Teaching China GATT

How would China fare in its first World Trade Organization (WTO) dispute? That question has been of interest to international trade law practitioners and scholars ever since China acceded to the WTO on 11 December 2001, and indeed even before then, in the years leading up to its accession. The answer now exists. China lost, and lost rather thoroughly, in the 2009 Auto Parts case concerning the imposition of 25 percent charge on imported auto parts by China. However, its loss is a lesson to China, and indeed all WTO Members, about important GATT principles, and indeed about the Golden Rule. Further, for China, and the world, the Auto Parts litigation leads to broader and deeper questions about the nature and extent of economic and political reforms.After a brief discussion of the facts leading to the dispute and the principles of international trade law applicable, the article examines the Panel and Appellate Body rulings and China’s arguments. The author concludes by making three comments: First, China can take heart from its small victory in proving it did not violate the promises it made when acceding to the WTO. Second, the dispute serves as an important lesson for China on the Golden Rule of international trade. Third, the dispute plays only a small role in the bigger scheme concerning the grip on political power held by the Chinese Communist Party.