China v U.S.- Various Products from China (#449)
U.S. v China- Auto Parts (#450)
China v. EU- Reusable Energy Sector (#452)
Japan v China- Steel (#454)
Vaishnavi Venkatesh
Jessica Weeks
Lucien Ziegler
Countervailing and
Anti-Dumping
Measures on Certain
Products from China
DSU 449
China vs. United
States
Third Parties: Australia,
Canada, European Union,
Japan, Turkey, Vietnam, India,
Russian Federation
HISTORY AND CONTEXT
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8 other cases prior to this filing on US trade remedy measures
●
1930 Tariff Act
●
March 13, 2012- signing of the Public Law 112-99 by President Obama and approved by House and Senate

“An act to apply the countervailing duty provisions of the Tariff Act of 1930 to non market countries, and for other
purposes”
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applied to countries that the US designated as non market economies
●
Why is China a Non Market Economy?
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Furthermore, PL 112-9 amended Tariff Act of 1930 by adding two sections:
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701(F)- "Applicability to Proceedings Involving Nonmarket Economy Countries"
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countervailing duty provisions now apply particularly to countries designated as nonmarket economies
•
US authorities could look at duties dating back to November 20,2006
777A (F)- "Adjustment to Antidumping Duty in Certain Proceedings Relating to Nonmarket Economy Countries"
•
provide the USDOC with legal authority to identify and avoid double remedies on or after March 13, 2012
PRINCIPLE WTO ARTICLES
Consultations:
Requested: September 17th, 2013
Held: November 5, 2012
Main Issues: Anti-dumping and CVD
Agreements Cited:
GATT Agreement of 1994
Article X- Publication and Administration of Trade Regulations
all trade measures of members should be published and therefore transparent
Article VI- Anti-dumping and Countervailing Measures
members may apply duties and other measures can be applied to goods originating in other members which are
dumped and/or enjoy export subsidies subject to specific conditions
Agreement on Subsidies and Countervailing Measures:
Articles 10, 15, 19, 21, 32
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
Articles 9 & 11 (Anti-dumping)
CHINA’S COMPLAINTS (IN-DEPTH)
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Public Law 112-99
 explicitly applies countervailing measures to non market economies
Countervailing duty between November 20, 2006 and March 13, 2012 against
Chinese products
 US did not apply these trade remedy laws “in a uniform, impartial and reasonable manner’’
Anti-dumping measures associated with the concerned countervailing duty
measures as well as their effects
 causes price of goods to increase, which would affect sales
United States’ failure to provide the US Department of Commerce with legal
authority to identify and avoid the double remedies dating between 20 November
2006 and 13 March 2012
 difference in effective dates
 no basis by US domestic law to determine which to identify and avoid double remedies
POSITION OF PARTIES
Panel Composed: March 4, 2013
U.S. defends itself:
Article X US claims to be completely transparent in reference to CVDs
Claims China misinterprets laws for its own use
Rejects China’s claims
SCMUS is aware of decision of DS379
claims to have already acted to investigate double remedies
also questions decision of DS379
Claims China has not sufficiently proved its case
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Date of Final Report to be Issued:
December 2013
Potential Implications and
Observations:
US- Amendment for more transparency and
correction in effective dates for PL 11299
US- recommendation to change
countervailing and AD measures
Auto and Auto Parts Industries
Export Subsidies in China
Consultation stageUnresolved
DSU 450
United States vs. China
HISTORY AND CONTEXT OF THE AUTO
TRADE SUBSIDY DISPUTE
Timeline


October 2011: US submits information to
WTO identifying 200 undeclared Chinese
subsidy programs
Prior Proceedings

 Less than two months prior to U.S.
presidential election
 Key concern of labor unions and workers in
battleground states
September 17th 2012: United States
requested consultations with China on
measures providing subsidies in the form of
grants, loans, forgone government revenue,
provision of goods and services, and other
incentives to stimulate export performance of
automobile and auto part enterprises in China
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September 28th 2012: EU requests to join

