The limits of transparency: China, the United States and the World Trade Organization

Padideh Alai and Katayoon Beshkardana

Transparency has always been one of the pillars of the multilateral trading system dating back to the creation of the General Agreement on Tariffs and Trade (GATT) in 1947.1 Decades later, in 1995, after the end of the Cold War and with creation of the World Trade Organization (WTO), the transparency pillar of the multilateral trading system became even more central to its mission." The growing centrality of transparency provisions of the WTO agreements has highlighted the role of the WTO as a supra-national regulatory body in promoting “good governance” norms and values in the administration of trade-related governmental measures.3 In the past 30 years, the market access and non-discrimination goals of the WTO have been balanced against the other non-economic mandates of a regulatory state such as: the environment, labour, or human, animal and plant life, health and safety. In balancing these competing interests, the concept of legal transparency has become central to the analysis and any exceptions to the market access and non-dis-crimination obligations of a WTO member state can only be justified if applied in a fair and transparent manner.

Lack of a transparent legal system in China has long been a source of concern for the United States. This concern is reflected in the text of China’s Protocol of Accession to the WTO whereby China committed to additional transparency requirements as a condition for accession to the WTO.4 Since its accession. China has taken many steps and promulgated many transparency related laws to comply with its WTO obligations, but the United States and other WTO members continue to be concerned about lack of legal transparency in China.5 Furthermore, increased transparency is not resulting in creating a more open society. This chapter looks at the limits of imposing legal transparency obligations on a country, like China, in hopes of creating a more open and democratic system.6

The first part of this chapter reviews the increasing importance of legal transparency obligations from the periphery of the GATT 1947 to a central obligation found throughout the WTO Agreements. In the second part, the chapter looks at how legal transparency was a centrepiece of China’s commitments in the Protocol of Accession to the WTO and how China has failed, from the perspective of the United States, to comply with these obligations.

The third part explores reasons why, in China, legal transparency is hard to implement, given the size of the country, its history and the variety of differences among local governments in implementing central government mandates. Legalism in China is premised upon governmental control, not governmental accountability. Furthermore, Confucian attitudes towards governance historically valued opacity not transparency.

From the periphery to the centre: centrality of the WTO transparency obligations

Transparency is generally defined as “sharing information or acting in an open manner,” or “a measure of the degree of which information about official activity is made available to the interested party.”7 In this sense, transparency implies openness, clarity and unobstructed access, especially to business and governmental records; lack of guilt and of any attempt to hide damaging information; financial disclosures, organisational policies and practices, law making and other activities when organisations interact with the public.8

Legal transparency similarly encompasses a central issue of “how much information about legal rules should be made available to the public at large.” For law to be considered as transparent in character, it must demonstrate that it is written clearly and comprehensibly, promulgated publicly; it is not voided by its vagueness; it is not too uncertain in applicability; and it is not silent as to the consequences of breaking the law.10 WTO agreements promote this concept of legal transparency amongst member states regarding measures that relate to or affect the trade in goods, services and intellectual property.

The Bretton Woods system that was created in the aftermath of the Second World War envisioned a system of global governance that would ensure peace by not allowing protectionism to flourish as it had in the inter-war years. The three Bretton Woods Institutions were: the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (World Bank) and the International Trade Organization (ITO). The first two were established but the ITO did not come into existence due to opposition to it in the United States Congress.11 Instead, the United States entered into the GATT 1947 that was a “provisional” agreement until such time when the ITO would come into existence.12

The GATT was not an international organisation and it did not have the constitutional underpinning of the other two Bretton Woods institutions. The original 23 nations who were signatories to the GATT (known as the Contracting Parties)13 committed to the twin goals of the GATT: (1) progressive liberalisation of markets to provide access through reduction of tariffs, quotas and non-tariff barriers; and (2) maintenance of non-discrimination and nonprotectionist policies in trade.14 Achievement of both goals was premised on the transparent administration and application of trade measures; therefore, transparency has long been the third pillar of the multilateral trading system.

The limits of transparency 137

Although, the word “transparency” itself is not used in the GATT, the concept of legal transparency is set forth in Article X of GATT 1947 entitled: Publication and Administration of Trade Regulations}5 The text of Article X is identical to the language originally proposed by the U.S. State Department in 1946 as Article 15 of the ITO Charter and eventually became article 38 of the Charter.16 The wording of Article X was influenced by the U.S. Administrative Procedure Act (“APA”). passed in 1946, and the philosophical underpinning of it was rooted in the democratic model of governance and doctrine of separation of powers.17

Article X of GATT 1947 imposed broad publication and procedural due process requirements on the administration of measures in the area of trade in goods. Article X:1 required “all laws, regulations, judicial rulings, and administrative rulings of general application published promptly in such manner as to enable governments and traders to become acquainted with them.”18 Article X:2 prohibited enforcement of such measures before publication.19 Article X:3 required all measures to be administered in a “uniform, impartial and reasonable manner” and compelled Members to establish tribunals or procedures for review of the administrative actions related to customs matters.20

The United States' motivation for proposing Article X was to level the playing field for U.S. traders who faced opaque and informal administrative structures in other countries while the U.S. administrative processes had to comply with the transparency requirements of the APA.21 From 1947 to 1994, GATT Contracting Parties viewed Article X as purely procedural and GATT panels dismissed Article X disputes considering them as peripheral and “subsidiary” to other substantive provisions. For example, in the 1980s, the United States brought a series of cases against Japan, claiming that the Japanese system of “administrative guidance” had led to a non-transparent administration of import quota systems and was therefore inconsistent with the obligations of Article X.” At issue in these cases was the failure of Japan to publish administrative rulings relating to import quotas;23 allocation of import licences to Japanese producers and distributors;24 administration of a quota system; failure to publish adequate and timely information on quota volume or value; failure to comply with requirements of transparency such as specificity and timing of notice; and “unreasonable” administration of the import quota system.25 GATT 1947 panels generally dismissed all the allegations of violations of Article X as ancillary after finding violation of other substantive provisions that required removal of the measure in question.26

