United States Prevails in WTO Countervailing Duty Dispute with China
Washington, D.C. – Today United States Trade Representative Ron Kirk announced that a World Trade Organization (WTO) dispute settlement panel found in favor of the United States in a dispute brought by China concerning antidumping (AD) and countervailing duty (CVD) measures applied by the U.S. Department of Commerce to a range of Chinese imports. The panel upheld the right of the United States to impose both antidumping duties – which respond to unfair pricing practices – and countervailing duties – which respond to government subsidies – on dumped and subsidized products from non-market economies such as China. China also challenged several other substantive and procedural aspects of Commerce’s CVD decisions, and the panel found in favor of the United States on the vast majority of these issues.
“This is a significant win for American workers and businesses affected by unfairly traded imports,” said Ambassador Kirk. “We are pleased that the panel recognized that the concurrent application of AD and CVD duties on subsidized Chinese goods to level the playing field for U.S. companies and workers is fully consistent with our WTO obligations. This case makes clear that the Obama Administration, including USTR and our colleagues at the Department of Commerce, will vigorously defend the application of our trade remedy laws.”
In September 2008, China initiated a WTO dispute settlement proceeding against the United States concerning AD and CVD measures on circular welded pipe (CWP), certain new pneumatic off-the-road tires (OTR), light-walled rectangular pipe and tube (LWR), and laminated woven sacks (LWS). China challenged the United States’ imposition of CVDs on unfairly subsidized products from non-market economies such as China, while also applying a non-market economy methodology in the AD investigations concerning the same products. In another challenge, China contested Commerce’s determination that certain Chinese state-owned enterprises (SOEs) and state-owned commercial banks (SOCBs) are “public bodies” that provide subsidies. China also contested Commerce’s choice of benchmarks to find the existence of a “benefit” and Commerce’s finding that certain subsidies were “specific” to a particular industry or region. In addition, China challenged procedural aspects of the determinations, including the use of “facts available” on the basis of shortcomings in information provided by the Chinese respondents and the time to respond to questionnaires issued by Commerce.
The WTO established a panel in January 2009 to hear this dispute, and the panel held meetings with the parties in July and November 2009.
The panel found in favor of the United States with respect to the vast majority of China’s claims. Most notably, the panel found in favor of the United States with respect to China’s challenges to:
• Commerce’s use of its non-market economy AD methodology to calculate and impose AD duties concurrently with the imposition of CVDs on the same Chinese imports;
• Commerce’s finding that the SOEs and SOCBs at issue are public bodies that provide subsidies;
• Commerce’s finding that lending by SOCBs in the OTR investigation was specific;
• Commerce’s decision not to perform a pass-through analysis of subsidies or to “offset” the “positive” and “negative” amounts of subsidies found in the OTR investigation;
• Commerce’s choice of benchmarks for certain inputs – including benchmarks outside of China – in the CWP, LWR, and LWS investigations;
• Commerce’s choice of benchmarks to calculate the benefit from government-provided land-use rights in China in the LWS and OTR investigations;
• Commerce’s choice of interest rate benchmarks to calculate the benefit from loans from SOCBs in the CWP, LWS and OTR investigations; and
• The amount of time that Commerce provides parties to respond to questionnaires.
The panel found in favor of China with respect to China’s challenges to:
• Commerce’s regional specificity determination regarding government land-use rights in the LWS investigation;
• Commerce’s calculation of the existence and amount of benefit from the purchase of SOE-produced inputs and the benefit of certain loans from SOCBs in the OTR investigation; and
• Commerce’s use of “facts available” to determine the amount of an SOE-produced input purchased from trading company suppliers in the LWR and CWP investigations.
Both sides have the right to appeal the decision to the WTO Appellate Body within 60 days.