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Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico
Report of the Appellate Body
1. Guatemala appeals from certain issues of law and legal interpretation developed in the Panel Report, Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico.1 That Panel was established by the Dispute Settlement Body (the "DSB") on 20 March 1997 with standard terms of reference2 based on Mexico's request for the establishment of a panel.3
2. The relevant facts are to be found in paragraphs 2.1 to 2.4 of the Panel Report.
3. The Panel considered claims made by Mexico concerning Guatemala's decision to initiate an investigation into allegations of dumping of portland cement from Mexico, Guatemala's conduct of that investigation by its authority leading to the preliminary determination, and its conduct of the final stages of the investigation. The Panel Report was circulated to Members of the World Trade Organization (the "WTO") on 19 June 1998. The Panel considered that its terms of reference entitled it to examine "the matters referred to in Mexico's request for establishment of a panel".4 The Panel made the following recommendations:
We ... recommend that the Dispute Settlement Body request Guatemala to bring its action into conformity with its obligations under Article 5.5 of the ADP Agreement.5
We... recommend that the Dispute Settlement Body request Guatemala to bring its action into conformity with its obligations under Article 5.3 of the Agreement.6
It also suggested that:
...Guatemala revoke the existing anti-dumping measure on imports of Mexican cement ... .7
4. On 4 August 1998, Guatemala notified the DSB8 of its intention to appeal certain issues of law covered in the Panel Report and legal interpretations developed by the Panel, pursuant to paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), and filed a Notice of Appeal with the Appellate Body, pursuant to Rule 20 of the Working Procedures for Appellate Review (the "Working Procedures"). On 14 August 1998, Guatemala filed an appellant's submission drafted in Spanish.9 On 31 August 1998, Mexico filed an appellee's submission also drafted in Spanish.10 In order to ensure that the third participant would have time to prepare its submission after receiving an English version of the appellant's submission, the Appellate Body granted the United States additional time to file its third participant's submission. The United States filed that submission on 14 September 1998.11 By our ruling of 31 August 1998, we declined Mexico's request that its appellee's submission be withheld from Guatemala and the United States until the end of the time-period allowed to the United States to file its third participant's submission. The oral hearing, provided for in Rule 27 of the Working Procedures, was held on 2 October 1998. At the oral hearing, the participants and the third participant presented their arguments and answered questions from the Division of the Appellate Body hearing the appeal.
II Arguments of the Participants and Third Participant
A. Guatemala - Appellant
1. Whether the Dispute was Properly Before the Panel
5. Guatemala argues that the Panel erred in concluding that it could examine Mexico's claims concerning the initiation of the anti-dumping investigation. In this respect, Guatemala asserts that the Panel incorrectly interpreted the relationship between the dispute settlement procedures of the Anti-Dumping Agreement and those of the DSU. It is clear from the wording of Article 1.2 of the DSU and from the opening clause of Article 17.1 of the Anti-Dumping Agreement that the provisions of these two covered agreements are to be applied together unless there is a difference between the special or additional rules and procedures contained in Articles 17.4, 17.5, 17.6 and 17.7 of the Anti-Dumping Agreement and the provisions of the DSU. Only in that event do the special or additional provisions prevail. According to Guatemala, since Article 17.3 is not mentioned in Appendix 2 of the DSU as a special or additional rule or procedure, it cannot prevail over the provisions of the DSU and must always be read and applied consistently with the DSU, in particular Article 4.4. The Panel therefore erred in disregarding the requirements of this provision. Article 4.4 requires the complaining Member to identify the "measures" at issue.
6. Guatemala submits that the word "difference" in Article 1.2 of the DSU means "contradiction" or "inconsistency". It is only if the special or additional rules contradict or are inconsistent with the provisions of the DSU that the special or additional rule must "prevail" over the provisions of the DSU. If the special or additional rule simply does not include one of the specific requirements of the provisions of the DSU, there is no conflict since it is possible to comply with both sets of rules at once.
