1. Introduction
At the forefront of modern international trade dynamics rests a crucial, albeit frequently overlooked, mechanism: domestic trade barrier procedures. Originally established to facilitate market access through well-defined domestic rules,Footnote 1 the significance and application of domestic trade barrier procedures have not only dramatically changed over the past decade but are now on the rise. The United States (US) has established a precedent with its strategic use of Section 301 to confront alleged unfair trade practices, marking a clear departure from previous practices.Footnote 2 Simultaneously, the European Union (EU) issued special Anti-Coercion Regulation, earmarked to tackle trade barriers with coercive intents.Footnote 3 China's recent probes into Taiwan's trade restrictions and the EU's Foreign Subsidies Regulation further exemplify this accelerated evolution towards more assertive national trade policies.Footnote 4 It is noticeable that trade barriers are increasingly politicized and weaponized; so are trade barrier investigations. The escalation towards unilateralism,Footnote 5 observed across various countries, is underpinned by the stalemate faced by WTO's Appellate Body.Footnote 6 Together, these developments challenge the foundational purpose of established multilateral trade mechanisms in ensuring market access, highlighting the need for a re-evaluation of domestic trade barrier arsenals.
In this context, this article examines domestic trade barrier procedures through qualitative and comparative analysis, aiming to clarify and recalibrate their role in addressing harmful trade practices. The analysis uncovers how domestic trade barrier procedures have transitioned from their initial objectives of enhancing market access and bridging private complaints to acting as instruments of unilateralism and strategic leverage. The discussion further points to the possible reform trajectories for these procedures with a view to increasing their effectiveness and relevance in addressing trade barriers in the current geopolitical climate. The article posits that, if executed properly, domestic trade barrier procedures may serve as a buffer mechanism vis-a-vis the tectonic shifts in economic order.
This article concentrates on three pivotal jurisdictions − the EU, the US, and China − whose unilateral actions significantly affect the international trading system.Footnote 7 The specific mechanisms under scrutiny here are Section 301 in the US,Footnote 8 the Trade Barrier Regulations (referred to as ‘TBR’) in the European Union,Footnote 9 and the rules of the foreign Trade Barrier Investigations (referred to as ‘TBI’) in China.Footnote 10 While these mechanisms bear distinct names, historical backgrounds, and particularities, they share a two-fold function regarding market access. Firstly, these mechanisms lay the statutory grounds for domestic investigations, potentially leading to the initiation of WTO cases or other responsive actions against harmful trade practices. Secondly, they create a platform for private petitions and formal channels for private–public communication and collaboration when confronting trade obstacles.Footnote 11 Ideally, the institutionalization of this dual function could foster a legalistic approach to addressing harmful trade practices and advancing rules-based fair-trade.
The article first demonstrates an emerging trend in the deployment of trade barrier procedures, showing that in the US, the EU, and China, these mechanisms have been increasingly used as strategic tools rather than as mechanisms for systematically addressing market access hindrances. The article coins this gradual shift as a ‘normative realignment’, which emerged as both a cause and a consequence of waning commitment to multilateralism.Footnote 12 The article then sets forth the operational paradigm of trade barrier procedures in addressing trade grievances, and on this basis, suggests that the role of trade barrier mechanisms must be re-evaluated and aligned with the recent developments. The article proposes several aspects where changes could be made.
The remainder of this paper is organized as follows. Section 2 outlines the history, objectives, and functions of domestic trade barrier procedures in three key jurisdictions: the US, the EU, and China. Section 3 evaluates the performance of domestic trade barrier procedures, addressing questions related to private actors' initiation of formal complaint proceedings, official investigations initiated in response to private requests, and the correlation between domestic trade barrier procedures and retaliation. Section 4 positions domestic trade barrier procedures within the broader context of power politics and provides a comprehensive overview of their limitations. Section 5 offers insights into the future of domestic trade barrier procedures and reform orientations. From the halls of multilateralism to the corridors of unilateral action, the journey of trade barrier procedures narrates a tale of strategic evolution and diplomatic pivots.
2. An Overview of Trade Barrier Mechanisms
This section outlines the history, objectives, and mechanics of domestic trade barrier investigation procedures.Footnote 13 The description focuses on the evolvement of domestic trade barrier procedures, their scope, rights of private applicants, discretionary power of government authorities under the procedures, and responsive actions following the investigations. The section emphasizes that the original purpose of domestic trade barrier procedures was to link private complaints and dispute resolution in order to combat detrimental trade practices by foreign states.
2.1 Historical Foundations and Objectives of Trade Barrier Procedures
The trade barrier procedures discussed in this article are a body of domestic legislation that instructs states to detect and respond to foreign unfair trade praxis. One of the earliest examples of domestic trade barrier procedures is US Section 301, initially established as a self-help tool to supplement the GATT's weak dispute resolution and enforcement system.Footnote 14 Section 301 is a legal provision that allows the US to retaliate foreign countries that break trade agreements with the US or participate in actions that are considered unjustified or unreasonable and negatively impact US commerce. Footnote 15 Therefore, Section 301 could be used not only in the case when US’ rights under trade agreements are afflicted but also any other trade practices that it deems unfair arise.
Foreign harmful acts are widely defined under Section 301. Apart from regular trade in goods, the US Congress expanded the purview of Section 301 several times to include various subject matters, including services and investment, intellectual property rights (IPR) protection, competition law enforcement, and labour practices.Footnote 16 As a result, Section 301 is said to cover ‘virtually any trade practice the USTR [United States Trade Representative] wishes to attack’.Footnote 17
The effectiveness of Section 301 in gaining market access is evident in its provenance.Footnote 18 From 1974 to 1985, the US predominantly utilized the mechanism to deal with any GATT non-compliance acts committed by its trading partners, thereby maintaining its position as a leading trading nation.Footnote 19 This focus is reflected in the profile of early Section 301 investigations, which were primarily directed at emerging economies or economic rivals to the US, such as the EU, Canada, Japan, and South Korea. Section 301 was therefore perceived as a major culprit of trade relations with the US by its trading partners,Footnote 20 eventually leading to the hallmark Section 301 case in 1998.Footnote 21 To be clear, although the WTO does not prohibit Member States from investigating alleged trade barriers unilaterally, it constrains unauthorized retaliation. Hence, while the Section 301 panel did not declare Section 301 as such as an outlaw, it considered the statute as a ‘prima facie’ violation of WTO obligations. Footnote 22 Subsequently, this ruling has curtailed the possibility of using Section 301 to attain rights under the WTO.Footnote 23 As will be demonstrated in this article, Section 301 has since then been gradually transformed from a major unilateral tool for economic reprisal to a procedural arrangement that links private complaints and dispute resolution.
