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WORLD TRADE
ORGANIZATION

WT/DS217/AB/R
WT/DS234/AB/R

16 January 2003

(03-0209)

Original: English

UNITED STATES - CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF
2000


AB-2002-7


Report of the Appellate Body


(Continued)



F. Japan and Chile - Appellee

  1. Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement

97. Japan and Chile, as joint appellees, submit that the CDSOA constitutes a violation of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement. They argue that the United States' assertion that a Members' sovereign power over fiscal matters is totally unconstrained by its WTO obligations is an overstatement. WTO Members agreed to impose many limitations on their sovereign powers to promulgate and enforce domestic laws and regulations, even in fiscal matters. For example, Article III of the GATT 1994 limits the power of Members with regard to taxation. Article VI of the GATT 1994 and the SCM Agreement restrain the otherwise sovereign power of Members to provide subsidies. Specifically relevant to this dispute, the United States has committed not to adopt measures that would constitute specific action against dumping or subsidization except in accordance with the provisions of the GATT 1994, as interpreted by the Anti-Dumping Agreement and the SCM Agreement.

98. Japan and Chile contend that the presence of the constituent elements of dumping, as determined by the United States investigating authorities themselves, is a condition sine qua non of the application of the CDSOA. This is supported by the text of the law itself, which provides that duties assessed pursuant to anti-dumping or countervailing duty orders shall be distributed to affected domestic producers. In US - 1916 Act , the Appellate Body stated that a measure constitutes a specific action if it is taken only in situations presenting the constituent elements of dumping. They contend that the CDSOA meets this test, as the CDSOA refers explicitly to the requirement of an anti-dumping order. Thus, the "constituent elements of dumping" can be found in the CDSOA's textual reference to the prerequisite of an anti-dumping order. According to Japan and Chile, the CDSOA addresses dumping and subsidization as such. As the title of the CDSOA and the Congressional findings in Section 1002 of the CDSOA make clear, the distribution of duties to the affected domestic producers offsets continued dumping and subsidization. The CDSOA acts specifically against dumping because it addresses dumping and subsidization as such, since dumping or subsidization are its cause and trigger, and because it will apply only when the constituent elements of dumping or subsidization are present. They add that, in their view, there is a clear connection between the determination of dumping and CDSOA offset payments.

99. Japan and Chile argue that the text of the CDSOA refutes the United States' claim that the link between the CDSOA and dumping or subsidization is remote. The findings listed in Section 1002 of the CDSOA reveal an immediate and clear link between dumping or subsidization and the offset payments. According to them, the link is evident from the title of the CDSOA-the Continued Dumping and Subsidy Offset Act.

100. According to Japan and Chile, the Panel correctly found that the CDSOA acts "against" dumping, in the sense that it has an adverse bearing on dumping. For them, there is no textual basis in either Article 18.1 or 32.1 for the interpretation of the word "against" as requiring a direct contact or impact on the dumped good or on the entity responsible for it. Therefore, the United States' argument that action "against" dumping must operate directly on the imported goods or entities responsible for them is not supported by the ordinary meaning of the phrase "specific action against dumping" in its context and in the light of the object and purpose of the Anti-Dumping Agreement or the SCM Agreement. They add that the very rationale underpinning Articles 18.1 and 32.1 is that Members should not be allowed to modify the conditions of competition between imported and domestic products that are in a competitive relationship, except to the extent necessary to counteract dumping and subsidization. They submit that the issue is not whether the CDSOA gives the affected domestic producers the incentive to use offset payments to bolster their competitive position, or whether it guarantees that producers will be successful in any attempts to bolster their competitive positions. The CDSOA gives the affected domestic producers the resources to improve their competitive positions vis-�-vis dumped imports, and it does so only because the imports are dumped-not as the United States' argument implies-regardless of the fact that they are dumped. That is precisely the element that, according to Japan and Chile, renders the CDSOA action against dumping. They also submit that the CDSOA creates an incentive to file or support applications for anti-dumping or countervailing investigations, and that a measure that leads to an increased number of investigations and orders is a measure "against" dumping/a subsidy.

