|
|
|
español - français - português |
Search
|
|
|
|
español - français - português |
|
Search
|
UNITED STATES – CONTINUED DUMPING AND SUBSIDY
4.733 Japan understands that the incentive questioned in this dispute is not incentive for the use of a WTO consistent remedy, but incentive for creation of an appearance clearing the legal requirements superficially for the use of WTO consistent remedy. Articles 5.4 of the AD Agreement and 11.4 of the SCM Agreement require a minimum expression of support by domestic producers before a Member legally may initiate an investigation. In other words, the expression of a sufficient degree of industry support is the predicate of a Member’s very right to initiate. A Member may not, in good faith compliance with its obligations under those articles, “purchase” that legal right by offering payments to domestic producers so as to induce them to express support they might not otherwise express.
4.734 The determination of the support under Article 5.4 of the AD Agreement must be based on the examination of true or genuine support to a claim that the domestic industry is injured by dumping. In ordinary situations, the investigation authorities may presume that expressions of support from domestic producers are true or genuine without further scrutiny unless circumstances or other evidence indicates that their expressions would be tainted by other interests. 4.735 The question in this dispute, however, is NOT whether the USG is obliged to scrutinize motives of domestic industries under Article 5.4 at the time of any polling of support. The question is whether a WTO Member may promise to provide financial benefits to domestic producers upon the condition that they support a petition at the time of the polling. 4.736 As discussed in Japan's first written statement, oral statement, and answer to Question 10 above, the USG has an obligation to perform the determination required by Article 5.4 in good faith. Further, Article 4.1 of AD Agreement informs Article 5.4, and makes clear the duty of care required of the investigating authorities to ensure that other interests do not distort expression by domestic producers of their support or opposition to a petition. Japan refers to its first written submission, paragraphs 4.47 through 4.75 for further discussion on this issue. The CDSOA explicitly supplies “other interests” to domestic producers in a manner inconsistent with USG’s obligations under Article 5.4. 4.737 The only way for the USG to perform its obligations under Article 5.4 in good faith and determine the degree of support properly is simply to remove the financial incentives that the CDSOA mandates.
4.738 While Article 8.3 of the AD Agreement does not require the acceptance of undertakings, a good faith application of its terms would require acceptance in those situations in which it is practical or appropriate to do so. Members have an obligation to consider offered undertakings in good faith and must have a proper reason if they are rejected. 4.739 Article 8.3 of the AD Agreement does not justify a Member’s rejection of an offered price undertaking only based on its policy never to accept price undertakings. The Member still would have an obligation to review an offered undertaking and may reject it only when it would have a proper reason to reject the individual offer in all cases. A mere statement that the Member has such a policy is not sufficient for the purpose of Article 8.3. This hypothesis, however, does not apply to the USG because the USG has never taken, or does not claim in its rebuttals, that it will take, such a position.
4.740 A subsidy granted without taking any procedures set forth in Article XVI of the GATT is not an action “under other relevant provisions of the GATT” within the meaning of footnotes 24 and 56. Article XVI does not provide a right to grant subsidies in general, it merely deals with reporting requirements and other procedural issues. Therefore, a Member that simply grants a subsidy is not taking action “under” Article XVI. 4.741 Subsidization further cannot be considered an action “under other relevant provisions of the GATT”, within the meaning of footnote 56 of the SCM Agreement because Article XVI is “the provisions of GATT” under Article 32.1. Article 32.1 prohibits Members from taking specific action against a subsidy of another Member “except in accordance with the provisions of GATT, as interpreted by this Agreement.” (emphasis added.) The SCM Agreement interprets not only Article VI:3 of GATT but also Article XVI. The reference in footnote 56 to “other relevant provisions of GATT” is meant to encompass only those provisions that are not covered by Article 32.1, i.e., provisions that are not interpreted by the SCM Agreement. Therefore, neither Article VI:3 nor Article XVI can be considered “other provisions of the GATT under footnote 56. 4.742 It also bears noting that the distributions under the
CDSOA do not fall in the scope of footnotes 24 and 56 because, as Japan and
other complainants have demonstrated, they are specific actions against
dumping or subsidy covered by Articles 18.1 and 32.1. The Appellate Body in the
1916 Antidumping Act case found that “action” within the meaning of footnote 24
is to be distinguished from “specific action against dumping” within the meaning
of Article 18.1.118 A measure that is considered “specific action against dumping”
is “governed by Article 18.1 itself.”119 Likewise, a measure that is considered
“specific action against a subsidy” is governed by Article 32.1. Also, the Panel
in the 1916 Antidumping Act case specified that footnote 24 does not affect the
conclusion that “when dealing with dumping as such, Members must comply with
Article VI of the GATT 1994 and the Anti-Dumping Agreement.”120 Therefore, the
distributions under the CDSOA, which are specific actions against dumping
or subsidy covered by Articles 18.1 and 32.1, would not fall within the scope of
footnotes 24 or 56. The United States cannot justify the distribution under the
CDSOA based on footnotes 24 and 56.
33. Please provide an example of a "non-specific" action
against dumping.
4.743 A safeguard measure in accordance with Article XIX of GATT 1994 and the Agreement of Safeguard is an example of a non-specific action against dumping. A safeguard measure normally is taken in response to situations in which an unforeseen increase of imports causes serious injury or threat of serious injury to domestic industry. If Japan supposes a case in which dumping is one of the elements causing the serious injury or threat thereof, taking a safeguard measure may, as a result, have effects to address dumping. It is, however, not an action which is specifically addressed to dumping, because a safeguard measure is an action taken in response to the increase of imports that causes serious injury or threat of serious injury, and not in response to dumping.
4.744 As discussed in Japan's answer to Question 14, a Member has an obligation to review an offered undertaking, and may reject it only when it has a proper reason to reject it in all cases. A mere statement that the Member has a policy not to accept price undertakings is not sufficient to justify the rejection for the purpose of Article 8.3.
4.745 The answer is “yes” to both questions. The international law principle of good faith is a basis to consider whether a Member performs its obligations in compliance with specific provisions of the AD Agreement and the SCM Agreement. The Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”) provides that this dispute settlement system serves to clarify the existing provisions of WTO agreements covered by DSU121 “in accordance with customary rules of interpretation of public international law.”122 Article 17.6(ii) of the AD Agreement also provides that the provisions of the AD Agreement shall be interpreted in accordance with customary rules of interpretation of public international law. 4.746 Article 26 of the Vienna Convention on the Law of Treaties, which requires that parties perform every treaty in good faith, has been recognized by the Appellate Body as “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.”123 4.747 Further, Article 31 of the Convention requires that the treaty, such as the AD Agreement and the SCM Agreement, must be interpreted in good faith in accordance with the ordinary meaning to be given to the terms in the context of the treaty, and in the light of its object and purposes. 4.748 While the good faith performance is not an independent obligation explicitly provided in the WTO Agreement, the administration of national trade laws and regulations in a uniform, impartial and reasonable manner is a Member’s obligation explicitly provided in Article X:3(a) of GATT 1994. Not only must a Member’s anti-dumping laws and regulations conform with the AD Agreement, that Member must also perform its obligations under the AD Agreement in a uniform, impartial and reasonable manner. For example, 732(c)(4)(A) of the Tariff Act of 1930 of the United States, codified at 19 USC. § 1673a(c)(4)(A), provides the same 50 per cent and 25 per cent for industrial support tests as provided in Article 5.4 of the AD Agreement and Article 11.4 of SCM Agreement. The USG thus has an obligation to perform these tests in a uniform, impartial and reasonable manner.
