Countervailing Measures and China’s Accession Protocol to the WTO

The existing policy tools of the European Union (EU) to fight against dumping and foreign subsidies do not cover all potential effects of foreign subsidies or support schemes by third countries on the EU internal market. As part of the ongoing discussions to address these distortive subsidies, this article highlights section 15(b) of China’s Accession Protocol to the World Trade Organization (WTO). The provision remains largely unexplored, both in practice and in case law, but offers advantages in its application compared to the normal trade remedy calculation rules: There is no explicit stipulation of an expiration (no fifteen-year timeframe), the threshold to rely on the section is relatively low (only ‘special difficulties’ need to exist), and the way how to determine the benchmarks for the benefit is open (both adjustments and alternative methodologies are foreseen). Particularly, within the stage of examination of ‘special difficulties’, the Commission has considerable latitude and may introduce a shift of burden of proof, putting the onus on Chinese exporters to prove they do not benefit from state subsidies. WTO Members should start conducting well-coordinated countervailing investigations domestically and initiate cases at the WTO at the same time to find out where the WTO system sets the limits of applying section 15(b) Chinese Accession Protocol (CAP). Countervailing Duties, Anti-Subsidy, China’s Accession Protocol, section 15(b) CAP, Industrial Policy, Foreign Subsidies, State-Owned Enterprises, Burden of Proof, Alternative Benchmarks, Subsidy Benefit