WORLD TRADE
ORGANIZATION
|
WT/DS141/AB/RW
8 April 2003
(03-1917) |
|
Original: English |
EUROPEAN COMMUNITIES � ANTI-DUMPING DUTIES ON IMPORTS
OF COTTON-TYPE BED LINEN FROM INDIA
RECOURSE TO ARTICLE 21.5 OF THE DSU BY INDIA
AB-2003-1
Report of the Appellate Body
I. Introduction
II. Arguments of the Participants and the
Third Participants
-
Claims of Error by India � Appellant
-
Article 21.5 of the DSU
-
Paragraphs 1 and 2 of Article 3 of the Anti-Dumping
Agreement
-
Article 17.6 of the Anti-Dumping Agreement
and Article 11 of the DSU
-
Article 3.5 of the Anti-Dumping Agreement
-
Arguments of the European Communities � Appellee
-
Article 21.5 of the DSU
-
Paragraphs 1 and 2 of Article 3 of the Anti-Dumping
Agreement
-
Article 17.6 of the Anti-Dumping Agreement and
Article 11 of the DSU
-
Article 3.5 of the Anti-Dumping Agreement
-
Arguments of the Third Participants
-
Japan
-
United States
III. Issues Raised in this Appeal
IV. Article 21.5 of the DSU
-
Introduction
-
Analysis
V. Paragraphs 1 and 2 of Article 3 of the Anti-Dumping Agreement
-
Introduction
-
Analysis
VI. Article 17.6 of the Anti-Dumping Agreement
and Article 11 of the DSU
-
Introduction
-
Analysis
VII. Findings and Conclusions
ANNEX 1: Notification of an Appeal by India under
paragraph 4 of Article 16 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes
TABLE OF CASES CITED IN THIS REPORT
Short Title |
Full Case Title and Citation |
Australia � Automotive Leather II
(Article 21.5 � US) |
Panel Report, Australia � Subsidies
Provided to Producers and Exporters of Automotive Leather � Recourse to
Article 21.5 of the DSU by the United States, WT/DS126/RW and
Corr.1, adopted 11 February 2000, DSR 2000:III, 1189 |
Australia � Salmon |
Appellate Body Report, Australia �
Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted
6 November 1998, DSR 1998:VIII, 3327 |
Australia � Salmon
(Article 21.5 � Canada) |
Panel Report, Australia � Measures
Affecting Importation of Salmon � Recourse to Article 21.5 of the DSU by
Canada, WT/DS18/RW, adopted 20 March 2000, DSR 2000:IV, 2035 |
Canada � Aircraft
(Article 21.5 � Brazil) |
Appellate Body Report, Canada �
Measures Affecting the Export of Civilian Aircraft � Recourse by Brazil to
Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000,
DSR 2000:IX, 4299 |
Chile � Price Band System |
Appellate Body Report, Chile � Price
Band System and Safeguard Measures Relating to Certain Agricultural Products,
WT/DS207/AB/R, adopted 23 October 2002 |
EC � Bananas III
(Article 21.5 � Ecuador) |
Panel Report, European Communities �
Regime for the Importation, Sale and Distribution of Bananas � Recourse to
Article 21.5 of the DSU by Ecuador, WT/DS27/RW/ECU, 12 April 1999,
DSR 1999:II, 803 |
EC � Bed Linen |
Appellate Body Report,
European Communities � Anti-Dumping Duties on Imports of Cotton-Type Bed
Linen from India, WT/DS141/AB/R, adopted 12 March 2001 Panel Report,
European Communities � Anti-Dumping Duties on Imports of Cotton-Type Bed
Linen from India, WT/DS141/R, adopted 12 March 2001, as modified by the
Appellate Body Report, WT/DS141/AB/R |
EC � Bed Linen
(Article 21.5 � India) |
Panel Report, European Communities �
Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India �
Recourse to Article 21.5 of the DSU by India, WT/DS141/RW,
29 November 2002 |
EC � Hormones |
Appellate Body Report, EC Measures
Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R,
WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135 |
EC � Sardines |
Appellate Body Report, European
Communities � Trade Description of Sardines, WT/DS231/AB/R, adopted
23 October 2002 |
Guatemala � Cement I |
Appellate Body Report, Guatemala �
Anti-Dumping Investigation Regarding Portland Cement from Mexico,
WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, 3767 |
Japan � Alcoholic Beverages II |
Appellate Body Report, Japan � Taxes
on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted
1 November 1996, DSR 1996:I, 97 |
Korea � Alcoholic Beverages |
Appellate Body Report, Korea � Taxes
on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R, adopted
17 February 1999, DSR 1999:I, 3 |
Mexico � Corn Syrup
(Article 21.5 � US) |
Appellate Body Report, Mexico �
Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the
United States � Recourse to Article 21.5 of the DSU by the United
States, WT/DS132/AB/RW, adopted 21 November 2001 |
Thailand � H-Beams |
Appellate Body Report, Thailand �
Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy
Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001 |
US � Carbon Steel |
Appellate Body Report, United States
� Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat
Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19
December 2002 |
US � Cotton Yarn |
Appellate Body Report, United States
� Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan,
WT/DS192/AB/R, adopted 5 November 2001 |
US � FSC |
Appellate Body Report, United States
� Tax Treatment for "Foreign Sales Corporations",
WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 1619 |
US � FSC
(Article 21.5 � EC) |
Appellate Body Report, United States
� Tax Treatment for "Foreign Sales Corporations" � Recourse to Article 21.5
of the DSU by the European Communities, WT/DS108/AB/RW, adopted
29 January 2002 |
US � Hot-Rolled Steel |
Appellate Body Report, United States
� Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan,
WT/DS184/AB/R, adopted 23 August 2001 |
US � Lamb |
Appellate Body Report, United States
� Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from
New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted
16 May 2001 |
US � Lead and Bismuth II |
Appellate Body Report, 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,
adopted 7 June 2000, DSR 2000:V, 2601 |
US � Offset Act
(Byrd Amendment ) |
Appellate Body Report, United States
� Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R,
WT/DS234/AB/R, adopted 27 January 2003 |
US � Shrimp
(Article 21.5 � Malaysia) |
Appellate Body Report, United States
� Import Prohibition of Certain Shrimp and Shrimp Products � Recourse to
Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, adopted
21 November 2001 |
US � Wheat Gluten |
Appellate Body Report, United States
� Definitive Safeguard Measures on Imports of Wheat Gluten from the European
Communities, WT/DS166/AB/R, adopted 19 January 2001 |
US � Wool Shirts and Blouses |
Appellate Body Report, United States
� Measure Affecting Imports of Woven Wool Shirts and Blouses from India,
WT/DS33/AB/R and Corr.1, adopted 23 May 1997, DSR 1997:I, 323 |
World Trade Organization
Appellate Body
European Communities � Anti-Dumping
Duties
on Imports of Cotton-Type Bed Linen from India
Recourse to Article 21.5 of the DSU by India
India, Appellant
European Communities, Appellee
Japan, Third Participant
Korea, Third Participant
United States, Third Participant
|
AB-2003-1
Present:
Abi-Saab, Presiding Member Bacchus, Member Taniguchi, Member
|
I. Introduction
1. India appeals certain issues of law and legal
interpretations in the Panel Report, European Communities � Anti-Dumping
Duties on Imports of Cotton-Type Bed Linen from India � Recourse to Article 21.5
of the DSU by India (the "Panel Report").1 The Panel was established
to consider a complaint by India with respect to the consistency with the Agreement
on Implementation of Article VI of the General Agreement on Tariffs and Trade
1994 (the "Anti-Dumping Agreement ") and the Understanding on
Rules and Procedures Governing the Settlement of Disputes (the "DSU") of the
measures taken by the European Communities to comply with the recommendations
and rulings of the Dispute Settlement Body (the "DSB") in EC � Bed Linen.2
2. The original panel found that Council Regulation (EC) No
2398/97 of 28 November 19973, imposing definitive anti-dumping duties on imports
of cotton-type bed linen from India, is inconsistent with Articles 2.4.2, 3.4,
and 15 of the Anti-Dumping Agreement.4 India and the European
Communities appealed certain issues of law and legal interpretations developed
by the original panel. The Appellate Body upheld the original panel's finding
that "the practice of 'zeroing' when establishing 'the existence of margins of
dumping', as applied by the European Communities in the anti-dumping
investigation at issue" is inconsistent with Article 2.4.2 of the Anti-Dumping
Agreement.5 In addition, the Appellate Body found that "the European
Communities, in calculating amounts for administrative, selling and general
costs and profits in the anti-dumping investigation at issue", had acted
inconsistently with its obligations under Article 2.2.2(ii) of the
Anti-Dumping Agreement and, therefore, reversed the findings of the
original panel to the contrary in paragraphs 6.75 and 6.87 of the original panel
report.6
3. On 12 March 2001, the DSB adopted the Appellate Body
Report and the original panel report, as modified by the Appellate Body Report.7
The parties to the dispute mutually agreed that the European Communities should
have until 14 August 2001 to implement the recommendations and rulings of the
DSB.8 On 7 August 2001, the Council of the European Union adopted Council
Regulation (EC) No 1644/2001, amending the original definitive anti‑dumping
measure on cotton-type bed linen from India.9 Subsequently, on 28 January
2002 and 22 April 2002, the Council of the European Union adopted
Council Regulations (EC) No 160/2002 and No 696/2002, respectively.10
EC Regulation 160/2002 terminated the anti‑dumping proceedings against
cotton-type bed linen imports from Pakistan and established that the
anti-dumping measures against Egypt would expire on 28 February 2002, if a
review were not requested by that date. This review was not requested, and the
anti-dumping measures against Egypt expired. EC Regulation 696/2002 established
that a reassessment of the injury and causal link based on imports from India
alone had revealed that there was a causal link between the dumped imports from
India and material injury to the European Communities industry. Additional
factual aspects of this dispute are set out in greater detail in the Panel
Report.11
4. India was of the view that the European Communities had
failed to comply with the recommendations and rulings of the DSB, and that
EC Regulations 1644/2001, 160/2002, and 696/2002 were inconsistent with several
provisions of the Anti-Dumping Agreement and Article 21.2 of the
DSU. India, therefore, requested that the matter be referred to a panel pursuant
to Article 21.5 of the DSU.12 On 22 May 2002, in accordance with
Article 21.5 of the DSU, the DSB referred the matter to the original panel. A
member of the original panel was unable to participate in the proceedings and
the parties therefore agreed on a new panelist on 25 June 2002.13 The Panel
Report was circulated to the Members of the World Trade Organization (the "WTO")
on 29 November 2002.
