DISPUTE SETTLEMENT: DISPUTE DS425

China — Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment from the European Union


This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Current status  back to top

 

Key facts  back to top

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 26 February 2013

  

Summary of the dispute to date  back to top

The summary below was up-to-date at

Consultations

Complaint by the European Union

On 25 July 2011, the European Union requested consultations with China concerning the imposition of definitive anti-dumping duties on x-ray security inspection equipment from the European Union, pursuant to China's Ministry of Commerce Notice No. 1(2011), including its Annex. 

The European Union claims that the measure is inconsistent with various provisions of the Anti‑Dumping Agreement related to the process of the anti-dumping investigation (including failure to provide access to relevant information and insufficient explanation of the basis for the determinations) as well as the anti‑dumping determination at issue (absence of objective examination of the effect of the dumped imports on prices in the domestic market and absence of objective determination of causality).  The European Union considers that the measure is inconsistent with Articles 2.4, 3.1, 3.2, 3.4, 3.5, 6.1, 6.2. 6.4, 6.5, 6.9, 12.2.2 of the Anti-Dumping Agreement, and Articles VI:1 and VI:6(a) of the GATT 1994.

On 8 December 2011, the European Union requested the establishment of a panel.  At its meeting on 19 December 2011, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

At its meeting on 20 January 2012, the DSB established a panel.  India, Japan, Norway, Thailand and the United States reserved their third party rights. Subsequently, Chile reserved its third party rights. On 2 March 2012, the European Union requested the Director-General to determine the composition of the panel.  On 12 March 2012, the Director-General composed the panel. On 4 June 2012, the Chairman of the panel informed the DSB that the timetable adopted by the panel after consultations with the parties envisaged that the final report shall be issued to the parties by December 2012.  The panel expected to conclude its work within that time-frame. On 17 October 2012, the Chairman of the panel informed the DSB that due to unavoidable scheduling conflicts pertaining to two panelists, the panel expected to conclude its work in January 2013.

On 26 February 2013, the panel report was circulated to Members.

Summary of key findings

  • This dispute concerned the imposition by China of anti-dumping duties on imports of certain security inspection equipment (x-ray scanners) from the European Union.  The European Union claimed that the anti-dumping duties imposed by China, and the underlying investigation conducted by the Chinese authorities, were inconsistent with various procedural and substantive provisions of the Anti-Dumping Agreement.

The European Union's claims with respect to MOFCOM's price effects analysis

  • The European Union claimed that MOFCOM's price effects findings did not constitute an objective examination based on positive evidence, contrary to the obligations under Articles 3.1 and 3.2 of the Anti-Dumping Agreement.  The basis for the European Union's claim was that MOFCOM's price effects methodology was flawed because it involved price comparisons, based on weighted average unit values, in circumstances where MOFCOM did not take into account the “considerable differences” among the products being compared, particularly between “high-energy” and “low-energy” scanners. According to the European Union, the distorting effects of the methodology followed by MOFCOM were exacerbated by the fact that during the POI there were no exports of high-energy scanners from the European Union to China.
  • The Panel upheld the European Union's claims against MOFCOM's price effects analysis, on the basis that MOFCOM failed to ensure that the prices it was comparing as a part of its price effects analysis were actually comparable. In particular, the Panel concluded that MOFCOM's price undercutting and price suppression analyses were inconsistent with Articles 3.1 and 3.2 because they were not based on an objective examination of positive evidence.

The European Union's claims with respect to MOFCOM's findings on the state of the domestic industry

  • The European Union claimed that MOFCOM did not base its injury finding on positive evidence, that MOFCOM's injury evaluation did not involve an assessment of all relevant economic factors, and that MOFCOM's injury analysis ignored the positive state of the domestic industry. The European Union claimed that MOFCOM instead found material injury based on a limited number of negative factors, ignoring the overall development and interaction among the positive and negative factors. The European Union claimed that, as a result, China violated Articles 3.1 and 3.4 of the Anti-Dumping Agreement.
  • The Panel rejected the European Union's claim that MOFCOM did not rely upon positive evidence in making its determination, on the basis that the European Union had not presented adequate evidence in this regard. However, the Panel concluded that China acted inconsistently with Articles 3.1 and 3.4 because MOFCOM failed to consider all relevant economic factors, in particular, the “magnitude of the margin of dumping”.  Further, the Panel found that MOFCOM's examination of the state of the industry lacked objectivity, and was not always reasoned and adequate.  Finally, in the light of its findings under Articles 3.1 and 3.2 of the Anti-Dumping Agreement, the Panel exercised judicial economy regarding whether MOFCOM acted inconsistently with Article 3.4 by failing to take into account the differences between high-energy and low-energy scanners.

