Yang Guohua: China's implementation of international rulings to amend domestic laws can be written into the history of China's legal system

As China's WTO accession negotiations entered its 10th year, Yang Guohua graduated with a Ph.D. from Peking University and joined the Department of Law and Regulation of the then Ministry of Foreign Trade and Economic Cooperation (now the Ministry of Commerce).

In the following 18 years, he successively served as director and deputy director of the WTO Legal Division of the Department of Articles and Law, participated in sino-US and other bilateral negotiations during the period of China's accession to the WTO, and then went to Geneva to fight the "first case of China's accession to the WTO."; looking back at the many WTO cases he handled, in his view, if the victory of the "first case of China's accession to the WTO" made the Chinese side taste the "sweetness" of china's accession to the WTO, then in order to fulfill the ruling on the "China Intellectual Property Case," the Chinese side revised the "Copyright Law of the People's Republic of China," which is a measure to amend its own domestic law to fulfill the international ruling." It can be written into the history of China's legal system. He said in an exclusive interview with the first financial reporter.

As for the cases handled in the past, Yang Guohua believes that there has never been a case because we have not experienced or have enough ability to lose, and there has not been a case that "should win but did not win", which benefits from the "four-body linkage" litigation mechanism established by the Ministry of Commerce from the beginning.

Yang Guohua, who is currently executive vice president of the WTO Law Research Association of the China Law Society and a professor at the Law School of Tsinghua University, continues the bond between him and the World Trade Organization (WTO): during the suspension of the Appellate Body of the WTO Dispute Settlement Mechanism, members including China and the European Union decided to establish a "Multi-Party Provisional Appellate Arbitration Arrangement" (MPIA), and Yang Guohua was elected as an MPIA arbitrator.

Speaking about the future of the Appellate Body, Yang said he was an optimist, and observing recent remarks by Representative Dai Qi of the Office of the United States Trade Representative (USTR) showed that she had a different attitude than her predecessor.

However, "as things stand now, even if it is relatively fast, it is likely that it will take two years before the Appellate Body resumes." Yang Guohua said.

"This can be written into the history of China's legal system"

CBN: In the 20 years since China's accession to the WTO, which WTO case has impressed you?

Yang Guohua: The most impressive case was China's accession to the WTO, the "US Steel Safeguards Case" (DS252). At that time, China had just joined the WTO for two or three months, and China and the European Union and other 7 other members sued the United States, and later won the case, the United States revoked its steel safeguard measures, the significance of the first case was very great, we tasted the "sweetness" of WTO accession.

From a legal point of view, the most impressive was the "China Intellectual Property Case" (DS362). In order to fulfill this case, we amended Article 4, Paragraph 1 of the Copyright Law of the People's Republic of China, which is the only case in which we are allowed to amend the laws passed by the National People's Congress. China's implementation of international rulings to amend its own domestic laws can be written into the history of China's legal system.

The third most impressive case was the China Publications and Audiovisual Products Case (DS363), which coincided with the China Intellectual Property Case. Cultural products involve ideological sensitivity, and after losing the case, we amended 19 publishing regulatory documents. The main significance of this case is that even in such a sensitive area the WTO ruling can be enforced, let alone other cases.

If the "U.S. Steel Safeguards Case" is that we have tasted the "sweetness", the "Chinese Publications and Audio-visual Products Case" has made those of us engaged in dispute resolution more confident. Later, the enforcement of those cases was a piece of cake, including rare earth cases, and some restrictions were immediately removed after losing the case.

CBN: Why is the ruling so conscientious?

Yang Guohua: To this day, China's decision-makers still take WTO rules very seriously. Why is there such awareness? First, during the WTO accession negotiations, we unified our thinking at the highest level, including the leaders of the countries at that time who personally gave lectures on the importance of the WTO. Second, in the stage of china's accession to the WTO, we have gone through a year or two of cleaning up laws and regulations, and we have revised or revoked inconsistent domestic laws and regulations in accordance with the WTO requirements, which is a very good educational process. Third, in the process of dispute settlement, we have witnessed many cases, among which Europe and the United States have lost cases and will enforce the results, and we have also won and lost, and even in the case of loss, even in very sensitive areas, the results of the ruling have been implemented, especially the "China Intellectual Property Case" and the "Chinese Publications and Audio-visual Products Case" have played a great exemplary role. At that time, everyone thought that the execution result was the right thing to do.

