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Report to the Ranking Minority Member, Committee on Finance, U.S.
Senate:
July 2003:
World Trade Organization:
Standard of Review and Impact of Trade Remedy Rulings:
GAO-03-824:
GAO Highlights:
Highlights of GAO-03-824, a report to the Ranking Minority Member,
Committee on Finance, U.S. Senate
Why GAO Did This Study:
World Trade Organization (WTO) members rely on trade remedies in the
form of duties or other import restrictions to protect their
industries from injury due to unfair foreign trade practices or
unexpected import surges. There is congressional concern that the WTO,
created in 1995 to administer trade rules, is interfering with this
ability. There is also congressional concern that the WTO is not
treating the United States fairly in resolving trade remedy disputes.
A congressional requester asked GAO to identify trends in WTO trade
remedy disputes since 1995, including the outcomes of these disputes
and how they affected members’ ability to impose trade remedies. The
requester also asked GAO to discuss the standards of review that the
WTO applies when ruling on trade remedy disputes and to present U.S.
agencies’ and legal experts’ views on the WTO’s application of these
standards and related trade remedy issues.
In their comments on a draft of this report, the Department of
Commerce and the U.S. International Trade Commission stated that the
report needed to put more emphasis on U.S. agencies’ concerns about
the potential adverse impact of WTO rulings on the U.S.’s use of trade
remedies. The U.S. Trade Representative provided only technical
comments on the report. GAO modified the report as appropriate.
What GAO Found:
About a third of the cases filed in the WTO dispute settlement system
from 1995 through 2002 challenged members’ trade remedies, with the
ratio of such cases increasing over time. Although a relatively small
proportion of WTO members’ trade remedy measures were challenged in
the WTO, the United States faced substantially more challenges than
other WTO members.
The WTO generally rejected members’ decisions to impose trade remedies
in the 25 trade remedy disputes resolved from 1995 through 2002.
However, GAO found that the WTO ruled for and against the U.S. and
other members in roughly the same ratios. Overall, WTO rulings
resulted in few changes to members’ laws, regulations, and practices
but had a relatively greater impact on those of the United States.
While U.S. agencies stated that WTO rulings have not yet significantly
impaired their ability to impose trade remedies, they had concerns
about the potential future adverse impact of WTO rulings.
Of the legal experts GAO consulted, a majority concluded that the WTO
has properly applied standards of review and correctly ruled on major
trade remedy issues. However, a significant minority strongly
disagreed with these conclusions. U.S. agencies also said that the WTO
has not always properly applied the standards and has, in some cases,
imposed obligations on members that are not found in WTO agreements.
Nonetheless, the experts almost unanimously agreed that the WTO was
not treating the United States any differently than other members.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Trade Remedy Cases Increased Over Time, but Few Measures Were
Challenged:
Domestic Determinations Generally Were Rejected, but Statutes Were
Upheld:
Rulings Resulted in Few Changes to Members' Laws, Regulations, and
Practices but Caused Numerous Changes to U.S. Measures:
Two Standards of Review Apply to WTO Trade Remedy Cases:
Expert Views and U.S. Agency Positions on Standard of Review and Other
Trade Remedy Issues:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Summaries of Completed WTO Trade Remedy Cases:
GAO Case Number 1: Brazil - Measures Affecting Desiccated Coconut (DS
22):
GAO Case Number 2: Guatemala - Antidumping Investigation Regarding
Portland Cement from Mexico (DS 60):
GAO Case Number 3: Korea - Definitive Safeguard Measure on Imports of
Certain Dairy Products (DS 98):
GAO Case Number 4: United States - Antidumping Duty on Dynamic Random
Access Memory Semiconductors (DRAMS) of One Megabyte or Above
Originating from Korea (DS 99):
GAO Case Number 5: Argentina - Safeguard Measures on Imports of
Footwear (DS 121):
GAO Case Number 6: Thailand - Antidumping Duties on Angles, Shapes, and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland (DS 122):
GAO Case Number 7: Mexico - Antidumping Investigation of High-Fructose
Corn Syrup (HFCS) from the United States (DS 132):
GAO Case Number 8: United States - Antidumping Act of 1916 (DS 136/
162):
GAO Case Number 9: United States - Imposition of Countervailing Duties
on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom (DS 138):
GAO Case Number 10: European Union - Antidumping Duties on Imports of
Cotton-Type Bed Linen from India (DS 141):
GAO Case Number 11: Guatemala - Definitive Antidumping Measures on Grey
Portland Cement from Mexico (DS 156):
GAO Case Number 12: United States - Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities (DS 166):
GAO Case Number 13: United States - Safeguard Measures on Imports of
Fresh, Chilled, or Frozen Lamb Meat from New Zealand and Australia (DS
177/178):
GAO Case Number 14: United States - Antidumping Measures on Stainless
Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea (DS
179):
GAO Case Number 15: United States - Antidumping Measures on Certain
Hot-Rolled Steel Products from Japan (DS 184):
GAO Case Number 16: Argentina - Definitive Antidumping Measures on
Imports of Ceramic Floor Tiles from Italy (DS 189):
GAO Case Number 17: United States - Measures Treating Export Restraints
as Subsidies (DS 194):
GAO Case Number 18: United States - Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line Pipe from Korea (DS
202):
GAO Case Number 19: United States - Antidumping and Countervailing
Measures on Steel Plate from India (DS 206):
GAO Case Number 20: Chile - Price Band System and Safeguard Measures
Relating to Certain Agricultural Products (DS 207):
GAO Case Number 21: Egypt - Definitive Antidumping Measures on Steel
Rebar from Turkey (DS 211):
GAO Case Number 22: United States - Countervailing Measures Concerning
Certain Products from the European Communities ("Privatization") (DS
212):
GAO Case Number 23: United States - Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany ("Sunset")
(DS 213):
GAO Case Number 24: United States - Section 129(c)(1) of the Uruguay
Round Agreements Act (DS 221):
GAO Case Number 25: United States - Preliminary Determinations With
Respect to Certain Softwood Lumber from Canada (DS 236):
Appendix III: Experts That GAO Interviewed for this Report:
Appendix IV: Comments from the Department of Commerce:
GAO Comments:
Appendix V: Comments from the United States International Trade
Commission:
GAO Comments:
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: U.S. Trade Remedy Laws Challenged in WTO Dispute Settlement,
1995-2002:
Table 2: Impact of WTO Rulings on Members' Laws, Regulations, Practices,
and Measures, 1995-2002:
Table 3: WTO Trade Remedy Dispute Settlement Cases Completed Between
1995 and December 31, 2002:
Table 4: Case 1 - Major Case Issue and Panel/Appellate Body Findings:
Table 5: Case 2 - Major Case Issues and Panel/Appellate Body Findings:
Table 6: Case 3 - Major Case Issues and Panel/Appellate Body Findings:
Table 7: Case 4 - Major Case Issues and Panel Findings:
Table 8: Case 5 - Major Case Issues and Panel/Appellate Body Findings:
Table 9: Case 6 - Major Case Issues and Panel/Appellate Body Findings:
Table 10: Case 7 - Major Case Issues and Panel Findings:
Table 11: Case 8 - Major Case Issues and Panel/Appellate Body Findings:
Table 12: Case 9 - Major Case Issues and Panel/Appellate Body
Findings:
Table 13: Case 10 - Major Case Issues and Panel/Appellate Body
Findings:
Table 14: Case 11 - Major Case Issues and Panel Findings:
Table 15: Case 12 - Major Case Issues and Panel/Appellate Body
Findings:
Table 16: Case 13 - Major Case Issues and Panel/Appellate Body
Findings:
Table 17: Case 14 - Major Case Issues and Panel Findings:
Table 18: Case 15 - Major Case Issues and Panel/Appellate Body
Findings:
Table 19: Case 16 - Major Case Issues and Panel Findings:
Table 20: Case 17 - Major Case Issues and Panel Findings:
Table 21: Case 18 - Major Case Issues and Panel/Appellate Body
Findings:
Table 22: Case 19 - Major Case Issues and Panel Findings:
Table 23: Case 20 - Major Case Issues and Panel/Appellate Body
Findings:
Table 24: Case 21 - Major Case Issues and Panel Findings:
Table 25: Case 22 - Major Case Issues and Panel/Appellate Body
Findings:
Table 26: Case 23 - Major Case Issues and Panel/Appellate Body
Findings:
Table 27: Case 24 - Major Case Issue and Panel Findings:
Table 28: Case 25 - Major Case Issues and Panel Findings:
Figures:
Figure 1: Total Number of WTO Cases Versus Trade Remedy Cases Filed per
Year, 1995-2002:
Figure 2: Most Frequent Complainants and Defendants in WTO Trade Remedy
Cases, 1995-2002:
Figure 3: Total Number of WTO Trade Remedy Measures Imposed and Number
Challenged, by Most Frequent Trade Remedy Users, 1995-2002:
Figure 4: Number of Findings on Domestic Agency Determinations and
Percentage of Those Determinations Rejected by the WTO in 21 Completed
Trade Remedy Cases, 1995-2002:
Figure 5: Number (Percent) of Domestic Agency Determinations Upheld and
Rejected by the WTO, the United States Versus Other Members, in
Completed Trade Remedy Cases, 1995-2002:
Abbreviations:
ADA: Antidumping Agreement:
CVD: countervailing duties:
DRAMS: dynamic random access memory semiconductors:
DSB: Dispute Settlement Body:
DSU: Dispute Settlement Understanding:
EU: European Union:
GATT: General Agreement on Tariffs and Trade:
HFCS: high-fructose corn syrup:
ITC: International Trade Commission:
NAFTA: North American Free Trade Agreement:
SAA: Statement of Administrative Action:
SCM: Subsidies and Countervailing Measures:
URAA: Uruguay Round Agreements Act:
USTR: United States Trade Representative:
WTO: World Trade Organization:
Letter July 30, 2003:
The Honorable Max Baucus
Ranking Minority Member
Committee on Finance
United States Senate:
Dear Senator Baucus:
The World Trade Organization (WTO) provides the institutional framework
for the multilateral trading system. Established in January 1995, the
WTO administers rules of international trade and provides a forum for
conducting trade negotiations. In addition, the WTO has a dispute
settlement system with panels and an Appellate Body that provides a
multilateral forum for resolving trade disputes among WTO members. A
dispute arises when one WTO member believes another member has violated
a WTO agreement and initiates a dispute settlement proceeding through
the WTO.
Many disputes in recent years have pertained to WTO members' use of
trade remedy measures. Members impose trade remedies in the form of
duties or import restrictions after determining that a domestic
industry has been injured or threatened with injury by imports.
Specifically, member governments impose antidumping or countervailing
duties[Footnote 1] when they find that imports are priced at less than
normal value,[Footnote 2] or benefit from a foreign subsidy, and that
such imports injure their domestic industry. Similarly, members impose
safeguard measures[Footnote 3] after finding that import surges have
seriously injured or threatened serious injury to domestic industry.
The WTO permits its 146 members to impose such trade remedy measures
but requires them to follow certain rules before doing so, as set forth
in various WTO agreements.[Footnote 4] Domestic agencies usually make a
number of "domestic agency determinations."[Footnote 5] When a trade
measure is challenged in the WTO dispute settlement system and a
dispute settlement panel is established, the panel reviews the domestic
agency determinations supporting the measure to determine whether they
are consistent with the relevant WTO agreements. In addition to cases
challenging WTO members' domestic determinations to impose specific
trade remedy measures, WTO members sometimes directly challenge other
members' trade remedy laws.
Over the past several years, Congress has raised concerns that some WTO
panel and Appellate Body rulings have adversely affected the U.S.'s
ability to impose trade remedy measures. For example, in the Trade Act
of 2002,[Footnote 6] Congress voiced concern about certain WTO rulings
on trade remedies, including how the WTO has applied standard of
review--that is, how the WTO evaluates and defers to the factual and
legal determinations of WTO members' domestic agencies. In addition,
some Members of Congress are concerned that some WTO rulings have
created new obligations for WTO members beyond those found in the WTO
agreements. For example, a Senate report accompanying the Trade Act of
2002 stated that WTO panels and the Appellate Body have substantially
rewritten part of the WTO Agreement on Subsidies and Countervailing
Measures in ways that are disadvantageous to the United
States.[Footnote 7]
Accordingly, you asked us to conduct a review of WTO dispute settlement
activity during the past 8 years, focusing on trade remedy disputes.
Specifically, in this report we (1) identified the major trends in WTO
dispute settlement activity concerning trade remedies; (2) analyzed
the
outcome of WTO rulings in completed trade remedy cases;[Footnote 8] (3)
assessed the major impacts of these rulings on WTO members' laws,
regulations, practices, and measures[Footnote 9] and on members'
ability to impose trade remedies; (4) identified the standards of
review for trade remedy cases and Appellate Body guidance on how the
standards should be applied; and (5) summarized legal experts' views
and U.S. agencies' positions on standard of review and other trade
remedy issues.
To address these objectives, we created a database using WTO data on
dispute settlement complaints filed from 1995 through 2002; reviewed
WTO and U.S. government documents; and interviewed U.S., WTO, and
European Union (EU) officials. In addition, we reviewed WTO panel and
Appellate Body reports in the 25 completed trade remedy cases through
2002. Finally, we interviewed 18 U.S. and foreign legal experts,
including practitioners, academics, and advisors on WTO-related trade
remedy issues. Appendix I contains a full description of our scope and
methodology, and appendix II contains summaries of the 25 completed
trade remedy cases. Appendix III contains the names and affiliations of
the 18 legal experts we interviewed. Appendixes IV and V contain agency
comments and our responses. Appendix VI identifies the major
contributors to this report.
Results in Brief:
Of the 198 cases filed in the WTO from 1995 through 2002, one-third
(64) challenged members' trade remedies, and the ratio of trade remedy
cases filed versus other types of cases generally has increased over
time. The United States was by far the most frequent defendant in trade
remedy cases, acting as defendant in 30 of the 64 challenges, with 17
of those 30 cases filed since January 2000. In contrast, the EU had
only 5 trade remedy cases filed against it. On the other hand, the
United States was less active in filing complaints against other WTO
members. For example, the United States filed only 5 of the 64 trade
remedy cases, while the EU filed 16 such cases. Overall, WTO members
challenged a small proportion of trade measures imposed. Of the 1,405
trade measures that members notified the WTO that they imposed from
1995 through 2002, WTO members challenged only 63 (4 percent) in the
WTO dispute settlement system. The United States imposed the most
measures (239) and had the highest proportion of its measures (12
percent) challenged, whereas the next biggest trade remedy users had
fewer of their measures challenged. For example, India had none of its
226 measures challenged, while the EU had 4 of its 182 measures
challenged. According to U.S. agency officials, one reason that the
United States has been a defendant more often than a complainant in
trade remedy cases is that the United States has the world's biggest
economy and most desirable market.
In the 25 trade remedy cases completed from 1995 through 2002, the WTO
generally did not uphold WTO members' domestic determinations to impose
trade remedy measures but upheld a higher proportion of members' trade
remedy laws that were challenged. In 17 of the 21 cases involving a
total of 175 WTO findings[Footnote 10] on domestic
determinations,[Footnote 11] the WTO rejected 50 percent or more of the
agencies' determinations as not complying with WTO agreements,
rejecting all determinations in 5 of those cases. Overall, the WTO
rejected about the same percentage of the U.S. and non-U.S. agency
determinations in the 21 cases, 57 percent and 56 percent,
respectively.[Footnote 12] In 9 of the 25 cases, there were 13
challenges to trade remedy laws, all of which were U.S. laws. The WTO
upheld U.S. trade remedy laws in 11 of the 13 challenges and rejected
U.S. laws in 2 challenges.
WTO rulings in the 25 completed cases we examined have not required
numerous changes to members' laws, regulations, and practices but have
resulted in the revision or removal of a number of trade remedy
measures that members imposed. As a result of the 14 cases in which the
United States was a defendant, two U.S. laws, one regulation, and three
practices were changed or are subject to change. In addition, the
rulings in 9 of those cases necessitated the onetime revision to, or
removal of, 21 U.S. trade measures. However, WTO trade remedy rulings
resulted in fewer changes to the laws, regulations, practices, and
measures of other WTO members. Specifically, no foreign laws or
regulations were affected, and only one foreign practice was changed,
in the 11 cases in which other WTO members were defendants. In
addition, only 7 foreign trade measures were subject to revision or
removal.[Footnote 13] U.S. officials told us that the trade remedy
rulings have not significantly impaired their ability to impose trade
remedies to date. However, they were concerned about the potential for
rulings to have a greater adverse impact in the future. For example,
these officials cited the possible negative ramifications of WTO
rulings in the privatization and EU bed linen cases. U.S. officials
also said that some WTO safeguard rulings have been extremely difficult
to implement. For instance, some safeguard rulings have placed a
greater burden on domestic agencies to establish a clearer link between
increased imports and serious injury to domestic industry. In addition,
U.S. officials said that the rulings have required U.S. agencies to
provide more detailed explanations of their analyses and procedures for
applying their methodologies in trade remedy investigations.
The WTO uses two principal standards of review to evaluate the factual
and legal determinations of WTO member domestic agencies in trade
remedy cases--article 11 of the WTO Dispute Settlement Understanding
and article 17.6 of the WTO Antidumping Agreement. Article 11 applies
to all cases brought under the WTO dispute settlement system and
requires that panels make an objective assessment of the factual and
legal determinations of WTO member domestic agencies. The Appellate
Body has found that in applying article 11, panels are not to conduct a
new review of domestic agency fact-findings nor totally defer to them.
Article 17.6 applies only to antidumping cases and is more specific and
deferential than article 11. For factual review, article 17.6 requires
panels to determine whether domestic agencies have properly established
the facts and evaluated them in an unbiased and objective manner, and,
if the agencies have done so, it does not allow panels to overturn the
agencies' determinations. For legal review, article 17.6 requires
panels to interpret the Antidumping Agreement by applying established
international rules for interpreting treaties and international
agreements.[Footnote 14] When a panel finds more than one permissible
interpretation of the Antidumping Agreement, and one of them is
consistent with a domestic agency's determination, article 17.6
requires the panel to uphold the agency's determination. The Appellate
Body has concluded that panels should apply article 17.6 in a certain
order: first, apply international rules of interpretation; and then,
consider whether to uphold the domestic agency's determination. The
Appellate Body has found that panels have generally interpreted and
applied both standards of review correctly in the relatively few
instances where standard of review was specifically an issue in a case.
Finally, the panels and the Appellate Body discussed the standards of
review in most of the trade remedy cases, but the extent of that
discussion varied by trade remedy area, case, and issue.
The most common concern raised by legal experts with whom we spoke,
although a minority view, related to the way in which the WTO has
applied article 17.6 to evaluate legal determinations of domestic
agencies. For example, some experts believed that Appellate Body
guidance to apply international rules of treaty interpretation first
has resulted in panels' improperly rejecting domestic agency
interpretations because, in the experts' view, these rules necessarily
lead to only one interpretation. The experts contended that this
tendency to find one interpretation made panels less likely to consider
alternative domestic agency interpretations. Some experts also stated
that the panels and the Appellate Body have not applied article 17.6 in
as deferential a manner as the United States intended. Overall,
however, a majority of the experts with whom we spoke indicated that
the WTO had not exceeded its authority in applying the standards of
review, and that the WTO had treated its members the same in trade
remedy cases. A majority of experts also said that the WTO has not
added new obligations or diminished WTO members' rights in these cases;
however, a significant minority of experts strongly disagreed with
these views. Finally, many experts considered some of the WTO rulings
on safeguards to be unclear and difficult to implement, particularly
regarding how agencies should link increased imports and serious injury
to domestic industry.
The U.S. agencies most involved in trade remedy activities said that
the WTO has improperly applied article 17.6(ii) in some trade remedy
cases, mainly because it has not applied the article in a way that
allows for upholding permissible interpretations of WTO members'
domestic agencies. These agencies also said that in certain trade
remedy cases, the WTO has found obligations and imposed restrictions on
WTO members that are not supported by the texts of the WTO trade remedy
agreements.
Background:
The 1994 Uruguay Round agreements created the WTO dispute settlement
system. The new system replaced the one under the General Agreement on
Tariffs and Trade (GATT), the predecessor to the WTO. The Uruguay Round
created a stronger dispute settlement system that, unlike the system
under the GATT, discourages stalemates by not allowing parties to block
decisions. In addition, the new system established a standing Appellate
Body, with the aim of making decisions more stable and predictable.
The WTO dispute settlement system operates in four major phases:
consultation, panel review, Appellate Body review (when a party appeals
the panel ruling), and implementation of the ruling. To initiate, or
file, a dispute, a WTO member requests consultations with the defending
member. If the parties do not settle the case during consultations, the
complainant may then request that a panel be established. Nonpermanent,
three-person panels issue formal decisions, or reports, for cases that
are appealed; three members of a permanent, seven-member Appellate
Body--comprised of individuals with recognized standing in the field of
law and international trade--review panel findings. The Dispute
Settlement Body, which is comprised of representatives of all WTO
members, approves all final reports, and only a consensus of the
members can block decisions. Thus, no individual member can block a
decision.
When a WTO member challenges a trade remedy measure, the panels and the
Appellate Body apply standards of review, outlined in certain WTO
agreements, to evaluate members' factual and legal determinations
supporting these measures. In the United States, the Department of
Commerce and the International Trade Commission (ITC) investigate
whether the United States should impose antidumping or countervailing
duties to offset unfair foreign trade practices. The ITC also
investigates whether the conditions exist for the United States to
invoke safeguards in response to import surges.
Trade Remedy Cases Increased Over Time, but Few Measures Were
Challenged:
From 1995 through 2002, WTO members brought 198 formal dispute
settlement cases against other members.[Footnote 15] One-third (64
cases) involved members' trade remedies, and the ratio of trade remedy
cases filed, versus all other types, generally increased over the time
period. Among WTO members, the United States has been by far the most
frequent defendant in trade remedy cases but relatively less active in
filing complaints. Overall, however, WTO members have challenged a
relatively small share of the trade measures that their fellow members
imposed, although the proportion of U.S. trade measures challenged was
larger.
About One-third of All Cases Involved Trade Remedies, and Ratio
Increased Over Time:
Overall, about one-third (64) of all WTO cases involved members' trade
remedies. From 1995 to 2000, an increasing proportion of the cases
filed pertained to trade remedy measures and laws, as shown in figure
1. In 2001 and 2002, there was somewhat of a shift in this trend.
Figure 1: Total Number of WTO Cases Versus Trade Remedy Cases Filed per
Year, 1995-2002:
[See PDF for image]
[End of figure]
United States Has Been the Most Frequent Defendant, but Less Active as
a Complainant:
In comparing WTO members' participation in the trade remedy cases, the
United States by far has been the most frequent defendant but less
active as a complainant. As shown in figure 2, the United States was a
defendant in 30 (47 percent) of the 64 trade remedy cases, a majority
of which were filed since January 2000. The next most frequent
defendants were Argentina, which defended 6 cases, and the EU, a
defendant in 5 cases. On the other hand, the United States was less
active than other WTO members in filing trade remedy cases. As figure 2
also shows, the EU was the most frequent complainant in the 64 trade
remedy cases, filing 16 complaints. Six WTO members each filed more
complaints than the United States.
Figure 2: Most Frequent Complainants and Defendants in WTO Trade Remedy
Cases, 1995-2002:
[See PDF for image]
[End of figure]
U.S. agency officials said that it was not surprising that the United
States had been a defendant more often than a complainant in WTO
disputes since (1) the United States has the world's biggest economy
and most desirable market and (2) U.S. laws and procedures are more
detailed and transparent than those of other members that are large
users of trade remedies. These officials also pointed to the easy
availability in the United States of trade lawyers, who could assist in
bringing trade remedy actions, as another factor.
Few Imposed Measures Were Challenged, but U.S. Measures Were Challenged
Most:
Although members notified the WTO that they imposed 1,405 trade remedy
measures from 1995 through 2002, only a small percentage of these
measures were challenged in the dispute settlement system.
Specifically, WTO members challenged only 63 (4 percent) of the 1,405
measures, but nearly one-half of these challenges involved U.S. trade
measures. Over the same period, as shown in figure 3, the United States
imposed the most trade remedy measures (239) and had the biggest number
and share (29, or 12 percent) of its measures challenged by other WTO
members. On the other hand, India, the next biggest user of trade
remedy measures, had none of its 226 measures challenged. WTO members
challenged 4 (2 percent) of the EU's 182 trade remedy measures and 7 (6
percent) of Argentina's 127 trade remedy measures.
Figure 3: Total Number of WTO Trade Remedy Measures Imposed and Number
Challenged, by Most Frequent Trade Remedy Users, 1995-2002:
[See PDF for image]
Notes:
Data on trade remedy measures imposed are the most recent available
from the WTO and are through December 2002.
Challenges to WTO members' sunset reviews are not included in these
figures. Sunset reviews are domestic agency reviews of whether to
terminate antidumping or countervailing duties after a certain period,
usually 5 years. The duties are terminated unless the authorities
determine, in a review, that the duties' elimination would likely lead
to a continuation or recurrence of dumping or subsidies and injury.
[End of figure]
Domestic Determinations Generally Were Rejected, but Statutes Were
Upheld:
While the 25 WTO trade remedy rulings completed from 1995 through 2002
generally rejected domestic agency determinations supporting trade
measures, the rulings upheld a vast majority of the trade remedy laws
that were challenged. The WTO rejected at least half of the domestic
agency determinations in most of the 21 cases dealing with such
determinations. The WTO also rejected roughly the same proportion of
U.S. and non-U.S. domestic determinations. The 21 rulings addressed
issues ranging from whether domestic agencies adequately justified
imposing a trade remedy measure to whether WTO members followed proper
procedures in initiating the disputes. Regarding WTO rulings on
members' laws, only U.S. laws were challenged during the period. The
WTO upheld more than three-quarters of the U.S. laws challenged in 9
cases involving 13 challenges.
