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TWN
Info Service on WTO and Trade Issues (Mar22/01) Geneva, 1 Mar (Kanaga Raja) – The WTO Dispute Settlement Body (DSB) on 28 February agreed to establish a dispute panel, at the request of China, to examine anti-dumping measures imposed by Australia on imports of wind towers, deep drawn stainless steel sinks and certain railway wheels from China, as well as countervailing measures imposed on imports of stainless steel sinks from China. This was a second-time request and panel establishment was automatic. Australia had blocked China’s first request for a dispute panel at a meeting of the DSB on 25 January. The European Union, the United States, the Russian Federation, Canada, Brazil, Switzerland, Norway, Singapore, Korea, India, Chinese Taipei and Japan reserved their third party rights to the dispute. OTHER ACTIONS Meanwhile, under a separate agenda item, the United States, for the fifty-first time, blocked a joint proposal by 123 WTO members calling for the start of the selection process to fill seven vacancies on the Appellate Body. (The Philippines became the latest co-sponsor of the joint proposal). The US said that it was still not in a position to agree to the joint proposal, introduced by Mexico on behalf of the 123 WTO members, that called for the simultaneous launch of the selection process to fill the vacancies as soon as possible. According to a Geneva trade official, the US said it is not in a position to support the proposed decision, adding that it continues to have systemic concerns with the Appellate Body. The US said that it believes that Members must undertake fundamental reform if the dispute settlement system is to remain viable and credible, adding that the dispute settlement system can and should support rather than undermine the WTO’s negotiating and monitoring functions. The US said that it looks forward to further discussions with Members on these important issues. According to a Geneva trade official, around 20 delegations, including the EU and Nigeria, on behalf of the African Group, took the floor to again stress the importance of the two-tiered dispute settlement system to the stability and predictability of the multilateral trading system. They said that the current impasse over the Appellate Body was impacting the rights and obligations of the entire membership. They pledged their support to continue the efforts to find a solution that is acceptable to all. Several members highlighted this issue as the top priority in the reform of the WTO and hoped that the upcoming WTO’s 12th Ministerial Conference (MC12) scheduled to be held in mid-June would provide the opportunity for members to move forward towards a solution on this issue. The outgoing chair of the DSB, Ambassador Didier Chambovey from Switzerland, expressed hope that members can find solutions through consensus so as to open the path towards resolving the matter in a collective spirit and finding a solution that is acceptable to all. Meanwhile, several members took the floor under various DSB agenda items to speak on recent events in Ukraine. According to a Geneva trade official, the US, the EU, the United Kingdom, Canada, Norway and Australia spoke at various points in the DSB meeting condemning Russia’s attack against Ukraine, saying that it is a violation of international law and Ukraine’s sovereignty. Ukraine thanked those members for their support and their unity in their response to Russia’s actions. According to a Geneva trade official, Russia said WTO members should refrain from discussing issues and events that are outside the scope of the WTO and which are the focus of other international organizations and diplomatic agencies. At the end of the meeting, members elected Ambassador Athaliah Lesiba Molokomme of Botswana as the new chair of the DSB for this year. She replaces Ambassador Chambovey from Switzerland. CHINA-AUSTRALIA DISPUTE In its communication to the DSB (WT/DS603/2) concerning its dispute with Australia, China said that it held consultations with Australia on 11 August 2021, but these consultations failed to resolve the dispute. Highlighting the measures at issue, China said that with respect to wind towers, by way of notices dated 14 April 2014, the Parliamentary Secretary to the Minister for Industry of Australia imposed final anti-dumping duties in respect of wind towers imported into Australia from China. It said the imposition of the duties was based on the findings and recommendations reported to the Parliamentary Secretary in Anti-Dumping Commission Report No. 221 – Dumping of Wind Towers Exported from the People’s Republic of China and the Republic of Korea (21 March 2014). With respect to stainless steel sinks, China said that by way of notices dated 19 March 2015, the Parliamentary Secretary to the Minister for Industry and Science of Australia imposed final anti-dumping and countervailing duties in respect of stainless steel sinks imported into Australia from China. It said the imposition of the duties was based on the findings and recommendations reported to the Parliamentary Secretary in Anti-Dumping Commission Report No. 238 – Alleged Dumping of Deep Drawn Stainless Steel Sinks Exported from the People’s Republic of China and Alleged Subsidisation of Deep Drawn Stainless Steel Sinks (19 February 2015). As for railway wheels, China said by way of notices dated 12 July 2019, the Minister for Industry, Science and Technology of Australia imposed final anti-dumping duties