WTO says China can't be convicted of two wrongdoings at same time

Posted by scapozzola on 03/14/2011

Here at ManufactureThis, we seem to say it just about every day: China gets ahead in manufacturing by cheating.  Beijing illegally subsidizes manufacturing, it undervalues its currency to gain an advantage, and it dumps product at below cost in order to undermine competitors.

This adds up to a huge competitive advantage, with America's manufacturers losing ground as a result.  Their only recourse has been to files cases with the U.S. International Trade Commission (ITC).

Thankfully, after diligent investigation, the ITC  has ruled in favor of U.S. manufacturers in a number of cases.

Unfortunately, the World Trade Organization (WTO) has now decided that some of those rulings are "unfair."

In 2007, the U.S. imposed punitive duties of up to 20% on Chinese steel pipes, tires, and laminated woven sacks that were deemed to have been both subsidized and dumped.  Beijing subsequently complained to the WTO that the U.S. had acted illegally.

Initially, the WTO rejected China's claims. Now, however, Beijing has won an appeal of the case by arguing the U.S. couldn't legally impose two different classes of punitive duties—antidumping and antisubsidy— on the same goods.

This is a somewhat ironic argument.  On its face, China is admitting to cheating.  But in doing so, it claims it is being overpunished. 

The United Steelworkers (USW) have voiced serious concerns about the WTO ruling, saying it will undercut the ability of the U.S. to fully and effectively apply countervailing duty and anti-dumping laws against China:

"Today's decision from the WTO is very troubling," said Leo W. Gerard, International President of the USW. "This is yet another example of the WTO overreaching and undermining the legitimacy of the WTO and the sovereignty of the United States.  When China joined the WTO in 2001, it agreed to be treated as a non-market economy in dumping cases and to be subject to countervailing duty laws -- today the Appellate Body appears to have created special carve outs for China that neither the U.S. nor anyone else agreed to ten years ago."

Read full coverage of the WTO ruling.

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