WTO Rejected Majority of Domestic Determinations; U.S./Non-U.S.
Rejection Ratios Were Similar:
The WTO made findings on a total of 175 domestic agency determinations
in 21 of the 25 trade remedy cases completed through 2002. As shown in
figure 4, in 17 of the 21 cases the panels rejected 50 percent or more
of the domestic agency's determinations--rejecting all determinations
in 5 cases. In all 21 cases, the WTO found at least one aspect of a
measure to be inconsistent with WTO requirements.
Figure 4: Number of Findings on Domestic Agency Determinations and
Percentage of Those Determinations Rejected by the WTO in 21 Completed
Trade Remedy Cases, 1995-2002:
[See PDF for image]
Note: The WTO findings on domestic determinations range in importance
from how well the domestic agency justified imposing the trade remedy
by adequately establishing a causal link between the increased imports
and injury to domestic industry to whether the domestic agency followed
proper procedures by providing public notice of the initiation of its
antidumping investigation.
[End of figure]
When comparing rulings among WTO members on domestic determinations,
the United States and other WTO members fared similarly. Overall, as
shown in figure 5, the WTO rejected almost the same proportion of the
U.S.'s and other WTO members' domestic determinations--57 percent and
56 percent, respectively.
Figure 5: Number (Percent) of Domestic Agency Determinations Upheld and
Rejected by the WTO, the United States Versus Other Members, in
Completed Trade Remedy Cases, 1995-2002:
[See PDF for image]
[End of figure]
All WTO Challenges to Trade Remedy Laws Involved U.S. Laws, but Most
Laws Were Upheld:
Although to date WTO members have challenged only U.S. laws, the WTO
upheld a large majority of these laws. As shown in table 1, in the 13
instances (in 9 cases), in which WTO members directly challenged U.S.
laws, the WTO upheld U.S. laws in 11 challenges and rejected U.S. laws
in 2 challenges.[Footnote 16]
Table 1: U.S. Trade Remedy Laws Challenged in WTO Dispute Settlement,
1995-2002:
Law challenged: Sections 733(e) and 735(a)(3) of the Tariff Act of
1930; WTO dispute settlement case: United States - Antidumping Measures
on Certain Hot-Rolled Steel Products from Japan (DS 184); Ruling
outcome: Law upheld.
Law challenged: Section 771(7)(c)(iv) of the Tariff Act of 1930; WTO
dispute settlement case: United States - Antidumping Measures on
Certain Hot-Rolled Steel Products from Japan (DS 184); Ruling outcome:
Law upheld.
Law challenged: Sections 776(a) and 782(d) and (e) of the Tariff Act of
1930; WTO dispute settlement case: United States - Antidumping and
Countervailing Measures on Steel Plate from India (DS 206); Ruling
outcome: Law upheld.
Law challenged: Section 751(b) of the Tariff Act of 1930 and
accompanying regulations; WTO dispute settlement case: United States -
Antidumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS)
of One Megabyte or Above Originating from Korea (DS 99); Ruling
outcome: Law upheld.
Law challenged: Section 751(c)(2) of the Tariff Act of 1930; WTO
dispute settlement case: United States - Countervailing Duties on
Certain Corrosion-Resistant Carbon Steel Flat Products from Germany (DS
213); Ruling outcome: Law upheld.
Law challenged: Sections 751(c)(1)(A) and 752(b) of the Tariff Act of
1930; WTO dispute settlement case: United States - Countervailing
Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from
Germany (DS 213); Ruling outcome: Law upheld.
Law challenged: Section 752(b)(4)(B) of the Tariff Act of 1930; WTO
dispute settlement case: United States - Countervailing Duties on
Certain Corrosion-Resistant Carbon Steel Flat Products from Germany (DS
213); Ruling outcome: Law upheld.
Law challenged: Section 771(5)(F) of the Tariff Act of 1930; WTO
dispute settlement case: United States - Countervailing Measures
Concerning Certain Products from the European Communities (DS 212);
Ruling outcome: Law upheld.
Law challenged: Sections 777A(e)(2)(A) and (B) of the Tariff Act of
1930 and accompanying regulations; WTO dispute settlement case: United
States - Preliminary Determinations With Respect to Certain Softwood
Lumber from Canada (DS 236); Ruling outcome: Law upheld.
Law challenged: Section 129(c)(1) of the Uruguay Round Agreements Act;
WTO dispute settlement case: United States - Section 129(c)(1) of the
Uruguay Round Agreements Act (DS 221); Ruling outcome: Law upheld.
Law challenged: Section 771(5)(B)(iii) of the Tariff Act of 1930; WTO
dispute settlement case: United States - Measures Treating Export
Restraints as Subsidies (DS 194); Ruling outcome: Law upheld.
Law challenged: Section 735(c)(5)(A) of the Tariff Act of 1930; WTO
dispute settlement case: United States - Antidumping Measures on
Certain Hot-Rolled Steel Products from Japan (DS 184); Ruling outcome:
Law rejected.
Law challenged: Section 801 of the Revenue Act of 1916[A]; WTO dispute
settlement case: United States - Antidumping Act of 1916 (DS 136/162);
Ruling outcome: Law rejected.
Legend: DRAMS dynamic random access memory semiconductors
URAA Uruguay Round Agreements Act:
Source: GAO analysis of WTO panel and Appellate Body reports.
[A] The official name of the law is section 801 of the Revenue Act of
1916; however, for purposes of this report, we use the name of the law
that the WTO used--the Antidumping Act of 1916.
[End of table]
Addressing why only U.S. trade remedy laws were challenged, a U.S.
agency official said that U.S. laws tend to be more vulnerable because
they are more detailed than those of other members, and their language
is not the same as the language in the WTO agreements. In contrast,
according to the official, some WTO members essentially take the
language in the relevant WTO agreement and make it their law.
Rulings Resulted in Few Changes to Members' Laws, Regulations, and
Practices but Caused Numerous Changes to U.S. Measures:
The 25 WTO trade remedy rulings completed from 1995 through 2002 did
not result in many changes to WTO members' laws, regulations, or
practices.[Footnote 17] However, the rulings more often resulted in the
onetime revision to, or removal of, trade remedy measures. The rulings
affected a number of U.S. laws, regulations, practices, and measures;
but for other WTO members, no laws or regulations were affected, and
only one practice was subject to change. Furthermore, fewer foreign
trade measures were subject to removal or revision. Nonetheless, U.S.
officials told us that the rulings to date had not significantly
impaired their ability to impose trade remedies. However, they told us
they were concerned about the potential for rulings to have a greater
adverse impact in the future. In addition, U.S. agencies said that,
with few exceptions, the rulings did not question U.S. methodologies
for determining whether to impose remedies but have required them to
provide fuller explanations and justifications for their decisions.
Rulings Caused Few Changes to Members' Laws, Regulations, or Practices:
WTO rulings resulted in a small number of changes to members' laws,
regulations, and practices, with all but one of those changes involving
U.S. trade remedies. In the 14 completed trade remedy cases in which
the United States was the defendant, two U.S. laws, one regulation, and
three practices were changed or are subject to change, as shown in
table 2. In the 11 cases involving other WTO members, only one practice
was subject to change.
Table 2: Impact of WTO Rulings on Members' Laws, Regulations,
Practices, and Measures, 1995-2002:
Defendants: United States; Laws: subject to change: 2; Regulations
subject to change: 1; Practices subject to change: 3; Measures
subject to revision or removal: 21.
Defendants: Other WTO members; Laws: subject to change: 0;
Regulations subject to change: 0; Practices subject to change: 1;
Measures subject to revision or removal: 7.
Source: GAO analysis of compliance action documents filed with the WTO
by members, plus information from U.S. agencies.
Notes:
The 21 U.S. measures were subject to revision or removal in 9 cases.
While 7 of those cases each involved 1 measure, 2 cases involved more
than 1 measure--1 case involved 12 measures and 1 case involved 2
measures.
In 2 cases, WTO members technically removed the relevant measures in
response to other judicial bodies that made similar rulings to the WTO:
one case was in direct response to a North American Free Trade
Agreement (NAFTA) panel ruling, and the other was in response to U.S.
domestic litigation (see app. II, case summaries 7 and 9).
[End of table]
Specifically, the two U.S. laws subject to change are a section of the
Antidumping Act of 1916 and a section of the Tariff Act of
1930[Footnote 18] involving calculation of the "all others"
rate.[Footnote 19] In the 1916 Antidumping Act case, the WTO found the
U.S. law to be in violation of GATT 1994 and the WTO Antidumping
Agreement because it authorized imposing fines, imprisonment, and
recovery of damages in response to the dumping of products in the U.S.
market--remedies that are not provided for in those agreements. Both
the U.S. Senate and the House of Representatives have introduced
legislation to repeal the 1916 Act.[Footnote 20] The proposed change to
the Tariff Act of 1930 involves making calculation of the "all others"
rate consistent with the WTO Antidumping Agreement. The WTO granted the
United States until the end of December 2003 to comply, but so far
Congress has not addressed this change.
The one change to a U.S. regulation stemmed from a case involving U.S.
antidumping duties imposed on imports of Korean dynamic random access
memory semiconductors (DRAMS). To implement the ruling, the United
States replaced its regulatory standard for revoking an antidumping
order--that dumping was "not likely" to occur--with the standard in the
WTO Antidumping Agreement--that "continued imposition of the
antidumping duty is necessary to offset dumping.":
The three changes to U.S. practices involved a revision of the "arm's-
length"[Footnote 21] methodology in antidumping cases and two
privatization methodologies that the Commerce Department used in
countervailing duty cases to calculate the extent to which the benefit
of past subsidies are passed on to private purchasers of state-owned
enterprises.[Footnote 22] The United States revised its "arms-length"
methodology to conform to the WTO Antidumping Agreement by expanding
the scope of sales to an affiliated business that could be considered
to be made in the ordinary course of trade. Commerce revised its
countervailing duty methodology to conform to the Appellate Body's
first privatization decision, but the Appellate Body later ruled that
the revised methodology was also inconsistent with the Subsidies and
Countervailing Measures Agreement. Commerce revised its methodology a
second time[Footnote 23] to reflect the Appellate Body's finding that
an arm's-length, fair market value sale of a subsidized, state-owned
entity to a private buyer creates a presumption that the privatized
entity no longer benefits from past subsidies.
Aside from the changes to U.S. laws, regulations, and practices, 1 case
resulted in a change to an EU practice. In that case,[Footnote 24] the
WTO ruled that the EU's practice of "zeroing" was not permitted under
the WTO Antidumping Agreement. Zeroing[Footnote 25] in that case
concerned the EU's changing negative dumping margins to zero when
comparing dumping margins of different models of like products--for
example, comparing dumping margins of high-end satin sheets with low-
end polyester/cotton blend sheets.
Rulings Brought about Increased Removals and Revisions of Specific
Trade Measures:
In contrast to the relatively few changes in members' laws,
regulations, and practices, most of the rulings in the 25 completed
trade remedy cases[Footnote 26] involved a case-specific removal or
revision of a WTO member's trade remedy measure. More U.S. measures
were affected than those of all other members. In the 14 completed
cases brought against the United States, 21 U.S. trade measures were
subject to revision or removal,[Footnote 27] while the 11 completed
cases against other countries resulted in 7 trade measures being
subject to revision or removal, as shown in table 2.
Specifically, the United States reduced antidumping margins on measures
in response to 3 WTO rulings,[Footnote 28] removed countervailing duty
measures in 1 case as a result of domestic litigation,[Footnote 29] and
is revising countervailing duty measures in 2 other cases.[Footnote 30]
And in 3 cases, the United States removed, or allowed to expire,
safeguard measures that the Appellate Body found inconsistent with the
WTO Safeguards Agreement.[Footnote 31]
By contrast, other WTO members removed antidumping measures in 3
cases[Footnote 32] and are due to remove or revise antidumping measures
in 2 cases.[Footnote 33]
In addition, other members removed safeguard measures as a result of 2
WTO rulings.[Footnote 34]
U.S. Officials Are Concerned about the Potential Impact of WTO Rulings
on U.S. Ability to Impose Trade Remedy Measures:
While U.S. officials told us that WTO trade remedy rulings had not yet
significantly impaired the U.S.'s fundamental right and ability to use
its trade remedies, they are concerned about the rulings' potential to
do so in the future. For example, Commerce Department officials said
that implementing the second Appellate Body ruling on privatization may
have a substantial impact on similar proceedings in the future as well
as existing countervailing duty orders.
In addition, U.S. officials expressed concern about the potential
negative ramifications of the WTO ruling in the EU bed linen case.
First, U.S. officials said that although the United States did not
change its "zeroing" practice as a result of the ruling against the EU,
they noted that the ruling could affect a current Canadian dispute
against the United States involving U.S. zeroing practices.[Footnote
35] Furthermore, the EU has recently challenged 21 Commerce Department
antidumping determinations with regard to the U.S.' zeroing practice.
The EU alleged that U.S. application of its zeroing practice is
inconsistent with the WTO Antidumping Agreement and GATT 1994. The EU
also asserted that U.S. laws and regulations providing for this zeroing
practice appear to be inconsistent with those agreements. As shown by
this challenge, U.S. officials believe that when the WTO strikes down a
practice, there is significant potential for WTO members to challenge
similar practices of other members. Accordingly, these officials said
they are monitoring WTO rulings and recommendations in cases not
involving the United States in order to prepare for similar, potential
challenges against the United States.
In the safeguards area, U.S. officials indicated that some WTO
rulings[Footnote 36] were confusing and extremely difficult to
implement, particularly regarding certain aspects of causation--the
extent to which increases in imports cause serious injury, or threaten
serious injury, to domestic industry. U.S. officials also said that
they have had to increase the level of detail they provide in
explaining their analyses and how they apply their methodologies in
safeguard investigations. For example, they cited safeguard rulings
dealing with "nonattribution," an aspect of causation requiring that
injury to domestic industry caused by factors other than increased
imports not be attributed to increased imports.[Footnote 37] U.S.
officials said that these rulings could be viewed as calling for
domestic agencies to quantify the amount of injury due to increased
imports versus the amount due to other factors--a task they consider to
be difficult, if not impossible. Moreover, the officials said they
would now have to expend more resources in conducting safeguard
investigations.
Two Standards of Review Apply to WTO Trade Remedy Cases:
WTO panels use two standards of review in evaluating the factual and
legal determinations of WTO members' domestic agencies in trade remedy
cases. Article 11 of the WTO Dispute Settlement Understanding applies
to all cases brought under the WTO dispute settlement system and calls
for an objective assessment of domestic agency determinations. The
Appellate Body has stated that in applying article 11, panels should
not conduct a new review of domestic agency fact-finding nor totally
defer to domestic agency determinations. Article 17.6 of the
Antidumping Agreement applies only to antidumping cases and is more
specific and deferential than article 11. Appellate body guidance on
article 17.6 calls for panels first to apply established international
rules of treaty interpretation to interpreting provisions of the
Antidumping Agreement before deciding whether to uphold a domestic
agency's interpretation. In the relatively few number of instances in
which the Appellate Body has considered standard of review issues, it
has found that panels have generally interpreted and applied both
standards of review correctly. Finally, panel and Appellate Body
decisions generally discuss the standards of review, but the extent of
the discussion varies by trade remedy area, case, and issue.
WTO Has Two Principal Standards of Review:
The standard of review that WTO panels and the Appellate Body apply in
WTO dispute settlement cases refers to how they evaluate and defer to
the factual and legal determinations of domestic agencies of WTO
members.[Footnote 38] The two principal standards of review that WTO
panels and the Appellate Body use to evaluate these determinations are
article 11 of the WTO Dispute Settlement Understanding and article 17.6
of the WTO Antidumping Agreement.[Footnote 39] Article 11 applies to
cases brought under all the WTO agreements that are covered by the
dispute settlement system and supplements article 17.6 in antidumping
cases. Article 17.6 only applies to cases brought under the Antidumping
Agreement, which is the only WTO agreement that has a specific standard
of review.[Footnote 40]
Article 11 Calls for an Objective Assessment:
Article 11 obligates a panel to make an "objective assessment of the
matter before it, including an objective assessment of the facts of the
case and the applicability of and conformity with the relevant" WTO
agreement.[Footnote 41] The Appellate Body has interpreted this
requirement to mean that panels should neither conduct a new review of
domestic agency fact-findings, often referred to as a "de novo review,"
nor totally defer to domestic agency determinations. In rejecting both
these extremes, the Appellate Body has found that the panels are poorly
suited to engage in new reviews and cannot ensure an objective
assessment by totally deferring to domestic agency determinations. What
the panels should do in safeguards cases, according to the Appellate
Body, is ascertain whether domestic agencies have evaluated all
relevant facts and provided an adequate, reasoned, and reasonable
explanation about how the facts supported their
determinations.[Footnote 42]
Article 17.6 Is More Specific and Deferential than Article 11:
Article 17.6 is more specific than article 11 and calls for more
deference to domestic agency determinations. Article 17.6 is divided
into two subparts--factual and legal--and establishes standards of
review for panel evaluations of domestic agency determinations. Under
the factual standard of review in article 17.6(i), panels must
determine whether domestic agencies have properly established the facts
and evaluated them in an unbiased and objective manner. When a panel
finds that the domestic agency has performed this task, the panel
cannot overturn the domestic agency's determination even if it might
have reached a different conclusion. The Appellate Body has stated that
the panel's obligation under the factual standard in article 17.6(i)
closely reflects the obligation imposed on panels under article
11.[Footnote 43]
Under the legal standard of review in article 17.6(ii), panels must
apply established international rules in interpreting provisions of the
WTO Antidumping Agreement. These rules are set forth in articles 31 and
32 of the Vienna Convention on the Law of Treaties[Footnote 44] and
provide a method for interpreting provisions of the Antidumping
Agreement. When a panel applies these rules and finds that there is
more than one permissible way to interpret a provision of the
Antidumping Agreement, the panel must uphold the domestic agency's
determination if it is consistent with one of the permissible
interpretations. The Appellate Body's guidance to panels about how they
are to apply this standard is consistent with the sequence implied
above. Thus, panels should first use the international rules to
interpret the WTO provision in question, and only after completing this
task should panels then decide whether to uphold the domestic agency's
legal determination. The Appellate Body has stated that application of
the international rules could give rise to at least two permissible
interpretations of some provisions of the Antidumping
Agreement.[Footnote 45]
Appellate Body Generally Upheld Panels' Treatment of Standards, but
Treatment Was Seldom Challenged:
WTO members did not often challenge panel interpretations and
applications of the standards of review, and most challenges involved
article 11. In most instances, the Appellate Body upheld the panels'
treatment of the standards. In the 14 instances in which the Appellate
Body specifically ruled on panel interpretations and applications of
standard of review, it found that the panels had correctly addressed
the standards in 11 instances--9 involving article 11 and 2 involving
article 17.6.
Panels/Appellate Body Discuss Standard of Review in Cases, but Extent
Varied:
As indicated above, panels have the responsibility for applying the
standards of review in articles 11 and 17.6 when evaluating
determinations of WTO member domestic agencies. The Appellate Body's
function is to review how panels have interpreted and applied these
standards and to uphold, modify, or reverse panel actions. For the most
part, Appellate Body decisions in trade remedy cases have included
longer and more detailed discussions of standard of review than the
panels.[Footnote 46]
Aside from differences between the panels and the Appellate Body, the
extent to which standards of review are discussed vary by trade remedy
area, case, and issue. Thus, standards of review are discussed, at
least to some extent, in all safeguard and antidumping cases involving
determinations of domestic agencies but are not mentioned in a number
of countervailing duty cases. In many of the safeguard and antidumping
cases, the panels discuss article 11 or article 17.6, respectively, at
the beginning of the case, indicating that they are the standards of
review to be applied in evaluating the domestic agency determinations
involved, though the amount of introductory discussion varies from case
to case. The standards of review are sometimes also discussed, or
alluded to, later in panel and Appellate Body reports in connection
with evaluations of particular domestic agency determinations. These
allusions to the standards of review involve use of language from the
standards themselves or interpretations of the standards rather than
any specific mention of them. For example, in the safeguard cases,
panels often invoke Appellate Body guidance about what kind of domestic
agency explanation is necessary--an "adequate, reasoned, and reasonable
explanation"--without mentioning article 11. Similarly, in antidumping
cases, panels sometimes refer to the requirement in article 17.6(i) to
conduct an "unbiased and objective" evaluation of domestic agency fact-
finding without specifically mentioning 17.6(i). Finally, for some
issues, panels neither specifically mention nor allude to standard of
review provisions.
Expert Views and U.S. Agency Positions on Standard of Review and Other
Trade Remedy Issues:
How the WTO has interpreted and applied the standard of review in trade
remedy cases and how it has resolved important trade remedy issues are
highly controversial issues in the United States. Further, a number of
these important trade remedy issues are highly complex, technical, and
not easily explained, as evidenced by their lengthy treatment in WTO
panel and Appellate Body reports. Accordingly, we decided to interview
a wide range of WTO legal experts to obtain their views on these
issues.
The most common concern identified by the experts with whom we spoke,
although a minority view, was about how the WTO was applying article
17.6(ii) in antidumping cases. Notwithstanding this concern, overall a
majority of the experts believed that the WTO had not exceeded its
authority in applying the standard of review in the trade remedy cases
we reviewed. Commenting on more general issues surrounding the WTO
trade remedy rulings, almost all of the experts believed that the
United States and other WTO members have received the same treatment in
trade remedy cases. In addition, a majority of the experts who
responded concluded that WTO decisions generally have not added to
obligations or diminished rights of WTO members and that it was
appropriate for the WTO to interpret vague and ambiguous provisions in
WTO agreements, sometimes referred to as "gap filling." However, a
significant minority of experts strongly disagreed with this view about
WTO members' obligations and rights and considered gap filling to be
inconsistent with several provisions of the Dispute Settlement
Understanding. Regarding specific rulings, a number of experts cited
some safeguard rulings as confusing and unclear.
In contrast to the majority views expressed above, the U.S. agencies
most involved in trade remedy activities believed that article 17.6(ii)
has been improperly applied in some trade remedy cases, mainly because
the WTO has not applied article 17.6(ii) in a way that allows for
upholding permissible interpretations of WTO members' domestic
agencies. They also believed that in certain trade remedy cases, the
WTO has found obligations and imposed restrictions on WTO members that
are not supported by the texts of the WTO trade remedy agreements.
Significant Minority Expressed Concerns about WTO Application of
Article 17.6(ii):
A common concern raised by a significant minority of experts with whom
we spoke was that the WTO was not properly applying the legal standard
of review in article 17.6(ii) of the Antidumping Agreement.
Specifically, these experts maintained that Appellate Body guidance
calling for panels to first apply international rules in the Vienna
Convention on the Law of Treaties to interpret provisions of the
Antidumping Agreement before they evaluate the domestic agencies' legal
determinations necessarily leads to only one interpretation.
Consequently, panels never reach the point of applying the part of
article 17.6(ii) that allows for multiple permissible interpretations
and upholding an agency determination that is based on one of these
interpretations.[Footnote 47] In fact, while several experts mentioned
specific rulings in which panels or the Appellate Body had upheld
domestic agency determinations as permissible, it was unclear whether
this was due to these bodies going through the article 17.6(ii)
analysis or solely because they agreed with the domestic agency. In
this regard, in the trade remedy cases we reviewed, no expert pointed
to a clear instance in which a panel first applied the Vienna
Convention, found several permissible interpretations, and then upheld
the agency determination because it was consistent with one of
them.[Footnote 48] One expert, who was a former U.S. negotiator in the
Uruguay Round, stated that U.S. negotiators in the round had not fully
appreciated how application of the Vienna Convention would limit the
possibility of panels or the Appellate Body finding multiple
permissible interpretations of the Antidumping Agreement.
Some experts also believed that panels and the Appellate Body have not
applied the legal standard of review in article 17.6(ii) in the
deferential way intended by the United States, as expressed in the U.S.
Statement of Administrative Action (SAA) accompanying the U.S. Uruguay
Round Agreements Act.[Footnote 49] The SAA describes article 17.6 as a
special standard of review analogous to the deferential standard
applied by U.S. courts in reviewing actions by the Commerce Department
and the ITC, commonly
referred to as the Chevron standard.[Footnote 50] Thus, from the U.S.
perspective, article 17.6 was intended to ensure that WTO panels
neither second-guess the factual conclusions of domestic agencies, even
when panels might have reached a different conclusion, nor rewrite,
under the guise of legal interpretation, the provisions of the
Antidumping Agreement.
Majority Said WTO Did Not Exceed Its Authority in Applying Standard of
Review:
Despite the concerns expressed above, the majority of the experts with
whom we spoke indicated that the panels and the Appellate Body
generally had not exceeded their authority in applying the standards of
review in articles 11 and 17.6 in the trade remedy cases we
reviewed.[Footnote 51] These experts indicated that panels and the
Appellate Body had properly applied article 11 in safeguards and
countervailing duty cases as well as the factual standard of review in
article 17.6(i) in antidumping cases. Several of this group even
questioned whether article 11 was intended to be a standard of review
provision at all and, if it was, that it did not intend the same level
of deference as article 17.6.[Footnote 52] Majority support for how
panels and the Appellate Body applied the legal standard in article
17.6(ii) included experts who thought the panels and the Appellate Body
had generally applied the article correctly and provided the right
amount of deference, those who believed the article was not
particularly deferential, and those who considered the article to
primarily set forth a method for interpreting provisions of the
Antidumping Agreement rather than for conferring deference. Finally, a
number of experts, including a few with divergent opinions about
whether the legal standard in article 17.6(ii) had been properly
applied, stated that evaluation of panel and Appellate Body decisions
should focus on their substantive rulings and not the technical issue
of standard of review.
