TWN Info Service on WTO and Trade Issues (Jul21/02)
2 July 2021
Third World Network

China initiates dispute over Australian duties on Chinese products
Published in SUNS #9378 dated 1 July 2021

Geneva, 30 Jun (Kanaga Raja) -  China has initiated a dispute at the World Trade Organization over anti-dumping and countervailing duty measures imposed by Australia on imports of wind towers, deep drawn stainless steel sinks and railway wheels from China.

As an initial step, China has sought consultations with Australia. The request was circulated to WTO members on 29 June.

If consultations fail to settle the dispute within 60 days, or if during the 60 days, the consulting parties jointly consider that the consultations have failed, the complaining party may request the establishment of a panel.

In its communication to the DSB (WT/DS603/1), China said the measures at issue include any and all preliminary and final anti-dumping and countervailing duty measures which were issued by the Anti-Dumping Commission of the Department of Industry, Science, Energy and Resources of the Australian Government, the determinations by the Commission to initiate the identified anti-dumping and countervailing duty investigations, the conduct of those investigations, and final anti-dumping and countervailing duty determinations as well as definitive anti-dumping and countervailing duties imposed as a result of those investigations.

China said its request for consultations also concerns subsequent periodic and sunset reviews of the anti-dumping and countervailing duty orders in the proceedings at issue.

According to China's communication to the DSB, the anti-dumping measures on wind towers, deep drawn stainless steel sinks and railway wheels appear to be inconsistent with Australia's obligations under the following provisions of the GATT 1994 and the Anti-Dumping Agreement:

1. Articles 2.1, 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, because Australia did not calculate the costs on the basis of the records kept by the exporters or producers under investigation and because Australia did not properly determine the costs of production;

2. Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of GATT 1994, because in constructing the normal value, Australia did not use the production cost in the country of origin;

3. Articles 2.1, 2.2 and 2.2.1.1 of Anti-Dumping Agreement, because in constructing the normal value, Australia included costs not associated with the production and sale of the product under consideration;

4. Article 2.4 of the Anti-Dumping Agreement, because Australia did not make a fair comparison between the export price and the normal value and because Australia did not make due allowance for differences which affect price comparability;

5. Articles 2.2 and 2.2.2 of the Anti-Dumping Agreement, because Australia did not properly determine the amounts for profits in accordance with the rules established under those articles;

6. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994, because the amount of the anti-dumping duty imposed by Australia exceeds the margin of dumping as established under Article 2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994.

China considers that the conduct of the identified countervailing duty investigation on deep drawn stainless steel sinks, as well as the countervailing duty determinations, orders, and any definitive countervailing duties imposed pursuant thereto, are inconsistent with the obligations of Australia under the SCM (Subsidies and Countervailing Measures) Agreement.

More specifically, China considers the Commission has applied unlawful standards and methodologies for these purposes in determining financial contribution, specificity, and benefit in respect of the alleged provision of inputs for less than adequate remuneration in the proceedings at issue, as detailed below:

1. Article 1.1(a)(1) of the SCM Agreement, because the Commission incorrectly determined, or did not have a sufficient basis to determine financial contribution within the meaning of that provision;

2. Articles 1.1(b) and 14(d) of the SCM Agreement, because the Commission improperly found that the alleged provision of goods for less than adequate remuneration conferred a benefit upon the recipient, and improperly calculated the amount of any benefit allegedly conferred, including, its erroneous findings that prevailing market conditions in China were "distorted" as the basis for rejecting actual transaction prices in China as benchmark;

3. Article 2.1(c) of the SCM Agreement, because the Commission failed to make a proper determination on the basis of positive evidence that the alleged provision of input goods for less than adequate remuneration was specific to an enterprise or industry or group of enterprises or industries;

4. Articles 11.1, 11.2, and 11.3 of the SCM Agreement, because:

(1) the Commission initiated countervailing duty investigations in respect of the alleged provision of inputs for less than adequate remuneration, in the absence of sufficient evidence in the petition to determine the financial contribution within the meaning of Article 1.1(a)(1) of the SCM Agreement, and in the absence of a sufficient review of the petition by the Commission in respect of this allegation;

(2) the Commission initiated countervailing duty investigations in respect of the alleged provision of inputs for less than adequate remuneration, in the absence of sufficient evidence in the petition to support an allegation that any such subsidy would be specific under Article 2.1(c) of the SCM Agreement, and in the absence of a sufficient review of the petition by the Commission in respect of this allegation.

The above-mentioned measures of the Commission appear to nullify or impair, directly or indirectly, the benefits accruing to China under the abovementioned agreements, said China.