China Sees Potential in Trade Litigation

Trade disputes with China have been commonplace since its accession to the WTO in 2001. Chinese manufacturers are consistently the target of antidumping and countervailing duties (AD/CVD) from trading partners like the US and EU. For years, Chinese manufacturers, taking their cue from the Ministry of Commerce, have decided largely to forego litigation and settle disputes outside of court. Recently, however, due to the financial crisis and China's prominent new role in the global economy, the Ministry of Commerce is starting to challenge AD/CVD and other safeguard measures at the WTO. An illustration of this newly found desire to counter claims of unfair trade practices is China's challenge to US antidumping duties on steel pipes, which is currently at the expert panel stage.

Perhaps an even more drastic departure from previous policy is China's decision to initiate its own trade litigation against notoriously litigious trading partners like the United States. Illustrative of this new trend is its recent challenge to US health restrictions that effectively ban the importation of Chinese poultry. China's decision to pursue trade litigation signals several shifts taking place in its approach toward international trade. First, China is seeing the WTO dispute settlement system as less of a restriction on its economic aims and more of an avenue to pursue its goals. Instead of developed countries using litigation to stymie the flow of imports from China, litigation can be used to secure access to those markets by proscribing illegal trade barriers. Second, China will no longer play the role of a sheepish trading partner. When claims of unfair trade practices are made against its industries, China will defend the practices in court. When illegal barriers are erected to its imports, China will challenge those barriers in court. Several keen observers have noted that China does not possess the legal infrastructure--Chinese WTO trained attorneys--to accommodate the rise in trade litigation. For the short term, at least, China will continue to rely on WTO-savvy American firms to handle the bulk of its international trade law workload.

Eric Langland



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