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UNITED STATES � CONTINUED DUMPING AND SUBSIDY
4.431 Korea considers that the Appellate Body in US �
Anti-Dumping Act of 1916 already has adjudicated the primary issue in this
proceeding, i.e., Members may take one and only one action against
dumping--they may impose duties equal to or less than the margin of dumping.
This logic extends without modification to countervailing duty proceedings.
(i) The Byrd Amendment constitutes an impermissible
�specific action�
4.432 In Korea's view, just like the 1916 Act, the Continued
Dumping and Subsidy Offset Act of 2000 (the CDSOA or Byrd Amendment) creates a
specific action, other than imposition of AD or CVD duties, to be taken where
imports are found to be dumped or subsidized. That action is that the US
authority must transfer the duties collected from imports directly to the US
companies that supported the petition. This �specific action against dumping�
(or subsidy) is inconsistent with Article VI of GATT 1994, Article 18.1 of the
AD Agreement and Article 32.1 of the SCM Agreement.
4.433 According to Korea, the counter-arguments contained in
the First Submission of the United States do not withstand scrutiny and are not
supported by the language of the relevant provisions.
4.434 First, in Korea�s view, the US interpretation of �[t]he
ordinary meaning of the term �against�� is contrary to the interpretation of
�against� in Article 18.1 of the AD and Article 32.1 of the SCM. Only on the
basis of an irrelevant ordinary meaning of �against� does the US argue that �the
actual elements or requirements of the CDSOA do not act �against� dumping or
subsidization because they do not apply to (have any contact with) imported
goods or importers.� The proper interpretation is that Article 18.1 stipulates
�specific action against dumping�, a process, rather than
�specific action against (dumped) imported goods or importers� as argued
by the US. Thus, the available ordinary meaning of �against� shows that the
CDSOA is a specific action �against� dumping (or subsidy). This interpretation
is confirmed by the panels and the Appellate Body in US-1916 Act.
4.435 Second, the US claims that the AB report in US- 1916
Act provides no guidance as to the meaning of the term �against�. The US
seems to argue that the CDSOA, even though it is �in response to� dumping, is
not �against� dumping. The examples presented by the United States do not
support this argument.
4.436 Third, the US argues that constituent elements of
dumping are not built into the CDSOA. Again, in Korea�s view, the AB�s
consideration of this issue in US�1916 Act shows that the US argument
cannot withstand scrutiny. In addition, contrary to the US argument, the
constituent elements of dumping are �built into� the CDSOA and the amount of the
distributions under the CDSOA is closely related to the extent to which a US
producer has been affected by dumping or subsidization of imports.
4.437 Fourth, the US argues that, if the Panel determined
that the CDSOA is an action against dumping or a subsidy, footnotes 24 and 56 to
Articles 18.1 and 32 operate to permit the CDSOA. In Korea�s view, the US
argument would be valid on only one condition, which is if footnotes 24 and 56
provided an exemption for the violation of Articles 18.1 and 32 in the nature of
Article XX or Article XXIV of GATT. But, there is no textual basis to argue that
footnotes 24 or 56 provide such an exemption. Moreover, the US itself
inadvertently admits that footnotes 24 and 56 cannot provide a safe harbour for
an action which has already been found to be an action against dumping.
4.438 In short, Korea submits that like the 1916 Act, the
Byrd Amendment mandates an impermissible �specific action.� It profoundly alters
the conditions of competition to favour US producers in all US markets
for all products. This analysis is confirmed by the opinions of the President
who signed the Amendment into law and of various other US government officials.
(ii) The Byrd Amendment violates the standing threshold
4.439 Korea argues that the Byrd Amendment is inconsistent
with Article 5.4 of the AD Agreement and Article 11.4 of the SCM Agreement. It
distorts and undermines the standing threshold, encouraging abuse of otherwise
permissible actions, and rendering these WTO provisions meaningless. These
thresholds were designed to balance carefully a number of competing rights and
interests, primarily the right of an industry to seek relief from unfair trade
practices versus the interest in ensuring that it is the industry, and not a
sector of it, or for that matter, an individual company, that is seeking relief.
4.440 First, Korea asserts, the US argues that the obligation
arising under Article 5.4 is limited to verifying the number of companies
expressing support for the petition. Under Article 26 of the Vienna Convention
on the Law of Treaties and Article X:3(a) of GATT, this cannot be a good faith
implementation of a treaty obligation.
4.441 Second, according to Korea, the US argues that the
complaining parties offer no empirical support for their contention that the
CDSOA encourages domestic companies to support a petition. The Appellate Body
has repeatedly stated that an �effects test� is irrelevant if the measure has
been found to violate the provisions of the WTO. The United States also
improperly supports its argument by claiming that it is �generally� irrational
for domestic companies to �oppose� relief. The quantitative target envisaged in
Article 5.4 is not the number of companies �opposing� the petition, but the
number of companies �supporting� the petition. Moreover, it is not irrational
for domestic companies not to support a petition.
4.442 Korea submits that, by enacting the Byrd Amendment, the
US government has improperly influenced the very facts that the US authority is
supposed to examine in making its determination. Thus, the US has violated its
obligation to conduct an objective examination under Article 5.4 of the AD
Agreement and Article 11.4 of the SCM Agreement.
(iii) The Byrd Amendment violates provisions on
undertakings
4.443 Korea is of the view that the Byrd Amendment is
inconsistent with Article 8 of the AD Agreement and Article 18 of the SCM
Agreement because it impermissibly deters agreements on undertakings. The Byrd
Amendment creates an incentive for the US industry to oppose undertakings. By
supporting the imposition of duties, the domestic industry may receive not
merely the imposition of the duties as allowed by the WTO agreements and US law
(which, in essence, results in price levels consistent with a price
undertaking), but also the direct transfer of the duties collected.
(iv) Violation of Article X:3(a)
4.444 In the opinion of Korea, the US argues that Article
X:3(a) addresses only the administration of national laws and not
national laws themselves. The CDSOA violates Article X:3(a) because it prevents
the US from uniform, impartial and reasonable administration of US laws
concerning standing threshold determinations and the acceptance of undertakings.
(b) Conclusion
4.445 Korea requests the Panel to recommend that the United
States bring its laws into conformity with its obligations under the relevant
WTO provisions and to suggest that the United States repeal the Byrd Amendment.
10. Mexico
(a) Introduction
4.446 In its oral statement, Mexico concentrates on the key
features of Mexico's claims under Article 5 of the SCM Agreement. The other
claims made by Mexico have been dealt with in its first written submission and
in the other claimants' first written submissions. Mexico agrees with the oral
statements of the other complaining parties with respect to those claims and
incorporates them into its arguments.
4.447 Mexico will be providing a detailed elaboration on all
of its claims in its written rebuttal submission.
(b) The negative economic impact of the Act
4.448 Before addressing its claims regarding Article 5,
Mexico wishes to comment on the negative economic impact of the Continued
Dumping and Subsidy Offset Act, which Mexico refers to as the �Act�.
4.449 Mexico argues that when anti-dumping and/or
countervailing duties are imposed, the relative competitive relationship between
the affected exports and competing US products is modified. WTO Members have
agreed to this modification. It requires exporters who remain competitive in the
US market to adjust their pricing practices to either avoid the duties or to
enable continued sales in situations where the duties are applied In such
circumstances, any additional modifications in the relative competitive
relationship will reduce the ability of the exporter to compete and, therefore,
its ability to sell into the US market.
4.450 Mexico is of the view that the subsidies conferred by
the Act as so destructive because the modify further the relative competitive
relationship in an adverse and direct manner which was not agreed to by the WTO
Members. The subsidies are generated by the duties collected and are then
granted to the direct competitors of the Mexican exporters. They are used
exclusively to subsidize the production of the like US products. Finally, only
those direct competitors that filed or support the petition for the original
investigation receive the subsidies. This is why the subsidies conferred by the
Act are so destructive.
4.451 In this way, Mexico submits, the subsidies
fundamentally and systematically alter the relative conditions of
competition between Mexican exporters and producers of like US products in a
manner that goes beyond the maximum protection permitted under GATT Articles II
and VI.
4.452 According to Mexico, since the date of entry into force
of the Act, its adverse effects were manifest because the granting of the
subsidies was explicitly mandated and the subsidies would be granted with
respect to qualifying expenditures that were made by the recipients on or after
the date of issuance of the order or finding in question.
(c) The legal dimensions of Mexico�s Article 5 claim
4.453 Mexico believes its claim under Article 5 of the SCM
Agreement is straight forward. In order for it to prevail, Mexico must
demonstrate that, through the use of a subsidy, the Act causes adverse effects
in the form of nullification or impairment of benefits accruing directly or
indirectly to Mexico under the GATT 1994.
4.454 Mexico asserts that it has established all the elements
of this claim:
The offsets distributed under the Act constitute
financial contributions that confer benefits and, therefore, amount to
subsidies within the meaning of Article 1 of the SCM Agreement.
The Act explicitly limits access to the subsidies to
certain enterprises and, therefore, the subsidies are specific within
the meaning of paragraph (a) of Article 2.1 of the SCM Agreement.
Consequently, the subsidies are actionable under Part III of the SCM
Agreement which includes Article 5.
By virtue of the fact that Article 7 of the SCM
Agreement entitles a WTO Member to invoke Article 5 where a subsidy is
granted or maintained, the meaning of �use of� any subsidy in Article 5
includes the granting or maintaining of a subsidy in the circumstances
of this dispute.
Through the use of the subsidies, the Act causes
adverse effects in the form of nullification or impairment of benefits
accruing directly or indirectly to Mexico under the GATT 1994:
Nullification or impairment under paragraph (b) of
Article 5 can take the form of �violation� nullification or impairment
and �non-violation� nullification or impairment. Mexico is pleading both
forms of nullification or impairment.
With respect to violation nullification or
impairment, to the extent that the Act violates provisions of the GATT
1994 and the violation is caused by the �use of� a subsidy, violation
nullification or impairment will occur.
Mexico�s non-violation nullification or
impairment claim consists of two elements:
- By mandating the granting of actionable
subsidies in the circumstances of this dispute, the Act will
necessarily cause nullification or impairment. Upon granting, the
subsidies will upset the competitive relationship between Mexican
and like US products that is legitimately expected by Mexico under
GATT Articles II and VI when its products face anti-dumping or
countervailing duties. The competitive relationship in such
circumstances should be modified by an amount, at most, equal to the
maximum anti-dumping and countervailing duties allowable under the
Articles. The subsidies alter the competitive relationship in excess
of that amount.
- By maintaining actionable subsidies in the
circumstances of this dispute, the Act also causes nullification or
impairment. The Act impairs the predictability needed to plan for
future trade that is legitimately expected by Mexico under GATT
Articles II and VI in situations when its products face anti-dumping
or countervailing duties. The benefits accruing to Mexico under
these Articles apply to actual trade and to the predictability
needed to plan future trade. It is that predictability that is being
impaired.
4.455 Mexico argues that the United States acknowledges that
the offsets distributed under the Act are subsidies. However, the United States
raises several arguments to attempt to rebut Mexico�s claim under Article 5(b)
of the SCM Agreement. I will address each argument in turn.
(i) Specificity
4.456 The US argues that the Act does not confer specific
subsidies because the Act does not limit the subsidies to certain enterprises
and that there is no evidence that the subsidies are specific �in fact�.
4.457 In Mexico's view, the US mischaracterizes Mexico�s
arguments regarding specificity. Mexico�s position is simple � �in law�, the
subsidies conferred under the Act are specific. There is no need for this Panel
to examine whether the subsidies are specific �in fact�. All of the arguments of
the United States that are based on paragraphs (b) and (c) of Article 2.1 of the
SCM Agreement � which concern specificity �in fact� � are legally irrelevant to
this proceeding.
4.458 Mexico submits that the test under paragraph (a) of
Article 2.1 of the SCM Agreement is plain � does �the legislation pursuant to
which the granting authority operates, explicitly limit access to a subsidy to
certain enterprises�?
4.459 The answer, according to Mexico, is clearly �yes�.
4.460 The funds that form the �financial contribution�
element of each subsidy are deposited and maintained in separate special
accounts that are, themselves, limited to the products that are the subject of
each order or finding. Thus, the subsidies are inherently specific from the
outset. Moreover, access to each subsidy is explicitly limited to certain
enterprises that produce a like product or worker representatives. Finally,
access is further restricted to those enterprises that were petitioners in the
original investigation that led to the duties or those enterprises that
supported the petition.
4.461 Thus, Mexico asserts, by legal requirement, the Act
explicitly limits access to the subsidies it confers to certain enterprises.
(ii) Adverse effects
4.462 The United States argues that Mexico has failed to
demonstrate �adverse effects� within the meaning of Article 5.
4.463 It seems that the central argument that the US is
making in this regard is that that the Act must be applied before there can be a
violation under Article 5 which, in its view, means that subsidies must be
granted under the Act. This is manifestly incorrect.
4.464 Mexico is raising two types of nullification or
impairment claims under its Article 5 challenge: (i) �violation� nullification
or impairment; and (ii) �non-violation� nullification or impairment.
4.465 Since �violation� nullification or impairment presumes
that the Panel finds a violation of a provision of the GATT 1994 in one of the
other claims before it and therefore does not give rise to an independent ground
for challenge, Mexico decides to focus on Mexico�s �non-violation� nullification
or impairment claims.
4.466 With respect to non-violation nullification or
impairment and the US claims that the Act must be �applied�, Mexico is
presenting two arguments.
Granting of actionable subsidies
4.467 The US argues that the Act must be applied�i.e., that
subsidies must be granted under the Act� before a non-violation nullification or
impairment claim can made under paragraph (b) of Article 5. This entire line of
argument is based on GATT and WTO jurisprudence related to claims brought under
GATT Article XXIII:1(b).
4.468 Mexico is of the view that, in making this argument,
the US ignores the substantive nature of Article 5. It also misconstrues the
�legislation as such� element of Mexico�s Article 5 claim. Finally, it confuses
a procedural matter with a substantive one.
4.469 The US argues that footnote 12 to the SCM Agreement
prevents Mexico from challenging the Act on the basis that the existence of
nullification or impairment is to be established in accordance with the practice
of application of Article XXIII:1(b). Mexico argues that, as is clear from the
text of the footnote, it relates to the determination of the existence of
nullification or impairment, not the question of when a challenge can be brought
under Article 5.
4.470 Mexico asserts that what is really at issue is the
procedural question of when Mexico can challenge the Act under Article 5. Does
Mexico have to wait until a subsidy has been granted? Clearly, the answer to
this question, according to Mexico, is �No�.
4.471 Mexico argues that Article 5, like any other
substantive provision of the WTO Agreements, is subject to the doctrine
governing a legislation as such challenge. If legislation mandates action that
will necessarily violate a WTO provision, that legislation can be challenged.
There is no legal or logical reason to conclude otherwise. By focusing on GATT
Article XXIII:1(b) and excluding any consideration of the substantive nature of
Article 5, the US has failed to recognize this.
4.472 Mexico is of the view that under the legislation as
such element of Mexico�s Article 5 claim, Mexico is simply arguing that the Act
mandates the granting of actionable subsidies and that, when granted, such
subsidies will cause nullification or impairment. In other words, when the
subsidies are granted�an action that even the US acknowledges as amounting to
�application��a violation will occur.
4.473 Thus, under Article 5, Mexico can challenge the
actionable subsidies conferred by the Act prior to those subsidies being
granted.
Maintaining of actionable subsidies
4.474 Mexico is also arguing that the Act is maintaining
actionable subsidies and that the maintenance of those subsidies in the
circumstances is nullifying or impairing benefits that accrue to Mexico under
the GATT 1994.
4.475 Subsidies can be challenged under Article 7 of the SCM
Agreement (the remedy provision for Article 5), when a Member maintains a
subsidy. A violation of Article 5 can be found where the maintenance of a
subsidy amounts to the �use of� that subsidy and it causes one of the specified
adverse effects.
4.476 Mexico asserts that in the circumstances of this
dispute, the Act �maintains� subsidies in that it provides the means for the
creation and conferral of those subsidies. The meaning of �use of� includes
maintaining a subsidy in the circumstances of this dispute where other actions
related to the subsidies have been taken. These actions include mandating the
granting of the subsidies, creating the special accounts and depositing funds
into them, and establishing a list of eligible recipients.
4.477 In the opinion of Mexico, even before subsidies are
granted under the Act, the maintenance of subsidies under the Act nullified or
impaired benefits accruing to Mexico under GATT Articles II and VI that
concerned the creation of predictability needed to plan future trade. Given the
certainty that any anti-dumping and countervailing duties that will be collected
will be re-distributed to the producers of directly competitive products and the
uncertainty as to the magnitude of the subsidies, it is impossible for Mexican
exporters to predict the relative conditions of competition between their
products and like US products. This is particularly problematic with respect to
products that require significant lead time between order and delivery.
(iii) Competitive relationship
4.478 The US argues that Mexico has failed to demonstrate
that the competitive relationship between US products and Mexican products has
been upset by a subsidy.
4.479 Mexico is of the view that a great part of the US
argument on this point is based on its mistaken belief that subsidies must be
granted under the Act before Mexico can bring an Article 5(b) challenge.
4.480 Mexico posits that it seems that the US is also arguing
that Mexico must prove adverse trade effects in order to establish nullification
or impairment, which according to Mexico is not the case. As was made clear at
paragraph 150 of the report of the Panel in Oilseeds I, the focus is on
whether there has been an adverse change in conditions of competition
legitimately expected by Mexico and not on trade flows or volumes of trade.
4.481 The United States argues the Panel in Oilseeds I
�carefully analyzed� the evidence presented in making its finding and that, in
this dispute, no such evidence has been presented by Mexico. Mexico argues that
this is incorrect.
4.482 In assessing whether there was an adverse change in
conditions of competition that led to a finding of nullification or impairment,
the Panels in Oilseeds I and Oilseeds II examined the framework,
mechanisms, essential features, characteristics and operations of the schemes in
question. That was the evidence �carefully analyzed� by the panels. In other
words, the panels made their findings based on the structure and architecture of
the schemes.
4.483 This is exactly what Mexico has done in this dispute.
By virtue of the structure and architecture of the Act:
- upon granting, the subsidies conferred by the
Act will adversely change the relative conditions of competition
that Mexico legitimately expected; and
- prior to the granting of subsidies, the Act per se interferes with the predictability related to those
relative conditions of competition that was legitimately expected by
Mexico.
(iv) �Floodgates� argument
4.484 The US argues that acceptance of Mexico�s argument
would �automatically� convert any specific domestic subsidy programme which is
related to a product on which there is a tariff concession into a non-violation
nullification or impairment (para. 68, US First Submission).
4.485 According to Mexico, this argument is incorrect. At
paragraph 81 of the Panel report in Oilseeds II, the Panel stated that
GATT contracting parties must �be assumed to base their tariff negotiations on
the expectation that the price effect of the tariff concession will not be
systematically offset�. Thus, the mere fact that a subsidy may offset the
effect of a tariff binding or any other benefit accruing under the GATT is not
enough to amount to nullification or impairment. The upsetting of the benefit
must be systematic, as it is in this dispute.
