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Trade and legalization in East Asia: government-business collaboration in trade dispute settlement

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Trade and legalization in East Asia: government-business collaboration in trade dispute settlement

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Content Trade and Legalization in East Asia:
Government-Business Collaboration in Trade Dispute Settlement

By

Jessica Chia-yueh Liao
________________________________________________________________________

A Dissertation Presented to the
Faculty of the USC Graduate School
University of Southern California
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(POLITICS AND INTERNATIONAL RELATIONS)
December 2013

Copyright 2013 Jessica Chia-yueh Liao

1
ABSTRACT

My dissertation asks why East Asian governments, which maintain substantial
discretionary power over trade policy, consider using the WTO dispute settlement system
and how their decision-making is affected by structural factors inherent in past
government-business relations. I argue that, in order to maintain relevance in the export
sector, more and more East Asian states are using WTO dispute settlement in order to
reduce export barriers. However, the extent for their success is determined by the
structure of the export sector and the degree of government collaboration with exporters.
The states that successfully promote their global trade interests through use of WTO
dispute settlement are the ones that have sufficient support from and collaboration with
their leading exporters. I present a comparative study of Korea and Taiwan’s experience
in responding to export barriers. Korea represents a case where its leading exporters,
namely the rising multinational corporations, are powerful and capable of both organizing
industry-wide campaigns and collaborating with the government to contest export
restrictions overseas. In contrast, Taiwan represents a case where the leading exporters,
small and subcontracting-based corporations, are either incapable of or not interested in
launching high-profile contestations over trade disputes because of their export model
and their distance from the government. I also make a single case study of China’s
handling of foreign-imposed export restrictions to discern the role of the state and the
pattern of how the structure of the export sector and government-exporter collaboration
affects the government’s policy towards trade disputes.

2
ACKNOWLEDGEMENTS

I owe many thanks to my dissertation committee. Professor Saori Katada, my
advisor, provided me with key support throughout this research project. Over the past
three years, she has not only taught me how to be a disciplined researcher and writer but
has also been an excellent mentor. Professor Katada also showed me that it is possible for
a woman to pursue both intellectual goals and support a family at the same time. I also
want to thank Professor Carol Wise for her encouragement as well as providing me
insights that helped me improve my thought process. I would also like to thank Professor
Robert Dekle, who has always made himself available to help. In addition, my
dissertation would not be possible without the support I received from the USC School of
International Relations, USC US-China Institute, Korea Foundation, Asiatic Research
Center of Korea University, and USC Tsai Family Fellowship.
I am also grateful for the many people who supported me while studying in the
POIR program. I want to thank Professor Kang, Professor Katada, Professor Odell,
Professor Sellers, Professor Wise and Professor Munck for their mentorship on
international political economy and comparative politics. Their insights helped shape my
ideas and passion for studying subjects related to ‘second image reversed’ and East Asian
political economy. I also want to thank Professor Wiseman, Professor Lynch, Professor
Lamy, Professor Kammas, Professor Weller, and Professor Onuf for broadening my
knowledge in diplomacy, foreign policy, methodology, and political theory. I want to
thank Veri, Cathy, Luda, and Linda for their help with everything from administration to
funding. They have all been very accommodating and always tried to make things easy
3
for me during my time away from campus. I also want to thank my fellow POIR
colleagues for not only partying with me but also sharing their experience, debating
ideas, and encouraging and standing by me when I needed it. I am very grateful to be a
part of the big POIR family.
Finally, I want to thank my mom for taking care of me and Leah, my then new-
born daughter, for two months so that I could quickly recover from my delivery and
return to work on my dissertation. I want to thank my mother and sister in law for taking
care of Leah at the final stage of my dissertation. I also want to thank Leah, just turning
seven months old, for empowering me by giving me a new identity as a mother, who
works hard not just for herself but to also set an example for her children.. Finally, my
PhD study and dissertation would not complete without my husband, Adam. His
unconditional support and faith in me throughout the past six years makes me believe that
I can be a wife and a mother, while pursuing my passion in academia and intellectual
happiness.

4
TABLE OF CONTENTS
ABSTRACT………………………………………………………………………………1
ACKNOWLEDGEMENTS ............................................................................................. 2
LIST OF TABLES ............................................................................................................ 6
LIST OF FIGURES .......................................................................................................... 7
CHAPTER ONE: Introduction ....................................................................................... 8
The Rise of Litigation and Adjudication in Trade Disputes: What is Missing in the
Literature? ......................................................................................................................... 10
Why Do East Asia’s WTO Disputes Matter? The Puzzle ................................................ 19
Overview ........................................................................................................................... 26
CHAPTER TWO: Developmental States Contesting Export Barriers in the WTO,
an Analytical Framework............................................................................................... 32
The Role of the State in WTO Litigation: A Critique ...................................................... 32
WTO Litigation by the Developmental State ................................................................... 37
The Importance of Government-Exporter Collaboration in Trade Policymaking ................. 37
A Roadmap to Assess Collaboration: Export Structure and Government-Exporter
Policymaking Network ........................................................................................................... 43
Hypotheses, Mechanism, and Operationalization ............................................................. 49
CHAPTER THREE: The Developmental State Goes Litigous, Korea’s Pursuit of
WTO Litigation ............................................................................................................... 55
Background: The Rise of Export Barriers ........................................................................ 56
Factors Affecting Exporters’ Handling of Foreign Trade Remedy Measures .................. 60
The Export Sector’s Structure: Size and Concentration of Production ................................. 60
The Government-Exporter Network ....................................................................................... 68
Litigation over Foreign Trade Remedy Issues beyond the WTO: A Sectoral Landscape 75
Taking Trade Disputes to WTO Adjudication .................................................................. 84
Strong Litigation .................................................................................................................... 88
Weak Litigation ...................................................................................................................... 97
Conclusion ........................................................................................................................ 97
CHAPTER FOUR: Taiwan, a Daunting Case of a Developmental State Going
Litigious ........................................................................................................................... 99
Background: The Rise of Export Barriers ...................................................................... 100
Factors Affecting Exporters’ Handling of Foreign Trade Remedy Measures ................ 104
The Export Sector’s Structure: Size and Concentration of Production ............................... 104
5
The Government-Exporter Network ..................................................................................... 113
Litigation over Foreign Trade Remedy Issues beyond the WTO: A Sectoral Landscape
......................................................................................................................................... 119
Taking Trade Disputes to WTO Adjudication ................................................................ 127
Strong Litigation .................................................................................................................. 129
Weak Litigation .................................................................................................................... 132
Conclusion ...................................................................................................................... 135
CHAPTER FIVE: The Legacy of a Developmental State, China’s Reservation in
Using the WTO Dispute Settlement System ............................................................... 137
Background: The Rise of Export Barriers ...................................................................... 138
Factors Affecting Exporters’ Handling of Foreign Trade Remedy Measures ................ 144
The Export Sector’s Structure: Size and Concentration of Production ............................... 144
The Government-Exporter Network ..................................................................................... 151
Litigation over Foreign Trade Remedy Issues beyond the WTO: A Sectoral Landscape
and its Development ....................................................................................................... 159
Taking Trade Disputes to WTO Adjudication ................................................................ 169
Strong Litigation with Concentrated Economic Interests .................................................... 174
Weak Litigation with Diluted Economic Interests ............................................................... 179
Conclusion ...................................................................................................................... 185
CHAPTER SIX: Comprehensive Analysis and Concluding Remarks .................... 187
The Role of State in Collaboration on Export Barriers: How the Developmental State
Evolves in the WTO Era ................................................................................................. 187
The Size of the Exporters, the Government-exporter Network, and the Use of WTO
Litigation ......................................................................................................................... 190
Lessons from the Comparison between Korea and Taiwan ................................................. 190
Theoretical Lessons from China’s Case .............................................................................. 196
Exporter Size, Government-exporter Collaboration, and WTO Litigation Strategies over
Trade Remedy Issues ...................................................................................................... 198
Lessons from the Comparison between Korea and Taiwan ................................................. 198
Theoretical Lessons from China’s Case .............................................................................. 205
Scholarly Contribution .................................................................................................... 208
BIBLIOGRAPHY ......................................................................................................... 212
APPENDIX .................................................................................................................... 227

6
LIST OF TABLES
Table 1. Ordinary least squares regression on the WTO disputes filed by 80 developing
WTO members, 1995-2010 .............................................................................................. 20

Table 2. Litigation and market share of East Asia and Latin America (1995-2010) ........ 21

Table 3. Regression on antidumping measures received by 80 developing WTO members
1995-2010 ......................................................................................................................... 24

Table 4. Korea’s major exporters and their world rankings ............................................. 63

Table 5. Korea’s top ten exporting goods, 1990-2010...................................................... 66

Table 6. U.S. antidumping/countervailing investigations on Korean steel products, issued
1997-1999 (not including reviews) ................................................................................... 81

Table 7. WTO dispute settlement cases filed by Korea (as a main complainant) 1997-
2012................................................................................................................................... 85

Table 8. Taiwan’s major exporters and their world rankings ......................................... 106

Table 9. Taiwan’s Top Ten Exporting Sectors, 2000-2010 ............................................ 110

Table 10. WTO dispute settlement cases filed by Taiwan (as a main complainant), 2002-
2012................................................................................................................................. 128

Table 11. Share of Chinese exports by enterprise ownership type, 2002-2007 (%) ....... 145

Table 12. China’s top ten exporting sectors, 2000-2011 ................................................ 149

Table 13. Chinese exports receiving antidumping orders by the United States (1979-
2000) ............................................................................................................................... 159

Table 14. WTO dispute settlement cases filed by China (as a main complainant), 1997-
2012................................................................................................................................. 171

7
LIST OF FIGURES
Figure 1. WTO dispute settlement process ....................................................................... 13

Figure 2. WTO litigation over trade remedy issues by East Asian countries from 1995 to
2012................................................................................................................................... 25

Figure 3. Antidumping and countervailing measures against Korean exports, 1995-2012
(Total measures: 180) ....................................................................................................... 58

Figure 4. Sectoral distribution of antidumping and countervailing measures against
Korea, 1995-2012 ............................................................................................................. 59

Figure 5. Antidumping and countervailing measures against Taiwanese exports, 1995-
2012 (Total measures: 152) ............................................................................................ 101

Figure 6. Sectoral distribution of antidumping and countervailing measures against
Taiwan, 1992-2012 ......................................................................................................... 102

Figure 7. Antidumping and countervailing measures against Chinese exports, 1995-2012
(Total measures: 706) ..................................................................................................... 140

Figure 8. Sectoral distribution of trade remedy measures against China, 1995-2012 .... 143

Figure 9. The size of the leading exporters in Korea and Taiwan .................................. 192

Figure 10. The record of litigation prior to the WTO stage ............................................ 195

Figure 11. China’s record of litigation prior to the WTO stage...................................... 197

Figure 12. Industry Structure, Government-Exporter Collaboration, and the WTO
Litigation Strategy—Korea and Taiwan ......................................................................... 199

Figure 13. Industry Structure, Government-Exporter Collaboration, and the WTO
Litigation Strategy- China ............................................................................................... 206

8
CHAPTER ONE:
Introduction

International trade policy has been shifting from diplomacy-based initiatives to
law-based initiatives, as signified by the unprecedented creation and subsequent use of
the dispute settlement mechanism in the World Trade Organization (WTO).
Corresponding to this trend, growing scholarship is dedicated to explaining the rise of
WTO dispute settlements. Surprisingly, while many studies offer political explanations
for this more recent phenomenon, these studies have neglected government discretion as
a rationale for why states choose to use the dispute settlement mechanism.
My dissertation asks why East Asian governments, which maintain substantial
discretionary power over trade policy, consider using the WTO dispute settlement system
and how their decision making is affected by structural factors inherent in past
government-business relations. In contrast with the mainstream literature that emphasizes
business pressure and contesting government-business relations, my research focuses on
government-business collaboration and its impact on a government’s decisions to use the
dispute settlement system. Specifically, I present a thesis, which I call the developmental
state goes litigious; my argument is that, in order to maintain relevance in the export
sector, more and more East Asian states are using the WTO dispute settlement system in
order to reduce export barriers and maintain the competitiveness of their exporters.
Further, the extent for their success is determined by the structure of the export sector and
the degree of government collaboration with domestic exporters. The states that
successfully promote their global trade interests through use of the WTO dispute
9
settlement system are the same ones that have sufficient support from and collaboration.
This is precisely what I mean by the developmental state going litigious.
East Asia offers a unique opportunity to study the structural effect on trade
dispute settlements because that export-led growth has been the norm and has spawned a
number of export-oriented corporations in the region. However, East Asia as a whole has
been historically the most affected by export restrictions set by developed countries. This
trend has continued into the WTO era, as trade remedies, e.g. antidumping,
countervailing, and safeguard measures, have become the most common tools for trade
protectionism in both the developed and developing world. From 1995 to 2011, East
Asian countries were the target of half of the world’s total antidumping measures, while
accounting for only 30 percent of world trade. Under such pressure, East Asian
governments have thus begun to contest these trade complaints at the WTO more
frequently. However, stark differences exist among countries in the region in terms of
their WTO litigation record; some countries are particularly aggressive at contesting
export barriers that derive from trade remedies, while others rarely use the WTO to tackle
these issues.
In pursuing a structural explanation for why this is the case, this dissertation
selects two countries that have been at opposite ends of the continuum in terms of
responding to trade remedy measures—Korea and Taiwan—to illustrate how the
government-exporter nexus shapes a state’s WTO litigation behavior. Korea, stands
among those states that have had the most WTO disputes over trade remedy issues, and
represents a case where its leading exporters, namely the rising multinational
corporations, are powerful and capable of both organizing industry-wide campaigns and
10
collaborating with the government to contest export restrictions overseas. In contrast,
Taiwan, ranks among those states that have had the fewest WTO disputes over trade
remedy issues; it represents a case where the leading exporters, small and subcontracting-
based corporations, are either incapable of or not interested in launching high-profile
contestations over trade disputes both because of their export model and their distance
from the government.
My research uses the same analytical framework to examine China’s handling of
foreign-imposed export restrictions beyond and within the WTO. China is an important
case, as its trade disputes sit at the nexus of world trade. However, my research takes into
account the idiosyncratic nature of the export barriers to China given the continued
designation of its non-market economic (NME) status at the WTO. The case of China is
not juxtaposed as a comparison with Korea and Taiwan; rather, it is a single case study to
discern the role of the state and the pattern of how the structure of the export sector and
government-exporter collaboration affects the government’s policy towards trade
disputes.

The Rise of Litigation and Adjudication in Trade Disputes: What is
Missing in the Literature?
Laws have become indispensable for the smooth functioning of today’s
international trade relations.
1
As trade liberalization has unfolded rapidly, instead of

1
This is because trade liberalization increases the volume and value of global trade and investment and
requires a more regulated global business environment. An international institution such as the WTO serves
as an instrument for countries to reduce and manage fluctuations and transaction costs derived from the
uncertainty of the global environment. For more discussion, see Judith L. Goldstein, Miles Kahler, Robert
11
relying on closed-door negotiations, state governments are more willing to abide by
international trade laws and to delegate their power to a third party for resolving trade
disputes. This trend—also known as the trade litigation movement or trade
legalization
2
—has accelerated since the unprecedented creation of the dispute settlement
mechanism at the World Trade Organization (WTO). Under this mechanism, member
states are eligible to litigate or file a complaint against another member to the WTO
Dispute Settlement Body (DSB). With its adjudication power, the DSB has become a
critical point of reference for the disputing parties, as well as the rest of the WTO
members, for the adjustment of their domestic legal systems and practices to comply with
WTO rules.
3

The WTO dispute settlement procedure is the result of a long transformation in
international trade policy. The General Agreement on Tariffs and Trade (GATT) operated
under a provisional agreement which provided informal consultations to resolve disputes.
However, this agreement, as Robert Hudec describes it, is merely “a nice sort of
nonadversarial, nonthreatening, look-at-the-positive-side phrase for what most people

O. Keohane and Anne-Marie Slaughter, eds., Legalization and World Politics (Cambridge, Mass.: The MIT
Press, 2001).
2
Legalization is indicated by three components: “…the degree to which rules are obligatory, the precision
of those rules, and the delegation of some functions of interpretation, monitoring, and implementation to a
third party.” See Kenneth W. Abbott and Duncan Snidal, “The Concept of Legalization” in Goldstein,
Kahler, Keohane and Slaughter, Legalization and World Politics: 37-72.
3
The WTO dispute settlement system is not an enforcement body. The members have to rely on self-
enforcement in complying with WTO rulings. However, it has been proven that nations take them into
account more frequently when enacting, implementing, and interpreting domestic laws and regulations. See
Paul B. Stephen, “American Hegemony and International Law: Sheriff or Prisoner? The United States and
the World Trade Organization,” Chicago Journal of International Law 1 (Spring 2000): 49-74.
12
would call a lawsuit.”
4
The “toothless” and “power-oriented” nature of the GATT dispute
settlement process was due to the rule of “positive consensus,” under which the
respondent to a dispute, particularly a powerful state, could veto the establishment of a
panel, a panel report, and the countermeasures authorized by the panel to retaliate against
the respondent.
5

The WTO Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU) created a formalized procedure that consists of a group of panel experts
and a standing Appellate Body of judges to review panel decisions. This procedure ended
the de facto veto right in the former system as, once a dispute is filed, the case moves
automatically according to the procedures and timeline stipulated by the DSU (Figure 1).
Although the DSB is not an enforcement body and ruling implementation remains
dependent on state’s own enforcement, the formalized procedure, including the Appellate
Body and periodic reviews of member states’ trade policies, makes it relatively effective
for increasing pressure on members to revise their conduct on specific issues.
6
Since its
establishment in 1995, the WTO has handled over four-hundred fifty disputes under the
DSU process. This number is tremendous considering that there were only four-hundred
fifty cases during the approximately half century of GATT’s existence.

4
Robert Hudec, “Transcending the Ostensible: Some Reflections on the Nature of Litigation between
Governments,” Minnesota Law Review 72 (1987): 224.
5
Robert Hudec, “The New WTO Dispute Settlement Procedure: An Overview of the First Three Years,”
Minnesota Journal of Foreign Trade 8, no. 1 (1999): 8, 9.
6
Marc L. Busch and Eric Reinhardt, “Testing International Trade Law: Empirical Studies of GATT/WTO
Dispute Settlement,” in Daniel M. Kennedy and James D. Southwick eds., The Political Economy of
International Trade Law: Essays in Honor of Robert Hudec (New York: Cambridge University Press,
2002): 457-481.
13
Figure 1. WTO dispute settlement process

Consultations (Members may request a panel if no consultation within 60 days, or
request good offices, conciliation, or meditation by the Director-General)
DSB established panel (No later than at the second DSB meeting)
Terms of reference (Standard terms unless special terms agreed within 20 days)
Composition (Agreed upon within 20 days or decided by the Director-General)
Panel examination (In general not to exceed 6 months, 3 months
in urgent cases)
Meetings with parties Meetings with third parties
Expert
Review
Group
Panel submits report to parties for comments (First descriptive part of report,
subsequently complete interim report)
Interim review meeting (If requested)
Panel circulates report to DSB
DSB adopts panel report
(Within 60 days unless appealed)
DSB monitors implementation of adopted panel/Appellate Body
recommendation
(To be implemented within defined “reasonable period of time”)
Parties negotiate compensation
pending full implementation
DSB authorizes “retaliation”
pending full implementation
(60 days after expiry of “reasonable
period of time”)
Appellate Review
(Not to exceed 90 days)
DSB adopts Appellate Reports
(Within 30 days)
14
Source: Data from the World Trade Organization, “The Panel Process.”
link:http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp2_e.htm Retrieved on 11 May 2011

The DSU’s success has captured the attention of scholars in political science,
economics, and law. The debates have focused on the pattern of WTO litigation and why
states litigate the way they do (e.g. the timing, tactics, extent of aggressiveness in
claiming business interests, and amount of damage versus returns etc.). While current
studies highlight economic variables as the major determinants, interpretations vary on
the factors that determine a state’s litigation behavior. Those who see economic interest
as the core of trade disputes believe that states with larger trade interests litigate more
since they have a greater incentive to file litigation. Their studies highlight trade volume
and the diversity of a state’s trade profile as the main factors affecting the likelihood that
a state will file WTO litigation.
7

Realists, while not denying the interest factor, explain WTO litigation patterns
through the lens of power distribution among states. Some realists focus on the impact of
economic power on a state’s calculation as to whether it will litigate and how it will
proceed. For example, several studies found that a state’s decision in filing or handling
WTO litigation is subject to the extent of trade dependence between the disputing
parties.
8
In a similar vein, the decision to litigate is also determined by the size of a

7
Henrik Horn, Petros C. Mavroidis, and Håkan Nordstrom, “Is the Use of the WTO Dispute Settlement
System Biased?” Economic Research and Analysis Division, WTO Centre for Economic Policy Research
(1999); Joseph Francois, Henrik Horn, and Niklas Kaunitz, “Trading Profiles and Developing Country
Participation in the WTO Dispute Settlement System,” IFN Working Paper No. 730, Research Institute of
Industrial Economics (2008); Chad P. Bown, “Developing Countries as Plaintiffs and Defendants in
GATT/WTO Trade Disputes,” The World Economy 27, no. 1 (2004): 59-80.
8
Chad P. Bown, “The Economics of Trade Disputes, the GATT’s Article XXIII and the WTO Dispute
Settlement Understanding,” Economics and Politics 14, no. 3 (2002): 283-323; James Smith, “Inequality in
International Trade? Developing Countries and Institutional Change in WTO Dispute Settlement,” Review
15
state’s economy and its economic power to retaliate against its counterpart.
9
They explain
that, as the enforcement of DSB rulings is dependent on a state’s own enforcement,
litigation is not effective if the victor state is incapable of economic retaliation against its
counterpart. In this sense, the threat of litigation is not credible due to power asymmetries
between disputing parties.
Realists also interpret the power factor from the angle of capacity constraint. They
found that large and wealthy states, on average, receive more favorable results from DSB
rulings than small and poor states due to their greater capacity for managing the litigation
process.
10
Others suggest that these factors may include language, legal expertise, and
human and financial resources.
11
They argue that developing countries as a whole are
constantly disadvantaged in trade disputes with developed countries given the cost and
technical barriers involved in WTO litigation.
Still others, mostly in political science, emphasize domestic factors, such as
political institutions and interest group formation, when tacking this question. They
conclude that democracies are more likely to utilize WTO dispute settlement than non-

of International Political Economy 11, no. 3 (August 2004): 542-573; Marc L. Busch and Eric Reinhardt,
“Developing Countries and GATT/WTO Dispute Settlement,” Journal of World Trade 37 (2003): 719-735.
9
Bruce A. Blonigen and Chad P. Bown, “Antidumping and Retaliation Threats,” Working Paper 8576,
National Bureau of Economic Research (2001); Chad P. Bown, Self-Enforcing Trade: Developing
Countries and WTO Dispute Settlement (Washington, D.C.: Brookings Institute, 2006).
10
Chad P. Bown, “Participation in WTO Dispute Settlement: Complainants, Interested Parties and Free
Riders,” World Bank Economic Review 19, no. 2 (2005): 287–310.
11
Valentina Delich, ‘‘Developing Countries and the WTO Dispute Settlement System,’’ in Bernard
Hoekman, Aaditya Matoo, and Philip English eds., Development, Trade, and the WTO (Washington, D.C.:
The World Bank, 2002): 71–80; Andrew Guzman and Beth Simmons, “To Settle or Empanel? An
Empirical Analysis of Litigation and Settlement at the World Trade Organization,” Journal of Legal
Studies 31 (2005): 205–35; Constantine Michalopoulos, Developing Countries in the WTO (New York:
Palgrave, 2001).
16
democracies since it is easier for interest groups in a checks-and-balances system to press
the state to handle disputes in a transparent manner.
12
Furthermore, they believe that
when facing a tough dispute the executive branch may prefer adjudication by a third party
as a way to allay domestic pressure by signaling its hands are tied.
13
It is clear that the
debate on this subject has advanced from describing economic factors at the macro level
to using these factors to both identify winners and losers and to explain the mechanism as
to how a decision to submit to WTO litigation is made in domestic political settings.
However, the debate on why states litigate overlooks several factors that affect
trade dispute settlement. The first factor, and the most overlooked one, is what causes a
trade dispute. As world trade is further liberalized under the WTO agreement, the act of
“dumping”—selling goods abroad at a price below that charged in the domestic market or
below the cost of production—is the trade practice of highest concern to most countries.
This is reflected in the rise of trade disputes related to trade remedy measures, i.e. the
most common form of restriction against imports with an unfair price advantage, as well
as the most-contested issue in WTO dispute settlement.
14
According to Chad P. Bown’s
study, WTO disputes relating to trade remedies made up nearly half of all WTO disputes
initiated between 1999 and 2004, whereas fewer than one in seven disputes concerned

12
Marc Busch, “Democracy, Consultation, and the Paneling of Disputes under GATT,” Journal of Conflict
Resolution 44, no. 4 (2000): 425–446; Peter Rosendorff, “Stability and Rigidity: Politics and Design of the
WTO’s Dispute Settlement Procedure,” American Political Science Review 99, no. 3 (2005): 389-400; Eric
Reinhardt, “Aggressive Multilateralism: The Determinants of GATT/WTO Dispute Initiation, 1948-1998,”
Manuscript, Emory University, 2000; Christina L. Davis, Why Adjudicate? Enforcing Trade Rules in the
WTO (Princeton: Princeton University Press, 2010).
13
Davis, Why Adjudicate? Enforcing Trade Rules in the WTO.
14
Trade remedies refer to policy tools that allow governments to take remedial action against imports
which are causing material injury to a domestic industry. Under the WTO framework, trade remedy
measures include antidumping, safeguards, and countervailing duties.
17
trade remedies from the period immediately following the WTO’s inception.
15
From 2004
to the end of 2012, the share of trade remedy disputes has surged to two-thirds of all
WTO disputes.
16
Such a large share of WTO disputes related to trade remedy measures is
not surprising given the relative transparency of the related rules in the WTO and the
proliferation of antidumping measures in particular. WTO members have issued 2601
antidumping measures after 4010 investigations from 1995 to 2011. In addition, the
number of countervailing and safeguard measures has also been on the rise. Particularly
since 2007, more countries have changed their practice of using countervailing duties on
countries with non-market economy (NME) status, as will be explained in detail later.
While current research tends to pack all WTO disputes together when analyzing
them, a more specific study is necessary to specify how states resolve disputes regarding
dumping, in particular through the WTO dispute settlement mechanism. Just a few
studies have done so. For example, both Daniel Tarullo’s study and Andrew Guzman and
Beth Simmons’ study found that tariff-related disputes, including the ones related to trade
remedies, present relatively clear legal cases compared with non-tariff-related disputes in
which case precedents are few and proof of loss caused by the barriers is more difficult.
17

Therefore, a complainant is more likely to win tariff-related litigation. Based on the WTO
disputes against the United States, Bown found that the size of the economic market at

15
Chad P. Bown, “Trade Remedies and World Trade Organization Dispute Settlement: Why Are So Few
Challenged?” The Journal of Legal Studies 34, no. 2 (June 2005): 515-555.
16
Ibid. I followed Bown’s rule, i.e. counting disputes cited agreements related to the chapter on
antidumping, countervailing and safeguard measures and found that within 159 disputes between 2004 and
2012, 93 disputes fall into this category.
17
Daniel Tarullo, “Paved with Good Intentions: The Dynamic Effects of WTO Review of Antidumping
Action,” World Trade Review 2, no. 3 (2004): 373-393; Guzman and Simmons, To Settle or Empanel? An
Empirical Analysis of Litigation and Settlement at the World Trade Organization.
18
stake and the capacity to potentially retaliate under the DSB’s authorization have an
impact on the decision of U.S. trading partners to litigate over trade remedy issues.
18

Nonetheless, economic factors do not automatically transform into policy
decisions. It is unclear as to why a dispute triggered by dumping might be escalated from
a bilateral issue to third-party dispute resolution. How does the respective government
and industry affected by trade remedies consider the value of WTO litigation from their
own independent standpoints? How do both reach their decision to litigate? How is this
decision-making process carried out within domestic institutional structures?
These questions point to the second piece that is missing in the current literature
on why states litigate: the domestic structural effect on government capacity. In this
respect, the discussion has focused on political systems and pressure groups. However,
the discussions in the current literature are largely influenced by liberal pluralism, which
assumes that contesting relations between government and business is the engine that
drives use of WTO litigation.
19
WTO litigation is thus interpreted as a strategy for the
government to lessen pressure from business groups.
20
While the contestation explanation
has merit for understanding business influences on policymaking, two problems emerge.
First, the business pressure is not the only reason for the state to approach the WTO; in
many cases, state governments have discretionary power and their decision to pursue

18
Chad P. Bown, “Trade Remedies and World Trade Organization Dispute Settlement: Why Are So Few
Challenged?” The Journal of Legal Studies 34, no. 2 (June 2005): 515-555.
19
Davis, Why Adjudicate? Enforcing Trade Rules in the WTO; Thomas Sattler and Thomas Bernauer,
“Dispute initiation in the World Trade Organization,” paper presented at the annual meeting of the
International Political Economy Society (Stanford University, Palo Alto, California, 2007).
20
Ibid.
19
WTO litigation is not necessarily because of concerns with business pressure. Instead of
contestation, collaboration between government and business, as many trade law
practitioners point out, is important in deciding to seek WTO arbitration.
21
Collaboration
affects policymakers’ decisions particularly in countries where governments have a long
history of intervening in the market. Moreover, while the business pressure explanation is
useful in explaining “group/sector specific” WTO litigation, it cannot properly address
disputes related to rules or procedures that can apply to different kinds of imported
goods. In this case, the role of government needs to be addressed in explaining why states
litigate. All in all, the analysis should be recalibrated to take into account government-
business relations.

Why Do East Asia’s WTO Disputes Matter? The Puzzle
While East Asia is no exception to the trend of trade litigation, the region presents
an opportunity to study trade disputes over dumping under the framework of government-
business relations. The survey below sheds some light on trade disputes involving
countries in the region.
22

21
Gregory C. Shaffer, Defending Interests: Public-private Partnerships in WTO Litigation. Washington
DC: Brookings Institution Press, 2003. Michelle Ratton-Sanchez , Gregory G. Shaffer, G. and Barbara
Rosenberg, “Brazil’s Response to the Judicialized WTO Regime: Strengthening the State through Diffusing
Expertise,” Paper presented at the annual meeting of the Law and Society Association, Berlin, Germany,
July 25
th
, 2007.
22
In this dissertation, East Asia includes China, Japan, South Korea, Taiwan and ASEAN states who are
members of the WTO.
20
Table 1. Ordinary least squares regression on the WTO disputes filed by 80 WTO
members, 1995-2010
Independent Variable coefficient standard error p-value
GDP per capita 0.00045 0.0001 0.0007 ***
Trade balance -1.3663 2.1847 2.43 ***
Export/GDP -0.1295 0.0444 0.0048 ***
log_GDP 0.37924 0.3321 0.2572
East Asia 7.61566 4.0277 0.0626 *
Latin America 3.04824 2.8157 0.2826
Constant -2.0771 7.1179 0.7713
Dependent variable: The number of litigation cases initiated by a WTO member state.
R²:0.54; Adjusted R²:0.50; F:14.15
Source: Data of The World Trade Organization, ‘Dispute Settlement: disputes by country/territory,’
http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm Retrieved on 15 May 2011;
Data of the World Bank, ‘Indicators,’ http://data.worldbank.org/indicator Retrieved on 4 April 2011.

First, in comparison with other regions dominated by developing countries, East
Asia as a whole demonstrates a higher pattern of growth in the filing of dispute
complaints in the WTO era. During the GATT period, East Asia accounted for only 21 of
448 total complaints (4.7 percent), within which only 3 went beyond the stage of
consultation. However, for fifteen years since the inception of the WTO, there have
already been 64 complaints from the region (15.3 percent of total complaints) and over
half of these complaints passed into panel review or beyond. If one takes into account
factors including general domestic production (GDP), GDP per capita, the GDP share of
exported goods and services, and the balance of trade, the cross-sectional regression on
21
litigation initiated by 80 WTO members from 1995 to 2010 shows that East Asian
countries are far more prone to initiate litigation than their Latin American counterparts
(Table 1).
23
Therefore, the growth of East Asia’s WTO disputes is not just caused by the
increase of its share in world trade, meaning there must be other factors at play.
Second, most of the WTO disputes filed by East Asian countries have involved
with developed countries rather than neighboring ones, as might be expected. For
example, one out of every two complaints from the region is against the U.S., whereas
this category only comprises one-fifth of the overall complaints from Latin America
(Table 2). The tendency to engage developed countries in trade disputes is also
counterintuitive given the fact that most of East Asia’s trading activities are intra-
regional.
24
The cause of this is related to the kind of issues that East Asian countries
complain about.

Table 2. Litigation and market share of East Asia and Latin America (1995-2010)
Country/
Region
Litigation
against U.S.
Total
litigation cases
Share of litigation
against U.S. (%)
Share of U.S.
imports (%)
China 5 7 71 18.4
Indonesia 2 5 40 9.3
Japan 8 14 57 16.4
Korea 8 14 57 10.4
Malaysia 1 1 100 11

23
For the detailed data and the regression on the 80 developing countries, see Appendix.
24
International Monetary Fund, Regional Economic Outlook: Asia and Pacific, October 2007.
22
Philippines 1 5 20 17.7
Singapore 0 1 0 9
Taiwan 1 3 33 11.6
Thailand 5 13 39 10.9
Viet Nam 1 1 100 19
East Asia’s
Average
3.2 6.4 51.8 13.4
Antigua and
Barbuda
1 1 100 23.6
Argentina 3 15 20 6.6
Bolivia 0 0 0 7.7
Brazil 10 25 40 10.3
Chile 2 10 20 11.3
Colombia 1 5 20 39.9
Costa Rica 1 5 20 27.6
Dominican
Republic
0 0 0 61.9
Ecuador 1 3 33 33.4
El Salvador 0 1 0 46.6
Guatemala 0 8 0 41
Guyana 0 0 0 13.4
Honduras 0 7 0 47.7
Jamaica 0 0 0 49.3
Mexico 9 21 43 80.7
Nicaragua 0 1 0 32.8
23
Panama 0 5 0 42.7
Peru 0 3 0 17.2
Trinidad &
Tobago
0 0 0 54.4
Uruguay 0 1 0 7
Venezuela 1 1 100 32
Latin
America’s
Average
1.38 5.33 19.1 37.72
Source: Data of The World Trade Organization, ‘Dispute Settlement: disputes by country/territory,’
http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm Retrieved on 15 March 2011;
Data of the World Bank, ‘Indicators,’ http://data.worldbank.org/indicator Retrieved on 4 June 2011.

A majority (approximately 70 percent) of East Asia’s WTO complaints are meant
to filed to contest trade remedy measures of importing countries, including antidumping,
countervailing, and safeguard duties.
25
Broadly speaking, the complaints are to defend
themselves against accusations of “dumping.” The growth of WTO litigation filed by
East Asian countries parallels the rise in trade remedy measures against them. For
example, half of the 2061 antidumping measures imposed between 1995 and 2011
targeted East Asia alone, with 70 percent of the measures against China, Korea, Taiwan,
Japan, and Indonesia.
26
A comparison between the antidumping orders on East Asia and

25
This estimate is based on the count of dispute settlement cases between 1995 and 2011. See
“Chronological list of disputes cases,” The World Trade Organization. Link:
http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm Data retrieved on 5 June 2012.
26
For more details, see The World Trade Organization. Link:
http://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByExpCty.pdf Data retrieved on June 5 2012.
24
Latin America indicates a similar pattern. As Table 3 shows, when holding constant a
country’s GDP, GDP per capita, balance of trade, and exports as a percentage of GDP,
East Asian countries as a whole have been significantly more susceptible to antidumping
measures than have the Latin American countries.
27

Table 3. Regression on antidumping measures received by 80 WTO members 1995-
2010
Independent Variable coefficient standard error p-value
GDP 1.6935 7.7411 0.0319 **
Trade balance 3.4986 2.1847 0.0807 *
Export/GDP -1.005 1.9750 0.0037 ***
GDP per capita -0.0003 0.3346 0.7588
East Asia 160.687 0.0009 4.712 ***
Latin America -4.6391 29.0541 0.8234
Constant 55.9872 18.2964 0.0031 ***
Dependent variable: the number of antidumping measure received by a WTO member state
R²:0.42; Adjusted R²:0.38; F:8.99
Source: Data of The World Trade Organization, ‘Dispute Settlement: disputes by country/territory,’
http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm Retrieved on 15 May 2011;
; Data of the World Bank, ‘Indicators,’ http://data.worldbank.org/indicator Retrieved on 4 April 2011.

27
See similar studies, Thomas J. Prusa, “On the Spread and Impact of Antidumping,” Canadian Journal of
Economics, 34, no. 3 (2001): 591–611. Thomas J. Prusa, “East Asia's Anti-Dumping Problem,” The World
Economy 29, no. 6 (June 2006): 743-761. Prusa argues that East Asia has always been the main target of
anti-dumping measures. But the impact of this discriminating measure has worsened since the WTO’s
inception because many new players from the developing world—India, Argentina, and South Africa,
especially—started to use this tool extensively. For the detailed data on the 80 developing countries, see
Appendix.
25

Although the amount of trade remedy measures against the East Asian region is
extraordinary, the decision to use WTO litigation to contest this issue varies from country
to country.

Figure 2. WTO litigation over trade remedy issues by East Asian countries from 1995
to 2012

As Figure 2 shows, Korea is by far the most aggressive at contesting trade remedy
measures that have been issued against it. Thailand, a relatively small economy, is also
aggressive. By contrast, Taiwan and Malaysia are relatively inactive at contesting the
considerable number of trade remedy measures that have been filed against them. In

Note: The X axis represents the logarithm of the number of trade remedy measures directed at
each East Asian country. Although Japan has filed 17 complaints at the WTO, only 8 of these
complaints contested trade remedy measures.
Source: The World Trade Organization, http://www.wto.org/, accessed 20 October 2012.
26
addition, although only second to Korea in terms of WTO complaints filed against it for
trade remedy issues, the number of WTO complaints filed by China is below average in
relation to the amount of trade remedy measures leverage against it.
Government-business relations can help make sense of the rise of trade disputes,
the charges of dumping, and the variance in contestation by East Asian countries. The
dumping charges directed at East Asia partly reflect the nature of government-sponsored
economic plans in these countries. Governments in this region have been known to use
public policy to direct and promote export-oriented industries. Although industrial policy
is restricted under the WTO rules, these governments continue to view export sector
performance as the source of their economic power and thus seek to ease the growing
barriers caused by trade remedy issues. However, their ability to do so differs, as the
WTO litigation process involves both public and private participation and thus
government-business collaboration.
28
Such collaboration is not entirely under the
government’s domain, but rather is under the influence of structural factors ranging from
the exporter’s production scale and market strategy to its relations with the government.