The Uruguay Round negotiations led to the creation of the WTO and transformed Article X of GATT 1947 into Article X of GATT 1994 with no changes to the text of the provision.2' However, the WTO agreements expanded the scope of Article X by making it explicitly applicable to other agreements, such as Customs Valuation Agreement,28 Agreement on Rules of Origin,29 Agreement on Safeguards,30 and Agreement on Import Licensing.31 Article X-like provisions were also included in General Agreement on Trade in Services (GATS),32 and Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).3' In addition, the Uruguay Round agreements containednumerous notification provisions and other transparency provisions that address procedural due process.34

The Uruguay Round negotiations also created the WTO Trade Policy Review Mechanism Agreement (TPRM) whose purpose is to make transparent government rules and regulations of member states. Specifically, TPRM monitors domestic transparency in government decision-making in the trade policy-making area under Part B “Domestic Transparency” which requires WTO members to:

recognize the inherent value of domestic transparency of government decision making on trade policy matters for both members’ economies and the multilateral trading system and agree to encourage and promote greater transparency within their own systems acknowledging that the implementation of domestic transparency must be on a voluntary basis and take account of each member’s legal and political systems.35

A manifestation of the increasing importance of transparency is largely reflected in the Reports of the WTO dispute settlement body. Unlike the GATT panels, the WTO panels and Appellate Body have directly addressed Article X.36 The WTO Appellate Body has clarified through several rulings that violation of the transparency obligations under Article X allows challenges to measures that otherwise are WTO consistent.'' According to the Appellate Body, Article X:2

may be seen to embody a principle of fundamental importance - that of promoting full disclosure of governmental acts affecting Members and private persons and enterprises, whether of domestic or foreign nationality. The relevant policy principle is widely known as the principle of transparency and has obviously due process dimensions.38

In one of the seminal early WTO cases known as US-Shrimp, the Appellate Body found that the procedures under which the United States authorities were granting certification to importers of shrimp into the United States were “informal” and “casual” and not “transparent” and “predictable.”39 By referring to Article X, the Appellate Body found that this provision establishes certain minimum standards for “transparency” and “procedural fairness” in the administration of trade regulations that the United States failed to meet.40

Since its accession to the WTO. China has had Article X complaints brought against it that are illustrative of the challenges China poses in the legal transparency area.41 In China-Raw Materials, the panel concluded that the failure by China to publish promptly the total amount and procedure for the allocation of zinc export quota was inconsistent with transparency provisions of Article X:l.42 Additionally, the Panel also found that 32 local departments throughout China each interpreted and applied the “operation

The limits of transparency 139 capacity” criterion of the regulations without any uniform definition, standard or guidelines.43 This diversity of application of laws among different local departments was found to be inconsistent with the “uniformity” requirement of Article X:3 (a) that requires uniform application of all measures throughout a member’s territory.44

China’s laws and regulations (measures) concerning transfer of foreign technology into China have also been a source of concern for WTO Member States. The European Union together with Japan and the United States in a recent communication with the WTO Dispute Settlement Body, have requested for consultation with China as part of the dispute settlement process on measures concerning transfer of technology.4’ According to the Complainants, China, through its domestic legislations, has imposed non-uniform rules on the import of technology that adversely affects the intellectual property rights of foreign companies compared to those of Chinese companies.46 The Complainants also claim that China has violated Article X:3 (a) of the GATT 1994 and Paragraph 2(A)2 of China’s Protocol of Accession because it has failed to administer its laws in an “impartial” or “reasonable” manner.47

China’s accession to WTO and Chinese efforts to promote legal transparency

China was one of the 23 original signatories of the GATT in 1948 but its membership was withdrawn by the nationalist government that had escaped to Taiwan after China’s Maoist Revolution in 1949.48 Although the government in Beijing never officially recognised this withdrawal decision, in 1986, China notified the GATT of its wish to resume its status as a GATT Contracting Party.49 In March 1987, a working party was established to examine China’s status but the negotiations were never concluded under the GATT 1947.’° Upon the creation of the WTO on 1 January 1995, a successor to the WTO Chinese Accession Working Party, composed of all interested WTO members, took over the negotiations.51 From 1995 to 2001 China engaged in multilateral negotiations with Working Party members on the rules that would govern trade with China.52 The rules commitments made by China in this area are set forth in the Protocol of Accession and an accompanying Report of the Working Party.’3

Throughout China’s accession negotiations there were serious concerns about China’s administrative legal regime and lack of transparency.’4 Although China had started to enact and enforce administrative laws in the late 1980s, these laws did not seem to regulate government disclosure of information to the public at large.5

In its WTO Protocol of Accession, China committed to implement significant changes to its trade regime at all levels of government and to embrace the WTO’s open-market-oriented approach in its trading system and institutions.56 Specifically, China committed to the following transparency related reforms in its Accession Protocol:

  • 1 Publish all laws, regulations and other measures pertaining to or affecting trade in goods, services, intellectual property or the control of foreign exchange.57
  • 2 Establish a single official journal for such publications and the provision of the right to comment before implementation of the regulations.58 Chinese commitment to establish or designate an official journal covered all laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange.’9 China also agreed to publish the journal regularly and to make copies of all issues of the journal readily available to enterprises and individuals.60
  • 3 Establish enquiry points for obtaining all information related to trade-related measures; According to this provision, any individual, enterprise or WTO Member may enquire and shall be furnished with all information relating to the measures to be published under the Protocol.61
  • 4 Translate into one or more of the official languages of the WTO all laws and regulations and measures;62 and
  • 5 Establish impartial and independent tribunals, contact points and procedures for review of administrative actions relating to the implementation of laws, regulations, judicial decisions and administrative rulings of general application referred to in Article X:1 of the GATT 1994, Article VI of the GATS and the relevant provisions of the TRIPS Agreement with the opportunity for appeal.63

