WTO jurisprudence on what constitutes a ‘public body’ has provoked one of the most controversial debates on the legitimacy and integrity of the WTO dispute settlement system and the WTO in general. Dispute settlement panels and the Appellate Body disagree on the interpretation and application of the public body concept, especially when applied to Chinese SOEs. In fact, the interpretation of ‘public body’ in the WTO Agreement on Subsidies and Countervailing Measures tackles a more fundamental question of whether the WTO system can handle the state capitalism of China and other non‐market economies within the framework of global trade rules that are primarily designed to deal with free market economies. The fate of the WTO system critically hinges on how legal interpretation of ‘public body’ can address structural differences of members’ economic systems. Addressing this challenge requires WTO members to implement long overdue legal and institutional reforms.
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