China to Ask WTO for Permission to Retaliate Over CVD Cases

China is going to ask the World Trade Organization to authorize retaliatory tariffs on $2.4 billion worth of goods at the WTO's dispute settlement body meeting Oct. 28. If the U.S. disagrees with either the argument that it's not complying with the ruling on countervailing duties, or the amount of retaliation permitted, an arbitrator will decide how much China may retaliate.

China says that's equivalent to the CVD levied in 12 cases between 2007 and 2012 (see 1907160044). The appellate body said that China's state-owned enterprises can be market distorting, but also said that Commerce did not prove specificity in the subsidies for the products, and it also could not show how the SOE inputs distorted market prices. It was not allowed to use other countries' prices as reference points to prove market distortions, the WTO said, unless it had specific evidence that government interference in the market warranted that. The appeal said that countries' ability to use other countries' prices in CVD cases is "very limited."

Given that most of U.S. exports to China have already faced retaliatory duties because of U.S. unilateral actions under Sections 232 and 301, it's not clear where China could place duties, once an arbitrator rules.