5. Before making findings on India's claims, the Panel made
the following rulings on four preliminary matters raised by the European
Communities. The Panel:
(i) ruled that EC Regulations 160/2002 and 696/2002
are not "measures taken to comply" with the recommendation of the DSB,
within the meaning of Article 21.5 of the DSU.14 Thus, the Panel
limited its examination to EC Regulation 1644/2001; (ii) declined to assess whether the measures "taken
to comply" were adopted within the "reasonable period of time" agreed by
the parties under Article 21.3 of the DSU15; (iii) found that India's "claim 6" was not properly
before the Panel, to the extent that it concerned the consistency of the
European Communities' measure with the obligation under Article 3.5 of
the Anti-Dumping Agreement to ensure that injuries caused by
"other factors" not be attributed to the dumped imports, because it was
disposed of by the original panel and not appealed.16 The Panel,
however, rejected the European Communities' request to exclude India's
"claim 5" because the Panel found that India could not have presented
that claim in the original dispute17; and (iv) rejected the European Communities' request that
the Panel exclude India's claims relating to Article 4.1(i) of the Anti-Dumping
Agreement and Article 21.3 of the DSU, given that India itself
denied making such claims.18
6. The Panel then examined India's claims and found that:
(i) India had failed to demonstrate that the European
Communities' calculation of a weighted average for administrative,
selling, and general costs on the basis of sales value violates
Article 2.2.2(ii) of the Anti-Dumping Agreement19; (ii) even assuming EC Regulations 160/2002 and
696/2002 properly formed part of the Panel's evaluation, the European
Communities had not violated paragraphs 1 and 3 of Article 3 or Article
5.7 of the Anti-Dumping Agreement in conducting a
cumulative assessment of the effects of dumped imports from India and
Pakistan (and Egypt), in subsequently re‑examining whether imports from
Pakistan were being dumped, and subsequently in reassessing the effects
of the dumped imports from India alone20; (iii) the European Communities had not acted
inconsistently with paragraphs 1 and 2 of Article 3 of the Anti-Dumping
Agreement in considering "dumped imports"21; (iv) the analysis and conclusions of the European
Communities with respect to injury are not inconsistent with paragraphs 1 and 4 of Article 3 of the Anti-Dumping
Agreement22; (v) the European Communities' finding of a causal
link between the dumped imports and the injury is not inconsistent with
Article 3.5 of the Anti-Dumping Agreement23; (vi) the European Communities had not acted
inconsistently with Article 15 of the Anti‑Dumping Agreement
by failing to explore possibilities of constructive remedies before
applying anti-dumping duties24; and (vii) the European Communities had not violated
Article 21.2 of the DSU.25
7. Having excluded, as a preliminary matter, India's claim that the European Communities had failed to ensure that injuries caused by "other factors" was not attributed to the
dumped imports pursuant to Article 3.5 of the Anti-Dumping Agreement, the Panel nevertheless made an
alternative finding on this issue and determined that the European Communities
had not acted inconsistently with Article 3.5 in this regard.26
8. For these reasons, the Panel concluded that EC Regulation
1644/2001 is not inconsistent with the Anti-Dumping Agreement or
the DSU.27 Therefore, the Panel found that the European Communities had implemented the recommendation of the DSB to bring its measure into conformity
with its obligations under the Anti-Dumping Agreement.28 In the
light of these conclusions, the Panel did not make any recommendations under
Article 19.1 of the DSU.29
9. On 8 January 2003, India notified the DSB 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 DSU, and filed a Notice of Appeal pursuant to Rule 20 of the Working
Procedures for Appellate Review (the "Working Procedures").30 On
20 January 2003, India filed an appellant's submission.31 On 3 February
2003, the European Communities filed an appellee's submission.32 On the same
day, Japan and the United States each filed a third participant's submission.33 Korea notified its intention to appear at the oral hearing as a third
participant.34
10. The oral hearing in this appeal was held on 20 February
2003. The participants and third participants presented oral arguments and
responded to questions put to them by the Members of the Division hearing the
appeal.
11. We recall that the Panel found, as a preliminary matter,
that only EC Regulation 1644/2001 was a measure "taken to comply" within the
meaning of Article 21.5 of the DSU, and thus the Panel excluded EC Regulations
160/2002 and 696/2002 from the scope of its examination.35 India has not
appealed this finding. During the oral hearing, India and the European
Communities agreed, moreover, that the measure at issue in this appeal is
EC Regulation 1644/2001.36 Therefore, we will confine our analysis in this
appeal to EC Regulation 1644/2001.
II. Arguments of the Participants and the Third
Participants
A. Claims of Error by India � Appellant
1. Article 21.5 of the DSU
12. India asserts that the Panel erred in finding, as a
preliminary matter, that India's claim, concerning the consistency of
EC Regulation 1644/2001 with the obligation under Article 3.5 of the
Anti‑Dumping Agreement to ensure that injuries caused by "other
factors" are not attributed to the dumped imports, was not properly before the
Panel. India notes that the European Communities based its request for a
preliminary ruling on two arguments: (i) that India should not be allowed to
raise claims before the Article 21.5 Panel that it could have raised before the
original panel; and (ii) that India was acting in bad faith. India submits that,
although the Panel found that India's claim was raised during the
original proceedings, and also that India was pursuing the matter
in good faith, the Panel nevertheless granted the European
Communities' request for a preliminary ruling.
13. According to India, instead of focusing on the facts of
the case, the Panel based some of its conclusions on overarching considerations
of the appropriate functioning of Article 21.5 panels and the dispute settlement
system as a whole. For example, the Panel determined that defending Members in
Article 21.5 proceedings would always be prejudiced by a finding in
Article 21.5 proceedings of a violation made on the basis of a claim that could
have been pursued in the original proceedings,
but was not, because the defending member would not have a reasonable period of
time for implementation. India submits that it had argued before the Panel that
the European Communities would not, in this particular case, suffer any
prejudice from lack of a reasonable period for implementation, since India's
claim under Article 3.5 is not the only claim in these proceedings. However,
according to India, the Panel "declined to address [India's] argument".37
14. India contends that the Panel failed to take into account
the Appellate Body Report in
US � FSC (Article 21.5 � EC), where the European Communities raised
a claim in the
Article 21.5 proceedings that it had not raised in the original proceedings. The
Article 21.5 panel
and the Appellate Body, nevertheless, made findings with respect to that claim.
In India's view, EC Regulation 1644/2001, like the measure before the Appellate
Body in US � FSC (Article 21.5 � EC), is a new and different
measure from the measure subject to the original dispute.38
15. India argues that the Panel erred in considering the
situation in US � Shrimp (Article 21.5 � Malaysia) to be analogous
to the situation in the present case. India asserts that in US � Shrimp
(Article 21.5 � Malaysia), the complainant sought to challenge exactly
the same measure that had been found to be WTO-consistent in the original
proceedings, whereas in the present case, the measure challenged by India is a new
measure that is separate and distinct from the original measure. According to
India, in US � Shrimp (Article 21.5 � Malaysia), the "measure"
consisted of several sub-measures, and the Appellate Body had found, in the
original dispute, that one of these sub-measures, Section 609, was consistent
with the General Agreement on Tariffs and Trade 1994 (the "GATT 1994").39
Therefore, in those Article 21.5 proceedings, the Appellate Body declined to
re-examine Section 609 because it had already found that it was consistent with
the GATT 1994. In India's view, the issue in this appeal is different from that
in US � Shrimp (Article 21.5 � Malaysia) because the "measure"
cannot be divided into sub-measures. According to India, all the aspects of the
original measure have been changed�there has been a redetermination of dumping
and injury, as well as a re‑examination of causation. India notes that the fact
that the European Communities analyzed causation anew, makes that analysis part
of the new implementation measure. In India's view, the European Communities
should have similarly re-ensured that the injury caused by other factors was not
attributed to the dumped imports.40
16. India also submits that the Panel should have followed
the Appellate Body's conclusion in Canada � Aircraft (Article 21.5 � Brazil),
that Article 21.5 panels are not confined to examining the "measures taken to
comply" from the perspective of the claims, arguments, and factual circumstances
related to the measure that was the subject of the original proceedings.41
2. Paragraphs 1 and 2 of Article 3 of the Anti-Dumping
Agreement
17. India appeals the Panel's finding that the European
Communities did not act inconsistently with paragraphs 1 and 2 of Article 3 of
the Anti-Dumping Agreement when determining the volume of "dumped
imports" for purposes of making a determination of injury. According to India,
the European Communities mistakenly concluded that 86 percent of the total
volume of imports of bed linen from India were dumped. India argues that the
proportion of imports attributable to sampled producers found to be
dumping (47 percent) constitutes the only positive evidence that could
have been used to objectively examine and determine the volume of
total imports from India that are dumped. India contends that if
the basis for determining dumped imports is the calculation of dumping margins
for sampled producers, and that calculation reveals no dumping for producers
representing 53 percent of the imports attributable to sampled producers, one
cannot objectively reach the conclusion that 86 percent of the total volume of
imports are positively dumped.
18. Second, India argues that the Panel erred in finding that
Article 3 does not provide any guidance on how to determine the volume of dumped
imports for purposes of making a determination of injury. In India's view,
Article 3.1 provides that an injury determination, including a determination of
the volume of dumped imports, shall be based on positive
evidence and involve an objective examination. Thus, according to
India, Article 3.1 casts an overarching obligation on domestic
authorities to make an objective examination of the volume of dumped imports
based on positive evidence. India refers to the Appellate Body Report in Thailand
� H-Beams as supporting this interpretation.42
19. India asserts that the Panel mistakenly found that the
European Communities had resorted to the second option provided
for in the second sentence of Article 6.10 of the Anti-Dumping Agreement,
namely that the European Communities individually examined producers accounting
for the largest percentage of the volume of exports which could reasonably be
investigated. This finding, according to India, is at odds with the conclusion
reached by the original panel in this dispute, which correctly established that
the European Communities had conducted its analysis of dumping based on
a statistically valid sample of Indian producers and exporters within
the meaning of the first option found in the second sentence of
Article 6.10. Thus, India asserts that the Panel ignored its own factual
determinations in the original proceedings. India notes that the evidence it
presented to the Panel demonstrated that the European Communities sought to
select a statistically valid sample. For example, India points to the Notice of
initiation of the investigation which provides for the use of sampling
techniques in this investigation. India refers also to an exchange of letters
between the association of Indian exporters and the European Commission which,
in India's view, demonstrates that the investigating authorities sought to
select a sample representing Indian producers and exporters.43 India
concludes that the failure of the European Communities to objectively examine
the positive evidence resulting from the sample of investigated Indian producers
or exporters runs directly counter to the overarching obligation under
Article 3.1 to base the determination of the volume of dumped imports on
positive evidence and an objective examination.
20. Third, India argues that the Panel confused two distinct
stages of the investigation�the stage of determining dumping and the stage of
duty collection. India notes that, instead of seeking guidance in the text of
Article 3, the Panel looked to Article 9.4 of the Anti-Dumping Agreement,
which concerns duty collection. India contends that it cannot be inferred that
the Anti-Dumping Agreement provides that all imports from producers or
exporters that have not been individually examined may be considered dumped for
purposes of analyzing injury, from the fact that Article 9.4 permits the
collection of anti-dumping duties from non-examined producers after
having completed a determination of dumping, injury,
and causality. In other words, India asserts that the Panel was wrong in
concluding, on the basis of the premise that a duty may be collected from
non-examined producers, that all non-examined producers have dumped and caused
injury. According to India, the Panel's reasoning disregards the fact that the
dumping and injury findings logically precede the collection of duties.
In addition, India contends that Article 9.4 expressly restricts the scope of
its application to the imposition of anti-dumping duties. Therefore,
according to India, it would be contrary to previous Appellate Body rulings
regarding effective treaty interpretation to read into Articles 2, 3, and 6 of
the Anti-Dumping Agreement the method set forth in Article 9.4 for
the calculation of anti-dumping duties. Moreover, India argues that extending
the application of the method set forth in Article 9.4 to other provisions of
the Anti-Dumping Agreement would upset the delicate balance of
rights and obligations agreed to by the Uruguay Round negotiators. Accordingly,
India asserts that this finding of the Panel is contrary not only to the Anti-Dumping
Agreement, but also to Articles 3.2 and 19.2 of the DSU, which provide
that findings and recommendations cannot add to or diminish the rights and
obligations provided in the covered agreements.