A majority of experts also maintained that the United States was not
successful in getting the standard of review it wanted in the
Antidumping Agreement and that the SAA only expresses the U.S.'s view
about the intent of article 17.6. They pointed out that while the
United States was the main proponent for having a strongly deferential
standard included in the Antidumping Agreement,[Footnote 53] numerous
WTO members opposed the United States on this issue. Although the
experts agreed that the lack of written negotiating history makes it
difficult to determine how much deference article 17.6 was intended to
provide, a large number believed that the language that was ultimately
agreed to did not include the Chevron standard.[Footnote 54]
Large Majority Said All WTO Members Were Treated the Same in Trade
Remedy Cases:
Experts with markedly divergent views on other issues were in near
unanimous agreement that the United States generally was being treated
about the same as other WTO members in trade remedy cases. Although
several experts pointed out that the United States was the most
frequent defendant and was losing more often than other WTO members,
they believed that the panels and the Appellate Body had ruled against
other WTO members with the same frequency and in the same or similar
manner as they had for the United States. Several experts also were
emphatic in describing the WTO as a plaintiff's court in trade remedy
cases and pointed out that in nearly all trade remedy decisions and all
the safeguards decisions we reviewed, respondents were asked to take
some action--for example, to ensure that a safeguard measure was
applied consistent with the Safeguards Agreement. When asked why
respondents usually lose trade remedy cases, some experts cited a WTO
free trade bias or bias against trade remedies as the principal
reason.[Footnote 55] Several others said that WTO members only bring
trade remedy actions in the WTO that they are confident they can win.
As to why the United States was the most frequent defendant in trade
remedy cases, several experts mentioned the fact that the United States
was the biggest market as well as the biggest user of trade remedies.
In addition, several experts believed that some of the Commerce
Department's decisions to impose trade remedy measures were unfounded.
Majority Said No New Obligations or Diminished Rights, but Minority
Strongly Disagreed:
A majority of experts who responded to this issue agreed that panels
and the Appellate Body generally have not added to the obligations or
diminished the rights of the United States and other WTO members in
trade remedy cases. They believed panels and the Appellate Body
generally had ruled appropriately in these cases, including the rulings
on issues that the experts cited most frequently as being important and
controversial--zeroing, facts available,[Footnote 56] nonattribution,
unforeseen developments, and privatization.[Footnote 57] A number of
these experts believed that the panels and the Appellate Body had both
the authority and the need to interpret vague or ambiguous provisions,
or to fill gaps,[Footnote 58] in the trade remedy agreements when no
provision clearly deals with an issue. A number also cited article 3.2
of the Dispute Settlement Understanding, which calls for dispute
settlement to "clarify the . . . provisions of the [WTO] Agreements,"
as support for panel and Appellate Body interpretations of vague or
ambiguous provisions. Furthermore, a number stated that it is a common
and accepted practice for courts to interpret vague or ambiguous
provisions of laws and agreements, or to fill gaps, when the meaning of
a legal provision is unclear.
A significant minority of experts, however, strongly believed that
panel and Appellate Body findings on a number of important issues,
including those listed above, had added to obligations or diminished
the rights of the United States and other WTO members. For example,
some in this group believed that panels or the Appellate Body should
have upheld the domestic agency determinations on the antidumping
issues of zeroing, facts available, and nonattribution as permissible
under the legal standard of review in article 17.6(ii). In addition,
they contended that gap filling was prohibited by articles 3.2 and 19.2
of the Dispute Settlement Understanding, both of which preclude the
Dispute Settlement Body from adding to obligations or diminishing the
rights of WTO members as provided in the WTO agreements covered by
dispute settlement. Furthermore, they believed that the WTO had engaged
in improper gap filling in its rulings regarding the aforementioned
issues, including privatization. They said that WTO provisions on these
issues were unclear and that privatization was not specifically
referred to in the Subsidies and Countervailing Measures Agreement.
Finally, some experts concluded that it was improper for the panels and
the Appellate Body to rule on issues that the negotiating members had
intentionally left unclear. They believed that the proper way to deal
with vague and ambiguous language in the WTO agreements was through
additional negotiations rather than through panel or Appellate Body
rulings.
Experts Believed Some Safeguard Rulings Were Confusing and Unclear:
A substantial number of experts stated that WTO rulings on the
safeguard issues of causation and unforeseen developments were
confusing and difficult to follow. This group included experts with
sharply divergent views on other trade remedy issues. Specifically,
these experts believed that the lack of clarity in the rulings on the
causation issue of nonattribution has made it difficult for domestic
agencies to implement the rulings. Some in this group were concerned
that the rulings seemed to require a quantitative analysis of each
factor causing serious injury to domestic industry to ensure the
factors were not being improperly attributed to increased
imports,[Footnote 59] and several questioned whether domestic agencies
could perform this kind of analysis. The experts also had concerns
about how domestic agencies could implement the Appellate Body rulings
on the issue of unforeseen developments. Specifically, they were unsure
how WTO members would show that increased imports causing serious
injury resulted from developments they had not foreseen when they made
tariff concessions or assumed other obligations under GATT. A few
experts were surprised that the Appellate Body had resurrected the GATT
requirement on unforeseen developments, which they thought had been
abandoned and had not been specifically included in the Safeguards
Agreement.
U.S. Agency Positions on Standard of Review and Other Trade Remedy
Issues:
In its December 2002 report to Congress,[Footnote 60] the executive
branch concluded that, overall, the United States had fared well in WTO
dispute settlement, including in a number of trade remedy cases.
Nevertheless, the report raised concerns about how the WTO had applied
standard of review in trade remedy cases and stated that some rulings
were troubling in "their failure to recognize that agreement terms may
be susceptible of multiple, reasonable interpretations among which WTO
members may properly choose." The report specifically criticized the
Appellate Body ruling in United States--Antidumping Measures on Certain
Hot-Rolled Steel Products from Japan for how it had applied the legal
standard of review in article 17.6(ii).
The executive branch report also stated that in certain trade remedy
cases, the WTO had found obligations and imposed restrictions on WTO
members that were not supported by the texts of the WTO
agreements.[Footnote 61] The report mentioned the rulings on facts
available, unforeseen developments, nonattribution, and several others
as examples. The report qualified these criticisms by stating that not
all of the WTO findings it cited were based on a problematical
analytical approach or that the WTO would have necessarily found in
favor of the United States had the proper approach been used.
Nevertheless, the report emphasized that the problematic findings were
troubling due to their lack of grounding in the texts of the negotiated
agreements.
During the course of our work, the Commerce Department and ITC
officials reiterated these concerns. ITC officials indicated that they
do not agree that the WTO has properly applied standard of review in
trade remedy cases. Specifically, they stated that the WTO has applied
article 17.6(ii) of the Antidumping Agreement in a manner that raises a
question about whether the second sentence of the provision, requiring
the WTO to uphold domestic agency determinations that rest on
permissible interpretations of the Antidumping Agreement, has real
meaning. In these officials' view, the WTO has not allowed for more
than one permissible interpretation of the relevant provisions. In this
regard, the United States recently proposed that article 17.6 be
considered as a topic for discussion in the Negotiating Group on Rules
in the ongoing WTO negotiations. In its submission, the United States
stated that panels and the Appellate Body have not accepted WTO
members' reasonable, permissible interpretations of the Antidumping
Agreement.
ITC officials also stated that in some instances, the Appellate Body
had ruled incorrectly on important issues and created new obligations,
which do not appear in and are unsupported by the plain language of the
relevant agreements. One example involved the Appellate Body findings
on the nonattribution provision of the Safeguards Agreement. The ITC
also found it particularly significant that the WTO had enunciated
systemic requirements for this issue, as well as unforeseen
developments,[Footnote 62] even though they are not specifically
covered by U.S. law.
Agency Comments and Our Evaluation:
We requested comments on a draft of this report from the Secretary of
Commerce, the Chairman of the U.S. International Trade Commission, and
the U.S. Trade Representative (USTR). The Commerce Department and the
ITC provided written comments, which are reprinted in appendixes IV and
V. We obtained oral comments from USTR officials, including the
Assistant U.S. Trade Representative for Monitoring and Enforcement.
The Commerce Department had three areas of concern regarding our
report. First, it emphasized the potential future impact of WTO trade
remedy rulings on the U.S.'s ability to impose trade remedies, noting
that this potential is far more significant than these rulings' limited
impact to date. Commerce cited, in particular, the possible negative
ramifications of two WTO rulings. Specifically, it said that the ruling
on privatization could impact a significant number of U.S.
countervailing duty orders, and that as a result of the EU bed linen
ruling, the EU has recently challenged more than 20 U.S. antidumping
investigations and reviews. As a result of this increased emphasis, we
modified the sections of this report that present U.S. agency views on
the potential future ramifications of WTO decisions on the U.S.'s
ability to impose trade remedies. Second, Commerce raised concerns
regarding the composition of the group of legal experts we consulted
and our characterization of their views as "majority" and "minority."
However, we believe that our methodology for selecting these experts
was sound (see app. I). In addition, we believe that our report
sufficiently addresses the concerns of the minority of experts.
Nevertheless, we have made modifications to the relevant sections of
our report to ensure that majority positions and minority concerns are
presented in a balanced manner. Finally, Commerce expressed concern
that we did not adequately address the executive branch's views on the
WTO's application of standard of review and other trade remedy issues.
As a result, we modified our report to give more prominent treatment to
U.S. agency positions.
The ITC had two main areas of concern regarding the report. First, the
ITC said that the report understated the full effect of WTO rulings on
the ability of the United States to impose and maintain trade remedy
measures in that the full effect of WTO rulings likely has not yet been
realized, citing for example several systemic WTO requirements for
safeguard determinations. In response to this comment as well a similar
comment from the Commerce Department, we modified the relevant sections
of the report as discussed above and used examples that the ITC cited.
Second, the ITC did not agree that WTO panels and the Appellate Body
have properly applied the standard of review in article 17.6(ii) of the
Antidumping Agreement. In response to this concern, we have
incorporated the ITC's views in our report.
In addition, we obtained technical comments from the Commerce
Department and the ITC, which we have incorporated into the report as
appropriate. For example, Commerce noted that we had included
challenges to WTO members' sunset reviews in some of our statistics on
trade remedy measures. As a result, we eliminated the sunset review
challenges from our statistics.
USTR provided technical comments such as clarification of certain
terminology. For example, USTR noted that the term "domestic
determination" usually connotes a final decision by the appropriate
agency as to whether dumping has occurred or whether increased imports
have caused injury or are threatening injury to domestic industry.
Accordingly, we clarified our definition in this report and made other
technical changes as appropriate. USTR also noted that U.S. trade
remedy measures had been challenged more frequently than those of other
WTO members in part because U.S. trade remedy laws and investigations
are more transparent. We have added this point to our report.
:
We are sending copies of this report to interested congressional
committees, the U.S. Trade Representative, the Secretary of Commerce,
and the Chairman of the U.S. International Trade Commission. We will
also make copies available to others upon request. In addition, the
report will be available at no charge on the GAO Web site at http://
www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-4128. Other GAO contacts and staff
acknowledgments are listed in appendix VI.
Sincerely yours,
Loren Yager,
Director, International Affairs and Trade:
Signed by Loren Yager:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
The Ranking Minority Member of the Senate Committee on Finance asked us
to conduct a review of the World Trade Organization's (WTO) dispute
settlement activity during the past 8 years, focusing on trade remedy
disputes. Specifically, in this report we (1) identified the major
trends in WTO dispute settlement activity concerning trade remedies;
(2) analyzed the outcome of WTO rulings in completed trade remedy
cases; (3) assessed the major impacts of these rulings on WTO members'
laws, regulations, and practices and on their ability to impose trade
remedies; (4) identified the standards of review for trade remedy cases
and Appellate Body guidance on how they should be applied; and (5)
summarized legal experts' views and U.S. agencies' positions on
standard of review and other trade remedy issues.
To identify the major trends in dispute settlement activity during the
last 8 years, we developed a database containing all members' requests
for consultation (complaints) filed from 1995 through 2002. We obtained
the data for the database from the WTO Web site, including data on each
request for consultation; data on the complainant(s), defendant, and
complaint date; and a short title. To determine which disputes related
to trade remedies, we examined the short titles of the cases; the
initial complaint filed with the WTO; and WTO documents, including the
Update of WTO Dispute Settlement Cases, January 2003. Our analysis of
trade remedy cases focused exclusively on cases brought under the WTO
trade remedy agreements--the Antidumping Agreement, the Agreement on
Safeguards, the Subsidies and Countervailing Measures Agreement, and
parts of the General Agreement on Tariffs and Trade 1994.
To obtain the number 198 for formal dispute settlement cases filed with
the WTO from 1995 through 2002, we combined multiple complaints against
one WTO member on the same law, measure, or action into one distinct
case for the purposes of our analysis. We did this because multiple WTO
members can file complaints against one member. For example, 9 WTO
members filed complaints regarding 1 U.S. steel safeguard measure
imposed in March 2002. As a result, the 276 separate complaints filed
from 1995 through 2002 resulted in 198 distinct cases.
To determine which WTO members imposed the most trade remedy measures
from 1995 through 2002, we used WTO data that were based on the
notifications filed with the WTO by each member. We excluded challenges
to WTO members' sunset reviews in our data on trade remedy measures in
response to agency comments. For antidumping and countervailing duty
measures, we used summary data that the WTO Secretariat compiled.
Department of Commerce officials noted that these WTO data differ from
Commerce's data on U.S. antidumping and countervailing measures and
recommended that we use Commerce data. However, because the WTO is the
only source of comparable data on the use of trade remedy measures by
all WTO members, we ultimately used the WTO data. For safeguards, we
analyzed the information contained in the annual reports of the WTO
Committee on Safeguards. These reports included information on both
preliminary and definitive safeguard measures imposed.
To analyze the outcome of WTO rulings in the completed trade remedy
cases, we compiled statistics on panel and Appellate Body findings
about whether domestic agency determinations and members' laws were
found to be consistent or inconsistent with WTO trade remedy
provisions. We defined "completed" cases as those cases in which the
Dispute Settlement Body had adopted a panel or Appellate Body decision
as of December 31, 2002. To analyze WTO findings about domestic
determinations, for the most part, we reviewed the concluding findings
at the end of the panel and Appellate Body reports. When several
findings were included within a single paragraph in the concluding
findings, we generally counted each finding separately. In the several
instances in which concluding sections of panel reports did not clearly
indicate these findings, we obtained our numbers by evaluating the full
reports. For our statistics on findings about domestic agency
determinations, we did not distinguish between more important issues--
such as the causal relationship between increased imports and injury to
domestic industry--and those that seemed less important--for example,
notification requirements and certain evidentiary issues. To analyze
direct challenges to members' laws in the completed cases, we analyzed
the full panel and Appellate Body reports.
To assess the major impacts of the WTO rulings in the completed trade
remedy cases on members' laws, regulations, and practices, and on their
ability to impose trade remedies, we identified compliance actions
taken, or in the process of being taken, by WTO members as a result of
the rulings. First, we consulted the WTO Web site to find any and all
official documents filed in the completed trade remedy cases. WTO
members and relevant parties in the cases file such documents with the
WTO to report actions taken following the rulings and recommendations
of adopted panel and Appellate Body reports. Alternatively, some
documents indicate only agreements between the relevant parties for
compliance actions to be taken, or the status of any ongoing
negotiations regarding compliance. For cases where official
documentation regarding compliance actions was not found on the WTO Web
site, we searched the Dispute Settlement Body archives. We also
consulted U.S. agency officials on the one case in which the United
States was the complainant.
For the cases in which the United States was the defendant, we also
consulted officials from the Commerce Department, the U.S.
International Trade Commission (ITC), and the U.S. Trade Representative
(USTR). These officials provided us the most up-to-date information on
the status of bilateral negotiations and U.S. intentions for certain
completed cases where compliance information was not yet publicly
available. In addition, we monitored congressional Web sites to glean
information on the status of legislation in cases involving challenges
to U.S. laws. Finally, we obtained copies of the changes to one U.S.
regulation and two established practices from the Federal Register.
For cases not involving the United States, for the most part, we did
not consult with foreign government officials. We relied primarily on
official documents that WTO members and relevant parties had filed with
the WTO to report their compliance actions and on pertinent comments
from U.S. agency officials.
To identify the WTO standards of review for trade remedy cases, we
analyzed the standards and obtained the views of legal experts,
including practitioners and academics (see below). To identify how the
panels and the Appellate Body were interpreting and applying the
standards, we read the panel and Appellate Body reports for the trade
remedy cases completed from 1995 through 2002 as well as Appellate Body
reports for other relevant WTO dispute settlement cases. In reading
these reports, we identified Appellate Body guidance on how the
standards should be applied. Finally, we also read the provisions of
the Vienna Convention on the Law of Treaties that the Appellate Body
had identified as pertinent to how one of the standards should be
applied.
To obtain and summarize legal experts' views on WTO standard of review
and other trade remedy issues, we conducted structured interviews with
18 legal experts, including practitioners, academics, and advisers on
WTO-related trade remedy issues. In addition, we interviewed a current
WTO official and an European Union (EU) official; however, in response
to agency comments, we reviewed our decision rule on the composition of
our expert group and excluded the WTO official and EU representative
from our discussion of expert views, since we did not include U.S.
agency officials in this group.
To identify the legal experts for our study, we conducted literature
searches, read formal publications on WTO standard of review and trade
remedies, sought recommendations from other experts and the
International Trade Committee of the American Bar Association, and
attended seminars on issues surrounding standard of review and trade
remedies. Our main criteria for selecting the experts for our study
were that they (1) had past experience with WTO trade remedy cases; (2)
had been active in writing and/or speaking about issues pertaining to
WTO dispute settlement, including standard of review and trade
remedies; and (3) constituted a mix of experts representing or
affiliated with U.S. domestic interests, foreign interests, or both. We
did not choose experts on the basis of their expressed views, because
we did not believe that this was methodologically sound. To obtain the
views of the experts, we conducted structured interviews to ensure that
we asked all of the experts the same questions. We coded the answers to
key survey questions to help us analyze the experts' views and assess
the frequency with which particular views were held.
To write the case summaries, we consulted the WTO Web site and reviewed
the panel and Appellate Body reports for the 25 completed trade remedy
cases. We also reviewed the dispute settlement commentaries on the
www.WorldTradeLaw.net Web site.
We performed our work from September 2002 to July 2003 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Summaries of Completed WTO Trade Remedy Cases:
Between the inception of the World Trade Organization (WTO) in 1995 and
December 31, 2002, the WTO ruled on 25 cases involving the trade
remedies of antidumping, countervailing duties (CVD), and safeguards.
Table 3 lists the cases in order of their WTO dispute case number. It
is followed by a brief summary of each case that includes information
on the case's outcome and major issues.
Table 3: WTO Trade Remedy Dispute Settlement Cases Completed Between
1995 and December 31, 2002:
GAO case number: 1; Case name: Defendant - subject: Brazil -
Measures Affecting Desiccated Coconut; WTO dispute case number: DS
22; Circulation date of panel or Appellate Body report[A]: 02/21/1997.
GAO case number: 2; Case name: Defendant - subject: Guatemala -
Antidumping Investigation Regarding Portland Cement from Mexico; WTO
dispute case number: DS 60; Circulation date of panel or Appellate Body
report[A]: 11/02/1998.
GAO case number: 3; Case name: Defendant - subject: Korea -
Definitive Safeguard Measure on Imports of Certain Dairy Products;
WTO dispute case number: DS 98; Circulation date of panel or Appellate
Body report[A]: 12/14/1999.
GAO case number: 4; Case name: Defendant - subject: United States
- Antidumping Duty on Dynamic Random Access Memory Semiconductors
(DRAMS) of One Megabyte or Above Originating from Korea; WTO dispute
case number: DS 99; Circulation date of panel or Appellate Body
report[A]: 01/29/1999.
GAO case number: 5; Case name: Defendant - subject: Argentina -
Safeguard Measures on Imports of Footwear; WTO dispute case number:
DS 121; Circulation date of panel or Appellate Body report[A]: 12/14/
1999.
GAO case number: 6; Case name: Defendant - subject: Thailand -
Antidumping Duties on Angles, Shapes, and Sections of Iron or Non-Alloy
Steel and H-Beams from Poland; WTO dispute case number: DS 122;
Circulation date of panel or Appellate Body report[A]: 03/12/2001.
GAO case number: 7; Case name: Defendant - subject: Mexico -
Antidumping Investigation of High-Fructose Corn Syrup (HFCS) from the
United States; WTO dispute case number: DS 132; Circulation date of
panel or Appellate Body report[A]: 01/28/2000.
GAO case number: 8; Case name: Defendant - subject: United States
- Antidumping Act of 1916; WTO dispute case number: DS 136/162;
Circulation date of panel or Appellate Body report[A]: 08/28/2000.
GAO case number: 9; Case name: Defendant - subject: United States
- Imposition of Countervailing Duties on Certain Hot-Rolled Lead and
Bismuth Carbon Steel Products Originating in the United Kingdom; WTO
dispute case number: DS 138; Circulation date of panel or Appellate
Body report[A]: 05/10/2000.
GAO case number: 10; Case name: Defendant - subject: European
Union - Antidumping Duties on Imports of Cotton-Type Bed Linen from
India; WTO dispute case number: DS 141; Circulation date of panel or
Appellate Body report[A]: 03/01/2001.
GAO case number: 11; Case name: Defendant - subject: Guatemala -
Definitive Antidumping Measures on Grey Portland Cement from Mexico;
WTO dispute case number: DS 156; Circulation date of panel or Appellate
Body report[A]: 10/24/2000.
GAO case number: 12; Case name: Defendant - subject: United States
- Definitive Safeguard Measures on Imports of Wheat Gluten from the
European Communities; WTO dispute case number: DS 166; Circulation
date of panel or Appellate Body report[A]: 12/22/2000.
GAO case number: 13; Case name: Defendant - subject: United States
- Safeguard Measures on Imports of Fresh, Chilled, or Frozen Lamb Meat
from New Zealand and Australia; WTO dispute case number: DS 177/178;
Circulation date of panel or Appellate Body report[A]: 05/01/2001.
GAO case number: 14; Case name: Defendant - subject: United States
- Antidumping Measures on Stainless Steel Plate in Coils and Stainless
Steel Sheet and Strip from Korea; WTO dispute case number: DS 179;
Circulation date of panel or Appellate Body report[A]: 12/22/2000.
GAO case number: 15; Case name: Defendant - subject: United States
- Antidumping Measures on Certain Hot-Rolled Steel Products from Japan;
: WTO dispute case number: DS 184; Circulation date of panel or
Appellate Body report[A]: 07/24/2001.
GAO case number: 16; Case name: Defendant - subject: Argentina -
Definitive Antidumping Measures on Imports of Ceramic Floor Tiles from
Italy; WTO dispute case number: DS 189; Circulation date of panel or
Appellate Body report[A]: 09/28/2001.
GAO case number: 17; Case name: Defendant - subject: United States
- Measures Treating Export Restraints as Subsidies; WTO dispute case
number: DS 194; Circulation date of panel or Appellate Body report[A]:
06/29/2001.
GAO case number: 18; Case name: Defendant - subject: United States
- Definitive Safeguard Measures on Imports of Circular Welded Carbon
Quality Line Pipe from Korea; WTO dispute case number: DS 202;
Circulation date of panel or Appellate Body report[A]: 02/15/2002.
GAO case number: 19; Case name: Defendant - subject: United States
- Antidumping and Countervailing Measures on Steel Plate from India;
WTO dispute case number: DS 206; Circulation date of panel or Appellate
Body report[A]: 06/28/2002.
GAO case number: 20; Case name: Defendant - subject: Chile - Price
Band System and Safeguard Measures Relating to Certain Agricultural
Products; WTO dispute case number: DS 207; Circulation date of panel
or Appellate Body report[A]: 05/03/2002.
GAO case number: 21; Case name: Defendant - subject: Egypt -
Definitive Antidumping Measures on Steel Rebar from Turkey; WTO
dispute case number: DS 211; Circulation date of panel or Appellate
Body report[A]: 08/08/2002.
GAO case number: 22; Case name: Defendant - subject: United States
- Countervailing Measures Concerning Certain Products from the European
Communities ("Privatization"); WTO dispute case number: DS 212;
Circulation date of panel or Appellate Body report[A]: 12/09/2002.
GAO case number: 23; Case name: Defendant - subject: United States
- Countervailing Duties on Certain Corrosion-Resistant Carbon Steel
Flat Products from Germany ("Sunset"); WTO dispute case number: DS
213; Circulation date of panel or Appellate Body report[A]: 11/28/2002.
GAO case number: 24; Case name: Defendant - subject: United States
- Section 129(c)(1) of the Uruguay Round Agreements Act; WTO dispute
case number: DS 221; Circulation date of panel or Appellate Body
report[A]: 07/15/2002.
GAO case number: 25; Case name: Defendant - subject: United States
- Preliminary Determinations With Respect to Certain Softwood Lumber
From Canada; WTO dispute case number: DS 236; Circulation date of
panel or Appellate Body report[A]: 09/27/2002.
Source: GAO analysis of WTO data.
