WTO Panel Approves Applying Both CV and AD NME Duties on Chinese Goods

China Disputes U.S. Application of CV Duties Along with AD NME Methods

Among other things, China had disputed the U.S. imposition of countervailing (CV) duties on certain products from China while also applying a non-market economy (NME) methodology in antidumping determinations for the same products.

Note that prior to 2007, Commerce did not apply CV duty law to any type of NME country because the existence of a centrally controlled economy in an NME made it difficult to identify specific actions as subsidies. However, in 2007, Commerce reversed this long-standing position and found that although China remained designated an NME country for AD duty purposes, it could also apply CV duty law to products from China.

Panel Finds U.S. Can Impose Both AD & CV Duties, Etc.

According to USTR and an analysis of the panel report, the panel has found in favor of the U.S. on the vast majority of issues, including the U.S.' right to concurrently impose both AD and CV duties in the four¹ China investigations at issue in the dispute.

USTR states that the panel has also found in favor of the U.S. with respect to China’s claims on:

• Commerce’s finding that the state-owned enterprises (SOEs) and state-owned commercial banks (SOCBs) at issue are public bodies that provide subsidies;
• Commerce’s finding that lending by SOCBs in the Certain New Pneumatic Off-the-Road Tires (OTR) investigation was specific;
• Commerce’s decision not to perform a pass-through analysis of subsidies or to “offset” the “positive” and “negative” amounts of subsidies found in the OTR investigation;
• Commerce’s choice of benchmarks for certain inputs -- including benchmarks outside of China -- in the Circular Welded Carbon Quality Steel Pipe (CWP), Light--Walled Rectangular Pipe and Tube (LWR), and Laminated Woven Sacks (LWS) investigations;
• Commerce’s choice of benchmarks to calculate the benefit from government-provided land-use rights in China in the LWS and OTR investigations;
• Commerce’s choice of interest rate benchmarks to calculate the benefit from loans from SOCBs in the CWP, LWS and OTR investigations; and
• The amount of time that Commerce provides parties to respond to questionnaires.

Panel Finds in Favor of China on Three Issues

USTR states that the panel has found in favor of China with respect to its claims on:

• Commerce’s use of “facts available” to determine the amount of an SOE-produced input purchased from trading company suppliers in the LWR and CWP investigations;
• Commerce’s regional specificity determination regarding government land-use rights in the LWS investigation; and
• Commerce’s calculation of the existence and amount of benefit from the purchase of SOE-produced inputs and the benefit of certain loans from SOCBs in the OTR investigation.

Both Sides Can Appeal Ruling Within 60 Days

Both sides have the right to appeal the decision to the WTO Appellate Body within 60 days.

¹Circular Welded Carbon Quality Steel Pipe, Certain New Pneumatic Off-the-Road Tires, Light-Walled Rectangular Pipe and Tube, Laminated Woven Sacks.

(See ITT’s Online Archives or 01/09/09 news, 09010925, for BP summary of USTR seeking comments on China’s WTO panel request.

See ITT’s Online Archives or 12/19/06 news, 06121925, for BP summary of ITA seeking comments on whether it should apply CV duties to imports from China.)

USTR press release, dated 10/22/10, available here.

WTO panel report, posted 10/22/10 available here.

BP Note

In August 2010, the Court of International Trade rejected Commerce’s approach to combined AD and CV duty tariffs on imports from non-market economies, and ordered the agency to forego imposing CV duties on off-the-road (OTR) tires from China.

However, the court later denied a motion by Chinese producers of OTR who sought an injunction to lift the CV duty deposits based on this August 2010 finding, citing the unsettled state of the law, a pending appeal by the government, and lack of irreparable harm. (See ITT’s Online Archives or 08/09/10 and 10/21/10 news, 10080911 and 10102104, for BP summaries.)