WTO Rules US Import Tariffs on China and India Were Unfairly Levied

In the case of China, brought by China in 2012, it was determined by the WTO that the U.S. did not have sufficient evidence that the exporters in question were “public bodies” receiving subsidies, a requirement for levying countervailing duties and taxes under the 1964 Marrakesh accords.

The WTO also rejected the U.S. argument that the India state-owned National Mineral Development Corp. was a public body.

Steel products in the cases include line pipe, OCTG, drill pipe, pressure pipe, seamless pipe and steel cylinders.

The WTO in its summary wrote, “We recommend that the United States bring its measures into conformity with its obligations under the SCM agreement.”

In a response to the WTO determination U.S. Trade Representative Michael Froman, said, “The Administration is committed to the strong enforcement of U.S. countervailing duty laws in order to respond to unfair subsidies, and to a strong defense of those duties when challenged by any U.S. trading partner.”

“The WTO panel’s decision to reject many of China’s challenges to U.S. countervailing duties on unfairly subsidized Chinese imports is a victory for American businesses and workers. With respect to the other findings in the panel report, the Administration is carefully evaluating its options, and will take all appropriate steps to ensure that U.S. remedies against unfair subsidies remain strong and effective.”

A background and summary of the WTO decision on exports from China was provided by the Office of the United States Trade Representative as follows:

Background:

In this dispute, China/CVD2 (DS437), China alleged that the United States had acted inconsistently with the SCM Agreement in 17 countervailing duty investigations with respect to Commerce’s determinations on public bodies, applications of facts available, calculations of benchmarks, determinations of specificity, and decisions to initiate investigations. The panel made the following findings:

 –  On Facts Available, China brought 48 challenges under Article 12.7 of the SCM Agreement to Commerce’s use of “facts available” when making findings of facts in the face of non-cooperation by respondent companies or China. The panel found that China had not established that the United States had acted inconsistently with the Agreement in 42 of those instances, and declined to make findings in the remaining six, finding that those claims were outside its terms of reference. 

 –  On Benchmarks, China brought claims on 12 investigations. The panel found that China failed to establish that Commerce acted inconsistently with the obligations of Article 14(d) on all 12 investigations. 

 –  On Specificity, with respect to 12 investigations, China brought four claims against Commerce’s determinations that the subsidies at issue were specific under Article 2.1 of the SCM Agreement. The United States prevailed on three of those claims, and China prevailed on one. 

 –  On Initiations, China brought 20 challenges to Commerce’s initiation of investigations of particular subsidies under Article 11 of the SCM Agreement, and the panel found that the China had not established that the United States had acted inconsistently with the Agreement in the challenges related to public bodies and specificity. 

 –  On Public Bodies, the Panel found that, in 12 investigations, Commerce’s determinations that certain SOEs were public bodies were inconsistent with Article 1.1(a)(1) of the SCM Agreement. 

 –  On Regional Specificity, China brought seven challenges to Commerce’s findings that certain subsidies were regionally specific under Article 2.2 of the SCM Agreement, and the panel found that China had established that Commerce acted inconsistently with the Agreement in six of those investigations. 

 –  On Export Restraints, China brought claims on two investigations. The panel found that China established that Commerce acted inconsistently with Article 11.3 when it initiated these two investigations without adequate evidence of the existence of a subsidy.

In regards to the WTO determination on certain steel products from India, most of the challenges from India were dismissed but the U.S. was found in violation of two WTO rules.

“This dispute is another example of the Administration’s commitment to fight for American workers and industry by taking strong trade remedy measures against unfair subsidies and defending those actions when challenged by our trading partners,” said Froman. “The WTO panel’s findings rejecting most of India’s numerous challenges to our laws and determinations is a significant victory for the United States and for the workers and businesses making these steel products.”

India, China and the United States have the right to seek adoption or appeal of the report within 60 days of the report’s circulation. It is likely the U.S. will file an objection that will prolong, perhaps by years, the ultimate resolution of these cases.