4.749 In addition to Appellate Body’s findings quoted above, Japan wishes the Panel to take note of the following findings by Appellate Body and the Panel. The Appellate Body found that: 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. (para. 137). 4.750 These findings clarify that no other measures, including the hypothetical subsidy set forth in Question 3 above, are permissible response to dumping. The negotiation history of Article VI strengthens these findings, as the EC Panel Report notes in paragraphs 6.201 and 6.202.124
4.751 Japan does not find any arguments specifically addressing the hypothetical set forth in question 3. Nevertheless, Japan draws the Panel’s attention to the following paragraphs of Japan’s written submission to the Panel and to the Appellate Body in the 1916 Antidumping Act case, regarding Article 18.1 of the AD Agreement:
4.752 No, due to the finding of the Appellate Body in US-1916 Act, it is not possible. 4.753 No, the Appellate Body’s finding does not suggest this. This is because, as a matter of logic (given the Appellate Body’s interpretation in US-1916 Act (para. 122)), if an action is “in response to” dumping it is “against” dumping. The Appellate Body has interpreted “against” dumping to be “in response to situations presenting the constituent elements of ‘dumping’.”
4.754 The Byrd Amendment does not operate, i.e., it has no effect whatsoever, absent a finding by the US authorities that the constituent elements of dumping have been met. This finding is a necessary condition precedent for operation of the Byrd Amendment and, therefore, the “constituent elements of dumping” have been incorporated into the Byrd Amendment.
4.755 Yes, it would be inconsistent. In response to a finding that dumping or subsidization has occurred in the context of an anti-dumping or countervailing duty investigation, a Member is permitted only to apply the remedies set forth within the relevant agreement, i.e., offsetting duties not to exceed the amount of dumping or subsidy. In general, a Member may, of course, grant a subsidy if it wishes, so long as the subsidy is not inconsistent with the relevant provisions of GATT 1994 and the SCM Agreement.
4.756 Insofar as the domestic subsidy programme would be “in response to situations presenting the constituent elements of ‘dumping’” or subsidy, the programme would not be permissible.
4.757 With all due respect, the question is irrelevant because criminals are not in a competitive market with their victims. The relationship between a criminal and its victim is completely different from that which exists between imported and domestic goods, which compete in a marketplace day in and day out. Thus, a grant to a victim (or a fine or penalty against a criminal) does not have a similar effect – the two parties are not competing in a marketplace.
4.758 The situation set out in the question is, perhaps, even worse, because the payment would precede an actual finding that the constituent elements exist. (In essence, it would be a specific action against alleged dumping.) It also would act to advantage the petitioners vis-à-vis the allegedly dumped imports. In addition, it certainly would improperly bias the process in favor of petitioners, possibly violating Article 5.4 of the AD Agreement and Article 11.4 of the SCM Agreement. This said, if one were to strictly apply the Appellate Body’s analysis set forth at paragraph 122 of the US - 1916 Act report, because the measure would not follow a positive finding of dumping, it would not be a “specific action against dumping.”
4.759 No, the payments would not constitute specific action against dumping of exports, because they would have no impact whatsoever on the conditions of competition.
4.760 The payments would be a specific action against dumping under Article 18.1 insofar as the payments would be conditioned on affirmative findings of dumping, injury and causation.
4.761 Yes. In that case (which does not exist here), Article 5.4 would be violated, because US companies still would be spurred by the legislation to file and support petitions, which, absent the legislation, they would not support. The incentive would exist because each US company could not be certain that other US companies would file and support a petition.
4.762 A Member is not acting in good faith when it alters the economic climate so as to encourage trade remedy proceedings. The provisions (e.g., standing) were negotiated with a view toward existing economic incentives (merits of the case), not with a view toward the existing economic incentives, biased by a cash reward. In other words, had the negotiators considered cash rewards permissible, the thresholds likely would be much higher. Moreover, 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.” This requirement limits the investigations (and consequently the imposition of measures) to cases where the domestic industry – not a small subset of it – is interested in the imposition of WTO-consistent measures, not cash rewards. Note, also, that in this case, the Byrd Amendment acts to encourage proceedings under a regime (the US anti-dumping regime) which has been found to violate WTO obligations and has yet to be brought into conformance.
4.763 At best, yes. However, Article 5.4 obligates Members, not industries. Nonetheless, when a Member acts to encourage spurious petitions, the Member must also act to ensure that the support is for reasons of the investigation itself rather than the cash reward.
4.764 Yes, the producer’s interest in starting an investigation should arise from market considerations.
4.765 Where a producer would not support a petition absent the possibility of a cash reward, the producer cannot be said to “support” the petition under Article 5.4.
4.766 Yes. A Member has the authority to reject undertakings that are “impractical.” Whether an undertaking is impractical should be decided on a case-by-case basis, considering the context and relevant circumstances.
4.767 The provisions are not related. A Member has the
authority to grant a subsidy, as long as the subsidy complies with the relevant
WTO provisions. This is true regardless of whether the conditions for imposing
anti-dumping duties, countervailing duties or a safeguard measure exist.
33. Please provide an example of a "non-specific" action
against dumping.
4.768 In a situation in which the requirements for imposing either an anti-dumping duty or a safeguard measure are met, a Member might decide to impose a safeguard measure, complying with the relevant WTO provisions.
4.769 A Member might establish a general policy of not accepting undertakings with regard to imports from a country that does not accept undertakings under the same conditions.
4.770 Yes, absent the requirement of “good faith,” the WTO agreements are meaningless. “Good faith” is required for any agreement to have meaning. This has been confirmed by the Appellate Body in US – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R (24 July 2001), para. 101.
4.771 The panels and Appellate Body were focusing on whether any type of remedy, other than permitted duties, was acceptable. They concluded “no.”
4.772 The Appellate Body‘s finding in United States - Anti-Dumping Act of 1916 does not suggest that "specific action against dumping" is a subset of action "in response to" dumping. The Appellate Body carefully examined the meaning of the phrase "specific action against" and explicitly determined that a "specific action against dumping" is an action taken in response to situations presenting the constituent elements of dumping. In the light of the above finding, there is no basis and, therefore, it is not necessary to create a distinction between “against” and “in response to”.. Applying the test established by the Appellate Body, the Continued Dumping and Subsidy Offset Act of 2000 ("the Act") and its offsets are "in response to situations presenting the constituent elements of dumping". As such, they constitute "specific action against" dumping or subsidization. 4.773 In this dispute, it is not necessary for the Panel to determine definitively the universe of measures that could constitute "specific action against dumping" within the meaning of Articles 18.1 and 32.1. Mexico submits that, at a minimum, the phrase "specific action against" encompasses actions such as the Act and the offsets it distributes. 4.774 As regards paragraph 91 of the United States' first
written submission, even if one were to accept that it is possible for an action
to be "in response to" dumping or a subsidy, but not "against" dumping or a
subsidy, the action at issue in this dispute is undoubtedly "against" dumping or
a subsidy, even using the United States' narrow interpretation of the term
"against".
2. Please explain exactly how you see that the “constituent
elements of dumping” have been incorporated into the CDSOA.
4.775 In Mexico's view, Article 18.1 of the Anti-Dumping Agreement encompasses action that is taken in response to situations presenting the constituent elements of dumping. The Act and the offsets distributed under it are clearly "in response to situations presenting the constituent elements of dumping" or subsidization, because the distribution of offsets is an action that may be taken only when the constituent elements of dumping or subsidization are present. 4.776 Since no funds would be collected and distributed in the absence of an order based on findings of dumping or of subsidization, because the magnitude of the subsidies is linked to the magnitude of the anti-dumping and countervailing duties, the Act is an action in response to situations presenting the constituent elements of dumping (or a subsidy), and therefore constitutes a "specific action against" dumping (or a subsidy).
4.777 Yes. As described, such an action appears to be inconsistent with Articles 18.1 and 32.1 especially if the subsidies equal in magnitude the duties that would otherwise be payable. Irrespective of whether subsidization is in lieu of anti-dumping or countervailing measures or in addition to such measures, it is not a form of action that is authorized under Article VI of the GATT 1994 (as interpreted by the Anti-Dumping Agreement and the SCM Agreement) to respond to situations presenting the constituent elements of dumping or subsidization.