In short, the reason why we are so conscientious about the results of the ruling may be because we have experienced such a process: from the unification of ideas at the top level, to the participation of the middle level in the clean-up of laws and regulations, to the subsequent 10 years of cases, everyone believes that this is right. The role of dispute settlement mechanisms is indeed very large, and it is very rational to use law to resolve international disputes.

There is not a single case of "should have won but didn't win"

CBN: When china joined the WTO, Chinese legal personnel entered the "unknown waters", in the past 20 years, how do you evaluate our "catching up" in the field of foreign-related rule of law?

Yang Guohua: The truth is that whether we are plaintiffs or defendants, we have done a beautiful job. There has never been a case in which we have lost because we are inexperienced or incompetent, and there has not been a case of "should have won but did not win". From the first case, the mechanism of prosecution and prosecution, the mechanism of the team engaged in dispute resolution, has been well established, which is relatively critical. This stems from what we often call the "four-body linkage" litigation mechanism (by the Department of Law and Regulation of the Ministry of Commerce, domestic lawyers, foreign lawyers and related industrial departments), which was established by Zhang Yuqing, then director of the Department of Articles and Laws, and this mechanism is now working particularly well, so it is very important to say that the vision of the founders is very important.

On the ground, we all invite the best lawyers in the world when we start a trial. Although we have only been a few months into the WTO, the lawyers we have hired may have 30 years of experience. Of course, we can't wait for our own level to catch up and then sue, and if we don't sue, we can never catch up with others.

For example, it is unthinkable to hire an outside lawyer in the "first case". It's okay for me to read two statements, but hearing and writing submissions is very legally professional work, which requires "years" and experience. As newcomers, in order to break the chain of "years", we hire external lawyers. Since we hire the best lawyers, the case can ultimately be maximized.

Although we are still hiring international lawyers on the front line, the other three groups have grown up, namely the Department of Treaty and Law of the Ministry of Commerce, domestic lawyers and people from relevant ministries. For example, although a company has its own legal department and will still hire external lawyers when fighting lawsuits, only legal counsel really understand the company's business. Outside lawyers are "mercenaries," but it is these last three groups of people who really understand the domestic situation and strategy. Now that the experience on our side has grown, we are more experienced when we discuss strategies with foreign lawyers.

In the past, the US side also found a phenomenon, that is, the external lawyers of other members are mostly the best Washington lawyers, while the Office of the United States Trade Representative (USTR) does not have external lawyers, and its in-house lawyers are two or three years (practice experience), while the external lawyers hired by other members are lawyers with 25 to 30 years of experience. It is not excluded that many of them lose the case for this reason.

Things like those of us who do law don't have to argue about, and one fact is "experience": you have no experience, and you can't do it without experience.

WTO reform priorities

CBN: You recently wrote in a paper that "treaties must be observed (pacta sunt servanda) is a basic principle of international law." The WTO is facing reform, do you support the formulation of so-called market economy standards within the WTO?

Yang Guohua: According to everyone's expectations for WTO accession, we should support the establishment of market-oriented standards in the WTO. This is also the successful experience from our WTO accession. We often say that China's accession to the WTO is a milestone in reform and opening up, and its characteristics are that it has changed from "independent opening up" to opening up according to rules, from partial opening up to all-round opening up, and from pilot-style opening up to expected opening up.

From the perspective of legal persons, there is an essential difference between from independent opening up to opening up according to rules, that is, independent opening can be taken back as not open, but according to the open rules of the rules, the rules include commitments, words must be done, and cannot be "pulled out of the drawer", which is the predictability of the law.

The most typical is the right to trade, that is, the issue of the right to import and export operations, and its evolution is divided into two or three stages. Before China's accession to the WTO, engaging in import and export trade needed to be examined and approved by the Ministry of Foreign Trade and Economic Cooperation (the predecessor of the Ministry of Commerce). After the reform and opening up in the early 1980s, the examination and approval power was transferred from the Ministry of Foreign Trade and Economic Cooperation to the provincial level or even the municipal level, and the number of enterprises with operating rights increased rapidly from a few hundred to nearly 6,000. However, around 1986, due to the overheating of the economy, the provinces began to govern, and the approval of import and export operation rights was withdrawn to the Ministry of Foreign Trade and Economic Cooperation, and the figure was cut from 6,000 to 3,800. This is a very typical example of independent opening up, adjusting the degree of openness with the domestic or international economic situation.

Trade rights are a core clause in China's WTO accession negotiations, that is, by 2004, the right to import and export operations will be liberalized. All enterprises, including individuals, have the right to engage in import and export, and later China also amended the Foreign Trade Law accordingly, changing the approval system to a registration and filing system, and filing is only a statistical need. After China's accession to the WTO, there are actually countless domestic or international reasons to withdraw trade rights, but no one from top to bottom has made such a suggestion. The reason is simple, because we have international commitments and even amend the law for this.

