WTO judges said on Monday that the US broke its rules in imposing hefty duties on Chinese steel products, solar panels and a range of other goods that Washington argues enjoyed government subsidies.
In a similar case involving US methods in deciding when foreign imports are unfairly priced, another WTO panel ruled in support of some claims by India against tariffs on steel exports from three of its major firms.
Trade diplomats said the two cases, both under scrutiny for nearly two years by the separate panels, reflected a widespread concern in the 160-member WTO over what many see as illegal US protection of its own producers.
In the US$7.2 billion Chinese case, the panel found that Washington had overstepped the mark in justifying the so-called countervailing duties it imposed as a response to alleged subsidies to exporting firms by the Chinese government.
Under the 1964 Marrakesh accords, which also set up the WTO, these duties can only be levied when there is clear evidence that state-owned or partially state-owned enterprises passing on the subsidies are “public bodies.”
The panel found that Washington had produced insufficient evidence for this and was also at fault in its calculations of the value of the subsidies to Chinese firms producing items like kitchen shelving, grass cutters and even citric acid.
And it told the US it should adapt its measures to bring them into line with the WTO’s agreement on subsidies and countervailing measures, dubbed the SCM in trade jargon.
The ruling, which gave the US some comfort in rejecting some aspects of the Chinese complaint, was welcomed in a statement from the Chinese Ministry of Commerce distributed by Beijing’s trade mission in Geneva.
“China urges the United States to respect the WTO rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises,” the statement said.
The US said it was weighing its options.
US Trade Representative Michael Froman said the decision to reject many of China’s challenges was a victory for US businesses and workers.
“With respect to the other findings in the panel report, the [US] administration is carefully evaluating its options, and will take all appropriate steps to ensure that US remedies against unfair subsidies remain strong and effective,” Froman said.
The WTO ruling in the Indian case — which involves steelmakers like Tata, Jindal and Essar that are supplied by the state-run iron-ore mining firm, NMDC — was not so clear-cut.
It said the US had “acted inconsistently” in terms of some provisions of the SCM agreement and had unfairly reduced Indian trade revenue.
Washington should bring its measures into line with the pact, the panel said.
However, it rejected many of the technical aspects of the Indian case.
Froman hailed the ruling while saying it was a “mixed result.”
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