WT/DS515/1  
G/L/1169  
G/ADP/D115/1  
 
15 December 2016  
(16-6845) Page: 1/4 
  Original: English  
 
 UNITED STATES – MEASURES RELATED TO PRICE COMPARISON MET HODOLOGIES  
REQUEST FOR CONSULTA TIONS BY CHINA  
The following communication, dated 12 December 2016 , from the delegation of China  to the 
delegation of the United States  and to the Chairperson of the Dis pute Settlement Body, is 
circulated in accordance with Article  4.4 of the DSU.  
 
_______________  
 
 
 My authorities have instructed me to request consultations with the Government of the 
United States pursuant to Article 4 of the Understanding on Rules and P rocedures Governing the 
Settlement of Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994 
(GATT 1994), and Article 17 of the Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade 1994 (AD Agreem ent). 
Background  
 At the time of China's accession to the WTO, the Members agreed that for a period of 15 
years, investigating authorities would be allowed to determine normal value in anti -dumping 
proceedings involving Chinese products using methodologies  "not based on a strict comparison 
with domestic prices or costs in China". The limited authority to use these methodologies was set 
forth in Section 15(a)(ii) of the Protocol on the Accession of the People's Republic of China 
("Protocol"), and subject to the conditions set forth therein. Pursuant to Section 15(d) of the 
Protocol,  "[i]n any event, the provisions of subparagraph (a)(ii) shall expire 15 years after the date 
of accession ". Accordingly, Members were required to terminate the use of these method ologies 
under Section 15(a)(ii) of the Protocol no later than 11 December 2016, and the continued use of 
these methodologies thereafter is in violation of a Member's obligations under the covered 
agreements.  
 After 11 December 2016, the provisions of the A D Agreement and the GATT 1994 that 
ordinarily apply to the determination of normal value apply to imports from China without 
derogation. China is concerned that the provisions of U.S. law pertaining to the determination of 
normal value in anti -dumping proc eedings involving products from China are inconsistent with 
those provisions.  
 Pursuant to Section 773(a) of the Tariff Act of 1930 (Tariff Act), the United States 
Department of Commerce (USDOC) ordinarily determines normal value based on: (1) the price at  
which the like product is sold or offered for sale for consumption in the exporting country; (2) the 
price at which the like product is sold or offered for sale for consumption in a third -country export 
market; or (3) the cost of production in the country  of origin, including an amount for 
administrative, selling, and general costs, and for profits.1 
 Under Section 773(c)(1) of the Tariff Act, however, if an investigation involves imports from 
a country that the United States designates as a "non -market ec onomy", and the USDOC "finds 
that available information" does not permit the determination of normal value in accordance with 
the methodologies set forth in Section 773(a) of the Tariff Act, then the USDOC "shall determine" 
                                                
1 The methodologies for determining the cost of  production in the country of origin are further specified 
in Sections 773(e) and 773(f) of the Tariff Act.  WT/DS515/1 • G/L/1169 • G/ADP/D115/1  
 
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  normal value on the basis of the  values of the factors of production (plus amounts for general 
expenses and profit) as identified in a third country (referred to hereinafter as "surrogate 
values").2 The USDOC's regulations implementing Section  773(c) of the Tariff Act are set forth at 
19 C.F.R. § 351.408.  
 Section 771(18)(c) of the Tariff Act provides that a determination by the USDOC that a 
country is a non -market economy "shall remain in effect until revoked by the administering 
authority", i.e. by the USDOC. The USDOC last determined t hat China is a "non -market economy" 
in 2006.3 As of the present date, the USDOC has not revoked that determination. Accordingly, 
pursuant to Section 771(18)(c) of the Tariff Act, the provisions of Section 773(c) of the Tariff Act 
remain applicable in anti -dumping proceedings relating to products from China.4 
 The foregoing provisions of US  law provide for, and result in, the determination of normal 
value and margins of dumping other than in accordance with the requirements of Article 2 of the 
AD Agreement a nd Article VI of the GATT 1994. These derogations from the covered agreements 
were exceptionally permitted pursuant to Section 15 of the Protocol, subject to the conditions set 
forth therein, but are no longer permitted as a result of the expiration of Sec tion 15(a)(ii).  
 Separate and apart from the provisions of Section 773(c) of the Tariff Act, Section  773(e) of 
the Tariff Act provides that, in some circumstances, the USDOC may determine a constructed 
normal value on the basis of "another calculation meth odology under this subtitle or any other 
calculation methodology". Section  773(e) could, in principle, pe rmit the USDOC as a matter of U S 
law to determine normal value and margins of dumping in investigations and reviews of imports 
from China using surroga te values.  
Measures at Issue  
 As described above, the measures at issue establish the US non -market economy 
methodology and result in the continued use of surrogate values to determine normal value and 
margins of dumping in anti -dumping investigations and reviews of Chinese products initiated 
and/or resulting in preliminary or final determinations after 11  December 2016. These measures 
consist of:  
1. Section 771(18) of the Tariff Act;  
2. Section 773 of the Tariff Act;  
3. Part 351.408 of the USDOC's regulations, 19 C .F.R. § 351.408;  
4. The USDOC's 2006 determinations that China is a "non -market economy" for the 
purposes of the Tariff Act; and  
5. The failure of the United States, by way of omission, to revoke the USDOC's 2006 
determinations that China is a "non -market econom y" or otherwise modify its laws and 
regulations to render the surrogate value provisions of Section 773(c) of the Tariff Act 
(or Section 773(e), to the extent that it permits the use of surrogate values) inapplicable 
                                                
