|
||
|
TWN
Info Service on WTO and Trade Issues (May25/20) Yerevan, 15 May (D. Ravi Kanth) — China and Canada have separately requested the establishment of dispute panels against each other at the World Trade Organization over a range of issues. China’s request for a panel against Canada (WT/DS627/2) concerns the 100% surtax imposed by Canada on Chinese-made electric vehicles (EVs), a 25% surtax on steel and aluminum products from China, as well as the imposition of surtaxes/tariffs on certain solar products, critical minerals, semiconductors, permanent magnets, and natural graphite from China. In turn, Canada’s request for a panel against China (WT/DS636/2) concerns additional import duties imposed by China on certain Canadian products pursuant to a domestic “antidiscrimination investigation” by the Chinese authorities. Both the panel requests are expected to be taken up at a meeting of the Dispute Settlement Body (DSB) on 23 May 2025. In their separate panel requests, the two countries informed that they failed to amicably resolve their specific concerns through consultations under Article 4 of the Dispute Settlement Understanding (DSU). CHINA’S REQUEST On China’s panel request against Canada, it is common knowledge that Canada’s surtaxes/tariffs on Chinese- made electric vehicles, steel and aluminum products, as well as on solar panels and critical minerals among others had much to do with similar measures and duties imposed by the former Biden administration, said people familiar with the development. As a close partner of the United States, Ottawa sought to show its solidarity with Washington by imposing the same level of duties as the US did on the Chinese products, said people, who asked not to be identified. According to China’s panel request, on 6 September 2024, China requested consultations with Canada to address its punitive duties on Chinese products, and both sides held consultations on 7 April 2025. China informed that the consultations with Canada failed to bring about an amicable solution, forcing Beijing to request for the establishment of a panel to adjudicate on the Canadian surtaxes/ tariffs. In its panel request, China listed several Canadian measures involving surtaxes/tariffs on Chinese products. The measures at issue include, among others: 1. Canada’s imposition of a 100% surtax on Chinese-made EVs, carried out through various actions, announcements and instruments leading up to and culminating in: (a) China Surtax Order (2024): SOR/2024-187; (b) Customs Notice 24-32: China Surtax Order (2024) – Electric vehicles. 2. Canada’s imposition of a 25% surtax on steel and aluminum products imported from China, carried out through various actions, announcements and instruments leading up to and culminating in: (a) China Surtax Order (2024) SOR/2024-187; (b) Order Amending the China Surtax Order (2024): SOR/2024-202; (c) Customs Notice 24-36: China Surtax Order (2024) – Steel and Aluminum. 3. Canada’s decision about the imposition of surtaxes and/or tariffs on certain solar products, critical minerals, semiconductors, permanent magnets and natural graphite imported from China, carried out through various actions, announcements and instruments leading up to and culminating in the official announcement by the Department of Finance Canada in Canada’s 2024 Fall Economic Statement, at pp. 150-151. 4. Any other measures attributable to Canada seeking to impose surtaxes and/or tariffs on products or materials that originate in China. China said that “the measures at issue taken by Canada discriminate against the importation into Canada of China-origin products and materials.” According to China, the Canadian measures “are inconsistent with Canada’s obligations to accord most-favoured nation treatment, and treatment no less favourable than that provided for in Canada’s Schedule of Concessions and Commitments (“Schedule”) annexed to the GATT 1994, to China with respect to the products and materials concerned, and exceed the duties for those products as provided for in that Schedule.” China considers that the Canadian measures at issue, together and individually, are inconsistent with Canada’s obligations under the GATT 1994. In its panel request, Beijing outlined the specific legal provisions of the GATT 1994 that Canada allegedly violated through its measures, including: 1. The measures at issue are inconsistent with Article I:1 of the GATT 1994 because the measures fail to accord “immediately and unconditionally” to China-origin products an “advantage, favour, privilege or immunity” granted by Canada “[w]ith respect to customs duties and charges of any kind imposed on or in connection with” the importation of like products originating in the territories of other Members. The surtaxes and tariffs fail to accord to China-origin products the most-favoured nation treatment to which they are entitled under Article I:1 of the GATT 1994. Whether officially announcing those surtaxes and tariffs with respect to the products and materials concerned or imposing them on importation, Canada discriminates against China-origin products by not according to them an advantage, favour, privilege or immunity granted by Canada to the importation of like products originating in the territories of other Members. The surtaxes and tariffs concerned, being ordinary customs duties for the purposes of Article I:1, apply only to, and are directed specifically at, China-origin products, to the exclusion of like products originating in the territories of other Members, said China. As well, the administrative arrangements associated with the surtaxes and tariffs are “methods of levying… duties and charges” and “rules and formalities” in connection with the importation of China-origin products that are different and additional to those that apply to like products originating in the territories of other Members, with the effect that those China-origin products are treated less favourably than like products originating in the territories of other Members, contrary to Article I:1 of the GATT 1994. 