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United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China: Re-Litigating through the Backdoor?

Published online by Cambridge University Press:  16 June 2021

Christine McDaniel  and
Edwin Vermulst
Christine McDaniel*
Affiliation:
Mercatus Center, George Mason University, Arlington, VA, USA
Edwin Vermulst
Affiliation:
VVGB Advocaten, Brussels, Belgium
*
*Email: cmcdaniel@mercatus.gmu.edu
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Abstract

This paper presents a legal-economic analysis of the World Trade Organization's Article 22.6 arbitration report on the dispute over certain United States’ antidumping methodologies. The Arbitrator sought to quantify the damages suffered by China due to US non-compliance with an earlier ruling. The case covered 25 antidumping duty determinations for which at least one of three methodologies (weighted average-to-transaction; single rate presumption; and zeroing) was incorrectly applied. Damage calculations rely heavily on how the counterfactual is defined – what would have been the duty had it not been for the inconsistent measures? The Arbitrator deemed a zero-duty counterfactual to be appropriate, but the justifications were in our view weak and illustrate the danger of an Arbitrator essentially performing re-litigation of violations that may or may not have occurred in the administrative investigations. We conclude that the Arbitrator may have gone above and beyond its mandate in this determination.

Keywords

World Trade OrganisationDispute SettlementAntidumping
Type
Original Article
Information
World Trade Review , Volume 20 , Special Issue 4: WTO Case Law , October 2021 , pp. 546 - 555
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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References

1 United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China (US–Anti-Dumping Methodologies (China)), Recourse to Article 22.6 of the DSU by the United States, WT/DS471/ARB, 1 November 2019.

2 Panel Report, US–Anti-Dumping Methodologies (China), WT/DS471/R, as modified by Appellate Body Report WT/DS471/AB/R, adopted 22 May 2017.

3 In anti-dumping investigations against China, the USDOC presumes that all NME companies are part of a single entity and therefore assigns one single duty rate to them (Single Rate Presumption or SRP), unless specific exporters demonstrate absence of government control, both in law and in fact, over their export activities by completing a separate rate application form and satisfying the conditions of the Separate Rate Test [SRT], essentially by showing that they operate without state interference.

4 See for a detailed analysis: T.J. Prusa and E.A. Vermulst (2018) ‘United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China: Nails in the Coffin of Unfair Dumping Margin Calculation Methodologies’, World Trade Review 18(2), 287–307.

5 This was the third largest arbitral award in the history of the WTO. The largest was the recent case European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, Recourse to Article 22.6 of the DSU by the European Union, WT/DS316/ARB, 2 October 2019, of $7.5B and then United States – Tax Treatment of ‘Foreign Sales Corporations’, Recourse to Article 22.6 of the DSU by the United States, WT/DS/108/ARB, 30 August 2002, of $4B.

6 United States – Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea – Recourse to Article 22.6 of the DSU by the United States (US–Washing Machines), WT/DS464/ARB, 8 February 2019, discussed in E. Balistreri, P.C. Mavroidis, and T.J. Prusa (2020) ‘What If? Tinkering with the Counterfactual. A Comment on US – Washing Machines (Article 22.6 – US)’, RSCAS Working Papers 2020/40, European University Institute.

7 Coated Paper, Oil Country Tubular Goods, and Steel Cylinders.

8 PET Film.

9 Aluminum Extrusions, Bags, Coated Paper, Diamond Sawblades, Furniture, Oil Country Tubular Goods, OTR Tires, PET Film, Ribbons, Shrimp, Solar Panels, Steel Cylinders and Wood Flooring.

10 See Prusa and Vermulst, ‘US – Certain Methodologies’, at 301, supra n. 4.

11 Copper Pipe and Tube, Iron Pipe Fittings, Passenger vehicle and Light Truck Tires, Residential Washers, Sheet and Strip, Steel Flat Products, Steel Line Pipe, Steel Nails, Steel Pipe, Steel Products, Steel Standard, Line, and Pressure Pipe and Steel Wire Rod.

12 US –Anti-Dumping Methodologies (China), paras 3.12–3.13.

13 Aluminum Extrusions from the People's Republic of China (Aluminum Extrusions).

14 Certain New Pneumatic Off-The-Road Tires from the People's Republic of China (OTR Tires).

15 Ibid., para. 3.10. For the minority opinion, see para. 3.11.

16 Ibid., paras. 5.1–5.3.

17 Ibid., paras. 5.7, 5.12.

18 Ibid., para. 5.11.

19 Certain Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses from the People's Republic of China (Coated Paper).

20 Certain Oil Country Tubular Goods from the People's Republic of China (Oil Country Tubular Goods).

21 High Pressure Steel Cylinders from the People's Republic of China (Steel Cylinders).

22 Polyethylene Terephthalate Film, Sheet, and Strip from the People's Republic of China (PET Film).

23 Excluding zero and de minimis margins and margins based on facts available (Article 9.4 ADA).

24 Prusa and Vermulst, ‘US – Certain Methodologies’, at 302–304, supra n. 4.

25 Ibid., para. 5.37.

26 See for an explanation of the double-counting issue, T.J. Prusa and E. Vermulst (2013) ‘United States – Anti-Dumping and Countervailing Duties on Certain Products from China: Passing the Buck on Pass-Through’, World Trade Review 12(2), 197–234.

27 US–Anti-Dumping Methodologies (China), para. 5.40 and case law support in footnotes 116 and 117.

28 Ibid., paras. 5.44–5.45.

29 Ibid., para. 5.49.

30 Ibid., para. 5.50.

31 Ibid., para. 5.51.

32 J. Francois and K.H. Hall (2003) ‘Global Simulation Analysis of Industry-Level Trade Policy’, technical paper, Version 3.0: 21 April 2003, mimeo (World Bank).

33 ‘United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China’, Recourse to article 22.6 of the DSU by the United States, Decision of the Arbitrator, page 34, www.wto.org/english/tratop_e/dispu_e/471arb_e.pdf.

34 This is like the approach taken by the EU courts.

35 United States – Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea, WT/DS464/AB/R, 7 September 2016. For an excellent discussion of the counterfactual and this two-step approach, see Balistreri, Mavroidis, and Prusa, ‘What If?’, supra n. 6.