4.486 Moreover, Mexico asserts, at paragraph 10.82 of the
Panel report in Film, it is stated that a �clear correlation� between the
measure at issue and the adverse effect on the relevant competitive relationship
must be shown. In order for this to occur, there must be �specific linkages�
between the subsidy and the nullification or impairment of the benefit in
question. This will occur only in exceptional circumstances.
4.487 Mexico argues that the facts of this dispute are
exceptional. The benefits accruing to Mexico under the GATT 1994 are being
systematically upset by the subsidies and a clear correlation and linkages
exist. This is exemplified by the fact that the amount of the offsets equals the
amount of the duties collected and the beneficiaries of the offsets are the same
as the petitioners and supporters who initiated the investigation that led to
those duties.
(v) Reasonable expectations
4.488 Finally, the US argues that Mexico could have
reasonably expected the Act on the basis that compensation proposals had been
suggested in the past.
4.489 Mexico is of the view that the evidence cited by the US
supports Mexico�s position that it could not have reasonably anticipated the
introduction of the Act. In every case where such a measure has been proposed in
the past, it has been adamantly opposed by the US administration and it has not
been passed into law. In fact, the US administration opposed the introduction of
the Act. In this context, Mexico could have assumed and did assume that any
attempt to introduce a similar legislative scheme would, once again, fail.
(d) Conclusion
4.490 For the foregoing reasons, Mexico believes that the US
has failed to rebut the prima facie case presented by Mexico with respect
to its Article 5 claim.
11. Thailand
(a) Introduction
4.491 Thailand notes that the following arguments contained
in its oral statement are complementary and supplementary to the arguments made
by other complaining parties.
(b) Rebuttal to the Legal Arguments Challenged by the
United States
4.492 According to Thailand, it is crystal clear that Members
shall have sovereign rights to appropriate lawfully assessed and collected
duties within the purview of international law. However, the United States has
made an argument from paras. 18 to 35 which concludes that �this panel
proceeding is not the appropriate forum to address these issues ex aequo et
bono.�
4.493 In Thailand's view, this argument has no role to play
in this dispute because of the following reasons:
- 1. Nothing is said in Thailand's request about
requesting the Panel to make any rulings on the basis of the notion
of ex aequo et bono ;
- 2. The complaining parties merely request the
Panel to make rulings and recommendations that the �Continued
Dumping and Subsidy Offset Act of 2000�(hereinafter referred to as
�CDSOA�) is inconsistent with US obligations under the WTO Agreement
by clarifying the existing provisions of the WTO Agreement and any
other covered agreement in accordance with customary rules of
interpretation of public international law, as stipulated in Article
3.2 of the DSU.
4.494 Thailand argues that the United States argues in bullet
2 of paragraph 33 of the first submission, if read a contrario, that the
legislation �may� violate WTO obligations. In fact, Article XVI.4 of the WTO
Agreement or the Marrakesh Agreement as well as Article 18.4 of the Anti-dumping
Agreement and Article 32.5 of the Subsidies and Countervailing Measures
Agreement (hereinafter referred to as �SCM�) clearly requires Members to ensure
the conformity of their laws, regulations and administrative procedures with
their obligations. In this light, the CDSOA may be subjected to interpretation
and brought to dispute settlement mechanisms if its application is found to be
in violation of the WTO Agreement. Moreover, the language used in Article 5 of
the SCM that �[n]o member should cause � adverse effects�� should be construed
to mean that any action, be it legislative or administrative, which �may� cause
adverse effects to the interests of other Members falls within the scope of
Article 5 of the SCM.
4.495 In Thailand�s view, paragraph 37 of the US first
submission implies, if not indicates, that the CDSOA is somewhat a subsidy, but
argues further that it may or may not be prohibited under the SCM. Thailand
argues that this line of argument made by the United States should be dismissed
as contended by other complaining parties. More important than that, the US
Customs Service in its news release on 30 January 2002 states that �[t]his
legislation, also known as the Byrd Amendment, required US customs to disburse
anti-dumping and countervailing (AD/CV) duties to domestic producers injured by
foreign dumping and subsidies. The claimants have received more than
$200 million to date.�
4.496 Thailand is of the view that paragraphs 77 to 89 of the
US first submission underscores the nature of the CDSOA that it is not based
upon the constituent elements of dumping or a subsidy. In Thailand's view,
domestic producers will be affected if there are importations of products which
are priced at prices lower than normal value. If so, the test for the
constituent elements are satisfied.
4.497 Thailand asserts that the argument in paragraph 86 that
any qualified applicant will be granted an amount of the distributions which is
not the recovery of damages is arguendo in absurdum because it goes
without saying that when a domestic producer is �affected� , he or she is then
considered as having �adverse� effects referred to in Article 5 of the SCM.
4.498 According to Thailand, even though paragraphs 90 to 100
of the US first submission attempt to convince the Panel that the CDSOA is not
meant to become a specific action �against� dumping or a subsidy within the
scope of Article 18 of the Anti-dumping Agreement and Article 32 of the SCM , it
is up to the Panel to rule, based on GATT/WTO jurisprudence, whether the term
�against� has its broad or narrow meaning, taking into account the object and
purpose of such covered agreements, in accordance with the general rule of
interpretation under international law, and whether any action attributable to
discouragement of dumping or a subsidy is an action against dumping or a
subsidy.
(c) Political consideration
4.499 Thailand fully shares the concern expressed by
Indonesia that if this kind of legislation is permitted it would not only set
debate-provoking precedent, but also huge burdens for developing countries to
bear when their products are subject to both competition policy and other
measures imposed by the importing Member in question.
(d) Conclusion
4.500 Thailand submits that the arguments appearing in the US
first submissions may be valid in other cases. Yet, they have failed to respond
to many issues raised in the complaining parties� submission.
D. FIRST ORAL STATEMENT OF THE UNITED STATES (a) Introduction
4.501 The United States considers that at issue in this case
is a law entitled the �Continued Dumping and Subsidy Offset Act of 2000� or, in
short, the CDSOA. The CDSOA is a government payment programme. Like all
governments, the US federal government makes payments to individuals or groups
for all sorts of purposes such as health care, public welfare, agriculture, etc.
Other WTO Members, including the complaining parties, maintain similar
programmes for their nationals.
4.502 According to the United States, The CDSOA has nothing
to do with the administration of the anti-dumping and countervailing duty laws.
The CDSOA instructs the US Customs Service to distribute funds in an amount not
to exceed the duties collected pursuant to anti-dumping and countervailing duty
orders to eligible domestic producers. The amount of the distributions have
nothing to do with the injury to the domestic producer or the recovery of
�damages� by the domestic producer. Rather, the amount depends upon the
applicant�s qualifying expenditures and whether other applicants also had
qualifying expenditures.
4.503 The United States argues that as a subsidy programme,
one would expect that the issues in this case would center on Article 3 or
Article 5 of the SCM Agreement. While the United States has heard today general
assertions of supposed harm that CDSOA will cause to the complaining parties�
companies that compete with US producers, none of the complaining parties have
backed up their allegations by pursuing an Article 5(c) claim. In the view of
the United States, this is tantamount to an admission by the complaining parties
that they cannot show the harm they complain of.
4.504 Except for Mexico, the complaining parties� primary
argument is that because the source of the funds for the distributions under
CDSOA are AD/CVD duties, the CDSOA is, on its face, inconsistent with the
Antidumping and SCM Agreements. The reality is that, because money is fungible,
the only real connection between the funds distributed under CDSOA and the
orders is that the duties collected serve to cap or limit the amount of the
annual distributions.
4.505 According to the United States, there is simply no WTO
obligation with respect to the uses to which AD/CVD duties might be put, or to
distinguish the use of these funds from any other source of government revenue.
Other than considering whether the CDSOA is an impermissible subsidy, a panel
proceeding is simply not the appropriate forum to address the complaining
parties� concern about the use of duties as a source of funds for domestic
expenditures.
(i) The CDSOA is not an actionable subsidy
4.506 In the view of the United States, it is elementary that
the granting of a subsidy is not, in and of itself, restricted under the SCM
Agreement. The Appellate Body recently recalled this point in its report in
United States � FSC. To be actionable, as claimed by Mexico, the complaining
party must demonstrate that the subsidy is �specific� within the meaning of
Article 2 of the SCM Agreement. Mexico, however, has failed to show that the
CDSOA is a specific subsidy. There is no question that CDSOA is not de jure
specific under Article 2.1(a) as its text does not expressly limit access to
certain enterprises, industries, or groups. Mexico does not even claim de
facto specificity.
4.507 The United States argues that even if Mexico passed the
specificity hurdle, Mexico has failed to establish that the CDSOA has caused
adverse effects to its interests as required by Article 5 of the SCM Agreement.
Instead, Mexico claims that the CDSOA as such causes per se adverse effects in
the form of nullification or impairment of benefits under Article 5(b). Mexico,
however, has not established that there is a presumption in Article 5(b) that a
subsidy that violates another WTO provision is an actionable subsidy without
showing adverse effects. Regardless, the CDSOA is not inconsistent with any
other WTO provision.
4.508 The United States is of the opinion that Mexico does
not satisfy the following requirements to establish a claim of non-violation
nullification or impairment either: 1) the application of a measure; 2) a
benefit accruing under the relevant agreement; and 3) the nullification or
impairment of the benefit as a result of the application of the measure that was
not reasonably anticipated. According to the United States, Mexico has failed to
establish the first and third elements at least.
4.509 First, the United States argues, Mexico�s claim is
insufficient on its face as Mexico does not challenge the application of the
CDSOA. Second, Mexico has failed to demonstrate that the competitive
relationship between any US products and Mexican imports has been upset by a
subsidy. Mexico has presented no evidence that US producers of products that
compete with Mexican products have actually received a distribution under the
CDSOA, let alone a �clear correlation� between the distributions and any
disruption of a competitive relationship. Indeed, Mexico cannot present such
evidence as it has challenged the CDSOA on its face, not the actual
distributions under the CDSOA. Finally, the United States has shown that Mexico
could have reasonably anticipated that AD/CVD duties would be distributed to the
domestic industry given proposed legislation in the US Congress in 1988, 1990,
1991, and 1994.
4.510 According to the United States, Mexico�s argument that
CDSOA will per se nullify or impair benefits under GATT Articles II and VI flies
in the face of the notion that a non-violation claim is an exceptional remedy,
renders the causation requirement meaningless, and automatically converts any
specific domestic subsidy programme with any connection to a product on which
there is a tariff concession into a non-violation nullification or impairment of
benefit. In sum, Mexico has failed to sustain its burden of demonstrating that
the CDSOA is a �specific� subsidy that is causing adverse effects within the
meaning of Articles 2 and 5 of the SCM Agreement.
(ii) CDSOA is not specific action against dumping or a
subsidy
4.511 The United States submits that the CDSOA cannot be
inconsistent with US obligations under the Antidumping and SCM Agreements, when
read with Article VI of GATT 1994, because the statute is not within the scope
of those agreements. The CDSOA does not impose any type of measure on imports or
importers. The CDSOA is a statute authorizing government payments. The
United States notes that the it is not challenging the conclusion of the
Appellate Body in the US - 1916 Act dispute that duties, provisional
measures and undertakings are the exclusive remedies for dumping. Thus, the
United States is not contradicting the US statements in the Norwegian -
Salmon dispute cited by some of the complaining parties today. The question
is whether the CDSOA is a specific action against dumping and a subsidy.
4.512 The United States is of the view that the complaining
parties� entire argument in this regard is built upon the Appellate Body�s
reasoning in United States � Antidumping Act of 1916. The United States
notes that most, if not all, of the complaining parties offer only a cursory
analysis of whether the reasoning of the Appellate Body in US � 1916
Act is applicable to the SCM Agreement. For the complaining parties to
prevail on their claims under GATT Article VI:3 and the SCM Agreement, however,
this Panel must find that it does. For the reasons explained in footnote 64 of
the US' written submission, it does not. Even assuming arguendo that it
does, the CDSOA is not inconsistent with the SCM Agreement for the same reason
that it is not inconsistent with the Antidumping Agreement � it does not
constitute a specific action against dumping or a subsidy.
4.513 In US � 1916 Act, the Appellate Body concluded
that Article 18.1 of the Antidumping Agreement applies to actions based upon the
constituent elements of dumping. The constituent elements of dumping are: (1)
products imported and cleared through customs, which are (2) priced lower than
their normal value.
4.514 In the opinion of the United States, the CDSOA,
however, simply fails to satisfy the test articulated in the 1916 Act. Without
question, the CDSOA distributions are not based upon the constituent elements of
dumping or a subsidy. As explained in the US' written submission, the
distributions are based upon the applicant�s qualification as an �affected
domestic producer� who has incurred �qualifying expenditures.� The Appellate
Body�s conclusion that the 1916 Act was a specific action against dumping was
very clearly based upon the fact that the �constituent elements of dumping were
built into the essential elements of civil and criminal liability under the 1916
Act.�
4.515 The United States argues that the statute at issue in
this dispute, the CDSOA, is completely different from the 1916 Act. The CDSOA is
a government payment programme based upon the definition of �affected domestic
producer� and �qualifying expenditures.� The Act has nothing to do with
measuring the extent to which a US producer has been injured or �damaged� by
dumping or subsidization of imports. In contrast, the 1916 Act is a statute
imposing criminal and civil liability upon importers for practices that
specifically include the constituent elements of dumping.
4.516 The US is perplexed by the complaining parties�
repeated statements that disbursements under the CDSOA require the existence of
a AD/CVD order. The complaining parties are simply restating the obvious. There
is no question that this is the case - of course AD/CVD duties will not be
collected without an order and presumably the complaining parties would not want
it any other way. Thus, the action against dumping or a subsidy has already been
taken.
4.517 According to the United States, the question in this
case is whether the Antidumping Agreement or the SCM Agreement limit what a
government can do with these revenues once collected. Nothing in these
agreements speaks to this, nor is there any ban on spending this revenue.
Spending this money cannot per se be action against dumping or a subsidy
- otherwise duties once collected could never be spent. The complaining parties�
reliance on the existence of AD/CVD orders is thus misplaced.
4.518 The United States asserts that in addition to not being
based upon the constituent elements of dumping or a subsidy, the CDSOA is not
�against� dumping or subsidies. This Panel must consider the proper
interpretation of the term �against� as a matter of first impression. The
ordinary meaning of the word �against� suggests that the specific action must be
in hostile opposition to and in contact with dumping or a subsidy. Here, the
CDSOA imposes no additional liability or burden on imported goods or importers
and, therefore, cannot be considered an action �against� dumping or a subsidy.
4.519 The United States notes that some of the complaining
parties have criticized the use of the New Shorter Oxford English Dictionary�s
definition of the term �against.� They take issue with the United States�
position that to be considered �against� dumping or a subsidy, the action must
impose or apply a burden or liability on the importer or imported good. They are
amused by the example of the government flags flying at half-mast. Yet,
according to the United States, the reality is that under their test, which is
action taken in response to dumping, the fictitious flag law would constitute a
specific action against dumping and a subsidy.
4.520 According to the United States, the sole basis of the
complaining parties� argument that the CDSOA is �against� dumping and subsidies
is the supposed intent or purpose of the law. Many complaining parties refer to
statements by various members of the US Congress and the title of the law
itself. However, this Panel must look to the actual operation of the law. As
emphasized by the panel in the 1916 Act dispute, the purpose of a measure is not
relevant to determining whether it falls within the scope of GATT Article VI and
the Antidumping Agreement. A panel must look at what the measure actually does.
The complaining parties rely heavily on the reasoning in 1916 Act. They should
not be permitted to do so in a self-serving selective manner.
4.521 The United States posits that, as explained in
paragraphs 101-111 of its written submission, in the event that the Panel
concludes that the CDSOA is an action against dumping or a subsidy, footnotes 24
and 56 to the Antidumping and SCM Agreements, respectively, operate to allow the
CDSOA as an �action� otherwise permitted. In sum, the complaining parties have
failed to establish that the CDSOA is even within the scope of, let alone
violates, Articles 1 and 18 of the Antidumping Agreement; Articles 4.10, 7.9,
10, and 32 of the SCM Agreement; or Article VI:2 and 3 of the GATT 1994.
(iii) The CDSOA is not inconsistent with any obligations
related to standing, undertakings or GATT Article X:3
4.522 In the view of the United States, the complaining
parties choose to ignore the fact that the standing provisions of the
Antidumping and SCM Agreements do not include any requirement that the
investigating authorities examine a statement of support to determine the
subjective motivation or reason that the domestic industry supported the
initiation of an anti-dumping or countervailing duty investigation. Articles 5.4
and 11.4 simply require authorities to follow certain quantitative benchmarks in
determining whether an investigation should be initiated. There is no allegation
in this dispute that the US investigating authority is failing to follow those
numerical benchmarks.
4.523 Likewise, the United States argues, the undertaking
provisions of the Antidumping and SCM Agreements do not require investigating
authorities to accept a proposed undertaking in the first place. Nor do those
provisions limit the types of reasons that may cause the administering authority
to decline a proposed undertaking. The decision to accept or reject a proposed
undertaking is within the complete discretion of the investigating authorities.
Thus, even if the CDSOA could be viewed as distorting the consideration of
undertakings, the decision to reject a proposed undertaking cannot form the
basis of a violation of Articles 8 and 18.
4.524 In any event, the United States asserts that, as
explained in paragraphs 123-125 of its written submission, the complaining
parties have offered no empirical support for their contention that the CDSOA
has a distorting effect on standing determinations and the consideration of
undertakings. The complaining parties� allegations are based on nothing more
than mere speculation.
4.525 The United States argues that with regard to GATT
Article X:3, the complaining parties have offered no arguments or evidence
concerning the actual administration of the CDSOA, which is the measure at issue
in this dispute. Consistent with the plain language of Article X:3(a), various
panel and Appellate Body reports have concluded that Article X:3(a) only
addresses the administration of national laws. Here, the complaining parties do
not even argue that the CDSOA is being administered in an unreasonable,
impartial or non-uniform manner. Nor did they identify the provisions of US law
relating to standing determinations and price undertakings as measures in their
panel requests. Thus, even if it were concluded that the CDSOA does somehow
affect the administration of US laws relating to standing and price
undertakings, this could not conceivably form the basis of an Article X:3(a)
finding against the CDSOA, which is the only measure at issue in this dispute.
(b) Conclusion
4.526 In closing, the United States submits that there cannot
be a breach of an obligation that does not exist � and such an obligation is not
created by virtue of the number of complaining parties. The CDSOA simply
distributes government revenue. Contrary to Mexico�s contention, the CDSOA does
not meet the requirements of an actionable subsidy under Article 5(b). Unlike
the 1916 Act, the CDSOA imposes no liability or burden on imported goods or
importers. Furthermore, it is not based upon the constituent elements of dumping
or a subsidy. In other words, it does not address dumping or subsidies as
such. Accordingly, it is not a �specific action against� dumping or
subsidies. Likewise, the CDSOA has nothing to do with standing determinations or
the consideration of price undertakings. As a legal matter, the complaining
parties have not identified any inconsistency with the obligations contained in
the standing and undertaking provisions. As a factual matter, the complaining
parties would have this Panel engage in sheer speculation.
