On The Application Of The WTO Dispute Settlement Mechanism To Cross-Strait Trade Disputes

This dissertation discusses the application of WTO Dispute Settlement Mechanism (hereafter referring to "DSM" ) to the trade disputes arising out of the economic interaction across the Taiwan Strait after WTO accession of the two parties.With China and Taiwan now having being in the WTO for more than one year, there is optimism for closer trade ties and the likelihood of less confrontation across the Taiwan Straits. However, it is worth noting as well that more trading between the two parties, more possible disputes. Indeed, in case of trade disputes between Mainland China and Taiwan, existing evidence shows that the two sides hold totally different approaches to the application of the DSM to the cross-strait trade disputes. Mainland China insists on a recognition of the "One China" principle before any further negotiation can be initiated and therefore mainland China has also hinted that it would not want to have its tradedisputes with Taiwan handled by the WTO Dispute Settlement Mechanism, while Taiwan is very much likely to hope to take advantage of the dispute settlement mechanism to enlarge its "international space" and as a result claims that the DSM is applicable to settle cross-strait trade disputes since Taiwan and mainland China are equal members in the WTO and granted equal rights of appealing to the DSM.In the dissertation, we are of the opinion that the built-in dispute settlement mechanism of the world trading system provides for the possibility of consultation or a forum for mandatory adjudicating between the two parties with a view to resolving the disputes. In other words, the DSM is applicable to settle the cross-strait trade disputes. Referring to the proof of the application of the DSM, following factors shall be taken into consideration.First of all, the character of the cross-strait trade disputes is a decisive factor. Here two sub-factors come: The first one is the legal status of cross-strait trade relationship after WTO accession. On the one hand, the cross-strait trade is between the Chinese main body and its separate customs territory, so even DSM being applied is in no breach of One China Policy; on the other hand, the cross-strait trade shall be defined as one between two members, which provides to Taiwan the member right of claiming the application of the DSM against any WTO member with on exception of mainland China. The second one is the character unique to cross-strait trade disputes, that is regionality and nearinternationality, which makes the application of the DSM possible.Second, the application of the DSM has legal basis in the WTO framework such as the stipulation on the preconditions of initiating a DSM judicial proceeding, the parties' status and basis of claim under the DSM. Furthermore, according to inter-retaliation clause, mainland China will be on a negative stand if it adopts a negative attitude to Taiwan's claim accepted and heard by the DSM.Last but not the least, applying the DSM to the cross-strait trade disputes does not mean weakening China's sovereignty. We hold here that on the one hand, the DSM jurisdiction is based on all WTO members prior consent made when they enter the WTO; on the other hand, in fact, GATT and the WTO have a long tradition avoiding political questions. Under the WTO/GATT framework, contracting parties are concerned only with what is relevant to the General Agreement, which is the trading arrangements proposed with respect to these territories and not their status in international law. The WTO is a functional organization; sovereignty is irrelevant to it. The reason the WTO has succeeded in reducing tariffs, removing non-tariff barriers, and expanding the scope of coverage is that it has been focusing on trade. Trade is the organization's concern, and the organization concerns only trade. As a result, the controversy over sovereignty between the Mainland China and Taiwan simply is beyond the reach of the WTO.In conclusion, the DSM of the world trading system, bona fide, is deemedas "a central element in providing securi...