[A] In cases that concluded with the adoption of the panel report, the
circulation date of the panel report is listed. In all other cases, the
circulation date of the Appellate Body report is listed.
[End of table]
GAO Case Number 1: Brazil - Measures Affecting Desiccated Coconut (DS
22):
Complainant: Philippines[Footnote 63] Defendant: Brazil:
Nature of Complaint:
In June 1994, Brazil initiated a countervailing duty (CVD)
investigation to determine whether imports of desiccated coconut and
coconut milk from Côte d'Ivoire, Indonesia, Malaysia, the Philippines,
and Sri Lanka had been subsidized. Brazil imposed provisional CVDs on
imports of desiccated coconut from all of these countries except
Malaysia in March 1995 and final CVDs in August 1995.
The Philippines challenged the Brazilian CVDs under various provisions
of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the
World Trade Organization (WTO) Agreement on Agriculture. Brazil's
principal argument was that none of the WTO provisions relied upon by
the Philippines applies in this case because the Brazilian subsidy
investigation was initiated on the basis of an application received
prior to the date the WTO Agreement entered into force.
Outcome:
The Appellate Body upheld the panel finding that GATT 1994 provisions
on CVD investigations did not apply because this dispute involved
application of a Brazilian CVD measure based on an investigation
initiated prior to January 1, 1995--the date on which the WTO Agreement
entered into effect. Accordingly, the Appellate Body upheld the panel's
finding that the dispute was not properly before it.
Compliance Action:
No compliance action was necessary.
Table 4: Case 1 - Major Case Issue and Panel/Appellate Body Findings:
Major case issue: Whether GATT 1994 rules on CVD investigations,
particularly article VI, and the WTO Agreement on Subsidies and
Countervailing Measures (SCM Agreement) applied to the Philippines'
challenge of Brazil's CVD measures on desiccated coconut imports;
Panel findings: GATT 1994 rules on CVDs did not apply to this dispute
because the Brazilian investigation that led to the CVD measure was
initiated prior to the WTO Agreement's entering into effect for
Brazil; The imposition of CVDs must comply both with article VI of
GATT 1994 and the SCM Agreement. Article 32.3 of the SCM Agreement
indicates that it only applies to CVD investigations initiated pursuant
to applications made on or after the date of entry into force for a WTO
member of the WTO Agreement; Pursuant to a GATT Tokyo Round SCM
Committee decision, the Philippines could have invoked the Tokyo Round
SCM Code dispute settlement provisions to resolve this dispute;
Appellate Body findings: Upheld the panel; CVDs may only be imposed
in accord with article VI of GATT 1994 and the SCM Agreement. Article
VI cannot be applied independently of the SCM Agreement; Article
32.3 of the SCM Agreement clearly states that for CVD investigations,
the dividing line between the GATT 1947 system of arrangements and the
WTO Agreement is to be determined by the date on which the application
was made for the CVD investigation. The Tokyo Round SCM Committee was
to handle disputes arising out of CVD investigations initiated pursuant
to applications made prior to the date the WTO Agreement became
effective.
[End of table]
Source: GAO analysis of WTO panel and Appellate Body reports.
GAO Case Number 2: Guatemala - Antidumping Investigation Regarding
Portland Cement from Mexico (DS 60):
Complainant: Mexico[Footnote 64] Defendant: Guatemala:
Nature of Complaint:
Mexico challenged both the initiation of Guatemala's antidumping
investigation of imports of grey portland cement from Mexico and
various decisions and conduct of the Guatemalan domestic authority
during the investigation. Guatemala's principal claim was that Mexico's
panel request did not identify any of the three measures listed in
article 17.4 of the Antidumping Agreement (ADA), and therefore the
panel should not hear the claim.
Outcome:
The panel found that Guatemala had failed to comply with article 5.3 of
the ADA by initiating the antidumping investigation on the basis of
insufficient evidence of dumping, injury, and casual link between
dumping and injury. The panel also found that the matters referred to
in Mexico's panel request for establishment of a panel were properly
before it. The Appellate Body reversed the panel and determined that
the dispute was not properly before the panel because Mexico's panel
request did not identify the measure it was complaining about.
Consequently, it did not consider the panel's findings on article 5.3.
Compliance Action:
After the Appellate Body effectively dismissed this case, Mexico
brought the case again with a new panel request (see our case summary
11 of Guatemala - Definitive Antidumping Measures on Grey Portland
Cement from Mexico, DS 156). The new panel considered many of the same
issues that were involved in this case.
Table 5: Case 2 - Major Case Issues and Panel/Appellate Body Findings:
Major case issues: Whether article 17 of the ADA provides for a
coherent set of rules for dispute settlement specific to antidumping
cases that replaces the more general approach of the Dispute Settlement
Understanding (DSU); Panel findings: Article 17 of the ADA provides
for a coherent set of rules for dispute settlement specific to
antidumping cases that replaces the more general approach of the DSU;
Appellate Body findings: Reversed the panel; Only when a provision
of the DSU and a special or additional provision of another WTO
Agreement are mutually inconsistent can the special or additional
provision be read to prevail over the DSU provision.
Major case issues: Whether Mexico was required by article 6.2 of the
DSU and article 17 of the ADA to identify at least one of the three
antidumping measures in article 17.4 in its panel request--definitive
antidumping duties, acceptance of a price undertaking, or a provisional
measure; Panel findings: Mexico's panel request did not have to
identify one of the three types of measures in article 17.4; Article
17.4 is a "timing provision" establishing when a panel may be requested
but not establishing the appropriate subject of a request; A
formalistic requirement that Mexico identify one of the three types of
measures identified in article 17.4 would undermine the status of the
special dispute settlement rules in the ADA; Appellate Body findings:
Reversed the panel; In disputes under the ADA relating to the
initiation and conduct of an antidumping investigation, members must
identify in their panel requests one of the three measures listed in
article 17.4 of the ADA.
Major case issues: Whether it was appropriate for the panel to make
suggestions about how Guatemala might deal with its substantive
violation of the standards for initiation of an antidumping
investigation; Panel findings: Consistent with the authority in
article 19.1 of the DSU, it was appropriate for the panel to suggest
that Guatemala revoke its existing antidumping measure on imports of
Mexican cement; Appellate Body findings: Since the dispute was not
properly before the panel, the Appellate Body came to no conclusions
about whether the panel was right or wrong on this issue.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 3: Korea - Definitive Safeguard Measure on Imports of
Certain Dairy Products (DS 98):
Complainant: European Union (EU)[Footnote 65] Defendant: Korea:
Nature of Complaint:
The EU challenged Korea's imposition of a safeguard measure on imports
of skimmed milk powder preparations from the EU. The safeguard measure
was in the form of a quantitative restriction on imports of these dairy
products. The EU argued that Korea's safeguard measure was inconsistent
with various provisions of the Safeguards Agreement as well as article
XIX:1 of GATT 1994. Generally, the EU contended that Korea had not
shown that increases in imports resulted from "unforeseen
developments," had not examined all factors in its examination of
serious injury, and had not adequately considered the extent of
application of the safeguard measure.
Outcome:
The Appellate Body upheld several panel findings that Korea had acted
inconsistently with the Safeguards Agreement because of its
determinations regarding serious injury. The Appellate Body also
reversed a panel finding on the issue of "unforeseen developments."
Accordingly, it recommended that Korea bring its safeguard measure into
conformity with the Safeguards Agreement.
Compliance Action:
Korea reported to the WTO that it had effectively terminated the
safeguard measure on imports of the dairy products on May 20, 2000. By
lifting the safeguard measure, Korea considers that it has implemented
the recommendations and rulings of the Dispute Settlement Body (DSB).
Table 6: Case 3 - Major Case Issues and Panel/Appellate Body Findings:
Major case issues: Whether Korea was required to examine if increases
in imports were the result of "unforeseen developments" as described in
article XIX:1(a) of GATT 1994; Panel findings: Korea was not required
to examine whether import trends under investigation were the result of
"unforeseen developments."; The "unforeseen developments" clause in
article XIX:1(a) does not provide an independent basis for finding that
a safeguard measure violates WTO rules; Appellate Body findings:
Reversed the panel; Although article XIX:1(a) does not establish
independent conditions for application of a safeguard, "unforeseen
developments" must be demonstrated as a matter of fact for a safeguard
measure to be applied; The Appellate Body could not decide whether
Korea had violated article XIX:1(a) due to insufficient facts on the
record.
Major case issues: Whether Korea was required by article 5.1 of the
Safeguards Agreement to ensure that the safeguard applied was not more
restrictive than necessary to prevent or remedy serious injury and
facilitate adjustment; Panel findings: When members apply a safeguard
measure, they must (1) apply a measure no more restrictive than
necessary to prevent or remedy serious injury and facilitate adjustment
and (2) provide a reasoned explanation about how authorities reached a
conclusion that the measure satisfied all requirements of article 5.1;
; Korea violated article 5.1 by not including in its recommendations
and determinations an explanation of how it concluded that the measure
was necessary to remedy serious injury and facilitate adjustment of the
industry; Appellate Body findings: Upheld the panel finding that the
first sentence of article 5.1 imposes an obligation on a WTO member
applying a safeguard measure to ensure the measure is "commensurate
with the goals of preventing or remedying serious injury and of
facilitating adjustment."; Reversed the panel finding that article
5.1 requires members to explain how it ensures these goals are met when
making recommendations about application of a measure that is not a
quantitative restriction; Absent a factual record, the Appellate
Body could not determine whether Korea had violated the second sentence
of article 5.1.
Major case issues: How the standard of review under article 11 of the
WTO DSU should be applied to evaluations under article 4.2 of the
Safeguards Agreement; Panel findings: A panel should consider whether
a domestic authority (1) examined all facts in its possession (or facts
it should have in its possession) and (2) provided an adequate
explanation about how facts supported the determinations; Appellate
Body findings: Under article 11, a panel has a duty to examine and
consider all evidence before it, not just evidence submitted by one or
the other party, and to evaluate the relevance and probative force of
each piece of evidence.
Major case issues: Whether Korea's finding that serious injury occurred
was consistent with article 4.2(a) of the Safeguards Agreement; Panel
findings: Korea violated article 4.2(a) by not adequately examining all
serious injury factors; Appellate Body findings: Not appealed.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 4: United States - Antidumping Duty on Dynamic Random
Access Memory Semiconductors (DRAMS) of One Megabyte or Above
Originating from Korea (DS 99):
Complainant: Korea Defendant: United States:
Nature of Complaint:
Korea challenged the U.S.'s failure to revoke an antidumping order on
Korean dynamic random access memory semiconductors (DRAMS) of one
megabyte or above. Korea contended that the U.S. regulatory
standard[Footnote 66] under which it refused to revoke the antidumping
order with respect to two Korean producers violated the ADA. Korea also
challenged the Department of Commerce's rejection of certain cost
information and its application of the de minimis[Footnote 67] standard
during the administrative review of the antidumping order.
Outcome:
The panel found that the U.S. regulatory standard for revoking an
antidumping order was inconsistent with the ADA. However, the panel
also upheld several aspects of the U.S.'s application of its
antidumping laws. The panel recommended that the DSB request that the
United States bring its regulatory standard for revoking an antidumping
order, and the results of its third administrative review, into
conformity with its obligations under the ADA. The parties did not
appeal the panel findings.
Compliance Action:
The United States took several compliance actions as a result of the
panel's findings. The United States deleted the "not likely" criterion
from its regulation and replaced it with a requirement that the
Secretary of Commerce consider "whether the continued application of
the antidumping duty order is otherwise necessary to offset dumping."
Using this modified standard, the United States found that the
continued application of the dumping order was necessary to offset
dumping and, accordingly, did not revoke the antidumping order. Korea
asserted that these actions failed to comply with the DSB's
recommendations and rulings. During the compliance panel proceeding,
however, the United States revoked the antidumping order as a result of
the U.S. sunset review process, primarily because the petitioner
withdrew from the proceeding. The United States and Korea then notified
the DSB of a mutually agreed-upon solution to the dispute, and the
compliance panel proceeding was terminated.
Table 7: Case 4 - Major Case Issues and Panel Findings:
Major case issues: Whether the U.S. regulatory standard for revoking an
antidumping order, requiring the United States to find that the foreign
producer is "not likely" to sell products at less than foreign market
value,[A] violates article 11.2 of the ADA; Panel findings: The U.S.
regulatory standard requiring a finding that it is "not likely" that
the producer will sell the merchandise in the future at less than
foreign market value was inconsistent with article 11.2; The "not
likely" standard is not equivalent to the standard in article 11.2 that
requires the domestic authority to examine whether "injury would be
likely to continue or recur" if the dumping duty were removed.
Major case issues: Whether the U.S. rejection of certain cost data
submitted by a Korean firm violated article 2.2.1.1 of the ADA relating
to the calculation of costs; Panel findings: The U.S. rejection of the
data did not violate the ADA; Korea failed to establish that an
objective and impartial investigating authority could not properly have
found that the data did not reasonably reflect the costs associated
with the production and sale of DRAMS.
Major case issues: Whether the de minimis standard for antidumping
investigations in article 5.8 of the ADA also applies to duty
assessment procedures under article 9.3; Panel findings: The de
minimis standard in article 5.8 does not apply to duty assessments
under article 9.3.
Source: GAO analysis of the WTO panel report.
[A] The term "foreign market value" was later replaced with "normal
value.":
[End of table]
GAO Case Number 5: Argentina - Safeguard Measures on Imports of
Footwear (DS 121):
Complainant: European Union (EU)[Footnote 68] Defendant: Argentina:
Nature of Complaint:
The EU challenged Argentina's imposition of safeguards on imports of EU
footwear. The safeguard measure took the form of minimum specific
duties on these imports. For several years prior to this EU challenge,
Argentina had maintained various measures regarding imports of footwear
and other clothing and textiles. The EU contended that the safeguard
measure violated article XIX:1(a) of GATT 1994 and various provisions
of the Safeguards Agreement.
Outcome:
The Appellate Body upheld panel findings that Argentina's safeguard
investigation and determinations of increased imports, serious injury,
and causation were inconsistent with articles 2 and 4 of the Safeguards
Agreement, and thus there was no legal basis for applying safeguards.
As a result, it recommended that the DSB request that Argentina bring
its safeguard measures into conformity with its obligations under the
Safeguards Agreement.
Compliance Action:
Argentina indicated to the WTO in February 2000 that it intended to
implement the DSB's rulings and recommendations.
Table 8: Case 5 - Major Case Issues and Panel/Appellate Body Findings:
Major case issues: Whether safeguard measures that meet the
requirements of the Safeguards Agreement must also satisfy the
requirements of article XIX:1(a) of GATT 1994 with respect to
"unforeseen developments."; Panel findings: Safeguard measures that
meet the requirements of the Safeguards Agreement also satisfy the
requirements of article XIX:1(a) of GATT 1994 on "unforeseen
developments."; Appellate Body findings: Reversed the panel's
conclusion, but in view of other findings did not decide whether
Argentina demonstrated that increased imports occurred as a result of
"unforeseen developments."; The "unforeseen developments" clause
establishes certain "factual circumstances" that must be demonstrated
in a safeguard investigation.
Major case issues: Whether Argentina violated article 2 of the
Safeguards Agreement by including imports from MERCOSUR[A] countries in
its investigation of imports, injury, and causation, but excluding them
from application of the safeguards measure; Panel findings: Argentina
violated article 2 because members of a customs union, like MERCOSUR,
must apply a safeguard measure to imports from all sources considered
in its analysis of imports during the investigation; Appellate Body
findings: Reversed the panel finding that it was dealing with a
safeguard measure applied by MERCOSUR on behalf of a member state. The
safeguard was applied by Argentina, not MERCOSUR; Upheld the panel's
parallelism analysis and concluded that Argentina could not impose
safeguards only on non-MERCOSUR sources on the basis of investigation
of imports from all sources, including imports from MERCOSUR member
states.
Major case issues: Whether the panel correctly applied the proper
standard of review in article 11 of the DSU to the EU claims under
articles 2 and 4 of the Safeguards Agreement; Panel findings: The task
of a panel is not to conduct a de novo review of Argentina's
investigation; The panel reviewed the full file and noted portions
of the record relied on by Argentina; Appellate Body findings: The
panel correctly stated and applied the appropriate standard of review
set forth in article 11; The panel did not conduct a de novo review
of the evidence or substitute its analysis and judgment for that of the
Argentine authorities.
Major case issues: Whether Argentina's examination of increased
imports, serious injury, and causation was consistent with articles 2
and 4 of the Safeguards Agreement; Panel findings: Argentina's
examination of increased imports, serious injury, and causation were
inconsistent with articles 2 and 4; In its causation analysis under
article 4.2(b), Argentina did not adequately consider factors operating
within the market other than increased imports, so that injury caused
by these other factors could be identified and properly attributed;
Appellate Body findings: Upheld the panel's conclusions, but disagreed
with the panel's interpretation of the requirement in article 2.1 on
increased imports; It was not reasonable for the panel to examine
the trend in imports over a 5-year period. Article 2.1 requires that
the increase in imports must have been recent, sudden, sharp, and
significant enough, both quantitatively and qualitatively, to cause or
threaten to cause serious injury.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
AMERCOSUR is a South American customs union composed of Argentina,
Brazil, Paraguay, and Uruguay. Bolivia, Chile, and Peru are associate
members.
GAO Case Number 6: Thailand - Antidumping Duties on Angles, Shapes, and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland (DS 122):
Complainant: Poland[Footnote 69] Defendant: Thailand:
Nature of Complaint:
Poland challenged Thailand's imposition of antidumping duties on
imports of certain Polish steel products. The final antidumping duty
was a percentage of a determined value of these products. Poland
contended that Thailand's injury and dumping determinations were
inconsistent with various provisions of the ADA.
Outcome:
The Appellate Body affirmed the panel's findings that Thailand had
violated the ADA with regard to Thailand's findings about injury to
domestic industry and the causal relationship between dumped imports
and injury to domestic industry. Although the Appellate Body also
upheld the panel's application of the standard of review in article
17.6(ii) of the ADA, it reversed a panel interpretation of article
17.6(i). As a result of these rulings, the Appellate Body recommended
that the DSB request that Thailand bring its antidumping measure into
conformity with its obligations under the ADA.
Compliance Action:
Thailand reexamined aspects of the injury determination that the panel
and Appellate Body had found to be inconsistent with the ADA and found
that the antidumping measure should be maintained. Subsequently, in
December 2001, Thailand informed the WTO that it had fully implemented
the DSB's recommendations. In January 2002, Poland and Thailand
announced they had reached agreement that this case should no longer be
on the DSB's agenda.
Table 9: Case 6 - Major Case Issues and Panel/Appellate Body Findings:
Major case issues: Whether Thai authorities had sufficient evidence of
dumping, injury, and the causal link between them to initiate an
investigation under article 5.2 of the ADA; Panel findings: Poland did
not establish that the contents of the application were insufficient to
meet the requirements of article 5.2; Appellate Body findings: Not
appealed.
Major case issues: Whether Thailand's injury determination was based on
an "objective examination" of the facts, as required by articles 3.1
and 17.6(i) of the ADA, since it included evaluation of confidential
information that was not made available to the parties; Panel
findings: Confidential government documents, which had not been made
available to the parties, could not be reviewed by the panel;
Articles 3.1 and 17.6(i) dictate that the reasoning supporting an
injury determination must be formally or explicitly stated in the
documentary record of the investigation to which interested parties
have access and that the factual basis relied upon by the authorities
must be discernible from those documents; Appellate Body findings:
Reversed the panel; Investigating authorities may rely on
confidential information not shared with the parties; The "facts"
referred to in article 17.6(i) embrace all facts, confidential and
nonconfidential, that are made available to the authorities of the
importing member.
Major case issues: Whether Thailand was required to consider all of
the 15 injury factors listed in article 3.4 of the ADA in making an
injury determination; Panel findings: The text of article 3.4 is
mandatory, and each of the 15 individual factors listed must be
evaluated. Therefore, Thailand acted inconsistently with article 3.4 of
the ADA; Appellate Body findings: Upheld the panel's interpretation of
article 3.4 and its application of the standard of review in article
17.6(ii); Since article 3.4 requires consideration of all its listed
factors, the panel could not have found Thailand's argument, that not
all factors need to be considered, a permissible interpretation under
article 17.6(ii).
Major case issues: Whether Thailand was required to consider all the
factors listed in article 3.5 of the ADA with respect to demonstrating
a casual relationship between dumped imports and injury to the domestic
industry; Panel findings: Thailand was not required to consider all
the factors listed in article 3.5 since that list is merely
illustrative; Thailand had considered the factors raised by Poland;
Appellate Body findings: Not appealed.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 7: Mexico - Antidumping Investigation of High-Fructose
Corn Syrup (HFCS) from the United States (DS 132):
Complainant: United States[Footnote 70] Defendant: Mexico:
Nature of Complaint:
The United States challenged Mexico's imposition of antidumping duties
on imports of two grades of high-fructose corn syrup (HFCS) from the
United States. The final antidumping measure imposed duties of up to
$175.50 per metric ton of imported HFCS and ordered the collection of
duties retroactive to the imposition of provisional duties. The United
States contended that both the initiation of the antidumping
investigation and the determination of threat of injury were
inconsistent with the ADA.
Outcome:
Although the panel upheld the way in which Mexico initiated its
antidumping investigation, it concluded that Mexico's imposition of the
antidumping measure was inconsistent with various provisions of the
ADA. As a result, the panel recommended that the DSB request that
Mexico bring its antidumping measure into conformity with its
obligations under the ADA. The panel findings were not appealed.
Compliance Action:
Mexico revised its antidumping determination following the panel
report.[Footnote 71] However, in a subsequent proceeding, Mexico again
concluded that the imports of HFCS constituted a threat of material
injury to the domestic sugar industry. As a result, the United States
requested a compliance review under article 21.5 of the DSU. In the
article 21.5 proceeding, the Appellate Body upheld panel findings that
Mexico's revised determination was inconsistent with various provisions
of the ADA. According to U.S. officials, Mexico revoked the antidumping
measure in May 2002.
Table 10: Case 7 - Major Case Issues and Panel Findings:
Major case issues: Whether Mexico had enough evidence of a threat of
injury or of a causal link between dumped imports and injury to
initiate an antidumping investigation as provided by article 5.3 of the
ADA; Panel findings: A panel's role under the standard of review in
article 17.6(i) is to examine whether an unbiased and objective
investigating authority evaluating the evidence and information before
it could properly have determined that sufficient evidence of dumping,
injury, and causal link existed to justify initiating the antidumping
investigation. A panel's role is not to newly evaluate the evidence and
information; An unbiased and objective investigating authority could
have found sufficient evidence to justify initiation of an antidumping
investigation under article 5.3; Under the standard of review in
article 17.6(i), as well as article 17.5(ii), in evaluating the
consistency of the initiation with article 5.3, a panel may only
consider what was actually available to the investigating authority at
the time of initiation of the antidumping investigation.
Major case issues: Whether in reaching a determination that a threat of
material injury exists, Mexico had to consider factors set forth in
both articles 3.7 and 3.4 of the ADA, which deal respectively with
threat of material injury and the impact of dumped imports on the
domestic industry; Panel findings: A threat of injury determination
requires that the factors in both articles 3.7 and 3.4 be considered;
; The Mexican investigating authority's determination of threat of
material injury failed to adequately address the factors set forth in
article 3.4 of the ADA concerning the impact of dumped imports on the
domestic industry. Accordingly, its determination of threat of material
injury was inconsistent with the ADA.
Major case issues: Whether Mexico properly concluded in its final
determination that the relevant domestic industry for purposes of its
threat of injury determination was Mexican sugar producers, instead of
the industry as a whole; Panel findings: Mexico ignored possible
effects of imports on the portion of the domestic industry's production
sold in the household sector and ignored the effect of the household
sector on the condition of the domestic producers of sugar.
Accordingly, Mexico failed to make a determination of threat of
material injury to the domestic industry as a whole, consistent with
the requirements of article 3 of the ADA.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 8: United States - Antidumping Act of 1916 (DS 136/
162):
Complainants: European Union (EU), Japan[Footnote 72] Defendant: United
States:
Nature of Complaint:
Japan and the EU separately challenged section 801 of the Revenue Act
of 1916 (1916 Act)[Footnote 73] as being inconsistent with article VI
of GATT 1994 and various provisions of the ADA. Section 801 of the 1916
Act allows for private claims against, and criminal prosecutions of,
parties that import or assist in importing goods into the United States
at a price substantially less than actual market value or wholesale
price. The Japan and EU challenges were to the law itself rather than
to its implementation.
Outcome:
The Appellate Body affirmed the panel conclusions that antidumping
legislation, including the 1916 Act, can be directly challenged, absent
any particular application. It also upheld the panel findings that the
1916 Act itself was inconsistent with article VI of GATT 1994 and
various provisions of the ADA. Accordingly, the Appellate Body
recommended that the United States bring the 1916 Act into conformity
with its obligations under these agreements.
Compliance Action:
The United States continues to work to enact legislation to implement
the WTO ruling. Although a number of bills have been introduced in the
Congress calling for repeal of section 801 of the 1916 Act, to date no
legislation has been passed. As of July 15, 2003, the latest bills were
H.R. 1073, introduced in the House of Representatives on March 4, 2003;
S. 1080, introduced in the Senate on May 19, 2003; and S. 1155,
introduced in the Senate on May 23, 2003. The bills are somewhat
different in that the repeals under H.R. 1073 and S. 1155 would not
affect pending cases, whereas the S. 1080 repeal would apply to them.
