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UNITED STATES - CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF
TABLE OF CASES CITED IN THIS REPORT
WORLD TRADE ORGANIZATION
I. Introduction 1. The United States appeals certain issues of law and legal interpretations developed in the Panel Report, United States - Continued Dumping and Subsidy Offset Act 2000 (the "Panel Report").1 2. On 12 July 2001, Australia, Brazil, Chile, the European Communities, India, Indonesia, Japan, Korea and Thailand requested the establishment of a panel to examine the WTO-consistency of the United States Continued Dumping and Subsidy Offset Act of 2000 (the "CDSOA").2 At its meeting of 23 August 2001, the Dispute Settlement Body (the "DSB") established the Panel. 3. On 10 August 2001, Canada and Mexico separately requested the establishment of a panel with respect to the same matter.3 At its meeting of 10 September 2001, the DSB agreed to those requests and, pursuant to Article 9.1 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), referred the matter to the Panel established on 23 August 2001.4 4. Australia, Brazil, Canada, Chile, the European Communities, India, Indonesia, Japan, Korea, Mexico and Thailand (the "Complaining Parties") argued before the Panel that the CDSOA is inconsistent with Articles 18.1 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement"), in conjunction with Article VI:2 of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994"), and Article 1 of the Anti-Dumping Agreement; Article 32.1 of the Agreement on Subsidies and Countervailing Measures (the "SCM Agreement"), in conjunction with Article VI:3 of the GATT 1994 and Articles 4.10, 7.9 and 10 of the SCM Agreement; Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement; and Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement "), Article 18.4 of the Anti-Dumping Agreement and Article 32.5 of the SCM Agreement. In addition, with the exception of Australia, the Complaining Parties contended that the CDSOA is in violation of Article X:3(a) of the GATT 1994, Article 8 of the Anti-Dumping Agreement and Article 18 of the SCM Agreement. Furthermore, in a separate claim, Mexico argued that the CDSOA is in violation of Article 5(b) of the SCM Agreement, and India and Indonesia asserted that the CDSOA undermines Article 15 of the Anti-Dumping Agreement. 5. In the Panel Report, circulated to the Members of the World Trade Organization (the "WTO") on 16 September 2002, the Panel found that the CDSOA is inconsistent with Articles 5.4, 18.1 and 18.4 of the Anti-Dumping Agreement; Articles 11.4, 32.1 and 32.5 of the SCM Agreement; Articles VI:2 and VI:3 of the GATT 1994; and Article XVI:4 of the WTO Agreement .5 6. The Panel concluded that the CDSOA nullifies or impairs benefits accruing to the Complaining Parties under the Anti-Dumping Agreement, the SCM Agreement and the GATT 1994 to the extent that the CDSOA is inconsistent with those agreements.6 Consequently, the Panel recommended that the DSB request the United States to bring the CDSOA into conformity with its obligations under the Anti-Dumping Agreement, the SCM Agreement and the GATT 1994.7 7. On 18 October 2002, the United States notified the DSB of its intention to appeal certain issues of law covered in the Panel Report and certain 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").8 On 28 October 2002, the United States filed its appellant's submission.9 On 12 November 2002, Australia, Brazil, Canada, Korea and Mexico each filed a separate appellee's submission.10 The European Communities, India, Indonesia and Thailand filed a joint appellees' submission. Japan and Chile also filed a joint appellees' submission. On the same day, Argentina, Hong Kong, China and Norway each filed a third participant's submission.11 Israel and Costa Rica notified the Appellate Body of their intention to appear at the oral hearing as third participants.12 8. In a letter dated 22 November 2002, the Director of the Appellate Body Secretariat informed the participants and third participants that, in accordance with Rule 13 of the Working Procedures, the Appellate Body had selected Mr. Giorgio Sacerdoti to replace Mr. A.V. Ganesan as Presiding Member of the Division hearing this appeal. The latter was prevented from continuing to serve on the Division for serious personal reasons. 