WTO Panel Rules Against China In Anti-Dumping And Countervailing Duty Investigations Of Grain Oriented Flat-Rolled Electrical Steel

Keywords: WTO Panel, China, Anti-Dumping, countervailing duty, CVD

On June 15, 2012, a World Trade Organization (WTO) dispute settlement Panel circulated its decision in the challenge brought by the United States regarding China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat- Rolled Electrical Steel (GOES) from the United States (WT/DS414/R). The United States had raised numerous claims, most of which were upheld by the Panel, regarding the manner in which China's investigating authority, MOFCOM, initiated and conducted these antidumping (AD) and countervailing duty (CVD) investigations. The Panel found China's analysis lacking in a number of respects, which may require China to revise its approach to AD and CVD investigations generally.

The Panel began by analyzing the United States' challenge to MOFCOM's initiation of the CVD investigation. The Panel first held that, under Articles 11.2 and 11.3 of the Subsidies and Countervailing Duty Measures (SCM) Agreement, an investigation is unjustified when an investigating authority lacks "sufficient evidence" of a subsidy, even if the evidence was not "reasonably available" to the applicant.

The Panel next reviewed the general requirements for a subsidy to exist and to be countervailable under the SCM Agreement, including that it be "specific" to particular users. The Panel rejected China's argument that, for purposes of initiation, the evidentiary standard for showing specificity is lower than for the other required elements of a subsidy. According to the Panel, "The same standard of 'sufficient evidence' applies regardless of whether the evidence relates to the existence of a financial contribution, benefit or specificity." The Panel went on to find that MOFCOM had lacked sufficient evidence to initiate the investigation as to any of the 11 alleged subsidy programs challenged by the United States.

The Panel next considered whether the Chinese applicants had provided adequate nonconfidential summaries of their data, as required by Articles 12.4.1 of the SCMAgreement and 6.5.1 of the AD Agreement. As explained by the Panel, both provisions require that summaries permit a "reasonable understanding" of the substance of the confidential information submitted, unless "exceptional circumstances" exist, in which case a statement of reasons why summarization is not possible must be provided. In this case, with respect to each issue challenged by the United States, the Panel found that the relevant summaries were inadequate.

The Panel upheld MOFCOM's finding that the respondents had failed to cooperate with certain requests for necessary information in the CVD investigation, thus justifying resort to "facts...