Commerce Starts China CVD Review

            The Commerce Department announced yesterday it will initiate a countervailing duty investigation on imports of coated free sheet paper from China – the first CVD case against China in 15 years (WTD, 11/1/06).

             In accepting the petition, Commerce will also initiate a review of its own rules that say countervailing duties cannot be calculated for non-market economies.  Commerce classifies China as a nonmarket economy.

            “The initiation of this investigation will require the department to review its long-standing policy of not applying the CVD law to non-market economies.  However, we have not at this time made any determination regarding the applicability of CVD law to NMEs in our initiation.  We will make this determination in the context of the investigation,” Commerce said in a statement.

            The department accepted CVD and antidumping petitions filed by Ohio-based NewPage Corporation against imports of the paper from China, Indonesia and South Korea.  The paper is used for catalog and magazine production.

            The department has issued an extensive review of China’s NME status in August.

            The US International Trade Commission is scheduled to make its preliminary injury determination by December 15 for all the cases.

          The United States investigation into alleged subsidies for Chinese coated paper violates WTO rules, said Chong Quan, spokesman of China's Commerce Ministry, yesterday according to a Xinhua news agency report from Beijing (see related report this issue).  Chong said China has provided data and legal evidence proving the investigation was “improper,” said Chong.

            “The US decision does not abide by WTO rules and breaks its own laws and regulations,” said Chong. “The United States ignore China's great achievement in the market reform over the past twenty years and insisted to treat China as a non-market economic country,” he said.  "The US decision did not comply with consensus the two countries have reached that resolving dispute through negotiation,” he said. The Chinese government would closely monitor developments and reserve the right to safeguard the legitimate rights and interests of the Chinese side, he said.

            Each year China exports 300,000 to 500,000 tons of coated paper, which includes the high quality glossy paper used for magazines or wrapping paper, according to