China and the United States are engaged in international trade disputes within the World Trade Organization (“WTO”) dispute settlement system which are currently at a boiling point. On June 4, 2012, the U.S. Commerce Department announced that it will likely impose a thirty-one percent tariff on all solar panel imports from China. Two other recent disputes, filed in September and October 2011, include allegations by the United States that China improperly levied tariffs on Chinese chicken imports and that China failed to disclose details of 200 Chinese subsidies as required by the WTO. Imposing tariffs on international imports between the United States and China is reciprocal China announced on December 16, 2011 that it will impose anti-dumping tariffs on imported U.S. vehicles with engines of 2.5-litres or above, effective from December 15, 2011, and lasting two years. These recent examples illustrate the current volatile nature of global trade between two of the largest importing and exporting countries in the world. 

 

 

Over the past decade, despite numerous safeguard complaints filed by the United States against China alleging trade violations, not one has been completely upheld by the WTO Appellate Body (“AB”). This trend ended on September 5, 2011, when the AB issued its report regarding Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China (“AB Tire Report”) in favor of the United States. It was the first time the WTO completely upheld any kind of safeguard measure. 

 

 

But what are the ramifications of the AB Tire Report? What will happen when the U.S.-China Protocol expires in December 2013? What legal implications does the AB Tire Report have on other trade industries such as the solar industry? In the tire dispute, unlike previous failed disputes, the United States adequately showed that imports from China were “increasing rapidly” and that these imports “caused significant harm to the domestic industry.” Other trade industries may be levied with tariffs by the United States because, from a statistical standpoint, their percentage of imports is similar to percentages found in the tire dispute. For example, because solar industry imports are at a similar level to tire imports, the WTO may uphold tariffs imposed on China by the U.S. solar industry.Thus, it is likely that the United States will experience success in subsequent trade disputes with China.