U.S. Appeals WTO Ruling in Anti-Subsidy Dispute with China (1)

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By Bryce Baschuk

The Trump administration April 27 appealed a World Trade Organization ruling that said the U.S. failed to sufficiently modify a series of illegal anti-subsidy duties against China.

The ruling stems from a 2014 WTO decision that rejected the U.S. Commerce Department’s duties on an array of Chinese products such as solar panels, kitchen shelves, and aluminum tubes.

The U.S. said it disagreed with the WTO’s latest compliance decision, which concluded the U.S. continues to impose flawed countervailing duties based on import prices of similar merchandise from third countries.

A WTO appellate body will now investigate the merits of the U.S. appeal and work to issue a report within 90 days, though that timeline may be prolonged due to a bottleneck of appeals.

If the WTO reaffirms the earlier ruling, it could blunt the Trump administration’s ability to tackle Chinese manufacturing subsidies and may add to the escalating trade tensions between the U.S. and China.

Indian Steel Duties

The WTO launched a separate investigation to determine whether the U.S. complied with a dispute ruling that rejected U.S. countervailing measures on Indian steel imports.

Two years ago, the U.S. lost a WTO ruling that said the U.S. Commerce Department improperly calculated anti-subsidy duties against hot-rolled carbon steel flat products from India.

U.S. trade officials criticized the ruling because it rejected the Commerce Department’s interpretation of a public body and said it undermined America’s ability to curb trade-distorting subsidies from major subsidizers like China.

The Commerce Department operates under the assumption that certain state-owned enterprises could be considered a “public body” within the meaning of Article 1.1 of the WTO Subsidies and Countervailing Measures Agreement.

Though the U.S. pledged to change its countervailing duty methodology, India alleged that the U.S. did not follow through during a previously defined compliance period.

A WTO dispute panel will now determine whether the U.S. fully implemented the ruling’s recommendations and issue a ruling within 90 days, though that timeline may be prolonged.

Paper Dispute

The WTO granted Indonesia’s request to launch a trade dispute investigation into Australia’s anti-dumping duties on Indonesian paper imports.

Indonesia alleged that Australia’s import duties on A4 copy paper violated international trade rules and requested WTO consultations to address its concerns.

Jakarta said Australia’s anti-dumping commission improperly calculated Indonesia’s prices and costs when calculating its anti-dumping measures on Indonesian imports of A4 copy paper.

The U.S. is participating in the dispute as a third party because it is the primary export market for Australian uncoated paper and the second-largest export market for Indonesian uncoated paper.

Other third-party participants include: Canada, Japan, the European Union, Singapore, Vietnam, Thailand, Ukraine, Russia, India, Israel, and China.

Korea Dispute Blocked

The U.S. separately blocked South Korea’s first request to investigate the legality of a key provision of U.S. anti-dumping and countervailing investigations.

South Korea’s dispute claimed the Commerce Department improperly applied the principle of “adverse facts available” to South Korean producers and exporters in six anti-dumping and countervailing cases that primarily involved steel products.

The Commerce Department’s “adverse facts available” principle generally permits U.S. trade officials to consider evidence that may have an adverse impact on the subject of an anti-dumping investigation that is deemed to be non-cooperative.

Though WTO rules permit the U.S.to block a first request for an inquiry, South Korea’s dispute request may not be rejected a second time.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bloomberglaw.com

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