E. ANSWERS OF COMPLAINANTS TO QUESTIONS FROM THE PANEL
1. Australia
(a) Questions to complaining parties
1. Please comment on para. 91 of the US first written
submission. Do you agree that "it is clearly possible for an action to be
'in response to' dumping or a subsidy but not be 'against' dumping or a
subsidy"? Please explain, taking into account the Appellate Body's finding
that "'specific action against dumping' � is action that is taken in
response to situations presenting the constituent elements of 'dumping'"
(1916 Act, para. 122). Does the Appellate Body's finding suggest that
"specific action against dumping" is necessarily a subset of action "in
response to" dumping? Please explain.
4.527 Australia considers that the statement by the United
States is unsustainable:95
it ignores that the Appellate Body�s finding on the
meaning of the phrase �specific action against dumping� gave meaning to
the word �against�, and did so in a way that encompasses other ordinary
meanings of the word in context;
it ignores also that, consistent with the requirement
of Article 3.2 of the DSU, the Appellate Body�s finding on the meaning
of �specific action against dumping� gave meaning to the phrase, as well
as the word �against�, in their context and in light of the object and
purpose of the broader framework of rules governing the imposition of
anti-dumping and countervailing measures provided by Article VI of GATT
1994 as interpreted by the Anti-Dumping and SCM Agreements in accordance
with the customary rules of interpretation of public international law.
(See also reply to Question 35 below);
it is premised on a misquotation of the Appellate
Body finding in US � 1916 AD Act. The US statement at issue is
preceded by numerous references to the Appellate Body having said that
�specific action against dumping� is �action that is taken in response
to the constituent elements of dumping�.96 In fact, the Appellate Body
said that �specific action against dumping� is �action that is taken in
response to situations presenting the constituent elements of
dumping�.97 The two statements are not equivalent;
it is based on selective quotations of the meaning of
�against�.98 However, the word �against� has other, equally valid,
ordinary meanings, including �in competition with�, �to the disadvantage
of�, �in resistance to� and �as protection from�99;
it presupposes a meaning of �dumping� (and �a
subsidy�) that has no basis in the relevant texts.100 Article 18.1
proscribes �specific action against dumping of exports from
another Member� not in accordance with GATT 1994. It does not proscribe
specific action �against dumped exports� or specific action
�against the importers of dumped exports� that is not in
accordance with the GATT 1994.
4.528 It follows that Australia does not agree that the
Appellate Body�s finding suggests that �specific action against dumping� is
necessarily a subset of action �in response to� dumping. In Australia�s view,
the Appellate Body�s finding equated the meaning of the two expressions.
2. Please explain exactly how you see that the
"constituent elements of dumping" have been incorporated into the CDSOA. 4.529 For offset payments to be made pursuant to the Act:
- a domestic producer must have supported an
application for an anti-dumping (or countervailing) duty
investigation; and
- there must have been a finding of dumping
(or subsidisation), as well as injury and a causal link, for an
anti-dumping (or countervailing) duty order to have been issued;101 and
- a domestic producer must have incurred
qualifying expenditure after the issue of the anti-dumping duty
finding or order (or countervailing duty order).
4.530 In other words, the existence of a situation presenting
the �constituent elements of dumping� (or a subsidy) is integral to a domestic
producer�s potential entitlement under the Act. Contrary to US assertions,102
Australia has not argued that the offset payments under the Act constitute
�specific action against dumping/a subsidy� because they are paid directly from
anti-dumping or countervailing duties: offset payments under the Act are
�specific action against dumping/a subsidy� because they constitute action that
may be taken only when the constituent elements of dumping or a subsidy are
present.
3. In your view, would it be inconsistent with Article
18.1 of the AD Agreement and Article 32.1 of the SCM Agreement for a Member
to provide subsidies in response to a finding of dumping or subsidization,
where that subsidization was in lieu of anti-dumping or countervailing
measures? If not, please explain in light of your view that these provisions
prohibit any action taken in response to situations presenting the
constituent elements of dumping. 4.531 To the extent that entitlement to the subsidies as
described is conditional on the existence of situations presenting the
constituent elements of dumping of subsidisation, such subsidies would be
inconsistent with Articles 18.1 and 32.1.
4. Assume that a Member (which has no legal framework for
the conduct of anti-dumping/ countervail investigations or imposition of
anti-dumping countervailing measures) implements a domestic subsidy
programme with the explicit purpose and design of offsetting the injurious
effects of dumped or subsidized imports. Would that programme constitute a
"specific action against dumping" (or subsidy)?
If not, please explain, and provide a reasoned
explanation as to how Article 18.1 of the AD Agreement (or Article 32.1 of
the SCM Agreement) can be interpreted to distinguish between this
hypothetical subsidy programme and the CDSOA regime.
4.532 It is not possible to provide a clear answer to this
hypothetical question. The key issue in determining whether such a measure would
be �specific action against dumping/a subsidy� within the meaning of Articles
18.1 and 32.1 would be whether entitlement is conditional on the existence of
situations presenting the constituent elements of dumping or subsidisation, in
other words, whether the presence of dumping or subsidisation is a necessary
condition.
5. Would a victim compensation scheme (funded from
central treasury resources, rather than penalties imposed on convicted
criminals) constitute a "specific action against" crime? Please explain.
Would your answer be any different if the scheme were funded from penalties
imposed on convicted criminals? Why? 4.533 With respect, Australia questions the relevance of this
scenario to the matter at issue in this dispute.
6. Assume that a Member enacts legislation mandating the
payment of $5,000 to petitioners to compensate them for the cost of making
the petition and participating in the anti-dumping investigation. Would that
payment constitute a "specific action against dumping of exports" within the
meaning of Article 18.1 of the AD Agreement? Why, or why not? 4.534 See reply to Question 4.
7. Assume that a Member enacts legislation requiring that
any anti-dumping duties collected be paid to state retirement homes. Would
such payments constitute "specific action against dumping of exports" within
the meaning of Article 18.1 of the AD Agreement? Why, or why not? 4.535 See reply to Question 4.
8. Assume that the US restricted offset payments under
the CDSOA to cases where the US found the existence of dumping, injury and
causation but did not impose an anti-dumping order, and that such payments
equalled the amount of anti-dumping duty that would have been collected had
an anti-dumping order been put in place. Would such payments constitute
"specific action against dumping of exports" within the meaning of Article
18.1 of the AD Agreement, or "action under other relevant provisions of
GATT 1994" within the meaning of note 24? Why, or why not?
4.536 See reply to Question 4.
9. Would the CDSOA violate AD Article 5.4 if offset
payments were made to all domestic producers of the product under
investigation, and not merely those domestic producers supporting the
petition? Please explain. 4.537 Yes, because offset payments as described would still
make it easier for the needed levels of industry support to be reached. The
offset payments as described would continue to provide an incentive to domestic
producers to support a petition until such time as the standing thresholds for
initiation of an investigation have been met, thereby distorting, or threatening
to distort, the requirement that the application be made �by or on behalf of the
domestic industry�.
10. Is a Member not acting in good faith when it provides
incentives for the use of a WTO-consistent remedy? Please explain. 4.538 While it may be possible in some circumstances for a
Member to act in good faith while providing incentives for the use of a
WTO-consistent remedy, the question is incorrectly premised in the context of
the present dispute. A remedy cannot be WTO-consistent if a Member takes action
that distorts the application of one of the necessary conditions for the
availability of that remedy: in this case, that an application be made �by or on
behalf of the domestic industry�.
11. Does support for an anti-dumping petition have to be
genuine (i.e., based on the actuality or expectation of injury) for the
purposes of Article 5.4 of the AD Agreement? If so, how could an
investigating authority ensure that support is genuine in all cases? 4.539 The negotiating history of Article 5.4 confirms that
its intent was to ensure that an application was being made �by or on behalf of
the domestic industry�.103 Moreover, Article 5.4, read in the context of Article 5
as a whole, provides that support for an anti-dumping investigation be expressed
by the domestic industry on the basis of evidence of dumping, injury and a
causal link between the dumping and injury. (In that context, Australia notes
that the premise of the question, �i.e., based on the actuality or expectation
of injury�, is misleading.) A variety of factors may of course influence a
domestic producer�s decision whether or not to support a petition. The basis of
Australia�s claim in this dispute, however, is that a Member government may not
take action that distorts that decision in ways not permitted by GATT Article VI
and the Anti-Dumping and SCM Agreements.
4.540 Absent evidence to the contrary, an investigating
authority must presume that the views expressed by domestic producers are
genuine. If, however, an investigating authority has evidence to indicate that
the expression of views by domestic producers may not be genuine, the
investigating authority may not ignore that evidence. By its very existence and
nature, the financial incentive provided by the Act to �affected domestic
producers� must be presumed to affect, at least to some degree, the genuine
expression of views by domestic producers in ways not contemplated by the
Anti-Dumping Agreement. In such circumstances, the investigating authority must
either suspend or nullify the examination of domestic industry views pending
further investigation of the possible effect of the extraneous influence or, if
the investigating authority is not empowered to take such action, to bring the
matter to the attention of those authorities who are so empowered.
12. Does a domestic producer only "support" an
anti-dumping application for the purpose of Article 5.4 if its support is
motivated solely by its desire for the imposition of an anti-dumping
measure? Please explain. 4.541 See reply to question 11.
13. Is it your view that there is no "support" (within
the meaning of Article 5.4) for an application if such support is motivated
- in part, at least - by a domestic producer's desire to be eligible for
CDSOA offset payments? 4.542 See reply to question 11.
14. Would a Member violate Article 8.3 of the AD
Agreement if it decided, as a matter of general policy, never to accept
price undertakings? Please explain. 4.543 Australia is not pursuing a claim concerning voluntary
undertakings under Article 8.1 of the Anti-Dumping Agreement.
(b) Question to Canada
30. At para. 44 of its oral submission, Canada states
that the Offset Act is a "specific action against dumping" because inter
alia "payments are made only to those producers 'affected' by dumping". Does
Canada consider that the Offset Act would be a "specific action against
dumping" if payments were made to all domestic producers, and not only those
that had supported the petition? Please explain.
4.544 Even if eligibility for the offset payments were
extended to all domestic producers, including those who did not support an
investigation, they would still be a �specific action against dumping� (or �a
subsidy�) because the payment would still be conditional on the existence of a
finding of dumping (or subsidisation).
(c) Questions to all parties
32. With reference to footnote 24 of the AD Agreement and
footnote 56 to the SCM Agreement, to what extent can subsidization be
considered an action "under" Article XVI of GATT 1994?
4.545 Footnotes 24 and 56 clarify the scope of Articles 18.1
and 32.1: they do not create exceptions to the scope of those provisions. In the
same way that a subsidy may be consistent with GATT Article XVI but inconsistent
with, for example, GATT Article III:2, for so long as the Act constitutes
�specific action against dumping/a subsidy� within the meaning of Articles 18.1
and 32.1, that is, action that may be taken only when the constituent elements
of dumping are present, it will be inconsistent with those provisions.
4.546 Moreover, GATT Article XVI is one of the provisions of
GATT 1994 interpreted by the SCM Agreement, in particular in Part III, within
the meaning of Article 32.1 of the SCM Agreement. It cannot also be an �other
relevant provision of GATT 1994� within the meaning of footnote 56 to the SCM
Agreement.104
33. Please provide an example of a "non-specific" action
against dumping. 4.547 Australia considers it is unclear what the Panel means
by �non-specific� action in the context of the present dispute. As indicated in
response to Question 1 above, the Appellate Body has clarified the meaning of
the entire phrase �specific action against dumping�. If the Panel means action
that may be taken in a situation where there may or may not be dumping or
subsidisation, then such action could be a tariff or safeguard action, subject
to that action being consistent with other relevant WTO provisions.
34. Please give examples of the sort of "other reasons,
including reasons of general policy" that Members might invoke under Article
8.3 of the AD Agreement.
4.548 Australia is not pursuing a claim concerning voluntary
undertakings under Article 8.1 of the Anti-Dumping Agreement.
35. Does the violation of the international law principle
of good faith necessarily constitute a violation of the WTO Agreement? Does
either the AD Agreement or the WTO Agreement impose an independent
obligation on Members to act in good faith? 4.549 Pursuant to Article 3.2 of the DSU,105 the provisions of
the covered agreements are to be clarified in accordance with customary rules of
interpretation of public international law, which the Appellate Body has found
are expressed in Articles 31 and 32 of the Vienna Convention on the Law of
Treaties106. Article 31.1 provides:
A treaty shall be interpreted in good faith in
accordance with the ordinary meaning to be given to the terms of the treaty
in their context and in the light of its object and purpose.
4.550 Accordingly, Article 3.2 of the DSU requires that the
provisions of the covered agreements, including the Anti-Dumping and the SCM
Agreements, are to be interpreted in good faith.
4.551 Moreover, �the principle of good faith, which is, at
once, a general principle of law and a principle of general international law, �
informs the provisions of the Anti-Dumping Agreement, as well as the other
covered agreements�.107
4.552 Thus, while there is no specific provision dealing with
the principle of good faith, the covered agreements must be interpreted by
Members and in the dispute settlement system in accordance with that principle.
36. Is there anything in the panel or Appellate Body
reports in the 1916 Act case to suggest that either the panel or the
Appellate Body, when addressing the meaning of Article 18.1 of the AD
Agreement, had in mind the pure subsidy hypothetical set forth in question 3
above? 4.553 Australia notes that the Appellate Body, at paragraph
81 of its Report, expressly stated that �specific action against dumping could
take a wide variety of forms�. Australia notes, too, that the Appellate Body
continued to be mindful of the possible variety of possible actions in its
subsequent examination of the scope of GATT Article VI at paragraphs 109-126. In
particular, footnote 66 to paragraph 122 would seem to indicate that the
Appellate Body was concerned that its finding in relation to the meaning of the
phrase �specific action against dumping� might in fact be too limiting.
4.554 However, Australia is not in a position to speculate on
what other forms the Appellate Body may have actually considered that specific
action against dumping could take when making its finding.
2. Brazil
(a) Questions to complaining parties
1. Please comment on para. 91 of the US first written
submission. Do you agree that "it is clearly possible for an action to be
'in response to' dumping or a subsidy but not be 'against' dumping or a
subsidy"? Please explain, taking into account the Appellate Body's finding
that "'specific action against dumping' � is action that is taken in
response to situations presenting the constituent elements of 'dumping'"
(1916 Act, para. 122). Does the Appellate Body's finding suggest that
"specific action against dumping" is necessarily a subset of action "in
response to" dumping? Please explain.
4.555 A �response� is defined as an �answer or reply� in the
New Shorter Oxford English Dictionary. As an alternative, it defines
response as �an action or feeling caused by a stimulus or influence; a
reaction.� There is a link between the stimulus (i.e. the question or the
action) and the response (i.e. the reply or reaction). The two are necessarily
related.
4.556 The Appellate Body in paragraph 122 of US -
1916 Act describes �specific action against dumping� as being �action taken
in response to situations presenting the constituent elements of dumping.� There
may, of course, be actions taken in �response� to dumping which are not
necessarily �against� dumping. As such, �specific action against dumping� is a
subset of actions which may be taken in response to the constituent elements of
dumping. Indeed, �specific action against dumping� read in the context of
Article VI:2 of the GATT 1994 means action �to offset or prevent dumping.� An
action �in response to the constituent elements of dumping� is an action which
is in reaction to dumping, but not necessarily an action which is �against�
dumping. For example, the flying of flags at half-mast after the issuance of
anti-dumping duty order is arguably �in response� to dumping. It is a symbolic
response. It is not, however, an action �against� dumping because it neither
offsets nor prevents the dumping.
4.557 Brazil would also distinguish between actions �in
response� to dumping and actions which are �contingent� on dumping. Here Brazil
would refer to the US example of giving anti-dumping duty revenues to charity.
While providing revenues to charity is �contingent� on the collection of
anti-dumping duties because these are the source of revenues for the charitable
giving, this action is not �in response� to dumping. Providing the revenues to
charity may be �in response� to a high poverty level in the country or to lack
of funding from other sources, but it is not �in response� to the constituent
elements of dumping. Brazil would concede that this is nothing more than a
payment programme which is contingent on the collection of anti-dumping duties.
4.558 Unlike the two examples provided by the United States �
flying the flag at half-mast and giving dumping revenues to charity � the Byrd
Amendment is clearly not only �in response� to the constituent elements of
dumping, it is �against� dumping in that it seeks to �offset or prevent dumping�
which are precisely the objectives of anti-dumping measures specified in Article
VI:2 of the GATT 1994.
2. Please explain exactly how you see that the
"constituent elements of dumping" have been incorporated into the CDSOA. 4.559 The text of the CDSOA itself indicates the linkage
between the statute and the constituent elements of dumping when it states:
�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�to the affected domestic producers for qualifying expenditures.�
The events which trigger payments under the CDSOA are identical to the events
that trigger anti-dumping measures. As such, there is no question that the
constituent are incorporated in the CDSOA. This is evident from the following:
- CDSOA payments are directly linked to a
determination of dumping and injury and the subsequent imposition of
anti-dumping measures. Similarly, they are also directly linked to
determination of subsidization and injury. Thus, without the
existence of the constituent elements of dumping (or subsidization)
and injury, the statute provides for no action by the US Government.
- Payments under the CDSOA are further linked to
the determination of dumping (or subsidization) and injury because
they are provided only to those parties that have requested the
imposition of anti-dumping (or countervailing) measures and have
been determined to have been injured by the dumping (or
subsidization).
- Payments under the CDSOA are further linked to
the determination of dumping (or subsidization) and injury because
the payments are directed at �qualifying expenses� related to the
product which has been found to be dumped (or subsidized).
4.560 There is a total overlap between the CDSOA and the
constituent elements of dumping (or subsidization). This includes not only the
criteria under which payments become available, but also eligibility in terms of
parties and products. If the CDSOA does not represent a situation where the
constituent elements of dumping are present, it is difficult to conceive of a
situation where they would be present other than in legislation implementing the
terms of the relevant agreements.
4.561 Brazil cautions against confusing the �constituent
elements of dumping� with the questions of whether the subsequent action is
�specific action� and is �in response� to or �against� dumping (or
subsidization). The constituent elements of dumping (or subsidization) are
present whenever an action is based on determinations of dumping (or
subsidization) and injury, as is the case with the CDSOA. It then remains to be
determined whether the action is �specific� and whether it is �against� dumping.
All three criteria are met in the case of the CDSOA.
3. In your view, would it be inconsistent with Article
18.1 of the AD Agreement and Article 32.1 of the SCM Agreement for a
Member to provide subsidies in response to a finding of dumping or
subsidization, where that subsidization was in lieu of anti-dumping
or countervailing measures? If not, please explain in light of your view
that these provisions prohibit any action taken in response to situations
presenting the constituent elements of dumping.
4.562 Articles 18.1 and 32.1 are not equivocal. They clearly
specify �no action� except action �in accordance� with the GATT 1994 and the
respective agreements may be taken against dumping and subsidization. The GATT
1994 and the respective agreements do not authorize any actions in lieu of
the measures specified in those agreement. These Articles do not state that,
should a member decide not to impose measures under these agreements, it may
impose other measures in lieu of these measures. Under Articles 18.1 and 32.1,
the question then is a very restricted question: are subsidies provided in lieu
of anti-dumping or countervailing measures specific actions against dumping or
subsidization. If they are, then these subsidies are inconsistent with the terms
of the GATT 1994, the AD Agreement and the SCM Agreement.