The adoption of Section 301 ruling has also affected the drafting of the subsequent trade barrier investigation procedures in other jurisdictions. Both the EU's TBR and China's TBI were inspired by Section 301.Footnote 24 Yet, they are not intended to be used in the same way as Section 301 initially. The EU's own TBR, which has replaced its forerunner, New Instrument of Commercial Policy,Footnote 25 came about in 1994 as part of the Uruguay Round implementation package.Footnote 26 However, unlike the early Section 301, the TBR was in the beginning expected to serve as a procedural means for private actors to request the Commission to lead their claims to dispute settlement.Footnote 27 This is evidenced by the fact that the procedure can only be triggered by complaints.Footnote 28 The legal basis for the TBR, Regulation 3286/94, was amended five times, with the most recent amendments taking effect in 2015.Footnote 29 A wide sweep of economic activities, including trade in goods, trade in services, and IPR issues, fall within the ambit of the TBR.Footnote 30 Yet, it is worth noting that, different from Section 301, the TBR was designed merely to assist the EU in pursuing international law-based rights.Footnote 31 Consequently, the TBR does not cover ‘unfair’ trade practices beyond bilateral and international accords to which the EU is a party. Overall, trade obstacles should meet three criteria to be considered actionable under the aegis of TBR: (1) they should be State act stricto sensu, as opposed to private restrictive business practices;Footnote 32 (2) with regard to the alleged obstacles there should be the international trade rules ‘establish a right of action’, including both outright prohibition and WTO non-violation claims;Footnote 33 and (3) the challenged obstacles should result either in injury on the EU market or have adverse trade effects on third-country markets.Footnote 34
In China, the adoption of TBI was driven by the Chinese government's concerns about mounting trade remedy measures against Chinese exports.Footnote 35 Provisional rules on TBI were promulgated in 2002, followed by the adoption of official rules in 2005.Footnote 36 Pursuant to Article 1 of the TBI, the rules were enacted ‘in order to conduct and standardize the investigation of foreign trade barriers, eliminate the impact of foreign trade barriers on [China]'s foreign trade, and promote the normal development of foreign trade’.Footnote 37 In addition, Foreign Trade Law of the People's Republic of China (hereinafter, ‘Foreign Trade Law’), which is a mainstay of Chinese foreign trade legislation, designates the Ministry of Commerce of the People's Republic of China (MOFCOM) as the responsible authority for addressing foreign trade matters nationwide. As noted, the intended objectives of TBI mirror those of the TBR but feature a less important role for private engagement in the procedure. The Chinese government conceived of the TBI as a mechanism ‘for notification and rapid reaction on foreign trade barriers … ’. Footnote 38 The term ‘foreign trade’ encompasses the import and export of goods, technology, and international trade of services, as well as foreign-trade-related IPR.Footnote 39 As the rules and procedures of TBI were largely modelled after the EU's TBR, the three criteria in identifying trade barriers were borrowed from the TBR mutatis mutandis.
To sum up, although the three procedures were enacted for differing purposes, they eventually converge in the key functionality. In both the EU and China, trade barrier procedures were intended as a procedural means to link private grievances to an international solution. Although Section 301 predates the WTO dispute settlement mechanism and came about as a unilateral self-help tool, it has also been converted into a similar procedural tool.
2.2 Operational Dynamics and Strategic Implications of Trade Barrier Mechanisms
This section provides an overview of the administration of domestic trade barrier procedures in the three jurisdictions and their various procedural phases. To fulfil their objectives of addressing and responding to trade barriers, these mechanisms encompass three major phases: initiation, investigation, and retaliation.Footnote 40
The initiation of trade barrier investigations is largely dependent on private complaints. In the EU, only complaints from private actors and the Member States can trigger the TBR procedure.Footnote 41 To serve its purpose of bridging private entities and government, all the trade barrier procedures were crafted to be highly accessible for private actors. This accessibility is underscored, inter alia, by the inclusivity of the applicants that the mechanisms accommodate. Section 301, for instance, permits ‘any interested person’ to hand in a petition.Footnote 42 According to TBI, eligible complaints are the ‘enterprises or industries that are directly related to the production of products or supply of services involved in the alleged trade barriers’, and natural persons, legal persons, or organizations representing them.Footnote 43 Furthermore, all these mechanisms establish well-defined procedures and set relatively low threshold requirements to encourage the private sector to submit petitions. For example, Section 301 does not explicitly include the requirements for filling a petition. While both the EU and China outline three key criteria that should be met with prima facie evidence, they have attempted to relax their rules.Footnote 44 More importantly, all three mechanisms specify reasonable and predictable time limits for executive authorities with limited potential for extensions.Footnote 45 Overall, on paper, the mechanisms offer private applicants an advantageous array of procedural and transparency guarantees, time limits, and decision-making machinery for submitting their grievances.
Putting aside these procedural safeguards, it is also true to say that the authorities retain broad margins of discretion in the process of official interrogations. In the US, although Section 301 highlights certain matters under which the USTR is bound to take action, it does not expressly create any obligation for the USTR to investigate.Footnote 46 The USTR is virtually entitled to open, suspend, and terminate any investigatory proceedings.Footnote 47 Even in mandatory cases, the USTR has sufficient latitude for the initiation and outcome of an investigation.Footnote 48 In addition, they are permitted to self-initiate investigations in the absence of private complaints.Footnote 49 Similarly, if the MOFCOM determines that a petition is well founded, it might consider launching an investigation; alternatively, it could start an investigation on its own initiative.Footnote 50 In the EU, while the Commission is not endowed with an equivalent self-initiation power, the TBR follows a ‘top-down’ approach, where authorities actively engage with private actors and can choose to reject petitions if they consider the evidence insufficient in the Union's interest.Footnote 51 To restrain administrative discretion, a judicial review of trade barrier investigations under the mechanisms is in theory possible in the US and the EU.Footnote 52 However, as noted, only the TBR grants private actors substantive rights to compel the authorities to act.Footnote 53
Once the procedures proceed to the official examination phase, authorities possess various investigation methods, such as hearings, onsite inspection, questionnaires, and expert and public consultations. The foreign country concerned and the petitioner shall be engaged with.Footnote 54 Further, both TBR and TBI explicitly empowered the executives to decide on the suspension and termination of an investigation during the course of the examination.Footnote 55
At the close of the investigation, the authorities should make determinations regarding the ensuing actions. Potential paths include WTO procedures and other forms of retaliation without prejudice to international obligations. For instance, Section 301 prescribes four grounds for the USTR to bring a WTO complaint or otherwise respond (and possibly retaliate) to a foreign country's practice of restricting US exports. Two of the grounds formally trigger the aforementioned ‘mandatory cases’: where there is a violation of any ‘trade agreement’ or the violation of any ‘international legal rights of the United States’.Footnote 56 Actions that the USTR may take include: (1) suspension of trade agreement concessions, (2) imposing duties or other import restrictions, (3) imposing fees or restrictions on services, (4) entering into agreements with the subject country to eliminate the offending practice or to provide compensatory benefits for the US; and/or (5) restricting service sector authorizations.Footnote 57 In the EU, the Commission's assessment of private complaints leads to three categories of outcome. Insofar as a complaint is deemed unjustified, it is rejected.Footnote 58 However, if the investigation leads to a finding of a trade obstacle, the EU should engage in dialogue with the implicated third country. Successful negotiations leading to satisfactory unilateral undertakings by a third country can result in the suspension or termination of the TBR procedure.Footnote 59 Conversely, if the third country fails to make adequate reparations,Footnote 60 the EU is poised to escalate measures.Footnote 61 These escalations include initiating international consultations or dispute settlement procedures, reaching agreements with the third countries involved, and implementing commercial policy measures as necessary. Parallel to the EU's approach, China's MOFCOM also responds to identified trade barriers under TBI Rules through various measures tailored to specific circumstances. Options at MOFCOM's disposal include engaging in bilateral consultations, invoking multilateral dispute settlement mechanisms, or resorting to other suitable measures. Overall, the implementation and retaliation tools of trade barrier mechanisms underscore an incremental approach to managing trade disputes, allowing for flexibility in response to international trade barriers, while aiming to uphold free trade practices and protect domestic interests.Footnote 62
The aforementioned procedural and substantive design of trade barrier regulations seems compatible with their purpose. First, the procedures span a broad coverage of subject matter, rendering them capable of accommodating varying trade concerns. Second, domestic trade barrier procedures offer a highly accessible channel for private parties to petition the government, despite the executives’ discretionary powers. Third, domestic trade barrier procedures offer various remedial and retaliatory measures, including WTO litigation. Ideally, the breadth and legalistic design of domestic trade barrier procedures should appeal to private actors, and monitoring protectionist trade policies should lead to claims at the WTO. The next section employs qualitative studies to verify these assumptions.