21. Fourth, India argues that the Panel erred in concluding
that India's proposed interpretation would lead to bizarre and unacceptable
results for which there are no remedial mechanisms. The Panel determined that
these results would be a consequence of the fact that only 47 percent of the
total imports from India would be considered dumped for purposes of making a
determination of injury, whereas pursuant to Article 9.4, anti-dumping duties
would be applied to all imports from exporters or producers not
individually examined. India notes that the Panel recognized the possibility of
refunds and reviews as mechanisms for remedying the situation where a duty would
be collected on imports from an unexamined producer that might not have been
dumped. In India's view, the reference to Article 11.2 (review possibilities)
and to Article 9.3 (refund possibilities) supports India's interpretation rather
than that of the Panel.
22. Finally, India asserts that, if the sample of European
Communities producers was accepted in this investigation to fully represent the
European Communities producers, the sample of exporting producers likewise
should have been considered to fully represent the Indian exporters.
3.
Article 17.6 of the Anti-Dumping Agreement
and Article 11 of the DSU
23. India submits that the Panel did not properly discharge
its duties under Article 17.6 of the Anti-Dumping Agreement and
Article 11 of the DSU in concluding that the European Communities did have
information before it on all relevant economic factors listed in Article 3.4 of
the Anti‑Dumping Agreement when making its injury determination.
24. India contends that the Panel misapplied the rules on the
allocation of the burden of proof and, therefore, acted inconsistently with
Article 11 of the DSU. India asserts that it had made a prima facie
case before the Panel, showing that information on a number of economic factors
had never been collected by the European Communities' investigating authorities.
India argues that, as a consequence, the Panel should have required the European
Communities to present evidence to rebut India's prima facie case.
India submits that, by not shifting the burden of proof to the European
Communities, the Panel failed to make an objective assessment of the facts as
required by Article 11 of the DSU.
25. India asserts, furthermore, that if the Appellate Body
were to conclude that the Panel correctly applied the rules on the allocation of
the burden of proof, the Appellate Body should then find that the Panel
distorted the evidence by accepting, as constituting evidence of a fact, a mere
assertion by the European Communities that data was collected. Accordingly,
India maintains that the Panel acted inconsistently with Article 11 of the DSU,
which requires panels to make an objective assessment of the matter, including
an objective assessment of the facts of the case.
26. Referring to the Appellate Body Report in US � Hot-Rolled
Steel, India argues that Article 17.6(i) of the Anti-Dumping
Agreement requires panels to actively review or examine the facts.44
India submits that despite the existence of this obligation, the Panel did not
actively review the assertions of the European Communities that it had collected
data on all relevant economic factors listed in Article 3.4, nor did the Panel
use its investigative power under Article 13 of the DSU to inquire about the
missing information on stocks and capacity utilization. In India's view, the
fact-specific nature of this dispute required the Panel to use its right to seek information under Article 13 of the DSU in order to discharge its obligation, under Article 17.6(i),
to actively review or examine the facts. India argues, furthermore, that Article 17.6(i) requires the Panel to do more than to merely state that it was clear to it that the European Communities had
the data in its record. In India's view, by failing to actively review the facts, the Panel acted contrary to the obligation contained in Article 17.6(i) of the Anti-Dumping Agreement.
4. Article 3.5 of the Anti-Dumping
Agreement
27. India submits that, if the Appellate Body were to
conclude that the Panel erred in dismissing, as not being properly before it,
India's claim challenging EC Regulation 1644/2001 as inconsistent with the
obligation in Article 3.5 of the Anti-Dumping Agreement to ensure that
injuries caused by "other factors" are not attributed to the dumped imports,
then the Appellate Body should examine the Panel's finding, in the alternative,
that the European Communities did not act inconsistently with that provision.
First, India challenges the Panel's finding that India could not rely upon
recital (50) of EC Regulation 1644/2001 as evidence of the fact that the
European Communities was aware of other factors simultaneously causing injury to
the European Communities industry. In India's view, the Panel was wrong to
dismiss India's argument on the grounds that recital (50) of the redetermination
is included in the section entitled "Conclusion on injury", and not in the
section on "Causation". India contends that a factual finding does not cease to
be a factual finding solely because it is contained in the preamble, conclusion,
or other section of the same document.
28. Second, India contends that the conclusions of the Panel
are based on a misrepresentation of the facts and an incorrect causation
analysis. India argues that the Panel reviewed the findings of the European
Communities on the basis of ex post justifications, instead of
analyzing whether the European Communities (i) had properly examined the
possible injurious effects of inflation and of the increase in the cost of raw
cotton and (ii) had separated and distinguished the injury caused by those
factors. Thus, India argues that the Panel erred in its analysis by relying upon
explanations which are not discernible from EC Regulation 1644/2001 and the
record of the investigation.
29. In addition, India argues that the Panel's
misrepresentation of the facts of the case is a consequence of two other errors.
First, India asserts that the Panel erred in reading into Article 3.5 an
arbitrary distinction between "independent" and "dependent" factors causing
injury, and in mistakenly assigning the authorship of this distinction to India.
India submits that it never made such a distinction. In India's view, the effect
of the Panel's distinction between independent and dependent causes of injury is
to render redundant the requirement to demonstrate a causal relationship between
the dumped imports and the injury to the domestic industry. India explains that,
if the Panel's theory were followed, investigating authorities would be able to
argue (i) that the injurious effects of every other known factor could have been
remedied through an increase in price and (ii) that this increase was not
possible due to price suppression. As a result, India argues, the injury in its
entirety would automatically be attributed to the dumped imports. According to
India, this approach cannot be considered to be consistent with the aim of
Article 3.5, which is to establish that injury to the domestic industry is
indeed caused by the dumped imports.
30. Second, in India's view, the Panel also erred by
disregarding the guidance provided by the Appellate Body in US � Hot-Rolled
Steel on the interpretation of Article 3.5.45 India submits that,
in US � Hot-Rolled Steel, the Appellate Body made it clear that if
an investigating authority has come to the conclusion that a known factor, other
than the dumped imports, is causing injury to the domestic industry, that
authority must ensure that the injurious effects of this other factor are not
attributed to the dumped imports. India argues that, although the European
Communities "tried" in recital (103) of Commission Regulation (EC) No 1069/9746
to follow the Appellate Body's guidance, it failed to do so.47
31. India argues, finally, that the Panel misunderstood
India's argument with respect to inflation and again based its conclusions on a
misrepresentation of facts. India disagrees with the Panel's finding that the
European Communities did not identify the inability of bed linen prices to keep
pace with inflation in prices of consumer goods as a cause of injury. India
contends that, in recital (50) of EC Regulation 1644/2001, the European
Communities does identify inflation in consumer prices as a cause of injury.
India submits that, in spite of this, the European Communities failed to
mention, let alone examine and distinguish, in its causation analysis the
injurious effects of the inability of European Communities producers to keep
pace with inflation. India notes that, although the Panel interpreted the
inability of bed linen prices to increase commensurate with inflation as an indicator
(instead of a cause) of injury, in India's view, the inability of bed linen
prices to keep pace with inflation is a factor partly responsible for declining
profitability of the European Communities industry.
B. Arguments of the European Communities �
Appellee
1. Article 21.5 of the DSU
32. The European Communities submits that the Panel correctly
dismissed India's claim that the European Communities violated Article 3.5 of
the Anti-Dumping Agreement by failing to ensure that injuries
caused by "other factors" not be attributed to the dumped imports, because that
claim was not properly before the Panel. According to the European Communities,
the determination on the "other factors" is an element of the original measure
that was not modified and thus cannot be regarded as part of the implementation
measure. Consequently, that determination cannot be challenged before an
Article 21.5 panel.
33. The European Communities contends that Article 21.5 of
the DSU is not intended to provide a "second service" to complainants which, by
negligence or calculation, have omitted to raise or argue certain claims during
the original proceedings.48 In the European Communities' view, India's
reading of Article 21.5 would diminish the procedural rights of defending
parties, altering the balance of rights and obligations of Members that the DSU
purports to maintain.
34. According to the European Communities, in US � FSC49, Mexico � Corn Syrup (Article 21.5 � US)50, and US � Offset Act (Byrd Amendment)51,
the Appellate Body emphasized that procedural actions under the DSU must be
taken in a timely fashion. The European Communities submits that, in a similar
way, the right to make a claim must be exercised promptly. Consequently,
Article 21.5 must be interpreted as excluding the possibility of raising a claim
for the first time before an Article 21.5 panel when such claim could have been
pursued before the original panel.
35. Furthermore, the European Communities contends that the
decision of the original panel rejecting India's claim "has res judicata
effects" between the parties.52 Therefore, in the view of the European
Communities, India is precluded from reasserting the same claim before another
panel. The European Communities asserts, in this regard, that the applicability
of the principle of res judicata to disputes under the DSU was confirmed in US � Shrimp (Article 21.5 � Malaysia), where the
Appellate Body noted that Appellate Body Reports that are adopted by the DSB
must be treated by the parties to a particular dispute as a final resolution to
that dispute.53 The same principle applies, according to the European
Communities, to adopted panel reports.
36. The European Communities argues that India's allegation
that the European Communities did not suffer prejudice is irrelevant and wrong.
According to the European Communities, the defendant is not required to
demonstrate prejudice. In addition, the European Communities submits that
prejudice to the defending party arises whenever a claim that could have been
pursued in the original proceedings is brought before an Article 21.5 panel,
because, as a result, the defending party will be deprived of the possibility of
correcting the alleged violation within a reasonable period of time, if indeed a
violation is found.
37. The European Communities argues that whether or not India
acted in good faith is also irrelevant for the interpretation of Article 21.5 of
the DSU. The European Communities contends that, as explained by the Panel, a
decision on this issue does not turn on the facts of any particular dispute. In
the European Communities' view, even though India might not, in this specific
case, have acted in bad faith, India's proposed interpretation of Article 21.5
would allow the kind of litigation techniques that are incompatible with the
good faith requirement set out in Article 3.10 of the DSU.
38. According to the European Communities, the Panel's ruling
is consistent with earlier decisions of the Appellate Body. The European
Communities submits that, contrary to India's arguments, the facts of the
present dispute are different from those in Canada � Aircraft
(Article 21.5 � Brazil), where Brazil raised claims against a new
and different measure.54 In the present case, in contrast, India's claim
relates to an element that is not part of the new measure, because the findings
on the "other factors" included in the original determination were not affected
by the redetermination. Furthermore, the European Communities asserts that the
present case differs from US � FSC (Article 21.5 � EC) because, in
the latter case, the United States did not object to the claim raised by the
European Communities under Article III:4 of the GATT 1994.55 In that case,
moreover, the claim brought by the European Communities under Article III:4
against the measure "taken to comply" was different from the claims that the
European Communities could have brought under the same provision before the
original panel, because the United States had repealed the measure at issue in
the original dispute and replaced it with an entirely new measure. The European
Communities argues that, in the current appeal, India is challenging findings
that were not modified in the implementation measure and, therefore, cannot be
considered as part of the measure "taken to comply".
2. Paragraphs 1 and 2 of Article 3 of the Anti-Dumping
Agreement
39. The European Communities asserts that the Panel did not
err in finding that the European Communities did not act inconsistently with
paragraphs 1 and 2 of Article 3 of the Anti-Dumping Agreement when
determining the volume of "dumped imports" for purposes of making a
determination of injury.
