Recently, lawyer Wang Lei, the director of Gaopeng Law Firm, accepted an exclusive interview with Pengpai News, recalling the story of his assisting previous negotiators in customs clearance, WTO accession negotiations, and representing China in the EU fastener anti-dumping case.

 

Editor's Note: On December 11th, 2001, China joined the World Trade Organization. This day has become an important watershed in the development of China's relations with the world. Over the past 20 years, China has fully fulfilled its commitments, continuously promoted reform and opening up, significantly enhanced its comprehensive national strength, continuously increased its international status and influence, and significantly improved the living standards of urban and rural residents. At the same time, foreign trade frictions continue to occur, and the current epidemic has also had a profound impact on global industrial and supply chains. How do you see the development and changes in the past 20 years after China's accession to the WTO? How long can the dividends of China's entry into the WTO last? How to advance the next step of opening up? On the occasion of the 20th anniversary of China's "accession to the WTO", surging news and many experienced, experts and scholars have deeply discussed the past, present, and future of China and the WTO, hoping to provide a multi-dimensional perspective on China's relations with the WTO and China's relations with the world.

 

"Today is a positive day, a drop of water, but I am fortunate to blend into the torrent of advancing downstream."

 

On December 11th, Wang Lei, director of Gaopeng Law Firm, left this sentence in his circle of friends to commemorate the 20th anniversary of China's accession to the World Trade Organization (WTO).

 

From the beginning of China's formal application to restore its status as a contracting party to the General Agreement on Tariffs and Trade (hereinafter referred to as "GATT") in 1986, Wang Lei has been deeply involved in the negotiations on the resumption of customs.

 

As the "Huangpu Phase I" of China's resumption of customs, Wang Lei served as the Deputy Director of the WTO Division of the Ministry of Foreign Trade and Economic Cooperation, assisted successive negotiators in the negotiations on the resumption of customs and accession to the WTO, and also worked at the Chinese Permanent Mission in Geneva for six years. As the main assistant of the embassy, he participated in the negotiations with the United States and Europe, drafted the WTO accession protocol and other legal documents, and participated in the Uruguay Round of multilateral trade negotiations throughout.

 

In 1996, Wang Lei resigned from the Ministry of Foreign Trade and Economic Cooperation and worked as a practicing lawyer in Brussels, Belgium, for six years. During this period, he represented a large number of Chinese enterprises in responding to anti-dumping cases in the European Union. After China's accession to the WTO, he returned to China to practice in 2002. In addition to participating in the settlement of China's trade disputes in the WTO field, Wang Lei has also been engaged in anti-dumping and countervailing cases initiated by Chinese enterprises abroad on behalf of them, as well as in the trade legal affairs of multinational companies in China.

 

The following is an interview transcript:

 

Pengpai News: How did you get along with GATT and WTO?

 

Wang Lei: Here I must speak about an old gentleman who has had a profound impact on me and the entire cause of international law in China.

 

In 1980, I entered the law department of Peking University to study economic law and became the first national student majoring in economic law. The founder of this major is Mr. Rui Mu, a leading scholar in law. He is the founder of Chinese economic law and international economic law. Mr. A was born in 1908, and when I enrolled, he was already over seventy years old and still insisted on teaching undergraduate students. Until the age of 92, Mr. Chen still insisted on taking a doctoral student. Mr. Liu enjoys a lofty position in the legal profession in China and even the world, and is also an outstanding legal educator of a generation, cultivating a large number of outstanding international law talents.

 

In 1985, there was some information in China that China was preparing to resume customs clearance. I wrote a master's thesis on the GATT dispute settlement mechanism and other topics, and my husband was responsible for guiding my thesis at that time.

 

After graduation, I went to the Ministry of Foreign Trade and directly engaged in GATT related work. From that time on, my correspondence with my husband has not been interrupted. After working in Geneva for six years, my husband wrote a credit international mail to the Chinese Embassy in Geneva. Mr. A said that he needs to find some information about GATT. Although China was not a member of the GATT at the time, but an observer, I still had some convenience in obtaining some GATT documents and materials, and I tried to copy them.

