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5 - The Potential of WTO Rules on Industrial Subsidies and China-Specific Obligations

Published online by Cambridge University Press:  10 November 2022

Henry Gao
Affiliation:
Singapore Management University
Weihuan Zhou
Affiliation:
University of New South Wales, Sydney
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Summary

Chapter 5 discusses the great potential of China-specific rules on pricing and commercial behaviour of SOEs, coupled with WTO rules on subsidies both in the original Agreement on Subsidies and Countervailing Measures (SCM Agreement) and further elaborated in China’s WTO Accession Protocol. In particular, in response to the argument that WTO subsidy rules have been rendered ineffective by the AB’s interpretation of the term ’public body’, we argue that the utility of the provision has been rehabilitated by the AB’s subsequent decision in US–Countervailing Measures (China) (Article 21.5). Moreover, even the original ’authority-based’ test is no longer an insurmountable hurdle due to the back-tracking of China’s SOE reform in recent years, which resulted in more micro-management by the Party and state in the management of SOEs. Thus, the best way to tackle China’s state capitalism is through WTO litigation based on existing rules discussed in this chapter.

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Between Market Economy and State Capitalism
China's State-Owned Enterprises and the World Trading System
, pp. 97 - 126
Publisher: Cambridge University Press
Print publication year: 2022

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