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1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS
ADOPTED BY THE DSB: E. UNITED STATES – CERTAIN METHODOLOGIES AND THEIR
APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA: STATUS REPORT BY THE
UNITED STATES
5.
CHINA – ANTI-DUMPING MEASURES ON STAINLESS STEEL PRODUCTS FROM JAPAN
China regrets that Japan decided to further its panel request with
regard to this dispute at this meeting. China maintains its domestic
anti-dumping regime in line with relevant WTO rules, and the Investigating
Authority, by adhering to its legal mandate, conducted a transparent, thorough
and fair investigation in relation to the imports concerned from Japan. It
finally determined the existence of dumping and found these trade distortions
had caused material injury to our domestic industry. As a necessary remedial
step, certain anti-dumping measures have been duly imposed by the Chinese
Investigating Authority.
As we stated at the August DSB meeting, China engaged with Japan in good
faith and provided upon its request information with respect to measures
challenged. We are also open to further consultations through appropriate
channels aiming at exploring the satisfactory solution. Therefore, China still
believes, at today’s meeting, that Japan’s request for the establishment of a
panel was premature.
6. CHINA – ANTI-DUMPING AND COUNTERVAILING DUTY
MEASURES ON WINE FROM AUSTRALIA A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY
AUSTRALIA
China regrets that
Australia decided to request a panel to be established with regard to this
dispute. We are not in a position to support such request today.
China maintains its
domestic anti-dumping and countervailing regime in line with relevant WTO
rules. Specifically in this dispute, through a transparent and fair
investigation, the Chinese Investigating Authority determined the existence of
dumping as well as material injury it caused to our domestic industry, and
decided to impose anti-dumping duty on the Australian product.
To avoid double remedy, China decided not to impose countervailing duties on the imports concerned from
Australia. We note that Australia does not include in the panel request matters
related to countervailing duties, and believe it is a constructive move for
settlement of this dispute.
China engaged with
Australia in good faith during the consultation and
provided upon required information with respect to measures challenged. We
recalled that both sides agreed the consultation was constructive. Given the
overall circumstance, China believes it is still premature to establish a panel
in this dispute, and stands ready to further engage with Australia.
8. STATEMENT BY CHINA REGARDING THE PANEL REPORT IN
THE DISPUTE: "UNITED STATES – SAFEGUARD MEASURE ON IMPORTS OF CRYSTALLINE
SILICON PHOTOVOLTAIC PRODUCTS"
China
appreciates the opportunity to express its deep concern with the systemically
harmful findings made by the panel report in “United States – Safeguard Measure
on Imports of Crystalline Silicon Photovoltaic Products” (DS562). In the past
26 years of the WTO, all of the safeguard measures challenged prior to this
case had been found to violate the WTO rules. However, the panel report of
DS562 has severely deviated from all these jurisprudences and substantially
lowered the threshold of imposing safeguard measures. The erroneous and
dangerous signal sent by this panel report to WTO members will lead to the
abuse of safeguard measures and thus seriously undermine the rules-based
multilateral trading system.
In
China’s view, the panel report contains serious legal errors, including a gross
misreading of legal requirements for imposing safeguard measures, as well as a
major misunderstanding of a panel’s proper role in examining trade remedy
investigations. China wishes to take
this opportunity to address some of the obvious errors of the panel report
because of the systematically harmful implications to the WTO safeguard
disciplines.
China
initiated this dispute because the United States imposed safeguard measures on
CSPV products in violation of the disciplines set forth in Article XIX of GATT
1994 and the Agreement on Safeguards. Under these agreements, it has long been
recognized that safeguard measures are exceptional remedies for extraordinary
situations only. In particular, because safeguard measures are adopted to
restrict trade in the absence of any unfair trade practices, and applied
globally to imports from all sources, their imposition must meet very high
thresholds. This includes demonstrating an unforeseen development that led to
the surge in imports, establishing a causal relationship between increased
imports and serious injury, and ensuring that the injuries caused by other
factors are not attributed to the increased imports through a non-attribution
analysis.