3. The Realities Behind the Ideal in Trade Barrier Investigations
In the light of a baseline understanding of their intended functions, the analysis progresses through a structured inquiry into three key areas: the frequency of states employing unilateral trade barrier procedures against unfair trade practices, the prevalence of formal complaints by private entities along with the discretionary power authorities in response, and the relationship between domestic trade barriers procudures and WTO litigations. The analysis leads us to discern a significant shift in the intended functions. It demonstrates a tangible and quantifiable move away from their original objectives, highlighting a transition in the deployment of trade barrier procedures towards unilateralism.
3.1 Strategic Realignment in Trade Barrier Investigations: An Analytical Overview
The first question investigates the frequency with which states use unilateral trade barrier procedures in response to unfair trade practices. An historical review of such investigations reveals distinct peaks within different jurisdictions (Figure 1). However, a similar tendency is discernible, signifying an inclination towards a normative alignment.
Figure 1. Comparative Trajectory of Trade Barrier Investigations in the US, EU, and China (1974–2023)
Source: Elaborated by the authors from various public sources.
3.1.1 Shifts in US Trade Policy: From Multilateralism to Unilateral Measures
As of 2024, more than 130 Section 301 investigations have been carried out. The prime period of Section 301 coincided with the 1980s and the 1990s, during which approximately 90 investigations were conducted.Footnote 63 However, after the establishment of the WTO in 1995, the number of Section 301 investigations declined drastically, with only 35 taking place.Footnote 64 Notably, investigations since 2000 have become increasingly rare. Prior to the Trump Administration, the most recent Section 301 investigation transpired in 2013 without sanctions.Footnote 65 The last investigation leading to tariffs, before the Trump administration's tenure, took place in 2009, focusing on Canada's compliance with the 2006 US–Canada Softwood Lumber Agreement. However, resurgence in the Section 301 investigations occurred in 2017, with most being self-initiated by the USTR. It is also noteworthy that two new investigations were opened during the Biden Administration, signifying a continued interest in the use of unilateral trade barrier procedures.
Table 1 provides a list of Section 301 investigations that the US government has carried out in a variety of nations as well as the WTO procedures that have followed those investigations. The table demonstrates that the US has undertaken a variety of investigations into other nations, the majority of which have focused on concerns relating to commerce and intellectual property. The results of these investigations were diverse, with some leading to WTO procedures or talks and others leading to unilateral penalties or bilateral agreements.
Table 1. Outcomes of Section 301 investigations and their international repercussions (1999–2024)
Source: Elaborated by the authors from various public sources.
Given this exploration of the changing landscape of Section 301 investigations, it becomes apparent that the US' approach to trade barrier investigations has undergone a significant transformation, marked by two distinct phases of normative realignment. The first significant shift occurred after the WTO was established in 1995. Before this period, the 1980s and the 1990s represented the prime period for Section 301, when Section 301 was employed as self-help tool as set forth in section 2. However, following the establishment of the WTO, there was a notable decline in the number of Section 301 investigations. This reduction signals a normative alignment towards a multilateral approach to resolving trade disputes, in congruence with the global trade norms and dispute resolution mechanisms instituted by the WTO. However, the narrative took a pivotal turn with the resurgence of Section 301 investigations under the Trump administration from 2017 onwards, which has been widely acknowledged as signalling a strategic recalibration towards unilateralism.Footnote 66 This demonstrates a significant shift in the US' recent perception of trade barrier resolution.
3.1.2 EU's Evolving Trade Defense: Reassessing the Trade Barriers Regulation
The normative realignment in the EU's use of trade barrier procedure is characterized by a phase of underutilization, followed by strategic reengagement with a rising amount of piecemeal trade barrier instruments. First of all, a parallel trend is observed in the EU's application of TBR, which exhibits glaring similarity to Section 301. As listed in Table 2, the European Commission initiated approximately 30 investigations under the TBR from 1995 to 2022.Footnote 67 This figure is strikingly smaller compared to the multitude of market access barriers encountered by the EU, with 2021 alone recording 455 active trade and investment barriers in 65 third countries.Footnote 68 Only one of these barriers progressed to a TBR investigation. Another observable shift occurs in the pattern of TBR investigations from 2009 to 2020, where marginalization of TBR investigations was notable, with the majority occurring before 2008 and only a handful initiated after 2010.Footnote 69 This number indicates a relative disengagement from the TBR mechanism in addressing trade disputes, potentially reflecting a reliance on alternative dispute resolution mechanisms or strategic recalibration within the EU's trade policy framework. However, from 2020 onwards, the EU renewed its interest in this instrument, launching two separate enquiries.Footnote 70 The revival of TBR is an outgrowth of the EU's strategic reassessment of its toolkit in addressing trade barriers amid evolving global trade dynamics.Footnote 71 Along these lines, the EU has also adopted other measures directed at politicized trade barriers, including a Public Procurement Instrument, passed in 2022, and Anti-Coercion Regulation, passed in 2023. Their distinct names and objectives notwithstanding, these measures similarly aim to respond to unfair trade practices and the weaponization of trade obstacles.
Table 2. Trade grievances and WTO dispute proceedings: a spectrum of TBR complaints
Source: Elaborated by the authors from various public sources.
3.1.3 China's Tactical Use of Trade Barrier Investigations: Economic Strategies and Geopolitical Considerations
Despite China's active role in trade defense measures globally, TBI has been sparingly utilized, with only three investigations completed and one ongoing. The first TBI investigation was initiated in 2004, filed by the Jiangsu Laver Association and focusing on Japanese import quotas for laver (seaweed).Footnote 72 Eight years later, the second investigation addressed US’ measures related to subsidies for the renewable energy sector. This petition was filed by the China Chamber of Commerce for Imports and Exports of Machinery and Electronic Products and the China New Energy Chamber of Commerce of the All-China Federation of Industry and Commerce.Footnote 73 The third TBI investigation, which was launched by MOFCOM on 13 April 2023 and concluded on January 2024, centres on Taiwan's restrictive trade measures targeting Chinese products.Footnote 74 The investigation was triggered at the request of three Chinese trade groups, encompassing the treatment of 2,455 Chinese products.Footnote 75 Many of the targeted trade restrictions stem from Taiwan's longstanding non-compliance with WTO rules and the Cross-Strait Economic Cooperation Framework Agreement (ECFA) between China and Taiwan.Footnote 76 However, China had for long turned a blind eye to these trade barriers.Footnote 77 The MOFCOM initially aimed to conclude the investigation by October 2023 but extended the deadline to 12 January 2024, the day before the next presidential election in Taiwan.Footnote 78 Hence, given its timing and context of cross-strait relations, this investigation subtly indicates a blend of economic and political considerations, shaping the deployment of the TBI mechanism.
