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USTR Statement Regarding WTO Appellate Body Report in Countervailing Duty Dispute with China

Washington, D.C. – The Office of the United States Trade Representative issued a brief public statement today following the release of the World Trade Organization (WTO) Appellate Body report in a dispute brought by China concerning antidumping (AD) and countervailing duty (CVD) measures applied by the U.S. Department of Commerce (Commerce) to a range of Chinese imports:

“I am deeply troubled by this report,” said United States Trade Representative Ron Kirk. “It appears to be a clear case of overreaching by the Appellate Body. We are reviewing the findings closely in order to understand fully their implications.”

BACKGROUND

China initiated a WTO dispute settlement proceeding against the United States in September 2008. China challenged AD and CVD measures imposed by Commerce on certain new pneumatic off-the-road tires, laminated woven sacks, circular welded pipe, and light-walled rectangular pipe and tube. China argued that the concurrent application of AD duties determined using a non-market economy methodology and CVDs on the same products, as well as a number of determinations Commerce made during its CVD investigations, are inconsistent with WTO rules. In October 2010, a WTO panel rejected nearly all of China’s claims.

China appealed the panel report and asked the WTO Appellate Body to reverse a number of the panel’s findings. The Appellate Body agreed with a number of China’s claims, and reversed the panel’s finding that Commerce’s concurrent application of AD duties determined using a non-market economy methodology and CVDs on the same products was not inconsistent with WTO rules. The Appellate Body also reversed the panel’s interpretation of the term “public body” and found that Commerce’s determination that certain Chinese state-owned enterprises are “public bodies” that provide subsidies was inconsistent with the SCM Agreement. The Appellate Body upheld Commerce’s “public body” determinations with respect to certain state-owned commercial banks. The Appellate Body also upheld Commerce’s use of benchmarks from outside of China to measure the “benefit” of certain subsidies, though the Appellate Body found that the panel failed to properly analyze the benchmark Commerce used to measure the benefit of government-provided loans. Finally, the Appellate Body affirmed Commerce’s determination that certain subsidies were “specific” to a particular industry.

The Office of the United States Trade Representative will continue to review the Appellate Body report and will work with Commerce to determine the appropriate response to the adverse findings. The WTO Dispute Settlement Body is expected to adopt the Appellate Body report and the panel report within the next 30 days.