Trade Remedies and Non-Market Economies: The WTO Appellate Body’s Report in United States – Definitive Antidumping and Countervailing Duties on Certain Products from China

On March 11, 2011, the Appellate Body (“AB”) of the World Trade Organization (“WTO”) issued its report in the WTO dispute brought by China against the United States concerning four sets of antidumping and countervailing duty determinations by the United States Department of Commerce. This dispute resolved a range of important questions on how and when WTO member governments can impose countervailing duties (extra duties on imports to offset subsidies conferred by foreign governments) on products from non-market economies (“NMEs”) such as China. Among others, the AB ruled on (1) the scope of “public bodies” whose provision of goods or services can legally constitute subsidies under the WTO Agreement on Subsidies and Countervailing Measures, and how this rule applies in the context of China’s state-owned-enterprises and state-owned commercial banks (“SOCBs”); (2) when SOCB lending subsidies are “specific” enough to be countervailable; (3) how the amounts of subsidies are to be calculated in light of alleged distortion of in-country prices and lending rates within China; and (4) the conditions under which it is permissible to apply countervailing duties concurrently with antidumping duties calculated using a special methodology for goods from NMEs. If fully implemented, these rulings will have a major impact on how the United States and other WTO members conduct trade remedies proceedings, particularly countervailing duty proceedings, against imports from NMEs.