101. According to Japan and Chile, the Panel correctly interpreted and gave full meaning to footnote 24 of the Anti-Dumping Agreement and footnote 56 of the SCM Agreement. The Panel explained, in accordance with the decision of the Appellate Body in the US - 1916 Act case, that "specific action" under Articles 18.1 and 32.1 must be distinguished from "action" under footnotes 24 and 56. Article 18.1 covers "specific action" against dumping. Footnote 24, by contrast, addresses non-specific action, and clarifies that the prohibition in Article 18.1 does not cover non-specific action under "other relevant provisions of the GATT", that is, provisions not interpreted by the Anti-Dumping Agreement . Footnote 24 covers action that addresses the "causes or effects of dumping", but not action that addresses dumping as such, or which makes dumping the cause for its imposition. Footnote 56 also refers exclusively to non-specific action.

102. Japan and Chile maintain that the Panel treated the stated purpose of the CDSOA as confirming evidence of the fact that the CDSOA acts against dumping, a conclusion it had already reached based on other considerations. According to them, reliance on municipal law as evidence of facts is accepted under WTO law and general public international law.

103. Japan and Chile argue that the minor textual differences between the text in the Anti-Dumping Agreement and the SCM Agreement do not undermine the Panel's conclusions regarding the applicability of the Appellate Body's interpretation of Article 18.1 of the Anti-Dumping Agreement in the US - 1916 Act to Article 32.1 of the SCM Agreement. They point to footnote 35 of the SCM Agreement, and note that it expressly states that, in certain circumstances, "only one form of relief " against subsidization may be available. Thus, according to them, the text of the SCM Agreement makes plain that Article VI of the GATT 1994 applies to more than one type of action against subsidization. They add that, if Article VI of the GATT 1994 and the SCM Agreement governed only countervailing duties, as the United States alleges, then the prohibition in Article 32.1 would not prohibit effectively specific action against a subsidy and would be rendered meaningless. The meaning and effectiveness of Article 32.1, like Article 18.1, lie in the fact that it prohibits all types of specific action against a subsidy, except for the specific actions that are permitted under Article VI of the GATT 1994 and the SCM Agreement. Japan and Chile also note that Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement are virtually identical, and that, in US - 1916 Act , the Appellate Body stated that Article 18.1 supports a conclusion that Article VI of the GATT 1994 is applicable to any "specific action against dumping" of exports. They argue that, by the same logic, Article 32.1 means that Article VI of the GATT 1994 is applicable to any specific action against a subsidy.

  1. Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement

104. Japan and Chile maintain that the language of Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement reflects the intention of WTO Members to ensure that anti-dumping and countervailing duty petitions have a specified level of support before investigations based on those petitions are initiated. According to them, the CDSOA distorts the proper expression and measure of this support by providing a financial incentive to members of an industry to express their views one way rather than another.

105. Japan and Chile refer to the report of the Appellate Body in US - FSC , and in EC - Sardines, to maintain that WTO Members are required to fulfill, perform and execute their treaty obligations in accordance with the "pervasive" principle of good faith. According to them, the Panel correctly found that the United States ignored its good faith obligations when it adopted the CDSOA.

106. Japan and Chile find support for their conclusion in other provisions of the Anti-Dumping Agreement and the SCM Agreement. They see, implicit in those provisions, a recognition that even a properly initiated investigation can impose a severe burden on the parties required to respond. According to them, those provisions, as well as Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement, seek to limit that burden. The object and purpose of Articles 5.4 and 11.4 was thus to place disciplines on the initiation of burdensome anti-dumping and countervailing duty investigations and to require that support, within the meaning of those provisions, be "freely-expressed".66

107. Japan and Chile agree with the United States that the motives of domestic producers in deciding whether to support or file an application are not relevant under Articles 5.4 and 11.4. They submit, however, that the action by the United States to influence those motives through a payment is relevant.

  1. The Combination of Duties and CDSOA Offset Payments

108. Japan and Chile argue that the Panel's finding that the CDSOA has an adverse bearing on the conditions of competition of dumped or subsidized goods is not based on, nor does it question, the consistency of the United States laws or regulations relating to the imposition of anti-dumping or countervailing duties. According to them, the CDSOA was the only measure whose consistency with the GATT 1994, the Anti-Dumping Agreement and the SCM Agreement was examined by the Panel. In examining whether the CDSOA constitutes a specific action against dumping/a subsidy, and whether it is consistent with Articles 18.1 and 32.1, they claim it was necessary for the Panel to consider other relevant United States trade laws in its examination of the CDSOA, since the terms of the CDSOA incorporate those laws by direct reference to anti-dumping and countervailing duty orders and to findings under the Antidumping Act of 1921. Nevertheless, none of the Panel's conclusions depends on any finding regarding the text of laws other than the CDSOA.

