WTO rules on public body definition and double counting

On 11 March, the Appellate Body of the World Trade Organization (WTO) issued two rulings which appear favourable to China.

The Appellate Body ruled that “double counting” (i.e. imposing both anti-dumping tariffs and anti-subsidy tariffs on the same goods, such that the combined penalty amounts to more than the total unfair price advantage that the tariffs are intended to counter) is a violation of the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement). The ruling overturns an earlier finding of a WTO panel. It follows, and is consistent with, a case in which Chinese companies that were subject both to anti-dumping and anti-subsidy tariffs successfully sued the US Department of Commerce at the US Court of International Trade.

The Appellate Body also reversed an earlier panel’s ruling that the term “public body” in article 1.1(a)(1) of the SCM Agreement includes “any entity controlled by a government”. Until this ruling, all state-owned enterprises (SOEs) were classified as public bodies, which made them vulnerable to countervailing duties.