On July 31, the World Trade Organization (WTO) issued a ruling in favor of the United States in a dispute over China's compliance with the prior recommendations and rulings of the WTO Dispute Settlement Body (DSB) regarding China's conduct of investigations that resulted in the imposition of antidumping (AD) and countervailing duty (CVD) orders with respect to U.S. exports of grain-oriented electrical steel (GOES). This marks the first time since its accession to the WTO in 2001 that China has been found to have failed to comply with an adverse DSB ruling. As China already allowed the illegal trade remedy measures to "sunset" in April 2015 in anticipation of the release of the compliance panel's report, the issuance of the ruling serves more as a rebuke to systemic deficiencies in China's administration of its trade remedy laws than as a directive with any practical impact on U.S. exports of GOES.
The dispute arose after China imposed AD and CVD orders on GOES from the United States in April 2010. The AD duties ranged as high as 64.8 percent, and the CVD rates ranged as high 44.6 percent. The imposition of these duties effectively closed a market worth more than $260 million to U.S. producers of GOES.
In September 2010, the United States initiated dispute settlement proceedings challenging various aspects of China's investigations and the conclusions made by China's administering authority to support its imposition of duties. The dispute settlement panel found that China breached several procedural and due process obligations in conducting its investigations. The panel also found numerous defects in China's conclusions with respect to whether U.S. exports of GOES were the cause of the alleged injury to China's domestic industry. In October 2012, the Appellate Body upheld the panel's findings relating to China's material injury determination.
Notwithstanding the DSB's recommendations that China bring its measures into conformity with WTO rules, China's July 2013 revised determination continued duties on GOES from the United States and did so largely on the basis of the same facts and analysis that were faulted in the original panel and Appellate Body reports.
On January 13, 2014, the United States initiated compliance proceedings pursuant to Article 21.5 of the WTO Dispute Settlement Understanding. As in the original proceeding, the compliance panel agreed with the United States on most of its claims, finding that China's conclusions that U.S. exports of GOES caused adverse price effects in the Chinese market and caused injury to China's domestic industry were deficient, unsupported by the facts on the record, and inconsistent with China's obligations under the WTO Agreements.