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China – Countervailing and Anti-dumping Duties on Grain Oriented Flat-rolled Electrical Steel from the United States: exporting US AD/CVD methodologies through WTO dispute settlement?


In July 2009, Chinese steel producers of grain oriented electrical steel filed anti-dumping (AD) and countervailing duty (CVD) cases against US and Russian producers. The US challenged the duties for a variety a reasons, many of which involved deficiencies in the producers' application to China's investigating authority, the Ministry of Commerce of the People's Republic of China (MOFCOM). The US also challenged certain aspects of MOFCOM's injury analysis. The Panel and Appellate Body ruled in favor of the US on virtually every issue. Given the deficiencies in the application and China's handling of the case, the Panel and AB decisions were justified. In a larger sense, however, we believe China may well emerge as the ‘winner’ in this dispute as this case establishes important standards for allegations and evidence in applications, standards that other countries (including the US) likely have failed to meet when they have imposed AD and CVD orders on the largest target country, China.

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1 China – Countervailing and Anti-dumping Duties on Grain Oriented Flat-rolled Electrical Steel from the United States, Panel Report, WT/DS414/R (15 June 2012), modified by Appellate Body Report, WT/DS414/AB/R (18 October 2012) [hereinafter China–GOES].

2 Panel Report, China–GOES, at para. 7.48.

3 Panel Report, China–GOES, at para. 2.2.

4 At least two Russian and one Swiss companies had registered and cooperated with the dumping investigation conducted by MOFCOM. They had no part in the case before the Panel.

5 Panel Report, China–GOES, at para. 2.5; also Annex A-1 to the Panel Report, China–GOES, Executive Summary of the First Submission of the United States, at paras. 12–14.

6 The Panel determined that it was not necessary to make a finding to the US claim that ‘China acted inconsistently with Article VI:2 of the GATT 1944 because the “all others” anti-dumping duty levied by China was greater in amount than appropriate margin of dumping’.

7 Article 11.2 of the SCM Agreement provides: ‘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.’

8 Panel Report, China–GOES, at para. 7.50.

9 Panel Report, China–GOES, at para. 7.52.

10 Ibid., at para. 7.54, citing to Panel Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS/264/R [hereinafter US–Softwood Lumber V], para. 7.84.

11 Ibid., at paras. 7.12 and 7.13.

13 Ibid., at para. 7.55.

14 Ibid., at para. 7.62.

15 Ibid., at para. 7.55.

16 Ibid, at para. 7.56.

17 Ibid., at para. 7.51.

18 Ibid., at para. 7.65.

20 Ibid., at para. 7.66.

22 Ibid., at para. 7.71.

24 Ibid., citing to Panel Report, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/R (17 December 2007) [hereinafter Japan–DRAMs (Korea)].

26 Ibid., at para. 7.80.

27 Ibid., at para. 7.82.

28 Ibid., at para. 7.85.

29 Ibid., at para. 7.86, citing the GATT panel on Subsidies and State Trading, Report on Subsidies, L/1160, 23 March 1960.

30 Appellate Body Report, US – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, at paras. 110–111 and para. 114.

31 Panel Report, China–GOES, at paras. 7.91 and 7.92.

32 Ibid., at paras 7.94 and 7.95.

33 Ibid., at para. 7.96.

34 Ibid.,

35 Panel Report, China–GOES, at para. 7.98.

36 Ibid., at para. 7.103.

37 China contended that a financial contribution existed through the provision of income or price support to the industry. The US argued that the application included insufficient evidence of actual income or price support within the meaning of Article 1.1(a)(2) of the SCM Agreement. Panel Report, China–GOES, at paras. 7.20, 7.37, 7.101, and 7.104.

38 Ibid., at para. 7.115.

39 Ibid., at para. 7.118.

40 Ibid., at para. 7.128, citing to Panel Report, United States – Final Countervailing Duty Determination with respect to certain Softwood Lumber from Canada, WT/DS/257/R [hereinafter US–Softwood Lumber IV], at para. 7.116.

41 Ibid., at para. 7.192.

42 Ibid., at para. 7.193.

43 Ibid., at para. 7.199.

44 Ibid., at para. 7.201.

45 Ibid., at para. 7.224.

46 Ibid., at para. 7.293.

47 Ibid., at para. 7.303.

48 The claims relating to ‘all others’ rates were raised by the US in separate claims. The US challenged the anti-dumping duties based on the decision to apply ‘facts available’ to ‘all other’ producers under Article 6.8 of the ADA and the countervailing duties for the same reason under Article 12.7 of the SCM Agreement.

49 Panel Report, China–GOES, at para. 7.385.

50 Ibid., at paras. 7.388 to 7.392, citing to Appellate Body Report, Mexico – Anti-dumping Measures on Rice (WT/DS295/AB/R), at paras. 259–260. In Mexico–Anti-dumping Measures on Rice the AB held that paragraph 1 of Annex II of the ADA conditioned the use of ‘facts available’ on making the interested parties aware that the failure to provide necessary information requested within reasonable time could lead to the application of ‘facts available’ by the investigating authority. When an unknown exporter was not notified of the information required, it was denied the opportunity to provide the information. The AB concluded that the investigating authority could not apply ‘facts available’ to such exporters.

51 Ibid., at para. 7.530.

52 Ibid., at para. 7.547.

53 AB report of China–GOES, at para. 154.

54 Ibid.,

55 Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R (3 August 2005), at para. 7.338.

56 AB Report of China–GOES, at para. 165.

57 Ibid., at paras. 166–167. The Panel stated that ‘MOFCOM simply assumed that (i) prices should have been able to rise with costs, and (ii) the only reason prices were not able to rise with costs was because of the effect of subject imports'. Panel Report, China–GOES, at para. 7.550.

