The United States has, for the first time, formally challenged China's implementation of a WTO ruling on August 13th. The U.S. alleges that China continues to impose "double-reverse" tariffs on U.S. steel exports, which it claims violates WTO regulations and necessitates further trade negotiations. This move comes after the U.S. Trade Representative (USTR) issued a statement on the same day, expressing concerns over China’s ongoing application of these duties.
According to the USTR, China had previously indicated that its imposition of "double-reverse" tariffs on U.S.-origin electrical steel was in compliance with WTO rules. However, the U.S. has now initiated a formal consultation under the WTO dispute settlement mechanism. This is the first time the U.S. has taken such action against China’s enforcement of a previous WTO decision.
Under WTO procedures, a 60-day consultation period is expected between the two countries. If no resolution is reached, the matter could be escalated to the WTO’s Appellate Body or a panel of experts for a final ruling.
Oriented electrical steel, known for its superior magnetic properties, is a high-tech material used primarily in transformers and large motors. In 2009, China launched an anti-dumping and countervailing duty investigation on U.S.-origin oriented electrical steel. It subsequently imposed anti-dumping duties ranging from 7.8% to 64.8%, along with countervailing duties between 11.7% and 44.6%.
The U.S. argued that these measures violated WTO rules and brought the issue to the WTO. In 2012, the WTO ruled that China had breached global trade rules by initiating the "double-reverse" investigations and imposing the duties.
In August of last year, China adjusted the "double-reverse" tariffs on U.S.-origin oriented electrical steel, reducing the highest anti-dumping duty to 19.9% and the countervailing duty to 3.4%. However, the U.S. claims that despite this adjustment, China still maintains tariffs that are inconsistent with WTO rules.
USTR spokesperson Froman stated, “The WTO found that China’s tariffs were not in line with WTO rules. We believe we are right, and China is wrong. Unfortunately, China does not seem to correct areas where it is out of compliance.â€
Following the 2012 ruling, the Chinese Ministry of Commerce emphasized that WTO members may have differing interpretations of the Anti-Dumping Agreement and the Subsidies and Countervailing Measures Agreement. China expressed willingness to comply with WTO rules and properly handle the case.
In October of last year, the U.S. Department of Commerce launched a new "double-reverse" investigation into China’s exports of oriented electrical steel. It planned to release preliminary findings on anti-subsidy and anti-dumping measures in December and March, though the initial results have not yet been announced.
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