Table 11: Case 8 - Major Case Issues and Panel/Appellate Body Findings:
Major case issues: Whether panels have jurisdiction to hear challenges
of antidumping law, absent any specific application of the law; Panel
findings: The panel had jurisdiction to hear direct challenges to the
1916 Act; Appellate Body findings: Upheld the panel; GATT and WTO
case law firmly establish that members may directly challenge
legislation. Nothing is inherent in antidumping legislation that would
distinguish it from other types of legislation for these purposes.
Major case issues: Whether the 1916 Act constitutes a mandatory or
discretionary law within WTO and GATT practice; Panel findings: The
1916 Act is mandatory; The discretion enjoyed by the United States
Department of Justice about whether to initiate a case is not the kind
of discretion to transform the 1916 Act into discretionary
legislation; Appellate Body findings: Upheld the panel; The
relevant discretion for purposes of distinguishing between mandatory
and discretionary legislation is discretion vested in the executive,
and not the judicial, branch of government.
Major case issues: Whether article VI of GATT 1994 and the ADA apply to
the 1916 Act; Panel findings: These WTO provisions apply to the 1916
Act; Appellate Body findings: Upheld the panel; Article VI and the
ADA apply to any specific action against dumping. The civil and
criminal proceedings and penalties provided for in the 1916 Act are
specific actions against dumping.
Major case issues: Whether the 1916 Act is inconsistent with article VI
of GATT 1994 and various provisions of the ADA; Panel findings: The
1916 Act violates various requirements of article VI and the ADA;
The 1916 Act violates article VI:2 of GATT 1994 by providing for
imposition of fines or imprisonment or for recovery of treble damages;
Appellate Body findings: Upheld the panel; Article VI and the ADA
limit permissible responses to dumping to definitive antidumping
duties, provisional measures, and price undertakings. To the extent
that the 1916 Act provides for civil and criminal proceedings and
penalties, it is inconsistent with these obligations.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 9: United States - Imposition of Countervailing Duties
on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom (DS 138):
Complainant: European Union (EU)[Footnote 74] Defendant: United States:
Nature of Complaint:
The United States imposed CVDs on imports of certain hot-rolled lead
and bismuth carbon steel products originating in the United Kingdom, as
a result of alleged subsidies[Footnote 75] the British Government
granted to British Steel Corporation, a state-owned company, between
1977 and 1986. The British Government began the privatization of
British Steel in 1986 and completed it in 1988. The Commerce Department
found the sale to be at arm's length for fair market value and
consistent with commercial considerations. Notwithstanding these
factors, the Commerce Department imposed CVDs on these United Kingdom
imports, initially in 1993 and in subsequent annual reviews, on the
grounds that a certain proportion of the subsidies granted to British
Steel had passed through to the new entities. The EU claimed that the
U.S. methodology[Footnote 76] in calculating the amount of these
subsidies was inconsistent with several provisions of the WTO SCM
Agreement.
Outcome:
The Appellate Body upheld the panel finding that the financial
contributions provided to British Steel did not confer a benefit on the
new owners. In doing so, the Appellate Body also upheld a panel finding
that faulted the Commerce Department's methodology in presuming that a
benefit had been provided to the new owners. Accordingly, it found that
the U.S. CVDs were inconsistent with the SCM Agreement and recommended
that the DSB request that the United States bring its measures into
conformity with its obligations under that agreement. The panel
suggested that the United States take all appropriate steps, including
revision of its administrative practices, to prevent a violation of the
SCM Agreement, but the Appellate Body did not make this specific
recommendation.
Compliance Action:
Prior to the issuance of the Appellate Body report, the Commerce
Department revoked the CVD measure in response to a request from the
U.S. industry. However, the Commerce Department changed its methodology
as a result of related domestic litigation.[Footnote 77]
Table 12: Case 9 - Major Case Issues and Panel/Appellate Body Findings:
Major case issues: Whether the panel should have applied the standard
of review in article 17.6 of the ADA to a dispute under Part V of the
SCM Agreement; Panel findings: Article 11 is the standard of review
that should be applied in cases involving Part V of the SCM Agreement.
Article 17.6 only applies in cases brought under the ADA;
Ministerial Declaration on Dispute Settlement under article VI of the
ADA[A] is not mandatory and simply recognizes the need for consistent
resolution of antidumping and CVD disputes but does not mandate any
action; Appellate Body findings: Upheld the panel; The Decision on
Review of Article 17.6,[B] which provides that article 17.6 shall be
reviewed after a period of 3 years with a view to considering its
general application, supports the conclusion that the article 17.6
standard applies only to disputes arising under the ADA.
Major case issues: Whether Commerce Department administrative reviews
should have examined whether a benefit accrued to the new owners of
British Steel; Panel findings: The Commerce Department should have
examined whether there was a benefit; Irrebuttable presumption in
U.S. CVD law that nonrecurring subsidies pass through to a new owner
violates the SCM Agreement; Appellate Body findings: Upheld the
panel; Given changes in ownership leading to creation of the new
entity, the Commerce Department was required to examine whether a
benefit accrued to the new owners; Disagreed with the panel's view
that the method for establishing the existence of a benefit is always
the same for the original investigation and an administrative review.
Major case issues: Whether a benefit was provided to the new owners as
a result of the contributions made to British Steel; Panel findings:
Because the privatization was done through an arm's length, fair market
value transaction, subsidies provided to British Steel did not
constitute a benefit to the new owners; Appellate Body findings:
Upheld the panel.
Major case issues: Whether the panel exceeded its mandate by finding
that no benefit was conferred on the new owners of British Steel;
Panel findings: No benefit was conferred; Appellate Body findings:
Upheld the panel; Panel acted within the scope of its DSU mandate to
resolve this issue.
Source: GAO analysis of WTO panel and Appellate Body reports.
[A] The full name is the Ministerial Declaration on Dispute Settlement
Pursuant to the Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994 or Part V of the Agreement
on Subsidies and Countervailing Measures.
[B] The full name is the Decision on Review of Article 17.6 of the
Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994.
[End of table]
GAO Case Number 10: European Union - Antidumping Duties on Imports of
Cotton-Type Bed Linen from India (DS 141):
Complainant: India[Footnote 78] Defendant: European Union (EU):
Nature of Complaint:
India challenged the EU's imposition of antidumping duties on imports
of various types of cotton bed linens from India. Due to the high
number of domestic producers involved in its investigation, the EU
established a sample of domestic producers consisting of 17 of the 35
companies identified as the EU industry. The dumping duties that were
imposed differed in amount depending on the exporter in question. India
argued that the imposition of antidumping duties was inconsistent with
various provisions of the ADA. One of the principal issues involved the
EU's practice of zeroing in calculating antidumping margins.
Outcome:
The Appellate Body affirmed the panel's finding that the EU's practice
of zeroingwas inconsistent with the ADA. The Appellate Body also
reversed several panel findings and concluded that the EU had acted
inconsistently with the ADA in calculating amounts for administrative,
selling, and general costs and profits in its investigation. As a
result, the Appellate Body recommended that the DSB request that the EU
bring its antidumping measure into conformity with its obligations
under the ADA.
Compliance Action:
After the DSB adopted the Appellate Body report, the EU established
lower dumping margins for Indian imports of bed linens. Although it
also concluded that dumped imports from India were still causing
material injury to the EU industry, the EU suspended application of the
duties for these imports. In a subsequent proceeding, the EU determined
that there was a causal link between dumped imports from India and
material injury to the EU industry, but the EU continued to suspend
imposition of the antidumping duties. Because India believed that the
EU had not complied with the recommendations of the DSB, it brought a
proceeding under article 21.5 of the DSU contesting compliance.
Although the panel in the article 21.5 proceeding determined that the
EU had implemented the recommendation of the DSB, the Appellate Body
reversed and found that the EU was still acting inconsistently with the
ADA. Accordingly, it recommended that the DSB request that the EU bring
its antidumping measure into conformity with that agreement.
Table 13: Case 10 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the EU violated the ADA by converting
negative dumping margins to zero in establishing overall margins of
dumping; Panel findings: The EU acted inconsistently with article
2.4.2 of the ADA by calculating margins of dumping through a
methodology that included zeroing of negative price differences; The
dumping calculation can only be for the product as a whole and not for
individual transactions concerning that product or discrete models of
that product; By using zeroing for some models, the EU failed to
carry out a comparison with all transactions, as required by article
2.4.2; Appellate Body findings: Upheld the panel; The EU clearly
identified cotton-type bed linen as the product under investigation;
In determining a dumping margin for a product, article 2.4.2 refers to
a comparison of all comparable transactions. By not offsetting dumping
margins, the EU did not take into account export transactions involving
models of cotton-type bed linen that were not dumped. This inflated the
margin of dumping; Export transactions involving types or models
falling within the scope of a like product are "comparable export
transactions" within the meaning of article 2.4.2.
Major case issues: Whether the panel failed to apply the legal standard
of review in article 17.6(ii) of the ADA by not finding that the EU's
zeroing practice was a permissible interpretation; Panel findings: In
accord with the provisions of the Vienna Convention governing treaty
interpretation, the panel looked first to the ordinary meaning of the
phrase "a comparison of a weighted average normal value with a weighted
average of all comparable export transactions" in article 2.4.2, in its
context and in light of its object and purpose, in determining whether
zeroing was permitted; Appellate Body findings: The panel applied the
standard of review in article 17.6(ii); The panel viewed the EU
interpretation of article 2.4.2 of the ADA, allowing it to use zeroing,
as impermissible. Thus, the panel was not faced with a choice among
multiple permissible interpretations that, under article 17.6(ii),
would have required it to give deference to the EU interpretation.
Major case issues: Whether the EU's methodology for determining amounts
for administrative, selling, and general costs and for profit, in
constructing normal value, was proper under article 2.2.2(ii) of the
ADA; Panel findings: The EU's methodology was consistent with article
2.2.2(ii); The method for calculating amounts for administrative,
selling, and general costs and profits under article 2.2.2(ii) may be
applied where there is data for only one other exporter or producer;
Appellate Body findings: Reversed the panel; Method for calculating
amounts for administrative, selling, and general costs and profits can
only be used if data relating to more than one other exporter or
producer are available.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 11: Guatemala - Definitive Antidumping Measures on Grey
Portland Cement from Mexico (DS 156):
Complainant: Mexico[Footnote 79] Defendant: Guatemala:
Nature of Complaint:
In 1999, Mexico challenged Guatemala's imposition of an antidumping
measure on imports of portland cement from Mexico. The measure was in
the form of an antidumping duty of 89.54 percent that was imposed on
these imports. In its challenge, Mexico contended that the initiation
and conduct of the antidumping investigation and the imposition of the
measure violated article VI of GATT 1994 and various provisions of the
ADA.
Mexico's challenge was a follow-up to an earlier Mexican challenge to
Guatemala's imposition of antidumping duties on imports of the same
product (see case summary 2). Although the panel in that case ruled
that Guatemala had acted inconsistently with several provisions of the
ADA and recommended that Guatemala revoke the dumping order, the
Appellate Body reversed the panel and found that the dispute was not
properly before the panel.
Outcome:
The panel determined that Guatemala did not properly determine that
there was sufficient evidence to justify initiation of the antidumping
investigation. It also found that Guatemala did not properly determine
that the imports under investigation were being dumped, that the
domestic producer of cement in Guatemala was being injured, or that the
imports were the cause of the injury. Accordingly, it concluded that
Guatemala had acted inconsistently with various provisions of the ADA.
Under the authority provided in article 19.1 of the DSU, the panel
recommended that Guatemala revoke its antidumping measure on these
imports. However, the panel rejected a Mexican request that the panel
recommend that Guatemala refund previously collected antidumping
duties. The panel findings were not appealed.
Compliance Action:
In December 2000, Guatemala informed the WTO that it had removed the
antidumping measures in question and complied with its recommendations.
Table 14: Case 11 - Major Case Issues and Panel Findings:
Major case issues: Whether the panel should perform a de novo review of
the evidence under the standard of review in article 17.6(i) of the
ADA; Panel findings: It is not the panel's role under article 17 to
perform a de novo review of the evidence that was before the
investigating authority; The panel must determine whether an
unbiased and objective investigating authority evaluating the evidence
before it at the time of the investigation could properly have made the
determinations Guatemala made; A panel is not to examine any new
evidence that was not part of the record of the investigation.
Major case issues: Whether Guatemala had sufficient evidence to justify
initiation of the antidumping investigation, consistent with article
5.3 of the ADA; Panel findings: An objective and unbiased
investigating authority could not have properly determined that there
was sufficient evidence of dumping and threat of injury to justify
Guatemala's initiating an antidumping investigation under article 5.3.
Major case issues: Whether Guatemala informed the Mexican exporter of
the essential facts that would be taken into account in imposing the
definitive antidumping measure, as required by various provisions in
article 6.9 of the ADA; Panel findings: Guatemala's disclosing to
Mexico the essential facts forming the basis of its preliminary
antidumping determination and offering to provide interested parties
with copies of all information in its file were not sufficient to
satisfy the requirements of article 6.9; Article 6.9 is intended to
allow exporters a fair opportunity to comment on the important issues
in an investigation after the record is closed to new facts. An
interested party will not know whether a particular fact is important
unless the investigating authority has explicitly identified it as one
of the essential facts.
Major case issues: Whether Guatemala was entitled to rely on the best
information available, as permitted by article 6.8 of the ADA, for
calculating normal value because the Mexican exporter refused to
cooperate in the investigation; Panel findings: Guatemala was not
entitled to rely on the best information available. Guatemala did not
act as an objective and impartial investigating authority in finding
that the Mexican exporter significantly impeded Guatemala's
investigation because it objected to Guatemala's including
nongovernmental experts with a conflict of interest in its verification
team; Although there are consequences under article 6.8 when
interested parties fail to cooperate with an investigating authority,
they do not apply here since the Guatemalan authority did not act in a
reasonable, objective, and impartial manner.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 12: United States - Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities (DS 166):
Complainant: European Union (EU)[Footnote 80] Defendant: United States:
Nature of Complaint:
The EU challenged a United States safeguard measure imposed on imports
of wheat gluten[Footnote 81] from the EU. The safeguard measure
consisted of a quantitative restriction on these imports for 3 years.
The United States excluded products from Canada, a U.S. NAFTA[Footnote
82] partner, and from certain other WTO members from the application of
the safeguard. The EU contended that the safeguard measure violated
provisions of the Safeguards Agreement and GATT 1994. The EU complaints
were directed at the U.S.'s serious injury determination, its
causation[Footnote 83] analysis, and its findings about the
relationship between the members included in its investigation and
those covered by the safeguard measure.
Outcome:
The Appellate Body found that the U.S.'s safeguard measure was applied
inconsistently with the Safeguards Agreement and GATT 1994 and
recommended that the DSB request that the United States bring the
measure into conformity with those agreements. Although the Appellate
Body upheld part of the panel findings on serious injury, it reversed
the panel findings on another serious injury issue and on an important
aspect of the panel's causation analysis. In addition, the Appellate
Body agreed with the panel that the United States inappropriately
excluded imports from Canada from its safeguard measure after including
such imports in its injury investigation.
Compliance Action:
The safeguard measure expired in June 2001.
Table 15: Case 12 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the United States was required to examine
only the relevant factors listed in article 4.2(a) of the Safeguards
Agreement in evaluating serious injury to a domestic industry; Panel
findings: The United States need only consider factors other than those
in article 4.2(a) that are clearly raised by the interested parties in
the investigation; Appellate Body findings: Reversed the panel; The
United States must evaluate all relevant factors, not just those raised
by interested parties.
Major case issues: Whether the causation standard in article 4.2(b) of
the Safeguards Agreement requires that increased imports alone cause
serious injury to the domestic industry; Panel findings: Increased
imports alone must cause serious injury; Appellate Body findings:
Reversed the panel; Domestic authorities must only find a causal
link between increased imports and serious injury that shows a genuine
and substantial relationship of cause and effect between the imports
and injury.
Major case issues: Whether the United States, consistent with article
4.2(b) of the Safeguards Agreement, adequately explained that injury to
the domestic industry from factors other than increased imports was not
attributed to increased imports; Panel findings: Did not fully analyze
this issue; Appellate Body findings: The United States did not
adequately show that injury caused to the domestic industry by
increases in average capacity to produce wheat gluten was not
attributed to increased imports.
Major case issues: Whether the United States properly excluded Canadian
imports from the safeguard measure after including such imports in its
investigation to determine whether serious injury to the domestic
industry had occurred; Panel findings: The United States was not
justified in excluding imports from Canada from its safeguard measure;
The United States failed to consider whether non-Canadian imports
themselves caused serious injury; Appellate Body findings: Upheld the
panel; Although the United States examined imports from Canada
separately, it did not establish that imports from the other sources
satisfied the conditions for application of a safeguard measure.
Major case issues: Whether the panel properly applied the standard of
review in article 11 of the DSU in evaluating factors dealing with
serious injury, as required by article 4.2(a) of the Safeguards
Agreement; Panel findings: The panel applied the standard of review to
evaluating four factors; Appellate Body findings: The panel properly
applied article 11 to three factors, but violated article 11 regarding
the fourth factor--"profits and losses"--by improperly relying on
supplementary information the United States provided to the panel that
was not part of the domestic proceeding.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 13: United States - Safeguard Measures on Imports of
Fresh, Chilled, or Frozen Lamb Meat from New Zealand and Australia (DS
177/178):
Complainants: Australia, New Zealand[Footnote 84] Defendant: United
States:
Nature of Complaint:
Australia and New Zealand challenged a U.S. safeguard measure imposed
on imports of fresh, chilled, and frozen lamb meat from New Zealand and
Australia. The measure was in the form of a tariff rate quota[Footnote
85] that was to span 3 years. The safeguard measure did not apply to
imports from Canada, Mexico, certain other U.S. trading partners, and
developing countries. Australia and New Zealand contended that the
safeguard measure violated various provisions of the Safeguards
Agreement and GATT 1994. Their complaints were directed at U.S.
findings about the definition of the domestic lamb meat industry, the
existence of serious injury, and the causal relationship between
increased imports and injury to the domestic lamb meat industry.
Outcome:
The Appellate Body found that the United States safeguard measure was
applied inconsistently with the Safeguards Agreement and GATT 1994 and
recommended that the DSB request that the United States bring its
measure into conformity with those agreements. Although the Appellate
Body upheld a number of important panel findings--including those
involving the definition of the domestic lamb meat industry, serious
injury, and a part of the panel's causation analysis--it reversed the
panel's interpretation of the causation requirements in the Safeguards
Agreement. The Appellate Body also concluded that the panel incorrectly
applied the standard of review in article 11 in evaluating the U.S.'s
determination about the existence of a threat of serious injury.
Compliance Action:
In August 2001, the United States decided to end the application of the
safeguard measure on imports of lamb meat, effective in November 2001.
Table 16: Case 13 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the United States violated article XIX:1(a)
of GATT 1994 by failing to demonstrate, as a matter of fact, the
existence of "unforeseen developments" prior to applying a safeguard
measure; Panel findings: Found a violation; Investigating
authorities must clearly examine the existence of "unforeseen
developments" and come to a reasoned conclusion about it; Appellate
Body findings: Upheld the panel finding though it didn't agree with all
of the panel's reasoning; Failure to address "unforeseen
developments" is not surprising. U.S. legal measures do not obligate it
to examine them in its investigation into the situation of a domestic
industry.
Major case issues: Whether the United States appropriately defined the
domestic industry in its safeguard investigation by including growers
and feeders of live lambs; Panel findings: Found the U.S. definition
improper; An enterprise can only be considered a producer of goods
it actually makes. Growers and feeders of live lambs are producers of
live lambs, not lamb meat; Appellate Body findings: Upheld the panel;
Input products can only be included in defining the domestic industry
if they are "like or directly competitive" with the end products.
Major case issues: Whether the panel appropriately interpreted and
applied the standard of review in article 11 in its evaluation of the
U.S. determination that a threat of serious injury to the domestic
industry existed; Panel findings: The panel's task was limited to
reviewing the U.S. threat of injury determination and examining whether
the determination provided an adequate explanation of how the facts
supported it. The panel should not conduct a new review of the
evidence; Appellate Body findings: Upheld the panel's interpretation
of the standard of review, but found that the panel did not apply it
properly in examining whether the United States provided a reasoned and
adequate explanation of how the facts supported its determination that
a threat of serious injury existed.
Major case issues: Whether the U.S. examination of causation was
consistent with article 4.2(b) of the Safeguards Agreement; Panel
findings: United States violated article 4.2(b) by applying a
"substantial cause"[ ][STANDARD] d and by failing to ensure that the
threat of serious injury caused by other factors was not attributed to
increased imports; Increased imports alone must be sufficient to
cause serious injury; Appellate Body findings: Upheld the panel
finding but reversed its interpretation that increased imports alone
must cause, or threaten to cause, serious injury; Since the United
States did not provide a meaningful explanation of the injurious
effects of six factors it considered, it was impossible to determine
whether injury caused by those factors was attributed to increased
imports.
Source: GAO analysis of WTO panel and Appellate Body reports.
[A] The panel explained that under the U.S. standard, the U.S.
International Trade Commission examines whether imports are an
important cause of injury and no less important than any other single
cause.
[End of table]
GAO Case Number 14: United States - Antidumping Measures on Stainless
Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea (DS
179):
Complainant: Korea[Footnote 86] Defendant: United States:
Nature of Complaint:
Korea challenged several aspects of the U.S. antidumping investigation
and measures on imports of stainless steel plate in coils (plate) and
stainless steel sheet and strip (sheet) from Korea. Specifically, Korea
challenged the U.S. treatment of currency conversions and of sales to
U.S. companies that failed to pay for the imports due to bankruptcy.
Finally, Korea challenged the U.S. calculation of the dumping margin.
Outcome:
The panel found several aspects of the U.S. investigation to be
inconsistent with the ADA. It found that the currency conversions in
the sheet investigation were inconsistent with the ADA, though it also
found that the conversions in the plate investigation were consistent
with the ADA. The panel also found the U.S. treatment of sales for
which payment was never received and its use of multiple averaging
periods in its calculation of dumping margins were inconsistent with
the ADA. Accordingly, the panel recommended that the United States
bring its antidumping duties on Korean steel plate and sheet into
compliance with the ADA. The panel findings were not appealed.
Compliance Action:
As of April 2003, the antidumping orders were still in effect.
According to officials from the Commerce Department, the United States
made some revisions in its calculation of dumping margins in this case.
Table 17: Case 14 - Major Case Issues and Panel Findings:
Major case issues: Whether the U.S. actions regarding currency
conversions violated the ADA; Panel findings: The U.S. treatment of
currency conversions in the stainless steel plate investigation
complied with the ADA. However, in the sheet investigation, the United
States acted inconsistently with the ADA by performing unnecessary
currency conversions.
Major case issues: Whether the United States treatment of sales for
which payment was never received due to a company's bankruptcy violated
article 2.4 of the ADA; Panel findings: The United States acted
inconsistently with article 2.4 of the ADA by improperly adjusting for
unpaid sales.
Major case issues: Whether the U.S. use of multiple averaging periods
for comparing prices--by dividing the period of investigation into two
averaging periods to take into account a major devaluation of the
Korean won--violated articles 2.4.2, 2.4.1, and 2.4 of the ADA; Panel
findings: The U.S.'s use of multiple averaging periods in this
investigation was inconsistent with the requirement of article 2.4.2 to
compare a "weighted average normal value with a weighted average of all
comparable export transactions." However, the U.S.'s use of multiple
averaging periods was not inconsistent with article 2.4.1 or the first
sentence in the chapeau of article 2.4 of the ADA.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 15: United States - Antidumping Measures on Certain
Hot-Rolled Steel Products from Japan (DS 184):
Complainant: Japan[Footnote 87] Defendant: United States:
Nature of Complaint:
Japan challenged the U.S.'s imposition of antidumping duties on imports
of hot-rolled steel products from Japan. Japan claimed that certain
provisions of U.S. antidumping laws, regulations, and administrative
procedures were inconsistent with the ADA. For example, Japan
challenged the U.S.'s application of "facts available" and adverse
facts as inconsistent with its ADA obligations. Japan also challenged
the U.S.'s statutory method[Footnote 88] for calculating an "all
others" rate as inconsistent with the ADA.
Outcome:
The Appellate Body upheld panel findings of U.S. violations relating to
the use of facts available, adverse facts, calculation of all other
rates, and application of the arm's-length test.[Footnote 89] The
Appellate Body also reversed the panel finding on the issue of
nonattribution without specifically finding against the United States
on that issue. Although the Appellate Body upheld a panel finding that
United States law on captive production was consistent with the ADA, it
reversed the panel's finding that the United States had applied the law
properly. As a result of the findings against the United States, the
Appellate Body recommended that the DSB request that the United States
bring its measures into conformity with the ADA. The
Appellate Body also made important statements about the standard of
review in article 17.6 of the ADA.[Footnote 90]
Compliance Action:
In November 2002, the United States completed a new antidumping
determination that implemented the recommendations and rulings of the
DSB. As a result of the changes made to the dumping margin
calculations, the dumping margins for all three companies and all
others were reduced.
The United States also revised its rules regarding its arm's-length
test to determine if sales are "in the ordinary course of trade." The
United States continues work to implement the recommendations and
rulings regarding the U.S. antidumping statutory provision on the "all
others rate." The United States and Japan agreed to extend the deadline
for implementation to December 2003, or until the end of the first
session of the next Congress, whichever is earlier.
Table 18: Case 15 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the United States violated article 6.8 and
annex II of the ADA by using facts available instead of certain
information from two companies submitted after the expiration of the
deadline for such information; Panel findings: The United States acted
inconsistently with the ADA because an objective and unbiased
investigating authority could not have concluded the two companies
failed to provide necessary information within a reasonable period of
time; Appellate Body findings: Upheld the panel, but on the basis of
modified reasoning.