4.563 Article VI:2 of the GATT 1994 informs the meaning of
�against� by use of the words �offset or prevent.� Thus, measures that offset or
prevent dumping are measures against dumping. Subsidies are clearly measures
which offset dumping. In essence, all or a portion of the price advantage gained
by the exporter as a result of the dumping is offset by the subsidy to the
industry in the importing country. Rather than forcing the import price upward
as is the mechanism of anti-dumping duties to offset or prevent dumping,
subsidizing the domestic industry simply provides the domestic industry with the
ability to offset the dumping by lowering its own price and, thereby, becoming
more competitive with the imported dumped (or subsidized) product. As such,
subsidies provided in situations where the constituent elements of dumping are
present (i.e. where there is dumping and injury) are measures against dumping.
4. Assume that a Member (which has no legal framework for
the conduct of anti-dumping/countervail investigations or imposition of
anti-dumping countervailing measures) implements a domestic subsidy
programme with the explicit purpose and design of offsetting the injurious
effects of dumped or subsidized imports. Would that programme constitute a
�specific action against dumping� (or subsidy)?
If not, please explain, and provide a reasoned
explanation as to how Article 18.1 of the AD Agreement (or Article 32.1 of
the SCM Agreement) can be interpreted to distinguish between this
hypothetical subsidy programme and the CDSOA regime.
4.564 Yes. This situation simply compounds the
inconsistencies of the action taken. In addition to taking specific action
against dumping or subsidization not provided in the GATT 1994, the AD Agreement
or the SCM Agreement, the Member has not followed the procedures for determining
dumping, subsidization, and injury required under the relevant Articles of the
agreements. Consequently, the Member is not only taking action against dumping
or subsidization not in accordance with the action permitted by the agreements,
it is also taking action inconsistent with the procedural and substantive rules
of the agreements. For example, the action being taken is not in accordance with
the required determinations of injury under Article 2 of the AD Agreement and
Article 15 of the SCM Agreement.
4.565 Brazil notes that the fact that a Member has no legal
framework for addressing dumping and subsidization of imports does not alter
that Member�s obligations under the AD and SCM Agreements or under Article XVI
of the Marrakesh Agreement. Simply put, a Member cannot use the absence of a
legal framework for anti-dumping and countervailing measures as an escape from
the disciplines of the agreements.
5. Would a victim compensation scheme (funded from
central treasury resources, rather than penalties imposed on convicted
criminals) constitute a "specific action against" crime? Please explain.
Would your answer be any different if the scheme were funded from penalties
imposed on convicted criminals? Why?
4.566 This question cannot be answered in the abstract. For
example, murder is a very different situation than, say, insurance fraud or
accounting fraud. Brazil would note, however, that the remedies at issue in the
1916 Act proceeding potentially involved both criminal fines and damages
to the victims. Both seek to �prevent� a violation. The latter, damages, also
seeks to offset the effects of the violation.
6. Assume that a Member enacts legislation mandating the
payment of $5,000 to petitioners to compensate them for the cost of making
the petition and participating in the anti-dumping investigation. Would that
payment constitute a "specific action against dumping of exports" within the
meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.567 While such legislation might be challenged on other
grounds, it is not apparent that it would constitute specific action against
dumping. Specifically, the payment is not dependent on establishing the
constituent elements of dumping.
7. Assume that a Member enacts legislation requiring that
any anti-dumping duties collected be paid to state retirement homes. Would
such payments constitute "specific action against dumping of exports" within
the meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.568 No. As explained in response to question 1, such a
payment is neither in response to or against dumping. Rather, such a payment is
simply contingent on the collection of anti-dumping duties, since these duties
are established as the source of the funding.
8. Assume that the US restricted offset payments under
the CDSOA to cases where the US found the existence of dumping, injury and
causation but did not impose an anti-dumping order, and that such payments
equalled the amount of anti-dumping duty that would have been collected had
an anti-dumping order been put in place. Would such payments constitute
"specific action against dumping of exports" within the meaning of Article
18.1 of the AD Agreement, or "action under other relevant provisions of GATT
1994" within the meaning of note 24? Why, or why not?
4.569 It is not clear how this situation is different from
the in lieu of situation in question 3. Members cannot take specific
action either in lieu of or in addition to the measures provided in the relevant
agreements. This would appear to be a measure against dumping in lieu of those
measures set forth in the AD Agreement.
9. Would the CDSOA violate AD Article 5.4 if offset
payments were made to all domestic producers of the product under
investigation, and not merely those domestic producers supporting the
petition? Please explain.
4.570 Yes. It would still be impossible to determine the
extent to which support of the petition was motivated by the prospect of
anti-dumping measures rather than the prospect of receiving offset payments. The
prospect of receiving offset payments would still be a factor, perhaps the only
factor, influencing supporters of the petition.
10. Is a Member not acting in good faith when it provides
incentives for the use of a WTO-consistent remedy? Please explain.
4.571 The issue before the panel is not whether Members are
acting in good faith if they provide incentives for the use of WTO consistent
remedies. The issue is whether the provision of the CDSOA payments frustrates
the objectives of Article 5.4, namely the requirement of determining the level
of support for a request for the imposition of anti-dumping measures. The CDSOA
monetary incentive for requesting the imposition of anti-dumping measures makes
it impossible for the requisite determination to be made under Article 5.4.
11. Does support for an anti-dumping petition have to be
genuine (i.e., based on the actuality or expectation of injury) for the
purposes of Article 5.4 of the AD Agreement? If so, how could an
investigating authority ensure that support is genuine in all cases?
4.572 It is not clear what is meant by �genuine� support. The
issue before the panel is not whether the support is or is not genuine, but
whether the US authorities can distinguish between the support contemplated by
the AD Agreement, namely support based on the prospects for imposition of
anti-dumping measures, and support not contemplated by the AD Agreement, namely
support based on the prospects of monetary reward. Brazil is not asking the
panel to decide the broader question of whether support must be �genuine� and
under what circumstances support may be deemed genuine. This is a more complex
issue and one likely to be resolved by the facts of a particular case. For
example, if one requesting party bribes other potential requesting parties to
support the request for anti-dumping measures, does that support qualify under
Article 5.4? This issue is not before the panel. The only issue before the panel
is whether the US authorities can distinguish between support for a petition
conditioned on the receipt of CDSOA payments and support that would exist
independent of the prospects for CDSOA payments.
12. Does a domestic producer only "support" an
anti-dumping application for the purpose of Article 5.4 if its support is
motivated solely by its desire for the imposition of an anti-dumping
measure? Please explain.
4.573 As indicated in the response to Question 11 above, this
issue is not before the panel.
13. Is it your view that there is no "support" (within
the meaning of Article 5.4) for an application if such support is motivated
- in part, at least - by a domestic producer's desire to be eligible for
CDSOA offset payments?
4.574 Again, the issue is being misconstrued. The question is
really a �but for� question. That is, would there be sufficient support for the
request for the imposition of anti-dumping measures �but for� the prospect of
receiving payments under the CDSOA. If there is insufficient support absent the
prospect of receiving payments under the CDSOA, then a determination that
support is sufficient under Article 5.4 is not in accordance with Article 5.4.
Brazil's position is that the prospect of CDSOA payments makes it impossible for
US authorities to determine the level of support that would exist absent the
prospect for CDSOA payments. As a result, the authorities cannot meet their
obligations under Article 5.4.
14. Would a Member violate Article 8.3 of the AD
Agreement if it decided, as a matter of general policy, never to accept
price undertakings? Please explain.
4.575 Yes. While Article 8 provides authorities with broad
discretion in accepting or rejecting price undertakings, it does impose an
obligation on the authorities to allow undertakings to be offered and to provide
a rationale for rejecting such offers. Brazil contrasts the language in Article
8 with the language in Article 9:1 which states that whether to impose
anti-dumping duties and whether to impose duties at or below the margin of
dumping �are decisions to be made by the authorities.� Although minimal, there
are conditions associated with the Article 8 decision on whether or not to
accept an undertaking. In contrast, in Article 9, there are no conditions.
(b) Questions to all parties
32. With reference to footnote 24 of the AD Agreement and
footnote 56 to the SCM Agreement, to what extent can subsidization be
considered an action "under" Article XVI of GATT 1994?
4.576 Footnote 24 of the AD Agreement and 56 of the SCM
Agreement are straight forward clarifications of the limitations of Articles
18.1 and 32.1 respectively. In essence, they clarify that while specific actions
against dumping of exports or subsidies by members are limited to the actions
permitted under the Agreements, this does not preclude actions taken based on
other provisions of the GATT 1994. This provision is necessary so as not to
preclude actions which are independently authorized under other provisions of
the GATT, such as Articles XIX, XII, or XVIII, which may impact the same
products or the same Members as are impacted by anti-dumping or countervailing
measures. These footnotes, for example, permit the imposition of anti-dumping
and countervailing measures on the same products, or safeguards and anti-dumping
measures on the same products. They do not, however, provide the basis for
broadening the scope of action against dumping beyond those specific actions
authorized under the AD and SCM Agreements.
33. Please provide an example of a "non-specific" action
against dumping.
4.577 Non-specific action against dumping is action which may
have an effect on the competitive dynamics in situations in which dumping is
involved but which are not specifically targeted at offsetting or preventing
dumping. For example, a country may have a programme which provides assistance
to industries or workers, as does the US, which have been adversely impacted by
imports, irrespective of whether the imports are dumped. The programme is to
facilitate adjustment to imports. It may incidentally impact the competitive
dynamics between products which have been found to be dumped and the domestic
like product, but the action is not specific to these products or to this
situation.
4.578 Another example would be the process of restructuring
under the US bankruptcy laws. Many US steel mills, for example, are now in the
process of such restructuring. These are the same steel mills that have filed
many anti-dumping and countervailing duty petitions and are currently seeking
safeguards protection. While they attribute their bankruptcies in large part to
dumped and subsidized imports, this does not mean that the US cannot act to
assist these companies through normal legal processes to restructure and emerge
from bankruptcy as competitive entities. While the restructured companies will
be stronger competitors and the restructuring will have altered the competitive
dynamics, the action of encouraging the restructuring is not specifically a
response to dumping.
4.579 Similarly, there has recently been a proposal that a
tax be levied on all sales of steel in the United States and that the revenues
from the tax be used to reduce unfunded obligations of US steel mills to retired
workers. Many believe that these so-called �legacy� costs make the industry
vulnerable to import competition, including competition from dumped imports.
However, neither the proposed tax nor the distribution of revenues is specific
to dumping. Obviously, US competitors will be in an improved position to compete
against imports, including dumped imports, if the programme is implemented.
However, it is not specific to dumping.
34. Please give examples of the sort of �other reasons,
including reasons of general policy� that Members might invoke under Article 8.3
of the AD Agreement. 4.580 As a general matter, the US is reluctant to enter into
undertakings for two reasons. First, they are viewed as being more difficult to
administer than anti-dumping duties. Second, they are viewed as being less
beneficial to the importing industry in terms of protection than are
anti-dumping duties. In fact, the US has rejected consideration of undertakings
offered for these reasons in the past.
35. Does the violation of the international law principle
of good faith necessarily constitute a violation of the WTO Agreement? Does
either the AD Agreement or the WTO Agreement impose an independent
obligation on Members to act in good faith? 4.581 The obligation of �good faith� arises out of Article
31(1) of the Vienna Convention on the Law of Treaties which sets forth
the rules of treaty interpretation. With respect to the Vienna Convention,
the Appellate Body stated in United States - Antidumping Measures on Certain
Hot-Rolled Steel Products from Japan:
We observe that the rules of treaty interpretation in
Articles 31 and 32 of the Vienna Convention apply to any
treaty, in any field of public international law, and not just to the
WTO agreements. These rules of treaty interpretation impose certain common
disciplines on treaty interpreters, irrespective of the content of the
treaty provision being examined and irrespective of the field of
international law concerned. Appellate Body Report at para. 60.
4.582 As such, the obligation of �good faith� is an
obligation related to the interpretation of substantive obligations contained in
a treaty. It requires that the relevant treaty be interpreted and the
obligations be observed in �good faith.� It does not create new or additional
obligations beyond the underlying obligations in the treaty. Rather, it serves
to inform those obligations.
4.583 The WTO agreements, including the AD and SCM
Agreements, do not impose any independent �good faith� obligation on Members.
However, as indicated by the Appellate Body in the language quoted above, the
rules of treaty interpretation impose common disciplines on all such
instruments. Furthermore, Article 3:2 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU) specifically refers to
the clarification of obligations in the WTO Agreements �in accordance with
customary rules of interpretation of public international law.� Thus, the �good
faith� obligation is applicable to the interpretation of obligations under the
WTO Agreements.
4.584 A �good faith� obligation in interpreting a treaty
provision would be meaningless unless it carried over into the implementation of
the substantive obligations of the treaty. Whether the interpretation of a
provision is in �good faith� only becomes an issue in the context of actions
implementing the interpretation. Thus, for example, the obligation to determine
the extent of industry support under Article 5.4 must be interpreted and
implemented in �good faith.�
36. Is there anything in the panel or Appellate Body
reports in the 1916 Act case to suggest that either the panel or the
Appellate Body, when addressing the meaning of Article 18.1 of the AD
Agreement, had in mind the pure subsidy hypothetical set forth in question 3
above?
4.585 The pure subsidy hypothetical does not appear to have
been addressed by the Panel or the Appellate Body in the 1916 Act.
3. Canada
(a) Questions to complaining parties
1. Please comment on para. 91 of the US first written
submission. Do you agree that "it is clearly possible for an action to be
'in response to' dumping or a subsidy but not be 'against' dumping or a
subsidy"? Please explain, taking into account the Appellate Body's finding
that "'specific action against dumping' � is action that is taken in
response to situations presenting the constituent elements of 'dumping'"
(1916 Act, para. 122). Does the Appellate Body's finding suggest that
"specific action against dumping" is necessarily a subset of action "in
response to" dumping? Please explain.
4.586 The Appellate Body interpreted the phrase �specific
action against dumping� to mean �action taken in response to situations
presenting the constituent elements of dumping.� The interpretation of the
Appellate Body is not treaty language, but an elaboration of it. Therefore, the
issue of one being a subset of another does not arise.
4.587 The Appellate Body in fact found that �specific action�
was action that operated against, or in response to, a situation presenting
the presence of those constituent elements. In this case, the Byrd Amendment
subsidies are paid out to �condemn� dumping and �neutralise� subsidies.108
�Condemn�, �neutralise� and �offset� denote acting against something.
These subsidies are paid out only where dumping and/or a subsidy is
present and not otherwise. In this way the Act is a specific action
against dumping or a subsidy.
2. Please explain exactly how you see that the
"constituent elements of dumping" have been incorporated into the CDSOA.
4.588 Article 18.1 and 32.1 of the Agreements has been
interpreted by the Appellate Body as referring to actions that are taken in
response to situations presenting the constituent elements of dumping. This is
true of the Byrd Amendment.
4.589 The panels in the United States � 1916 Act
challenge clarified that these elements require that goods enter into the
commerce of the United States and are priced below normal value. The Byrd
Amendment is triggered by an order � a finding of injurious dumping or
subsidisation � and the collection of duties when under-priced goods actually
enter into the commerce of the United States. Where the dumped goods do not
enter the United States, no offset payments will be available for
distribution.
4.590 Moreover, special accounts segregate funds on the basis
of specific situations of the constituent elements of dumping (represented by
the imposition of an order); recipients are those �affected� by the presence of
constituent elements of dumping who participate in investigations. Qualifying
expenditures are those incurred by �affected domestic producers� during the time
an order is in place for costs related to the production of a domestic product
that competes with an import that has been the subject of an order.
4.591 The Byrd Amendment is part and parcel of the US
anti-dumping and countervailing duty regime and is not severable from it. It is
a specific action against dumping or subsidisation as required by
the specific terms of Articles 18.1 and 32.1 because it is an action that could
not, and would not, be triggered unless a finding of dumping or a subsidy is
made, and it is an action that seeks to �condemn� dumping and �neutralise�
subsidies.
3. In your view, would it be inconsistent with Article
18.1 of the AD Agreement and Article 32.1 of the SCM Agreement for a Member
to provide subsidies in response to a finding of dumping or subsidization,
where that subsidization was in lieu of anti-dumping or
countervailing measures? If not, please explain in light of your view that
these provisions prohibit any action taken in response to situations
presenting the constituent elements of dumping. 4.592 Yes. The obligation contained in Articles 18.1 and 32.1
of the Agreements is that any action taken against situations presenting the
constituent elements of dumping or subsidies must be in an authorized form.
These are limited to anti-dumping or countervailing duties, undertakings and
provisional duties (or countermeasures) in very specific circumstances.
Subsidisation is not an authorised form of response. Therefore, such a response
is inconsistent with Articles 18.1 and 32.1.
4.593 �Specific action against dumping� and/or a subsidy was
thoroughly dealt with in both Agreements. Articles 18.1 and 32.1 represent the
express intention of the Members of the WTO that only certain types of
anti-dumping and countervailing measures were to be permitted under the
Agreements, and such actions were to be governed by detailed rules. In this
context, Canada underlines the importance of maintaining the integrity of the
Anti-dumping and SCM Agreements. There are detailed rules governing the
initiation of investigations, imposition of provisional measures, determination
of the level of permissible duties, duration of duties and so on. To suggest
that Members may use subsidies as �specific action against dumping� or a
subsidy, is to say that Members may counteract dumping or subsidies by measures
not subject to the disciplines set out in the Anti-dumping or SCM Agreements.
4. Assume that a Member (which has no legal framework for
the conduct of anti-dumping/ countervail investigations or imposition of
anti-dumping countervailing measures) implements a domestic subsidy
programme with the explicit purpose and design of offsetting the injurious
effects of dumped or subsidized imports. Would that programme constitute a
"specific action against dumping" (or subsidy)? 4.594 Yes. Specific action against dumping or subsidies may
be taken by a Member only in accordance with its obligations under the
Anti-dumping and SCM Agreements. Articles 18.1 and 32.1 of the Agreements have
been interpreted by the Appellate Body to limit those responses to duties,
provisional measures and undertakings. A domestic subsidy programme is,
therefore, not a permissible response.
4.595 As noted above, Members agreed at the time of the
conclusion of the WTO Agreement that such specific action may be taken only in
accordance with detailed anti-dumping and countervailing duty rules. If Members
had considered counter-subsidies an appropriate �specific action�, they could
have included this in the SCM Agreement � and negotiated rules for the proper
amount and duration of such counter-subsidies. They did not do so. They limited
�specific action� to only those measures for which they had negotiated detailed
rules. Any other interpretation of Articles 18.1 and 32.1 of the Agreements
would mean that the substantive rules negotiated to govern those �specific
actions� are rendered meaningless where a Member decides to counter-subsidise,
rather than impose anti-dumping or countervailing duties.