in respect of railway wheels imported into Australia from China. It said the imposition of the duties was based on the findings and recommendations reported to the Minister in Anti-Dumping Commission Report No. 466 – Alleged Dumping of Certain Railway Wheels Exported from the People’s Republic of China and France (1 March 2019). China said the legal claims with respect to the anti-dumping measures relate to each of the measures concerning wind towers, stainless steel sinks and railway wheels. China considers that the anti-dumping measures at issue are inconsistent with Australia’s obligations under the relevant Articles of the covered agreements: 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 in the determination of the margin of dumping, Australia did not use the cost of production of the products concerned in China, nor base the cost of production of the products concerned on the cost of production in China, when China was the country of origin of the products. For example: a. in the case of wind towers, the cost for plate steel and flanges was a non-China cost calculated by reference to information from a previous investigation concerning hot rolled plate steel, and in a related later measure the non-China cost was adjusted by an index based on movements in the Steel Bulletin Board (Platts) benchmark from the original investigation period; b. in the case of stainless steel sinks, the cost for 304 stainless steel cold rolled coil was calculated by reference to MEPS (International) Ltd-based average price using monthly reported MEPS North American and European prices (excluding the Asian price), and in a related later measure by reference to an average price of grade 304 stainless steel cold rolled coil for North America and Europe published by Steel Business Briefing Ltd; c. in the case of railway wheels, the cost for steel billet was calculated by reference to a steel billet price paid by a French producer of railway wheels adjusted for selling, general and administrative expenses of a third-party company. 2. Articles 2.1, 2.2, 2.2.1 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, because in the determination of domestic sales in the ordinary course of trade for the determination of the margin of dumping in the case of stainless steel sinks, Australia did not use the cost of production of the products concerned in China, being the country of origin of the products. Instead, the cost for 304 stainless steel cold rolled coil was calculated by reference to MEPS (International) Ltd- based average price using monthly reported MEPS North American and European prices (excluding the Asian price), and in a related later measure by reference to an average price of grade 304 stainless steel cold rolled coil for North America and Europe published by Steel Business Briefing Ltd. 3. Articles 2.1, 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, because in the determination of normal value, Australia: a. failed to determine whether the records kept by the exporters reasonably reflected the costs of production associated with the production of the products concerned before determining not to calculate the exporters’ costs on the basis of their records; b. wrongly determined that the costs of the exporters should not be calculated on the basis of their records, where those records were kept in accordance with the generally accepted accounting principles of China and reasonably reflected the costs of production associated with the production of the products concerned. 4. Articles 2.1, 2.2, 2.2.1 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 because, in the case of stainless steel sinks, in treating the exporters’ sales of like products in the domestic market as not being in the ordinary course of trade, Australia: (a) failed to determine whether the records kept by the exporters reasonably reflected the costs of production associated with the production of the products concerned before determining not to calculate the exporters’ costs on the basis of their records; (b) wrongly determined that the costs of the exporters should not be calculated on the basis of their records, where those records were kept in accordance with the generally accepted accounting principles of China and reasonably reflected the costs of production associated with the production of the products concerned. 5. 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 properly determine (a) whether the exporters’ costs should be calculated on the basis of their records; and (b) the exporters’ costs of production; when (c) in the case of the determinations relating to wind towers, Australia considered and used a plate steel input cost difference to ascribe a higher cost of that input to the exporter, where the cost difference was not a cost difference in the country of origin and was not based on the records kept by the exporter; (d) in the case of the determination relating to railway wheels, Australia considered and used a cost of an input, being a purchase cost of steel billet, where the exporter did not have such a cost in its financial records because steel billet was self-made by the exporter from raw materials including iron ore and coking coal. 6. Article 2.4 of the Anti-Dumping Agreement, because Australia: a. used an item of cost in the calculation of the normal value for exporters under investigation that was different to the cost of production in either and both the country of origin and their records but then failed to make, or in the alternative failed