Because the Uruguay Round required all members to bind the vast majority of their tariff lines and achieved some significant liberalization, many more trading nations since 1995 have found themselves needing to adopt or more actively utilize trade remedies to address import problems that arise. While each of the trade remedies address a different factual situation (antidumping cases address international price discrimination which causes injury to a domestic industry in an importing country; countervailing duty cases address certain government subsidization practices which result in injury to a domestic industry in an importing country; safeguard cases address a significant increase in imports that are overwhelming a domestic industry in the importing country (but without allegations of dumping or subsidization)), each of the remedies has seen the rise of many developing country users in the last eighteen years. Is this a cause of concern or a positive sign that more WTO members are using the internationally negotiated tools within the WTO to address the occasional import problems that are raised by domestic producers and their workers?

 

 

 

 

To this writer, the answer is clearly the latter – countries have undertaken much larger tariff commitments and have lost the ability to use a range of other tools (simply raising tariffs, employing discretionary licensing systems, etc.). Thus, the use of trade remedies is not in itself a cause of concern but rather a good sign for the multilateral trading system. It is unfortunate that the WTO itself often characterizes the use of trade remedies as a problem and the decline in the use of trade remedies as a “positive”. The seeming institutional bias against the use of legitimate rights within the WTO should be addressed by WTO members and by the next Director-General.  

 

 

As established users like the U.S. or Canada or Australia have had laws on their books for a century and hence have had decades to improve administrative processes, one can certainly find fault with some of the new users in terms of transparency, due process and functioning of their administrative processes. For such new users, they are expected to get down the learning curve in terms of how to administer the remedies much more quickly than historic users have had to do and can face challenges at the WTO where they fail to do so. These so-called “learning curve” issues should be transitory as new users gain experience and their systems are challenged. So they should not be an ongoing concern for the system.

 

 

At the same time, some new users seem to routinely resort to trade remedy actions at least in part as a form of retaliation against trading partners pursuing their WTO rights. Such an approach to the use of trade remedies should not be tolerated and undermines the multilateral system. China’s actions have been particularly troublesome to trading partners in this regard. However, China is by no means the only country where the timing of actions and some of the public pronouncements at least support conclusions that cases are being initiated to demonstrate displeasure with other actions of a trading partner. Both the U.S. and the EU have brought WTO challenges to Chinese antidumping and/or countervailing duty actions on products where concerns were present that the cases were about retaliation.[1] Hopefully, one will see an elimination of this practice by members.

 

 

 

 

WTO members provide the WTO Secretariat with semiannual reports on cases initiated, orders in place and other information. While there can be a difference in the scope of cases (with safeguard cases potentially permitting broader application to imported products and typically applying to all countries vs. individual countries for an antidumping or countervailing duty investigation), historically, and more recently, the primary trade remedy used by WTO members is the antidumping remedy. From 1995-2012, the WTO membership (to date not including Russia) reported 4,209 antidumping investigations initiated (with the number initiated in any given years ranging from 155 to 371). During the same time there were only 301 countervailing duty actions initiated by WTO members (low of 6 initiations, high of 41 initiations in a given year). There were also 254 global safeguard actions initiated by WTO members (low of 2 initiations, high of 34 initiations in a given year). Thus, antidumping initiations were 88.3% of total trade remedy initiations. Countervailing duty initiations were 6.3% of total initiations, and global safeguard initiations were 5.3% of the total.

 

 

At least 46 WTO members (treating the EU’s 27 members as one) initiated one or more antidumping investigations over the first 18 years of the WTO. While the U.S., EU, Canada and Australia remain major users of the antidumping remedy, in the first 18 years they accounted for 1,328 initiations (31.6% of total antidumping initiations). If one adds in cases initiated by Japan, New Zealand, Israel and individual members of the EU (prior to their joining the EU), the total for developed countries is 1,467 or 34.9% of total antidumping initiations. If one adds Ukraine, the total would be 1,507 antidumping initiations (35.8%). Thus, developing countries within the WTO accounted for roughly two thirds of antidumping initiations over the first eighteen years (2,702 or 64.2%).

