China challenges US countervailing duties

: 0 Comment(s)Print E-mail Xinhua, May 25, 2012

Adjust font size:

China has formally challenged U.S. countervailing duties over 22 categories of Chinese products, accusing the United States of abusing World Trade Organization (WTO) rules and infringing the legitimate rights of Chinese firms.

According to a statement issued on Friday by the Ministry of Commerce (MOC), the country has requested WTO consultations, the first stage of a formal dispute settlement, with the United States over a case involving products worth 7.29 billion U.S. dollars.

In its countervailing duty investigations over the Chinese imports in question, the United States has acted inconsistently with WTO rules in many aspects -- including its application of the term of public bodies, specificity, facts available and its considering export restriction measures as subsidies -- the MOC said in a statement.

The WTO has already ruled against the United States on these grounds in the past, but the world's biggest economy has continued to follow the wrong path in the investigations and has not resolved the issues despite China's strong concerns, according to the statement.

"The U.S. behaviors abused trade remedy practices and harmed the legal rights and interests of Chinese companies ... The Chinese government opposes abuse of WTO rules and trade protectionism explicitly and consistently," the statement quoted spokesman Shen Danyang as saying.

He said China filed the case to exercise its membership rights and safeguard the legal interests of domestic industries.

"We hope that, through active dialogue and communication under the WTO dispute settlement mechanism, the United States can correct its long-time wrong behavior in countervailing duty investigations, abide by WTO rules and address our concerns properly," Shen added.

If consultations fail to produce a solution, China may request a WTO panel ruling on the case.

If the Asian nation wins the case but the United States refuses to adjust its policies strictly in line with the rules, China has the legal right to launch trade retaliation measures, said Li Chenggang, head of the MOC's Department of Treaty and Law.

The United States has initiated almost 30 anti-dumping and countervailing duty probes over Chinese imports in the past five years. China successfully challenged four of them at the WTO in March, 2011.

Li said China has discovered the same problems found in the 2011 case occurred to other probes, too, and decided to bring the rest to the WTO in a package this time.

China's move came amid worsening clashes between the two countries over solar products, which arose last year when a group of U.S. solar panel manufacturers filed a formal complaint to the Department of Commerce.

U.S. producers said China-made panels were being sold at extremely low prices because of hefty government subsidies, but Chinese makers argued their commercial success resulted from fair competition.

However, Li said China has no special considerations about the timing of this challenge at the WTO.

"We did profound and rigorous analysis and we are positive that [countervailing duties over] the 22 products are problematic. We have confidence in succeeding in this challenge," he explained.

In the latest round of China probes, the U.S. government announced a preliminary decision in March to impose countervailing duties at rates ranging from 2.9 percent to 4.73 percent on crystalline silicon photovoltaic cells.

In another preliminary decision last week, the U.S. Commerce Department announced anti-dumping duties over Chinese solar cells at rates from 31.14 percent to 249.96 percent.

In those two cases, the United States again behaved wrongly, Shen commented.

A WTO panel ruled in March 2011 that parallel anti-dumping and countervailing duties imposed by the United States on four Chinese imports are inconsistent with WTO rules as a "double penalty."

The countervailing duty probe over solar products is also a target of China's challenge at the WTO this time. Other products involved include oil well pipes, coated paper and steel wheel hubs.

China's challenge will mainly focus on the U.S. claim of so-called Chinese government subsidies on the investigated companies, Li said.

The United States considers all Chinese state-invested firms, no matter how large their state-owned stakes, as "public bodies," alleging that state firms supplying goods for, or state banks lending to, investigated companies are providing a form of government subsidy.

The U.S. practice was unfair to China's state-owned enterprises, Li countered.

China's position was already supported by the WTO in the case of March 2011, when an appellate body decided that the United States taking Chinese state-owned suppliers and banks as "public bodies" was inconsistent with WTO rules.

Instead, a public body should be an entity that possesses, exercises, or is vested with, government authority, the appellate body ruled.

Transgression of WTO rules has become a common phenomenon in the U.S. trade remedy investigations and aroused concerns from other WTO members, too, Li added.

In April, India also requested WTO consultations with the United States to challenge the latter's countervailing duties on steel products.

"All WTO members have to follow rules strictly ... This challenge is not a trade war, but an action guided by rules," Li noted.