 

"But I couldn't afford the international postage for photocopying materials, so I entrusted comrades from China who had come to the conference to bring them back.". For many years, I have been in correspondence with my husband, and he has also shared his research and thinking with me. Benefiting from the job opportunities in Geneva, I have the advantage of being closer to home than domestic legal professionals, making it easier to understand the rules of the GATT game. Therefore, I wrote my research into an English paper for publication abroad, and I also sent the article to my husband for guidance.

 

After returning to China in 1994, my husband asked me to come to Peking University to teach graduate students about GATT and WTO rules. At that time, it was a crucial period for China to negotiate the resumption of customs clearance. I could only go to Peking University to teach for a year in my spare time on weekends. "My teacher said to me, 'We don't have funds for you in our department, we can only reimburse you for the cost of a' noodle 'ride.'"

 

There are about 20 students in this class, including Chinese and Korean students. Because most of them are graduate students, I don't have much indoctrination content. Instead, I arrange for students to read relevant literature and cases, and then assign each person to choose a topic. First, prepare an outline of the article, and then the students will explain it in class. Everyone will comment, and finally I will make comments.

 

These students are students trained by their teachers, and many of them have become mainstays of China's WTO legal team.

 

Pengpai News: During your work in Geneva, which is also the negotiation stage when China begins to resume customs clearance, did you have any stories that impressed you deeply during your participation in the negotiation process?

 

Wang Lei: Regarding China's application for "restoration" of contracting party status, the way that countries have reached agreement on this issue is to solve it by playing a word game.

 

China is one of the founding countries of the United Nations established after World War II. At the same time as the establishment of the United Nations, major powers deliberated and negotiated between 1945 and 1947, and established GATT in 1948. Later, due to changes in China's domestic political situation, until the 1980s, more than 30 years later, the Chinese government proposed to restore the GATT seat, but this was unprecedented in the history of the General Agreement.

 

China, the parties to the GATT and the GATT Secretariat have conducted intensive discussions on the way and procedure for China to enter the GATT.

 

Some members believe that China is re joining and should follow the procedures for joining the GATT. China firmly opposes this, as it legally severs the continuity of China's main body of international law and is politically inconsistent with the resolutions of the General Assembly. However, with regard to the position of restoring seats, various parties have raised various puzzles and doubts: If it is to restore seats, what is the account from the withdrawal of the predecessor in 1950 to the present? What are the benefits of tariff concessions between China and its members during this period? Should China make up the unpaid membership dues during this period?

 

After negotiation, the parties finally achieved a tacit understanding.

 

Without prejudice to the restoration of its seat position, China is prepared to negotiate a new schedule with all member states as a "threshold fee" in accordance with the accession process in fact, in order to fulfill the rights and obligations of GATT. On the premise that China has actually negotiated to enter the GATT in accordance with the accession procedure, all parties and the GATT have no objection to China's resumption of its position.

 

Accordingly, restoration is not a restoration of the original breakpoint, but rather a resumption of negotiations at the time point of the conclusion of future negotiations. As a result, the account for the former's withdrawal to the current restored seat is written off.

 

During the entire negotiation of China's resumption of customs duties, any document derived from the tone of GATT, including the name of the working group established to negotiate China's restoration of seats, has avoided using the word "restoration" and replaced it with "China's Status as a Contracting Party.". Although this statement is very inarticulate, it is the largest common divisor for all parties.

 

Pengpai News: As an attorney, you once participated in the China v. EU Fastener Anti dumping Case (DS397), and after seven years of fierce competition, can you tell me about your experience and feelings in handling this case.

 

Wang Lei: During my work at the diplomatic mission in Geneva, I participated in the drafting and negotiation of several agreements in the Uruguay Round, including the rules of WTO dispute settlement procedures. Although familiar with the provisions, I have never had the opportunity to practice them. It was not until 2009 that I participated in the case of representing the Chinese government in the WTO to sue the European Union for anti-dumping against Chinese fasteners (DS397 case) that I completed the process from drafting negotiations to applying dispute resolution practices to the provisions and rules.

 

The case took seven and a half years from the consultation in 2009 to the issuance of the final ruling by the WTO's enforcement appeals body in January 2016, and nearly completed all legal relief procedures granted to members by the WTO.