2. The measures at issue are inconsistent with Article II:1(a) of the GATT 1994 to the extent that the measures fail to accord to the China-origin products and materials concerned “treatment no less favourable” than that provided for in Canada’s Schedule annexed to the GATT 1994, and are inconsistent with the exemption of such goods from ordinary customs duties in excess of those set forth and provided in that Schedule under Article II:1(b) of the GATT 1994. (a) With respect to EVs for which Canada has bound its ad valorem tariff rate and which are subject to the surtax, Canada’s bound ad valorem tariff rates are lower than 100%. The surtax of 100% causes the ad valorem rate of duties imposed on China-origin EVs which are subject to the surtax to exceed the bound rate where applicable. (b) With respect to steel products for which Canada has bound its ad valorem tariff rate and which are subject to the surtax, Canada’s bound ad valorem tariff rates are lower than 25%. The surtax of 25% on those steel products causes the ad valorem rate of duties imposed on China-origin steel products subject to that surtax to exceed the bound rate where applicable. (c) With respect to aluminum products for which Canada has bound its ad valorem tariff rate and which are subject to the surtax, Canada’s bound ad valorem tariff rates are lower than 25%. The surtax of 25% causes the ad valorem rate of duties imposed on China-origin aluminum products subject to that surtax to exceed the bound rate where applicable. (d) To the extent that Canada’s officially announced surtaxes and/or tariffs with respect to other China-origin products including certain solar products, critical minerals, semiconductors, permanent magnets, and natural graphite exceed the ad valorem bound rates under Canada’s Schedule, they constitute ordinary duties that are inconsistent with those set forth in that Schedule. Whether officially announcing those surtaxes and tariffs with respect to the products and materials concerned or imposing them on importation, Canada treats the commerce of China less favourably than that provided for by its Schedule. Accordingly, China submits that Canada’s measures at issue, announcing duties in the form of surtaxes with respect to the products and materials concerned and imposing them on importation, are inconsistent with Articles II:1(a) and (b) of the GATT 1994. CANADA’S REQUEST In its panel request, Ottawa said that Canada held consultations with China on 23 April 2025, to amicably resolve the issue of additional import duties imposed by China on certain Canadian products pursuant to a domestic “antidiscrimination investigation” by the Chinese authorities. However, according to Canada, the two sides failed to arrive at an amicable solution. Consequently, Canada sought the establishment of a dispute panel to adjudicate on its concerns over the Chinese measures. Canada said that its “request relates to additional duties announced by China on March 8, 2025, pursuant to an investigation under the Foreign Trade Law of the People’s Republic of China. That investigation, termed an “antidiscrimination investigation”, purported to determine that Canada was discriminating against Chinese products and recommended “countermeasures” in the form of additional import duties.” Canada said the additional duties imposed by China, which “cover a range of agricultural and fishery products and impose an ad valorem import duty of 100% on some products and 25% on others, came into effect on March 20, 2025.” Canada said that China’s antidiscrimination investigation and subsequent imposition of countermeasures on products from Canada “is a unilateral action that flies in the face of the well-established rules for resolving disputes under the multilateral trading system.” It argued that “China’s decision to proceed unilaterally in this manner is in direct contravention of the fundamental obligation on WTO Members to seek recourse to the dispute settlement processes set out in the Understanding on the Settlement of Disputes (DSU) when seeking redress for alleged violations of the covered agreements.” “In addition,” according to Canada, “China’s unilateral actions have deprived the broader WTO Membership of any role in the dispute settlement process and stripped the Dispute Settlement Body of its crucial function of facilitating a satisfactory resolution of the dispute.” Canada said that it considers the measures at issue, operating separately or together, to be inconsistent with China’s obligations under: a. Article 23.1 of the DSU because China has failed to have recourse to, and abide by, the rules and procedures of the DSU, in a situation where it seeks redress of an alleged violation of obligations under a covered agreement; b. Article 23.2(a) of the DSU because China made a unilateral determination of a violation of WTO obligations by Canada, and imposed countermeasures in response to alleged discriminatory treatment by Canada without engaging the dispute settlement processes set out in the DSU and, consequently, in the absence of findings contained in an adopted panel report or arbitration award rendered under the DSU; c. Article 23.2(b) of the DSU, read in conjunction with Article 21 of the DSU, because by unilaterally suspending concessions against Canada, China failed to obtain the authorization of the DSB according to the procedures set out in Article 21.3 of the DSU; d. Article 23.2(c) of the DSU, read in conjunction with Article 22 of the DSU, because by unilaterally suspending concessions on a discriminatory basis against Canada, China failed to follow the procedures set forth in Article 22 of the DSU and to obtain DSB authorization in accordance with those procedures before suspending obligations under a covered agreement in response to the alleged failure of Canada to implement DSB recommendations and rulings; e. Article I:1 of the GATT 1994, because China has applied additional import duties on certain agricultural and fishery products originating in Canada that have not been levied on products originating in the territory of other WTO Members and has thereby failed to extend immediately and unconditionally to Canada any advantage, favour, privilege or immunity granted by China with respect to customs duties and charges of any kind imposed on or in connection with the importation of products originating in the territory of other Members, as well as with respect to the method of levying such duties and charges and the rules and formalities in connection with importation; f. Article II:1(a) of the GATT 1994 because the measures at issue fail to accord to the commerce of Canada treatment that is no less favourable than that provided in China’s Schedule of Concessions that is annexed to GATT 1994; g. Article II:1(b) of the GATT 1994 because China has imposed duties on imports of certain agricultural and fishery products in excess of the duties set forth and provided in China’s Schedule of Concessions and Commitments annexed to the GATT 1994, and has failed to exempt products of Canada subject to the measures at issue from ordinary customs duties in excess of those set forth and provided in China’s Schedule of Concessions and Commitments annexed to the GATT 1994 and from all other duties or charges in excess of those imposed on the date of the GATT 1994 or those directly and mandatorily required to be imposed thereafter by legislation in force in China on that date. Given that both panel requests are first-time submissions, the chances of panels being established at the first instance are unlikely as the two countries could respectively block each other’s panel requests. However, pursuant to the DSU, the establishment of panels will be automatic, if both panel requests come up again at the next meeting of the DSB. +
|
||