4.778 For the reasons explained in Mexico's reply to question
3 and in Mexico’s other submissions with respect to the meaning of the
expression "specific action against", the hypothetical programme and the
subsidies granted under it could constitute a "specific action against dumping"
or a subsidy.
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?
4.779 In the case of the United States – Anti-Dumping Act
of 1916, the Appellate Body found that the phrase “specific action against
dumping of exports” meant an action that is taken “in response to situations
presenting the constituent elements of dumping”. It is difficult to apply this
finding to the analogy suggested by the Panel. However, Mexico notes that a
victim compensation scheme differs from the CDSOA and its offsets in many
respects. For example, any payment under such a scheme does not directly and
systematically “offset” the crime committed. The payments and their amount
(irrespective of the source of the funds) may not be generated by crime in and
of itself.
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?
4.780 The hypothetical measure described in this question is distinguishable from the Act and its offsets in that the payment of $5,000 to petitioners does not appear caused by and linked to the existence of a finding or order of injurious dumping, nor is it linked to the magnitude of the anti-dumping or countervailing duties collected. As such, in the absence of other elements demonstrating that the payment can only be made where the constituent elements of dumping exist, it appears that the measure would not constitute a "specific action against" dumping.
4.781 In this hypothetical case, the linkages between the action and the dumping and subsidization are not defined. Accordingly, it is difficult to analyze whether it would amount to a specific action against dumping of exports without making further assumption. 4.782 Under the narrow interpretation of “against” proposed by the United States, arguably such an action would not be against dumped imports or the importers.
4.783 Based on the facts described in the question, the payments appear to constitute an action which may be taken only in response to situations presenting the constituent elements of dumping, and therefore would be "specific action against dumping".
4.784 Yes. It appears that under the hypothetical scenario raised by the Panel, an incentive distorting the functioning of the thresholds regarding standing and, therefore, the examination that the investigating authority is required to make in order to determine whether the application has been made "by or on behalf of the domestic industry" would still exist. The distorting incentive would remain, because it would be in the interest of producers to increase the likelihood that an investigation will take place (and therefore the likelihood that subsidies will be granted) by filing or supporting a petition.
4.785 The issue in this dispute is not whether the United States is providing an incentive for the use of a WTO-consistent remedy., Rather, it is whether the incentives that are being provided undermine the requirements of the Anti-Dumping and SCM Agreements. A Member cannot be characterized as acting "in good faith" if its actions undermine the agreements.
4.786 In this dispute the legal issue to be decided under Article 5.4 is not whether the support for an anti-dumping petition is "genuine" or whether the investigating authorities must examine what motivated domestic producers to support a petition. Rather, it is whether the United States has undermined its ability to make determinations in an objective manner when it rewards domestic producers that support the petition and, consequently, penalize those that do not. Distorting expression of support by the domestic industry by providing a new incentive to petition or support a petition is not compatible with the United States obligation to make determinations under Article 5.4 in an objective manner.
4.787 See the reply to question 11.
4.788 See the reply to question 11. In such a situation, a domestic producer’s expression of support is tainted. At the risk of placing their competitors in a more advantageous competitive position, domestic producers must indicate support for the petition.
4.789 Yes. Such a measure appears to violate Article 8.3 of the Anti-Dumping Agreement because it would make it impossible for the investigating authorities of the Member in question to conduct an objective investigation into whether price undertakings would be appropriate in any given case. Therefore, it would render Article 8.3 of the Anti-Dumping Agreement inutile.
4.790 The context of the phrase "in particular" makes it
clear that the reference to "benefits of concessions bound under Article II of
GATT 1994" can be interpreted as the chief type of "benefits accruing
directly or indirectly to other Members under GATT 1994" that are referenced in
paragraph (b). Under this interpretation, benefits under Article II would be
relevant to a paragraph (b) analysis "much more than in other cases" (i.e. much
more than the benefits accruing under other provisions of GATT 1994). However,
the nullification or impairment of benefits accruing under other articles of
GATT 1994 could still be subject to scrutiny under paragraph (b). The phrase "in
particular the benefits of concessions bound under Article II of GATT 1994"
simply presents the chief type of such nullification or impairment.
26. If a subsidy contained eligibility criteria or conditions
that were not "objective" within the meaning of footnote 2 to the SCM Agreement,
would it ipso facto be specific within the meaning of Article 2?
4.791 No. In contrast to paragraph (a) of Article 2.1,
paragraph (b) does not establish requirements for determining when specificity
exists. Rather, it elaborates on a situation where an allegation of specificity
is based on criteria or conditions established by the granting authority or by
the legislation pursuant to which the granting authority operates. In such a
situation, the defending Member can counter the allegation of specificity by
demonstrating that the requirements of paragraph (b) and footnote 2 have been
met.
27. Please explain further the basis for your view that, when
examining the issue of specificity, each offset should be treated as a "separate
and distinct subsidy".
4.792 The United States argues that the Act, in itself, is not specific. The appropriate question is not whether the Act is specific; rather, it is whether the subsidies conferred under the Act are specific. 4.793 Factually, the subsidies conferred by the Act can be distinguished from those conferred under a typical subsidy programme. In the case of the subsidies conferred by the CDSOA, there is no common pool of funds. Rather, discrete "special accounts" are established to fund each offset, which is linked to a specific anti-dumping or countervailing order or finding. Each of the special accounts is funded separately through the assessment and collection of anti-dumping and countervailing duties and the amount of the funds for each account is dependent on the magnitude of the duties assessed and collected under its respective finding or order. Finally, recipients eligible for offsets paid from one special account are not eligible for offsets paid from another special account unless they meet the eligibility requirements for that account. Consequently, the structure and architecture of the Act creates a series of separate and distinct subsidies. 4.794 Legally, this means that the "financial contribution"
and the "benefit" associated with each special account (i.e. with each offset)
are separate and distinct. In other words, each special account or offset
constitutes a separate and distinct subsidy within the meaning of Article 1.1.
28. Mexico advances a number of arguments in support of its
claim that the CDSOA causes non-violation nullification or impairment. Would
Mexico rely on the same arguments to demonstrate non-violation nullification or
impairment in respect of a programme under which the grant of a subsidy is not
contingent on a demonstration of the constituent elements of dumping or
subsidization?
4.795 The basic approach to providing non-violation nullification or impairment would also be applicable generally to nullification or impairment claims pertaining to subsidies. That is, nullification or impairment can be proven based on the design, structure and architecture of the subsidy in question. 4.796 What could differ in the case of non-violation nullification or impairment claims relating to a subsidy that is not linked to the existence of dumping or subsidization is the benefits accruing directly or indirectly under the GATT 1994 which are claimed to have been nullified or impaired. 4.797 In this dispute, the systematic and direct linkage
between dumping and subsidization, the collection of anti-dumping and
countervailing duties and the conferral of subsidies to eligible recipients
creates the nullification or impairment of the benefits accruing to Mexico under
Articles II and VI of the GATT 1994. The arguments underpinning this
nullification or impairment may not be relevant to the challenge of another type
of subsidy.
29. The Oilseeds Panel asserted that countries "must … be
assumed to base their tariff negotiations on the expectation that the price
effect of the tariff concessions will not be systematically offset". That Panel
further asserted that "[a]t issue in the case before it are product-specific
subsidies that protect producers completely from the movement of prices for
imports and thereby prevent tariff concessions from having any impact on
the competitive relationship between domestic and imported oilseeds" (underline
supplied). To what extent, if any, does the CDSOA "systematically offset" the
price effects of tariff concessions granted by the US to Mexico? Please explain.
To what extent, if any, does the CDSOA provide for "product-specific subsidies
that … prevent tariff concessions from having any impact on the
competitive relationship between domestic and imported" (underline supplied)
products? Please explain.