Upon its accession, China embarked on ambitious reforms to meet its commitments under the Protocol of Accession. In 2007, China committed to adopting Open Government Information Regulations (OG1).64 A few municipalities have issued provisions explicitly implementing OG1 regulations.6’ Since 2008 when the Regulations took effect, the Chinese government has also published nearly 72 million records and received 3.8 million disclosure requests. Combined with the impacts of Administrative Procedure Law, which started to normalise plaintiffs prevailing against the government, over one-third of 5,000 OG1 decisions were found for plaintiffs. Furthermore, most recently in 2019, China revised the OG1 Regulations, clarifying types of information to be disclosed, eliminating the controversial “needs test,” and discarding sanctions for officials who revealed information that “should not be disclosed.”66

Under its WTO Protocol of Accession, China committed to creating an enquiry point where any individual, enterprise or WTO Member may enquire and obtain all information related to trade-related measures.67 China has established a WTO Enquiry and Notification Center, operated by Ministry of Commerce (MOFCOM) Department of WTO Affairs.68 Other ministries and agencies have also established formal or informal, subject-specific enquiry points.69 In addition, some ministries and agencies have created websites to provide answers to frequently asked questions, as well as further guidance and information. ”

In March 2006, China’s State Council issued a notice directing all central, provincial and local government entities to begin sending copies of all of their

The limits of transparency 141 trade-related measures to MOFCOM for immediate publication in the China Foreign Trade and Economic Cooperation Gazette, known as the MOFCOM Gazette1^ In 2010, the State Council issued the Opinions on Strengthening the Building of a Government Ruling by Law.12 This measure calls on ministries and agencies at the central and provincial levels of government to solicit public comment when developing regulations, rules and normative documents, subject to certain exceptions.73 In 2012, the State Council Legislative Affairs Office (SCLAO) published on its website two measures, the Interim Measures on Solicitation of Public Comment on Draft Laws and Regulations and the Notice on Related Issues Regarding Solicitation of Public Comments on Draft Departmental Rules14 China has confirmed that these two measures are binding on central government ministries, but there are concerns that such measures fall short of the need for a broader harmonized system of public notice-and-comment obligation as required under the Chinese WTO Protocol of Accession.'-''

Despite significant reforms, according to the USTR’s latest report, China is not fully in compliance with its transparency requirements under the Protocol of Accession.'6 China has never established or designated an official journal to publish laws, regulations and other measures pertaining to or affecting trade in goods, services, intellectual property or the control of foreign exchange.77 Rather, China has relied on multiple channels, including ministry websites, newspapers and a variety of journals and gazettes, to provide information on trade-related measures.78

To date, some but not all central government entities publish trade-related measures in the MOFCOM Gazette™ At the same time, while trade-related regulations and departmental rules are published in the journal, it is less common for other central government measures such as opinions, circulars, orders, directives and notices to be published, even though they are all binding legal measures.80 Sub-central government measures are rarely published in the official journal.81

China’s Protocol of Accession has a provision concerning the procedures for adopting or revising laws, regulations and other measures affecting trade in goods, services, TRIPS or the control of foreign exchange.82 Accordingly, China has agreed to provide a reasonable period for public comment on new or modified laws, regulations and other measures before implementing them, except in certain cases involving national security, specific measures setting foreign exchange rates or monetary policy and other measures the publication of which would impede law enforcement.83 In practice, China’s ministries and agencies have a poor record of providing an opportunity for public comment before implementation of new or modified laws, regulations and other measures.84 Although the State Council issued regulations in December 2001 addressing the procedures for the formulation of administrative regulations and rules and expressly allowing public comment, many of China’s ministries and agencies continued to follow the practice that existed prior to China’s WTO accession.8- Typically, the ministry or agency drafting a new or revisedmeasure consults with and submits drafts to other ministries and agencies, as well as Chinese experts and affected Chinese companies. At times, it consults with selected foreign companies, although it would not necessarily share drafts with them. As a result, only a small proportion of new or revised measures get a period for public comment, and even in those cases the amount of time provided for public comment is generally too short.86

China’s Ministry of Commerce (MOFCOM) began following the rules set forth in its Provisional Regulations on Administrative Transparency in 2004.87 Nevertheless, basic compliance with China’s notice-and-comment obligation continued to be uneven in the following years, as numerous major trade-related laws and regulations were finalised and implemented without the National People’s Congress (NPC) or the responsible ministry circulating advance drafts for public comment.88 Specifically, these measures do not remove concerns regarding the so-called “normative documents.”

Normative documents are regulatory documents that do not fall into the category of administrative regulations or departmental rules but still impose binding obligations on enterprises and individuals. To date, while China continues to consider reforms relating to the handling of normative documents, most normative documents are still not published for public comment.89

In October 2017, MOFCOM did issue a draft Measure on the Formulation and Administration of normative documents, which proposes to require the use of notice-and-comment procedures for certain types of normative documents issued by MOFCOM.90 In April 2018, MOFCOM issued the final measure, which provided that, in general, there should be a 30-day comment period for draft normative documents.91 However, this measure leaves much to the discretion of agency officials, as it only proposes to require public comment for normative documents issued by MOFCOM that are “binding” and involve “major matters.” 2 Subsequently, in May 2018, the State Council issued a notice calling for more public consultation in the drafting process for normative documents and requiring drafts of normative documents that “involve vital interests of the people” or “have significant impact on the rights and obligations of citizens, legal persons, and other organizations” to be published for public comment, subject to certain exceptions.93 The notice also calls for final normative documents to be published.94

China also has a poor record of compliance with WTO translation commitment of its trade-related laws and regulations.95 China still has not established an appropriate infrastructure to undertake the agreed-upon translations of its trade-related measures in a timely manner.96

In October 2002, the Supreme People’s Court designated courts to rule on certain issues related to hearing of international trade administrative cases,97 but serious concerns continue to exist about the independence of China’s judiciary. Chinese judges continue to be influenced or directed by political, government or business interests.98 Lack of adequate measures to fulfil a transparent trading system has caused foreign businesses to continuously complain about difficulty of operation in China particularly given discrepancies

The limits of transparency 143 between Beijing and local governments in handling reforms." It is argued that even if Beijing aims to increase market access and level the playing field for foreign companies, local governments ignore advice from the central government.100

In sum. Beijing has done a lot to comply with its WTO commitments under its Protocol of Accession. Although much still needs to be done before China is deemed to be in full compliance with its obligations, legal transparency related reforms so far have not created a system of governance that is even slightly more accountable or democratic.

