Trade, Law and Development, Vol 4, No 2 (2012)

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A Note on the Appellate Body Report in the Chinese Minerals Export Restrictions Case

Mitsuo Matsushita


Until recently, export restrictions by countries producing natural resources have not been the subject of much discussion in WTO jurisprudence. However, the situation is changing rapidly due to the prospect of an increasing scarcity of natural resources. The Appellate Body (AB) in the Chinese Minerals dispute handed down a decision upholding most of the panel rulings and reversing some. The major rulings of the AB report include the following. First, with respect to terms of reference, the AB reversed the panel’s ruling that insufficiency of information and arguments in the original terms of reference could be cured by later submissions of the parties and rendered moot some other parts of the Panel’s decisions. By overturning the panel ruling on this point, the AB may have tried to tighten up the discipline with respect to drafting of the terms of reference. However, it seems to the author, that this issue has to be decided on a case-by-case basis. Second, the AB held that the panel’s recommendation could cover not only the measures which the claimants alleged to be an infringement of WTO agreements at the time of initiating the dispute settlement procedure, but also subsequent measures, as long as they are related to implementing the Panel’s recommendation; thus, it upheld the panel’s ruling in this regard. The author believes that the purpose of the panel’s recommendations is to rectify a WTO-inconsistent measure and bring it in conformity with WTO agreements. In a dispute like the one at hand, where the framework legislation is implemented through a series of measures; whereby some measures are abolished and renewed annually, the panel recommendation ought to have some prospective effect in order for it to be effective. Third, the AB upheld the Panel’s ruling that China could not invoke a provision in its Accession Protocol to justify its export restrictions based on Article XX exceptions, as Para 11.3 of the Accession Protocol does not state that rights and obligations under the WTO Agreement (GATT 1994) are not affected. Fourth, the AB criticized the Panel report in respect of its ruling that Article XI: 2 (a) and Article XX: (g) of the GATT are mutually exclusive and application of one precludes the application of the other., The AB stated that there would be subject matters that are covered both by GATT Article XI: 2 (a) and, at the same time, by Article XX: (g). This ‘overlap theory’ enunciated by the AB seems to lead to a contradiction, that an application of Article XI: 2 (a) could constitute an infringement of Article XX: (g) and vice-versa, making a harmonious interpretation of these two provisions difficult. Fifth, the AB reversed that portion of the panel’s holding which held that in order to satisfy the requirement of GATT Article XX: (g), the export restriction in question must be primarily aimed at guaranteeing the effectiveness of the domestic restriction because there is no wording in Article XX: (g) that would justify this requirement. The AB Report in the Chinese Export Restrictions of Minerals dispute is an important precedent in the relationship between WTO principles and export control of natural resources and it is hoped that WTO jurisprudence in this area is further enriched.


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