109. Japan and Chile also note the United States' reference to footnote 334 of the Panel Report (referring to the combination of anti-dumping duties and offset payment subsidies in the particular circumstances of the CDSOA). According to them, the purpose of footnote 334 is to reiterate the Panel's statement in paragraph 7.52, which makes clear that the Panel did not make findings regarding anti-dumping and countervailing duty orders under the respective United States trade laws that were outside its terms of reference. They argue that it is inaccurate to assert that the Panel examined other provisions of United States law in order to find a WTO violation. Rather, they argue that the Panel made an objective assessment of the facts of the case, which included anti-dumping and countervailing duty orders issued under applicable United States laws.

  1. Article XVI:4 of the WTO Agreement, Article 18.4 of the Anti-Dumping Agreement, Article 32.5 of the SCM Agreement and Article 3.8 of the DSU

110. Japan and Chile argue that, because the CDSOA is inconsistent with Articles 18.1 and 5.4 of the Anti-Dumping Agreement , Articles 32.1 and 11.4 of the SCM Agreement, and Articles VI:2 and VI:3 of the GATT 1994, it is also in violation of Article XVI:4 of the WTO Agreement, Article 18.4 of the Anti-Dumping Agreement and Article 32.5 of the SCM Agreement.

  1. The "Advisory Opinion"

111. Japan and Chile submit that the Panel's observations contained in paragraph 7.22 of the Panel Report are not, as the United States claims, an "advisory opinion." They point out that the Panel was merely clarifying the factual basis for its finding that the offset payments under the CDSOA can be made only in situations where the constituent elements of dumping are present. By stating that it would have reached the same conclusion had the payments been funded directly from the United States Treasury, and in an amount unrelated to the collected anti-dumping duties, the Panel, according to them, was emphasizing that the connection between the offset payments and the determination of dumping was so clear, direct and unavoidable, that it would remain even if the payments were funded from another source.

  1. Article 9.2 of the DSU

112. Japan and Chile argue that the Panel's decision not to accept the United States' request for separate panel reports was justified by the right of the Complaining Parties to a prompt settlement of the dispute and the need to prevent an untimely and abusive exercise of rights on the part of the United States, which would have prejudiced the complainants. According to them, it is inherent in every legal precept that confers rights to a party in a proceeding that such rights, either procedural or substantive, must be exercised in a reasonable and timely manner.

113. Japan and Chile submit that, by rejecting the request for separate panel reports, the Panel did not diminish the United States' rights under Article 9.2 of the DSU; rather, it protected the complainants' right under Article 3.3 of the DSU to a prompt settlement of the dispute and also protected them from an abusive exercise of the United States' rights. They also claim that the Panel properly determined that acceptance of the United States' request would have delayed the issuance of the final report and would have prolonged the nullification and impairment of the rights of the complainants under the covered agreements caused by the CDSOA. Thus, they conclude, that the Panel maintained the proper balance between the procedural right of the United States to separate panel reports and its obligations not to nullify and impair the benefits accruing to the complainants under the covered agreements.

G. Korea - Appellee

  1. Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement

114. Korea submits that the CDSOA is a specific action in response to dumping. According to Korea, the Panel carefully analyzed the structure and design of the CDSOA, and found that the CDSOA requires the constituent elements of dumping for its application. It was only on that basis that the Panel concluded that there is a clear, direct and unavoidable connection between the determination of dumping and CDSOA offset payments, and that the CDSOA is "specific action" related to dumping.

115. Korea contends that the Panel's definition of "against" was in line with the rules of treaty interpretation. Korea notes the United States' assertion that "against" implies that an action must come into contact directly with the imported or subsidized good or importer, exporter or foreign producer. Korea argues that "in contact with" is an ordinary meaning of "against" when it is used to describe physical contact, and that it cannot be the ordinary meaning of "against" as it is used in relevant WTO provisions. Korea adds that the proper context in which the term "against" is used is "against dumping". It is neither against dumped imports nor against entities connected to the dumped good.

