WTO Sides With US In Steel Duty Dispute With China

The World Trade Organisation's Dispute Settlement Body has adopted a report pertaining to the dispute over anti-dumping duties applied by China on grain oriented flat-rolled electrical steel (GOES) from the United States.

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 electrical machines.

China had imposed anti-dumping and countervailing duties, alleging that American GOES manufacturers were being given subsidies by the US government; in particular the "Buy America" provisions of the American Recovery and Reinvestment Act of 2009 and also state government procurement laws.

In September 2010, the US requested consultations with China with respect to the imposition of the duties on GOES from the US, following a final determination released by the Chinese Ministry of Commerce (MOFCOM) in April that year. In its determination, MOFCOM calculated ad valorem subsidy rates of 11.7% and 12% for the respondent companies, and dumping margins of 7.8% and 19.9%.

A WTO panel was established in March 2011 when negotiations failed, and its findings were published in June. It agreed with the majority of the United States' arguments that China had failed to properly assess the impact of the US measures, and did not adequately communicate what data had been used when calculating margins in its final determination. The panel also agreed China had failed to adequately demonstrate that US dumped and subsidised imports had had a significant price effect, and had caused injury to Chinese exporters.

China brought an appeal to the WTO Appellate Body in July 2012, arguing that the WTO panel's findings had been erroneous. However, the Appellate Body rejected all of MOFCOM's legal arguments in October 2012, finding no basis to reverse the panel's decision in the case.

Welcoming the adoption of the report outlawing the Chinese duties, the United States highlighted that the problems identified in this dispute were also present in other investigations that were also subject to dispute settlement: that China's price effect analysis was flawed, that China had failed to disclose essential facts, and that China failed to explain its determination, in breach of several provisions of the Subsidies and Countervailing Measures Agreement and the Anti-Dumping Agreement.

Despite not agreeing with all the findings of the Appellate Body and the Panel, China said it respected the conclusions and would work towards implementing the findings.

November 25, 2012

Source: Tax News