Overview
My dissertation seeks the structural explanations for East Asia’s WTO litigation
behavior, which can be gauged by the frequency and the strategy of filing WTO
complaints. The research explores several questions: Why are some East Asian countries

28
Peter B. Evans, Embedded Autonomy (Princeton: Princeton University Press, 1995); Alfred Chandler,
Franco Amatori, and Takashi Hikino eds., Big Business and the Wealth of Nations (New York: Cambridge
University Press, 1997). Eduardo Silva, The State and Capital in Chile: Elites, Technocrats, and Market
Economics (Boulder, CO: Westview, 1996); Sylvia Maxfield and Ben Ross Schneider, Business and the
State in Developing Countries (Ithaca, NY: Cornell University Press, 1997).
27
litigating trade remedy issues more frequently than others in the WTO? And when East
Asian countries do utilize the WTO dispute settlement system, why some are more
prompt, more determined going through the panel process, and more aggressive than
others at declaring their business interests?
I present a thesis, which I call, the developmental state goes litigious, to explain
the logic of decision-making in East Asian countries as to whether and how to use WTO
litigation. I argue that East Asia’s litigation movement, while provoked by the rise of
trade remedy measures filed against the region, represents a renaissance of the
developmental state, i.e. that governments intend to maintain their market relevance by
taking legal initiatives in order to reduce economic fluctuation and maintain private
sector’s competitiveness. This action is not driven by pressure facilitated by checks-and-
balances mechanisms, however. With their high discretionary power, governments in
East Asia are pursuing litigation to maintain their reputations of continued commitment
in the promotion of those export sectors which they view as critical to their economic
plans. In this sense, WTO dispute settlement is used by the East Asian governments to
pursue accomplishment.
The question that follows is what domestic structural factors determine the extent
to which governments in East Asia are likely to use WTO litigation to maintain their
reputation as such? I argue that WTO litigation by East Asian governments is determined
by the structure of their export sector and by government-export collaboration in
combating export barriers. Their litigious behavior will be more aggressive if the leading
exporters are characterized by large oligopolies in key industries. These exporters are not
only more likely to commit to contesting export barriers prior to filing with the WTO, but
28
are also more capable of collaborating within the industry as well as with the government
once the WTO adjudication process starts. From the governments’ viewpoint, WTO
litigation for these exporters presents a more rational consideration, a higher chance of
victory, and a more politically valuable action than exporters with small-scaled and
scattered production. I hypothesize that the governments in East Asia will contest export
barriers more often, more promptly, and more aggressively when the dispute involves
exporters with these characteristics. On the contrary, in the absence of these exporters,
governments will not have a strong impetus to pursue high-profile contestation such as
WTO litigation. In turn, they will use the WTO dispute settlement system less frequently
and when they do use it their litigation strategy (e.g. the timing, tactics, the extent of
claimed business interests, the amount of damage versus return etc.) will be relatively
moderate.
Chapter Two develops the argument described above and places it within the
context of the current literature. To test the causality presented in Chapter Two,
qualitative methods are essential to trace the decision-making process of WTO litigation.
First, my dissertation focuses on the cases of Korea and Taiwan to explain how export
industry structure affects the government’s WTO litigation strategy. The merit of this
comparison comes from these two economies’ many parallels—from historical and
cultural to political and economic profiles—which allow us to control for noisy variables.
While both Korea and Taiwan have been major targets of trade remedy measures, the
record of their WTO litigation demonstrates substantial variation. Korea has been among
the most aggressive countries within the WTO when it comes to contesting trade remedy
29
issues, whereas Taiwan has rarely used the WTO dispute settlement mechanism to
address the issue of export barriers.
Key independent variables in both countries also demonstrate sufficient variation.
For example, the Korean export sector is dominated by conglomerates, whereas small and
medium enterprises prevail in Taiwan. Chapters Three and Four compare how industry
structure and government-business relations in Korea and Taiwan influence the handling
of disputes related to trade remedy issues and therefore the government’s consideration in
filing legal complaints at the WTO. The former presents a successful case of the
developmental state goes litigious, i.e. that the government frequently and strongly
defends its global trade interests by exploiting the WTO dispute settlement system in
order to maintain its relevance to multinational corporations. The latter, on the other
hand, presents an unsuccessful case, i.e. the government rarely files for WTO
adjudication due to a lack of initiative on the part of key export industries in contesting
trade remedy-related disputes, as well as a lower level of collaboration with the
government.
In addition to Korea and Taiwan’s experience, this dissertation also examines
China’s WTO litigation. However, considering the idiosyncratic nature of China’s trade
remedy problem, which is under the category of non-market economy, Chapter Five is
not intended to be juxtaposed with the cases of Korea and Taiwan for the sake of
comparative studies. Rather, this chapter serves as a single case study to illustrate how
Chinese export sector’s structure and capacity to cooperate internally and to collaborate
with the government affects the latter’s decision on whether and how to pursue WTO
litigation. Another point to bear in mind about China’s case is the capacity of industrial
30
organization to collaborate with the government on trade dispute issues. This discussion
is passed over in the chapters on Korea and Taiwan as the political space for policy
advocacy in both countries is equally sufficient and can be held constant. However, due
to China’s rapid political and economic transition, the chapter on China needs additional
discussion on the legal status of interest groups and their development during market
opening and reform so as to assess how industrial organizations have been able to
influence the Chinese government on trade issues. Given the fact that China has been by
far the largest target of trade remedy measures, Chapter Five is significant for applying
the government-exporter nexus framework to understand the focal point of the current
trade remedy disputes in the WTO.
While variation may exist among different types of exporting industries regarding
their handling of trade remedy measures, each chapter outlines the general characteristics
of exporters and sectoral distinctions in each country. These can serve as a foundation for
a comprehensive comparison of the pattern of WTO litigation employed by different
states in the conclusion chapter, namely Chapter Six. While summarizing the findings of
each empirical chapter, the conclusion examines the empirical findings based on the
theoretical framework and the concomitant hypotheses proposed in Chapter Two. The
analysis is based on the country-level comparison of Korea’s and Taiwan’s WTO
litigation experiences, while sectoral characters are detailed to improve our understanding
of the subnational variance. The conclusion also provides a summary of the case study-
style analysis of China’s WTO litigation, focusing on the connection between the
character of national level policy and the variance of sectoral factors. With the evidence
of these three cases, the dissertation aims to explain the logic of East Asian governments’
31
decision-making process in the use of WTO litigation to contest export barriers based on
trade remedy measures.
32
CHAPTER TWO:
Developmental States Contesting Export Barriers in the WTO,
an Analytical Framework

This chapter constructs a framework to explain the decision-making behind WTO
litigation within a political system where the executive branch holds a substantial extent
of discretionary power in trade affairs. It first reviews and critiques the current literature
on explaining why states file WTO litigation, laying out the justification for studying East
Asia’s experience in WTO litigation from the viewpoint of government-exporter
collaboration. Tracing the previous literature on East Asian political economy, the
chapter explains WTO litigation’s political value to governments and how government-
exporter collaboration fits into the government’s deliberation process. Combining the
literature on East Asian political economy and organized interests, it then moves to
explore the structural factors that determine government-exporters collaboration in the
face of export barriers. Based on this analysis, this chapter proposes two sets of
hypotheses that will be tested in the empirical chapters.

The Role of the State in WTO Litigation: A Critique
Although public and private interests are more intertwined than ever as
international trade relations become legalized, WTO dispute settlement continues to be an
exclusive arena for government action under the current WTO framework. For this
reason, a majority of the research on this subject continues to use the state as the unit of
33
analysis, and the scope of this research remains focused on interstate relations.
Specifically, most scholars examine how governments handle trade disputes with one
another under the arrangement of this international regime. These studies emphasize the
effect of WTO adjudication on state behavior, claiming that trade regimes serve as a
“soft” factor through functions such as the reputation costs of non-compliance, normative
pressures of rulings, and the inherent exchange of information.
29
While acknowledging
the potential function of the regime, others continue to see international structure as the
key to explaining state behavior. In particular, this perspective sees trade interests and
power distribution among states as dominant in a state’s decision whether and how to file
for WTO adjudication or to settle a trade dispute
30

While providing insights into interstate relations under the influence of trade
regimes, the mainstream literature, by assuming states as unitary actors, cannot
sufficiently explain more nuanced differences in state behavior. For example, Christina
Davis challenges the international structural perspective by pointing out that some small

29
Wilfred J. Ethier, Punishments and Dispute Settlement in Trade Agreements, Economic Policy Research
Unit (EPRU) Discussion Paper No. 2001-14, University of Copenhagen, 2001; Christina R. Sevilla,
“Explaining Patterns of GATT/WTO Trade Complaints,” Working Paper 98/1, Weatherhead Center for
International Affairs, Harvard University, 1998. Christina R. Sevilla, “A Political Economy Model of
GATT/WTO Trade Complaints,” Jean Monnet Working Paper No. 5/97, New York University School of
Law, 1997. Giovanni Maggi, “The Role of Multilateral Institutions in International Trade Co-operation,”
American Economic Review 89, no. 1 (1999): 190–214. Kyle Bagwell and Robert W. Staiger, “An
Economic Theory of GATT,” American Economic Review 89, no. 1 (1999): 215–248.
30
Henrik Horn, Petros C. Mavroidis, and Håkan Nordstrom, “Is the Use of the WTO Dispute Settlement
System Biased?” Economic Research and Analysis Division, WTO Centre for Economic Policy Research
(1999); Eric Reinhardt, “Aggressive Multilateralism: The Determinants of GATT/WTO Dispute Initiation,
1948-1998,” Manuscript, Emory University, 2000; Thomas Sattler and Thomas Bernauer, “Dispute
initiation in the World Trade Organization,” paper presented at the annual meeting of the International
Political Economy Society (Stanford University, Palo Alto, California, 2007). Marc L. Busch and Eric
Reinhardt, “Testing International Trade Law: Empirical Studies of GATT/WTO Dispute Settlement,” in
Daniel M. Kennedy and James D. Southwick eds., The Political Economy of International Trade Law:
Essays in Honor of Robert Hudec, (New York: Cambridge University Press, 2002): 457-481; Chad P.
Bown, “Developing Countries as Plaintiffs and Defendants in GATT/WTO Trade Disputes,” The World
Economy 27, no. 1 (2004): 59-80.
34
and developing countries, like Thailand, are more aggressive than, for example,
Botswana, which is at a similar level of development and geopolitical value.
31
As the
international structure explanation focuses on macro-level factors, the trigger for a
decision within the government to file WTO litigation remains unclear when considering
all trade disputes for that country. The country’s domestic dimension thus emerges as an
essential factor to understanding this decision-making process.
Studies on the effect of domestic politics on WTO litigation have risen to fill this
gap. Among them, the most common explanation for and effective factor in predicting a
state’s WTO litigation behavior are business pressure and contesting government-
business relations.
32
These studies conclude that in a political system where checks-and-
balances mechanisms, or the power of the legislative branch, is strong, pressure from
interest groups can be easily channeled to demand that the executive branch represent
their interests more transparently. From the executive branch’s perspective, WTO
adjudication is also more favorable in a tough negotiation as it “serves as a release valve
that allows the governments to respond to multiple competing interests while avoiding a
trade war”.
33
In other words, filing WTO litigation is a signal to domestic groups that the

31
Davis, Why Adjudicate? Enforcing Trade Rules in the WTO: 69.
32
Marc Busch, “Democracy, Consultation, and the Paneling of Disputes under GATT,” Journal of Conflict
Resolution 44, no. 4 (2000): 425–446; Peter Rosendorff, “Stability and Rigidity: Politics and Design of the
WTO’s Dispute Settlement Procedure,” American Political Science Review 99, no. 3 (2005): 389-400; Eric
Reinhardt, “Aggressive Multilateralism: The Determinants of GATT/WTO Dispute Initiation, 1948-1998,”
Manuscript, Emory University, 2000; Christina L. Davis, Why Adjudicate? Enforcing Trade Rules in the
WTO (Princeton: Princeton University Press, 2010). Thomas Sattler and Thomas Bernauer, “Dispute
initiation in the World Trade Organization,” paper presented at the annual meeting of the International
Political Economy Society, Stanford University, Palo Alto, California, 2007. Christina L. Davis, Why
Adjudicate? Enforcing Trade Rules in the WTO (Princeton: Princeton University Press, 2010).
33
Davis, Why Adjudicate? Enforcing Trade Rules in the WTO:12.
35
executive branch’s hands are tied on an issue. These scholars conclude that democracies
encourage use of adjudication to resolve trade disputes for accountability purposes.
While business pressure provides by far the most established explanation on how
domestic politics shape a state’s decision to utilize WTO litigation, its portrait of
contestation between the government and business groups may be at the cost of grasping
other factors that matter to the government. First, the government may have its own
strategic concerns in using WTO litigation. For example, Miles Kalher observes that
during WTO negotiations East Asian countries unanimously expressed their interest and
support for the WTO dispute settlement procedure even without any particular domestic
pressure.
34
Rather, their interest came from their desire to enhance their bargaining power
vis-à-vis strong countries, like the United States, that have them at a disadvantage in
bilateral negotiations. Other studies also suggest that states may show different
preferences for adopting multilateral rules depending on the regional context
35
In addition
to this strategic concern, a state may also care about its capacity for WTO litigation.
Several studies suggest that the financial resources and legal expertise that the executive

34 Miles Kahler, “Litigation as Strategy: The Asia-Pacific Case” in Judith L. Goldstein, Miles Kahler,
Robert O. Keohane and Anne-Marie Slaughter, eds., Legalization and World Politics (Cambridge, Mass.:
The MIT Press, 2001): 165-188.
35
Joseph M. Grieco, “Systemic Sources of Variation in Regional Institutionalization in Western Europe,
East Asia and America,” in Edward L. Mansfield and Helen V. Milner eds., The Political Economy of
Regionalism (New York: Columbia University Press, 1997): 164-187. Using the evidence of East Asia’s
regional integration, Grieco found that the extent of institutionalization of regional agreements has been
influenced by power relations among members. In areas where local distribution of power capabilities has
shifted, weaker states have opposed establishing a formal institution, fearing that it would reflect the
interest of more powerful members and undermine their security.
36
branch holds particularly matters to the case of developing countries or countries lacking
experience in using WTO Dispute Settlement Procedures.
36

The above critiques point to a more fundamental problem of the business pressure
explanation, i.e., their inadequacy in explaining how the executive branch comes to a
decision to file WTO litigation in the first place. The lack of interest at exploring state
autonomy makes it difficult to understand the logic of WTO litigation in a political
system where the legislative branch delegates high power to the executive branch in the
handling of trade disputes, as exemplified by East Asian countries. Up to now, none of
the governments in East Asia has institutionalized and enforced laws, like the U.S. Trade
Act of 1974, that mandate the executive branch to take action against foreign trade
barriers in response to private party requests, meaning that the executive branches in the
region maintain broad discretion in export barrier issues.
37
As the exporters lack access
through the legislative branch to demand that the government file WTO litigation on their
behalf, the executive branch continues its dominant role in this decision-making process.
The question that follows is, in countries where the government’s discretionary
power is high, what drives the government to take an action such as filing WTO

36
Valentina Delich ”Developing Countries and the WTO dispute settlement system,” Bernard Hoekman,
Aaditya Mattoo and Philip English eds., Development, Trade and the WTO, A Handbook (Washington,
D.C,: World Bank, 2002): 71-80. Constantine Michalopoulos, Developing Countries in the WTO (New
York: Palgrave, 2001); Andrew Guzman and Beth Simmons, “To Settle or Empanel? An Empirical
Analysis of Litigation and Settlement at the World Trade Organization,” Journal of Legal Studies 31
(2005): 205–35.
37
Sections 301 through 310 of the Trade Act of 1974 set forth a procedure for the United States Trade
Representative (USTR) to act in this situation. In 1979, 1984, 1988, and 1994, Congress passed
amendments broadening the scope of Section 301 to cover foreign barriers in services and investment,
intellectual property protection, competition law enforcement, and labor practices. The Japanese and the
Chinese government have passed laws similar to the Trade Act. However, these have not been
implemented.
37
litigation? I make two arguments. First, I argue that WTO litigation may serve the
government’s desire to be perceived as politically active and thus enhance its economic
leadership. Second, to achieve this goal, collaboration, instead of contestation, between
the government and exporters, is the key that drives the government to file WTO
litigation. East Asian countries may elucidate these two points given the governments’
high discretionary power in trade affairs. To elaborate my arguments, the following
section explains the importance of government-business collaboration to policymakers
based on a review of the East Asian political economy literature.

WTO Litigation by the Developmental State
The Importance of Government-Exporter Collaboration in Trade Policymaking
The debate on East Asia’s political economy sheds light on the political value of
economic policymaking.
38
The first wave of the discussion on East Asian political
economy often characterizes the governments in the region as developmental states for
their ability to direct and construct export-oriented industries.
39
Their explanation of East

38
High-performing Asian economies, or HPAEs, refer to certain East Asian economies that had high
economic growth between the 1960s and the 1990s. They include the early developer, Japan, the tiger
economies (Hong Kong, Singapore, South Korea, and Taiwan), and the late-coming economies (Indonesia,
Malaysia, and Thailand). Many also include post-reform China, and possibly Vietnam, in this category. For
more detail, see The World Bank, The East Asian Miracle: Economic Growth and Public Policy (New
York: Cambridge University Press, 1993).
39
These governments do so by coordinating with and allocating performance-based incentives to industries.
Other scholars note that another important function of the developmental state is to provide public goods
that can sustain a firm’s competence according to a country’s long-term economic policy. For more
discussion, please read Chalmers A. Johnson, MITI and the Japanese Miracle. (Palo Alto: Stanford
University Press, 1982); Robert Wade, Governing the Market: Economic Theory and the Role of
Government in East Asian Industrialization (Princeton: Princeton University Press, 1990); Stephan
Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries
(Ithaca: Cornell University Press, 1990). Meredith Woo-Cumings ed., The Developmental State (Ithaca:
Cornell University Press, 1999).
38
Asia’s export promoting policies emphasizes political insulation, whereby the executive
branch is able to make technocratic policies that help economic growth, promote social
stability, and therefore secure the political legitimacy of the regime.
40

However, later scholarship, particularly in light of the financial crisis in the late
1990s, challenges the assumption of political insulation and instead emphasizes business
pressure on economic policies. They argue that a small number of business groups, once
under the governments’ command and patronage, gradually have gained influence over
the economy and now demand the governments in the region to conduct policies that
serve their interests.
41
Policy decision making, in their explanation, is held captive by
business interests, leaving the governments little discretion of their own.
A third stream of scholarship offers an intermediate explanation of policy choice
in East Asia between these two explanations. On the one hand, scholars in this third
stream admit the continuing tendency of East Asian governments to involve themselves
with the market because, in spite of the waning of market intervention following the rise
of democratization and trade liberalization, economic growth is still imperative to their
political legitimacy. On the other hand, they also recognize the influence of business.
However, rather than portraying business actors as a source of pressure, they address the
importance of business input where collaboration between the government and business

40
Ibid.
41
Robert Wade, “From “miracle” to “cronyism”: Explaining the great Asian slump,” Cambridge Journal of
Economics 22 (1998): 693-706. Andrew Macintyre, “The Politics of the Economic Crisis in Southeast
Asia,” International Organization 55, no. 1 (Winter 2001): 81-122. David C. Kang, Crony Capitalism:
Corruption and Development in South Korea and the Philippines (Cambridge: Cambridge University Press,
2002); Linda Y.C. Lim and Aaron Stern, “State Power and Private Profit: the political economy of
corruption in Southeast Asia,” Asian-Pacific Economic Literature 16, no. 2 (November 2002): 18-52. Arvid
Lukauskas, “Financial Restriction and The Developmental State in East Asia: Toward a More Complex
Political Economy,” Comparative Political Studies 35 (2002): 379-412.
39
actors is essential for East Asian bureaucrats who require knowledge about the industries
they govern to ensure the credibility of their policies. Specifically, they stress the role of
government industry associations, which help the bureaucrats “embed” into the economy
by gathering market information and coordinating the enterprises to ensure effective
policy implementation.
42
Some scholars also argue that this policy collaboration
continues even when a state’s political autonomy is in decline. They stress that most
industry associations in East Asia have transformed from delivering top-down commands
to communicating business interests to the government.
43

More recent scholarship furthers the collaboration explanation by portraying East
Asia’s adoption of neoliberal foreign economic policies as a natural outgrowth of
government-business coevolution.
44
They explain, as leading East Asian enterprises
become more globalized following trade liberalization, their governments are prone to

42
Peter B. Evans, Embedded Autonomy: States and Industrial Transformation (Princeton: Princeton
University Press, 1995). This term, “embeddedness,” was coined by Evans who used “embedded
autonomy” to describe East Asian governments’ simultaneous political insulation from and close
collaboration with the private sector in terms of policymaking.
43
Yun-han Chu, “The Institutional Foundation of Taiwan’s Industrialization: Exploring the State-Society
Nexus,” in Gustav Ranis, Sheng-cheng Hu, and Yun-peng Chu eds., The Political Economy of Taiwan’s
Development into the 21
st
Century, Volume 2 (Cheltenham U.K.: Edward Elgar Publishing Co., 1999):
285-310; Chung-in Moon, “Changing Patterns of Business-Government Relations in South Korea,” in
Andrew MacIntyre eds., Business and Government in Industrialising Asia (Ithaca: Cornell University
Press, 1994): 142-166. Cheng-Tian Kuo, “Private Governance in Taiwan,” in Steve Chan, Cal Clark, and
Danny Lam eds., Beyond the Developmental State: East Asia’s Political Economy Reconsidered (London:
Macmillian, 1998): 84-95. Richard F. Doner and Ben Ross Schneider, “Business Associations and
Economic Development: Why Some Associations Contribute More Than Others,” Business and Politics
2(3) (2000): 261-288.
44
Christopher M. Dent, The Foreign Economic Policies of Singapore, South Korea and Taiwan
(Cheltenhem: Edward Elgar Publication, 2003). Barry K. Gills, “Economic Liberalization and Reform in
South Korea in the 1990s: A Coming of Age or a Case of Graduation Blues?” Third World Quarterly 17,
no. 4 (1996): 667-688; Linda Weiss, “Developmental States in Transition: Adapting, Dismantling,
Innovating, not “Normalizing,”’ The Pacific Review 13, no. 1 (2000): 21–55; Robert Wade, “What
Strategies are Viable for Developing Countries Today? The World Trade Organization and the Shrinking of
“Development Space,” Review of International Political Economy 10, no. 4 (2003): 621–644.
40
acquire policy tools that fit the neoliberal trajectory to maintain relevance with the
business sector. Using Japan and Korea’s move to adopt bilateral investment treaties and
regional trade agreements as examples, these scholars see the convergence of the
governments’ desire for reviving the economy and the leading enterprises’ yearning for
expanding the global markets as the impetus for neoliberal policy choices.
45
Some add
that this interest convergence developed from the government-business policymaking
networks in both countries as numerous advisory groups formed between the economic
ministries and enterprise and industry associations studying and formulating trade
policies.
46

The collaboration explanation is useful for understanding WTO litigation’s
political value for East Asian governments. While filing WTO litigation may facilitate
exports, governments that have close relations with their exporters might be particularly
interested in litigation due to their desire to maintain economic leadership. While their
exporters continue to expand their businesses overseas, governments should naturally
begin taking on new tasks, such as the handling of export barriers in multilateral
channels.

45
Weiss, Developmental States in Transition: Adapting, Dismantling, Innovating, not “Normalizing”;
Paul Bowles, “Regionalism and Development after (?) the Global Financial Crises,” New Political
Economy 5, no. 3 (November 2000): 433-455. Mireya Solis, Barbara Stallings, and Saori N. Katada eds.,
Competitive Regionalism: FTA Diffusion in the Pacific Rim (New York: Palgrave Macmillan 2009).
46
For more discussion on how government-business network influences Japan and Korea’s foreign
economic policy, see Dent, The Foreign Economic Policies of Singapore, South Korea and Taiwan;
Shigeko Hayashi, Japanese Foreign Economic Policy and the Idea of an Asian Monetary Fund, Discussion
Paper (Warwick University, Department of Politics and International Studies, 2002). Chi-wook Kim,
“Toward a Multistakeholder Model of Foreign Policy Making in Korea? Big Business and Korea-US
Relations,“ Asian Perspective 35 (2011), 471–495.
41
Moreover in terms of governments’ economic leadership, the credibility of their
policy choices are also at stake, as trade laws in East Asian countries, as mentioned in the
previous section, grant the executive branch substantial discretionary power over export
barrier issues. Collaboration with exporters is essential to ensure the success, and thus the
apparent soundness, of their policy choices. This line of thought fits into rational
intuition. A decision maker, who is not obligated to respond to specific pressure groups,
has no reason to litigate over a dispute that does not have much chance of winning.
Studies lend support to this explanation. Richard Posner found that, when selecting
matters for adjudication, bureaucratic agencies prioritize the “win-rate” over any other
factor. Collaboration, in this sense, enhances the likelihood of winning WTO litigation.
47

Government-exporter collaboration is also addressed in the literature on litigation
capacity, where scholars emphasize the superior professional capacity of the private
sector.
48
The capacity of the private sector is important because, as Gregory Shaffer
points out, it is enterprises that stand at the center of commercial disputes.
49
Enterprises
that are aggressive at legal contestation are most likely ones that work closely with the
government over disputed issues. However, the function of collaboration is often taken
for granted in developed countries, where the interest groups that are capable of working
with the executive branch in WTO adjudication are often the ones that can leverage

47
Richard Posner, “The Behavior of Administrative Agencies,” The Journal of Legal Studies 1, no. 2
(1972): 305–347.
48
Marc Galanter, “Afterword: Explaining Litigation,” Law and Society Review 9, no. 2 (1975): 347-368;
Ann Bernstein and Peter L. Berger, Business and Democracy: Cohabitation or Contradiction? (New York:
Continuum International Publishing Group, 2000).
49
Gregory C. Shaffer, Defending interests: public-private partnerships in WTO litigation (Washington DC:
Brookings Institution Press, 2003), 11.
42
themselves through check-and-balance mechanisms. The effect of the private sector’s
capacity in trade legal disputes is observable in developing countries where the
governments are particularly engaged in WTO dispute settlements.
50
For example,
Gregory Shaffer and Ricardo Meléndez-Ortiz found that in Brazil, India, and Thailand,
the private sector has made substantial improvement in developing a collaboration
mechanism with the government in handling transnational trade disputes.
51

After knowing the importance of government-exporter collaboration for whether a
government decides to pursue WTO litigation, the next question is what affects the extent
of collaboration between governments and exporters in East Asia in handling trade
disputes and filing with the WTO. The following section draws insights from the
literature on East Asia’s political economy, organized interests, and litigation capacity to
identify and explain how government-exporter collaboration in trade disputes is shaped
by certain structural factors. Finally, as far as my research interest in East Asia is
concerned, the analysis will examine the disputes related to trade remedy issues in
particular, as they are the major trade barrier for countries in the region.

50
Ibid. Gregory C. Shaffer and Ricardo Meléndez-Ortiz eds., Dispute Settlement at the WTO: The
Developing Country Experience, 1st ed. (New York: Cambridge University Press, 2010); Michelle Ratton-
Sanchez , Gregory G. Shaffer, G. and Barbara Rosenberg, “Brazil’s Response to the Judicialized WTO
Regime: Strengthening the State through Diffusing Expertise,” Paper presented at the annual meeting of the
Law and Society Association, Berlin, Germany, July 25
th
, 2007; Saadia Pekkanen, Japan's Aggressive
Legalism: Law and Foreign Trade Politics Beyond the WTO (Palo Alto: Stanford University Press, 2008).
51
Shaffer and Meléndez-Ortiz, Dispute Settlement at the WTO: The Developing Country Experience.
43
A Roadmap to Assess Collaboration: Export Structure and Government-Exporter
Policymaking Network
Which exporters, or exporting industries, are likely to strongly contest trade
remedy issues? This is a critical question because those who commit to contesting the
issues have a greater chance of winning a court case, and therefore more chances for the
exporter’s government to assist them through WTO dispute settlement procedures. But
before asking this question, some knowledge about trade remedy measures—the major
issue that East Asian countries contest in the WTO—will help us understand how
government-exporter collaboration matters for handling trade disputes.
Trade remedies refer to policy tools that allow governments to take remedial
action against imports which cause material injury to a domestic industry. According to
the WTO agreements, these include antidumping, countervailing, and safeguard
measures, and they serve to curb injurious imports at different junctures in the trade
process.
52
The WTO specifies a clear set of rules and procedures for governments to
implement trade remedy measures. It often starts with petitions from domestic industries
or workers of importing countries requesting a limit on imports causing them material
injury. In the case of antidumping and countervailing measures, the importing

52
Dumping takes place when a product is exported at less than its normal value, i.e. the comparable price,
in the ordinary course of trade, for the like product when consumed in the exporting country. Antidumping
measures are measures that can be undertaken whenever the importing country confirms that dumping and
material injury resulting from the goods under investigation has occurred. Countervailing measures are
measures that can be undertaken whenever an investigation, by the investigating authority of the importing
country, has led to the determination that the imported goods are benefiting from subsidies, and that they
also result in material injury. Safeguard means action taken to protect a specific industry that is seriously
injured by an unexpected buildup of imports. All three measures often take the form of duties or the price
undertakings by the exporting firms or the authorities of the exporting country (in the case of
countervailing measures). For more details, see the World Trade Organization, “Antidumping,” link:
http://www.wto.org/english/tratop_e/adp_e/adp_e.htm retrieved on 1 April 2011.
44
administration starts an investigation per the request of the petitioner into foreign
producers or governments to determine whether dumping or subsidization has occurred.
Meanwhile, a separate and independent body conducts another investigation determining
whether the domestic industry is suffering material injury, or whether there is a threat
thereof, as a result of the imports under investigation. Duties are imposed if both
authorities find in the affirmative. The investigating authorities for safeguard measures
may differ from those for antidumping and countervailing measures due to the nature of
the issue. However, they also have to conduct a transparent and established procedure
according to the WTO rules to investigate and determine whether a measure is in the
public interest.
53

Throughout this process, disputes may occur between the investigating authorities
and the industry of the exporting country under investigation regarding whether the
procedure or the determination is consistent with WTO rules. Exporters or the
government of the exporting country may appeal to the domestic court of the importing
country regarding the implementation of trade remedy measures by the two investigating
authorities. For example, in the United States, exporters can appeal to U.S. Court of
International Trade (CIT) against the determinations of the Department of Commerce
(DOC) and the International Trade Committee (ITC). The same action can be taken in the
European Union Court of Justice. If the plaintiff is still not satisfying with the ruling of
the Court, WTO dispute settlement procedures become the last resort to contest the
implementation of trade remedy measures. From this point on, the dispute escalates from

53
For more information about the WTO rules on safeguards, see the World Trade Organization,
“Safeguard,” link: http://www.wto.org/english/tratop_e/safeg_e/safeg_e.htm retrieved on 1 April 2011.
45
the industry level to the state level, as it is the government of the exporting country that
must initiate a WTO investigation.
The picture described above points to some crucial realities about trade remedy-
related disputes. First, before contesting at the WTO level, the exporters, or the exporting
industries, under investigation have already undergone a series of investigations, or
sometimes judicial reviews, in the importing country. According to WTO rules on
antidumping and countervailing measures, the process from initiating a preliminary
investigation to determining the result takes more than one year and may be prolonged if
the exporter continues to contest rulings in the court of the importing country. In addition,
although the investigation is in theory a pure function of the trade rules at the state level,
disputes between the exporters under investigation and the authorities of the importing
country may occur. In fact, many studies suggest that the results of trade remedy
investigations are subject to political pressure imposed by the petitioners, their business
alliances, and their legislative delegations.
54
This means that, in order to win a case the
exporters not only have to participate in the investigation process but also have to rival
political pressure from petitioners of the importing countries by lobbying with the
relevant business groups, government bureaus, and even legislature of the importing
county. In short, it is not an easy task for exporters or industries to contest a trade remedy
issue unless they are determined to do so.

54
Robert E. Baldwin, The Political Economy of U.S. Import Policy, (Cambridge, MA: MIT Press, 1985);
Judith Goldstein and Stefanie Lenway, “Interests or Institutions: An Inquiry into Congressional-ITC
Relations,” International Studies Quarterly 33 (1989): 303-327; Wendy L. Hansen, “The International
Trade Commission and the Politics of Protectionism,” American Political Science Review 84, no. 1 (1990):
21-46; Wendy L. Hansen and Thomas J. Prusa, “The Economics and Politics of Trade Policy: An Empirical
Analysis of ITC Decision Making,” Review of International Economics, vol. 5 (May 1997): 230-245.
46
The next question is which industries contest trade remedy issues the most? As
trade remedy measures have industry-wide impact, one should examine the exporting
industry as a whole to find the answer. The literature on organized interests provides
insights into how industry composition affects the way it handles trade barriers. The size
of the group has been identified as an important factor. Specifically, studies suggest that
the members of small and homogeneous groups with strong communities of interests
have greater individual chances for favorable policy decisions.
55
They can organize at
lower cost and can more successfully control the free riding that otherwise would
undermine the achievement of their collective goals. While small groups act more
effectively as a whole, other studies caution that they lack economies of scale in the
production of pressure. A large group, meaning industry in the case of trade policy
lobbying, has larger profit margins and should have more resources to provide more
votes, money, organization, and thus influence.
56
If a large group can overcome the free
riding problem, it can potentially channel greater political pressure. Industry leadership is
critical in this sense.
57
If the leadership can accumulate enough economy of scale,
provide free rides to smaller members, and consolidate common interests, the industry

55
Kenneth J. Arrow, Social Choice and Individual Values, 2nd ed. (New York: Wiley, 1963); Mancur
Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, MA: Harvard
University Press, 1965); William H. Riker, The Theory of Political Coalitions (New Haven: Yale
University Press, 1962); James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical
Foundations of Constitutional Democracy (Ann Arbor: University of Michigan Press, 1962).
56
Sam Peltzman, “The Gains and Losses from Industrial Concentration,” Journal of Law and Economics
20 (April 1977): 229–263; Yale Brozen, Concentration, Mergers, and Public Policy (New York:
Macmillan, 1982); Harold Demsetz, “Industry Structure, Market Rivalry, and Public Policy,” Journal of
Law and Economics 16 (April 1973): 1-10; Joseph E. Stiglitz and G. Frank Mathewson eds., New
Developments in the Analysis of Market Structure (Cambridge, MA: MIT Press, 1986); Gary S. Becker, “A
Theory of Competition among Pressure Groups for Political Influence,” The Quarterly Journal of
Economics 98 (1983):371-400.
57
Mancur Olson, The Logic of Collective Action (Cambridge: Harvard University Press, 1965).
47
can effectively act as a whole to demand entitlements, protection policies, or any sort of
lobbying activities.
This account has been tested by the petitions of trade remedy measures in
importing countries. According to Patrick Messerlin’s study, nearly 75 percent of
antidumping measures—the most used form of trade remedy—from 1995 to 2000 were
filed by industries in metals, chemicals, machinery and electrical equipment, textiles and
clothing, and plastics.
58
These industries, he explains, tend to be assembled by
oligopolistic firms with a high proportion of relatively standard products. Those firms,
given their high-stakes interest and their small-group advantage, are able to organize
themselves to prevent foreign competition.
The composition of interest group is as important to trade remedy petitioners as to
trade remedy defenders. The size of businesses, particularly for the industry leadership, is
an important factor. In trade remedy investigations, the importing country’s authority
often requests surveys of a number of leading firms as a representative sample of the
industry. However, not all firms have the resources to participate in both the investigation
process and the advocacy campaign against trade remedy suits. After all, most exporters
compete in foreign markets on narrow price and profit margins. If those firms have larger
scales of production and higher profit margins, they are more likely to bear the brunt of
the trade remedy investigations for the whole industry. In addition, large exporters have
more to lose when not confronting the trade barriers. Given the scale of their investment,

58
Messerlin notes that these features are more distinct in the metals and chemicals sectors while the other
sectors require a closer look with disaggregation. For more discussion, read Patrick A. Messerlin,
“Economic Effects of China's Accession to the World Trade Organization,” The World Bank Economic
Review 18, no. 1, (2004): 105-130.
48
operation, and market value, they have less flexibility to adjust to market fluctuations
caused by trade remedy measures, for example, by transferring their products to an
alternative market to compensate for their losses or by moving their manufacturing to
gain better market access.
59
However, if the exporting industry consists of oligopolistic
firms, the collective action problem is easy to solve. They not only have their own vast
resources but also can easily collaborate with each other to strengthen their common
position on behalf of the whole industry.
Nonetheless, not all exporters are large-scale oligopolistic firms. Many export
industries in developing countries lack capital and consist mostly of small and medium
enterprises (SMEs). The large number of firms and the low concentration ratio of
production not only prevent individual firms from accumulating profit margins but also
make the free-riding problem hard to manage. This means that when the leading firms,
due to budget constraints, decide not to respond to an importing country’s survey during
an investigation, it becomes difficult for their industry association to unite the support of
the whole industry, both financially and professionally, to address trade remedy suits.
Moreover, the SME exporters may have fewer needs or interests in trade remedy issues.
Given the size of their operation, it is relatively easy for them to adjust to the new
business environment. Specifically, SME exporters have more flexibility to shift their
product from one market to another, or even to shift from one product to another, in the
face of trade restrictions. This adjustment strategy is relatively manageable and cost-

59
For example, many Korean exporters affected by trade remedy measures from Europe and the United
States in the late 1980s moved their manufacturing sites to Europe and North America (including Mexico)
to circumvent the trade barriers. On the other hand, most Taiwanese exporters that face similar barriers
moved to China and Southeast Asia. This point will be discussed in more detail in the following chapters.
49
effective in comparison with handling trade remedy suits, which require an established
system and resources to handle a long, tedious legal process without guaranteed market
access. This is not to say that SME exporters do not suffer from trade barriers. Rather, it
means that an individual firm’s cost-benefit analysis may lead it to opt for a suboptimal
situation instead of cooperating with other firms within its industry.
In sum, the above discussion illuminates two points about which industries
contest trade remedies. First, the size of the firm is an important factor. The larger the
exporter is, the greater the firm may be affected by the trade remedy measures and the
more likely it may contest this measure. Second, concentrated industries with a handful
of dominant firms will be more effective in obtaining protection than industries with
many small firms. With fewer free rider problems, more opportunities to reach a
consensus, and fewer communication problems among members, they may be more
organized and better at handling trade remedy suits. Likewise, they are also in a better
position collaborating with the government to address export barrier issues.

Hypotheses, Mechanism, and Operationalization
Based on the above discussion, I propose two pairs of hypotheses which are
followed by explanations on how the hypotheses are derived.
Hypothesis 1.1: The size of the exporters correlates positively with the chance for
the East Asian governments to file a WTO complaint over the issue of export barriers,
particularly trade remedy measures.
Hypothesis 1.2: The effectiveness of the government-exporters network at
handling trade disputes correlates positively with the chance for the East Asian
50
governments to file a WTO complaint over the issue of export barriers, particularly on
trade remedy measures.
Hypothesis 2.1: The size of the exporters correlates positively with the
aggressiveness of the East Asian governments’ litigation strategy over the issue of export
barriers, particularly trade remedy measures.
Hypothesis 2.2: The effectiveness of the government-exporters network at
handling trade disputes correlates positively with the aggressiveness of the East Asian
governments’ litigation strategy over the issue of export barriers, particularly trade
remedy measures.

Given promotion of export-led economic growth, most governments in East Asia
see export performance as imperative to their political survival and are interested in
embracing policy that helps maintain their economic leadership, such as using the dispute
settlement system to contest trade barriers against their export sector. However, the extent
that the government is able to do so varies.
The theoretical analysis in the previous sections points to two structural factors
that affect East Asian governments’ decision making on how to handle trade disputes and
whether to file WTO litigation. The first factor is industrial structure. Specifically,
industries whose production is dominated by a number of large companies are more
responsive to trade barriers like trade remedy measures as the economic impact caused by
the barriers is substantial enough to provoke the leading companies to take initiatives in
response. Likewise, the concentration of economic impact is also effective at stirring the
government’s concern over the trade barrier. Persuade
51
The second factor that makes the large exporters a central actor in dispute
settlement is their networking capability with the government. Industries that are
dominated by these large exporters are in a better position to organize themselves to
contest trade remedy issues. They are also more capable of pleading and collaborating
with the government over the issue. Moreover, exporters with large-scale production in
East Asia are often outgrowths of past government export-promotion policies. In many
cases, trade barriers targeting large exporters are premised on these exporters’ previous
government connections, which further enhances the need for them to collaborate for
dispute settlement. The economic incentives and the operational feasibility of large
exporters lend support for the government’s decision to use the WTO dispute settlement
to handle trade barriers. However, there are situations where the government, in order to
demonstrate its economic leadership, needs to file a WTO complaint without a proper
private partner to collaborate with during the dispute, especially in issues related to
industries across sector. In these cases, the filing of the complaint may be done in such a
way that it does not completely reflect business interests; rather the government has other
considerations, such as state’s international status.
60

I construct two independent variables that represent these two structural factors.
The first independent variable, representing industrial structure, is company size in the
exporting industries. This can be observed through a company’s capital, annual output or
trade volume, and global ranking. The second independent variable, representing an
exporter’s networking capability, is the industry’s network structure. This can be
observed through industry associations’ organizational capacity, both with the members

60
This point will be elaborated in Chapter Four.
52
and with the government, when facing foreign trade remedy charges or other trade
disputes. One can use the association’s size, resources, legal professionalism, lobbying
activities, and response to foreign trade remedy charges as a proxy for its capability.
To demonstrate the effect of the two independent variables, I construct two
dependent variables to represent the government’s WTO litigation behavior. The first
dependent variable is the “chance” or “likelihood” the government will file WTO
litigation regarding export barriers, mostly related to trade remedy rules. The variation of
this dependent variable can be observed by the frequency that a country files a WTO
complaint against other countries. As indicated by Hypothesis 1.1 and Hypothesis 1.2, the
larger the leading exporters are in a country and the more the industry associations are
able to collaborate within the industry and with the government to handle trade disputes,
the more likely the government is to use WTO dispute settlement to contest export
barriers. The converse—that if a government uses WTO dispute settlement, it will likely
have large leading exporters and high inter-industry and government-collusion—is also
true.
Industrial structure and government-exporter networking should have a similar
effect on the government’s litigation strategy in the WTO, or why the government
litigates in the WTO the way it does—the second dependent variable. Litigation strategy
refers to the timing, tactics, and aggressiveness at claiming business interest in a WTO
complaint. As it is less straightforward to discern the variation of such a qualitative
variable, for the purpose of operationalization, I dichotomize litigation strategy into two
broad categories, namely, strong litigation strategy and weak litigation strategy; the
former is characterized with the complainant’s (complaining government’s) promptness
53
and aggressiveness in going through WTO dispute settlement process and claiming
business interests, whereas the latter is characterized with postponement and reservation
in going through WTO dispute settlement process and claiming business interests. As
indicated by Hypothesis 2.1 and Hypothesis 2.2, the larger the leading exporters are in a
country and the more the industry associations are able to manage within the industry and
with the government to handle trade disputes, the more likely the government may take a
strong litigation strategy against export barriers in the WTO. The converse—that if a
government has a strong litigation strategy, it likely is serving large leading exporters and
has high inter-industry and government-exporter collusion—is also true.
I compare the empirical sources from Korea and Taiwan to test the two pairs of
hypotheses and the mechanisms behind them. As already indicated in Chapter One, while
Korea and Taiwan present distinct WTO litigation records, they share many similarities
in politics, economics, history and culture, which lay a good background for controlling
the effect of noise variables on my research. First, I shall describe the export barriers,
particularly the rise of trade remedy measures, against Korea and Taiwan, as a
background for the following analysis. Then, I shall first analyze the industrial structure
and the government-exporter network and compare to what extent different sectors of
both countries care about and work with the governments on export barrier issues. I shall
then examine the pre-WTO litigation record of the different export sectors in both
countries which may shed light on what private actors have been most and least dedicated
to the issue of export barriers. The analysis should then continue to cover both countries’
WTO litigation record in terms of both frequency and litigation strategy and their causal
connections with the two independent variables.
54
As Chapter One describes, China’s record of launching WTO litigation, which is
surprisingly below average given its economic size, also presents a puzzle. I also use the
same analytical framework to explain the Chinese government’s decision making on
whether and how to file WTO complaints. Following the flow of the analysis as
described above, the empirical chapter on China’s WTO litigation experience is a single
case study that illustrates how the government’s decision for and strategy in WTO
litigation is constrained by the export sector’s capacity to act as a whole and to
collaborate with the government.
55
CHAPTER THREE:
The Developmental State Goes Litigious,
Korea’s Pursuit of WTO Litigation

Since the inception of the WTO, Korea has been one of the most frequent member
states that use the Dispute Settlement Procedures to handle trade disputes and defend its
export interests. Using the analytical framework from Chapter Two, it explains how
Korea’s multinational corporations-dominated export structure and their collaboration
with the government drive the Government of Korea (GOK) to aggressively use WTO
litigation to fight for the disputes with their competitors in developed countries. The
GOK is doing so not only because of its long-standing tie with these exporters but also
because of their desire to lead them to be the world-class enterprises and boost Korea’s
economic growth.
The chapter starts with an overview of the trade barriers, mostly trade remedy
measures, against Korean exports. It then follows with two sections—one on the
industrial structure of Korea’s export sector and another on the policymaking networking
system between the GOK and domestic enterprises—to explain how these two structural
factors affect the ways that the government and the exporters may collaborate and
respond to trade protectionism. The rest of the chapter demonstrates this as a causal effect
with empirical evidence from Korea’s experience in trade disputes. It first analyzes top
Korean exporters’ record at handling dumping charges by foreign governments in non-
WTO legal venues; this part also provides background information for the WTO disputes
56
to be discussed in the following section. The second part of this analysis reviews WTO
complaints that Korea has filed, examining how the industrial structure and the public-
private network have meshed in such a way to compel the GOK and Korea’s top
exporters to aggressively use the WTO dispute settlement system. The analysis in this
section focuses on the collaboration between the government and the affected exporters
throughout the process of the disputes. Finally, extra attention is also paid to several
WTO complaints involved with the previous industrial policies where the GOK
demonstrates the most litigious behavior with the intent to both maintain its regulatory
reputation and expand export markets.

