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Imports from China Could Get Revised AD/CV Duty Rates After WTO Decision

Thursday, July 10, 2014
Sandler, Travis & Rosenberg Trade Report

A July 7 ruling by the World Trade Organization’s Appellate Body in a dispute concerning a U.S. trade remedy law and 25 related determinations against imports of Chinese goods favors the U.S. on some points and China on others. The law at issue confirmed the Department of Commerce’s ability to impose countervailing duties on imports from non-market economy countries and was enacted in March 2012 in response to a contrary ruling by the Court of Appeals for the Federal Circuit in GPX Int’l Tire Corp. v. U.S. It applies to all CV proceedings initiated by the DOC on or after Nov. 20, 2006.

The Appellate Body was unable to determine whether the GPX law violates Article X:2 of the WTO Agreement on Subsidies and Countervailable Measures, which prohibits measures that increase a rate of duty or impose a new or more burdensome requirement from being enforced before they are officially published. Previously, a WTO dispute settlement panel determined that the law was enforced before its publication but was not covered by Article X:2 because it did not increase a duty rate levied under an established and uniform practice or impose a new or more burdensome requirement, restriction or prohibition on imports. The Appellate Body reversed that finding, concluding that the panel erred in its evaluation of what constituted “an established and uniform practice.” However, it said there was insufficient evidence in the record (due to an incomplete analysis by the panel) to determine whether GPX changed U.S. CV duty law, thereby effecting a duty increase or imposing a new or more burdensome requirement that would be prohibited under Article X:2, or merely clarified prior applicable law and thus made no such change.

The Appellate Body also left intact a panel decision that could require the U.S. to re-examine 25 AD and CV duty orders on Chinese goods. The panel had agreed with China that the U.S. violated WTO rules by failing to investigate in these proceedings whether the concurrent application of AD duties determined using an NME methodology and CV duties on the same products may have resulted in an overlap of remedies (i.e., double counting). The U.S. did not appeal that decision (noting, among other things, that the GPX law requires such an analysis for all AD/CV proceedings initiated after March 13, 2012), but did claim that this issue was not properly within the panel’s terms of reference. The Appellate Body rejected that argument, meaning the panel’s decision will stand. While U.S. officials said they are still reviewing the effect of this ruling, the end result could be a revision in the duty rates on Chinese goods covered by 25 AD and CV duty orders issued between Nov. 20, 2006, and March 13, 2012.

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