries, production of vaccines in 2022 will exceed volumes produced in 2021. Exports will also increase as trends in the second half of 2021 show have been happening.

While different sources look at vaccinations for individual countries and territories, attached is an excel spreadsheet of data from the World Health Organization for data available as of January 20, 2022. There are countries not covered by the WHO data (e.g., Taiwan) and others for which there is no World Bank 2022 income designation. I have added the categories of the World Bank GNI per capita income (low income, lower-middle income, upper-middle income, high income) to the WHO table. At the end of the WHO listing I have broken the data out by income group. For those countries/territories with no World Bank designation, they are listed “na”. For countries or territories in the World Bank list but not shown on the WHO list, I have included the name of the country/territory at the end of the income grouping.

As reviewed in prior posts, for groups and organizations focuses on vaccine equity, it is important to understand the causes of the very large differences in vaccines/100 people shown within at least the low income, lower-middle income and upper-middle income categories. For example, Rwanda (97.195 vaccinations/100 people), Mozambique (54.492 vaccinations/100 people) are low income countries. But their experience in vaccine access is much different than many other low income countries (most under 30 vaccine doses/100 people, many under 20 or 10/100 people, one less than 1/100 people). Medical infrastructure and many other factors are certainly important components in improving vaccine access to many low income countries. See GAVI, World leaders launch call for renewed support for vaccination in 2022 as part of the global fight against COVID-19, (” Specifically, COVAX leaders called for at least US$ 5.2bn in new funding: US$ 3.7 billion to fund a 600 million dose Pandemic Vaccine Pool to address uncertainties and related uncovered risks, such as boosters, additional coverage, new variant vaccines if required, and to make sure there is reliable supply for the poorest countries. In addition, catalytic delivery funding of US$ 1 billion is requested to support getting doses into arms rapidly and safely without undermining routine immunization activities. A further US$ 545 million is needed to cover ancillary costs such as syringes, transport and insurance for donations.”).

The same is true for lower-middle income countries with Cambodia and Mongolia recording 189.643 and 164.686 vaccine doses/100 people respectively while Nigeria, Cameroon and and Zambia report just 9.007, 3.859, and 5.665 vaccine doses/100 people respectively. Seventeen countries have reported more than 100 vaccine doses/100 people while 9 have reported 20 vaccine doses/100 people or fewer.

The same is true for upper-middle income countries where the range of vaccine doses/100 people range from 32.258 for Equitorial Guinea to 283.945 for Cuba.


Cybertheft of intellectual property – do there need to be greater trade deterrents?

Cybertheft is a tremendous problem for governments, companies and individuals. While actors in the space are pursuing a range of objectives, this post looks at cybertheft of intellectual property and its effects on industry. Thus, the huge losses incurred by governments and by individuals outside of the business arena are not addressed nor are the misinformation campaigns of recent years.

In 2011, The Council on Foreign Relations published an interview with Dmitri Alperovitch, then McAfee’s vice president of threat research. The interview was titled “Cybertheft and the U.S. Economy”. See Council on Foreign Relations, Cybertheft and the U.S. Economy, August 11, 2011, The summary introduction paragraph summed up the situation as follows:

“In August 2011, the cybersecurity firm McAfee released an eye-opening report (PDF) detailing its investigation into a multi-year, most likely state-sponsored cyberattack that includes intrusions into the U.S. federal government and defense contractors, resulting in the theft of massive stores of intellectual property. The report’s author and McAfee’s vice president of threat research, Dmitri Alperovitch, describes these attacks, known as Operation Shady RAT, as a profound threat, indicative of a larger trend that may result in ‘the complete destruction’ of the U.S. economy. Rather than focus on the potential for a theoretical ‘cyber Pearl Harbor,’ he says that U.S. policymakers should use all of the nation’s power to stem the steady theft of national secrets.”

A 2019 report prepared by Price Waterhouse Cooper for the European Commission examined the scope of the cybertheft problem for businesses in the EU. See PWC, Study on the Scale and Impact of Industrial Espionage and Theft of Trade Secrets through Cyber, 2019, The estimated cost to EU industry was summarized in the conclusion on the last page:

“Estimates of February 2018 provide details of the negative impacts at the European level of cyber theft of trade secrets: about €60 billion lost in economic growth, resulting in a loss of competitiveness, jobs and reduced R&D investments. More specifically, 289,000 jobs could be at risk in 2018 in Europe and 1 million jobs could be at risk by Stakeholders emphasized that direct impacts account for about 10% of costs the company will have to face. Therefore, the remaining 90% of costs are due to indirect impacts that are effectively measured and assessed 5-6 years after the cyber-intrusion.”

There have been many other reports looking at the costs and problems from cyber theft. See, e.g., U.S. Department of Justice, REPORT OF THE ATTORNEY GENERAL’S CYBER DIGITAL TASK FORCE, 2018,

But efforts at cybertheft have continued and intensified. See, e.g., New York Times, U.S. Accuses Hackers of Trying to Steal Coronavirus Vaccine Data for China, July 20, 2020,, (“The Justice Department accused a pair of Chinese hackers on Tuesday of targeting vaccine development on behalf of the country’s intelligence service as part of a broader yearslong campaign of global cybertheft aimed at industries such as defense contractors, high-end manufacturing and solar energy companies.”).

Existing deterrents

Theft of intellectual property and other cybertheft actions face civil and criminal penalties in many countries, including the U.S. and other WTO Members. U.S. law also permits blockage of imports that violate IP holders rights (e.g., patents). The WTO since its launch in 1995 has had a Trade Related Aspects of Intellectual Property Rights Agreement, which incorporates provisions from a range of IP conventions, and requires WTO Members to provide adequate enforcement of such rights. The WTO has dispute settlement provisions which permit challenging trading partners who are not enforcing intellectual property rights. In addition, the U.S. has worked through its Special 301 authority to work with governments where the U.S. doesn’t perceive adequate enforcement occurring. It has also entered into bilateral agreements (e.g., U.S.-China Phase I Agreement) to address enforcement concerns including on cybertheft of intellectual property.

Despite these tools and the vast sums spent by industry trying to protect its intellectual property, the problems continue and in many ways are intensifying.

Experts like Dmitri Alperovitch have put forward a series of proposals for U.S. Congressional and Executive Branch action in 2022 to improve the situation for U.S. companies. See January 14, 2022 email from Silverado Policy Accelerator, Inc. (Mr. Alperovitch is Co-founder and Executive Chairman), Silverado’s 2022 Cybersecurity Policy Priorities for the Legislative and Executive Branches. The contents of the email are copied below (NOTE: I serve as one of a number of strategic advisors to Silverado but was not involved on the cybersecurity issues).