Background: The Rise of Export Barriers
As a newly industrialized country, Korea has been a major target of protectionist
policies from developed countries since the late 1970s. The export restrictions that Korea
has faced ranged from quotas and voluntary export restraints (VERs) to various other
non-tariff barriers. In the late 1970s, 24 percent of its exports were subject to non-tariff
barriers; this number climaxed 41 percent in the mid-1980s and remained above 20
percent through the early 1990s.
61

While quotas and VERs remained a common practice during the GATT (the
General Agreement on Tariffs and Trade) period, trade remedy measures, and
antidumping measures in particular, were already the most frequently used tool to restrict

61
“World Trade News (GATT): South Korea Keen to Stake Its Trade Claim,” Financial Times, 24 July
1985; “World Trade News: S Korea Urged to Liberalise Trade Policies,” Financial Times, 10 July 1992.
57
imports from Korea in the 1980s.
62
According to the statistics of Han et al., from 1960 to
1994 at least 291 trade remedy measures against Korean exports were reported; among
them, over 80 percent were initiated after the 1980s and over 90 percent were imposed by
developed countries (the U.S., the European Community, Canada, and Australia).
63

This trend continued to unfold as trade remedy measures became the primary
protectionist tool in the WTO era. From 1995 to 2012, there were 180 antidumping and
countervailing measures (Figure 3) against Korean exports, making Korea the second
largest recipient of antidumping and the fourth largest recipient of countervailing
measures among WTO members.
64
The surge of trade remedy measures against Korea is
in part a result of the proliferation of antidumping measures by new utilizers of trade
remedy in the developing world. On the other hand, as shown by Figure 3, this number
rose dramatically from 1998 to 2000, indicating that the growth of trade remedies against
Korea is also related to the fluctuation of Korean exports following the 1997-1998 Asian
financial crisis. Also noteworthy is that the eight countervailing measures against Korea
all came shortly after this crisis, suggesting that the source of disputes is not only Korean
exporters but also the GOK for subsidizing the exporters’ dumping action.

62
Chong-Hyun Nam, “Protectionist U.S. Trade Policy and Korean Exports,” in Takatoshi Ito and Anne O.
Krueger eds., Trade and Protectionism: NBER-East Asia Seminar on Economics, Vol. 2, (Chicago:
University of Chicago Press, 1993): 183-222; Taeho Bark, Antidumping Restrictions against Korean
Exports: Major Focus on Consumer Electronic Products, (Seoul: Korea Institute for International
Economic Policy, 1991).
63
Nae-hi Han et al., Cases of the Trade Dispute of the Korean Industries. (Seoul: POSRI, 1999): 37.
64
China is the largest recipient of foreign trade remedy measures; from 1995 to 2012, it received 664
antidumping orders and 62 countervailing measures.
58
Figure 3. Antidumping and countervailing measures against Korean exports, 1995-
2012 (Total measures: 180)

The sectoral nature of these trade remedies sheds more light on their specific
impact on Korean exports. The trade remedy measures against Korea, like other export-
led countries, concentrate on homogeneous or low added-value products like metal or
chemical and plastic products, but the ratio of trade remedies on metal products is
particularly high (Figure 4). Also noteworthy is the high ratio of trade remedies on
electric and electronic products (Section XVI in Figure 4), among which are many higher
added-value finished goods or technology components, as will be discussed later. This
data leads to the following questions: How do different exporters or export sectors

Source: The World Trade Organization. Data retrieved on 23 January 2013. Link:
http://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByExpCty.pdf;
http://www.wto.org/english/tratop_e/scm_e/CV_InitiationsByExpCty.pdf
59
respond to this protectionist pressure? What factors affect the way they handle this
barrier? To answer these questions, the following section focuses on the effect of
industrial structure and government-exporters collaboration on Korean government and
exporters’ handling of foreign trade remedy measures.

Figure 4. Sectoral distribution of antidumping and countervailing measures against
Korea, 1995-2012

*VI: Products of the Chemical or Allied Industries; VII: Plastics and Articles Thereof; Rubber and Articles
Thereof; X: Pulp Of Wood or of Other Fibrous Cellulosic Material, Paper and Paperboard and Articles
Thereof; XI: Textiles and Textile Articles; XV: Base Metals and Articles of Base Metal; XVI: Machinery
and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers,
Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles.

Source: The World Trade Organization. Data Retrieved on 23 January 2013. Link:
http://www.wto.org/english/tratop_e/adp_e/AD_Sectoral_MeasuresByExpCty.pdf;
http://www.wto.org/english/tratop_e/scm_e/CV_Sectoral_InitiationsByExpCty.pdf

0
10
20
30
40
50
60
Number of Initiations
Sectoral Distribution*
60
Factors Affecting Exporters’ Handling of Foreign Trade Remedy
Measures
The Export Sector’s Structure: Size and Concentration of Production
Korea’s industrialization is shaped by the government’s dirigiste policies and
nationalist ambition.
65
Under such policies, a handful of oligopolistic enterprises—also
known as chaebŏ l in Korean—were set up in various sectors as national champions
leading Korea’s economic development.
66
Benefiting from the post-war economic boom
and trade liberalization in advanced countries, these oligopolistic firms not only
dominated the domestic market but served as the pillars of Korea’s export sector. They
started as light manufacturers in the 1960s.
67
However, as the GOK promoted heavy and
strategic industries in the 1970s and 1980s, they quickly moved from labor-intensive to
capital-intensive production. These ranged from large finished goods like ships, cars, and
electronic appliances to high-technology parts.
68

65
Alice Amsden, Asia’s Next Giant: South Korea and Late Industrialization (New York:
Oxford University Press, 1989); Frederick C. Deyo, Beneath the Miracle: Labor Subordination in the New
Asian Industrialism (Berkeley: University of California Press, 1993); Atul Kohli, State-Directed
Development (Cambridge: Cambridge University Press, 2004).
66
Gary G. Hamilton and Nicole W. Biggart, "Market, Culture, and Authority: A Comparative Analysis of
Management and Organization in the Far East," American Journal of Sociology 94 (1988): p.52-94; Brian
Levy, "Korea and Taiwan as International Competitors: The Challenges Ahead," The Columbia Journal of
World Business (1988): 23.
67
Stephan Haggard, Pathways from the Periphery: the Politics of Growth in the Newly Industrializing
Countries (Ithaca: Cornell University Press, 1990); Brian Levy and Wen-Jeng Kuo, "The Strategic
Orientation of Firms and the Performance of Korea and Taiwan in Frontier Industries," World Development
19 (4) (1991): 363-374.
68
Suk-Chae Lee, “The Heavy and Chemical Industries Promotion Plan, 1972-1979” in L. Cho and Y. Kim
eds., Economic Development in the Republic of Korea: A Policy Perspective (Honolulu: University of
Hawaii, East-West Center, 1991): 431-71; Lewis M. Branscomb,and Young-Hwan Choi eds., Korea at the
Turning Point: Innovation-Based Strategies for Development (Westport, CT: Praeger, 1996); Byung-Nak
Song, The Rise of the Korean Economy, 3rd ed. (New York: Oxford University Press: 2003).
61
The size of chaebŏl firms was boosted by their efforts at exploring foreign
markets in the 1980s as the domestic market plateaued.
69
Their acquiring of overseas
markets was supported by the GOK, which intended to promote export as a strategy to
compensate for the domestic market being forced open by the United States.
70
Chaebŏl
firms were keen not only to build their own branded products but also to maintain their
price advantage, which effectively helped them expand globally. In turn, Samsung’s
electronic products, GoldStar’s home appliances,

Daewoo’s personal computers, and
Hyundai’s vehicles and commercial vessels swiftly emerged as viable competitors in
markets that were previously dominated by firms from advanced countries.
71
In addition,
the national-champion industrial policy—industrialization through state-controlled
finance that aims to advance national interests—also promoted a steel quasi-monopoly—
Pohang Iron and Steel Corporation (POSCO)—which has been one of the fastest growing
steelmakers in the world since the 1980s.
72

69
Eun-mee Kim, “Globalization of the South Korean Chaebol,” in Samuel S. Kim ed., Korea's
Globalization (Cambridge U.K.: Cambridge University Press, 2000): 102-125; Gerardo R. Ungson, Korean
Enterprise: the Quest for Globalization (Boston: Harvard Business School Press, 1997).
70
Paul W. Kuznets, “Trade, Policy, and Korea-United States relations,” Journal of Northeast Asian Studies
8, no. 4 (Winter 1989): 24-42; Stephan Haggard, Pathways from the Periphery: the Politics of Growth in
the Newly Industrializing Countries (Ithaca: Cornell University Press, 1990): 126-160; C. Fred Bergsten
and Il-Sa Kong, The Korea-United States Economic Relationship (Washington DC: Institute for
International Economics, 1997).
71
GoldStar was changed as LG Electronics and LG Cable in 1995 after merging with the competitor
Lucky.
72
Suk-Chae Lee, “The Heavy and Chemical Industries Promotion Plan, 1972-1979” in L. Cho and Y. Kim
eds., Economic Development in the Republic of Korea: A Policy Perspective (Honolulu: University of
Hawaii, East-West Center, 1991): 431-71; Sang Young Rhyu, “The Political Economy of POSCO’s
Growth: Government-Business Relations, Continuity Debate, and Rent-Seeking Behavior,” Korean
Journal of Political Science 35, no. 2 (2001): 67-87; William Hogan, POSCO Strategy: A Blueprint for
World Steel’s Future (Lanham, MA: Lexington Books, 2001). In order to support the development of
downstream heavy industries like shipbuilding, automobile and electronic appliance, in the 1970 the GOK
established the state-owned steelmaker, Pohang Iron and Steel Corporation (now, POSCO). It was not until
the early 2000s that POSCO became completely private owned.
62
Despite temporary setbacks amid the financial crisis in the late 1990s, Korea’s top
enterprises stood stronger and larger than ever as the restructuring program promoted
merger and sector-specific expansion.
73
For example, Samsung electronics, the largest
business in Korea, surged to become the largest memory chipmaker in the world since
2001, and Hynix also rose to the top three since 2003. Since 1999, Hyundai Merchant
Marine became the largest shipbuilder globally, with Daewoo and Samsung among the
top 10. As the fifth largest automaker in the world since 2002, Hyundai Motor continues
to challenge the old champions of the automobile industry. Likewise, POSCO became the
world’s largest steelmaker in 1999. Table 4 lists a number of Korean large enterprises
with their global rankings and contributions to Korea’s exports; chaebŏl firms dominate
each sector listed here. The importance of their oligopolistic power is also illustrated by
the fact that in 2010 the six largest chaebŏl firms contributed to 70 percent of Korea’s
overall exports.
74

73
In order to direct different chaebŏl firms to concentrate on different sectors, the Kim Dae-jung
government’s restructuring program did so by controlling chaebŏl firms’ cross-sector investment and
promoting merger and integration among them. For more discussion, see Eun-mee Kim, “Globalization of
South Korean Chaebol,” in Samuel S. Kim ed., Korea's Globalization (Cambridge U.K.: Cambridge
University Press, 2000).
74
Lucy Williamson, “South Korea's Small Businesses Fight for Survival,” BBC News, 17 August 2011,
http://www.bbc.co.uk/news/business-14554015, accessed 10 August 2012.
63
Table 4. Korea’s major exporters and their world rankings
Major industry Global status and ranking Major conglomerates revenue
and their global ranking 2011-
2012
Semiconductors  11.3 percent of the global
market; 45.3 percent of the
global DRAM market in
2002.
 Represented 10 percent of
Korea’s total exports in
2002 (with 75 percent of
the total from Samsung).
Samsung Semiconductor: $32.7
billion (ranked second and first at
DRAM category); Hynix
Semiconductor*: $9.4 billion
(ranked 8
th
and second at DRAM
category)
Consumer
Electronics**
 11 percent of the global
market in 2002.
 Represented 17.5 percent
of Korea’s total export in
2002.
Samsung Electronics (excluding
semiconductor): $98.1 billion
(ranked 1
st
); LG Electronics:
$48.64 billion; LG Display $22.1
billion (LG Electronics and LG
Display combined ranked 4
th
)
Shipbuilding  Approximately 40 percent
of all orders worldwide in
2002.
 Represented 5.8 percent of
Hyundai Heavy Industries:
$38.96 billion (ranked first in
2012); Samsung Heavy
Industries: $12 billion (ranked
64
Korea’s total exports in
2002 (with 30 percent of
the total from Hyundai).
second in 2012), Daewoo
shipbuilding & marine
engineering: 11.4 billion (ranked
third in 2012)
Iron & Steel  5 percent of the global
market in 2002.
 Represented 4.8 percent of
Korea’s total exports in
2002 (with 60 percent of
the total from POSCO).
POSCO: 52.46 billion (Ranked
fourth in 2012).
Automobiles  5.6 percent share of the
global market in 2002.
 Represented 9.9 percent of
Korea’s total exports in
2002.
Hyundai Motor: $97.4 billion;
Kia Motor: $42.5 billion
(Hyundai Motor and Kia Motor
combined ranked fifth in 2012).
* Hynix was formerly known as Hyundai Electronics; Clarkson’s rank of the output of shipyard in
2003; World Steel Association’s rank of crude steel output in 2000. Global Electronics Statistical 2003
by Electronics Industries Association of Korea.
** Consumer electronics include home appliances, visual display, mobile communication, and other IT
products (computer, laptop, scanner, copier, etc.).
Source: The Ministry of Knowledge Economy; IHS iSuppli Semiconductor preliminary ranking for
2003; Clarkson’s rank of the output of shipyard in 2003; World Steel Association’s rank of crude steel
output in 2000; IHS iSuppli Semiconductor preliminary rankings for 2003.

65
While serving as the driving force of Korea’s economic miracle, the oligopolistic
export model brought concerns to the GOK. An official study conducted by the Korean
economic ministries concluded that the Korean economy was particularly vulnerable to
protectionist policies of foreign countries because of the high concentration on a small
number of commodities produced by large exporters.
75
This assessment did not change
much according to recent research,
76
suggesting that, since the inception of the WTO in
1995, the ratio of the top ten export goods to Korea’s total exports has steadily increased
and since 2005 has hovered at approximately 40 percent, the same level as its climax in
the mid-1980s. Moreover, as shown in Table 5, the top ten export goods in recent years
are at much higher added value than those from two decades ago, making Korea’s
economy even more reliant on these exports. In other words, export restrictions on any of
these commodities can significantly impact Korea’s economy.
Another worrisome factor about Korea’s top export goods is the business
strategies adopted by the leading Korean exporters. Starting from the 1980s, chaebŏl
firms graduated from subcontractors to contractors managing their own source,
production, and distribution channels. While this business model creates better added
value for their production, it also makes them prime targets for trade litigation as they
compete directly with longer-established multinational corporations in the world’s major
markets. Hence, their competitors may use trade remedy measures to block their top-
selling products. Trade remedy measures of this kind are particularly impactful as they

75
Chung Soo Kim ed., Effects of Neo-Protectionism of the Korean Exports (Seoul: Korea Institute for
Economy and Technology, 1986).
76
Duol Kim, Export Diversification: Lessons from Korean Experience, working paper (Seoul: Korea
Development Institute, 2012).
66
might disrupt chaebŏl firms’ business operations, for which many have established their
own marketing and retailing ventures worldwide.
77
In addition, as they rely heavily on
economies of scale, stable access to major markets is essential to maintain their
production flow. Due to the effect of trade remedy measures, many chaebŏl have
relocated their manufacturing sites to their major markets in North America and Europe
since the 1990s to mitigate trade remedy charges.
78

Table 5. Korea’s top ten exporting goods, 1990-2010
1990 2000 2010
Commodity Value Commodity Value Commodity Value
Garments/clothes
Semiconductor
Footwear
Video apparatus
Vessel and parts
thereof
Computer
Audio apparatus
7,600
4,541
4,307
3,627
2,829

2,549
2,480
Semiconductor
Computer
Automobile
Articles of
petroleum
Vessel and parts
thereof
26,006
14,687
13,221
9,055

8,420

Semiconductor
Vessel and parts
thereof
Automobile
Flat display and
sensor
Articles of
petroleum
50,707
49,112

35,411
32,589

31,531

77
Gerardo R. Ungson, Richard M. Steers, and Seung-Ho Park, Korean Enterprise: The Quest for
Globalization (Boston: Harvard Business School Press, 1997).
78
“Survey of South Korea – Trade, Industry and Finance (2): Growing Confidence Abroad, Korean
Companies are Expanding the Range of their Activities beyond Manufacturing/Overseas Direct
Investment,” Financial Times, 20 October 1995. Litigation against trade remedy charges, on the other hand,
also serves the purpose of penetrating the export barriers as later discussed in detail.
67
Steel flat-rolled
products
Man-made fabrics
Automobile
2,446

2,343
1,971
Wireless
communication
apparatus
Synthetic resin
Steel flat-rolled
products
Garments/clothes
Video apparatus
7,882

5,041
4,828

4,652
3,667
Wireless
communication
apparatus
Part of automobile
Synthetic resin
Steel flat-rolled
products
Computer
27,621

18,963
17,051
16,589

9,116
Total 65,016 Total 172,268 Total 466,384
Sorting based on MTI 3 classification. Unit of value: US$10,000.
Source: Korea International Trade Association, International Trade Yearbook, various years.

To be sure, small and medium enterprises (SMEs) also exist in Korea’s export
sector. Many of them manufacture parts or equipment that chaebŏl firms use for
assembling their branded products.
79
Others exist in less capital- or technology-intensive
industries, such as light assembly, textile manufacture, and low-end metal and plastic
products.
80
Although the GOK, growing concerned with the economy’s high dependence
on chaebŏl firms, has intentionally assisted the development of SMEs, their share of
Korean exports remains limited due to the dominance of chaebŏl . A recent report

79
Linsu Kim and Jeffrey B. Nugent, The Republic of Korea's Small and Medium-Size Enterprises and
Their Support Systems (Washington: The World Bank 1999).
80
Ibid.
68
suggests that SME output only represents one third of Korea’s exports.
81
The ramification
of this is that the economic impact of foreign trade remedy measures on chaebŏl -
dominated sectors is far more significant than on SME-dominated sectors.

The Government-Exporter Network
I. The Institutional Infrastructure
Korea’s corporatist infrastructure, a legacy of its authoritarian period, is also
known as “Korea, Inc.,” a reference to the effectiveness of the close consultation between
the government officials and top business leaders at gathering market information and
ensuring policy implementation.
82
During the Park Chung Hee regime, all firms were
required to join state-sponsored monopolized industry associations which covered small
and medium businesses in each sector.
83

Another pillar of business representatives was centered with chaebŏl firms, such
as the Federation of Korean Industry (FKI), the Korean Trader Association (KTA; then
Korea International Trade Association, KITA), and a few chaebŏl -dominated industry
associations like the Korean Automobile Industry Association (KAIA) and the Korean
Shipbuilders Association (KSA). Numerous councils, working groups and institutional

81
See note 74.
82
Bruce Cumings, “The Origins and Development of Northeast Asian Political Economy: Industrial
Sectors, Product Cycles, and Political Consequence,” in Frederick Deyo, ed., The Political Economy of the
New Asian Industrialism (Ithaca, N.Y.: Cornell University Press, 1987): 44-83; Yun-Han Chu, “State
Structure and Economic Adjustment of the East Asian Newly Industrialized Countries,” International
Organization 43 (4) (Autumn 1989): 647-72; Mark Clifford, Troubled Tiger (Armonk, N.Y.: M.E. Sharpe,
1994).
83
Moon Kyu Park, “Interest Representation in South Korea: the Limits of Corporatist Control” Asian
Survey 27, no. 8 (August 1987): 904-919; Mark Clifford, Troubled Tiger (Armonk, N.Y.: ME Sharpe,
1994): 60-66.
69
forums were held among the association heads, economic bureaucrats, and political
leaders. By 1995, Korean business representatives sat on 78 advisory, consultative, and
decision-making commissions attached to the GOK.
84

The link between the government and business sectors continued to expand
through the 1990s and beyond, although this corporatist nature evolves alongside the
transformation of government-business relations. The impetus of this change is mostly
from chaebŏl and their affiliated associations.
85
Chaebŏl -affiliated associations were
already influential in the old days for their close and direct relations with the top
policymaking circle.
86
Following their success both domestically and globally, chaebŏl
became even more proactive at advocacy activities on economic issues among which
foreign trade policy was a top priority.
87
The professionalization of their policy advocacy
was illustrated by the mushrooming of trade-oriented think tanks affiliated with chaebŏl
and their affiliated associations since the 1980s.
88
For example, the FKI funded a number

84
Ministry of General Administration of the Republic of Korea, various reports, 1995.
85
Yun-Tae Kim, “Neoliberalism and the Decline of the Developmental State,” Journal of Contemporary
Asia 29, no. 4 (1999): 441-461; Mark Clifford, Troubled Tiger (Armonk: ME Sharpe, 1994): 39-40; D.
Michael Shafer, Winners and Losers: How Sectors Shape the Developmental Prospects of States (Ithaca,
NY: Cornell University Press, 1994).
86
Carter J. Eckert, Korea Old and New: a History (Cambridge, MA: Harvard University Press, 1990);
Jung-en Woo, Race to the Swift: State and Finance in Korean Industrialization (New York: Columbia
University Press, 1991): 199-200;Yun-han Chu, "The State and the Development of Automobile Industry
in South Korea and Taiwan," in Joel D. Aberbach, David Dollar, and Kenneth L. Sokoloff eds., The Role of
the State in Taiwan's Development (Armonk, NY: ME Sharpe, 1994): 141.
87
Park, Interest Representation in South Korea; Kim, Neoliberalism and the Decline of the Developmental
State; Christopher M. Dent, The Foreign Economic Policies of Singapore, South Korea and Taiwan
(Gloucestershire: Edward Elgar, 2003): 183-186.
88
Jongryn Mo, “A View from Abroad: The Korean Experience in Developing Public Policy Research,” in
Toru Hashimoto, Stefan Hell, and Sang-Woo Nam eds., Public Policy and Research Training in Viet Nam
(Hanoi: Asian Development Bank Institute, 2005):172-213.
70
of organizations with various specialties.
89
The Korea International Trade Association
(KITA) also created a think tank, the Institute for International Trade, to provide policy
recommendations to the GOK on foreign economic issues.
The rise of big business-led policy advocacy, as Kim observes, has effectively
transformed the tenor of policymaking dialogues between government and business from
authoritarian to consensual.
90
In turn, chaebŏl and their affiliated associations participated
in more and more consultative and decision-making commissions, covering both broad
structural and specific sectoral aspects of economic policymaking.
91
The effectiveness of
their policy advocacy was confirmed by a 1991 FKI report stated that it had averaged
thirty formal policy suggestions every year to government economic bureaus since the
1980s.
92
The SME sector, which recently has enjoyed government support, is also
increasing its policy advocacy. However, as they concentrate on domestic markets, their
policymaking influence rarely goes beyond domestic issues.
93

To keep up with chaebŏl demands regarding foreign economic affairs, the GOK
also underwent a series of reforms in the mid-1980s, including reorganizing economic
ministries and creating trade-focused think tanks.
94
Reform continued through the 1990s

89
Among the institutes affiliated with the FKI, Korean Economic Institute, the Korean International
Economic Institute and International Management Institute are related to foreign economic affairs.
90
Kim, “Neoliberalism and the Decline of the Developmental State,” 1999: 454-456.
91
Ibid; Dent: 183-186.
92
Federation of Korean Industry. The 30 Years of History of the FKI [in Korean] (Seoul: Federation of
Korean Industry, 1991).
93
Dent, 185-186.
94
In 1984, the Ministry of Commerce and Industry became the Ministry of Trade and Industry, with more
emphasis on foreign trade affairs related to GATT negotiations and bilateral trade relations. Since 1995, the
Ministry of Trade and Industry expanded to absorb the Ministry of Energy's administration of energy
71
when neoliberal principles became the new norm among leading political elites in the
Kim Young-sam through Roh Moo-hyun administrations.
95
The Ministry of Foreign
affairs and Trade’s restructuring in particular demonstrates the imperative to address
trade issues, under which the Office of Minister of Trade (OMT) was set up and became
increasingly important for coordinating foreign economic affairs.
96
In addition to the
OMT, the capacity of the economic ministries at handling trade-related affairs also
improved tremendously since the 1990s as more bureaucrats developed professional
capacity in this area, according to Won-Mog Choi (Choi Won-mok), a former OMT
official and a trade lawyer who has consulted for various ministries.
97

As a result, Korea has a relatively efficient policymaking framework for trade
remedy issues. Beginning in the early 1980s, when trade protectionism from advanced
countries started to rise, a working group was soon established among the economic

affairs. On the other hand, the Korea Institute for International Economic Policy (KIEP) was created in
1989 for advising the government on all major international economic policy issues and served as an
information warehouse on Korea’s international economic policies. KIEP worked closely with MOCIE as
well as MOFAT after the GOK’s ministerial reorganization in 1997.
95
Samuel S. Kim, “Korea and Globalization (Segyehwa): A Framework for Analysis,” in Samuel S. Kim
ed., Korea’s Globalization, (Cambridge, U.K.: Cambridge University Press, 2000): 1-28; Barry K. Gills,
“Economic Liberalization and Reform in South Korea in the 1990s: A Coming of Age or a Case of
Graduation Blues?” Third World Quarterly 17, no. 4 (1996): 667-688.
96
Dent, 187-190; Min Gyo Koo, “South Korea’s FTAs: Moving from an Emulative to a Competitive
Strategy” in Mireya Solis, Barbara Stallings, and Saori N. Katada eds., Competitive Regionalism: FTA
Diffusion in the Pacific Rim (New York: Palgrave Macmillan 2009): 181-197. As Tae-Sik Lee, former
Director-General of Trade in the Foreign Ministry, recalls, as part of the segyehwa program, the Foreign
Ministry created a new trade policy plan that to be compatible with GATT’s post-Uruguay Round
economic reality. Following the government restructuring program in 1998, the Ministry of Foreign Affairs
became the Ministry of Foreign Affairs and Trade (MOFAT), under which the Office of Minister of Trade
was in charge of international economic diplomacy. OMT worked closely with MOCIE which remained the
key agency at economic policymaking. Tae-Sik Lee (former Director-General of Trade in the Foreign
Ministry of Republic of Korea), in discussion with the author, 1 May 2012.
97
Won-mog Choi (former OMT officer; Professor of International Trade Law and Director of the WTO
Law Center, Ewha Womans University School of Law), in discussion with the author, 29 March 2012.
72
ministers and the leaders of export-related associations, most of which were chaebŏl -led
associations.
98
Chaebŏl recommendations about trade remedies were effectively absorbed
by this group and eventually became the roadmap for government policy. For example, as
is discussed later, the GOK started to strengthen overseas lobbying activity amid trade
remedy investigations. In addition, the GOT also started to urge the revision of the GATT
agreements on antidumping laws and the establishment of a more formalized dispute
settlement body.
99

The same effort at coping with trade remedies continued with the WTO. An
antidumping taskforce under the OMT was created in 1998 to handle trade remedy issues
and other trade barriers while offering an opportunity for the businesses that are in trade
disputes to use the WTO Dispute Settlement Body (DSB).
100
This taskforce also served
as a hub coordinating the exporters and the relevant ministries on the subjects.
While this taskforce is designed to serve all businesses, chaebŏl and their
affiliated associations remain the key counterparts that the taskforce has worked with,
according to Christopher Dent.
101
Won-Mog Choi, who served in the taskforce in the late

98
It included FKI, KTA, Electronics Industries Association of Korea, Korea Steel and Iron Association
(KOSA), and the Korean Federation of Textile Industries. This working group was led by the External
Economy Policy Committee chaired by the vice Prime Minister, with members from relevant line
ministries. The studies and policy recommendations accomplished by this working group were compiled
into a book. See Kim, Effects of Neo-protectionism on the Korean Exports.
99
“World Trade News (GATT): South Korea Keen To Stake Its Trade Claim,” Financial Times, 24 July
1985.
100
The OMT also launched a program developing in-house trade lawyers to strengthen the capacity of the
taskforce. A professionalization movement took place since the early 1990s as more diplomats started to
develop their expertise and career track in trade. Along with this trend, the OMT decided to select a number
of diplomats with trade law specialties for advancement training. Tae-sik Lee. in discussion with the
author, 1 May 2012.
101
Dent, The Foreign Economic Policies Of Singapore, South Korea And Taiwan, 85. According to Dent.
both the FKI and KITA worked closely with the OMT and the Ministry of Commerce, Industry, and
Energy (MOCIE) on the WTO Disputes Settlement Body issues, particularly on the antidumping duties
73
1990s, concurs with Dent’s observation. He explains, “When big companies [chaebŏl ]
approached us for a trade dispute, they were very prepared in every aspect and often
ready to enter the litigation process when necessary. In this case, our jobs were mostly to
facilitate and coordinate for the subject matters.”
102
To be sure, in spite of the constant
collaboration between the government and chaebŏl , the OMT and the economic
ministries also initiated several programs for assisting SME exporters affected by trade
barriers, Choi added.
103
Nonetheless, he also admitted that the initiatives are dwarfed by
the institutional memory built by decades-long collaboration on export restrictions
between the GOK and chaebŏl .

II. The Legal Status of the Policymaking Network
The evolution of Korean trade law also demonstrates the rising influence of the
private sector. Trade laws prior to the 1970s were for the government to promote
strategic export sectors. The issue of export barriers was first addressed in the Trade Act
of 1986 to help Korean exporters cope with growing protectionism from advanced
countries. For example, copied from Section 301 of the U.S. Trade Act of 1974, it
authorized the Ministry of Commerce, Industry, and Energy (MOCIE) to take special
measures when Korea’s rights and interests are violated.
104
Moreover, in order to promote

applied on Korean exports. Echoed this findings, this chapter focused on the specific incident of the
disputes and the industry association’s role at the event.
102
Won-mog Choi, in discussion with the author, 29 March 2012.
103
The dispute settlement case on the Philippines’ antidumping measures against polypropylene resin from
Korea was part of the initiatives, as will be discussed later this chapter.
104
The Foreign Trade Act of 1986 is accompanied by the Enforcement Decree and an Ordinance, issued by
74
Korean enterprises overseas, the Foreign Trade Act of 1996—a revision of the Trade Act
of 1986—authorized MOFAT to investigate unfair matters arising from laws and
practices in partner countries.
105
Finally, the Trade Act of 1996 also charged the Trade
Minister with supporting collaboration between the trade associations and foreign and
local governments, institutions, or other associations for a variety of subjects.
106
As Lee
observes, this legal change not only marks the private sector’s rising status but also the
decline of the government-led export-promoting policy.
107

Nonetheless, despite a gradual trend toward a more private sector-based trade
policy, the Korean trade laws leave substantial discretionary power for the executive
branch to implement trade policy. Moreover, unlike the U.S. Trade Act that upholds the
legal rights of the exporters affected by the trade barriers set by foreign governments,
108

Korea has up to now lacked the legal provisions that either authorize the legislative

the President and the MOCIE respectively to specify the Act’s delegations and enforcement. Foreign Trade
Act of 1986, Article 4.
105
Foreign Trade Act of 1996, Article 8(1)-(7). While the Act authorizes the MOCIE with this
responsibility, the MOFAT, after taking over the duty of foreign trade affairs, becomes the main
administer.
106
Foreign Trade Act of 1996, Article 9(1)-(2).
107
Eun Sup Lee, “Foreign Trade Regulation of Korea in the WTO World,” Journal of Transnational Law
and Policy 231 (Spring 1999): 246-247.
108
The United States legislative branch has passed multiple versions of the Trade Act since 1974 to
strengthen the position of the legislative branch and the export sectors’ handling export barriers while
restricting the discretionary power owned by the executive branch in the previous period. Specifically,
Section 301 of the U.S. Trade Act of 1974 authorizes the United States Trade Representatives (USTR) to
take retaliatory action against a foreign country whose government maintains unreasonable or unjustifiable
restrictions against U.S. exports. In the Trade Act of 1984, the U.S. Congress further substantiated this act
by mandating USTR to take specific procedures annually to enforce this law. The Omnibus Trade Act of
1988 further describes the function of Section 301 regarding the trade barriers related to intellectual
property rights, also known as Super Section 301, which authorizes USTR to take special measures against
foreign countries that deny adequate and effective protection of intellectual property rights or fair and
equitable market access for Americans relying on intellectual property protection. See I. M. Destler,
American Trade Politics, 3rd ed. (Washington DC: Institute for International Economics, 1995).
75
branch to hold accountable or mandate the economic ministries to respond to exporter
requests.
109
Under such a legal setting, private sector influence is constrained by
executive branch supervision, which remains the final decision-maker in many ways.
This is not to say that the private sector has no influence on policy decisions. On the
contrary, the network between government officials and business leaders is essential for
the policymakers to discern the impact of foreign trade barriers and to determine how to
handle a trade dispute, including the use of WTO dispute settlement mechanism.

Litigation over Foreign Trade Remedy Issues beyond the WTO: A
Sectoral Landscape
As early as the early 1980s when developed countries started trade protectionism
targeting Korea, the GOK and major exporters were already proactively working together
to combat the coming trade litigation. The consumer electronic industry’s battle against
antidumping was the earliest and the most prominent of this kind. Led by three chaebŏl
firms—Samsung, Daewoo, and GoldStar—the industry developed swiftly in the early
1980s and became the largest industry in Korea, contributing to about one quarter of
Korean exports by the end of the decade.
110
However, their surging production and
oligopolistic structure also drew a barrage of antidumping and countervailing

109
However, the treaties, such as FTAs, which fall under Article 60 of the Constitution of the Republic of
Korea, must win the consent of the National Assembly after the signing of the treaties and before their
ratification by the President. Therefore, the GOK (administration body) normally seeks to involve the
National Assembly during the process of its FTA negotiations by providing relevant information to its
members to facilitate the consent procedure at a later stage.
110
The output of the three companies accounted for 93.5 percent of Korea’s consumer electronics market in
the 1980s. Bark, Antidumping Restrictions against Korean Exports: Major Focus on Consumer Electronic
Products: 28-29.
76
investigations from developed countries on products from color televisions, video
recorders, and microwave ovens to radios and personal computers.
111

The GOK and chaebŏl have never shied away from rising export barriers, even
since the first U.S. antidumping investigation on Korean-made color television sets in
1983.
112
Following the success at repealing the voluntary export restraint (VER)
agreement with the United States, Korean-made color TV sets surged radically in the
U.S. market and in turn received a punitive antidumping order—as high as 52 percent at
the preliminary ruling—by the U.S. trade investigating authority.
Awakened by this charge, the GOK and the three firms quickly adjusted for their
follow-up handling. Under the facilitation of the response team formed by the
government, the three chaebŏl , and the industry associations, the U.S. investigating
authority eventually accepted data provided by Korea and largely reduced the dumping
margin at the final ruling.
113
The team continued to work at the review investigations and
succeeded at keeping the dumping margins in the following years at bay. Korea’s
determination on this case persisted even after Samsung, the largest Korean color TV
producer, moved most of its production to Mexico in 1989. Samsung continued to

111
There were 15 antidumping initiations against Korean electronic products from 1973 to 1989. The U.S.
was responsible for two with color television sets and color picture tubes; Canada placed one order on
microwave ovens; and the European Community ordered four antidumping orders on videotapes, video
recorders, personal computers, and small-sized color television sets while Australia restricted lamps and
audiotapes.
112
The case was filed on 23 May 1983 under the commerce case number, A-580-008.
113
GoldStar, Samsung, and Daewoo received 20.08, 52.5, and 25.09 percent of punishment duties
respectively in the preliminary ruling, which were reduced to 7.47, 12.23, and 14.88 percent in the final
ruling.
77
petition for the revocation of this decade-long antidumping order in the U.S., which
eventually led to Korea’s first WTO complaint, as will be discussed later.
Collaboration between the GOK and these three firms remains active now, as
shown by their close collaboration amid the recent antidumping and countervailing
investigations petitioned by the U.S. manufacturer Whirlpool on refrigerators and
residential washers exported from Korea and Mexico.
114
The economic impact of these
cases were significant as the United States was the largest consumer electronic market in
the world and imported close to $4 billion worth of refrigerators and washers from Korea
and Mexico, where Samsung and LG have large manufacturing sites. While working
closely throughout the investigation process, the GOK, Samsung, and LG also
campaigned loudly in the United States against the Department of Commerce (DOC)’s
errors in its method in calculating and comparing dumping margin.
115
According to a
government legal consultant who had knowledge of the case, top Korean trade officials
even approached top U.S. International Trade Commission (ITC) officials for this case.
Korea’s persistence eventually led to a negative determination by the ITC on the affected
products.
Similar public-private joint efforts were also demonstrated in another high-profile
battle against the U.S. antidumping measures on semiconductors. Following the 1986

114
On 26 April 2011, DOC launched antidumping and countervailing investigations on bottom mount
combination refrigerator-freezers from Korea and Mexico. On 26 June 2012, DOC launched antidumping
and countervailing investigations on large residential washers from Korea and Mexico. Samsung, LG, and
Daewoo were involved in both cases while Samsung and LG were required to respond to cases against both
Korea and Mexico as their manufacturing in Mexico was the focal point of the investigation. For more
details, see 76 Federal Register (FR) 23281, 26 April 2011; 76 FR 23298, 26 April 2011; 76 FR 23281, 26
April 2011; 77 FR 4007, 26 January 2012; and 77 FR 4279, 27 January 2012.
115
Jaemin Lee (former OMT official; Professor of Law at School of. Law, Hanyang University), in
discussion with the author, 16 March 2012.
78
U.S.-Japan Semiconductor Trade Agreement, dynamic random-access memory (DRAM)
chips become Korea’s fastest-growing and second largest export in the late 1980s.
116
As
with the color TV set antidumping order, the GOK and the three semiconductor giants—
Samsung, Hyundai, and LG (formerly, GoldStar)—were already keen to pursue sales
expansion by renegotiating the quota agreement with the United States before handling
the antidumping issue. When the negotiation collapsed, the GOK and the three
chipmakers were well-prepared for coping with U.S. manufacturer Micron’s antidumping
attacks.
117
Their rapid response at submitting data and communicating with the
investigators effectively made DOC drop the punitive duties in the preliminary
investigation in 1992.
118
The three chipmakers continued painstaking work at the review
investigations and moreover they succeeded at appealing parts of DOC’s rulings at the
review investigation by the U.S. Court of International Trade (CIT).
119
In order to revoke

116
The 1986 U.S.-Japan Semiconductor Trade Agreement promoted the U.S. memory chip market share in
Japan while setting floor prices for memory chips imported from Japan to the U.S. market. Therefore, U.S.
buyers of memory chips turned to Korean memory chips that were not bound by the Agreement.
117
In the 1980s, Japanese semiconductor suppliers flooded the U.S. market with below-cost DRAM chips.
Prices collapsed, triggering massive losses and prompting 11 U.S. chip makers to abandon their businesses.
Micron, however, stood its ground and filed anti-dumping petitions with the U.S. Department of Commerce
and the International Trade Commission. Since then, Micron is one of the only four U.S. companies that
still make DRAM memory chips. The production of the other three companies—Texas Instruments,
Motorola, and International Business Machines Corp—were primarily for their own consumption.
118
In the preliminary investigation, Samsung, GoldStar, and Hyundai received dumping margins of 87
percent, 52 percent, and 7.2 percent respectively. See “U.S. Rules South Korea Dumped Chips but
Temporary Import Duties, which Ran as High as 87%, where Lowered to 7.2% or Less,” San Jose Mercury
News, 17 March 1993. In May 1993, DOC issued an antidumping duty order for DRAMS from Korea and
found an antidumping margin of 0.82 percent for Samsung, 4.97 percent for GoldStar, 11.16 percent for
Hyundai, and 3.83 percent for all others.
119
The U.S. Court of International Trade remanded the case to DOC to correct certain errors. In August
1995, DOC revised dumping margins to 0.22 percent (de minimis) for Samsung, 4.28 percent for LG, 5.15
percent for Hyundai, and 4.55 for all others from Korea. Thus, Samsung was exempted from future
reviews. In the administrative reviews, DOC found LG and Hyundai had not dumped during the period of
review for three consecutive years. However, DOC denied the request of revoking the antidumping duties
79
the 1992 order, the GOK, Hyundai, and LG initiated multi-year campaigns that brought
in support from some of the largest U.S. computer manufacturers, including Compaq
Computer, Dell Computer, and Digital Equipment. Their efforts eventually paved the
way for Korea’s using the WTO dispute settlement system for this case, as is discussed in
the next section.
Heavy industries like shipbuilding and steelmaking have also been among the
earliest and most active sectors working with the GOK to take down export barriers.
Korean shipbuilders started to handle this issue in the early 1980s when the world’s ship
market suffered from decline.
120
While being criticized for dumping, shipbuilders like
Hyundai Heavy Industries and Daewoo Shipbuilding and Heavy Machinery as well as the
Korea Shipbuilders Association (KOSHIBA) rejected such charges and promptly
initiated consultation with its European and Japanese competitors.
121
The Ministry of
Commerce and Industry, on the other hand, was closely involved in corresponding with
foreign governments while coordinating among local shipbuilders seeking adjustment
plans.
122
In turn, the officials and the shipbuilding leaders formulated a mechanism to

as it considered they remained ‘likely’ to dump in the near future. The U.S. CIT also rejected LG and
Hyundai’s request of revocation, claiming that this move was beyond its jurisdiction.
120
The traditional antidumping and countervailing procedures were not applicable to the shipbuilding
industry given the large-commodity nature of the industry. The principle agreements on this issue area were
governed by the Organization of Economic Development and Cooperation (OECD) including General
Guidelines for Government Policies in the Shipbuilding Industry (first negotiated in 1969), General
Guidelines for Government Policies in the Shipbuilding Industry (1972), and General Guidelines for
Government Policies in the Shipbuilding Industry (1976). However, their effectiveness was limited because
of their non-binding nature. The dispute started because Korean shipbuilders were not bound by the
Guidelines.
121
“World Trade News: S. Korean Shipyards Pay Price for Success,” Financial Times, 25 June 1982.
122
Despite the strong opposition, the GOK, with little leverage against the foreign counterparts, eventually
put a temporary haul to its expansion plan and demanded the shipbuilders to reevaluate their capacity for
financing adjustment.
80
jointly deal with their foreign counterparts. This mechanism since then has served to
prepare for the negotiations under the OECD administration and to respond to the
investigation of the European Commission regarding Korean shipbuilders’ restructuring
plan in the late 1990s.
123

Finally, Korean steelmakers have been the most frequent actor at handling
dumping charges. Starting from the 1970s and 1980s when the United States steel
industry used antidumping, price targeting, and import quota remedies against imports
from abroad, KOSA and the top steelmaker POSCO already had collaboration systems
with the GOK in place to help them negotiating or use legal procedures to settle
disputes.
124
When antidumping measures became the main tool of protectionism after the
quota system expired in 1992, Korean steelmakers further developed their legal capacity
accordingly. As it became the top global steelmaker in the 1997 financial crisis’
aftermath, POSCO preempted trade remedy charges. On the one hand, POSCO worked
closely with the OMT and the Basic Metal Bureau in the MOCIE at restructuring the
import price system and organizing overseas campaigns lobbying the related U.S.
government branches. On the other hand, POSCO was active at making business
alliances overseas, both within and beyond steelmaking industry, to affect the ruling of

123
Kwang-Seo Park and Seung-hyuk Roh, “A Study on the Background and Negotiations around a Trade
Dispute Regarding the Shipbuilding Industry of Korea and the EU,” Journal of Korea Trade Research 27,
no. 2 (2002): 405-426. The negotiations resulted in the Agreement Respecting Normal Competitive
Conditions in the Commercial Shipbuilding and Repair Industry. The negotiations on the Agreement were
launched by the U.S. Government in the autumn of 1989, in the framework of the OECD Council Working
Party on Shipbuilding. In December 1994, the Commission of the European Communities, and the
Governments of Finland, Japan, the Republic of Korea, Norway, Sweden, and the United States finalized
the agreement which was scheduled to enter into force on 15 July 1996. However, its enforcement has
failed due to opposition from the major US military shipyards.
124
Sung-woo Kim (Director General, The Korea Iron & Steel Association), in discussion with the author,
26 April 2012.
81
the U.S. trade remedy authority. POSCO successfully exempted itself from an
antidumping investigation on hot-rolled flat-rolled carbon quality steel.
125
In addition, as
Table 6 shows, POSCO is relatively effective in handling these investigations in terms of
the ruling results compared with other Korean steelmakers. As an OMT official explains,
this collaboration between the GOK and POSCO continues to this day and POSCO
routinely brings complaints to the GOK.

