China Launches WTO Challenge to U.S. Countervailing Duties

May 30, 2012

On May 25, 2012, China requested World Trade Organization (WTO) consultations with the United States regarding U.S. countervailing duties on 22 Chinese products, thereby initiating the WTO’s dispute settlement process. China’s Ministry of Commerce released a statement arguing that the U.S. countervailing duty orders on Chinese products are inconsistent with WTO rules. In particular, China is challenging the U.S. Department of Commerce’s use of the term “public bodies,” as well as its application of specificity and facts available, and its consideration of export restrictions as subsidies. According to Chinese officials, the complaint involves $7.3 billion worth of exports ranging from solar panels and wind towers to citric acid and lawn groomers. Should consultations fail to achieve a mutually agreeable solution, China may request a ruling by the WTO Dispute Settlement Body.

In a previous Chinese challenge to U.S. countervailing duties, the WTO’s Appellate Body determined in March 2011 that the U.S. violated WTO rules by “double-counting” in its calculations and application of antidumping and countervailing duties to non-market economies. While the United States Congress has subsequently passed legislation addressing the calculation and application of such duties, Chinese officials argue that the legislation does not fully remedy the problem of double-counting. The constitutionality of the law applying countervailing duties to non-market economies is also currently being challenged in the U.S. courts.

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