More recently, upon receiving complaints again from China Chamber of Commerce for Import and Export of Machinery and Electronic Products, the MOFCOM initiated another prominent trade barrier investigation, targeting the EU's foreign subsidies regulation.Footnote 79
The infrequent use of TBI, juxtaposed against the backdrop of China's broader engagement in trade defense,Footnote 80 signals a strategy towards utilizing TBI for matters of considerable economic or strategic significance. Therefore, normative realignment in China's application of domestic trade barrier procedures is characterized by a strategic and selective approach. This approach underlines the integration of economic objectives with broader geopolitical considerations, marking a cautious, yet significant, shift in China's leverage of trade barrier investigations within its trade policy arsenal.
The analysis portrays domestic trade barrier procedures as an infrequently used tool in trade policy instruments. However, all three jurisdictions demonstrate a normative realignment of their domestic trade barrier procedures over time, reflecting a broader trend towards leveraging these mechanisms for strategic interests within the global trade context. Looking closer at the concluded investigations, the following subsection examines the influence of private sector initiation on the limited use of these procedures, as well as its role in the observed procedural realignment.
3.2 Corporate Inertia and the Underutilization of Trade Barrier Procedures
Understanding the private sector's participation in trade barrier procedures is crucial because it highlights the gap between legal mechanisms and their practical utilization by businesses, revealing the status quo of the system. This insight is key to reforming and optimizing trade policies to better serve the dynamic needs of the global trading environment.
To start with, Section 301 mandates that all petitions be published in the Federal Register.Footnote 81 An examination of the registry data reveals a significant decline in private petitions, with a shift towards government self-initiated cases. Historically, from Presidents Ford to Clinton, there was a higher incidence of private petitions, reaching their peak during Ronald Reagan's tenure with 39 petitions.Footnote 82 However, this trend was reversed by George W. Bush's presidency, with a noticeable absence of private petitions and a rise in government-initiated investigations from then onwards.Footnote 83 This shift underscores the transition from private to government-led enquiries under Section 301. The latest petition recorded was in October 2022,Footnote 84 further emphasizing the ongoing gap in private initiation of Section 301 investigations.
Considering permissible administrative discretion, the subsequent logical enquiry is whether the absence of the petition results from the USTR's official, formal objections. Upon closer inspection, the USTR has rarely refused to investigate formally and this happened only under specific circumstances. In the past investigations, the USTR might object to an official investigation if the company filing the complaint had no standing in the petition filed. This occurred in 2011, when the USTR received a complaint against certain measures adopted by the Dominican Republic.Footnote 85 The USTR dismissed these petitions because the petitioner lacked standing on their claims. The second situation occurs when the petitioner fails to provide sufficient evidence to support their claims. In 2011, the USTR received a complaint against Germany. However, the USTR decided not to initiate any action since the petition did not include sufficient information on the burdens or restrictions on US commerce arising from the alleged requirements for access to the German bar aptitude examination. The third and last reason is that the petitioner was correct in providing sufficient evidence and standing, but the USTR refrained from taking action since it was addressing the issue through other means. For instance, in 2004, the USTR received a few petitions seeking inquiry into certain unreasonable labour practices and policies in China.Footnote 86 However, the USTR decided not to initiate any investigation. The reason cited was that the US was already involved in ongoing efforts to address currency valuation issues with China.Footnote 87 However, these precedents do not mean that the lack of petition has nothing to do with the exercising of discretion of the USTR. How informal determination affects domestic petition will be further explored in Section 4.1.
In both the EU and China, the initiation of the mechanisms is more reliant on private complaints. In the EU, most of these investigations were based on complaints lodged by EU business enterprises. An earlier comprehensive assessment of the TBR revealed that approximately half of the complaints eventually led to EU investigations.Footnote 88 This underscores the fact that official private complaints are outnumbered by the actual trade barriers that European companies encounter.
A similar scenario has been observed in the case of TBI in China. Similar to Section 301 and the TBR, the underuse of TBI is largely attributed to the unwillingness of private parties to submit complaints. According to observers, the authority received only two meagre enquiries from the private sector over a six-year period following the Japan–Laver case, none of which resulted in the submission of a formal complaint. It is also noteworthy that the industry associations involved in the Taiwan and Foreign Subsidy Regulation investigations have extensive political ties with the Chinese government and thus are hardly ‘private’. Moreover, since 2005, the role of TBI as a government–private communicative forum has been replaced by an informal scheme called the ‘Quadrilateral Coordination Mechanism’ (si ti lian dong) (QCM).Footnote 89 The primary legal basis for the QCM is the Regulations on Responding to Anti-dumping Cases against Exports as opposed to TBI.Footnote 90 The QCM does not entail formal petitions or investigations.
3.3 Evaluating the Outcome: The Forms of Responses to Trade Barriers
As outlined in section 2, trade barrier procedures can result in various responsive measures, one of which is the initiation of WTO proceedings. Therefore, evaluating the correlation between domestic trade barrier procedures and subsequent WTO litigations reveals states’ perception of the relations between the mechanism and rules-based multilateralism.
The data show that across the US, the EU, and China, there is no consistent direct link between the initiation of trade barrier investigations and the pursuit of WTO disputes. This is evidenced by the limited number of investigations that have progressed to WTO litigation across these jurisdictions.
Of the 35 Section 301 investigations initiated after 1994, only three were WTO dispute proceedings. Importantly, most of the claims that the US brought to the WTO did not stem from prior formal Section 301 investigations.Footnote 91 In the period from 1994 to the present, the US filed more than 70 cases at the WTO, with only three being preceded by a Section 301 investigation. Nonetheless, it is worth noting that the US frequently initiated WTO claims concurrent with the publication of Section 301 and Special 301 annual reports.Footnote 92 These cases typically followed the release of information from these reports. Moreover, despite Section 301's explicit authorization of unilateral measures, the period from the creation of the DSU to the Trump Administration witnessed a rare utilization of Section 301 for imposing unilateral sanctions.Footnote 93 Even before 1994, only 15 out of 119 (approximately 12%) Section 301 investigations ultimately resulted in actual trade sanctions.Footnote 94
In the EU, the TBR procedures demonstrate a closer link to WTO proceedings. Approximately half of all investigations conducted under the TBR advanced to the WTO dispute settlement system (Table 2). A considerable number of these cases halted at the consultation stage, with only five leading to the establishment of a WTO Panel. In terms of dispute resolution, a significant portion of TBR investigations were resolved through negotiation.Footnote 95 Intriguingly, since 1994, a substantial proportion of WTO disputes involving the EU, whether as a complainant or defendant, have bypassed TBR proceedings. Of the 39 trade barriers that the EU claimed to have resolved in 2021,Footnote 96 only two were subjected to TBR investigations and yielded reports. This is in stark contrast to the EU's extensive utilization of the WTO's dispute-resolution mechanism. From 1995 to 2021, more than 600 formal dispute settlement procedures were adjudicated through the WTO, with the EU participating as either a complainant or a defendant in approximately one-third of them.Footnote 97 At present, the EU appears to perceive TBR as a measure of last resort to address trade barriers.Footnote 98 In its 2022 implementation report on trade agreements, where the European Commission listed available instruments and fora to address trade barriers, dispute settlement at the WTO and investigations under the TBR are listed in tandem as final options to address unfair trade.Footnote 99 This juxtaposition of the TBR and the WTO dispute settlement mechanism indicates the EU’ perception of the former as an alternative to the latter.