4.798 This question raises two issues: (i) whether the nullification or impairment of a benefit or concession must be 100 per cent (i.e. prevent tariff concessions from having any impact); (ii) the nature of the nullification or impairment caused by the Act. 4.799 Regarding the first of these issues, in the Follow-up on the Panel Report in the case European Economic Community – Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins (BISD 39S/91) (Oilseeds II), it was established that non-violation nullification or impairment can occur in situations where the impairment of the benefit is less than 100 per cent. The key consideration is a “systemic offsetting” of a legitimately expected competitive relationship. 4.800 Regarding the second issue, Mexico is not arguing that the legitimately expected competitive relationship solely accrues from or is being defined by the tariff concessions under Article II of the GATT 1994 (as was the case in Oilseeds I and II). Factually, the competitive relationship at issue is that which is legitimately expected by Mexico when anti-dumping or countervailing duties have been imposed against exports of Mexican products. Legally, the benefits defining this relationship accrue to Mexico from Articles II and VI of the GATT. This is explained in paragraphs 80 to 83 of Mexico's first written submission. 4.801 The systematic nature of the nullification or impairment of the competitive relationship legitimately expected by Mexico arises from the methodical and regular way the subsidies conferred under the CDSOA upset that competitive relationship. As a result of those subsidies, Articles II and VI of the GATT 1994 no longer limit the adverse impact on the expected competitive relationship arising from the application of the anti-dumping and countervailing duties. The benefits accruing from these provisions are manifestly impaired.
4.802 Article XVI does not refer to the positive act of
subsidization. In other words, there is no textual basis for the position that
the subsidy could occur “under” Article XVI.
33. Please provide an example of a "non-specific" action
against dumping.
4.803 The provision of restructuring support to an industry that is facing difficulties and that is being adversely affected by dumped exports where that support is not contingent upon a finding of dumping. In such a situation, the restructuring support is not a specific action against dumping because it is not an action that may be taken only when the constituent elements of dumping are present.
4.804 Two examples would be anti-trust concerns and circumvention concerns related to the undertakings.
4.805 No. The two mentioned Agreements do not impose an independent obligation on WTO Members to act in good faith. However, this does not mean that the principle of good faith is irrelevant. Pursuant to Article 3.2 of the DSU, this principle applies to the interpretation of WTO Agreements, and consequently, to the interpretation, implementation and application of the Agreements by WTO Members.
4.806 Mexico takes the view that there is nothing in the reports of the Panel or the Appellate Body in the US - 1916 Act to suggest that the Panel or the Appellate Body considered the "pure subsidy hypothetical" set forth in question 3.
4.807 No. The "subsidy hypothetical" established in question 3 was not discussed in the submissions made by Mexico during these proceedings.
4.808 With respect to the Panel’s question concerning whether specific action is "against" dumping or subsidization if it is applied to the exporter and is burdensome, the answer of the United States is yes. Articles 18.1 and 32.1 of the Antidumping and SCM Agreements, respectively, concern the type of action taken against dumping or subsidization. As a practical matter, imported goods are produced, exported, and imported by foreign producers, exporters, and importers. Therefore, specific action could be applied to an exporter of a dumped or subsidized import. CDSOA cannot be specific action against dumping or subsidization because it does not (1) authorize action in response to the constituent elements of dumping or subsidization, or (2) apply to and burden imports or their importers, foreign producers, or exporters. 4.809 With respect to the Panel’s question of whether undertakings are specific action "against" dumping or subsidization, the United States recalls that the Appellate Body in United States – Anti-Dumping Act of 1916 explained that the permissible responses to dumping to definitive anti-dumping duties, provisional measures, and price undertakings. The three forms of action are, by definition, specific action against dumping or subsidization. Moreover, undertakings fall within the definition of specific action “against” dumping or subsidization because they (1) are action in response to the constituent elements of dumping or subsidization which can only be entered into with respect to conduct producing a preliminary affirmative determination of dumping or subsidization, and (2) apply to the exporter to limit its ability to export dumped or subsidized products to the importer, or apply to the government of the exporting Member to eliminate or limit the subsidy available to the exporter or take other measures concerning its effects. 4.810 With respect to the Panel’s question of whether severance of diplomatic relations would constitute action “against” dumping or subsidization, such action would not be action "against" dumping or subsidization because it would not apply to imports, or their importers, foreign producers, or exporters. 4.811 With respect to the Panel’s question on the meaning of the phrase “in particular” in Article 5(b) of the SCM Agreement, the phrase "in particular" is a transitional expression used throughout GATT 1994 and the SCM Agreement. The Oxford English Dictionary defines “in particular” as “as one of a number distinguished from the rest; especially” and “one by one, individually.” When used in Article 5(b), the phrase illustrates the meaning of the main phrase it modifies and suggests that tariff concessions under Article II are not the only negotiated benefit which can be nullified or impaired under GATT 1994. Regardless, Mexico has not proved any nullification or impairment of benefits accruing to it under any article of GATT 1994. 4.812 With respect to the Panel’s question concerning whether a subsidy would be ipso facto specific if it contained eligibility criteria or conditions that were not “objective,” Article 2 of the SCM Agreement contains progressive guidelines for the determination of whether a programme is specific or non-specific. Article 2.1(b) describes subsidies that are not specific under Article 2. The fact that a subsidy does not meet the description in Article 2.1(b), however, does not mean that it is therefore deemed specific. 4.813 With respect to the Panel’s question concerning how the criteria for CDSOA eligibility are economic in nature, the term "economic" is defined by the New Shorter Oxford Dictionary as "relating to monetary consideration, financial" and "relating to the management of private, domestic, etc., finances." This definition provides support for a broad interpretation of the term “economic” that encompasses the inclusion of any government or private action related to monetary or financial concerns (e.g. production, consumption, distribution or other such factors). The plain language of footnote 2 and the negotiating history support a broad interpretation of criteria that are "economic in nature." The criteria for receiving CDSOA distributions are within the rubric of the term “economic.” First, in supporting a petition, domestic producers act to protect monetary and financial concerns in a market where they are experiencing unfair competition. Second, the requirement that the producer remain in operation is also based on monetary and financial considerations because by remaining in business, a company deals with those monetary and financial concerns of maintaining profitability and viability in the market. Third, the qualifying expenditures are economic in nature as they relate to operating and production costs. 4.814 With respect to the Panel’s question concerning whether a subsidy would be de jure or de facto specific if it were rendered specific because of eligibility requirements that were not objective, the United States points out that a subsidy is not necessarily specific by virtue of the presence of non-objective criteria. A showing of specificity must still be made under Article 2.1(a) or 2.1(c). Assuming argendo that presence of non-objective criteria makes a subsidy specific, it would not be possible to determine whether it would be de jure or de facto specific without more information about the law. If the law explicitly limited the availability of the subsidy, it would be de jure specific. If it, in practice, limited the subsidy to certain enterprises, it would be de facto specific. 4.815 Concerning the Panel’s request to consider the Appellate Body’s statement in Canada-Autos at para. 100, the request pre-supposes that the discussion in Canada – Autos has relevance to the issue of specificity. The Canada – Autos discussion, however, is not instructive because there is a crucial difference between the specificity provisions of Article 2.1 and the export contingency provisions of Article 3. Article 2.1(a), the "de jure" provision of specificity, states that a subsidy is specific if it "explicitly" limits access to a subsidy. "Explicitly," even under the most relaxed definition, must mean at least that the limitation to certain enterprises must be evident on the face of the legislation. Article 3.1(a), however, does not use the term "explicitly," and, as interpreted by Canada – Autos, could include situations where the underlying legal instrument does not provide expressis verbis, but implicitly, that the subsidy is contingent upon exportation. The use of word "explicitly" in Article 2.1(a) precludes identification of a subsidy as being specific based upon the hypothetical operation of the law rather than the actual words of the law. 4.816 With respect to the Panel’s question of whether imposing sanctions for failure to support a petition would violate AD Agreement Article 5.4, it is difficult to answer this hypothetical question without complete facts, but do not see why it would violate Article 5.4. 