9. On 5 November 2002, Canada filed a request for a preliminary ruling in respect of certain questions of fact and law that it claimed were improperly included in the United States' appellant's submission, alleging that they were not included in the Notice of Appeal. The following day, we invited the United States and the other participants and third participants to comment on the issues raised by Canada in its request for a preliminary ruling, and set 8 November 2002 as the deadline for submission of comments. We received comments from the European Communities, India, Indonesia and Thailand (as joint appellees), Japan and the United States. By letter of 8 November 2002, the Director of the Appellate Body Secretariat informed the participants and third participants that we had decided not to issue a preliminary ruling, nor to make findings, at that stage, on the substance of Canada's submissions. 10. The oral hearing was held on 28 and 29 November 2002.13 The participants and third participants presented oral arguments and responded to questions put to them by the Members of the Appellate Body Division hearing the appeal. 11. The CDSOA was enacted on 28 October 2000 as part of the Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act, 2001.14 The CDSOA amended Title VII of the Tariff Act of 1930 (the "Tariff Act"), entitled "Countervailing and Antidumping Duties", by adding a new Section 754 entitled "Continued Dumping and Subsidy Offset".15 12. The CDSOA provides that the United States Commissioner of Customs ("Customs") shall distribute, on an annual basis, duties assessed pursuant to a countervailing duty order, an anti-dumping duty order, or a finding under the United States Antidumping Act of 1921, to "affected domestic producers" for "qualifying expenditures".16 An "affected domestic producer" is defined as a domestic producer that: (a) was a petitioner or interested party in support of the petition with respect to which an anti-dumping duty order, a finding under the Antidumping Act of 1921, or a countervailing duty order has been entered; and (b) remains in operation.17 The term "qualifying expenditures" refers to expenditures on specific items identified in the CDSOA, which were incurred after the issuance of the anti-dumping duty finding, or order or countervailing duty order.18 Those expenditures must relate to the production of the same product that is subject to the anti-dumping or countervailing duty order, with the exception of expenses incurred by associations which must relate to the same case.19 13. The CDSOA, together with its implementing regulations issued by Customs, provides that Customs shall establish a special account and a clearing account with respect to each countervailing duty order, anti-dumping duty order, or a finding under the Antidumping Act of 1921.20 All anti-dumping and countervailing duties assessed under such orders or findings are first deposited into a "clearing account".21 Transfers from "clearing accounts" to "special accounts" are made by Customs throughout the fiscal year.22 Such transfers are made only after the entries23 in question that are subject to a countervailing duty order or an anti-dumping order or finding have been properly "liquidated".24 Thus, when, and only when, the entries have been liquidated, will the proceeds be transferred to a special account. Only once there are funds in a special account (not a clearing account), can distributions to domestic producers under the CDSOA be made.25 Therefore, if liquidation of entries has been enjoined, for instance, by a court-perhaps pending judicial review of the determination of dumping or countervailable subsidization-or if liquidation of entries has been suspended due to an administrative review of those entries, the relevant special account will be empty and no distribution can be made to domestic producers under the CDSOA.26 14. Pursuant to the CDSOA, Customs shall distribute all funds (including all interest earned on the funds) from the assessed duties received in the preceding fiscal year (and contained in the special accounts) to each affected domestic producer based on a certification by the affected domestic producer that it is eligible to receive the distribution and desires to receive a distribution for qualifying expenditures incurred since the issuance of the order or finding.27 Funds deposited in each special account during each fiscal year are to be distributed no later than 60 days after the beginning of the following fiscal year.28 There is no statutory or regulatory requirement as to how a disbursement is to be spent.29 The Panel found that CDSOA distributions to "affected domestic producers" made as of December 2001 totalled over $206 million.30
2
WT/DS217/5. Referred to in the Panel Report also as the "Byrd
Amendment" and the "Offset Act".
3
WT/DS234/12 and WT/DS234/13.
4
WT/DS234/14.
