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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)


VI. Issues Raised in This Appeal

223. The following issues are raised in this appeal:

(a) whether the Panel erred in finding, in paragraphs 7.51 and 8.1 of the Panel Report, that the Continued Dumping and Subsidy Offset Act of 2000 ("CDSOA") is a non-permissible specific action against dumping or a subsidy, contrary to Article 18.1 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement ") and Article 32.1 of the Agreement on Subsidies and Countervailing Measures (the "SCM Agreement");

(b) whether the Panel erred in finding, in paragraphs 7.66 and 8.1 of the Panel Report, that the CDSOA is inconsistent with Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement ;

(c) whether the Panel erred in finding, in paragraphs 7.93 and 8.1 of the Panel Report, that the CDSOA is inconsistent with certain provisions of the Anti-Dumping Agreement and the SCM Agreement and that, therefore, the United States has failed to comply with Article 18.4 of the Anti-Dumping Agreement , Article 32.5 of the SCM Agreement and Article XVI.4 of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement");

(d) whether the Panel erred in finding, in paragraph 8.4 of the Panel Report, that, pursuant to Article 3.8 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), the CDSOA nullifies or impairs benefits accruing to the Complaining Parties under those Agreements; and

(e) whether the Panel acted inconsistently with Article 9.2 of the DSU by rejecting, in paragraph 7.6 of the Panel Report, the request by the United States for a separate panel report on the dispute brought by Mexico.

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

224. We turn now to the United States' appeal of the Panel's conclusion that the CDSOA is a non-permissible specific action against dumping, contrary to Article 18.1 of the Anti-Dumping Agreement, and a non-permissible specific action against a subsidy, contrary to Article 32.1 of the SCM Agreement .151 We will start by reviewing briefly the Panel's analysis of this issue.

225. The Panel began its analysis by referring to our ruling in US - 1916 Act , where we said:

In our view, the ordinary meaning of the phrase "specific action against dumping" of exports within the meaning of Article 18.1 is action that is taken in response to situations presenting the constituent elements of "dumping". "Specific action against dumping" of exports must, at a minimum, encompass action that may be taken only when the constituent elements of "dumping" are present.152 (original emphasis; footnote omitted)

226. The Panel decided that this ruling is not conclusive of whether the CDSOA is a specific action against dumping or a subsidy for three reasons. First, the Panel observed that, in US - 1916 Act , we were not interpreting Article 18.1 of the Anti-Dumping Agreement , as such, but were rather referring to that Article in order to clarify the scope of application of Article VI of the General Agreement on Tariffs and Trade (the "GATT 1994").153 Second, the Panel noted that we were not required to consider, in deciding that appeal, the meaning of the word "against" as used in Article 18.1 of the Anti-Dumping Agreement , because there was no disagreement between the participants in that dispute that the measure at issue, which imposed criminal and civil liabilities on importers engaged in dumping, constituted action "against" dumping.154 Third, the Panel opined that the category of action "in response to" dumping is broader than the category of action "against" dumping.155

227. Having decided that our ruling in US - 1916 Act was not dispositive of the issues in the present case, the Panel developed the following standard to determine whether a measure is a specific action against dumping or a subsidy: a measure will constitute specific action against dumping or a subsidy if: (1) it acts "specifically" in response to dumping or a subsidy, in the sense that the measure may be taken only in situations presenting the constituent elements of dumping or a subsidy; and (2) it acts "against" dumping or a subsidy, in the sense that the measure has an adverse bearing on the practice of dumping or on the practice of subsidization.156

228. Applying this standard to the CDSOA, the Panel, as a preliminary matter, determined that the CDSOA is a "specific action related to"157 dumping or a subsidy. According to the Panel, the CDSOA meets the first condition of the standard because CDSOA payments may be made only in situations where the constituent elements of dumping (or of a subsidy) are present. The Panel also pointed out that CDSOA offset payments follow automatically from the collection of anti-dumping (or countervailing) duties, which in turn may be collected only following the imposition of anti-dumping (or countervailing duty) orders, which in turn may be imposed only following a determination of dumping (or subsidization). The Panel thus determined that the CDSOA is a specific action related to dumping (or subsidization) because there is a "clear, direct and unavoidable connection"158 between the determination of dumping (or subsidization) and CDSOA offset payments.

