GATT Article X:2 provides that:
2. No measure of general application taken by any contracting party effecting an advance in a rate of duty or other charge on imports under an established and uniform practice, or imposing a new or more burdensome requirement, restriction or prohibition on imports, or on the transfer of payments therefor, shall be enforced before such measure has been officially published.
This Article represents the general principle of administrative law, i.e., transparency or due process. Here, an important interpretive issue is whether there was a “new” measure. Obviously, a government need not re-publish an old, pre-existing measure for the purpose of this Article. However, determining whether there was truly a new measure and thus whether the measure falls under the Article might not be an easy question in a real dispute, in particular when the life-cycle of that measure has been turbulent. If a domestic policy or regulation has changed from its previous position within the context of its domestic governance (agency-court-legislature), should this be considered a “new” measure under Article X:2 and therefore should be officially published before being enforced? Or, could the agency argue that this technically new measure is nonetheless a mere clarification of the old practice, albeit unsettled (non-final), within its broad discretion?
In a new decision released today (United States – Countervailing and Anti-Dumping Measures on Certain Products from China (DS449)), the Appellate Body did not render a definite answer to this puzzle. Here goes some background of the dispute. Originally, the U.S. Department of Commerce (DOC) had not imposed countervailing duties on products from non-market economies (NMEs). The over-simplified version of the rationale behind this position is that if there is no market, there is no subsidy (to be more precise, one cannot calculate market effects of such subsidy), or that the government in an NME subsidies every aspect of the economy any way in the absence of a market. In 1986, the U.S. Court of Appeals (Georgetown Steel) endorsed the DOC’s position in the shadow of congressional silence.
Then, the DOC suddenly changed its position and attempted to impose countervailing duties on Chinese imports starting from 2006. Its rationale was that there have recently been enough market aspects in China that would justify the calculation of subsidies even though China still remains an NME. Domestic litigation ensued (GPX I – VI). In a 2011 court ruling (GPX V), the U.S. Court of Appeals held that “it was not in accordance with United States law for USDOC to apply United States CVD law to imports from NME countries, including China.” But, the Congress quickly overturned this decision by hastily enacting PL 112-99 in March 2012. While China viewed this new statute (PL 112-99) as an “amendment,” and thus a new measure (para. 4.137), the United States considered it as a “clarification and confirmation” of an old (albeit unsettled) practice (para. 4.138).
After a long discussion involving many details, the Appellate Body ruled that:
4.183. For these reasons, we are unable to complete the analysis and arrive at a conclusion as to whether Section 1 changed the US countervailing duty law and therefore determine whether Section 1 of PL 112-99 effected an "advance" in a rate of duty or imposed a "new or more burdensome" requirement or restriction on imports within the meaning of Article X:2 of the GATT 1994.
Yet, the Appellate Body sided with China in certain legal issues as it reversed some findings of the panel. (See para. 4.119). In particular, the Appellate Body faulted the panel in that the latter failed to conduct the “holistic assessment” of the measure in question as it neglected to consider relevant U.S. court decisions. (para. 4.110). I think this might be one of the most important findings in this Appellate Body decision. This finding tends to open an indirect way in which a WTO panel is required to reference a relevant domestic court decision. In a sense, the WTO tribunal is now mandated to engage with a domestic court, even indirectly, under relevant circumstances (discursive engagement).
Finally, a question. If the Appellate Body had ruled that the United States indeed violated Article X:2, what would have been a remedy? Would the United States have been required to repeal the statute (PL 112-99)?