7. According to Guatemala, it therefore follows that the Panel erred in considering that Articles 17.4 and 17.5 replace12 the corresponding rules of the DSU, in particular Article 6.2, because there is no contradiction or inconsistency between them. The Panel did not explain in what way the provisions of the Anti-Dumping Agreement differ from Article 6.2 of the DSU. In Guatemala's view, although Article 17.5 is silent regarding the need to identify the measure at issue, it is not in conflict with Article 6.2 of the DSU. A better interpretation of Article 17.5 is that it is an additional rule that requires the request for the establishment of a panel to include a statement regarding nullification or impairment of benefits that is not required under Article 6.2 of the DSU. Given that there is no conflict between the two provisions, the panel request must also satisfy the requirements of Article 6.2 of the DSU and must therefore identify the measure at issue and give a summary of the legal basis for the claims made.
8. As regards the measures that may be contested in an anti-dumping dispute, Guatemala contends that Article 17.4 of the Anti-Dumping Agreement is more than a "timing provision". Rather, it limits the types of measure that may be challenged under the Anti-Dumping Agreement to the three measures that are specifically identified in Article 17.4: the provisional anti-dumping duty, the final anti-dumping duty and the acceptance of a price undertaking. Furthermore, a provisional measure can only be challenged if the "significant impact" requirement is satisfied. Guatemala asserts that this interpretation of Article 17.4 is borne out not only by its wording, but also by its context, object and purpose and the drafting history of the Anti-Dumping Agreement.
9. Articles 1 and 18.3 of the Anti-Dumping Agreement, which form part of the context of Article 17.4, draw a distinction between an "anti-dumping measure" and "investigations". Thus, an investigation is not a measure. Furthermore, Articles 3.8, 15 and 17.6(ii) of the Anti-Dumping Agreement refer to "measures" as distinct from procedural actions or decisions taken during an investigation. Article 13 also limits the obligation to maintain a system of domestic judicial review to review of the final determination and administrative acts related to it. Guatemala considers that the importance of the word "measure" is further underlined by the fact that it appears in Articles 3.3, 3.7, 4.2, 4.4, 6.2, 10.4, 12.10, 19.1, 21.2, 21.8, 22.1, 22.2 and 22.8 of the DSU.
10. According to Guatemala, a broad interpretation of Article 17.4 of the Anti-Dumping Agreement and of the word "measure" in this context would permit a Member to seek consultations and the establishment of panels for alleged violations arising from the hundreds of acts or decisions that are taken during the course of an anti-dumping investigation. This could lead to innumerable proceedings concerning a single investigation, and the consequence would be a waste of resources and a strain on the WTO dispute settlement system, while giving Members a way of utilizing that system to exert influence on domestic anti-dumping investigations. Guatemala argues that the true object and purpose of Article 17 is to provide a coherent set of rules for the settlement of anti-dumping disputes that strikes an appropriate balance between the rights of Members to impose anti-dumping measures and the rights of other Members to challenge those measures.
11. In Guatemala's view, the drafting history of the Anti-Dumping Agreement also bears out this interpretation of Article 17.4. During the negotiations leading to the conclusion of the Agreement, several countries proposed permitting a challenge to the decision to initiate itself. These proposals were, however, rejected.
12. In addition, Guatemala believes that several Appellate Body Reports substantiate its argument that anti-dumping disputes should be limited to one of the three measures enumerated in Article 17.4. In Brazil - Measures Affecting Desiccated Coconut ("Brazil - Coconut")13, the Appellate Body seems to interpret a countervailing measure as something that results from an investigation. In United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India ("United States - Shirts and Blouses")14, the Appellate Body considered that procedural actions resulting from a measure are not in themselves "measures". Thus, steps in an investigation that either result from or lead to a "measure" are not in themselves "measures".
13. Guatemala submits that a proper reading of Article 17.4 of the Anti-Dumping Agreement also means that the Panel's broad reading of the word "measure"15 is wrong since, in the context of the Anti-Dumping Agreement, Article 17.4 defines the types of measure that may be challenged and there is no room for such a broad reading.
14. Guatemala adds that although Article 17.4 of the Anti-Dumping Agreement limits the types of "measure" that may be contested, there are no restrictions on the "claims" that may be made concerning such a measure. The claims may, for instance, relate to the initiation and conduct of the investigation. Guatemala considers that different considerations apply to disputes brought pursuant to Article 18.4 of the Anti-Dumping Agreement since such disputes concern anti-dumping laws, regulations or administrative procedures and not "anti-dumping measures" of the type covered by Article 17.4 of that Agreement.