40. The European Communities first notes that the Panel's
observation that the European Communities' investigating authorities did not use
a "statistically valid sample", within the meaning of the first option in the
second sentence of Article 6.10 of the Anti-Dumping Agreement, is
a factual finding beyond the scope of appellate review. The European Communities
submits that the group of exporters selected for purposes of the dumping
examination represents the largest percentage of the volume of exports which
could reasonably be investigated, within the meaning of the second option in the
second sentence of Article 6.10. Therefore, the Panel's factual observation that
the European Communities did not resort to a "statistically valid
sample" is correct. According to the European Communities, the selection of
companies of different types was aimed at improving the representativeness of
the selection, but it cannot be considered sufficient to produce a
"statistically valid sample".
41. In addition, the European Communities explains that the
fact that its investigating authorities, on a few occasions, referred to the
group of examined exporters as a "sample", does not mean that the dumping
examination was based on a "statistically valid sample" within the meaning of
Article 6.10. The European Communities notes that if all "samples" were by
definition "statistically valid", it would have been superfluous to add that
precision into Article 6.10. According to the European Communities, the
investigating authorities used the term "sample" because, in European
Communities law and practice, the terms "sampling" and "sample" are used to
designate indistinctly either of the two options envisaged in Article 6.10 of
the Anti-Dumping Agreement. Similarly, the references made by the
original panel and the Article 21.5 Panel to a "sample" merely reflect the
European Communities' use of that term.
42. The European Communities states that, in any event, the
Panel did not attach any legal consequences to the finding that the European
Communities did not use a statistically valid sample. The Panel's conclusion
that the European Communities did not act inconsistently with paragraphs 1 and 2
of Article 3 would be equally valid were the Appellate Body not to agree with
this finding of fact. The European Communities contends that, even if the
examined exporters selected by the investigating authorities constituted a
"statistically valid sample", there would still be no basis to assume that the
proportion of imports found to be dumped within the sample is positive evidence
of the proportion of imports outside the sample which would have been found to
be dumped had all the exporters been examined individually.
43. The European Communities asserts that "dumped imports"
are those imports for which a positive determination of dumping, whether
individual or collective, has been made. The European Communities contends that,
following this reasoning, its investigating authorities determined that all the
imports from the unexamined exporters (cooperating and non-cooperating) were
dumped. As India has not challenged the dumping determination in these
proceedings, it is illogical and contradictory for India now to claim that some
of those imports should be considered not dumped for purposes of making a
determination of injury. According to the European Communities, the obligation
to determine dumped imports objectively and on the basis of positive evidence is
satisfied where the imports have been found to be dumped in accordance with the
relevant provisions of the Anti‑Dumping Agreement governing the
determination of dumping.
44. The European Communities agrees with the Panel's
conclusion that Article 3 of the Anti‑Dumping Agreement contains no
guidance with respect to the determination of the volume of dumped imports. In
the European Communities' view, the general requirement to make an objective
examination of injury based on "positive evidence", set forth in Article 3.1,
cannot be read as imposing a new obligation with respect to the determination of
dumping where none is provided in the relevant provisions of the Anti-Dumping
Agreement.
45. In addition, the European Communities argues that India's
proposed interpretation would lead to an absurd result�where the same imports
could be simultaneously considered dumped and not dumped under different
provisions of the Anti-Dumping Agreement�because Article 9.4 would allow
the application of duties to imports which have been previously found not to be
dumped for purposes of injury determinations under Article 3.
46. The European Communities contends, furthermore, that
India's proposed interpretation assumes that no dumping margin needs to be
assigned to unexamined exporters. However, in the European Communities' view, if
the dumping margin of the unexamined exporters is not calculated, it is
impossible to establish whether the country-wide dumping margin is above de
minimis, as required by Article 5.8.
47. The European Communities states that, although the Anti-Dumping
Agreement does not prescribe any specific rules for calculating the dumping
margin of the unexamined exporters, it is implicit in Article 6.10 that, where
the investigating authorities limit the investigation of dumping to some
exporters, they may use the data collected for those examined exporters in order
to calculate the dumping margin of the unexamined exporters. In addition, the
European Communities refers to Article 9.3, which expressly states that there is
a logical link between the level of the dumping margin and that of the dumping
duty. Therefore, it contends that if Article 9.4 allows the investigating
authorities to apply anti-dumping duties to all imports from the
unexamined exporters, it is because all such imports can be
considered dumped, including for purposes of paragraphs 1 and 2 of Article 3. In
the light of this, the European Communities asserts that its investigating
authorities were entitled to regard all imports from the unexamined exporters as
dumped.
48. Finally, the European Communities argues that its investigating authorities were entitled to treat as "dumped" all imports from non-cooperating exporters, upon calculating the
corresponding dumping margin for the non-cooperating exporters in accordance with the methodology set out in Article 6.8 and Annex II to the Anti-Dumping Agreement. In addition, the
European Communities contends that, even if India's interpretation were correct,
the proportion of dumped imports from the examined exporters within the sample
could not be considered as representative of the proportion of dumped imports
from the non-cooperating exporters, because the non-cooperating exporters were
not included in the pool of exporters from which the sample was selected.
3. Article 17.6 of the Anti-Dumping
Agreement and Article 11 of the DSU
49. The European Communities argues that the Panel did not
err in finding that the European Communities had information before it on all
relevant economic factors listed in Article 3.4 of the Anti‑Dumping Agreement,
including stocks and capacity utilization, and thus acted consistently with
Article 3.4. According to the European Communities, the Panel correctly applied
the rules regarding the allocation of the burden of proof, did not distort the
evidence before it, nor did it fail to actively review the facts.
50. The European Communities submits that because India did
not properly establish a prima facie case that no data was collected by
the European Communities' investigating authorities, the Panel did not fail to
apply the rules on the allocation of the burden of proof. Alternatively, the
European Communities argues that, even if India had established a prima facie
case, this prima facie case had been refuted by the European
Communities. Furthermore, the European Communities emphasizes that the weighing
of evidence is within the discretion of the Panel as the trier of facts.
Consequently, the European Communities argues that the Panel was entitled to
conclude that the European Communities had the relevant information in its
possession, and acted consistently with Article 11 of the DSU.
51. In the European Communities' view, the Panel did not
distort the evidence. The European Communities argues that the information
contained in EC Regulation 1644/2001 is not "a mere assertion" as claimed by
India. Rather, the regulation explains the basis of the European Communities'
conclusion that stocks and capacity utilization did not have a bearing on the
state of the domestic industry. The European Communities refers to the statement
in the Appellate Body Report in EC � Hormones to the effect that a
claim of distortion implies that a panel committed an egregious error that calls
into question its good faith.56 The European Communities then underscores
that India has explicitly admitted that it is not alleging that the Panel in
this case committed an egregious error or acted in bad faith.
52. The European Communities submits that the Panel did not
fail to actively review the facts
as required by Article 17.6(i) of the Anti-Dumping Agreement. According
to the European Communities, India failed to demonstrate that the Panel's
assessment of the evidence is inconsistent with Article 11 of the DSU;
therefore, its identical claim under Article 17.6(i) is equally unfounded. In
addition, the European Communities argues that the Panel's decision not to use
its power of investigation under Article 13.2 of the DSU does not constitute a
violation of Article 17.6(i), because a panel's right to seek information under
Article 13.2 is discretionary. In the European Communities' view, the Appellate
Body's ruling in EC � Sardines supports the conclusion that the
Panel's decision not to seek information does not imply that the Panel failed to
make an objective assessment of the facts.57
4. Article 3.5 of the Anti-Dumping
Agreement
53. The European Communities argues that the Panel did not
err in finding that the European Communities did not act inconsistently with
Article 3.5 of the Anti-Dumping Agreement by failing to ensure
that injuries caused by "others factors" were not attributed to the dumped
imports. In the European Communities' view, the Panel's finding that the
increase in the cost of raw cotton and inflation were not causes of injury is a
factual finding and thus beyond the scope of appellate review.
54. The European Communities submits that India's arguments
misrepresent the findings of the investigating authorities. According to the
European Communities, the passages of EC Regulation 1644/2001 referred to by
India demonstrate that the investigating authorities did not consider the
increase in the cost of raw cotton as a separate cause of injury.
55. The European Communities notes that "price suppression"
is one of the possible "effects" of dumping set forth in Article 3.2 of the Anti-Dumping
Agreement. Accordingly, price suppression cannot be, at the same time, one
of the "other causes" of injury to be examined under Article 3.5. The European
Communities asserts that the increase in the cost of raw cotton is not the cause
of price suppression, but rather the fact that renders necessary the price
increase. According to the European Communities, this is in accordance with
Article 3.2, which provides that the "cause" of the "price suppression" is the
fact that "prevents" the price increase, and not the fact that renders necessary
such price increase. The European Communities contends, moreover, that India has
not argued that any other factor that was not examined by the investigating
authorities prevented the European Communities producers from increasing their
prices to reflect the increase in the cost of raw cotton.
56. Furthermore, the European Communities argues that the
injurious effects of the increase in the cost of raw cotton cannot be separated
and distinguished from the effects of the dumped imports. In the European
Communities' view, the existence of "price suppression" presupposes the
existence of two elements: (i) a factor that renders a price increase
necessary; and (ii) a factor that "prevents" such price increase. If either of
these elements is absent, there can be no "price suppression" within the meaning
of Article 3.2 and, consequently, no injury. The European Communities contends
that the injurious effects of the two constituent elements of price suppression
cannot, therefore, be "separated and distinguished".
57. The European Communities argues that, contrary to India's
allegation, the Panel's reasoning does not render redundant Article 3.5, because
a price increase cannot be said to remedy the injury caused by the factors
listed in that Article. As an example, the European Communities explains that a
price increase would not remedy the injurious effects of a contraction of
demand, but rather would aggravate them.
58. The European Communities submits that its investigating
authorities did not find, as alleged by India, that the failure of bed linen
prices to keep pace with inflation in the prices of consumer goods was a cause
of injury. According to the European Communities, EC Regulation 1644/2001
mentioned the failure of bed linen prices to keep pace with inflation as a
further indication of the existence of price suppression. In any event, the
European Communities contends that the failure of bed linen prices to keep pace
with inflation cannot be a cause of injury in the form of declining and
inadequate profitability. The European Communities notes that the profitability
of bed linen is a function of its cost of production and of its
sales price. The inflation rate for other consumer goods does not affect either
of these two variables. Therefore, the European Communities argues, the
inflation rate cannot be the cause of the injury suffered by the European
Communities industry. Rather, it is an indication or symptom of injury, as
indicated by the Panel.
C. Arguments of the Third Participants
1. Japan
59. Japan submits arguments relating only to the
determination of the volume of dumped imports for purposes of making a
determination of injury under Article 3 of the Anti-Dumping Agreement.
Japan submits that an analysis of the text, the context, and the object and
purpose of Article 9.4 of the Anti‑Dumping Agreement demonstrates that
Article 9.4 does not apply to the determination of dumping, injury, and
causation under Articles 2 and 3 of the Anti-Dumping Agreement. Japan
contends that Article 9.4 provides rules applicable only to the stage where
duties are collected, which follows the investigating authorities' affirmative
determination of dumping, injury, and causation.
60. Japan argues that the use of the term "duty" or "duties"
in Article 9.4 confirms the understanding that Article 9.4 applies only to the
stage of imposition of anti-dumping duties. In addition, Japan contends that the
use of the present perfect tense in Article 9.4 indicates that Article 9.4
becomes relevant only after the investigation phase has been completed and the
investigating authorities have found dumping, injury, and causation. In Japan's
view, the title of Article 9, as well as the principles set forth in
Article 9.1, clarify that Article 9 sets forth rules concerning imposition and
collection of duties, and that it does not affect the determinations of dumping,
injury, and causation.