Table 6. U.S. antidumping/countervailing investigations on Korean steel products,
issued 1997-1999 (not including reviews)
Product Initiating
Date
Final result
(dumping/subsidy margin rate)
Stainless steel wire rod
(AD)
08/26/1997 5.19 percent on Dongbang, Changwon,
POSCO, 28.44 percent on Sammi, and
5.19 percent on all others
Stainless steel round
wire (AD)
05/12/1998 3.07 percent on Korea Sangsa and all
others (not including POSCO)
Stainless steel plat in
coils (AD)**
04/28/1998 16.26 percent on POSCO and all others
Stainless steel plat in
coils (CVD)
04/28/1998 Negative determination (POSCO
dropped)

125
“Steel Industry Concerned about Antidumping Moves Abroad,” The Korea Herald, 26 September 1998;
“Business News Briefs: U.S. Exempts Korea from Steel-Dumper List,” The Korea Herald, 2 October 1998.
82
Stainless steel sheet
and strip in coil (AD)**
07/13/1998 12.12 percent on POSCO, 0 percent on
Inchon, 58.79 percent on Taihan, and
12.12 percent on all others
Stainless steel sheets
and strip in coil (CVD)
07/13/1998 0.65 percent on POSCO, 2.64 percent on
Inchon, 1.58 percent on Dai Yang, 59.3
percent on Sammi, 7 percent on Taihan,
and 1.68 percent on all others
Cut to length carbon-
quality steel plate (AD)
03/16/1999 0.05 percent on POSCO (de minimis),
2.98 percent on Dongkuk and all others
Cut to length carbon-
quality steel plate
(CVD)
03/16/1999 0.95 percent on POSCO, 2.21 percent on
DSM and all others
Structural steel beam
(AD)
08/03/1999 25.51 percent on Inchon, 49.73 percent
on Kangwon, 37.72 percent on all others
Structural steel beam
(CVD)
08/03/1999 0.15 percent on Inchon, 3.88 percent on
Kangwon, 1.34 percent on DSM, 3.87
percent on all others
** Cases taken to WTO adjudication.
Source: The U.S. Department of Commerce, Antidumping and Countervailing Duty Federal Register
Notices and Unpublished Decisions., link: http://ia.ita.doc.gov/frn/index.html Retrieved on 29 June
2012

83
Certainly, trade remedy measures affect both large exporters and small exporters
in Korea. As early as the 1970s, miscellaneous and low-end plastic and metal goods have
been targeted by antidumping and countervailing charges overseas. The manufacturers of
these industries were often small and medium size and were neither familiar with the
legal procedure of trade remedy suits nor had a proper model to collaborate with the
GOK. A potent example is the antidumping suits against photo albums manufacturers.
Almost at the same time as the first U.S. antidumping charge against color televisions,
the photo album-makers, mostly SMEs, were threatened by retaliating antidumping
duties. This case roused widespread public attention as it was described as American
superiority cracking down on small Korean businesses.
126
The GOK therefore made
particular efforts at handling this issue. Nonetheless, the slow response and inefficient
coordination between the government and the photo album sector failed to combat the
antidumping attack. Since this episode, Korean exports of album products to the U.S.
market plummeted from US$36 million in 1984 to US$0.33 million per year since 1986,
effectively wiping out the photo album industry in Korea.
Also noteworthy is that the GOK has a “developmental state” mentality in
deciding which trade remedies to address. For example, footwear, textiles, and bicycles,
all of which contributed significant value to Korea’s exports in the 1980s, were also
bombarded by trade remedy measures. However, the GOK considered them as less
important to Korea’s long-term economic competitiveness and did little to defend those
industries. Instead, as the joint working group formed in the mid-1980s indicated, the

126
“Group Report on Foreign Trade Barriers on ROK Goods,” Yonhap News Agency, 9 January 1985.
84
GOK preferred to use this foreign pressure as a force to move forward and enhance the
added value of Korea’s export industry.
127
These industries eventually phased out.

Taking Trade Disputes to WTO Adjudication
Since entering the WTO, Korea has been among the most active users in East
Asia of the WTO dispute settlement system, having filed fifteen complaints by the end of
2012. Representing the most contentious trade disputes the country, these complaints
(Table 7) in general fit into the litigation record described above and almost all of the
involved private participants were Korea’s largest exporters who had a long history of
handling foreign dumping charges prior to WTO litigation. This WTO dispute record
indicates that Korea’s chaebŏl -dominated economy is prone to have high-profile
commercial disputes and therefore is more in need of WTO arbitration for unresolvable
bilateral disputes.
Although the structure of the enterprises/industries is a critical factor of WTO
litigation, the GOK, holding substantial discretionary power, remains the key decider of
whether and how to utilize WTO litigation. The question that follows is how the relations
between these exporters affect the way that WTO litigation proceeds. The following
section divides Korea’s WTO complaints into two groups—strong and weak cases—by
how aggressively the GOK advocated for its exporters and analyzes the effect of the
public-private collaboration on Korea’s litigation strategy.

127
Kim, Effects of Neo-Protectionism of the Korean Exports.
85
Table 7. WTO dispute settlement cases filed by Korea (as a main complainant) 1997-
2012
Date/
Case
number
Defendant Subject Involved
(Korean)
Private
Party
Status of the
dispute
1997.7.10
DS89
United
States
Antidumping Duty
on Imports of Colour
Television Receivers
Samsung Case withdrawn
after cancellation
of antidumping
duty
1997.8.14
DS99
United
States
Antidumping Duty
on Dynamic
Random Access
Memory
Semiconductors
(DRAMs) of One
Megabyte or Above
Hyundai,
GoldStar
Panel report
favored Korea;
dispute settled
1999.7.30
DS179
United
States
Antidumping
Measures on
Stainless Steel Plate
in Coils and
POSCO Panel report
favored Korea;
dispute settled
86
Stainless Steel Sheet
and Strip
2000.6.13
DS202
United
States
Definitive Safeguard
Measures on Imports
of Circular Welded
Carbon Quality Line
Pipe
Korea lron &
Steel
Association
Appellate Body
report favored
Korea; dispute
settled as
safeguard
measures
terminated
2000.12.15
DS215

Philippines Antidumping
Measures Against
Polypropylene Resin
Over ten
textile
exporters
Case withdrawn
after cancellation
of antidumping
duty
2000.12.21
DS217
United
States (joint
complaint)
Continued Dumping
and Subsidy Offset
Act of 2000 (joint
complainant)
Korea lron &
Steel
Association
Appellate Body
report favored
Korea;
implementation
failed
2002.3.20
DS251
United
States (joint
complaint)
Definitive Safeguard
Measures on Imports
of Certain Steel
Products
Korea lron &
Steel
Association
Appellate Body
report favored
Korea; dispute
settled after
87
termination of
safeguard duty
2003.6.30
DS296

United
States
Countervailing Duty
Investigation on
Dynamic Random
Access Memory
Semiconductors
(DRAM)
Hynix Appellate Body
report favored
the United
States; dispute
settled
2003.7.25
DS299
European
Union
Countervailing Duty
Investigation on
Dynamic Random
Access Memory
Semiconductors
(DRAM)
Hynix Panel report
favored Korea;
dispute on
implementation
continued
2003.9.3
DS301

European
Union
Measures Affecting
Commercial Vessels
Korea
Shipbuilders
Association
Panel report
favored
European Union;
dispute settled
2004.2.13
DS307
European
Union
Aid for Commercial
Vessels
Korea
Shipbuilders
Association
Case withdrawn
after the panel
report on DS 301
released
88
2004.12.1
DS323
Japan Import Quotas on
Dried Laver and
Seasoned Laver
Over 50
some laver
exporters
Dispute settled
prior to the
release of Panel
report
2006.3.14
DS336
Japan Countervailing
Duties on Dynamic
Random Access
Memories from
Korea
Hynix Appellate Body
report favored
Korea; dispute
settled
2009.11.24
DS402
United
States
Use of Zeroing in
Antidumping
Measures Involving
Products from Korea
POSCO Panel report
favored Korea;
dispute settled
2011.1.31
DS420
United
States
Antidumping
measures on
corrosion-resistant
carbon steel flat
products from Korea
POSCO In process

Strong Litigation
Korea’s disputes regarding semiconductor and shipbuilding industries, the two
largest export sectors in Korea, demonstrate the GOK’s most aggressive action at
claiming trade interests. Amid the 1997-1998 financial crisis, the GOK undertook a
89
widespread restructuring plan with the assistance of the International Monetary Fund
(IMF). Usage of the IMF rescue fund in these two sectors became central to critiques
following the 2001 recession in the United States and the European Union. Both
governments and businesses in the two regions blamed continuing GOK state-
sponsorship for chaebŏl firms’ price advantage in the crisis aftermath. To address this
concern, Korea filed five WTO complaints (DS296, DS299, DS301, DS307, DS336).
Three disputes (DS296, DS299, DS336) are centered with Hynix’s bank loans in
the early 2000s. As part of Kim Dae Jung’s plan for reducing overcapacity, Hyundai
Electronic and LG Semiconductor were forced to merge as Hynix Semiconductor. While
taking over the financial burden the two companies left, Hynix was distressed by a
recession in the memory chip market and sought continued leniency from its major
lenders, mainly state-owned banks.
128
In an attempt to disrupt Hynix’s bailout plan,
Micron Technology, a long-standing opponent of Korean chipmakers, launched a
campaign contending that the GOK continued to protect Hynix through state-owned
banks with the help of IMF rescue funds. This campaign was so high-profile that even the
U.S. investigating authority, namely, DOC, made an unusual move warning the GOK not
to bailout Hynix.
129

128
These banks include Korean Development Bank (KDB), Korea Exchange Bank, and Hanvit Bank (now,
Woori Bank).
129
U.S. Secretary of Commerce Donald L. Evans recently sent a letter to South Korea's Commerce
Minister Chang Che Sik stating, “Extending additional, extraordinary financial assistance to Hynix
Semiconductor (calls) into question Korea’s commitment to genuine structural market reform and to its
obligations under the World Trade Organization.” See “Hynix Sells Part Of LCD Unit To Consortium—
Semiconductor Focus Spurs Deal With Cando-Led Group,” The Asian Wall Street Journal, 7 September
2001.
90
Given the symbolic meaning of the Hynix case to Kim Dae Jung’s reform plan,
the GOK firmly defended the independence of its state-owned banks, which decided to
roll over Hynix’s debt to KRW8.6 trillion (over US$6.5 billion).
130
This decision was
soon followed by a countervailing suit filed by Micron, blaming Hynix’s low prices for
the drastic plunge in global chip prices in 2001. Confident from their successful recovery,
Hynix and the GOK were keen to prepare for the investigation. Throughout this process,
several top Korean officials approached both U.S. and IMF officials to campaign for a
favorable ruling countering Micron’s charge.
131
When the final determination of 44
percent of countervailing duties was made, the GOK promptly filed a complaint to the
WTO to prove its innocence and compliance with the IMF and WTO. Korea fought
through the entire process until the Appellate Body ruling.
132
Likewise, they launched
another two WTO complaints against the EU and Japan as soon as they copied the U.S.
countervailing rulings against Hynix. Although the Appellate Body ruled against Hynix,
the company continued its efforts at convincing all the foreign counterparts, including
Micron, of its the proper use of bank loans. Eventually, the U.S., EU, and Japan lifted the
duties, which expired in 2008.

130
The GOK claimed that despite the government’s majority ownership, it is the creditor banks, instead of
the government, that made the decision on Hynix’s loans, and its policy-based fund and tax break code was
in line with IMF and WTO rules. Since the bailout, coupled with the global demand’s recovery, Hynix
successfully gained market share and overtook Micron as the world’s second largest memory chipmaker.
131
“South Korea Calls US Decision to Levy High Tariffs on Semiconductors ‘Unfair,’” Yonhap News
Agency, 2 April, 2003.
132
The WTO panel report favored Korea in several key points regarding the definition of a state-owned
body and whether state-owned banks have been ‘entrusted’ or ‘directed’ in their decisions to extend
commercial loans. The United States appealed to the Appellate Body which overturned the panel decision.
For more information, see the World Trade Organization, WT/DS296/AB/R, 27 June 2005.
91
Korea’s IMF fund usage provoked another high-profile dispute related to the
shipbuilding industry.
133
This dispute followed a decade-long dispute between Korean
and European shipbuilders. In the late 1990s, many European shipyards closed down
during the decline of the global shipbuilding market. This was followed by a European
Commission (EC) investigation in 2000, concluding that Korean shipbuilders violated the
WTO 1994 Subsidies Agreement for the substantial subsidies they received from the
government.
134
Specifically, the investigation suggested that the GOK used IMF rescue
funds to issue cheap bank loans through its state-owned banks to ailing shipbuilders so
they could sell their ships at dumping prices.
135
The European shipbuilders intended to
use the EC ruling to force its Korean competitors to return to the negotiation table
regarding debt and loan regulations.
136

While rejecting most of the EC findings, the joint delegation of Korean
shipbuilders and the government held a hard line in negotiations with the EC. The
delegation insisted that their market gains were a result of improved competitiveness and
the depreciation of the Korean won after the financial crisis and thus refused to settle

133
For more detail about the history of the rivalry between the Korean and European shipbuilding
industries, see Tae-Woe Lee, “Restructuring of the Economy and Its Impacts on the Korean Maritime
Industry,” Maritime Policy & Management 4 (1999): 311-325.
134
Third Report to the Council on the Situation in the World, COM(2000)730 final, Commission of the
European Communities, 2000, Brussels, Link: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2000:0730:FIN:en:PDF; retrieved on 1 October 2011.
135
Daewoo Shipbuilding and Samho Heavy Industries (managed by Hyundai Heavy Industry) were the
focal point of the EC investigation.
136
.As the OECD Agreement of 1994 failed ratification, the EU sought bilateral negotiations with Korea.
Also see note 123.
92
most EC demands about loan and debt forgiveness.
137
Korea’s hard stance led to the EU’s
filing a WTO complaint on this issue. Holding an assertive position, Korea launched two
WTO complaints (DS306, DS307) in return, challenging the European shipbuilders for
their extended subsidies from their own governments.
138
Rather than claiming interests
for Korean shipbuilders, these two complaints were more as bargaining chips against the
EU since the Korean shipbuilders were hardly affected by the loss of market share caused
by the EU’s extended subsidies. The shipbuilding dispute dragged on for five years due
to a stalemate between the two sides until the WTO panel ruled in favor of Korea’s post-
crisis restructuring plan.
139

In addition to the close public-private collaboration described above, the
economic stake involved with these two disputes was enormous and particularly
important to the GOK, which ardently sought for export expansion to boost its post-crisis
economy. The imperative of these disputes is illustrated by the fact that Hynix, as the
world’s third largest chipmaker, contributed to 4 percent of Korea’s exports in 2000.
Likewise, during the shipbuilding dispute, the GOK and the Korean shipbuilding industry
opened a program, calling for US$120 million to develop new technology over the next

137
Position Paper on Korean/EU Shipbuilding Talks, Korea Shipbuilders Association (KSA), Seoul
(November 2000).
138
In June 2002, the EU issued a temporary subsidy order to the affected shipbuilders, which was
prolonged by a new resolution until March 2005. Later in September, the EU requested a WTO panel
against Korea’s export subsidies in the form of advance payment guarantees and loans provided by the
state-owned bank. Amid the stalemate in negotiations, the GOK launched a WTO complaint in 2003
against the EU temporary subsidy order.
139
However, the WTO Panel upheld the part of the EU’s claims in export subsidies and preferential tax
code. The GOK responded that the WTO simply confirmed what they already knew, and the prohibited
export subsidies and tax breaks were to expire anyway. Jonathan Fowler, “EU, South Korea Face off at
World Trade Organization over Shipbuilding Aid,” AP World Stream, 11 April 2005.
93
10 years with a target of 40 percent global market share by 2010.
140
Moreover, as the
IMF rescue funds were the focal point of these disputes, the GOK was directly involved.
As a legal advisor to the OMT explained, these complaints matter from the government’s
perspective because they could have significant implications for many other Korean
industries that experienced similar post-crisis restructuring programs.
141
It was critical for
the Kim Dae Jung administration’s neoliberal financial ambitions in particular to clarify
the subsidy issue since he had embarked on a plan to make Seoul an “Asian financial
hub.”
Korea also filed several complaints to protect steel interests. Although steel
exports were not as important to Korea’s economy as semiconductors and shipbuilding,
they grew rapidly, with POSCO becoming the world’s largest steelmaker in the late
1990s. In this sense, POSCO’s export became increasingly critical to the prospect of
Korea’s post-crisis recovery. The concentration of interest is confirmed by the fact that
half of the complaints related to the steel sector were directly related to POSCO’s
business. Moreover, even in the complaints where POSCO’s business was not
significantly affected, it was essential for the GOK to prevent other countries from
copying U.S. trade remedy measures against Korea, and filing WTO complaints could
serve this purpose.
142

140
“Korea Eyeing 40 percent Global Shipbuilding Share by 2010,” The Korea Herald, 18 June 2002.
141
Duk-geun Ahn (Professor of Trade Law and Policy, the Graduate School of International
Studies(GSIS)/Law School, Seoul National University), in discussion with the author, 12 March 2013.
142
In DS307, POSCO managed to mitigate the impact caused by the US trade remedy rules. Nonetheless, it
still supports KOSA and its steel alliances’ filing the complaint against the US. For the detail about the
GOK’s decision in this policy, see Hidetaka Yoshimatsu, “U.S.-East Asian Trade Friction: Exit and Voice
in the Steel Trade Regime,” Asian Affairs 30, no. 3 (Fall 2003): 200-217.
94
On the other hand, prior to these complaints, the government and the steel sector,
mainly POSCO, were already collaborating closely. A dispute started amid the 1998 steel
crisis during which the U.S. steel industry launched a barrage of trade remedy measures
against its foreign competitors. POSCO, the world’s largest steelmaker at the time, was
particularly cautious to follow DOC’s investigation procedure as well as maintain contact
with other steelmakers about market prices.
143
Meanwhile, the GOK phased out several
import rules that were criticized by the U.S. and prepared for the overall privatization of
POSCO. Their joint actions successfully minimized the impact involved with some trade
remedy charges. Later in the two antidumping investigations against the stainless steel
plate in coils (plate, hereafter) and stainless steel sheet and strip in coils (sheet, hereafter),
the GOK and POSCO also worked closely to lobby against DOC’s counting errors
144
In
2009 they pushed for other two complaints against the review investigations on plate and
sheet products for DOC’s usage of a “zeroing” rule, a counting procedure banned by the
WTO rulings.
145
Finally, in two WTO complaints where Korea was a co-complainant

143
Ibid. The U.S. steel industry targeted Korea for several reasons. First, the plunge of Korea’s economy,
together with the depreciation of Korean won amid the financial crisis, drove Korean steelmakers to
transfer their products for export. Second, as POSCO grew rapidly and became the largest steelmaker in
1998, its long history of state ownership also made it subject to subsidized dumping charges.
144
At the preliminary ruling determinations of the “plate” and “sheet” cases, the dumping margins imposed
were 2.77 percent and 3.92 percent respectively. POSCO officials argued that the sharp increase a result of
Washington having excluded November and December prices from their calculation, although the U.S.
officials said their investigation included the whole of 1997. During the two months, they said, POSCO
continued to ship their products at previously-contracted prices despite the sharp depreciation of the Korean
won against the U.S. dollar in the wake of the nation's economic crisis. POSCO’s officials also argued their
export prices were below the industry standard because Washington included unrecovered payments from
American companies, which had gone bankrupt, in the calculations. For more information about the errors
of these methods, see the World Trade Organization, WT/DS179/R, 22 December 2000.
145
Zeroing refers to the practice of replacing the actual amount of dumping when it yields negative
dumping margins with a value of zero prior to the final calculation of a weighted average margin of
dumping for the product under investigation with respect to the exporters under investigation. Zeroing
drops transactions that have negative margins and hence increases the overall dumping margins and the
resulting size of the applied antidumping duty. Although in January 2007 DOC suspended zeroing in their
original investigations, this complaint pertained to the U.S. antidumping duties on “sheet” and “plate”
95
with seven other countries, the Korea Iron & Steel Association (KOSA) took a proactive
stance and engaged the GOK to join other governments in the global campaign against
the Bryd Amendment and Bush’s safeguard order in the U.S.
146

To be sure, these complaints were not as provocative as the disputes involved
with semiconductor and shipbuilding industry in the sense that Korea was more in a
defensive position. Prior to filing WTO complaints, both the GOK and POSCO made
adjustments hoping to mitigate the damage. Also, Korea’s claim of trade interests in these
complaints was relatively moderate since disputes over numerical values are often less
controversial than disputes over definitions in subsidy-related cases.
147
Moreover, in the
complaints against the Bryd Amendment and Bush’s safeguard order, Korea was not a
lead actor as it had less economic interest than other parties involved in these cases. It is
also fair to say that although the interest at stake is highly concentrated in the steel
disputes, the scale of economic impact was not to the point that the GOK has to take an
aggressive stance confronting its major trade partners.

generated by “zeroing” counting on POSCO between 1999 and 2006. This case also covers the
antidumping duties on diamond saw blades and parts from other Korean cutting tool manufactures
including Ehwa, Hyosung, and Shinhan Diamond Industrial Co., Ltd. For more information, see Chad P.
Bown and Alan O. Sykes, “The Zeroing Issue: A Critical Analysis of Softwood V,” World Trade Review 7,
no. 1 (2008): 121-142; Dan Ikenson, “Zeroing In: Antidumping’s Flawed Methodology under Fire,” Cato
Free Trade Bulletin 11, 27 April 2004: 1-3; Thomas J. Prusa and Edwin Vermulst, “A One-Two Punch on
Zeroing: U.S. – Zeroing (EC) and U.S. – Zeroing (Japan)” World Trade Review 8, no. 1 (2009): 187-241.
146
Sponsored by late Senator Robert Byrd, the amendment revised the Tariff Act of 1930 which allows for
the distribution of revenues collected from antidumping and countervailing duties to domestic filing
complainants. Such legislation provided steel producers with both subsidies and incentives to file further
antidumping charges.
147
For more discussion on the character of trade remedy-related disputes, see Daniel Tarullo, “Paved with
Good Intentions: The Dynamic Effects of WTO Review of Antidumping Action,” World Trade Review 2,
no. 3 (2004): 373-393; A. Guzman and B. Simmons “To Settle or Empanel? An Empirical Analysis of
Litigation and Settlement at the World Trade Organization,” Journal of Legal Studies 31 (2005): 205-235.
96
In addition to the microchip and steel industry cases discussed above, it is also
noteworthy that the GOK and several top electronic exporters worked together filing
Korea’s first two complaints in the WTO. One complaint was regarding the U.S.
antidumping duty on color television receivers made by Samsung. Another complaint
was regarding the U.S. antidumping duty on memory chips of one megabyte or above
from Hyundai and GoldStar. The economic impact of these two complaints was less
substantive. Samsung had already moved much of its production to Mexico nearly a
decade prior to the case filing. Likewise, Hyundai and LG had already managed to keep
the antidumping duties on their product relatively low before the complaint.
148
However,
these complaints had significant implications for their marketing strategy. The U.S.
antidumping order on color television receivers posed a threat to the potential export of
Samsung’s HD televisions in the future. Similarly, since the mid 1990s, LG and Hyundai
actively sought to expand their manufacturing capacity and thus were in need of a better
prospect for market access to the United States for raising capital. Moreover, those
companies were active in engaging the GOK to use the multilateral channels to tackle
trade remedy issues since the GATT period.
149
With years of experience fighting disputed
issues, those companies became the GOK’s first choice to test the new WTO jurisdiction.

148
See note 118 and 119.
149
For the color-television case, see Junsok Yang, “Learning by Doing: the Impact of a Trade Remedy
Case in Korea,” in Peter Gallagher, Patrick Low, and Andrew L. Stole eds., Managing the Challenges of
WTO Participation (New York: Cambridge University Press, 2005): 300-315.
97
Weak Litigation
In December 2000, Korea filed a WTO complaint against the preliminary and
final determinations of the Tariff Commission of the Philippines on polypropylene resins
from Korea in 1999 and 2000 respectively. Instead of the exporters of polypropylene
resins, the OMT took the initiative in this case. In fact, some exporters did not respond
well to the investigations and eventually received a levy on antidumping duties.
150
“As
many of them [the affected companies] are small and medium enterprises who have
relatively little resource in dealing with trade remedy investigations, we felt the need to
assist them throughout this process [sic],” said Won-mog Choi, the former OMT officer
in charge of this complaint. Under the OMT’s support, a working group, including
lawyers and accountants from both public and private practice was formed to assist the
affected exporters in preparing their WTO complaints.
151

Conclusion
This chapter illustrates how the concentrated export structure and the well-
functioning policy network consolidates and promotes collaboration between the GOK
and exporters in handling export barriers and disputes with foreign governments. As
more and more of Korea’s leading exporters, namely, chaebŏl , become the new leaders in

150
The affected firms include Daelim Corp., Hanwah Corp., Kolon International Corp., Hyundai Corp., SK
Global Co., Jinwon Trading, LT International, Sekitoku, Sewon Corp., and Hyosung Co.
151
As a response to the GOK’s request, the Philippines Permanent Mission in Geneva found that there was
“no significant increase in the volume of dumped imports, both in absolute terms and relative to domestic
consumption.” The finding was later confirmed by The Philippines Tariff Commission, which lifted the
measures. “DTI Lifts Anti-dumping Duty on Korean Resins,” The Philippine Star, 21 November 2001.
http://www.philstar.com/business/140857/dti-lifts-anti-dumping-duty-korean-resins, accessed 2 August
2012.
98
global markets, they encounter greater export barriers and charges of dumping and thus
demand greater use of multilateral legal venues, such as the DSB, to appeal unresolvable
bilateral disputes. The fact that chaebŏl support reinforces the government’s chance to
contest WTO disputes is proved by the cost distribution of the WTO litigation cases
involving chaebŏl , all of which are shared by the government and the affected chaebŏl or
their affiliated associations.
152
When the economic impetus of trade litigation is
substantial, long-standing collaboration between the government and chaebŏl moves the
handling of trade dispute efficiently and effectively. Once chaebŏl exhaust all options,
the GOK rapidly files WTO complaints on their behalf. The strong litigation strategy is
particularly demonstrated by the WTO complaints involved with shipbuilding and
semiconductor industries where the GOK filed complaints promptly after the bilateral
settlement collapsed and, during the WTO dispute settlement process, stood firmly for the
business interests it claimed until the end of the adjudication.
Finally, a repeated theme in all of Korea’s WTO complaints is the GOK’s
persistence and commitment to defend the interests of its leading exporters and to
promote the growth of its export sector. This tendency is particularly strong given the fact
that the GOK fervently supported export expansion as a way to boost its economic
recovery in the aftermath of the 1997-1998 Asian financial crisis. The use of WTO
dispute settlements, in this sense, is a strategy for the GOK to lead and stay relevant to
the exporters in the globalization era.

152
Won-mog Choi, in discussion with the author, 29 March 2012.
99
CHAPTER FOUR:
Taiwan,
a Daunting Case of a Developmental State Going Litigious

As one of the largest foreign trade remedy measures recipients, Taiwan has not been
active in using the WTO dispute settlement system to remove trade barriers. This is
puzzling since the WTO is the only international organization that Taiwan can utilize to
settle trade disputes.
153
Using Taiwan as a control case to compare with the experiment
case, Korea, this chapter argues that while the GOT yearns for using WTO dispute
settlement system to guide and promote its exporters’ global business, it was pulled back
by its exporters’ small and subcontracting business model and the paucity of government-
exporter coordination on export barrier problem.
This chapter first reviews the trade barriers Taiwanese exports face, emphasizing
trade remedy measures. It then examines the industrial structure of Taiwan’s export
sector and the system for Taiwanese government-exporter collaboration, while at the
same time comparing the difference between Taiwan and Korea in these two aspects. It
continues with a survey of how Taiwanese exporters handled export restrictions at the
bilateral level since the 1980s, again focusing on trade remedy measures. This analysis
argues that the dual structural factors of Taiwan’s export sector and Taiwanese
government-exporter collaboration prevent the GOT and the Taiwanese exporters from

153
Studies show that a country will be less active in using WTO dispute settlement system if alternative
forums are available. See Christina Davis, “Overlapping Institutions in Trade Policy,” Perspectives &
Politics 7, no. 1 (March 2009): p. 25-31.
100
embracing legal options through the WTO when facing foreign trade protectionism. As
the final section focusing on Taiwan’s three WTO dispute settlement cases will
demonstrate, this argument explains why the GOT was unable to use the WTO more
promptly and aggressively to defend Taiwanese exporter interests.

Background: The Rise of Export Barriers
In past decades, Taiwan was not only excluded from the Generalized System of
Preference (GSP) by the European Community and Canada, but also underwent a barrage
of export restrictions. In addition to quota and voluntary export restraints (VERs), other
non-tariff barriers under administrative or unfair trade regulations in force or under
investigation frequently challenged Taiwanese exports.
154
Among these restrictions,
antidumping measures have been most frequent and widespread, illustrated by the fact
that from 1980 to 1995 Taiwan was targeted by 119 antidumping measures.
155
The
majority of these orders were from Taiwan’s main overseas markets, primarily from
developed countries, with the United States contributing to a third of the orders.
156
In
addition, other measures were often used against Taiwanese exports by reason of
subsidies, material injury in the importing country, and violation of intellectual property

154
Trade remedy measures prior to the inception of the WTO broadly referred to all the administrative
measures proceeded by the state government. The WTO agreements defined trade remedy measures as
antidumping, countervailing, and safeguard measures while creating a separate chapter regarding
administrative measures for intellectual property rights.
155
For the statistics, see Thomas Prusa, “East Asia’s Anti-dumping Problem,” The World Economy 29, no.
6 (2006): 743-761; Chu-Wei Tseng, Woguo zao qingxiao kongsu qijian gean chanpin zhi xingwei fenxi-yi
meiguo 1992-1998 nian anjian wei li [The Effect of Antidumping Suits on Taiwan’s Exports: Study on the
United States Antidumping Cases, 1992-1998] (Taipei: Trade Investigation Committee, Ministry of
Economic Affairs, 2000).
156
Ibid. From 1980 to 2002, the United States imposed 56 antidumping orders on goods from Taiwan.
101
rights. Likewise, the United States was the key agent imposing these measures against
Taiwan.

Figure 5. Antidumping and countervailing measures against Taiwanese exports,
1995-2012 (Total measures: 152)

While many trade barriers were removed by the WTO agreements, Taiwanese
exports continued to be challenged by a high number of antidumping orders. From 1995
to 2012, Taiwan received 142 antidumping orders (and 3 countervailing orders), only less
than China and South Korea among WTO members. As Figure 5 shows, while
antidumping orders affected Taiwan most heavily in the early 2000s, the number of

Source: The World Trade Organization. Data retrieved on January 23, 2013.
Link: http://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByExpCty.pdf;
http://www.wto.org/english/tratop_e/scm_e/CV_InitiationsByExpCty.pdf
102
orders remains relatively constant year to year. Contrasting the pre-WTO period, over
half of the antidumping orders against Taiwan are from developing countries, including
India, China, Argentina, South Africa, and Turkey.

Figure 6. Sectoral distribution of antidumping and countervailing measures against
Taiwan, 1992-2012

*VI: Products of the Chemical or Allied Industries; VII: Plastics and Articles Thereof; Rubber and Articles
Thereof; X: Pulp Of Wood or of Other Fibrous Cellulosic Material, Paper and Paperboard and Articles
Thereof; XI: Textiles and Textile Articles; XV: Base Metals and Articles of Base Metal; XVI: Machinery
and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers,
Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles;
XVII: Vehicles, Aircraft, Vessels and Associated Transport Equipment; XX: Miscellaneous Manufactured
Articles.

Source: The World Trade Organization. Data Retrieved on January 23, 2013.
Link: http://www.wto.org/english/tratop_e/adp_e/AD_Sectoral_MeasuresByExpCty.pdf;
http://www.wto.org/english/tratop_e/scm_e/CV_Sectoral_InitiationsByExpCty.pdf

0
5
10
15
20
25
30
35
40
Number of Initiations
Sectoral Distribution*
103
By sector, most antidumping orders against Taiwan targeted at relatively standard
products like steel and iron, petro-chemicals, and plastics (Figure 6).
157
India and China
reinforced this trend— the two largest developing countries initiating antidumping orders
against Taiwan— increasing orders against Taiwan in these product categories in recent
years.
However, in contrast to Korea, antidumping measures against Taiwan,
particularly the ones from developed countries, also covered a variety of light-assembled
goods in plastic and miscellaneous categories (Figure 6). For instance, U.S. antidumping
orders against Taiwan included fireplace mesh panels, industrial belts, bicycles and parts
thereof, bicycle tires, polyethylene retail carrier bags, oil country tubular goods, steel
fittings, locks, wire ropes, nails, nuts & bolts, and wire garment hangers.
Among recent trade remedy measures against Taiwan, those China issued are
worth further examination as China rapidly soared as the largest export market for
Taiwan since their WTO accessions.
158
Since the early 2000s, more Taiwanese factories
were relocated to China and likewise more materials at the upstream industries in Taiwan
were exported to China to supply the Taiwanese investors. From 2002 to 2012, China has
imposed 14 antidumping measures on exports from Taiwan, making China the third most
frequent antidumping agent against Taiwan. In addition, China also imposed safeguard
orders in 2002 on 27 steel products from Taiwan. Many contend that the Chinese orders

157
To use the U.S. record as an example, antidumping orders against Taiwan included polyvinyl chloride
sheet and film; polyethylene terephthalate film, sheet, and strip; acrylic sheets; polyvinyl alcohol; carbon
steel plate; stainless steel bars; hot-rolled and cold-rolled carbon steel flat products; and many other
stainless steel products.
158
China and Taiwan entered the WTO at almost the same time; the former became a WTO member on 11
December 2001 and the latter on 1 January 2002.
104
intend to disrupt the relations between Taiwanese upstream material suppliers and
downstream manufacturers investing in China so as to force the manufacturers to opt for
sourcing Chinese suppliers.
159

Given this background, questions of interest to this research are as follows. How
have Taiwanese exporters handled the foreign trade remedy suits? What factors affected
Taiwanese exporters’ responses to foreign trade remedy suits? Finally, how did handling
the trade remedy measures vary by sector? The following section answers these questions
by examining the effect of the industrial structure and the government-exporter
collaboration on Taiwanese exporters’ capacity to handle foreign trade barriers.

Factors Affecting Exporters’ Handling of Foreign Trade Remedy
Measures
The Export Sector’s Structure: Size and Concentration of Production
Conservative monetary and financial policy in the post-war era has made
Taiwan’s export sector highly disaggregated and dominated by small and medium
enterprises (SMEs).
160
The SMEs, nonetheless, have become the driving force of
Taiwan’s export sector and led Taiwan’s economic growth for decades. At its peak in the

159
Chinese National Federation of Industries, Guonei Qiye Chukou Shichang Maoyi Zhangai Diaocha
Baogao, 2003-2011 [Reports on Foreign Trade Barriers to the Domestic Enterprises, 2003-2011], 2003-
2011, http://wto.cnfi.org.tw/all-module12.php?module_class=2, accessed 20 January 2013.
160
After retreating from Mainland to Taiwan, the Kuomintang government prioritized inflation and land
reform in its political agenda so as to stabilize its regime. For more information, see Joel D. Aberbach,
David Dollar, Kenneth L. Sokoloff eds., The Role of the State in Taiwan's Development (Armonk, N.Y.:
M.E. Sharpe, 1994); Thomas B. Gold, State and Society in the Taiwan Miracle (Armonk: M.E. Sharpe,
1986); Tun-Jen Cheng and Yun-hen Chu, “State-Business Relationship in Taiwan: A Political Economic
Perspective” in Peter C.Y. Chow ed., Taiwan’s Modernization in Global Perspective (Newport CT: Praeger
2002): 195-214.
105
1980s over 75 percent of SME revenue relied on foreign markets and, likewise, SME
revenue represented two-thirds of Taiwan’s exports. Since the 2000s, SMEs have
continued to produce over half of Taiwan’s export value.
SMEs started as light assembly industries that required little capital and
technology investment. They quickly spread to a variety of low value-added production,
ranging from textile, garment and shoes, to toys, accessories, and miscellaneous. While
each could only produce a small amount of parts or intermediate goods given the
restricted access to capital, the SMEs often developed into industry clusters to maintain
effective production and flexibility to meet their client needs.
161
Such traits have made
them ideal subcontractors for multinational corporations and allowed them to
successfully enter the global market.
162
However, as SMEs competed fiercely with each
other, they kept closer relations with the upstream suppliers, downstream buyers, and
overseas contractors than with their competitors in the same industry.
163

As their business relied on small-lot production and purchases, the SMEs were
better at adjusting to the changing business environment by diversifying or changing their

161
Gary Hamilton, Marco Orru, and Nicole Biggart, “Enterprise Groups in East Asia, An Organizational
Analysis,” Shoken Keizai 161 (1987): 78-106; Marco Orru, “The Institutional Logic of Small-Firm
Economies in Italy and Taiwan,” Studies In Comparative International Development 26, no. 1 (Spring
1991): 3-28; Gary Gereffi and Mei-Lin Pan, “The Globalization of Taiwan's Garment Industry” in Edna
Bonacich et al., Global Production (Philadelphia: Temple University Press, 1994): 126-146; Gary Gereffi,
“Global Production Systems and Third World Development,” in Barbara Stallings ed., Global Change,
Regional Response: The New International Context of Development (New York, Cambridge University
Press: 1995): 100-142.
162
Gereffi, Global Production Systems and Third World Development.
163
The industrial clusters among the SMEs maintain close relationships with both the conglomerates at the
upstream industries and the trading companies in Japan and the United States. Meanwhile, the clusters
themselves formed around informal networks of family or personal connections (guanxi). The informal
network allows the industrial clusters to better absorb cost and make quick production adjustments to the
market climate. For more information, see Gwo-shyong Shieh, "Boss" Island: The Subcontracting Network
and Micro-entrepreneurship in Taiwan's Development (New York: Peter Lang Publication Co., 1993).
106
production in a timely manner.
164
This advantage accelerated Taiwanese export industry
transformation in the 1980s when light assembly industries were largely replaced by
electronic industries with higher added value. Electronic industries, the largest export
sector in Taiwan since the 1990s, also followed the pace of their overseas contractors and
quickly moved to produce a variety of technology products.
165
Under such development,
the character of SMEs also prevailed in Taiwan’s leading technology sectors; for
example, Taiwan’s top four technology exports—computers, smart phones, tablet
devices, and motherboards (Table 8)—all require industry clusters to supply components
or intermediate goods in complete variety. In addition, due to the SME-based structure,
the manufacturing of these products remained disaggregated and controlled by a number
of manufacturers that prevent the market from being dominated by a single player.

