MGIMO/ESI Moscow, December 1, 2016 METHODOLOGICAL SEMINAR „Effects of the WTO Agreements in the EU and in the Eurasian Economic Union“ MGIMO/ESI Moscow, December 1, 2016 © Friedl Weiss 2016

The status of export restrictions in WTO law: Implications of „China-Raw Materials“ for trade in natural resources and energy products em. Univ-Prof.Dr.Friedl Weiss, LL.M. Department of European, International and Comparative Law, Faculty of Law, University of Vienna © Friedl Weiss 2016

Overview Introduction Export Restrictions Summary Findings and Rulings ITO Havana Charter – GATT – WTO Key Findings in „China- Raw Materials“ Legal Assessment Implications of „China-Raw Materials“ Concluding Remarks © Friedl Weiss 2016

I. Introduction © Friedl Weiss 2016

I. Introduction In 2012, the Appellate Body (AB) of the WTO ruled on complaints of the USA, EU and Mexico that China‘s export restrictions and export duties on 9 raw materials were not consistent with WTO rules. On 8 November 2016, the Dispute Settlement Body (DSB) again established panels requested by the EU and USA concerning alleged export duties, export quotas, and quota administration issues involving raw materials (including antinomy, chromium, cobalt, copper, graphite, indium, lead, magnesium, talc, tantalum, and tin). © Friedl Weiss 2016

II. Export Restrictions © Friedl Weiss 2016

II. Export Restrictions fastest growing type of trade restrictions made up ~ 27% of all new trade restrictive measures in 2013-2014 ambivalent  particularly controversial! Pros  Cons ― export restrictions on natural resources and foodstuffs discussed in Doha Round negotiations on Non-Agricultural Market Access (NAMA) and agriculture © Friedl Weiss 2016

III. Summary Findings and Rulings © Friedl Weiss 2016

III. Summary Findings and Rulings Appellate Body WTO members must ensure even-handed distribution of natural resources they extract or harvest amongst WTO Members China‘s Accession Protocol  China was not permitted to invoke any public policy justification (e.g. environmental protection) © Friedl Weiss 2016

III. Summary Findings and Rulings Russia Accession Protocol: almost no „WTO-plus“ commitments in the energy sector!  Gazprom able to apply export taxes when exporting raw materials and fuels Disparity among WTO Members remains problematic, fuelling distrust in the system. © Friedl Weiss 2016

IV. Havana Charter – GATT – WTO © Friedl Weiss 2016

IV. Havana Charter – GATT – WTO ITO contained a chapter on „Intergovernmental Commodity Agreements“, including a definition of raw materials Any product of farm, forest or fishery or any mineral, in its natural form or which has undergone processing customarily required for its marketing in substantial volume in international trade. © Friedl Weiss 2016

IV. Havana Charter – GATT – WTO GATT does not contain ist own rules on trade with raw materials energy trade was not contemplated in the late 1940s but prohibition of QURs, and of fees/ formalities connected with importation and exportation © Friedl Weiss 2016

IV. Havana Charter – GATT – WTO WTO: ever growing „to do list“ with respect to energy trade – absent any specific inclusion of energy OPEC: production quotas as main instrument for stabilisation of oil prices, in combination with subsidies for some petroleum products © Friedl Weiss 2016

V. Key Findings in „China-Raw Materials“ © Friedl Weiss 2016

V. Key Findings in „China-Raw Materials“ 3 sets of important findings guidance on how exceptions to GATT prohibition of export restrictions relate to general principles of International Law clarification of the relationship between China‘s Accession Protocol and the GATT confirmation that the complainants could challenge measures by China © Friedl Weiss 2016

V. Key Findings in „China-Raw Materials“ Legal Findings by Appellate Body: the challenged export restrictions affected legal interests protected by WTO law lacking justification, according to standards of WTO law all 5 categories of export duties were found to be WTO-illegal China had not demonstrated that the application of export quotas is justified. © Friedl Weiss 2016

V. Key Findings in „China-Raw Materials“ export quotas were likewise found to breach Art XI:1 GATT; those quotas could not be characterized as conservation measures as they would have to satisfy 2 conditions: the export restriction would have to be applied jointly with restrictions on domestic production and consumption, and, the purpose of the export restriction would have to be made effective in conjunction with restrictions on domestic production or consumption. © Friedl Weiss 2016

VI. Legal Assessment © Friedl Weiss 2016

VI. Legal Assessment narrow interpretation given to the term „critical shortage“ in Art XI:2 GATT sensible interpretation given to the „conservation“ exception in Art XX (g) © Friedl Weiss 2016

VII. Implications of „China-Raw Materials“ © Friedl Weiss 2016

VII. Implications of „China-Raw Materials“ Appellate Body‘s ruling has potentially far reaching implications in a world of uneven distribution of natural resources Guiding principle: WTO Members are free in their decision whether and to what extent to harvest their natural resources – but once they have decided to do so, they must make those resources available to other WTO Members as well – except in the case of a temporary critical shortage Decisions of OPEC countries: WTO Members, who cut production of oil in order to lift market prices, are not affected by the ruling of China-Raw Materials © Friedl Weiss 2016

VIII. Concluding Remarks © Friedl Weiss 2016

Thank you for your attention! © Friedl Weiss 2016