November 6th and 7th 2012: Consultations
consultations
held in Geneva, but dispute remains unresolved
Political Context

Previous auto parts cases
DS 339, 340, 342
 Second consecutive WTO challenge that US
has brought against China within auto
sector, the first being on AD/CVD
measures

MAIN WTO ISSUE
•Inconsistent
with Subsidies and Countervailing Measures
 The U.S. contested 84 policies that the Chinese government established to
develop a series of “export bases”
 Policies provide export subsidies such as cash grants for exporting, R&D, paying
interest on loans and preferential tax treatment
•Charges
are twofold
 Policies are prohibited under WTO’s Agreement on Subsidies and Countervailing
Measures
 China failed to notify WTO members of these policies and administer them
through WTO stipulations
PRINCIPLE WTO ARTICLES
Subsidies and Countervailing
Measures Agreement
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•
Article XVI:1 of GATT

Article 3, Paragraph (a)- Subsidies contingent
upon export performance are prohibited
Article 25: Notifications
 25.1- members shall submit notification of subsidies
no later than 30 June of each year, in accordance to
provisions of paragraph 1 of Article XVI of GATT
 25.2- members shall notify any subsidy defined in
paragraph 1 of Article 1, granted/maintained within
their territories
 25.3- content of notifications should be sufficiently
specific to enable members to evaluate trade effects
and operation of subsidy programmes.
 25.4- explanation of subsidies should be provided in
the notification itself, if not elsewhere
If any contracting party grants or maintains any
subsidy to increase exports or reduce imports of any
product form, it shall notify the contracting parties
the extent, nature and estimated effect of
subsidization. If a “serious prejudice” to the interests
of any other contracting party is caused or
threatened by subsidization, the contracting party
granting the subsidy must discuss the possibility of
limiting the subsidization.
Accession Protocol
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Part 1, Paragraph 1.2- China must provide
translation of measures in an official WTO language
Part 1, Paragraph 2 (C)(1)- any laws, regulations
and other measures affecting trade in goods, services,
TRIPS should be readily available to the other WTO
members
Part 1, Paragraph 2(C)(2)- China must establish
or designate an official journal dedicated to the
publication of all laws and regulations and other
measures affecting trade in goods, services or TRIPS
IMPACT OF EXPORT SUBSIDIES
China
Policies have yielded a net of $1
billion to Chinese manufacturers
between 2009-2011
 Value of China’s exports of autos
and auto parts increased more
than nine-fold, from $7.4 billion to
$69.1 billion between 2002-2011
 U.S. was China’s largest export
market for auto parts between
2002 to 2011, and by 2011, sales
rose 26% to $12.9 billion

United States
•
•
400,000 jobs in the U.S. auto supply
chain have been forgone since 2000 due
to China’s persistent violations of WTO
rules
$62 billion worth of Chinese auto parts
have been imported into the U.S.
causing the auto parts deficit b/w U.S.
and China to increase by more than 850%
CURRENT STATE OF PLAY
Actions of Main Parties

June 2012, WTO’s Trade Policy Review, issued for China
every two years, highlighted the fact that subsidies were
important features of China’s trade policy and industrial
policy making

China requests WTO consultations with the U.S.
regarding US Public Law-99, and several AD and CVD
measures on the same day as DS450 complaint
Observations on Current Actions
•
Current case fails to address majority of other subsidies and
unfair trade practices that China has used to support
domestic auto industry
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Currency manipulation
Provision of preferential loans and loan guarantees
Favorable tax incentives
Import tax exceptions
Does not preclude companies injured by China’s unfair trade
practices, such as AD/CVD, from seeking alternative forms of
relief
Implication of winners and losers
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If China refuses to terminate these policies,
the United States will have the right to
impose retaliatory tariffs on a range of
imports outside of the auto sector from
China

