Sean Dubiel, Jin Xianying, Lin Jianyong DS 449 United States — Countervailing and Anti-dumping Measures on Certain Products from China Sean Dubiel, Jin Xianying, Lin Jianyong

Overview Historical Background Complainant and Respondent viewpoints Dispute Panel Conclusions Appellate Panel Conclusions Resolution Consequences

Historical Background1 U.S. Department of Commerce decided in the 1980’s to not apply countervailing duties (CVD) to subsidized products from non-market economies GATT Agreement on Subsidies and and Countervailing Measures allows for for imposition of duties on government subsidized goods Impossible for Commerce to identify government support to producers in economies controlled by the government Commerce reviewed this policy in 2006 in response to a petition to investigate Coated Free Sheet Paper made in China Commerce decided the modern Chinese economy was privatized enough that it was possible to determine what products were subsidized Applied CVD to Coated Free Sheet Paper

Historical Background In 2008, Commerce investigated certain tires from China and applied both CVD and Anti-dumping measures. Chinese exporters challenged in U.S. courts arguing against CVDs for NME’s U.S. Court of Appeals ruled in 2011 that that U.S. law DID NOT allow for CVDs against NME’s The U.S. Government petitioned for a re-hearing in 2012 while Congress passed a law explicitly stating that CVDs could be applied against a NME. Section 1 of US Public Law (PL) 112-99 2, enacted on 13 March 20122 Provides for the application of the countervailing duty provisions of the US Tariff Act of 1930 to non-market economy countries Applies to all countervailing duties initiated by the United States on or after 20 November 2006 as well as to all pending court proceedings relating to such countervailing duty proceedings

Complainant View: Publication and Administration of Trade Agreements3 Section 1 of P.L. 112-99 Was Not "Published Promptly in Such a Manner as to Enable Governments and Traders to Become Acquainted" with the New Law, as Required by Article X:1 of the GATT 1994 Published on 13 March 2012 but effective as of 20 November 2006 The Retroactive Application of Section 1 of P.L. 112-99 Is Inconsistent with Article X:2 of the GATT 1994 “No measures of general application . . . effecting an advance in a rate of duty . . . or imposing a new or more burdensome requirement . . . shall be enforced before such measure has been officially published.” The United States Has Failed to Ensure that Decisions of its Courts Are "Implemented by", and "Govern the Practice of", the USDOC, in Violation of Article X:3(b) of the GATT 1994 It was inconsistent for the Federal Circuit to issue its decision and for the United States to then amend the law, retroactively, to change the outcome of that decision.

Complainant View: Double Remedies4 The United States Acted Inconsistently with Article 19.3 of the SCM Agreement by Failing to Investigate and Avoid Double Remedies in the Identified Investigations The U.S. Government was aware that the simultaneous application of countervailing and anti-dumping duties could result in offsetting the same subsidy twice – once through the imposition of the countervailing duty, and then again through the manner in which the United States calculates anti-dumping duties under its NME methodology

Respondent View 5 Prompt Publishing: China’s claims are without merit “implausible reading that would require publication before the existence of a measure and substantive requirements governing the content of a measure. Such a reading is unfounded.” Retroactive enforcement: China’s claims are without merit “legislation was neither a change in the law, nor did it result in any change in the treatment of imports from China” Tribunal Process: China’s claims are without merit Appeals Court “opinion was not finalized under the U.S. judicial appeals process, and was under appeal, and therefore there was no final decision to implement.” Double Remedies: China’s claim must be rejected “China makes conclusory and generalized allegations as to what Commerce found across 31 sets of determinations without even a cursory citation to a single piece of evidence”

Dispute Panel Actions6 Consultations failed to resolve the dispute. ( 5 Nov. 2012) ------Dispute Panel established On 19 November 2012, China requested the establishment of a panel with standard terms of reference.(Articles 4.7 and 6 of the DSU) On 17 December 2012, DSB established a panel pursuant to the request of China.(Article 6 of the DSU) On 21 February 2013, China requested to determine the composition of the panel.(Article 8.7 of the DSU) On 4 March 2013, the Director-General accordingly composed the Panel. Members of the Panel: Chairperson: Mr. José Graça Lima Members: Mr. Donald Greenfield Mr. Arie Reich