Table 8. Taiwan’s major exporters and their world rankings
Major exports Industry’s global status and
ranking
Major enterprises revenue
and their global ranking
2011-2012
Semiconductors  Overall, ranked fourth
globally and represented 18
 TSMC: $14.6 billion
(ranked 3
rd
, including wafer

164
Ibid.
165
For more discussion on the development of high technology industries in Taiwan, see Peter C. Y Chow,
Taiwan in the Global Economy: From an Agrarian Economy to an Exporter of High-tech Products
(Newport CT: Praeger Publishers, 2002); Zhaocheng Mai and Jiansheng Shi, Taiwan's Economic Success
since 1980 (Cheltenhem: Edward Elgar Publishing, 2001); and Suzanne Berger and Richard K. Lester eds.,
Global Taiwan: Building Competitive Strengths in a New International Economy (Armonk N.Y.: M.E.
Sharpe, 2005).
107
percent of Taiwan’s exports in
2010.
 Ranked second in IC
(integrated circuit) design,
fourth in IC manufacturing,
first in wafer foundry,
packing, and testing in 2010.
foundry); UMC: $3.7
(ranked 19
th
, including
wafer foundry)
Consumer
electronics*
 Ranked first in laptop
computer manufacturing, with
89.4 percent of the global
market (including OEM);
represented 24.8 percent of
Taiwan’s exports in 2010.
 Ranked first in smart phone
manufacturing, with 81
percent of the global market
(including OEM); represented
8 percent of Taiwan’s exports
in 2010.
 Ranked first in large-sized
LCD (liquid crystal display)
manufacturing (including
OEM), with 69.2 percent of
Top enterprises: Foxconn
($95.19 billion; OEM); Quanta
($35.72 billion; OEM);
Compal ($28.17 billion;
OEM); Acer ($19.98 billion;
ranked 3
rd
largest computer
manufacturer also including
OEM); Wistron ($19.54
billion; OEM); ASUS ($16.
AUO ($16 billion; OEM);
HTC ($9.84 billion)

Types of products:
 Computer: Acer, Foxconn,
Compal, Quanta; Wistron
 Telecommunication: HTC,
108
the global market; represented
5.2 percent of Taiwan’s
exports in 2010.
 Ranked first in desktop
computer manufacturing, with
43.6 percent of the global
market; represented 5.4
percent of Taiwan’s exports in
2010.
 Ranked first in tablet devices,
with 86 percent of the global
market (including OEM);
represented 3 percent of
Taiwan’s exports in 2010.
 Ranked first in motherboards,
with 80 percent of the global
market; represented 2 percent
of Taiwan’s exports in 2010.
Foxconn, Pegatron,
Winstron, Compal, Arima
 LCD: AUO, CMO, Hanns,
QDI, CPT.
 Tablet Device: Acer, ASUS,
FIC, VIA, MIS, Twinhead,
Inventec, compal, Wistron,
Gigabyte.
 Motherboard: ASRock,
MIS, Gigabyte.
Iron and Steel  Ranked 21
st
largest in the
world in 2010; represented 3.7
percent of Taiwan’s export in
2010.
 China Steel: $1.13 billion in
2012.
109
* Consumer electronics include home appliances, visual display, mobile communication, and other IT
products (computer, laptop, scanner, copier, etc.).
Sources: Annual statistics of exports and imports, Ministry of Finance, Republic of China (Taiwan),
2010. Industry & Technology Intelligence Service, Ministry of Economic Affairs, Republic of China
(Taiwan), 2010. Annual Industry and Business Statistic, Direct-General of Budget, Accounting, and
Statistics, the Executive Yuan, Republic of China (Taiwan) 2002.

It is true that some of the SMEs have turned into large enterprises after decades of
expansion and that, among these leading exporters, some decided to pursue high-end
markets, particularly those in the electronic industry. For example, HTC, Acer, and
ASUS, known previously for their role as subcontractors for multinational corporations,
now manage their own branded products and competed head to head with their ex-
contractors. These enterprises were the minority nonetheless. The majority of the leading
exporters in Taiwan continue to practice the marketing strategy used by most Taiwanese
SMEs and keep original equipment manufacture (OEM) as their core business (Table
9).
166

In addition to the SME sector, enterprises that require economies of scale such as
steel, petrochemicals, plastics, and semiconductors also contributed to Taiwan’s exports,
albeit to varied extent. As Table 9 shows, steel and metal products and chemical and
plastic products each contributed to 5 percent of Taiwan’s exports in 2000, growing to
7.5 and 11.4 percent respectively in 2010 following the relocation of the Taiwanese SME

166
Timothy J. Stergeon and Ji-Ren Lee, “Industry Co-Evolution: A Comparison of Taiwan and North
American Electronics Contract Manufacturers” in Suzanne Berger and Richard Keith Lester eds., Global
Taiwan: Building Competitive Strengths in a New International Economy (Armonk N.Y.: M.E. Sharpe,
2005): 33-75.
110
manufacturers to China and Southeast Asia. The semiconductor industry, the fastest-
growing export in Taiwan, contributed to 10 and 18 percent of Taiwan’s export value in
2000 and 2010 respectively. However, since there is no far-reaching industry policy in
Taiwan that promotes national champion-style enterprise, the production scale of these
industries is either small or disaggregated. For example, in 2009 Taiwan’s flat-rolled steel
production only ranked twenty-first. While Taiwan’s semiconductor output was
substantial, the industry consists of numerous firms that specialize in a mere segment of
production. Among these firms, only the two largest ones, Taiwan Semiconductor
Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) are
in the world’s top 20 semiconductor producers.
167

Table 9. Taiwan’s Top Ten Exporting Sectors, 2000-2010
2000 2010
Commodity Share Commodity Share
Electrical machinery and equipment
and parts thereof**
Machinery and mechanical appliances,
parts thereof
Plastic and article thereof
Transportation equipment
29.1

26.6

5.4
3.3
Electrical machinery and equipment
and parts thereof**
Machinery and mechanical appliances,
parts thereof
Optical instruments
Plastic and article thereof
37.6

10.2

8.5
7.2

167
In 2002, TSMC ranked 9th in the world’s top 20 semiconductor sales leaders (including foundries). It
moved to 3rd in 2012 while UMC moved up to 19th. “Research Bulletin,” IC Insights, 7 November 2012.
Link: http://www.icinsights.com/data/articles/documents/466.pdf Retrieved on 2 April 2013.
111
Steel flat-rolled products
Metal products
Man-made fibers
Optical instruments
Knitted textile goods
Toys

2.9
2.7
2.6
2.5
1.9
1.5
Minerals and fuel
Organic chemical products
Metal Products
Steel flat-rolled products
Transportation equipment

5.2
4.1
3.7
3.7
2.9

Sorting based on MTI 3 classification.
** Within the category of electrical machinery and equipment and parts thereof, the share of semiconductor-related
exports was about 10 percent in 2000 and 18 percent in 2010.
Source: Bureau of Foreign Trade, Ministry of Economic Affairs, Republic of China, 2000-2010. Link:
http://www.trade.gov.tw/Pages/List.aspx?nodeID=289; Retrieved on 20 January 2013.

Taiwan’s export model has many implications for understanding the effect of
trade barriers in comparison with Korea’s export model. First, Taiwan’s export profile,
made up by a high percentage of SME-made products, is more diversified and dynamic
than Korea’s export profile, which is characterized by particular products with high-
volume production but more limited product variety.
168
Therefore, despite the large
number of antidumping orders against Taiwanese goods, the coverage of antidumping
orders was not as widespread as that against Korean goods. This is proved by the
statistics in the mid-1980s, which suggested that 15 percent of Taiwanese exports to their

168
Robert C. Feenstra, Tzu-Han Yang, and Gary G. Hamilton, “Business Groups and Product Variety in
Trade: Evidence from South Korea, Taiwan and Japan,” Journal of International Economics 48 (1999):
71–100.
112
top fifteen export markets were under export restrictions, whereas 40 percent of Korean
exports were subject to export restrictions.
169
Given the lower concentration in assembly
and light manufacture production, Taiwanese exporters have fewer sunk costs and more
flexibility to adjust their operations even if trade barriers are in effect. In short, trade
remedy measures were less impactful to Taiwan’s SME-based export model than Korea’s
chaebŏ l-based export model.
Second, although Taiwan’s export profile in the 2000s was less diversified than in
the 1980s and thus more dependent on large exporters in electronic and technology
industries, unlike chaebŏ l firms, the leading Taiwanese exporters have less trouble with
trade barriers as they maintain the OEM business model and do not concern themselves
with marketing. Even the largest Taiwanese exporter, TSMC, successfully expanded its
business by focusing on wafer foundry, a form of subcontracting semiconductor
production.
170
While the profit of subcontracting manufacturing was not as lucrative as
that of chaebŏl firms, they have less conflict with overseas competitors and thus have
more secure market access. On the other hand, trade remedy measures remain a persistent
problem to industries like steel, metal, and chemical and plastic industries in both Taiwan

169
For the data on trade protectionism on Taiwan, see Tseng, The Effect of Antidumping Suits on Taiwan’s
Exports: Study on the United States Antidumping Cases, 1992-1998. Tseng’s study was based on the period
1980-1989, but the data did not include the trade remedy measures from Australia. On the other hand, the
Korean government’s statistics in the mid 1980s showed that 40 percent of Korean exports were under
export restrictions. See Chapter Three for more information.
170
TSMC is the largest wafer foundry manufacturer in the world, whose annual production is worth of 14.6
billions USD in 2012. However, the production scale of wafer foundry is still much smaller than that of
regular integrated circuit (IC). For example, the production of Intel and Samsung, two largest IC producers
in the world, is 49.7 billions USD and 32.7 billions USD in 2012 respectively. IC Insights, “Research
Bulletin,” 7 November 2012. Link: http://www.icinsights.com/data/articles/documents/466.pdf Retrieved
on 2 April 2013.
113
and Korea. Nonetheless, as the production scale of these industries in the former is
smaller than that in the latter, so is the economic loss caused by trade remedies.

The Government-Exporter Network
I. The Institutional Infrastructure
The government-business network is underdeveloped in post-war Taiwan. Similar
to the Korean government, the GOT created a corporatist system to mediate between
public and private sectors.
171
Within this system, the government mandated that business
actors in each sector join the state-controlled associations and each association was
directed under three national organizations at the top of the hierarchy. The blue-ribbon
National Council of Industry and Commerce (NCIC) represented the largest enterprises;
the Federation of Commerce (CNFC) represented the entire service sector; and the
Federation of Industry (CNFI) represented the entire manufacturing sector. While both
the NCIC and CNFC, for a long time, focused on the domestic market, the CNFI,
covering a full range of manufacturing industries, was the most important and the largest
export sector representative.
However, the function of Taiwan’s corporatist organizations at facilitating public-
private networking or promoting policy advocacy was quite restricted, as many have
observed.
172
The reason is twofold. First, as government-business relations had been at

171
Yun-han Chu, “State Structures and Economic Adjustment in the East Asian Newly Industrializing
Countries,” International Organization 43, no. 4 (August 1989): 647-672; Karl J. Fields, “Trading
Companies in South Korea and Taiwan: Two Policy Approaches,” Asian Survey 29, no. 11 (November
1989): 1073-1089; Tun-jen Cheng, “Political Regimes and Development Strategies: South Korea and
Taiwan,” in Gary Gereffi and Donald Wyman, eds. Manufactured Miracles: Patterns of Development in
Latin America and East Asia (Princeton: Princeton University Press, 1991): 153-171.
172
Peter Evans, “The State as Problem and Solution: Predation, Embedded Autonomy, and Structural
Change,” in Stephan Haggard and Robert R. Kaufman eds., The Politics of Economic Adjustment
114
arm’s length since the Kuomintang (KMT) took power, the industry associations were
mostly used as an arm of the state bureaucracy and the ruling party to supervise policy
implementation.
173
Business representatives, as a result, were rarely included in the KMT
government’s policymaking coalition.
174
In fact, as Peter Evans observes, this
policymaking process lacked meaningful inputs from most of the private sector.
175
The
distance, if not distrust, between the government and businesses was particularly salient
in the case of SMEs, which mostly consisted of native Taiwanese businessmen.
More fundamentally, the government-business network was hindered by the poor
function of industry associations in Taiwan.
176
While starting as semi-government agents,
industry associations, particularly in the SME-dominated sector, were often incapable of
self-sufficiency.
177
This was because most SMEs, surviving by razor-thin profits and

(Princeton: Princeton University Press, 1992): 158-163; Karl Fields, “Strong States and Business
Organization in Korea and Taiwan” in Sylvia Maxfield and Ben Ross Schneider eds., Business and the
State in Developing Countries (Ithaca: Cornell University Press): 149-151; Tun-Ren Cheng, The Politics of
Industrial Transformation: The Case of the East Asian NICs, PhD Thesis, Berkeley: University of
California, Berkeley, 1987.
173
Chu, State Structures and Economic Adjustment in the East Asian Newly Industrializing Countries;
Cheng, The Politics of Industrial Transformation: The Case of the East Asian NICs; Yun-han Chu, “The
State and the Development of Automobile Industry in South Korea and Taiwan” in Joel D. Aberbach,
David Dollar, Kenneth L. Sokoloff eds., The Role of the State in Taiwan's Development (Armonk, N.Y.:
M.E. Sharpe, 1994): 125-156.
174
The policymaking coalition during the KMT government was centered with the economic bureaucrats,
party-related academics and think-tanks, the heads of state-owned enterprises and, occasionally a number
of Taiwanese native conglomerates. For more information, see Wade, Governing the Market:275, Fields,
Strong States and Business Organization in Korea and Taiwan:149-150.
175
Evans, The State as Problem and Solution: 161.
176
Hsin-Huang Michael Hsiao, “Jiedu Taiwan Zhongxiao Qiye Jia Yu Da Qiye Jia De Chuangye
Guocheng” [The Entrepreneurial Process of Taiwan's Small-Medium and Big Businessmen] Zhongguo
Shehui Xue Kan [Chinese Journal of Sociology], 16 (1993): 139-167.
177
Chao-Chi Wang, Taiwan Gongye Tuanti De Zhuanxing Yu Fazhan [The Transformation and
Development of Industry Associations in Taiwan], (Taipei: Ding-Mao Publishing Co., 2001).
115
competing fiercely among each other, are indifferent to industry-wide collaboration.
178
In
addition, Taiwan’s disaggregated industrial structure and OEM-led manufacturing further
disrupted any sense of cooperation’s necessity since SMEs maintained closer relations
with their overseas contractors than with their domestic competitors.
179
Without the
support of members, many export-related associations were challenged by budget,
resource, and legal profession. The poor functioning of associations and the lack of
government-business networking are summed up by a recent survey, suggesting that over
80 percent of SME exporters do not think that their business operations need any
assistance from either industry associations or the government.
180

Trade barriers demonstrate the low-functioning nature of government-business
networking. For example, in the 1980s when the economic ministries anxiously sought
for responsive strategies regarding the rise of trade remedy measures against Taiwanese
exports, neither their actions nor their policy recommendations succeeded in establishing
a mechanism for exporters to input market information under the CNFI like the one

178
Ibid.
179
In a recent seminar held by the Economic Developmental Council of the Taiwanese Government on how
to assist and transform the small and medium enterprises, Hung-Min Tsai, the chairman of the CNFI, and
Hsin-Chiang Wu, the director general of the Importers and Exporters Association in Taipei, pointed out the
fact that export-oriented manufacturers do not have regular communications with each other given the
OEM business model reduces the risk of doing business overseas. National Policy Foundation, Keji jingji
luntan-Xin Shidai Zhongxiao Qiye Xilie: Jing Fa Hui Hulue De Jingji Fazhan Zhongda Yiti-(3) Ruhe
Xiezhu Zhongxiao Qiye Zouchu Kunjing Zuotan Hui Shilu [Technology and Economy Forum-New
Generation SME Series: The Economic Subjects the Economic Development Advisory Conference
Neglected, How to Assist SMEs during Hard Time], 6 September 2011, Taipei,
http://old.npf.org.tw/monograph/series/series057-TE.PDF; retrieved on 20 July 2012.
180
The survey was conducted among members of Importers and Exporters Association of Taipei, the
largest association of trading firms in Taiwan. Meng-Jia Tsai, “Taiwan Maoyi yè De Weiji Yu Zhuanji,”
[Crisis and Turning Point for Taiwan’s Trading Sector] Maoyi Zazhì [Trade Magazine] 181 (July 2006),
Taipei: 15-23.
116
created between the Korean government and chaebŏl firms.
181
The GOT instead proposed
the creation of a defense fund to assist the handling of trade remedy measures.
182
Their
proposal, due to the lack of support from the exporters and the financial distress of
export-related associations, did not materialize. Instead, collaboration between the GOT
and exporters only emerged on an ad hoc basis, as explained later.
It was not until the early 2000s—the eve of Taiwan’s WTO accession—that
economic ministries took initiatives geared toward enhancing government-exporter
collaboration regarding trade remedy issues.
183
To begin with, a five-year project called
“the firewall of trade remedies” was created, including sending a trade remedies team to
set up early warning systems for industries that have been most targeted by the trade
remedies.
184
New rules were issued to allocate part of the Trade Promotion Fund to
financially assist industrial associations that involved with trade remedy lawsuits. In
addition, the CNFI was designated to educate its members about trade remedy laws and
practices, including the usage of the WTO dispute settlement system. Finally, the Office

181
For example, the Bureau of Foreign Trade had conducted a number of research projects on trade barriers
from advanced countries. The conclusions of these projects emphasized the aspects of policy adjustment at
the macroeconomic level, such as industry and production upgrades. No specifics were mentioned about
enhancing outreach to SME sectors. See Lien-sheng Tsai and Xi Zhu, Woguo Suo Mianlin Shijie Ge
Zhuyao Guojia Zhi Maoyi Zhangai [Trade Barriers against the Republic of China from Advanced
Countries], (Taipei: The Bureau of Foreign Trade, the Ministry of Economic Affairs, 1986).
182
For more information about the fund, see Central News Agency, “BOFT Seeks Defense Fund to Fight
‘Protectionist’ Lawsuits,” 17 October 1984.
183
The International Trade Commission, Maoyi Jiuji Fanghuoqiang De Shiwu Yu Gainian [The Practice
and Concept of the Firewall System of Trade Remedies] (Taipei: The Ministry of Economic Affairs, 1999).
184
Ibid. The assistance of the program lasts for two years and afterward the industry associations take over
the operation of the early warning system. As of 2005, this program was provided to eight industry
associations including Taiwan Steel & Iron Industry Association, Petrochemical Industry Association of
Taiwan, Taiwan Paper Industry Association, Taiwan Electronic and Electrical Manufacturers Association,
Taiwan Semiconductor Industry Association, Taiwan Association of Mechanical Industry, Taiwan Cement
Association, and Taiwan Plastic Association.
117
of Trade Negotiation (OTN) was established under the Ministry of Economic Affairs in
2007 to assist the exporters in utilizing the WTO dispute settlement system for trade
disputes.
Nonetheless, the GOT’s top-down policy has its limit in promoting collaboration
between itself and the export sector. For example, the CNFI, which conducts annual
surveys on export barriers, is often frustrated by the low responsiveness of its members.
Pi-ying Chiou, the executive secretary of the CNFI, explained that industry associations
often do not even have the capacity or professional knowledge to identify export barriers,
making it impossible to respond to the CNFI’s inquiries about them.
185
Similar problems
plague other parts of the “firewall of trade remedies.” Given the length of the project, it
was ineffective at addressing a lack of support from the industrial associations’
membership. Some associations’ confess that the early warning system’s effectiveness
varies from one sector to another given personnel constraints and more importantly
members’ reluctance to share business information.
186
Moreover, some associations
admitted that they have no knowledge or interest in using the WTO dispute settlement
procedure, explaining that the involvement of the government might complicate disputes
with their foreign counterparts, as is examined below. In short, the GOT continued to
scramble for ways to “assist” the export sector while its “partnership” with businesses at
handling trade barriers has yet to mature.

185
Pi-ying Chiou (Executive Secretary, the National Federation of Industry, the Republic of China), in
discussion with the author, 11 August 2011.
186
Ibid; Wayne Lee (Director General, Kaohsiung Chamber of Industry), in discussion with the author, 20
August 2011.
118
II. The Legal Status of the Policymaking Network
Taiwanese business groups, similar to their Korean counterparts, have had little
de jure power at influencing foreign economic policies. The lack of recognition at
regulating government-business relations in trade affairs is demonstrated in the practice
of the existing trade rules.
187
The Trade Law of 1993—the first trade-related law in
Taiwan—copying Section 301 of the U.S. Trade Act of 1974, wrote that the government
shall respond to countries that violate international trade agreements or the principle of
reciprocity.
188
The Rules on Implementing the Trade Law of 1993 also described the
government’s responsibility to investigate and remove export barriers.
189
However, as of
now none of these rules has been faithfully implemented as the Trade Law has never
specified a clear procedure for implementation nor provided a formal channel for
exporters to request government assistance in trade disputes. In other words, the
executive branch has substantial discretionary power in how or whether it responds to
exporter demands.
The same situation applies to the current rules on trade negotiations. While the
Trade Law of 1993 stipulated a procedure to consult the Legislative Yuan and the public
prior to negotiations, it lacked specific wording on how to incorporate the opinions of
interest groups into the negotiation process. “The under-specification of the executive
branch’s responsibility was necessary,” according to a Taiwanese trade official, “since

187
Trade Law enacted in 1997, revised in 1997, 1999, and 2002. Five Chapters, 37 sections.
188
Section 6.6 describes the government’s responsibility as assisting businesses to handle export barriers
and commercial disputes. The Trade Law, Republic of China, 1993.
189
Section 15, Rules on Implementing the Trade Law of 1993, Republic of China, 1993.
119
Taiwan is a small economy, coupled with the diplomatic challenge it has faced, the
government has to keep a certain degree of flexibility when handling foreign affairs.”
190

It is also interesting to note that the current legal setting indicates Taiwan’s strong
state, small society relationship. As mentioned earlier, the GOT in the 1980s failed to
create a joint fund, based on financial contributions from export-related industry
associations, to support exporters charged with trade remedy investigations. With the
anticipation of growing trade remedy measures after entering the WTO, the GOT in 2002
enacted Measures of Trade Promotion and Assistance, which provide financial support to
exporters who respond to foreign trade remedy investigations.
191
In this sense, the
concern over the weak position of the exporters is more relevant than the concern over
collaboration with the exporters under foreign trade remedy investigations.

Litigation over Foreign Trade Remedy Issues beyond the WTO: A
Sectoral Landscape
Since the 1980s, the governments of developed countries started to embrace trade
remedy measures to prevent Taiwanese exports from entering their markets. As the
previous sections mentioned, these measures concentrated on a wide range of metal and
plastic parts and intermediate and small assembled goods, of which many were
manufactured by SMEs. These SMEs, however, have not handled trade remedy

190
Kristy Tsun Tzu Hsu (Associate Researcher, Taiwan WTO & RTA Center, Chung-Hua Institution for
Economic Research), in discussion with the author, 12 August 2011.
191
Section 19-26, Chapter Four, Measures of Trade Promotion and Assistance, Republic of China, 2002.
120
investigations well, according to several studies. Tseng reviewed the antidumping
investigations against Taiwanese exports from Taiwan’s six largest overseas markets
from 1976 to 1986, finding a particularly high ratio of affirmative determination for
Taiwanese exporters.
192
Prusa’s study on United States antidumping measures since the
inception of the WTO also concluded that the Taiwanese exporters tend to receive a
higher dumping margin at antidumping investigations.
193
Likewise, Lin also found that
the sunset reviews of the United States antidumping measures against Taiwan since 1995
have had a particularly high ratio of affirmative determination.
194
Moreover, among the
eleven antidumping orders made prior to 1995, all of them received affirmative
determination in recent reviews, leading to decade-long punishment duties for Taiwanese
exporters.
195

While the high ratio of affirmative determination might reflect actual dumping
behavior, the poor handling of foreign trade remedy investigations on the part of
Taiwanese exporters has also been an important factor. According to Pi-jan Wu, a trade

192
There were 75 antidumping investigations against Taiwanese exports during this period from the United
States, Canada, European Union, Australia and South Korea. Tseng reviewed 31 out of the 75 cases and
found that the affirmative determination of the investigations by the Canadian trade authority was as high
as hundred percent, followed by 55.6% by the American trade authority. Tseng, The Effect of Antidumping
Suits on Taiwan’s Exports: Study on the United States Antidumping Cases, 1992-1998.
193
Thomas J. Prusa, “The trade effects of U.S. antidumping actions,” in Robert C. Feenstra ed.,
Effects of U.S. Trade Protection and Promotion Policies (Chicago: University of Chicago Press,
1997):191-213.
194
Lin reviewed 22 sunset reviews from 1995 to May 2005 and found 14 cases led to an affirmative
determination of continuous antidumping order. Fong Lin, Meiguo Fanqingxiao Luori Fucha Sunhai
Jiantao Yaodian Shiwu Qianxi [Appraisal on the U.S. Antidumping Sunset Reviews and Their Impact], The
Federation of Industry of Taiwan, November 2005. Link: http://www.cnfi.org.tw/wto/admin/upload/23/4-
5.pdf; Retrieved on 28 December 2012.
195
Ibid.
121
lawyer who has assisted SME exporters handling antidumping suits for over two decades,
as trade remedy investigations are based on the “best information available,” many
Taiwanese exporters received high dumping margins often because of their ill-
responsiveness and under-preparedness to investigations filed overseas.
196
“Poor handling
has been a common situation among the SMEs,” Wu added.
The reason for this is twofold. First, investigations were costly to the SMEs as
they were required to compile meticulous information regarding pricing, inventory,
production cost, and accounting. Many did not find it cost-effective to go through the
legal process following the investigations.
197
Second, the fragmentized industrial
structure made it more difficult for SME-led export sectors to combine their resources in
handling the investigations. Likewise, the industry associations were ineffective due to
weak leadership, mistrust and lukewarm response from their members, and the
membership’s unwillingness to share business information or litigation cost.
198
The
Taiwanese government, meanwhile, was incapable of resolving this situation because it
lacked regular connections with SMEs.
A comparative case study on the U.S. antidumping investigations of color
television receivers from Taiwan and Korea can shed more light on the problems facing

196
Sui-yu Wu (Attorney, Wu & Partners, Attorneys at Law), in discussion with the author, 15 August 2011.
197
Pi-ying Chiou, in discussion with the author, 11 August 2011.
198
In an antidumping investigation, the leaders in the industry are often selected as the representative
sample for investigating dumping margins. They determine the baseline for the rest of industry. In this
sense, those who are excluded from the survey also have interests in ensuring that the surveyed firms have
low dumping margins.
122
Taiwan’s SME-based exporters under foreign trade remedy suits.
199
Color televisions
were the top export for Taiwan and Korea in the 1980s, albeit the production structure in
both countries was quite distinct. Color television production in Korea was characterized
by mass production and was dominated by three oligopolistic firms, whereas color
television production in Taiwan was on a smaller scale and was disaggregated among a
number of middle to large firms. The production systems and marketing channels of the
Taiwanese television producers were distinct from each other; some of them specialized
at OEM while others produced their own branded products and started marketing them
overseas. As they faced different levels of pressure from their overseas competitors, they
could not settle on a coherent strategy for how to handle and what information to offer
the investigations.
Alert to the impact of this antidumping suit, the GOT tried to build common
ground regarding response strategies through the Taiwan Electrical Appliance
Manufacturers Association (TEAMA).
200
Regardless, without the consensus of common
interests among the leading firms, TEAMA failed to coordinate its members and let
several escape investigation, which led to high punitive duties for the entire industry.
201

The antidumping order effectively brought an end to the Taiwanese color television
manufacturers’ venture in marketing self-branded products. The Korean television

199
The investigations were issued on 27 May

1983. The Commerce Codes of the two cases were A-583-
009 and A-580-008 respectively.
200
The Taiwan Electrical Appliance Manufacturers Association was renamed the Taiwan Electrical and
Electronic Manufacturers Association in 1994.
201
Seven manufacturers were requested to participate in the investigations and, with the exception of three
companies which manufacture for overseas contractors, were found to have dumping margins of 4.66-23.77
percent. Failing to cooperate with the investigation, Jen-Hung and Sampo received the highest dumping
margin.
123
industry led by three oligopolistic firms, on the other hand, handled the antidumping
investigation in a much more aggressive and consistent manner while the Korean
government was closely involved with and coordinated the handling of the
investigation.
202
Korea continued to respond to several review investigations and
eventually received reduced duties for their products. During this time, the Korean
branded televisions thrived in the U.S. market.
Foreign antidumping orders covered many other Taiwanese exporters whose
manufacturing or trading scale was smaller and more disaggregated than color television
producers. Some investigations requested more than ten, sometimes over twenty,
companies to respond to the inquiries.
203
There was occasionally government financial
assistance for affected firms depending on the nature of the case and whether the
government was required to participate in the survey.
204
However, for the most part, the
GOT and the affected firms rarely collaborated during the investigations. As observed by
a former United States Trade Representative Official, compared with Korea and Japan, it
was rare to see a joint effort between the Taiwanese officials and businesses in lobbying
on Capitol Hill about trade remedy cases or other unfair trade investigations.
205

202
For more details, see Chapter Three.
203
For example, the U.S. antidumping investigations on bicycles in 1982 required more than forty
companies to respond to the survey. The U.S. antidumping investigations on porcelain and steel cooking
ware and on stovetop stainless steel cooking ware in 1985 and 1986 also required twenty-nine and twenty-
one companies respectively. Tseng, The Effect of Antidumping Suits on Taiwan’s Exports: Study on the
United States Antidumping Cases, 1992-1998.
204
For example, the GOT funded the litigation cost for the U.S. countervailing investigation on stovetop
stainless steel cooking ware because of its direct involvement in the case. But the GOT did not give
financial assistance for the associations handling the antidumping investigation. The regular fund to support
exporters under antidumping investigation did not materialize until 2000.
205
“ROC Should Strengthen Washington Lobby U.S. Official Says,” Central News Agency, 16 April 1987.
124
However, it is noteworthy that while the use of legal channels to take down trade
barriers is uncommon among SME exporters, many of them manage to survive, or
transform, via alternative means. For example, exporters of bicycle tires and tubes were
quick at rerouting their products via Italy to the United States to circumvent duties.
206

Exporters of helical spring lock washers shifted the majority of their goods to Nigeria,
which replaced the U.S. as their largest overseas market the same year as the U.S.
antidumping order took place.
207
Manufacturers of welded carbon steel pipes and tubes
started to produce fencing materials as it was less targeted by antidumping charges. The
television manufacturers reopened their production lines for video monitors. Most
importantly, the majority of the SMEs affected by export restrictions eventually relocated
their manufacturing sites to a third country to circumvent the duties.
208
Foreign trade
remedy measures, in this sense, were like a market force either phasing them out of
highly-competitive industries or pushing them to upgrade or reinvent themselves.
To be sure, not all Taiwanese exporters were passive at responding to trade
remedy measures. In 1997, the U.S. semiconductor manufacturer, Micron Technology,
filed an antidumping request against the export of static random-access memory (SRAM)
from Taiwan. A year later, Micron filed another more provoking complaint, charging
Taiwan for dumping dynamic random-access memory (DRAM). Micron’s actions casted

206
This refers to the antidumping duties case in 1983 on bicycle tires and tubes (Commerce Code: A-583-
401).
207
This refers to the antidumping duties case in 1993 on helical spring lock washers (Commerce Code: A-
583-820).
208
Circumvention was one of the reasons for the rise in SME overseas relocations since the late 1980s.
Other factors included the increase of labor cost and standards and the rise of new Taiwan dollars.
125
a shadow on Taiwan’s most important industry—which had been strategically developed
under state sponsorship—and awakened the economic officials. The GOT’s
determination on the cases was demonstrated by several assertive statements from key
economic officials and the assembly of a high-profile inter-ministerial taskforce to assist
the investigations. The government’s action was in part in response to the requests of the
Taiwan Semiconductor Industry Association (TSIA). TSIA, unlike most industry
associations in Taiwan, was financially capable. It played a proactive role at formulating
responsive strategies among its members while urging the government to cooperate
throughout the investigation. After the positive determination of the antidumping order
on SRAM, TSIA continued its efforts at coordinating its membership, business alliances,
and the GOT in their appeal, which eventually succeeded.
209
Likewise, TSIA was quick
to file a counter lawsuit in Taiwan—which also imported a large amount of
semiconductor products for its technology industry—against Micron after being charged
with the antidumping order on DRAM. TSIA managed to gain bargaining chips for the
DRAM case as the Taiwanese trade investigation authority took a tough stance by
making a positive ruling on Micron. The countersuit eventually forced Micron to drop its
charges in the U.S.
In recent years, upstream steel and petrochemical industries became one of the
most frequent respondents to foreign trade remedy measures following the growth of
their exports to China and Southeast Asia. Companies in those industries were more
capable at handling foreign trade remedy suits as the players were few and, given past

209
This is the first case in which the Taiwanese exporters succeeded at both the appeal to the U.S. Court of
International Trade (CIT) and the appeal after the applicant complained about the determination of the
International Trade Committee (ITC).
126
industrial policies, they had better connections with the government. However, due to
Taiwan’s special relationship with China, which in some cases accounted for over half of
their overseas sales, they were unwilling to embrace full-fledged collaboration with the
government.
Their reservation of working with the GOT is showcased by the recent dispute
regarding China’s first antidumping order on the export of cold-rolled steel from several
Taiwanese steelmakers.
210
The Chinese government purposely avoided contacts with the
Taiwanese delegation in Geneva and had the notice of antidumping investigation sent
directly to the Taiwan Steel and Iron Industries Association (TSIIA), a move not
approved under WTO regulations. Another unusual thing about this episode was its
ruling result: China Steel—the Taiwanese state-owned steelmaker—was punished with a
duty rate much higher than the other companies under investigation, causing suspicious
that China’s intention was to oppose Taiwanese authority.
211
Unhappy with this
treatment, the GOT sought support from the business group in an attempt to bring this
case to the WTO dispute settlement body. However, the GOT’s move was rejected by the
affected steelmakers, including China Steel, fearing that elevating this issue to the WTO
would politicize and complicate the dispute. TSIIA eventually handled the disputes in
bilateral negotiation with Chinese authorities and steelmakers without the participation of
the GOT’s Ministry of Economic Affairs (MOEA).

210
In 2002, China started its first antidumping investigation on Taiwanese steelmakers, including China
steel, Yieh Long, Kao Hsing Chang, Sheng Yu, and others.
211
However, after the positive determination of this ruling, the Chinese government ordered it suspended
after the TSIIA settled an agreement with its Chinese counterpart, the China Steel and Iron Industries
Association.
127

Taking Trade Disputes to WTO Adjudication
Taiwan reapplied GATT (the General Agreement of Tariffs and Trade)
membership in 1990 under the name Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu (Chinese Taipei) and after a decade of effort it joined the WTO in
January 2002. Taiwan’s WTO accession was widely viewed by Taiwanese officials as the
most critical diplomatic breakthrough since its retreat from the United Nations in 1971.
Considering the importance of WTO membership, GOT officials have been interested in
WTO affairs, including the use of the Dispute Settlement Body (DSB). “The value of the
DSB is not only significant in the economic sense but politically meaningful to the
Taiwanese government as the WTO is one of the few intergovernmental forums where
we have a voice,” says Yen Ching-chang, Taiwan’s first ambassador to the WTO.
212

Other economic officials also expressed the same sentiment, suggesting action within the
DSB has diplomatic value to Taiwan.
213

In spite of officials’ enthusiasm, Taiwan has rarely used WTO dispute settlement
procedures to defend its export interests. Taiwan has only consulted with three WTO
members since entry, and, within these three consultations (see Table 10), only the one
with the European Union (EU) (DS377) in 2008 went on to the stage of panel review and
only the one with India (DS318) was made without other complainants involved in the

212
Ching-chang Yen (former Ambassador to the WTO, the Republic of China, Taiwan), in discussion with
the author, 26 August 2011.
213
Chun-fang Hsu (former Deputy Director General, Bureau of Foreign Trade, Ministry of Foreign Affairs.
the Republic of China, Taiwan), in discussion with the author, 16 August 2011; Cheng-Chi Chen,
(Negotiator for WTO dispute settlement, the Office of Trade Negotiation, the Ministry of Economic
Affairs, the Republic of China, Taiwan), in discussion with the author, 8 August 2011.
128
process. In other words, Taiwan has never independently litigated for a WTO complaint.
“When there is no demand from the business sector, it is difficult for the government to
act on behalf of business interests in WTO dispute settlements,” said one Taiwanese trade
negotiator. The GOT’s inactivity in WTO litigation parallels Taiwanese exporters’ poor
use of legal channels to take down foreign trade barriers. The exporters’ disinclination is,
as described in the previous section. rooted in the industrial structure and the
government-exporter relationship in Taiwan. The following section further examines how
these two structural factors affected Taiwan’s three consultations through WTO dispute
settlement procedures.

Table 10. WTO dispute settlement cases filed by Taiwan (as a main complainant),
2002-2012
Date/ Case
number
Defendant Subject Involved
Private Party
Status of the
dispute
2002.11.01
DS274
(filed by
multiple
members)
The United
States
Definitive Safeguard
Measures on Imports
of Certain Steel
Products
Five
companies
Case
withdrawn
after bilateral
agreement
reached.
2004.10.28
DS318
India Anti-Dumping
Measures on Certain
Products from the
Separate Customs
Five
companies
Case
withdrawn
after
cancellation of
129
Territory of Taiwan,
Penghu, Kinmen and
Matsu
antidumping
duty.
2008.06.12
DS377
(filed with
the United
States and
Japan)
European
Union

Tariff Treatment of
Certain Information
Technology Products
Three
companies
Panel report
favored
Taiwan;
dispute settled.

