Japanese government requests consultations with China under the WTO agreement regarding China’s imposition of anti-dumping duties
On 11 June 2021, the Japanese government announced that it had requested a consultation with China under the WTO agreement regarding anti-dumping measures that have been imposed on several stainless steel products since July 2019¹. This is the third WTO consultation request by Japan regarding China. The first was China — Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum in March 2012 (DS433) while the second was China — Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes (“HP-SSST”) from Japan in December 2012 (DS 454).
The Chinese government initiated an anti-dumping investigation in July 2018, claiming that the Chinese domestic industry had been injured by surging imports of stainless steel products such as stainless steel billets, hot-rolled stainless steel plates and hot-rolled stainless steel coils from Japan, the EU, Indonesia and South Korea². In July 2019, they made a final decision to impose anti-dumping tariffs on the import of these products, finding that dumping was taking place as well as injury to domestic industry caused by the dumped imports from the above countries. The Japanese government considers this anti-dumping measure decision to be erroneous and believes that the Chinese authorities’ investigation process may be inconsistent with the WTO Anti-Dumping Agreement. In response to China’s decision, Japan has repeatedly asked China to abolish the anti-dumping measure through WTO committees and in bilateral meetings, but has failed to resolve the issue. Therefore, it has requested consultations under the WTO Agreement.
While Japan does not challenge China’s determination that dumping is taking place, the Japanese government points out nine violations by China in its request for consultations. The main pillar of its claim is China’s failure to conduct a proper injury determination under the AD Agreement³. Specifically, Japan claims that (i) China improperly concluded that the subject imports as a whole had a significant effect on the prices of like domestic products as a whole, without taking into account the inherent differences in the subject imports, thus violating Arts. 3.1 and 3.2 of the AD Agreement; (ii) China’s cumulative assessment of the effects of subject imports from the European Union, Japan, Indonesia and South Korea was inappropriate in light of the differences in conditions of competition, thus violating Arts. 3.1 and 3.3 of the AD Agreement; and (iii) China failed to conduct an objective examination of all relevant economic factors and indices having a bearing on the state of the domestic industry and to provide a reasoned and adequate explanation of the determination of material injury to domestic industry, thus violating Arts. 3.1 and 3.4 of the AD Agreement.
Based on the press release of the Ministry of Economy, Trade and Industry in Japan, the total value of exports of stainless steel from Japan to China is approximately 70 billion yen (approx. $636 million) per year, of which exports of the products subject to the anti-dumping measure account for approximately JPY 9.2 billion (approx. USD 84 million)⁴ (both figures as of 2019). Owing to those anti-dumping tariffs, importers of these Japanese products need to pay JPY 1.1 billion (approx. USD 10 million) in additional tariffs every year. The Japanese government and the Chinese government will enter into consultations in good faith within 30 days (Art. 4.3 of the Understanding on Rules and Procedures Governing the Settlement of Disputes⁵), and if the consultations fail to settle the dispute within 60 days, Japan will be able to request the establishment of a panel (Art. 4.7). The panel may be established this Autumn at the earliest (Art. 6.1).
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¹https://www.meti.go.jp/english/press/2021/0611_001.html
²Ministry of Economy, Trade and Industry in Japan, 2020 Report on Compliance by Major Trading Partners with Trade Agreements, pp. 10-11
https://www.meti.go.jp/english/report/data/2020WTO/pdf/01_01.pdf
³Request for Consultations by Japan, China – Anti-Dumping Measures on Stainless Steel Products, WT/DS601/1 (15 June 2021)
⁴https://www.meti.go.jp/english/press/2021/0611_001.html
⁵https://www.wto.org/english/docs_e/legal_e/28-dsu_e.htm#4