Non-market Economies in the Global Trading System by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9789811313318
Publisher: Springer Singapore

6 Conclusion

Double remedy is a situation which commonly occurs from the simultaneous imposition of ADD and CVD on the same product. The problem hinges on the application of a surrogate country benchmarking for the calculation of a normal value in AD investigations—a methodology which is used predominantly against imports from NMEs. The WTO legality of double counting in case of domestic subsidies has been a contentious issue over the years until the recent decision in the US—AD and CVD case.

The Appellate Body findings clarified that cumulative duties which result in double remedy are not permitted under the SCM Agreement, thus rendering parallel investigations more difficult for importing countries. The investigating authorities are under the obligation to make necessary adjustment to ensure that the same situation of subsidisation is not offset twice under ADD and CVD. As a result, the US introduced an amendment to its domestic legislation which requires the investigating authority to reduce ADD to the extent the coutervailable subsidy inflated the dumping margin. However, the practice has been criticised for limiting the adjustment to the dumping margin mainly to the value of raw materials and additional input provided by the state and ignoring other types of subsidies. The EU, on the other hand, defended its practice of parallel AD and CVD investigations against imports from NME arguing that the double counting is avoided because the final measures were calculated in accordance with the lesser duty principle and the sum of both types of duties was limited by the injury margin. However, this position has not been yet examined by the WTO DSB. Although the Appellate Body has scrutinised only the NME methodology, its broad findings are equally applicable to other techniques for the calculation of normal value which are likely to produce a double remedy effect when combined with parallel CVD investigation. Specifically, Article 2.2 of the WTO AD Agreement which, in particular circumstances, authorizes importing countries to disregard exporter’s domestic prices as the basis for calculating normal value, will probably become more relevant for importing countries which can no longer treat China as NME. The investigating authorities are likely to interpret Article 2.2 AD Agreement creatively in order to establish new methodologies to allow the use of out-of-country data for the calculation of normal value for Chinese imports. Such new techniques resulting in inflated dumping margin, when combined with cumulative CVD, can also lead to excessive remedy. As a result, the problem of double counting is not expected to become entirely irrelevant following the expiry of the NME dumping provisions of China’s and Vietnam’s Protocols of Accession. In particular, the review of the Chinese economy, recently concluded by the USDOC, found that the country does not operate sufficiently on market principles in order to permit the use of its prices and costs for the purposes of AD analysis. The review determined that due to the significant distortions and government’s control over Chinese economy the US investigating authority will continue to apply the NME method to determine a normal value in AD investigations against Chinese imports.

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