229. Moving to the question whether the CDSOA acts "against" dumping or a subsidy, in the sense that it has an adverse bearing on dumping or a subsidy, the Panel affirmed that Article 18.1 of the Anti-Dumping Agreement (and Article 32.1 of the SCM Agreement ) concerns measures that act against dumping as a practice (or subsidization as a practice), and do not require that the measure at issue must act against the imported dumped (or subsidized) product, or entities connected to, or responsible for, the dumped (or subsidized) product, such as the importer, exporter, or foreign producer.159 The Panel added that the term "against" in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement encompasses measures having a direct, as well as indirect, adverse bearing on the practice of dumping (or subsidization).160

230. Two considerations led the Panel to find that the CDSOA operates "against" dumping (or a subsidy), in the sense that it has an adverse bearing on dumping (or a subsidy). First, according to the Panel, the CDSOA acts against dumping (or a subsidy) by conferring on affected domestic producers, which incur qualifying expenses, an offset payment subsidy that would allow them to establish a competitive advantage over dumped (or subsidized) imports. Second, the Panel was of the view that the CDSOA has an adverse bearing on dumping (or a subsidy) because it provides a financial incentive for domestic producers to file anti-dumping (or countervail) applications, or at least to support such applications, in order to establish their eligibility for offset payments.

231. The Panel noted that, in our Report in US - 1916 Act , we found that Article VI of the GATT 1994, in particular Article VI:2, read in conjunction with the Anti-Dumping Agreement , limits the permissible responses to dumping to definitive anti-dumping duties, provisional measures and price undertakings.161 The Panel took the view that a similar approach should apply in respect of the permissible responses to subsidization.162 The Panel observed that Part V of the SCM Agreement foresees definitive countervailing duties, provisional measures and undertakings, whereas Part III foresees countermeasures. According to the Panel, these are the permissible responses to subsidization.163 Because the CDSOA does not fall within the range of the permissible responses to dumping under Article VI of the GATT 1994 and the Anti-Dumping Agreement , or within the range of the permissible responses to subsidization under the GATT 1994 and the SCM Agreement , the Panel concluded that the CDSOA constitutes a non-permissible specific action against dumping, contrary to Article 18.1 of the Anti-Dumping Agreement , and a non-permissible specific action against a subsidy, contrary to Article 32.1 of the SCM Agreement .

232. In addition, the Panel rejected the United States' argument that the CDSOA is an action permitted by virtue of footnote 24 to Article 18.1 of the Anti-Dumping Agreement and footnote 56 to Article 32.1 of the SCM Agreement . According to the Panel, a measure that has been characterized as "specific" under Article 18.1 of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement cannot be permitted under those footnotes, because the footnotes cover non-specific actions against dumping or a subsidy. In other words, the "actions" covered in the provisions and the "actions" covered in the footnotes are mutually exclusive.

233. On appeal, the United States contends that the Panel erred in finding that the CDSOA constitutes specific action against dumping within the meaning of Article 18.1 of the Anti-Dumping Agreement and specific action against a subsidy within the meaning of Article 32.1 of the SCM Agreement , and asks us to reverse the Panel's finding that the CDSOA is inconsistent with Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement .

234. We begin our analysis with a review of the relevant provisions. Article 18.1 of the Anti-Dumping Agreement reads as follows:

Final Provisions

No specific action against dumping of exports from another Member can be taken except in accordance with the provisions of GATT 1994, as interpreted by this Agreement.24
__________________

24 This is not intended to preclude action under other relevant provisions of GATT 1994, as appropriate.

235. Article 32.1 of the SCM Agreement reads as follows:

Other Final Provisions

No specific action against a subsidy of another Member can be taken except in accordance with the provisions of GATT 1994, as interpreted by this Agreement.56
__________________

56 This paragraph is not intended to preclude action under other relevant provisions of GATT 1994, where appropriate.

236. Looking to the ordinary meaning of the words used in these provisions, we read them as establishing two conditions precedent that must be met in order for a measure to be governed by them. The first is that a measure must be "specific" to dumping or subsidization. The second is that a measure must be "against" dumping or subsidization. These two conditions operate together and complement each other. If they are not met, the measure will not be governed by Article 18.1 of the Anti-Dumping Agreement or by Article 32.1 of the SCM Agreement . If, however, it is established that a measure meets these two conditions, and thus falls within the scope of the prohibitions in those provisions, it would then be necessary to move to a further step in the analysis and to determine whether the measure has been "taken in accordance with the provisions of GATT 1994", as interpreted by the Anti-Dumping Agreement or the SCM Agreement . If it is determined that this is not the case, the measure would be inconsistent with Article 18.1 of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement .

A. The Term "Specific" in the Phrase "Specific Action Against" Dumping or a Subsidy

237. We observe that Article 18.1 of the Anti-Dumping Agreement is identical in language, terminology and structure to Article 32.1 of the SCM Agreement , except for the reference to dumping instead of subsidy. The Panel analyzed the terms "specific" and "against" in Article 18.1 in the same manner as it did with respect to their use in Article 32.1. We agree with the Panel's approach. We also note that the United States does not challenge such approach and that, at the oral hearing, none of the appellees or third participants expressed the view that the terms, as used in Article 18.1 should have a different meaning as used in Article 32.1.

238. As mentioned above, in US - 1916 Act , we interpreted the phrase "specific action against dumping" in Article 18.1 of the Anti-Dumping Agreement . We said:164

In our view, the ordinary meaning of the phrase "specific action against dumping" of exports within the meaning of Article 18.1 is action that is taken in response to situations presenting the constituent elements of "dumping". "Specific action against dumping" of exports must, at a minimum, encompass action that may be taken only when the constituent elements of "dumping" are present.66
__________________
66 We do not find it necessary, in the present cases, to decide whether the concept of "specific action against dumping" may be broader.

Given that Article 18.1 of the Anti-Dumping Agreement and 32.1 of the SCM Agreement are identical except for the reference in the former to dumping, and in the latter to a subsidy, we are of the view that this finding is pertinent for both provisions.

239. We recall that, in US - 1916 Act , the United States argued that the 1916 Act did not fall within the scope of Article VI of the GATT 1994 because it targeted predatory pricing, as opposed to dumping. We disagreed, and determined that the 1916 Act was a "specific action against dumping" because the constituent elements of dumping were "built into"165 the essential elements of civil and criminal liability under the 1916 Act. We also found that the "wording of the 1916 Act … makes clear that these actions can be taken only with respect to conduct which presents the constituent elements of 'dumping'."166 Accordingly, a measure that may be taken only when the constituent elements of dumping or a subsidy are present, is a "specific action" in response to dumping within the meaning of Article 18.1 of the Anti-Dumping Agreement or a "specific action" in response to subsidization within the meaning of Article 32.1 of the SCM Agreement. In other words, the measure must be inextricably linked to, or have a strong correlation with, the constituent elements of dumping or of a subsidy. Such link or correlation may, as in the 1916 Act, be derived from the text of the measure itself.

240. This leads to the question of how to determine what are the constituent elements of dumping or a subsidy. We recall that, in US - 1916 Act , we said the constituent elements of dumping are found in the definition of dumping in Article VI:1 of the GATT 1994, as elaborated in Article 2 of the Anti-Dumping Agreement.167 As regards the constituent elements of a subsidy, we are of the view that they are set out in the definition of a subsidy found in Article 1 of the SCM Agreement .168

241. We turn now to determine whether the CDSOA is a "specific action" against dumping or subsidization within the meaning of Article 18.1 of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement .

242. In our view, the Panel was correct in finding that the CDSOA is a specific action related to dumping or a subsidy within the meaning of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement .169 It is clear from the text of the CDSOA, in particular from Section 754(a) of the Tariff Act170, that the CDSOA offset payments are inextricably linked to, and strongly correlated with, a determination of dumping, as defined in Article VI:1 of the GATT 1994 and in the Anti-Dumping Agreement , or a determination of a subsidy, as defined in the SCM Agreement . The language of the CDSOA is unequivocal. First, CDSOA offset payments can be made only if anti-dumping duties or countervailing duties have been collected. Second, such duties can be collected only pursuant to an anti-dumping duty order or countervailing duty order. Third, an anti-dumping duty order can be imposed only following a determination of dumping, as defined in Article VI:1 of the GATT 1994 and in the Anti-Dumping Agreement. Fourth, a countervailing duty order can be imposed only following a determination that exports have been subsidized, according to the definition of a subsidy in the SCM Agreement . In the light of the above elements, we agree with the Panel that "there is a clear, direct and unavoidable connection between the determination of dumping and CDSOA offset payments"171, and we believe the same to be true for subsidization. In other words, it seems to us unassailable that CDSOA offset payments can be made only following a determination that the constituent elements of dumping or subsidization are present. Therefore, consistent with the test established in US - 1916 Act , we find that the CDSOA is "specific action" related to dumping or a subsidy within the meaning of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement .

243. In its appellant's submission, the United States argues that the CDSOA is not specific action related to dumping or to a subsidy because, contrary to the 1916 Act examined in a previous appeal, the language of the CDSOA does not refer to the constituent elements of dumping (or of a subsidy), and dumping (or subsidization) is not the trigger for application of the CDSOA.172 The United States suggested at the oral hearing that the CDSOA is not "specific" because the constituent elements of dumping or of a subsidy do not form part of the essential components of the CDSOA. In addition, the United States submits that, according to the Panel's reasoning, any expenditure of collected anti-dumping (or countervailing) duties, including expenditure for international emergency relief, would be characterized as specific action against dumping (or a subsidy). For the United States, the Panel's approach "cannot withstand scrutiny."173

244. We disagree with these arguments. The criterion we set out in US - 1916 Act for specific action in response to dumping is not whether the constituent elements of dumping or of a subsidy are explicitly referred to in the measure at issue, nor whether dumping or subsidization triggers the application of the action, nor whether the constituent elements of dumping or of a subsidy form part of the essential components of the measure at issue. Our analysis in US - 1916 Act focused on the strength of the link between the measure and the elements of dumping or a subsidy. In other words, we focused on the degree of correlation between the scope of application of the measure and the constituent elements of dumping or of a subsidy. In noting that the "wording of the 1916 Act also makes clear that these actions can be taken only with respect to conduct which presents the constituent elements of 'dumping'"174, we did not require that the language of the measure include the constituent elements of dumping or of a subsidy. This is clear from our use of the word "also", which suggests that this aspect of the 1916 Act was a supplementary reason for our finding, and not the basis for it. Indeed, we required that the constituent elements of dumping (or of a subsidy) be "present"175, which in our view can include cases where the constituent elements of dumping and of a subsidy are implicit in the measure. Thus, we agree with the European Communities, India, Indonesia and Thailand that the "test"176 established in US - 1916 Act "is met not only when the constituent elements of dumping are 'explicitly built into' the action at issue, but also where … they are implicit in the express conditions for taking such action."177 In fact, the presence of the constituent elements of dumping and of a subsidy is implied by the very words of the CDSOA, which refer to "[d]uties assessed pursuant to a countervailing duty order, an antidumping duty order, or a finding under the Antidumping Act of 1921 …".178

