U.S. Says it Will Implement WTO Ruling on AD/CV "Double Counting"

On April 21, 2011, the U.S. announced its intention to implement the World Trade Organization's Appellate Body ruling against its practice of “double counting” subsidies in four U.S. antidumping and countervailing investigations of products from China (DS379), and requested a reasonable period of time to do so.

(The investigations were on certain new pneumatic off-the-road tires, laminated woven sacks, circular welded pipe, and light-walled rectangular pipe and tube.)

Appellate Body Said U.S. Couldn’t Account for Same Subsidy Twice

In March 2011, the Appellate Body (AB) ruled against the U.S. imposition of “double remedies” which it described as the offsetting of the same subsidization twice by the concurrent imposition of AD duties calculated on the basis of an NME methodology and CV duties.

This and other findings reversed certain positions taken by an October 2010 WTO panel, which had upheld the U.S. "double counting" practice.¹

Not Yet Clear How U.S. Will Implement Ruling

It is not yet known how the U.S. will address the double counting issue in its implementation (i.e., whether it will simply remove the CV duties or try to adjust for double counting in some other way such as by keeping CV duties in place but lowering the AD duty, etc.) It is also not yet clear whether the U.S. will implement the WTO ruling broadly or only with respect to the four products subject to the dispute.

CV Duties Usually Lower than AD Duties for China

Note that CV duties are usually significantly less than AD duties for China. For example, the China-wide and all-others’ rates were as follows for recent AD and CV duty orders for China:

However, for a recent case on aluminum extrusions from China, the all-others CV rate was 374%, much higher than its AD counterpart, which was 33%.

CIT also Ruled Against AD/CV Double Counting in China Tire Case

In August 2010, the Court of International Trade also rejected ITA’s approach to combined AD and CV duty tariffs on imports from non-market economies, and ordered the agency to forego imposing CV duties on off-the-road (OTR) tires from China (one of the four products at issue in the WTO dispute).

However, the court denied a motion by Chinese producers of OTR who sought an injunction to lift the CV duty deposits based on this August 2010 finding, citing the unsettled state of the law, a pending appeal by the government, and lack of irreparable harm. (See ITT’s Online Archives or 08/09/10 and 10/21/10 news, 10080911 and 10102104, for BP summaries.)

Before 2007, ITA Only Applied AD Duties on China

Prior to 2007, the International Trade Administration (ITA) did not apply CV duties to non-market economy (NME) imports because the existence of a centrally controlled economy in an NME made it difficult to identify specific actions as subsidies. However, in 2007, the agency reversed this long-standing position and found that although China remained designated an NME country for AD duty purposes, it could also apply CV duty law to products from China.

¹The AB reversed another panel ruling and found that certain Chinese state-owned enterprises (SOEs) are “public bodies.” However, the AB also upheld certain of the panel’s findings, including those which found the following practices to be WTO-consistent: (i) “public body” determinations with respect to certain state-owned commercial banks (SOCBs); (ii) use of benchmarks from outside of China to measure the “benefit” of certain subsidies; and (iii) determination that certain subsidies were “specific” to a particular industry. (See ITT’s Online Archives or 03/14/11 news, 11031414, for BP summary of the AB ruling.)