August 19, 2020
WTO Dispute Settlement Procedures
Ministry of Trade, Industry and Energy (MOTIE) of the Republic of Korea (ROK) eliminated the anti-dumping duties on pneumatic valves from Japan as of 12:00 a.m. on August 19, 2020.
Through its examination at the request of Japan, the WTO Dispute Settlement Body had ruled that the ROK’s imposition of the anti-dumping duties was inconsistent with the Anti-Dumping Agreement and had recommended the ROK to make corrections.
Overview
Through the examination at the request of Japan, the WTO Appellate Body ruled, on September 10, 2019, that the ROK’s anti-dumping duties on pneumatic valves from Japan (hereinafter simply referred to as the “anti-dumping duties”) were inconsistent with the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement), and recommended the ROK to bring its measure into conformity with the WTO Agreements. The ROK agreed with Japan to take a corrective measure by May 30, 2020.
On May 29, 2020, the ROK government externally announced as follows.
- The ROK has reexamined the anti-dumping duties, and has corrected the part inconsistent with the Agreement, and then will continue imposing them.
- The ROK will end the anti-dumping duties as of 12:00 a.m. on August 19, 2020, when the five-year period expires.
As announced above, the anti-dumping duties were officially eliminated today.
The Japanese government’s stance
Japan has repeatedly requested the ROK to promptly eliminate the anti-dumping duties, which were inconsistent with the WTO Agreement. The ROK’s elimination of the anti-dumping duties was brought about through the WTO dispute settlement procedures, which were undertaken at the request of Japan.
Anti-dumping duties are to be terminated upon the lapse of five years in principle, but may be extended by conducting a review investigation for the extension. However, the ROK government had publicized its intention not to extend the anti-dumping duties as of May 29, and eliminate the duties accordingly. This can be highly evaluated as a successful example of early withdrawal of problematic measures through the WTO dispute settlement procedures.
It was unfortunate that the ROK continued imposing the duties beyond May 30, 2020, the original deadline for corrective measures. The ROK cannot be recognized as having performed its duties sincerely in line with the WTO’s recommendation.
Considering the fact that the ROK has announced its intention to terminate the anti-dumping duties in August, and that the WTO procedures to check measures taken for compliance normally take one or two years, the Japanese government has watched the ROK’s moves carefully. On June 15, 2020, the Japanese government undertook procedures for reserving its right to suspend duty concession or other obligations (so-called retaliatory measures under the WTO Agreement, e.g. tariff increases on products from the ROK). Japan concluded an agreement with the ROK and notified it to the WTO, thereby urging the ROK to early eliminate its measure.
Future schedule
As the ROK government eliminated the anti-dumping duties, Japan will refrain from taking further legal procedures under the WTO Agreement, such as retaliatory measures.
Continuously utilizing the WTO dispute settlement procedures, Japan will make it clear that the abuse of protectionist trade remedies, which are often observed in developing countries, etc., is not permitted under the WTO Agreement and will work to correct and eliminate such problematic measures.
References
(1) Pneumatic valves (valves for pneumatic transmission)
Pneumatic valves are parts (valves) which control the flow of compressed air in extending, retracting and rotating pneumatic cylinders by making use of the air, which are applied to assembly or conveyor equipment in semiconductor or automobile manufacturing plants.
(2) Anti-dumping duty
An anti-dumping duty is a customs duty imposed on a certain product by an importing country where it is demonstrated through an official investigation that the export price of the product is less than its selling price destined for consumption in the exporting country and the dumped imports are causing injury to the competing industry in the importing country. The amount of anti-dumping duty cannot exceed the difference between the export price of the product and the domestic selling price of the like product in the exporting country.
(3) The anti-dumping duties
In August 2015, the ROK started to impose anti-dumping duties of 11.66% to 22.77% on valves for pneumatic transmission exported from Japan (for five years). The amount of exports of pneumatic valves from Japan to the ROK was approximately 5.6 billion yen per year, of which the amount of exports of products subject to the anti-dumping duties was approximately 3.7 billion yen (2019).
(4) Extension of anti-dumping duties
Anti-dumping duties are to be terminated upon the lapse of five years in principle, but may be extended when a review investigation for the extension is conducted and it is found that the expiry of the duties will be likely to lead to continuation or recurrence of dumping and injury.
Among five cases in which the ROK currently impose anti-dumping duties on Japanese products, four cases include the anti-dumping duties continuously imposed beyond the five-year period.