“To the friends of Silverado Policy Accelerator,

“The past year witnessed several notable bipartisan policy advances in the cyber arena. In March, Congress authorized $1 billion for the Technology Modernization Fund as part of the bipartisan American Rescue Plan to support new investments in federal agencies’ cybersecurity infrastructure. In May, the Biden administration released its Executive Order on Improving the Nation’s Cybersecurity, which included provisions to increase security standards for vendors who supply high-risk software through the government acquisition process and a number of critical technology implementation requirements that raise the bar for security across federal government networks. Finally, the Infrastructure Investment and Jobs Act, passed by Congress in November, included $1.9 billion for a range of cyber-related investments. 

“Although these bipartisan initiatives collectively represent a historic investment in the nation’s cybersecurity, there is much still to do to ensure that government agencies—as well as American companies and organizations—are protected from cyber attacks. As the legislative and executive branches look ahead to the coming calendar year, Silverado Policy Accelerator has compiled its own list of six policy priorities that deserve particular attention in 2022 (included below).

“Additionally, please join us tomorrow, January 13 from 9:00-10:00 am ET as Silverado’s Co-Founder and Executive Chairman Dmitri Alperovitch sits down with Congresswoman Yvette Clarke (D-NY), Congressman John Katko (R-NY), DHS Under Secretary for Policy Robert Silvers, and the FBI Cyber Division’s Assistant Director Bryan Vorndran to hear their perspectives on cybersecurity policy priorities for the coming year. You can register for tomorrow’s event here.

“A recording of tomorrow’s event will be available on Silverado’s website following the live broadcast. 

“* * *

Silverado’s 2022 Cybersecurity Policy Priorities for the Legislative and Executive Branches 

1. Passage of a comprehensive federal cyber incident reporting law

“In light of the 2022 National Defense Authorization Act not including provisions requiring companies to report hacks and ransom payments to the government, Congress should consider alternative paths to enacting a mandatory cyber incident reporting requirement in 2022. Such a law should require major private companies, including critical infrastructure entities, to report technical indicators associated with breach attempts to the Cybersecurity and Infrastructure Security Agency (CISA).  CISA should also build the architecture to immediately pass the information on to other agencies with a need to know, such as the FBI and sector-specific relevant agencies. Rapid access to these incident reports by CISA and FBI, among others, is necessary to allow the government to have a clear view into adversary campaigns targeting the U.S. and to support timely federal action. Such legislation is critical to provide insights to the government about the true nature of the threat to the private sector in order to take appropriate deterrent action (criminal investigation, cyber offense, sanctions, etc), as well as to help warn and notify other victims or vulnerable organizations who may not be aware that they had been targeted.

2. Provide CISA with the appropriate authorities and resources to eventually become the operational federal CISO, or Chief Information Security Office, for the civilian federal government (excluding DoD and IC)

“Congress took an important step toward centralizing federal cybersecurity strategy by creating CISA in DHS in 2018, but the next step is to give CISA both the authority and the resources that it needs to effectively execute its mission. The long-term goal for CISA should be to evolve into an operational cybersecurity shared services provider for most civilian federal government agencies, taking over fully or partially their cybersecurity operations. Achieving this objective would result in streamlined and more effective cybersecurity efforts, centralized accountability and a higher standard for security across the government.

“Congress should support CISA’s ongoing efforts in the following ways: 

  • Provide CISA with the resources and authority to create a 24/7 threat hunting operation center to search for intrusions on federal networks. 
  • Authorize CISA to conduct a trial in which it assumes responsibility for running cybersecurity operations of a small executive agency. The trial would allow the government to gauge what sort of additional resources CISA would need to be able to evolve into an operational Chief Information Security Office (CISO) for the civilian federal government.
  • Create budgetary and FISMA compliance incentives for federal agencies to outsource their cybersecurity operations to CISA, turning it into a Shared Service Provider for cybersecurity.
  • Provide CISA with the appropriations that are commensurate with its growing importance by reallocating resources from agencies that opt into the Shared Service Provider model. 

3. Adopt speed and outcome-based metrics to measure agencies’ response time to cyber threats

“In cyberspace, the only way to reliably defeat an adversary is to be faster than they are. For this reason, Congress should require federal agencies to adopt speed-metrics that measure agencies’ response to cyber threats based on the time it takes to begin and complete fundamental defensive tasks. ​

“Through legislation, Congress could require agencies to adopt speed-based metrics by mandating that they collect data on the average time it takes to perform three fundamental defensive actions: (1) detecting an incident; (2) responding to an incident; and (3) fully mitigating the risk of high-impact vulnerabilities. Taking these measurements should be as simple as recording the times of the initial discovery of the event (intrusion or vulnerability) and the time when the investigation or mitigation action is finished. Thus, it should require minimal additional resources to implement. Congress could also include a “recoverability metric” to measure agencies’ ability to recover data in the event of a ransomware attack or major cyber incident.

“Over time, these metrics would provide objective and diachronic measurement of an agencies’ incident response capabilities that they could report to CISA, OMB, and the relevant oversight committees in Congress. If the metrics prove effective at driving the right behavior to decrease agencies’ response time to cyber threats, Congress should also consider models to extend their adoption by the private sector.

“In addition to these fundamental intrusion and mitigation metrics, CISA should also be given the authority to develop new metrics beyond these fundamental intrusion and mitigation ones to respond to changes in the threat and defense landscape. To incentivize agencies to drive down the times it takes to discover and respond to intrusions or vulnerabilities, CISA should also implement a civilian-government-wide annual awards program to publicly acknowledge agencies and their leaders who achieve the best metrics.

4. Strengthen the executive branch’s authority to sanction foreign cryptocurrency exchanges that fail to comply with basic “Know Your Customers” and anti-money laundering requirements

“Ransomware criminals rely on widely-available and largely anonymous cryptocurrency such as Bitcoin to collect hundreds of millions of dollars in ransom payments each year and to launder ransom payments into fiat currencies without risk of disclosing their identities to victims or law enforcement. Although U.S.-based exchanges are required by law to comply with robust “Know Your Customer” (KYC) and other anti-money laundering regulations, foreign exchanges have been slow to adopt similar requirements. The lack of widespread compliance undermines the efficacy of the U.S.’s and other like-minded governments’ efforts to clean up the global cyber ecosystem, since malicious actors can easily circumvent security requirements simply by using less secure foreign exchanges.

“The United States should pursue a two-pronged strategy to level the international playing field. First, it should work with existing and new trading partners to ensure they have adequate KYC and AML safeguards in place for cryptocurrency exchanges based in their jurisdictions. Second, the executive branch should explore its ability to sanction foreign cryptocurrency exchanges that fail to comply with minimum KYC and other anti-money laundering requirements or that refuse to cooperate with U.S. law-enforcement on investigations. 

