DISPUTE SETTLEMENT

DS: China — Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes (ôHP-SSSTö) from Japan

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

See also:

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Current status

 

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Key facts

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 14 February 2015
Appellate Body Report circulated: 14 October 2015

  

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Latest document

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Japan. (See also DS460)

On 20 December 2012, Japan requested consultations with China concerning measures imposing anti-dumping duties on high-performance stainless steel seamless tubes (“HP-SSST”) from Japan, as set forth in Ministry of Commerce of the People's Republic of China (“MOFCOM”) Notice No. 21 [2012] and Notice No. 72 [2012], including any and all annexes and any amendments thereof.

Japan claims that the measures are inconsistent with:

  • Articles 1, 3.1, 3.2, 3.4, 3.5, 5.3, 5.8, 6.5, 6.5.1, 6.8, 6.9, 7.4, 12.2 and 12.2.2 of the Anti‑Dumping Agreement; and
     
  • Article VI of the GATT 1994.

On 15 January 2013, the European Union requested to join the consultations.  Subsequently, China informed the DSB that it had accepted the request of the European Union to join the consultations. On 11 April 2013, Japan requested the establishment of a panel.  At its meeting on 24 April 2013, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

At its meeting on 24 May 2013, the DSB established a panel.  The European Union, India, Korea, the Russian Federation, and the United States reserved their third party rights.  Subsequently, Saudi Arabia and Turkey reserved their third party rights. On 17 July 2013, Japan requested the Director‑General to compose the panel. On 29 July 2013, the Director-General composed the panel.

On 13 February 2015, the panel report was circulated to Members.

These disputes concern the imposition by China of anti-dumping duties on certain high-performance stainless steel seamless tubes from Japan and the European Union. The complainants claimed that the anti-dumping duties imposed by China, and the underlying investigation conducted by the Chinese investigating authority (MOFCOM), were inconsistent with various procedural and substantive provisions of the Anti-Dumping Agreement, and Article VI of the GATT 1994. The complainants brought virtually identical claims concerning MOFCOM's injury determination, and MOFCOM's handling of certain procedural issues. The European Union also brought additional substantive claims in respect of MOFCOM's determination of dumping.

The complainants brought a series of Article 3 claims against MOFCOM's determination that dumped imports had caused injury to the domestic industry. They claimed that MOFCOM's consideration of the price effects of subject imports was inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement; 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 that MOFCOM's determination that there is a causal link between dumped imports and material injury to the domestic industry was inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement. The Panels upheld many of the claims under Articles 3.1, 3.2, 3.4 and 3.5, but did not side with the complainants on all matters. In particular, the Panels rejected the complainants' claims under Article 3.2 that MOFCOM was required — and failed — to assess whether price undercutting by the subject imports had the actual effect of placing downward pressure on domestic prices.

The complainants claimed that MOFCOM failed to fulfil the requirements of Article 6.8 and Annex II:1 in applying facts available to determine the all others rates for unknown exporters. The Panels rejected the complainants' claims. The Panels found that there was no factual basis to conclude that MOFCOM had failed to inform unknown exporters/producers of the information required of them, since MOFCOM had posted the exporter questionnaire on its website.

The complainants claimed that MOFCOM failed to comply with the Article 6.9 obligation to disclose essential facts regarding its dumping and injury determinations, and its determination of the all others rates. The Panel rejected the complainants' claims concerning MOFCOM's use of a narrative description to disclose essential facts in respect of its dumping determination. The Panel noted that MOFCOM had provided narrative descriptions of the essential facts that referred to factual information already in the exporters' possession. The Panels upheld the claims that MOFCOM failed to disclose its dumping margin calculation methodology. The Panels also upheld the bulk of the complainants' claims that MOFCOM had failed to disclose essential facts pertaining to its injury determination. The Panels rejected the complainants' claims that MOFCOM had failed to disclose essential facts regarding the all others rate.

The complainants claimed that MOFCOM failed to ensure that its public notice of the Final Determination complied with the requirements of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement. Their claims pertained to information concerning MOFCOM's injury determination, and MOFCOM's determination of the all others rates. The Panels rejected certain aspects of the claims brought in respect of MOFCOM's injury determination, and exercised judicial economy in respect of others. The Panels upheld one aspect of the claims brought in respect of MOFCOM's dumping determination, but rejected the others.

The complainants claimed that China acted inconsistently with Article 6.5 of the Anti-Dumping Agreement because MOFCOM permitted the full text of certain reports to remain confidential without a proper showing of “good cause” for such treatment by the petitioners. The complainants also claimed that China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement because MOFCOM failed to require sufficient non-confidential summaries or explanations as to why such summaries were not possible. The Panels upheld all of the claims brought by the complainants.

The complainants claimed that, by applying provisional measures for a period exceeding four months without meeting the requirements of Article 7.4 of the Anti-Dumping Agreement, China acted inconsistently with that provision. The Panels upheld these claims.

The European Union made a number of claims in respect of MOFCOM's dumping determination. These claims concerned (i) the use of SG&A amounts (Articles 2.2.1, 2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement); (ii) the fairness of the comparison (Article 2.4 of the Anti-Dumping Agreement); and (iii) the alleged double-counting of certain administrative expenses (Article 6.7 and Annex I:7 of the Anti-Dumping Agreement). The Panels upheld the European Union's Article 2.2.2 claim concerning SG&A amounts, and exercised judicial economy in respect of the remaining claims concerning that matter. The Panels upheld the European Union's fair comparison claim under Article 2.4. The Panels upheld a procedural aspect of the European Union's claim under Article 6.7 and Annex I:7 concerning the alleged double-counting of certain administrative expenses.