Even if successful, however, the U.S. case
may not lead to the removal of export
subsidies or to the imposition of retaliatory
tariffs on unfairly traded automobiles and
auto parts from China
HOW WILL THE PROPOSAL BE
RESOLVED?
Assuming consultations are unsuccessful…
Dispute Settlement Panel will not lead to China withdrawing subsidy policies or the
U.S. imposing retaliatory tariffs
WHY??
Looking at one of China’s “export bases” in Tianjin, only means of government
support include the following:
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A fund of no less than 100 million yuan ($15.9 million) to support activities such as research and
development (R&D), third-party testing, overseas market research, product development, and training on
the laws and regulations and intellectual property registration in overseas countries.
Preferential tax policies that provide tax deductions equal to 150 percent of actual R&D expenditures
Certain tax discounts for companies buying key foreign technologies and equipment and for those
companies purchasing environmental protection, energy-saving, water-saving and safety equipment
A lower, 15 percent corporate income tax rate for qualified high-tech enterprises.
Interest-free loans to encourage the cooperation between auto parts companies and assemblers.
Financial support of no more than 50 percent of the total expenses required to build public service
platforms.
In other words, it is difficult to find $1 billion worth of subsidies, even across 12
export bases & most items deal with R&D and training which Commerce Dept.
regularly engages to promote American exports and develop higher tech products
Renewable Energy Feed-in
Tariffs (FIT) in the E.U.
[Consultation Stage – Unresolved]
DSU 452
China vs. European Union
HISTORY AND CONTEXT
What is the DS-452 Trade Dispute
About?
• At issue is what China views as unfair promotion of feed-in
•
tariffs (FIT) for renewable energy production in EU states,
specifically Italy and Greece.
The complaint regards, in its own words, “certain measures
affecting the renewable energy generation sector. These
measures include but may not be limited to domestic
content restrictions relating to the feed-in tariff
programs of EU Member States including but not limited
to Italy and Greece.”
A feed-in tariff (FIT) is “an instrument for promoting investment in renewable energy and typically
sets a fixed price for purchases of renewable power, providing electricity producers with a premium
above the market price for electricity—per kilowatt-hour (kWh)—fed into the grid.” Doing so
incentivizes renewable energy production.
The FITs alone are not the problem and are common in many countries. At issue is the prioritization
of domestic suppliers of instruments, equipment, or services over international that violates the
national principal and other WTO accords
Why the complaint?
Italy – Conto Energia V - “Fifth Energy Plan”
• Commissioned by EU directive 2009/28/EC
requiring an energy roadmap for EU member
states, requires Italy to produce 17% of energy
with renewables by 2020.
• Conto Energia V follows Conto Energia IV, which
called for a €6 billion photovoltaic feed-in tariff
(FIT).
• Articles 4(5)(d), 5(2)(a) and 2(1)(v) of Italy’s Fifth
Energy Bill call for the “incentivizing of the
production of electrical energy from photovoltaic solar
installations.” China alleges that this includes a
premium for the installation of those that
use main components produced within the
EU/EEA states.
Greece – Law 4062/2012
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Greece' Law 4062/2012 (FEK A'70/30.03.2012) of 27 March
2012 on the “Development of the Athens former
international airport Hellinikon - Project HELIOS Promotion of the use of energy from renewable sources
(Integration of Directive 2009/28/EC) Sustainability criteria
of biofuel and bioliquids (integration of Directive
2009/30/EC)”
A new incentive to use equipment produced within the EU
or the EEA was recently introduced by Law 4062/2012. In
particular, article 39, paragraph 12 of this Law
stipulates that the FiT for electricity generated by
PV stations may be increased by up to 10% provided
that at least 70% of the costs for the equipment of the PV
station derives from products from an EU or EEA member
state.
What laws and agreements are Italy and
Greece and the E.U allegedly violating?
