WTO sides with EU, Japan in battle over Chinese tariffs on steel pipes

Kyodo, Reuters

A ruling body at the World Trade Organization on Wednesday upheld a decision requiring China to review its antidumping duties on some steel pipes made in Japan and the European Union.

The WTO Appellate Body rejected Beijing’s claim that its steel makers were damaged by cheap imported seamless stainless steel tubes, saying the tubes — which are often used at coal-fired power plants — are more advanced than China’s own products and therefore do not compete.

Since November 2012, China has imposed a tariff of 10 percentage points above normal tax rates on pipes supplied by Japan’s two biggest steel producers, Nippon Steel & Sumitomo Metal Corp. and JFE Holdings Inc., as well as products made by European steel makers.

Japan and the EU asked for dispute settlement panels to be set up in April and August 2013, respectively, after consultations with China failed to resolve their grievance.

In February, the dispute settlement panels upheld their claims that China’s action was inconsistent with WTO rules.

Japan exported stainless steel seamless pipes worth $190 million in 2014, of which 74 percent were shipped to China, according to the Economy, Trade and Industry Ministry. China’s tariffs amounted to an additional burden of more than ¥530 million a year, the ministry said.

The dispute was one of a series of often tit-for-tat trade complaints where China and its richer trading rivals sparred to protect their firms’ right to take advantage of each others’ markets, a rivalry that was supercharged by China’s faster economic growth and its growing share of world exports.

At the peak in 2008, Japan exported around $224 million of the pipes to China, while the EU made sales of $283 million, according to data from the International Trade Centre, a joint agency of the WTO and United Nations.

In 2012, exports from both the EU and Japan were worth less than $80 million, the ITC figures show.

The WTO appeal ruling is final and China will now be asked to bring its rules into line with global trade rules.

The EU said in a statement that the ruling was “of systemic importance.”

“It highlights again the shortcomings of Chinese trade defense investigations and provides guidance how the WTO rules on price effects, disclosure of essential facts and confidential treatment of information should be applied in the future.”

China’s Commerce Ministry expressed “deep regret” about the ruling and said it would “appropriately handle” the case according to WTO regulations, in a statement posted to its website late on Wednesday.

But the WTO ruling may be too late to repair any damage done to Japanese and EU exporters because such decisions do not have retroactive effect. Since the trade dispute erupted, China’s economic growth, including growth in electricity production, has slowed sharply.