WTO Sides With China Over US Double Duties

The World Trade Organization (WTO), in a surprise decision, has upheld China’s appeal that the United States could not apply both antidumping (AD) and countervailing duty (CVD) measures to a range of Chinese imports.

China had initiated a WTO dispute settlement proceeding against the US in September 2008. It challenged AD and CVD measures imposed by the US Department of Commerce, in 2007, 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 (anti-subsidy) CVDs on the same products are inconsistent with WTO rules.

In October 2010, a WTO panel rejected nearly all of China’s claims. China then 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 the concurrent application of AD duties and CVDs on the same products was not inconsistent with WTO rules.

AD duties are meant to punish the selling of goods below cost in a foreign country, while CVDs should compensate for government subsidies in the production of the goods in question, such as grants and low-interest loans. With regard to the latter, the Appellate Body also reversed the panel’s interpretation of the term “public body” and found that the US’s determination that certain Chinese state-owned enterprises are “public bodies” that provide subsidies was inconsistent with the WTO’s agreement on subsidies and countervailing measures.

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

However, the USTR, Ron Kirk, did issue a statement that he is “deeply troubled by this report. 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.” It has been pointed out that the US has put together many other cases where AD duties and CVDs are imposed on the same basis and methodology.

From its viewpoint, China’s Ministry of Commerce is reported to have welcomed the ruling that establishes that the US may not continue in the methods by which it calculates and imposes CVDs on imports from China.

March 15^th, 2011

Source: tax-news.com