The CFS Case: Looking back and Looking forward

Julien Chaisse, World Trade Institute, Bern
Luan Xinjie, International Trade Institute, China Jilang University

Abstract

The coated free sheet paper from China case (CFS case) is the first one to give rise to a substantial countervailing duty investigation in the history of trading frictions between China and the United States of America. This landmark investigation and its final definite countervailing subsidy determination have set a controlling precedent for subsequent US countervailing duty investigations against exports from China. While looking back to look forward, we shall put emphases on four key issues in this case, namely: (i) whether the Department of Commerce’s countervailing duty investigation is “half-cooked rice”; (ii) a neglected “deliberation principle” under the GATT/WTO countervailing duty mechanism; (iii) an issue of double counting of duties; and (iv) the mechanism of using third country benchmarks for the calculation of the subsidy benefit. In any case, a compromise or consideration for the other side is always indispensable.