 

Fasteners, commonly known as the "meter of industry", include screws, nuts, bolts, and washers, and are widely used. China is the world's largest fastener manufacturing country and also a major fastener exporter.

 

In 2007, the European Union launched an anti-dumping investigation against Chinese steel fasteners and made a ruling in 2009, imposing an anti-dumping duty of up to 85% on Chinese fastener products for a period of five years. According to industry statistics, in 2009, the EU began to levy taxes after the final anti-dumping ruling, and since then, China's market share in Europe has dropped significantly from 26% to 0.5%.

 

The Chinese government resorted to the WTO dispute settlement mechanism for European measures on July 31, 2009. The case went through two rounds of dispute resolution procedures, namely, the original trial and the execution. China successively won the case during the initial trial expert panel and the appeal stage. Since then, the European side revised the EU's Basic Regulations on Anti dumping in 2012 to implement the decisions of the original expert group and the appellate body, but the subsequent review of anti-dumping measures against Chinese fasteners initiated by the EU did not comply with the decisions of the WTO expert group and the appellate body. The Chinese government continued to resort to the WTO dispute settlement mechanism on the issue of EU enforcement decisions until 2016, when the enforcement appeals body issued a final decision, fully supporting China's claims.

 

The DS397 case has epoch-making significance in many aspects: for the first time, China sued the EU in the WTO and won the lawsuit; Having completed all legal relief procedures granted to members by the WTO; Due to China's victory, the EU was forced to amend its laws; China obtained the right of retaliation against the EU for the first time after joining the WTO through this case; In addition, in the final report of the enforcement phase issued by the Appellate Body on January 18, 2016, China obtained support from the enforcement appeals body on all 23 issues, while all claims of the EU were rejected. This is unprecedented in the history of dispute settlement in China and even in the WTO.

 

The surging news: After a complete victory, is there no obstacle for Chinese fastener companies to return to the EU?

 

Wang Lei: That's not true. The WTO ruling only targets the trade policies and measures of the members concerned, and does not involve specific compensation. The ruling is not binding on other members. This is the inherent defect of the WTO dispute settlement mechanism.

 

The DS397 case has been under way for seven years, which actually means that during the seven years of the litigation period, the European Union has been using or partially using anti-dumping measures that do not comply with the WTO, and has not given Chinese enterprises reasonable and fair competitive treatment. This has forced many Chinese enterprises to withdraw from the market or abandon their business with Europe.

 

The final ruling of the WTO in 2016 was just five years ago. In 2020, the European Union again conducted an anti-dumping investigation against carbon steel fasteners made in China. Just last month, on November 16th, the EU's ruling disclosed that the anti-dumping tax rate on certain imported steel fasteners originating in China was 23.9% - 89.8%.

 

"We won the fastener lawsuit in the WTO, but the losing party, the EU, did not compensate for the real gold and silver losses of Chinese fastener enterprises in the EU market. The heavy losses caused by the EU's violation of the WTO to Chinese fastener enterprises have not been fully recovered, and Chinese fasteners have not really returned to the EU market.".

 

Of course, this is not to say that the WTO dispute settlement mechanism is useless. The WTO dispute settlement mechanism only maintains the balance of rights and obligations that members have achieved under the WTO. It only corrects errors and does not make up for them.

 

Pengpai News: If you use one word to summarize the twenty years since China joined the WTO, which word would you use?

 

Wang Lei: It can be summarized in the word "carrying forward the past and opening up the future". We should inherit the momentum of the past 20 or 35 years of continuous reform and opening up, inherit that international perspective, and constantly open up new roads in the new era.

 

Whether it is for China itself or for the WTO, I think it is applicable to carry forward the past and open up the future.

 

I have experienced the booming reform and opening up in China in the 1980s and 1990s, which can be described as rapid changes. For China, we still need to continue this spirit of reform and opening up and open up a new development path. At the same time, the WTO once had glorious moments. Under current circumstances, how to carry forward the multilateral trading system and promote the WTO to continue to move forward also requires carrying forward the past and opening up the future.

 

(This article is translated by software translator for reference only.)