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United States Prevails in WTO Section 421 Safeguard Dispute with China

Washington, D.C. – Today United States Trade Representative Ron Kirk announced that a World Trade Organization (WTO) dispute settlement panel found in favor of the United States in a dispute brought by China challenging the imposition of additional duties on imports of Chinese tires under the transitional safeguard mechanism included in China’s Protocol of Accession to the WTO. The panel rejected all of China’s claims, finding that the United States acted consistently with its WTO obligations.

“This is a major victory for the United States and particularly for American workers and businesses. We have said all along that our imposition of duties on Chinese tires was fully consistent with our WTO obligations. It is significant that the WTO panel has agreed with us, on all grounds,” said Ambassador Kirk. “Along with our recent panel win in China’s challenge to our simultaneous use of antidumping and countervailing duties on Chinese imports, this outcome demonstrates that the Obama Administration is strongly committed to using and defending our trade remedy laws to address harm to our workers and industries.”

BACKGROUND

On September 11, 2009, the President imposed additional duties on imports of certain passenger vehicle and light truck tires from China for a period of three years in order to remedy the market disruption caused by those imports, as determined by the U.S. International Trade Commission (USITC). This safeguard measure was imposed in response to a petition filed by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union under section 421 of the Trade Act of 1974, as amended (19 U.S.C. § 2451). Section 421 implements the transitional safeguard contained in Section 16 of China’s Protocol of Accession to the WTO.

On September 14, 2009, China requested consultations with respect to the President’s determination. China alleged that the additional duties were inconsistent with the GATT 1994, the Agreement on Safeguards, and China’s Protocol of Accession. China also alleged that various elements of the USITC’s determination regarding market disruption were inconsistent with the Protocol of Accession. In addition, China alleged that the level and duration of the additional duties were also inconsistent with the Protocol of Accession. Finally, China alleged that the section 421 definition of significant cause was in and of itself inconsistent with the Protocol of Accession. The WTO established a panel in January 2010 to hear this dispute. The panel held meetings with the parties in June and July 2010.

The panel found in favor of the United States with respect to all of China’s claims. Both sides have the right to appeal the panel’s findings to the WTO Appellate Body within 60 days.