WTO Rules Against US CVD Calculations in 17 Cases on Chinese Imports
The U.S. lost its appeal of a 2018 World Trade Organization decision that it had not properly calculated countervailing duties for Chinese pipes, tubular goods, solar panels, aluminum extrusions and other items. China had originally challenged the cases in 2016 -- the cases were brought between 2007 and 2012 (see 1805010071). The earlier ruling held that the U.S. was right to say that Chinese state-owned enterprises count as "public bodies" and therefore their actions can be market distorting. The appeal upheld that element of the case, but also upheld the victories for China. The WTO said that Commerce did not prove specificity in the subsidies for the products, and it also could not show how the SOE inputs distorted market prices. It was not allowed to use other countries' prices as reference points to prove market distortions, the WTO said, unless it had specific evidence that government interference in the market warranted that. The appeal said that countries' ability to use other countries' prices in CVD cases is "very limited."
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The decision, released July 16, contained a lengthy dissent that said the WTO's expectations were unfair for how Commerce could prove that market prices were distorted, and therefore countervailing duties were warranted,
The U.S. trade representative responded to the decision by saying, "Today’s appellate report recognizes that the United States has proved that China uses State-Owned Enterprises (SOEs) to subsidize and distort its economy. Nonetheless, the majority in the report says that the United States must use distorted Chinese prices to measure subsidies, unless the U.S. provides even more analysis than the hundreds of pages in these investigations."
Because this was an appeal of a compliance report, if the U.S. does not roll back the countervailing duties, China would be entitled to implement balancing tariffs on U.S. exports equal to its losses. Given the size of tariffs already levied on U.S. exports as part of the more recent trade war, it's not clear where China could raise tariffs aside from products it has chosen to spare because putting tariffs on them would be too damaging to China.