Limits of transparency

China has centuries of tradition that is based on legal decentralisation and cultural attitudes towards law that is dissimilar to the West. China’s promulgation of new laws and rules is unlikely to change fundamental differences in attitudes and governance. It is possible that China’s problem with providing efficient and widespread transparency is not merely due to lack of laws or procedures. Chinese history has always seen a struggle between the Confucianists and Legalists (known as Ru Fa douzheng). 1 Confucians valued opacity over transparency and the legalists were primarily concerned with controlling people through law, who they viewed as inherently selfish and covetous.102 In that context, where does the imposition of Western norms of legal transparency leave us?

In China, legislative and administrative actions at the local level traditionally operate with very limited supervision and virtually no transparency.103 This opacity has been the basis of the growth of what is termed “local protectionism,” and has represented itself as a growing concern to foreign investors.104 A major source of concern for WTO members has been the use of these “normative documents” that do not fall into the category of administrative regulations or departmental rules, but still administrative bodies specifically at the local level extensively use them.10'' As most of them are not published, their application creates non-transparent procedures to the detriment of the foreign traders and firms.106

Despite the major misconceptions that there was no law in traditional China, Chinese legal history is deep and complex but the intention of this paper is not to provide an overview of a legal heritage that spans nearly four thousand years.107 However, a brief simplified explication of traditional Chinese conceptions of law may help us answer the queries of this paper, particularly given President Xi Jinping’s penchant for quoting classical philosophers and thinkers.108

Traditional Chinese conceptions of law have been largely influenced by three major schools of philosophy: Confucianism (Ru-Jia), Legalism (Fa-Jia) and Naturalism (Yin-Yang Jia).109 This section will focus particularly on the influences of Confucianism and Legalism. Confucianism’s legal and political theory revolves around its virtue-ethics conception of the world. Confucius

(551 479 все) believed that people were educable and that anybody, with the right practice of ritual (//), could attain virtue (ren). The sages (junzi) were individuals who had attained ren and by setting an example for others in society, could help society as a whole reach a virtuous and harmonious state. Therefore, the Confucian notion of “good governance” relied on the virtuosity of the leader, the government officials, and the people. This idea is reflected in the Analects 2:3:

The Master said. “Lead the people with administrative injunctions (zheng) and keep them orderly with penal law (xing), and they will avoid punishments but will be without a sense of shame. Lead them with excellence (de) and keep them orderly through observing ritual propriety (li) and they will develop a sense of shame, and moreover, will order themselves.”110

In essence, Confucius imagined a politics that allowed social freedom, guided by ritual etiquettes and social customs (li), for individuals and government officials to exercise moral autonomy rather than a series of strict administrative regulations and laws.111

Han Fei (280-233 все) disagreed with Confucius and expanded the legalist movement that was burgeoning under Shang Yang (390-338 все), chief adviser to the Qin state. The Qin state, through legalist reform under Shang Yang during the Warring States Period, grew to be a powerful, centralised state power that conquered the other six of the seven warring states to become the Qin Dynasty, the first dynasty of Imperial China, under Qin Shi Huangdi.112 Han Fei’s writings, particularly those on autocratic government, were particularly influential to Qin Shi Huangdi.113 Fei and Shang believed that human beings are fundamentally selfish, brutish and covetous; additionally, contrary to Confucian belief, they believed that this situation could not be solved through self-cultivation or through diligent practice of rituals (li).'14 Therefore, Fei reasoned that the best way to govern human beings was to control that base nature depending on the environment of the times.115 Accordingly, Qin Shi Huangdi imposed a simple, harsh and uniform law and pushed for an eradication of Confucianism, which promoted laws and rituals as methods of attaining and cultivating virtue.116 However, the Qin Code still retained the hierarchical treatment reminiscent of Confucianism and when the Han dynasty succeeded the Qin, a “Confucianization of law” provided and implemented the idea of differential application of law.117 The mixture of Confucian and Legalist notions of governance and functions of law remained a central feature of Chinese law and persisted until the early twentieth century.118 Guild rules, clan rules and other informal rules guided trade and mediation.119 Local magistrates utilised appropriate customary laws to settle civil disputes.120

Today, when Chinese leaders talk about the rule of law, they seem to mean the Legalists “rule by law,” which is to use rules as instruments to maintain

The limits of transparency 145 social discipline rather than to limit the power of the state and the traditional Legalist approach is further complicated by the existence of the Communist Party. As China legal scholar Jamie Horsley has stated:

Chinese perception of an administrative state and rule of law is complex and nuanced. In a political structure where the party leadership is above everything including the law, the party maintains a dual state-legal system under which the party owns the absolute leadership but continues to delegate to state legal institutions, the authority to address day-to-day matters.”121

The Chinese Communist Party continues to bypass state legal requirements when dealing with what it views as “sensitive” matters. The political agenda of the ruling party always trumps the business interests of private parties even when codified into the laws. President Xi recently quoted the following statement by Han Fei: “When those who uphold the law are strong, the state is strong. When they are weak, the state is weak.”122 This quotation illustrates integration of Legalism into the one-party framework.

The United States is upset that the Chinese have not fulfilled their WTO commitments, including their transparency obligations. More importantly, the United States is disappointed that accession to the WTO has not opened up the Chinese economy or democratised its government. The United States regrets supporting China’s accession to the WTO, because it believes China’s accession has undermined both the U.S. and the WTO. Legal transparency, when superimposed upon a culture that values opacity or legalism and control in addition to a political structure that elevates the Party, will not give us rule of law, accountability or due process. Instead, it allows a centrally controlled economy to mobilise its resources to control and dominate the marketplace.