The European Union's claims with respect to MOFCOM's causation analysis

  • The European Union claimed that MOFCOM attributed the injurious state of the domestic industry to subject imports on the basis of a flawed volume effects analysis and a flawed price effects analysis.  Further, the European Union claimed that MOFCOM's non-attribution analysis was inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement because MOFCOM disregarded the actual causes of any negative condition of the domestic industry.
  • The Panel concluded that MOFCOM acted inconsistently with Articles 3.1 and 3.5 due to the failure to take into consideration the differences in the products under consideration in the price effects analysis and due to the failure to provide a reasoned and adequate explanation regarding how the prices of the dumped imports caused price suppression in the domestic industry, particularly in 2008.  The Panel exercised judicial economy with respect to MOFCOM's analysis of the effect of the volume of subject imports.  Finally, the Panel concluded that MOFCOM failed to consider certain “known factors”, and failed to consider evidence relating to other factors that it did explicitly consider, in its non-attribution analysis.

The European Union's claims with respect to the non-confidential summaries

  • The European Union challenged two aspects of MOFCOM's treatment of non-confidential summaries.  First, the European Union identified a number of instances in which MOFCOM allegedly accepted non-confidential summaries provided by Nuctech that were not adequate to permit a reasonable understanding of the substance of the information submitted in confidence, contrary to the first two sentences of Article 6.5.1 of the Anti-Dumping Agreement.  Second, the European Union claimed that MOFCOM allowed the Public Security Bureau not to submit any non-confidential summaries of confidential information, even though the conditions for application of the “exceptional circumstances” mechanism provided for in the third and fourth sentences of Article 6.5.1 had not been fulfilled.  The European Union also pursued dependent claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement.
  • For the most part, the Panel upheld the European Union's claims that the non-confidential summaries provided by Nuctech were not adequate, contrary to the first sentence of Article 6.5.1. The Panel also upheld the European Union's claim that MOFCOM had improperly invoked the Article 6.5.1 exceptional circumstances mechanism by failing to require Nuctech to provide a statement of reasons why the relevant confidential information could not be summarized. The Panel exercised judicial economy in respect of the European Union's dependent claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement.

The European Union's claims with respect to the disclosure of essential facts

  • The European Union claimed that MOFCOM failed to disclose certain essential facts to interested parties, contrary to Article 6.9 of the Anti-Dumping Agreement.  The European Union also pursued dependent claims under Articles 6.2 and 6.4.
  • For the most part, the Panel upheld the European Union's claims under Article 6.9. In doing so, the Panel was guided by the findings of the Appellate Body in China — GOES, which were circulated during the Panel's proceedings. The Panel exercised judicial economy in respect of one aspect of the European Union's Article 6.9 claim, and in respect of its dependent claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement.

The European Union's claims with respect to the contents of the public notice issued by MOFCOM

  • The European Union claimed that China violated Article 12.2.2 of the Anti-Dumping Agreement because of alleged shortcomings in the content of MOFCOM's public notice of affirmative determination providing for the imposition of definitive anti-dumping duties. The European Union made two types of claims under Article 12.2.2.  First, in respect of the first sentence of Article 12.2.2, the European Union claimed that MOFCOM failed to include in its public notice certain relevant information on the matters of fact and law which led to the imposition of final measures.  Second, in respect of the second sentence of Article 12.2.2, the European Union claimed that MOFCOM failed to include in its public notice the reasons for rejecting relevant arguments made by Smiths during the course of the investigation.
  • The Panel upheld certain aspects of the European Union's claims under both the first and second sentences of Article 12.2.2, but rejected other aspects thereof.

At its meeting on 24 April 2013, the DSB adopted the panel report.

 

Reasonable period of time

At the DSB meeting on 24 May 2013, China said that it intended to implement the DSB's recommendations and rulings in a manner that respects its WTO obligations and that it will require a reasonable period of time to do so. On 19 July 2013, China and the European Union informed the DSB that they have agreed that the reasonable period of time to implement the DSB's recommendations and rulings shall be 9 months and 25 days.  Accordingly, the reasonable period of time expired on 19 February 2014.

 

Implementation of adopted reports

At the DSB meeting on 26 February 2014, China said that its Ministry of Commerce had published a notice and launched a re-investigation on the X-ray security inspection equipment from the European Union and that the anti-dumping duty at issue was terminated.  Thus, it had fully complied with the DSB recommendations and rulings.

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