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China Slams US Countervailing Duties

by Mary Swire, Tax-News.com, Hong Kong

27 December 2011


Following the decision of the United States Federal Court of Appeals against US countervailing duties, China’s Ministry of Commerce (MoC) issued a statement condemning their use against Chinese imports over the last five years.

The Court of Appeals for the Federal Circuit in Washington, D.C., ruled on December 19 that the US Commerce Department’s imposition of countervailing duties, of up to 210%, on Chinese-made tyres in 2008 was illegal.

Such duties are normally applied to maintain a competitive balance between the prices of domestically-produced and imported goods by offsetting any benefits of government subsidies to industries in the exporting country. However, the Court of Appeals decided that the US Congress had determined that government payments cannot be characterized as ‘subsidies’ in a non-market economy (NME), and therefore that, as had originally been held in the Trade Court in October 2010, countervailing duties do not apply to NME countries, such as China.

However, while the Court of Appeals gave no judgement as to a timetable for removing the duties on tyres, or whether any remedies should be applied, it has been noted that the decision by the Court of Appeals could have repercussions for duties on other products imported from China, such as steel and paper.

In addition, in March this year, a World Trade Organization (WTO) Appellate Body had already found that the imposition by the US of double remedies, that is, the offsetting of the same subsidization twice by the concurrent imposition of anti-dumping duties and countervailing duties, was inconsistent with its WTO obligations.

Consequently, after the Court of Appeal’s ruling, the MoC called on the US to halt similar duties imposed on other Chinese products. In its statement, it said that: “The US has for many years imposed anti-subsidy investigations on Chinese goods in contravention of WTO rules and (which) have no US legal basis”.

It hoped that the US government would quickly stop its frequent use of anti-dumping and countervailing measures to restrict Chinese products. It disclosed that the US Department of Commerce has, without any domestic legal basis, initiated 30 anti-dumping and countervailing duty cases against Chinese products, which it calls “typical of trade protectionism”.

The MoC added that it hoped that the US would now respect the US judicial decision. It pointed out that the US and China should adopt a relationship with a “more long-term perspective and a more open attitude, to work together to strengthen dialogue and coordination and oppose trade protection”.

TAGS: tax | commerce | tariffs | anti-dumping | China | trade disputes | United States | import duty | trade

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