“The Treasury Department currently has broad authority to sanction specific foreign exchanges based on evidence that they cooperate with prohibited nations or entities, but it does not have the authority to sanction exchanges for non-compliance with KYC and AML regulations. Granting them such authority explicitly would likely encourage foreign institutions to implement these regulations in order to avoid the prospect of sanctions.

5. Incorporate cyber-specific details into OFAC’s SDN list

“The most difficult task facing many foreign cyber threat actors is procuring anonymous, reliable, fast, and long-lasting infrastructure (such as domains and cloud servers) to support malicious cyber attacks. These actors frequently go to great lengths—including registering shell companies and developing complex anonymous payment mechanisms—to disguise their activity, since using stolen bank accounts and credit cards for payment often results in the rapid shutdown of their infrastructure once the chargebacks start being reported. In addition, threat actors are increasingly taking advantage of legal constraints on the U.S. intelligence community’s ability to monitor domestic networks to gain access to the U.S.-based cyber infrastructure needed to carry out attacks against both private sector companies and U.S. government agencies. 

“The United States needs stronger mechanisms to deter cyber threat actors from leveraging U.S.-based cyber infrastructure to carry out cyber attacks. The Treasury Department’s Office of Foreign Assets Control (OFAC) already maintains a Specially Designated Nationals and Blocked Persons List (SDN), but the list only contains names of cyber criminals and other threat actors and does not include bank account information, credit card numbers or cryptocurrency wallets. As a consequence, the list is not always effective at identifying and blocking cyber threat actors, who almost always use fake names to procure infrastructure. 

“The Treasury Department should consider how to add these other identifying financial elements to the SDN to allow payment processors and cryptocurrency exchanges to block adversary-initiated transactions at the point of sale.

6. Require threat hunting on Defense Industrial Base (DIB) networks

“In March of 2020, the Cyberspace Solarium Commission recommended that Congress direct regulatory action that the executive branch could pursue in order to require companies that make up the Defense Industrial Base, as part of the terms of their contract with DoD, to create a mechanism for mandatory threat hunting on DIB networks. This recommendation was partially authorized in Section 1739 of the FY21 NDAA, but that article only required DoD to conduct an assessment on the feasibility and suitability of a DIB threat-hunting program without requiring DoD to establish the program after the report is issued. Congress should pass the necessary legislation to fulfill the intent of the initial proposal and enable DoD to execute threat hunting operations on the networks of cleared defense contractors that hold sensitive national security information.”

Are other trade remedies needed?

When the only remedies available to companies are individual or company specific and require the cooperation of the country from which cybertheft is occurring (if offshore), there is often a reluctance of companies who have been harmed to identify the problem or pursue legal actions. Fear of retaliation by foreign governments can also reduce the willingness of companies to defend their commercial interests in such situations.

This raises the question whether broader-based remedies should be available to deter such activity and provide a major incentive better behavior by trading partners where such conduct is not being addressed adequately.

For example, where a country provides notice to a trading partner of problems and there is no resolution in a relatively short period (e.g., 90 days), should the complaining party block imports of products in the same general category, prohibit investments in the sector, and/or other actions?

If the cybertheft from companies appears to be for the benefit of a foreign government or at the direction of a foreign government, should there be a loss of MFN treatment for the sector or more broadly?

The concerns around cybertheft could be addressed within the WTO or within bilateral or regional agreements. Considering the length of time that cybertheft has been harming many economies, unilateral action may be warranted pending broader agreement.

Is it time for a new approach to bilateral trade with China?

Press accounts last week reviewed new record merchandise trade surpluses for China with the world and a growing trade surplus with the United States despite the Section 301 tariffs and other actions which reduced the bilateral trade deficit in 2019 and 2020 from the figures in 2018. See Reuters, China posts record trade surplus in Dec and 2021 on robust exports, January 14, 2022, (“The trade surplus hit $676.43 billion in 2021, the highest since records started in 1950, up from $523.99 billion in 2020, according to data from the statistics bureau.” “China’s hefty trade surplus with the United States, a key source of contention between the world’s two biggest economies, hit $39.23 billion in December, widening from $36.95 billion the month before, but below this year’s high of $42 billion in September.”). While U.S. trade data are not yet available for December, the U.S. bilateral trade deficit with China for eleven months of 2021 was $319.151 billion, suggesting full year deficit with China of more than $358 billion — reversing the declining deficits of the last several years with China.

For the U.S., 2021 will be the first year where the trade deficit in goods exceeds $1 trillion dollars. So while the U.S. has significant deficits with a number of countries, for the Biden Administration and Congress, the most concerning aspect of the deficit is the effect of distortions flowing from China’s economic system, one that is at odds with the U.S. market-based system and not consistent with WTO basic principles.

I have in prior posts reviewed the incompatability of the Chinese economic system with WTO norms. I have also provided the views of a former WTO Deputy Director-General on the importance of convergence of economic systems as opposed to coexistence, and the views of trade officials in the U.S. and EU on challenges posed by Chna’s economic system. See, e.g., December 11, 2021:  20 Years of China’s Membership in the WTO — a brief critique,; October 16, 2021:  What role China could play in WTO reform — possibilities are real but chances of a positive role are not,; April 8, 2021:  USTR 2021 National Trade Estimate Report on Foreign Trade Barriers — areas of concern with a focus on China,; March 31, 2021:  “Blowing up the trading system” — Clyde Prestowitz’s suggested way for the world to move forward in light of China’s economic system,; March 29, 2021:  China and the WTO – remarks by Dennis C. Shea to the Coalition for a Prosperous America,; January 17, 2021, USTR on January 14, 2021 released its 2020 report to Congress on China’s WTO compliance,; November 10, 2020:  The values of the WTO – do Members and the final Director-General candidates endorse all of them?,; August 24, 2020:  USTR Lighthizer’s Op Ed in the Wall Street Journal – How to Set World Trade Straight,; July 25, 2020:  A new WTO without China?  The July 20, 2020 Les Echos opinion piece by Mogens Peter Carl, a former EC Director General for Trade and then Environment,

As has been reviewed in annual USTR reviews of China’s compliance with WTO commitments, the challenges faced by China’s trading partners are many and largely unaddressed despite efforts through dispute settlement, through bilateral negotiations and otherwise. The U.S.-China Phase 1 Agreement resulted in minimal affirmative movement in U.S. exports to China and there are open issues in terms of China’s implementation and enforcement of other commitments. See, e.g., Peterson Institute for International Economics, December 23, 2021, US-China phase one tracker: China’s purchases of US goods, As of November 2021, While there were increases in U.S. exports to China over 2017 levels in 2020 and 2021 for agriculture, manufactured goods and energy, there were large declines for non-covered goods, so that there was relatively little actual overall progress on merchandise trade and large declines in services trade. See, e.g., USITC data web, U.S. total exports to China (2017, $130.0 BN; 2018, $120.2 BN; 2019, $106.4 BN; 2020, $124.5 BN; 2021 (11 mos.) $137.7 BN); U.S. Census Bureau and the U.S. Bureau of Economic Analysis, MONTHLY U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, NOVEMBER 2021, January 6, 2022, (Exhibit 20b).