Transparency has long been an essential element for the rule of law and accountability in a democratic state. Integral to the definition of legal transparency is elevation of procedural due process. The rise of a regulatory state in the past half a century in both the United States and Europe has led to proliferation of non-tariff barriers to trade and has necessitated balancing public policy goals against the trade liberalisation objectives of the multilateral trading system. In this process, transparency has become central to the commitments of member states of the WTO. Legal transparency in promulgation, application and enforcement of trade measures is one way to distinguish between a WTO consistent and a WTO non-consistent governmental measure. Concern about China’s non-transparent system of laws and governance led to negotiation of additional transparency related provisions during China’s accession negotiations to the WTO. These additional obligations resulted in a wave of reforms and passage of many laws, rules and regulations. It was the hope of the United States that China’s accession to the WTO and imposition of additional transparency requirements would push Chinatowards a liberal market-based economic system. Instead, the story of China’s accession to the WTO has also become about the limits of legal transparency and the inability of the WTO to impose structural reforms in a country as large and important as China.

China, like many others, is not fully compliant with its WTO obligations, including its transparency commitments. However, given China’s thousands of years history coupled with the role of the communist party, it is unclear whether any level of compliance with legal transparency requirements would be capable of satisfying the United States or reflect the goals of legal transparency such as the rule of law and due process as understood in a liberal democracy.


  • 1 General Agreements on Tariffs and Trade (GATT) first negotiated in 1947 and came into force in 1948. From 1947 to 1994. GATT was a de facto international organization for negotiating and administering the multilateral trading system. GATT 1947 contained principles based on which governments were able to carry forward their multilateral cooperation on trade. See General Agreement on Tariffs and Trade (30 October 1947), 61 Stat. A-l 1, 55 U.N.T.S. 194 [GATT 1947].
  • 2 Marrakesh Agreement Establishing the World Trade Organization (15 April 1994), 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994) [hereinafter Marrakesh Agreement],
  • 3 Padideh Ala’i, “From the Periphery to the Center? The Evolving WTO Jurisprudence on Transparency and Good Governance,” Journal of International Economic Law 11, no. 4: 780 (October 2008).
  • 4 See Protocol of Accession of the People’s Republic of China to the World Trade Organization, Part I (2)(C) and Part I (2)(D). WT/L/432 (10 November 2001). [China’s Protocol of Accession]
  • 5 See generally 2018 Report to Congress on China’s WTO Compliance, United States Trade Representative (February 2019), [2018 USTR Report] Section 421 of the U.S.-China Relations Act of 2000 (P.L. 106 286), 22 U.S.C. § 6951 (the Act) requires the United States Trade Representative (USTR) to report annually to Congress on compliance by China with commitments made in connection with its accession to the WTO, including both multilateral commitments and any bilateral commitments made to the United States. The USTR released first report on 11 December 2002. For European Union concerns regarding lack of transparency in China see 2016 EU New Strategy on China where it insisted on promotion of mutual transparency in safeguarding intellectual property as well as in energy sector available at communication_to_the_european_parliament_and_the_council_-_elements_for_a_ new_eu_strategy_on_china.pdf. See also EU-China 2020 Strategic Agenda for Cooperation available at: In a recent communication for consultation at the WTO DSB. EU has raised concerns regarding China's transparency obligations and non uniform rules on import of technology that affect the intellectual properties rights of foreign companies. See China: Certain Measures on the transfer of technology. Request for Consultation by the European Union, WT/DS549/1-G/ L1244-IP/D/39 (6 June 2018).

In the legal context, transparency refers to procedural due process including publication, access to and flow of information, and independent judicial review. See William Mock, "On the Centrality of Information Law: A Rational Choice Discussion of Information Law and Transparency,” John Marshall Journal of Computer and Information Law 17, 1069 & 1082 (1999).

Bryan A. Garner and Henry Campbell Black, eds.. Black's Law Dictionary, 10th ed. (St. Paul, MN: Thompson Reuters, 2014). The concept of transparency has ambiguous meanings and is used differently in different contexts. From the perspective of information recipients, markets are regarded as transparent when the information that is available is as comprehensive as possible. For the holder of the information however, transparency does not necessarily imply disclosure but requires refraining from deceit with regards to certain facts and not dissimulating. John W. Head, "Opposing Legal Transparency in Dynastic China: The Persuasive Logic of Confucianist Views on Legal Opaqueness” in Research Handbook on Transparency, edited bv Padideh Ala’i and Robert Vaughn (London: Edward Elgar Press, 20 І 4), 115, 116.

Ibid., 117.

Ivan D. Trofimov, “The Failure of the International Trade Organization (ITO): A Policy Entrepreneurship Perspective,” Journal of Politics and Law. 5, no. 1: 57 (2012).

In the aftermath of the Second World War, the Allied Nations proposed an International Trade Organization (ITO) to perform a global trading system. But the potential threats that countries felt to their sovereignty and the division caused by the emergence of the Cold War resulted in the failure of the creation of ITO. The Allied Powers instead agreed on the General Agreement on Tariffs and Trade (GATT) 1947, a multilateral trade agreement that gradually became an informal international organization for almost half a century regulating trade among nations from 1948 to 1994. It hosted eight rounds of multilateral trade negotiations from the time of its establishment in 1947 until succeeded by the WTO in 1995. The Uruguay Round of multilateral trade negotiations concluded the Marrakesh Agreement that established the World Trade Organization in 1994 to replace the old GATT 1947. For the history, origins and foundations of the World Trade Organizations see Craig VanGrasstek, The History and Future of the World Trade Organization (Geneva: WTO Publications, 2013). See also Gabrielle Marceau, Amelia Porges, Daniel Ari Baker, “Introduction and Overview,” in History of Law and Lawyers in the GATT!WTO edited by Gabrielle Marceau (Cambridge: Cambridge University Press, 2015), 1-59.

The 23 Contracting Parties of GATT 1947 were Australia, Belgium. Brazil, Burma, Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India. Lebanon, Luxembourg, Netherlands, New Zealand, Norway. Pakistan. Southern Rhodesia. Syria. South Africa, United Kingdom and the United States. See Fiftieth Anniversary of the Multilateral Trading System, Press Brief, available at:

See Preamble of the GATT 1947.

See GATT 1947. Article X.

Havana Charter for an International Trade Organization, art. 38. U.N. Conference on Trade and Employment, Final Act and Related Documents, U.N. Doc. E/CONF. 2/78, U.N. Sales No. II.D.4. (1984).

