Skip to Content

The United States Challenges China's Non-Compliance In WTO Steel Dispute

Washington, D.C. - Today, U.S. Trade Representative Michael Froman announced that the United States is requesting that China enter into consultations regarding China’s claim that it has brought its duties on U.S. exports of grain oriented flat-rolled electrical steel (GOES) into compliance with WTO rules. AK Steel Corporation, based in Ohio, and Allegheny Ludlum, based in Pennsylvania, manufacture GOES. China’s actions cut off more than $250 million in exports of this high-tech steel product, and in 2012 the United States won a dispute at the WTO that China broke WTO rules with its imposition of antidumping and countervailing duties on GOES. The United States continues to pursue this dispute to ensure that China follows through on its obligations under the ruling and does not further harm U.S. exports, and the American workers and firms that make them, by abusing trade remedies. This is the first time the United States has initiated a proceeding in the WTO to challenge a claim by China that it has complied in a WTO dispute.

“Supporting American jobs is our number one job. And to ensure that Americans see the full benefit of the rules and market access we have negotiated in our international trade agreements, the President put enforcement of America’s rights in the global trading system on a par with opening markets for U.S. exports,” said Ambassador Froman. “The WTO found that China’s duties are inconsistent with WTO rules. We were right, and China was wrong. Unfortunately, it appears that China has not corrected those inconsistencies. Today’s action shows that when the United States steps up to the plate on trade enforcement, we will follow through.”

On November 16, 2012, the WTO adopted the panel and Appellate Body reports in the China – GOES dispute, which concluded that China imposed duties on GOES from the United States in breach of both procedural and substantive WTO rules. In its efforts to comply with the WTO’s ruling, on July 31, 2013, China issued a re-determination of duties on GOES from the United States. In its re-determination, China has continued to impose antidumping and countervailing duties on GOES from the United States. Since July 31, 2013, the United States has engaged with U.S. stakeholders to review the re-determination and considers that, in continuing to impose duties on GOES from the United States, China has failed to bring its measures into conformity with WTO rules.

BACKGROUND

GOES is a high-tech, high-value magnetic specialty steel that is used primarily by the power generating industry in transformers, rectifiers, reactors, and large electric machines. AK Steel Corporation, based in Ohio, and Allegheny Ludlum, based in Pennsylvania, manufacture GOES. On April 10, 2010, China imposed antidumping (AD) and countervailing duties (CVDs) on GOES from the United States. On September 15, 2010, the United States initiated dispute settlement proceedings challenging China’s imposition of these duties.

The WTO panel found in favor of the United States in a report circulated in June 2012. The Panel found that China breached several procedural and due process obligations in conducting its AD and CVD investigations. In addition, the Panel found numerous defects in China’s determination that U.S. exports caused adverse price effects in the Chinese market. The Panel also found that China made unsupported findings that U.S. exports caused injury to China’s domestic industry.

In October 2012, the Appellate Body upheld the Panel’s findings. In particular, the Appellate Body upheld the Panel’s findings of defects in China’s determination that U.S. exports caused adverse price effects in the Chinese market. The Appellate Body also upheld Panel findings that China failed to disclose essential facts, and failed to explain its determination. Notably, China did not appeal Panel findings that China acted in a manner inconsistent with WTO rules in finding that U.S. exports caused injury to China’s domestic injury.

The WTO recommended that China bring its measures into conformity with WTO rules. An arbitrator determined July 31, 2013, as the deadline for China’s compliance efforts in this dispute. On that date, China issued a re-determination based on a review of the existing evidence and information in the primary AD/CVD investigations at issue. The re-determination continued the imposition of AD/CVD duties on imports of GOES from the United States. As in its original determination, in the re-determination, China found that U.S. exports caused adverse price effects in the Chinese market, and that U.S. exports caused material injury to the domestic industry.

Today, the United States is seeking consultations with China as a first step in challenging China’s compliance in the China – GOES dispute. The United States considers that China’s findings regarding adverse price effects in the Chinese market and material injury to its domestic industry do not comply with the WTO’s rulings and recommendations.

 

For a complete transcript of Ambassasdor Froman's remarks, please click here