We also fundamentally believe that China's economy and import and export growth have benefited from the increase in foreign trade entities. This example is to argue that China should support the WTO in requiring members to implement a market economy and to set standards for a market economy, and that members cannot violate these disciplines. In this way, in the process of our future reform and opening up, if there is any retrogressive behavior, there will be voices in the decision-making process to remind that this is a violation of the WTO agreement, and the non-market-oriented rules will be suppressed to ensure that China will move forward.

CBN: In the joint statement of the US-Japan-EU trade ministers, state-owned enterprises and transparency have been mentioned many times, how do you judge this? Will there be any movement in WTO reform?

Yang Guohua: First, China's achievements in the 20 years since its accession to the WTO have benefited from the concepts of market economy and equal subjects. Second, from the perspective of national decision-making, there are several recent events that are exciting, including joining the Regional Comprehensive Economic Partnership (RCEP), completing the China-EU Investment Agreement (CAI) negotiations with the European Union, and recently, the Chinese leaders also talked about the negotiations on state-owned enterprises, digital economy, trade and environmental and industrial subsidies at the Fourth China International Import Expo, pointing out that these can be discussed, which is very encouraging.

Logically, this thing is "supposed" to succeed. Because this is good for China, the decisions of leaders or countries in the past two years have also shown this direction. As long as China agrees and actively participates in the discussion and formulation together, then this matter will become the majority.

Can the Appellate Body still transfer it?

CBN: Is it possible for the WTO Appellate Body (AB) to resume operations?

Yang Guohua: Yes, I am an optimist. As can be seen in the Oct. 14 speech by USTR representative Dai Qi, she has a different attitude from her predecessor, Lighthizer. Although she also does not seem to be in a hurry to restore the Appellate Body, the argument is completely different. She did not blame the Appellate Body throughout, noting that there were two problems with the dispute settlement mechanism, without mentioning the "six major charges" of the Appellate Body (in the Lighthizer era).

First, Dai Qi believes that the dispute settlement mechanism is creating its own rights and obligations. However, she also said that this is because the channels for legally creating rights and obligations in the negotiations are not smooth, which has led to the judicial side having to create its own. Second, the proceedings were too "lengthy, expensive and contentious" to the proceedings. From WTO members to academics, everyone acknowledges these two issues. Therefore, Dai Qi is not attacking the Appellate Body, but asking existing issues. Asked directly whether the Appellate Body should be reinstated, Dai Qi said that it was time to resolve the fundamental issues of the dispute settlement mechanism, rather than simply announcing the resumption of the appellate body's functions. I think this is acceptable, and after Dai Qi took office, I think there is room for negotiation.

My own proposal is to retain the Appellate Body, but to weaken the judicial function and avoid protracted litigation. In this way, the issue of dispute settlement of concerns can be resolved. Based on my experience with Americans, this innovative line of thinking can be explored.

Dai Qi's speech is equivalent to kicking the ball to other countries, and the person who receives the ball also has to kick out, and can't always hold it. China, as a striker, also has to play decently. Therefore, on the basis of summing up the lessons learned in the 20 years since china's accession to the WTO, we should put forward what real reform should look like.

I think that since the US side is now reasonable and willing to listen to everyone's suggestions, then we can work hard. Based on our years of experience dealing with the United States, at least at the technical level, if we can tell the truth, Americans will agree.

CBN: Last year, China, the European Union and more than a dozen other WTO members jointly issued a ministerial statement and decided to establish a "multi-party interim appellate arbitration arrangement (MPIA)" in the WTO. Do you think this mechanism can be useful?

Yang Guohua: It seems that it is possible to play a role now, because the restoration of the Appellate Body takes time, and the interval between this pause may even last for two years. Our expectation was that if the Biden administration came to power and immediately agreed to the selection of a justice, the Appellate Body could be back in operation as soon as 2021, and the MPIA would end its mission without going through the case.

But as things stand, even if it is relatively fast, it is likely that it will take two years before the Appellate Body resumes. The 12th WTO Ministerial Conference (MC12) was scheduled to take place from November 30 to December 2 this year, but was cancelled due to the pandemic. Now that MC12 is delayed, MC13 won't be held until 2024, and uncertainty about the next U.S. administration will increase. As soon as this time is extended, the likelihood of MPIA playing a role increases.