Dispute Panel Actions Australia, Canada, European Union, India, Japan, Russian Federation, Turkey, and Viet Nam notified their interest in participating in the Panel proceedings as third parties. Panel adopted its Working Procedures on 14 March 2013 and its timetable on 28 March 2013. On 2, July 2013,the Panel held a first substantive meeting with the parties. On 27 August, the Panel held a second substantive meeting with the parties. On 15 November, the Panel issued its Interim Report On 20 December 2013, the Panel issued its Final Report.

Dispute Panel Conclusions2 This dispute concerns two different US measures: Section 1: US Public Law (PL) 112‑99 & GATT (1994) X:1 X:2 X:3(b) Section 2: double remedies & SCM 19.3

Dispute Panel Conclusions(PL 112‑99 ) China raised claims under Articles X:1, X:2, and X:3(b) of the GATT 1994. X1: Panel disagreed with China, not 2006 but 2012. ----U.S. is good X2: Panel disagreed with China, falls outside Article X2.----U.S. is good （Although 1 panelist disagreed） X3(b): Panel disagreed with China, X3(b) does not prohibit membertake legislative action like Pl 122-99. ----U.S. is good

Dispute Panel Conclusions (double remedies) Panel agreed with China. U.S. did not investigate whether “double remedies” arose in the proceedings at issue. -----U.S. is not good.

Complainant & Respondent Reaction On 8 April 2014, China decided to appeal. On 17 April 2014, U.S. decided to appeal. “...notified the DSB of its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the panel.”

Appellate Body Actions July 7th 2014 Upholds the Panel's finding in paragraph 4.2 of the Panel's Preliminary Ruling and paragraph 7.4 of the Panel Report Reverses the Panel's interpretation of Article X:2 of the GATT 1994, in paragraph 7.155 of the Panel Report Reverses the Panel's application of its interpretation of Article X:2 of the GATT 1994 to the measure at issue Reverses the Panel's findings, in paragraphs 7.209, 7.210.c, 7.211, and 8.1.b.ii of the Panel Report Declares moot and of no legal effect the Panel's findings Reversed the Panel's findings regarding its interpretation and application of Article X:2 of the GATT 1994 Unable to complete the analysis under Article X:2 of the GATT 1994

Appellate Body Conclusions The Appellate Body reversed the Panel’s finding The Appellate Body recommends that the Dispute Settlement Body request the United States to bring the investigations and reviews identified in this Report, and in the Panel Report as modified by this Report, to be inconsistent with its obligations under the SCM Agreement into conformity with that Agreement.

China and US agreement Reasonable period of time August 21st 2014 February 20th 2015 July 23rd 2015 China and the U.S. agreed to modify the reasonable period of time expired on July 22nd 2015 ➙ August 5th 2015. August 21st 2015

Consequences of Decision U.S. agrees to take actions to avoid double remedies on Chinese goods Appellate Panel did not have enough time to determine if the U.S. changes to law created an “advance” in a rate of duty or imposed a “new or more burdensome” requirement. Direct impacts of the dispute are limited but the process raises unresolved questions7: The role of precedent: AB findings are technically not precedent but still used Remand authority: AB can not engage in fact finding Filing requirements: requirements do not seem to be applied uniformly Status of Municipal law: AB is forces to examine domestic laws Double remedies: no solid economic analysis on if NME creates both AD and CVD

References Beshkar, Mostafa, and Adam S Chilton. “Revisiting Procedure and Precedent in the WTO: An Analysis of US – Countervailing and Anti-Dumping Measures (China),” n.d., 25. WTO Dispute Settlement: One-Page Case Summaries: DS449 Report of the Panel: UNITED STATES – COUNTERVAILING AND ANTI-DUMPING MEASURES ON CERTAIN PRODUCTS FROM CHINA, Annex B ibid WTO Dispute Panel Report：DS449 Beshkar and Chilton, “Revisiting Procedure and Precedent in the WTO”.