China scores victory against U.S. in WTO anti-dumping case
Updated 20:48, 02-Nov-2019
Alexandr Svetlicinii
/VCG Photo

/VCG Photo

Editor's note: Alexandr Svetlicinii is an associate professor of law at the University of Macau, where he also serves as program coordinator for the Master of Law in International Business Law in English Language program. The article reflects the author's opinions, and not necessarily the views of CGTN.

On November 1, a WTO arbitrator authorized China to impose 3.6 billion U.S. dollars in sanctions against the United States in the case "United States – Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China." It is the third-largest award of damages obtained through the WTO dispute settlement mechanism since its establishment.

The case dates back to 2013, when China filed a dispute against the Obama administration applying certain methodologies in its anti-dumping investigations against China. 

As consultations with the U.S. proved unsuccessful, China asked the WTO to establish a panel and resolve the dispute under the WTO Anti-Dumping Agreement. The panel's report, released in October 2016 accepted some of China's claims concerning the inconsistency of the pricing methodologies applied by the U.S. authorities. 

Since some of its claims were rejected, China moved to appeal the case before the WTO Appellate Body, which in May 2017 accepted some of China's claims and modified the panel's report. 

The United States was supposed to comply with the ruling by August 22, 2018. Following the U.S.'s failure to comply, China applied to the WTO for authorization to impose retaliatory sanctions. China requested 7.043 billion U.S. dollars in sanctions, while the arbitrator concluded that only 3.579 billion U.S. dollars could be authorized.

The case prompted warnings of caution that the WTO arbitrator's ruling may upset the ongoing trade talks between China and the United States. Some commentators stated that China is expected to leverage its recent legal victory and the Trump administration will further distance itself from the "unfair" WTO dispute settlement. 

Nevertheless, it is highly unlikely that this decision will change the parties' stance on the major issues under negotiation or create any significant leverage for either side. At the same time, the case highlights the ongoing challenges faced by the multilateral trade governance system.

First, the economic sanctions of 3.579 billion U.S. dollars authorized by the WTO are a drop in the ocean compared to the current 25-percent tariffs imposed by the U.S. on 500 billion U.S. dollars of Chinese goods and the Chinese duties levied on more than 100 billion U.S. dollars of products from the United States.

The WTO headquarters in Geneva, Switzerland, September 21, 2018. /VCG Photo

The WTO headquarters in Geneva, Switzerland, September 21, 2018. /VCG Photo

Second, the Trump administration could be less motivated to blame the WTO for the alleged unfairness given its two recent victories in cases against the European Union (7.5 billion U.S. dollars of authorized sanctions against the EU for its subsidies to Airbus) and India (prohibited export subsidies). 

U.S. Trade Representative Robert Lighthizer called it a "resounding victory for the United States," adding that  "under the leadership of President Trump, the United States is using every available tool, including WTO enforcement actions, to ensure American workers are able to compete on a level playing field."

Third, the legal issues decided in the anti-dumping case brought by China against the United States will have no effect on the pending assessment of the U.S. tariffs on steel and aluminum products, which were imposed by the Trump administration in March 2018. 

These tariffs have been challenged in cases brought by China, India, the EU, Canada, Mexico, Norway, Russia, Switzerland, and Turkey. These cases will be decided by the WTO panels in the light of the recent case "Russia – Measures concerning traffic in transit," where a WTO panel explained how the members should impose trade restrictions using the security exceptions embedded in the WTO agreements. 

It should be noted that the panel has rejected U.S. view that the trade-restrictive security measures cannot be reviewed by the WTO and should be left entirely to the discretion of the member invoking the security exception.

Fourth, the case demonstrated the currently diverging attitudes of the parties towards the WTO dispute settlement system. Through continuous pursuit of its economic interests through the applicable WTO procedures, China demonstrated its support of the existing multilateral trade governance system under the WTO umbrella, which has been declared by high-ranking Chinese officials on numerous occasions. 

The United States, on the other hand, continues to block appointments to the WTO Appellate Body, which will be forced to cease operations unless the U.S. relents.

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