Tuesday, August 4, 2009

Sino-US trade - import duties on steel pipes, tyres and laminated woven slacks - issues of AD/CVD

by M. Ulric Killion

Chinese steel pipes; Photo/Internet.

There is an interesting blog at the International Economic Law and Policy Blog that addresses, and is titled, "GATT Article VI:5 and Dual Remedies for AD/CVD," which is posted by Simon Lester on July 27, 2009. Mr. Lester is discussing the US viewpoint that, "dual remedies against dumping and subsidies are only prohibited where the subsidies in question are export subsidies."

According to Mr. Lester, "For other kinds of subsidies, dual remedies are permitted. This seemed like a strange result to me, so I went where I always go for questions about the meaning of the GATT text: John Jackson's World Trade and the Law of GATT. At page 412, he says: Article VI:5 'prevents the imposition of both antidumping and countervailing duties to compensate for the same situation -- one or the other can be utilized but not both at the same time. It's interesting that his description does not distinguish between export subsidies and other kinds of subsidies. And it may very well be that the drafters did not have this distinction in mind, and did not mean to carve out separate rules for export subsidies.' Nevertheless, as a textual matter, I find the U.S. argument difficult to rebut."

The source or center focus of Mr. Lester's comments is the US response in the WTO/DS379 dispute or, more accurately, UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA (WT/DS379).

The history of this particular trade dispute dates back to 2008, when China filed a WTO complaint against duties placed by the United States on the imports of certain Chinese steel pipes, tyres and laminated woven sacks. On September 27, 2009, China publicly announced, "Considering that bilateral consultations between China and the US failed to solve concerns of China, China requested consultations with the US under the WTO dispute settlement mechanism regarding those measures" (考虑到中美双边协商无法解决中方关注的问题,中国要求在WTO争端解决机制下与美方就[关税]措施进行协商). 

Washington imposed the import tariffs because China allegedly was selling those products in the US market at less than their normal value, or simply, dumping. As a general rule and broad definition, dumping in trade constitutes the practice of selling goods abroad below the price charged for the same goods in the domestic market or at a price below the cost of production, usually with the aim of driving competitors out of the market.

On September 27, 2009, China further announced, "After the anti-dumping and countervailing investigations by the US against the above mentioned products were initiated, China was highly concerned and has repeatedly articulated its position at various occasions, opposing the unfair practices of the US in those investigations" (美国对上述产品发起反倾销和反补贴调查后,中国即表示高度关注并且在不同场合反复阐明自己的立场,反对美国在这些调查中的不公平做法). According to China, the anti-dumping and countervailing investigations, including the import duties against China products, were unfair trade practices.

Moreover, and potentially consequential for future Sino-US trade, the pending trade dispute and/or request for consultation represents the second time that China's government has officially initiated a dispute at the WTO level.

In the historical context of WT/DS379, Mr. Lester's comments examined the First Written Submission of the United States, filed May 27, 2009, in UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA (WT/DS379). His comments focused, in light of the US response in WT/DS378, on the issues of GATT Article VI:5 and the availability of dual remedies for anti-dumping and countervailing duties.

Then there is the issue of Sino-US trade. Although the final outcome of this trade dispute remains pending, the final resolution of this case at the WTO level may affect both future Sino-US trade relations, and subsequent legal interpretations of GATT Article VI: 5 and anti-dumping and countervailing duties, especially the issue, or US argument (WT/DS379), of whether "dual remedies against dumping and subsidies are only prohibited where the subsidies in question are "export subsidies" (Lester).

In other words, for many reasons, the pending dispute in WT/DS379 presents an interesting trade dispute deserving our attention.

Copyright Protected - All Rights Reserved M. Ulric Killion, 2009.

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