61. Japan also contends that Article 9.4 contains a very
narrowly-focused set of rules that apply only in exceptional cases where an
examination of all responding parties is "impracticable," as set forth in the
second sentence of Article 6.10.
62. Japan finds support in the Appellate Body Report in US
� Hot-Rolled Steel for its argument that the European Communities'
position would dilute the requirement established in Article 3.1 that a
determination of injury be based on "positive evidence" and an "objective
examination."58 Japan submits that the European Communities' methodology is
inconsistent with the requirement that the evidence "must be of an affirmative,
objective and verifiable character, and that it must be credible."59 In
addition, Japan alleges that by using the data of the sampled producers in a
biased and unfair manner, the European Communities failed to comply with the
requirement that a determination of injury must involve an objective
examination�that is, that the " 'examination' process must conform to the
dictates of the basic principles of good faith and fundamental fairness."60
63. Japan contends, moreover, that its interpretation is
supported by Article 17.6(i) of the Anti‑Dumping Agreement. Japan argues
that although Article 17.6(i) is directed to panels, the obligation of an
unbiased and objective evaluation of facts applies equally to the investigating
authorities, because panels review the investigating authorities' evaluation of
facts in accordance with that standard.
2. United States
64. The United States agrees with the finding of the Panel
that when a party's argument is rejected in a report adopted by the DSB, that
party cannot raise new arguments on the same claim in a proceeding under
Article 21.5 of the DSU. The United States disagrees with India's view that the
mere inclusion of a finding in the legislative or administrative vehicle that
implements a DSB recommendation makes it a measure taken to comply subject to
Article 21.5 review. The text of that provision premises a panel's jurisdiction
over a claim under Article 21.5 on whether that claim challenges measures that
were taken to comply with DSB recommendations and rulings.
65. The United States submits that the Panel correctly
concluded that investigating authorities may treat all imports from producers or
exporters for which an affirmative dumping determination has been made as
"dumped imports" for purposes of making a determination of injury. The United
States submits that Article 2.1 of the Anti-Dumping Agreement defines
dumped products "[f]or the purpose of [the Anti-Dumping] Agreement", on a
country-wide basis, and that, therefore, the references to "dumped imports" in
paragraphs 1 and 2 of Article 3 and throughout Article 3 refer to all imports of
the product from the countries subject to the investigation.
66. In the United States' view, the Anti-Dumping
Agreement requires investigating authorities to examine, on the one hand,
the volume and price effects of the dumped imports, and, on the
other hand, all relevant economic factors having a bearing on the state of the
domestic industry. The United States argues that, through this examination of
both the dumped imports and the injury factors, the investigating
authorities examine the "consequent impact" of those dumped imports on
the domestic industry, as set out in paragraphs 1 and 2 of Article 3 of the Anti-Dumping
Agreement.
67. The United States contends that Article 9.4 confirms this
conclusion, as that provision does not provide for any separation of imports
from each non-examined producer or exporter into two categories�dumped and not
dumped. Rather, the United States contends that the provision provides for a
calculated duty to apply to all of the imports from each non-examined
producer.
68. The United States believes that the Panel correctly
recognized that, under the Anti-Dumping Agreement, an
investigating authority may appropriately draw a distinction between the
economic factors and indicia that indicate whether an industry's overall
condition is declining, and "other factors" that may be causing such decline.
Only the latter are subject to the non-attribution provisions of Article 3.5 of
the Anti-Dumping Agreement.
69. The United States agrees with the Panel's finding that
the European Communities properly found that the industry's rising raw material
costs and inflation were not "other factors" causing injury subject to the
non-attribution provision of Article 3.5. Even if the Appellate Body were to
conclude that these factors should have been considered "other factors", subject
to the provisions of Article 3.5, the United States believes that the European
Communities' analysis of the effect of the factors on the industry represents a
reasoned and adequate discussion that does not attribute to imports the effects,
if any, of these two factors. The United States believes that the European
Communities' analysis of the effects of rising raw material costs and inflation
would satisfy the European Communities' non-attribution obligation under
Article 3.5, as that obligation has been interpreted by the Appellate Body.
III. Issues Raised in this Appeal
70. The following issues are raised in this appeal:
(a) (i) whether the Article 21.5 Panel61 erred in
dismissing India's claim that the European Communities had acted
inconsistently with Article 3.5 of the Agreement on Implementation
of Article VI of the General Agreement on Tariffs and Trade 1994 (the
"Anti-Dumping Agreement ") �by failing to ensure that injuries
caused by "other factors" was not attributed to the dumped
imports�because that claim was not properly before the Panel; and, if so
(ii) whether the Panel erred in finding, in the
alternative, that the European Communities had ensured that injuries
caused by "other factors" was not attributed to the dumped imports and,
therefore, had not acted inconsistently with Article 3.5 of the Anti-Dumping
Agreement;
(b) whether the Panel erred in concluding that the
European Communities had acted consistently with paragraphs 1 and 2 of
Article 3 of the Anti-Dumping Agreement in calculating the
volume of dumped imports, for purposes of determining injury; and
(c) whether the Panel failed to discharge its duties
properly under Article 17.6 of the Anti‑Dumping Agreement
and Article 11 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (the "DSU"), in finding that
the European Communities had information before it on all relevant
economic factors listed in Article 3.4 of the Anti-Dumping Agreement,
including stocks and capacity utilization.
IV. Article 21.5 of the DSU
A. Introduction
71. We turn first to the issue raised by India that the Panel
erred in dismissing India's claim that the European Communities had acted
inconsistently with the requirement of Article 3.5 of the Anti‑Dumping
Agreement by failing to ensure that injuries caused by "other factors" was
not attributed to the dumped imports. We recall that India claimed before the original
panel that the European Communities had acted inconsistently with
Article 3.5 of the Anti-Dumping Agreement by failing to determine to
what extent injuries caused by "other factors" were responsible for the injury
allegedly suffered by the domestic industry.62 The original panel ruled:
Finally, with respect to India's claim that the
European Communities failed to properly consider "other factors" which
might have been causing injury to the domestic industry, as required by
Article 3.5 of the AD Agreement, we note that, with the exception of the
argument concerning improper consideration of "dumped" imports, India
has made no other arguments in support of this claim. Having rejected
India's position in that regard, we consider that India has failed to
present a prima facie case in this regard.63
India did not appeal this panel finding in the original
dispute. Thus, the panel report in the original dispute was adopted by the
Dispute Settlement Body (the "DSB") without modification of this finding.
72. In order to comply with the recommendations and rulings
of the DSB in the original dispute, the European Communities adopted Council
Regulation (EC) No 1644/200164, reflecting the investigating authorities' revised
determinations of dumping and injury. In the light of these revised
determinations, the European Communities also re-examined whether a causal link
existed between the dumped imports and injury suffered by the domestic industry.65
The European Communities did not, however, revise the analysis of
"other factors" made in the original determination.66 Rather, in
EC Regulation 1644/2001, the European Communities confirmed the findings of the
original determination in this respect, except for a minor change.67
73. Subsequently, before the Article 21.5 Panel,
India claimed that the European Communities had violated Article 3.5, inter
alia, because it had disregarded the obligation to not attribute to the
dumped imports injuries caused by "other factors", and had failed to separate
and distinguish injuries caused by those "other factors" from the injury caused
by the dumped imports.68 The European Communities responded with a request
for a preliminary ruling, asking the Panel to dismiss India's claim under
Article 3.5 insofar as it concerned aspects of the original determination which
were the subject of a claim before the original panel, which was not pursued
before that panel.69 India asked the Panel to reject the European
Communities' request for a preliminary ruling.70
74. The Panel stated that:
� a claim which, as a legal and practical matter,
could have been raised and pursued in the original dispute, but was not,
cannot be raised on the same facts and legal premises in an Article 21.5
proceeding to determine the existence or consistency of measures taken
to comply with the recommendation of the DSB in the original dispute.71
According to the Panel, neither Article 21.5 of the DSU nor
any other provision entitles India to such a "second chance".72 The Panel
concluded that:
� with respect to India's claim 6, insofar as it
concerns the consistency of the EC's measure with the obligation in
Article 3.5 to ensure that injuries caused by "other factors" not be
attributed to the dumped imports, the EC's request for preliminary
ruling has merit. We consider that this aspect of India's claim is not
properly before us, having been disposed of by the Panel in the original
Report and not appealed, and will not make any ruling on it.73
75. In this appeal, India requests that we reverse the
Panel's finding dismissing its claim under Article 3.5 relating to "other
factors", and complete the legal analysis.74 India argues that its claim
under Article 3.5 forms part of the matter before the Article 21.5 Panel because
India identified this claim in its request for the establishment of that Panel.
In India's view, the Panel was not precluded from examining this claim, even
though the original panel had dismissed it. Referring to our Report in Canada
� Aircraft (Article 21.5 � Brazil), India submits that the measure at
issue in this implementation dispute is a new measure that is
legally separate and distinct from the original measure.75 India
argues further that an implementation dispute is not confined to examining the
measures taken to comply from the perspective of the claims, arguments, and
factual circumstances related to the measure that was the subject of the original
proceedings.76 In support of this position, India asserts that, in the US � FSC
(Article 21.5 � EC) implementation dispute, a claim under Article III
of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994") was
accepted on appeal, even though the European Communities could have raised it
during the original proceedings, but did not.77
76. India also contends that the Panel erred in finding the
situation in these implementation proceedings to be analogous to the situation
in US � Shrimp (Article 21.5 � Malaysia).78 In India's view, the
measure in US �Shrimp (Article 21.5 � Malaysia) was the same
measure that had been found to be consistent with obligations of the World Trade
Organization (the "WTO") in the original proceedings.79 In this dispute,
India notes that the European Communities re-examined causation in the
redetermination as a consequence of revised dumping and injury findings.
Therefore, in India's view, the causation analysis is a new component of
the measure taken to comply that was not part of the measure before the original
panel.80
77. The European Communities responds that we should uphold
the Panel's ruling dismissing India's claim under Article 3.5 relating to "other
factors".81 The European Communities argues that it was under no obligation
to correct, in the redetermination, its findings on "other factors", because the
original panel had not ruled that these findings were inconsistent with
Article 3.5.82 The European Communities concludes, therefore, that the
aspects of the redetermination relating to "other factors" are not part of the
measure "taken to comply" with the recommendations and rulings of the DSB in the
original dispute.83 According to the European Communities, claims
challenging measures other than those taken to comply cannot form part
of Article 21.5 proceedings. The European Communities agrees with the Panel's
reliance on our findings in US �Shrimp (Article 21.5 � Malaysia).84 In the European Communities' view, the implementation disputes
in Canada �
Aircraft (Article 21.5
� Brazil) and in US � FSC (Article 21.5 � EC) can be
distinguished from the present Article 21.5 proceedings because those disputes
concerned new claims challenging modified aspects of
the measure.85 The European Communities emphasizes that the original panel's
finding rejecting India's claim relating to "other factors" represents the final
resolution of the dispute between the parties, because it forms part of a panel
report adopted by the DSB. For this reason, the European Communities maintains
that India is precluded from reasserting this claim in these Article 21.5
proceedings.
B. Analysis
78. In examining whether India's claim under Article 3.5
relating to "other factors" was properly before the Panel, we must first
establish the appropriate subject-matter of Article 21.5 proceedings.