4.817 With respect to the Panel’s question of whether the United States has changed the manner in which it performs its assessment of standing as a result of the CDSOA, the answer is no. 4.818 With respect to the Panel’s question concerning the meaning of the Statement of Administration Policy issued on 11 October 2000 referring to "significant concerns regarding the ... consistency with [US] trade policy objectives" of the CDSOA, the US Administration has changed since issuance of the statement. The current Administration cannot detail the “significant concerns” of the prior Administration as that Administration did not memorialize them. 4.819 Concerning the Panel’s request for comment on the EC’s statement that it would be important to know how many undertakings were rejected or not offered in the first place because of industry opposition, the US government could not possibly know how many undertakings were not offered in the first place because of opposition by the domestic industry and does not regularly maintain information concerning the number of undertakings rejected. The United States notes that it provided information concerning suspension agreements effective August 2001 (based on information available on the Department of Commerce website and in its public files) in Exhibit 7 of its First Written Submission. It is the complaining parties who assert that the CDSOA has a particular effect on undertakings and therefore it is their burden to demonstrate that effect. 4.820 Concerning the Panel’s request for comment on concerns raised by Indonesia and other complaining parties about the impact of the CDSOA on developing countries, the United States notes that Article 15 of the Antidumping Agreement is not within this Panel's terms of reference, as it was not identified in any of the panel requests, and therefore cannot be entertained by the Panel. In any case, the United States continues to fulfill its Article 15 "best efforts" commitment. Article 15 only necessitates only that the developed countries "explore" constructive remedies before applying anti‑dumping duties. Indonesia's argument is a misplaced effort to rewrite other Antidumping Agreement provisions, or to insert substantive rules never accepted by negotiators. Moreover, the complaining parties have provided no evidence that the CDSOA will affect the administration of US laws governing undertakings; thus concerns that the CDSOA will somehow affect commitments under Article 15 are similarly unfounded. 4.821 With respect to the Panel’s question about the extent to which subsidization can be considered an action "under" Article XVI of GATT 1994, subsidies provided to a Member’s domestic producer for any reason must be consistent with or, in other words, in accordance with GATT Article XVI. 4.822 With respect to the Panel’s request for an example of a "non-specific" action against dumping, non-specific action against dumping is an action covered by the terms of footnote 24 of the Antidumping Agreement. Non-specific action does not include action against dumping, as such, but would include action against the causes or effects of dumping. It is action, however, that does apply to dumped imports or the importer/exporter/foreign producer. One such example is a safeguard. 4.823 With respect to the Panel’s request for examples of the sort of "other reasons, including reasons of general policy" that Members might invoke under Article 8.3 of the AD Agreement, a Member might conclude that it already has enough undertakings in place and lacks the resources (or does not want to devote the resources) to properly monitor and administer additional undertakings. Or, a Member might consider that negotiating price commitments represents bad policy and that the only desirable form of anti-dumping measure is a duty equal to the full calculated margin of dumping. 4.824 With respect to the Panel’s question of whether a violation of the international law principle of good faith necessarily constitutes a violation of the WTO Agreement, a violation of the good faith principle cannot constitute a violation of the WTO Agreement without a violation of a particular obligation in the agreement. Appendix 1 to the DSU, which defines the covered agreements for purposes of the DSU, does not list an international law principle of good faith. Nor does the WTO distinguish between a breach of an agreement in good faith and a breach in bad faith – in either case it would be a breach of the agreement and would have the consequences provided in the WTO Agreement. Nor is it clear what is meant by a violation of the international law principle of good faith. 4.825 With respect to the Panel’s question of whether the AD Agreement or the WTO Agreement impose an independent obligation on Members to act in good faith, neither agreement nor any other provision of the WTO Agreement imposes an independent obligation on Members to act in good faith. Concerning the present case, there is no WTO provision requiring Members to judge the subjective motivations of domestic producers in supporting an anti-dumping or countervailing duty petition or opposing an undertaking. According to AD Article 5.4 and SCM Article 11.4, the United States is only obligated to meet certain numerical thresholds of domestic industry support before initiating an investigation. According to AD Article 8 and SCM Article 18, undertakings need not be accepted at all. Thus, even if the CDSOA did provide some motivation for domestic producers to support a petition or oppose an undertaking, it would not “threaten” action inconsistent with WTO obligations, or impede the United States from upholding its obligations in good faith under AD Articles 5.4 and 8 and SCM Articles 11.4 and 18. 4.826 With respect to the Panel’s question of whether there is anything in 1916 Act reports 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, there is nothing in the reports to suggest that they considered a subsidy hypothetical. The panels and Appellate Body in that case were concerned with the issue of whether or not civil and criminal penalties imposed on importers were specific action against dumping within the meaning of Article 18.1 of the Antidumping Agreement. 4.827 With respect to the Panel’s question about whether there was anything in the US submissions to the panel or Appellate Body in the 1916 Act proceedings that would have caused the panel or the Appellate Body to address the meaning of Article 18.1 of the AD Agreement in the context of the pure subsidy hypothetical set forth in question 3 above, the answer is no. 4.828 With respect to Chile’s question about the tax and accounting treatment given the money distributed under the CDSOA, the money distributed under the CDSOA is taxable income and should be reflected in the accounting books of the recipients as such. 4.829 With respect to what happens to the funds collected as a result of investigations initiated ex officio by the investigating authority, the US Customs Service has not specifically addressed this issue. The statute, however, states that the Commission shall forward to Customs a list of “petitioners and persons with respect to each order and finding and a list of persons that indicate support of the petition by letter or through questionnaire response.” Even if there is no “petitioner,” Customs will still receive a list of supporters identified by letters or through their questionnaire responses. The relevant letters and questionnaire responses are those filed in the “Commission’s record” or, in select cases, entries of appearances in administrative reviews conduced by the Commerce Department. 4.830 With respect to Chile’s question concerning how the “situation” of the industry investigated differs when in one “scenario” an order is imposed and in the second “scenario” an order is imposed, plus the domestic industry receives money collected on dumped or subsidized imports, it is not clear what is meant by “situation.” If the question intends to ask how the exporting industry is affected by the subsidy to the domestic industry, the answer will depend on the facts. In other words, the exporting industry may or may not be affected. 4.831 With respect to Chile’s question concerning how the “situation” of the domestic industry differs in the two “scenarios,” in the second, the domestic industry receives a subsidy. 4.832 With respect to Chile’s question concerning how the competitive relationship between the two industries differs in the two “scenarios,” the answer will depend on the facts of the case. 4.833 With respect to Chile’s question concerning the difference between the burden or liability to which the investigated industry is subject in the two “scenarios,” in the first scenario, the duty is imposed on the good being produced (or sold) by the exporting industry/foreign producer. Thus, a duty is an additional financial burden to the exporting industry. However, whether the exporting industry is financially burdened by a subsidy to the domestic industry (scenario two above) will depend on the facts. It may or may not be affected. 4.834 With respect to Chile’s question as to whether the CDSOA is an incentive for domestic producers to file or support anti-dumping petitions in order to have access to the “funds,” the CDSOA does not serve as a real incentive to file or support petitions. The costs of participating in an investigation for an industry, already materially injured or threatened with material injury, could be far greater than the disbursements received years later. Moreover, that a petition will result in an order is far from guaranteed and even if an order does result, payments, if any, received are contingent on a number of factors and remote in nature. The "promise" of a remote, uncertain and unknown payment is not an incentive to spend a million plus dollars without knowing whether an order will be issued, the amount of duties that may be collected, or the share of those duties to be received by the company. 4.835 With respect to Chile’s question concerning whether it would be irrational for a company to abstain from stating its position or to express opposition to an investigation, it may or may not be irrational, from an economic point of view, for a domestic producer to abstain from stating a position or expressing opposition in the remote chance of receiving distributions. 4.836 With respect to Chile’s question concerning how many price undertakings were rejected, the United States references its response to Question 23 from the Panel where it indicates that it does not keep information on undertakings that have been rejected.
