Inevitable: China Files WTO Dispute re: 22 US CVD Cases

As you may recall, when the United States passed a law in March 2012 overruling a couple federal court decisions and retroactively applying US law to scads of completed countervailing duty investigations of Chinese imports, I explained that the law's illogical, biased structure - in particular, not addressing WTO-inconsistent "double counting" in any case completed before the law's enactment - all but guaranteed at least one WTO challenge from the Chinese government because the WTO's Appellate Body (in DS379) had already ruled that a failure to fix the problem in several other cases violated WTO rules.

The first dispute, it appears, arrived today:

China has asked for consultations at the World Trade Organization's Dispute Settlement Body on countervailing duty measures applied by the U.S. against 22 Chinese products, including solar panels, a statement posted on the Commerce Ministry's website said Friday.

The measures also were related to paper and steel products and affected $7.29 billion of Chinese exports to the U.S., Commerce Ministry spokesman Shen Danyang said in the statement.

U.S. actions on subsidy calculations and in determining that China's export restrictions were "effectively a subsidy" are violations of WTO rules, Mr. Shen added....

"The U.S. practices are an abuse of the trade remedy mechanisms and have damaged the legitimate interests of Chinese companies," Mr. Shen said. "We are greatly dissatisfied with this."

Mr. Shen said China has reiterated its stance on many occasions, but the U.S. has ignored China's concerns and "repeated its improper methods in the recent solar panel case."...

"China is hoping that the U.S. will correct its mistaken actions in anti-subsidy investigations," Mr. Shen said, adding that Beijing also hopes the U.S. "will use positive talks and communication under the WTO dispute-resolution mechanism to return to practices that are in line with WTO rules."

If consultations fail to produce a solution, China may request a ruling by a WTO panel.

China's formal request for consultations isn't yet available on the WTO's website, but the WSJ article makes clear that China is challenging several issues in these investigations.  BNA[$] adds that, according to the Chinese mission in Geneva, one of those issues is the US Commerce Department's treatment of Chinese state-owned enterprises as "public bodies" (i.e., as the Chinese government itself) in order to determine whether their sales of goods and services to targeted exporters constitute subsidies.  As you may recall, the public body issue also was addressed in DS379, and the United States just informed the WTO that it published on May 18 a preliminary determination on public bodies in the "Section 129" determination that the Commerce Department is (delinquently) completing to comply with the Appellate Body's DS379 report.

I guess Commerce's May 18 determination wasn't what the Chinese Government was hoping for, eh?

Anyway, today's WTO dispute adds to the long string of litigation surrounding the United States' application of CVDs on imports from China and other "non-market economies."  The US government recently had the opportunity to end much of this litigation, but instead doubled-down on the messy status quo when it passed the CVD/NME law in March and in the subsequent Section 129 proceedings.  Since then, we've seen the law's constitutionality challenged in US court, and now China's back at the WTO complaining about, among other things, what the law didn't fix in 20-plus CVD investigations.  Both of these legal reactions were completely expected, and pretty much ensure that US-China trade policy will be marred by an issue that (a) was easily solvable via one of several rational policy options; (b) keeps the US on the defensive in bilateral trade talks; and (c) increasingly looks to be putting American exports at risk via China's imposition of WTO-sanctioned retaliatory tariffs due to continued US malfeasance.

But other than that...