U.S. V CHINA (AUTO PARTS) PENDING CASE #450
CHINA V. U.S. (VARIOUS PRODUCTS FROM CHINA) PENDING CASE #449
CHINA V. E.U. PENDING CASE #452
JAPAN (STEEL) V. CHINA PENDING CASE #454
Joshua Swarz
Jeff Young
Diego Velazquez
Ian White
Introduction of U.S. v. China Pending
Case #450
• The case charges China with unfairly subsidizing exports of cars
and auto parts.
• Auto industry accounts for 52,400 jobs in Ohio.
• In 2011, U.S. manufacturers produced over $350 billion worth of
autos and auto parts.
• In a typical year, auto and auto parts production in the U.S.
accounts for 5% of GDP and 16% of all durable good shipments.
• 2012 Election Year, President Obama brings forth this case in
defense of U.S. autoworkers.
• Mitt Romney accuses President Obama of not standing up to
China on trade.
• President Obama accuses Mitt Romney of outsourcing jobs to
China and playing politics with the issue.
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U.S. v. China Pending Case #450
• Dispute DS450
• Main question of the case: Is China providing subsidies that are in
direct violation of the above-mentioned Articles?
• 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.
• The provision of subsidies to the automobile and auto-parts
industries in China that would give an unfair advantage to these
enterprises that are in direct competition with similar U.S.
enterprises in both the global market and the national market of
the United States.
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Principal WTO agreement(s) and
article(s) involved
• Articles 3, 25.1, 25.2, 25.3 and 25.4 of the SCM Agreement –
Article 3 pertains to the prohibition of subsidies that are
contingent upon export performance or the use of domestic over
imported goods. Article 25 pertains to the divulgence of use of any
subsidies, which shall still conform to other provisions agreed
upon within the document, within a timely manner.
• Article XVI:1 of the GATT 1994 – States that if any contracting
party grants or maintains any subsidy which operates directly or
indirectly to increase exports of any product or to reduce imports
of any product into its territory, it shall notify the contracting
parties in writing the extent and nature of the subsidization.
• Paragraphs 1.2, 2(C)(1) and 2(C)(2) of Part I of China's Accession
Protocol – These Paragraphs generally pertain to the agreement of
China to adhere to all WTO law and regulations.
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Significance of the Case
• China’s subsidies distort trade conditions for auto and auto parts
manufacturers in the United States by providing an unfair
advantage to China’s auto and auto-parts industries. This results in
a loss of sales and market share in U.S. and world markets for
competing U.S. auto and auto parts manufacturers and workers.
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Further thoughts:
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Based on publicly available documents, the value of subsidies made available to auto
and auto parts manufacturers in China between 2009 and 2011 was at least $1 billion.
In the years 2002 through 2011, the value of China’s exports of autos and auto parts
increased more than nine-fold, from $7.4 billion to $69.1 billion. China rose from the
world’s 16th largest to the 5th largest auto and auto parts exporter during his period.
The United States was China’s largest export market for auto parts in the years 2002
through 2011
Eliminating export subsidies produces real, job-supporting results for American firms
and working families
In 2011, the United States produced over $350 billion worth of auto and auto parts,
and production of these parts accounts for about five percent of GDP
As of July 2012, the auto and auto parts manufacturing sector employed nearly
800,000 American workers.
In 2011, the United States exported $123 billion of autos and auto parts, supporting
the jobs of thousands of American workers.
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Introduction of China v. U.S. Pending
Case #449
• This case was filed the same day as case #450.
• These two cases have been viewed as a good example of the
political implications of trade negotiations.
• The background of the case involves China bringing a case against
the U.S. and accusing the U.S. of imposing countervailing duties on
paper, steel, tires, magnets, chemicals, kitchen appliances, wood
flooring, and wind towers.
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U.S. v. China Pending Case #449
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Dispute DS449
On 17 September 2012, China requested consultations with the United States
concerning four issues:
(i) a new piece of legislation (Public Law 112-99) that explicitly allows for the
application of countervailing measures to non-market economy countries;
(ii) countervailing duty determinations or actions made or performed by US
authorities between 20 November 2006 and 13 March 2012 in respect of
Chinese products;
(iii) anti-dumping measures associated with the concerned countervailing duty
measures as well as the combined effect of these anti-dumping measures and
the parallel countervailing duty measures
(iv) the United States' failure to provide the US Department of Commerce
(USDOC) with legal authority to identify and avoid the double remedies in
respect of investigations or reviews initiated on or between 20 November 2006
and 13 March 2012.
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Principal WTO agreement(s) and
article(s) involved
• Articles 10, 15, 19, 21 and 32 of the SCM Agreement – These
articles pertain to the insurance that any imposition of
countervailing duties will be in accordance with the provisions of
Article VI of GATT 1994, shall be based on positive evidence, and
shall remain in force only as long as is necessary to counteract the
injuring subsidization
• Articles VI, X:1, X:2 and X:3 of the GATT 1994 – These articles
pertain to the right of contracting parties to apply anti-dumping
measures, the necessity of a timely formal notice of any antidumping measures and the right of all parties to put forth
evidence which they consider relevant.
• Articles 9 and 11 of the Anti-Dumping Agreement – These articles
pertain to the amount, method, and manner in which
countervailing and anti-dumping duties shall be implemented and
collected.
