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World Trade Organization (WTO).

WTO DISPUTE SETTLEMENT PANEL ISSUES MIXED REPORT IN UNITED STATES-CHINA DISPUTE OVER UNITED STATES ANTI-DUMPING AND COUNTERVAILING DUTIES ON CHINESE STEEL PIPES, OFF-ROAD TIRES, RECTANGULAR PIPES AND TUBES AND LAMINATED WOVEN SACKS

A Dispute Settlement Panel [DSP] of the World Trade Organization (WTO) issued its Report in the dispute United States of America--Definitive Anti-Dumping and Countervailing Duties on Certain Products from China (DS379). The dispute began in September 2008 when China requested consultations with the U.S. regarding U.S. anti-dumping (AD) duties and countervailing (CWD) duties on the following Chinese products: (1) circular welded carbon steel pipe (CWP); (2) pneumatic off-the-road tires (OTR); (3) light-walled rectangular pipe and tube (LWR); and (4) laminated woven sacks (LWS).

The consultations failed in November 2008, and China requested the WTO to establish a Panel to resolve the dispute. In particular, China claimed that the investigations and determinations of the U.S. Department of Commerce (DOC) were inconsistent with trading rules.

As for CWP, the DOC had determined that the Chinese government provided hot-rolled steel to producers through state-owned enterprises (SOEs) which resulted in subsidies. Also, the DOC found that private trading companies bought hot-rolled steel from state-owned companies, which resulted in countervailable subsidies. According to the investigation, China also provided subsidies in the form of preferential loans through state-owned commercial banks (SOCBs). The DOC investigations of the other products at issue led to similar results.

The Panel concludes that: (a) in respect of China's claims concerning the DOC's determinations of financial contributions in the countervailing duty investigations at issue, that:

(i) the DOC acted consistently with trading rules in determining--in the relevant investigations--that SOEs and SOCBs constituted "public bodies";

(ii) the DOC acted consistently with trading rules by failing to determine, in the LWR, CWP, and OTR investigations, that trading companies were "entrusted" or "directed" by the government to make financial contributions to producers of the investigated products, in the form of the provision of goods;

(b) in respect of China's claims concerning the DOC's specificity determinations in the countervailing duty investigations at issue, that:

(i) the DOC acted consistently with trading rules by determining in the OTR investigation that lending by SOCBs to the OTR tire industry was de jure specific;

(ii) the DOC acted inconsistently by determining that the government provision of land-use rights, in the LWS investigation, was regionally specific;

(c) in respect of China's claims concerning the DOC's benefit determinations in the countervailing duty investigations at issue, that:

(i) the DOC acted consistently with trading rules by failing to conduct a pass-through analysis in the OTR investigation to determine whether any subsidy benefits received by trading companies selling rubber inputs were passed through to the OTR producers purchasing those inputs;

(ii) the DOC acted inconsistently by failing to ensure in the OTR investigation that the methodology it used to establish the existence and amount of benefit to tire producers from their purchases of SOE-produced inputs from trading companies did not calculate a benefit amount in excess of that conferred by the government provision of those inputs; [...]

(iv) China failed to show that the DOC had acted inconsistently with the obligations of the U.S. by not "offsetting" positive benefit amounts with "negative" benefit amounts, either across different kinds of rubber or across different months of the period of investigation, in the OTR investigation; [...]

(vi) China did not prove that the DOC acted inconsistently with the obligations of the United States by rejecting in-country private prices in China as benchmarks for HRS in the CWP and LWR investigations and for certain polypropylene in the LWS investigation;

(vii) China did not establish that the DOC acted inconsistently with the obligations of the U.S. by rejecting interest rates in China as benchmarks for calculating the benefit from Chinese currency loans from SOCBs, in the CWP, LWS and OTR investigations, or that the benchmarks actually used in respect of the loans were inconsistent with those obligations;

(viii) the DOC acted inconsistently with the obligations of the U.S. by using average annual interest rates as benchmarks for one of the Chinese producer's U.S. dollar-denominated loans from SOCBs in the OTR investigation;

(ix) China did not establish that the DOC acted inconsistently with the obligations of the U.S. by rejecting land-use prices in China as benchmarks for government-provided land-use rights in the LWS and OTR investigations, or that the benchmarks actually used were inconsistent with those obligations; [...]

To the extent that the U.S. has acted inconsistently with certain provisions of the SCM Agreement and of the GATT 1994, it has nullified or impaired benefits accruing to China under these agreements. The U.S. shall bring its measures into conformity with its obligations under those Agreements.

NOTE: The U.S. Trade Representative (USTR) issued a press release that interpreted the Report as a win for the U.S., as the Panel upheld the U.S. right to impose anti-dumping duties (response to unfair prices) and countervailing duties (response to government subsidies). The USTR emphasizes that the Panel found in favor of the U.S. in some respects, such as (a) the USDOC's use of its non-market economy AD methodology to calculate and impose AD duties concurrently with CW duties on the same Chinese products, and (b) the USDOC's finding that SOEs and SOCBs are public bodies that provide subsidies.

CITATION: United States of America--Definitive Anti-Dumping and Countervailing Duties on Certain Products from China (DS379) (22 October 2010). See full Report on WTO website at www.wto. org; U.S. Trade Representative Press Release of August 24, 2010, available at www.ustr.gov.
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Title Annotation:United States-China dispute over anti-dumping and countervailing duties on Chinese products
Publication:International Law Update
Geographic Code:9CHIN
Date:Nov 1, 2010
Words:932
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