2 Section 773(c)(2) provides that if the USDOC finds that the available information concerning the 
values of the factors of production in a "market economy country" is "inadequate", the USDOC shall determine 
normal value by reference to the price at which the product at issue is sold from a "market economy" country 
into the United States or other countries.  The term "surrogate values" as used herein encompasses the use of 
third-country prices as provided for under Section 773(c)(2).   
3 See The People's Republic of China (PRC) Status as a Non -Market Economy (NME) , Memorandum 
(15 May 2006) and Antidumping Duty Investigation of Certain Lined Paper Produ cts from the People's Republic 
of China ("China") – China's Status as a Non -Market Economy ("NME") , Memorandum (30 August 2006).  
4 The provisions of Section 773(c) of the Tariff Act apply in any circumstance in which the USDOC 
determines normal value for t he purposes of the anti -dumping provisions of the Tariff Act.  These 
circumstances include: (i) original anti -dumping investigations initiated pursuant to section 732 of the Tariff 
Act; (ii) administrative (periodic) reviews of anti -dumping orders pursuant  to sections 751(a)(1) and 
751(a)(2)(A) of the Tariff Act; (iii) "new shipper" reviews pursuant to section 751(a)(2)(B)  of the Tariff Act; 
(iv) "changed circumstance" reviews pursuant to section 751(b) of the Tariff Act ; and (v) sunset (expiry) 
reviews pur suant to section 751(c) of the Tariff Act  (items (ii) through (v) referred to hereinafter, collectively, 
as "reviews").  WT/DS515/1 • G/L/1169 • G/ADP/D115/1  
 
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  to anti -dumping investigations and revi ews of Chinese products initiated and/or resulting 
in preliminary or final determinations after 11  December 2016.  
Legal Basis of the Complaint  
 It appears to China that the measures at issue, in their combined operation, are inconsistent 
with: 
1. Article 2.2 of the AD Agreement and Article VI:1 of the GATT 1994, because the 
measures at issue provide for, and result in, the calculation of normal value and margins 
of dumping in investigations and reviews of products from China other than on the basis 
of the cost  of production "in the country of origin" (or on the basis of "a comparable 
price of the like product when exported to an appropriate third country");  
2. Article 2.1 of the AD Agreement and Article VI:1 of the GATT 1994, because the 
measures at issue provide for, and result in, the calculation of normal value and margins 
of dumping in investigations and reviews of products from China other than by reference 
to the price at which the product at issue is sold "when destined for consumption in the 
exporting count ry", i.e. China;  
3. Article VI:2 of the GATT 1994, because the measures at issue provide for, and result in, 
the levying of anti -dumping duties greater than the margin of dumping determined in 
accordance with the provisions of Article VI:1 of the GATT 1994;  
4. Article 18.1 of the AD Agreement, because the measures at issue constitute a specific 
action against dumping taken other than in accordance with the provisions of the GATT 
1994 as interpreted by the AD Agreement;  
5. Article I:1 of the GATT 1994, because the me asures at issue fail to extend immediately 
and unconditionally to China an "advantage, favour, privilege or immunity" granted by 
the United States "[w]ith respect to customs duties and charges of any kind imposed on 
or in connection with" the importation o f products originating in the territory of other 
Members, as well as with respect to "the method of levying such duties and charges" 
and the "rules and formalities in connection with importation";  
6. Article 9.2 of the AD Agreement, because the measures at is sue provide for, and result 
in, the collection of anti -dumping duties other than on a "non -discriminatory basis";  
7. Article 18.4 of the AD Agreement and Article XVI:4 of the Marrakesh Agreement 
Establishing the World Trade Organization, as a consequence of t he foregoing, because 
the United States has failed to ensure "the conformity of its laws, regulations and 
administrative procedures" with the identified provisions of the AD Agreement and the 
GATT 1994.  
 In addition, and as a consequence of the foregoing, the measures at issue appear to nullify 
or impair benefits accruing to China directly or indirectly under the cited agreements.  
 The inconsistencies with the covered agreements specified above ceased to be justifiable 
when Section 15(a)(ii) of the Protocol  expired on 11 December 2016 pursuant to Section 15(d) of 
the Protocol. After that date, Section 15(a)(ii) of the Protocol does not provide a legal basis for 
Members to determine normal value using methodologies that are "not based on a strict 
comparison w ith domestic prices or costs in China". In addition, the measures at issue are not 
justifiable under the second Supplementary Provision to Article VI:1 of the GATT 1994, as 
referenced in Article 2.7 of the AD Agreement.  
* * * 
 China reserves the right to r aise additional claims and legal matters regarding the above -
mentioned measures during the course of the consultations. For the avoidance of doubt, China 
considers the scope of this request for consultations to encompass specific instances of the 
applicati on of the measures described herein, as well as any ongoing conduct resulting from the WT/DS515/1 • G/L/1169 • G/ADP/D115/1  
 
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  continued application of these measures in respect of anti -dumping investigations and reviews of 
Chinese products initiated and/or resulting in preliminary or final dete rminations after 
11 December 2016.  
 China looks forward to receiving the reply of the Government of the United States to this 
request and to setting a mutually convenient date for consultations.  
 
 
 
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