Strong Litigation
In 2008, six years after its WTO accession, Taiwan with other two
complainants—the United States and Japan—filed a WTO complaint against the EU for
the tariff treatment of three technology products, namely, flat-panel display devices, set-
top boxes with a communication function, and multifunctional digital machines. While
the U.S. and Japan were responsible for the handling of set-top boxes and multifunctional
digital machines respectively, Taiwan was in charge of flat-panel display devices. The
core of the dispute was whether these three technology products created after 1996
qualified as duty-free technology products under the 1996 International Technology
Agreement (ITA).
214
Prior to the filing of this case, EU customs imposed a 14 percent

214
The Ministerial Declaration on Trade in Information Technology Products (ITA) was concluded by 29
participants at the Singapore Ministerial Conference in December 1996. The number of participants has
grown to 70, representing about 97 percent of world trade in information technology products. The ITA
provides for participants to completely eliminate duties on IT products covered by the Agreement.
130
duty on flat-panel display devices with receivers over 19 inches, which were classified as
televisions. Also disqualified from duty-free treatment under the ITA, set-top boxes and
multifunctional digital machines were also levied by EU customs with duties of 13.9
percent and 6 percent respectively.
“We [the GOT] believe that the ITA case is crucial to Taiwan’s trade interests
given the fact that the technology industry is critical to Taiwan’s exports and Europe is
one of the most important markets for Taiwan’s technology products,” said John Chen-
Chung Deng, the former director of the Office of Trade Negotiation.
215
The ITA case was
the first—and up to now the only—time that the GOT devoted substantial efforts in a
trade dispute.
216
Taipei fought this case without compromising its stance. Its effort
continued for over two years until the panel requested the European Union to completely
drop its current custom code on the flat panel devices.
The interest at stake involved with this case was substantial. The value of the
imports of the three products to the EU in 2007 was close to US$11billion. Flat-panel
display devices (also known as LCD monitors) in particular have been among Taiwan’s
top exports.
217
Moreover, the majority of U.S. and Japanese brand LCD monitors were

Developing country participants have been granted extended periods for some products. For more
information, see the World Trade Organization, http://www.wto.org/english/tratop_e/inftec_e/inftec_e.htm,
Retrieved on 20 September 2011.
215
John Chen-Chung Deng (former director of the Office of Trade Negotiation, Ministry of Economic
Affairs, the Republic of China, Taiwan), in discussion with the author, August 29 2011.
216
In order to handle the ITA case, the OTN assembled a special team, including two lawyers borrowed
from the Ministry of Justice in Washington, D.C. as legal consultants. Chern-Chi Chen, in discussion with
the author, 8 August 2011.
217
“Wo Yu Mei, Ri Gongtong Xiang WTO Yaoqiu Chengli Zhengduan Jiejue Xiaozu Shenyi Oumeng Dui
San Xiang Zixun Keji Chanpin Ke Zheng Guanshui An,” [Taiwan, the U.S. and Japan requested a WTO
dispute settlement panel with the European Communities and its member states with the respect of tariff
treatment of certain information technology products] Office of Trade Negotiations, the Ministry of
131
manufactured by OEM companies in Taiwan. Many suspected that EU tariff codes were a
tactic to force U.S. and Japanese firms to shift their contracts to OEM factories in Eastern
Europe in the hopes of boosting employment rates there.
218

Regardless of economic impact, the insufficiency of government-business
collaboration caused some wrinkles amid the filing process. Prior to the GOT’s decision
to file the complaint, the flat panel manufacturers petitioned the Ministry of Finance
(MOF) to revise its tariff codes—which were similar to the EU’s—to be compatible with
the ITA, hoping this revision would promote reciprocity from European authorities by
waiving the duties for LCD imports from Taiwan. The petition was shot down by the
government as the MOF refused to revise its tariff code. The issue returned to the table of
the Ministry of Economic Affairs in 2008 when the U.S. and Japan, both affected by EU
tariff codes, invited Taiwan to join the case. The invitation came shortly after the
establishment of the Office of Trade Negotiation under the MOEA where the officials
were keen to prove their worth. Eventually, officials from the MOEA convinced the
MOF to revise the related tariff codes to support their filing the complaint against the EU.
Given this episode prior to the filing, the affected exporters were skeptical about whether
the Taiwanese government’s action in the WTO would yield results. In addition,
communication between OTN and the affected exporters during the consultation process
was difficult, according to OTN staff. “They feared that giving away the information of

Economic Affairs, the Republic of China, 29 August 2008,
http://iknow.stpi.org.tw/Post/Read.aspx?PostID=608. Data retrieved on November 21 2011.
218
Ibid.
132
their production cost would come back to harm their business,” said Wen-Cheng Liao, a
legal assistant in OTN.
219

Weak Litigation
Taiwan also requested two consultations, one with the United States and one with
India, through WTO dispute settlement. However, the GOT, lacking sufficient support
from or collaboration with the affected exporters, did not take an aggressive stance in
pursuing the case beyond the stage of consultation.
The first consultation was regarding the United States safeguard order of 8 to 30
percent duties on over ten steel products issued in early 2002. This order affected over
twenty steel export countries including Taiwan. However, Taiwan’s request of
consultation with the U.S. came nine months after the previous complaint filed by eight
WTO members.
220
Moreover, unlike those who further pursued panel reviews to
determine how to implement the WTO rulings, Taiwan merely reserved the right to
participate in these panels as a third party. Shortly after the request, Taiwan and the U.S.
made a bilateral agreement and settled the dispute.
221

219
Wei-chun Liao (Assistant to the Negotiator of WTO Dispute Settlement, the Office of Trade
Negotiation, Ministry of Foreign Affairs, the Republic of China, Taiwan), in discussion with the author, 8
August 2011.
220
This multiple-party complaint was led by the European Union and Japan and followed by South Korea,
China, Norway, Switzerland, New Zealand, and Brazil.
221
By the end of 2001, the United States and Australia cut a deal regarding duties on steel products, which
effectively exempted Australia from the 2002 safeguard order. The United States was forced to make
separate bilateral agreements with Brazil, South Korea, and New Zealand after they further pursued the
WTO panel proceedings over the 2002 safeguard order. Taiwan was the only WTO member that did not
participate in the panel proceedings but made a bilateral settlement with the United States regarding the
steel exports to the U.S. market.
133
The economic impetus was limited for the Taiwanese officials and steelmakers to
pursue this case in a more aggressive manner. First of all, Taiwan only contributed to 3.4
percent of the U.S. steel imports, meaning that the economic impact of the 2002
safeguard order to Taiwan was insignificant compared with that to other major steel
exporters like the European Union, Japan, South Korea, and China. As one Taiwanese
economic official summarized, “Since we are not the key player in this game, why bother
going through the complex panel proceedings.” Moreover, the U.S. steel market already
became much less important to the Taiwanese steelmakers prior to the 2002 safeguard
order. Taiwanese steel exports to the United States reduced dramatically after the decline
of the U.S. steel market in the late 1990s.
222
Meanwhile, Taiwanese steelmakers
increasingly shifted their products to China and Southeast Asia as more and more
Taiwanese down-stream manufacturers moved to these two destinations. As this case
lacked economic impetus, few steel exporters urged the government to use the WTO
dispute settlement to solve this dispute.
According to a source with knowledge of this case, Taiwan’s consultation began
with several economic officials’ decision to “bandwagon” and, more importantly, to
participate in international economic affairs.
223
The Taiwanese government and
steelmakers did not establish substantial collaboration prior to opening the case
proceedings. As a matter of fact, the Taiwanese steelmakers disapproved of using WTO

222
The U.S. at 19 percent used to be the second largest overseas market for Taiwan’s steel exports.
However, after the U.S. steel recession in the late 1990s, Taiwan’s steel exports to the U.S. dropped by
over half in 2001 and continued to shrink since then. In 2010, the U.S. steel market represented only 4
percent of Taiwan’s steel exports.
223
Interview with a Taiwanese economic official, 8 August 2011.
134
dispute settlement for two reasons. First, unlike the world’s top steelmakers relying
heavily on economies of scale, Taiwanese steelmakers tend to view the WTO channel
unnecessary given the cost involved in the dispute settlement procedure. Second, the
WTO dispute settlement did not seem to be an effective tool to solve potential disputes
with China, the largest market for Taiwanese steel exports, as illustrated by the dispute
regarding China’s first steel antidumping measures on Taiwan mentioned earlier.
The Taiwanese officials continued to seek opportunities to strike a victory in
WTO dispute settlement, yet their decision-making process remained top-down, as is
illustrated by Taiwan’s consultation with India regarding several antidumping measures
on certain Taiwanese exports. According to a lawyer participating in the process, this
case started in 2005 as the economic officials at the Bureau of International Trade (BIT)
started to review the antidumping orders against Taiwan in an attempt to initiate a WTO
dispute consultation.
224
They focused on India, the largest antidumping user in the WTO,
and found the antidumping orders on seven petrochemical products problematic. BIT
then assembled a team with a group of trade lawyers, legal scholars, accountants, and the
affected exporters to discuss the prospect of using the WTO forum to address those
illegal antidumping orders.
However, the government’s enthusiasm was hampered by economic reality. As
recalled by Pin-Jan Wu, who worked in this case, the affected businesses did not seem
interested in cooperating with officials as the impact of India’s orders was very small;

224
Sui-yu Wu, in discussion with the author, 15 August 2011; Kristy Tsun Tzu Hsu, in discussion with the
author, 12 August 2011.
135
moreover, some products under consideration were no longer exported to India.
225

Regardless, the GOT decided to request a WTO consultation with India on four products
that remained in dispute. Although the GOT claimed the consultation was completed
amicably, amid this process it had to drop the requests on several products because the
affected exporters declined to disclose their business information.

Conclusion
This chapter examines Taiwan’s experience in handling export restrictions within
and beyond the WTO and explains how the structure of Taiwan’s export sector and
government-exporter relations produced little impetus for embracing a litigious trade
policy. Another point highlighted in this chapter is that Taiwanese officials, driven by the
old mentality of a developmental state, continue to look for opportunities to prove their
value through promoting the usage of WTO dispute settlement to assist the export sector.
However, their ambition is often trumped by the reality that, given the disaggregated
production structure, the leading Taiwanese exporters rarely face significant trade
barriers that require WTO intermediation. What is also discouraging for Taiwanese
officials is that their top-down initiatives often cannot remedy the export barrier problem
since its roots are in the disconnection between the public and export sectors. As a result,
the GOT has hardly used WTO dispute settlement to defend its business interests. When
it did file a WTO complaint against the United States or against India, its WTO litigation
strategy is characterized with rapid settlement and lack of input from the affected

225
Ibid.
136
exporters throughout the process. Even in the ITA complaint where Taiwan demonstrated
the strongest litigation strategy, mutual collaboration between the GOC and the affected
exporters was not in place at the initial stage.
As a Taiwanese economic official noted, “the state-led initiative was not
sustainable especially when the cost of litigation and management involved with WTO
dispute settlement was so high.” He warned, “If the business sector does not recognize
the imperative to remove trade barriers by WTO dispute settlement or other means, the
government’s willingness to assist is not able to last.”
226

226
Interview with a Taiwanese economic official, 8 August 2011.
137
CHAPTER FIVE:
The Legacy of a Developmental State, China’s Reservation in
Using the WTO Dispute Settlement System

Trade has been indispensable to China’s economy since its market opening and reform.
With exponential trade expansion, the Chinese economy has enjoyed more than two
decades of over 9 percent annual GDP growth. China’s accession to the WTO in 2001
continued this momentum, further integrating its economy into world markets. Now
China is the largest trading country and the second largest economy in the world.
227
In
spite of the high volume of trade flows, China has been reserved in filing WTO litigation
against other countries. Its rare use of the WTO Dispute Settlement System is puzzling
given the fact that Chinese exports have faced extraordinary restrictions from foreign
governments both prior to and after its WTO accession.
This chapter uses China’s export structure and policy networking system to
explain this puzzle. Specifically, it argues that the Government of China (GOC) has not
been interested in the WTO dispute settlement system because of the Chinese exporters’
inactiveness at either confronting foreign trade barriers or urging the GOC to do so; this
inactiveness is rooted in China’s disaggregated and foreign invested enterprises-
dominated export structure and the local exporters’ lack of cooperation with the
government in addressing trade barrier issues.

227
China overtook Japan as the world’s second largest economy in 2010 and surpassed the United States as
the world’s largest trading country in terms of imports and exports in 2013.
138
This chapter first reviews the trade barriers against Chinese exports with emphasis
on the rise of trade remedy measures in the WTO era. The next section examines the
industry structure of China’s export sector and the level of collaboration between the
GOC and Chinese exporters on export restriction issues. The analysis here focuses on the
impact of each of these factors for China’s handling of trade remedy measures. To test
this analysis, the rest of the chapter examines China’s record at litigating against trade
remedy measures beyond and within the WTO system. It is important to note that, when
reviewing China’s export barriers and litigation record against export barriers, one should
not juxtapose China’s case with Korea and Taiwan given the idiosyncratic nature of
export barriers for China.
228
Rather, this chapter uses China’s export structure and policy
network to explain why China, facing tremendous pressure from foreign trade remedy
measures, is unable to use WTO litigation to safeguard its export interests more
aggressively.

Background: The Rise of Export Barriers
It is well known that China has benefited tremendously from trade liberalization
since its market opening and reform, but what is less discussed is the increase in
restrictions on Chinese exports. Prior to China’s accession to the WTO in 2001, China

228
China’s WTO accession protocol admitted China’s non-market economy status. Under this status, the
rules of trade remedy measures for Chinese exports are stricter than for market-economy members. For
more information, see Alexander Polouektov, “Non-Market Economy Issues in the WTO Anti-Dumping
Law and Accession Negotiations” Journal of World Trade 36(1) (2002):1-14; Michelle Q Zang, “The
WTO Contingent Trade Instruments against China: What Does Accession Bring?” International and
Comparative Law Quarterly 58(2) (2009): 321-324; Andrew L Stoler, “Treatment of China as a Non-
Market Economy: Implications for Antidumping and Countervailing Measures and Impact on Chinese
Company Operations in the WTO Framework,” Presentation at the Forum on WTO System and
Protectionism: Challenges China Faces After WTO Accession, Shanghai, China, 2003,
www.iit.adelaide.edu.au/docs/Shanghai%20Speech.pdf, retrieved on 20 January 2012.
139
did not enjoy the guaranteed most-favored-nation (MFN) treatment with WTO members
and therefore had uncertain market access.
229
Thus, China’s major trading partners chose
to limit its exports by resorting to trade remedy measures, among which antidumping
measures have been the most frequent and widespread.
230
China was already the world’s
largest recipient of antidumping measures in its pre-WTO stage; from 1979 to the end of
2001, it had fallen under more than 450 antidumping investigations from 29 countries.
231

The number of antidumping measures against China continued to rise after 2002
and climaxed during the 2008-2010 global financial crisis (Figure 7). From 2002 to 2012,
China received 916 antidumping investigations and, more seriously, 664 (72.5 percent) of
these investigations yielded a positive ruling.
232
In the investigations that resulted in final
antidumping measures being imposed, the average antidumping duty facing exporters
from China was often much higher than the average facing all exporters.
233
Also

229
Some countries offered Chinese exports, particularly agricultural, textile, and handicraft products,
reasonable access to their markets either through voluntary MFN treatment or sometimes even preferential
treatment through programs such as the Generalized System of Preferences (GSP). Nonetheless, the
voluntary MFN treatment and the GSP, which were offered unilaterally, were subject to occasional
scrutiny. For example, the United States Congress voted on a year-to-year basis during the 1990s, after
floor debates over a number of issues, including China’s humanitarian record, on whether to continue
granting China MFN status.
230
This has to do with China’s non-market economic status. This point will be explained later this chapter.
231
Li-Zhi Tan and Jen-Zhong Tan, “Waiguo Dui Hua Fanqingxiao Toushi Ji Qishi” [Insights and
Implication of Foreign Antidumping Orders against China] Waimao Jingji Guoji Maoyi [International
Trade] 10 (2002): 54-58.
232
For the statistics, see “Antidumping,” The World Trade Organization, link:
http://www.wto.org/english/tratop_e/adp_e/adp_e.htm, accessed 2 November 2011.
233
For example, Bown, examining the U.S. antidumping measures against China during the 1995-2001
period, finds that Chinese exporters received an average antidumping margin of 131.77 percent—almost
twice as high as the average facing all exporters. See Chad P. Bown, “China’s WTO Entry: Antidumping,
Safeguards, and Dispute Settlement,” in Robert C. Feenstra and Shang-Jin Wei eds., China’s Growing Role
in World Trade, (Chicago: University of Chicago Press, 2010): 281-337.
140
noteworthy is that the agents of antidumping orders against China in the WTO era
include both the historically developed economies (the U.S., EU, Canada, and Australia)
and the new developing economies (Argentina, Brazil, India, Mexico, South Africa, and
Turkey), with the latter economies playing increasingly important role in using the orders
against China.

Figure 7. Antidumping and countervailing measures against Chinese exports, 1995-
2012 (Total measures: 706)

Source: The World Trade Organization. Data retrieved on 23 January 2013. Link:
http://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByExpCty.pdf;
http://www.wto.org/english/tratop_e/scm_e/CV_InitiationsByExpCty.pdf;
Chad B. Bown, China-Specific Safeguards Database (CSGD): part of the Temporary Trade
Barriers Database (TTBD), the World Bank, 2012. Data retrieved on 2 February 2013. Link:
http://econ.worldbank.org/ttbd/csgd/

141

This extraordinary number is in part a result of China’s non-market economy
(NME) status, which has been preserved by China’s WTO Accession Protocol. NME
status is critical in that it allows WTO member to use a surrogate country in counting
dumping margin on China, an extremely unfavorable method for Chinese exports.
234

While bearing extra antidumping levies, China had been, until recently, exempted from
countervailing investigations given the difficulties in calculating subsidy margins for
NME countries.
235
However, China’s WTO Accession Protocol declared that surrogate
rule may also be applied to counting subsidy margins, implicitly leaving China exposed
to the alternation of no countervailing investigations on NME countries.
In 2005, foreign countries started to alter this practice by initiating both
antidumping and countervailing investigations on Chinese exports under NME terms.
Since then, countervailing measures against China have steadily risen (Figure 7).
Moreover, unlike antidumping investigations, surrogate prices in countervailing

234
In antidumping investigations, the dumping margin, and thereby the maximal possible duty, is derived
from a comparison between the price at which the product is sold to importers in the importing country (the
export price) and the product’s “normal value.” Under regular circumstances, the normal value corresponds
to the price at which a like product is sold in the exporting country’s home market. However, it may be
impossible to establish a home market price in countries which are deemed to have no real market, in the
sense that the prices there are not determined by supply and demand because of a high degree of state
interference. This situation, in trade law jargon, is called a “non-market economy” (NME). In the absence
of a reliable home market price, the investigation of an NME country often uses the surrogate method, i.e.
the use of price or production data from third countries to evaluate the normal value of the product.
However, unclear rules on how to select a third country often allow the investigators to arbitrarily choose a
representative country, which leads to positive rulings or exceedingly high dumping margins. Studies also
show that NME exporters are more often found to be “conducting dumping” and thus face more severe
antidumping duties than others.
235
The rule that countervailing duties are not applicable to NME countries comes from the landmark case
Georgetown Steel Corp v. the United States made in 1983. In this case, the USCIT ruled that countervailing
duties are not applicable to NMEs due to difficulties in calculation. For more detail, please see “Carbon
Steel Wire Rod from Poland; Final Negative Countervailing Duty Determination,” 49 Federal Register (7
May 1984): 19374-75; “Carbon Steel Wire Rod from Czechoslovakia; Final Negative Countervailing Duty
Determination,” 49 US Federal Register (7 May 1984): 19370-71.
142
calculations will not expire along with the end of China’s NME status in 2016, meaning
that countervailing measures may become the main tool for other WTO members to
restrict Chinese exports in the future.
236

“Transitional product-specific safeguards” against China have also allowed for
the increase in antidumping and countervailing measures against China, which were also
granted by China’s WTO Accession Protocol.
237
Since China’s WTO accession, thirty
investigations were initiated based on the China safeguard clause, with seventeen
affirmative rulings (Figure 7).
The sectoral distribution of trade remedy measures against China from 2005 to
2012 was unusually encompassing, covering almost all product categories (Figure
8Figure 8). The majority of remedy measures concentrate on products which are common
antidumping targets, namely, iron and steel (XV), industrial chemical (VI), and plastic
goods (VII). Others target light industries like textile and garment (XI), footwear (XII),
paper (X), bicycle (XVII), and miscellaneous goods (XX). Notably, the antidumping
measures against Chinese textiles and garments during this period were constrained as
other provisions provided importing countries alternative safeguard instruments against

236
Ibid.
237
According to China’s WTO Accession Protocol, WTO members can use transitional product-specific
safeguards against China’s exports until 2014. Many believe that the characteristics of this “China
safeguard” are at odds with core WTO principles. The China safeguard requires weakened evidentiary
criterion—even relative to antidumping—that members can easily satisfy in order to meet WTO legal
requirements to impose new barriers on Chinese trade. For more information, see Chad P. Bown and
Meredith A. Crowley, “China’s Export Growth and the China Safeguard: Threats to the World Trading
System?” Canadian Journal of Economics 43(4) (November 2010): 1353-1388.
143
exports from China.
238
In this sense, the exports of light and assembly industries were
under larger trade restriction than what appears in this count of trade remedy measures.

Figure 8. Sectoral distribution of trade remedy measures against China, 1995-2012

238
Prior to 2004, Chinese textile and garment exports were restricted by the WTO Agreement on Textiles
and Clothing, which contained its own transitional safeguard provision during the phase-out of the Multi-
Fiber Arrangement. In addition, China’s WTO Accession Protocol provided a transitional textile and
apparel product safeguard policy instrument that can be used until 2008.

*II: Vegetable Products; V: Mineral Products; VI: Products of the Chemical or Allied Industries;
VII: Plastics and Articles Thereof; Rubber and Articles Thereof; IX: Wood and Articles of Wood; X:
Pulp Of Wood or of Other Fibrous Cellulosic Material, Paper and Paperboard and Articles Thereof;
XI: Textiles and Textile Articles; XII: Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-
Sticks, Seat-Sticks, Whips, Riding-Crops and Parts Thereof; Prepared Feathers and Articles Made
Therewith; Artificial Flowers; Articles of Human Hair; XIII: Articles of Stone, Plaster, Cement,
Asbestos, Mica or Similar Materials; Ceramic Products; Glass and Glassware; XV: Base Metals and
Articles of Base Metal; XVI: Machinery and Mechanical Appliances; Electrical Equipment; Parts
Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and
Reproducers, and Parts and Accessories of Such Articles; XVII: Vehicles, Aircraft, Vessels and
Associated Transport Equipment; XVIII: Optical, Photographic, Cinematographic, Measuring,
Checking, Precision, Medical or Surgical Instruments and Apparatus; Clocks and Watches; Musical
Instruments; Parts and Accessories Thereof; XX: Miscellaneous Manufactured Articles.

Source: The World Trade Organization. Data Retrieved on 23 January 2013. Link:
http://www.wto.org/english/tratop_e/adp_e/AD_Sectoral_MeasuresByExpCty.pdf;
http://www.wto.org/english/tratop_e/scm_e/CV_Sectoral_InitiationsByExpCty.pdf; Chad B. Bown,
China-Specific Safeguards Database (CSGD): part of the Temporary Trade Barriers Database
(TTBD), the World Bank, 2012. Data retrieved on 2 February 2013. Link:
http://econ.worldbank.org/ttbd/csgd/
144
Factors Affecting Exporters’ Handling of Foreign Trade Remedy
Measures
The Export Sector’s Structure: Size and Concentration of Production
The export sector has been the engine of China’s economic growth since the
beginning of market opening and reform. Given the transitional nature of the Chinese
economy and the GOC’s gradual and mixed approach to reform, the export sector is not
only characterized by immense change but also by business actor diversity. At the heart
of China’s export sector are foreign-invested enterprises (FIEs). The FIEs started in the
form of joint ventures in labor-intensive and light assembly products such as handicrafts,
toys, and miscellaneous goods. Following investment liberalization in the 1990s, which
allowed more Chinese local governments to experiment with free market rules and use
tax exemptions to attract foreign capital, FIEs boomed and rapidly expanded to a variety
of export-oriented sectors. FIEs have controlled approximately half of China’s
manufacturing exports since China’s WTO accession in 2002 (Table 11). In particular,
they have acquired a dominant position in a number of China’s leading export sectors
such as electronics and telecommunications, garments, leather products, cultural
products, and plastics. In 2011, 78 percent of China’s top 200 exporters were FIEs,
doubled from 2001. Among these top foreign firms, more than 70 percent were in the
technology and electronic industry.
239

239
“2011 Nian Zhongguo Waimao 200 Qiang,” [Top 200 Chinese Exporters in 2011], China Customs
Magazine, http://www.ccmag.cn/cusmMaganized!docMaganized.jspa?id=3044, accessed December 28,
2012.
145
Table 11. Share of Chinese exports by enterprise ownership type, 2002-2007 (%)
Ownership type 2002 2003 2004 2005 2006 2007
State-owned 37.7 31.49 25.88 22.15 19.74 18.46
Collectively-
owned*
5.79 5.73 5.36 4.79 4.24 3.8
Foreign-invested** 52.2 54.83 57.07 58.3 58.18 57.1
Local private 4.23 7.93 11.67 14.73 17.62 20.32
* Enterprises where the assets are collectively owned by residents where the enterprises are located but
effectively controlled by the local governments.
** Exclusively foreign-invested enterprises, joint-venture enterprises with foreign investment, and
enterprises with foreign share-holders.
Source: The Ministry of Commerce; Data retrieved on May 13 2012. Link: www.mofcom.gov.cn

Nonetheless, FIEs in China range widely in size, form, and economic activities.
240

In 2010, there were reportedly 445,244 FIEs registered in China from a variety of
sources, including Hong Kong, the British Virgin Islands, Japan, the United States,
Taiwan, Singapore, and South Korea. Local governments compete fiercely with each
other for foreign capital, and FIEs in China range from subcontractors or subsidiaries of
multinational corporations in technology industries to small and medium enterprises in
traditional industries.

240
“FIEs” refers to exclusive foreign-invested enterprises, joint-venture enterprises with foreign
investment, and enterprises with foreign share-holders. SOEs here refer to both SOEs and collectively
owned enterprises controlled by local governments down to the township level.
146
In addition to FIEs, state-owned enterprises (SOEs) and private enterprises are
also important in China’s export sector, albeit in different ways. Prior to reform in the
mid-1990s, SOEs dominated low-end process and assembly manufacturing industries.
While they accounted for almost half of China’s exports, many were known for their
loss-making production due to their desire for export expansion. Following the state
sector reform that shuttered a large number of small and medium SOEs, they have
retreated tremendously from export-oriented industries and account for less than a fifth of
China’s exports since 2006 (Table 11).
241
Noteworthy is that the remaining SOEs tend to
be large, are situated at the central or provincial level, and continue to dominate upstream
industries in China. Such an industry structure, as many observe, is similar to Taiwan’s in
the 1970s, emphasizing state control in key sectors that supply materials required by
downstream export manufacturers.
242
However, more and more foreign governments
question whether the dominance of the state sector in China’s upstream industries
constitutes market intervention, or “subsidies,” for exported goods, as will later be
addressed in detail.
On the other hand, local private enterprises are the fastest-rising actors in China’s
export sector (Table 11) as they fill in the gap created by SOE reform. In 2007, their
output represented a fifth of China’s exports. However, as most of them lack the
technology and capital of foreign or state investors, the scale and variety of their

241
In China, SOEs at the regional level are also known as collectively owned enterprises.
242
Tianbiao Zhu, “Building Institutional Capacity for China’s New Economic Opening,” in Linda Weiss
ed., State in the Global Economy: Bring the Domestic Institutions Back In (Cambridge: Cambridge
University Press, 2003): 142-160; Seung-Wook Baek, “Does China Follow ‘the East Asian Development
Model’?” Journal of Contemporary Asia 35, no.4 (2005): 485-498. Keun Lee, Donghoon Hahn, and Justin
Lin, “Is China Following the East Asian Model? A ‘Comparative Institutional Analysis’ Perspective,’” The
China Review 2, no. 1 (Spring 2002): 85-120.
147
production is usually small and limited to low-end process and assembly industries. For
example, in 2006 Chinese Customs estimated over nine thousand private enterprises in its
footwear export sector and over 80 percent of them were small to medium-sized
enterprises. In addition to footwear, local private enterprises were the main actors in
number of light industries like handicrafts, cultural products, mechanical parts, and
textiles and garments.
The above picture of China’s export structure has important implications on the
impact of foreign trade remedy measures on China. First, given the variety of business
actors and the new leading role of local private actors, the production of China’s export
sector is highly disaggregated and not dominated by a small number of leading exporters.
The low ratio of production concentration is a major problem for China’s current
industrial structure.
243
Chu and Prusa, comparing China’s and the U.S.’s industry
structure, found the production structure in China much smaller and scattered, concluding
that this harms the exporters’ profitability.
244
They further explained that these low profit
margins not only can lead to higher duty margin but also can trigger price competition
among exporters leading to more antidumping initiations.
245
This competition, as
illustrated by the case studies discussed later, can be worsened by China’s decentralized

243
The Tenth Five-Year Plan on Industrial Structure Adjustment recognized this fact and outlined tasks to
enhance production concentration in a number of manufacturing industries, including several export-
oriented ones.
244
Tianshu Chu and Thomas J. Prusa, “The Reasons for and the Impact of Antidumping Protection: The
Case of People's Republic of China,” Economics Study Area Working Papers 69, East-West Center (April
2004): 19-20.
245
Ibid.: 20.
148
market reform, where officials from different regions jockey for investment and export
expansion.
246

Second, although China’s export-oriented industries rapidly move up the value
chain, a substantial extent of China’s exports are still traditional industries such as
textiles, footwear, furniture, and leather goods (Table 12), and these are among the top
targets of foreign trade remedy charges. However, many of the large firms within these
sectors are FIEs. They are usually well integrated into the global supply chain and thus
better manage conflict with foreign competitors.
247
The foreign trade remedies targeting
these sectors, in this sense, affect local exporters in particular. Following the scaling back
of the state-owned sector in export-oriented industries in the mid-1990s, the private local
exporters in turn became the prime foreign trade remedy targets.

246
Barry R. Weingast, Qian Yingyi, and Montinola Gabriella, “Federalism, Chinese Style: The Political
Basis for Economic Success in China,” World Politics 48, no. 1 (1995): 50-81.
247
Even if FIEs are in the sectors targeted by foreign trade remedies, they are often able to receive
exemptions or reduced duties. Examples will be given in the next section.
149
Table 12. China’s top ten exporting sectors, 2000-2011
2000 2011
Commodity Share of
Exports
(%)
Commodity Share of
Exports
(%)
Electrical machinery and
equipment and parts thereof**
Machinery and mechanical
appliances, parts thereof
Textile
Footwear
Toys, game and sport
equipment
Mineral products
Furniture, lighting and
bedding
Leather articles, travel goods
Plastic and article thereof
Others

18.7

13.2

11.6
4.1
3.4

3.3
3.2

3.1
2.9
36.6
Electrical machinery and
equipment and parts
thereof**
Machinery and mechanical
appliances, parts thereof
Textile
Medical technical
equipment
Furniture, lighting and
bedding
Iron and steel products
Vehicles and parts thereof
Plastic and article thereof
Others

23.5

18.6

7.5
3.2

3.1

2.7
2.6
2.4
36.4
** Within the category of electrical machinery and equipment and parts thereof, the share of
semiconductor-related exports was about 10 percent in 2000 and 18 percent in 2010.
150
Source: The Statistics, Bureau of Foreign Trade, Ministry of Economic Affairs, Republic of China, 2000-
2010. http://www.trade.gov.tw/Pages/List.aspx?nodeID=289

To be sure, some FIEs in China are also affected by foreign trade remedy
measures. These are mostly firms relocated from developed economies in East Asia
following the rise of local wage and foreign trade remedy charges in their home
countries, and their production concentrated on low added-value items in traditional
industries. Chu and Prusa’s study found that the expansion of the ‘incompetent FIEs’ was
correlated with the growth of antidumping measures against China over the past two
decades.
248
Therefore, the presence of these FIEs has added more challenges for China’s
export sector which is already greatly exposed to trade remedies.
More importantly, due to its reliance on the FIEs, China lacks indigenous world-
class enterprises leading its top export industries. The problem is even more poignant in
light of a recent statistic that while China received one fifth of the world’s antidumping
orders since its WTO accession, the value of Chinese exports of merchandise goods was
merely ten percent of the world’s total. In other words, China’s exports are by and large
at the low-value category. This focus on low value goods produced by small to medium
enterprises—differing from one centered on multinational exporters like Korea’s
chaebŏl —constrains Chinese exporters’ profits as well as their capability to
independently handle market access issues.

248
Tianshu Chu and Thomas J. Prusa, “The Reasons for and the Impact of Antidumping Protection: The
Case of People's Republic of China,” Economics Study Area Working Papers 69, East-West Center (April
2004): 17-19.
151
The Government-Exporter Network
I. The Institutional Infrastructure
The government-business network in China is well-known for its complexity
owing largely to its scattered industry structure.
249
There are several organized interests
within this network. First, two types of peak organizations represent the organized
interest at the national level. One type is common ownership-based organizations whose
members are private investors, state investors, and foreign investors respectively.
250

Another type is more relevant to trade remedy issues, namely, industry-based
organizations, of which there are approximately four hundred national industry
associations. The industry coverage of these associations largely overlaps, with one
industry covered by multiple associations.
In addition to these two organization types, there are chambers of commerce
governing the exporters and importers in six general product categories. In the pre-WTO
era when the domestic and foreign markets were strictly separate, these chambers were in
charge of foreign trade, whereas industry organizations were in charge of domestic
markets. In the WTO era, these two organizations often have to coordinate to tackle
issues regarding export barriers. These industry associations and chambers of commerce
also exist at the regional level. The abovementioned organizations are mostly government

249
Hui Yu, “WTO Tizhi Xia Hanye Xiehui De Yingdui Celue- Yi Fanqingxiao Weili,” [Strategies for
Business Associations under the WTO Framework: An Example from Antidumping] Zhong-Guo Gongye
Jingji [China Industrial Economy] 3 (March 2002), Beijing: pp. 39-46.
250
They include the Self-Employed Laborers Association (SELA), which represents small and medium
private enterprises; the All-China Federation of Industry and Commerce (ACFIC), which represents large
private enterprises; the China Enterprise Confederation-China Enterprise Directors Association, which
represents large state-owned enterprises; and the China Association for Enterprises with Foreign
Investment (CAEFI), which represents foreign invested firms. Although the ACFIC was established in
1954, it was moribund throughout Mao’s regime until 1979.
152
created (both central and regional), but since the mid-1990s, certain industries led by
private enterprises have been allowed to create their own associations. These are
concentrated in several coastal provinces and cities. Finally, foreign investors also set up
chambers of commerce (such as the American Chamber of Commerce) to represent their
interests. As Chinese scholars observe, this complex structure makes it difficult for
enterprises to aggregate and act upon their interests.
251

Other factors also prevent industry associations from being effective in response
to export barriers. As the majority of the industry associations are spun off from the
government or controlled by state interests, their goal is to administer rather than to serve
their members.
252
In addition, the associations, staffed by government retirees or those
with official connections, are often short on professional knowledge for conducting
industry-wide affairs.
253
The partisanship and poor quality make it difficult to integrate
business actors like FIEs or private enterprises whose trade interests are often in stark
contrast with the SOEs. Low industry membership coverage is particularly rampant in
low value-added and labor-intensive manufacturing industries where the majority of the
business actors are small and medium enterprises. For example, the Light Industry
Association in 2002 included less than 30 percent of relevant enterprises.
254
Poor
membership coverage further frustrates industry association wherewithal.

251
Hui Yu, Hangye Xiehui Ji Qi Zai Zhongguo De Fa Zhan: Lilun Yu Anli [Industrial Association and its
Development in China: Theory and Case Study] (Beijing: Economic Management Publication, 2002).
252
For example, the Ministry of Light Industry and the Ministry of Textiles were transformed into the Light
Industry Association and the Textile Industry Association respectively.
253
For example, the leaders of the Iron and Steel Industry were shifted in 1993 to fill the leadership of the
Steel Industry Association.
254
Yu, Industrial Association and its Development in China: Theory and Case Study. 113.
153
Regional protectionism exacerbates the problem for some national industry
associations. Given China’s decentralized political system, national industry associations
lack supervising power over regional industry associations, particularly in sectors that are
not controlled by the central government. In many cases, regional industry associations
serve as a vehicle for the local officials to favor their SOEs (or, more specifically,
collectively-owned enterprises) and to resist compliance with national regulations.
Finally, industry associations are also limited by the separation of industry
associations and chambers of commerce. While the former can comprise all enterprises in
the industry, the members of the latter are usually SOEs or large private enterprises. The
collaboration between the two types of organizations amid the trade dispute makes it hard
for industry associations to look out for the interests of their SME members.
Given the ineffectiveness of the formal, organized industry network described
above, enterprises that have resources and great interest at stake would rather use “one-
on-one” or informal channels to develop government networks.
255
In this case, individual
companies develop direct and personal contacts, or guanxi, with ministries responsible
for the issues concerning them. The Ministry of Commerce (MOFCOM), for example, is
a key bureau for informal exporter networks. Such a connection does not necessarily
mean bribery; rather, like lobbyists in Western society, they help government officials to
grasp the market from an enterprise’s perspective. Research found that informal

255
Kellee S. Tsai, Back-Alley Banking: Private Entrepreneurs in China (Ithaca: Cornell University Press,
2002); Scott Kennedy, The Business of Lobbying in China (Cambridge, MA: Harvard University Press,
2008).
154
networking in China is getting more sophisticated as more enterprises hire public
relations firms to develop networks with various ministries.
256

One-on-one government-business networks have their limitations, however. First,
only large, influential SOEs and private enterprises have the resources to engage in such
a high-cost activity, and their individual policy agendas do not necessarily represent the
interests of the industry as a whole. Second, because this network is unorganized and
only able to handle subjects of narrow interest, they cannot address collective action
problems, such as antidumping suits or other forms of export restrictions.
It is worth noting that recently private SMEs, as the leading firms expand larger,
have started to organize within the industries and create their own associations. As later
described in detail, these associations have been able to coordinate their members and
respond to export restrictions effectively. These successful privately-run associations are
often developed from regional industry clusters. Their government network strategy is
innovative; they first develop strong ties with the local government whose political
credentials depend largely on industry growth. According to their mutual interest, the
local government and the association collaborate closely to lobby for central government
support when facing export restrictions. However, a survey suggests that this type of
association makes up less than ten of all industry associations in China.
257

To be sure, the GOC has made efforts to improve government-exporter networks.
The Department of Treaty and Law (DTL) was set up within MOFCOM in 2002 as the
leading bureau handling WTO dispute settlements. In addition, MOFCOM has been

256
Kennedy, The Business of Lobbying in China.
257
Yu, Industrial Association and its Development in China: Theory and Case Study.
155
working on developing collaboration among “the four entities”—namely, the central
government, local governments, industry associations, and individual enterprises—in
both preventing and handling trade barriers and disputes.
258
This collaboration is evident
in litigation strategy, as indicated by the fact that, in China’s recent complaints in the tire-
safeguard and footwear cases as written in following section, MOFCOM engaged the
local governments and industrial associations in intensive dialogue prior to its WTO
filings, as is later detailed. The GOC also made several legal revisions, as discussed in the
following section, to strengthen the role of industry associations in handling foreign trade
remedy charges. Nonetheless, the government-exporters network is still far
underdeveloped owing to the underdevelopment of organized interests in China.

II. The Legal Status pf the Policymaking Network
Even today, Chinese laws do not permit any form of government-business
network to affect the policymaking process. Unlike Korea or Taiwan, the Chinese
government retains full discretionary power under its centralized political system.
Therefore, in scrutinizing business actors’ influence on the policymaking process, one
must scale back to examine a more basic level, namely, the legal development with
respect to business groups. Like other parts of legal and economic reform, the current
Chinese laws governing business groups are a mixture of freedom and restriction so as to
allow their intermediary functions as well as to maintain the government’s supervision
over them.

258
Shi-chun Wang, the former Director of the Bureau of Fair Trade for Imports and Exports, Ministry of
Commerce, People’s Republic of China. [in Chinese], 13 September 2004,
http://finance.sina.com.cn/roll/20040914/13001022180.shtml, accessed 27 October 2011.
156
Since China’s economic reform began, business actors, like other social entities,
have received legal status and rights in several economic areas. The key regulations are
the 1998 “Regulations on the Registration and Regulation of Social Organizations,”
which replaced a 1989 law of the same name. While allowing enterprises to voluntarily
assemble industry or commerce associations, the Regulations require associations, prior
to registration, to have a sponsoring government agency which usually has a voice in how
the association is operated.
259
Given that this system was designed for social
organizations in general, this law gives a vague definition of the range of activities
allowed or prohibited. As a result, the sponsoring agency has great discretion in defining
the functions of industry or commerce associations, which can restrict their activities. For
example, the Regulations prohibit associations from undertaking profit seeking
activities.
260
Thus, without their sponsoring agency’s approval, industry associations may
run the risk of breaching this rule by carrying out essential tasks like market surveys and
business facilitation. In addition, strict rules on membership fees indirectly force the
associations to depend on the sponsor agency’s finance. Efforts at the regional level have
been made to promote a more active role of industry association. For example, Shanghai
and Wenzhou city government pioneer in this field by authorizing the local industry
associations with greater autonomy in organizing activities.
The fact that China has yet had special laws at the national level governing
business associations hinders the current industry and commerce associations from

259
The Regulations for Registration and Management of Social Organisations, Peoples Republic of China
State Council Order No. 250, issued 25 October 1998.
260
Ibid., Article 4.
157
developing profession and services to the enterprises of the industry. Orders and
provisions were issued sporadically to remedy this problem. For example, the State
Economic and Trade Commission, the main agency in charge of business associations,
have issued a few orders to specify and strengthen industry association’s tasks and
functions, including selecting Shanghai, Guangzhou, Wenzhou and Xiamen, to pioneer
programs enhancing the association’s autonomy.
261

Regulations regarding foreign trade also restrict industry associations. Prior to
2001, exporter and importer associations and FIE associations in China were given
exclusive powers to represent exporters in responding to antidumping suits from foreign
governments.
262
Industry associations did not gain full legal recognition in handling this
matter until the revision of several laws between 2001 and 2006.
263
Nonetheless, all these
legal changes only improve the legal ability of business groups to handle foreign trade
issues. These changes serve as a way for the government to delegate its power in return

261
These orders include People’s Republic of China State Economic and Trade Commission Order No. 139
(1997), Measures on Testing Industry Associations in the Selected Cities; Order No. 1016 (1999),
Suggestions for Developing Industry and Commerce Associations; and Order No. 278 (2002), Tasks for
Strengthening the Management and Development of Industry and Commerce Associations. Industry
associations have started to develop more dynamically at the regional level. In Wenzhou, the most active
industry associations are created by enterprises instead of the city government. In Shanghai, the
government accepted FIE membership in some local industry associations so as to enhance the
collaboration within industries in which FIEs play an essential part.
262
Rules of the Ministry of Foreign Trade and Economic Cooperation on Response to Anti-dumping
Charges Raised by Foreign Countries against Chinese Export Commodities, Decree [1994] No.1, Ministry
of Foreign Trade and Economic Cooperation, People’s Republic of China, 12 April 1994.
263
The Provisions on Responding to Actions of Antidumping of Export Products, Decree [2001] No.5,
Minister of the Ministry of Foreign Trade and Economic Cooperation, People’s Republic of China, 11
October 2001; The Provisions were revised under the same name, Decree [2006] No.12, 14 August 2006.
In addition, State Economic and Trade Commission Order No. 128 (2001) authorized industry associations
to handle trade remedy measures related to both import and export.
158
for better economic governing while continuing to prevent business actors’ access to the
policy-making process.
However, room for business petitioning is widening in trade issues. In the face of
growing export restrictions since China’s WTO accession, the State Council enacted the
2005 Foreign Trade Barriers Investigation Rules. The Rules established a procedure for
business entities to petition the government to challenge foreign trade barriers.
264

However, the Rules remain underdeveloped at the institutional level and have yet to have
a significant effect on business actors’ access to the policymaking process. As the
guidelines on how to implement this law lack specifics, Beijing still holds a significant
amount of discretionary power in deciding how and when this collaboration should take
place.
265

Although the industry network does not have a place in China’s policymaking
process at the institutional level, this does not mean the industry network has no effect.
As Kennedy explains, in democracies, the executive branch of the government will open
their doors and ears to business groups for policymaking as they are the best source of
information about their industries. Likewise, business groups in China also have a
privileged position at the policy table, albeit informally.
266
In this sense, the informal
industry network becomes an even more important reference for Chinese policymakers.

