Trade in Environmental Goods: A Review of the WTO Appellate Body’s Ruling in US — Countervailing Measures (China)

In this paper we claim that, in the WTO Appellate Body (AB)'s ruling in US. Countervailing Measures (China), the AB decision has not put in question the practice of imposing countervailing duties (CVDs). While the US has formally 'lost' the case, a change in the procedures and tests used to motivate the CVD will allow the US to continue using this policy tool on the specified products. From an economic point of view, this is not welcome news since CVDs have the standard distortionary effects of tariffs and could go against environmental goals. From a political-economy point of view, the CVDs in this case appear driven by pressure of domestic manufacturers of clean energy technology and products.