Major case issues: Whether the United States violated article 6.8 and
annex II of the ADA by using certain adverse information because a
company did not provide information the United States had requested;
Panel findings: The United States acted inconsistently with the ADA by
using certain adverse information because the use of adverse facts is
only appropriate when a party does not cooperate in an investigation;
An unbiased and objective investigating authority could not have
found that the Japanese company failed to cooperate; Appellate Body
findings: Upheld the panel.
Major case issues: Whether the U.S.'s statutory methodology for
calculating a dumping margin for exporters and producers was not
individually investigated--the "all others rate"--and its application
violated article 9.4 of the ADA; Panel findings: U.S. law governing
calculation of a dumping margin for all other exporters, and its
application, was inconsistent with article 9.4 of the ADA because it
required consideration of margins that were based, in part, on facts
available; Appellate Body findings: Upheld the panel.
Major case issues: Whether the United States "captive production"
law[A] is, on its face, and, as applied, inconsistent with the ADA;
Panel findings: The captive production law is not on its face or as
applied inconsistent with the ADA; The U.S. International Trade
Commission (ITC) made an affirmative injury or threat of injury
determination whether they applied the captive production provision or
not; Appellate Body findings: Upheld the panel with regard to the
challenge to the captive production law, but reversed the panel with
respect to its application; The captive production provision does
not require an exclusive focus on the merchant market, nor does it
exclude an equivalent examination of the captive market; The ITC
provided no adequate explanation about why it failed to examine the
merchant market without also examining the captive market in a
comparable manner, and therefore acted inconsistently with articles 3.1
and 3.4 of the ADA.
Major case issues: Whether the U.S.'s application of the arm's-length
test was inconsistent with article 2.1 of the ADA; Panel findings:
U.S. application of the arm's-length test violated the ADA because it
did not rest on a permissible interpretation of the phrase "sales in
the ordinary course of trade."; Appellate Body findings: Upheld the
panel finding on the basis of modified reasoning.
Major case issues: Whether the U.S.'s reliance on downstream sales
between parties affiliated with an investigated exporter and
independent purchasers to calculate normal value was inconsistent with
article 2.1 of the ADA; Panel findings: The United States acted
inconsistently with article 2.1 of the ADA by using in its calculation
of normal value, certain downstream sales made by an investigated
exporter's affiliates to independent producers; Normal value is to
be determined on the basis of the prices of sales made by the
investigated companies themselves, in the ordinary course of trade;
Appellate Body findings: Reversed the panel; Reliance by the United
States on downstream sales to calculate normal value rested upon an
interpretation of article 2.1 of the ADA that, in principle, is
permissible following application of the rules of treaty interpretation
in the Vienna Convention.
Major case issues: Whether the United States violated article 3.5 of
the ADA by failing to ensure that injury caused by factors other than
dumped imports was not attributed to the dumped imports; Panel
findings: The United States did not violate article 3.5 of the ADA
because it did not attribute injury actually caused by other factors to
dumped imports; Appellate Body findings: Reversed the panel reasoning
without specifically finding against the United States;
Investigating authorities must separate and distinguish the injurious
effects of other factors from the injurious effects of dumped imports.
Source: GAO analysis of WTO panel and Appellate Body reports.
[A] Section 771(7)(C)(iv) of the Tariff Act of 1930, as amended. This
provision distinguishes between the segment of the market consisting of
commercial shipments on the open market and the captive segment of the
market, which refers to internal transfers of the product that
generally do not enter the open market because the product is used by
an integrated producer to manufacture a downstream product. Domestic
producers whose production is captive, therefore, do not compete
directly with importers because their imports generally are not used in
the captive production of the downstream product. Japan argued that the
captive production provision ignores the fact that a significant part
of the domestic industry--captive production--is shielded or protected
from the effects of allegedly dumped imports.
[End of table]
GAO Case Number 16: Argentina - Definitive Antidumping Measures on
Imports of Ceramic Floor Tiles from Italy (DS 189):
Complainant: European Union (EU)[Footnote 91] Defendant: Argentina:
Nature of Complaint:
The EU challenged Argentina's imposition of antidumping measures on
imports of ceramic floor tiles from Italy. The antidumping measures
took the form of specific antidumping duties that were based on the
difference between the actual import price and a designated minimum
export price, whenever the former was lower than the latter. The EU
claimed that the antidumping measures were inconsistent with various
provisions of the ADA. Among other things, the EU maintained that
Argentina disregarded important information provided by exporters,
failed to allow for differences in physical characteristics between
models of tiles exported to Argentina and those sold in Italy, and did
not inform Italian exporters of important facts that formed the basis
for the decision to apply antidumping measures.
Outcome:
The panel found that Argentina acted inconsistently with various
provisions of the ADA and upheld most of the EU claims. As a result,
the panel recommended that Argentina bring its antidumping measures
into conformity with its obligations under the ADA. The panel findings
were not appealed.
Compliance Action:
In May 2002, Argentina informed the DSB that on April 24, 2002, it had
revoked the antidumping measure at issue in this case.
Table 19: Case 16 - Major Case Issues and Panel Findings:
Major case issues: Whether Argentina acted inconsistently with article
6.8 and annex II of the ADA by calculating dumping margins on the basis
of facts available and disregarding, in whole or in part, information
submitted to the Argentine investigating authority by Italian tile
exporters; Panel findings: Argentina acted inconsistently with article
6.8 and annex II of the ADA by (1) in large part disregarding exporter
information used for determining normal value and export prices; (2)
not informing the exporters why it rejected the information; (3) not
providing exporters with an opportunity to provide further explanations
of questions asked, within a reasonable period; and (4) not giving, in
any published determinations, the reasons for rejection of evidence or
information; In applying the standard of review in article 17.6(i),
the panel found that the Argentine authority failed to perform an
objective and unbiased evaluation of the facts by apparently deciding
to disregard, in large part, the information provided by the
exporters.
Major case issues: Whether Argentina acted inconsistently with article
2.4 of the ADA by failing to make due allowance for physical
differences affecting price comparability between the various models of
tiles exported to Argentina and those sold domestically; Panel
findings: An objective and unbiased evaluation of the facts of this
case would have required Argentina to make additional adjustments for
physical differences affecting price comparability. Therefore,
Argentina acted inconsistently with article 2.4.
Major case issues: Whether Argentina acted inconsistently with article
6.9 of the ADA by failing to disclose to the exporters the "essential
facts" under consideration that formed the basis for the Argentina
decision about whether to apply definitive antidumping measures; Panel
findings: Argentina violated article 6.9 by failing to inform the
exporters of the "essential facts" under consideration; The
exporters could not have been aware, simply by reviewing the complete
record of the investigation, that evidence submitted by petitioners and
derived from secondary sources, rather than from facts the exporters
submitted, would form the primary basis for the determination of the
existence and extent of dumping.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 17: United States - Measures Treating Export Restraints
as Subsidies (DS 194):
Complainant: Canada[Footnote 92] Defendant: United States :
Nature of Complaint:
Canada directly challenged a number of U.S. legal measures[Footnote 93]
that it argued required the United States to treat export
restraints[Footnote 94] as financial contributions, and thus potential
subsidies,[Footnote 95] in violation of the SCM Agreement. Canada
argued that export restraints could result in providing subsidies to
other products that used or incorporated the restricted product when
the domestic price of the restricted product was affected by the
restraint. Canada's challenge was only to U.S. legal measures and not
to a particular instance in which an export restraint had been the
subject of a CVD investigation.
Outcome:
The panel found against Canada and concluded that U.S. CVD law is not
inconsistent with the SCM Agreement; U.S. law does not require that
export restraints be treated as financial contributions and thus
subsidies. In addition, the panel suggested that three of the legal
measures Canada contested could not be challenged independently of the
relevant U.S.
statute.[Footnote 96] To facilitate its analysis of the challenge to
the U.S. legal measures, the panel first concluded that export
restraints, as defined in the dispute, do not constitute financial
contributions within the meaning of the SCM Agreement. The panel
findings were not appealed.
Compliance Action:
No compliance action was necessary.
Table 20: Case 17 - Major Case Issues and Panel Findings:
Major case issues: Whether export restraints can be considered
"financial contributions," and thus subsidies, within the meaning of
article 1.1 of the SCM Agreement (Definition of a Subsidy); Panel
findings: Export restraints, as defined in this dispute, do not
constitute financial contributions, and thus subsidies, within the
meaning of article 1.1; Export restraints in this case cannot be
considered government-entrusted or government-directed provision of
goods; Rejects U.S. approach that to the extent that an export
restraint causes an increased domestic supply of the restrained good--
in effect, it is a subsidy.
Major case issues: Whether U.S. law requires the treatment of export
restraints as financial contributions, in conflict with article 1.1 of
the SCM Agreement; Panel findings: Section 771(5) of the Tariff Act,
as read in light of the Statement of Administrative Action (SAA)
accompanying the Uruguay Round Agreements Act and the preamble to the
U.S. CVD regulations, does not mandate the treatment of export
restraints as financial contributions; Section 771(5) does not
specifically address export restraints. The SAA and preamble do not
require the Commerce Department to interpret section 771(5) as
requiring that export restraints be treated as financial contributions.
Moreover, Canada did not show that the Commerce Department practice
required export restraints to be treated as financial contributions.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 18: United States - Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line Pipe from Korea (DS
202):
Complainant: Korea[Footnote 97] Defendant: United States:
Nature of Complaint:
Korea challenged the U.S. imposition of a safeguard measure on imports
of certain line pipe from Korea. The safeguard measure that was imposed
was in the form of a duty increase for 3 years. The measure applied to
imports from all WTO members except Canada and Mexico. Korea maintained
that parts of the U.S. investigation as well as the safeguard measure
itself violated provisions of the Safeguards Agreement and GATT 1994.
Outcome:
The panel and the Appellate Body found several aspects of the U.S.
safeguard measure to be inconsistent with provisions of the Safeguards
Agreement and GATT 1994. This included U.S. determinations about
causation. The Appellate Body also reversed several panel findings
about exclusion of certain WTO members from the safeguard measure and
the extent of application of the measure, which resulted in findings
against the United States. The Appellate Body also reversed the panel
on one of its injury findings, which resulted in upholding a United
States determination. As a result of the findings against the United
States, the Appellate Body recommended that the DSB request that the
United States bring its measure into conformity with the Safeguards
Agreement and GATT 1994.
Compliance Action:
In July 2002, the United States and Korea agreed on several steps to
implement the recommendations of the DSB. They agreed that the United
States would increase the amount of imports exempt from additional
tariffs, beginning in September 2002 and ending in March 2003. The
measure then expired in March 2003.
Table 21: Case 18 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the United States improperly excluded Canada
and Mexico from application of the safeguard measure after including
them in its analysis of whether serious injury occurred; Panel
findings: Korea failed to show that the United States had violated the
Safeguards Agreement by excluding Mexico and Canada from the measure;
Appellate Body findings: Reversed the panel; The United States
violated articles 2 and 4 of the Safeguards Agreement by excluding
Canada and Mexico from the safeguard without providing a reasoned and
adequate explanation that imports from other sources by themselves
satisfied the conditions for applying the safeguard.
Major case issues: Whether the United States adequately explained that
the injury to the domestic industry caused by factors other than
increased imports was not attributed to increased imports; Panel
findings: The United States violated article 4.2(b) of the Safeguards
Agreement by not adequately explaining how it ensured that injury
caused by other factors was not attributed to increased imports; The
ITC's "more important cause of injury" standard does not satisfy the
requirements of article 4.2(b); Appellate Body findings: Upheld the
panel.
Major case issues: Whether Korea made a prima facie case that the
United States imposed a safeguard measure beyond the extent necessary
to prevent or remedy serious injury and to facilitate adjustment;
Panel findings: Korea failed to make a prima facie case; Appellate
Body findings: Reversed the panel; The United States violated
article 5.1 of the Safeguards Agreement by applying the line pipe
measure beyond the extent necessary.
Major case issues: Whether U.S. determination of "serious injury or
threat of serious injury" was consistent with articles 3.1 and 4.2(c)
of the Safeguards Agreement; Panel findings: The United States
violated articles 3.1 and 4.2 (c) of the Safeguards Agreement by not
explicitly finding that increased imports either (1) have caused
serious injury or (2) threaten to cause serious injury; Appellate Body
findings: Reversed the panel; The ITC's determination of serious
injury or threat of serious injury was consistent with the Safeguards
Agreement; Articles 3.1 and 4.2(c) do not require a discrete
determination either of serious injury or threat of serious injury.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 19: United States - Antidumping and Countervailing
Measures on Steel Plate from India (DS 206):
Complainant: India[Footnote 98] Defendant: United States:
Nature of Complaint:
India challenged several aspects of the U.S. antidumping investigation
for imports of steel plate from India. Specifically, India challenged
the U.S. rejection of certain sales information and its reliance on
facts available in its investigation. India further challenged U.S.
statutory provisions[Footnote 99] governing the use of "facts
available" and the U.S. treatment of India as a developing country.
Outcome:
The panel upheld the U.S. statutory provisions governing the use of
"facts available," but found that the United States had not provided a
legally sufficient justification for rejecting some sales information
during its investigation. Accordingly, the panel recommended that the
DSB request that the United States bring its antidumping measure into
conformity with its obligation under the ADA. The panel also found that
the U.S. "practice" governing total facts available is not a "measure"
that can violate the ADA. The panel findings were not appealed.
Compliance Action:
In February 2003, the United States informed the DSB that it had
implemented the WTO's ruling by issuing a second determination
regarding antidumping duties imposed on imports of steel plate from
India. Also in February 2003, the United States and India came to an
agreement regarding the procedure to be followed if India believes that
the United States has not fully complied with the findings and
recommendations of the DSB.
Table 22: Case 19 - Major Case Issues and Panel Findings:
Major case issues: Whether the U.S. rejection of certain sales
information and its reliance completely on "facts available" violated
article 6.8 and annex II of the ADA; Panel findings: The United States
acted inconsistently with article 6.8 and annex II of the ADA because
it did not provide a legally sufficient justification for rejecting
certain sales data from the Indian producer and instead relied entirely
on "facts available" when calculating dumping margins.
Major case issues: Whether the U.S. statutory provisions governing the
use of "facts available" are inconsistent with article 6.8 and annex II
of the ADA; Panel findings: U.S. statutory provisions do not on their
face require the investigating authority to act inconsistently with
article 6.8 and annex II of the ADA.
Major case issues: Whether the United States failed to give "special
regard" to India as a developing country under article 15 of the ADA;
Panel findings: The United States did not act inconsistently with
article 15 of the ADA because the article imposes "no specific or
general obligation" on members to take any particular action when
considering the application of antidumping measures to developing
country members.
Major case issues: Whether the U.S. "practice" related to "total facts
available" is a "measure" that can violate the ADA; Panel findings:
The U.S. "practice" is not a separate measure that can independently
give rise to a WTO violation.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 20: Chile - Price Band System and Safeguard Measures
Relating to Certain Agricultural Products (DS 207):
Complainant: Argentina[Footnote 100] Defendant: Chile:
Nature of Complaint:
Argentina made two distinct challenges to Chilean restrictions on
imports of Argentine wheat, wheat flour, sugar, and edible vegetable
oils. Thus, Argentina challenged both Chile's price band
system,[Footnote 101] which Chile applied to calculate tariff rates on
these imports, and its imposition of safeguard measures on these
imports. In certain situations, the use of Chile's price band system
resulted in tariff rates higher than the bound tariff rate in Chile's
WTO schedule. Chile also used its price band system to calculate the
safeguard measures it imposed on the Argentine imports. Argentina
claimed (1) that Chile's price band system violated GATT 1994 and the
WTO Agreement on Agriculture and (2) that Chilean safeguards violated
various provisions of the Safeguards Agreement as well as GATT 1994.
Argentina's safeguards challenges were directed at how Chile evaluated
increases in imports, the causal connection between imports and injury
to Chile's domestic industry, and the scope of the safeguard measures.
Outcome:
With respect to the safeguards issues, the panel determined that Chile
had violated various provisions of the Safeguards Agreement and GATT
1994. Nevertheless, the panel did not make a recommendation regarding
removal of the safeguard measures because they had been removed before
the panel published its report. Although the panel findings on
safeguards were not appealed, the Appellate Body upheld panel findings
that Chile's price band system was inconsistent with GATT 1994 and the
Agreement on Agriculture. As a result, the Appellate Body recommended
that the DSB request that Chile bring its price band system into
conformity with its obligations under the Agreement on Agriculture.
Compliance Action:
No action was required with regard to the safeguard measures. Chile's
compliance with regard to its price band system involves the WTO
Agreement on Agriculture and is due by December 23, 2003.
Table 23: Case 20 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the panel violated article 11 of the DSU by
finding that the duties resulting from Chile's price band system were
inconsistent with the second sentence of article II:1(b) of GATT 1994;
Panel findings: The duties called for under Chile's price band system
are inconsistent with both the first and second sentences of article
II:1(b); Appellate Body Decisions: Reversed the panel finding with
respect to the second sentence of article II:1(b) because Argentina had
not made any claim under that sentence; Although the panel acted in
good faith, by making a finding on a claim that was not before it, it
did not make an objective assessment of the matter and, thus, acted
inconsistently with article 11 of the DSU; In making an objective
assessment under article 11, a panel is also obligated to ensure that
due process is respected.
Major case issues: Whether Chile demonstrated that its safeguard
measures were applied as a result of "unforeseen developments," as
required by article XIX:1(a) of GATT 1994; Panel findings: Chile
violated article XIX:I(a) by failing to demonstrate that the safeguard
measures were applied as the result of "unforeseen developments.";
"Unforeseen developments" is a circumstance that must be demonstrated
as a matter of fact; Appellate Body Decisions: Not appealed.
Major case issues: Whether Chile showed sudden and recent increases in
imports of products that justified imposing safeguard measures; Panel
findings: Chile acted inconsistently with articles 2.1 and 4.2(a) of
the Safeguards Agreement by failing to find a sudden and recent
increase in imports of products; Appellate Body Decisions: Not
appealed.
Major case issues: Whether Chile limited its safeguard measures to
remedying serious injury to and facilitating adjustment for its
domestic industry, as required by article 5.1 of the Safeguards
Agreement; Panel findings: Chile violated article 5.1 by not ensuring
that its safeguards were only applied to the extent necessary to
prevent or remedy serious injury and facilitate adjustment; Chile's
use of the price band system to calculate safeguards was improper;
Appellate Body Decisions: Not appealed.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 21: Egypt - Definitive Antidumping Measures on Steel
Rebar from Turkey (DS 211):
Complainant: Turkey[Footnote 102] Defendant: Egypt:
Nature of Complaint:
Turkey challenged Egypt's imposition of antidumping duties on imports
of steel rebar from Turkey. The antidumping duties imposed ranged from
about 23 percent to 61 percent, depending on the exporter. Turkey
contended that Egypt's determinations of injury and dumping and the
causal relationship between the dumped imports and injury to domestic
injury were inconsistent with the ADA. A number of Turkey's claims
involved questionnaires that the Egyptian investigating authority sent
to respondent companies requesting information about sales prices and
the cost of producing rebar.
Outcome:
Although the panel upheld 19 determinations of the Egyptian
investigating authority, it found that Egypt had violated articles 3.4
and 6.8 of the ADA. Accordingly, the panel recommended that Egypt bring
its definitive antidumping measure on imports of steel rebar from
Turkey into compliance with the ADA. The panel findings were not
appealed.
Compliance Action:
In November 2002, Egypt and Turkey informed the WTO that they had
agreed Egypt would implement the DSB's recommendations and rulings by
July 31, 2003. In May 2003, Egypt reported to the WTO that it was
reexamining the dumping calculations of two Turkish companies, and the
general injury assessment, in light of this case.
Table 24: Case 21 - Major Case Issues and Panel Findings:
Major case issues: Whether the panel should engage in a new--de novo--
review of the facts submitted to Egypt; Panel findings: The standard
of review in article 17.6(i) of the ADA precludes a de novo review by
the panel; It was necessary for the panel to undertake a detailed
review of the evidence submitted by Egypt to determine whether an
objective and unbiased investigating authority could have reached the
determinations that Turkey challenged; The panel would not consider
evidence that was not before the Egyptian investigating authority
because this could be construed as a de novo review.
Major case issues: Whether Egypt appropriately resorted to "facts
available" with regard to five Turkish exporters, as permitted by
article 6.8 and Annex II of the ADA; Panel findings: Egypt
appropriately resorted to facts available with regard to three Turkish
exporters in calculating costs of production. An unbiased and objective
investigating authority could have found that the three exporters
failed to provide the necessary information Egypt requested; Egypt
did not appropriately resort to facts available with regard to two
exporters. Although Egypt received information from the two exporters
that it had identified as being necessary to be provided, it still
found that the exporters had failed to provide the necessary
information. Egypt also did not inform the exporters of this finding
and, before resorting to the use of "facts available," did not give the
exporters the required opportunity to provide further explanations.
Major case issues: Whether Egypt failed to evaluate all of the factors
listed in article 3.4 of the ADA, which deals with the examination of
dumped imports on the domestic industry; Panel findings: Although
Egypt gathered data on all of the factors listed in article 3.4, it
failed to evaluate a number of these factors and thus acted
inconsistently with that provision; Under the standard of review in
article 17.6(i) panels must determine whether an investigating
authority's examination of the facts is objective and unbiased.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 22: United States - Countervailing Measures Concerning
Certain Products from the European Communities ("Privatization") (DS
212):
Complainant: European Union (EU)[Footnote 103] Defendant: United States:
Nature of Complaint:
The EU challenged U.S. CVDs resulting from 12 investigations on imports
of certain EU steel products.[Footnote 104] The steel products subject
to these proceedings were formerly produced by state-owned enterprises
that had been privatized in arm's-length transactions for fair market
value. The EU complained that the two methodologies[Footnote 105] the
United States used to determine whether past subsidies continued to
benefit the privatized company violated the SCM Agreement. In addition,
the EU claimed that a provision of U.S. countervailing law--section
771(5)(F) of the Tariff Act of 1930[Footnote 106]--was, on its face,
inconsistent with that agreement.
Outcome:
The panel found that where a privatization is at arm's length and for
fair market value, the benefit from a prior subsidy to a state-owned
enterprise is not passed on to the privatized entity. The Appellate
Body affirmed the panel's finding that the Commerce Department's
privatization methodologies were inconsistent with the SCM Agreement
but disagreed with the panel reasoning that a fair market value sale of
a government entity necessarily extinguishes prior subsidy benefits.
The Appellate Body reversed the panel and found that section 771(5)(F)
of the Tariff Act of 1930 was consistent with the SCM Agreement.
Compliance Action:
On June 23, 2003, the Commerce Department published in the Federal
Register its final modification to its privatization practice[Footnote
107] in order to comply with the WTO's rulings and recommendations. The
parties have agreed that the United States will use the new methodology
in the 12 disputed investigations and reviews by November 8, 2003, and
in future cases. In addition, Commerce is evaluating how many other CVD
orders might be affected by this new methodology.
Table 25: Case 22 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether the United States acted inconsistently with
the SCM Agreement in 12 CVD investigations and reviews by imposing and
maintaining CVDs without determining whether a subsidy benefit
continued to exist after privatization at arm's length and for fair
market value; Panel findings: The United States violated the SCM
Agreement by failing to determine whether the new privatized producer
received any benefit from financial contributions previously provided
to state-owned producers. Accordingly, the United States violated
articles 14 and 19 of the SCM Agreement, which prohibit imposition of
CVDs where there has been no subsidization; Appellate Body findings:
Upheld the panel.
Major case issues: Whether a subsidy benefit that is derived from a
nonrecurring financial contribution continues to exist following a
transfer of ownership of a state-owned enterprise to a new private
owner at arm's length and for fair market value; Panel findings: Once
an importing member determines that a privatization has taken place at
arm's length and for fair market value, it must conclude that no
benefit resulting from the prior subsidization continues to accrue to
the privatized producer; Both "gamma" and "same person"
methodologies, which the Commerce Department used to determine if a
subsidy benefit is extinguished by privatization, violate the SCM
Agreement; Appellate Body findings: Reversed the panel finding on when
a subsidy benefit is extinguished by privatization, but upheld the
panel finding that "gamma" and "same person" methodologies are
inconsistent with the SCM Agreement; There is only a rebuttable
presumption, rather than an inflexible rule, that benefits derived from
pre-privatization financial contributions expire following
privatization at arm's length and for fair market value; "Same
person" methodology impedes the Commerce Department from complying with
its obligation to examine whether a countervailable subsidy continues
to exist where the pre-and post-privatization entities are the same
legal person.
Major case issues: Whether section 771(5)(F) of the Tariff Act of 1930
allows the United States to exercise its discretion in a WTO-compatible
manner; Panel findings: Section 771(5)(F) violates the SCM Agreement
because it prohibits the Commerce Department from systematically
concluding that privatizations at arm's length and for fair market
value extinguish prior subsidy benefits; Appellate Body findings:
Reversed the panel; Section 771(5)(F) does not mandate a method
contrary to the SCM Agreement for determining the continued existence
of a subsidy benefit after a privatization. Therefore it does not
prevent the Commerce Department from exercising a WTO-compatible
discretion.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 23: United States - Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany ("Sunset")
(DS 213):
Complainant: European Union (EU)[Footnote 108] Defendant: United
States:
Nature of Complaint:
The EU challenged provisions of U.S. countervailing law and regulations
as well as application of the law and regulations to a sunset review of
a CVD order on certain imports of carbon steel from Germany. The EU
argued that, among other things, the United States had acted
inconsistently with the SCM Agreement by automatically self-initiating
the sunset review, by failing to apply a 1 percent de minimis[Footnote
109] standard of subsidization set forth in the SCM Agreement, and by
applying an improper standard to determine whether a continuation or
recurrence of subsidization was likely.
