WTO Gives Mixed Ruling in China Anti-dumping Duty on EU/Japan Stainless Steel Tubes

A WTO dispute panel issued a mixed ruling last week in the dispute concerning China’s imposition of anti-dumping duties on certain high-performance stainless steel seamless tubes (HP-SSST) from Japan and the European Union, which are used mainly in boilers for coal-fired power stations.

The duties had resulted from the 2012 decision by China’s Ministry of Commerce (MOFCOM) to impose definitive anti-dumping duties ranging from 9.2 to 14.4 percent on imports of these products from the EU and Japan, following a year-long investigation.

The move prompted Brussels and Tokyo to file WTO complaints, claiming that both the anti-dumping duties themselves and the underlying investigation were inconsistent with various procedural and substantive provisions of the Anti-Dumping Agreement and Article VI of the General Agreement on Tariffs and Trade (GATT 1994).

The EU and Japan are among the top exporters of these products to China. EU exports of these tubes, for instance, had reached €90 million in 2009. Brussels claims that this number fell to €20 million following the imposition of the duties.

Chinese domestic producers began to produce steel tubes for these types of boilers in 2008, with Beijing’s twelfth “five-year” plan for its steel industry (2011-2015) indicating that the domestic production of HP-SSST was key for upgrading this sector.

Injury to domestic industry

Among other claims, Japan and the EU had argued that MOFCOM had wrongly determined that these allegedly dumped imports had caused material injury to Chinese domestic industry.

In determining material injury, Article of 3.1 of Anti-dumping Agreement requires proof of both the volume of the dumped imports and their effect on domestic prices for like products, as well as the impact on domestic producers. Other sub-provisions outline technical considerations and factors for investigating authorities to assess the evidence on injury.

Tokyo and Brussels had said that MOFCOM’s consideration of the price effects of these imports was inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement.

They also argued that MOFCOM’s assessment of the impact of the dumped imports on the state of the domestic industry was inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement, and questioned the legality of MOFCOM’s determination that there is a causal link between dumped imports and the alleged material injury.

The panel upheld many, though not all, of these claims. For instance, the panels rejected the complainants’ argument that MOFCOM was required to assess whether price undercutting by these imports actually pushed down domestic prices, and that the Chinese agency had failed in doing so.

Investigation procedures

The complainants had also raised various claims against China’s methods in conducting the anti-dumping investigation. For example, they argued that MOFCOM failed to fulfil WTO requirements in applying “facts available” to determine the “all others” rates for unknown exporters.

In applying antidumping duties for exporters or producers not included in the sample, investigating authorities usually establish an “all others” rate. For the current dispute, MOFCOM based this rate on the highest margins of dumping for the cooperating European and Japanese exporters.

The panel rejected the complainants’ claims, finding that there was no factual basis to conclude that MOFCOM had failed to inform unknown exporters/producers of what was required of them, given that the Chinese government agency had posted the exporter questionnaire online.

However, the panel upheld the EU’s and Japan’s claims that MOFCOM failed to disclose its dumping margin calculation methodology, along with the bulk of the allegations over whether the agency had failed to disclose essential facts pertaining to its injury determination.

The complainants also claimed that MOFCOM failed to include certain key factual information or reasoning in its public notice concerning the injury determination and the determination of the all others rates. Regarding the former, the panel rejected certain aspects of these claims and exercised judicial economy for the others. For the latter, the panel upheld one aspect of the claims, but rejected the others.

Other complaints from the EU and Japan included MOFCOM’s decision to allow the full text of certain reports to remain confidential without showing “good cause” for such treatment, and failing to provide sufficient non-confidential summaries or explanations as to why such summaries were not possible. The panel upheld all of these claims.