245. We also disagree with the submission of the United States that, under the Panel's reasoning, any expenditure of the collected anti-dumping (or countervailing) duties would be characterized as a specific action against dumping (or a subsidy). This submission does not take into account the express terms of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement, which, as we said earlier, contain two conditions precedent, namely that the action be "specific" to dumping or a subsidy, and that it be "against" dumping or a subsidy. To refer to the example given by the United States, international emergency relief financed from collected anti-dumping or countervailing duties would not, in our opinion, be subject to the prohibitions of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement, because such action would have no effect whatsoever on dumping or subsidization and, therefore, could not be characterized as operating "against" dumping or a subsidy. As the Panel noted, we did not focus on the word "against" in our ruling in US - 1916 Act , because there was no dispute there that the measure (imposing civil and criminal liabilities on importers) was indeed "against" something-the question there was whether the action was against dumping, or some other conduct (predatory pricing).179

B. The Term "Against" in the Phrase "Specific Action Against" Dumping or a Subsidy

246. We move now to an analysis of the term "against" as used in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement . As mentioned above, Article 18.1 of the Anti-Dumping Agreement is identical in language, terminology and structure to Article 32.1 of the SCM Agreement , except for the reference to dumping instead of subsidy, and therefore we will proceed, as the Panel did, with an analysis of the word "against" on the basis that it has the same meaning in both provisions. We note that neither the United States nor any of the appellees objects to this approach.

247. We agree with the Panel that our statement in US - 1916 Act -to the effect that "the ordinary meaning of the phrase 'specific action against dumping' of exports within the meaning of Article 18.1 is action that is taken in response to situations presenting the constituent elements of 'dumping'"180 —is not conclusive as to the nature of the condition flowing from the term "against". The Panel took the position that an action operates "against" dumping or a subsidy within the meaning of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement if it has an adverse bearing on dumping or subsidization.181 The United States criticizes this approach, contending that an action is "against" dumping or a subsidy if it is "in hostile/active opposition" to dumping or a subsidy.182 The United States puts emphasis on the argument that an action, in order to be characterized as being "against" dumping or a subsidy, must "come into contact with"183 dumping or a subsidy, in the sense of "operating directly"184 on the imported good, or the entity responsible for the dumped or subsidized good.185 In the view of the United States, the Panel erred by finding that the term "against" in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement encompasses any form of adverse bearing, whether it be direct or indirect, and by finding that this term does not imply a requirement that the action applies directly to the imported good or an entity responsible for it, and is burdensome.186 The United States contends that such a requirement derives from the ordinary meaning of the term "against". Specifically, the United States relies on a definition found in the New Shorter Oxford English Dictionary, according to which "against" means "in contact with".187 In order to identify the ordinary meaning of the term "against" as used in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement, the United States posits three definitions of that term: (1) "of motion or action in opposition"; (2) "in hostility or active opposition to"; and (3) "in contact with".188

248. In our view, the first and second definitions invoked by the United States could, arguably, have some relevance in identifying the ordinary meaning of the term "against" as used in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement . However, we do not believe the third definition is appropriate given the substance of Articles 18.1 and 32.1. Indeed, the third definition refers to physical contact between two objects and, thus, in our view, is irrelevant to the idea of opposition, hostility or adverse effect that is conveyed by the word "against" as used in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement . It should be remembered that dictionaries are important guides to, not dispositive statements of, definitions of words appearing in agreements and legal documents.

249. We also note that the third dictionary definition cited by the United States is incomplete; not only does that dictionary definition refer to "in contact with", it also refers to "supported by". This latter element is difficult to reconcile with any idea of opposition, hostility or adverse bearing.189

250. Therefore, as the definition "in contact with" cannot be used to ascertain the ordinary meaning of "against" as used in Article 18.1 of the Anti-Dumping Agreement and in Article 32.1 of the SCM Agreement , we do not believe the United States is justified in using that definition to support its view that an action against dumping or a subsidy must have direct contact with the imported good, or the entity responsible for the dumped or subsidized good. More generally, we fail to see how such a meaning can be given to the term "against", which, given the substance of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement , must relate to an idea of opposition, hostility or adverse effect.

