DS483: China — Anti-Dumping Measures on Imports of Cellulose Pulp from Canada

DS483: China — Anti-Dumping Measures on Imports of Cellulose Pulp from Canada

The Latest News: Request for Consultations

On September 11, 2018, Canada requested consultations with China pursuant to Article 21.5 of the DSU with respect to certain measures adopted by China imposing anti-dumping duties on imports of cellulose pulp from Canada.

Canada considers that China has not properly implemented the DSB’s recommendations and rulings. In particular, it appears that China’s continuing anti-dumping measures on cellulose pulp from Canada are imposed inconsistently with the following provisions of the Anti-Dumping Agreement and the GATT 1994.

 

The Dispute

A WTO Dispute initiated by Canada against the People’s Republic of China (“China”) regarding cellulose pulp has recently resolved, with China indicating that it has implemented the Dispute Settlement Board’s (“DSB’s”) recommendation to bring the disputed measure into conformance with WTO law.  As a result, no compliance proceeding will be initiated.

The third parties are the European Union, Chile, Japan, Republic of Korea, Norway, United States, Brazil, Singapore, and Uruguay.

On October 15, 2014, Canada requested consultations with China with respect to China’s measures imposing anti-dumping duties on imports of cellulose pulp from Canada.  Canada had claimed that the measures were inconsistent with numerous articles and Annex II of the Anti-Dumping Agreement and  Article VI of the GATT 1994.

After consultations failed to resolve the dispute, Canada requested that the Dispute Settlement Board (“DSB”) establish a panel, which the DSB did on April 15, 2015.  Thereafter, the panel composed a report, which was circulated to the members on April 25, 2017.

 

The Key Findings of the Panel Report (as written by the WTO Secretariat under its own responsibility):

This dispute concerned the anti-dumping measure imposed by China on imports of cellulose pulp originating from Canada. Canada challenged China’s Ministry of Commerce’s (“MOFCOM’s”) determination of injury in the anti-dumping investigation at issue.

Although Canada’s panel request included claims regarding the determination of dumping and procedural aspects of the investigation, Canada specifically abandoned these claims in its first written submission. Canada requested that the Panel find that the measure at issue is inconsistent with China’s obligations under Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement, and as a consequence also inconsistent with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

Canada claimed that MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to assess the significance of an absolute increase in dumped imports in light of the factual circumstances in the market, such as domestic demand, volume of domestic like product and non-dumped imports.

The Panel rejected Canada’s claim, concluding, inter alia, that MOFCOM was not obligated to consider the significance of an absolute increase in imports in the context of changes in other factors. The Panel noted, however, that the investigating authority’s decision whether any given increase in imports, whether considered significant or not, ultimately supports a determination of injury caused by dumped imports is an element of causation analysis under Article 3.5.

Canada claimed that MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to assess the significance of an absolute increase in dumped imports in light of the factual circumstances in the market, such as domestic demand, volume of domestic like product and non-dumped imports.

The Panel rejected Canada’s claim, concluding, inter alia, that MOFCOM was not obligated to consider the significance of an absolute increase in imports in the context of changes in other factors. The Panel noted, however, that the investigating authority’s decision whether any given increase in imports, whether considered significant or not, ultimately supports a determination of injury caused by dumped imports is an element of causation analysis under Article 3.5.

Canada claimed that MOFCOM acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement by failing to objectively examine the domestic industry’s market share and to properly analyse and interpret data relating to factors that showed an improvement in the state of the domestic industry.

The Panel considered that MOFCOM provided a plausible and reasonable explanation of the positive trends in several factors, in particular that they were driven by the expansion of the market for cellulose pulp in China and the domestic industry’s expansion. The Panel also considered that MOFCOM’s evaluation of market share was reasonable and objective. The Panel found that Canada had not established that MOFCOM acted inconsistently with Articles 3.1 and 3.4.

Canada claimed that MOFCOM’s demonstration of a causal relationship between the dumped imports and injury to the domestic industry is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement. Canada also claimed that MOFCOM failed to objectively examine several “other factors” allegedly causing injury to the domestic industry simultaneously with the dumped imports, namely: (a) changes in cotton and viscose staple fibre prices; (b) domestic industry overexpansion, overproduction and inventory build-up; (c) non-dumped imports; and (d) shortage of cotton linter.

The Panel found that MOFCOM failed to demonstrate a causal relationship between the dumped imports and the injury to the domestic industry consistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement. The Panel rejected Canada’s allegation with regard to the shortage of cotton linter, but upheld Canada’s claim with regard to the remaining “other factors”.

The Panel also upheld Canada’s consequential claims that China acted inconsistently with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

At its meeting on May 22, 2017, the DSB adopted its panel report.

 

The Reasonable Period of Time

On June 1, 2017, Canada and China informed the DSB that they had agreed that the reasonable period of time to implement the DSB’s recommendations and rulings would be 11 months, which expired on April 22, 2018.

At the DSB meeting on 19 June 2017, China informed the DBS of its intention to implement the DSB’s recommendations and rulings and confirmed the agreement with Canada on the reasonable period of time.

 

Implementation of the Adopted Reports:

On January 11, 2018, China informed the DSB that, on August 25, 2017, MOFCOM published a notice and launched a re-investigation on cellulose pulp from Canada.  In its communication, China indicated that through this re-investigation China will fully implement the DSB’s recommendations and ruling in this dispute.

On 2 May 2018, China and Canada informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU (sequencing agreement), named the Understanding between China and Canada regarding procedures under articles 21 and 22 of the DSU WT/DS483/8.

For the full list of documents filed with the WTO, click here.

 

Stay Tuned…

As the case is updated, we will provide updates on this blog.

 

John Reiterowski, DS Lawyers Canada, LLP

jreiterowski@dsavocats.ca

DS Customs & Trade team located in Paris, Brussels, Montreal, Toronto, Lima, Singapore, Vietnam, Beijing, Guangzhou, Dakar and Cotonou is at your disposal to provide you with additional information.

CONTACT US:

dscustomsdouane@dsavocats.com

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s