If not, please explain, and provide a reasoned
explanation as to how Article 18.1 of the AD Agreement (or Article 32.1 of
the SCM Agreement) can be interpreted to distinguish between this
hypothetical subsidy programme and the CDSOA regime.
4.596 Not applicable.
5. Would a victim compensation scheme (funded from
central treasury resources, rather than penalties imposed on convicted
criminals) constitute a "specific action against" crime? Please explain.
Would your answer be any different if the scheme were funded from penalties
imposed on convicted criminals? Why?
4.597 The answer to the first part of the question is no.
4.598 Under normal circumstances, a victim compensation
scheme funded from the general treasury is not a specific action against
crime. Such compensation schemes are not intended to reduce crime, nor do they
in fact do so. Such schemes are generally not devised to �condemn� or
�neutralise� crime; they compensate the victim. In this respect, victim
compensation funds may be compared to general adjustment policies or programmes.
4.599 The answer would be yes in respect of the second
part of the question. A scheme funded by penalties imposed on criminals would,
by contrast, constitute a �specific action against crime.� �Restitution� is a
generally accepted part of the criminal justice system as a measure against
crime. By making payments to the victim, the criminal is reminded of the
harm he or she has done and is required to make good the damage caused. Indeed,
in some jurisdictions, monetary penalties are a perfectly acceptable
�punishment� for most crimes, especially crimes against property and the person.
In these circumstances, it should be noted, the �compensation� in question is
imposed in lieu of rather than in addition to incarceration or
other punishment.
4.600 In this respect, such a scheme is to be contrasted with
the Byrd Amendment. The United States first �punishes� the importer by imposing
countervailing or anti-dumping duties on its goods. In doing this, the United
States also, by definition, readjusts the competitive balance between
imported goods and domestic like products. The Byrd Amendment is a �punishment�
in addition to the duties imposed and collected, to the extent that it
subsidises the domestic competitors of the importer.
6. Assume that a Member enacts legislation mandating the
payment of $5,000 to petitioners to compensate them for the cost of making
the petition and participating in the anti-dumping investigation. Would that
payment constitute a "specific action against dumping of exports" within the
meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.601 This payment does not appear to be triggered by or
depend on a finding of dumping. Therefore, it would not be �specific action
against dumping of exports� within the meaning of Article 18.1 as articulated by
the Appellate Body.
7. Assume that a Member enacts legislation requiring that
any anti-dumping duties collected be paid to state retirement homes. Would
such payments constitute "specific action against dumping of exports" within
the meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.602 No. For a measure to fall within Article 18.1, it must
be a �specific action against dumping�. Specific action against dumping is
action triggered by situations presenting the constituent elements of dumping or
subsidies and action that is in �response to� such practices. Payments to
retirement homes do not �respond� to the practice of dumping of exports.
Therefore, the payment of anti-dumping duties to retirement homes is not an
action against dumping or a subsidy. Nothing in such payment
intrinsically offsets, counteracts, �condemns� or �neutralises� dumping or a
subsidy.
8. Assume that the US restricted offset payments under
the CDSOA to cases where the US found the existence of dumping, injury and
causation but did not impose an anti-dumping order, and that such payments
equalled the amount of anti-dumping duty that would have been collected had
an anti-dumping order been put in place. Would such payments constitute
"specific action against dumping of exports" within the meaning of Article
18.1 of the AD Agreement, or "action under other relevant provisions of GATT
1994" within the meaning of note 24? Why, or why not?
4.603 Yes. Article 18.1 of the AD Agreement limits responses
to situations presenting the constituent elements of dumping to duties,
provisional measures and undertakings. Offset payments are not a permitted
response. This is regardless of their amount or whether or not they follow an
order.
4.604
First, a finding that the Byrd Amendment is
a specific action against dumping does not depend on whether anti-dumping duties
are otherwise imposed. As noted above, Members negotiated and agreed on an
extensive and detailed set of rules governing the imposition of those �specific
actions� expressly provided for in the Anti-dumping and SCM Agreements. They did
not contemplate, and accordingly did not negotiate, rules governing the use of
other measures such as subsidies as �anti-dumping� or �countervailing�
measures. In this respect, the question of the Panel contains its own answer: if
subsidies were permitted as �anti-dumping� measures, other WTO Members must
depend on the good will of the subsidising Member not to exceed the level of
dumping found to exist, not to grant subsidies retroactively, not to grant them
for more than five years, etc. Therefore, it is irrelevant that the United
States would not be imposing anti-dumping duties. If the measure it does impose
is not a contemplated �specific action�, it is not permitted.
4.605
Second, a finding that the Byrd Amendment is
a specific action against dumping or a subsidy does not depend on these
subsidies being funded by anti-dumping or countervailing duties. That they are
so funded establishes even more clearly the logical and inescapable conclusion
that the Byrd Amendment subsidies are �specific action�, but the source of the
funds is not a necessary condition for the purposes of Articles 18.1 and
32.1.
4.606 (One can speculate that the Byrd Amendment would
never have succeeded legislatively had the American taxpayer been asked to
directly subsidise US industries to the tune of billions of dollars a year.
One can further speculate that the special accounts for the duties collected
were necessary not to limit the amount of the subsidies, as the United
States alleges, but to ensure that the duties collected never show up on the
General Accounts of the United States, thus hiding from the American taxpayer
the opportunity costs of the Byrd Amendment. But such speculations would not be
relevant for the purposes of the Panel�s legal analysis.)
9. Would the CDSOA violate AD Article 5.4 if offset
payments were made to all domestic producers of the product under
investigation, and not merely those domestic producers supporting the
petition? Please explain.
4.607 Yes. Such payments would continue to provide incentives
to bring or support petitions in anticipation of a potential cash payout
in addition to the duties imposed. This incentive distorts the
determination of threshold levels. Accordingly, it violates Article 5.4. This
issue is that the payments distort/undermine the obligation by obscuring the
meaning of threshold determinations under Article 5.4 and making it more likely
that positive determinations will result.
10. Is a Member not acting in good faith when it provides
incentives for the use of a WTO-consistent remedy? Please explain.
4.608 Article X:(3)(a) of GATT 1994 requires that Members
administer their laws, regulations, decisions and rulings in a �uniform,
impartial and reasonable manner�. The Appellate Body has stated that this
obligation creates minimum standards of procedural fairness in the
administration of trade regulations. It would follow that incentives for any
form of remedy against imports could potentially not result in a fair, neutral
administration of laws.
11. Does support for an anti-dumping petition have to be
genuine (i.e., based on the actuality or expectation of injury) for the
purposes of Article 5.4 of the AD Agreement? If so, how could an
investigating authority ensure that support is genuine in all cases?
4.609 The question at issue in this dispute � indeed, in any
dispute before a WTO Panel � is the conduct of the Member in respect of
its obligations. A good faith implementation of an obligation requires,
at the very least, that the implementing Member does not actively undermine the
obligation it purports to implement. Where a Member is required to determine
a level of support, it may not set that level by, for example,
legally requiring support. Nor may it distort a level of support by providing
for cash payment incentives. If the thresholds in Articles 5.4 and 11.4 are to
mean anything, they must not be subject to overt or covert manipulation by the
Member required to determine whether they have been met.
12. Does a domestic producer only "support" an
anti-dumping application for the purpose of Article 5.4 if its support is
motivated solely by its desire for the imposition of an anti-dumping
measure? Please explain.
4.610 The question before the Panel is the obligations of the
United States under Articles 5.4 and 11.4. The United States has an obligation
to determine the level of support in accordance with thresholds set out in those
Articles. Where the United States provides a cash incentive for the industry to
support a petition, it moves to distort its own determination under Article 5.4
and 11.4.
13. Is it your view that there is no "support" (within
the meaning of Article 5.4) for an application if such support is motivated
- in part, at least - by a domestic producer's desire to be eligible for
CDSOA offset payments?
4.611 The question before the Panel is the obligations of the
United States under Articles 5.4 and 11.4. The United States has an obligation
to determine the level of support in accordance with thresholds set out in those
Articles. Where the United States provides a cash incentive for the industry to
support a petition, it moves to distort its own determination under Article 5.4
and 11.4.
14. Would a Member violate Article 8.3 of the AD
Agreement if it decided, as a matter of general policy, never to accept
price undertakings? Please explain.
4.612 Yes. An interpretation that permitted such a course of
action would render the Article 8.3 obligation meaningless. Members undertook to
give their investigating authorities the ability to enter into undertakings. An
ability to do something must necessarily imply both the legal authority and
the discretion to do so. To provide for a legal authority and then foreclose
the discretion would constitute a breach of the obligation under Article 8.3.
(b) Questions to Canada
30. At para. 44 of its oral submission, Canada states
that the Offset Act is a "specific action against dumping" because inter
alia "payments are made only to those producers 'affected' by
dumping". Does Canada consider that the Offset Act would be a "specific
action against dumping" if payments were made to all domestic producers, and
not only those that had supported the petition? Please explain.
4.613 Yes. The elements set out in paragraph 44 collectively
support the conclusion that subsidies under the Byrd Amendment constitute
a specific action against dumping or a subsidy. Each establishes a nexus between
the Act and dumping or a subsidy. None is a necessary condition for a
finding that Byrd Amendment subsidies are a specific action prohibited by
Articles 18.1 and 32.1; though each, in context, could constitute sufficient
evidence to establish Canada�s claim. The Byrd Amendment would constitute
�specific action� whether all producers under the order received payments under
it or only those that support the petition. Even if all producers were
qualified, no payments could be made unless the practice of dumping or
subsidisation existed and claims were limited to qualifying expenditures taken
to offset dumping and subsidisation. Producers would therefore still be
�affected� by dumping or subsidisation.
(c) Questions to all parties
32. With reference to footnote 24 of the AD Agreement and
footnote 56 to the SCM Agreement, to what extent can subsidization be
considered an action "under" Article XVI of GATT 1994?
4.614 Under footnote 56, the answer is straightforward.
Subsidisation cannot be �action under� Article XVI of GATT 1994 that falls
within the scope of that footnote because it is not action under �other relevant
provisions of GATT 1994�. The Appellate Body said �GATT 1994 as interpreted by
the Agreement� with the meaning of Article 18.1 of the AD Agreement (and
therefore Article 32.1 of the SCM Agreement) meant the specific provisions of
GATT 1994 that the Agreement interprets. Under Article 32.1, the SCM Agreement
interprets both GATT Articles VI and XVI.
4.615 Under footnote 24 of the AD Agreement subsidisation
cannot be considered �action� if it responds to dumping or subsidies as such.
Therefore, whether it is a subsidy permitted under Article XVI is irrelevant if
it is a response as such. Then the test becomes whether that action accords with
Articles 18.1 and 32.1. It can only constitute action under Article XVI if it
responds to something other than dumping or subsidisation as such.
4.616 Moreover, a subsidy that is in compliance with Article
XVI of GATT 1994 is not action per se. Article XVI does not provide a
right to grant subsidies but merely deals with reporting requirements and
procedural requirements where Members provide subsidies.
33. Please provide an example of a "non-specific" action
against dumping. 4.617 An action �against� dumping that would fall within the
scope of footnote 24 is action that does not respond to dumping as such. For
example, safeguards measures and countervailing measures can constitute action,
that is �non-specific action� within the meaning of footnote 24. If a safeguard
measure under Article XIX of GATT is applied in the context of a situation where
there is an increase in imports which causes injury, where dumping is in part
the cause of the increase, it can be considered an action in part against
dumping because it applies to dumped imports. It is not specific action against
dumping because the safeguard action is not dependent on a finding of dumping.
Rather, it is contingent on a finding of an increase in imports that cause
injury. The trigger for the imposition of the measure is therefore not the
dumping itself but the increase in imports.
34. Please give examples of the sort of "other reasons,
including reasons of general policy" that Members might invoke under Article
8.3 of the AD Agreement.
4.618 A Member may decide not to accept any undertakings
where authorities consider the undertaking impracticable to administer. They may
also reject undertakings where monitoring is too difficult or there is reason to
believe that exporters or foreign governments will not respect the terms and
conditions of the undertaking agreements.
35. Does the violation of the international law principle
of good faith necessarily constitute a violation of the WTO Agreement? Does
either the AD Agreement or the WTO Agreement impose an independent
obligation on Members to act in good faith?
4.619 Article 3.2 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (the DSU) states
that:
� The Members recognise that it serves to preserve the
rights and obligations of Members under the covered agreements, and to
clarify the existing provisions of those agreements in accordance with
customary rules of interpretation of public international law. �
4.620 The Vienna Convention on the Law of Treaties
forms part of the rules of public international law that bears on the
interpretation of the WTO Agreements. Article 31(1) requires that
A treaty shall be interpreted in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their
context and in the light of its object and purpose.
4.621 Article 26 requires
Every treaty in force is binding upon the parties to it
and must be performed by them in good faith.
4.622 Therefore, while there is no express and independent
obligation of good faith in the WTO Agreements, DSU Article 3.2 and the
provisions of the Vienna Convention require that provisions are interpreted and
performed in good faith. The Appellate Body has stated that the principle of
good faith is �at once, a general principle of law and a principle of general
international law, that informs the provisions of the Anti-dumping Agreement, as
well as the other covered agreements.�109 It has further stated:
This principle, at once a general principle of law and a
general principle of international law, controls the exercise of rights by
states. One application of this general principle, the application widely
known as the doctrine of abus de droit, prohibits the abusive
exercise of a state�s rights and enjoins that whenever the assertion of a
right �impinges on the field covered by [a] treaty obligation, it must be
exercised bona fide, that is to say reasonably. An abusive exercise by a
Member of its own treaty right thus results in a breach of the treaty rights
of the other Members and, as well, a violation of the treaty obligation of
the Member so acting.
4.623 In the accompanying footnote, the Appellate Body cited
B. Cheng, stating:
B. Cheng, General Principles of Law as applied by
International Courts and Tribunals (Stevens and Sons, Ltd., 1953),
Chapter 4, in particular, p. 125 elaborates: �� A reasonable and bona fide
exercise of a right in such a case is one which is appropriate and necessary
for the purpose of the right (i.e., in furtherance of the interests
which the right is intended to protect) ��110
4.624 Therefore, while there is no claim for an independent
violation of the principle of good faith at issue here, it is clear that an
obligation of good faith pervades over the manner in which Members must conduct
their affairs. Obligations cannot be fulfilled where the principle of good faith
is violated.
36. Is there anything in the panel or Appellate Body
reports in the 1916 Act case to suggest that either the panel or the
Appellate Body, when addressing the meaning of Article 18.1 of the AD
Agreement, had in mind the pure subsidy hypothetical set forth in question 3
above?
4.625 That issue was not before the United States �
1916 Act panel or the Appellate Body. The question before this Panel
is whether the facts as presented � most of which are not contested by the
United States � establish that Byrd Amendment subsidies are �specific actions
against dumping� or a subsidy. In Canada�s submission, Byrd Amendment subsidies
are intended to, and in fact do, �condemn�, �neutralise� and �offset� dumping or
a subsidy. As such subsidies are not one of the three responses to dumping or
subsidies provided for, and governed by, the Agreements, the Byrd Amendment is
not permitted by Articles 18.1 and 32.1.
4. Chile
(a) Questions to the complaining parties
1. Please comment on para. 91 of the US first written
submission. Do you agree that "it is clearly possible for an action to be
'in response to' dumping or a subsidy but not be 'against' dumping or a
subsidy"? Please explain, taking into account the Appellate Body's finding
that "'specific action against dumping' � is action that is taken in
response to situations presenting the constituent elements of 'dumping'"
(1916 Act, para. 122). Does the Appellate Body's finding suggest that
"specific action against dumping" is necessarily a subset of action "in
response to" dumping? Please explain.
4.626 In paragraph 122 of its report in United States
� Anti-Dumping Act of 1916, the Appellate Body clearly states that
"specific action against dumping" � is action that is taken in response to
situations presenting the constituent elements of "dumping". There is nothing in
the report to indicate that an action in response to dumping (or a subsidy) is
not an action against dumping (subsidy). Moreover, the Anti-Dumping Agreement
(AD Agreement) does not mention the concept of "response to." It follows that
the Appellate Body is plainly using the concept of "in response to" as a way to
explain what "action against" should be understood to mean.
2. Please explain exactly how you see that the
"constituent elements of dumping" have been incorporated into the CDSOA.
4.627 As Chile noted in its first joint written submission
with Japan, the constituent elements of dumping are not expressly identified in
any WTO Agreement. However, both Article VI of the GATT 1994 and Article 2.1 of
the AD Agreement tell us when there is dumping:
(a) When products from one country are introduced
into the commerce of another country; and
(b) When these products are introduced at less than their
normal value.
A third element should be added here:
(c) When these developments produce injury or the threat of
injury.
4.628 The CDSOA provides for the distribution of anti-dumping
or countervailing duties assessed to the "affected domestic producers" for
"qualifying expenditures." Both concepts are defined in the CDSOA, and Chile
considers they need not be repeated here. Accordingly,
(a) The duties distributed under the CDSOA will only be collected pursuant to a petition, an investigation, and a
finding of dumping made by the US authorities. Without a finding of
dumping (or subsidy), there are no duties to be distributed; and in
order for there to be a finding, the authority must establish (on the
basis of credible evidence) the existence of the constituent elements of
dumping. It is worth noting that a number of panel and the Appellate
Body reports concluded that not all the constituent elements of dumping
were present in some findings.
(b) Duties will only be distributed to the
affected domestic producers, i.e., to those producers who filed or
supported a petition for an anti-dumping investigation. The duties are
distributed neither to those firms which opposed the investigation, nor
to those producers of goods that are not "like products."
(c) The duties are distributed to offset qualifying
expenditures. These, under the CDSOA, are expenses incurred after the
issuance of an anti-dumping (or subsidy) finding. Here again, in the
absence of the constituent elements of dumping � i.e., if no dumping
were found � there would be no expenditures incurred after the
imposition of an anti-dumping or countervailing duty.
3. In your view, would it be inconsistent with Article
18.1 of the AD Agreement and Article 32.1 of the SCM Agreement for a
Member to provide subsidies in response to a finding of dumping or
subsidization, where that subsidization was in lieu of anti-dumping
or countervailing measures? If not, please explain in light of your view
that these provisions prohibit any action taken in response to situations
presenting the constituent elements of dumping.
4.629 The findings of the Appellate Body in United States
� Anti-Dumping Act of 1916 are clear and unequivocal. Actions against
dumping (and by analogy against subsidy) are limited. Any other action that is
not an anti-dumping duty, provisional measure or price undertaking (and by
extension, a countervailing duty or countermeasure authorized by the DSB) is
prohibited. However, footnote 24 indicates that Article 18.1 is not intended to
preclude action under other relevant provisions of the GATT 1994 (footnote 56 of
the SCM Agreement says the same thing). In Chile's opinion, a Member may take
actions other than those specified, when the existence of dumping coincides with
the specific circumstances and limitations that allow for the adoption of
another action under the pertinent WTO Agreement. For example: if there are
unforeseen developments and if imports are taking place in such increased
quantities and under such conditions as to cause, or to threaten to cause
serious injury to the domestic industry, the authority may adopt a safeguard
measure � provided that the strict and specific requirements of Article XIX of
the GATT 1994 and the Agreement on Safeguards are met � even when such imports
may also be dumped, i.e., the authority may decide not to make a finding and
thus refrain from imposing anti-dumping or countervailing duties.
