The development of the rule of law in China is a matter of critical importance to its social and economic development. It is also critical to its trading partners, which agreed to China’s accession to the WTO based in part on its commitment to fully implement the rule of law. Under the current leadership, however, China has halted its progress toward the goal established by the prior leadership and enshrined in its WTO commitments. The failure to follow through on its commitment to the rule of law and the reductions in market access generated by the current leadership’s efforts to reassert control of the state sector of China’s economy, have raised serious questions regarding China’s compliance with its WTO commitments. The WTO dispute settlement procedures establish a means for holding China to its commitments. In particular, those procedures allow for complaints not only for outright violations of a member’s commitments but also actions a member takes that “nullify or impair” (i.e., undercut) the benefits its trading partners reasonably expected would accrue from previous commitments. The chapter outlines the basis on which China’s trading partners might pursue such a claim.

Chapter 5 is concerned with Articles 22.6 DSU and 4.10 SCM Agreement – namely, those provisions that allow one Member to bring retaliatory measures against another Member where that other Member fails to bring its measure into compliance with the covered agreement(s). The chapter argues that, although not reflected in current jurisprudence, there should be a need to demonstrate the causal link between a Member’s failure to bring its measure into conformity with a DSB ruling and the level of nullification or impairment incurred (that is, a causal link analysis). The chapter also raises parts of the jurisprudence that would seem to support a non-attribution analysis being used in this context, too. The chapter then puts forward the Non-attribution/Causal Link Analysis as one method for performing these analyses.