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(Dec 16, 2010) On December 3, 2010, the World Trade Organization (WTO) issued a panel report that examined a complaint by China against the European Union in the case " European Communities – Definitive AD [Anti-Dumping] Measures on Certain Iron or Steel Fasteners from China" (DS397). The dispute panel supported China's claims that the EU had violated world trade rules through the imposition of antidumping duties on imports of Chinese screws, bolts, and other types of fasteners. (Panel Report Out on China-EU Fastener Dispute, WTO website (Dec. 3, 2010), http://www.wto.org/english/news_e/news10_e/397r_e.htm; Daniel Pruzin, WTO Panel Ruling Supports Complaint of Chinese Against EU Antidumping Duties, 27 INTERNATIONAL TRADE REPORTER 1881 (Dec. 9, 2010), Bureau of National Affairs online subscription database, http://news.bna.com/itln/ITLNWB/split_display.adp?fe
dfid=18815612&vname=itrnotallissues&fn=18815612&jd=a0c5m9g3k7&split=0
.)

The dispute centered on a January 2009 decision by the EU "to impose a definitive antidumping duty order on Chinese exporters of Chinese fasteners." (Pruzin, supra.) Two of the Chinese companies involved, both of which were subsidiaries of European companies, were exempt from the duties. The tariff on the exporters under the order ranged from 26.5% to 79.5%, with a rate of 85% to be imposed on "all others." China undertook WTO dispute settlement proceedings against the EU duties in July 2009; the panel was established on October 23 of that year. (Id.)

The panel agreed with China's claim that a provision under the EU's framework regulation on antidumping – in particular, article 9(5) of EU Council Regulation 384/96 of 1995 on protection against imports from non-EC member countries (known as the Basic AD Regulation) – allowed the EU to impose a blanket duty, rather than company-specific duties, on Chinese exporters in violation of the WTO's Antidumping Agreement. More specifically, "China charged that the criteria for market economy treatment set out under the regulation violated the Antidumping Agreement since the WTO rules set down no such conditions in order for exporters to benefit from an individual dumping margin." (Id.; Council Regulation (EC) No 384/96 of 22 December 1995 on Protection Against Dumped Imports from Countries Not Members of the European Community, 1996 OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES (L 56) (dated Mar. 6, 1996), EUR-LEX, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?ur
i=CONSLEG:1996R0384:19980701:EN:PDF
; Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 [the WTO Anti-Dumping Agreement], WTO website, http://www.wto.org/english/docs_e/legal_e/19-adp_01_e.htm (last visited Dec. 14, 2010).)

Although it supported a number of China's claims against the EU, the panel also rejected a number of China's additional claims having to do with "substantive and procedural determinations made by the EU investigators [of fastener dumping actions by Chinese exporters], including [China's] claim that the EU's determination that the dumped goods caused injury to competing EU producers was fundamentally flawed." (Pruzin, supra.) Some of the other claims that China failed to establish in the fasteners investigation were that the EU acted inconsistently with respect to certain articles of the AD Agreement in regard to the dumping determination, the definition of domestic industry, and the determination of price undercutting. In its recommendations, the panel called on the EU to bring article 9(5) into conformity with WTO requirements. However, it rejected China's request that the panel suggest specific ways to the EU on to implement this recommendation. (Id.)

China's Ministry of Commerce hailed the panel findings; the head of its Department of Treaty and Law stated that the EU requirement that Chinese exporters prove they meet the "single tariff" requirements in response to anti-dumping charges "is a heavy burden and unfair treatment to Chinese companies. In particular the WTO Expert Panel ruled that such anti-dumping measures were discriminatory and in violation of the WTO's rules." (Press Release, MOFCOM, MOFCOM Comments on WTO's Ruling on EU's Anti-Dumping Measures Against China's Fastener Imports (Dec. 6, 2010), http://english.mofcom.gov.cn/aarticle/newsrelease/si
gnificantnews/201012/20101207287109.html
.) European Commission trade spokesman John Clancy called the ruling a mixed decision, however, adding that it was "too early to speculate" on its potential impact. The EU and China have 60 days to decide whether to appeal the panel's rulings. (Pruzin, supra.)

The fasteners case is China's first complaint against the EU; it has launched only three other complaints, all against the United States, since its entry into the WTO in 2001, in comparison with the annual average of 60 cases launched against China for infractions of trade rules. (China Wins Its First Trade Complaint Against the EU, THE INDEPENDENT (Dec. 4, 2010), http://www.independent.co.uk/news/business/news/china-wins-its-first-tra
de-complaint-against-the-eu-2151139.html
; Ding Qingfen, More Trade Complaints Urged, CHINA DAILY (Mar. 12, 2010), http://www0.chinadaily.com.cn/china/2010npc/2010-03/12/content_9576963.h
tm
.) The WTO panel report on one of these three cases, U.S. measures affecting imports of tires from China, was also just published, on December 13, 2010. (Panel Report Out on China-US Tyre Dispute, WTO website (Dec. 13, 2010), http://www.wto.org/english/news_e/news10_e/399r_e.htm.)

The charge of fastener dumping is apparently not one-sided. On May 7, 2010, in a complaint lodged with the WTO, the EU requested consultations with China in regard to China's provisional anti-dumping duties on some iron and steel fasteners from the EU. (China – Provisional Anti-Dumping Duties on Certain Iron and Steel Fasteners from the European Union, WTO website, http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds407_e.htm (last visited Dec. 17, 2010).)

Author: Wendy Zeldin More by this author
Topic: Foreign trade and international finance More on this topic
Jurisdiction: World Trade Organization More about this jurisdiction

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Last updated: 12/16/2010