China and the World
Trade Organization
Tim Brightbill
Introduction
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China joined the WTO in 2001, and it is increasingly involved
in WTO disputes.
World Trade Organization dispute panels have addressed
key trade law issues involving China in several recent cases
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United States – Various Products from China (AD/CVD)
United States – Tires from China (Section 421)
EU – Fasteners from China
The ongoing proceeding in China –Raw Materials could have
a significant impact on key raw materials for making steel
The United States has also requested consultations with
China through the WTO regarding China’s subsidies to the
green technology industries
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United States: Various Products
from China (AD/CVD)
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China sought WTO dispute settlement regarding
U.S. antidumping (AD) and countervailing duty
(CVD) cases involving four different sets of
products, including pipe and tube
The WTO panel upheld a number of key aspects of
the U.S. determinations
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United States: China (AD/CVD)
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Sales of inputs by state-owned enterprises (SOEs)
at below-market rates could constitute a subsidy
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State-owned enterprises are “public bodies” capable
of bestowing subsidies
Majority government ownership indicates government
control of a company
Where SOEs dominate a market, the U.S.
Department of Commerce properly looked to
benchmarks outside of China to value inputs
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Land
Bank loans
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United States: China (AD/CVD)
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Double counting: The panel found that, because of the AD
methodology the United States applies to non-market
economy (NME) countries like China, applying both
countervailing duties and antidumping duties to a given
product could theoretically result in double-counting
subsidies
But the WTO Agreement on Subsidies and Countervailing
Measures does not prohibit this result, so the Panel held that
the U.S. action was GATT-legal
The panel also found that imposition of both antidumping and
countervailing duties to Chinese products does not violate
the most favored nation requirement of the GATT
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Ramifications
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China has appealed the panel decision to the WTO
Appellate Body
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The Appellate Body recently held a hearing on the
appeal
If the decision is upheld, the United States will be
able to continue
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To treat sales of inputs by SOEs at below-market
prices as bestowing countervailable subsidies
To apply both antidumping and countervailing duties
to imports from China without taking any steps to
eliminate “double counting”
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United States – Tires from China
(Section 421)
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After an investigation in response to a petition
under Section 421
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The U.S. International Trade Commission found that
imports of certain types of tires from China were
disrupting the U.S. market
President Obama determined to impose additional
duties on imports of tires from China
This was the first time the WTO had considered
the legality of measures taken by the United States
under Section 421
China argued that a number of aspects of the U.S.
decision violated China’s rights The WTO rejected
essentially all of China’s arguments
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Tires from China: Key Panel
Holdings
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Imports did not have to increase at an accelerating
pace to qualify as “increasing rapidly”
Imports were only required to be a significant
cause of market disruption, not the only cause or
even the chief cause of disruption
There was no requirement that there be any
statistical correlation between increases in imports
and indicators of injury to the U.S. industry
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Tires from China: Ramifications
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In this decision, the WTO panel upheld the use of
Section 421
Indeed, this is the first time a WTO panel has
upheld any U.S. safeguard measure
China has appealed this ruling to the Appellate
Body
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The Appellate Body’s ruling could be crucial to the
future application of Section 421
Section 421 is available to address other import
surges from China (but expires in 2013).
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EU: Fasteners from China
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China challenged the EU’s antidumping duties on
imports of steel and iron fasteners from China
The WTO panel held that the EU’s use of a single
country-wide antidumping duty rate to most
Chinese producers violated the WTO Antidumping
Agreement and the GATT
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The panel held that, if a producer provided the EU
with the necessary information, the EU was required
to calculate an individual rate for it
The United States applies a similar approach (but
with differences) to China
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China – Raw Materials
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The United States, the EU, and Mexico have
challenged China’s application of a variety of
restrictions to exports of key raw materials used in
steel making, including
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Coke
Refractory bauxite
Fluorspar
Zinc
The restrictions China applies include
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Export duties
Export quotas
Restrictive bidding procedures
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China – Raw Materials
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China has argued that these measures are justified to
prevent pollution and to preserve natural resources
China has also claimed a “sovereign right to regulate” its
raw material exports
The panel will release its decision this year:
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The interim report is due February 18, 2011
The final report is due April 1, 2011
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This decision could have a major impact on international
trade in raw materials for steel making
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Many other countries also restrict exports of raw
materials, especially steel scrap
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USTR is very interested in a potential case regarding
China’s restrictions on exports of rare earths and other
raw materials
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China – Green Energy Technology
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The USW has filed a petition asking USTR to investigate a
number of China’s policies regarding “green technology”
The Chinese practices identified include
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Subsidies to the solar and wind power industries
Restrictions on exports of rare earths, antimony and
tungsten
Measures discriminating against foreign companies
attempting to enter Chinese renewable energy industries
Technology transfer requirements
USTR has requested consultations with China through the
WTO regarding subsidies to the wind industry
USTR has stated that it will continue to investigate the other
measures
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China’s Steel Industry
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China’s trade law violations relating to its steel
industry are well documented
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Subsidies
State ownership and control
Massive market distortion (overcapacity)
USTR WTO litigation has become more
aggressive
It is time to take a serious look at a comprehensive
challenge to China’s steel-related WTO violations
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Conclusion
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Recent decisions involving China have largely
upheld U.S. laws, regulations, and decisions
The United States is more aggressively using
WTO challenges to address China’s failure to meet
its international trade commitments
A favorable decision in the China – Raw Materials
case could substantially increase trade of key raw
materials for making steel
Important to consider future cases against China’s
export restrictions (on rare earths and other raw
materials) and its many trade-distorting actions on
behalf of its steel industry
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