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$85 Million in Retaliation Authorized in WTO Dispute over AD Duties

Tuesday, February 12, 2019
Sandler, Travis & Rosenberg Trade Report

The World Trade Organization has authorized Korea to impose $85 million worth of retaliatory sanctions against the U.S. for its failure to comply with a WTO ruling against the way it calculated antidumping and countervailing duties on large residential washers from Korea. The WTO is also allowing Korea to increase these sanctions each year for inflation.

In March 2016, a WTO dispute settlement panel ruled that the U.S. acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement by, among other things, inconsistently applying the comparison methodology provided in the second sentence of that article and using zeroing when applying that methodology. The panel also determined that the U.S. acted inconsistently with Article 2.1(c) of the Agreement on Subsidies and Countervailing Measures by failing to take account of certain mandatory factors and issuing inconsistent original and remand determinations of disproportionality.

Korea eventually requested WTO authorization for $711 million worth of sanctions in one part of the dispute, but a WTO arbitrator ruled this month that the proper retaliation level is only $84.89 million. However, the arbitrator also devised a formula that Korea may use to determine the level of potential sanctions if the U.S. applies the violative measures to other Korean products in the future.

There has been no indication yet as to which U.S. goods may be subject to higher tariffs in Korea (the likely form of retaliation) or when such action might be taken. According to a Yonhap article, Korea’s Ministry of Trade, Industry, and Energy plans to discuss retaliatory measures with local industry before making a final decision.

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