WTO’s Ruling Smacks of Western Bias

On Jan. 30, the WTO made its ruling on the suit brought by the U.S. and Europe against China regarding its export of raw materials, concluding that Chinese export limits on nine types of raw materials, including bauxite, coke and fluorspar, violated its terms of accession and that an unfair trade bias existed. Furthermore, the WTO requested that China lower its export duties, remove export quotas, etc.

After objecting that the WTO’s panel of experts had made a biased decision on the case in July, China had [at the time] already brought up grounds for refutation and an appeal. We were greatly astonished by the results of the final ruling issued by the WTO this time, even to the point that doubts were raised about the related WTO regulations. Those doubts are whether the special clause concerning the involvement of non-renewable resources and environmental protection in article 20 of the General Agreement on Tariffs and Trade was in effect, as well as whether the levying of export duties is the sole right of each nation, and should be respected [as such]. However, upon serious reflection, the WTO’s ruling is unsurprising.

The core question is who controls the WTO, or simply put, who controlled the panel of experts on this case. [To find out, we] must look at who comprised the members on the panel of experts, and also whose interests they represented — the interests of the demand side or those of the supply side.

The core argument of this case is that China was coming from an attitude of being responsible in protecting the environment and strengthening regulation of natural resource products, especially managing the production and sale of raw materials which heavily pollute the environment, and furthermore has already gained positive results. However, these measures may have led to a rise in prices on the global market, or a temporary shortage in supply, thereby having an effect on several consumer countries’ interests.

Ignoring the positive aspects and the public good in the effects of China’s policies, the U.S. and European nations instead went on the warpath. One after another, they attacked our relevant policies, even going so far as to submit the case to the WTO’s system of arbitration, using this to protect the West’s economic interests. Because the WTO and its panel of experts — and even the workings of the system — are fundamentally directed by the West’s influence, their aforementioned ruling is completely unsurprising.

This case exposed an even more serious problem, namely the issue of the WTO’s fairness and authority. How to guarantee that the WTO’s system of arbitration can independently make equitable rulings, as well as implement them, is a problem which has concerned everyone from the beginning. If it loses its fairness and authority, any ruling becomes meaningless.

I believe that the current global economy is directly approaching a period of transformation. The Western economies have all run into differing levels of difficulty in their development, with the only option for solving these difficulties and contradictions being to strengthen cooperation in trade and eliminate the obstructions of trade protectionism. However, real circumstances are precisely the opposite. Competition between the powers is growing more intense by the day and Western countries’ trade protectionism is rising unchecked, severely interfering with the balanced development of the global economy and trade and blocking the path to globalization of economies and cooperation in trade.

Because the WTO is a multilateral trade organization, [the problem of] how to strengthen its equitable nature as well as its role in promoting the healthy development of global trade is extremely important. Obviously, hastening reforms of the WTO’s systems currently in place and realizing the WTO’s positive role participating in the governance of global trade has already been put on the agenda.

Huo Jianguo is president of the Chinese Academy of International Trade and Economic Cooperation.