Obviously for nations facing the challenges of dealing with the distortions flowing from China’s economic system, one can attempt to work through the WTO and seek reforms that will address at least some of the major distortions. The U.S., EU, Japan and others are attempting that in the areas of industrial subsidies, state owned and controlled entities and other areas. The prognosis for movement is limited in the near term and even in the middle or long-term as long as China is committed to maintaining its system. Plurilateral negotiations on Joint Statement Initiatives also offer some hope for certain areas, assuming China is a participant and actually implements obligations undertaken.

Plurilateral trade agreements, such as CPTPP, could be another option. China has applied and would have to undertake some significant reforms to enter. The real question would be whether those changes would change the underlying disconnect between the state system pursued by China and market disciplines followed by many others.

Others have argued for major countries withdrawing from the WTO and setting up a system where China is either not a member or must become a market economy in fact to participate. Arguably if the EU and US were to join the CPTPP and seek further modifications, and if China’s application were not accepted until China’s system were significantly modified, this would be an option. A suggestion from the former EC Trade Commissioner is for the EU and U.S. to join the CPTPP. See PIIE’s Cecilia Malmstrom, The EU should use its trade power strategically, January 4, 2022, (“The European Union should also seek to enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and convince the United States to do the same. The European Union already has agreements with most members of the CPTPP, but an FTA would signal the European Union’s readiness to strengthen global trading rules with its partners.”).

The United States has pursued a strategy of strengthening various tools to address discrete issues with China and working with China to have them honor their existing WTO and bilateral agreements. Presumably that approach will continue to be pursued, but the downside of such an approach without more is the long time delay to meaningful change which means ongoing harm to the U.S. industrial base, workers and communities.

Warren Buffett in 2003 and again in 2016 advocated for a system of issuing import certificates to exporters equal to the value of the exports which certificates could be sold, etc. and which would result in a trade balance in goods. See, e.g., Fortune, Warren Buffett: Here’s How I Would Solve the Trade Problem,
April 29, 2016, ttps:// His idea was to address the trade deficit overall and not focus on trading partners whose economic systems don’t mesh with the U.S. model. But an approach vis-a-vis selected countries pending the necessary economic reforms would be a narrower option and more focused on the underlying concern.

Last month in the Harvard Business Review, an article by Thomas Hout argued for a cap and trade system with China. See Harvard Business Review, Thomas Hout, A New Approach to Rebalancing the U.S-China
Trade Deficit, December 20, 2021, The cap and trade approach is similar to Warren Buffett’s idea but limited to trade with China, as the author notes.

“Such a cap-and-trade system for imports from China would be much like the one for greenhouse gas emissions in various parts of the world. The beauty of this system is its insulation from political favoritism and bureaucracy: Market forces would determine who buys licenses and what gets imported. The cap’s level can be managed relative to a target such as GDP or the size of the trade deficit.” The author suggests flexibility in its implementation to limit any disruptions to U.S. businesses.


The Biden Administration has put its initial efforts into addressing domestic competitive needs such as the infrastructure legislation and the Build Back Better bill. At the same time, the Administration has been reviewing how the U.S. should be dealing with China across a broad array of issues including trade.

A multifaceted approach will certainly be needed. While the U.S. has pursued various multifaceted approaches in the past, China’s decision not to abandon state direction and control requires a recognition that global trade principles alone will not ensure fair trade conditions for U.S. companies either in the U.S., in China or in third countries.

In such a situation, considering a cap and trade system for trade with China and encouraging our major market-based trading partners to do the same would seem an important tool for achieving greater sustainability in our trade relationship with China.

WTO efforts to address the COVID-19 pandemic — the January 10, 2022 General Council meeting and some current developments of interest

As the world enters the third full year of fighting the COVID-19 pandemic, the WTO continues to seek both a response to the current challenges and a path forward for future pandemics. India, which along with South Africa (and later support from other countries), has sought since October 2020 a waiver from certain intellectual property protections provided under the WTO’s Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) to address the COVID-19 pandemic, in late December 2021 sent a letter to the General Council Chair of the WTO seeking a virtual ministerial meeting to address the WTO response to the pandemic. This followed the postponement of the 12th WTO Ministerial Conference because of restrictions on travel flowing from the increase in COVID cases from the omicron variant.

The WTO press release on the General Council informal meeting held on January 10, 2022 to explore India’s request put a largely positive spin on the meeting, although press accounts suggest that there was push back from many other WTO Members to holding such a virtual Ministerial for various reasons, including lack of progress in developing an agreed text on any TRIPS waiver, need to address other pressing issues and the challenges of doing a Ministerial meeting virtually based on last year’s experience. See WTO news release, General Council discusses India’s call for virtual ministerial meeting on pandemic response, 10 January 2022, (” General Council Chair Ambassador Dacio Castillo (Honduras) convened the 10 January meeting in response to India’s recent proposal to hold a virtual Ministerial Conference on the WTO’s response to the COVID-19 pandemic, including a proposed waiver of relevant intellectual property protections. At the meeting, Director-General Ngozi Okonjo-Iweala urged WTO members to urgently step up their efforts, suggesting that with the requisite political will, members can in the space of the coming weeks reach multilateral compromises on intellectual property and other issues so that the WTO fully contributes to the global response to COVID-19 and future pandemics.”); Inside U.S. Trade’s World Trade Online, WTO members reluctant to hold virtual ministerial on TRIPS waiver, January 10, 2022, (“India’s bid to schedule a virtual ministerial meeting focused on the proposed waiver of some intellectual property obligations to fight the pandemic did not win the support of other World Trade Organization members on Monday, as they raised concerns about the virtual format as well as with a lack of progress in the negotiations.”). While the U.S. was reportedly favorably disposed to such a meeting with greater clarifications, the European Union statement noted all of the issues raised in the Inside U.S. Trade article. See also The Hindu, WTO General Council discusses India’s call for holding virtual Ministerial meet on COVID-19 pandemic response, 11 January 2022,

While the U.S., under the Biden Administration, has stopped posting on the U.S. Mission website their statements at meetings other than the Dispute Settlement Body (unclear if this is due to a policy change or simply the lack of a Deputy USTR confirmed by the Senate), the EU is posting their statements on their Geneva website. See EU Statement at the General Council Informal Meeting, 10 January 2022, The entirety of the EU statement is copied below.

