China said Monday it would levy anti-subsidy duties of up to 11.19 percent on imports of EU potato starch, in apparent retaliation over Brussels' decision to slap taxes on Chinese fine art paper.
The commerce ministry said in a statement that importers of potato starch will have to pay a deposit from Thursday based on the alleged European Union subsidy rates of 7.7 to 11.19 percent of the import price.
French starch producer Roquette and AVEBE of the Netherlands are among the companies affected by the decision, the statement said.
The taxes are to be imposed on top of anti-dumping duties of 12.6 to 56.7 percent which the ministry started to levy from last month.
I wonder how China dealt with the issue of applying both anti-dumping and countervailing duties to the same products.
There's also the issue of this being "apparent retaliation" for earlier EU actions. Here's a comment from Hosuk Lee-Makiyama of ECIPE:
Experts said the move was likely to start of a series of tit-for-tat retaliations and worsening trade relations between the two sides.
"As the EU subsidises local production in various sectors, China is not short of sectors to retaliate against," Hosuk Lee-Makiyama of the Brussels-based European Centre for International Political Economy (ECIPE) think-tank said in a policy brief.
"It has already imposed a tariff on potato starch from the EU and more cases are forthcoming," he added.
"A trade war with China on subsidies seems now unavoidable."
Turning back to the EU "double remedy" from the previous post, this is from the Council Implementing Regulation:
4.3.2. ALLEGATIONS WITH RESPECT TO DOUBLE REMEDY
(269) The GOC argued that the proposal for countervailing measures amounts to a double remedy. It was submitted that under the EU practice in anti-dumping investigations against China normal value is determined by reference to data obtained from producers in a third market-economy country. Thus, in such cases countervailing duties would provide a double remedy to address the same matter since the anti-dumping duties effectively ‘offset’ any subsidy allegedly granted to Chinese companies.
(270) APP claimed that if the normal value is based on domestic sales in the analogue country, the rejection of the MET claim and the use of non-subsidised normal value have the effect of increasing the duty by the amount of subsidisation and the subsidies would be counted twice.
(271) GOC submitted that the same alleged distortions have already been addressed in the parallel anti-dumping proceedings. GOC also submitted that that the practice of the Commission is in violation of EU and WTO law and that the Commission should either terminate the CVD proceedings or grant MET to the co-operating exporting producers in the parallel anti-dumping proceedings. The GOC also submitted that it does not accept the Commission's argument that there is no double counting by virtue of the injury margin that is lower than the dumping margin. Finally the GOC argued that on the basis of the findings of the WTO Appellate Body on the US – PRC dispute DS379 (1) with respect to double remedy the current proceedings should be terminated.
(272) Those claims had to be rejected. In this respect it is noted that double remedy does not play any role in these proceedings. Whether or not the simultaneous imposition of anti-dumping and countervailing duties in the case of a non-market economy can lead to a potential ‘double remedy’, this situation, by definition, could only occur where there is a cumulation of the dumping margin and the amount of subsidy i.e. where the combined level of two types of duty exceeds the higher of the dumping margin or the amount of subsidy. As will be explained below, this is not the case here.
(273) First of all it is recalled that the EU is applying the lesser duty rule when imposing anti-dumping and countervailing duties on the same product. In other words in EU investigations the Commission establishes the level of dumping, subsidization and injury caused to the Union industry. The level of duties can never be higher than the injury margin and the injury margin here is the same for both proceedings. In the parallel anti-dumping proceedings the Commission established a margin of dumping that is much higher than the injury margin. In line with the lesser duty rule the Commission proposed the imposition of measures that are based on the injury margin (see Council Regulation (EU) No 451/2011 of 6 May 2011 imposing a definitive anti- dumping duty and collecting definitively the provisional duty imposed on imports of coated fine paper originating in the People's Republic of China (2)). Thus the subsidy margin found in the current ant-subsidy investigation will not provide any additional protection to the Union industry as compared to the dumping margin because the anti-dumping duty will already be capped by the injury margin. Therefore there is no overlap or cumulation of duties in the two parallel proceedings and consequently, even assuming that there is a potential for a double remedy as described in recital (269) above, there can be no requirement by law to ‘offset’ dumping against the subsidy. Indeed, the difference between the dumping and injury margins found in the anti-dumping proceedings was much higher than the amount of subsidization found in the present investigation. It should be also highlighted that when it comes to the actual composition of the duties to be paid the Commission has a practice to first impose the duty amount resulting from the CVD investigation. If there is still a gap between the aforementioned duty level and the injury margin, this gap can be filled with the duty resulting from the anti-dumping investigation. However, this does not mean that there is double counting because the combined level of duties could already have been justified as a result of the anti- dumping investigation alone.
(274) Secondly, it should be noted that the remedies proposed by the GOC are not permitted by law since (i) the investigation established the existence of countervailing subsidies that caused material injury to the Union industry and imposition of measures was found to be in the Union interest thus these proceedings cannot be terminated, (ii) not all Chinese parties requested MET in the parallel anti-dumping proceedings, (iii) MET cannot be granted automatically to parties that have not requested and (iv) for those parties where MET was refused this was done because of the serious deficiencies found with respect to Criteria 1, 2 and 3 of Article 2(7)(c) of the basic anti-dumping Regulation.
Does the lesser duty rule get the EU off the hook here?