Pending U.S. Cases

1. Pending U.S. Cases 2013

2. Outline Andrew Trager-Kusman: DSU 449 China v. U.S. (Various Products from China) Masseh Tahiry: DSU 450 U.S. v. China (Auto Parts) Jonathan Wagner: DSU 451 Mexico v. China (Textile and Apparel) Thomas Vari: DSU 452 China v. EU (Reusable Energy Sector) Jonathan Wagner: DSU 454 Japan v. China (Steel)

3. China vs. U.S. Various Products from China

4. HISTORY/CONTEXT • DSU 449 (PENDING) • Complainant: China • Respondent: United States • On September 17th 2012, China request consultation with the United State concerning the follow: • A new piece of legislation that explicitly allows the application of countervailing duties • The duties were applied between November 2006 and March 2012 in respect to Chinese Products • Anti-dumping measures were combined with/ and applied in parallel with other anti-dumping remedies. • Failure of the US department of commerce to identify and avoid the double remedies

5. MAIN ISSUES • 2012 provisions to the Tariff Act of 1930: Countervailing Duties are to be applied to Nonmarket Economies • China Maintains Inconsistent with Articles X 1-3: • Laws were not “published promptly in such a manner as to enable governments and trade to become acquainted with them.” • They were enforced prior to publication • Laws are not being applied “in a uniform, impartial, and reasonable manner”

6. MAIN ISSUES • 2012 provisions to the Tariff Act of 1930: Gives USDOC legal authority to investigate • China Maintains Inconsistent with Articles X-2 • Countries must enforce laws in a uniform manner • China maintains that there was a lapse in time which did not give USDOC legal authority to investigate such incidents prior to March 13 2012.

7. MAIN ISSUES • 2012 provisions to the Tariff Act of 1930: Possible Lapse in investigatory authority • China Maintains Inconsistent with Article 10, 15, 19, 21,and 32 of Agreement on Subsidies and Countervailing Duties • 10:Duties may only be imposed pursuant to investigations • 15: Investigation should show injury, and all countries should be treated equally • 19: Duties shall be appropriate amount after investigation • 21: Duties should be in place only as long as necessary

8. MAIN ISSUES • 2012 provisions to the Tariff Act of 1930: Gives Failure to identify double remedies • Violates Article 9 and 11 of Anti-Dumping measures • 9: Duties should be imposed for no more than in order then the margin of dumping • 11: Ant-dumping should only applied as long as it takes to counteract injury. • China maintains the double remedies exceed these measures

9. PROPOSED RESOLUTION • Recommendations for the resolution of trade issues: • The U.S. should investigate, and retroactively correct the double remedies, if they find they were above the margin of dumping, or the cost of injury. • Why is this case important? • The U.S. and China are large trading partners. • Set precedent for the largest trade relationship in the world.

10. U.S. vs. China Automobile and Automobile Parts

11. HISTORY/CONTEXT • DSU 450 • Complainant: United States • Respondent: China • On 17 Sept 2012, the U.S. requested consultations with China concerning export subsidies extended to China's auto and auto-parts companies located in export bases • On 28 Sept 2012, the E.U. requested to join consultations • Action filed by the Obama administration during the election campaign • Republican ads accusing President Obama of failing to challenge Chinese trade practices

12. MAIN ISSUES • China appears to be providing export subsidies • Specifically to auto and auto-parts manufacturers in China that meet certain export performance requirements located in “export bases” • Violation of WTO's prohibited subsidies article • No documentation of subsidies • China has not notified contracting parties of subsidies nor is it publicly available

13. MAIN ISSUES • WTO and other agreements and provisions involved: • Subsidies and Countervailing Measures Agreement: • Article 3, Paragraph (a) – subsidies contingent upon export performance are prohibited • Article 25.1 – members shall submit notification of subsidies no later than 30 June of each year • Article 25.2 – members shall notify any subsidy granted or maintained within their territories • Article 25.3 – the content of a subsidy notification should be sufficiently specific to enable other members to evaluate trade effects • Article 25.4 – explanation of subsidy should be provided in the notification itself if not addressed elsewhere • GATT 1994: • Article 26 paragraph 1 – if any contracting party grants or maintains any subsidy which operates directly or indirectly to increase exports of any product, it shall notify the contracting parties in writing of the extent and nature of subsidization and its effects. If serious prejudice to the interests of any other contracting party is caused/threatened then both parties need to discuss the possibility of limiting the subsidization

