S. Korea wins WTO case over U.S. AFA provision

The World Trade Organization (WTO) on Thursday ruled in favor of South Korea in a lawsuit against the United States concerning high tariffs imposed on Korean steel and transformer products under the “adverse facts available (AFA)” provision.

According to Korea's Ministry of Trade, Industry and Energy on Thursday, a WTO panel found that the eight cases of high anti-dumping and countervailing duties imposed by the U.S. on steel and transformer products from Korea under the AFA provision violated its rules.

The AFA provision allows the U.S. Department of Commerce to impose high anti-dumping duties if it finds an interested party fails to cooperate in an investigation such as failing to submit requested documents.

Following an amendment in its customs law in August 2015, the U.S. applied the AFA provision to Korean products and started imposing 47.80 percent tariff on Korean steel products from May 2016. The tariffs on electric transformers reached 60.81 percent.

The Korean government had repeatedly raised an issue with the U.S. on the AFA application but after the two countries failed to narrow their differences, Korea filed a lawsuit with the WTO in February 2018.

An unnamed trade ministry official said that Korea could win the case after it closely analyzed more than 25,000 pages of evidential documents over the three-year dispute period.

The WTO panel judged that the eight items of Washington’s tariffs on Korean steel and transformer products violated its pact. In particular, the panel raised hands for Korea on 37 issues while the U.S. on only three.

The Korean trade ministry expected that the latest decision will help prevent unlawful AFA application on other export items from the country.

Ahn Duk-geun, professor of the Graduate School of International Studies at Seoul National University, expected the latest ruling has set the ground for Korean companies’ fight against the abuse of the AFA provision in the future.

If the U.S. decides not to appeal, the ruling should hold legal binding power by having the U.S. abolish the AFA provision or carrying out a re-investigation on the eight items without applying the adverse facts available.

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