China Ends Duties On Cars And Begins Implementing WTO Decision On Chicken Products

by King & Spalding

Over the past year, many of the United States' disputes with China at the World Trade Organization ("WTO") over China's AD and CVD practices have moved toward resolution in favor of U.S. manufacturers. China recently has indicated that it will eliminate duties on U.S. auto exports and bring its measures on chicken broiler products into compliance with its WTO obligations. The dispute over Chinese measures on grain oriented flat-rolled electrical steel ("GOES"), however, is ongoing.

The U.S. launched the dispute over China's AD/CVDs on automobile exports in July 2012 following China's December 2011 imposition of duties on $3 billion worth of auto exports. The greatest impact was on exports from GM and Chrysler, which received government assistance during the 2009 financial crisis. While the WTO panel plans to release its report in March 2014, China ended the duties when no stakeholder requested a review at their scheduled expiration in December 2013. This Chinese decision does not appear to have ended the WTO dispute, which would require a mutually agreed solution between the parties. The removal of duties, however, would facilitate compliance if the eventual Dispute Settlement Body ("DSB") decision finds China's measures WTO-inconsistent.

The DSB adopted the panel report in the dispute over chicken products in September 2013. The panel report, which was not appealed, found that China had violated many procedural and substantive WTO obligations. After informing the DSB that it would implement the ruling within a reasonable period of time, the Chinese Ministry of Commerce announced in December 2013 that it would re-open the AD/CVD investigation in order to comply with the decision. WTO guidelines indicate that a reasonable time period for implementation should not exceed fifteen months from the DSB's adoption of the report, which would give China until December 25, 2014 to comply with the ruling.

In the GOES dispute, the U.S. prevailed on almost every claim at the panel and Appellate Body levels. In July 2013, China claimed that it had complied with the DSB ruling. China undertook a review of the original duty determination pursuant to the ruling, but it continued to impose duties after redetermination. The United States contends that the redetermination did not bring the measure into compliance, and in January 2014 it requested further consultations with China.

The most recent report of the United States Trade Representative ("USTR") on China's WTO compliance notes U.S. concerns about China's conduct of AD/CVD investigations. Although China's decision not to appeal the chicken products ruling and its termination of auto duties while the dispute is ongoing may indicate an increased willingness to bring its practice into compliance when forced to do so, China's response to the adverse rulings in GOES demonstrates that China has significant room for improvement, particularly in the legal and factual analyses underlying its injury determinations

-Jordan Shepherd

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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