15. In conclusion, Guatemala submits that the Panel's interpretation of the dispute settlement provisions in the DSU and the Anti-Dumping Agreement is wrong in two ways: (1) the Panel erred in considering that it is not necessary for a Member to identify a specific anti-dumping measure in its request for consultations and in its request for the establishment of a panel; and (2) the Panel erred in concluding that the measure may be any of the hundreds of substantive decisions and procedural actions taken during the course of an anti-dumping investigation.
16. As regards the Panel's terms of reference, Guatemala submits that the Panel could not take the view that it had authority to examine claims relating to the final anti-dumping duty. First, as the Panel found, the "matter" referred to the DSB and the "matter" which was the subject of consultations must be the same "matter".16 In this case, Mexico could not have identified the final measure in its request for consultations since it had not been adopted at that time. The "matter" referred to the DSB could not therefore include that "measure". Furthermore, according to Guatemala, the request for the establishment of the Panel does not, in any event, identify the final anti-dumping duty as the measure.
17. Guatemala observes that the Panel declined to consider whether the provisional anti-dumping duty was properly before it.17 The Appellate Body should find, therefore, that the Panel did not have jurisdiction to consider any of the claims made concerning the initiation of the investigation or the notification of that initiation. Alternatively, Guatemala refers the Appellate Body to the arguments it made to the Panel concerning "significant impact". It submits that Article 17.4 of the Anti-Dumping Agreement requires the provisional measure to have a "significant impact" and this requirement must be met before a complaining Member has the right to refer a provisional measure to the DSB. Guatemala contends that Mexico did not claim, still less prove, that the provisional measure had a significant impact on its trade interests or competitive position. The Panel did not therefore have any authority to examine either the provisional measure or claims made in relation to it.
2. Interpretation of Article 19.1 of the DSU
18. Guatemala submits that the Panel erred in interpreting Article 19.1 of the DSU as permitting it to recommend that Guatemala bring its "action" into conformity with its obligations under Articles 5.3 and 5.5 of the Anti-Dumping Agreement. This Panel has broadened the powers of panels by allowing recommendations to be made that refer not only to "measures" but also to any "action" taken during the course of an anti-dumping investigation. The Panel, therefore, has acted contrary to the rules of interpretation set forth in Article 31 of the Vienna Convention on the Law of Treaties (the "Vienna Convention")18, as it has imported a concept into Article 19.1 of the DSU that is not part of that provision. In Guatemala's view this reading also violates Article 19.2 of the DSU since panels could make wide-ranging recommendations concerning a variety of procedural actions that were not "measures", thereby limiting the rights of Members to conduct investigations.
19. Guatemala also argues that the Panel's suggestion concerning the implementation of its recommendation on the violation of Article 5.3 of the Anti-Dumping Agreement violates Article 19.1 of the DSU. According to Guatemala, "suggestions" must refer to the same measure as the one which is the subject of "recommendations". Since the final anti-dumping measure was outside its terms of reference, the Panel could not, according to Guatemala, make any "recommendations" or "suggestions" regarding it. Guatemala contends that the Panel's reading of Article 19.1 would give panels discretion to refer to measures that bear no relation to the dispute, that have not been contested and that lie outside their terms of reference.
To continue with Presumption of Nullification or Impairment
2WT/DS60/3, G/ADP/D3/3, 5 May 1997.
3WT/DS60/2, G/ADP/D3/2, 13 February 1997.
4Panel Report, para. 7.27.
5Panel Report, para. 8.4.
6Panel Report, para. 8.5.
7Panel Report, para. 8.6.
8WT/DS60/9, 4 August 1998.
9Pursuant to Rule 21(1) of the Working Procedures.
10Pursuant to Rule 22 of the Working Procedures.
11Pursuant to Rule 24 of the Working Procedures.
12Panel Report, para. 7.16
13Adopted 20 March 1997, WT/DS22/AB/R.
14Adopted 23 May 1997, WT/DS33/AB/R.
15See Panel Report, para. 7.24.
16Panel Report, para. 7.15.
17Panel Report, footnote 219.
18Done at Vienna, 23 May 1969, 1155 U.N.T.S. 331; (1969), 8 International Legal Materials, 679.