58 AB Report of China–GOES, at para. 32.

59 Ibid., at paras. 190–193.

60 Ibid., at para. 200.

61 Ibid., at para. 207.

62 Ibid., at para. 206.

64 Ibid., at para. 224.

65 Ibid., at para. 210 and footnote 350.

66 Ibid., at para. 219.

67 It was noted by the AB that Article 3.2 of the ADA and Article 15.2 of the SCM Agreement were to be read together with Article 3.1 of the ADA and Article 15.1 of the SCM Agreement because the findings of inconsistency under the first two Articles would be based on an integrated analysis of both sets of provisions. See the AB Report, at paras. 112 and 113. The Panel had also found that the causation analysis by MOFCOM was inconsistent with Articles 3.1 and 3.5 of the ADA and Articles 15.1 and 15.5 of the SCM Agreement. However, the issue was not appealed by China. The AB noted that, despite the fact that the price effects analysis formed part of the causation analysis, the Panel's finding with respect to causation would stand irrespective of its conclusion on the price effects findings.

68 AB Report of China–GOES, at para. 240.

69 The Preliminary Determination refers to MOFCOM Announcement No. 99 of 10 December 2009 [2009] (English translation in Panel Exhibit CHN-17) and the Final Injury Determination refers to the Essential Facts Under Consideration Which Form the Basis of the Determination on Industry Injury Investigation of the Anti-dumping Investigation of GOES from the US and Russia and the Anti-subsidy Investigation of GOES from the US, Shang Diao Chan Han No. 67 of 5 March 2010 [2010] (English translation in Panel Exhibit CHN-27).

70 AB Report of China–GOES, at para. 257.

71 Compiled from data provided in Chad P. Bown (2012) ‘Global Countervailing Duties Database’, available at

72 Within the meaning of the proverb: If you wish to beat a dog, it is easy to find a stick.

73 Panel report China–GOES, para. 7.296, AB report Mexico–Rice, para. 289.

74 Panel report China–GOES, para. 7.302.

75 Panel report China–GOES, para. 7.303–7.310.

76 Panel report China–GOES, at para. 7.386.

77 Panel report China–GOES, at para. 7.388 citing Panel Report, Argentina – Definitive Anti-Dumping Measures on Imports of Ceramic Floor Tiles from Italy, WT/DS189/R, adopted 5 November 2001.

78 It is noted that on the basis of a different claim the panel found that China acted inconsistently with Article 6.9 of the ADA in failing to disclose certain ‘essential facts’ forming the basis of the conclusion that ‘all other’ exporters were dumping at a rate of 64.8%. See Panel report China–GOES, paras 7.395–7.412. The panel further found a violation of Articles 12.2 and 12.2.2 of the ADA.

79 The analogous argument can be made if there are two exporters instead of two domestic producers.

80 Panel Report, China–GOES, at para. 7.193.

81 Ibid., at para. 7.547.

82 China's appellant's submission, paras. 53 and 54 (referring to Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 28 September 2000 at para. 7.161; and Panel Report, Korea – Anti-Dumping Duties on Imports of Certain Paper from Indonesia, WT/DS312/R, adopted 28 November 2005, at para. 7.242).

83 Chad P. Bown, (2012) ‘Global Anti-dumping Database’, available at

84 The GOES cases against the US and Russia were the 172nd and 173rd cases since 1997; most of the cases involved more than one country which explains why the number of investigations totals only 57.

85 Prusa Thomas J. and Vermulst Edwin, ‘United States – Anti-Dumping and Countervailing Duties on Certain Products from China: Passing the Buck on Pass-Through’, World Trade Review (2013), 197234.

86 As we discuss below, China is also the leading target for US AD allegations.

87 See Cyndee Todgham Cherniak, ‘China is Learning to Play the Anti-Dumping Retaliation Game’, Trade Policy Blog, 4 June 2009 at

88 UN Comtrade Statistics available at HS codes used to define products are as follows: Plates Cut-to-Length (720840, 720851, 720852, 721090, 721113, 721114, 721921, 721922, 721931, 722011, 722540, 722550, 722691); Plates in Coils (720810, 720825, 720836, 720837, 721114, 721911, 721912, 721931, 722530); Hot Rolled Sheets (720826, 720827, 720838, 720839, 720840, 720853, 720854, 720890, 721913, 721914, 721923, 721924, 722540); Cold Rolled Sheets (721932, 721933, 721934, 721935, 721990, 722550, 722599); GOES (722511, 722519, 722611, 722619); Galvanized Sheets & Strip (721030, 721041, 721049, 721070, 721220, 721230, 722591, 722592, 722699).

89 See, Circular Welded Carbon Quality Steel Line Pipe from China, USITC Investigation Nos. 701-TA-455 and 731-TA-1149.

90 USITC reports indicate that GOES represents less than 1% of all flat-rolled steel produced in the US. See United States International Trade Commission, Steel, Investigation No. TA-201-73, Publication 3479, December 2001 and United States International Trade Commission, Grain-Oriented Silicon Electrical Steel from Italy and Japan, Investigation Nos. 701-TA-355 and 731-TA-659–660 (Review), USITC Publication 3396 (February 2001).

92 Compiled from data provided in Chad P. Bown, (2012) ‘Global Anti-dumping Database’, available at

94 Traditional AD users are the US, EU, Canada, and Australia.

95 Bown Chad P.China's WTO Entry: Anti-dumping, Safeguards, and Dispute Settlement’, in Feenstra Robert C. and Wei Shang-Jin (eds.), China's Growing Role in World Trade, University of Chicago Press for the NBER, 2010, pp. 281337.

The views expressed in this paper are those of the authors and all omissions and errors are also of the authors. The authors would like to thank Madison Meng for her helpful assistance in the preparation of this paper.

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