The
USITC met none of these requirements in its CSPV safeguard investigation
challenged by China in DS562. During its investigation, the USITC failed to
demonstrate an “unforeseen” development leading to the increase in CSPV
imports, failed to establish a causal link between increased imports and
serious injury, and failed to separate and distinguish other factors’ injurious
impact on its domestic industry. These factors include failure of domestic
producers to focus on the utility sector of the market, quality and service
problems of domestic producers, and wider market trends leading to a decline in
the market price. Essentially, the
United States was using the safeguard measure to save a domestic industry, not
from imports, but from its own bad performance and poor business
decisions.
Regrettably,
the Panel failed to address these issues as raised by China and many third
parties in its panel report. Instead, the panel report suffered from three most
severe legal errors.
First, the
Panel’s decision impermissibly lowered the legal standards for safeguard
measures under the established WTO disciplines. For example, the Panel
dismissed the argument that when an overall coincidence in trends does not
exist, the competent authority’s explanation for the existence of a causal link
must be “compelling”, contrary to the decisions made on this same issue in many
prior WTO cases. This mistaken reading of the applicable legal standards has
allowed the Panel to uphold the USITC’s causation finding, even though the
domestic industry showed a number of positive developments in fundamental
injury factors during the period of investigation.
As
another example, despite the fact that Agreement on Safeguards requires and
prior cases emphasize the importance of examining conditions of competition in
a causation analysis, the Panel refused to take into account evidence that CSPV
market in the US is highly segmented, and that the domestic industry did not
focus on the utility market segment which experienced the highest growth. As a
result, the Panel’s finding failed to consider how domestic industry’s lack of
participation in the utility segment affected its performance. Instead, the
Panel’s erroneous application of the legal standard has made imports the
scapegoat for the domestic industry’s poor business decisions.
Second, the
Panel failed to observe its duty under Article 11 of the DSU to conduct an
objective assessment of the matter before it. The Panel simply failed to make
an objective assessment of China’s claim on causation, including any factual
issues underlying China’s claim. In many places, the Panel deferred to the
findings of the USITC as valid without any further inquiry of its own. A
typical example is on the Panel’s treatment of the issue of unforeseen
development. The USITC asserted that, somehow, the industrial policies in China
created a global increase in CSPV
production. It did not demonstrate what these alleged industrial policies were,
nor establish any linkage between industrial policies in China and the increase
in imports, which predominately comes from the rest of the world. While
acknowledging these factual and logical deficiencies, the Panel nevertheless
upheld the USITC’s findings without further inquiry.
The
Panel’s failure to observe Article 11 of the DSU is also apparent from its
findings on non-attribution. During the CSPV safeguard investigation, the
respondents explicitly argued that the domestic industry suffered injury from a
number of other factors, including lack of participation in the utility sector,
the falling raw material price, the pressure to attain grid parity, quality and
service issues, and changes in government incentive programs. Despite evidence
on the record which was overlooked by the USITC, the Panel simply upheld the
findings of the USITC. The panel report is replete with other examples where
the findings of the USITC were confirmed, without any concrete assessment into
the alternative views presented by the respondents during the investigation.
Instead of evaluating whether the USITC provided reasoned and adequate
explanation in its report, the Panel has turned itself into a rubber stamp for
the USITC’s determinations.
Third, the
panel report completely disregarded the proper standard of review of trade
remedy measures. In all trade remedy cases, the report of the investigating
authority must be examined as it was published at the time. A Member cannot
offer additional rationalization for the conclusions and determinations set
forth in the report. However, in the present dispute, the Panel allowed the
United States to remedy omissions or deficiencies in the USITC’s report during
the proceedings, refurbishing the USITC report through impermissible post-hoc justifications. The Panel’s
approach created a harmful practice: it
allows an investigating authority to make an unsound determination and impose
WTO in-consistent trade remedy measures, and the Member of that investigating
authority to rescue that decision during the dispute settlement proceedings.