In China, of the three closed investigations, only the US – Renewable Energy Subsidy investigation led to WTO litigation,Footnote 100 while the Japan Laver investigation was resolved through bilateral negotiations and the Taiwan investigations was concluded without further retaliation thus far.Footnote 101
The data and the broader legal context reveal that the link between investigations under domestic trade barrier procedures and WTO litigation is driven by strategic considerations. The bulk of trade barrier investigations do not lead to WTO litigation; and the decision to escalate disputes to the WTO hinges on various factors, not just the outcomes of the investigations. Furthermore, it is also clear that trade barrier procedures are not a purely unilateral, retaliatory tool. The vast majority of trade barrier investigations lead to negotiation and consultation rather than substantive retaliation. The shift towards domestic trade barrier procedures therefore underscores a normative realignment in handling trade disputes, favouring unilateral actions and non-institutionalized bilateral engagements over direct litigation.
To recapitulate, three key insights emerge from the findings of this section. Firstly, the resurgence of such mechanisms indicates a strategic reconsideration of unilateral trade barrier tools geared towards unilateralism and bilateralism. Secondly, the scant initiation of formal investigations reflects a reluctance among private entities to engage in these procedures, highlighting a disconnect between the initial design of the mechanisms and their actual utility. Lastly, the relationship between the use of trade barrier procedures and WTO cases illuminates a growing preference for unilateral interventions over multilateral dispute resolution mechanisms. Collectively, these observations reveal that while domestic trade barrier procedures were envisioned as tools for linking private complaints and multilateral dispute resolution, a notable realignment towards unilateralism and a redefinition of their operational ethos are evident, signalling a critical re-evaluation of their role and effectiveness in contemporary international trade architecture. Having laid down the tendency for normative realignment, in the next section we explore the potential of domestic trade barrier procedures in solving trade disputes in the absence of a multilateral framework.
4. A Rules-based Domestic Approach: Unpacking Trade Barrier Procedures
Section 3 has highlighted a normative realignment of domestic trade barrier procedures. This observation necessitates a shift in analytical focus: moving from questioning the efficacy of private–public partnerships in advancing market access, the enquiry pivots towards understanding potential in addressing harmful trade practice within the current geopolitical context.
In this section, an examination of the reasons behind the limited use of formal trade barrier procedures reveals a complex interplay of formalistic, legalistic, and political dimensions that curtail their effectiveness. The following analysis seeks to understand the power dynamics in the operation of domestic trade barrier procedures and questions the underlying assumptions of their dominant legal and economic theories. The section sheds light on the limitations of the current frameworks while setting the stage for contemplating the future of domestic trade barrier procedures.
4.1 Inhibitors to Action: Dissecting Reluctance in the Private Sphere
Insights from section 3 suggest that the underutilization of formal trade barrier procedures can, by and large, be attributed to private parties’ reluctance to engage with these mechanisms.Footnote 102 However, in some jurisdictions, such as the US and China, authorities are accorded with ex officio power to launch a procedure and can play an active role. Therefore, to understand the underuse of trade barrier procedures, it is imperative to pin down the domestic power dynamics underneath trade barrier investigations and resolution.
To start with, it is a common knowledge that in practice trade agencies are often under-resourced. Trade barrier investigations, however, are a highly resource- and time-consuming procedural means constrained by time limits. This resource incompatibility invariably dissuades authorities from using frequently trade barrier procedures. As observed, although Section 301 contains an ‘investigation’ process, ‘neither the USTR nor any other government agency in fact conducts – or has the resources to conduct – any meaningful investigation’.Footnote 103 In contrast, if government agencies pursue informal complaints, they are not saddled by timelines and can avail themselves of more flexibility.
For private actors, filing petitions does not address any trade nuisance. Instead, of interest to petitioners is whether or not the government would take necessary measures against these market access barriers. Traditionally, solving a market access barrier for private complaints is more about persuasion and pressure lobbying than idly waiting for a formal decision from government officials.Footnote 104 In this way, businesses procure a voice in formulating a policy issue while governments obtain information and political support.Footnote 105 These informal paths also offer a handy black box for firms or industry representatives to exert pressure on politicians and, consequently, capture trade policymaking agendas.Footnote 106 This means that companies can communicate and coordinate with trade agencies before formally filing a petition. Also, if an agency considers a formal investigation undesirable or that there exist better-off alternatives and communicates its preliminary decision informally to private parties, the private actors involved are unlikely to push for a formal investigation.
Of course, this interaction varies depending on a country's political culture. In China, for instance, one of the reported causes for the inadequacy of TBI is the absence of a direct link between private enterprises and government authorities. Consequently, private companies are unaccustomed to seeking official aid when confronted with trade obstacles. In the EU, although the Commission is generally open and accessible, European industries are not as proactively and broadly engaged in trade policymaking as US industries.Footnote 107 According to studies, the TBR procedure can be avoided in cases where there is a close relationship between the governments of the Member States and the company and it is evident that the foreign state has violated its commitments under the treaty.Footnote 108 Hence, in a country where private–public connections are underdeveloped, neither formal nor informal channels are demonstrably more effective. Overall, enhanced transparency and procedural guarantees in administrative proceedings might, to an extent, help countries with unstable state structures to convince business representatives to invest time and resources.Footnote 109 However, whether businesses would do so ultimately hinges on the government's credibility and ability in problem-solving.
Another prevailing concern for private actors is the level of transparency adjacent to the domestic trade barrier procedures.Footnote 110 Businesses in Europe have reported that the TBR is a burdensome mechanism that requires the transmission of sensitive information to the DG Trade and the opening of the door to open-ended requests for more data.Footnote 111 Unlike trade defense measures, the main focus of trade barrier procedures is trade hindrances in foreign country markets. When operating in a foreign country, companies depend on close and amicable ties with local governments. Such dependence results in the inclination of businesses to eschew a high-profile presence against foreign governments. For this reason, informal complaints are advantageous in terms of guaranteeing anonymity for individual companies.
In a nutshell, the initiation of a trade barrier investigation is by no means dependent on private petitions, and viewing it as a burdensome procedural tool, trade agencies are unlikely to engage with this mechanism frequently. After all, if a trade barrier is in outright violation of WTO law, it can be directly referred to the WTO without an interim, official investigation at the national level.
