The U.S. Challenges Chinese Anti-Dumping Duties

It has been announced that the United States is looking to eliminate China's imposition of anti-dumping and countervailing duties on more than USD3bn in exports of American-produced cars, by requesting dispute settlement consultations at the World Trade Organization (WTO).

"As we have made clear, the Obama Administration will continue to fight to ensure that China does not misuse its trade laws and violate its international trade commitments to block exports of American-made products," United States Trade Representative Ron Kirk stated. "This is the third time that the Obama Administration has challenged China's misuse of trade remedies."

This action was said to be the latest in a series of enforcement steps the Administration has recently taken to continue to hold China accountable for its WTO commitments. In two earlier WTO cases, the US challenged duties that China had imposed to restrict imports of certain steel products and chicken products from the United States.

The US has also brought actions against China's export restraints on several industrial raw materials, including rare earths, and China's restrictions on electronic payment services and subsidies to the wind power equipment sector. In addition, the US previously invoked a China-specific safeguard to address rapidly increasing imports of Chinese passenger and light truck tyres.

In each of these matters, the key principle at stake, according to the Administration, is that China must play by the rules to which it agreed when it joined the WTO. Those commitments include maintaining open markets on a non-discriminatory basis, and following internationally-agreed procedures in a transparent way.

However, shortly after President Obama decided in September 2009 to impose the safeguard measure against Chinese tyre imports, China's Ministry of Commerce announced that it would initiate anti-dumping and countervailing duty investigations on imports of American-made cars and sport utility vehicles (SUVs).

Then, in May 2011, China's Ministry of Commerce issued final determinations in which it found that imports of American-made automobiles had been sold at less than fair value into the Chinese market and had also benefited from subsidies. Subsequently, in December 2011, China began imposing both anti-dumping and countervailing duties on imports of American-produced automobiles.

The antidumping duties range from 2.0% to 21.5%, and the countervailing duties range from 6.2% to 12.9%, and were imposed for an initial period of two years to December 14, 2013. The specific products affected by the duties are American-produced cars and SUVs with an engine capacity of 2.5 litres or larger. Last year, the US exported more than USD3bn of these automobiles to China, covering more than 80% of US car exports to China.

The US has decided that: China initiated the investigations without sufficient evidence; failed to objectively examine the evidence; and made unsupported findings of injury to China's domestic industry. In addition, the US alleges that China failed to disclose "essential facts" underlying its conclusions, failed to provide an adequate explanation of its conclusions, improperly used investigative procedures, and failed to require non-confidential summaries of Chinese company submissions.

China's Permanent Mission to the WTO confirmed that it received the consultation request on July 5, and the Chinese Ministry of Commerce issued a statement commenting only that China would handle the US consultation request in line with the procedural rules of WTO dispute settlement.

Consultations are the first step in a WTO dispute. Under WTO rules, if parties do not resolve a matter through consultations within 60 days, complainants may request the establishment of a WTO dispute settlement panel.