TWN Info Service on WTO and Trade Issues (Oct12/05)
10 October 2012
Third World Network

Panel to examine US duties on certain Chinese products
Published in SUNS #7449 dated 2 October 2012

Geneva, 1 Oct (Kanaga Raja) -- The Dispute Settlement Body (DSB) of the World Trade Organisation (WTO) on 28 September agreed to establish a panel, at the request of China, to examine countervailing (CV) duty measures imposed by the United States on a wide range of products from China.

This was a second-time request and panel establishment was automatic.

The European Union, Japan, India, Turkey, Norway, Vietnam, Australia, the Russian Federation, Canada, Brazil and Korea reserved their third party rights to the dispute.

In its communication to the DSB, China said that the dispute concerned the preliminary and final CV duty measures issued by the United States Department of Commerce (the USDOC) on thermal paper, pressure pipe, line pipe, citric acid, lawn groomers, kitchen shelving, oil country tubular goods, wire strand, steel grating, wire decking, magnesia bricks, seamless pipe, print graphics, drill pipe, aluminium extrusions, wood flooring, steel wheels, steel wire, steel cylinders, solar panels, wind towers, and steel sinks (the products were listed in Appendix 1 to its request for panel establishment).

China said that the measures include the determination by the USDOC to initiate the identified countervailing duty investigations, the conduct of those investigations, any preliminary or final countervailing duty determinations issued in those investigations, any definitive countervailing duties imposed as a result of those investigations, as well as any notices, annexes, decision memoranda, orders, amendments, or other instruments issued by the United States in connection with the CV duty measures identified in Appendix 1.

The measures at issue also include the "rebuttable presumption" established and applied by the USDOC, under which the USDOC considers majority government ownership of an enterprise sufficient to determine that an enterprise is a "public body" within the meaning of Article 1.1 of the SCM (Subsidies and Countervailing Measures) Agreement, unless a party is able to demonstrate that majority government ownership does not result in "control" of the enterprise.

China considered that the countervailing duty measures are inconsistent with the obligations of the United States under, inter alia, Article VI of the GATT 1994, Articles 1, 2, 10, 11, 12, 14, and 32 of the SCM Agreement, and Article 15 of the Protocol on the Accession of the People's Republic of China.

It further considered that the measures nullify and impair benefits accruing to China under the GATT 1994, the SCM Agreement, and the Protocol of Accession.

In its statement at the DSB, the US said that the WTO Agreements permit Members to levy a countervailing duty in order to offset injurious subsidies bestowed by another Member on the manufacture, production, or export of goods in or from that other Member's jurisdiction.

With respect to the CV duty proceedings at issue in this dispute, the US said that it conducted the proceedings transparently and with all the procedural safeguards provided for under the WTO Agreement.

Voicing disappointment that China has decided to request a panel on this matter, the US said that it will defend its use of countervailing duties which are necessary to counteract the injury caused by China's subsidies.

In its statement at the DSB, China said that although some of these measures at issue were adopted after the issuance of the Appellate Body report of a previous dispute (DS379), in which the Appellate Body clearly ruled that a similar set of measures are WTO-inconsistent, it regretted that the USDOC did not modify its conduct in the subsequent trade remedy investigations.

Furthermore, the USDOC had made Chinese respondents worse off in some instances. The USDOC's trade remedy practices at issue significantly impaired the legitimate interests of Chinese enterprises under the covered agreements. The measures at issue not only deprived the Chinese enterprises of the procedural fairness envisioned by the WTO rules, but also undermined their substantive rights, it added.

China said it recognises WTO Members' legitimate rights to adopt trade remedy measures, but such rights must be exercised in accordance with WTO rules and not be subject to any form of abuse.

In other matters, China blocked a first-time panel request by the United States over anti-dumping and countervailing duties imposed by China on certain automobiles from the United States.

Panel establishment will be automatic when the request comes up again before the DSB.

In its communication to the DSB, the United States considers that China's measures imposing anti dumping and countervailing duties on certain automobiles from the United States, as set forth in Ministry of Commerce of the People's Republic of China (MOFCOM) Notice No. 20 [2011] and Notice No. 84 [2011], including any and all annexes, are inconsistent with China's obligations under the provisions of the Anti-Dumping (AD) Agreement, SCM Agreement, and GATT 1994.

In its statement at the DSB, the US said that as a result of profound procedural and substantive deficiencies in the autos investigations, China's dumping and subsidy determinations appear to breach a number of its obligations under the GATT 1994, the AD Agreement and the Subsidies Agreement.

"Many of the matters at issue in this dispute should by now be familiar to WTO Members," it said, adding that this is the third time that the US has brought a dispute relating to China's "multiple failures" to apply the appropriate procedures and legal standards in its injury determination, and to adhere to transparency and basic procedural requirements set out in the AD Agreement and the Subsidies Agreement.

This dispute, together with DS414, which concerns anti-dumping and countervailing duties China has imposed on grain-oriented electrical steel, as well as DS427, concerning anti-dumping and countervailing duties China imposed on broiler products, once again suggests systemic issues in the way China is applying its trade remedy laws, the US added.

In its statement, China said that in the investigations concerned, the Chinese Investigating Authority had determined that the imports of the product concerned originating in the US constituted dumping and was benefiting from the US government's subsidisations and that the dumped and subsidised imports had caused material injury to the domestic industry of China.

As a result, an anti-dumping measure and a countervailing measure have been imposed by the Chinese Investigating Authority after investigations. The impositions of the anti-dumping measure and the countervailing measure are consistent with China's obligations under the WTO rules, it added. +