China Raw Materials: A Controversial Step Towards Evenhanded Exploitation of Natural Resources
16 Pages Posted: 7 Sep 2013 Last revised: 21 Oct 2013
Date Written: August 27, 2013
This paper discussed the WTO panel and Appellate Body rulings in the China Raw Materials case. This sheds light on the question whether WTO members, when exploiting their natural resources, can give priority to the needs of their domestic market as opposed to the needs of other WTO Members. From the ruling of the Appellate Body, and the unappealed part of the panel decision, one can conclude that a WTO Member normally must ensure an evenhanded distribution of the natural resources that it decides to mine or harvest amongst the WTO membership. The only difference arises where a Member’s citizens or industries face a crisis because of a temporary shortage of an essential product. For those who share an international outlook on the world, this is an acceptable, and even a desirable outcome. The ruling potentially has far-reaching implications for international trade, not only in minerals and metals, but for agricultural and energy goods as well (US restrictions on exports of shale gas are taken as an example). However, in reaching this laudable result, circumscribing the use of export restrictions, the Appellate Body also made a highly regrettable finding. It ruled that China, because of the wording of its Accession Protocol, was not allowed to invoke a public policy justification for certain of its export restrictions (notably: its export duties, on which it had assumed additional commitments). The underlying assumption that sovereign states can sign away their rights to pursue public policies, such as environmental protection, which are generally admitted amongst the WTO membership, is deplorable.
Keywords: WTO, WTO Plus obligations, China, Accession Protocol, dispute settlement, export restrictions, export duties, natural resources, minerals, metals, energy, shale gas, environmental protection, conservation
JEL Classification: F13, Q31, Q32, Q42, Q48, K32, K33, K41
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