26 January 2022
On 26 January, a WTO arbitrator issued a decision on the level of countermeasures China may request in its dispute with the United States regarding US countervailing duties on certain products from China (DS437).
DS437 United States — Countervailing Duty Measures on Certain Products from China
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- United States – Countervailing duty measures on certain products from China – Recourse to article 22.6 of the DSU by the United States – Decision by the Arbitrator – BCI omitted, as indicated [[***]]
WT/DS437/ARB | 26 January 2022
Summary of the dispute to date
The summary below was up-to-date at 26 January 2022
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 25 May 2012, China requested consultations with the United States concerning the imposition of countervailing duty measures by the United States on certain products from China.
China challenges various aspects of certain identified countervailing duty investigations, including their opening, conduct and the preliminary and final determinations that led to the imposition of countervailing duties. China also challenges the “rebuttable presumption” allegedly established and applied by the US Department of Commerce that majority government ownership is sufficient to treat an enterprise as a “public body”.
China claims that the challenge measures are inconsistent with:
- Article VI of the GATT 1994;
- Articles 1.1, 2, 11.1, 11.2, 11.3, 12.7 and 14(d) of the SCM Agreement; and
- Article 15 of the Protocol of Accession of China.
Panel and Appellate Body proceedings
On 20 August 2012, China requested the establishment of a panel. At its meeting on 31 August 2012, the DSB deferred the establishment of a panel.
At its meeting on 28 September 2012, the DSB established a panel. Australia, Brazil, Canada, the European Union, India, Japan, Korea, Norway, the Russian Federation, Turkey and Viet Nam reserved their third party rights. Subsequently, Saudi Arabia reserved its third party rights.
On 14 November 2012, China requested the Director-General to determine the composition of the panel. On 26 November 2012, the Director-General composed the panel. On 29 April 2013, the Chair of the panel informed the DSB that the timetable adopted by the panel after consultations with the parties envisaged that the final report would be issued to the parties by January 2014. On 18 November 2013, the Chair of the panel informed the DSB that due to the complexity of the issues raised by the parties in this dispute, the panel expected to conclude its work in May 2014.
On 14 July 2014, the panel report was circulated to Members.
On 22 August 2014, China filed an appeal covering most of the issues on which the Panel did not rule in its favour. On 27 August 2014, the United States filed a cross-appeal of the Panel’s preliminary determination relating to the consistency of one section of China’s panel request with Article 6.2 of the DSU. The United States did not appeal the Panel’s finding that the USDOC’s application of a “rebuttable presumption” to determine whether certain entities can be characterized as “public bodies” was inconsistent “as such” with Article 1.1(a)(1) of the SCM Agreement. Nor did the United States challenge on appeal the Panel’s finding that the “public body” determinations made by the USDOC in 14 countervailing duty investigations were inconsistent with the same provision, or the Panel’s findings regarding the USDOC’s treatment of certain export restraints in two of the investigations at issue.
On 18 December 2014, the Appellate Body report was circulated to Members.
At its meeting on 16 January 2015, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.
Reasonable period of time
On 13 February 2015, the United States informed the DSB that it intended to implement the DSB’s recommendations and rulings in a manner that respects its WTO obligations, and that it would need a reasonable period of time to do so. On 26 June 2015, China requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. On 9 July 2015, China requested the Director-General to appoint the arbitrator. On 17 July 2015, the Director-General appointed Mr Georges M. Abi-Saab to act as arbitrator under Article 21.3(c) of the DSU. On 22 July 2015, Mr Abi-Saab accepted this appointment.
On 9 October 2015, the Award of the Arbitrator was circulated to Members. The Arbitrator determined the reasonable period of time as 14 months, 16 days. The reasonable period of time will thus expire on 1 April 2016.
Implementation of adopted reports
On 15 April 2016, China and the United States informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.
Compliance proceedings
On 13 May 2016, China requested consultations pursuant to Article 21.5 of the DSU, in connection with the United States’ alleged failure to implement the recommendations and rulings of the DSB in this dispute. On 8 July 2016, China requested, pursuant to Article 21.5 of the DSU, the establishment of a compliance panel. At its meeting on 21 July 2016, the DSB agreed to refer to the original panel, if possible, the matter raised by China. Australia, Canada, the European Union, India, Japan, Korea, the Russian Federation, and Viet Nam reserved their third party rights. On 26 September 2016, China requested the Director-General to determine the composition of the panel because two of the original panelists were not available to serve in the compliance panel proceedings. On 5 October 2016, the Director-General composed the panel. On 15 November 2016, the Chairperson of the compliance panel informed the DSB that the compliance panel expected to issue its final report to the parties in the second half of 2017.
On 21 March 2018, the Compliance panel report was circulated to Members.
On 27 April 2018, the United States notified the DSB of its decision to appeal to the Appellate Body certain issues of law covered in the compliance panel report and certain legal interpretations developed by the compliance panel. On 2 May 2018, China notified the DSB of its decision to cross-appeal.
Although the appeal in this dispute was initiated in April 2018, work on this appeal could gather pace only in October 2018. On 2 July 2019, the Chair of the Appellate Body notified the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated to WTO Members on 16 July 2019. In an earlier communication, the Chair of the Appellate Body had explained that this was due to a number of factors, including the backlog of appeals pending with the Appellate Body at present and the overlap in the composition of all divisions resulting in part from the reduced number of Appellate Body Members.
On 16 July 2019, the Appellate Body report was circulated to Members.
At its meeting on 15 August 2019, the DSB adopted the Appellate Body report and the panel report, as upheld by the Appellate Body report.
Proceedings under Article 22 of the DSU (remedies)
On 17 October 2019, China requested the authorization of the DSB to suspend concessions or other obligations pursuant to Article 22.2 of the DSU on the grounds that the United States had failed to comply with the DSB’s recommendations and rulings within the reasonable period of time provided in agreed procedures under Articles 21 and 22 of the DSU (sequencing agreement). On 25 October 2019, the United States informed the DSB that it objected to China’s proposed level of suspension of concessions pursuant to Article 22.6 of the DSU.
At the DSB meeting on 28 October 2019, the Chair of the DSB took note that the matter raised by the United States had been referred to arbitration pursuant to Article 22.6 of the DSU.
The Arbitrator was composed by one of the original panelists and two other individuals.
On 26 January 2022, the arbitration report was circulated to Members.