4.2 A Sweeping Tool for Power Politics
However, it is clear that in some instances, trade agencies indeed look upon trade barrier procedures as a plausible and effective avenue to solve trade barriers. This subsection attempts to explain when this happens.
Based on the analysis above, similar to WTO adjudication, the inauguration of trade barrier procedures has the effect of inducing compliance without resulting in unilateral sanctions. Arguably, the process of determining violations in a legal proceeding potentially raises compliance pressure. Therefore, the commencement of investigation procedures is often sufficient to draw attention from the targeting state or sometimes from the international community. In the past, Section 301 solved more trade barriers through a deterring effect than actual sanctions.Footnote 112 It has been well discussed in the literature how the USTR deployed Section 301 investigations to ratchet up pressure on trade partners by way of wielding a sequence of deadlines.Footnote 113 Oftentimes, the prospect of incurring penalties from the US, rather than the penalties themselves, is sufficient to induce trade partners to alter their conduct.Footnote 114 Similarly, the TBR was demonstrated to be efficient in propelling the EU's trading partners to resolve disputes in a timely and amicable manner.Footnote 115 For private parties, filing a complaint under the procedures could press a foreign government for a more favourable hearing for their concerns.Footnote 116 Compared to full-fledged litigation, such interim settlements are usually preferable for private complainants as they are time- and resource-saving.Footnote 117 Therefore, when a seasoned trade official suggests the pathway of trade barrier procedures, the official does not intend for it to lead to a full-scale litigation.
As a result, although linked to litigation, trade barrier procedures address trade barriers through a distinctive logic. Functioning through deterring and signalling effects, it is a separate pacific dispute resolution path independent from formal litigation. By initiating trade barrier investigations under the procedures, a country seeks to signal the targeting countries, exhorting or propelling them to correct their behaviours during the probes. The EU's recent conception of the TBR as a parallel tool to WTO litigation is a testament to this point. Compared to trade defense measures, which primarily serve the purpose of alleviating the adverse effects of unfair trade practice, trade barrier procedures function differently. The objective of using this mechanism is to primarily induce countries, rather than individual companies, to alter their conduct. This explains why such a mechanism is not used as frequently as trade defense measures.
Second, the signalling and deterring function of trade barrier procedures defines their formidable role in politicized cases. Given the highly legalistic and resource-consuming nature of the procedures, domestic trade barrier investigations are inevitably directed at potent and prominent cases. In these situations, by means of initiating trade barrier investigations, government agencies also demonstrate to their domestic constituencies their commitment to trade obstacle elimination.Footnote 118 As Davis noted, kicking off legal proceedings against a foreign government, even if primarily for show, can be a practical way to handle international relations and internal pressure.Footnote 119
The present analysis reveals the inherent contradictions and potential of domestic trade barrier procedures. These procedures are constructed to serve as a mechanism for private actors to petition their governments to resolve trade barriers. However, this internal function is inherently intertwined with the external function of enabling state action against foreign nations for various other purposes. Therefore, there remains the prospect that authorities might encourage private companies to utilize these formal procedures, not as a primary recourse, but as a means to leverage the external functionalities of the mechanisms in broader trade negotiations or disputes. This approach highlights the potential strategic use of domestic trade barrier procedures in the broader context of tactical and opportunistic trade policy engagement.
5. Redefining Trade Barriers Procedures: Further Adaptation for Modern Global Trade
Section 4 explored the role and inherent potential of trade barrier procedures. It revealed the redundant role of private initiation in the procedures given the transitioning (geo)political environment. Furthermore, it highlighted that the genuine value of domestic trade barrier procedures lies in its formidable deterring and signalling effects. On this basis, this final section transitions from theoretical exploration to strategic consideration of the potential for a new generation of domestic trade barrier procedures. This potential is underpinned by international economic law and new policy realities. Acknowledging the changing international economic environment and adhering to the foundational, limited functions of domestic trade barrier procedures is neither practical nor beneficial. The current geopolitical environment, characterized by heightened rivalries and the competitive pursuit of technological dominance,Footnote 120 requires a revised approach to these frameworks. The ongoing normative realignment further demands a forward-thinking adjustment, recognizing the necessity of defending national economies against protectionism and economic coercion, and addressing vulnerabilities highlighted by geopolitical tensions.
We contend that the normative realignment, rather than signalling an impasse, opens new horizons for reimagining domestic trade barrier procedures in alignment with contemporary trade dynamics. This suggests that amidst these shifts, there is an unprecedented opportunity to further upgrade domestic trade barrier procedures to enhance their adaptability, relevance, and effectiveness.
This section argues that to enhance the effectiveness of trade barrier procedures and restore their relevance in line with the normative realignment, the mechanism should be revaluated in two significant ways: recalibrating the role and mechanism of private engagement in the procedural design and a systematic readjustment of its configuration, scope and procedural rules.
5.1 Debunking the Relevance of Private Initiation
To devise an elevated trade barrier procedures, we must first reconsider and reconstruct their procedural design, the role of private engagement, and the discretion of trade agencies inherent to the mechanism, as these elements define the modus operandi of current trade barrier procedures.
To begin with, we first inquire into the legalistic nature of domestic trade barrier procedures. The wisdom of political economy theories tells that trade barrier procedures are essentially an institution. States establish such institutions to reduce transaction costs in instances where market failures can impede cooperation.Footnote 121 Institutions perform two general functions: aggregation and delegation.Footnote 122 They mediate and transform the pressures inflicted by organized interests and the general public, which in turn affect policymaking. Institutional complexity is conceived of with distributional circumstances and the subject's externalities in mind.Footnote 123 Cross-border trading implicates complex technicalities and externalities, and as the principal-agent theory indicates, when the intricacy of an issue drives up the costs of decision-making, the legislature often finds it helpful to rely on specialized agents who develop the necessary competence. In the meantime, legislatures, as principals, must control the behaviour of their agents through, among other means, legislation.Footnote 124 Yet, in this process, the legislature must balance administrative flexibility and constraints against bureaucratic drift susceptible to future political intervention.Footnote 125
Putting these considerations in a legal jargon, the necessity of a highly institutionalized trade barrier resolution mechanism is deeply rooted in the requirement of legalization with a view to controlling trade agencies. The empowerment of private industry is merely an additional layer of fire alarm that will bring the legislature's attention to the undue performance of the bureaucracy.Footnote 126 In the realm of foreign affairs, domestic checks and balances in advancing legalization is a typical pattern.Footnote 127
However, as demonstrated in section 4, the necessity for a high degree of legalization in fostering private–public cooperation on trade issues is open to debate;Footnote 128 it is unlikely to yield the perceived result of bridging private complaints to trade barrier removal. For influential political groups, the availability of informal channels obviates the need for formal procedures. And for small and medium-sized enterprises, the utility of these formal mechanisms will always remain conditional, largely dependent on the economic impact of the barriers concerned.Footnote 129 Hence, it is evident that the initiation of the trade barrier procedures by no means depends on private complaints. Rather, private actions play a secondary, facilitatory role in the initiation and investigation procedures.
