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China challenges US bill on countervailing duties

Publication Date : 18-09-2012

 

A US trade bill that could see tariffs and duties slapped on Chinese exports has prompted China to request a consultation with the US through the World Trade Organisation.

The bill entitles the US Department of Commerce to continue levying countervailing duties on imports from non-market economies like China and Vietnam that it believes are subsidised.

US President Barack Obama signed the bill into law in March, despite a decision by the US Court of Appeals for the Federal Circuit that the US countervailing-duty law should not be applied to non-market economies.

China and the US have 60 days for the consultation, according to WTO rules.

China "is willing to solve the dispute through consultation", while a failure of the consultation will entitle China to ask for a panel to look into the case, according to an unnamed source from the Department of Treaty and Law of the Ministry of Commerce.

Tu Xinquan, deputy director of the China Institute for WTO Studies at the University of International Business and Economics in Beijing, said the US passed the law very quickly with little debate, which did not give WTO members a chance for discussion under WTO rules.

"The consultation will definitely reach no result because the US Department of Commerce has no right to overturn a law that had already been enacted at home," Tu said.

"The US Congress is unlikely to cancel the law following China's opposition because the US seldom steps down from launching anti-dumping and countervailing investigations against China," Tu said.

Shen Danyang, spokesman of the ministry, said on the website of China's Ministry of Commerce that, despite having no legal basis, the US has launched more than 30 countervailing investigations against Chinese exports since 2006, which it justifies through the law applied retroactively.

"The US moves violate the WTO rules including transparency and due process and thus put Chinese enterprises in an uncertain legal environment."

The transparency rule of the WTO requires its members to publish the enacting and adoption of trade measures. Any measures that are not published should not be applied.

"By tracing the countervailing investigations back to 2006, the US was applying a law that was not published and ran against the WTO rule of transparency," a source with the Department of Treaty and Law of the ministry said in a news briefing.

"Also, there was not a transitional period between the publishing and the application of the bill and thus deprived the citizens and enterprises of a predictable legal environment, which ran against the due process of the WTO rules."

Since the first countervailing investigation against Chinese exports in November 2006, the US has launched more than 30 investigations against 24 types of Chinese exports worth more than US$7.2 billion, according to the Ministry of Commerce.

"Politics are partly responsible for the US move in a presidential election year. But there has been a long-running accusation that Chinese exporters have won their competitive edge through huge government subsidies," the unnamed source from the Commerce Ministry said.

The Obama administration will announce a trade complaint against China as he campaigns in Ohio, alleging impermissible subsidies of auto and auto-parts exports that encourage outsourcing to China from the US, Bloomberg cited an unnamed administration official as saying yesterday.

The US is accusing China of $1 billion in illegal subsidies between 2009 and 2011 that benefit as much as 60 per cent of Chinese auto-parts exports, according to the official.

 

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