Outcome:
The Appellate Body upheld the panel findings that U.S. laws--regarding
(1) the automatic self-initiation of sunset reviews and (2) the
obligation in the SCM Agreement to determine the likelihood of
continuation or recurrence of subsidization in sunset reviews--were
consistent with the SCM Agreement. Nevertheless, with regard to the de
minimis standard, the Appellate Body reversed the panel[Footnote 110]
and found that the 1 percent de minimis standard applied only to
initial CVD investigations and not to sunset reviews of CVD orders.
Accordingly, it found that U.S. law setting forth a de minimis
subsidization threshold for sunset reviews below that set forth for
original investigations, as well as its application, was consistent
with the SCM Agreement.
In an issue that was not appealed, the panel found that the United
States had acted inconsistently with the SCM Agreement in the sunset
review by failing to properly determine the likelihood of the
continuation or recurrence of subsidization. On the basis of this
finding, the Appellate Body recommended that the United States bring
its CVD measure into conformity with the SCM Agreement.[Footnote 111]
Compliance Action:
The United States has agreed to implement the panel's finding on the
likelihood of continuation or recurrence of subsidization. Commerce
Department officials said that implementation would require the agency
to conduct a new sunset analysis with respect to this particular German
steel order, but would not require a regulatory change.
Table 26: Case 23 - Major Case Issues and Panel/Appellate Body
Findings:
Major case issues: Whether absence of an evidentiary standard for self-
initiation of sunset reviews in U.S. CVD law is consistent with article
21.3 of the SCM Agreement; Panel findings: U.S. law does not violate
article 21.3; Article 21.3 does not require that investigating
authorities apply any evidentiary standard before they self-initiate
sunset reviews; Appellate Body findings: Upheld the panel.
Major case issues: Whether the SCM Agreement requires that a 1 percent
de minimis standard of subsidization be applied during sunset reviews;
Panel findings: The1 percent de minimis standard in article 11.9 of the
SCM Agreement applies to sunset reviews described in article 21.3;
The ½ percent standard in U.S. CVD law violates article 21.3;
Appellate Body findings: Reversed the panel; U.S. law is consistent
with the SCM Agreement because the 1 percent de minimis standard in
article 11.9 is not implied in article 21.3; A finding that the de
minimis standard of article 11.9 is implied in sunset reviews would
upset the delicate balance of rights and obligations attained in
negotiations.
Major case issues: Whether U.S. CVD law and regulations mandate WTO-
inconsistent behavior regarding the obligation under article 21.3 for
an investigating authority to determine the likelihood of continuation
or recurrence of subsidization in a sunset review; Panel findings:
U.S. CVD law is consistent; The language of U.S. law is nearly
identical to article 21.3. Though a U.S. regulation imposes severe
limitations on the Commerce Department's ability to reach a new rate of
subsidization, it does not mandate WTO-inconsistent behavior;
Appellate Body findings: Upheld the panel; The panel acted properly
under article 11 of the DSU in evaluating this issue; The panel
properly applied the distinction between mandatory and discretionary
legislation.
Major case issues: Whether U.S. CVD law was properly applied regarding
the Commerce Department's obligation to determine the likelihood of
continuation or recurrence of subsidization in a sunset review; Panel
findings: The United States violated article 21.3 of the SCM Agreement
by making an improper likelihood determination; The Commerce
Department's decision regarding the rate at which subsidization was
likely to continue or recur lacked an adequate factual basis;
Appellate Body findings: Not appealed.
Source: GAO analysis of WTO panel and Appellate Body reports.
[End of table]
GAO Case Number 24: United States - Section 129(c)(1) of the Uruguay
Round Agreements Act (DS 221):
Complainant: Canada[Footnote 112] Defendant: United States:
Nature of Complaint:
Canada directly challenged section 129(c)(1) of the U.S. Uruguay Round
Agreements Act (URAA), claiming that it was inconsistent with
provisions of a number of WTO agreements.[Footnote 113] Canada
specifically argued that section 129(c)(1) of the URAA has the effect
of requiring the United States to act inconsistently with or precludes
the United States from complying with various agreements.
Outcome:
Canada failed to establish that section 129(c)(1) is inconsistent with
WTO rules. The panel findings were not appealed.
Compliance Action:
No compliance action was necessary.
Table 27: Case 24 - Major Case Issue and Panel Findings:
Major case issue: Whether section 129(c)(1) of the URAA requires the
United States to act inconsistently with provisions of several WTO
agreements with respect to unliquidated entries of merchandise
occurring prior to the date that the United States Trade Representative
(USTR) directs implementation of a WTO ruling; Panel findings: Section
129(c)(1) does not mandate action that is inconsistent with WTO rules,
nor preclude action that is consistent with the rules; Section
129(c)(1) does not apply to unliquidated entries occurring prior to the
date that USTR directs implementation of a DSB ruling. Section
129(c)(1) only addresses entries that take place on or after the
implementation date.
Source: GAO analysis of the WTO panel report.
[End of table]
GAO Case Number 25: United States - Preliminary Determinations With
Respect to Certain Softwood Lumber from Canada (DS 236):
Complainant: Canada[Footnote 114] Defendant: United States:
Nature of Complaint:
Canada challenged the U.S. imposition of provisional CVD measures on
certain softwood lumber imports from Canada. Canada also claimed that
the U.S. law and regulations concerning expedited and administrative
reviews of CVD orders were, in several respects, inconsistent with the
SCM Agreement and Article VI of GATT 1994.
Outcome:
Although the panel upheld the United States on several issues,
including the direct challenges to U.S. law, it found that the
methodology the Commerce Department used to determine the subsidy
benefit was inconsistent with the SCM Agreement. The panel also found
that the Commerce Department's retroactive application of the
provisional measure was inconsistent with the SCM Agreement.
Accordingly, it recommended that the DSB request that the United States
bring its provisional measure into conformity with its obligations
under that agreement. The panel findings were not appealed.
Compliance Action:
In November 2002, the United States notified the DSB that the CVD
measures challenged by Canada were no longer in effect and that the
provisional cash deposits had been refunded. Canada, however, argued
that Commerce's final determination was substantially unchanged and
subsequently brought another WTO complaint challenging that:
determination. The WTO panel's decision in that case is due to be made
public around the time this report is issued.[Footnote 115]
Table 28: Case 25 - Major Case Issues and Panel Findings:
Major case issues: Whether Canadian provincial sales of timber from
public lands can amount to a subsidy within the meaning of article 1 of
the SCM Agreement, which defines a subsidy for purposes of the
agreement; Panel findings: Canadian provincial stumpage programs by
which standing timber was being supplied to tenure holders is a
provision of a good within the meaning of article 1.1(a)(l)(iii) of the
SCM Agreement; The Commerce Department's determination that the
provision of stumpage constituted a financial contribution was not in
violation of article 1.1.
Major case issues: Whether the U.S.'s use of U.S. rather than Canadian
stumpage prices to determine whether a benefit was provided was
consistent with the SCM Agreement; Panel findings: By using U.S.
stumpage prices to determine the benefit to the recipient, the United
States acted inconsistently with article 14 of the SCM Agreement, which
deals with calculation of subsidy benefits. U.S. stumpage prices do not
constitute the prevailing market conditions in Canada; The United
States provided no rationale consistent with article 14(d) for
rejecting Canadian private stumpage prices as the basis for calculating
the benefit.
Major case issues: Whether the United States was required to determine
whether a benefit was passed to downstream producers of lumber by
unrelated upstream producers of log inputs; Panel findings: The United
States acted inconsistently with article 1.1(b) of the SCM Agreement by
assuming that the subsidy passed through to the producers of the
lumber; The United States should have examined whether certain
lumber producers benefited from the financial contribution given to
tenure holders that do not own processing facilities or who sell logs
and lumber to the lumber producers.
Major case issues: Whether the U.S.'s retroactive application of the
provisional measure was inconsistent with article 20.6 of the SCM
Agreement; Panel findings: The U.S.'s retroactive application of the
provisional measure in the form of cash deposits or bonds is
inconsistent with article 20.6 of the SCM Agreement since that
provision allows only for retroactive application of definitive duties,
not preliminary duties; Imposition of provisional measures, such as
the requirement of a cash deposit or the posting of a bond, is not
necessary to preserve the right to apply definitive duties
retroactively.
Major case issues: Whether provisions of the U.S. Tariff Act of 1930
and accompanying regulations[A] mandate action inconsistent with
articles 19 and 21 of the SCM Agreement concerning expedited and
administrative reviews of CVDs; Panel findings: The U.S. Tariff Act
and accompanying regulations do not preclude the U.S. executive branch
from acting consistently with its obligations under articles 19 and 21
of the SCM Agreement with respect to expedited and administrative
reviews; Legislation that merely gives the executive authority
discretion to act inconsistently with the SCM Agreement cannot be
challenged before a; panel, independent of its actual application.
Source: GAO analysis of the WTO panel report.
[A] The challenge was to sections 777A(e)(2)(A) and (B) of the Tariff
Act of 1930 and 19 C.F.R. §§ 351.214(k) and 351.213(b) and (k).
[End of table]
[End of section]
Appendix III: Experts That GAO Interviewed for this Report:
Raj Bhala, Rice Distinguished Professor, School of Law, University of
Kansas:
Richard Cunningham, Senior International Trade Partner, Steptoe &
Johnson LLP:
William Davey, Professor of Law, University of Illinois College of Law:
James Durling, Partner, Willkie, Farr & Gallagher:
David Gantz, Professor of Law and Director, International Trade Law
Program, James E. Rogers College of Law, University of Arizona:
John Greenwald, Partner, Wilmer, Cutler & Pickering:
Gary Horlick, Partner, Wilmer, Cutler & Pickering:
Robert Howse, Professor of Law, University of Michigan School of Law:
John Jackson, Professor of Law, Georgetown University Law Center:
Peter Lichtenbaum, Partner, Steptoe & Johnson LLP:
Robert Lighthizer, Partner, Skadden, Arps, Slate, Meagher & Flom LLP:
Mitsuo Matsushita, Professor Emeritus, Tokyo University, and Counsel,
Nagashima, Ohno & Tsunematsu law firm in Tokyo:
Christopher Parlin, Counsel, Kaye Scholer LLP:
Joost Pauwelyn, Associate Professor of Law, Duke University Law School:
John Ragosta, Partner, Dewey Ballantine LLP:
Frieder Roessler, Executive Director, Advisory Center on WTO Law:
Terence Stewart, Managing Partner, Stewart and Stewart Law Offices:
Daniel Tarullo, Professor of Law, Georgetown University Law Center:
[End of section]
Appendix IV: Comments from the Department of Commerce:
GENERAL COUNSEL OF THE UNITED STATES DEPARTMENT OF COMMERCE
Washington, D.C. 20230:
July 14, 2003:
Mr. Loren Yager:
Director, International Affairs and Trade U.S. General Accounting
Office:
441 G Street, N.W. Washington, D.C. 20548:
Dear Mr. Yager:
Thank you for providing the U.S. Department of Commerce with a copy of
the draft General Accounting Office (GAO) report entitled "World Trade
Organization - Standard of Review and Impact of Trade Remedy Rulings"
for review and comment. We appreciate the opportunity to share our
views on the report with you and request that you include these views
in an appendix to the report.
The report explains that a Member of Congress requested GAO to review
trends in WTO disputes over trade remedy cases since 1995, including
the outcomes of those disputes and how those outcomes affected members'
ability to impose trade remedies. GAO also undertook to identify the
standards of review that the WTO applies when ruling on trade remedy
disputes and to present legal experts' views on the WTO's application
of these standards and related issues.
To respond to this request, the draft report primarily follows a two-
pronged approach. First, it compiles and assesses certain statistics
regarding the number and broad outcomes of relevant disputes. Second,
it reports on a poll of certain experts. While GAO itself carefully
refrains from engaging in any analysis either of factors that might
underlie the statistical data or of the application of the legal
standard of review by WTO panels and the Appellate Body, we are
concerned that the manner in which the results of this essentially
quantitative approach are reported will inadvertently mislead readers
about the Administration's own assessment of these issues, the position
of the United States in current trade negotiations, and the very real
implications of some WTO panel and Appellate Body decisions that
apparently gave rise to the request to GAO for this report.
1. Statistical Reporting:
The draft report notes that during the covered period, WTO members
notified 1405 trade
remedy measures, of which 239 (17%) were from the United States.
According to GAO's data, WTO members challenged 78 of those measures
(over half of which - 43 - were U.S. measures) in WTO disputes. GAO
concludes that these rulings resulted in few changes in WTO members'
laws, regulations, and practices, and reports advice from U.S.
officials that the rulings generally have not impaired the United
States' ability to impose trade remedies.
The combination of the data presented by GAO and the reported comments
of people whom it interviewed unfortunately obscures the potential
impact of the WTO dispute settlement system on the United States' use
of trade remedies. As the report notes, the number of trade remedy
cases has increased over time, and many of the cases fall within the
later half of the reporting period. More importantly, however, the
report fails to recognize the potential future ramifications of some of
these decisions, such as Privatization and Bed Linens. The fact that
these decisions have not yet impacted a substantial number of cases is
far less significant than the fact that they have the potential to do
so. For example, of the 33 countervailing duty measures imposed by the
United States since 1995, more than one-third may be impacted by the
Privatization decision. Similarly, as a result of the Bed Linens
decision, the EU alone has recently challenged over twenty Department
of Commerce dumping determinations. It is important in this regard to
bear in mind that there is no statute of limitations in the WTO dispute
settlement system. In short, it is premature to conclude that the WTO
dispute settlement system has not impacted the United States' ability
to impose trade remedies.
Further, without more meaningful probing, the simple data concerning
the number of measures reported and challenged may also be misleading.
For example, WTO members apparently challenged only 78 of the 1405
notified measures; no challenges at all are noted for the 226 measures
notified by India, or 74 notified by Canada. Thus, the WTO rendered
adverse decisions involving relatively few of the 1405 reported
measures. Judged on this basis alone, it can hardly be surprising that
the draft report's presentation implies that the impact of the dispute
settlement system on members' ability to impose trade remedies must be
small. Similarly, given this small universe of proceedings, the
position of the United States can be seen as not materially different
in numerical terms than that of other members.
The GAO's statistics also show that while 18% of the United States' 239
measures were challenged, members challenged only 3% of the EU's 182
measures and 6% of Argentina's measures, and as noted above, none of
India's 226 measures. Thus, the system has
unquestionably had a disproportionate impact on U.S. trade remedies -
while the percentage of adverse determinations among countries is
roughly equal, the United States has had more measures in dispute. As
presented, the data also do not convey the rapid rise in the number of
measures imposed by WTO members other than the United States and the
European Union, nor do they shed light on why few or no measures of
these other members have thus far been challenged (although the GAO
reports the observation that the United States has a large and
desirable market).
In sum, to understand whether the impact of the WTO dispute settlement
process on the United States' administration of its trade remedy laws
is potentially greater than the data suggest, it may be important for
GAO to delve deeper into the data against which the U.S. experience is
being compared, and to determine whether the administration of trade
remedy laws by other countries differs materially from that of the
United States in ways (e.g., with less transparency) that tend to
discourage challenges elsewhere.
2. Poll of Legal Experts:
Of more fundamental concern is the draft report's presentation of
information gleaned from GAO's polling of legal experts, particularly
about the experts' assessments of the manner in which WTO panels and
the Appellate Body have interpreted and applied applicable standards of
review. The draft report concludes that a "majority" are of the opinion
that WTO panels and the Appellate Body properly apply the standard of
review and have correctly ruled on important issues in trade remedy
cases, along the way appropriately engaging in "gap filling" when
interpreting the WTO agreements.
It is important for GAO to consult outside persons with expertise in
the field, and to present insights gained from those interviews.
Presenting the results of such consultations as "majority" and
"minority" views, however - with the clear implication that the
"majority" view carries the truth of the matter - immediately calls
into question the composition of the group GAO chose to poll. There can
be no doubt in this case that what is expressed as the "majority" view
directly correlates to the number and backgrounds of the sample group.
Specifically, of the 18 experts GAO interviewed, a substantial majority
either (i) have records of criticism of trade remedy measures, in
particular antidumping measures, (ii) regularly represent foreign
respondents in U.S. unfair trade actions, and thus have clients with a
direct
stake in sustaining a critical approach by the WTO in its review of
challenged measures, or (iii) were WTO officials directly involved in
dispute settlement proceedings during the period in which many of the
decisions covered by the report were issued. Had the GAO included more
members of the trade bar who represent primarily domestic interests in
trade actions (the GAO list of experts includes only three), the
results of the poll would undoubtedly have been different. We note also
that although the GAO list of experts includes a current EU official,
conspicuously absent are U.S. government officials.
The experts polled by GAO are indeed eminent practitioners and scholars
whose opinions are valuable in assessing the WTO dispute settlement
process. But to categorize their views as "majority" and "minority"
devalues the import of the insights those experts otherwise have to:
offer as individuals. In short, this section of the draft report
suffers from severe sample bias, and should be revised if GAO is to
avoid conveying as fact what clearly are views that can be attributed,
fairly or not, to persons having pre-ordained answers to the questions
put to them.
3. U.S. Government Position:
The draft report briefly notes that U.S. officials advised GAO that the
WTO rulings generally have not impaired the United States' ability to
impose trade remedies. We wish to ensure, especially in the context of
the findings of the draft report, that this statement is not
misinterpreted.
As noted on page 7 of its December 2002 report to Congress on the
Executive Branch's strategy on WTO dispute settlement,
the United States does not agree with the approach that WTO panels and
the Appellate Body have sometimes taken in disputes, and is concerned
about the potential systemic implications. In particular, the executive
branch views with concern the manner in which WTO panels and the
Appellate Body have applied the applicable standard of review in
disputes involving U.S. trade remedy and safeguards matters, and
instances in which they have found obligations and restrictions on WTO
Members concerning trade remedies and safeguards that are not supported
by the texts of the WTO agreements.
As set forth in that report, the Administration is taking action in the
current round of WTO negotiations to address its concerns and those of
the Congress. Specifically, the United States has proposed as a topic
for discussion in the negotiating group on Rules the special standard
of review in the Antidumping Agreement. Also, in the Dispute Settlement
Understanding review, the United States has made proposals aimed at
improving transparency and flexibility and Member control in dispute
settlement proceedings.
The December 2002 report and these proposals, therefore, make it clear
that the Administration has some serious concerns with WTO dispute
settlement.
Thank you again for the opportunity to share our views with you.
Sincerely,
Theodore W. Kassinger
General Counsel:
Signed by Theodore W. Kassinger:
The following are GAO's comments on the Department of Commerce's letter
dated July 14, 2003.
GAO Comments:
1. Our report presents data on changes to WTO members' laws,
regulations, and practices that have resulted from WTO rulings through
December 2002. The data clearly indicate there have been few changes in
WTO members' laws, regulations, and practices to date.
2. In response to the Commerce Department's (and the ITC's) comment(s),
we modified our characterization of U.S. agency views on the impact of
WTO rulings on the U.S.'s ability to impose trade remedies. The
sections of this report that provide U.S. agencies' viewpoints now
reflect the agencies' increased emphasis on the potential future
ramifications of WTO decisions indicated by the Commerce Department
(and ITC).
3. The Commerce Department states that our report's presentation
implies that the impact of the WTO dispute settlement system on
members' ability to impose trade remedies must be small based on
statistical information we present. However, our report simply provides
data on the number of WTO members' measures that were notified to the
WTO from 1995 through 2002 and the number that were challenged.
Moreover, we have modified the report to reflect agency concerns about
the impact of the dispute settlement system on members' ability to
impose trade remedies.
4. While our report provides aggregate data on the number of trade
remedy measures imposed by all WTO members from 1995 to 2002, it was
beyond the scope of our review to analyze trends in the growth of these
measures for individual WTO members and reasons for the challenges to
these measures.
5. While the Commerce Department raised concerns regarding the
composition of the group of legal experts we consulted, we believe that
our methodology for selecting these experts as outlined in appendix I
is sound. As noted, we selected individuals who were identified as
leading experts on WTO dispute settlement. These individuals--
academics, practitioners, and advisors on WTO-related trade remedy
issues--have been active in writing and/or speaking about issues
pertaining to WTO dispute settlement. Moreover, the Commerce
Department's assertion that we only included three experts representing
domestic petitioners' interests is incorrect. Although we did not
choose experts on the basis of their expressed views because we believe
that approach would have been methodologically flawed, our information
indicates that of the nine practitioners we interviewed, three
represent domestic petitioners, three represent foreign respondents,
and three represent both. Nevertheless, in responding to agency
comments, we reviewed our decision rule on the composition of the group
of experts we consulted. Subsequently, we excluded the views of the
current WTO official and the EU representative from our discussion of
expert views since we did not include current U.S. officials in this
group. However, we briefly noted the views of the current WTO and EU
officials.
6. While we believe that our report sufficiently emphasizes the
concerns of the minority of experts regarding standards of review and
the other trade remedy issues discussed in this report, we have made
modifications to the relevant sections of our report to ensure that
majority positions and minority concerns are presented in a balanced
manner.
7. See comment 2.
8. In response to the Commerce Department's (and the ITC's) comment(s),
we added a section to our report presenting U.S. agencies' positions on
WTO dispute settlement issues, including the executive branch's
position as outlined in its December 2002 report to Congress.
9. In response to the Commerce Department's comments, we have added
material to our report that discusses relevant aspects of the recent
U.S. submission to the WTO Negotiating Group on Rules.
[End of section]
Appendix V: Comments from the United States International Trade
Commission:
UNITED STATES INTERNATIONAL TRADE COMMISSION:
WASHINGTON, DC 20436:
July 14, 2003:
Mr. Loren Yager:
Director, International Affairs and Trade United States General
Accounting Office Washington, DC 20548:
Dear Mr. Yager:
The U.S. International Trade Commission (Commission) thanks you for the
opportunity to comment on this draft report, Report to the Ranking
Minority Member, Committee on Finance, U.S. Senate, on the World Trade
Organization: Standard of Review and Impact of Trade Remedy Rulings,
GAO-03-824. As an initial matter, the Commission appreciates the
efforts made by the General Accounting Office (GAO) to attempt to
document the current state of dispute settlement activity by the World
Trade Organization (WTO) with regard to trade remedies. The Commission,
as a primary agency with the statutory authority to administer the
trade laws that are subject to WTO challenge, wishes to articulate its
position on the major questions addressed by GAO's draft report.
As an initial matter, the Commission thinks that it is premature to
conclude that current WTO decisions will not prove to have impaired the
United States' ability to impose trade remedies. In fact, in several
instances, the Administration has terminated a remedy or reached a
negotiated settlement with complaining parties following adverse
decisions.[NOTE 1] Moreover, it is likely that the full effect of WTO
rulings on the ability of the United States to impose and maintain
trade remedy measures has not yet been realized. The Commission has
altered some practices because of Appellate Body reports in response
to direct requests from the President pursuant to existing U.S.
statutes, but it is not clear whether these changes in practice will
satisfy the WTO. Moreover, the changes in practice the Commission can
make are necessarily limited given that all decisions must be made
pursuant to U.S. law, which has not changed. While the 1994 Uruguay
Round Agreements Act is presumed to have put all U.S. laws into
compliance with the WTO Agreements, WTO panels and the Appellate Body
continue to find that Commission determinations violate WTO
Agreements.
Page Two:
Of particular significance, WTO panels and the Appellate Body have
enunciated three systemic requirements for safeguard determinations,
none of which is specifically contemplated by U.S. law: (1) to find
that the injurious import increases resulted from developments
unforeseen by trade negotiators; (2) where imports from partners to
free-trade agreements (such as NAFTA) are excluded from a safeguard
measure, to conduct an injury analysis that excludes those partners'
imports; and (3) to separate and distinguish the injurious effects of
other factors from the effects of imports. The Appellate Body has
extended the last requirement to the antidumping context, an area in
which the Commission typically issues a much larger number of
determinations in comparison to safeguards. These and other important
issues continue to be reviewed by the WTO in new cases; and in the
absence of any change to the status quo, these issues are likely to
result in further adverse rulings.
The Commission also does not agree that WTO panels and the Appellate
Body generally have properly applied the standard of review, For
example, under Article 17.6(ii) of the Antidumping Agreement, a panel
is to apply international rules of interpretation, which the Appellate
Body has interpreted as being Articles 31 and 32 of the Vienna
Convention on the Law of Treaties. If there is more than one
permissible way to interpret a provision of the Antidumping Agreement,
and a competent authority's determination is consistent with one of
those interpretations, the panel must uphold the competent authority's
determination. The WTO, however, has applied Article 17.6(ii) in a
manner that raises the question of whether the second sentence of the
clause, requiring the WTO to uphold a determination made on a
permissible interpretation of the Agreement, has real meaning because
WTO panels and the Appellate Body have not allowed for more than one
permissible interpretation of the relevant provisions.
In light of continued adverse findings by the Appellate Body, it
appears likely that the United States will be subject to additional
adverse WTO rulings, with all the attendant consequences. Thus, it is
too early to fully assess the extent to which the current WTO
applications of the standard of review will impair the United States'
ability to impose trade remedies.
Thank you for your efforts and the opportunity to comment.