116. Korea submits that the Panel fully explained why the "conditions of competition" test is applicable to Article 18.1 and Article 32.1. The Panel found, from the ordinary meaning of "against", that a measure will act "against" dumping if it has an adverse bearing on the practice of dumping. The Panel then took note of the fact that "against" is not qualified in any way in Article 18.1, and thus found that the ordinary meaning of "against" encompasses any form of adverse bearing, be it direct or indirect. The Panel then proceeded to analyze the structure and design of the CDSOA to see how the CDSOA distorts the conditions of competition between dumped and domestic products. From this, the Panel found that the CDSOA distorts the conditions of competition between domestic and dumped products, which it found to be a form of adverse bearing on dumping.

117. Korea supports the Panel's finding that the CDSOA has an adverse impact on the conditions of competition. Korea disagrees with the United States that this finding of the Panel is based on mere suppositions, and argues that it results rather from an analysis of the structure and design of the CDSOA. Korea contends that the Panel correctly referred to the stated purpose of the CDSOA to confirm this finding. Korea notes that in Chile - Alcoholic Beverages, the Appellate Body made a distinction between subjective intentions inhabiting the minds of individual legislators, and the purpose or objective objectively expressed in the statute itself. According to Korea, although it is not necessary for the panel to sort through the subjective intentions of legislators, the Appellate Body found that the purpose or objective objectively expressed in the statute itself are pertinent. The Appellate Body added that this objective expression can be discerned from the design, the architecture and the structure of a measure.67 Korea submits that the Panel's analysis was in full compliance with such guidance from the Appellate Body.

118. Korea maintains that the Panel correctly found that its findings on claims under Article 18.1 of the Anti-Dumping Agreement apply equally in respect of the claims under Article 32.1 of the SCM Agreement. According to Korea, the Appellate Body's analysis in US - 1916 Act was not based on any particular provisions of the Anti-Dumping Agreement in isolation, but on the Anti-Dumping Agreement as a whole. Also, Korea notes that the Panel stated that it is important to have regard to the fact that the types of remedies foreseen by the SCM Agreement are broad, including countervailing duties and countermeasures.

  1. Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement

119. Korea endorses the Panel's finding that the CDSOA constitutes a violation of Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement.

120. According to Korea, the peculiarity of Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement is that the object and purpose of those provisions is explicitly contained in the provisions themselves. Korea concludes that a violation of the "object and purpose" of those provisions is a violation of the explicit terms of those provisions as well.

121. Korea notes the assertion by the United States that the Panel's finding is not based on a violation of Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement, but rather on a violation of the principle of good faith. According to Korea, the United States seems thereby to assert that, even though "good faith implementation of a treaty provision is a substantive obligation arising from the Vienna Convention on the Law of Treaties"68 , it is not "part of the WTO law."69

122. Korea submits that WTO Members must observe the general principle of good faith, recognized by the Appellate Body as a pervasive principle that informs the covered agreements, in the application and interpretation of the Anti-Dumping Agreement and the SCM Agreement.

123. Korea endorses the Panel's finding that the CDSOA provides a financial inducement to domestic producers to file or support applications for the initiation of anti-dumping and countervailing duty investigations, because CDSOA payments are made only to those producers that file or support such applications and because the financial rewards for doing so are significant. Korea submits that the Panel's findings to this effect were based on a careful examination of the structure and operation of the CDSOA and not on speculation, as the United States asserts.

  1. The Combination of Duties and CDSOA Offset Payments

124. Korea notes that the United States, in making the claim that the Panel exceeded its terms of reference by examining the CDSOA in combination with United States laws, does not make any reference to the Panel Report. Korea argues that the absence of any reference is not because of inadvertence, but because the Panel did not make such an examination.

125. According to Korea, the CDSOA and anti-dumping (or countervailing) duties are not bifurcated and independent from each other. On the contrary, the presence of anti-dumping duties is a sine qua non for the disbursement of CDSOA offset payments. Korea submits that all of the relevant findings of the Panel were made in relation to the analysis of the CDSOA alone, without any reference to United States laws on the imposition of anti-dumping (or countervailing) duties.

H. Mexico - Appellee

  1. Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement

126. Mexico submits that the Panel interpreted Articles 18.1 and 32.1 properly. The Panel applied the analysis of "constituent elements" used by the Appellate Body in US - 1916 Act and determined that the CDSOA offset payments acted specifically in response to dumping. The Panel interpreted the meaning of "against dumping" as "an adverse bearing on dumping" and applied its legal interpretation to the facts of the dispute in order to determine that the CDSOA was a non-permissible "specific action against dumping". The Panel also applied its analysis in relation to Article 18.1 of the Anti-Dumping Agreement to the argument on Article 32.1 of the SCM Agreement, and found that the CDSOA was a non-permissible "specific action against a subsidy".

