The China-Rare Earths WTO Dispute: A Precious Chance to Revise the China-Raw Materials Conclusions on the Applicability of GATT Article XX to China’s WTO Accession Protocol

Abstract

On 23 July 2012, the Dispute Settlement Body (DSB ) of the World Trade Organization WTO) established a single panel to examine the complaints brought by the United States, the European Union and Japan against the Chinese export restrictions on rare earth elements (REE s), tungsten and molybdenum. The controversy is very sensitive for at least three series of reasons: a) the economic and strategic relevance of the materials involved in the dispute (rare earths being essential, in particular, for hightech, information, military, and green industry); b) the difficult balance to find between mining and trading REEs while protecting the environment and thus respecting the principle of sustainable development enshrined in the Preamble of the Agreement establishing the WTO; c) the challenging task of defining the relation of the WTO-plus obligation to eliminate export duties, characterizing China’s accession to the Marrakech system, with the multilateral public policy exceptions clause enshrined in GATT Article XX. In this essay, we intend to offer a presentation of the above listed salient aspects of the China-Rare Earths controversy in the light of the recent China-Raw Materials case. In particular, we will concentrate on the necessity, for the Geneva jurisdictional pillar, to revisit the highly problematical conclusions reached last January by the Appellate Body (AB) on the applicability of GATT Article XX to China’s WTO Accession Protocol (AP). We are, in fact, convinced that the new mineral trade dispute may be positively —and durably— settled only if the under regulated area of WTO law on export restrictions is adequately addressed also at political level: and such a target may, of course, be considerably fostered, inspired and supported by a well-balanced interpretative activity of the WTO judiciary. Consequently, we will try in this essay to propose a different perspective on the way in which GATT public policy exceptions and China’s Accession Protocol should be connected, grounding our suggested interpretative approach on each of the hermeneutic elements for treaty interpretation codified in Articles 31 and 32 of the 1969 Vienna Convention on the Law of Treaties.