On the Change of the Legal Standards for “Public Body” in the WTO Subsidy and Countervailing Agreement

-- Take China’s Victory in WTO v. the United States as an Example

Abstract

 The WTO Agreement on Subsidies and Countervailing Measures (ASCM) defines a subsidy as having four elements, of which the "public body determination criterion" is designed to ascertain whether a state-owned enterprise (SOE) constitutes the subject of a subsidy, and is an important prerequisite for confirming the establishment of a subsidy. However, neither the WTO nor other international organizations have clearly specified this concept. In DS437, one of the points of contention was the criteria for determining a "public body". On 16 June 2019, the WTO published the Appellate Body (AB)'s report, whose explanation of the "public body" determination substantially rejects China's argument and to some extent supports U.S. claim. This ruling shows that the risk of China's SOEs being recognized as public bodies will continue to exist, leaving room for other countries' countervailing agencies to investigate. In this regard, China should further promote the "governmental authority Theory", while continuing to deepen the mixed-ownership reform of SOEs, so as to get out of the predicament of SOEs participating in international competition.