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Basic Principle Involved:
• The U.S. Public Law 112-99 allows the U.S. to apply countervailing
duty and anti-dumping provisions on 24 Chinese products
amounting to US$7.23 billion, including paper, steel, photovoltaic
cells (cells used in solar panels), tires, magnets, chemicals, kitchen
appliances, wood flooring, and wind towers.
• PL 112-99 was signed into law on March 13, 2012.
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Significance of the Case for U.S. Trade
Policy
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China is disputing the ability of the U.S. to implement anti-dumping and
countervailing duties on certain Chinese imports, particularly the ability of
the U.S. to apply both of these duties simultaneously. Finally, China claims
the United States has failed to provide the USDOC with the legal authority to
identify and avoid the double remedies in respect of investigations or
reviews.
• At its meeting on December 17, 2012, the DSB established a panel.
Australia, Canada, the EU, Japan, Turkey, and Vietnam reserved their
third party rights. Subsequently, India and the Russian Federation
reserved their third party rights. On February 21, 2013, China requested
the Director-General to determine the composition of the panel. On
March 4, 2013, the Director General composed the panel. On September
11, 2013, the Chair of the panel informed the DSB that it expects to issue
its final report to the parties by December 2013, in accordance with the
timetable adopted after consultation with the parties.
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Further thoughts:
• PL 112-99 was signed into law by President Obama on March 13,.
The legality of PL 112-99 is currently being contested in the US
court system.
• China alleges that the United States: (i) did not publish the
provisions of Section 1 of PL 112-99 in a prompt manner so as to
allow companies and other WTO members to become acquainted
with them; and (ii) enforced PL 112-99 prior to its official
publication
• China alleges that the United States Department of Commerce has
not taken steps, nor has the legal authority to, investigate and
avoid double remedies in AD/CVD investigations and reviews
initiated between November 30, 2006 and March 13, 2012.
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Introduction of China v. E.U. Pending
Case #452
• This case was brought in response to an E.U. complaint against
China.
• The accusation was that China was dumping solar panels into the
E.U. market.
• China in response contends that certain E.U. countries (Italy &
Greece) had additional subsidies for local producers.
• Canada had lost a similar case in the WTO.
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China v. E.U. Pending Case #452
• E.U., specifically Greece & Italy, passed laws guaranteeing
purchase of energy produced by renewable sources while
requiring locally produced equipment.
• The main question to be determined in this case was is it
permissible for countries to require local content for companies to
qualify for subsidies?
• The main principle involved here is are these subsidies in violation
of WTO principles?
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Principal WTO agreement(s) and
article(s) involved
• GATT 1994 Article I; Article III of SCM
• Article VIII of the Agreement on Trade Related investment
Measures (TRIM)
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Significance of the Case for U.S. Trade
Policy and Further Thoughts
• Many states offer concessions for locating plants in their localities.
• Japan and EU had just won a similar case against Ontario, Canada.
• US also has a similar case India involved local content
requirement.
• Current Status:
– On 16 November 2012, Japan requested to join the consultations. Australia
and Argentina requested to join the consultations a few days later. The
European Union informed the DSB that it had accepted the request of Japan
to join the consultations.
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Introduction of Japan v. China,
Pending Case #454
• Case was filed the day after Japan won a WTO ruling against
Canada and four days after a landslide election win for the Liberal
Democratic Party of Japan.
• Complaint seeks to overturn China’s decision to levy anti-dumping
duties on Japanese stainless steel tubes.
• Chinese duties also targeted the E.U. with a 9.7% tariff on imports
from Tubacex S.A. and a 11.1% on products from Salzgitter A.G.
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Japan v. China Pending Case #454
• China is imposing anti-dumping duties against Japanese stainless
steel tubes used in boilers.
• The basic principle involved here is China had not disclosed its
methodology for determining that Japanese products were being
dumped, thus harming domestic producers.
• The basic question to be determined is whether China’s dumping
calculation methodologies were sound.
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Principal WTO agreement(s) and
article(s) involved
• GATT 1994 Article VI Anti-dumping and Countervailing Duties
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Significance of the Case for U.S. Trade
Policy and Further Thoughts
• Many other countries have complained about China’s application
of its anti-dumping policy.
• U.S. and E.U. also complain about Chinese methodologies for
calculating dumping determinations.
• Current Status:
– The DSB established a panel on May 24, 2013. The European Union, India,
Korea, the Russian Federation, Saudi Arabia, Turkey and the United States
reserved their third party rights to the case. On 17 July 2013, Japan
requested the Director-General to compose the panel. The Director-General
composed the panel 12 days later.
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Bibliography:
• http://www.nytimes.com/2012/09/18/us/politics/in-car-countryobama-trumpets-china-trade-case.html?pagewanted=all&_r=0
• http://www.ustr.gov/about-us/press-office/factsheets/2012/september/wto-case-challenging-chinese-subsidies
• http://www.ustr.gov/about-us/press-office/factsheets/2012/september/wto-case-challenging-chinese-subsidies
• China Securities Journal. Detailed Rules on Promoting the Growth
of Foreign Trade to Be Introduced before the National Day.
www.cs.com.cn.
• http://about.bloomberglaw.com/practitioner-contributions/waveof-trade-disputes-complicates-global-market-for-renewableenergy-firms-particularly-solar-sector/
• http://www.reuters.com/article/2012/12/20/china-japan-tradedispute-idUSL5E8NK5HE20121220
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