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
China thanks the United States for its latest status report. However, it is disappointing that more than three years after the expiry of the reasonable period of time, the United States still fail to implement the adopted rulings and recommendations in this dispute. We urge the United States to honor its obligation in line with Article 21.1 of the DSU by bringing full compliance in this dispute without further delay.
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.
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.