“Statement delivered by Ambassador João Aguiar Machado

“For the European Union, the WTO needs to put in place a process that is conducive to progress on all topics of the MC12 agenda.

“Of course, the European Union shares the view that the response to the pandemic is important. However, we need to be careful that a focus on this part of the MC12 agenda must not lead to a loss of momentum on the other key components, which are equally essential to the revitalisation of the organisation – such as the conclusion of the fisheries subsidies negotiations, agreeing on a way forward on agriculture, and finalising the Ministerial Declaration with a strong commitment on WTO reform – and this, building upon the work done by you, Chairman [Chairman of the General Council], in the run-up to the Ministerial meeting in November. These elements are all essential for the credibility and viability of this organisation. WTO reform is also essential from a health perspective. We need an efficient and effective organisation if we are going to be in a position to act decisively in the case of future pandemics.

“Before any decision to call a virtual Ministerial meeting and topics to be decided, we believe the WTO Director General and the Chair of the General Council should hold consultations with Members, to assess the way forward on all four issues that I referred to.

“As regards trade and health, the aim should be to seek consensus on the way forward both on intellectual property and on the Declaration and Action Plan. As regards the latter, Ambassador Walker’s draft text should be the basis for such consultations. And as regards intellectual property rights, consultations should continue with a view to identifying a text on which the WTO Membership can agree.

“Any virtual Ministerial should take place only once there is a consensus both on intellectual property rights and on the Declaration and Action Plan on the wider pandemic response. Only a comprehensive trade response to the pandemic can make a difference and address the identified bottlenecks as regards the production and distribution of COVID-19 vaccines such as restricted access to raw materials and other inputs as well as complex supply chains. Agreeing on the comprehensive elements contained in the Walker text will be important not only to tackle Covid-19, but also to address future pandemics.

“If we want to take forward work on all elements of the MC12 agenda, we must have a credible process in place.

“In summary, the European Union is open to consider the proposal by India and to reach an agreement on all aspects of the response to Covid-19 as quickly as possible. However, in the European Union’s view, it is premature to decide at this point in time on either the principle or on the date for such a virtual meeting.”

Thus, while the Director-General is pushing Members for an early resolution of the pandemic response (including any TRIPS waiver), the path forward looks certain to take significantly more time than a few weeks to reach agreement.

The WTO has added a page to its website entitled “Trade and health: WTO response to the COVID-19 pandemic”. The page accessed today states “State of Play – 6 January 2022” — i.e., before the informal General Council meeting on January 10th. However, it provides a good overview of what has been proposed and differences that exist on the waiver issue. See Briefing Note, State of Play 6 January 2022, Trade and health: WTO response to the COVID-19 pandemic, The briefing note is embedded below.


Some current developments of interest

By the end of 2021, COVID vaccines were being produced at a rate of about 1.5 billion doses per month. Additional vaccines are being added which will drive production up even higher during the early months of 2022. See, e.g., BBC, Covovax and Corbevax: What we know about India’s new Covid vaccines, 28 December 2021,

Corbevax has received a lot of attention in the media in the last few weeks. The Indian producer has 150 million doses ready for distribution, will be producing 100 million doses per month and plans to export one billion doses to other countries. The developers and the Indian producer are working with the WHO to pursue emergency use authorization through the WHO as well. See, e.g., NPR, A Texas team comes up with a COVID vaccine that could be a global game changer, January 5, 2022, (“A vaccine authorized in December for use in India may help solve one of the most vexing problems in global public health: How to supply lower-income countries with a COVID-19 vaccine that is safe, effective and affordable. The vaccine is called CORBEVAX. It uses old but proven vaccine technology and can be manufactured far more easily than most, if not all, of the COVID-19 vaccines in use today. ‘CORBEVAX is a game changer,’ says Dr. Keith Martin, executive director of the Consortium of Universities for Global Health in Washington, D.C. ‘It’s going to enable countries around the world, particularly low-income countries, to be able to produce these vaccines and distribute them in a way that’s going to be affordable, effective and safe.'” “Hotez says that unlike the mRNA vaccines from Pfizer and Moderna, and the viral vector vaccine from Johnson & Johnson, protein subunit vaccines like CORBEVAX have a track record. So he and Bottazzi were relatively certain CORBEVAX would be safe and effective. ‘And it’s cheap, a dollar, dollar fifty a dose,’ Hotez says. ‘You’re not going to get less expensive than that.'”); The Times of India, Discussions underway for WHO approval for
Corbevax Covid-19 vaccine, says developer, 31 December 2021,

These developments are occurring at a time of record breaking numbers of new infections due to the more highly contagious omicron variant. While many parts of the world are seeing huge surges, Europe and the United States are seeing particularly huge increases. See, e.g., Reuters, U.S. reports 1.35 million COVID-19 cases in a day, shattering global record, January 11, 2022,; WHO, WHO: 7 million new omicron COVID cases in Europe last week, January 11, 2022,

A few thoughts

When one looks at vaccination distribution in 2021, the concerns about inequity center largely on the vary small volume of vaccines that have gone to low income countries (as classified by the World Bank) and to some lower middle-income countries. See, e.g., December 30, 2021:  COVID-19 and vaccine equity — outlook for 2022,

The largest volume of vaccines that COVAX had envisioned going to these countries were lower cost ones that would be easier to store, handle and administer than some of the high cost new technology vaccines. Production problems and export bans of the more cost effective and easier to store vaccines in 2021 were the largest reasons of poor distribution of vaccines to lower income countries.

With large volumes of donations committed for 2022 from countries like the U.S. and EU and others and with Indian production both ramping up significantly and exports having resumed and with the availability of low cost options, including new vaccines like Corbevax already approved in India and likely to be produced in various countries around the world at very low costs, and with the overall very high levels of global vaccine production by the end of 2021 continuing to expand, the question of getting the world vaccinated in 2022 against COVID will almost certainly be more about issues other than availability of vaccines.

So the WTO’s most important role in the coming weeks and months is to focus on reducing barriers to trade such as those covered by the Walker draft text (discussed in the briefing paper). The TRIPS waiver issue is one that has attracted a lot of attention because of the perception of global needs and whether intellectual property rights were restricting access. In my view, while the proposal was popular with many groups, the evidence of production during 2021 did not support the concern that the TRIPS agreement was restricting production. More than 10 billion doses of COVID-19 vaccines were produced and shipped in 2021 — twice as many doses as all vaccines produced and shipped in 2020 for all other needs. Many licenses were granted for production in other countries. A waiver would not have resulted in significantly more production in 2021.

