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TWN
Info Service on WTO and Trade Issues (Dec22/23) Geneva, 22 Dec (D. Ravi Kanth) — After losing a major trade dispute at the World Trade Organization on 21 December over the imposition of origin marking requirements on imports of goods from Hong Kong, China, the United States appears to have adopted a rather “hegemonic” position in that it will never implement the panel ruling. In a press statement issued on 21 December, a spokesperson from the Office of United States Trade Representative (USTR) said somewhat aggressively that Washington “strongly rejects the flawed interpretation and conclusions in the World Trade Organization (WTO) Panel report released today regarding Hong Kong, China’s challenge to the US determination and action suspending differential treatment for marks of origin.” The USTR spokesperson, Mr Adam Hodge, said “the US action responded to highly concerning actions by the People’s Republic of China to erode Hong Kong, China’s autonomy and the democratic and human rights of its people, threatening US national security interests.” Further, the Biden administration defended the former Trump administration’s executive order of 2020, by stating that “the Biden Administration remains committed to preserving US national security and protecting human rights and democracy, and taking action to protect national security is a right inherent to any sovereign nation and explicitly reflected in the WTO Agreement.” Further, despite the ruling against the arbitrary use of Article XXI of the GATT 1994 concerning security exceptions, the USTR spokesperson said “the United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement, and the WTO has no authority to second-guess the ability of a WTO Member to respond to what it considers a threat to its security.” He argued that “the Hong Kong panel report suggests that the United States cannot act to address China’s undermining of democratic and human rights and democracy in Hong Kong.” The position, apparently reflecting the allegedly “hegemonistic” stance of the US against international trade rulings, threatened the WTO, with the USTR spokesperson saying that “to be clear, the United States does not intend to remove the marking requirement as a result of this report, and we will not cede our judgment or decision-making over essential security matters to the WTO.” “This report further underscores the need for fundamental WTO reform and the United States will continue to work constructively with Members to ensure that the WTO remains relevant to the lives of all people.” The panel ruling over the US origin marking requirement came days after the USTR, Ambassador Katherine Tai, slammed WTO panel rulings against the use of the security exception by the US under Article XXI of the GATT 1994. However, a three-member panel ruled on the evaluation of information provided by the US that it did not constitute an “emergency in international relations”. In a 96-page ruling, the three-member panel chaired by Ms. Beatriz Leycegui Gardoqui, upheld the claims made by Hong Kong, China that “the origin marking requirement is inconsistent with Article IX:1 of the GATT 1994 because it accords to products of Hong Kong, China treatment with regard to marking requirements that are less favorable than the treatment accorded to like products of any third country.” More importantly, the panel pronounced that the US “has not demonstrated that the situation at issue constitutes an emergency in international relations, and therefore the origin marking requirement is not justified under Article XXI(b)(iii).” The panel exercised judicial economy on Hong Kong, China’s claim that the origin marking requirement is inconsistent with Article I:1 of the GATT 1994, Articles 2(c) and 2(d) of the ARO (Agreement on Rules of Origin), and Article 2.1 of the TBT (Technical Barriers to Trade) Agreement. In its conclusion, the panel said that “under Article 3.8 of the DSU (Dispute Settlement Understanding), in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment.” “We conclude that, to the extent that the measure at issue is inconsistent with Article IX:1 of the GATT 1994, it has nullified or impaired benefits accruing to Hong Kong, China under that agreement,” the three-member panel pronounced. The panel said “pursuant to Article 19.1 of the DSU, we recommend that the United States bring its measure into conformity with its obligations under the GATT 1994.” LOSS OF FACE ON USE OF NATIONAL SECURITY PROVISIONS The Trump administration enacted a law in 2020 on origin marking requirements against Hong Kong, China following certain political events in Hong Kong, China between 2019 and 2020. The law required Hong Kong, China to remain sufficiently autonomous from China. Apparently, following the political disturbances in Hong Kong, China, former President Donald Trump issued executive order 13939 that Hong Kong, China was no longer sufficiently autonomous and ordered the suspension of the differential treatment in some areas (including origin marking). The Biden administration allegedly continued to follow the trade policies of the Trump administration somewhat more aggressively over the last 12 months by imposing a range of trade sanctions against China based on national security interests, said people, who asked not to be quoted. While the Biden administration is apparently pursuing a strategy of dismantling Trump-era policies domestically, in internal trade, the Biden administration appears to be aggressively embracing the allegedly discredited Trump policies, said people who asked not to be quoted. “However, the repeated US claims in support of “security exceptions” failed to convince the panelists,” said people, who asked not to be quoted. +
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