251. A textual analysis of Articles 18.1 and 32.1 supports, rather than defeats, the finding of the Panel that these provisions are applicable to measures that do not come into direct contact with the imported good, or entities responsible for the dumped or subsidized good. We note that Article 18.1 refers only to measures that act against "dumping", and that there is no express requirement that the measure must act against the imported dumped product, or entities responsible for that product. Likewise, Article 32.1 of the SCM Agreement refers to specific action against "a subsidy", not action against the imported subsidized product or a responsible entity. The United States' contention is further contradicted by the contextual consideration that the SCM Agreement authorizes multilaterally-sanctioned countermeasures "against" a subsidy, which may consist of indirect action affecting other products.

252. Turning to considerations of object and purpose, we do not consider that the object and purpose of the Anti-Dumping Agreement and of the SCM Agreement , as reflected in Article 18.1 of the Anti-Dumping Agreement and in Article 32.1 of the SCM Agreement , support the incorporation into these provisions, through the term "against", of a requirement that the measure must come into direct contact with the imported good, or the entity responsible for it. Both provisions fulfil a function of limiting the range of actions that a Member may take unilaterally to counter dumping or subsidization.190  Excluding from Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement actions that do not come into direct contact with the imported good or the entity responsible for the dumped or subsidized good, would undermine that function.

253. We, therefore, agree with the Panel that in Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement , there is no requirement that the measure must come into direct contact with the imported product, or entities connected to, or responsible for, the imported good such as the importer, exporter, or foreign producer. We also agree with the Panel that the test should focus on dumping or subsidization as practices.191 Article 18.1 refers only to measures that act against "dumping"; there is no express requirement that the measure must act against the imported dumped product, or entities responsible for that product. Likewise, Article 32.1 of the SCM Agreement refers to specific action against "a subsidy", not to action against the imported subsidized product or a responsible entity.

254. Recalling the other two elements of the definition of "against" from the New Shorter Oxford Dictionary relied upon by the United States, namely "of motion or action in opposition" and "in hostility or active opposition to", to determine whether a measure is "against" dumping or a subsidy, we believe it is necessary to assess whether the design and structure of a measure is such that the measure is "opposed to", has an adverse bearing on, or, more specifically, has the effect of dissuading the practice of dumping or the practice of subsidization, or creates an incentive to terminate such practices. In our view, the CDSOA has exactly those effects because of its design and structure.

255. The CDSOA effects a transfer of financial resources from the producers/exporters of dumped or subsidized goods to their domestic competitors. This is demonstrated by the following elements of the CDSOA regime. First, the CDSOA offset payments are financed from the anti-dumping or countervailing duties paid by the foreign producers/exporters. Second, the CDSOA offset payments are made to an "affected domestic producer", defined in Section 754(b) of the Tariff Act as "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 that "remains in operation". In response to our questioning at the oral hearing, the United States confirmed that the "affected domestic producers" which are eligible to receive payments under the CDSOA, are necessarily competitors of the foreign producers/exporters subject to an anti-dumping or countervail order. Third, under the implementing regulations issued by the United States Commissioner of Customs ("Customs") on 21 September 2001, the "qualifying expenditures" of the affected domestic producers, for which the CDSOA offset payments are made, "must be related to the production of the same product that is the subject of the related order or finding, with the exception of expenses incurred by associations which must relate to a specific case."192 Fourth, Customs has confirmed that there is no statutory or regulatory requirement as to how a CDSOA offset payment to an affected domestic producer is to be spent193, thus indicating that the recipients of CDSOA offset payments are entitled to use this money to bolster their competitive position vis-à-vis their competitors, including the foreign competitors subject to anti-dumping or countervailing duties.

256. All these elements lead us to conclude that the CDSOA has an adverse bearing on the foreign producers/exporters in that the imports into the United States of the dumped or subsidized products (besides being subject to anti-dumping or countervailing duties) result in the financing of United States competitors-producers of like products-through the transfer to the latter of the duties collected on those exports. Thus, foreign producers/exporters have an incentive not to engage in the practice of exporting dumped or subsidized products or to terminate such practices. Because the CDSOA has an adverse bearing on, and, more specifically, is designed and structured so that it dissuades the practice of dumping or the practice of subsidization, and because it creates an incentive to terminate such practices, the CDSOA is undoubtedly an action "against" dumping or a subsidy, within the meaning of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement .

