Friday, September 21, 2012

CVD/NME Law Now in the WTO's Crosshairs

As you may recall, when the US government implemented a new law in March retroactively applying countervailing duties to imports from non-market economies (NMEs) like China and Vietnam, I opined that (contrary to what the staff on the House Ways & Means Committee were claiming)legal challenges in both US courts and the WTO were inevitable.  The US court cases were quick to follow and a couple WTO disputes (one by India and another by China) emerged on other US CVD issues, but the CVD/NME law itself remained unmentioned in WTO dispute settlement. 

Until now.

As noted Monday, on the same day that President "I love Detroit" Obama brazenly announced a new dispute against Chinese auto subsidies, China filed its own case against US anti-dumping and countervailing duty measures.  Today the WTO finally released China's request for consultations in that dispute, and it reveals that China has officially put the CVD/NME law (aka Public Law 112-99) in its WTO crosshairs.  In particular, China has challenged (i) the law; (ii) any and all determinations in connection with AD or CVD investigations or reviews of Chinese imports that were initiated between November 20, 2006 (the date of the first CVD case against China) and March 13, 2012 (the date of the CVD/NME law's implementation) - a total of 31 CVD investigations, 31 AD investigations and 6 reviews; and (iii) "as an omission, the failure of the United States to provide the US Department of Commerce with legal authority to identify and avoid the double remedies that are likely to result when the USDOC applies countervailing duties in conjunction with anti-dumping duties determined in accordance with the US non-market economy methodology (hereinafter, 'double remedies'), in respect of investigations or periodic reviews initiated on or between" the aforementioned dates.

The legal claims are pretty complex, but there are four main parts:
  1. Section 1 of the law (retroactive application back to 2006) "as such" and all related AD/CVD measures are inconsistent with GATT Articles X:1, X:2, and X:3;
  2. Section 2 of the law (prospective application of the double remedy provisions) "as such" is inconsistent with GATT Article X;
  3. The "absence of any basis under domestic law for the US authorities to identify and avoid double remedies in respect of investigations and reviews initiated between 20 November 2006 and 13 March 2012 is an omission that is inconsistent, as such, with" Articles 10, 15, 19, 21, and 32 of the SCM Agreement, GATT Article VI,and Articles 9 and 11 of the AD Agreement; 
  4. The "failure of the US authorities to investigate and avoid double remedies in the identified investigations and reviews" has caused (i) all resulting CVD measures to be inconsistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement, as well as GATT Article VI and (ii) all associated AD measures to be inconsistent with Articles 9 and 11 of the AD Agreement and GATT Article VI.
Like I said, complex.  (Of course, all of this complexity could've easily been avoided had someone in the US government just heeded my advice back in February.  Alas.)

More to come, I'm sure.

(And no, I'm not holding my breath waiting for Ways & Means staff to apologize.)

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