4.630 However, in the case of the CDSOA this situation does
not arise, because at issue is not simply a prohibited action against dumping,
but an action that is being taken over and above the anti‑dumping or
countervailing action. In other words, a twofold remedy is involved; and when a
subsidy is granted subject to an anti-dumping or countervailing finding on top
of the anti-dumping duty or countervailing duty, that subsidy has the effect of
removing the injury in full or in part. In that case, retention of the
anti-dumping or countervailing duties is contrary to the AD Agreement and the
SCM Agreement.
4. Assume that a Member (which has no legal framework for
the conduct of anti-dumping/countervail investigations or imposition of
anti-dumping countervailing measures) implements a domestic subsidy
programme with the explicit purpose and design of offsetting the injurious
effects of dumped or subsidized imports. Would that programme constitute a
�specific action against dumping� (or subsidy)?
If not, please explain, and provide a reasoned
explanation as to how Article 18.1 of the AD Agreement (or Article 32.1 of
the SCM Agreement) can be interpreted to distinguish between this
hypothetical subsidy programme and the CDSOA regime.
4.631 Yes, this would be a "specific action against dumping"
as defined by the Appellate Body. This is because, in contrast to one of the
examples given in reply to question 33, the authority has first made a dumping
or subsidy finding, and has accordingly found that the constituent elements of
dumping are present. But because this is not an anti-dumping duty, provisional
measure, or price undertaking, the said domestic subsidy programme would be a
prohibited action.
5. Would a victim compensation scheme (funded from
central treasury resources, rather than penalties imposed on convicted
criminals) constitute a "specific action against" crime? Please explain.
Would your answer be any different if the scheme were funded from penalties
imposed on convicted criminals? Why?
4.632 The concept of "specific action against crime" is not
in any WTO Agreement � and therefore it has not been defined by the Appellate
Body. The meaning of this phrase is thus hard to establish. Furthermore, if one
were to apply (by analogy, and for the sake of argument) the conclusions in
United States Anti-Dumping Act of 1916, one would first have to define the
constituent elements of crime, and this would fall well beyond the purview of
the case before the panel.
6. Assume that a Member enacts legislation mandating the
payment of $5,000 to petitioners to compensate them for the cost of making
the petition and participating in the anti-dumping investigation. Would that
payment constitute a "specific action against dumping of exports" within the
meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.633 No. As the Appellate Body pointed out, "a specific
action against dumping" is action that is taken in response to situations
presenting the constituent elements of dumping. These elements were individually
specified in Chile's reply to question 2. None of these elements is present in
the example postulated in this question, since although the law might establish
an incentive for petitioning for anti-dumping investigations (albeit not as
clear and perverse as in the CDSOA), the payment of US$5,000 is not conditional
upon a finding (negative or affirmative) of dumping. Accordingly, in this
particular example, the payment of US$5,000 is made automatically, irrespective
of whether or not the constituent elements of dumping are found.
7. Assume that a Member enacts legislation requiring that
any anti-dumping duties collected be paid to state retirement homes. Would
such payments constitute "specific action against dumping of exports" within
the meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.634 No. In the example given, the law does not constitute a
response to situations presenting the constituent elements of dumping. Contrary
to what the United States asserts in its first written submission, Chile � in
common with the other complaining parties � does not question a Member's
sovereign right to distribute the proceeds from assessed anti-dumping or
countervailing duties. Chile is specifically questioning the distribution of
anti-dumping and countervailing duties in the manner provided for under the
CDSOA.
8. Assume that the US restricted offset payments under
the CDSOA to cases where the US found the existence of dumping, injury and
causation but did not impose an anti-dumping order, and that such payments
equalled the amount of anti-dumping duty that would have been collected had
an anti-dumping order been put in place. Would such payments constitute
"specific action against dumping of exports" within the meaning of Article
18.1 of the AD Agreement, or "action under other relevant provisions of
GATT 1994" within the meaning of note 24? Why, or why not?
4.635 Leaving aside the fact that the postulated example is a
hypothetical one, since it is impossible to make a rigorous projection of the
amount that would have been collected had anti-dumping measures been imposed,
given that the imposition of such measures generates distortions in trade flows
� distortions which in many cases are significant, and which in some cases
impede exports altogether � such payments would constitute a specific action
against dumping. Indeed, the case described is a response to situations
presenting the constituent elements of dumping � i.e., the introduction of
products into the commerce of another country at less than their normal value,
as well as the attendant injury or threat of injury (see reply to question 2).
The offset payments in the example given here are not one of the measures which
the Appellate Body defined as the only permissible actions against dumping, and
accordingly, such payments would be contrary to Article 18.1 of the
AD Agreement. Moreover, as was indicated in Chile's reply to question 3, this
situation would not be covered by other relevant provisions of the GATT 1994
within the meaning of footnote 24.
9. Would the CDSOA violate AD Article 5.4 if offset
payments were made to all domestic producers of the product under
investigation, and not merely those domestic producers supporting the
petition? Please explain.
4.636 To answer this question, Chile believes it must first
ascertain whether there is an additional obligation to be met over and above the
quantitative requirements established in AD Article 5.4. Chile believes that
there is, indeed, such an obligation. The representativeness of the domestic
industry is not based purely on quantitative criteria (whether or not a
particular quorum is met); qualitative criteria are also involved: i.e. the
quorum must be confined to those producers that favour and support an
application presenting the three basic and essential requirements prescribed in
AD Article 5.2, namely, dumping, injury, and causal link.
These are the requirements that must be respected in an application for an
investigation, which must be based on evidence. The authorities must examine the
accuracy and adequacy of that evidence to determine whether there are sufficient
grounds to justify the initiation of an investigation. To these considerations
Chile wishes to add a fourth factor associated with the object and purpose of
Article VI of GATT 1994 and the AD Agreement: to obtain protection from the
government to prevent or remedy the injury and to offset unfair trading
practices. In other words, quorums must be achieved on the basis of factors
inherent in the AD Agreement, and not on the basis of other factors constituting
economic incentives, which would unquestionably distort the analysis that
producers must perform when deciding whether or not to support an anti-dumping
and/or countervailing petition.
4.637 Thus, both the CDSOA and the example postulated in the
question constitute a factor which in various ways distorts the analysis which
each producer must perform when deciding whether or not to support a petition.
If the producer decides to support the petition under these circumstances, the
(qualitative) representativeness of the domestic industry would no longer be
based on the factors required by the AD Agreement for the initiation of an
investigation, even if the quantitative requirements were met. It follows that
the spirit and scope of Article 5.4 of the AD Agreement and Article 11.4 of the
SCM Agreement would be violated in both cases.
4.638 At all events, the question is not a purely
hypothetical one inasmuch as the incentive provided by the CDSOA on condition
that an anti-dumping duty is applied, would lead all producers to pursue and
support the initiation of an investigation in light of the possible benefit to
be derived.
10. Is a Member not acting in good faith when it provides
incentives for the use of a WTO-consistent remedy? Please explain.
4.639 As Chile indicated in its reply to the previous
question, the domestic industry's applications for anti-dumping or
countervailing investigations must be based on factors spelled out in Article VI
of the GATT 1994 and the AD Agreement or the SCM Agreement (in other words there
must be dumping and/or subsidy, injury, and a causal link); furthermore,
petitioners must seek the government's protection to prevent or remedy this
injury and offset unfair trading practices. Taking these factors into
consideration, the domestic industry must carry out its own examination of the
costs and benefits involved in submitting an application. If the government
provides incentives as well, this will distort the examination which the
domestic industry has to perform.
4.640 If one pursues to its logical conclusion the argument
put forward in reply to question 10, each Member would have an underlying
obligation to refrain from introducing any decision-making factors extraneous to
the AD Agreement and SCM Agreement, or to Article VI of the GATT, if such
factors were to promote and encourage "false" support for the petition and, by
the same token, inevitably distort the meaning and scope of the concepts "degree
of support" and "opposition" under Articles 5.4 and 11.4.
4.641 Besides, the Member in the example given above would be
acting in a manner inconsistent with Article X.3(a) of the GATT 1994,
irrespective of whether there were good or bad faith in said Member's
intentions.
11. Does support for an anti-dumping petition have to be
genuine (i.e., based on the actuality or expectation of injury) for the
purposes of Article 5.4 of the AD Agreement? If so, how could an
investigating authority ensure that support is genuine in all cases?
4.642 As Chile indicated in its reply to question 10, prior
to initiating an investigation, the investigating authority is obliged to review
the evidence submitted by the domestic industry of dumping, injury, and a causal
link. An anti-dumping application based on these elements, duly verified by the
investigating authority, would accordingly be justified. It follows that the
producers that support this application are those that are able to produce
evidence of the existence of these three elements, including the existence or
expectation of injury. If such elements were not present, (i) the application
would fail to meet the requirements specified in Article 5.2, and (ii) the
authority would be unable to fulfil its obligation to review the relevant
evidence to determine whether there were grounds for initiating an
investigation. If the producers' support were based on other factors � such as
the incentive generated by the CDSOA � the application would not be genuine, and
the authority would be unable to fulfil its obligation under Article 5.3 of the
AD Agreement in an unbiased, objective, and reasonable manner.
4.643 For this reason, the AD Agreement establishes two
mechanisms that enable the investigating authority to ensure that the support is
genuine. First, the authority is required to examine the accuracy and adequacy
of the evidence of dumping, injury, and causal link, submitted with the
application (Chile describes this as "qualitative support"). Second, the
authority is obliged to determine the degree of support or opposition using the
quantitative parameters established in Article 5.4 (this Chile might refer to as
"quantitative support").
4.644 Finally, the investigating authority must ensure that
the relevant legislation and the WTO Agreements have been used appropriately.
Here, the authority may not interfere in private parties' decisions to petition
for an investigation.
4.645 Having said that, Chile believes that the investigating
authority's assessment of whether support for the application is genuine should
go no further than the requirements stated in Article 5; accordingly, the
authority should not attempt to gauge the intentions of the parties involved.
What Chile is questioning in this dispute are the incentives afforded by the
CDSOA, which will generate an increased number of anti-dumping and subsidy
investigations, with their attendant impact on global trade flows.
12. Does a domestic producer only "support" an
anti-dumping application for the purpose of Article 5.4 if its support is
motivated solely by its desire for the imposition of an anti-dumping
measure? Please explain.
4.646 A domestic producer will support an anti-dumping
application when there is dumping, when the dumping produces injury or the
threat of injury, and when there is a causal link between the dumped imports and
the injury. Such support is accordingly motivated by the producer's desire for
this situation to be remedied by means of an anti-dumping measure. The authority
must ensure that the support is genuinely given on the basis of the three
elements referred to above. Now, if there are other motives attributable to
government incentives or pressure, and if the support is provided solely because
these incentives are available � in other words, if there would be no support
without the incentives � then unquestionably the requirements of Article 5 of
the AD Agreement would not be met.
13. Is it your view that there is no "support" (within
the meaning of Article 5.4) for an application if such support is motivated
- in part, at least - by a domestic producer's desire to be eligible for
CDSOA offset payments?
4.647 If the domestic producer, in the absence of a desire to
be eligible for CDSOA offset payments, would not have supported a petition, then
there would be no support within the meaning of Article 5.4.
14. Would a Member violate Article 8.3 of the AD
Agreement if it decided, as a matter of general policy, never to accept
price undertakings? Please explain.
4.648 Yes it would, because in so doing the Member would be
turning this particular provision into a dead letter. Article 8.3 establishes
certain circumstances under which the investigating authority may exceptionally
reject undertakings, including a procedure for notifying the exporter and giving
the latter an opportunity to make comments thereon. If the hypothetical case
stated in your question were to materialize, this exception would become the
only rule preventing the use of an instrument that is explicitly provided for
and regulated by the AD Agreement.
4.649 In developing countries, this scenario would prevent
the authority from making use of one of the few constructive remedies specified
in AD Agreement, as provided for in Article 15.
(b) Questions to all parties
32. With reference to footnote 24 of the AD Agreement and
footnote 56 to the SCM Agreement, to what extent can subsidization be
considered an action "under" Article XVI of GATT 1994?
4.650 Although Chile is not sure exactly what the Panel means
by this question, it would appear to be focusing on the scope of footnote 24. In
fact, footnote 56 cannot make reference to Article XVI since that Article is one
of the provisions of the GATT 1994 as interpreted in the SCM Agreement, under
Article 32.1 of the SCM Agreement. Now, Articles XVI and VI (where relevant) of
the GATT 1994, as interpreted in the SCM Agreement, form an architecture which
regulates subsidies. Under this architecture, there are subsidies which Members
may grant and other subsidies which are prohibited. In addition to its
procedural rules, Article XVI contains prohibitions on using particular
subsidies; conversely, however, it permits subsidies that are not prohibited
(whether under that Article or under the SCM Agreement). Accordingly, it may
well be possible to adopt actions "under" Article XVI, if the latter is
considered part of an architecture.
4.651 Nevertheless, Chile would welcome clarification from
the Panel so that it can provide a more specific answer to the question.
33. Please provide an example of a "non-specific" action
against dumping.
4.652 Assuming that a product is believed to be a dumped
product, and if � by virtue of the fact that it is a commodity or
commodity-like � such dumping is very widespread, the investigating
authority (in lieu of an anti-dumping action or investigation) may take
other steps that counteract the injury more effectively and facilitate the
adjustment process. For example:
(a) A safeguard;
(b) Raise the MFN duty up to the bound level;
(c) Renegotiate the tariff under Article XXVIII of GATT 1994;
(d) Subsidize the production of the affected industry;
(e) Subsidize the consumer.
4.653 None of these actions is contingent upon a finding of
all the constituent elements of dumping. Note that in the case of border
measures, they are on a MFN basis. In general, these are economic policy options
which may, in certain instances, prove more effective than an anti-dumping
action under the AD Agreement.
34. Please give examples of the sort of "other reasons,
including reasons of general policy" that Members might invoke under Article
8.3 of the AD Agreement.
When the undertaking offered is incompatible with the laws
on competition in the market in question.
When the market structure would render them ineffective as
undertakings. For example, if there were many importer firms connected with
the exporters.
35. Does the violation of the international law principle
of good faith necessarily constitute a violation of the WTO Agreement? Does
either the AD Agreement or the WTO Agreement impose an independent
obligation on Members to act in good faith?
4.654 It is understood that Members in their dealings with
other Members, as well as in observing the treaties which they have entered
into, must perform their obligations in good faith (Article 26 of the Vienna
Convention). Accordingly, if a Member fails to perform its obligations under
these treaties � in other words, violates the treaties � then that Member is
acting in bad faith. However, even if there is no independent obligation to act
in good faith, no such obligation would be necessary inasmuch as the principle
is fully applicable to the WTO Agreements. For example, in US � Hot-Rolled
Steel, the Appellate Body held that good faith is a general principle of law
and a principle of general international law, that informs the provisions of the
AD Agreement as well as the other covered agreements. Furthermore, to the extent
that WTO Members are meeting their obligations and undertakings, they are also
meeting the "obligation" to act in good faith that is incumbent upon them under
international law.
36. Is there anything in the panel or Appellate Body
reports in the 1916 Act case to suggest that either the panel or the
Appellate Body, when addressing the meaning of Article 18.1 of the AD
Agreement, had in mind the pure subsidy hypothetical set forth in question 3
above?
4.655 Chile was not a party to the US - 1916 Act
proceedings; thus it had no access to the documents submitted by the Parties,
nor did it take part in oral hearings. Accordingly, aside from the matters
discussed in the pertinent reports, Chile would be unable to determine the
intent of the Panel or Appellate Body. Furthermore, question 3 has been posed by
the current Panel which is examining the particular case before us here; thus it
is hard to say whether a panel or Appellate Body in a different case, that took
place a while ago, might have shared the same concerns.
5. European Communities, India, Indonesia, Thailand
(a) Questions to the complaining parties
1. Please comment on para. 91 of the US first written
submission. Do you agree that "it is clearly possible for an action to be
'in response to' dumping or a subsidy but not be 'against' dumping or a
subsidy"? Please explain, taking into account the Appellate Body's finding
that "'specific action against dumping' � is action that is taken in
response to situations presenting the constituent elements of 'dumping'"
(1916 Act, para. 122). Does the Appellate Body's finding suggest that
"specific action against dumping" is necessarily a subset of action "in
response to" dumping? Please explain.
4.656 The Appellate Body has interpreted the notion of
�specific action against dumping� as �action taken in response to situations
presenting the constituent elements of �dumping��. That interpretation leaves no
scope for arguing that �specific action against dumping or subsidisation� is a
�subset� of �action in response to dumping�. For the Appellate Body, the two
expressions have the same meaning: �specific action against dumping� is �action
in response to dumping�.
4.657 The US contention that the above passage �provides no
guidance as to the meaning of the term against� is untenable. By interpreting
the notion of �specific action against dumping� as �action taken in response to
the constituent elements of dumping�, the Appellate Body was giving meaning also
to the term �against�.
4.658 In support of its assertion that �it is clearly
possible for action to be �in response to� dumping or a subsidy but not be
�against� dumping or a subsidy� the United States relies exclusively on two
examples: the distribution of anti-dumping or countervailing duties to a
charity; and the flying of flags at half-mast following the issuance of an
anti-dumping or countervailing duty order. Both examples are purely
hypothetical, can be readily distinguished from the offset payments and, in any
event, fail to prove the US point.
4.659 As discussed below (Reply to Question 7), contrary to
the assumption made by the United States, the distribution of anti-dumping or
countervailing duties to a charity is not an action �in response to� dumping or
subsidisation. As regards the second example, flying the flag at half-mast, the
possibility that a Member will ever take such action is remote. Moreover, in the
even remoter case that another Member would bother to bring a complaint against
such action, the defendant would stand a good chance to become the first Member
to ever succeed in rebutting the presumption of nullification or impairment
attached to all the violations of the WTO Agreement. The Complainants submit
that the Panel need not disturb the interpretation made by the Appellate Body in
U.S - 1916 Act in order to make room for the use of flag flying as
a trade remedy.
4.660 For the above reasons, the Panel should reject the US
attempts to re-interpret the term �against�. That term has already been
interpreted by the Appellate Body in 1916 Act as part of its interpretation of
the notion of �specific action against dumping�. By arguing now that it is
necessary to give meaning to the term �against�, the United States is in reality
seeking to replace the Appellate Body�s interpretation of �specific action
against dumping� by a narrower, self-serving interpretation of that notion.
4.661 However, should the Panel agree with the US view that
the Appellate Body�s interpretation of �specific action against dumping� needs
to be qualified by re-interpreting the term �against�, the Complainants submit
that the reading of that term made by the United States is unduly restrictive.
In accordance with its ordinary meaning, the term �against� may encompass not
only action that �applies� directly to imports or importers, but more generally
any action which is objectively capable of offsetting or preventing dumping or
subsidisation, whether by imposing a direct burden on the importers, or by
providing an advantage to the domestic producers (see the Complainants� Second
Submission, at Section IV.B).