However, this is not to suggest that private participation in trade barrier procedures could be sidestepped. In fact, these mechanisms are more accurately characterized as platforms for facilitating public–private collaboration, encompassing activities such as fact-gathering, strategizing, negotiating, and potentially litigating foreign trade restrictions. In recent years, as pointed out, ‘[f]aced with regulatory stakes and increasing legalization, the exchange between business and government is therefore based on the exchange of technical expertise and legitimacy inter pares’.Footnote 130 Therefore, in two significant ways, private actors are playing an indispensable role in trade barrier elimination: first, it informs the competent authority of the existence or emergence of trade barriers or the threat thereof and facilitates the investigations by providing information on the ground. Second, as explained above, it serves as an extra level of political check, ensuring that the trade authority responses are effective and timely to the demands of domestic industries. On these premises, any adaptation of the procedures should consider and seek to maximize these two functions.
First of all, trade authorities have an ultimate voice in deciding whether to initiate action against a particular foreign trade barrier and which actions are appropriate, and this margin of autonomy should remain. Given that the initiation of trade barrier procedures usually entails massive political and economic manoeuvres, it is unreasonable to require trade authorities to respond to each case individually. A higher degree of administrative discretion is also intrinsic to the technical nature of trade barrier elimination. Therefore, while it is imperative to recognize the limits of private oversight in the case of trade barrier regulation, we propose that the mechanism and procedural design could be reinforced to ensure the legitimacy of trade barrier elimination. This could include establishing clear guidelines for prioritizing cases based on their potential impact, creating a feedback loop to keep complainants informed, and ensuring transparency in the decision-making process.
More importantly, to enhance the communicative and precautionary functions of private participation, and especially small and medium-sized enterprises, efforts should be steered towards a more systematic approach. Instead of collecting information in a ‘person-to-person’ manner, an online platform based on big data analysis is more efficient. This platform could bring the attention of the authorities to cases with significant economic and political implications. Such platforms already exist in many countries; the EU's Access2Market platform serves as a telling example. However, these existing platforms are currently not synchronized with the trade barrier procedures, leaving them as two separate mechanisms. To address this, it is advisable to integrate the platforms with different phrases of the trade barrier procedures, including initiation, investigations, and retaliation, to ensure seamless communication and efficiency. In each of these phases, as different interest group may be affected, their voices should be heard to achieve a holistic solution.
5.2 Substantive and Procedural Enhancements
As set forth, trade barrier procedures fare not only as a prominent self-help and deterring mechanism, but also a discursive and communicative forum for problem-solving. Whether one agrees with their propriety or not, reprisals and bilateral consultations have always been popular tools in international affairs. Indeed, the establishment of the WTO's dispute settlement mechanism curbs certain forms of unilateral actions, as evidenced by the foregoing Section 301 case.Footnote 131 However, due to the demise of the multilateral mechanism, the resurgence of unilateral measures such as domestic trade barrier procedures is inevitable. States who suffer from actions under such procedures may challenge them at the WTO, if conditions permit, but this may come to no avail given the paralysed dispute settlement mechanism. Moreover, trade barrier procedures also span many instances outside the ambit of WTO agreements. Hence, the adherence to original concepts is inadequate as geopolitical tensions escalate, and it is probable that nations will increasingly use domestic trade barrier procedures, not just for economic reasons, but as part of a wider strategic arsenal.Footnote 132 It is therefore worth inquiring into the possibility of adjusting trade barrier procedures in the face of rising protectionism and global instability. Ultimately, trade barrier procedures possess the potential to serve various objectives, from influencing geopolitical adversaries or allies to protecting critical sectors and maintaining technological sovereignty.
Overall, the analysis starts from a critical postulate that the evolution of domestic trade barrier procedures should aim to achieve a balanced goal. On the one hand, the improvement should aim to enhance their adaptability, responsiveness, and strategic significance as a trade policy tool vis-à-vis emerging harmful trade practice. On the other hand, the deployment of such measures should yield pacific solutions instead of escalated tensions. Bearing that in mind, without exceeding the scope of this article, it is possible to identify five areas where substantive adaptation could be made. In general, the wide coverage of trade barrier procedures and the enhancement of specificity and agility should be espoused.
5.2.1 Strategic Refinement of Trade Barrier Mechanisms
Due to the increased fragmentation of trade policy tools, the first necessary step is to reevaluate and recast trade barrier procedures, aligning them with other domestic regulations, instruments, and policy goals. As explained, the advantage of using this approach is that it could induce countries to change their conduct. Consequently, such an approach ought to be employed sparingly and distinguished from other instruments addressing trade harms such as trade defense measures. The analysis in this article also indicates that the mechanisms are increasingly serving not only market access but also security considerations. Therefore, the incorporation of economic security evaluations into the analysis of trade barriers and further policy and scholarly enquiry into additional strategic and defensive refinements of domestic trade barrier procedures are warranted. Given the profound implications of controlling and distributing cutting-edge technologies on national security and economic competitiveness, this approach would involve crafting guidelines to scrutinize the national security implications of trade practices related to advanced technologies. Such guidelines would aim to ensure that economic policies are in harmony with wider security goals.
Furthermore, in some jurisdictions, such as the EU, there is a significant overlap in functionality between TBR and other emerging instruments. In this regard, instead of devising additional instruments, it is critical to identify the potential of TBR and use it more consistently. This strategic refinement could be projected on the wider institutional engagement during the trade barrier investigations. For instance, in the past, lower-ranking officials or authorities are typically assigned to handle private complaints. For instance, China's TBI is controlled by a relatively low-level division under the Bureau of Fair Trade. In China, such a disposition makes it almost impossible for the TBI Division to take significant action or make substantial judgments. Given the influence and strategic interest associated with trade barrier handling under the auspices of trade barrier procedures, higher level of departments or inter-agency cooperation should be involved.
5.2.2 International Harmonization
One of the major functions of trade barrier procedures is to root out non-compliance with trade agreements. This process seeks to induce compliance by exerting pressure on the recalcitrant countries. Where international rules and standards exist, the investigations and examination should reflect existing rules to ensure coherence and consistency. Indeed, divergence in the interpretation of international rules is unavoidable, but a clear manifestation of international norms demonstrates warranted deference to international commitments and enhances the external legitimacy of the measures. Moreover, it serves as a discursive process, which could potentially facilitate the evolvement of international norms. In the situations where international rules are lacking, attention should be paid to the development of collaborative international standards, aiming at harmonizing regulations and promoting a cohesive approach to trade barriers, especially in sectors marked by emerging technologies.
5.2.3 Extending Scrutiny to Extraterritorial Trade Barriers
In all the jurisdictions examined in this article, trade barrier procedures cover a wide range of trade obstacles, including IPR, trade in services, and investment. However, it is doubtful whether such mechanisms could be used to counter measures with extraterritorial effects. A wide range of emerging trade and investment policies and tools possess the capacity to affect companies, not only in the imposing country, but also the third country and even domestic activities of companies. Salient examples include, for instance, the US’ varying sanction schemes, the EU's Carbon Border Adjustment Mechanism, and the emerging outbound foreign investment screening mechanisms. Many of these measures are new and inchoate. As they are susceptible to protectionism and lack international scrutiny, such measures easily incite negative resentments and even counter-retaliation. The rules-based trade barrier procedures provide a formal mechanism for countries who incur from these measures to look into these new schemes and voice their grievances.