Administrative Procedure Act, 5 U.S.C. § 552(a) (Pub.L. 79 404, 60 Stat. 237, enacted 11 June 1946) directs U.S. Federal agencies to make certain government-held information publicly available through publication in the Federal Register. GATT 1947, art. X:l.

Ibid., Art. X:2.

Ibid., Art. X:3.

Padideh Ala’i, “From the Periphery to the Center?,” 782.

See GATT Panel Report, Japanese Measures on Imports of Leather (Japan— Leather II). L/5623-31S/94, paras 16, 26, 28, 57, adopted on 15 May 1984; GATT Panel Report, Japan—restrictions on Imports of Certain Agricultural Products (Japan—Agricultural Products I). L/6253—35S/163, paras 3.5 & 5.4.2, Adopted on 2 February 1988; GATT Panel Report, Japan—Trade in Semi-Conductors (Japan—Semi-Conductors). L/6309 35S/116, paras 81 & 128, adopted on 4 May 1988.

GATT Panel Report, Japan - Leather II (US), Ibid., para 16.

GATT Panel Report, Japan - Leather II (US), Ibid., para 28.

GATT Panel Report, Japan - Agricultural Products I. Ibid., para 3.1.1. & para 3.5.1.

See GATT Panel Report, Japan - Leather II ( US), Ibid., para 57; GATT Panel Report, Japan - Agricultural Products I. Ibid., para 5.4.2; GATT Panel Report. Japan- Semi-Conductors, Ibid., para 128. The only GATT Report that found violation of Article X is the GATT Panel Report, European Economic Community—restrictions on imports of Dessert Apples (EEC—Dessert apples) L/6513-36S/ 135, adopted on 22 June 1989. Panel concluded the Report by finding in para 5.26 that the operation of a back-dated import restriction in respect of Chile was inconsistent with Article X.

General Agreement on Tariffs and Trade 1994. 15 April 1994. Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T. S. 190, 33 I.L.M. 1153 (1994) [GATT 1994].

Agreement on the Implementation of Article VII of GATT 1994 (Customs Valuation Agreement), Article 12. Apr. 15, 1994. Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1868 U.N.T.S. 279.

Agreement on Rules of Origin, part II, Article 2(g), Article 3(e), and Annex II (3)(C), 15 April 1994. Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1868 U.N.T.S. 397.

Agreement on Safeguards, Article 12, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 154.

Agreement on Import Licensing, Article 5 & 8, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T. S. 436, 33 I.L.M. 1197.

General Agreement on Trade in Services (GATS). 15 April 1994. Marrakesh Agreement Establishing the World Trade Organization, Annex IB. 1869 U.N.T. S. 183, 33 LL.M. 1167 (1994). Art. Ill of the GATS largely follows the language of Article X of the GATT 1994 and requires publication of all relevant measures including international agreements affecting trade in services. Article III also requires that the WTO Members annually inform the WTO Council for Trade in Services of any changes made to the laws that affect trade in services and the commitments that each member has made on that agreement. It also requires all members to “establish one or more enquiry point to provide specific information to other members.” Article VI of the GATS requires members to maintain “judicial, arbitral or administrative tribunals” to review administrative decisions affecting trade in services.

General Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 LL.M. 1197 (1994). Article 63 of the TRIPS requires publication of all intellectual property related measures and notification to the WTO Council for TRIPS. In addition. Article 63.3 allows members to object to another member’s specific judicial or administrative rulings in the area of intellectual property and to request detailed written justification for the ruling.

See generally Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), Marrakesh Agreement Establishing the World Trade Organization, Annex 1A. 1867 U.N.T.S. 493 (1994); Agreement on Technical Barriers to Trade (TBT Agreement), Marrakesh Agreement Establishing the World Trade Organization. Annex 1A. 1868 U.N.T.S. 120 (1994); Agreement on the Implementation of Article VI of GATT 1994 (Antidumping Agreement), Marrakesh Agreement Establishing the World Trade Organization, Annex 1A. 1868 U.N.T.S. 201(1994), Agreement on Subsidies and Countervailing Measures (SCM Agreement), Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869, U.N.T.S. 14 (1994).

See WTO Trade Policy Review Mechanism. Marrakesh Agreement Establishing the World Trade Organization, Annex 3, 1869 U.N.T.S. 480 (1994) [hereinafter TPRM],

To date, there have been 62 cases brought before the WTO dispute Settlement Body involving Article X. For summaries of these cases and rulings, refer to:

For example, see WTO Appellate Body Report, United States—Restrictions on Imports of Cotton and Man-Made Fibre Underwear (United States-Underwear), WT/DS/24/AB/R, 20-21, adopted on 10 February 1997. See also WTO Appellate Body Report, United States—Import Prohibition of certain Shrimp and Shrimp Products (United States-Shrimp). WT/DS58/AB/R, paras 182 &183, adopted on 12 October 1998.

See WTO Appellate Body Report, United States-Underwear, 21.

See WTO Appellate Body Report, United States-Shrimp. paras 180-181.

The Appellate Body therefore found that "The non-transparent and ex parte nature of the internal governmental procedures applied by the competent officials in the Office of Marine Conservation, the Department of State, and the United States National Marine Fisheries Service throughout the certification processes under Section 609, as well as the fact that the countries whose applications are denied do not receive formal notice of such denial, nor of the reasons for denial, and the fact too, that there is no formal legal procedure for review of, or appeal from, a denial of an application, are all contrary to the spirit, if not the letter, of Article X:3 of the GATT 1994.” Ibid., paras 182-183. For further example of a transparency related case see WTO Appellate Body Report. United States-Countervailing and Anti-dumping Measures on Certain products from China, WT/ DS449/AB/R. paras 4.53-4.92 & 4.119-4.120, adopted on 7 July 2014. The issue at stake was the retroactive enforcement of the law before it has officially been published and as such inconsistent with provisions of Article X:2. While the Panel found that U.S. law was not inconsistent with Article X:2, the Appellate Body reversed the Panel’s finding.