Article 21.5 provides in relevant part:
Where there is disagreement as to the existence or
consistency with a covered agreement of measures taken to comply with
the recommendations and rulings such dispute shall be decided through
recourse to these dispute settlement procedures, including wherever
possible resort to the original panel.
As in original dispute settlement proceedings,
the "matter" in Article 21.5 proceedings consists of two elements: the specific
measures at issue and the legal basis of the complaint (that is, the
claims).86 If a claim challenges a measure
which is not a "measure taken to comply", that claim cannot properly be
raised in Article 21.5 proceedings. We agree with the Panel that it is,
ultimately, for an Article 21.5 panel�and not for the complainant or the
respondent�to determine which of the
measures listed in the request for its establishment are
"measures taken to comply".87 Although the issue raised by India in this
appeal relates primarily to the scope of claims that may be raised in
Article 21.5 proceedings, this issue is intertwined with the question of which measures
may be considered as "measures taken to comply" with the DSB rulings in
an original dispute.
79. We addressed the function and scope of Article 21.5
proceedings for the first time in Canada � Aircraft (Article 21.5 � Brazil).
There, we found that Article 21.5 panels are not merely called upon to assess
whether "measures taken to comply" implement specific "recommendations and
rulings" adopted by the DSB in the original dispute.88 We explained there
that the mandate of Article 21.5 panels is to examine either the "existence" of
"measures taken to comply" or, more frequently, the "consistency with a
covered agreement" of implementing measures.89 This implies that an
Article 21.5 panel is not confined to examining the "measures taken to comply"
from the perspective of the claims, arguments, and factual circumstances
relating to the measure that was the subject of the original
proceedings.90 Moreover, the relevant facts bearing upon the "measure taken
to comply" may be different from the facts relevant to the measure at issue in
the original proceedings. It is to be expected, therefore, that the claims,
arguments, and factual circumstances relating to the "measure taken to comply"
will not, necessarily, be the same as those relating to the measure in the
original dispute.91 Indeed, a complainant in Article 21.5 proceedings may
well raise new claims, arguments, and factual circumstances different
from those raised in the original proceedings, because a "measure taken to
comply" may be inconsistent with WTO obligations in ways different from
the original measure. In our view, therefore, an Article 21.5 panel could not
properly carry out its mandate to assess whether a "measure taken to comply" is fully
consistent with WTO obligations if it were precluded from
examining claims additional to, and different from, the claims raised in the
original proceedings.92
80. This appeal, however, raises an issue different from the
issue that was before us in Canada � Aircraft (Article 21.5 � Brazil).
Here, India did not raise a new claim before the Article 21.5
Panel; rather, India reasserted in the Article 21.5 proceedings the same
claim that it had raised before the original panel in respect of a component of the implementation measure which was the same as in the original measure. This same claim was dismissed by the original panel, and
India did not appeal that finding.
81. Despite this previous dismissal, and despite India's
decision not to appeal it, India insists that it should be entitled to reassert
its claim under Article 3.5 relating to "other factors" in these Article 21.5
proceedings. India argues that it should be entitled to do so because the
"measure taken to comply" in this dispute is "separate and distinct" from the
measure subject to the original dispute.93 For support, India refers to our Report in Canada � Aircraft (Article 21.5 � Brazil), where we
stated that:
In principle, a measure which has been "taken to
comply with the recommendations and rulings" of the DSB will not
be the same measure as the measure which was the subject of the original
dispute, so that, in principle, there would be two separate and distinct
measures: the original measure which gave rise to the
recommendations and rulings of the DSB, and the "measures taken to
comply" which are � or should be � adopted to implement those
recommendations and rulings.94 (original italics; footnote omitted)
82. Relying on this, India contends that it is not,
in fact, challenging the same measure that was before the original panel. India
maintains that, although some aspects of the measure remain the same, the
redetermination must be considered "as a whole new measure" because it is not
capable of being divided into separate elements.95
83. In contrast, the European Communities contends that there
are limits to the scope of the claims that may be raised in
Article 21.5 proceedings, even where such claims challenge "measures taken to
comply" as inconsistent with WTO obligations, in contrast to measures that gave
rise to the original proceedings. The European Communities refers
to our Report in US � Shrimp (Article 21.5 � Malaysia), on which the
Panel also relied96, where we stated:
With respect to a claim that has been made
when a matter is referred by the DSB for an Article 21.5 proceeding,
Malaysia seems to suggest as well that a panel must re-examine, for
WTO-consistency, even those aspects of a new measure that were part of a
previous measure that was the subject of a dispute, and were found by
the Appellate Body to be WTO�consistent in that dispute, and
that remain unchanged as part of the new measure.97 (original
italics)
We concluded in that appeal that:
� the [US � Shrimp (Article 21.5 � Malaysia)]
Panel properly examined Section 609 as part of its examination of
the totality of the new measure, correctly found that Section 609 had
not been changed since the original proceedings, and rightly concluded
that our ruling in United States � Shrimp with respect to the
consistency of Section 609, therefore, still stands.98
84. In the light of these considerations, we turn to an
examination of the measure taken to comply in this implementation dispute. In
doing so, we look to the various aspects of the redetermination carried out by
the European Communities in order to comply with the DSB rulings in the original
dispute.
85. We agree with India that the investigating authorities of
the European Communities were required to revise the original determination of
dumping and injury in order to comply with the DSB recommendations and rulings.
Towards this end, the European Communities recalculated the dumping margins
without applying the practice of "zeroing" that had been found to be
inconsistent with WTO obligations in the original dispute. According to the
recalculation, two of the individually examined Indian producers were not
dumping.99 The investigating authorities deducted the imports attributable
to those two producers from the volume of dumped imports, and,
accordingly, the volume of dumped imports in the redetermination was lower
than in the original determination. According to EC Regulation 1644/2001, the
investigating authorities of the European Communities also "re-examined" whether
a causal link between the two revised elements�dumped imports and
the injury to the domestic industry�still existed, and the Panel reviewed that
re-examination.100
86. The amount of dumped imports will, of course,
have an impact on the assessment of the effects of the "dumped imports"
for the purposes of determining injury. It is clear, therefore, that the
revised findings on dumping and injury could have a bearing on whether a causal
link exists between dumping and injury. But whilst a revised finding of dumping
will, in all likelihood, have an impact on the "effect of dumped
imports", we see no reason to conclude as well that this revised finding would
have any impact on the "effects � of known factors other than the
dumped imports" in this dispute.101 Accordingly, we are of the view that the
investigating authorities of the European Communities were not required to
change the determination as it related to the "effects of other factors" in this
particular dispute. Moreover, we do not see why that part of the redetermination
that merely incorporates elements of the original determination on "other
factors" would constitute an inseparable element of a measure taken to comply
with the DSB rulings in the original dispute. Indeed, the investigating
authorities of the European Communities were able to treat this element
separately. Therefore, we do not agree with India that the redetermination can
only be considered "as a whole new measure".102
87. We conclude, therefore, that, in these Article 21.5
proceedings, India has raised the same claim under Article 3.5 relating
to "other factors" as it did in the original proceedings. In doing so, India
seeks to challenge an aspect of the original measure which has not changed, and
which the European Communities did not have to change, in order to comply with
the DSB recommendations and rulings to make that measure consistent with the
European Communities' WTO obligations.
88. For these reasons, we agree with the Panel's statement
distinguishing, in this respect, the Canada � Aircraft (Article 21.5 � Brazil)
dispute from these Article 21.5 proceedings:
In that case, Canada had implemented the
recommendation of the DSB by adopting a new and different measure. In
the Article 21.5 proceeding, Brazil made claims regarding that measure
that it had not made in the original dispute. Canada objected to claims
raised by Brazil against the new measure on the grounds that no similar
claims had been raised against the original measure. Had Canada's
objection been upheld, Brazil would have been barred from making claims
that could not have been raised in the original proceedings. The
issue before us is whether India should be allowed to raise, in this
Article 21.5 proceeding, claims with respect to Article 3.5 which it
could and did raise before the original panel, but which it
did not pursue, and which the Panel dismissed for failure to present a prima
facie case of violation.103 (original boldface)
We agree with the Panel that the Canada � Aircraft
(Article 21.5 � Brazil) dispute involved a new claim challenging a new
component of the measure taken to comply which was not part of the original
measure. The situation in Canada � Aircraft (Article 21.5 � Brazil) was
thus different from the situation in this appeal.
89. Nor does our finding in US � FSC (Article 21.5 � EC)
support India's position in this appeal.104 In that implementation dispute,
the Article 21.5 panel ruled on a new claim under Article III of
the GATT 1994 that the European Communities had not raised in the original
proceedings. We upheld that ruling on appeal. In that dispute, the European
Communities challenged a "foreign content limit" (which is similar to a local
content requirement) imposed by the "FSC Repeal and Extraterritorial Income
Exclusion Act of 2000 (ETI)"105 on foreign trade property eligible for
special tax treatment. That provision established a different "foreign
content limit" from the one contained in the original "Foreign Sales Corporation
(FSC) regime"106, which the United States had changed in order to
comply with the DSB recommendations and rulings in the original dispute. In
other words, the US � FSC (Article 21.5 � EC) dispute involved a new
claim challenging a changed component of the measure taken to comply,
while this dispute, by contrast, concerns the same claim against an
unchanged component of the implementation measure that was part of the
original measure and that was not found to be inconsistent with WTO obligations.107
Therefore, the situation in US � FSC (Article 21.5 � EC) was different
from the situation in this appeal.
90. Having distinguished the situations in these two previous
implementation disputes from the situation in this appeal, we turn next to the
question of the effect of a ruling adopted by the DSB in
an original dispute for the parties to Article 21.5 proceedings. The European
Communities argues
that a ruling adopted by the DSB provides a final resolution to the dispute
between the parties as it relates to the particular claim and the specific
aspect of the measure.108 As we have noted, the US � Shrimp (Article 21.5 � Malaysia) dispute involved a claim against an
aspect of the implementation measure that was the same as in the original
measure, and that we had found to be not inconsistent with WTO
obligations in the original dispute. In that Article 21.5 dispute, we ruled:
We wish to recall that panel proceedings under
Article 21.5 of the DSU are, as the title of Article 21 states, part of
the process of the "Surveillance of Implementation of Recommendations
and Rulings" of the DSB. This includes Appellate Body Reports. To be
sure, the right of WTO Members to have recourse to the DSU, including
under Article 21.5, must be respected. Even so, it must also be kept in
mind that Article 17.14 of the DSU provides not only that Reports of the
Appellate Body "shall be" adopted by the DSB, by consensus, but also
that such Reports "shall be � unconditionally accepted by the parties to
the dispute. �" Thus, Appellate Body Reports that are adopted by the DSB
are, as Article 17.14 provides, "� unconditionally accepted by the
parties to the dispute", and, therefore, must be treated by the
parties to a particular dispute as a final resolution to that dispute.
In this regard, we recall, too, that Article 3.3 of the DSU states that
the "prompt settlement" of disputes "is essential to the effective
functioning of the WTO".109 (underlining added)
91. Thus, we concluded there that an adopted Appellate Body
Report must be treated as a final resolution to a dispute between
the parties to that dispute. We based this conclusion on Article 17.14 of the
DSU, which deals with the effect of adopted Appellate Body Reports (as opposed
to panel reports). Article 17.14 reads, in relevant part:
Adoption of Appellate Body Reports
An Appellate Body report shall be adopted by the DSB
and unconditionally accepted by the parties to the dispute unless the
DSB decides by consensus not to adopt the Appellate Body report within
30 days following its circulation to the Members. (footnote omitted)
92. The issue raised in this appeal is similar to the issue
we resolved in US � Shrimp (Article 21.5 � Malaysia). In this appeal,
however, the original panel's finding on India's claim under Article 3.5
relating to "other factors" was not appealed in the original
dispute. Accordingly, the finding of the original panel relating to that claim
was adopted by the DSB as part of a panel report, and, therefore,
Article 17.14, which deals with the adoption of Appellate Body
Reports, does not dispose of the issue before us.
