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WTO Again Strikes Down “Retaliatory” Chinese AD/CV Duties on U.S. Exports

Tuesday, May 27, 2014
Sandler, Travis & Rosenberg Trade Report

The World Trade Organization has upheld “nearly all U.S. claims” in a case against Chinese antidumping and countervailing duties on U.S.-made cars and sport-utility vehicles, the Office of the U.S. Trade Representative announced May 23. A USTR press release notes that while China announced the termination of these duties in December 2013, the U.S. pursued this case because “the conduct and actions being challenged in this dispute are representative of a continuing pattern of disregard for WTO rules by China’s investigating authority.”

USTR states that the AD/CV duties ranged as high as 21.5% and in 2013 affected about 40% of U.S. auto exports to China, which has become the second-largest export market for U.S. automakers after Canada. The U.S. alleged that China imposed the duties in retaliation for U.S. safeguard measures against Chinese tires.

According to USTR, the WTO found that China breached its WTO obligations by (1) improperly determining that U.S. exports were causing injury to the domestic Chinese industry, (2) improperly analyzing the effects of U.S. exports on prices in the Chinese market, (3) calculating the “all others” dumping margin and subsidy rates for unknown U.S. exporters without a factual basis, (4) failing to disclose essential facts to U.S. companies, including how their dumping margins were calculated, and (5) failing to provide non-confidential summaries of Chinese submissions containing confidential information. However, the WTO rejected U.S. claims that (a) China’s definition of the domestic industry was inconsistent with WTO rules and (b) China’s public notices failed to disclose the essential facts and findings and conclusions reached on all issues of fact and law considered material in relation to the determination of the residual duty rates.

“This is the third time that the United States has prevailed in a WTO dispute challenging China’s unjustified use of trade remedies,” said USTR Mike Froman, following similar cases involving specialty steel products and chicken broiler products. “Each time, a WTO panel of experts has made clear that China had no basis whatsoever for imposing duties on American goods.” Commerce Secretary Penny Pritzker added that the U.S. “conducts antidumping and countervailing duty proceedings in an open, transparent and fair manner and we expect the same from our trading partners.”

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