Most famous of these cases are the so-called “China-Raw Materials." See WTO Panel Report. China - Measures Related to the Exportation of Various Raw Materials (China-Raw Materials), WT/DS394/R; WT/DS395/R; WT/DS398/R adopted on 11 July 2011.

Ibid., para. 8.11(f) at 276.

Ibid., paras. 7.741-7.746. pp. 193-194.

Ibid. para. 8.11(e), p. 276.

China-Certain Measures on the transfer of technology, Request for Consultation by the European Union, WT/DS549/1-G/L/1244-IP/D/39 (6 June 2018). China-Certain Measures on the transfer of technology, Request to join Consultations, Communication from Japan. WT/DS549/2 (11 June 2018). China-Certain Measures on the transfer of technology, Request to join Consultations, Communication from United States, WT/DS549/3 (15 June 2018).



Communications from Secretary General of United Nations Regarding China, GATT/CP/54 (8 March 1950).

Request of the Government of the People’s Republic of China for resumption of its status as a GATT contracting party, L/6017 (10 July 1986).

See Report of the Working Party on the Accession of China. WT/ACC/CHN/49.

1 (1 October 2001). [Report of the Working Party]

"In a communication dated 7 December 1995, the Government of China applied for accession to WTO pursuant to Article XII of the Marrakesh Agreement. Following China’s application and pursuant to the decision of the General Council on 31 January 1995, the Working Party on China's Status as a GATT 1947 Contracting Party was transformed into a WTO Accession Working Party, effective from 7 December 1995. The terms of reference and the membership of the Working Party are reproduced in document WT/ACC/CHN/2/Rev. 11 and Corr. 1.” Ibid.


China’s Protocol of Accession; Report of the Working Party. WT/L/432 (23 November 2001).

See Sylvia Ostry, China and the WTO: The Transparency Issue, 3 UCLA Journal of International Law and Foreign Affairs 1 (1998) (describing why China’s lack of transparency in its administrative law will mean the country fails to fully fulfil its obligations under the WTO).

See generally. Administrative Procedure Law of the People' Republic of China, adopted on 4 April 1989 (while the APL authorized private suits against administrative bodies and personnel, there is no provision that enforces government disclosure of information to the general public).

China’s Protocol of Accession.

Ibid, Part I (2)(C)(1).

Ibid, Part I (2)(C)(2).

Ibid, Part I (2)(C)(1).

Ibid, Part I (2)(C)(1).

Ibid, Part I (2)(C)(3).

According to the China WTO Working Party Report, the representative of China confirmed that China would make available to WTO Members translations into one or more of the official languages of the WTO all laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange, and to the maximum extent possible would make these laws, regulations and other measures available before they were implemented or enforced, but in no case later than 90 days after they were implemented or enforced. See Report of the Working Party, para 334. China also bilaterally committed in 2014 at the U.S.-China Strategic and Economic Dialogue that it would translate trade-related departmental rules into English within a reasonable period of time. Subsequently, in March 2015, China issued a measure requiring trade-related departmental rules to be translated into English. This measure also provides that the translation of a departmental rule normally should be published before implementation, but no later than 90 days after implementation. Following the issuance of this measure, the United States pressed China to ensure that it similarly publishes translations of trade related laws and administrative regulations before implementation, as required by China’s WTO accession agreement. See 2018 USTR Report, 48.

Protocol of Accession Part I. (2)(D)( 1 )&(2).

See generally, Zhónghuá rénmín gònghéguó zhèngfü xinxï gôngkâi tiáoli (lpí£ ALCACI:&$l) [Regulations of the People’s Republic of China on Open Government Information] (Decree No. 492 of the State Council of the

People’s Republic of China on 5 April 2007), tent_593403.htm (China); See also Zuigäo renmin fäyuän guänyü shenli zhengfü хіпхї göngkäi xingzheng änjiän ruögän went! de guiding (ІйЖЛК/іІй^с'ТФ’

[Supreme People’s Court Provisions on Certain Questions Concerning the Trial of Open Government Information Administrative Cases] (adopted at the 1505th meeting of the Judicial Committee of the Supreme People’s Court on 13 December 2010), n-xiangqing-3111.html (China); see also Guöwüyuän bängöng ting guänyü jiä-qiäng he gulfän zhengfü хіпхї göngkäi qingkuäng töngji bäo söng göngzuö de töngzhi

[Notice of the General Office of the State Council on Strengthening and Standardizing Reporting Work for Statistics on the Open Government Information Situation], (State Council Issued 23 June 2014), 2014-07/04/content_8919.htm.

See Hangzhou shi zhengfü хіпхї göngkäi guiding (І/ІіЖШЙЙЖЙ'&ЗТШлМ) [Hangzhou Municipal Provisions on Open Government Information] (deliberated and approved by the 39th Executive Meeting of the Municipal People’s Government on 15 April 2004. effective 1 October 2004), http://hrss.hangzhou.; see also Hünän sheng shishl zhönghuä renmin göngheguö zhengfü хіпхї göngkäi tiäoli bänfä (ііИРЙ^ЙЙІ + ^ARJtillifrS) [Measures of Hunan Province to Implement the Regulations of the People’s Republic of China on Open Government Information] (Approved by the 40th Executive Meeting of the Municipal People’s Government on 27 October 2009, implemented 1 January 2010), www.huna See also Shäng-häi shi zhengfü хіпхї göngkäi zhinän (І’ЖЯїЙ/ЙІрМ^ТГІпЙ) [Shanghai Municipal Provisions on Open Government Information] (adopted 11 December 2019), 1495/index.html.

See Jamie P. Horsley, "Open Government Developments in China: Implications for US businesses,” Brookings Institute (1 July 2019), inions/open-government-developments-in-china-implications-for-us-businesses/.

See also Regulations of the People’s Republic of China on Open Government Information, see note 64 (revised 3 April 2019), 2019-04/15/content_5382991 .htm.

China’s Protocol of Accession. Part I (2)(C)(3).

See 2018 USTR Report, 167.



Ibid., 164.

Ibid., 166.


2018 USTR Report, 167.


See generally 2018 USTR Report.