264
Foreign Trade Barrier Investigation Rules, Decree [2005] No.4, The Ministry of Commerce, People’s
Republic of China, 21 January 2005.
265
Henry S. Gao, “Taking Justice into Your Own Hand: The TBI Mechanism in China,” Journal of World
Trade 44 (2010): 633-659.
266
Scott Kennedy, “Transnational Political Alliances: An Exploration with Evidence from China,” Business
& Society 46, no. 2 (June 2007): 174-200.
159
Litigation over Foreign Trade Remedy Issues beyond the WTO: A
Sectoral Landscape and its Development
As mentioned earlier, China has been the largest recipient of the world’s
antidumping measures, and, moreover, the antidumping measures against China have had
an extraordinarily high ratio of positive declarations and dumping margins. While
China’s NME status is commonly blamed for these results, studies also indicate that prior
to 2001 less than 30 percent of the foreign antidumping initiations against China received
proper responses and among those respondents only 25 percent successfully rejected the
rulings.
267
In other words, the foreign governments often issued antidumping orders
without being contested by Chinese exporters.

Table 13. Chinese exports receiving antidumping orders by the United States (1979-
2000)
Resource-intensive exports Labor-intensive exports Other exports
Potassium permanganate
Chloropicrin
Barium Carbonate
Barium Chloride
Menthol
Industrial Nitrocellulose
Sulfur Chemicals
Cotton Shop Towels
Greig Polyester Cotton
Print Cloth
Iron construction Castings
Bristle Paint Brushes
Steel Wire Nails
Petroleum wax candles
Desktop Note
Counters and
Scanners

267
This count includes participants throughout the preliminary to final investigations. Hui Yu, “Strategies
for Business Associations after China’s entry to the WTO—The Example of the Antidumping Issue” [in
Chinese], China’s Industrial Economy (March 2002): 39-46.
160
Silicon Metal
Tungsten Ore Concentrates
Sulfanilic Acid
Ferrosilicon
Nitromethane
Silicon Carbide
Sebacic Acid
Silicomanganese
Coumarin
Pure Magnesium
Furfuryl Alcohol
Glycine
Manganese Metal
Polyvinyl Alcohol
Persulfates
Foundry Coke
Hot-Rolled Carbon Steel
Products
Small Diameter Standard Pipe and
Tube
Porcelain-on-steel Cooking Ware
Tapered Roller Bearings
Headwear
Heavy Forged Hand Tools
Sparklers
Oscillating Fans and Ceiling Fans
Chrome-plated Lug Nuts
Carbon Steel Butt-weld Pipe
Fittings
Iron Waterworks Fittings
Hair Brushes
Helical Spring Lock Washer
Paper Clips
Cased Pencils
Melamine Institutional
Dinnerware
Brake Rotors
Steel Concrete Reinforcing Bars
Total: 49.8% 49.5% 0.2%
Source: International Trade Administration, United States Department of Commerce. Data retrieved on
30 January 2013. Link: http://ia.ita.doc.gov/site-index.html

161
China’s export profile and production structure shed light on the reasons for
exporter inactivity. To take the Chinese exported goods to the U.S. before 2001 as an
example (Table 13), they were overwhelmingly standardized, low-cost resource-intensive
or labor-intensive products. Production of this kind requires less complex technology and
intensive capital and has lower entry barriers.
268
In other words, if a particular product
succeeds in an international market, Chinese firms can easily enter that market by
producing and exporting similar products—a move that often triggers a price cutting
competition and therefore dumping charges. To be sure, some exporters have moved to
produce bulk products like desktop scanners, color televisions, and microwaves.
Nonetheless, the products of this kind are mostly low-priced, generic models, also
making them susceptible to price competition.
269
According to a Chinese trade lawyer,
Chinese exporters that engage in price competition of this sort are also those who have
the least ability to afford litigation costs.
270
He explains that in addition to being low-end
producers, the majority of the exporters in these product categories were small and
medium-sized enterprises, which limited them from reaping economies of scale.
271

Moreover, competition among different regions complicated production
integration testing. Regional SOEs that could rely heavily on local government subsidies

268
Bin Jiang and Alexandra E. Ellinger, “Challenges for China-the World's Largest Antidumping Target,”
Business Horizons 46(3) (2003): 25-30; Patrick A. Messerlin, “China in the World Trade Organization:
Antidumping and Safeguards,” The World Bank Economic Review 18(1) (2004): 105-130.
269
Ibid. In addition to the U.S. antidumping order on desktop scanners from China, the European Union
had also ordered antidumping investigations on color televisions and color television tubes, fax machines,
microwaves, magnetic disks, and ring-binder mechanisms from China.
270
Interview with a Chinese trade lawyer. 6 July 2011.
271
Ibid.
162
often engaged in price competition by selling products to foreign buyers at a loss.
272
The
national-level industry associations and chambers of commerce, on the other hand, were
ineffective at containing the regional rivalry since they lacked influence to cut the tie
between the regional governments and their sponsored enterprises under China’s
decentralized system. This circumstance further lessened the prospect for the exporters to
either self-regulate the export price or cooperate in the face of foreign lawsuits. As a
result, “When the antidumping suits hit, they [the exporters] all expected to ‘free-ride’
rather than to zealously protect the interests affecting the whole industry,” says the
lawyer.
273
The lack of cooperation was particularly harmful given China’s non-market
economy status, which requires pervasive information to prove the market functions and
to evaluate real production costs in an antidumping investigation.
274

The failure of collective action amid the antidumping investigations abounded in
industries from low-end chemical and metal products to light assembled goods. In some
extreme cases, such as several EU antidumping charges against industrial chemicals
during the 1990s, none of the hundreds of implicated industries responded to the surveys,
resulting in high punitive tariffs. In fact, for those cases, the relevant industry associations
and chambers of commerce failed to stop, and even encouraged, the oversupply problem

272
Richard S. Eckaus, “China’s Exports, Subsidies to State Owned Enterprises and the WTO,” China
Economic Review 17 (2006): 1-13; Robert Cull and Lixin Colin Xu, “Who Gets the Credit? The Behavior
of Bureaucrats and State Banks in Allocating Credit to Chinese State-Owned Enterprises,” Journal of
Economic Development 71 (2003): 553-559.
273
Interview with a Chinese trade lawyer. 6 July 2011.
274
Under NME status, one Chinese firm violating the antidumping rule means that the punishment duties
will go to all the Chinese firms in the industry. However, after China’s state-owned sector reform in the late
1990s, more investigations used discretionary rules which grant individual Chinese firms market economic
status when meeting the necessary criteria.
163
in the domestic market caused by price wars among the various small firms from several
regions.
275
The cut-throat competition was soon followed by antidumping charges abroad.
Finally, in sectors consisting of rather large groupings of FIEs, such as footwear and
bicycle parts manufacturing, cooperation is even more difficult. The local and foreign-
invested manufacturers, competing fiercely with each other, lack trust to share
information during the investigations. Moreover, the FIEs in these sectors often have a
record of dumping in their home countries (mostly Taiwan and South Korea) prior to
their relocation to China, drawing criticism from the locally-invested manufacturers.
A similar problem also existed in industries requiring more economies of scale,
such as color television manufacturing. In the late 1980s, the color television makers
from different provinces engaged in a price war, soon causing an overproduction problem
in China’s domestic market. They followed this by exporting color televisions at a loss.
This move was shortly countered with antidumping charges by the European
Commission in 1988 where five television manufacturers—two Japanese joint ventures
and three SOEs—were under investigation.
276
The two Japanese joint ventures, holding a
better position in the investigation given their autonomy at importing parts and exporting
products, barely cooperated with the three SOEs, whose production and marketing
channels were labeled as lacking market function. The three SOEs even failed to
collaborate with each other amid the investigation owing to their longstanding rivalry and

275
Hui, Strategies for Business Associations after China’s entry to the WTO—The Example of the
Antidumping Issue.
276
The charge was against color televisions with screens under 14 inches. The two Japanese joint ventures
were Hitachi-Fujian and Hua-Qiang Sanyo, and the three SOEs were China Great Wall Manufacturing Co.
(Shanghai Branch), China National Export and Import Co. of Electronic Appliances, and China National
Export and Import Co. of Light Industry (Tianjin Branch).
164
different market interests.
277
The investigation ended up with a unified tariff of 15.3
percent to the three SOEs and tariffs of 13.1 percent and 7.5 percent to the two Japanese
joint ventures. Worse still, this antidumping order was followed by many others launched
by the EU from 1992 to 1998 (including review investigations and investigations on color
televisions in other models). Among this period of time, the tariffs against Chinese color
televisions continued to rise as none of the manufacturers responded to the
investigation.
278

Poor response on the part of the exporters started to worry the GOC as the impact
of antidumping orders became more widespread in the mid-1990s.
279
However, the GOC
did not make most of its efforts at industry restructuring until just prior to its accession to
the WTO. In the late 1990s, a majority of small- and medium-sized SOEs in the export
sectors were merged, privatized, or closed down.
280
While the reform helped integrate the
production structure to some extent, foreign-invested and private enterprises in the
relevant sectors remained abundant.

277
For example, China National Export and Import Co. of Electronic Appliances, whose overseas sales
were mostly to developing countries, was not willing to share the cost of litigation proposed by the other
two SOEs. The three SOEs eventually failed to establish a mutual fund for handling antidumping charges.
278
The investigation in 1998 concluded with a record-high 44.6 percent tariff on all color television models
from China.
279
Article 30 of the 1994 Foreign Trade Law was China’s first legislation governing the antidumping rule
in China. The State Council then promulgated the Antidumping and Antisubsidy Regulations in 1997. After
China’s WTO accession, the Regulations were revised in 2001 and 2004.
280
Nicholas Lardy, Integrating China Into the Global Economy (Washington DC: Brookings Institution
Press, 2002).
165
A more pervasive change on the part of the GOC concerning the antidumping
issue came at the end of China’s WTO accession negotiation.
281
While its NME status
remained intact in the final agreement, the GOC, under the tremendous pressure from
domestic business groups, put export barriers at the top of its policy agenda.
282
The State
Council in turn authorized industry associations to have greater responsibility in working
with the chambers of commerce in handling of foreign antidumping investigations.
283
The
Ministry of Commerce also set up warning systems for the steel, chemical, and
mechanicals sectors.
284
Since then, MOFCOM has become more attentive to individual
cases and more willing to directly support the affected enterprises or industries. These
initiatives led to a sudden surge in Chinese exporter responses to antidumping charges;
the former Ministry of Foreign Trade and Economic Cooperation (MOFTEC; now,
MOFCOM) Minister Shi Guangshen claimed that in 2002 Chinese enterprises won two
third of the antidumping suits and responded to every antidumping charge raised by the
EU or the U.S.
285

281
Charles Tiefer, “Sino 301: How Congress Can Effectively Review Relations with China after WTO
Accession,” Cornell International Law Journal 34, no. 1 (2001): 55, 78.
282
Nadeem M. Firoz and Ahmed S. Maghrabi, “Antidumping War against China and the Effects of WTO
Membership,” Journal of American Academy of Business 3 (September 2003): 311-318.
283
For the related laws, see note 261.
284
“Three Major Sectors Established Early Warning System against Antidumping Suits,” The People’s
Daily, 12 September 2002, http://www1.peopledaily.com.cn/BIG5/jinji/31/179/20020912/820913.html,
retrieved on 21 December 2011.
285
“Sheng: Maoyi Baohu Shi Zhongguo Kuoda Chukou De Zhongyao Zhangai,” [Trade Protectionism is
the Major Barrier for China’s Export Expansion, said Shi] The People’s Daily, 4 June 2002,
http://www.people.com.cn/BIG5/jinji/31/179/20020604/744059.html, retrieved 11 December 2011.
166
However, this government-led campaign against antidumping is inconsistent and
continues to favor industries prioritized by the GOC’s economic policies. Industries
dominated by large or oligopolistic enterprises are far more proactive in getting support
from the government and the relevant associations than industries without wealthy and
prominent leaders. For example, in the late 1990s six Chinese steelmakers and the China
Iron and Steel Association (CISA) took initiative in monitoring the U.S. steel market and
then requested MOFTEC and the China Chamber of Commerce of Metals Minerals &
Chemicals Importers & Exporters (CCCMC) to join several consultations with their U.S.
counterparts before the filing antidumping and special safeguard charges. They started
another campaign in 2007 regarding the U.S. Department of Commerce’s
antidumping/countervailing duties as later explained in detail. Another high-profile
campaign was led by the solar panel sector, one of the major industries in the GOC’s
current industry plan.
286
In 2012 the authorities in the United States and the European
Union launched investigations on China for dumping and subsidizing solar panels. China
Photovoltaic Industry Alliance, insisting on the validity of their exports, was aggressive
in handling the investigations.
287
MOFCOM, on the other hand, prepared for the WTO

286
In 2007, the Chinese National Development and Reform Commission set a renewable energy plan target
of reaching 1800 megawatts of installed solar capacity by 2020. “CORRECTED - CORRECTED-China
solar set to be 5 times 2020 target-researcher,” Reuters, 5 May 2009,
http://www.reuters.com/article/2009/05/05/china-solar-idAFPEK12384620090505 retrieved on 11 January
2012.
287
The China Photovoltaic Industry Alliance was directly administered by the Chinese National
Development and Reform Commission.
167
dispute settlement procedure and launched its own investigation on wine imported from
Europe so as to retaliate against the threat to solar panel exports.
288

This contrasts starkly with the antidumping fights on behalf of light industry. In
the recent antidumping charges by the United States and the European Union against
porcelain, car glass, ribbon, footwear, and ironing boards, only one or two firms out of
the hundreds decided to respond. While the leading firms in some industries, after years
of loss and lessons, were willing to take the initiative in handling the antidumping
charges, this task was not an easy one. The lack of support from the majority of its
members put the industry association in an awkward position to help those leading firms
who participated in the survey. Thus, many of them fought the lawsuit with their own
resources. The central and local governments from time to time provided them with
financial or technical support to avoid a “no respondent” situation.
289
Nevertheless, this
top-down support is on an ad hoc basis, as illustrated by the latest MOFCOM data,
stating that light industry in general remains reluctant to handle antidumping charges,
with a 35 percent response rate to all charges and 60 percent to charges issued by
developed countries.
290
In fact, rumors circulate that there is a growing feeling within the
Chinese cabinet to be disinclined to take a legal stance in defending these uncompetitive

288
“China Hits Back at EU Wine over Solar Panel Duties,” Reuters, 5 June 2013,
http://uk.reuters.com/article/2013/06/05/uk-china-eu-solar-idUKBRE9540LE20130605, retrieved on 11
June 2013.
289
The situation refers to many antidumping charges in the 1990s and prior where none of the Chinese
exporters responded to the surveys requested by the foreign governments.
290
“Quanqiu Dui Hua Qing Gong hangye Maoyi Jiuji Anjian De Tedian Yu Qushi,” [Characters and Trend
of World Trade Remedy Measures on Light Industries] International Business Daily, 11 May 2012,
http://cafiec.mofcom.gov.cn/aarticle/tongjipeixun/201205/20120508131266.html, retrieved 8 April 2013.
The same report stated that the metallurgical industry overall has a 60 percent response rate to all charges
and 85 percent to charges issued by developed countries.
168
industries as more officials see their activities as a drain on China’s long-term
productivity.
291

However, recently more industries clustered in certain regions, mostly in China’s
coastal areas, and the regional governments there and the leading companies in the
industries have worked together to develop regional associations that are centered with
private enterprise interests. These “bottom-up” associations exercise self-regulation of
market rules and coordinate matters regarding trade barriers. Wenzhou Lighter Industry
Association is the most famous example. It has successfully led lighter manufacturers in
Wenzhou to win an antidumping suit and another suit regarding technical barriers in the
European Court. As the next section explains, other sectors, like fasteners and footwear,
after years of failure handling antidumping suits, also followed the same pattern working
with regional governments, and this eventually caught the central government’s attention.
Finally, Chinese exporters faced an uphill battle in recent years as more countries
started to use means other than antidumping measures—namely, special safeguard and
countervailing measures under the NME rule—against Chinese products. “Litigation
involved with these charges is more complex than antidumping charges, and the
concomitant cost is even more unaffordable for most of the exporters whose profit is
razor thin,” a Chinese trade lawyer commented.
292
The U.S. antidumping and
countervailing charges against coated free sheet paper from China is the first example of
this kind where the manufacturers being charged with subsidized dumping eventually

291
Interview with a legal scholar from a State Council-affiliated research organization, 9 July 2011.
Interview with a legal scholar from a State-Council-affiliated research organization, 19 July 2011.
Interview with a researcher affiliated with MOFCOM, 21 August 2011.
292
Interview with a Chinese trade lawyer, 6 July 2011.
169
gave up because of the financial stress caused by the litigation. These new charges are
particularly worrisome to the GOC not only because they affect a variety of sectors but
also because they directly hold the GOC responsible for dumping. In other words, this
trend pushes the GOC to the frontline of trade remedy-related disputes with foreign
governments and eventually to the center of the WTO dispute settlement system.

Taking Trade Disputes to WTO Adjudication
In March 2002, shortly after its WTO accession, China joined seven other countries and
filed its first WTO complaint against the United States safeguard measures on imports of
certain steel products.
293
Nonetheless, for most of its decade-long WTO membership,
China has been reserved in filing complaints against others through WTO dispute
settlement procedures. From January 2002 to December 2012, China only independently
filed ten complaints (Table 14). China’s record in launching WTO litigation is far less
than that of other large developing countries in relation to the size of their economies.
294

According to Hufbauer and Woollacott, China requested only two consultations with the
U.S. for every trillion dollars of two-way merchandise trade from 2002 to 2010, much
lower than Brazil (14.3), India (8.1), and Mexico (2.9).
295
In addition, eight out of the ten

293
However, as many have observed, this decision is, unlike most WTO dispute cases, more a result of
“bandwagoning.” See Henry S. Gao, “Aggressive Legalism: The East Asian Experience and Lessons for
China,” in Henry S. Gao and Donald Lewis eds., China’s Participation in the WTO (London: Cameron
May, 2005).
294
As China’s economic conditions (economic level and scale, trade volume, etc.) differ largely from
Korea’s and Taiwan’s, the comparison with other large developing countries is more valid than with Korea
and Taiwan.
295
Gary Clyde Hufbauer and Jared C. Woollacott, Trade Disputes between China and the United States:
Growing Pains so Far, Worse Ahead? Working paper, Peterson Institute for International Economics,
December 2010).
170
cases were filed only after 2009, seven years after China’s WTO accession, meaning that
China’s filing of WTO complaints is a very recent phenomenon.
Table 14 shows another interesting trait about the WTO dispute cases China filed;
that is, all the cases involve enterprises of an entire industry or multiple industries. This
indicates that the trade barriers reported in these cases have industry-wide effects and
thus require the industry associations to represent the whole industry in the dispute. It is
noteworthy that since current Chinese law requires trade barriers to be jointly-handled by
the associations or chambers of commerce designated at the national level, a large
number of associations are involved in each dispute. As is later explained, the
representation does not always mean the meaningful participation of industry associations
and chambers of commerce, but rather indicates top-down mobilization from political
demands. While China’s centralized political system gives policymakers plenty of
discretionary power on whether to file a complaint with the WTO, enterprises remain the
ones standing at the center of commercial disputes. As such, deliberations on filing a
WTO dispute are still affected by the involved industry’s and government-business
collaboration. The following section shows how China’s WTO litigation strategy is
influenced by the interaction of the top-down decision-making process and the business
sector’s capacity in pushing for government assistance.

171
Table 14. WTO dispute settlement cases filed by China (as a main complainant), 1997-
2012
Date/
Case
number
Defendant Subject Involved (Chinese)
Private Party
Status of
the
dispute
2002.3.26
DS252
The United
States
Definitive
Safeguard
Measures on
Imports of
Certain Steel
Products
China Iron and Steel
Association; China
Chamber of Minerals &
Minerals & Chemicals
Importers & Exporters
The AB
favored
China
2007.9.14
DS368
The United
States
Preliminary
Antidumping
and
Countervailing
Duty
Determinations
on Coated
Freesheet Paper
from China
China Paper Association Complaint
withdrawn
2008.9.19
DS379
The United
States
Definitive
Antidumping
China Chamber of
Minerals & Minerals &
Chemicals Importers &
The AB
favored
China
172
and
Countervailing
Duties on
Certain
Products from
China
Exporters; China
Chamber of Commerce
for Import & Export of
textile; China Iron and
Steel Association; China
Rubber Industry
Association; China
National Textile And
Apparel Council; China
Plastics Processing
Industry Association
2009.4.17
DS392
The United
States
Certain
Measures
Affecting
Imports of
Poultry from
China
China Animal and
Agriculture Association
Panel
Report
favored
China
2009.7.31
DS397

The
European
Union
Definitive
Antidumping
Measures on
Certain Iron or
Steel Fasteners
from China
China Chamber of
Commerce for Import &
Export of Machinery and
Electronic Products;
China General Machine
Components Industry
Panel
Report
favored
China
173
Association (Fastener
sub-association);
Fastener Association of
Jianxing City and
Zhejian Province
2009.9.14
DS399
The United
States
Measures
Affecting
Imports of
Certain
Passenger
Vehicle and
Light Truck
Tires from
China
China Chamber of
Minerals & Minerals &
Chemicals Importers &
Exporters; China Rubber
Industry Association (the
tires branch)
The AB
disfavored
China
2010.2.4
DS405
The
European
Union
Antidumping
Measures on
Certain
Footwear from
China
China Chamber of
Commerce for Import
and Export of Light
Industrial Products and
Arts-Crafts; China
Leather Industry
Association (Leather
shoes & sport shoes
commission); Footwear
The AB
favored
China
174
Association of
Guangdong, Wenzhou
and Quangzhou
2011.2.28
DS422
The United
States
Antidumping
Measures on
Frozen
Warmwater
Shrimp and
Diamond
Sawblades from
China
China Chamber of
Commerce of Import and
Export of Foodstuffs,
Native Produce &
Animal By-Products (the
seafood branch); China
Machine Tool & Tool
Builders’ Association
(The sawblade branch)
Settled

Strong Litigation with Concentrated Economic Interests
On 29 June 2009, the US International Trade Committee (USITC) investigation
concluded that the surge of tire imports from China was hurting manufacturers of like
products in the U.S. and accordingly suggested activation of a transitional safeguard
measure. On 11 September 2009, U.S. President Barack Obama conceded to USITC
findings with additional duty orders on the product. According to a source with
knowledge of this case, MOFCOM’s WTO legal advisors and its affiliated legal expert
pool both reckoned that the odds of winning the case were low, suggesting that a WTO
complaint would be a bold and risky move. Nonetheless, on 14 September, the first
175
working day after the US announcement, China filed a complaint with the WTO against
the measure (United States—Measures Affecting Imports of Certain Passenger Vehicle
and Light Truck Tires from China; “the tires safeguard case,” hereafter) and spent two
years fighting this case all the way to the Appellate Body Report, which determined that
China lost the case.
This case is considered China’s most aggressive WTO complaint in terms of the
presence of support from both government and businesses. From the GOC’s standpoint,
the tires safeguard case carries high political meaning and cross-sector economic impact
as it is related to the U.S.’s first usage of a China-specific safeguard measure.
296
Before
this case, there were already a handful of countries imposing or attempting to impose
China-specific safeguard measures.
297
The timing of China’s WTO complaint was critical
as the world was still struggling for recovery from the financial meltdown in late 2008
and the US action might inspire other countries to launch full-scale protectionism against
China. On the other hand, the recession’s pressure was massive in China. As all of its
major export markets struggled, many forecasted China’s exports might drop as much as
5 percent in 2009. Considering that trade contributes to one third of China’s GDP, these

296
Under US law, this special safeguard measure can be petitioned for under section 421 of the Trade Act
of 1974, as amended, and is available until its expiration on 31 December 2013. From 2001 until the tires
case, US industries had filed six petitions to impose section 421 safeguards but none of them came into
effect.
297
Before the tires case, ten WTO members initiated a total of 31 special safeguard mechanism
investigations against China: the U.S. (6), India (6), Turkey (6), Columbia (4), Ecuador (4), the EU (1),
Peru (1), Canada (1), Taiwan (under the name Chinese Taipei) (1), and the Dominican Republic (1).
Twenty-six of these investigations led to no measures being imposed. Three of them resulted in final trade
measures: Turkey (float glass), India (aluminum flat rolled products and aluminum foil), and Taiwan
(towels).
176
numbers were disturbing. Thus, the GOC viewed it as imperative to keep global markets
open through the multinational trade regime.
In addition to the strong political initiatives, there was also a rare concentration of
business support for this case. Throughout the whole process before the U.S. President’s
order, the Tire Branch of the China Rubber Industry Association and seven tire-makers,
jointly with CCCMC, had been keen to engage the GOC to push back U.S. pressure,
including sending Primer Wen Jia-Bao a public letter requesting retaliation against U.S.
imports. The tire maker group also assembled one of China’s largest Washington
lobbying teams, hiring public-relations firms for political advocacy, visiting Congress
and the relevant government departments, mobilizing their local business alliances to
support their petition, and attending the public hearing held by U.S. Trade
Representative. The tire maker group’s campaign was supported by the cohesion of tire
industry association, whose membership covers 90 percent of China’s tire production
enterprises and whose key members are among the world’s top 20 tire makers.
298

Although less timely, government-exporter collaboration—often starting from the
regional level—was also present in the three WTO complaints with respect to leather
upper footwear, fasteners, and frozen warmwater shrimp and diamond sawblades.
299
In
the footwear case, in 2009 Chinese footwear manufacturers contested the EU’s
antidumping orders, which had been followed by an over decade-long practice of quota

298
“Guanyu Fenhui” [About the Branch], The Tire Branch of China Rubber Industry Association,
http://www.tyrefh.org/about.aspx?info=515, retrieved on 15 January 2012.
299
One combined WTO complaint was issued for the disputes related to shrimp and diamond sawblades.
177
restriction on footwear imports from China.
300
The restriction, supposed to expire in
2005, was extended by multiple antidumping orders since 2006, including the one in
2009 that was highly controversial as it had EU Council support.
301
The economic stake
of this case was high, as in 2006 footwear ranked as China’s 9
th
largest export and Europe
had been the second largest market for Chinese footwear exporters.
Although collective action within the footwear sector had long been lacking due
to the complex production and ownership structure, since the 2000s locally-invested
footwear manufacturers had expanded rapidly, and the leaders in the industry had become
active in cooperating with the local governments on export restriction issues. For the first
time the footwear-makers associations from the three largest footwear capitals in China—
Guangdong, Wenzhou, and Quanzhou—created an antidumping coalition to handle the
EU antidumping investigation in 2006. Following the investigation’s ruling, the four
largest footwear-makers from the coalition filed a lawsuit with the European Court of
Justice, contesting the result of the European Commission’s antidumping order. These
legal actions were not only supported by the leading firms but by the three regional
governments. During this process, this public-private coalition group constantly urged the
GOC to elevate this issue to the WTO level.
302

300
In 2006, the EU imposed antidumping duties of 16.5 percent on footwear with leather uppers from
China. Due to broad division within the EU on this issue, the term of the antidumping order was cut from
five years to two years.
301
This support was controversial because the EU Council, a political organ, was the one reviewing the
policy and determining an extension on the antidumping order’s two-year term.
302
“China Shoemakers Call for Appeal against EU’S Extension of Anti-Dumping Duties,” Xinhua News
Agency, 27 December 2009, http://news.xinhuanet.com/english/2009-12/27/content_12708125.htm,
retrieved on 14 January 2013.
178
Business support was also in place in the fastener and the warmwater shrimp
cases. Although mostly consisting of small and medium private business actors, the
fastener and warmwater shrimp sectors are tightly clustered in certain coastal provinces.
After years of struggle fighting against foreign antidumping charges, they have developed
close relations with regional governments for handling trade issues. For example, the
associations of fasteners exporters and importers of Jiaxing City and of Zhejiang
Province and the government of Zhejiang Province fought together against the EU
antidumping investigation in 2009. With the ruling result imposing 26.5 to 85 percent of
antidumping duties onto the entire industry except for only two Chinese subsidiaries of
European firms out of the hundreds of Chinese fastener makers, the government of
Zhejiang Province played an essential role contesting the ruling and lobbied the central
government to elevate this issue to the WTO level.
303

Likewise, facing one of the most serious barriers to China’s agricultural exports,
the warmwater shrimp producers for the first time formed a multi-province alliance in
2005, collaborating with the Chamber of Commerce for Foodstuffs and Native Produce
(CCCFNA) to handle the U.S. antidumping investigation. This collaboration led to the
highest response rate among antidumping investigations on China’s agricultural sector.
304

To contest the calculating method used by the investigation, the alliance and several
regional governments, including Guangdong, Zhejiang and Fujian, eventually turned to

303
The World Trade Organization, WT/DS397/1, G/L/891, G/ADP/D79/1, 4 August 2009.
304
According to the CCCFNA, there were 57 firms, about 63 percent of the entire sector, responding to the
investigation. See “Shanghui Zhu Nuan Shui Xia Chukou Qiye Tuwei” [CFNA Helping Shrimp Export
Enterprises Break Through Trade Barrier], China Chamber of Commerce of Foodstuffs and Native
Produces, 6 May 2011,
http://www.cccfna.org.cn/article/%E7%94%B5%E5%AD%90%E6%9D%82%E5%BF%97/623.html,
retrieved on 14 January 2013.
179
press the central government to address this issue through the WTO dispute settlement
mechanism.
305

Weak Litigation with Diluted Economic Interests
China’s filing of a series of WTO complaints in respect to antidumping and
countervailing trade remedies demonstrated another litigation strategy, this one spurred
by government prompting. For the first time in China’s history, the GOC, together with a
Chinese exporter, filed a lawsuit in January 2007 in the U.S. Court for International
Trade (USCIT), opposing U.S. DOC’s preliminary decision of imposing antidumping and
countervailing duties with an NME calculation on coated freesheet paper from China.
306

Claiming that it lacked jurisdiction under relevant U.S. law, the USCIT refused to hear
this case in late March 2007. In September, the GOC took this issue to the WTO in order
to preempt the U.S. International Trade Committee’s final determination on this case.
307

Three months after the WTO filing, the USITC decided that the US industry was not
injured or threatened with injury by China’s coated paper, rejecting DOC’s decision. A
year later, it submitted another WTO complaint against DOC’s definite decision of

305
For both the warmwater shrimp and diamond sawblades cases, the GOC filed WTO complaints prior to
the final determination so as to influence DOC’s and USITC’s decisions. The WTO filing eventually led to
a negative determination on the two cases.
306
This case has been the first one ever and the only one so far where the GOC initiated a lawsuit at the
national court of another country or jurisdiction. In principle, the GOC holds that it enjoys the jurisdictional
immunities of a state from the jurisdiction of another state’s court under international law. In practice, the
GOC has never responded to cases in the court of another state so far. For a brief study of China’s past
practice and position in relation to state immunity, please see Dahai Qi, “State Immunity, China and Its
Shifting Position,” Chinese Journal of International Law 7, no. 2 (June 2008): 307–337.
307
According to the US Trade Act of 1974, DOC is responsible for determining whether and how much of
imports are dumped or subsidized into the US market. The USITC is responsible for determining whether
the import causes material injury to U.S. industry. Both DOC and USITC have to make a positive ruling in
order for an antidumping or countervailing duty on the import to take effect.
180
antidumping and countervailing duties on four products from China (United States—
Definitive Anti-dumping and Countervailing Duties on Certain Products from China; “the
four set case,” hereafter).
308
This time China fought until the ruling of the Appellate Body
Report in March 2011 upheld a number of arguments China had made. However, China
was unsatisfied as the WTO ruling merely fine-tuned, rather than stopped the
antidumping and countervailing remedies. In 2012, it filed two more complaints covering
22 products affected by the same remedies. The two complaints are now in the process of
panel review.
The coated paper case and three other related cases received much political
support in China because of their implications for China’s NME status, which since
China’s WTO entry, has aroused much discontent within the cabinet that denounced it as
“protectionism by developed countries.”
309
While bearing extra antidumping levies as an
NME country, perhaps the only advantage for China was the exemption of countervailing
investigations given the difficulties in calculating the subsidy margins of NME
countries.
310
The coated paper case, however, opened Pandora’s box by changing this
longstanding practice.
311
Many Chinese officials were upset that the U.S. demanded that

308
The four items include circular-welded carbon-quality steel pipe, certain new pneumatic off-road tires,
light-walled rectangular pipe and tube, and laminated woven sacks.
309
Also see “German, Chinese Ministers Condemn Protectionism,” People’s Daily, 26 February, 2009.
Link: http://english.people.com.cn/90001/90776/90883/6601169.html retrieved 11 January 2013; “China:
Protectionism Is No Cure to Crisis,” Xinhua News, 10 February 2011. Link:
http://www.china.org.cn/government/opinions/2009-02/10/content_17251131.htm retrieved on 11 January
2013.
310
For more information, see note 235.
311
Prior to the coated paper case, the government of Canada had already initiated countervailing
investigations against China. But the value involved with the coated paper case was more significant.
181
China once again take extra punishment after its suffering from the WTO accession talks.
Moreover, the economic impact of antidumping and countervailing remedies for China is
tremendous as all exports from China in the future may be subject to new precedents set
by these WTO cases.
Despite vociferous political support for these WTO cases, business pressure for
these four WTO complaints was dispersed given the cross-sector nature of the issue in
dispute and the variety of industries affected. To be sure, a number of industries with
better response rates to antidumping charges advocated for the cases. For example, CISA
and CCCMC, which have regular communication with their American counterparts about
their trade relations, raised concerns over antidumping and countervailing practices in
early 2007. Shortly after, they launched a Washington campaign against DOC’s decision
to impose antidumping and countervailing duties on circular welded carbon quality steel
pipe and light walled rectangular pipe and tube (two of the four products in the four set
case) from China.
312
The tire industry association, prior to the ruling of the four set case,
was also active in addressing this issue in the U.S., including supporting Hebei Starbright
Tire Co. Ltd. and others’ suit in the USCIT. The China Chamber of Commerce for
Machinery and Electronic Products (CCCME) and solar industry leaders (one of the 22
products involved with the WTO case) in 2012 also assembled their own coalitions,
collaborating with MOFCOM during DOC investigations as well as urging for a WTO

312
These two products are mid-stream steel products and are not directly produced by Chinese steel
oligopolies. However, many manufacturers of these two products have close relations with their upstream
suppliers. In addition, DOC’s calculations in both cases took into account material cost. Thus, Chinese steel
oligopolies have great interest in the outcome of these cases.
182
complaint. Nonetheless, these activities were limited to the sectoral level; a cross-sector
coalition opposing antidumping and countervailing remedies was not found.
More importantly, most of the industries affected by this issue did not strongly
pursue their cases. In fact, many leading firms of these industries decided either to give
up or drop out of DOC antidumping and countervailing investigations owing to the much
larger financial and management resource commitment required versus typical
antidumping investigations. Even within the manufacturers of circular welded carbon
quality steel pipe and light walled rectangular pipe and tube, many were not aggressive,
or even capable of being aggressive, in responding to DOC investigations. As explained
by Chenming Paper Co. Ltd., one of the two respondents that dropped out of the DOC’s
investigations on coated paper for financial reasons, it seemed more practical to start
looking for alternative markets than to endure a complicated and expensive litigation
process without a guarantee of returns.
What made cross-sector support for these four WTO cases even more difficult,
however, was the government-led approach. Due to the cost, professional expertise, and
personnel necessary to litigate a WTO dispute settlement, the government absolutely
dominated the direction of China’s case. From the GOC’s perspective, they prioritized
the general principles with respect to WTO rules more than damage to business
interests.
313
This is best illustrated by the GOC’s decision to pack multiple investigations

313
Ibid. First, China explained that DOC inflated duties on the same goods by calculating antidumping and
countervailing duties with rates for a non-market economy, in other words, “double counting.” Second,
China asserted that the U.S. generalized the inputs of SOE suppliers at the upstream industries and the
loans from state-owned commercial banks as “financial contributions from public bodies” without
sufficiently proving that the business operations of these entities are influenced or controlled by the
government. Finally, China opposed the general practice of using surrogate price to calculate the “real
market price” and the subsidy margins derived from public bodies through, for example, interest rates and
granted land-use rights. As to why this strategy forgoes business interests, see Elliot J. Feldman, “Unless
It's All Politics, China And The United States Should Tone It Down,” China-U.S. Trade Law, 25 April
183
on different products into one WTO complaint.
314
Instead of responding to DOC
measurements on each investigation, China merely based its argument on three general
principles with respect to WTO rules: double counting, public body, and surrogate price.
Nonetheless, China’s approach was somewhat ineffective in claiming its interests in light
of the Appellate Body Report.
315
This report upheld China’s arguments by rejecting the
practice of double counting antidumping and countervailing duties and denying the status
of SOEs in upstream industries as public bodies.
316
However, the Report merely rejected
the mistaken double counting methods rather than prohibiting concurrent antidumping
and countervailing measures using methods established for NME-status countries.
317

Under this ruling, DOC has broad discretion in administering anti-subsidy measures
against China. Moreover, the “package strategy” forwent opportunities to challenge
particular DOC investigation methods. As Feldman explains, since the use of a surrogate
price was upheld by the Appellate Body ruling, China has no room to question, for
example, the inscrutability of DOC comparisons of land prices in urban Bangkok to those
in Shandong Province.
318

2011, http://www.chinaustradelawblog.com/2011/04/articles/trade-disputes/wto/unless-its-all-politics-
china-and-the-united-states-should-tone-it-down/, accessed 12 November 2011.
314
The World Trade Organization, G/ADP/D74/1, G/L/854, G/SCM/D78/1, WT/DS379/1, 22 September
2008.
315
The panel report disfavored most of China’s claims, but the Appellate Body ruling reversed several key
points in the report.
316
The Panel Report rejected China in all its major claims. China then appealed to the Appellate Body
which overruled several rulings of the Panel in favor of China. For more detail, see The World Trade
Organization, WT/DS379/R, WT/DS379/6 and WT/DS379/7, 22 October 2010.
317
Ibid.
318
Elliot J. Feldman, “Unless It's All Politics, China And The United States Should Tone It Down,” 25
April 2011, http://www.chinaustradelawblog.com/2011/04/articles/trade-disputes/wto/unless-its-all-
politics-china-and-the-united-states-should-tone-it-down/, accessed 12 November 2011. However, other
184
The GOC’s choice of litigation strategy has to do with its cautiousness over WTO
disputes. As Bown correctly observed, “It is no fun politically always to be seen as the
accused and the loser.”
319
In order to claim political credibility, victory in WTO litigation
is vital to decision-makers.
320
This is more so when negative reports on WTO complaints
against China have encouraged public suspicion of the WTO and criticism of the
government’s handling of the cases.
321
To avoid further complaints, China’s leaders are
wary, even conservative, in executing their litigation strategy. However, the downside of
their choice is the ineffectiveness of their WTO complaints. As the four set case failed to
deter the continuation of antidumping and countervailing practices, China eventually had
to engage in more disputes in respect to more products. This situation makes it even more
difficult for the involved industries to identify a focal point for taking joint action or
collaborating with the government in WTO disputes.

lawyers argue that this litigation strategy choice is rational in WTO dispute settlements since the
government has to fight over issues of “principle” instead of the particular measures that affect the private
sector’s. For more discussion, see Duk-geun Ahn and Jieun Lee, “Countervailing Duty against China:
Opening A Pandora’s Box in the WTO System?” Journal of International Economic Law 14(2) (2011):329-
368.
319
Chad P. Bown, “U.S.-China Trade Conflicts and the Future of the WTO,” Fletcher Forum of World
Affairs 33 (2009): 44.
320
Ji Wenhua and Cui Huang, “China’s Path to the Center Stage of WTO Dispute Settlement: Challenges
and Responses,” Global Trade and Customs Journal 5, no. 9 (2010): 365-377.
321
“China Regrets WTO's Report on Tire Dispute,” Xinhua News Agency, 6 September 2011,
http://news.xinhuanet.com/english2010/china/2011-09/06/c_131100921.htm, accessed 2 January 2013;
“China Rejects Call for WTO Panel on Export Limits, China Daily, 20 November 2009,
http://www.chinadaily.com.cn/world/2009-11/20/content_9006982.htm, accessed 2 January 2013; “China
Rejects Double Standards on Clean Energy,” The People’s Daily, 20 October 2010,
http://english.people.com.cn/90001/90780/91421/7173541.html, accessed 2 January 2013.
185
Conclusion
This chapter explains how the complex, scattered industrial structure and the
underdeveloped government-exporter network holds China back from using the WTO
dispute settlement system to safeguard its export interests. While the major Chinese
enterprises have concentrated on domestic markets, the majority of China’s export sector
consists of foreign-invested enterprises or local small and medium enterprises. As major
foreign trade barrier victims, Chinese small and medium exporters have poorly defended
their interests due to inability to coordinate amongst themselves and with the
government. As one Chinese trade lawyer puts it, China lacks the indigenous world-class
multinational enterprises that prioritize the trade remedy problem and push the
government to aggressively contest this problem.
322
Without such partners, the Chinese
government has not been able, or even has needed, to use the WTO dispute settlement
system for its trade interests.
To be sure, some Chinese exporters, after years of failure at coping with trade
remedy measures, have eventually learned from the past and in their recent disputes they
have demonstrated persistence in pursuing their trade interests by engaging in trade
litigation, as is shown by the WTO disputes regarding tires, shoes, and fasteners. The
majority, however, remain incapable of playing this type of game, especially as the trend
of countervailing and safeguard measures imposed on Chinese exporters is on the rise.
These measures are not centered on the enterprises per se, but on the government and its
policies pertaining to enterprises, meaning that public-private collaboration is even more

322
Interview with a Chinese trade lawyer, 6 July 2011.
186
needed amid the trade dispute. However, disaggregated industry structure and poor
industry networking capability make it difficult for Chinese exporters to correspond with
the GOC’s effort to fight these charges.
In other words, extraordinary foreign pressure pushes the GOC to take the lead
filing WTO complaints so as to defend its NME status as well as the interests of varied
export industries. However, this state-led contestation over export barriers has its limit in
terms of pursuing the interests of the affected exporters, as shown by China’s strategy in
contesting several U.S. antidumping and countervailing orders in the WTO (the four-set
case and the 22-set case). In these cases, the litigation strategy is ineffective at claiming
exporters’ interests because, on the one hand, the GOC chose to pursue trade principles
that sacrifice the substance of business interests and on the other hand, the GOC’s
decision was made without clear partnership from the affected exporters.
However, this chapter also illustrates that the GOC realizes the unrealistic nature
of taking a state-led approach in assisting small and medium exporters fighting export
barriers. As the GOC does not provide a blanket of assistance to all the sectors affected
by foreign trade remedy measures, foreign trade remedy measures are to some extent part
of the government’s plan for industry phase out non-competitive industries and upgrade
their production. The GOC’s discretion at fighting export barriers, in this sense, reflects
the continuation of a “developmental-state” mentality in its trade policymaking.
187
CHAPTER SIX:
Comprehensive Analysis and Concluding Remarks

This chapter contextualizes the empirical findings of Chapters Three through Five
into the theoretical framework set up in Chapter Two. Specifically, it does two things.
First, it explains the parallels among the roles of the states in Korea, Taiwan, and China
in light of their experience in WTO dispute settlement. Second, it analyzes the findings
across the empirical chapters to test the hypotheses from Chapter Two. It ends with a
discussion of the scholarly contribution of this study and possibilities for future research.