2. Please explain exactly how you see that the "constituent
elements of dumping" have � been incorporated into the CDSOA.
4.662 The offset payments constitute �action which may be
taken only when the constituent elements of dumping or subsidisation are
present� and, therefore, �specific action against dumping or subsidisation�, for
at least three different reasons:
- first, the offset payments are not made to all
US enterprises, or even to all US producers �affected� by imports,
but only and exclusively to the US producers �affected� by an
instance of dumping or subsidisation which has been previously the
subject of an anti-dumping or a countervailing duty order,
respectively;
- second, the offset payments are paid for
�qualifying expenses� incurred by the affected domestic producers
�after� the issuance of an anti-dumping or a countervailing duty
order; and
- third, the �qualifying expenses� must be
related to the production of a product that has been the subject of
an anti-dumping or countervailing duty order.
4.663 The fact that the offset payments distributed to the
�affected� producers of a given product are paid from the duties collected on
imports of the like product provides further evidence of the remedial purpose of
the CDSOA. But it is neither a sufficient nor a necessary condition for
establishing that the offset payments constitute �specific action against
dumping or subsidisation�.
4.664 Contrary to the US assertions, the Complainants do not
claim that the offset payments constitute �specific action against dumping or
subsidisation� merely because they are paid from anti-dumping or countervailing
duties. If the offset payments were financed directly from the US Treasury, and
in an amount unrelated to the amount of collected anti-dumping or countervailing
duties, they would still be �specific action against dumping� for the above
mentioned three reasons.
3. In your view, would it be inconsistent with Article
18.1 of the AD Agreement and Article 32.1 of the SCM Agreement for a
Member to provide subsidies in response to a finding of dumping or
subsidization, where that subsidization was in lieu of anti-dumping
or countervailing measures? If not, please explain in light of your view
that these provisions prohibit any action taken in response to situations
presenting the constituent elements of dumping.
4.665 Yes. Article 18.1 of the Anti-dumping Agreement and
Article 32.1 of the SCM Agreement do not distinguish between �specific action
against dumping or subsidisation� which is taken in lieu of anti-dumping
or countervailing measures and that which is taken in addition to those
measures. They prohibit all specific actions against dumping and subsidisation
which are not in accordance with those Agreements. The Complainants have shown
that the offset payments provide a double remedy to the �affected domestic
producers�. But the offset payments would still be prohibited by Article 18.1 of
the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement even if they
did not provide such double protection.
4. Assume that a Member (which has no legal framework for
the conduct of anti-dumping/countervail investigations or imposition of
anti-dumping countervailing measures) implements a domestic subsidy
programme with the explicit purpose and design of offsetting the injurious
effects of dumped or subsidized imports. Would that programme constitute a
�specific action against dumping� (or subsidy)?
If not, please explain, and provide a reasoned
explanation as to how Article 18.1 of the AD Agreement (or Article 32.1 of
the SCM Agreement) can be interpreted to distinguish between this
hypothetical subsidy programme and the CDSOA regime.
4.666 Yes, in so far as the grant of the subsidies was
conditional upon a finding of dumping or subsidisation.
5. Would a victim compensation scheme (funded from
central treasury resources, rather than penalties imposed on convicted
criminals) constitute a "specific action against" crime? Please explain.
Would your answer be any different if the scheme were funded from penalties
imposed on convicted criminals? Why?
4.667 The Complainants see little merit in the suggested
analogy, since there is a fundamental difference between the situation described
in the question and the situation at issue in this case: victims and criminals
do not compete with each other to sell goods in the same market. At any rate,
making compensatory payments to the victims could indeed constitute an effective
�action against crime� if tied to �qualifying expenses� in items such as
body-guards, alarm mechanisms or electrified fences.
6. Assume that a Member enacts legislation mandating the
payment of $5,000 to petitioners to compensate them for the cost of making
the petition and participating in the anti-dumping investigation. Would that
payment constitute a "specific action against dumping of exports" within the
meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.668 As described in the question, the payment would seem
not to be dependent upon a positive finding of dumping and, therefore, would not
constitute �specific action against dumping� according to the test set forth at
paragraph 122 of the Appellate Body�s report in US - 1916 Act. The EC
would recall, nevertheless, that in footnote 66 of that report the Appellate
Body left open the possibility that the notion of �specific action against
dumping� might be broader. However, like the Appellate Body in US - 1916 Act,
the Panel need not reach that issue in this case, because the CDSOA meets
clearly the test of paragraph 122.
7. Assume that a Member enacts legislation requiring that
any anti-dumping duties collected be paid to state retirement homes. Would
such payments constitute "specific action against dumping of exports" within
the meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.669 Making payments to state retirement homes is not a
�response� to dumping and, therefore, does not constitute �specific action
against dumping�. The mere fact that an action is funded with anti-dumping or
countervailing duties does not turn such action into a �response� to dumping.
Money is fungible. It would be absurd if one and the same action had to be
characterised as an �action against dumping� if it were funded with anti-dumping
duties, as an �action against sales� if it were financed from a value added tax,
or as an �action against profits� if it were funded with the proceeds of an
income tax.
4.670 The test laid down by the Appellate Body in US -
1916 Act (�action that may be taken only when the constituent elements of
dumping are present�) must be satisfied by the �action� itself, and not by the
funds used to finance such action. In the proposed example, the relevant
�action� is making payments to a state retirement home. That �action� is not, as
such, dependent upon the constituent elements of dumping, but only upon the
existence of a qualifying recipient institution. It is only the funding of such
action which is dependent upon a finding of dumping.
4.671 As explained above, the Complainants do not claim that
the offset payments are �specific action against dumping or subsidisation�
simply because they are paid from anti-dumping or countervailing duties. The
offset payments are a �response� to dumping or subsidisation because they are
made exclusively to domestic producers affected by dumping or subsidisation for
qualifying expenses incurred after the issuance of an anti-dumping or
countervailing duty order with respect to the production of the same product
which is the subject of such orders. The offset payments would still be
dependent upon a finding of dumping or subsidisation and, consequently,
�specific action against dumping or subsidisation� if they were paid from the US
Treasury or from any other source of Government revenue.
8. Assume that the US restricted offset payments under
the CDSOA to cases where the US found the existence of dumping, injury and
causation but did not impose an anti-dumping order, and that such payments
equalled the amount of anti-dumping duty that would have been collected had
an anti-dumping order been put in place. Would such payments constitute
"specific action against dumping of exports" within the meaning of Article
18.1 of the AD Agreement, or "action under other relevant provisions of
GATT 1994" within the meaning of note 24? Why, or why not?
4.672 The payments described in the question would constitute
an action that �may be taken only when the constituent elements of dumping are
present� and, consequently, would be �specific action against dumping�. The fact
that the United States refrains from imposing an anti-dumping order would not
exclude a violation of Article 18.1, for the reasons already explained in the
reply to question 3. The payments described in the question would not constitute
�action under other relevant provisions of GATT 1994� for the same reasons that
they constitute �specific action against dumping�. Moreover, they would not be
made �under� any other �relevant� GATT provision (see below the reply to
Question 32).
9. Would the CDSOA violate AD Article 5.4 if offset
payments were made to all domestic producers of the product under
investigation, and not merely those domestic producers supporting the
petition? Please explain.
4.673 Yes. In the situation described in the question, the
offset payments would still provide an incentive to file or support
applications, because each domestic producer could not be sure that the other
domestic producers would file or support an application. The incentive to file
an application would remain until an application is lodged by another producer,
while the incentive to support the application would subsist until the moment
when the thresholds for initiating an investigation are reached.
10. Is a Member not acting in good faith when it provides
incentives for the use of a WTO-consistent remedy? Please explain.
4.674 The proposition advanced in the question is like saying
that, because the Constitution of the United States allows the re-election of
President Bush, his supporters act in good faith if they buy the necessary votes
to ensure that he is re-elected.
4.675 The question misses the crucial point that anti-dumping
and countervailing measures are not �a WTO consistent remedy� unless they have
been imposed pursuant to an investigation initiated on the basis of an
application made �by or on behalf of the domestic industry�. The purpose of that
requirement is to limit the initiation of investigations (and consequently the
imposition of measures) to those cases where the domestic industry (rather than
the Government or a minority of domestic producers) is interested in the
imposition of measures. The CDSOA seeks to avoid the limitations on the
initiation of investigations imposed by Article 5.4 of the Anti-Dumping
Agreement and Article 11.4 of the SCM Agreement by providing a financial
incentive to file or support applications.
4.676 The obligation to perform a treaty obligation in good
faith means that such obligations �must not be evaded by a merely literal
interpretation�. It means also that the parties �must abstain from acts that are
calculated to frustrate the object and purpose of the treaty�. As explained in
the Complainants� submission, the CDSOA frustrates the object and purpose of
Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement
because it encourages the opening of investigations and the imposition of
measures in cases where the domestic industry is not interested in such
measures. For that reason, the CDSOA is incompatible with the obligation of the
United States to comply in good faith with the requirements of those articles.
11. Does support for an anti-dumping petition have to be
genuine (i.e., based on the actuality or expectation of injury) for the
purposes of Article 5.4 of the AD Agreement? If so, how could an
investigating authority ensure that support is genuine in all cases?
4.677 Yes. If the domestic producers declare their support
for the application in order to escape a sanction imposed by the law (or a harm
threatened by the Government or by another party) such declaration cannot be
considered as �support� for the purposes of Article 5.4 of the Anti-Dumping
Agreement and Article 11.4 of the SCM Agreement. Likewise, if the domestic
producers declare their support for the application in order to qualify for an
advantage, such as the offset payments, that declaration does not constitute
�support� for the application. Rather, it is �support� for the offset payments.
4.678 If, as argued by the United States, it did not matter
whether the support is �genuine�, a Member�s authorities would be entitled to
take any action within their reach in order to make sure that the thresholds are
attained: not only bribing the domestic producers to file or support
applications, as in the present case, but also denying them advantages (e.g. tax
credits or government contracts), or even imposing upon them sanctions (e.g.
fines or, why not, imprisonment) if they failed to do so. In those Members where
the respect of human rights is of less concern than the protection of the
domestic industries, the authorities could go even further. For example, they
could subject any reluctant domestic producers to torture with the assurance
that the �subjective motivations� of those producers for signing the
declarations of support would be deemed irrelevant for WTO purposes. These
examples evidence that the US formalistic interpretation of the term �support�
would lead to absurd results and cannot be correct.
4.679 In the absence of evidence to the contrary, the
authorities must presume that, if a domestic producer has declared formally its
support for the application, such support is �genuine�, just like the electoral
authorities of all countries presume that, in the absence of any evidence to the
contrary, the ballots cast by the voters are the genuine expression of their
political choices. However, if the authorities are presented with evidence that
a declaration of support is not �genuine�, for example, because the petitioner
has threatened or bribed the producer concerned, they cannot disregard such
evidence. To do so would be a violation of their duty to conduct an objective
examination of the existence of support.
4.680 By its very existence, the CDSOA destroys the
presumption that a formal declaration of support is evidence of genuine support.
The CDSOA provides a strong incentive to file �non-genuine� applications and to
make �non-genuine� declarations of support. As a result, it renders suspect all
applications and declarations of support made by the US producers. If the
authorities could read the minds of the US producers, they could disregard the
�non-genuine� declarations of support and make a proper determination of
support, notwithstanding the incentives provided by the CDSOA. Since this is
impossible, the CDSOA has the necessary consequence that the US authorities are
prevented from reaching a proper determination of support, whether positive or
negative, before initiating an investigation, thereby violating Article 5.4 of
the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement.
4.681 The United States concedes, indeed stresses, the
obvious point that the US authorities cannot tell the genuine
applications/declarations of support from those induced by the CDSOA, but fails
to draw the appropriate consequence from this. According to the United States,
since the U.S authorities cannot ascertain whether support is genuine or induced
by the CDSOA, it would follow that the whole issue is entirely irrelevant. This
argument puts logic on its head. It is like saying that the buying of votes
should be permitted because the authorities cannot exclude that those voters who
have been bribed by a candidate would have voted for that candidate anyway. It
is precisely because the motivations of voters cannot be ascertained that all
democracies ban the buying of votes per se, regardless of its actual impact on
the outcome of the election.
12. Does a domestic producer only "support" an
anti-dumping application for the purpose of Article 5.4 if its support is
motivated solely by its desire for the imposition of an anti-dumping
measure? Please explain.
4.682 A domestic producer �supports� an application if it
declares its support because it supports the measures as such, and not because
it has been coerced or induced to make a declaration of support by the
Government (or by the petitioner). In the case at hand, this means that a
domestic producer cannot be considered to �support� an application unless it
would have declared its support also in the absence of the offset payments.
13. Is it your view that there is no "support" (within
the meaning of Article 5.4) for an application if such support is motivated
- in part, at least - by a domestic producer's desire to be eligible for
CDSOA offset payments?
4.683 As explained above, there is no �support� when the
domestic producer would not have supported the application but for the offset
payments.
14. Would a Member violate Article 8.3 of the AD
Agreement if it decided, as a matter of general policy, never to accept
price undertakings? Please explain.
4.684 Yes. The interpretation suggested in the question would
render superfluous Article 8.3 Anti-Dumping Agreement.
4.685 The reference to �reasons of general policy� in Article
8.3 means that a Member may reject undertakings not only for �reasons� related
to the specific terms and circumstances of each undertaking offered, but also
for more general considerations which do not require a case-by-case examination
of each undertaking. For example, a Member may decide not to accept any
undertakings in a certain product sector where monitoring is too difficult, or
where there is a history of evasion of undertakings, or where undertakings raise
anti-trust concerns.
(b) Question to Canada
30. At para. 44 of its oral submission, Canada states
that the Offset Act is a "specific action against dumping" because inter
alia "payments are made only to those producers 'affected' by
dumping". Does Canada consider that the Offset Act would be a "specific
action against dumping" if payments were made to all domestic producers, and
not only those that had supported the petition? Please explain.
4.686 The CDSOA defines the notion of �affected domestic
producer� as including only those producers who have filed or supported an
application leading to the imposition of anti-dumping or countervailing duties.
However, even if that definition were amended to cover all the US producers of
the like product (i.e. including those who did not support the application), the
offset payments would still be �specific action against dumping or
subsidisation�, because it would remain that no offset payments would be paid to
the US producers of other products which are not �affected� by dumping or
subsidisation.
(c) Questions to the European Communities
31. With reference to the last sentence of para. 33 of
the EC oral statement, does the European Communities consider that price
undertakings may only be rejected if the acceptance of an undertaking is not
"practicable"? Please explain.
4.687 The EC would suggest that this question should have
been addressed to the United States. Indeed, at paragraph 132 of its First
Submission, the United States stated that
[�] [Articles 8 and 18] state that an undertaking �need
not be accepted if the authorities of the importing member consider the
acceptance impractical� because the number of exporters is too great, or
�for other reasons, including reasons of general policy�. The ordinary
meaning of �impractical� is that which is �not practical� or �not available
or useful in practice�, or �not inclined or suited to action�. These
articles do not limit or define the reasons that an administering authority
may find an undertaking to be �impractical�.
4.688 At paragraph 134, the Unites States added that
[�] As explained above, the articles provide that the
authorities need not accept an undertaking if it is �impractical�. They do
not limit the reasons that may lead the authorities to conclude that
acceptance is �impractical.�
4.689 Finally, at paragraph 136 the United States stated that
[�] The logical reading of the two sentences is that,
once an administering authority has concluded that an undertaking is
impractical for whatever reason, the undertaking is also considered to be
�inappropriate�.
4.690 The above quoted passages suggest that the United
States takes the view that an undertaking may be rejected only if it is
�impractical�. The passage of the EC�s oral statement cited in the question
addressed that argument. An alternative reading of Article 8.3 of the
Anti-Dumping Agreement and Article 18.3 of the SCM Agreement would be that
undertakings may be rejected if they are �impractical� or for �other reasons,
including reasons of general policy�. In support of this reading, it could be
argued that the second sentence of those two Articles does not use the term
�impractical� but the term �inappropriate�, presumably with the intention to
capture the two categories of �reasons� mentioned in the first sentence (i.e.
�impracticability� and �other reasons�). The argument made by the Complainants
at paragraph 96 of their First Submission is based on this reading.
4.691 Regardless of the interpretation, it remains that,
contrary to the US assertions, the rejection of undertakings is not within the
authority�s �complete discretion�, but must be based on �reasons�.
(d) Questions to all parties
32. With reference to footnote 24 of the AD Agreement and
footnote 56 to the SCM Agreement, to what extent can subsidization be
considered an action "under" Article XVI of GATT 1994?
4.692 Footnotes 24 and 56 allude to action taken �under other
relevant provisions� of the GATT. This is not the same as saying �action which
is not prohibited by some other GATT provision�. The �other relevant provisions�
referred to in footnotes 24 and 56 are those GATT provisions which confer and
regulate positively the right to take a certain type of remedial action, such as
Article VI, Article XIX, or Articles XII and XVIII. Article XVI is not one of
such �relevant provisions�.
4.693 Article XVI, as interpreted and elaborated in Parts II
and III of the SCM Agreement, lays down certain disciplines governing the use of
subsidies, but does not provide for a positive right to grant subsidies as a
trade remedy. A measure which is neither prohibited by Part II nor actionable
under Part III may still be prohibited, on different grounds, by another WTO
provision (e.g. Article III:2 of the GATT). One can say of a subsidy that it is
not prohibited by Part II or not actionable under Part III of the SCM Agreement,
but not that it is �action� taken �under� Article 3 or �under� Article 5 of the
SCM Agreement.
4.694 As far as footnote 56 of the SCM Agreement is
concerned, the Complainants would recall that the SCM Agreement does not
interpret only the subsidies provisions of Article VI of the GATT. The SCM
Agreement is also an interpretation of Article XVI of the GATT. Therefore,
Article XVI cannot be one of the �other relevant provisions of GATT 1994�
mentioned in footnote 56. Instead, it is one of the �interpreted� provisions of
the GATT alluded in Article 32.1
33. Please provide an example of a "non-specific" action
against dumping.
4.695 Assume that a Member imposes a safeguard measure under
Article XIX of GATT against an injurious increase in imports which is caused, at
least in part, by dumping. That action may be characterised as an action
�against dumping� in so far as it applies, inter alia, to dumped imports,
but is not �specific action against dumping� because it is not dependent upon a
finding of dumping. It is dependent upon a finding of an injurious increase in
imports.
4.696 Or assume that a Member grants a subsidy which allows
its exporters to engage in dumping. If another Member imposes countervailing
duties on those exports, such action would be �action against dumping� because
it applies to dumped imports. But it would not be �specific action against
dumping�, because it would not be conditional upon a finding of dumping, but
instead upon a finding of subsidisation.
4.697 To mention but one more example, assume that a Member
grants subsidies to any industry in difficulties which agrees to a restructuring
plan, regardless of the causes of the difficulties (and, therefore, including
the situation where the difficulties are caused by dumped imports). That action
would be �action against dumping� in so far as the difficulties are caused by
dumped imports. But they would not be �specific action against dumping� because
the granting of the subsidies is not dependent upon a finding of dumping.
34. Please give examples of the sort of "other reasons,
including reasons of general policy" that Members might invoke under Article
8.3 of the AD Agreement.
