US, China Both Claim Victory In WTO Steel Dispute

Both the Chinese Ministry of Commerce (MOFCOM) and the United States Trade Representative (USTR) have claimed success in the various findings of a World Trade Organization (WTO) dispute settlement panel, regarding China’s imposition of anti-dumping and countervailing import duties on grain-oriented flat-rolled electrical steel (GOES) from the United States.

On September 15, 2010, the US requested consultations with China with respect to measures imposing countervailing duties and anti-dumping duties on GOES from the US. After consultations failed to resolve the matter, the WTO established the panel in March 2011, which reported its findings on June 15, 2012.

The subsidies that China determined confer a benefit to US producers of GOES are the “Buy America” provisions of the American Recovery and Reinvestment Act of 2009 and also state government procurement laws, but the US alleged that China appears to be acting inconsistently with its obligations under the Subsidies and Countervailing Measures (SCM) Agreement, and Anti-Dumping Agreement.

In addition, the US also challenged the manner in which China conducted its investigation, alleging that it violated numerous procedural and due process obligations, impairing the ability of the US companies to defend their interests. The US also alleged that China’s finding of injury to its domestic industry was unsupported by the evidence on the record, as was China’s calculation of the subsidy rates for US companies.

China was found to have failed to provide an adequate explanation of its conclusions; to disclose essential facts underlying its conclusions; and to examine objectively the evidence on the record. According to the US Trade Representative Ron Kirk, the panel’s ruling is also notable as it confirms that China must do more to meet its transparency and due process commitments, and that it carries the potential to strengthen future challenges to China’s trade remedy tactics.

“The panel upheld our claims that China’s duties on US exports of steel products failed to comply with many WTO rules,” Kirk confirmed. “This decision sends another clear signal to China that it must do more to fulfill its WTO commitments, and that it will be held accountable to play by WTO rules."

However, MOFCOM was more sanguine in its assessment of the panel’s many rulings. While it will look at the rulings against it, and reserves the right to appeal, it welcomed the findings that support China’s claims, including its acceptance that China acted consistently with the WTO rules regarding the use of "facts available" to calculate subsidy rates and the disclosure of the data and calculations it used to arrive at the dumping margins.

Furthermore, the panel also rejected the US claim that MOFCOM did not adequately explain, in either the preliminary or final determinations, why the exclusion of foreign producers from the competitive bidding process under US government procurement statutes led to the conclusion that the resulting prices were not market prices.

June 19, 2012

Source: Tax News