Resource Sovereignty in the WTO Dispute Settlement:
Implications of China – Raw Materials and China – Rare Earths
ABSTRACT: The international law principle of permanent sovereignty over natural resources (PSNR) recognizes that states shall have sovereign rights in exploiting, utilizing and managing natural resources within their territories. For the first time in the history of WTO dispute settlement, this principle has been invoked by China in two recent widely-reported cases, namely China-Raw Materials and China-Rare Earths, to support its argument on GATT Article XX (g) exception. The invocation of this principle has profound implications. It not only involves the unsettled issue of the relationship between general international law and WTO law and its role in WTO dispute settlement, but it also helps demonstrate the need to reconcile the ‘conflicting’ goals of respecting state sovereignty and promoting free trade. The limited role of this principle in these cases also suggests that the ‘pro-trade bias’ in WTO dispute settlement could hinder the development of some resource-exploiting and exporting countries at more fundamental level.