WTO rules against US countervailing duties on Chinese products

15 Jul 2014


The World Trade Organisation (WTO) has ruled against the United States' trade measures against import of steel products, solar panels and a range of other goods from India and China that Washington argues enjoyed government subsidies.

In a similar case involving US methods in deciding unfairly pricing of imported goods, another WTO panel has ruled in support of some claims by India against tariffs on steel exports from three of its major firms.

The rulings that come after nearly two years of scrutiny by two separate panels are clear proof of illegal US protection of its own producers – a widespread concern among members of the 160-strong WTO.

In China's case, the panel found that Washington had overstepped the mark in imposing the so-called countervailing duties against alleged subsidies to exporting firms by China's government. The impost of US countervailing measures could endanger $7.2 billion worth of Chinese exports annually, the ministry said.

"The panel ruling marks one more victory for China in challenging the US discriminative countervailing duty measures on Chinese products. This will further constrain the US misuse of trade remedy measures and benefit Chinese enterprises," Li Chenggang, director-general of the Department of Treaty and Law of the Chinese ministry of commerce, told reporters in Beijing.

Under the 1964 WTO accord reached in Marrakesh, countervailing duties can be levied only when there is clear evidence that state-owned or partially state-owned enterprises passing on the subsidies are "public bodies."

The US had imposed countervailing duty on 22 products from China. The WTO backed China "on many aspects such as the identification of public body and found the US measures breach the WTO rules, which is welcome to China", China's ministry of commerce said in a web site release.

Washington, however, failed to produce sufficient evidence to show that the Chinese products were state-subsidised. The US authorities also erred in calculating the value of the alleged subsidies to Chinese firms producing a host of items like kitchen shelving, grass cutters and even citric acid, the WTO panel observed.

The WTO panel also asked the United States to adapt measures to bring import duties on these products in line with the WTO agreement on subsidies and countervailing measures.

The ruling, however, rejected some aspects of the Chinese complaint

US Trade Representative Michael Froman said the decision to reject many of China's challenges was a victory for American businesses and workers. He said the

United States would look for options.

"With respect to the other findings in the panel report, the Administration is carefully evaluating its options, and will take all appropriate steps to ensure that US remedies against unfair subsidies remain strong and effective.''

Several other WTO members, including the European Union and Japan, had declared themselves as interested parties in the disputes. However, none of these countries responded to the WTO ruling.

The ruling in the Indian case - which involves steelmakers like Tata, Jindal and Essar who are supplied by the state-run iron-ore mining firm, NMDC - was not so clear-cut.

It said the United States had "acted inconsistently" in terms of some provisions of the SCM agreement and had unfairly reduced Indian trade revenue. Washington should bring its measures into line with the pact, the panel said.

But it rejected many of the technical aspects of the Indian case.

Froman hailed the panel ruling while recognising it as a "mixed result."

"The panel's findings rejecting most of India's numerous challenges to our laws and determinations is a significant victory for the United States and for the (US) workers and businesses making these steep products," he said.

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