U.S. v. China - International Trade Relations

U.S. v. China
4 Pending Cases in the WTO
Antidumping on auto parts
Export restrictions on rare earths
Subsidies and wind power
CVD on products from China
Case #1:
Anti-Dumping and Countervailing
Duties on Certain Automobiles from
the United States
Complaint: United States
Respondent: China
Photo: https://motoren.wordpress.com/page/156/
China’s New Tariffs
• In December 14, 2011, the Chinese government officially introduced two new
tariffs on U.S. car imports.
• The Announcement on Imposing Anti-dumping and Countervailing Measures on Imports of
Certain U.S.-made Cars (MoC Announcement [2011] No.84) states: between
December 15, 2011 and December 14, 2013, both anti-dumping and
countervailing tariffs will apply to U.S-made passenger cars and sports utility
vehicles with engine capacities of 2.5 liters and above.
• China’s trade protectionism?
• “Normal trade remedies”
• In line with WTO rules
Source and Photo: http://www.china-briefing.com/news/2011/12/16/u-s-car-exporters-get-hit-by-chinas-new-tariffs.html
“If a company exports a product at a price lower than the price it normally charges
on its own home market, it is said to be “dumping” the product. Is this unfair
competition? The WTO agreement does not pass judgement. Its focus is on
how governments can or cannot react to dumping -it disciplines anti-dumping
actions.” –WTO
Subsidies and Countervailing Measures
“The WTO Agreement on Subsidies and Countervailing Measures disciplines the
use of subsidies, and it regulates the actions countries can take to counter the
effects of subsidies. Under the agreement, a country can use the WTO’s disputesettlement procedure to seek the withdrawal of the subsidy or the removal of its
adverse effects. Or the country can launch its own investigation and ultimately
charge extra duty (“countervailing duty”) on subsidized imports that are found to
be hurting domestic producers.” –WTO
Source: http://www.wto.org/english/tratop_e/adp_e/adp_e.htm
Dispute DS440
Complaint by the
United States
• On 5 July 2012, the United States requested
consultations with China with regard to
Notice No. 20 [2011] and Notice No. 84 [2011]
of the Ministry of Commerce of the People's
Republic of China (“MOFCOM”) imposing
anti-dumping and countervailing duties on
certain automobiles from the United States,
including any and all annexes.
Source: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds440_e.htm
Photo: http://www.caribbeanbusinesspr.com/news/escalation-in-china-us-trade-clashes-76426.html
China’s Unfair Imposition of Duties
“The United States believes that China initiated the investigations
without sufficient evidence; failed to objectively examine the
evidence; and made unsupported findings of injury to China’s
domestic industry. In addition, China failed to disclose “essential
facts” underlying its conclusions; failed to provide an adequate
explanation of its conclusions; improperly used investigative
procedures; and failed to require non-confidential summaries of
Chinese company submissions.”
– U.S. Trade Representative Press Release,
July 05, 2012
Source: http://www.ustr.gov/about-us/press-office/press-releases/2012/july/obama-administration-challenges-chinas-unfair-duties-american-made-cars
Anti-Dumping Agreement (Article VI of GATT 1994):
Articles 1, 3.1, 3.2, 3.4, 3.5, 4.1, 5.3, 5.4, 6.2, 6.5.1, 6.8 (including Annex II,
paragraph 1), 6.9, 12.2, and 12.2.2
Subsidies and Countervailing Measures Agreement:
Articles 10, 11.3, 11.4, 12.4.1, 12.7, 12.8, 15.1, 15.2, 15.4, 15.5, 16.1 22.3, and 22.5
Source: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds440_e.htm
Photo: http://www.renewableenergyworld.com/rea/news/article/2012/05/31-percent-anti-dumping-tariffs-announced-for-chinese-solar-panels
Likely Outcome
• On September 17, 2012, the United States requested the establishment of a
• At its meeting on September 28, 2012, the Dispute Settlement Body deferred
the establishment of a panel.
• Pending
Source: http://www.ustr.gov/about-us/press-office/press-releases/2012/july/obama-administration-challenges-chinas-unfair-duties-american-made-cars
Photo: http://www.latimes.com/news/politics/la-pn-china-wto-obama-20120916,0,550815.story
Complainant: United States
Respondent: China
Photo Credit: http://cdni.wired.co.uk/620x413/k_n/mining.jpg
Complaint by the United States
• The United States alleges that China has
imposed and administered export
restrictions on rare earths, tungsten and
molybdenum, including export duties,
export quotas, minimum export price
requirements, export licensing
requirements and additional requirements
and procedures in connection with the
administration of the quantitative
What’s All The Fuss About?
“America’s workers and manufacturers are being hurt in both established and
budding industrial sectors by [China’s] policies. China continues to make its
export restraints more restrictive, resulting in massive distortions and harmful
disruptions in supply chains for these materials throughout the global
marketplace.” – U.S. Ambassador Kirk.
Because China is a top global producer for these key inputs, its harmful
policies artificially increase prices for the inputs outside of China while
lowering prices in China.
This price dynamic creates significant advantages for China’s producers
when competing against U.S. producers – both in China’s market and in
other markets around the world.
The improper export restraints also contribute to creating substantial
pressure on U.S. and other non-Chinese downstream producers to move
their operations, jobs, and technologies to China.
Violated Agreements
• Articles VII, VIII, X and XI of the GATT 1994
• Paragraphs 2(A)2, 2(C)1, 5.1, 5.2, 7.2, 8.2 and
11.3 of Part I of China's Protocol of Accession,
as well as China's obligations under paragraph
1.2 of Part I of the Protocol of Accession.