Production in 2022 and the arrival of new low cost vaccines should mean there is adequate volumes for the world to achieve 70% vaccination rates this year. The issue of equity in 2021 had to do with distribution of the production, infrastructure in many countries, trade restrictions on vaccines and inputs. These do not require a TRIPS waiver to address in 2022.

Looking forward to the next pandemic, there is much that the WTO Members could agree to that would reduce many of the challenges COVID-19 has posed. It is not clear that actions on intellectual property beyond what is being proposed by the EU are needed or justified by the experience gained these last several years.

How to Make Trade Work for Working Men and Women in 2022 — changing the status quo is needed but unrealistic in the near future

In prior posts, I have reviewed how the existing global trading system is not working as intended because of the massive distortions created by different economic systems (in particular, the presence and growth on state directed economies). See, e.g., October 16, 2021:  What role China could play in WTO reform — possibilities are real but chances of a positive role are not, (“Trade and the WTO have obviously been highly beneficial to China and to many other Members. Nonetheless, China has been working hard not to have its economic system evolve to a market-based one. It has generally not pursued liberalization that benefits all versus favoring China. It insists on coexistence vs. convergence. It uses the consensus system to prevent evaluation of its practices which distort trade It has limited transparency of its actions and has engaged in actions against individual Members that are retaliatory and coercive. As the world’s largest exporter, China has a critical role in global trade. But the dangers Amb. Wolff has outlined in his speech where market principles and convergence are not the core values are manifesting themselves in the world marketplace as countries look for alternative approaches to deal with China’s trade distortions. Amb. Wolff’s speech outlines a number of ways that China can improve the functioning of the WTO and exhibit leadership in WTO reform. His speech is an important one which hopefully has had a receptive audience in China. Unfortunately, while there are some identified actions that China may take, it is unlikely that China will do anything to address the critical differences that its economic system poses to the survival of the global trading system.”); October 8, 2021: The gap between WTO activity and the needs of businesses and workers for the international trading system, (“The challenges at the WTO flow from some historical challenges (the preference of India to see no agreements imposing obligations on them, now supported by South Africa and others), from the growing divergence in views as to the purpose of the WTO, from the increased importance of non-market economies in the global trading system and the current failure of existing rules to address their distortions to global trade flows and competition, and the inability of a consensus system with 164 Members to move forward in a timely manner, if at all.”); May 1, 2021:  Alan Wolff’s vision for saving the WTO — aspirational but is it achievable?,; March 31, 2021:  “Blowing up the trading system” — Clyde Prestowitz’s suggested way for the world to move forward in light of China’s economic system,, March 29, 2021:  China and the WTO – remarks by Dennis C. Shea to the Coalition for a Prosperous America,; March 24, 2021:  When human rights violations create trade distortions — the case of China’s treatment of the Uyghurs in Xinjiang,

The Biden Administration has been advocating a worker centric trade policy and has advanced domestic policies intended to improve U.S. competitiveness. But the challenges for working men and women in a trading system that doesn’t operate in fact on market principles and doesn’t have effective tools for addressing quickly distortions can be seen in the conflicts that arise when trade actions are taken by a single country. Remedies imposed (such as duties, quotas, etc.) will help the harmed industries and workers, although based on the level of difficulty of achieving a remedy, may occur only after the industry and its workers have suffered isignificant harm (layoffs, plant closings, reduced investment, etc.). At the same time, downstream users who have to compete with products from producers in other countries who have access to the distortively priced products view themselves as harmed by conditions of fair trade being imposed on inputs.

When a country like China engages in massive distortions through state direction, subsidization and other means, global excess capacity of extraordinary amounts can put global competitors in a long term struggle to survive despite not having caused the excess capacity. The Trump Administration imposed Section 232 tariffs on steel and aluminum to address U.S. national security concerns about the sectors with the primary cause of the problem being China’s actions and the global reactions to massive excess capacity. Similarly, long standing concerns about a range of practices by China led to the Trump Administration’s Section 301 investigation in 2018 and action when China did not address the U.S. concerns (with retaliation and counter actions following).

While many countries filed WTO disputes in 2018 on the 232 actions of the U.S. and a number of countries retaliated without WTO authorization (many claiming U.S. was a safeguard action permitting at least some retaliation immediately) and China challenged the 301 action, and the U.S. filed challenges to the retaliation taken by trading partners, those disputes remain before panels at the beginning of 2022, with indications that panel reports will issue during the first half of 2022 (232 challenges) or second half of 2022 (cases on retaliation).

The Biden Administration has continued both sets of remedies though has come up wth alternatives to tariffs for steel and aluminum with certain trading partners (EU, Japan in negotiations).

Because users of products subject to Section 232 or 301 tariffs look at the short term issue of cost competitiveness (and the consequences to their businesses and workers), importers have pursued broader product exclusions from tariffs or an end to the tariffs altogether. As has been true over the last three years, such efforts have support from some members of Congress.

Thus, conflict exists among different groups within the United States but flows directly from the massive market distortions flowing from activities by some countries for which there are no existing remedies. While seeking changes in global trading rules is an important avenue for change, such change will take years (a decade or more in all likelihood) to achieve, if any resolution is actually possible. The steel and aluminum sectors have been seeking a global solution to the massive excess capacity problem caused by China and others for years now with no demonstrable progress.

For workers in the industries directly affected by the massive distortions, they have been promised a trading system where trade will be guided by market principles and where distortions can be addressed through trade defense instruments or other tools or where temporary relief from imports can take place to address significant problems. Very clearly, the trading system has not ensured a level playing field in fact and has not addressed the massive distortions that exist for countries with state-controlled or directed economies like China. This has put an unreasonable burden on workers and their employers to pursue trade remedies in a system where there is no compensation for past harm and relief is not available until jobs are lost, companies have shuttered factories, reduced investment including in R&D.

A recent letter to the U.S. Congress from the United Steelworkers International President Thomas M. Conway on various duties (301, 232 and other) lays out the frustrations of working men and women who are in the direct line of attack from trade distortions abroad and their need for relief from such practices. The letter is embedded below.


The USW is a former client of my firm before my retirement. As a result, I am aware of the extraordinary effort they take to preserve jobs from the effects of market distortions in a wide array of manufacturing sectors in the U.S. The USW understandably views efforts to undermine trade actions to address distortions or to protect national security as contrary to the interests of working men and women.

While 232 and 301 relief have been subject to exclusion processes in the U.S., for users, such processes will work only when applicants are actually attempting to work with domestic producers or third country producers for alternative sources of supply (for either immediate supply or for supply in the coming months/years) and only where frivolous requests carry some costs for the applicant. Exclusions should only continue until an alternate source or sources of supply are found and shouldn’t frustrate efforts of domestic producers and their workers to expand offerings. The existence of a lower price from China or others should not be the basis for an exclusion where a domestic producer is producing or will product the specific product of interest.