 

 

The 10 largest users over the 18 years accounted for 3,164 antidumping initiations (75.2% of the total):

 

 

India, 674 initiations (16.0%)

United States, 468 initiations (11.1%)

European Union, 450 initiations (10.7%)

Argentina, 310 initiations (7.4%)

Brazil, 279 initiations (6.6%)

Australia, 244 initiations (5.8%)

South Africa, 216 initiations (5.1%)

China, 200 initiations (4.8%)

Canada, 166 initiations (3.9%)

Turkey, 157 initiations (3.7%) 

 

 

Cases were brought against 101 countries (including individual members of the EU) as well as 90 cases brought against the EU as an entity. For many of these 101 countries there were only 1-4 cases brought over an 18 year period. Some countries have faced a large number of cases, either reflecting their large presence in the trading system or ongoing major differences between their economic system and that of most trading nations within the system. Thus, China has faced more cases than anyone else – 914 in the first 18 years (21.7% of total antidumping cases) reflecting both their status as the world’s largest exporter and the significant ongoing differences between their economic system and that of many of the WTO members.

 

 

On countervailing duty initiations of investigations, the historic users continue to dominate the cases brought. Of the 301 cases, the United States initiated 119, the European Union 67, Canada 33 and Australia 14 – 233 or 77.4%. That said, 21 WTO members (treating the EU’s 27 members as one) have brought one or more cases since 1995 with greater activity starting to arise from developing countries like Argentina, Brazil, Chile, China, Egypt, India, Mexico, Pakistan, Peru, South Africa, Turkey and Venezuela. In terms of countries against whom countervailing duty cases are brought, China has been a major target, particularly since 2004 with 62 of the 301 cases (20.6%). India has also been involved in a large number of cases, 55 over the 18 years (18.3%).

 

 

Global safeguard cases (authorized by GATT Article XIX and the Agreement on Safeguards) are against all imports (with certain exceptions under national law). Over the last eighteen years, the vast majority of the safeguard cases have been brought by developing countries. Since safeguard investigations do not require the demonstration of an unfair trade practice (dumping or actionable subsidization), safeguard cases can be less burdensome for an administrator to handle. There is less summary information from the WTO Secretariat on global safeguards, but in 2011-2012, thirty-six cases were initiated: 3 by Russia, 1 by Israel, 2 by Ukraine, and the rest by developing countries – Indonesia (11), Egypt (5), Thailand (2), Brazil (1), Chile (1), Costa Rica (1), India (2), Jordan (1), Morocco (1), South Africa (1), Viet Nam (1), Malaysia (1) and Turkey (2).

 

 

 

 

For many industries, their workers and the communities in which they live and work, a sine qua non for increased trade liberalization is a functioning system of trade remedy laws to be sure that distortions in the market can be reasonably addressed and that when an industry is in trouble, options exist to preserve the jobs and investment that undergird communities around the world. For no country have trade remedies typically affected more than a few percent of trade at any given time.

 

 

Resort to internationally agreed trade remedies is not a sign of protectionism in the sense of something that undermines the international trading system. Rather, trade remedies are an integral part of the trading system and can help member nations expand their liberalization. Of course, trade remedies should be pursued in a manner consistent with international obligations and should be challenged when they are not. While there are learning curve issues for new users, technical assistance from established users and challenges where appropriate will help new users bring their systems into conformance. A more serious problem exists where any member, whether on a one-off basis or as a matter of practice uses trade remedies for purposes of retaliation against a trading partner’s use of WTO rights. There should be a zero tolerance approach for such actions.

 

 

The WTO as an institution has an obligation to respect all rights and obligations that members have agreed to and not to denigrate rights that some members individually may not like. It is particularly inappropriate for members of the WTO Secretariat at any level to criticize members’ use of WTO-authorized tools to address issues within their countries. All governments should insist on that neutrality by the staff of the WTO. The next Director-General should ensure that an environment of neutrality is restored. And most importantly, the WTO’s Appellate Body [“AB”] needs to rethink its approach to reviewing trade remedy matters. The AB and its separate secretariat are entrusted with helping members resolve disputes and identify actions that are inconsistent with clear WTO obligations. It is not their proper role to create obligations or rights not contained in the documents or to bring a bias against users of trade remedies. A review of the AB decisions over the first eighteen years of the WTO does not give a reader confidence that the AB adheres to such a role in fact in any number of decisions.

 

 

Companies, workers, and communities, for whom trade remedies are important tools to ensure a level playing field, should use the opportunity of the Director-General selection process and the upcoming Appellate Body openings to communicate with the Administration and Members of Congress to stress the importance of neutrality by those entrusted to lead the WTO Secretariat and by those entrusted to serve on the Appellate Body.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

________________________________________