China Challenges US at WTO on Dumping Methodology

The US and China are once again set to face off at the WTO over the use of trade remedies, after Beijing filed a formal challenge against Washington at the global trade arbiter on 3 December. This marks the eighth case that China has launched against the US on the subject, four of which were submitted to the WTO this year alone.

This particular complaint focuses on 13 anti-dumping measures that the US has imposed against certain Chinese products, such as oil-well pipes.

In its consultation request, Beijing criticises the US Department of Commerce’s decision to use “targeted dumping” methodology, which includes the controversial practice of zeroing, in trade remedy proceedings.

Chinese Ministry of Commerce spokesman Shen Danyang has said that the US agency’s investigation involved a “series of wrong behaviors” that were in violation of WTO rules. These trade remedies have affected US$8.4 billion of annual exports from Chinese enterprises, Shen said, “seriously [injuring] the legitimate interests of Chinese enterprises.”

In trade law jargon, targeted dumping refers to a situation where dumping - the practice of selling products overseas at prices lower than their domestic value - is targeted to a specific region, period, or purchaser. If targeted dumping is found, the importing country can then use an alternative method of calculating dumping margins that determines normal value using an average of market prices. That average is then compared to the prices of individual export transactions, rather than the conventional “average-to-average” or “transaction-to-transaction” comparison.

Under WTO rules, members can use this alternative method provided certain conditions are met. The imposing country must also explain and justify the reason behind this change. Beijing alleges that Washington has not complied with these requirements.

Parties to a WTO dispute have 60 days to conduct consultations to resolve their differences. If this fails, the complainant may then request that a panel be established to hear the case.

The US is also facing a separate challenge from Korea dealing with Washington’s targeted dumping methodology (DS464). That case is currently in the consultations phase.