14. MAIN ISSUES • WTO and other agreements and provisions involved: • Accession Protocol: • Part 1, Paragraph 1.2 – China must provide translation of measures in an official WTO language • Part 1, Paragraph 2(C)(1) – any laws, regulations and other measures affecting trade in goods, services, TRIPS should be readily available to other WTO members • Part 1, Paragraph 2(C)(2) – China must establish or designate an official journal dedicated to the publication of all laws and regulations and other measures affecting trade in goods, services, TRIPS

15. MAIN ISSUES • Are the issues consistent or inconsistent with WTO obligations? • The issues stated clearly violate WTO obligations • The “export base” program provides export subsidies such as cash grants for exporting, grants for research and development, subsidies to pay interest on loans, and preferential tax treatment • China has not notified any of its trading partners (U.S. or E.U.) of its subsidies

16. PROPOSED RESOLUTION • Recommendations for the resolution of trade issues: • The U.S. and E.U. should implement Countervailing Duties—tariff surcharge—on auto and auto-parts from Chinese manufacturers • The U.S. and E.U. should discuss possible limitations of subsidization of auto and auto-parts manufacturers (e.g. restriction of auto-part imports) • Why is this case important? • Unfairly promotes exports of auto and auto-parts • Chinese export subsidies hurt U.S. auto and auto-parts manufacturers

17. Mexico vs. China Textile and Apparel

18. HISTORY/CONTEXT • DSU 451 • Complainant: Mexico • Respondent: China • On 15 October 2012, Mexico requested consultations with China concerning their use of prohibited and actionable subsidies • On 25 October 2012, the European Union requested to join the consultations.  • On 26 October 2012, Australia and Guatemala requested to join the consultations.  • On 29 October 2012, Brazil, Peru and the United States requested to join the consultations.  • On 30 October 2012, Honduras requested to join the consultations. • On 15 November 2012, Colombia requested to join the consultations.

19. MAIN ISSUES • Mexico cites (9) ways in which China unfairly promotes domestic producers and exporters of apparel and textiles : • Prohibited Subsidies contingent on the use of goods from China: • Income Tax exemptions for “Foreign Invested Enterprises” (FIE) • Reduction of import duties and VAT on purchases of equipment • Support for production, sale, and use of domestic cotton and chemical fibers • Raw materials used in textile end products which are given unfair advantage over imported products. • Cash payments from government agencies when • Operate in line with china’s industrial policy • Expand into foreign markets • Operate in “key” industry • Are owned in part by Chinese Government • Actionable Subsidies causing adverse effects to the interest of Mexico • Exemptions from Municipal taxes for certain groups, specifically FIE • Low cost loans, Exetended Payments, and Debt forgiveness by state-owned banks • Preferential land use rights and prices • Discounted electricity rates

20. MAIN ISSUES • WTO agreement and provisions involved • Subsidies and Countervailing Measures Agreement:  • Article 3.1(a) and (b) - Prohibited Subsidies are those that are contingent upon export performance favor domestic products over imported goods. • Article 5(c) – Actionable subsidies that cause serious prejudice to another member. • Article 6.3(b) and (c) – Subsidies cannot impede on the exports of one member to a third party, nor can they result in significant price undercutting. • Article 6.4 - Subsidies cannot result in a change in the share of the market to the disadvantage of the non-subsidized products. • Article 6.5 – Price undercutting can be demonstrated by difference in market price, or export unit values. • GATT 1994: • Article III:4 –It is not permitted to favor domestic over imported products. • Article XVI- Subsidies created to increase exports must be brought to the attention of all parties involved. If prejudice is apparent, parties involved must discuss limiting subsidies. • Agreement on Agriculture: • Articles 3 –Members cannot provide subsidies in excess of limits pre-established in Section I of Part IV of its schedule. • Article 9 - The provision of subsidies to producers of an agricultural product, contingent on export performance • Article 10 – Export subsidies not already banned, should not be created to circumvent established subsidy commitments. • China's Accession Protocol: • Paragraph 1.2 of Part I - China’s obligations to the WTO as a member

