On September 2, the WTO circulated a panel report in a complaint brought by China against U.S. safeguard measures on certain solar products, in which the panel found that the U.S. measures do not violate WTO obligations. This leaves China with a difficult choice: Appeal the report, or let it be adopted? As elaborated below, its decision could have implications for the current crisis in the WTO dispute settlement system.
The case, United States - Safeguard Measure on Imports of Crystalline Silicon Photovoltaic Products (DS562), involves Chinese claims against a 2018 U.S. safeguard measure on crystalline silicon photovoltaic products. The U.S. International Trade Commission had found that increased imports of these products were causing serious injury to the U.S. industry, and recommended that trade restrictions be imposed in response. Under U.S. law, the President makes the final decision on a remedy, and President Trump chose a combination of a tariff-rate quota and tariffs.
The WTO panel rejected various Chinese claims that the U.S. safeguard measures violate WTO obligations. In general terms, the panel accepted the adequacy of the International Trade Commission's reasoning in support of its conclusion.
In normal circumstances, China would be expected to appeal the panel report, in the hopes that the Appellate Body would reverse the panel's findings and instead find that a violation exists. But due to the ongoing Appellate Body crisis, in which the United States has blocked appointments and there are no Appellate Body Members currently serving, any appeal would go "into the void," and would remain in limbo for a time period that cannot be ascertained at the moment.
In a blog post at the International Economic Law and Policy blog, I suggested that China might be best served by letting the report be adopted:
It could appeal the report into the void, in order to maintain some uncertainty about these issues. On the other hand, it would be a show of good faith to let the report be adopted and simply move on. That wouldn't solve the bigger issues surrounding China's participation in the WTO, but a gesture of this sort could help move things in a positive direction.
To date, the general practice since the Appellate Body crisis has been for parties to appeal panel reports into the void. It would certainly send a message of support for the rule of law if China were to allow adoption here. (China could still express its criticisms of the report at the DSB meeting where adoption takes place.)
In response to my suggestion, law professor Henry Gao offered a different perspective (on Twitter):
The question here is whether such an appeal would give the United States much of an incentive to remove its block on Appellate Body appointments. How much value would it see in having the Appellate Body restored so that it could hear the appeal of the case, possibly uphold it, and finalize and adopt the reasoning and result in the case?
So far, China has not made any public statement on its intentions. (At a September 3 press conference, a foreign ministry spokesperson said only that China "regrets the decision.") It has 60 days from the date of circulation to decide on its approach.