4.837 With respect to the EC’s question about whether CDSOA offsets have the purpose described in the section of the CDSOA entitled “Findings,” the answer is no. The “findings” are not part of the law and, in any event, do not identify a purpose. If a purpose is not specifically identified in a law, the purpose of the law is reflected in the language of the law itself. Here, the CDSOA is intended to distribute funds to recipients that meet the criteria set forth in the Act. 4.838 With respect to the EC’s hypothetical concerning a monetary fine on domestic producers who do not support an application, this hypothetical is not before the Panel, and the United States believes it is more useful to focus on the measure at issue. Having said that, depending on the actual facts and application of such a measure, it might give rise to a claim of non-violation nullification or impairment. The United States does not see why it would breach Articles ADA 5.4 and SCM 11.4. 4.839 With respect to the EC’s question concerning whether Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement apply to dumping and subsidisation which do not involve imports into the territory of the Member taking the action, first, the premise of this question is incorrect. Articles 18.1 and 32.1 apply to specific action taken against dumping or a subsidy (not to “dumping or subsidization”). Second, Members do not take specific action against dumping or a subsidy which do not involve imports into their territory.
4.840 In its First Submission, Australia demonstrated that the Continued Dumping and Subsidy Offset Act of 2000 (“the Act”) is mandatory legislation that is inconsistent with provisions of the Anti-Dumping Agreement, the SCM Agreement, the GATT 1994 and the WTO Agreement. 4.841 Australia is of the view that the United States has not countered or refuted the prima facie case made by Australia in respect of any of its claims. In it second submission, Australia addresses the defensive arguments put forward by the United States. Australia will show that, contrary to the assertion by the United States that Australia has misunderstood the structure of the Act and the operation of United States trade laws,125 it is the United States which has misunderstood and/or ignored the essential elements of Australia’s case.
4.842 According to the United States:
4.843 In fact, what Australia has done is to ask the Panel to find that the Act is a specific action against dumping or a subsidy otherwise than in accordance with GATT 1994 as interpreted by the Anti-Dumping Agreement and/or the SCM Agreement, contrary to the obligations already accepted by the United States under those Agreements. The assertions by the United States are a clear misrepresentation of Australia’s case. Australia is not arguing that Members can’t distribute anti-dumping or countervailing duties otherwise than to the national treasury. There is nothing in the First Submission of Australia – or any other complainant – to suggest otherwise. Neither is Australia, nor any other complainant, asking the Panel to act ex aequo et bono. The United States has put forward voluminous material to refute arguments that have not been made. That material is not pertinent to this dispute. 4.844 Moreover, the United States recognises that “WTO Members have agreed to exercise their sovereignty according to their WTO Agreement commitments”128, and “Members are free to pursue their own domestic goals through spending so long as they do not do so in a way that violate commitments made in the WTO Agreement”129. Australia endorses these statements wholeheartedly. It is the precise nature of Members’ existing commitments under the WTO Agreement in relation to “specific action against dumping/a subsidy” that is at issue in this dispute. 4.845 The issue of restricting a Member’s sovereign right to appropriate lawful revenues ex aequo et bono simply does not arise in this dispute. Rather, this dispute concerns whether the United States is acting in a manner that violates commitments already made in the WTO Agreement.
4.846 Australia asserts that the United States argues that “because it does not mandate the imposition of anti-dumping or countervailing measures, or any other type of specific action against dumping or subsidies, on imports or their importers, the [Act] is not within the scope of GATT Article VI, or the various provisions of the Antidumping and SCM Agreements cited by the complaining parties”.130 The United States further argues that the Act “is simply a statute authorizing governmental payments”131 (emphasis in original). The United States then purports to apply the reasoning of the Appellate Body in US – 1916 AD Act to show that, because the offset payments under the Act are “not based upon” the constituent elements of dumping or a subsidy and because the Act is not an action “against” dumping or a subsidy, the Act does not constitute “specific action against dumping/a subsidy”.132 However, the United States’ arguments are unsustainable.
4.847 According to the United States, “Article VI and the Antidumping and SCM Agreements do not apply to the [Act] because it is not based upon the constituent elements of dumping or a subsidy”133 (emphasis added). It is not clear to Australia what the United States means by the phrase “not based upon”, or indeed the authority to which it refers for its interpretation of GATT Article VI and the Anti-Dumping and SCM Agreements. 4.848 In US – 1916 AD Act, the Appellate Body found that the phrase “specific action against dumping” is “action that is taken in response to situations presenting the constituent elements of dumping”134 (emphasis added). The Appellate Body did not say “that the phrase ‘specific action against dumping’ … meant ‘action that is taken in response to the constituent elements of dumping’ ”, notwithstanding the United States’ repeated assertions otherwise.135 The Appellate Body’s finding clearly recognised that specific action against dumping is not limited to action against the constituent elements of dumping, but that it “encompass[es] action that may be taken only when the constituent elements of ‘dumping’ are present […]”136 (emphasis in original). It was in this context that the Appellate Body then found that “the constituent elements of ‘dumping’ are built into the essential elements of civil and criminal liability under the 1916 Act”.137 The Appellate Body’s findings in US – 1916 AD Act do not provide any support for the contention that Article VI and the Anti-Dumping and SCM Agreements are not applicable because the Act “is not based upon the constituent elements of dumping or a subsidy”. 4.849 Further, Australia argues, the United States contends that footnote 373 to the Panel Report in the EC complaint in US – 1916 AD Act confirms that “the scope of Article VI and the Antidumping Agreement extends to measures which address dumping as such” and that “dumping as such refers to action based upon the constituent elements of dumping”138 (emphases in original). However, it is clearly evident from the text of footnote 373 that the Panel was distinguishing “dumping as such” from “the effects of dumping” in considering the meaning of footnote 24 to Article 18.1 of the Anti-Dumping Agreement. Again, according to Australia, the United States’ contention is not in fact supported by the Panel’s findings. 4.850 The United States concludes that, because the Act is not based upon a test that includes the constituent elements of dumping or a subsidy, the Act does not address dumping or subsidisation as such and is not within the scope of Article VI and the Anti-Dumping and SCM Agreements.139 However, Australia asserts, this conclusion ignores the fundamental fact that there must have existed 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. (Moreover, the United States’ argument also ignores that the availability of funds for disbursement as offset payments under the Act is conditional on continued dumping and subsidisation: if no anti-dumping or countervailing duties are collected, no payments are made.) In other words, a prerequisite for an offset payment under the Act is the existence of a situation presenting the constituent elements of dumping or a subsidy: an offset payment under the Act may be made only when the constituent elements of dumping or a subsidy are present.