257. We note that the United States challenges what it views as the Panel's incorporation of a "conditions of competition test" in Article 18.1 of the Anti-Dumping Agreement and in Article 32.1 of the SCM Agreement .194 In our view, in order to determine whether the CDSOA is "against" dumping or subsidization, it was not necessary, nor relevant, for the Panel to examine the conditions of competition under which domestic products and dumped/subsidized imports compete, and to assess the impact of the measure on the competitive relationship between them. An analysis of the term "against", in our view, is more appropriately centred on the design and structure of the measure; such an analysis does not mandate an economic assessment of the implications of the measure on the conditions of competition under which domestic product and dumped/subsidized imports compete.

258. As mentioned above195, the finding of the Panel that the CDSOA is a measure against dumping or a subsidy is also based on the view that the CDSOA provides a financial incentive for domestic producers to file or support applications for the initiation of anti-dumping and countervailing duty investigations, and that such an incentive will likely result in a greater number of applications, investigations and orders.196 We agree with the United States that this consideration is not a proper basis for a finding that the CDSOA is "against" dumping or a subsidy; a measure cannot be against dumping or a subsidy simply because it facilitates or induces the exercise of rights that are WTO-consistent. The Panel's reasoning would give Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement a scope of application that is overly broad. For example, the Panel's reasoning would imply that a legal aid program destined to support domestic small-size producers in anti-dumping or countervailing duty investigations should be considered a measure against dumping or a subsidy within the meaning of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement , because it could be argued that such legal aid is a financial incentive likely to result in a greater number or applications, investigations and orders.

259. The United States also argues that the Panel erred in relying on the stated purpose of the CDSOA, as expressed in the "Findings of Congress" set forth in Section 1002 of the CDSOA, to support its finding that the CDSOA is a measure against dumping or a subsidy.197 We note that the Panel referred to the "Findings of Congress", not as a basis for its conclusion that the CDSOA constitutes a specific action against dumping or subsidies, but rather as a consideration confirming that conclusion.198 We agree with the Panel that the intent, stated or otherwise, of the legislators is not conclusive as to whether a measure is "against" dumping or subsidies under Article 18.1 of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement . Thus, it was not necessary for the Panel to inquire into the intent pursued by United States legislators in enacting the CDSOA and to take this into account in the analysis. The text of the CDSOA provides sufficient information on the structure and design of the CDSOA, that is to say, on the manner in which it operates, to permit an analysis whether the measure is "against" dumping or a subsidy. Specifically, the text of the CDSOA establishes clearly that, by virtue of that statute, a transfer of financial resources is effected from the producers/exporters of dumped or subsidized goods to their domestic competitors. This essential feature of the CDSOA constitutes, in itself, the decisive basis for concluding that the CDSOA is "against" dumping or a subsidy-because it creates the "opposition" to dumping or subsidization, such that it dissuades such practices, or creates an incentive to terminate them. Therefore, there was no need to examine the intent pursued by the legislators in enacting the CDSOA.199 In our view, however, the Panel did not err in simply noting that the stated legislative intent, which appears in the statute itself, confirms the conclusion it had reached as to the scope of the measure.


To continue with C. Footnote 24 of the Anti-Dumping Agreement and Footnote 56 of the SCM Agreement

Return to Index


151 Panel Report, para. 7.51.

152 Appellate Body Report, US - 1916 Act , para. 122.

153 Panel Report, para. 7.15.

154 Ibid., para. 7.16.

155 Ibid., para. 7.17.

156 Ibid., para. 7.18. In paragraph 7.18, the Panel refers only to dumping. We understand, however, that, in the light of the conclusion the Panel reached in paragraph 7.51, the two conditions set out in paragraph 7.18 extend mutatis mutandis to Article 32.1 of the SCM Agreement , which deals with subsidies.

