WTO Panel Rules Against China's AD/CV Duties on U.S. Electrical Steel
A World Trade Organization dispute settlement panel rejected several aspects of Chinese antidumping and countervailing duties on U.S. electrical steel. In its decision in China -- Countervailing and Anti-Dumping Duties on Grain Oriented Flat-rolled Steel from the United States (DS414), the panel found fault with the initiation of China’s CV investigation, which had determined that U.S. “Buy American” procurement provisions confer a subsidy, and the failure to provide public versions of documents, application of facts available, and injury determinations in China’s AD and CV investigations.
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(In June 2009, China’s Ministry of Commerce (MOFCOM) initiated AD and CV proceedings on grain oriented flat-rolled electrical steel (GOES) from the U.S. and on April 10, 2010, it imposed AD duties ranging from 7.8% to 64.8 and CV duties between 11.7% and 44.6%. In September 2010, the U.S. requested WTO consultations with China on its AD and CV duties. After negotiations failed, the U.S. requested establishment of a WTO panel in February 2011. See ITT’s Online Archives 10091616 for summary of the announcement by the U.S. Trade Representative that it had brought its complaint to the WTO, and 11021427 for summary of the USTR’s announcement that it had requested a panel in this case, as well as the U.S. challenge of Chinese electronic payment services.)
Panel Says Initiation Procedure was Faulty, China Didn’t Disclose Some Information
The panel agreed with the U.S. that China’s initiation of its CV investigation was insufficiently supported by evidence. The WTO said the Chinese Ministry of Commerce (MOFCOM) did not properly assess the accuracy and adequacy of the evidence submitted by the Chinese petitioners.
The U.S. also complained that MOFCOM did not require the petitioners to submit adequate non-confidential summaries (public versions) of the information relied on to initiate both the AD and CV investigations of U.S. electrical steel. The panel agreed, and said the public versions did not provide a reasonable understanding of the substance of the confidential information.
Panel Agrees that Application of Facts Available Improper and Unexplained
The U.S. also challenged China’s application of facts available (reliance on inferences from earlier proceedings, domestic submissions of information, etc. in cases where the investigated company or country does not provide adequate information). The panel agreed that China improperly resorted to facts available in calculating the CV rates for two U.S. exporters, and improperly resorted to facts available in calculating the AD and CV rates for exporters that were unknown to it.
The panel also agreed with the U.S. claim that China did not disclose the essential facts or provide adequate explanation of its application of facts available to “unknown” U.S. exporters.
WTO says China’s Injury Determination Unsupported and Insufficiently Explained
The panel agreed with the U.S. challenges of China’s injury determination. It upheld U.S. claims that China’s analysis of whether dumped and subsidized imports had significant price effects on Chinese industry did not reflect an objective examination of the evidence, and that China did not disclose supporting evidence or provide sufficient explanation for its price effects findings.
The U.S. also contested China’s causation analysis (whether dumped or subsidized imports caused injury) in that China erroneously concluded that the rapid increase in the capacity of its domestic electrical steel industry during the period of investigation could not have been a cause of injury to the domestic industry. The panel upheld this claim, as well as another U.S. claim that the Chinese causation analysis did not comply with “objective examination” and “positive evidence” requirements embodied in the WTO subsidies and antidumping agreements. Finally, the panel agreed with the U.S. that China did not disclose supporting evidence nor provide adequate explanation of its causation analysis.
Panel Rejects U.S. Arguments on Calculation Disclosure, Chinese Non-Market Price Determination
However, the panel rejected U.S. arguments that China should have provided notice of the calculations used to determine AD margins, and China’s decision that the “Buy American” procurement provisions result on non-market prices for the purposes of its CV determination. With respect to the disclosure of calculations, the panel said no obligation exists in the antidumping agreement to disclose such information. With respect to China’s decision that “Buy American” creates non-market prices, and specifically that the exclusion of foreign producers from the competitive bidding process under U.S. government procurement statutes meant that the resulting prices were not market prices, the panel said (1) China adequately supported and provided notice of its finding, and (2) the panel can’t rule on whether a member’s fact-based reasoning was correct.