WTO Panel Finds Many Problems With US Residential Washers Safeguard
A World Trade Organization panel said the U.S. International Trade Commission made numerous errors as it laid the groundwork for a safeguard tariff on large residential washing machines and parts, a tariff that is still in place for entries above the quota. The tariff is currently 14% within the quota threshold for washers and 30% on parts and washers above the quota threshold.
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The U.S. said that after the Commerce Department issued antidumping and countervailing duties on LG and Samsung washers from South Korea and Mexico, production shifted to China, and then when antidumping duties were placed on those washers, production shifted to Thailand and Vietnam, so domestic producers sought the global safeguard.
The panel said Feb. 8 that South Korea was right to challenge the ITC's finding that imported parts competed with domestically produced parts. The panel said South Korea was right that the ITC failed to provide a reasoned and adequate explanation in support of its finding of increased imports of large residential washers. The panel said the ITC's analysis of profitability violated WTO rules, and said that South Korea was right to challenge the ITC's price analysis, as the panel said the report did not offer evidence that supported the claim that prices across the industry were constrained, particularly when it came to agitator-based top-load washers, which are the least expensive segment of the market.
South Korea's trade ministry said it won the dispute, according to Yonhap News Agency.
The panel did reject some of South Korea's claims, including some claims about the ITC's determination of increased imports, and South Korea's claim that the ITC did not objectively examine the share of the domestic market taken by increased imports and the profitability of the domestic industry. It also declined to judge whether the finding of serious injury violated WTO rules.
Office of the U.S. Trade Representative spokesman Adam Hodge did not directly answer a question from International Trade Today about whether the U.S. would appeal the case. If it does appeal, nothing can happen, because a U.S. blockade on appointments to the appellate body means there is no binding dispute settlement in Geneva, unless countries have agreed to participate in an appellate body alternative. The U.S. has not joined that group.
Hodge said: "The United States appreciates that the Panel rejected several of South Korea’s claims in this dispute, including on aspects of serious injury and the form of the safeguard measure. However, its findings that the USITC must identify unforeseen developments and tariff concessions that resulted in the increased imports further illustrates our concern that panels may follow past Appellate Body reports and not apply WTO rules as they are written. We will continue to carefully review the report and consider next steps as appropriate.”
If the U.S. does not appeal, the panel report will be adopted within 60 days, and the U.S. will have to bring the safeguard into compliance with WTO rules.