21. MAIN ISSUES • Are the issues consistent or inconsistent with WTO obligations? • Many issues clearly violate WTO obligations. • Mexico currently believes that all of China’s policies listed above are prejudice to its interests. • Price undercutting will show that Mexico has been pushed out of the apparel and textile market in the U.S. • China's policies towards cotton to appear to be inconsistent with Articles 3, 9, and 10 of the Agreement on Agriculture. • This will be easy to prove or disapprove when compared to tariff rates established in schedule of concessions. • Will be harder for Mexico to show that China favors domestic products over the use of imports. • Opaque government process

22. PROPOSED RESOLUTION Recommendations for the resolution of trade issues. Safeguards and Countervailing Duties are not an Option. Complainants can conduct Anti-Dumping Investigation Countries (U.S.) to enact Anti-Dumping measures. Dispute Resolution will have to prove China violated WTO obligations Price undercutting has resulted in loss of market share for Mexico China has implemented policies that violate binding Tariffs in Schedule of Concessions. Why is this case important? The United States serves as the number 1 country of exportation for both China and Mexico. (Global Trade Atlas) China exports roughly 41% of its apparel and clothing accessories to United States Mexico exports roughly 59% of its apparel and clothing accessories to United States Anti-Dumping measures would change national policy in China Problems involve state owned companies in china If China found to be dumping textiles and apparel, will ripple throughout other markets

23. China vs. E.U. Reusable Energy Sector

24. HISTORY/CONTEXT DSU 452 Complainant: China Respondent: EU, Italy, Greece On November 5, 2012, China requested consultations with the EU, Italy and Greece concerning their use of prohibited and actionable domestic content restrictions and feed-in tariffs in the renewable energy sector On 16 November 2012, Japan requested to join the consultations On 19 November 2012, Australia and Argentina requested to join the consultations

25. MAIN ISSUES • China cites 4 laws in which the EU, Italy and Greece unfairly promote domestic producers and exporters of renewable energy products: • Violation of the National Treatment principle : • subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods. • No contracting party shall establish or maintain any internal quantitative regulation relating to the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any product which is the subject of the regulation must be supplied from domestic sources. 

26. MAIN ISSUES • WTO agreement and provisions involved • Subsidies and Countervailing Measures Agreement:  • Article 3.1(b) - subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods. • Article 1.1 - there is a financial contribution by a government or any public body within the territory of a Member • Article 3.2 -  A Member shall neither grant nor maintain subsidies referred to in paragraph 1. • GATT 1994: • Article I - …any advantage, favor, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties. • Article III:I - he contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production. • Article III:4 - The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. • Article III:5 - No contracting party shall establish or maintain any internal quantitative regulation relating to the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any product which is the subject of the regulation must be supplied from domestic sources. 

27. MAIN ISSUES • WTO agreement and provisions involved • Trade Related Investment Measures (TRIMS):  • Article 2.1 - Without prejudice to other rights and obligations under GATT 1994, no Member shall apply any TRIM that is inconsistent with the provisions of Article III or Article XI of GATT 1994. • Article 2.2 - An illustrative list of TRIMs that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT 1994 and the obligation of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 is contained in the Annex to this Agreement.

