Keywords: Appellate Body, World Trade
Organization, WTO, China, domestic industry,
On September 5, 2011, the Appellate Body of the World Trade
Organization (WTO) published its report on United States – Measures Affecting
Imports of Certain Passenger Vehicle and Light Truck Tyres from
China(DS399). The Appellate Body affirmed an
earlier ruling by a WTO dispute settlement panel that the United
States did not act inconsistently with its WTO obligations when it
imposed a tariff (also known as a "safeguard" measure) on
imports of certain passenger vehicle and light truck tires from
China. This is the first case to address a provision in China's
WTO Accession Protocol that allows other WTO Members to impose
product-specific restrictions on Chinese imports when the imports
enter a Member country in such significant numbers so as to cause
material harm to its domestic industry.
China brought the case to the WTO after President Obama signed
an order in September 2009 imposing a safeguard measure on imports
of Chinese tires in the form of additional import tariffs for a
three-year period. The investigation that led to the
President's decision was initiated by the United Steelworkers
union when it filed a petition in April 2009 with the US
International Trade Commission (USITC) alleging that certain
passenger vehicle and light truck tires produced in China were
being imported into the US in such increased quantities or under
such conditions as to cause or threaten to cause market disruption
to domestic producers of like or directly competitive products. The
USITC determined that there was market disruption due to the
rapidly increasing imports of the particular tires from China that
were a significant cause of material injury to the US domestic tire
industry.
In December 2010, a WTO panel found that the US had not violated
its obligations under Section 16 of China's Accession Protocol
when it imposed the tires safeguard measure. Under Section 16 of
the Protocol, WTO Members have the right to impose safeguard
measures on imports from China when such imports are
"increasing rapidly" so as to be "a significant
cause" of material injury to the domestic industry. China
immediately appealed the panel's decision, which the Appellate
Body has now upheld. In particular, the Appellate Body affirmed the
panel's finding that the USITC had properly evaluated whether
China's imports were "increasing rapidly" and were
"a significant cause" of material injury to the US
domestic industry under Paragraph 16.4 of the Protocol.
US Trade Representative Kirk has hailed the Appellate Body's
decision as a "tremendous victory" for US workers and
manufacturers. The US, he added, "will use our trade laws to
stand up for our workers and address harm to them." However,
the ability of the US to impose safeguard measures on other imports
from China in the future is limited. Safeguards can be put in place
for a three-year period. Section 16 of China's Accession
Protocol, which allows for safeguards, expires at the end of 2013.
Although it is unclear whether this means new safeguard measures
cannot be put in place after 2013 or whether existing safeguards
cannot continue after this date, the approaching expiration date
seems to have deterred other US industry groups from seeking
safeguard measures. No safeguard petitions have been filed since
the Chinese tires safeguard order was issued in 2009.
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