The United States Trade Representative (“USTR”) published a notice in the Federal Register on September 1, 2009 requesting comments and announcing a public hearing on China’s compliance with its WTO commitments. This notice is part of an institutional mechanism the United States created to monitor and enforce other countries’ compliance with their WTO obligations. That mechanism is deployed with particular vigilance when it comes to China.
USTR is requesting these particular comments and holding a public hearing because Section 421 of the U.S.-China Relations Act of 2000 requires USTR to submit annually a report to Congress on China’s compliance with commitments made in connection with its accession to the WTO. Thus, the Obama Administration is following the law as written by Congress, where there is continuous skepticism about China’s fidelity to international trade rules.
The United States is not nearly so vigilant, unfortunately, when it comes to its own WTO obligations. The most glaring example of this double standard is the United States Commerce Department’s continuing refusal to give up its “zeroing” practice, notwithstanding more than seven WTO Appellate Body decisions over the last five years finding the practice inconsistent with WTO obligations. “Zeroing” is a technique used in antidumping cases that increases the likelihood of finding dumping, and inflates the “margins” – the amount of duties to be charged on imports – once dumping has been found. In the most recent WTO decision, United States – Measures Relating To Zeroing And Sunset Reviews – Recourse To Article 21.5 Of The DSU By Japan, issued August 18, 2009, the WTO Appellate Body found that the United States had failed to comply with the WTO Dispute Settlement Body ruling, dated January 23, 2007, that the U.S. practice of zeroing in administrative reviews is contrary to the WTO Antidumping Agreement. The WTO Appellate Body has ruled, repeatedly, that zeroing is not permissible, whether for original investigations or for administrative reviews.
In the Japanese case, the United States Commerce Department made new determinations for the specific administrative reviews without zeroing, but subsequently assessed antidumping duties on certain of the affected customs entries at the rates found in the original determinations using zeroing. It also refused to implement the results going forward, claiming that the reviews at issue had been superseded by subsequent administrative reviews in which the Commerce Department again used zeroing. The Appellate Body found that, because of these actions, the United States had failed to implement the 2007 ruling and remains in continuing violation of its obligations under the WTO Antidumping Agreement.
In our view, China should comply faithfully with its WTO obligations and the scrutiny of its actions required by U.S. law should give it no problems. However, China, and other WTO members, should hold the United States to the same high standard the United States expects of China and all other countries. It is important for the rule of law to apply to everyone equally.