5.2.4 Enhancing Technological Expertise and Capacity Building
As trade barriers are increasingly technologized, modification of procedures to address the distinctive challenges presented by digital trade barriers is imperative. Such modifications may entail establishing specialized investigative units within trade regulation agencies equipped with the technical acumen required to assess the impact of trade barriers on strategic technology sectors and to execute swift, focused interventions. The creation of responsive regulatory frameworks is essential to facilitate rapid adjustments to the swiftly changing landscape of global trade and technology.
5.2.5 Ensuring Procedural Legitimacy and Transparency
Above all, procedural guarantees of trade barrier elimination should be reconstructed and reinforced. While trade barrier procedures should not replicate the WTO dispute settlement system or trade remedy laws, the importance of procedural design for unilateral measures cannot be neglected. It is imperative to ensure the internal and external legitimacy of the mechanism, and moreover to ensure its effectiveness in achieving the intended goal of signaling discontent, resolution, and inducing compliance of trading partners.
Firstly, ensuring that these processes are transparent and the measures are proportionate can help build trust among international partners and reduce the likelihood of retaliatory measures. It ratchets up pressure by following a clear timeline and sending an unmistakable signal as to how the investigation would proceed. Furthermore, publishing detailed reports on the investigations and decision-making processes related to trade barriers can provide greater understanding of the rationale behind these actions. The increased transparency and accountability, in turn, demonstrate to the broader international community the imposing countries’ concerns, resolve, and legitimacy.
Apart from this external dimension, procedural guarantees are likewise important for the international legitimacy of the mechanisms. In many jurisdictions, the competence over trade issues is traditionally bestowed upon administrative authorities.Footnote 133 As argued, the need for sufficient procedural safeguards is hence inherent in trade barrier procedures to avoid arbitrary decision-making in administrative actions. This would demand transparency, with investigations open and procedure rules manifestly provided.Footnote 134 Notably, the imposition of deadlines and the establishment of action procedures ensure that the bureaucratic agent implements the desired policies. Some trade barrier procedures, such as Section 301, are already equipped with detailed procedural requirements. Furthermore, due to the vast implications of trade barrier investigations, their regulatory impact on various sectors should be analysed to weigh its pros and cons. A remedial path in line with due process requirements should also be provided for companies and business operations affected by trade barrier investigations and implementation, whether they are domestic or foreign. In this regard, improving the transparency and clarity of trade barrier procedures is critical to enhance their legitimacy and accountability towards domestic stakeholders.
In addition, while the article has primarily focused on China, the US, and the EU, due to the wealth of available data, it is important to recognize that numerous other jurisdictions also face trade barriers. Consequently, it is plausible that countries, such as Canada, Japan, India, and Brazil, might similarly refine their domestic rules. Pioneers of these reforms will likely establish new benchmarks, fostering wider international acceptance and refinement of this new generation of domestic trade barrier procedures.
6. Conclusion
The evolution from the original concept to the modern application of domestic trade barrier procedures has experienced a significant transformation far from its initial principles. Beginning with a foundational enquiry into whether these mechanisms effectively serve as bridges between private grievances and WTO litigation, the analysis reveals a profound shift. This evolution, characterized not by the expansion of multilateral dispute resolution but by the ascendancy of unilateral strategies, underpins the core of our findings.
Initially designed as an institutional pathway to facilitate market access, domestic trade barrier procedures promised a legal framework within which private actors could address grievances. However, the practical applications of these procedures deviate significantly from their original intent. Instead of catalyzing complaints into actionable WTO disputes, these mechanisms have increasingly mirrored the unilateral tendencies of their host nations. This pivot away from multilateralism towards a more insular approach to trade policy reflects a nuanced ‘normative realignment’ within the law governing these procedures.
Central to understanding this realignment is recognizing the underutilization of these procedures by the private sector. Despite the mechanisms in place for companies, both large and small, to lodge formal complaints, there is a palpable reluctance. This hesitancy stems not from a lack of grievances but from a calculated disinterest in pursuing formal investigations. The preference for informal negotiations over the rigidity of formal procedures underscores the broader critique of the existing legal framework, highlighting its inadequacy in addressing international trade disputes. Moreover, the transformation of trade barrier procedures into tools of unilateralism does not occur in isolation, but as part of a strategic adjustment by nations to protect their trade interests.
In the face of escalating geopolitical tensions and the race for technological supremacy, a return to the original, narrow confines of domestic trade barrier procedures is not only impractical, but also counterproductive. Attempts to enhance private sector engagement or simplify compliance procedures under the old paradigm fail to address the strategic nature of contemporary trade disputes, particularly those involving advanced technologies. The dynamic international arena demands further normative realignment, emphasizing the strategic enhancement of these frameworks to address emerging economic and security challenges. This evolution, prioritizing the protection of innovation, the integration of economic security assessments, and agility to respond to high-tech sector disputes, underscores the imperative for thoughtful reengineering of domestic trade barrier mechanisms. Far from seeking a return to past practices, the moment calls for advancement towards a new generation of domestic trade barrier procedures.
This analysis, while delineating the encysted unilateralism within domestic trade barrier procedures across the US, the EU, and China, should not be misconstrued as heralding the demise of multilateral trade governance. Indeed, the findings underscore a critical juncture at which enhancing domestic trade barrier procedures becomes imperative, not at the expense of, but in tandem with, the reinforcement of multilateral frameworks. The strategic realignment of these procedures presents an opportunity for economies to safeguard their economic interests while upholding and strengthening international trade order. It posits that a harmonious balance between national priorities and international cooperation is not only feasible, but also essential for the sustainability of global trade dynamics. Consequently, the recommendations aim to invigorate this balance, advocating for reforms that respect sovereign rights, while defending the collaborative spirit that underpins multilateral trade agreements. Ultimately, the evolution of domestic trade barrier mechanisms can serve as a cornerstone of a more resilient and equitable international trade system.
Acknowledgements
The development of this article was significantly enriched through discussions with participants at various events where the authors presented their insights into the complexities of trade barrier procedures and WTO litigation. Notably, these interactions took place during the Law and Development Conference at Brasilia University School of Law in April 2023, a workshop hosted by the David Rockefeller Center for Latin American Studies at Harvard University in January 2024, and another workshop organized by the Indian Institute of Foreign Trade in New Delhi in June 2023. The authors wish to express their appreciation for the valuable comments and suggestions received from the attendees of these gatherings. Special thanks are extended to Cristián Rodríguez Chiffelle, Henry Gao, Manjiao Chi, James Nedumpara, Debashis Chakraborty, Marcus Gustafsson, Jan Wouters, and Michelle Egan for their insightful feedback. Furthermore, the constructive critiques provided by the editors, anonymous reviewers, and the staff at the World Trade Review have been instrumental in enhancing the quality of this work. This research is part of an extensive project that investigates the factors influencing WTO dispute resolution outcomes. It has received generous support from the General Research Fund (GRF) under the Hong Kong Special Administrative Region Research Grants Council (RGC Ref. No. 11608122). The views expressed herein by authors are their personal ones.
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