to consider the requirement to make, a due allowance to ensure a fair comparison between the export price and the normal value for the effect of that cost difference on price comparability; b. in the case of stainless steel sinks: (i) made a due allowance for taxation to an extent that did not exist; (ii) for one exporter, in one instance, made a due allowance for accessories that included an amount for the exporter’s profit on its domestic sales of the stainless steel sinks concerned where the accessories were produced by the exporter, but did not include an amount for the exporter’s profit on its domestic sales of the stainless steel sinks concerned where the accessories were purchased by the exporter; and, in another instance, failed to make a due allowance based on the actual costs of accessories of the specific products as reported by the exporter; (iii) for another exporter, made a due allowance for accessories where the amount of the due allowance was determined by comparing the cost of two export models, instead of by comparing the cost of the export model and its comparable domestic model. 7. Articles 2.1, 2.2 and 2.2.2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, because: a. in the cases of wind towers and stainless steel sinks, Australia failed to determine the amount for profits based on actual data pertaining to production and sales of the product concerned in the ordinary course of trade by the exporters under investigation; b. in the case of railway wheels, Australia failed to determine the amount for profits on the basis of the actual amounts incurred and realized by the exporter under investigation in respect of production and sales in the domestic market of the country of origin of the same general category of products; c. in the case of wind towers, Australia considered the products that were destined for consumption in the exporting country to be like products for the purposes of calculating the amount for profits, but not to be like products for the purposes of considering whether there were sales of like products in the domestic market. In so doing, Australia either: (i) improperly determined that the exporter’s normal value could not be determined under Article 2.1 due to a lack of domestic sales of like products; or (ii) improperly determined the amount for profit on the basis that there were no domestic sales of like goods for normal value purposes under Articles 2.2 and 2.2.2. 8. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994, because the amount of the anti- dumping duties imposed by Australia exceeds any margins of dumping that may have been properly established under Article 2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994. China said the legal claims with respect to the countervailing measures relate to the measures concerning stainless steel sinks, and only with regard to the alleged Program 1 – Raw Materials Provided by the Government at Less than Fair Market Value. China considers that the countervailing measures at issue are inconsistent with Australia’s obligations under the relevant Articles of the covered agreements: 1. Article 1.1(a)(1) of the SCM Agreement, because Australia incorrectly determined that a certain State-invested enterprise (SIE) was a “public body” within the meaning of that Article, based on an erroneous interpretation of this term and/or in the absence of any evidence or any sufficient evidence that the enterprise possessed, exercised or was vested with governmental authority. 2. Article 1.1(b) of the SCM Agreement, because Australia failed to determine, or improperly determined, that the alleged provision of goods conferred a “benefit” to the recipient, in circumstances where the recipient was not or was not shown to be placed in a more advantageous position than it would have been in the absence of the alleged financial contribution. 3. Article 14(d) of the SCM Agreement, because Australia wrongly determined that the alleged provision of cold rolled stainless steel coil was made for less than adequate remuneration and failed to determine the adequacy of remuneration for the cold rolled stainless steel coil in relation to prevailing market conditions in the country of alleged provision. 4. Articles 1.2 and 2.1(c) of the SCM Agreement, because Australia failed to make a proper determination that the alleged provision of goods for less than adequate remuneration was specific to an enterprise or industry or group of enterprises or industries and did not clearly substantiate its determination on the basis of positive evidence. This includes, inter alia, Australia’s: (a) failure to properly consider the existence or duration of a “subsidy programme”, pre-dominant use by certain enterprises, whether disproportionately large amounts of the alleged subsidy were granted to certain enterprises, and the manner in which the alleged subsidy was granted; and (b) failure to account for the diversification of economic activities. 5. Articles 11.1, 11.2 and 11.3 of the SCM Agreement, because Australia initiated the countervailing investigation without sufficient evidence of the existence of the alleged program with regard to the existence, amount and the nature of the subsidy in question, and without proper review of the accuracy and adequacy of the evidence provided in the application. The measures at issue appear to nullify or impair the benefits accruing to China directly or indirectly under these agreements, said China.
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