Amid the ongoing wave of economic nationalism and unilateralism in the world economy, safeguard measures (SG), previously an unpopular trade defence instrument, appear to be on the rise and could increasingly be used.
Associate Professor Weihuan Zhou has co-authored an article in the World Trade Review with Assistant Professor Mandy Meng Fang from the City University Hong Kong. “Unforeseen Developments’ Before and After US – Safeguard Measure on PV Products: High Standard or New Standard?’ offers a comprehensive study of the jurisprudence on the ‘as a result of unforeseen developments’ test under the WTO's safeguards (SG) rules.
The two authors contribute to the existing scholarship on this topic by making three fresh arguments:
1. The World Trade Organisation Appellate Body decision to ‘revive’ the test as a prerequisite for the application of SG measures is not necessarily incompatible with the drafting record of the SG Agreement, even though this agreement does not make explicit reference to the test.
2. The test is not excessively difficult to satisfy under the standard of review established by case law, even though governments have failed to pass it in almost all SG disputes to date.
3. In sharp contrast, the recent World Trade Organisation panel decision in the US–Safeguard Measure on PV Products dispute took a strikingly more deferential approach which fell far short of the established standard of review. This decision has arguably created a new standard which could lead to the abuse of SG measures. It also disrupted the development of jurisprudence and hence of the predictability and certainty of the dispute settlement system. If this or a similar approach is not avoided in future disputes, it would provoke China to appeal into the void in more disputes and frustrate China’s faith in the system over time.
Ultimately the authors observe this as another potential challenge for the World Trade Organisation in demonstrating its continued competence and credibility in promoting trade liberalization and cooperation. As far as trade disputes are concerned, this challenge calls for a more cautious and sophisticated approach to pursue not only a proper balance in maintaining the underlying function of the SG mechanism, but also the predictability and certainty of the dispute settlement system.
This article is available here.