The U.S. was on the losing side in two cases at the World Trade Organization in April.
In the first, a WTO-appointed arbitrator said the U.S. must correct its antidumping and countervailing duty (AD and CVD) calculations on washing machines imported from South Korea by the end of 2017. If not, the U.S. could face retaliatory action from Seoul.
The dispute began in 2012 when Whirlpool Corp. petitioned for AD and CVD duties on Korean washing machines, primarily targeting Samsung. It alleged Samsung’s pricing tactics and receipt of an unfair government subsidy caused injury to the U.S. domestic industry.
Whirlpool was successful with its petition. The Department of Commerce imposed significant AD and CVD duties. The U.S. International Trade Commission concurred, finding the imported washing machines were a threat to U.S. manufacturers.
South Korea then pursued dispute settlement proceedings at the WTO. Although it succeeded on a number of its claims at the panel stage, both sides appealed portions of the decision.
In September 2016, the Appellate Body (AB) upheld some of Seoul’s key claims. The DOC then asked to be granted 21 months to implement the AB’s findings and recalibrate AD and CVD rates. The arbitrator disagreed and determined 15 months from September 2016 was enough time for the U.S. to comply.
In the second case, three other arbitrators ruled Mexico can impose $163 million in retaliatory trade restrictions against the U.S. because U.S. dolphin-safe labeling rules for tuna products, modified in 2013, were found discriminatory by the WTO on four occasions.
The core finding is tuna caught in the eastern Pacific Ocean, a mainstay of the Mexican fishing industry, faces more stringent U.S. labeling requirements than fish captured in other waters.
In 2016, the U.S. revised its labeling requirements again in an attempt to bring them into WTO compliance. These modified rules are under consideration by a U.S.-requested compliance panel. Should the panel find the updated U.S. labeling requirements adequate, Mexico would no longer be allowed to retaliate. Until such time, Mexico can maintain its retaliation in the amount established by the arbitrator.
For more information, contact: Charles De Jager