Sincerely,
Deanna Tanner Okun, Commissioner:
Jennifer A. Hillman, Vice Chairman:
Marcia E. Miller, Commissioner:
Stephen Koplan, Commissioner
Signed by all:
NOTES:
[1] According to Table 2 of the GAO draft report, 22 U.S. trade remedy
measures have been subject to revision or removal as a result of WTO
dispute settlement. The removal or revision of particular measures
impairs the ability of the affected U.S. industries to obtain the
relief to which they believed they would receive under U.S. law.
The following are GAO's comments on the U.S. International Trade
Commission's letter dated July 14, 2003.
GAO Comments:
1. In response to the ITC's (and Commerce's) comment(s), we modified
our characterization of U.S. agency views on the impact of WTO rulings
on the U.S.'s ability to impose trade remedies. The sections of this
report that provide U.S. agencies' viewpoints now reflect the agencies'
increased emphasis on the potential future ramifications of WTO
decisions. :
2. In response to the ITC's comments, we have added some discussion of
the safeguards issues that the ITC raises in the report's section on
expert views and U.S. agencies' positions.
3. In response to the ITC's comments, we have added some discussion of
their views on article 17.6(ii) in the report's section on expert views
and U.S. agencies' positions.
4. See comment 1.
[End of section]
Appendix VI GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Elizabeth Sirois (202) 512-8989 Nina Pfeiffer (202) 512-9639 Richard
Seldin (202) 512-4094:
Staff Acknowledgments:
In addition to those named above, Jason Bair, Josey Ballenger, Sharron
Candon, Martin De Alteriis, Rona Mendelsohn, Mary Moutsos, Mark
Speight, and Laura Turman made key contributions to this report.
(320154):
FOOTNOTES
[1] Antidumping or countervailing measures take the form of increased
duties on imports. Dumping is generally considered to be the sale of a
commodity in a foreign market at a lower price than its normal value.
WTO rules allow for the imposition of antidumping duties, or fees, to
offset dumping. Countervailing duties are special customs duties
imposed to offset subsidies provided on the manufacture, production, or
export of a particular good. Subsidies essentially lower a producer's
costs or increase its revenues.
[2] For the purposes of this report, we use the term "normal value" to
mean home market value. Normal value is also sometimes referred to as
"fair market value."
[3] A safeguard is a temporary import control or other trade
restriction that a WTO member imposes to prevent serious injury to
domestic industry caused by increased imports.
[4] The relevant WTO agreements for trade remedy determinations are the
Antidumping Agreement, the Agreement on Subsidies and Countervailing
Measures, the Safeguards Agreement, and parts of the General Agreement
on Tariffs and Trade 1994 (GATT 1994).
[5] Throughout this report, we use the term "domestic agency
determination" to refer to a finding by a domestic agency leading to a
decision to impose one or more trade remedy measures. An example of
this would be a domestic agency finding in a safeguards case that a
product is being imported in such increased quantities as to cause or
threaten to cause serious injury to a domestic industry.
[6] Public Law No. 107-210, § 2101, 116 Stat. 933, 993.
[7] S. Rep. No. 107-139, at 6-7 (2002).
[8] "Completed" refers to those cases in which the WTO Dispute
Settlement Body has adopted a panel or Appellate Body report as of
December 31, 2002.
[9] We define "measures" broadly to include orders calling for
antidumping or countervailing duties or some type of safeguard action.
For the purposes of this report, the term "measure" does not include
members' laws, regulations, or practices.
[10] To analyze WTO findings about domestic determinations, for the
most part we reviewed the concluding sections of panel and Appellate
Body reports. When several findings were included within a single
paragraph in the concluding section, we generally counted each finding
separately. In the several instances in which concluding sections of
panel reports did not clearly indicate these findings, we obtained our
numbers by evaluating the full reports.
[11] Four cases did not involve WTO findings on domestic agency
determinations--3 challenged only statutes, and 1 was found to be not
properly before the WTO. Although the Appellate Body ruled that another
case was not properly before the panel, the panel ruled on a number of
antidumping issues involving determinations of a domestic agency.
[12] These data, however, do not distinguish domestic agency
determinations on the basis of their importance. Thus, these
determinations ranged in importance from whether domestic agencies
established the proper link between dumped imports and injury to
domestic industry to whether the agency followed proper procedures in
providing public notice of its proceedings. Furthermore, panels and the
Appellate Body addressed the same issues in a number of cases. See
appendix I for a further discussion of the methodological limitations
on these data.
[13] We relied primarily on the WTO and U.S. agencies for information
about foreign laws, regulations, practices, and measures. For the most
part, we did not obtain information from foreign governments on these
matters.
[14] Principally, these are articles 31 and 32 of the Vienna Convention
on the Law of Treaties, U.N. Doc. A/CONF. 39/27 (May 23, 1969).
[15] These 198 cases originated from 276 separate requests for
consultation or filings--the first of the four phases in the dispute
settlement process. For the purposes of our analysis, we combined
multiple requests for consultation regarding the same measure or law
into a single case. For instance, nine WTO members requested
consultations regarding the steel safeguard that the United States
imposed in March 2002; we counted this as one case, because all of the
requests for consultation pertained to the same measure.
[16] In the 13 challenges to U.S. law, 3 were cases challenging only
laws, while 10 involved both laws and domestic agency determinations.
[17] "Practices" refer to WTO members' uncodified methodologies and
procedures in investigating injury to domestic industry and in
determining the appropriate trade remedy measures, according to
Commerce Department officials.
[18] Sections 735(c)(5) of the Tariff Act of 1930, codified at 19
U.S.C. § 1673d(c)(5).
[19] The "all others" rate is the rate used to calculate antidumping
duties for exporters and producers who are not individually
investigated.
[20] While the House bill (H.R. 1073), introduced on March 4, 2003, and
one of the Senate bills (S. 1155), introduced on May 23, 2003,
explicitly state that the repeal would not affect pending cases,
another Senate bill (S. 1080), introduced on May 19, 2003, would apply
to any pending cases on the date of enactment.
[21] The "arm's-length" methodology involves determining whether home
market sales by an exporter to an affiliated party are made at arm's
length, that is, in the ordinary course of trade.
[22] The privatization cases concern the issue of whether past
subsidies provided to a state-owned enterprise continue to benefit the
enterprise after it is sold to a private buyer. The two relevant U.S.
methodologies are commonly referred to as the "gamma" and "same person"
methodologies and are described by the Appellate Body in paragraphs 12-
16 of United States--Countervailing Measures Concerning Certain
Products from the European Communities, WT/DS212/AB/R (see case summary
22 in app. II). The U.S. Court of Appeals for the Federal Circuit
rejected the gamma methodology in Delverde, SRL v. United States, 202
F.3d 1360, 1362-63 (Fed. Cir. 2000). This occurred before the WTO
Appellate Body ruled in the first WTO privatization case--United
States--Imposition of Countervailing Duties on Certain Hot-Rolled Lead
and Bismuth Carbon Steel Products Originating in the United Kingdom,
WT/DS138/AB/R (see case summary 9 in app. II).
[23] The final modification to the U.S. privatization methodology was
published in the Federal Register on June 23, 2003. 68 Fed. Reg. 37125.
[24] European Communities--Antidumping Duties on Imports of Cotton-Type
Bed Linen from India, WT/DS141/AB/R (see case summary 10 in app. II).
[25] The dumping margin is the amount by which the imported merchandise
is sold below normal value. For example, if the export price is $200
and the normal value is $220, the dumping margin is $20. This margin is
expressed as a percentage of the export price; in this example, the
margin is 10 percent. The term "zeroing" is used to describe
designating dumping margins for non-dumped sales (i.e., sales made
above the normal value) as zero. Thus, if the export price is $220 and
the normal value is $200, the level of dumping (i.e., the amount by
which normal value exceeds the export price) is zero, not negative $20.
By zeroing comparisons where the export price exceeds normal value,
dumping margins tend to be higher.
[26] Four U.S. cases did not involve domestic agency determinations,
and thus did not concern trade measures; 3 directly challenged laws,
and 1 was found not to be properly before the WTO.
[27] The 21 U.S. measures were subject to revision or removal in 9
cases. While 7 of those cases each involved only 1 measure, 2 cases
concerned more than 1 measure. United States--Countervailing Measures
Concerning Certain Products from the European Communities, WT/DS212/AB/
R, involved 12 measures, and United States--Antidumping Measures on
Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from
Korea, WT/DS179/R (see case summary 14 in app. II), concerned 2
measures.
[28] These cases were United States--Antidumping Measures on Stainless
Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea,
WT/DS179/R; United States--Antidumping Measures on Certain Hot-Rolled
Steel Products from Japan, WT/DS184/AB/R (see case summary 15 in app.
II); and United States--Antidumping and Countervailing Measures on
Steel Plate from India, WT/DS206/R (see case summary 19 in app. II).
[29] See Delverde, SRL v. United States, 202 F.3d 1360, 1362-63 (Fed.
Cir. 2000).
[30] These cases were United States--Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/
AB/R (see case summary 23 in app. II), and United States--
Countervailing Measures Concerning Certain Products from the European
Communities, WT/DS212/AB/R (see case summary 22 in app. II).
[31] These cases were United States--Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/
DS202/AB/R (see case summary 18 in app. II); United States--Definitive
Safeguard Measures on Imports of Wheat Gluten from the European
Communities, WT/DS166/AB/R (see case summary 12 in app. II); and United
States--Safeguard Measures on Imports of Fresh, Chilled, or Frozen Lamb
Meat from New Zealand and Australia, WT/DS177/AB/R and WT/DS178/AB/R
(see case summary 13 in app. II).
[32] The cases were Guatemala--Definitive Antidumping Measures on Grey
Portland Cement from Mexico, WT/DS156/R (see case summary 11 in app.
II); Argentina--Definitive Antidumping Measures on Imports of Ceramic
Floor Tiles from Italy, WT/DS189/R (see case summary 16 in app. II);
and Mexico--Antidumping Investigation of High-Fructose Corn Syrup
(HFCS) from the United States, WT/DS132/R (see case summary 7 in app.
II). In the latter case, Mexico actually removed its antidumping
measure pursuant to a panel ruling under the North American Free Trade
Agreement. The WTO panel had made similar rulings and recommendations
regarding Mexico's compliance with the Antidumping Agreement.
[33] These cases are Egypt--Definitive Antidumping Measures on Steel
Rebar from Turkey, WT/DS211/R (see case summary 21 in app. II), and
European Union--Antidumping Duties on Imports of Cotton-Type Bed Linen
from India, WT/DS141/AB/R (see case summary 10 in app. II).
[34] These cases were Argentina--Safeguard Measures on Imports of
Footwear, WT/DS121/AB/R (see case summary 5 in app. II), and Korea--
Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/
DS98/AB/R (see case summary 3 in app. II).
[35] According to a Commerce Department official, the WTO panel is due
to issue an interim ruling in a case involving a final dumping
determination on softwood lumber from Canada in September and a final
ruling in December 2003. See United States--Final Dumping Determination
on Softwood Lumber from Canada, WT/DS264.
[36] In addition to the safeguard rulings in this study, a WTO panel in
July 2003 issued a decision on challenges brought by a number of WTO
members against U.S. safeguards imposed on certain steel products. The
panel found against the United States on unforeseen developments and
aspects of causation, among other issues. See United States--Definitive
Safeguard Measures on Imports of Certain Steel Products, WT/DS248-49,
251-54, 258-59/R.
[37] The Appellate Body has found, with regard to the issue of
nonattribution, that members must separate and distinguish the
injurious effects of other factors from the injurious effects of
increased or dumped imports to comply, respectively, with article
4.2(b) of the Safeguards Agreement and article 3.5 of the Antidumping
Agreement.
[38] In the 25 trade remedy cases we reviewed, panels and the Appellate
Body also resolved 13 direct challenges to U.S. laws. For many of these
challenges to laws, panels and the Appellate Body did not specifically
mention articles 11 or 17.6 or articulate any other standard of review
for evaluating whether the laws were consistent with WTO obligations.
[39] Some experts view article 3.2 of the Dispute Settlement
Understanding as an additional standard of review. Under article 3.2,
WTO members recognize that the dispute settlement system serves both to
preserve the rights and obligations of WTO members under the WTO
agreements covered by dispute settlement and to clarify the provisions
of those agreements in accordance with customary rules of
interpretation of public international law. It also provides that
Dispute Settlement Body recommendations and rulings cannot add to or
diminish the rights and obligations provided in the WTO agreements.
Although panels and the Appellate Body have not specifically identified
article 3.2 as a standard of review, they frequently do refer to it
when interpreting provisions of WTO trade remedy agreements.
[40] A WTO ministerial decision adopted by the Uruguay Round Trade
Negotiations Committee in December 1993 states that the standard of
review in article 17.6 "shall be reviewed after three years with a view
to considering the question of whether it is capable of general
application." This has not been done. In addition, in the WTO
countervailing duty case, United States--Imposition of Countervailing
Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom, WT/DS138/AB/R, the United States
argued that article 17.6 should also apply to countervailing duty cases
brought under the WTO Subsidies and Countervailing Measures Agreement.
Part of the U.S. argument was based on a WTO ministerial declaration
that called for "consistent resolution of disputes arising from anti-
dumping and countervailing duty measures." The Appellate Body, however,
rejected this position and found that article 11 was the appropriate
standard of review to apply in these disputes.
[41] Article 11 also obligates panels to "make such other findings as
will assist the Dispute Settlement Body in making" recommendations and
rulings.
[42] See Fresh Lamb Meat from New Zealand and Australia, above,
paragraphs 97-108.
[43] In paragraphs 55 and 62 of United States--Antidumping Measures on
Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, the
Appellate Body described the complementary interaction between articles
11 and 17.6, particularly regarding panel review of factual
determinations of domestic agencies.
[44] These provisions call for applying general and supplementary
methods to interpreting provisions of treaties and international
agreements. Under article 31, general rules for interpreting treaty
provisions are first applied, and supplementary methods under article
32 are used to (1) confirm the meaning resulting from application of
article 31 or (2) determine the meaning when the interpretation under
article 31 is ambiguous or obscure or leads to an unreasonable result.
[45] United States--Antidumping Measures on Certain Hot-Rolled Steel
Products from Japan, WT/DS184/AB/R, paragraphs 59-60. See also,
Thailand--Antidumping Duties on Angles, Shapes, and Sections of Iron or
Non-Alloy Steel and H-Beams from Poland, WT/DS/AB/R, paragraphs 125-27
(see case summary 6 in app. II).
[46] The Appellate Body decisions in United States--Safeguard Measures
on Imports of Fresh, Chilled, or Frozen Lamb Meat from New Zealand and
Australia, WT/DS177/AB/R, and United States--Antidumping Measures on
Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, contain
the most detailed discussions, respectively, of articles 11 and 17.6.
[47] Some of these experts stated that by not applying part of article
17.6(ii), panels and the Appellate Body are violating the principle
that every provision of a treaty or international agreement should be
given effect.
[48] In United States--Antidumping Measures on Certain Hot-Rolled Steel
Products from Japan, WT/DS184/R, on an issue involving calculation of
normal value, the Appellate Body upheld a U.S. determination as resting
on an interpretation of article 2.1 of the Antidumping Agreement that
was, in principle, permissible "following application of the rules of
treaty interpretation in the Vienna Convention." Nevertheless, the
Appellate Body did not first set forth several permissible
interpretations and then uphold the United States determination because
it was consistent with one of them. In the April 2003 WTO panel report,
Argentina--Definitive Anti-Dumping Duties on Poultry from Brazil, WT/
DS241/R, the panel appeared to go further in applying the article
17.6(ii) process in finding permissible an Argentinean interpretation
dealing with the definition of "domestic industry."
[49] The SAA is an authoritative expression of the United States about
the interpretation and application of the Uruguay Round Agreements and
the Uruguay Round Agreements Act. Public Law No. 103-465, 108 Stat.
4815, codified at 19 U.S.C. §§ 3512(d). H.R. Doc. No.103-316, at 818
(Vol. 1 1994).
[50] The Chevron standard or doctrine was established by the United
States Supreme Court in Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S.C. 837, 842-45 (1984). Under the Chevron
doctrine, when a reviewing court determines that the law is clear on a
particular issue, the court as well as the agency must give effect to
the law. If, however, the law is silent or ambiguous, the court is to
uphold an agency's interpretation when it is reasonable, even if it is
different from the interpretation of the law that the court would have
reached.
[51] A majority of experts also agreed that, both in a WTO and domestic
political context, the United States has had the most concerns about
how standard of review has been applied in trade remedy cases.
[52] This included one expert who was highly critical about how panels
and the Appellate Body had applied article 17.6(ii) in a number of
instances in antidumping cases.
[53] The United States also wanted article 17.6 to apply to
countervailing duty cases.
[54] Among other things, the U.S.'s draft language for article 17.6(ii)
that incorporated the Chevron term "reasonable interpretation" was
changed to "permissible interpretation."
[55] A few of these experts viewed a bias toward liberalizing trade
positively and consistent with WTO agreement provisions.
[56] Under the "facts available" provisions in article 6.8 and annex II
of the WTO Antidumping Agreement, domestic agencies are authorized to
make antidumping determinations on the basis of whatever facts are
available to them when the defending party fails to provide relevant
facts within a reasonable period of time or significantly impedes the
investigation.
[57] The Appellate Body ruled against respondents on nearly all of
these issues and, with the exception of zeroing, all involved cases in
which the United States was a respondent.
[58] Not all of the experts agreed on the meaning of "gap filling."
Some viewed the term negatively in that it led to inappropriately
adding obligations to WTO agreements, while others agreed that it was
synonymous with interpreting vague or ambiguous provisions. When asked
about which of several factors had influenced WTO decisions, gap
filling was among the most frequently cited by the experts.
[59] In the antidumping context, the Appellate Body recognized that it
might not be easy to separate and distinguish the injurious effects of
different causal factors but found that this was what was intended by
the nonattribution language in the Antidumping Agreement. United
States--Antidumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/AB/R, paragraph 228.
[60] The report was entitled Executive Branch Strategy Regarding WTO
Dispute Settlement Panels and the Appellate Body: Report to the
Congress Transmitted by the Secretary of Commerce, at 6-10 (Dec. 30,
2002), and was required by the Trade Act of 2002, Public Law No. 107-
210, § 2105(b)(3), 116 Stat. 1016. The report was prepared by the
Commerce Department in consultation with the Secretary of State, the
Secretary of the Treasury, the Attorney General, and the U.S. Trade
Representative.
[61] In contrast, an EU and a WTO official we interviewed stated that
standard of review has been properly applied by the WTO in trade remedy
cases and that WTO rulings have not added to obligations or diminished
rights of WTO members.
[62] In the recent panel report, United States--Definitive Safeguard
Measures on Imports of Certain Steel Products, WT/DS248-49, 251-54,
258-59/R, the panel found against the United States on the issue of
unforeseen developments, among others.
[63] Canada, the EU, Indonesia, Sri Lanka, and the United States were
third parties in this case.
[64] Canada, El Salvador, Honduras, and the United States were third
parties in this case.
[65] The United States was a third party in this case.
[66] The regulatory provision in question deals with revocation of an
antidumping order based on the absence of dumping and should not be
confused with the regulatory provision dealing with "sunset reviews."
[67] De minimis refers to the level below which a dumping margin or
subsidy is considered to be negligible. Antidumping or CVD actions are
terminated in cases where the margin of dumping or level of subsidy is
below the de minimis level.
[68] Brazil, Indonesia, Paraguay, the United States, and Uruguay were
third parties in this case.
[69] The EU, Japan, and the United States were third parties in this
case.
[70] Jamaica and Mauritius were third parties in this case.
[71] A North American Free Trade Agreement (NAFTA) panel also found
that Mexico failed to establish a threat of material injury to the
domestic injury.
[72] India and Mexico were third parties in this case.
[73] 15 U.S.C. § 72.
[74] Brazil and Mexico were third parties in this case.
[75] The subsidies principally were in the form of equity infusions.
[76] This methodology is commonly referred to as the "gamma"
methodology.
[77] See Delverde, SRL v. United States, 202 F.3d 1360, 1362-1363 (Fed.
Cir. 2000).
[78] Egypt, Japan, and the United States were third parties in this
case.
[79] Ecuador, El Salvador, the EU, Honduras, and the United States were
third parties in this case.
[80] Australia, Canada, and New Zealand were third parties in this
case.
[81] Wheat Gluten is a by-product of the industrial production of
starch and, among other things, is used to enrich protein in flours for
bread, pasta, etc.
[82] The parties to NAFTA are Canada, Mexico, and the United States.
[83] Causation in safeguards cases refers to whether increased imports
cause or threaten to cause serious injury to domestic industry.
[84] Canada, the EU, Iceland, and Japan were third parties in this
case.
[85] Tariff rate quotas consist of two different tariff rates. A lower
rate is applied to a certain quota amount of a product, and a higher
tariff rate applies to amounts that exceed that quota.
[86] The EU and Japan were third parties in this case.
[87] Brazil, Canada, Chile, the EU, and Korea were third parties in
this case.
[88] Section 735(c)(5)(A) of the Tariff Act of 1930.
[89] This test relates to whether certain sales are "in the ordinary
course of trade." The United States treated home market sales by an
exporter to an affiliated customer as within the ordinary course of
trade so long as prices to the affiliated customers were on average at
least 99.5 percent of the average prices charged to unaffiliated
customers.
[90] The Appellate Body concluded that there was no conflict between
the factual standard of review in article 17.6(i) and article 11, and
that the legal standard of review in article 17.6(ii) supplements
rather than replaces article 11. The Appellate Body also concluded that
the second sentence of article 17.6(ii) presupposes that application of
the rules in articles 31 and 32 of the Vienna Convention on the Law of
Treaties could give rise to, at least, two permissible interpretations
of some ADA provisions.
[91] Japan, Turkey, and the United States were third parties in this
case.
[92] Australia, the EU, and India were third parties in this case.
[93] Canada challenged the following U.S. legal measures: Section
771(5) of the Tariff Act of 1930, codified at 19 U.S.C. § 1677(5), as
amended by the Uruguay Round Agreements Act; the U.S.'s Statement of
Administrative Action accompanying the Uruguay Round Agreements Act;
the Commerce Department's preamble to CVD regulations; and U.S.
"practice" related to the treatment of export restraints.
[94] For purposes of this dispute, the panel considered an export
restraint to be "a border measure that takes the form of a government
law or regulation which expressly limits the quantity of exports or
places explicit conditions on the circumstances under which exports are
permitted, or that takes the form of a government-imposed fee or tax on
exports of the product calculated to limit the quantity of exports."
[95] Under article 1.1 of the SCM Agreement, the definition of a
subsidy has two elements: (1) a financial contribution, (2) which
confers a benefit. The parties agreed that an export restraint could
confer a benefit.
[96] These measures were the Statement of Administrative Action, the
preamble to the relevant Commerce Department regulations, and the
Commerce Department's administrative practice.
[97] Australia, Canada, the EU, Japan, and Mexico were third parties in
this case.
[98] Chile, the EU, and Japan were third parties in this case.
[99] Sections 776(a) and 782(d) and (e) of the Tariff Act of 1930.
[100] Australia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador,
the EU, Guatemala, Honduras, Japan, Nicaragua, Paraguay, the United
States, and Venezuela were third parties in this case.
[101] Under this system, the total amount of a tariff duty that was
applied to these Argentine imports was (1) an applied tariff rate of 8
percent and (2) a specific price band duty that was determined for each
import by comparing a reference price with the upper or lower threshold
of a price band. These upper and lower price bands were calculated for
each imported product on the basis of certain international prices. The
reference prices were set for each product based on prices in certain
foreign markets.
[102] Chile, the EU, Japan, and the United States were third parties in
this case.
[103] Brazil, India, and Mexico were third parties in this case.
[104] The 12 proceedings included 6 original investigations, 2
administrative reviews, and 4 sunset reviews.
[105] These are called the "gamma" and "same person" methodologies. The
Appellate Body had faulted the gamma methodology in United States--
Imposition of Countervailing Duties on Certain Hot-Rolled Lead and
Bismuth Carbon Steel Products Originating in the United Kingdom, WT/
DS138/AB/R. A United States Court of Appeals found this methodology to
be inconsistent with United States law. Delverde, SRL v. United States,
202 F.3d 1360, 1368-69 (Fed. Cir. 2000).
[106] 19 U.S.C. § 1677(5)(F).
[107] 68 Fed. Reg. 37125 (June 23, 2003).
[108] Japan and Norway were third parties in this case.
[109] De minimis subsidization is the level below which a subsidy is
considered to be negligible. CVD actions are terminated in cases where
the level of subsidy is below the de minimis level.
[110] Although the panel's majority found that U.S. law was
inconsistent with the SCM Agreement, in a rare dissent in WTO dispute
settlement cases, one panelist concluded to the contrary.
[111] The United States Court of International Trade also found that
the Commerce Department's determination of likelihood of subsidization
was inconsistent with U.S. law. AG Der Gillinger Huttenwerke v. United
States, 193 F. Supp.2d 1339 (CIT 2002).
[112] Chile, the EU, India, and Japan were third parties in this case.
[113] Section 129 of the URAA generally authorizes the U.S. Trade
Representative (USTR) to request the Commerce Department or the ITC to
take actions not inconsistent with WTO rulings in antidumping or CVD
cases. Subsection 129(c)(1) provides that Commerce Department
determinations under section 129 shall apply to unliquidated entries of
merchandise that enter or are withdrawn from a warehouse for
consumption on or after the date on which USTR directs Commerce to
implement a WTO ruling.
[114] The EU, India, and Japan were third parties in this case.
[115] United States--Final Countervailing Duty Determination With
Respect to Certain Softwood Lumber from Canada, WT/DS257.
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