On November 1, the World Trade Organization (WTO) issued a decision arising from a longstanding dispute between the United States and China concerning certain methodologies used by the United States in anti-dumping (AD) proceedings involving imports of Chinese products. In this dispute, China argued that certain methodologies used by the U.S. Department of Commerce (Commerce) were inconsistent with WTO agreements and obligations, and a full WTO Dispute Settlement Body (DSB) concurred in May 2017. These inconsistencies fall into two categories: (1) findings of inconsistency concerning U.S. use of the weighted average-to-transaction (WA-T) methodology with “zeroing” in calculating dumping margins; and (2) findings of inconsistency concerning U.S. treatment of multiple exporters as a single government-wide entity under the so-called Single Rate Presumption.
The United States was given until August 22, 2018, to implement the DSB’s recommendations and rulings. When Commerce failed to address these inconsistencies, China sought WTO authorization to retaliate in the amount of $7.043 billion in tariffs as to trade in goods. In considering this request, the WTO arbitration panelists reviewed 25 Commerce AD orders and – while rejecting China’s proposed calculation model – nevertheless determined “that the level of nullification or impairment of benefits accruing to China as a result of the WTO-inconsistent methodologies used by the United States in anti-dumping proceedings concerning products imported from China is 3,579.128 million USD per annum.” As a result, China will be allowed to formally request the implementation of these retaliatory duties at the next DSB meeting on November 22, 2019.