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Article III:1 of the GATT 1994
Article III:4 of the GATT 1994
Article III:5 of the GATT 1994
Article I of the GATT 1994
• Articles 3.1(b) and 3.2 of the
SCM Agreement (Agreement
on Subsidies and
Countervailing Measures)
• Articles 2.1 and 2.2 of the
TRIMs Agreement
Projected Outcome
• Although the current status of the
complaint is in the
consultations/mediation phase, it is likely
it will never make it past this.
• The E.U.’s regulations alone prioritizing
and incentivizing the use of E.U.
components in the production of
renewable technology appears to be in
clear violation of the above GATT, SCM
and TRIMs agreements as previously
highlighted in this presentation
• Domestic-incentivizing language is likely
to need to be removed from Italian,
Greek, and EU laws pertaining to
renewable energy
Why is this complaint important?
The big business of renewable energy and Sino domination of the PV production
• A tale of two economies
• A Greek tragedy and one
(former) minister’s plan to
save it
Project Helios – will it
survive??
•
Trade law versus
Climate/Energy regulation
A related ruling in EU/Japan vs
Canada
China — Measures Imposing AntiDumping Duties on High-Performance
Stainless Steel Seamless Tubes from
Japan
DSU 454
Japan vs. China
Third Parties:European Union, India,
Republic of Korea, Russian Federation,
United States, Turkey, Kingdom of Saudi
Arabia
History and Context
DSU 454 precedes, but is strikingly similar in detail to DSU 460 filed by the European
Union (concerns the same high-performance stainless steel seamless tubes (HPSSST)).
Consultations:
Requested: December 20, 2012
Panel Composed: July 19, 2013
Japan requested consultations with China concerning measures imposing
anti-dumping duties on high-performance stainless steel seamless tubes
(“HP-SSST”) from Japan, as set forth in Ministry of Commerce of the People's
Republic of China (“MOFCOM”) Notice No. 21 [2012] and Notice No. 72
[2012]. The tariff ranges from 9.2 percent to 14.4 percent and will last 5 years
from 2012
PRINCIPLE WTO ARTICLES
Agreements Cited:
GATT Agreement of 1994
Article VI- Anti-Dumping and Countervailing Duties
“No countervailing duty shall be levied … in excess of an
amount equal to the estimated bounty or subsidy determined to
have been granted…”
Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994
Articles 1, 3.1, 3.2, 3.4, 3.5, 5.3, 5.8, 6.5, 6.5.1, 6.8, 6.9,
7.4, 12.2, 12.2.2, Annex II
Main Issue: Anti-dumping
Current State of Play and Analysis
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China and Japan, the E.U., and the US are locked in a tit-for-tat over antidumping, particularly in the industry for high-quality steel products
The heart of Japan’s complaint, as previously itemized in the principle
WTO articles cited, is that China’s actions seemed motivated by
retaliation and were not “based on an objective examination of all relevant
evidence”
China is both the world’s biggest producer and consumer of steel, and was
repeatedly cited by major trade partners for alleged dumping in its massive
exports of steel products before the financial crisis in 2008, but China still
relies on importing high-grade steel from Japan, the E.U. and the United
States
Current State of Play and Analysis (Cont)
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Filed case after an election in Japan
Was Japan’s second, official trade complaint against China in the
WTO
filed the day after it won a WTO ruling against Canada
It challenged Beijing's claim that Japanese steel firms were
competing unfairly in the world's biggest steel market
China can legitimately apply such duties if it suspects imports are
being sold at unfairly cheap prices on its market.
But Japan is challenging the duties and the way China applied them,
alleging it did not have enough evidence and kept what it did have
secret, shielding the companies who had complained.
Impact of the forthcoming resolution
Could affect the price of steel on global markets, and
lower price of Japanese Steel as an import of China
 Japanese steel is claimed to be of better quality, so it
could cause the standard of Chinese domestic steel
quality to be raised if Japanese steel is able to be sold
at a lower price
 Would allow Japanese businesses to potentially export
more steel
 Could help to balance out price of steel on world
market
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