October 22, 2010 / 4:14 PM / 7 years ago

WTO rejects many Chinese claims in U.S. duties case

3 Min Read

GENEVA (Reuters) - A World Trade Organization panel largely rejected Chinese claims on Friday in a dispute with the United States over extra duties on Chinese goods which Washington argued were priced at below cost and subsidized.

U.S. Trade Representative Ron Kirk welcomed the ruling as a win for American businesses and workers affected by unfairly traded imports.

The case involved treatment of goods from a country that is not a market economy, where the state sets or influences prices.

The ruling backed the right of an importer to set duties on goods from such economies to compensate for unfair pricing and for subsidies -- something that a U.S. court had struck down.

The two-year-old dispute turned on duties imposed by the United States on imports of Chinese steel pipes, off-road tires and woven sacks.

The panel did back some Chinese complaints and called on the United States to bring its measures in line with WTO rules where they breached them.

China had challenged the way the United States calculated the duties and the fact that it suffered a double penalty of anti-dumping (AD) duties for unfairly priced goods and countervailing duties (CVD) for subsidized products.

Double Indemnity

"We are pleased that the panel recognized that the concurrent application of AD and CVD duties on subsidized Chinese goods to level the playing field for U.S. companies and workers is fully consistent with our WTO obligations," Kirk said in a statement.

China also argued the United States had been wrong to conclude that the producers of the goods were subsidized because they had received inputs from state-owned companies or loans from state-owned banks, but the panel rejected this claim.

For many years the U.S. Commerce Department did not impose countervailing duties on China as a non-market economy. It reversed that policy in 2007 but still treated China as a non-market economy when it calculated anti-dumping duties.

WTO rules allow countries to impose anti-dumping duties on imports that are dumped, or sold for less than they cost at home.

But in a non-market economy it is unclear what a fair domestic price is, or how far it has been undercut. So the normal rules do not apply and importers have some discretion in calculating the duties for goods from non-market economies.

China argued this treatment resulted in higher anti-dumping duties than justified and it was unfair to be hit by both types of duty when it is still treated as a non-market economy.

In August, a U.S. court reviewing the duties on the off-road tires, found that that Commerce Department was wrong to impose both countervailing and anti-dumping duties on the same product.

Both parties now have 60 days within which to appeal.

Editing by Stephanie Nebehay/David Stamp

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