Likely Outcome
Photo Credit: http://www.mining.com/wp-content/uploads/2012/07/China_USA_tensions-300x250.jpg
China: Measures
power equipment
Case #3
Complainant: United States
Respondent: China
1. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy,
Allied Industrial and Service Workers International Union, AFL-CIO CLC
file petition China's acts, policies, and practices affecting trade and
investment in green technologies. (September 9, 2010).
2. The petition sparks an investigation by U.S. Trade Representative to
determine if these acts, policies, and practices deny U.S. rights or benefits
under the GATT 1994, under the Agreement on Subsidies and
Countervailing Measures the (Oct. 20, 2010).
3. The U.S. Trade Representative requests consultation regarding subsidies
provided by China on wind power equipment through its Wind Power
Equipment Fund (December 22, 2010).
4. Within a week of each other, the EU (Jan 12, 2011) and Japan (Jan 17, 2011)
requested to join the consultation.
Resolution DS419:
U.S. Complaints
1. The grants, funds, or awards are contingent on
the use of domestic over imported goods.
Article 3 of the Subsidies and Countervailing
Measures (SCM) Agreement.
2. China did not notify the WTO of these
Article XVI:1 of the GATT 1994 as well as
Article 25.1, 25.2, 25.3 and 25.4 of the SCM
3. China did not provide translation of the
subsidy measures into any of the WTO official
Part I, Paragraph 1.2, of its Protocol of Accession.
Contradicting Positions
U.S. (EU and Japan)
• Subsidies are harmful to the global economy,
providing unfair advantage to green-energy
manufacturers, and expressly prohibited under WTO
• China has inadequate transparency to monitor
• It is a misunderstanding, measure at hand was to
enhance investments on R&D in wind power. This
case should be a non-issue.
Likely Outcome
On June 7, 2011, the Office of the U.S. Trade Representative issued
press release stating:
“China has ended certain wind power equipment subsidies…this is the third
successful WTO challenge that the U.S. has brought against Chinese government
subsidies. In each of these cases, following formal consultations at the WTO,
China agreed to eliminate the subsidies that the U.S. had challenged.”
Case is still open (last update March 2011). Why? Other countries also
filed and the multifaceted aspects of the case.
Prediction: China will be comply, but will find other subsidies/grants
and get away with it due to “lack of transparency.”
Countervailing Duty Measures on
Certain Products from China
Complainant: China
Respondent: United States
Third Parties:
The European Union, Japan, India, Turkey, Norway, Vietnam, Australia,
the Russian Federation, Canada, Brazil and Korea
Photo credit: clv-triangle.vn
Complaint by China
On 25 May 2012, China requested consultations with the United States
concerning the imposition of countervailing duty measures by the
United States on over 22 categories of Chinese products (including,
steel products, solar cells and paper products) worth $7.29 billion.
China challenges various aspects of certain identified countervailing
duty investigations, including their opening, conduct and the
preliminary and final determinations that led to the imposition of
countervailing duties.
The “rebuttable presumption” allegedly established and applied by the
US Department of Commerce that majority government ownership is
sufficient to treat an enterprise as a “public body”.
Violated Agreements
• Article VI of the GATT 1994;
• Articles 1.1, 2, 11.1, 11.2, 11.3, 12.7 and 14(d) of the
SCM Agreement; and
• Article 15 of the Protocol of Accession of China.
Photo credit: http://www.chinaustradelawblog.com/
China’s Position
• The WTO has already ruled against the United States in
2011 that a similar set of measures (DS379) and
although some of these measures at issue were adopted
after the issuance of the Appellate Body report, the U.S.
did not modify its conduct.
• China recognizes WTO members' legitimate rights to
adopt trade remedy measures, however, such rights
must be exercised in accordance with WTO rules and
not be subject to any form of abuse.
United States’ Position
The U.S. will defend its use of countervailing duties
which are necessary to offset the injury caused by
China's illegal government subsidies.
Photo credit: http://www.chinaustradelawblog.com/tags/subsidies/
Consultations and
Dispute panel
• Consultations were held on June 25 and July 18, 2012 but the dispute
failed to be resolved
• August 20, 2012, China requested the establishment of a dispute
• The U.S. exercised its right to block the creation of a panel for one
meeting of the WTO's dispute settlement body, meaning China can
renew its request at the next session and at the August 31, 2012
meeting, the DSB deferred the establishment of a panel.
• At China’s second request for a panel establishment, the DSB agreed
on September 28, 2012 to establish a panel, to examine
countervailing (CV) duty measures imposed by the United States on a
wide range of products from China.
• The panel has not yet been composed.
Other pending
Photo credit: http://theocculttruth.com/
Photo credit: http://www.katv.com/
• DS449- Complaint by China: On 17 September 2012, China
requested consultations with the United States on countervailing and
anti-dumping measures applied to a wide range of products exported
by China to the US. Among the products cited by China, affected by
the measures, are paper, steel, tyres, magnets, chemicals, kitchen
appliances, wood flooring, and wind towers.
• DS450- Complaint by the United States: On 17 September 2012, the
United States requested consultations with China concerning certain
measures providing subsidies in the form of grants, loans, forgone
government revenue, the provision of goods and services, and other
incentives contingent upon export performance to automobile and
automobile-parts enterprises in China.
Case #1: Is it better to strengthen or
weaken ties with China in regards to
Case #2: On the one hand, the West
demands China export more rare earths, on
the other, the West demands China
protect the environment. Is the West being
hypocritical? Should this play a role in the
WTOs decision(s)?
Case #3: What should take precedence,
focusing on and bolstering domestic
renewable energy or equal opportunity for
foreign companies?
Case #4: Is it possible for a long-term
winner to prevail from a U.S./China trade