Japan and the European Union claimed that, by failing to comply with the provisions of the Anti-Dumping Agreement, China had consequently acted inconsistently with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994. The Panels upheld those consequential claims.

On 12 March 2015, China and Japan requested the DSB to adopt a draft decision extending the 60‑day time period stipulated in Article 16.4 of the DSU to 20 May 2015. At its meeting on 23 March 2015, the DSB agreed that, it shall no later than 20 May 2015, adopt the panel report unless (i) the DSB decides by consensus not to do so or (ii) China or Japan notifies the DSB of its decision to appeal the panel report.

On 20 May 2015, Japan notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretation in the panel report.  On 26 May 2015, China also notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretation in the panel report.

On 28 July 2015, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that the Appellate Body Reports in these appeal proceedings as well as in those of DS460, would be circulated to WTO Members no later than Wednesday, 14 October 2015.

On 14 October 2015, the Appellate Body report was circulated to Members.

Good cause: The Appellate Body saw no error in the Panel's conclusion that, in the absence of any evidence that MOFCOM objectively assessed the “good cause” alleged, it had no basis to conclude that MOFCOM undertook an objective assessment and properly determined that the petitioners had shown “good cause” for their requests for confidential treatment. The Appellate Body therefore upheld the Panel's finding that China acted inconsistently with Article 6.5 of the Anti‑Dumping Agreement because MOFCOM permitted the full text of the four reports at issue to remain confidential without objectively assessing “the petitioners' showing of ‘good cause’”. In doing so, the Appellate Body noted that an investigating authority “must objectively assess the ‘good cause’ alleged for confidential treatment, and scrutinize the party's showing in order to determine whether the submitting party has sufficiently substantiated its request”. It added that a panel tasked with reviewing whether an investigating authority has objectively assessed the “good cause” alleged by a party must examine this issue on the basis of the investigating authority's published report and its related supporting documents, and in the light of the nature of the information at issue and the reasons given by the submitting party for its request for confidential treatment.

MOFCOM's price effects analysis: Contrary to the Panel, the Appellate Body found that Article 3.2 requires a dynamic assessment of price developments and trends in the relationship between the prices of the dumped imports and those of domestic like products, and that the investigating authority may not disregard evidence suggesting that the prices of dumped imports have no, or only a limited effect on domestic prices. The Appellate Body added that while an examination of whether there is a price differential between imported and domestic products may be a useful starting point for an analysis of price undercutting, it does not provide a sufficient basis for an investigating authority to satisfy its obligation under Article 3.2. The Appellate Body therefore reversed the Panel's finding rejecting Japan's claims that China acted inconsistently with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement, and found instead that MOFCOM's assessment of whether there had been a significant price undercutting by Grade C imports, as compared with the price of the domestic Grade C, was inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement.

MOFCOM's impact analysis: The Appellate Body found that the Panel erred in its interpretation of Articles 3.1 and 3.4 of the Anti‑Dumping Agreement to the extent it found that the results of the inquiries under Article 3.2 are not relevant to the impact analysis under Article 3.4. The Appellate Body recalled that Article 3.4 does not merely require an examination of the state of the domestic industry, but contemplates that an investigating authority must derive an understanding of the impact of subject imports on the basis of such an examination. The Appellate Body observed that, in order to examine the impact of the dumped imports on the state of the domestic industry, an investigating authority may be required to take into account the relative market shares of product types with respect to which it has made a finding of price undercutting, as well as the duration and extent of price undercutting, price depression, or price suppression, that it has found to exist. The Appellate Body therefore reversed the Panel's findings rejecting Japan's claims that China acted inconsistently with Articles 3.1 and 3.4 because MOFCOM did not undertake a segmented analysis of the impact of the dumped imports on the state of the domestic industry.

MOFCOM's causation analysis: The Appellate Body upheld the Panel's findings that China acted inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement because MOFCOM improperly relied on the market share of dumped imports, and its flawed price effects and impact analyses, in determining a causal link between dumped imports and material injury to the domestic industry, and made no finding of cross-grade price effects whereby price undercutting by Grade B and C imports might be shown to affect the price of domestic Grade A HP‑SSST. The Appellate Body also upheld the Panel's findings that China acted inconsistently with Articles 3.1 and 3.5 of the Anti‑Dumping Agreement because MOFCOM failed to ensure that the injury caused by other known factors was not attributed to the dumped imports. In addition, the Appellate Body upheld the Panel's finding that Japan had not advanced any independent Article 3.5 claims — other than those concerning MOFCOM's reliance on market shares and MOFCOM's non‑attribution analysis — concerning MOFCOM's price effects and impact analyses.

At its meeting on 28 October 2015, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.

 

Reasonable period of time

At the DSB meeting on 25 November 2015, China stated that it intended to implement the DSB's recommendations and rulings in a manner that respects its WTO obligations and that it would need a reasonable period of time to do so. On 19 February 2016, Japan and China informed the DSB that they had agreed that the reasonable period of time for China to implement the DSB recommendations and rulings shall be 9 months and 25 days from the date of adoption of the Appellate Body and panel reports. Accordingly, the reasonable period of time is set to expire on 22 August 2016.

 

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