93. All the same, in our view, an unappealed finding
included in a panel report that is adopted by the DSB must be treated as
a final resolution to a dispute between the parties in respect of the
particular claim and the specific component of a measure
that is the subject of that claim. This conclusion is supported by Articles 16.4
and 19.1, paragraphs 1 and 3 of Article 21, and Article 22.1 of the DSU. Where a
panel concludes that a measure is inconsistent with a covered agreement, that
panel shall recommend, according to Article 19.1, that the Member
concerned bring that measure into conformity with that agreement. A panel
report, including the recommendations contained therein, shall be
adopted by the DSB within the time period specified in
Article 16.4�unless appealed. Members are to comply with recommendations and rulings adopted by the DSB promptly, or within a reasonable period
of time, in accordance with paragraphs 1 and 3 of Article 21 of the DSU. A
Member that does not comply with the recommendations and rulings adopted by the
DSB within these time periods must face the consequences set out in
Article 22.1, relating to compensation and suspension of concessions. Thus, a
reading of Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and Article
22.1, taken together, makes it abundantly clear that a panel finding which is
not appealed, and which is included in a panel report adopted by the
DSB, must be accepted by the parties as a final resolution to the
dispute between them, in the same way and with the same finality as a finding
included in an Appellate Body Report adopted by the DSB�with respect to the
particular claim and the specific component of the measure that is the subject
of the claim. Indeed, the European Communities and India agreed at the oral
hearing that both panel reports and Appellate Body Reports would have the same
effect, in this respect, once adopted by the DSB.110
94. On this point, we recall that we resolved the question of the
effect of findings adopted by the DSB as part of a panel report in the
same vein in Mexico � Corn Syrup (Article 21.5 � US). In that
implementation dispute, we relied on Article 3.2 of the DSU, which emphasizes
the need for security and predictability in the trading system, and on
Article 3.3 of the DSU, which stresses the necessity for the prompt settlement
of disputes. There, we treated certain findings of the original panel that had
not been appealed in the original proceedings, and that had been
adopted by the DSB, as a final resolution to the dispute between the parties in
respect of the particular claim and the specific component of the measure that
was the subject of the claim. We observed there that "Mexico seems to seek to
have us revisit the original panel report"111, and added that:
� the original panel report, regarding the initial
measure (SECOFI's original determination), has been adopted and that
these Article 21.5 proceedings concern a subsequent measure
(SECOFI's redetermination). We also note that Mexico did not appeal the
original panel's report, and that Articles 3.2 and 3.3 of the DSU
reflect the importance to the multilateral trading system of security,
predictability and the prompt settlement of disputes. We see no basis
for us to examine the original panel's treatment of the alleged
restraint agreement.112 (original italics)
95. We, therefore, agree with the Panel in this dispute that:
� the same principle [as that expressed in
Article 17.14] applies to those aspects of the Panel's report that are
not appealed and are thus not addressed by the Appellate Body. Thus, the
portions of the original Report of the Panel that are not appealed,
together with the Appellate Body report resolving the issues appealed,
must, in our view, be considered as the final resolution of the dispute,
and must be treated as such by the parties, and by us, in this
proceeding.113 (footnote omitted)
96. We consider next whether the fact that the Panel dismissed
India's claim because India had not established a prima facie case
has any relevance for our decision on the effect of the adoption by the DSB of a
finding of a panel report that was not appealed. We recall that, when we ruled
in
US � Shrimp (Article 21.5 � Malaysia) that a finding adopted by the
DSB should be treated as a final resolution to a dispute, we relied on the fact
that, in our original Report in US � Shrimp, we had found that the
unchanged aspect of the measure, as such, was consistent
with Article XX of the GATT 1994. Here, however, the original panel ruled that
India had failed to present a prima facie case in respect of its claim
under Article 3.5 relating to "other factors".114 In our view, the effect,
for the parties, of findings adopted by the DSB as part of a panel report is the
same, regardless of whether a panel found that the complainant failed to
establish a prima facie case that the measure is inconsistent with
WTO obligations, that the Panel found that the measure is fully consistent with
WTO obligations, or that the Panel found that the measure is not consistent with
WTO obligations. A complainant that, in an original proceeding, fails to
establish a prima facie case should not be given a "second chance"
in an Article 21.5 proceeding, and thus be treated more favourably than a
complainant that did establish a prima facie case but, ultimately,
failed to prevail before the original panel, with the result that the panel did
not find the challenged measure to be inconsistent with WTO obligations. Nor
should a defending party be subject to a second challenge of the measure found
not to be inconsistent with WTO obligations, merely because the complainant
failed to establish a prima facie case, as opposed to failing
ultimately to persuade the original panel. Once adopted by the DSB, both
findings amount to a final resolution to the issue between the parties with
respect to the particular
claim and the specific aspects of the measure that are the
subject of the claim.115 Moreover, here, India decided not to appeal the
panel finding at issue in the original proceedings, even though it could have
done so, inasmuch as the issue was not of an exclusively factual nature. Hence,
India itself seems to have accepted the finding as final.
97. Therefore, we agree with the Panel's conclusion that:
When considering the status of adopted panel reports,
the Appellate Body has indicated that they are binding on the parties
"with respect to that particular dispute". In our view, the
Panel's ruling in the original dispute disposed of India's claim in this
regard. Thus, we consider that India is precluded from reasserting in
this proceeding and presenting arguments in support of a claim
challenging the EC's consideration of "other factors" of injury.116
(footnotes omitted)
98. The Panel's ruling that India's claim under Article 3.5
relating to "other factors" was not properly before it is also consistent with
the object and purpose of the DSU. Article 3.3 provides that the prompt
settlement of disputes is "essential to the effective functioning of the WTO".
Article 21.5 advances the purpose of achieving a prompt settlement of disputes
by providing an expeditious procedure to establish whether a Member has fully
complied with the recommendations and rulings of the DSB.117 For that
purpose, an Article 21.5 panel is to complete its work within 90 days, whereas a
panel in an original dispute is to complete its work within 9 months of its
establishment, or within 6 months of its composition. It would be incompatible
with the function and purpose of the WTO dispute settlement system if a claim
could be reasserted in Article 21.5 proceedings after the original panel or the
Appellate Body has made a finding that the challenged aspect of the original
measure is not inconsistent with WTO obligations, and that report
has been adopted by the DSB. At some point, disputes must be viewed as
definitely settled by the WTO dispute settlement system.
99. In the light of the foregoing, we conclude that the
original panel's finding on India's claim under Article 3.5 relating to "other
factors" provides a "final resolution" to the dispute in this respect118
between the parties, because it was not appealed, and forms part of a panel
report adopted by the DSB. Therefore, we uphold the Panel's finding, in
paragraph 6.53 of the Panel Report, that India's claim under Article 3.5 of the
Anti-Dumping Agreement, as far as it relates to the European
Communities' consideration of "other factors", was not properly before the
Panel.
100. As a result, we do not need to rule on the issue of
whether the Panel erred, in its alternative finding, in paragraph 6.246 of the
Panel Report, that the European Communities had ensured that injuries caused by
"other factors" was not attributed to the dumped imports, and thus had not acted
inconsistently with Article 3.5 of the Anti-Dumping Agreement. We recall
that, at the oral hearing, India confirmed that its appeal against the Panel's
alternative finding is conditional on our reversing the Panel's finding that
India's claim under Article 3.5 relating to "other factors" was not properly
before the Panel, and that, therefore, we need not reach this issue if we were
to rule as we, in fact, have ruled.119
1 WT/DS141/RW, 29 November 2002.
2 The recommendations and rulings of the DSB resulted from the
adoption, by the DSB, of the Appellate Body Report and the panel report, as
modified by the Appellate Body Report, in EC � Bed Linen.
3 Council Regulation (EC) No 2398/97, 28 November 1997,
imposing a definitive anti-dumping duty on imports of cotton-type bed linen
originating in Egypt, India and Pakistan, published in the Official Journal of
the European Communities, 4 December 1997, L-series, No. 332 ("EC Regulation
2398/97").
4 Original Panel Report, WT/DS141/R, adopted 12 March 2001, as
modified by the Appellate Body Report, WT/DS141/AB/R.
5 Appellate Body Report, EC � Bed Linen, adopted 12
March 2001, para. 86(1).
6
Ibid., para. 86(2).
7 WT/DS141/9, 22 March 2001.
8 WT/DS141/10, 1 May 2001.
9 Council Regulation (EC) No 1644/2001, 7 August 2001, amending
Regulation (EC) No 2398/97 imposing a definitive anti-dumping duty on imports of
cotton-type bed linen originating in Egypt, India and Pakistan and suspending
its application with regard to imports originating in India, published in
the Official Journal of the European Communities, 14 August 2001, L-series,
No. 219 ("EC Regulation 1644/2001").
10 Council Regulation (EC) No 160/2002, 28 January 2002,
amending Council Regulation (EC) No 2398/97 imposing a definitive anti-dumping
duty on imports of cotton-type bed linen originating in Egypt, India and
Pakistan, and terminating the proceeding with regard to imports originating in
Pakistan, published in the Official Journal of the European Communities, 30
January 2002, L-series, No. 26 ("EC Regulation 160/2002").
Council Regulation (EC) No 696/2002, 22 April 2002,
confirming the definitive anti-dumping duty imposed on imports of cotton-type
bed linen originating in India by Regulation (EC) No 2398/97, as amended and
suspended by Council Regulation (EC) No 1644/2001, published in the Official
Journal of the European Communities, 25 April 2002, L-series, No. 109
("EC Regulation 696/2002").
11 Panel Report, paras. 2.1-2.11.
12 WT/DS141/13/Rev.1, 8 May 2002.
13 WT/DS141/14, 2 July 2002; WT/DS141/14/Corr.1, 10 July 2002.
14 Panel Report, para. 6.22.
15
Ibid., para. 6.27.
16
Ibid., para. 6.53.
17
Ibid., para. 6.57. India's "claim 5" related to the
assessment of whether the European Communities' reconsideration of injury was
consistent with Article 3.4.
18 Panel Report., para. 6.68.
19 Panel Report, para. 6.94.
20
Ibid., para. 6.116.
21
Ibid., para. 6.144.
22
Ibid., para. 6.217.
23
Ibid., para. 6.233.
24
Ibid., para. 6.260.
25
Ibid., para. 6.271.
26 Panel Report, para. 6.246.
27
Ibid., para. 7.1.
28
Ibid., para. 7.2.
29
Ibid., para. 7.3.
30 WT/DS141/16, 9 January 2003.
31 Pursuant to Rule 21(1) of the Working Procedures.
32 Pursuant to Rule 22(1) of the Working Procedures.
33 Pursuant to Rule 24(1) of the Working Procedures.
34 Pursuant to Rule 24(2) of the Working Procedures.
35 Panel Report, para. 6.22.
36 India's and the European Communities' responses to
questioning at the oral hearing.
37 India's appellant's submission, para. 145.
38 India's response to questioning at the oral hearing.
39 India's response to questioning at the oral hearing.
40
Ibid.
