TWN Info Service on WTO and Trade Issues
28 January 2022
Third World Network
www.twn.my

China criticizes US for failing to implement WTO rulings
Published in SUNS #9502 dated 28 January 2022

Geneva, 27 Jan (D. Ravi Kanth) – China has said that the WTO award issued on 26 January on imposing trade retaliatory measures worth USD 645 million annually against the United States “proves that the United States has violated the WTO rules, abused trade remedy measures, and refused to implement WTO rulings and international obligations”.

The award was announced by a World Trade Organization arbitrator due to Washington’s failure to comply with the dispute panel ruling, in a trade dispute that China launched against Washington’s countervailing duties imposed on a range of Chinese products exported to the US, which were found to be WTO-inconsistent.

The US actions in not implementing the WTO rulings and international obligations as specified in the WTO rules “seriously damaged the fair and just international trade environment.”

In a press release issued on 26 January, China urged the US “to stop seeking any excuses and take immediate actions to correct its wrongful conduct in trade remedy investigations targeting China.”

Beijing said that “it attaches great importance to the positive role of the international rule of law in stabilizing the international economic and trade order and regulating international economic and trade relations.”

China said it “will pay close attention to subsequent implementation measures by the United States and reserves the right to take further actions to safeguard the authority of the multilateral trading system.”

BACKGROUND

The United States needs to pay compensation to China to the tune of USD 645.121 million annually in terms of retaliatory duties on American goods imported by China, due to the award issued by the WTO arbitrator as a result of Washington’s failure to comply with a WTO ruling against US countervailing duty measures imposed on certain Chinese products.

This amount of USD 645.121 million constitutes the level of nullification or impairment suffered by the Chinese exporters due to Washington’s inconsistent measures that breached the rules set out in the WTO’s Subsidies and Countervailing Measures Agreement.

In an 87-page ruling, the arbitrator explained how the arbitration proceedings arose in a dispute launched by China against the US over its countervailing duties imposed on a range of Chinese products.

These countervailing duty measures were found to be WTO-inconsistent in the original and compliance panel proceedings.

Subsequently, China asked for authorization from the DSB to suspend concessions at an annual amount of USD 2.4 billion, which was objected to by the US.

The arbitrator was tasked “to establish whether the level of suspension of concessions that China requested for authorization are equivalent to the level of nullification or impairment (N/I) suffered by Chinese exporters.”

During the arbitrator’s proceedings, China further reduced this amount of USD 2.4 billion to USD 1.02 billion and later to USD 788.75 million.

“In light of the parties’ arguments and evidence in these proceedings, we have determined the appropriate level of N/I is USD 645.121 million per annum,” the arbitrator said.

The arbitrator further clarified that “we have calculated this figure based on the parties’ agreement to use a two- step Armington model similar to that applied in the arbitration decisions in US – Washing Machines (Article 22.6 – US) and US – Anti-Dumping Methodologies (China) (Article 22.6 – US).”

In conclusion, the arbitrator said that “we determine that the level of N/I of benefits accruing to China as a result of the WTO-inconsistent methodologies used by the United States in the CVD (countervailing duty) proceedings concerning products imported from China is USD 645.121 million per annum.”

“Therefore, in accordance with Article 22 of the DSU, China may request authorization from the DSB to suspend concessions or other obligations at a level not exceeding USD 645.121 million per annum.”