28. MAIN ISSUES • Are the issues consistent or inconsistent with WTO obligations? • Many issues clearly violate WTO obligations. • China contends that all of the EU, Italy and Greece’s policies listed above contrary to multiple WTO agreements. • Domestic content laws in the renewable energy sector prevent China from enjoying the full benefits of WTO membership with regards to sector. • The EU, Italy and Greece’s policies towards the renewable energy sector to appear violate the TRIMs, GATT 1994 and Subsidies agreements

29. PROPOSED RESOLUTION Recommendations for the resolution of trade issues. Countervailing Duties are an option; albeit one of limited efficacy when confined to the renewable energy sector. Respondents will likely have to remove domestic-content language from laws and allow China unfettered access to their markets Why is this case important? The renewable energy sector in the EU, US and China is growing China produces roughly 30% of all solar panels worldwide, and is the largest single producer (NY Times) China produces the most wind turbines in the world. (NY Times) The abilities of Chinese renewable energy materials and products to access the world market will affect renewable energy worldwide Removal of domestic-content provisions could have negative effects on EU firms Chinese firms will be able to undercut European producers do to lower labor costs and increased economy of scale.

30. Japan vs. China Steel

31. HISTORY/CONTEXT • DSU 454 • Complainant: Japan • Respondent: China • On 20 December 2012, Japan requested consultations with China concerning their anti-dumping duties on high-performance stainless steel seamless tubes • This was addressed in the Ministry of Commerce of the People's Republic of China (“MOFCOM”) • *8 Sept 2011 Notice No. 57 [2011]-States that they will begin investigation into dumping.* • * 17 April 2012 Semi-Annual Anti-Dumping Report* • 8 May 2012 Notice No. 21 [2012] –Released preliminary ruling, cited companies and calculation of deposits to be made • 8 Nov 2012 Notice No. 72 [2012]-Identifies companies and their assigned dutiable rates. (Much lower than No. 21) Will be in place for 5 years. • *-Not addressed by Japan

32. MAIN ISSUES • Japan hopes to prove that China has unfairly imposed Anti-Dumping duties on their HPSSST • WTO agreement and provisions involved: • GATT 1994: • Article VI of the GATT 1994- Introducing products into markets of another country at less than normal value is condemned if it threatens established industry in that territory. • Anti-Dumping Agreement:  • Articles 1- AD should only be applied as addressed in Art. VI of the GATT and with proper investigations. • 3.1 – Investigations should be objective and require positive evidence of injury • 3.2 – Decide on volume dumped and if price undercutting occurred • 3.4 – Investigation should include all relevant economic factors affecting the state of the industry • 3.5 –Injuries caused by other factors must not be attributed to suspected dumping • 5.3 – Only accurate evidence should result in an investigation • 5.8 – Investigation should be terminated as soon as evidence is lacking, or affects of dumping are deemed negligible • 6.5 and 6.5.1 – Confidential information must be accompanied by non-confidential summaries. If summaries cannot be provided, statements as to why they cannot be provided must be completed • 6.8 – If parties fail to comply with investigation, decision can be made without offered/requested evidence • 6.9 – Before determination is made, all parties must be notified of the facts under consideration in a timely manner • 7.4 – Unless have requested to do so, provisional measures should not exceed 4-months, • 12.2 and 12.2.2 – Public notice of findings and conclusions must be made

33. MAIN ISSUES Are the issues consistent or inconsistent with WTO obligations? Pros for China China did notify via semi-annual anti-dumping report China followed 60 day provisional measure rule Pros for Japan China only cites Anti Dumping Regulations of People Republic of China in announcements Not WTO agreement Japan claims notification were insufficient Investigation was not started on basis of solid evidence. The investigation conducted by China has been opaque. Involved parties have not been provided with sufficient summaries of evidence. China failed to follow timelines with provisional measures. Exceeded 4 month provisional measures Could not find paperwork requesting extension from the domestic companies Failure to conduct thorough, and objective investigation will be hardest to prove.

34. PROPOSED RESOLUTION • Recommendations for the resolution of trade issues. • Anti-Dumping duties should be removed to due China’s failure to follow implementation process. • Why is this case important? • May force China to evaluate the way in which it imposes ant-dumping duties • Depends on intentions of China • May have already had desired impact • This Anti-Dumping case has been viewed by outsiders as retaliation by China • Expect EU to join as third party in case

35. Questions?