4.851 According to the United States, “it is clearly possible for an action to be ‘in response to’ dumping or a subsidy but not be ‘against’ dumping or a subsidy”.140 The United States also contends that “to consider a specific action as ‘against’ dumping or subsidization, the action must apply to the imported good or the importer, and it must be burdensome”.141 Again, however, these arguments are not sustainable in a number of respects. 4.852 Firstly, Australia argues that the United States 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. 4.853 Secondly, in the view of Australia, the United States ignores 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 to 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 GATT Article VI as interpreted by the Anti-Dumping and SCM Agreements in accordance with the customary rules of interpretation of public international law. 4.854 Thirdly, Australia submits, the United States’ arguments are premised on the repeated misquotation of the Appellate Body’s findings in US – 1916 AD Act that “specific action against dumping” is ‘action that is taken in response to the constituent elements of dumping’.142 4.855 Fourthly, according to Australia , the United States bases this argument on selective dictionary meanings of the word “against”: it asserts that “the ordinary meaning suggests that the specific action therefore must be in ‘hostile opposition to’ dumping/subsidization, and must ‘come into contact with’ dumping/subsidization”.143 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”.144 Moreover, none of these meanings, including those put forward by the United States, compel the conclusion that a specific action “against” dumping or subsidisation must apply exclusively to the imported good or to the importer, and must be burdensome to those goods or importers. 4.856 Fifthly, Australia posits that the United States’ argument is premised on meanings of “dumping” and “a subsidy” that have no basis in the relevant texts. Article 18.1 of the Anti-Dumping Agreement 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”, “against the dumpers of exports” or “against the importers of dumped goods” not in accordance with GATT 1994. Similarly, Article 32.1 of the SCM Agreement proscribes specific action “against a subsidy” not in accordance with GATT 1994. It does not proscribe specific action “against subsidised exports” or “against importers of subsidised goods” not in accordance with GATT 1994. The United States is in effect arguing that the Panel should create new rights and obligations under GATT 1994, the Anti-Dumping Agreement and the SCM Agreement or, in other words, act ex aequo et bono. To read the distinctions requested by the United States into the words of Articles 18.1 and 32.1 would not give the words their ordinary meaning in their context and in light of the object and purpose of the Anti-Dumping Agreement, the SCM Agreement and the GATT,145 and would be contrary to the Panel’s obligation to clarify the provisions in accordance with the customary rules of interpretation of public international law as required by Article 3.2 of the DSU. 4.857 Finally, it is the opinion of Australia that the United States ignores that the offset payments are likely to precipitate changed behaviour on the part of the producers and importers of dumped or subsidised goods, as well on the part of domestic producers, thereby altering the competitive relationship between imported goods and the domestic like products in ways not contemplated by GATT 1994 or the Anti-Dumping or SCM Agreements. (Moreover, the competitive relationship with goods that have not been found to be dumped or subsidised is also likely to be altered.) Thus, it cannot be said that the Act imposes no burden or liability on imported dumped or subsidised goods. 4.858 Contrary to assertions by the United States,146 Australia has not argued that the offset payments under the Act constitute a specific action against dumping or subsidisation because they are paid directly from anti-dumping or countervailing duties. Rather, Australia has argued that the offset payments constitute specific action against dumping or subsidisation because they are conditional on the existence of situations presenting the constituent elements of dumping: they are payments that may be made only when the constituent elements of dumping or a subsidy are present. 4.859 The United States further argues that the “intent” of the law is the sole basis for Australia’s claim that the Act is a specific action against dumping and subsidisation.147 Australia argues that once again, however, the United States has ignored the essential element of Australia’s argument: that the Title of the Act and the accompanying Findings of Congress confirm that the Act is, and was intended to be, specific action against dumping/a subsidy.148 The Act is a “specific action against dumping/a subsidy” on the basis of the substantive provisions of the Act: payments under the Act may be made only when the constituent elements of dumping and subsidisation are present. 4.860 Australia considers that the United States has presented an argument that has no basis in either the texts of GATT 1994, the Anti-Dumping or SCM Agreements or in the clarifications of the relevant provisions provided by previous WTO jurisprudence.
4.861 The United States argues that, even if the Act is determined by the Panel to be “an action against dumping or a subsidy, footnotes 24 and 56 to Articles 18.1 and 32, respectively, operate to permit the [Act]”149 as action under another relevant GATT provision (GATT Article XVI).150 According to Australia, this argument, however, is unsustainable. 4.862 Australia argues that the footnotes to Articles 18.1 and 32.1 clarify the scope of those provisions: they do not create exceptions to that scope. As the Panel in US – 1916 AD Act found in response to the argument by the United States that footnote 24 does not lock a Member into levying anti-dumping duties when faced with a factual situation constituting injurious dumping and leaves the option of taking other measures that are in accordance with the GATT 1994:
4.863 The Panel’s reasoning is equally applicable in the present case. To accept the United States’ argument that offset payments under the Act are permitted by footnotes 24 and 56 would be to reduce the prohibition in Articles 18.1 and 32.1 on “specific action against dumping/a subsidy” otherwise than in accordance with GATT 1994 to inutility and redundancy. This of course the Panel may not do.152 4.864 Moreover, Australia submits, GATT Article XVI cannot be an “other relevant provision of GATT 1994” within the meaning of footnote 56, as 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. In US – 1916 AD Act, the Appellate Body found that the provisions of the GATT 1994 “interpreted” by the Anti-Dumping Agreement were those provisions of GATT Article VI concerning dumping, and that the “other relevant provisions of GATT 1994” in footnote 24 “can only refer to provisions other than the provisions of Article VI concerning dumping”.153 By the same rationale, the other relevant provisions of GATT 1994 in footnote 56 can only refer to provisions other than the provisions of Article VI concerning countervailing duties and Article XVI. 4.865 The United States itself said: “In sum, the ordinary meaning of the phrase ‘not intended to preclude action under other relevant provisions of GATT 1994’ in footnotes 24 and 56 is to permit action involving dumping or subsidies (but not specifically against) that is consistent with GATT provisions other than GATT Article VI”154 (emphasis added). Australia agrees. It is the scope of “specific action against dumping/a subsidy” that is the issue and this has already been clarified by the Appellate Body. 4.866 The fact that the offset payments under the Act might not be inconsistent with GATT Article XVI – an issue which need not be addressed here – is irrelevant. For so long as the Act constitutes “specific action against dumping/a subsidy”, that is, action that may be taken only when the constituent elements of dumping are present, it will be inconsistent with Articles 18.1 and 32.1.
4.867 Australia does not intend to pursue further arguments in relation to Articles 4.10 and 7.9 of the SCM Agreement.
4.868 Australia is of the view that the arguments of the United States that the Act is not within the scope of GATT Article VI or the provisions of the Anti-Dumping and SCM Agreements at issue in this dispute and that the Act is simply a government payment programme are without merit. The Act is a clear and systematic extension of the United States’ statutory framework for the imposition of anti-dumping and countervailing duties. Offset payments under the Act are conditional, inter alia, on findings that there exist situations presenting the constituent elements of dumping or a subsidy. The Act is a “specific action against dumping/a subsidy” within the meaning of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement respectively that is not in accordance with the provisions of the GATT 1994 as interpreted by the Anti-Dumping/SCM Agreements.
4.869 In its First Submission, Australia argued that:
4.870 The United States has offered little to refute Australia’s argument. The United States says: “It is highly unlikely that the complaining parties could ever summon credible evidence that the [Act] has distorted the decisions of companies in supporting petitions … To establish such distortion, the complaining parties would have to show that, ‘but for’ the distributions, domestic producers would not otherwise have filed a petition or supported an investigation, and that the participation of those producers was necessary to establish standing in that investigation”.155 4.871 Australia asserts that the United States’ view of what is necessary to establish distortion of domestic producer decisions cannot be correct. If it were, it would mean that the United States could enact legislation – to the opposite effect of what it has done – imposing substantial monetary penalties on domestic producers who do not support an investigation. Yet in such circumstances it would never be possible to “summon credible evidence” – as defined by the United States – to demonstrate that such legislation has distorted the decisions of companies. 4.872 The United States also argues that it is generally irrational for domestic producers to oppose relief.156 However, Australia is of the view that there could well be occasions when it will be perfectly rational that at least some domestic producers will not support, or will oppose, relief, for example, if a domestic producer considered that a domestic competitor would be likely to receive a higher offset payment and thus gain a financial advantage. 4.873 The United States further argues “it is rare for domestic producers in the United States not to have sufficient industry support in filing anti-dumping or countervailing duty petitions. … Thus, if there is sufficient support anyway, it cannot be said that the [Act] will affect the number of cases meeting the thresholds of Articles 5.4 and 11.4, even if such an increase could constitute a breach of those articles”157 (emphasis added). 4.874 However, according to Australia, the mere possibility that the Act could distort the requirement that an application be made “by or on behalf of the domestic industry” in any circumstances must be a breach of those Articles, notwithstanding that the incidence of insufficient industry support for an investigation is rare. 4.875 In US – Section 301, the Panel found that “the good faith requirement in the Vienna Convention suggests, thus, that a promise to have recourse to and abide by the rules and procedures of the DSU, also in one’s legislation, includes the undertaking to refrain from adopting national laws which threaten prohibited conduct”.158 Australia is of the view that this finding is equally applicable to the current dispute. The principle of good faith “that informs the provisions of the Anti-Dumping Agreement, as well as the other covered agreements”159 suggests that a promise to apply anti-dumping measures “only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated […] and conducted in accordance with the provisions of”160 the Anti-Dumping Agreement includes the undertaking to refrain from adopting national laws which threaten prohibited conduct. 4.876 Australia considers that also pertinent to this dispute is the Appellate Body’s statement in US – Hot-Rolled Steel, in relation to Article 3.1 of the Anti-Dumping Agreement, that “investigating authorities are not entitled to conduct their investigation in such a way that it becomes more likely that, as a result of the fact-finding or evaluation process, they will determine that the domestic industry is injured”.161 It is Australia’s view that the situation in the current dispute is analogous: the United States cannot be entitled to enact legislation that makes it more likely that the needed levels of domestic industry support will be reached in any investigation.
