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U.S. Countervailing Duties Hit Again in WTO Case Filed by China

Wednesday, July 16, 2014
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative reports that aspects of U.S. countervailing duty policy were again called into question this week in a World Trade Organization case filed by China. In what USTR said was “a broad challenge” against 17 separate CV duty investigations, a WTO dispute settlement panel issued a “mixed result” similar to the one delivered in a separate but also wide-ranging case involving CV duty orders on steel products from India.

According to a USTR press release, China alleged that the U.S. acted inconsistently with the SCM Agreement with respect to the Department of Commerce’s determinations on public bodies, application of facts available, calculations of benchmarks, determinations of specificity, and decisions to initiate investigations. USTR asserts that the WTO panel rejected most of the claims involving the use of facts available, the use of out-of-country benchmarks, aspects of the analysis used to determine whether a subsidy is specific, and the initiation of investigations of particular subsidies. USTR further states that the claims on which China prevailed “mainly involved issues where the WTO panel followed findings made in previous WTO reports.”

Specific findings include the following.

- China brought 48 challenges under Article 12.7 of the SCM Agreement to the DOC’s use of “facts available” when making findings of fact in the face of non-cooperation by respondent companies or China. The panel ruled in favor of the U.S. in 42 of those instances and declined to make findings in the remaining six, determining that those claims were outside its terms of reference.

- China brought claims concerning benchmarks on 12 investigations, and the panel ruled in favor of the U.S. on all 12.

- China brought four claims against the DOC’s determinations that the subsidies at issue in 12 investigations were specific under Article 2.1 of the SCM Agreement but only prevailed on one.

- China brought 20 challenges to the DOC’s initiation of investigations of particular subsidies under Article 11 of the SCM Agreement and the panel found in favor of the U.S. in the challenges related to public bodies and specificity.

- The panel found that the DOC’s determinations in 12 investigations that certain state-owned enterprises were public bodies were inconsistent with Article 1.1(a)(1) of the SCM Agreement.

- China brought seven challenges to the DOC’s findings that certain subsidies were regionally specific under Article 2.2 of the SCM Agreement, and the panel found in favor of China in six of those investigations.

- China brought claims on export restraints in two investigations and the panel found that the U.S. acted inconsistently with WTO rules when it initiated these two investigations without adequate evidence of the existence of a subsidy.

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