The challenge for the United States and other WTO Members is to adopt rules that deliver a level playing field in fact, that prevent massive global excess capacity, that permit defensive action to be taken before plants are closed, workers laid off, investments postponed or cancelled and R&D reduced, and that compensate companies and workers injured by dumping, subsidization and other distortive practices to reduce the incentive to engage in such practices.

The WTO and Member governments can’t be surprised at the lack of support for the trading system from many working men and women when a fundamental promise of the system is not kept — competition based on market principles with remedies to address distortions in a timely manner. The WTO has never been able to move quickly. Many issues simply never get addressed because of the consensus system and the lack of agreement on fundamental purpose and principles by the existing 164 Members. Thus, one should expect continued concern among working men and women with the ability of the WTO to deliver market based competition with effective remedies for distortions.

China’s “bullying” of Lithuania — a repeating story inconsistent with WTO rules

While China portrays itself as a champion of the global trading system and the WTO rules, it has a long history of misusing WTO provisions and cutting off market access to punish countries that take actions that China objects to. In a prior post, I reviewed the actions of China against Australia — actions that China has pretended were not occurring or simply reflected product quality issues or unfair trade actions by Australia. See December 22, 2020:  China’s trade war with Australia – unwarranted and at odds with China’s portrayal of itself as a strong supporter of the WTO,

Members have raised concerns about lack of transparency and discriminatory practices in various fora at the WTO including during the recent Trade Policy Review of China (hearing held on October 20 and 22, 2021), as captured in the Chair’s concluding statement. See WTO news release, TRADE POLICY REVIEW: CHINA, Concluding remarks by the Chairperson, 20-22 October 2021, (“Some Members also voiced concerns over a general increase in non-transparent and discriminatory measures and practices in China, sometimes in response to political disagreements with other trading partners. They urged China to take measures to end non-transparent and discriminatory measures.”).

Similarly, in the January 2021, USTR 2020 Report to Congress on China’s WTO Compliance (pages 7-8), USTR provided a review of a number of concerns including retaliation, intimidation and lack of transparency.

“China has been a particularly bad actor when it comes to trade remedies. While the use of trade remedies in a manner consistent with WTO rules is an important tool for protecting domestic industries
from unfair and injurious trade practices, China has made a practice of launching antidumping (AD) and
countervailing duty (CVD) investigations that appear designed to discourage its trading partners from the
legitimate exercise of their rights under WTO rules. This type of retaliatory conduct is not typical of WTO
members, nor is it a legitimate basis for seeking AD and CVD relief. Moreover, when China has pursued
AD and CVD investigations under these circumstances, it appears that its regulatory authorities have tended to move forward with the imposition of duties regardless of the strength of the underlying legal claims and evidence. The United States’ three successful WTO cases challenging the duties imposed by China on imports of U.S. grainoriented electrical steel (GOES), U.S. chicken broiler products, and U.S. automobiles offer telling examples of this problem. Indeed, China’s poor behavior does not always stop after an adverse WTO ruling. In two of the three WTO cases brought by the United States on trade remedies, China did not implement the WTO’s recommendations, and the United States was forced to bring Article 21.5 compliance proceedings to secure China’s compliance.

“China’s retaliatory use of trade remedies highlights another unique issue that WTO members face when
dealing with China – the threat of reprisal. It is no secret that foreign companies are hesitant to speak
publicly, or to be perceived as working with their governments to challenge China’s trade policies or
practices, because they fear retaliation from the Chinese state. A study by one U.S. industry association noted that foreign companies confidentially have reported receiving explicit or implicit threats from Chinese government officials – typically made orally rather than in writing – about possible retaliatory actions that could have severe repercussions for a company’s business prospects in China. At the same time, it is also no secret that China threatens more vulnerable WTO members to dissuade them from speaking publicly against China.

“A further persistent problem is China’s inadequate transparency. China disregards many of its WTO
transparency obligations, which places its trading partners at a disadvantage and often serves as a
cloak for China to conceal unfair trade policies and practices from scrutiny. For example, for the first 15
years of its WTO membership, China failed to notify any sub-central government subsidies to the WTO,
despite the fact that most subsidies in China emanate from provincial and local governments. The magnitude and significance of this problem is illustrated by the five WTO cases that the United States has brought challenging prohibited subsidies maintained by China. While those cases involved hundreds of subsidies, most of the subsidies were provided by sub-central governments. The United States was able to bring those cases only because of its own extensive investigatory efforts to uncover China’s opaque subsidization practices. Most other WTO members lack the resources to conduct the same types of investigations. Today, China continues to shield massive sub-central government subsidies from the scrutiny of WTO members. Together with other non-market practices, these subsidies contribute to the serious excess capacity problems that plague industries like steel, aluminum, solar panels, and fishing and devastate global markets and foreign competitors. Industrial plans such as Made in China 2025, which reportedly targets 10 sectors in China with hundreds of billions of dollars in subsidies, inevitably will create a new wave of industries with severe excess capacity to the detriment of China’s trading partners.

“For years, the United States has urged China to change the behaviors described above and become a
responsible member of the WTO. In the future, the United States will continue this effort. The United States also will continue to use the WTO dispute settlement mechanism as an enforcement tool as
appropriate and will continue working through WTO committees and councils and other WTO bodies to
seek effective actions to curb problematic Chinese policies and practices.”

The Chinese actions against Lithuania and indirectly against the European Union and United States

Last year, China embargoed imports from Lithuania after a warming of relations between Lithuania and Taiwan (Chinese Taipei). There are many articles on the row between China and Lithuania, but China’s political concerns about Lithuania’s actions towards Taiwan have led it to put pressure on European and U.S. companies in China to cut off using Lithuanian parts as well as embargoing imports from Lithuania and from other countries where products include Lithuanian components. See, e.g., Politico, China’s trade attack on Lithuania exposes EU’s powerlessness; Companies from several EU countries that depend on Lithuanian supply chains are now finding they face blockades at Chinese ports, December 16, 2021, (“As Lithuania sought to deepen diplomatic ties with Taiwan over recent months, Beijing has moved to make an example of Vilnius by flexing its massive trade muscle and stopping imports of Lithuanian goods. Business organizations told POLITICO that China’s embargo is now hitting manufactured goods from other EU countries — such as France, Germany and Sweden — that are dependent on Lithuanian supply chains.” “A China-based business executive told POLITICO that Beijing is putting pressure on EU businesses to stop importing Lithuanian products. The executive explained that two German companies in the auto industry had parts stopped at Chinese ports in recent days because they were manufactured in Lithuania. Some of these components could take years to be replaced with trusted alternative suppliers, he added.”); Bloomberg, Europe Raises China-Lithuania Trade Dispute With WTO Chief, December 9, 2021, chief#:~:text=The%20EU%20raised%20Lithuania’s%20claim,denied%20it’s%20blocking%20Lithuania’s%20exports (“The European Union raised its concerns over a growing dispute between member state Lithuania and China to the World Trade Organization as efforts by the bloc to get information from Beijing have been rebuffed.” “‘The EU is informed that Lithuanian shipments are not being cleared through Chinese customs and that import applications from Lithuania are being rejected,’ the EU’s trade chief, Valdis Dombrovskis, told reporters in Brussels on Thursday.”).

