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TWN
Info Service on WTO and Trade Issues (Apr24/04) A panel report circulated by the WTO on 26 March suggests that Australia violated several provisions of the WTO’s Anti-Dumping Agreement. In a statement, China said, “the panel report is clear and unequivocal in finding that the anti-dumping measures taken by Australia against certain products from China are incorrect and discriminatory.” Beijing said that it “looks forward to Australia’s respect of the WTO rulings, immediate correction of its inconsistent practices and elimination of the anti-dumping duties imposed.” It expressed hope that “Australia could strictly follow the WTO rules in other trade remedy investigations, work together with China to support the multilateral trading system, and promote a healthy bilateral economic and trade relationship.” BACKGROUND On 24 June 2021, China requested consultations with Australia with respect to anti-dumping and countervailing duty measures imposed by Australia on Chinese wind towers, deep drawn stainless steel sinks and railway wheels. A panel of arbitrators under the auspices of the newly created Multi-Party Interim Arbitration Arrangement, pursuant to Article 25 of the Dispute Settlement Understanding (DSU), pronounced largely in favour of China in that Australia’s measures are inconsistent with the key provisions of the Anti-Dumping Agreement. China challenged Australia’s measures concerning a series of anti-dumping/countervailing duty proceedings with respect to three different products, i.e. wind towers, deep drawn stainless steel sinks, and railway wheels. China challenged the anti-dumping duty measures in each of the three proceedings. It also challenged the countervailing duty measures with respect to stainless steel sinks. Australia requested that the panel reject China’s claims in the dispute in their entirety. Australia requested that the panel decline any findings/recommendations with respect to wind towers and stainless steel sinks, on grounds that the Chinese claims were directed against measures that had expired before the date of the panel’s establishment; and that China’s panel request failed to satisfy the requirements of Article 6.2 of the DSU. The panel seems to have concurred with Australia, as some of the measures had already expired before the establishment of the panel. PANEL’S FINDINGS The panel’s findings are as follows: 1. As regards the AD (anti-dumping) measures on railway wheels, the Australian investigating authority, the Anti-Dumping Commission (ADC), had only completed an original investigation. However, for wind towers, the ADC had completed an original investigation and a sunset review (the parties referred to sunset reviews as “expiry reviews”). For stainless steel sinks, the ADC had completed an original investigation, multiple interim reviews, and an expiry review. 2. For each of the latter two products, with limited exceptions, China brought claims against all segments (investigations, interim reviews, and expiry reviews). For those two products, the Panel considered it generally sufficient to make findings with respect to the expiry reviews only. On wind towers, the Panel found that, in the expiry review, the ADC acted inconsistently with: * Article 2.2.1.1 of the Anti-Dumping Agreement because the ADC improperly rejected using the examined exporter’s record costs for steel plate in constructing normal value; * Article 2.2 of the Anti-Dumping Agreement by “uplifting” the examined exporter’s steel plate costs when constructing normal value, and then transferring that methodology over onto the ADC’s calculation of normal values for the uncooperative and all other exporters, without a reasoned and adequate explanation as to why the uplifted costs, without any adjustments to adapt such uplifted costs to the exporter’s circumstances, represented a cost of production in China for the examined exporter; * Article 2.2 of the Anti-Dumping Agreement by determining that domestic sales of wind towers did not permit a proper comparison with export sales on the basis of a “relevance” test that has no basis in Article 2.2; and * Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 to the extent that the ADC acted inconsistently with Article 2 of the Anti-Dumping Agreement. The Panel found that China had not demonstrated that the ADC acted inconsistently with Article 2.2.2 of the Anti-Dumping Agreement, by applying a profit rate to improperly uplifted cost data, because China failed to make a prima facie case in this context. On stainless steel sinks, the Panel ruled that the ADC, in the expiry review, acted inconsistently with: * Article 2.2 of the Anti-Dumping Agreement by failing to provide a reasoned and adequate explanation as to why surrogate costs of production chosen for performing the ordinary course of trade test represented a cost of production in China. The Panel also found a consequential violation of Article 2.2.1; * Article 2.4 of the Anti-Dumping Agreement by: (i) comparing export models to export models for purposes of performing a fair comparison as between the normal value and export price for a certain examined exporter; (ii) making an adjustment for taxation vis-a-vis a normal value that was flawed due to the improper use of surrogate costs in applying the ordinary-course-of-trade test; and (iii) treating accessories purchased by a certain examined exporter from third party suppliers differently from accessories produced by the exporter without an adequate and reasonable explanation; and * Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 to the extent that the ADC acted inconsistently with Article 2 of the Anti-Dumping Agreement. On railway wheels, the Panel found that the ADC, in the original investigation, acted inconsistently with: * Article 2.2.1.1 of the Anti-Dumping Agreement because the ADC improperly departed from using the examined exporter’s record costs of production when constructing normal value; * Article 2.2 of the Anti-Dumping Agreement by failing to provide a reasoned and adequate explanation as to why uplifted costs of production used in constructing normal value, without any adjustments to adapt such uplifted costs to the examined exporter’s circumstances in China (other than SG&A adjustments), represented a cost of production in China for the examined exporter; * Article 2.2.2(i) of the Anti-Dumping Agreement by failing to calculate profit on the basis of the actual amounts realized by the examined exporter in respect of “sales in the domestic market of the country of origin”. The ADC also acted inconsistently with Article 2.2.2(i) of the Anti-Dumping Agreement by using surrogate costs of production in its profit determination; and * Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 to the extent that the ADC acted inconsistently with Article 2 of the Anti-Dumping Agreement. The Panel recommended that Australia bring its measures into conformity with its obligations under the GATT 1994 and the Anti-Dumping Agreement.
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