1. CHINA ‑ COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL (GOES) FROM THE UNITED STATES
A. REPORT OF THE APPELLATE BODY (WT/DS414/AB/R) AND REPORT OF THE PANEL (WT/DS414/R)
The United States would like to begin today by thanking the Panel, the Appellate Body, and the Secretariat assisting them for their hard work in this dispute.
Grain-oriented flat-rolled electrical steel (GOES) is a high‑tech, high‑value magnetic specialty steel. The countervailing duties (CVD) and anti-dumping (AD) duties that China maintains on U.S. exports of GOES unfairly restrict U.S. trade to this important market. In fact, since China initiated its investigation, U.S. exports of GOES to China have fallen to virtually nothing.
Both the Panel and the Appellate Body in this dispute found serious and pervasive deficiencies with China’s measures. The United States would like to draw attention to several key findings included in these reports.
First, the Panel found that China’s initiation of the CVD investigation into several purported subsidies was inconsistent with Article 11.3 of the SCM Agreement, concluding that an objective investigating authority would not have initiated an investigation in the first place based on the petition’s unsupported allegations.
Second, the Panel found that China failed to require non-confidential summaries of allegedly confidential information in breach of Article 12.4.1 of the SCM Agreement, and Article 6.5.1 of the AD Agreement, a failure that prevented the United States and U.S. companies from gaining a reasonable understanding of the substance of the information.
Third, the Panel found that China breached Article 12.7 of the SCM Agreement because there was no factual basis for its determination regarding the utilization rate of certain programs. In fact, China’s determination was actually contrary to facts that were on the record.
Fourth, the Panel found that China breached numerous provisions of the SCM and AD Agreements by improperly applying duties to other U.S. exporters/producers of GOES based on facts available. China compounded the error by failing to disclose the essential facts, and failing to explain the findings and conclusions that led to this result.
Fifth, the Panel found that China’s price effects analysis in its injury determination underlying both its CVD and AD investigations was fundamentally flawed. Among the numerous deficiencies cited by the Panel were (a) China’s failure to disclose essential facts supporting the analysis, (b) China’s failure to base this analysis on positive evidence, (c) China’s failure to engage in an objective examination of the evidence, and (d) China’s failure to offer an adequate explanation for its price effects findings.
Sixth, and finally, the Panel found that China’s causation analysis in its injury determination contained the same defects as its price effects analysis.
On appeal, China only challenged the Panel’s price effects findings. The Appellate Body fully rejected China’s claims and upheld the findings of the Panel. In particular, the Appellate Body upheld the Panel’s findings that China’s price effects analysis was flawed, China failed to disclose essential facts, and China failed to explain its determination.
Mr. Chairman, we think that Members will agree that these are serious flaws, which deprived respondents of the opportunity to adequately defend their interests. It is striking that China’s measures were based on such pervasive errors and deficiencies. Furthermore, the problems identified in these reports were not confined to the particular AD/CVD investigations on U.S. GOES that are at issue here, but have been repeated in other investigations, several of which are also subject to WTO dispute settlement.
In conclusion, Mr. Chairman, the United States is pleased to propose that the DSB adopt these important reports. We look forward to action by China to address the findings in this dispute and more broadly to ensure that all of the AD and CVD investigations that it conducts comport with its obligations.
This point already may be quite apparent but the United States would add that we would not share many of China’s characterizations of the reports that we are adopting today. We simply would invite Members to take a look at these reports and we think that they confirm the understanding that we’ve advocated today.