International Decisions: United States — Definitive Anti-Dumping and Countervailing Duties on Certain Products from China

In 2005 Canada became the first country to impose countervailing duties on Chinese products under the World Trade Organization (WTO) system, which raised the whole new issue of the permissibility in WTO law of using such duties against nonmarket economies, particularly when the United States decided to join Canada by imposing its own countervailing duties against China. In so doing, the U.S. Department of Commerce suddenly reversed its longstanding policy not to use countervailing duties against nonmarket-economy countries—China is still treated as such for purposes of trade remedy actions—pursuant to the 1986 Georgetown Steel decision by the United States Court of Appeals for the Federal Circuit. In response to the U.S. imposition of countervailing duties in all seven investigations initiated against China in 2007, China brought the first four U.S. measures before the WTO dispute settlement system as soon as they were actually implemented in 2008. China's complaint can be categorized broadly as comprising three issues: (1) how to define subsidies in the unique economic structure of China; (2) how to calculate countervailing duties; and (3) whether to permit the concurrent application of countervailing duties and antidumping duties against China's alleged subsidies—that is, a double remedy. As regards these three issues, the panel ruled that the Commerce Department had not been WTO inconsistent in determining that state-owned enterprises and state-owned commercial banks are public bodies; that the department's calculation of countervailing duties was largely WTO consistent; and that use of the double remedy did not violate the WTO Agreements. The Appellate Body reversed the panel on many crucial elements of these rulings, including the public-body determinations regarding state-owned enterprises and the findings on the U.S. imposition of double remedies…