The Role of State in Collaboration on Export Barriers: How the
Developmental State Evolves in the WTO Era
My dissertation first criticizes using contesting government-business relations to
explain why East Asian states litigate in the WTO. As the empirical chapters show, due
to the lack of laws that empower the legislative branch’s supervision over trade policy,
the exporters and legislative branches in Korea, Taiwan, and China seldom work together
to address the issue of export barriers or to press the executive branch to address trade
remedy issues. Rather, the executive branch in all three cases, although to various
extents, dominates policy on these issues from evaluating the subject matter to
collaborating with the exporters to file WTO complaints. Therefore, it is essential to
understand the logic of government discretion in these three cases by tracing their
government-business relations from the past.
188
I argue that in the WTO era East Asian states continue to see themselves as being
at the commanding heights of the economy. Therefore, when it comes to the issue of
export barriers, they may see the WTO dispute settlement system as a means to promote
their economic goals and prove their economic leadership. This rationale is illustrated by
the three empirical cases. From Korea’s long-standing bureaucratic reform, to the
Taiwanese government’s “trade firewall initiatives,” to the Chinese government’s plan to
promote collaboration among “the four entities,” the states have demonstrated substantial
interest in enhancing their capacity to exploit opportunities the WTO dispute settlement
system presents. State’s enthusiasm is also showcased by Korean and Taiwanese
governments’ initiatives in assisting the small and medium sized exporters to resolve
trade disputes via the WTO. Rather than responding to a concentrated source of business
pressure, their actions are more like a renaissance of the developmental state; that is, the
governments sense the urgency to self-generate new value that can potentially assist and
benefit the exporters in the post-liberalization era and in turn strengthen their political
legitimacy. China’s WTO complaints against the double counting method are not
necessarily driven by the government’s desire to be valuable to the affected exporters.
Nonetheless, the Chinese government came to realize the importance and necessity of a
state-led approach in WTO dispute when the impact of export barriers becomes more and
more cross-sector.
The developmental state mentality, however, is also demonstrated by
government’s discretion in what cases are to be brought to the WTO. Disputes involved
with industries that were strategically important or implicated to the old government-
business relations (such as semiconductor industry for Korea and Taiwan and
189
shipbuilding industry for Korea) are fast at catching the officials’ attentions, as shown by
Chapters Three and Four. The discretion, on the other hand, is illustrated by the Chinese
officials’ disincline to defend exporters that produce low value-added goods and their
allocation of resources to support the trade remedy fights for sectors that are in line with
their future industry plan, such as steel and solar panel.
I also argue that, although all of the three governments uphold the developmental
state mentality, the extent to which they are able to utilize the WTO dispute settlement to
promote export and stay relevant to the exporters is determined by the extent to which the
government and the key export sector can collaborate on the issue of export barriers. No
matter it is the Korean government’s decades-long effort, or Taiwanese and Chinese
governments’ post-WTO entry spur to strengthen their ties with the exporters, the fact
that these three governments all intended to enhance exporter collaboration mechanisms
illustrates the importance of this collaboration factor.
Collaboration itself is important for determining strategies to deal with export
barriers and thus enhances governments’ WTO complaint win-rates, an essential part of
their discretion. I argue, however, the extent to which the states succeed in building up
collaboration channels is determined by two structural factors, namely industry structure
and the existing government-exporter network. The following section explains this in
detail using the findings from the empirical chapters.

190
The Size of the Exporters, the Government-exporter Network, and the
Use of WTO Litigation
Lessons from the Comparison between Korea and Taiwan
The first set of hypotheses (Hypothesis 1.1 and Hypothesis 1.2) in Chapter Two
proposes that the governments in East Asia, while holding a substantial extent of
discretionary power, are prone to use the WTO dispute settlement system to defend their
export interests when there is effective collaboration with the leading exporters on export
barriers. The effectiveness of government-exporter collaboration is, in turn, shaped by the
export structure and the government-exporter network.
A comparison of the empirical evidence from Korea and Taiwan sheds light on
this causal relationship. First, the industrial structure of these two countries presents a
clear contrast. For the majority of the post-war era, the Korean government has
maintained an economic nationalist stance, sponsoring national champion enterprises
with mass production capacity to spearhead the country’s export growth. In addition, the
government painstakingly promoted the exporters to engage in large capital and high
value-added industries. Under these two industrial goals set by the government,
conglomerates have dominated Korea’s export sector with key industries that thrive on
economies of scale, such as semiconductors, shipbuilding, steelmaking, car making,
home appliances, and telecommunication devices. Many of these conglomerates have
successfully maintained cost-effective production and made names as the new leaders of
the industries, competing with the old oligopolies in the importing countries.
On the contrary, conglomerates have not been the major players in Taiwan’s
exporting industries due to the government’s arm’s-length relations with enterprises and
191
due to restricted private sector capital accumulation. Without strong sponsorship from the
government, Taiwan’s export sector thrives according to market rules where a large
number of enterprises with equivalent capital and production capacity compete head to
head with each other in foreign markets. This industrial structure also makes Taiwanese
exporters have lower concentration production ratios and benefit less from economies of
scale than their Korean counterparts. It is true that industries that require economies of
scale present in both countries. However, as government sponsorship is far from full-
fledged in Taiwan, exporters in these industries are smaller, rarely make it to the world’s
top rankings, and thus have less tension with their overseas competitors. Finally, despite
without Korean exporter’s economies of scale, Taiwanese exporters develop their niche
at production flexibility and maintain contracting relations with the old oligopolies in the
importing countries so as to reduce market risk. This strategy is prevalent among the
country’s major exporters.
The contrast presented here does not suggest that there are no small and medium
enterprise (SME) in Korea’s export sector and no large enterprises in Taiwan’s. Rather, it
emphasizes the role of the large exporters or exporting industries and their contribution to
the country’s economy. Figure 9 presents a rough comparison of the size of the exporters
in both countries. I use the revenue of the leading exporters described in Chapters Three
and Chapter Four (Table 4 and Table 8 respectively) as a proxy of the size of the
industries that these exporters are at. While sectoral difference between large and small
exporters exists in both countries, the production scale of Korea’s leading exporters by
far surpasses that of Taiwan’s leading exporters. Moreover, as Chapters Three and Four
show, the export barriers to Korea affect a variety of these leading exporters whereas
192
most of the largest exporters in electronic industries are integrated into the global supply
chain and rarely encounter difficult trade disputes. Instead, medium-sized Taiwanese
exporters in various sectors are the ones most affected by foreign trade remedies.

Figure 9. The size of the leading exporters in Korea and Taiwan

The size of exporters has significant implications for the economic impact caused
by trade remedy measures. Conglomerates, as the leading exporters in Korea, have been
affected the most by trade remedy measures, whereas in Taiwan the majority of exporters
hit by the measures are small and medium sized. In addition, as Chapters Three and Four
detail, the ability to accommodate the threat of trade remedy measure also differs
between conglomerates and SME exporters; the former have less flexibility to
accommodate the opportunity cost caused by the uncertainty accompanied with trade
remedy measures and the latter are more adaptable to this uncertainty by self-imposing
solutions such as diversifying their markets, products, or production sites. In other words,
LARGE SMALL
Shipbuilding
Iron & Steel
Iron & Steel
TAIWAN
Plastics & Chemicals
KOREA
Semiconductor
Consumer electronics
Automobile Others
Others
Note: Based on the revenue of the leading exporters in each industry (See Table 4 and Table 8)

Metal products

Semiconductor
Consumer electronics
193
Korea has more to lose than Taiwan both per exporter and per export industry in
considering the scale and the concentration of the economic impact that trade remedy
measures cause on both countries.
More importantly, Korean and Taiwanese exporters also differ in the extent of
their ability to coordinate within the industry and with the government regarding export
barrier issue. Their collaborating ability not only reflects the respective industrial policies
but also the disparity of the industry association’s capacity in both countries. As shown in
Chapter Three, with the financial advantage, Korea’s leading exporters and their
affiliated associations have been proactive at addressing export barriers, from handling
the legal affairs related to the trade remedy investigations, seeking foreign alliances, and
negotiating with foreign competitors. On the other hands, these leading associations,
while being traditionally well connected with the government officials, have been keen in
expanding its functions in policy advocacy and communication with the government
regarding the export barriers. Their effort is demonstrated by the numerous overseas
lobbying campaigns jointly led by the Korean governments and its leading associations.
Their collaboration has been crucial for forging bureaucratic consensus to use WTO
dispute settlement for resolving trade disputes as well as for ensuring the soundness of
this decision-making.
As shown in Chapter Four, this institutional linkage is relatively limited in
Taiwan because of the longstanding arm’s-length relationship between the state and the
private sector. As major industrial associations failed to facilitate collaborating network,
cooperation between the government and exporters only took place on an ad hoc basis
when a trade remedy suit might cause the bureaucrats enough economic discomfort. It
194
was not until the late 1990s that the government took the initiatives to enhance
collaboration with several export-oriented industries in handling trade remedy issues.
More fundamentally, many of Taiwan’s export-oriented industries have long endured the
collective action problem themselves due to the lack of leadership within their
disaggregated production structure. Thus, industry associations often failed to handle
export barrier issues effectively. Although not all the export-oriented associations in
Taiwan are ill-functioning, the WTO or non-WTO litigation record in Chapter Four
shows that a mature cooperating mechanism between the government and exporters is yet
established in handling trade disputes.
Figure 10 illustrate a rough comparison of how exporter’s size and its
collaboration affect the extent of their legal action in addressing export barriers. The
pattern here is confirmed by Korea’s and Taiwan’s litigation record against trade remedy
suits since the 1990s. Korea’s conglomerates in steel, semiconductors, shipbuilding, and
consumer electronics have been most active at self-organizing as well as collaborating
with the government to fight foreign trade remedy charges. Lacking such prominent
industry leaders that concern about export barrier issues, Taiwan’s export sector is
moderate and inconsistent in handling trade remedy issues. In many cases, exporters
affected by trade remedy suits chose not to contest and instead used alternatives to adjust
to the new business environment.
Figure 10 also shows the enduring effect of the developmental state in both
countries, as indicated by the positive correlation between the size of the exporters and
the degree of government-exporter collaboration. This is because both governments in the
past allocated capital to industries prioritized by their economic policies while preventing
195
the rest of the business sector equal access to capital. In other words, those who are
aggressive and capable in contesting trade remedy issues often have historically stronger
government ties. This relation is confirmed by Korea’s WTO litigation record where
several high-profile disputes were centered with the previous industry policy that tied the
government and leading exporters. This factor adds additional impetus to Korean
government to confront the foreign government in dispute so as to prove its leadership by
defending its economic policies.

Figure 10. The record of litigation prior to the WTO stage

LARGE SMALL
The degree of
government-exporter
collaboration
HIGH
Taiwan
Korea
Semiconductor
Semiconductor
Shipbuilding
Steelmaking
Home appliances
Textile
Steelmaking
Textile
Chemicals
Miscellaneous
Miscellaneous
Metal goods
LOW
The Record of Litigation
prior to the WTO stage
High
Low
Industries most likely to
demand WTO litigation
The size of the exporters
Car and parts thereof
LCD display
Source: Based on the findings of non-WTO litigation in Chapter Three and Chapter Four
196
Theoretical Lessons from China’s Case
A similar structural analysis can explain sectoral distinctions in trade remedy-
related litigation, as presented in Figure 11. China’s export sector was developed under a
decentralized process in which most exporters started with disaggregated and small-scale
production. Foreign-invested enterprises, on the other hand, increasingly dominated
China’s export sector and due to their different marketing strategy, they often do not
share the same interests with the local exporters when it comes to export barriers. This
structure makes China’s local exporters particularly vulnerable to trade remedy measures
as they constantly suffer from lack of leadership and collaboration with the central
economic ministries. Despite Chinese government undertook reforms to restructure the
organizational capacity of the local exporters and assisted them to embrace litigation
against trade remedy measures, exporters in light or low value-added industries continued
to have trouble consolidating industry-wide action or advocating for government
assistance. The Chinese government, like other East Asian states, also maintains a
“developmental state mentality” in scrutinizing whether and to what extent to assist
exporters in trade remedy disputes. It is less willing to assist trade remedy cases in the
case of light or traditional industries since these sectors have a lower priority in its
current economic plans.
However, a unique pattern has emerged to supplement the lack of support from
the central government. For example, some small-scale exporters of fasteners, footwear,
and lighters in distinct geographic clusters have developed close relations with local
governments who, in some sense acting like a developmental state, took the initiative in
lobbying to the central economic ministries on behalf of their local investors. Another
197
noticeable point about China’s export sector is its similarity with Taiwan’s. Under
industrial reform in the 1990s, the state sector retreated from most of the export sector
while remaining in control of upstream industries with an emphasis on the domestic
market. After this reform, China’s export sector in general lacked both enterprises with
large economies of scale and close government collaboration. This industrial structure
and government-exporter relationship might explain to some extent why the Chinese
government has not aggressively filed WTO litigation, even as it falls under tremendous
trade barriers from trade remedy measures.

Figure 11. China’s record of litigation prior to the WTO stage

LARGE SMALL
The size of the exporters
The degree of
government-exporter
collaboration
HIGH
The Record of Litigation
prior to the WTO stage
High
Low
Steelmaking
China
Rubber
Chemicals
Metal goods
Fastener
Food processing
Miscellaneous
Footwear
Lighters
China (with the support of the
local government)
Industries most likely to
demand WTO litigation
LOW
Textile
Plastic goods
Paper
Source: Based on the findings of non-WTO litigation in Chapter Five
198
Exporter Size, Government-exporter Collaboration, and WTO
Litigation Strategies over Trade Remedy Issues
Lessons from the Comparison between Korea and Taiwan
The second set of hypotheses (Hypothesis 2.1 & Hypothesis 2.2) in Chapter Two
proposes that the export structure and the government-exporter network should correlate
positively with East Asian governments’ strategy in WTO dispute settlements. The
comparison of Korea’s and Taiwan’s WTO litigation record (Figure 12) confirms the
correlation suggested by the two hypotheses.
First, most WTO complaints Korea has filed rank high in terms of exporter size
and government-exporter network effectiveness. The effects of these two factors, based
on the theoretical framework outlined in Chapter Two, should be understood from the
standpoint of the government, where political value and litigation win-rate are two major
concerns. First, all these cases started from disputes among the world’s largest enterprises
and therefore were involved with some of Korea’s largest oligopolies. For example, in
the DRAM countervailing cases, Micron, the world’s second largest chipmaker, fought
against Hynix, one of the only two chipmakers in Korea and the 4
th
largest chipmaker in
the world during the dispute; in the vessel disputes, the European shipbuilding industry as
a whole fought against the Korean shipbuilding industry led by Hyundai and Daewoo, the
world’s largest and 4
th
largest shipyards respectively; and in a series of antidumping and
safeguard disputes, the American steel industry fought against POSCO, Korea’s
steelmaking monopoly and the world’s largest steel mill, and the mid-stream steelmakers
whose production was tightly connected to POSCO. The economic impact involved with
these disputes was large and concentrated, meaning that the affected oligopolies not only
199
had a lot to fight for but, with their financial clout, were able to do so either
independently or with the support of the country’s industry as a whole.
323

Figure 12. Industry Structure, Government-Exporter Collaboration, and the WTO
Litigation Strategy—Korea and Taiwan

Second, the collaboration between the government and these oligopolies was
thorough during these disputes. At the industry level, illustrated in Chapter Three, all

323
There was no collective action problem in the DRAM countervailing dispute as Hynix was the only
exporter involved.
The size of the exporters involved
in WTO litigation
LARGE
The degree of government-
exporter collaboration
in WTO litigation
SMALL
LOW
HIGH
Strong Litigation
Weak Litigation

Taiwan
Korea
The vessel cases
The DRAM countervailing cases
The steel antidumping cases
The color television case
The DRAM antidumping case
The resin antidumping case
The ITA case
The steel safeguard case
The seven-item antidumping case
The steel safeguard cases
Source: Based on the findings of non-WTO litigation in Chapter Three and Chapter Four
200
those oligopolies or the industry associations that they were affiliated with were engaged
in disputes with their foreign counterparts for years, if not decades, and they actively
sought resolutions prior to WTO litigation. The legal forces in the oligopolies or the
industry associations were an important asset for the government in filing with the WTO.
In addition, as the economic ministries work regularly with them, a dispute-specific
taskforce can be promptly set up, as shown by a joint team assembled by the Ministry of
Foreign Affairs and Trade (MOFAT) and the Ministry of Trade, Industry, and Energy
(MOTIE) for the specific WTO disputes. As demonstrated in the vessel dispute, the steel
antidumping dispute, and the DRAM countervailing dispute, the functions of the public-
private taskforce range from lobbying foreign economic bureaus and legislators and
providing testimony in public hearings, to negotiating with the disputing counterparts and
courting business alliance support. As this collaboration is aimed at conducting all-
encompassing matters within and beyond litigation, it is more effective at reconciling the
fundamental issues of disputes. Finally, the public-private relations in these disputes were
indicated by the fact that the cost of WTO litigation was shared by the government and
the involved enterprises or industries, leading to a more equalized position for the private
sector to demand the government address their business interests during the disputes.
While these two conditions provide a better win-rate in fighting the dispute, they
also create greater political value for the Korean government to launch WTO litigation.
Safeguarding the interests of these oligopolies was politically critical given their output
accounts for the vast majority of Korea’s exports, which were particularly devastated by
the financial crisis in the late 1990s. Thus, it is not only the exporters who are affected by
trade barriers and need government assistance, but the government also depends on its
201
exporters to boost the economy and legitimize its policies. As showcased by the
economic ministry’s plan to boost ship exports during the vessel dispute, filing WTO
litigation for the oligopolies was mutually beneficial for the Korean government which
sought to maintain a stable environment for economic recovery. Finally, these cases are
politically important as they affect the Korean government’s reputation. The core of
disputes involving oligopolies is in some sense a legacy of Korea’s state-led
industrialization. The dispute regarding the countervailing duties on Hynix was the most
salient example; likewise, in the vessel dispute, the European shipbuilders also criticized
state-arranged loans for Korean shipbuilders. POSCO, which was privatized in the
aftermath of the financial crisis, was frequently cited as having a price advantage due to
state subsidies. Continuing suspicion from foreign governments and businesses made it
crucial for the Korean government to use WTO litigation to defend its conduct and
relations with the oligopolies and thus preserve its international reputation.
Exporter size and the degree of government-exporter collaboration affect how
aggressively the Korean government litigates in the WTO on behalf of business interests.
For example, as KSA members, particularly Hyundai and Daewoo, held firm positions on
several issues, including the new cost structure and the rules on advance loans for
exports, they prolonged their dispute with the European vessel association for years. This
persistence also gave the Korean government impetus to launch counter suits against the
EU so as to leverage its position in negotiations outside the WTO. The dispute was
settled only when the KSA finalized a temporary agreement with its European
counterparts regarding the most contentious issues. In the dispute related to antidumping
duties on steel plates and sheets in 1999, the Korean government forwent other firms
202
involved in the case, solely focusing on the loss to POSCO, who had orchestrated the
campaign against this antidumping order prior to WTO litigation. Following POSCO’s
demands, the Korean government filed another two WTO suits in 2009 and 2011 against
the United States regarding the ‘zeroing’ rule of the antidumping order which affected the
same products from 1999 to 2006. The demand from the private sector was also high in
the dispute related to the safeguard order on steel products, as KOSA played a strong role
in forming global alliances with the associations of other major steel producing countries.
When facing pressure from the United States Department of Commerce to drop the
Korean government’s part in the joint WTO complaint, the Korean government was
prompt to refuse due to its commitment to supporting KOSA’s position. The government
was in a stronger position in relation to Hynix given the state-owned bank loans were the
focal point in the dispute. Nonetheless, Hynix also played a vital part in the litigation in
constructing evidence to prove the procedural validity of the loan and to prove that the
low production cost was a result of its restructuring based on market principles.
It is noteworthy that although Korea’s first two WTO litigation cases regarding
color television receivers and DRAM also involved conglomerates (Samsung, Hyundai,
and LG electronics), the government played a more dominant role in these cases as the
collaboration mechanism for WTO dispute settlement had yet to be established. To test
the feasibility of using WTO litigation to defend trade interests, the Korean government
cautiously picked issues that the conglomerates had already contested for years and thus
had experience in. Although this litigation did not necessarily produce the desired result
in terms of exports, this experience has effectively boosted bureaucratic consensus and
confidence for handling future disputes via the WTO.
203
Within the few WTO litigation cases Taiwan has filed, the one regarding the
European Union’s tariff rate on technology products can be considered a “strong” case,
since this dispute affected one of Taiwan’s most important technology exports, flat-panel
display devices. Four major producers of flat-panel display devices affected by the
dispute (Chimei, UAO, CPT, and Hannstar), whose output contributes to 40% of global
production, referred this issue to the economic bureaus which were non-responsive. The
underlying force that changed the authority’s position and pushed it to file a WTO
complaint was partnership with the U.S. and Japanese governments. While Taiwan’s
government and the affected enterprises reached a certain degree of collaboration, their
communication, as detailed in Chapter Four, was undercut by a lack of past collaboration.
Moreover, as the entire litigation cost was paid by the government, the affected
enterprises did not have much say in the case presented to the WTO. This comparison of
Korea’s and Taiwan’s “strong” cases demonstrates a distinct disparity in terms of the
governments’ litigation behavior and the impetus from the degree of economic impact
and of government-exporter collaboration throughout the WTO litigation process.
Based on Hypothesis 2.1 and Hypothesis 2.2 from Chapter Two, the smaller the
size of the exporters affected by a dispute and the worse the government-exporter
collaboration, the less aggressively the government will contest WTO disputes based on
business interests (Figure 12). This effect can be illustrated by Korea’s WTO litigation
against the Philippines’ antidumping order on polypropylene resin from Korea. Once
supported by the government’s industrial plan, textile and synthetic fiber industries have
waned in Korea’s exports and since the 1980s has been concentrated in small- and
medium-sized production. In the Philippine’s antidumping order in 2000, over ten textile
204
manufacturers were affected but they did not come out with a common position to contest
this order given their differences in affected market share. The dispute was not brought to
the WTO until MOFAT took the initiative in setting up a working group to assist them—
a process in stark contrast with the ones involving Korean oligopolies. However, lacking
active private sector participation, this WTO case was simply settled after the Philippine
authorities dropped the order, but this did not effectively reconcile the prolonged
competition between the two countries’ textile industries.
A similar problem can be found in Taiwan’s WTO litigation against India’s
antidumping orders on seven petrochemical products from Taiwan. The case began even
in the absence of the private sector’s demand, as the exporters either had already phased
out or had produced an insignificant amount of the products restricted by India’s orders.
Therefore, after the Ministry of Economic Affairs (MOEA) took the initiative in
addressing India’s WTO-inconsistent antidumping orders, the exporters involved with
this case were halfhearted in complying with the investigation. Moreover, due to a lack of
prior government-exporter collaboration, negotiations with the Indian authorities often
were restricted by the fact that the exporters were unwilling to provide information
relevant to the case.
A question that follows is why does the government decide to file WTO litigation
when the exporters and government-exporter collaboration do not provide sufficient
support to be successful? Both the Korean and Taiwanese governments continued to view
themselves as relevant to the economy and thus intended to use WTO litigation to assist
their exporters’ global outreach. In particular, the Taiwanese government saw additional
political value in this effort, as the WTO was the sole economic diplomatic channel
205
available to it and the government was thus eager to test this opportunity. However, as
shown by the two WTO disputes described above, claiming political value through WTO
litigation has its limit without support from the export sector and government-exporter
collaboration mechanisms.

Theoretical Lessons from China’s Case
Contesting trade remedy issues is a tough and distinctive task in the case of China
not only because of the rise of protectionism against Chinese exports but also because of
its non-market economic (NME) status in the WTO. Thus, the Chinese government’s
evaluation of the win rate and political value of filing WTO litigation should not be directly
compared with that of Korea and Taiwan. However, an examination of China’s WTO
litigation record also shows the effect of the size of the exporters involved with the dispute
and the degree of government-exporter collaboration, as illustrated in Figure 13.

206
Figure 13. Industry Structure, Government-Exporter Collaboration, and the WTO
Litigation Strategy- China

Within China’s WTO litigation record, the dispute against the United States
safeguard order on tires from China can be considered a case where the Chinese
government demonstrated the most aggressive stance in claiming business interests. On
the one hand, the Chinese tire industry was relatively large and concentrated in
comparison with other export sectors in China. Since the U.S. was the most important
foreign market for Chinese tire-makers, the economic impact of this safeguard order was
tremendous. The tire industry was effectively mobilized to formulate a coalition to deal
with their overseas counterparts while lobbying the Chinese government to act in their
The size of the exporters
(involved in the WTO litigation)
LARGE
The degree of government-
exporter collaboration
(in the WTO litigation)
SMALL
LOW
HIGH
Strong Litigation
Weak Litigation

China
The tire safeguard case
The footwear case
The fastener case
The coated paper case
The four-set case
The 22-set case
The warmwater shrimp and
diamond sawblades case
China (with the support of
the local government)
Source: Based on the findings of non-WTO litigation in Chapter Five
207
interests. The strong private demand shortly led to a public-private delegation group in
handling this case. As detailed in Chapter Five, similar demand from the private sector
was present in other disputes including the footwear dispute, the fastener dispute, and the
warm-water shrimp dispute. These industries had long suffered from antidumping orders
or other trade restrictions while failing to appeal these restrictions due to collective action
problems. However, as the industry expanded, leadership started to merge and, more
importantly, those leading exporters started to collaborate with local governments to
address trade remedy issue at lobbying the central government. The public-private
partnership at the local level was effective in influencing the central economic bureaus’
opinion on using WTO litigation.
On the other hand, the Chinese government also fought trade remedy issues
without the support of specific exporters. This situation is inevitable given that many
disputes between China and its trade partners are derived from WTO general principles
or agreements instead of a particular trade case. In this case, the government’s litigation
strategy is relatively “weak” in terms of claiming business interest, as illustrated by three
WTO litigation cases (the coated paper case, the four-set case and the 22-set case) against
the United States’ practice of double-counting antidumping and countervailing duties.
Given the widespread economic impact involved in those cases, the Chinese government
lacked a clear partnership from the private sector and thus its contestation emphasized
public rather than business interests, as is demonstrated by the government’s strategy of
packing disparate disputes into one case. Moreover, as Chapter Five explained in detail,
due to its concern with victory, its litigation strategy failed to effectively deter the
208
contested practice of the foreign government and led to the need to use WTO litigation to
contest the same issues in more disputes.
The above analysis suggests that using WTO litigation in the interest of the
private sector still requires participation from the export sector. In this regard, China and
Taiwan share a similar problem as both governments lack the collaboration mechanisms
or regular working relations with major export sectors that are essential for successfully
litigating these disputes. As a result, even when the government attempts to sponsor and
provide a public service through WTO litigation, its success is limited, and it is often
ineffective at safeguarding business interests.

Scholarly Contribution
Despite the fact that East Asia has become a major player in world trade and that
new trends indicate an increase of East Asian litigation in trade disputes, the mainstream
literature in this field still stresses the experience of the Western developed world. None
of these studies are completely applicable to East Asia given its political and economic
context. It is thus essential to determine why the region is legalizing. My study on three
East Asian countries’ experience in WTO dispute settlement provides several theoretical
implications.
While the business pressure explanation dominates the current understanding of
why states use WTO dispute settlement, my dissertation offers an alternative explanation
that emphasizes the motivations behind government discretion in using this mechanism.
As my dissertation shows, this motivation is clear in a country where the government has
been heavily involved with export promotion, such as many East Asian countries. On the
209
one hand, the motivation represents the government’s desire to accomplish something
economically so as to increase its political credibility. The motivation, on the other hand,
may also come from the government’s need to enhance its economic leadership, since the
core of the disputes, especially the high-profile ones, involved with these countries is
often related to the fundamentals of the country’s economic structure or government-
business relations. The use of the WTO dispute settlement, in this sense, also serves as a
way for the executive branch to defend its policy decisions and its private sector
relations.
Contrasting with the business pressure explanation, my dissertation uses empirical
evidence from three East Asian countries, focusing on the effect of government-exporter
collaboration, to explain government decision-making on whether and how to file a WTO
complaint. Instead of picturing contested relations between the government and business
actors, my dissertation emphasizes their close cooperation in the midst of trade disputes
as a key impetus for the government to launch a WTO complaint.
Specifically, how well the government and the exporters collaborate on the issue
of export barriers is shaped by the concentration of exporter structure and the
effectiveness of government-exporter networks. As illustrated by the case of Korea, the
government’s aggressive stance in the WTO goes hand in hand with the rise of
international business actors who are both in need of and able to collaborate efficiently
with the government to overcome trade barriers. In this sense, the government’s success
in using WTO dispute settlement to enhance its relevance to the economy also depends
on the participation of the exporters. On the contrary, the Taiwanese government’s
attempt to play a “developmental state” role through WTO litigation has been tempered
210
by a lack of export sector demand and the longstanding arm’s-length relations between
the government and exporters. In other words, the Taiwanese government is unable to
aggressively take advantage of WTO litigation given the limited political gain it may
deliver. Finally, China’s experience in WTO litigation also illustrates that a lack of strong
indigenous exporters may hold the government back from using WTO dispute settlement
more aggressively. However, as the export barriers caused by China’s non-market
economy status extraordinarily impact export sectors across the board, the Chinese
government is pushed into take a leading position to remedy the collective action
problem among its export industries.
My dissertation supplements current studies on WTO litigation, which are on the
one hand dominated by quantitative research and on the other hand based on the
empirical understanding of the Western democratic system. It benefits the current
literature by refining our understanding about East Asian governments’ decision-making
logic and process regarding WTO litigation. In addition, when current scholarship
emphasizes trade conflicts between developed and developing countries, East Asia’s
dispute settlement experience help us understand the WTO’s function in reconciling
challenges to newly industrialized and export-led economic practices.
However, my dissertation merely uses three sample countries to highlight the
structural factors affect how government and business collaborate on trade policy. The
future scholarship may expand the cross-sector analysis of my research into more details
of sector dynamics. For example, one can make an in-depth analysis on the industries of
concentrated trade remedy measures (like steel and metals, chemical and plastics, and
electronic and mechanics) between two or more countries and examine how the structural
211
change of the industry affect the way the exporters and import-competing firms in
different countries lobby their governments and rival with each other, including the filing
and counter filing trade remedy charges against each other.
Second, one can select one industry and draw samples from a larger pool of
countries to compare how their business scale affects their internal collaboration and
collaboration with the government in handling foreign trade remedy charges. In addition,
the research scope can also be extended to how within the same industry exporters and
import-competing manufacturers compete with each other by using trade remedy
measures and how their ability to do so is affected by their respective industrial structure.
Finally, one may apply the framework of this dissertation to explain the different
WTO litigation records between East Asia countries and Latin American countries. While
the role of the government in East Asia is referred to as developmental state, the role of
the government in Latin America is often referred to as fragmented state. As the survey in
Chapter One shows, a clear contrast exists between these two regions in terms of using
WTO dispute settlement in general and in terms of using WTO dispute settlement against
the neighboring countries. It is therefore interesting to examine how government-business
collaboration in these two regions affect the way government decides on whether and
how to use the WTO dispute settlement system and why the former has been reluctant
than the latter to embrace litigious trade policy.

212
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227
APPENDIX
Country WTO AD GDP
export
% GDP
import
% GDP trade balance
GDP per
capita
Antigua and
Barbuda 1 0 793.17 66.07 79.29 -142047929.27 9885.00
Argentina 15 31 242671.01 17.93 14.62 -468330982.80 6476.60
Australia 7 23 569907.41 19.21 20.42 -27113447020.21 28382.67
Bangladesh 1 2 54693.57 15.27 21.72 226508356.93 371.27
Bolivia 0 0 9883.74 27.73 29.53 178367863.93 1123.40
Botswana 0 0 8043.70 47.73 38.09 700538261.64 4479.60
Brazil 25 108 891795.45 11.53 11.34 -12906811429.60 4944.73
Bulgaria 0 14 23412.72 55.50 64.55 -2976897293.57 3005.93
Cambodia 0 0 7981.82 65.50 73.16 -458054599.40 558.33
Cameroon 0 0 13912.80 39.62 21.18 -341452573.80 814.87
Canada 33 36 921637.49 22.33 36.05 10843463652.20 28967.93
Chile 10 27 101789.34 35.73 31.38 304785648.53 6382.80
China 7 761 2705359.22 31.89 26.93 172422894934.25 2063.33
Colombia 5 5 130359.86 16.53 20.47 -3029529953.27 3118.07
Congo,
Republic of 5 0 4622.92 77.53 58.44 -114177762.92 1384.80
Costa Rica 5 2 18616.60 45.20 48.29 -893645347.14 4496.87
Cote d'Ivoire 0 0 14790.05 44.73 36.03 152201190.67 808.47
Croatia 0 6 42960.62 42.50 48.77 -2694177664.80 9683.00
Czech
Republic 1 19 102593.03 63.73 64.21 -3196165034.53 9944.40
Dominican
Rep. 0 2 27942.99 33.47 39.72 -721910714.29 3016.87
Ecuador 3 3 31008.22 29.43 30.05 83060235.77 2471.07
Egypt 0 12 100510.00 22.87 28.03 130440000.00 1354.07
El Salvador 0 2 15193.83 25.60 41.70 -513762889.14 2529.93
Estonia 0 4 12846.88 75.09 80.57 -1211050686.55 9532.27
European
Union 82 72 8810948176.70 35.71 34.03 25537614326.67 27745.33
Gabon 0 0 7230.04 59.80 34.24 659931953.36 5498.33
Georgia 0 1 6664.74 29.40 49.12 -950218215.90 1519.60
Ghana 0 0 9270.03 38.60 58.05 -840790905.87 441.80
Guatemala 8 4 23855.67 22.73 34.34 -1066904280.80 1967.67
Guyana 0 0 741.44 83.13 105.42 -86887500.00 974.93
Honduras 7 1 8300.41 49.87 65.94 -545590073.21 1241.13
Hong Kong 1 28 173127211.59 162.70 157.18 12692024695.58 25897.07
Hungary 5 15 82013.83 60.93 66.49 -5019136525.80 8101.47
India 19 145 688764.27 15.93 18.07 -5582100801.29 642.53
Indonesia 5 156 268458.11 32.27 28.48 3718953525.60 1249.67
Israel 0 10 132069276.44 35.80 37.90 412560000.00 20039.00
Jamaica 0 0 9999.72 43.00 55.98 -853015497.43 3814.93
228
Japan 14 155 4475375591.16 12.08 10.74 132053517746.13 35227.60
Jordan 0 1 13711.57 49.60 78.70 -857354979.30 2511.30
Kenya 0 0 17329.57 25.07 33.59 -981448798.79 506.40
Korea 14 264 664753269.94 38.00 35.72 10237862779.33 13979.73
Kuwait 0 1 57734880.44 54.79 34.77 19064493364.47 23961.86
Kyrgyz
Republic 0 0 2528.40 42.50 61.47 -169390918.18 492.33
Latvia 0 7 16589.48 42.73 54.83 -1805336363.64 7227.09
Lithuania 0 10 27441.44 54.63 62.86 -2130436240.00 8083.89
Macedonia 0 0 5300.82 46.00 66.34 -384568388.17 3424.14
Malaysia 1 97 123777.49 110.29 94.50 12060933942.21 5032.40
Mauritius 0 0 1771.75 34.00 64.06 59616653.50 625.47
Mexico 21 47 668541.77 28.67 29.78 -9553257013.40 6601.07
Morocco 0 0 3331.13 29.47 35.41 -210192003.20 1726.27
Moldova 0 4 52323.79 47.56 69.57 -326486666.67 929.00
Namibia 0 0 5473007.14 42.73 49.64 268184008.93 2812.73
New
Zealand 7 11 83496268.39 30.15 26.00 -5116693412.07 20686.47
Nicaragua 1 1 4417701.46 24.77 44.39 -833121535.29 836.80
Nigeria 0 1 85087151.73 41.87 32.80 12362553190.20 611.33
Norway 4 6 243418681.26 42.71 28.11 32156708959.13 52879.20
Oman 0 2 30666580.23 55.44 35.35 3152655627.78 11694.22
Pakistan 3 6 94891528.62 15.27 18.97 -2754739557.07 635.87
Panama 5 0 15044338.46 72.85 70.06 -824406662.69 4754.62
Paraguay 0 2 8854193.43 47.00 54.33 -115825879.67 1574.67
Peru 3 4 73808572.65 19.27 19.22 -1348948514.33 2728.00
Philippines 5 11 97301615.23 46.07 49.88 846266666.67 1185.20
Poland 3 6 256833961.35 30.93 33.91 -8826200000.00 6710.93
Romania 0 36 79591861.84 31.07 39.04 -6712755333.33 3656.33
Singapore 1 45 115340801.76 215.00 191.41 20028281230.21 27163.13
South Africa 0 58 187847660.90 27.93 27.28 -6063490612.07 4129.40
Sri Lanka 1 4 21995947.53 33.20 41.88 -833275935.20 1135.27
Swaziland 0 0 2005068.52 77.60 87.90 -32191175.00 1824.87
Switzerland 4 4 328266961.87 44.46 38.35 32158553200.07 44868.86
Taiwan 3 198 34174750.00 48.00 42.10 25092500000.00 14686.50
Thailand 13 150 171431097.93 62.71 58.06 3620306815.00 2664.40
Trinidad &
Tobago 0 3 12139867.96 57.07 43.08 1466902648.31 9237.73
Tunisia 0 0 25778847.24 47.40 50.37 -728556782.00 2622.67
Turkey 2 45 363905704.72 22.67 25.02 -12245466666.67 5206.27
Ukraine 1 63 146768794.77 46.50 49.86 -7282000000.00 3179.50
United
States 96 205 10853153333.3 10.77 14.29 -448529596240.00 37501.67
Uruguay 1 4 21640058.55 23.00 23.95 -267380464.07 6563.53
Venezuela 1 18 142771396.89 29.73 20.05 11778533333.33 5492.47
Viet Nam 1 26 84505004.83 74.67 87.91 -8829555000.00 979.00
Zimbabwe 0 2 6080221.56 35.73 39.57 0.00 493.60

229
Code:

WTO: The number of filing WTO complaint from 1995 to 2010
AD: The number of being targeted by antidumping measures from 1995 to 2010
GDP: Value of general domestic production (GDP) (1000 $USD) (2010)
Export%GDP: Value of export / GDP (2010)
Import%GDP: Value of import / GDP (2010)
Trade balance: Value of trade balance (2010)
GDP per capital: GDP per capital (2010)

Source: Data of The World Trade Organization, ‘Dispute Settlement: disputes by
country/territory,’ http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm
Retrieved on 15 May 2011; ‘Antidumping Statistics,’
http://www.wto.org/english/tratop_e/adp_e/adp_e.htm Retrieved November 2, 2011; and
Data of the World Bank, ‘Indicators,’ http://data.worldbank.org/indicator Retrieved on 4 April
2011.

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Creator Liao, Jessica Chia-yueh (author)

Core Title Trade and legalization in East Asia: government-business collaboration in trade dispute settlement

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Publication Date 04/12/2015

Defense Date 08/16/2013

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