127. Mexico contends that it is not necessary for the "constituent elements" of dumping or of a subsidy to be expressed in the language of the law. Interpreting Article 18.1 as requiring that a law must explicitly establish the constituent elements of dumping opens up the possibility of circumventing this provision. Such an interpretation should, therefore, be avoided.

128. Mexico argues that the distribution of CDSOA offset payments is directly related to, and caused by, the imposition of anti-dumping or countervailing duties, which legally can be imposed only when the elements of dumping and subsidy are present. According to Mexico, the Panel correctly found that there is a clear, direct and unavoidable connection between the determination of dumping and CDSOA offset payments.

129. Mexico adds that there is nothing in the "constituent elements" test that specifies that the payments and the dumping must occur at the same time. Even though, under certain circumstances, CDSOA payments may be retrospective, this does not alter the fact that there is an unavoidable connection between the payments and the dumping or subsidization. By their very structure and design, CDSOA payments occur after the collection of anti-dumping and countervailing duties.

130. Mexico maintains that the scope of Articles 18.1 and 32.1 on the one hand, and footnotes 24 and 56 on the other, are mutually exclusive. Action prohibited by an article cannot be permitted by a footnote to that article. According to Mexico, even though the footnotes are relevant to this dispute, the United States has not established that the CDSOA is action "under other relevant provisions of GATT 1994". The fact that the measures are not inconsistent with the GATT 1994 does not mean that they are taken under other relevant provisions of the GATT 1994.

131. Mexico submits that there is no basis for interpreting the word "against" as meaning that action must have an adverse bearing on imports or persons "directly" related to the imports. There is no mention in any part of Articles 18.1 or 32.1 of actions taken "directly" against dumped or subsidized imports and there is no text or context that imposes this requirement. Those Articles simply refer to "action against", which may include direct or indirect action. The reference in Article 18.1 to "dumping of exports" instead of "dumped exports" and the reference in Article 32.1 to "a subsidy of another Member" instead of "subsidized imports" or "subsidized exports" confirms this. For Mexico, if those who drafted the two Agreements had wanted to follow the limited interpretation given by the United States, they would have used other words instead of "dumping of exports" or "a subsidy of another Member".

132. Mexico contends that the Panel did not interpret Articles 18.1 and 32.1 to include a "conditions of competition" test. The Panel's reference to conditions of competition was in the context of evaluating the relevant facts and circumstances of the CDSOA, and whether the CDSOA has "an adverse bearing" on dumping. For Mexico, the Panel was not creating a new legal test. Mexico maintains that the distortion of competition between the dumped product and the domestic product is proof of an adverse bearing on dumping.

133. Mexico submits that the conclusions of the Panel that the CDSOA has a specific adverse impact on the competitive relationship between domestic products and dumped imports, and that such dissuasive effect means that the CDSOA bears adversely on dumping, and therefore acts against dumping, are not the result of speculation and are not based on assumptions or hypothetical examples. Rather, they are the result of the Panel's analysis of the structure and design of the CDSOA. The real impact of the CDSOA is shown in the Panel's finding that "[e]xporters/foreign producers know that if they dump products in the United States, and if those products are subject to an anti-dumping order, not only will anti-dumping duties be levied, but those duties will be transferred to at least some of their US competitors in the form of CDSOA offset payments."70

134. Mexico argues that the Panel is empowered to examine the legislative history of a law when examining its significance. In US - 1916 Act , the panel considered the text of the measure at issue in that dispute in the context of its enactment, including the legislative history.71 In US - Countervailing Measures on Certain EC Products, the panel indicated that "when examining internal legislation, a Panel must look to all the elements that establish its meaning, not just the statutory language. Therefore, it is also necessary to look at other domestic interpretive tools such as the legislative history �".72 In US - Section 110(5) Copyright Act, the panel stated that "we also observed that stated public policy purposes could be of subsidiary relevance for drawing inferences about the scope of an exemption and the clarity of its definition. In our view, the statements from the legislative history indicate an intention of establishing an exception with a narrow scope."73 Mexico adds that the Panel in this case did not base its finding that the CDSOA constitutes "specific action against dumping" on the legislative history. Rather, it looked to the legislative history of the CDSOA to confirm its finding.