Lowering
the applicable standards for safeguard measures, deferring to the investigating
authority’s determination without objective assessment, allowing a Member to
rescue a deficient decision through post-hoc rationalization – through
each of these steps, the Panel normalized the safeguard measure from an
exceptional remedy to a convenient tool for trade protectionism, which can be
put to use whenever a domestic industry wishes to complain about imports even
when imports are not to blame for its own failures. The systematically harmful
impact of these findings and the troubling logic behind it must be pointed out,
not just for safeguard cases, but also for all trade remedy disputes.
As
provided in Article 3.2 of the DSU, security and predictability are core values
of the dispute settlement system. It is of systemic importance that the
principle of security and predictability shall be upheld through ensuring the
quality of panel reports, especially under the severe situation of paralysis of
the Appellate Body since the end of 2019. By sharply deviating from the WTO
disciplines and the established jurisprudence, the Panel has not only upset
this fundamental objective, but also undermined the trust of all Members in the
dispute settlement mechanism and created irreversible damage to the
multilateral trading system.
Once
again, China wishes to remind the Members that safeguard measures are
extraordinary measures for extraordinary situations. Safeguard measures cannot
be used as a convenient tool to rescue a domestic industry in bad shape because
of its own business decisions and injuries caused by other factors not
attributed to the increased imports. Any other characterization of the
safeguard measure than a measure subject to stringent legal threshold could
open the door to the dangerous use of safeguard measures for protectionist
purposes. However, this panel report amounted to an approval of doing just that
which in consequence will seriously undermine the rules-based multilateral
trading system.
In
closing, China recalls that in WTO’s 26 years of existence, this is the first
time in a dispute when all challenges against a
global safeguard measure have been rejected. In a step that sharply deviates
from existing WTO jurisprudence, the Panel issued a report that not only
misunderstood the proper role served by safeguards in the WTO system, but also
misconstrued the duties of an investigating authority and the proper role of a
WTO panel in trade remedy cases. China reminds all Members of the dangerous situation
this might create if future investigating authorities are allowed to impose
trade restriction measures without satisfying the stringent requirements.
China
has already notified its appeal decision to the DSB, and China will await further instructions from the division of the
Appellate Body, when it may eventually be composed, regarding any
further steps to be taken by China in this appeal.
9.
APPELLATE BODY APPOINTMENTS
China supports the statement delivered by
Mexico on behalf of 121 co-sponsors and call upon more Members to join this
proposal. We refer to our previous statements on this urgent matter and
reiterate our firm commitment to an independent and impartial two-tier dispute
settlement system.
The paralysis of the Appellate Body has posed
serious challenge to the multilateral trading system, and more than a dozen of
cases, including the one mentioned in today’s meeting, have been appealed into
the void. This severe situation not only deprives members’ right to defend
their interests, but also jeopardizes the security and predictability of this
rules-based organization. Therefore, we call upon all members to prioritize the
restoring of the Appellate Body function, and to engage constructively in the
solution-based consultation with a view to breaking the selection impasse at
the earliest date. We would also like to echo the statements made others, and
call upon members to join the MPIA as a contingent arrangement during the AB
deadlock.
OTHER BUSINESS
Thank you, Chair, for giving us the opportunity to
make a short statement.
Composition of a panel is a crucial step in the
panel proceeding, and appointment of high-quality, independent and neutral
panelists holds the key of smoothly resolving the dispute. This is of paramount
importance against the backdrop of defunct Appellate Body.
We appreciate the support provided by the
Secretariat in providing the slate of candidates for the panel. At the same
time, given our recent experience, we would like to take this opportunity to
emphasize the importance of due process, due diligence and due respect
obligations the Members expect the Secretariat to shoulder when carrying out
its assistance in the panel stage, especially in the composition of the panel.
For example, in our view, the Secretariat
should make best efforts in identifying proper candidates in line with the
criteria set by the DSU and the parties, facilitating and respecting the
parties’ agreement on all or some panelists, timely checking and keeping the
parties informed about the availability of the potential panelists, and further
consulting with the parties when the agreed candidate is not able to serve. We
believe that the more professional and neutral the Secretariat's service is,
the more confident Members will have in the dispute settlement system and the
multilateral trading system as a whole.