Ibid., 164. '


2018 USTR Report, 165.



China's Protocol of Accession, Section 2 (C) 2.


2018 USTR Report, 165 166.


Ibid., 166.

2018 USTR Report, 166.



Ibid, 167.



2018 USTR Report, 167.


Ibid. For China's commitment to translate its laws and regulations see Report of the Working Party, para 334.

See 2018 USTR Report, 164 165.

Ibid. (There continues to be little data, as few U.S. or other foreign companies have had experience with these courts).

Ibid, 168.

Amanda Lee, “China still not doing enough to woo foreign investment, with local governments accused of harming progress,” South China Morning Post, 12 September 2019, -still-not-doing-enough-woo-fbreign-investment-local.

Ibid. As part of the attempt. China updated in 2019 the foreign investment law and made it illegal for local companies and governments to demand forced technology transfers as a condition of doing business.

See generally, Bernd Eberstein, “China's History in Chinese Dress: The Struggle between Confucianism and Legalism: Recent Developments in Chinese Historiography,” Oriens Extremus 24. no. '/г (1977): 145-166 (detailing and noting that discussions of the Confucianism-Legalism debate reflects the fundamental personal and political conflicts within the Chinese leadership).

See generally. John W. Head, “Opposing Legal Transparency in Dynastic China." Ostry, China and the WTO, 13.


See Henry S. Gao, “The WTO Transparency Obligations and China,” Journal of Comparative Law 12 (2018): 334.


See Jianfu Chen, Chinese Law: Context and Transformation: Revised and Expanded Edition, 210 (Leiden: Brill Nijhoff, 2015) (Chinese scholars generally trace the history of administrative law back to 1700 все. The Book of High Offices [Shangshu], was written in 1700-1200 все, outlining the system of administration at the time).

See Isabel Hilton, "Ancient Origins of President Xi's Harsh Brand of Justice in China,” Financial Times (16 August 2015); see also Chris Buckley, “Leader Taps into Chinese Classics in Seeking to Cement Power,” New York Times (11 October 2014). See Jianfu Chen, Chinese Law: Towards an Understanding of Chinese Law, its Natures, and Development (Leiden: Martinus Nijhoff Publishers, 1999), 7.

See The Analects of Confucius: A Philosophical Translation, translated and introduced by Roger T. Ames and Henry Rosemont Jr. (New York: Random House. 1998), 2:3.

Ibid, 9:3 (It is essential here to note that the concept of li is not a set of detailed rules that guide or instruct social customs or behaviour. As Chen succinctly put, li is not a set of rules universally applicable to all men but, rather varies according to one’s status in society and in the family. The famous example in the Analects is in 9:3 where Confucius answers a question about whether one should wear a silk or hemp ceremonial cap: "The Master said, ‘The use of a hemp cap is prescribed in the observance of ritual propriety (li). Nowadays, that a silk cap is used instead is a matter of frugality. I would follow accepted practice on this. A subject kowtowing on entering the hall is prescribed in the observance of ritual

The limits of transparency 153 propriety (//). Nowadays that one kowtows only after ascending the hall is a matter of hubris. Although it goes contrary to accepted practice, I still kowtow on entering the hall.’”).

See generally "Qin Dynasty,” Encyclopaedia Britannica, ic/Qin-dynasty (20 November 2019).

See Roger T. Ames, "Han Feizi,” Encyclopaedia Britannica, www.britannica. com/biography/Han-Feizi (24 February 2014).

See Shang Yang et al. The Book of Lord Shang, translated and introduced by J. J. L. Duyvendak (London: Arthur Probsthain. 1928), 23:2: (“the people follow after benefit as water flows downward”; both Shang and Han Fei believed that rulers could utilize this human trait as an advantage to governance).

See Han Feizi 49:443 in Han Feizi: Basic Writings, edited by Burton Watson (New York: Columbia University Press. 2003) doi:10.7312/watsl2968 (Han Fei describing the changes of human behaviour and consequently societal behaviour as a whole when there are differences in the population resource ratio. Shang Yang, another legalist, summarised Han Fei’s intentions in the passages as "When the affairs of the world change, one should implement a different Way. ... Therefore, it is said: ‘When the people are ignorant, one can become monarch through knowledge; when the generation is knowledgeable, one can become monarch through force.’”).

See generally, Qin Dynasty.

See generally. Tung-Tsu Chu, Law and Society in Traditional China (The Hague: Mouton Press, 1969). As Qu Tongzi (Tung-Tsu Chu) once described, the Han Code was a "Confucianization of law”; for example, the code provided that violations of a subordinate against their superior should be punished more severely than the converse.

See Chen, Chinese Law: Context and Transformation, 212; see also Chen. Chinese Law: Towards an Understanding of Chinese Law, 36-7. (Between 1937 and 1949, some 3.000 administrative rules and regulations were issued, but these were mainly concerned with implementing Party policies, following the legalist tradition of centralizing government power through regulations and law. Even during the founding of the PRC, the “Common Program”, which established a new judicial system, was geared to confronting social order problems, including the remnant KMT troops and “remnant crimes prevalent from old society,” by consolidating power and control through political campaigns. Thus, while the 1954 Constitution provided that “citizens of the People’s Republic of China have the right to bring complaints against any person working in organs of state for transgression of law or neglect of duty, by making a written or verbal statement to any organ or state at any level,” it was not until the post-Mao China under Deng Xiaoping's reformist leadership that the separation of administration and the judiciary were truly considered and administrative law started to look at providing checks and balances for the administration).

See generally. William P. Alford, "Chinese Law,” Encyclopaedia Britannica, available at: (22 October 2014).


Jamie P. Horsely, “Party Leadership and Rule of Law in the Xi Jinping Era: What Does an Ascendant Chinese Communist Party Mean for China’s Legal development?” Brookings Institute Report (September 2019).

Isabel Hilton, “Ancient Origins of President Xi’s Harsh Brand of Justice in China,” Financial Times (16 August 2015); available at 1 ba05c-4295-11 e5-b98b-87c7270955cf.

Ibid.; see also Buckley, "Leader Taps into Chinese Classics in Seeking to Cement Power.”

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