135. Mexico maintains that the Panel correctly interpreted Article 32.1 of the SCM Agreement. As noted by the Panel, Article 18.1 and Article 32.1 contain essentially identical language. The Panel acknowledged the differences between Article 1 of the Anti-Dumping Agreement and Article 10 of the SCM Agreement, but did not see why a different approach should apply in respect of the permissible responses to subsidization. In the case of the Anti-Dumping Agreement , the permitted responses to dumping are provisional anti-dumping duties, definitive anti-dumping duties and price undertakings. In the case of the SCM Agreement, the permitted responses to a subsidy are provisional and definitive countervailing duties, price undertakings, and countermeasures.

  1. Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement

136. Mexico supports the finding of the Panel that the CDSOA is inconsistent with Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement, because it operates in such a way that the investigating authorities cannot carry out an objective and impartial examination of the degree of support for the application.

137. Mexico submits that, contrary to the United States' claim, the wording of these provisions interpreted in good faith and taking into account their context and object and purpose, does not mean that the only thing WTO Members have to do is to examine whether the statistical thresholds in Articles 5.4 and 11.4 have been met prior to initiating an investigation. Rather, Articles 5.4 and 11.4 require a positive determination based on the degree of support for an application "by or on behalf of the domestic industry". Such a determination must be objective and must comply with the principle of good faith.

138. Mexico submits that, for the thresholds set out in Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement to be meaningful, a WTO Member may not distort the degree of support for, or opposition to, any particular application. In order to comply with this obligation, it is not necessary to enquire into the motives or intent of producers that elect to support an application. Members of the WTO must ensure, however, that no measure increases (or decreases) the possibility that the domestic industry meets the prescribed threshold, and that the investigating authority's decision regarding the degree of support is objective and unbiased.

139. Mexico concludes that, "[b]y giving applicants or those supporting applications economic advantages, the CDSOA prevents the United States investigating authorities from making an objective and unbiased finding regarding the degree of support for any application."74 In itself, the CDSOA "invariably distorts the degree of support for an application"75 and is therefore inconsistent with Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement.

140. Mexico further submits that the Panel's analysis of whether or not the CDSOA creates a financial incentive to support anti-dumping or countervailing duty investigations is relevant with respect to addressing the issue of whether the United States has maintained measures which prevent investigating authorities from conducting an objective examination of whether or not an application has been made "by or on behalf of the domestic industry" within the meaning of Articles 5.4 and 11.4.

  1. The Combination of Duties and CDSOA Offset Payments

141. Mexico argues that the Panel did not exceed its terms of reference by examining the claims concerning the CDSOA in combination with other laws and regulations. According to Mexico, the CDSOA is within the Panel's terms of reference. In addition, the complainants did not contest the consistency of United States legislation on anti-dumping and countervailing duties, so it is not necessary for this legislation to be identified as the actual measure in dispute in this case. At the same time, however, the Panel had the authority to examine the context of the CDSOA, which includes other United States legislation. Mexico also claims that the panel report in US - Section 129(c)(1) URAA, cited by the United States, does not support the United States' position, but is rather contrary to it .

  1. Article XVI:4 of the WTO Agreement, Article 18.4 of the Anti-Dumping Agreement, Article 32.5 of the SCM Agreement and Article 3.8 of the DSU

142. Mexico argues that the Panel correctly 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, and Articles VI.2 and VI.3 of the GATT 1994. Therefore, the CDSOA is inconsistent with Article XVI.4 of the WTO Agreement. It also nullifies or impairs the benefits accruing to the Complaining Parties under these agreements.

  1. The "Advisory Opinion"

143. Mexico argues that paragraph 7.22 of the Panel Report is obiter dictum and not a legal finding by the Panel that has to be upheld, modified or reversed by the Appellate Body.


To continue with I. Arguments of the Third Participants

Return to Index


66 Japan's and Chile's appellees' submission, para. 101.

67 Appellate Body Report, Chile - Alcoholic Beverages, para. 62.

68 Korea's appellee's submission, para. 50.

69 Ibid.

70 Panel Report, para. 7.39.

71 Panel Report, US - 1916 Act (EC), paras. 6.120-6.133 and 6.228; Panel Report, US - 1916 Act (Japan), paras. 6.141-6.151 and 6.289.

72 Panel Report, US - Countervailing Measures on Certain EC Products, para. 7.139.

73 Panel Report, US - Section 110(5) Copyright Act, para. 6.157.

74 Mexico's appellee's submission, para. 54.

75 Ibid.