5
Panel Report, para. 8.1.
6
Ibid., para. 8.4.
7
Ibid., para. 8.5.
8
WT/DS217/8, WT/DS234/16, 22 October 2002.
9
Pursuant to Rule 21(1) of the Working Procedures.
10
Pursuant to Rule 22(1) of the Working Procedures.
11
Pursuant to Rule 24(1) of the Working Procedures.
12
Pursuant to Rule 24(2) of the Working Procedures.
13
Pursuant to Rule 27 of the Working Procedures.
14
Public Law 106-387, 114 Stat. 1549.
15
Section 754 of the Tariff Act corresponds to Section 1675c of
Title 19 of the United States Code.
16
The CDSOA provides that: "[d]uties assessed pursuant to a
countervailing duty order, an antidumping duty order, or a finding under the
Antidumping Act of 1921 shall be distributed on an annual basis under this
section to the affected domestic producers for qualifying expenditures. Such
distribution shall be known as 'the continued dumping and subsidy offset'."
(Section 754(a) of the Tariff Act)
17
Section 754(b)(1) of the Tariff Act defines "affected
domestic producer" as:
� any manufacturer, producer, farmer, rancher, or
worker representative (including associations of such persons) that - (A) was a petitioner or interested party in
support of the petition with respect to which an anti-dumping duty
order, a finding under the Antidumping Act of 1921, or a
countervailing duty order has been entered, and
(B) remains in operation.
Companies, businesses, or persons that have ceased
the production of the product covered by the order or finding or who
have been acquired by a company or business that is related to a company
that opposed the investigation shall not be an affected domestic
producer. 18 Section 754(b)(4) of the Tariff Act defines the term
"qualifying expenditure" as "an expenditure incurred after the issuance of the
antidumping duty finding or order or countervailing duty order in any of the
following categories:
(A) Manufacturing facilities.
(B) Equipment.
(C) Research and development.
(D) Personnel training.
(E) Acquisition of technology.
(F) Health care benefits to employees paid for by the
employer.
(G) Pension benefits to employees paid for by the
employer.
(H) Environmental equipment, training, or technology.
(I) Acquisition of raw materials and other inputs.
(J) Working capital or other funds needed to maintain
production."
19 Section 159.61(c) of Title 19, Code of Federal Regulations
("C.F.R.").
20
Section 754(e)(1) of the Tariff Act, 19 C.F.R. �
159.64(a)(1)(i).
21
19 C.F.R. � 159.64(a)(2).
22
19 C.F.R. � 159.64(b)(1)(ii).
23
Customs defines "entry" as the process of presenting
documentation for clearing goods through customs following the arrival of the
goods at a port. (See United States Import Requirements at
www.customs.gov/impoexpo/import).
24
19 C.F.R. � 159.64(b)(1)(ii). The United States explained in
its first written submission to the Panel that "[u]nder United States' law,
liquidation is defined as the 'final computation or ascertainment of duties' -
it is Customs' determination of the grand total to be paid by the importer."
(United States' first written submission to the Panel, footnote 12.) Generally
speaking, it may be said therefore that the United States uses a "retrospective"
assessment system under which final liability for antidumping and
countervailing duties is determined only after the goods have been
imported. (See "Antidumping Duties; Countervailing Duties", United States
Federal Register, 19 May 1997 (Volume 62, Number 96), p. 27392)
25
19 C.F.R. � 159.64(b)(1)(i).
26
United States' first written submission to the Panel, para.
13.
27
Sections 754(d)(2) and (3) of the Tariff Act.
28
Section 754(c) of the Tariff Act.
29
"Distribution of Continued Dumping and Subsidy Offset to
Affected Domestic Producers", United States Federal Register, 21 September 2001
(Volume 66, Number 184), p. 48549. See also Panel Report, para. 7.37.
30
Panel Report, para. 7.44. Agreements | Disciplines | Trade Policy Developments | Countries | Trade & SMEs |