4.698 See above the reply to Question 14.
35. Does the violation of the international law principle
of good faith necessarily constitute a violation of the WTO Agreement? Does
either the AD Agreement or the WTO Agreement impose an independent
obligation on Members to act in good faith?
4.699 The Complainants have not invoked the violation of an
�independent�, self-standing obligation to act in good faith. Rather, the claim
made by the Complainants is that, by failing to perform in good faith the
obligations imposed by the provisions at issue of the Anti-Dumping Agreement and
the SCM Agreement, the United States has violated those provisions.
4.700 The principle of good faith is an �integral part� of
the rule pacta sunt servanda, i.e. of the rule that treaties are binding.
This is reflected in Article 26 of the Vienna Convention on the Law of Treaties
which, under the title �pacta sunt servanda�, provides that
Every treaty in force is binding upon the parties of it
and must be performed by them in good faith.
4.701 Thus, by failing to perform in good faith a treaty
obligation, a party violates that treaty obligation. The same is true of the
obligations imposed by the WTO Agreement.
4.702 The WTO Agreement does not contain any express
provision to the effect that the obligations which it imposes must be performed
in good faith. Nevertheless, Article 3.2 of the DSU stipulates that the
provisions of the covered agreements must be interpreted in accordance with the
customary rules of interpretation of public international law. Similarly,
Article 17.6 (ii) of the Anti-Dumping Agreement provides that �the panel shall
interpret the relevant provisions of the Agreement in accordance with customary
rules of public international law�. By now it is well established that the rules
alluded in those two provisions include those codified in the Vienna Convention
on the Law of Treaties.
4.703 Article 31(1) of the Vienna Convention states the
general rule of interpretation of treaty obligations as follows:
A treaty shall be interpreted in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their
context and in their light of its object and purpose.
4.704 Unlike the Vienna Convention, the WTO Agreement does
not state expressly an obligation to �perform� in good faith the obligations
imposed by the WTO Agreement. But such obligation is implicit in the requirement
to �interpret� those obligations in good faith. Surely, if the WTO provisions
must be interpreted in good faith it is because they must be observed in good
faith.
4.705 The Appellate Body has recognised the relevance of the
principle of good faith in the context of the WTO Agreement. According to the
Appellate Body, the principle of good faith is �at once a general principle of
law and a principle of general international law that informs the provisions of
the Anti-Dumping Agreement, as well as the other covered agreements�.
4.706 More specifically, the Appellate Body has explained
that the requirement to conduct an �objective examination� of the existence of
injury set forth in Article 3.1 of the Anti-Dumping Agreement means that such
examination must conform �to the dictates of the basic principles of good faith
and fundamental fairness� and is �yet another expression of the general
principle of good faith�.
36. Is there anything in the panel or Appellate Body
reports in the 1916 Act case to suggest that either the panel or the
Appellate Body, when addressing the meaning of Article 18.1 of the AD
Agreement, had in mind the pure subsidy hypothetical set forth in question 3
above?
4.707 As far as the EC can recall, the �subsidy hypothetical�
set forth in Question 3 was not discussed before the panels or the Appellate
Body.
4.708 The Complainants do not wish to speculate on what the
panels or the Appellate Body �had in mind�. They would recall, nevertheless,
that at paragraph 81 of its report, the Appellate Body noted that �specific
action against dumping could take a wide variety of forms�. Further, in footnote
66 the Appellate Body cautioned that �it did not consider it necessary, in the
present cases, to decide whether the �concept of specific action against
dumping� may be broader�. This suggests that, when defining the notion of
�specific action against dumping�, the Appellate Body �had in mind� a �wide
variety of actions� and was concerned that the definition set forth at paragraph
122 of the report might be, if anything, too restrictive.
6. Japan
(a) Questions to the complaining parties
1. Please comment on para. 91 of the US first written
submission. Do you agree that "it is clearly possible for an action to be
'in response to' dumping or a subsidy but not be 'against' dumping or a
subsidy"? Please explain, taking into account the Appellate Body's finding
that "'specific action against dumping' � is action that is taken in
response to situations presenting the constituent elements of 'dumping'"
(1916 Act, para. 122). Does the Appellate Body's finding suggest that
"specific action against dumping" is necessarily a subset of action "in
response to" dumping? Please explain.
4.709 Japan disagrees with the United States� allegation that
it is possible for an action to be �in response to� dumping but not be �against�
dumping. The Appellate Body states 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�.�111 It further states �Article VI is
applicable to any �specific action against dumping� of exports, i.e.,
action that is taken in response to situations presenting the constituent
elements of �dumping�.�112 These statements clarify that �specific action �against�
dumping� is equivalent to �action that is taken �in response to� situations
presenting the constituent elements of dumping.� The �specific action against
dumping� is not a subset of action �in response to� dumping.
4.710 The Appellate Body�s expression in the 1916 Act of an
action �in response to� dumping would be properly understood when separated it
into two elements. First, an action can be taken �in response to� dumping only
when the constituent elements of dumping exist before the action is taken. The
presence of the dumping is thus a precondition to take an action. Second, the
Appellate Body uses expression of �in response to� in the context of Article VI,113
and accordingly, the expression must be understood in that context. In this
respect, the Appellate Body uses the term �in response to dumping�
interchangeably with �counteract dumping� to discuss the scope of Article VI and
the AD Agreement114. The EC Panel in 1916 Act also found that Article VI:2 provides
that only measures in the form of anti-dumping duties may be applied to
counteract dumping as such.115 These statements clarify that the Appellate
Body�s expression of an action �in response to� dumping would properly be
understood to mean an action �to counteract� dumping.
4.711 Therefore, An action is specific against dumping when
it satisfies the following conditions:
(i) The action is conditioned upon situations
presenting the constituent elements of dumping; and,
(ii) The action is taken to counteract dumping.
4.712 Examples presented in the US first written submission,
such as contributions to charity and flying a flag at half-mast, are not
specific actions against dumping because these examples are not actions to
counteract dumping, and thus fail to satisfy the second condition above. In
contrast, the distribution, which the CDSOA mandates, satisfies both conditions,
and therefore is �specific action against dumping.�
2. Please explain exactly how you see that the
"constituent elements of dumping" have been incorporated into the CDSOA.
4.713 As discussed in Japan's first written submission in
para. 4.13, the �constituent elements of dumping� include the introduction by a
country of a product into the commerce of another country at less than its
normal value.
4.714 The CDSOA has incorporated the constituent elements of
dumping because the CDSOA mandates the distribution only when the United States
Government (�USG�) issues an order to impose anti-dumping duties on imported
products and only as long as the USG maintains the order. See Section 754
(a) of Tariff Act of 1930, as amended by Section 1003 of CDSOA. The USG issues
an anti-dumping order only when it finds an export price of a product into the
United States is less than its normal value. Further, the order would be able to
remain in force �only so long as and to the extent necessary to counteract
dumping which is causing injury.� See Article 11.1 of AD Agreement. The
distribution under the CDSOA is conditioned upon the situations presenting
constituent elements of dumping. The distributions of collected duties under the
CDSOA become a practical and theoretical impossibility in the absence of the
constituent elements of dumping (or subsidization). As such, the �constituent
elements of dumping� have been incorporated into the CDSOA.
3. In your view, would it be inconsistent with Article
18.1 of the AD Agreement and Article 32.1 of the SCM Agreement for a
Member to provide subsidies in response to a finding of dumping or
subsidization, where that subsidization was in lieu of anti-dumping
or countervailing measures? If not, please explain in light of your view
that these provisions prohibit any action taken in response to situations
presenting the constituent elements of dumping.
4.715 Assuming that the subsidy is provided to �affected
domestic producers,� as is the CDSOA, this hypothesis would be inconsistent with
these Articles.
4.716 The Appellate Body stated in the 1916 Act case,
�Article VI, and, in particular, Article VI:2, read in conjunction with the
Anti-Dumping Agreement, limit the permissible responses to dumping to
definitive anti-dumping duties, provisional measures and price undertakings.�116 As
the Appellate Body found, these Articles and provisions prohibit Members from
taking any other actions in response to dumping except for these three measures.
Subsidies in response to a finding of dumping in this hypothesis are not one of
the three types of permissible measures.
4.717 As discussed in Japan's first written submission in
paragraphs 4.36 through 4.46, Article 10, footnote 35, and 32.1 of the SCM
Agreement limit specific actions against subsidy that a Member may take to
countervailing duties, provisional measures, price undertakings, or
countermeasures under Article 4 and 7. The provision of subsidies in response to
a finding of subsidisation is not among of these permissible measures.
4.718 A Member, therefore, may not provide subsidies in
response to dumping or subsidisation. This conclusion does not differ even if
the subsidisation is in lieu of anti-dumping or countervailing measures
permitted under the AD Agreement or the SCM Agreement. Indeed, it is within a
Member�s discretion whether to impose either or none of the permitted measures.
No provisions in the AD Agreement, the SCM Agreement or other WTO Agreements,
however, permit any alternative measures. Thus, the hypothesized subsidies are
inconsistent with the AD and the SCM agreements irrespective of the fact that
the Member refrains from taking permissible measures in response to dumping or a
subsidy.
4. Assume that a Member (which has no legal framework for
the conduct of anti-dumping/countervail investigations or imposition of
anti-dumping countervailing measures) implements a domestic subsidy
programme with the explicit purpose and design of offsetting the injurious
effects of dumped or subsidized imports. Would that programme constitute a
�specific action against dumping� (or subsidy)?
If not, please explain, and provide a reasoned
explanation as to how Article 18.1 of the AD Agreement (or Article 32.1 of
the SCM Agreement) can be interpreted to distinguish between this
hypothetical subsidy programme and the CDSOA regime.
4.719 Japan assumes that the subsidy programme is to offset
the injury caused by �dumping� or �subsidy� as defined in Article
VI of GATT 1994, the AD Agreement or the SCM Agreement. Japan also assumes that
the subsidy is not a countermeasure permitted under Article 4 or 7 of the SCM
Agreement. Upon these assumptions, this hypothetical programme would be
inconsistent with the AD Agreement and the SCM Agreement.
4.720 The subsidy would satisfy the first condition as
discussed in Japan's answer to Question 1 above. The subsidy would be granted
only when the Member finds dumping or a subsidy within the meaning of Article VI
of GATT 1994, the AD Agreement or the SCM Agreement. The execution of the
subsidy programme is therefore conditioned upon situations presenting the
constituent elements of dumping or subsidization.
4.721 The subsidy would also satisfy the second condition in
Japan's answer to Question 1 above. In this hypothesis, a Member would provide a
subsidy to domestic producers, which are injured because of dumping or subsidy.
This subsidy is intended and designed to resume the competitive power of
domestic producers against dumping or subsidy. In other words, the subsidy is
intended and designed to counteract dumping or subsidy. The subsidy is therefore
a measure to counteract dumping or subsidy.
4.722 The subsidy programme thus would satisfy both of the
two conditions discussed in Japan's answer to Question 1 above. The programme
therefore constitutes a specific action against dumping or subsidy under Article
18.1 of the AD Agreement or Article 32.1 of the SCM Agreement.
4.723 It should be noted that a Member must act in a manner
consistent with Articles 18.1 and 32.1 of the AD and SCM Agreements, even if the
Member chooses not to have any legal framework for anti-dumping or
countervailing duty investigations, as discussed in Japan's answer to the
Question 3 above.
5. Would a victim compensation scheme (funded from central treasury resources, rather than penalties imposed on convicted criminals) constitute a "specific action against"
crime? Please explain. Would your answer be any different if the scheme were funded from penalties imposed on convicted criminals? Why?
4.724 Because of differences in nature among various crimes, it is a difficult task to discuss what constitutes a �specific action against� crime in general. A victim compensation
scheme, however, may be viewed as a �specific action against� some crimes, such as fraudulent interference with a victim�s business. If Japan may consider that monetary loss by the interference to the
victim is a situation presenting the constituent elements of the crime, compensation to the victim then would counteract the crime. It therefore would be a specific action against crime.
4.725 Japan's answer would not change due to the source of the fund. When the funding to victims is considered to be a specific action against crime as analysed above, the source of
the funding is irrelevant to the analysis. Imposition of a penalty on a criminal would constitute another specific action against crime separately from this hypothetical funding.
6. Assume that a Member enacts legislation mandating the payment of $5,000 to petitioners to compensate them for the cost of making the petition and participating in the
anti-dumping investigation. Would that payment constitute a "specific action against dumping of exports" within the meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.726 Assuming that a Member would make the payment, upon a finding of dumping, for preparation of a petition and participation into an investigation under the AD Agreement, such
payment would constitute a �specific action against dumping of exports.� In this case, a valid petition must contain positive evidence of the constituent elements of dumping. See Article 5.2 of AD
Agreement. The payment for the petition, therefore, is a specific action taken where the first condition as discussed in Japan's answer to the Question 1 above is satisfied.
4.727 The preparation of the petition is also an action to counteract dumping. The action of preparing a petition is required of any petitioner, and is therefore an action necessary
to counteract dumping. A Member�s payment for the preparation of a petition is equivalent to the action of the preparation itself, and thus is also a specific action to counteract dumping. The payment
therefore also satisfies the second condition to be a �specific action against dumping.� As the payment would satisfy both conditions to be a �specific action against dumping,� the payment would be an
action prohibited under the Article 18.1 of the AD Agreement.
7. Assume that a Member enacts legislation requiring that any anti-dumping duties collected be paid to state retirement homes. Would such payments constitute "specific action
against dumping of exports" within the meaning of Article 18.1 of the AD Agreement? Why, or why not?
4.728 The payment to state retirement homes would not constitute a �specific action against dumping� because the payment would not be an action to counteract dumping, and therefore
does not satisfy the second condition as discussed in the answer to the Question 1 above.
8. Assume that the US restricted offset payments under the CDSOA to cases where the US found the existence of dumping, injury and causation but did not impose an anti-dumping
order, and that such payments equalled the amount of anti-dumping duty that would have been collected had an anti-dumping order been put in place. Would such payments constitute "specific action
against dumping of exports" within the meaning of Article 18.1 of the AD Agreement, or "action under other relevant provisions of GATT 1994" within the meaning of note 24? Why, or why not?
4.729 This offset payment would constitute a �specific action against dumping of exports� because the offset payment would be made in situations presenting the constituent elements
of dumping, and would counteract dumping or subsidy. The USG�s decision not to impose an anti-dumping duty on imports is irrelevant. Even if the offset payment would not be funded from the collected
anti-dumping or countervailing duties, it does not alter the payment�s status as a �specific action against dumping.� Please see Japan's answers to Questions 1, 3 and 4 above for further discussions
in this connection.
4.730 The offset payment in this hypothesis is not an �action under other relevant provisions of GATT 1994� because the offset payment is a �specific action against dumping.� The
Appellate Body in the 1916 Act case found that � �Action� within the meaning of footnote 24 is to be distinguished from �specific action against dumping� of exports, which is governed by Article 18.1
itself.�117 It further found that �Article 18.1 should be read as requiring that any �specific action against dumping� of exports from another Member be in accordance with the relevant provisions of
Article VI of the GATT 1994, as interpreted by the Anti-Dumping Agreement.� These statements clarify that footnote 24 exclude no �specific action against dumping� from the application of Article
18.1.
4.731 The United States erred in arguing that the CDSOA is exempted from the application of Article 18.1 of AD Agreement because of footnote 24. As Japan demonstrated in its first
written submission, oral statement, second submission and above, the CDSOA mandates a �specific action against dumping� within the meaning of Article 18.1 of AD Agreement that is not permitted by
Article VI and the AD Agreement. As the Appellate Body instructs, footnote 24 does not exclude the CDSOA from the application of Article 18.1.
9. Would the CDSOA violate AD Article 5.4 if offset payments were made to all domestic producers of the product under investigation, and not merely those domestic producers
supporting the petition? Please explain.
4.732 Yes. The payment still provides a financial incentive to support a petition because the offset payment will never be made unless an anti-dumping or countervailing duty
investigation is initiated. An anti-dumping or countervailing investigation may be initiated only when a petition attracts 25 per cent support among the entire domestic production, and 50 per cent
support among domestic production expressing either support or opposition. The offset payments thus still provide a strong incentive to domestic producers to support the petition.
96 See, for example, First Submission of the United States,
paragraphs 81, 84, 86, 87 and 89.
97 US � 1916 AD Act, AB Report, paragraph 122.
98 First Submission of the United States, paragraph 92.
99 The New Shorter Oxford English Dictionary, 1993,
pp.38-39, (L. Brown ed).
100 See, for example, First Submission of United States,
paragraph 92.
101 As set out in paragraphs 32-41 of the First Submission of
Australia, an anti-dumping duty order or finding under the Antidumping Act of
1921 within the meaning of the Act are the administrative instruments by which
the US has formally determined that there exists a situation presenting the
constituent elements of dumping. (Similarly, a countervailing duty order is the
administrative instrument by which the US has formally determined that there
exists a situation presenting the constituent elements of a subsidy.)
102 See, for example, First Submission of the US, paragraph 19.
103 See, for example, First Submission of Japan and Chile,
paragraphs 4.51-4.55.
104 See also Second Submission of Australia, paragraphs 22-26.
105 Article 17.6(ii) of the Anti-Dumping Agreement imposes a
similar obligation in respect of that Agreement.
106 Japan � Taxes on Alcoholic Beverages, Report of the
Appellate Body, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, page 10.
107 United States � Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, Report of the Appellate Body,
WT/DS184/AB/R, paragraph 101.
108 Continued Dumping and Subsidy Offset Act of 2000, �
1002 (Title X (Sections 1001 � 1003) of the Agriculture, Rural Development,
Food and Drug Administration, and Related Agencies Appropriations Act, 2001,
Pub. L. No. 106-387; 114 Stat. 1549, 1549A-72 (2000)) (Common Exhibit-1).
109 United States � Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, Report of the Appellate Body,
WT/DS184/AB/R, adopted 23 August 2001, para. 101.
110 United States � Import Prohibition of Certain Shrimp and
Shrimp Products, Report of the Appellate Body, WT/DS58/AB/R, adopted 6
November 1998, para. 158 and footnote 156.
111 Appellate Body Report, United States � Anti-Dumping Act of
1916 (WT/DS 136,162/AB/R) (�1916 Appellate Body�), para. 122. (emphasis
added.)
112 1916 Appellate Body, para.126 (emphasis added).
113 1916 Appellate Body, para. 126 (�[w]e have found that
Article 18.1 of the Anti-Dumping Agreement requires that any �specific
action against dumping� be in accordance with the provisions of Article VI of
the GATT 1994 concerning dumping�.) See also other quotations from the
1916 Appellate Body, supra.
114 1916 Appellate Body, para. 109. See also para. 116,
and 117.
115 See WT/DS136/R para.6.204.
The EC Panel and Japan Panel also uses the term �address�
to paraphrase the term �counteract.� (�We have reached the conclusion that rules
and declines of that article [Article VI] apply to laws that address
�dumping� as defined in Article VI:1 of GATT 1994�) (WT/DS136/R para. 6.163.
See also WT/DS162, para. 6.182).
116 1916 Appellate Body, para 137.
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