U.S., China to Seek Rulings Challenging Antidumping, Countervailing Measures

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By Daniel Pruzin  

Feb. 14 — Tensions between the U.S. and China over trade remedy measures are expected to heat up at the World Trade Organization, after both countries said they would be seeking the establishment of WTO dispute panels to challenge each other's antidumping (AD) and countervailing (CV) duty actions.

China will request the establishment of a WTO panel to rule on the Commerce Department's use of the “targeted dumping” methodology, as well as the use of the controversial zeroing methodology in connection with the targeted dumping investigations.

China is also challenging Commerce's practices related to China's status as a non-market economy (NME), as well as the agency's use of “adverse facts available” in its AD investigations on various Chinese imports.

The U.S. will ask for a WTO panel to rule whether China has complied with an earlier WTO ruling faulting a Chinese investigation that resulted in AD and CV duties on grain oriented flat-rolled electrical steel from the U.S.

Both requests have been put on the agenda for the next meeting of the WTO's Dispute Settlement Body (DSB) scheduled for Feb. 26.

China Targets U.S. Dumping

Targeted dumping involves patterns of export prices that differ significantly among purchasers, regions or periods of time and that could be used to conceal dumping. The WTO already has condemned the zeroing methodology when used in the original antidumping investigation as well as in other contexts, but it has never addressed the use of zeroing in targeted dumping probes.

China is also challenging Commerce's use of the “single rate presumption” for NMEs, under which a single AD rate duty is determined under the presumption that all producers and exporters in an NME comprise a single entity under common government control, as well as other practices related to the NME-wide methodology.

The challenged practices have been used in U.S. investigations targeting the following Chinese goods: coated paper suitable for high-quality print graphics using sheet-fed presses; oil country tubular goods; high pressure steel cylinders; polyethylene terephthalate film, sheet and strip; aluminum extrusions; frozen and canned warmwater shrimp; new pneumatic off-the-road tires; crystalline silicon photovoltaic cells; diamond sawblades and parts thereof; multilayered wood flooring; narrow woven ribbons with woven selvedge; polyethylene retail carrier bags; and wooden bedroom furniture.

China and the U.S. held WTO consultations on the issue Jan. 23, but the two sides failed to resolve their differences, prompting China to submit its panel request. The U.S. can block China's panel request at the Feb. 26 DSB meeting, but any second request from China at a subsequent DSB meeting can't be vetoed.

Targeted dumping is already the subject of a separate dispute settlement proceeding initiated by South Korea against the U.S. On Jan. 22, the DSB accepted a second Korean request to rule on Commerce's use of targeted dumping and zeroing in its AD investigation on imports of Korean washing machines.

Chinese Compliance on GOES

The U.S. is challenging China's claim that it has complied with a 2012 WTO ruling which faulted a Chinese Ministry of Commerce (MOFCOM) investigation into GOES imports. GOES is a high-value magnetic specialty steel that is used primarily by the power generating industry in transformers, rectifiers, reactors and large electric machines. AK Steel Corp., based in Ohio, and ATI Allegheny Ludlum Corp., based in Pennsylvania, manufacture GOES, according to the Office of the U.S. Trade Representative (USTR). The WTO found that MOFCOM violated global trade rules in finding that the imported U.S. steel caused significant price depression and price suppression for Chinese GOES producers; in failing to disclose all essential facts relating to its price comparison of imported and domestic steel that served as the basis for its finding of dumping and subsidization; and in failing to disclose all relevant information underlying MOFCOM's conclusion regarding the “low price” of the targeted U.S. imports.

China had until July 31, 2013, to comply with the ruling. On that day, MOFCOM issued a redetermination which once again found that the GOES imports were causing adverse price effects in the Chinese market, as well as material injury to competing Chinese producers, thus justifying the continued imposition of AD and CV duties.

The U.S. charges that, in its redetermination, MOFCOM again failed to establish that:

  • • the effect of the dumped and subsidized imports was to depress prices or prevent price increases to a significant degree;
  • • an objective examination of the record and positive evidence showed that the dumped and subsidized imports negatively impacted the domestic industry; and
  • • MOFCOM's analysis of the alleged causal relationship between subject imports and injury to the domestic industry was based on an objective examination of the record and positive evidence.

    The U.S. also charges that MOFCOM failed to disclose the “essential facts” under consideration which form the basis for its redetermination and failed to provide in sufficient detail the findings and conclusions reached.

    The U.S. and China met Jan. 24 to discuss the U.S. claims of Chinese noncompliance, but the two sides failed to resolve their differences, resulting in the U.S. request for the compliance panel.

    Under a prior procedural agreement between the two sides, China will not block the U.S. request for the compliance panel. The two sides also agreed to work together to ensure that the panel could issue its ruling within 90 days, with both the U.S. and China reserving their right to appeal.

    The USTR said that before the combined duties entered into force, U.S. exports of GOES to China amounted to more than $250 million a year. The year after the duties were imposed, the value fell to $3 million per year.

    If the WTO rules against China, the U.S. may request WTO authorization to impose retaliatory duties on Chinese imports for noncompliance.

    To contact the reporter on this story: Daniel Pruzin in Geneva at correspondents@bna.com

    To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com