TWN Info Service on WTO and Trade Issues (July17/02)
4 July 2017
Third World Network

China lowers MC11 ambition on AD-CVD, US still opposed
Published in SUNS #8492 dated 30 June 2017

Geneva, 29 Jun (D. Ravi Kanth) -- China faces an acid test for bringing about a modest outcome of improvements in trade remedies at the World Trade Organization's eleventh ministerial meeting in Buenos Aires in December as the United States remains dead opposed to any changes in the anti-dumping provisions as well as negotiated deliverables in the Argentinean capital.

In its latest proposal "on enhancing transparency and strengthening due process in anti-dumping and countervailing proceedings" circulated on 26 June, China has signalled its intention for a modest deliverable at Buenos Aires.

At a time when all efforts are focused on a comprehensive brand new agreement on fisheries subsidies in the Doha rules negotiations, particularly for prohibiting certain categories of fisheries subsidies that contribute to overfishing and depletion of fisheries stocks, China's proposal on trade remedies seems pretty truncated and inconsequential.

Yet, the Chinese proposal could face fierce opposition from the United States which does not want any negotiated outcomes at the WTO's eleventh ministerial meeting in Buenos Aires.

China says "transparency and due process in AD and CVD proceedings are vital for interested parties on both sides to effectively defend their rights and interests and for investigating authorities to make fair and impartial determinations."

Given the considerable volume of work done on transparency and due process in previous Doha rules negotiations since 2011, China says that it is time to consider improvements in AD provisions.

The improvements in transparency and due process include further clarifications in (a) "petitioner's standing" in Article 5.4 of the Anti-Dumping Agreement (ADA), (b) "notice before initiation" in Article 5.5 and 6.13 of ADA, (c) "access to information" (ADA Articles 6.4, Articles 6.5.1), (d) "disclosure" (ADA Article 6.9), and (e) transparency and due process in CVD proceeding.

China has listed the proposed amendments to the Anti-Dumping Agreement in Article 5 on "initiation and subsequent investigation."

In Article 5 of the ADA, China wants that "no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25% of total production of the like product produced by the domestic industry."

China has elaborated the proposed amendment to Article 5 as follows:

5.4 An investigation shall not be initiated pursuant to paragraph 1 unless the authorities have determined, on the basis of an examination of the degree of support for, or opposition to, the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry. The application shall be considered to have been made "by or on behalf of the domestic industry" if it is supported by those domestic producers whose collective output constitutes more than 50% of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25% of total production of the like product produced by the domestic industry. For the purpose of this paragraph, the term "domestic industry" shall be interpreted as referring to the domestic producers as a whole of the like product, subject to the application of Article 4.1(i) and 4.1(ii)."

As regards evidence in Article 6, China says "as soon as an investigation has been initiated, the authorities shall provide the full text of the written application received under paragraph 1 of Article 5 to the known exporters and shall make it available, upon request, to other interested parties involved. Due regard shall be paid to the requirement for the protection of confidential information, as provided for in paragraph 5."

Further, "the authorities shall, before a final determination is made, provide all interested parties with a written report of the essential facts under consideration which they intend will form the basis for the decision whether to apply definitive measures. Interested parties shall have 20 days to respond to this report and the authorities shall address such responses in their final determination."

China also proposed amendments to "initiation and subsequent investigation" in Article 11 of the Agreement on Subsidies and Countervailing Measures." It has suggested the following amendment in Article 11.2:

"An application under paragraph 1 shall include sufficient evidence of the existence of (a) a subsidy and, if possible, its amount, (b) injury within the meaning of Article VI of GATT 1994 as interpreted by this Agreement, and (c) a causal link between the subsidized imports and the alleged injury. Simple assertion, unsubstantiated by relevant evidence, cannot be considered sufficient to meet the requirements of this paragraph. The application shall contain such information as is reasonably available to the applicant on the following:

(iii) evidence with regard to the existence of elements including financial contribution, benefit and specificity of the subsidy in question."

These improvements in China's latest proposal seem to be a considerably scaled down version as compared to China's earlier proposal circulated on April 24, trade negotiators said.

China's last proposal had called for improvements on five "doable" issues so to finalize an outcome at the World Trade Organization's eleventh ministerial meeting in Buenos Aires in December.

The five issues identified by China include (i) enhancing transparency and strengthening due process, (ii) preventing anti-dumping measures from becoming "permanent", (iii) preventing AD measures from "over-reaching", (iv) special consideration and treatment of small and medium enterprises, and (v) transplanting similar provisions from the Agreement on Anti-dumping (ADA) to the Agreement on Subsidies and Countervailing Measures (ASCM).

China had also linked progress in trade remedies to an ambitious outcome in the fisheries subsidies on grounds that it needs a "balanced" result in the Doha rules negotiations.

But, at an informal open-ended meeting convened by the Chair for Doha rules negotiations Ambassador Wayne McCook of Jamaica on 31 May, the US rejected China's proposal, saying there was no basis for discussing the improvements based on the Doha agenda on grounds that some members had not accepted the continuation of Doha negotiations at the WTO's tenth ministerial conference in Nairobi in December 2015.

The US also said it will not take part in any further discussions on issues raised by China in its proposal for improving provisions governing trade remedies.

The US position was not shared by members, particularly the friends of the anti-dumping group led by Japan.

Some members had also ruled out any linkage between an outcome on fisheries subsidies to improvements in rules governing trade remedies.

The US Trade Representative Ambassador Robert Lighthizer has said in his prepared remarks recently that "looking ahead to December, we are pursuing (a) successful ministerial in Buenos Aires this December that reinvigorates the WTO [with the previous Uruguay Round Agreements]. We do not advocate a meeting that seeks major deliverables or significant negotiated outcomes."

Further, according to a news report in the Financial Times, Ambassador Lighthizer had also warned the WTO Director-General Roberto Azevedo that any decision to label China "a market economy" would have "cataclysmic" consequences for the body.

He told the US Senate Finance Committee that the US was eager to see changes in the WTO's dispute resolution system.

According to the news report in the Financial Times, Ambassador Lighthizer singled out a dispute brought last December by China against the European Union whether it should be deemed a market economy as the "most serious litigation that we have at the WTO right now."

Against this backdrop, it remains moot whether China will press ahead with its proposal on improvements in the Anti-Dumping Agreement or remain silent when push comes to shove, said a trade negotiator who asked not to be quoted. +