41 Appellate Body Report, Canada � Aircraft (Article 21.5 �
Brazil), para. 41.
42 Appellate Body Report, Thailand � H-Beams, para. 106.
43 India's appellant submission, paras. 56 and 59.
44 Appellate Body Report, US � Hot-Rolled Steel, para.
55.
45 Appellate Body Report, US � Hot-Rolled Steel, paras.
221-223.
46 Commission Regulation (EC) No 1069/97, 12 June 1997, imposing
a provisional anti-dumping duty on imports of cotton-type bed linen originating
in Egypt, India and Pakistan, published in the Official Journal of the European
Communities, 13 June 1997, L-series, No. 156 ("EC Regulation 1069/97").
47 India's appellant's submission, para. 178.
48 European Communities' appellee's submission, para. 140.
49 Appellate Body Report, US � FSC, para. 166.
50 Appellate Body Report, Mexico � Corn Syrup (Article 21.5 �
US), para. 50.
51 Appellate Body Report, US � Offset Act (Byrd Amendment),
para. 314.
52 European Communities' appellee's submission, para. 150.
53 Appellate body Report, US � Shrimp (Article 21.5 �
Malaysia), para. 97.
54 Appellate Body Report, Canada � Aircraft (Article 21.5 �
Brazil), paras. 8-14.
55 Appellate Body Report, US � FSC (Article 21.5 � EC),
paras. 40-44.
56 Appellate Body Report, EC � Hormones, para. 133.
57 Appellate Body Report, EC � Sardines, para. 302.
58 Appellate Body Report, US � Hot-Rolled Steel,
paras. 192-193.
59
Ibid., para. 192.
60
Ibid., para. 193.
61 Hereinafter "the Panel".
62 Original Panel Report, para. 6.123. India also claimed under
Article 3.5 that the European Communities had failed to establish the existence
of a causal link between dumped imports and injury suffered by the domestic
industry. According to India, by cumulating all imports from the
countries under investigation, the European Communities had included in its
calculation of "dumped imports" what India considered to be non-dumped
import transactions. (Ibid., paras. 6.121-6.122) The original panel found
no violation of Article 3.5 in relation to this particular claim. (Ibid.,
para. 6.142) India did not appeal this finding in the original dispute.
63
Ibid., para. 6.144.
64 Council Regulation (EC) No 1644/2001, 7 August 2001, amending
Council Regulation (EC) No 2398/97, imposing a definitive anti-dumping duty on
imports of cotton-type bed linen originating in Egypt, India, and Pakistan and
suspending its application with regard to imports originating in India,
published in
the Official Journal of the European Communities, 14 August 2001, L-series,
No. 219 ("EC Regulation 1644/2001").
65
Ibid., recitals (52)-(53).
66
Ibid., recitals (59)-(64).
67 The Panel noted that the European Communities expanded its
findings in the redetermination with respect to the development of consumption
of bed linen in order to take into account slightly different figures on
domestic industry sales. The Panel stated that India's claim in the Article 21.5
proceedings did not rely on this minor change. (Panel Report, footnote 75 to
para. 6.52)
68 In addition, India claimed before the Article 21.5 Panel that
the European Communities had acted inconsistently with Article 3.5 by failing to
establish a causal link between dumped imports and the injury allegedly suffered
by the domestic industry. (Panel Report, para. 6.218)
69
Ibid., para. 6.30.
70
Ibid., para. 6.34.
71
Ibid., para. 6.43. The Panel disagreed with India that
the original panel's finding on India's claim under Article 3.5 concerning
"other factors" was an exercise of judicial economy. In the Panel's
view, it was a finding that India had failed to present a prima facie
case of violation. (Ibid., para. 6.44)
72
Ibid., para. 6.43.
73
Ibid., para. 6.53. However, the Panel did rule on the
merits of another aspect of India's claim under Article 3.5, namely the
existence of a causal link between dumped imports and injury. The Panel found
that the European Communities' finding of a causal link is not inconsistent with
Article 3.5. (Ibid., para. 6.233) India has not appealed this finding.
74 India's appellant's submission, para. 154.
75
Ibid., paras. 151-152, referring to Appellate Body
Report, Canada � Aircraft (Article 21.5 � Brazil), paras. 36 and 41.
76
Ibid., para. 136.
77
Ibid., para. 146.
78
Ibid., paras. 148 ff, referring to Panel Report,
paras. 6.50 and 6.52.
79
Ibid., para. 149, referring to Appellate Body Report,
US � Shrimp (Article 21.5 � Malaysia), para. 89.
80 India's statement at the oral hearing.
81 European Communities' appellee's submission, para. 121.
82
Ibid., para. 142.
83 European Communities' appellee's submission, para. 134.
84
Ibid., para. 149.
85
Ibid., paras. 136 and 160.
86 Appellate Body Report, Guatemala � Cement I, paras. 72
and 76, interpreting Article 7 of the DSU.
87 The Panel stated in paragraph 6.17 of the Panel
Report:
To the extent a party may have challenged, in a
request for establishment of an Article 21.5 panel, measures which were
not "taken to comply" by the implementing Member, it is our view
that a Panel may decline to address claims concerning such measures.
(original boldface)
In paragraphs 6.13 ff of the Panel Report, the Panel refers,
in support of this interpretation, to the panel reports in Australia �
Salmon (Article 21.5 � Canada) (para. 7.10.22) and Australia �
Automotive Leather II (Article 21.5 � US) (para. 6.4).
88 Appellate Body Report, Canada � Aircraft (Article 21.5 �
Brazil), para. 40.
89
Ibid., paras. 40-41. The panels in EC � Bananas III
(Article 21.5 � Ecuador) (paras. 6.8-6.9) and
Australia � Salmon
(Article 21.5 � Canada) (para. 7.10.9) reached essentially the same
conclusion.
90 Appellate Body Report, Canada � Aircraft (Article 21.5 �
Brazil), para. 41.
91
Ibid.
92 As we put it in Canada � Aircraft (Article 21.5 � Brazil):
Indeed, the utility of the review envisaged under
Article 21.5 of the DSU would be seriously undermined if a panel were
restricted to examining the new measure from the perspective of the
claims, arguments and factual circumstances that related to the original
measure, because an Article 21.5 panel would then be unable to examine
fully the "consistency with a covered agreement of the measures taken to
comply", as required by Article 21.5 of the DSU.
(Appellate Body Report, Canada � Aircraft (Article 21.5 �
Brazil), para. 41) We defined the function of Article 21.5 proceedings in
the same vein in our Report in US � Shrimp (Article 21.5 � Malaysia)
(para. 87).
93 India's appellant's submission, para. 151.
94 Appellate Body Report, Canada � Aircraft (Article 21.5 �
Brazil), para. 36. In US � Shrimp (Article 21.5 � Malaysia), we
recalled our rulings on this issue, explicitly referring to our Report in Canada
� Aircraft (Article 21.5 � Brazil). (Appellate Body Report, US � Shrimp
(Article 21.5 � Malaysia), para. 86)
95 India's response to questioning at the oral hearing.
96 Panel Report, para. 6.50.
97 Appellate Body Report, US � Shrimp (Article 21.5 �
Malaysia), para. 89.
98
Ibid., para. 96.
99 In the original determination, the European Communities
treated all imports from India as "dumped" because it found, in applying
the practice of "zeroing", that all of the individually-examined producers were
dumping. The original panel ruled that all import transactions attributable to a
producer found to be dumping may be considered as "dumped" for purposes of
making a determination of injury. (Original Panel Report, para. 6.137)
100 Panel Report, paras. 6.228 and 6.233.
101 We do not see how a change in the volume of "dumped imports"
would affect the relationship between injury caused by "dumped imports" and
injury caused by "other factors" in a situation where those "other factors"
alone do not cause injury. However, a change in the volume of
"dumped imports" could affect this relationship in a situation where "other
factors" cause a certain amount of injury.
102 India's response to questioning at the oral hearing.
103 Panel Report, para. 6.48.
104 India's appellant's submission, para. 146.
105 United States Public Law 106-519, 114 Stat. 2423 (2002).
106 Sections 921-927 of the Internal Revenue Code and Related
Measures Establishing Special Tax Treatment for Foreign Sales Corporations.
107 We also agree with the Panel's statements, in paragraphs 6.46
and 6.49 of the Panel Report, that the claims raised in EC � Bananas III
(Article 21.5 � Ecuador), as well as those raised in Australia �
Salmon (Article 21.5 � Canada), concerned aspects of the "measures
taken to comply" in those disputes which were different from the
measures subject to the respective original disputes.
108 European Communities' appellee's submission, paras. 150-151.
109 Appellate Body Report, US � Shrimp (Article 21.5 �
Malaysia), para. 97.
110 India's and the European Communities' responses to
questioning at the oral hearing.
111 Appellate Body Report, Mexico � Corn Syrup (Article 21.5 �
US), para. 78.
112
Ibid., para. 79.
113 Panel Report, para. 6.51. The Panel found support for its
view in our finding in Japan � Alcoholic Beverages II that
"[a]dopted panel reports are an important part of the GATT acquis. �
They create legitimate expectations among WTO Members, and, therefore, should be
taken into account where they are relevant to any dispute. However, they are not
binding, except with respect to resolving the particular dispute between the
parties to that dispute". (Ibid., footnote 73 to para. 6.51, quoting
Appellate Body Report, Japan � Alcoholic Beverages II, at 108) (emphasis
added)
114 The Panel stated that:
Neither the Panel nor the Appellate Body in the
original dispute had the opportunity to consider arguments with respect
to India's claim in the original proceeding concerning the consistency
of the EC's anti-dumping duty with Article 3.5 of the AD Agreement
concerning consideration of "other factors" of injury, because India did
not present arguments in support of its claim. The Panel did,
however, rule on India's claim, finding that India had failed to present
a prima facie case on this claim, and that aspect of the Panel's
report was adopted without modification.
(Panel Report, para. 6.52) (original boldface)
115 We note that, at the oral hearing, the participants agreed
that a finding adopted by the DSB, expressed in terms of WTO-consistency or the
failure to present a prima facie case, has the same effect in terms of
providing a final resolution to a dispute, in this respect, between the parties.
We also recall that the Panel noted, in paragraph 6.44 of the
Panel Report, that the original panel's dismissal of India's claim under
Article 3.5 relating to "other factors" was not an exercise of
"judicial economy". The issue raised in this appeal is different from a
situation where a panel, on its own initiative, exercises "judicial
economy" by not ruling on the substance of a claim. In this respect, we recall
our statement in Australia � Salmon that:
The principle of judicial economy has to be applied
keeping in mind the aim of the dispute settlement system. This aim is to
resolve the matter at issue and "to secure a positive solution to a
dispute". To provide only a partial resolution of the matter at issue
would be false judicial economy. A panel has to address those claims on
which a finding is necessary in order to enable the DSB to make
sufficiently precise recommendations and rulings so as to allow for
prompt compliance by a Member with those recommendations and rulings "in
order to ensure effective resolution of disputes to the benefit of all
Members."
(Appellate Body Report, Australia � Salmon, para. 223)
(footnotes omitted)
We believe that in a situation where a panel, in declining to
rule on a certain claim, has provided only a partial resolution of the matter at
issue, a complainant should not be held responsible for the panel's false
exercise of judicial economy, such that a complainant would not be prevented
from raising the claim in a subsequent proceeding.
116 Panel Report, para. 6.52.
117
Ibid., para. 6.45.
118 By this we mean this particular claim and the specific
component of the measure that was the subject of that claim.
119 India's response to questioning at the oral hearing.
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