157 Panel Report, para. 7.23.

158 Panel Report, para. 7.21.

159 Ibid., para. 7.33.

160 Ibid.

161 Ibid., para. 7.7.

162 Ibid.

163 Ibid.

164 Appellate Body Report, US - 1916 Act , para. 122.

165 Appellate Body Report, US - 1916 Act , para. 130.

166 Ibid. (original emphasis)

167 Appellate Body Report, US - 1916 Act , paras. 105-106 and 130.

168 In response to questioning at the oral hearing, the participants did not dispute that the constituent elements of dumping refer to the definition of dumping in Article VI:1 of the GATT 1994, as elaborated in Article 2 of the Anti-Dumping Agreement , and that the constituent elements of a subsidy refer to the definition of a subsidy found in Article 1 of the SCM Agreement .

169 Panel Report, para. 7.23.

170 Section 754(a) of the Tariff Act provides:

Duties assessed pursuant to a countervailing duty order, an anti-dumping 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".

171 Panel Report, para. 7.21.

172 United States' appellant's submission, para. 18.

173 Ibid., para. 20.

174 Appellate Body Report, US - 1916 Act , para. 130. (original emphasis)

175 Ibid., para. 122.

176 European Communities', India's, Indonesia's and Thailand's appellees' submission, para. 14.

177 European Communities', India's, Indonesia's and Thailand's appellees' submission, para. 14.

178 Section 754(a) of the Tariff Act.

179 Panel Report, para. 7.16.

180 Appellate Body Report, US - 1916 Act , para. 122.

181 Panel Report, para. 7.18 and footnote 271 thereto.

182 United States' appellant's submission, para. 31.

183 Ibid., para. 32.

184 Ibid., para. 33.

185 Ibid.

186 Panel Report, para. 7.33.

187 United States' appellant's submission, para. 31.

188 Ibid.

189 Further support for our view is found in the examples given by the New Shorter Oxford English Dictionary in relation to this definition:

17. W. OWEN Under his helmet, up against his pack, . . Sleep took him by the brow and laid him back. R. CHANDLER There was a bar against the right hand wall.

190 See supra, para. 231.

191 Panel Report, para. 7.33.

192 19 C.F.R. § 159.61(c).

193 "Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers", United States Federal Register, 21 September 2001 (Volume 66, Number 184), p. 48549.

194 United States' appellant's submission, para. 41. The Panel found that the CDSOA is a measure against dumping or a subsidy because it "has a specific adverse impact on the competitive relationship between domestic products and dumped [or subsidized] imports". (Panel Report, para. 7.39) According to the Panel, the CDSOA is against dumping or a subsidy because it affects competition between, on the one hand, dumped or subsidized products, and, on the other hand, domestic products, to the detriment of the imported products.

195 See supra, para. 230.

196 Panel Report, para. 7.42.

197 United States' appellant's submission, paras. 80-83. The United States, viewing the statutory provision entitled "Findings of Congress" as legislative history, stated at the oral hearing that a United States' court will not look to the legislative history of a statute unless that statute is ambiguous.

198 Panel Report, para. 7.41.

199 We discussed the role of the legislative or regulatory intent in Japan - Alcoholic Beverages II, where we examined whether a measure is consistent with Article III:2 of the GATT 1994. We said:

This third inquiry under Article III:2, second sentence, must determine whether "directly competitive or substitutable products" are "not similarly taxed" in a way that affords protection. This is not an issue of intent. It is not necessary for a panel to sort through the many reasons legislators and regulators often have for what they do and weigh the relative significance of those reasons to establish legislative or regulatory intent. If the measure is applied to imported or domestic products so as to afford protection to domestic production, then it does not matter that there may not have been any desire to engage in protectionism in the minds of the legislators or the regulators who imposed the measure. It is irrelevant that protectionism was not an intended objective if the particular tax measure in question is nevertheless, to echo Article III:1, "applied to imported or domestic products so as to afford protection to domestic production". This is an issue of how the measure in question is applied. (original emphasis; underlining added)

(Appellate Body Report, Japan - Alcoholic Beverages II, at 119)