Typically, the Chinese government has hidden behind claims of faulty products, have denied intimidation or failing to grant import licenses. See, e.g., Foreign Ministry Spokesperson Zhao Lijian’s Regular Press Conference on December 22, 2021, question from The Paper and answer by Zhao Lijian

The Paper: During the phone call with Lithuanian Prime Minister Ingrida Simonyte on December 21, US Secretary of State Antony Blinken said he noted public reports that China’s customs authorities are not clearing Lithuanian shipments or shipments with Lithuanian components, and that they are rejecting import applications from Lithuania. He said that such measures appear to constitute economic coercion. The US underscored its support for Lithuania and the commitment to work with like-minded countries to push back against China’s coercive diplomatic and economic behavior. What is China’s comment?

“Zhao Lijian: The Lithuanian side bears the sole responsibility for the severe difficulties in China-Lithuania relations. The claim that China’s authorities ‘are not clearing Lithuanian shipments’ and that ‘they are rejecting import applications from Lithuania’ is not true. If companies face technical problems in exporting certain products to China, they can report to competent Chinese authorities through normal channels.”

Nonetheless, Chinese media understand the embargo applied by China against Lithuanian goods and other goods incorporating Lithuanian components. See, e.g., South China Morning Post, China snubs EU efforts to mediate in Lithuania row, as trade embargo worsens, 9 December 2021,

The U.S. has announced its support for Lithuania and the European Union in seeking to end the bullying and coercion. See, e.g., USTR press release, Readout of Ambassador Katherine Tai’s Call With Lithuanian Foreign Minister Gabrielius Landsbergis, January 5, 2022,; U.S. Department of State Press Release, Secretary Antony J. Blinken and German Foreign Minister Annalena Baerbock at a Joint Press Availability, January 5, 2002, The USTR readout and an excerpt from Secretary Blinken during the joint press conference are copied below.

“January 05, 2022

“WASHINGTON – United States Trade Representative Katherine Tai today spoke with Lithuanian Foreign Minister Gabrielius Landsbergis and expressed the United States’ continuing strong support for Lithuania in the face of economic coercion from the People’s Republic of China (PRC).

“Ambassador Tai emphasized the U.S. commitment to working with the European Union and its Member States to address coercive diplomatic and economic behavior. They discussed the importance to addressing our shared challenges through a close, transatlantic partnership that embraces and reflects U.S. and EU jointly-held values, which can be supported in part through the U.S.-EU Trade and Technology Council. Ambassador Tai and Minister Landsbergis both noted that the United States and the EU, as democratic market economies, share a number of core values and principles that we need to defend internationally.

“Ambassador Tai and Minister Landsbergis agreed to stay in regular communication to strengthen the U.S. – EU and U.S. – Lithuanian economic relationship and to continue to address the PRC’s economic coercion.”


“The foreign minister and I also discussed China. Germany and the United States agree on the importance of transatlantic coordination on China because it poses a significant challenge to our shared values; to the laws, rules, and agreements that foster stability, prosperity, and freedom worldwide. We also agreed that together, we will continue to build, across the board, an affirmative vision for the future because fundamentally, this is about what we’re for together, not what we’re against.

“Having said that, we have immediate concern about the Government of China’s attempts to bully Lithuania, a country of fewer than three million people. China is pushing European and American companies to stop building products with components made in Lithuania or risk losing access to the Chinese market, all because Lithuania chose to expand their cooperation with Taiwan.

“Here again, this isn’t just about Lithuania, but about how every country in the world should be able to determine its own foreign policy free from this kind of coercion. And the United States will work with our allies and partners, including Germany, to stand up against intimidation like this from China by strengthening our economic resilience, diversifying our supply chains, and countering all forms of economic blackmail. And we’ll continue to stand together against flagrant human rights abuses by the Government of China and advocating for universal human rights around the world.”

China responded to the U.S. statements of support for Lithuania viewing such support as an effort to create a wedge between China and Taiwan. See, e.g., NPR, China lashes out at U.S. for supporting Lithuania in feud with Beijing over Taiwan, January 6, 2022,

China’s actions undermine integrity of WTO system and promote retaliation

While many WTO Members may take actions that are inconsistent with WTO obligations over time, the WTO is premised on Members’ commitment to compliance, transparency to permit trading partners to understand and, where appropriate, challenge Member policies, laws, regulations, practices and actions. While non-trade issues are relevant in most/all bilateral relationships, the WTO is premised on Members not taking trade actions that are inconsistent with WTO obligations for political reasons.

China’s practice of taking punitive actions against trading partners where it disagrees with actions taken by such trading partners, hiding the fact and denying the existence of such actions, intimidating companies invested in China or exporting to China and misusing WTO trade defense tools and standards as a means of retaliation is clearly contrary to a rules based approach to trade embodied by the WTO.

Uncorrected, such actions encourage large trading partners to consider unilateral retaliation options as is happening now in the European Union. See Politico, France eyes quick anti-China action to bail out Lithuania in trade war, January 6, 2022, (“France wants the EU to punch back quickly to stop China holding the bloc hostage in a snowballing trade conflict over Lithuania.” “The EU has plans to roll out a new trade weapon called an ‘anti-coercion instrument’ to retaliate in precisely these kinds of cases but that fresh legislation could take years to fully enter into force and Paris is signaling that action over Lithuania would be needed well before that. When asked whether Paris would push for EU action to resist Beijing before the anti-coercion instrument is ready, a senior French government official on Thursday told POLITICO: ‘Yes. We will take measures very quickly.'”).

Presumably, like minded Members (e.g., U.S., EU, Japan, Korea, Canada, Australia, New Zealand and others) will be looking at what types of WTO reforms would have a better chance of minimizing the type of bullying and economic coercion being practiced by China. The real question is whether such reforms can be adopted and whether they could be effective. Any such reforms are years away in a best case situation. Until then, one should expect continued flouting of WTO rules by China when it finds such actions politically attractive.