Late last week, China filed a request with the World Trade Organization (WTO) Dispute Settlement Body (DSB) for authorization to “suspend concessions and related obligations” in the amount of $2.4 billion as recourse for the United States’ alleged failure to comply with a 2015 dispute settlement report. The disagreement stems from a dispute filed by China in May 2012 challenging certain aspects of 17 countervailing duty investigations by the United States, on a wide range of products, as conducted by the Department of Commerce (DS437). The decision reached by a WTO panel, as modified by the WTO Appellate Body and adopted by the DSB in January 2015, included a number of findings in favor of and against the United States. In particular, the WTO Appellate Body found that Commerce’s “rebuttable presumption” that Chinese state-owned enterprises are public bodies, and that Commerce’s rejection of Chinese private transaction prices as distorting the benchmark for the “provisions of goods or services for less than adequate remuneration” benefit analysis, were inconsistent with WTO rules.
In May 2016, China returned to the WTO to request consultations with the United States under Article 21.5 of the Dispute Settlement Understanding (DSU), which establishes procedures for when parties disagree about whether the losing party has implemented the DSB’s recommendations and rulings. Failed consultations led to the establishment of a compliance panel, which issued a decision in March 2018. Both China and the United States appealed to the WTO Appellate Body. In July 2019, the Appellate Body upheld the compliance panel’s