4.877 For the reasons presented in its submission, Australia respectfully maintains its request that the Panel make the findings and recommendations set out at paragraphs 124-125 of its First Submission.
4.878 Brazil asserts that in the Oral Statement of the United States at the First Meeting of the Panel in United States - Continued Dumping and Subsidy Offset Act of 2000, the United States was unable to rebut any of the claims made by the complaining parties in this proceeding. The United States relies principally on the argument that the Continuing Dumping and Subsidy Offset Act of 2000162 (hereinafter the Byrd Amendment) is nothing more than a payment programme and, in the absence of specific WTO obligations with respect to the uses of the revenues from anti-dumping and countervailing duties, it should be viewed as any other payment programme of a government.163 Under this standard, the United States argues, “the disciplines relevant to government payment programmes are contained in the subsidies provisions of the SCM Agreement” and that the “relevant legal question is whether the CDSOA is a prohibited subsidy.”164 4.879 In fact, Brazil is of the view that the relevant legal question is whether the Byrd Amendment payments constitute “specific action against dumping” under Article 18.1 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (hereinafter “AD Agreement”) which is not “in accordance with the provisions of GATT 1994” as interpreted by the AD Agreement. The kind of payments under the Byrd Amendment clearly are not among the actions specified in the AD and SCM Agreements – anti-dumping or countervailing duties, provisional measures, or undertakings. Consequently, if these payments are specific action against dumping they are not in accordance with the GATT 1994, as interpreted by these Agreements. 4.880 Brazil asserts that the United States can only prevail in this proceeding if it convinces the panel to ignore the direct relationship between the Byrd Amendment payments and the dumping and subsidization against which the United States is permitted to take specific measures under the AD and SCM Agreements. The linkages, however, are abundantly clear and include the following:
4.881 Brazil argues that the Byrd Amendment provides that companies which successfully petition for the imposition of anti-dumping or countervailing duties will receive not only the protection that the imposition of these duties affords but also the revenues collected as a result of these duties. 4.882 Brazil's submission will not seek to review the arguments already made by Brazil or to address each and every argument relied upon by the United States. Rather, the submission will be limited to addressing the deficiencies in the principal US arguments as presented in its oral statement on 5 February.
4.883 Brazil asserts that the United States argues that the complaining parties are seeking to expand existing obligations under the covered agreements contrary to Article 19.2 of the Understanding on the Rules and Procedures Governing the Settlement of Disputes (hereinafter DSU). This argument is based on the assertion by the United States that there is “no WTO obligation with respect to the uses to which anti-dumping and countervailing duties might be put, or to distinguish the use of these funds from any other source of government revenue.”165 As with most of the US argumentation, this argument misses the point. 4.884 According to Brazil, while the AD Agreement does not restrict the uses to which anti-dumping duties can be applied once collected, the AD Agreement does contain very specific language in Article 18.1 that prohibits specific action against dumping except in accordance with the GATT 1994 and the AD Agreement. By rewarding the parties requesting the anti-dumping duties with the disbursement of the revenues from those duties under Byrd Amendment, the United States is contravening its WTO obligations. They are contravening these obligations not because the AD Agreement or the GATT 1994 place limitations on how the revenues from anti-dumping duties may be spent, but because the AD Agreement and GATT 1994 place limitations on the actions which may be taken against dumping. 4.885 Thus, Brazil argues, the complaining parties in this proceeding are not seeking to impose any new or additional obligations on Members, rather they are simply seeking to enforce the existing obligations under Article 18.1 of the AD Agreement consistent with the findings of the panel and Appellate Body in United States - Antidumping Act of 1916.166 (hereinafter the “1916 Act”) The obligations at issue are the restrictions on actions against dumping. Whether and how the United States uses the revenues collected from anti-dumping duties is only relevant in the context of whether they are being used for actions against dumping.
4.886 The United States makes much of the fact that no party has claimed that the payments under the Byrd Amendment constitute prohibited subsidies under the SCM Agreement and that only Mexico has made a claim that these payments are actionable subsidies.167 The US rationale is that the disciplines governing payment programmes are contained in the subsidies provisions of the SCM Agreement.168 Brazil asserts that again, the US argument misses the point and should be dismissed as irrelevant. 4.887 According to Brazil, the complaining parties, with the exception of Mexico, did not base their complaint on the issue of whether the Byrd Amendment payments constitute actionable subsidies for a very simple reason: the panel does not need to reach this issue to find the US in violation of its WTO obligations. Again, the US tries to confuse the issue. The issue is not whether there are constraints on how the US spends the revenues from anti-dumping and countervailing duties, but whether rewarding US parties that have supported the imposition of these duties by disbursing the revenues from the duties to these parties is a specific action against dumping or subsidization not authorized under the relevant agreements. 4.888 Thus, Brazil argues, the US discussion of whether the Byrd Amendment payments are actionable subsidies under Article 5 of the SCM Agreement is simply not relevant to the claims under Articles 18.1 and 32.1 of the AD and SCM Agreements respectively. While these payments may be actionable subsidies and may cause adverse effects, this question is wholly independent of the question of whether they constitute specific action against dumping and subsidization.
Contrary to the United States arguments, the relevant question is not whether the Byrd Amendment payments are imposed on imports or importers, but whether they are specific actions against dumping and subsidization, namely actions to “offset or prevent” dumping 4.889 The US claims that the Byrd Amendment payments are not specific actions against dumping and subsidization because they do not “impose any type of measure on imports or importers.”169 The primary basis of this argument is an obscure definition of the word “against” which the US claims indicates that the specific action must be “in hostile opposition to and in contact with dumping or subsidy.”170 To support its position, the United States attempts to read into the relevant agreements, language and definitions that are without merit. 4.890 Brazil asserts that according to Article VI:2 of the GATT 1994, anti-dumping duties are intended to “offset or prevent” dumping. The specific actions permitted to “offset or prevent” dumping are provided for in Articles 7, 8 and 9 of the AD Agreement, specifically provisional measures, anti-dumping duties and price undertakings. Other actions to “offset or prevent” dumping are not permitted under Article 18.1 of the AD Agreement. Thus, the relevant question is not whether the Byrd Amendment constitutes action against imports or importers or even whether the action is in hostile opposition to or in contact with the dumping and subsidy. The relevant question is whether the Byrd Amendment payments constitute specific action to offset or prevent dumping and subsidization. 4.891 Brazil is of the view that the US attempt to read into the language “specific action against dumping” a limitation which defines specific action as action against imports or importers is specifically contradicted by the text, which places no such limitation on actions against dumping, and confirmed by prior panel and Appellate Body decisions. Specifically, the panel report in 1916 Act defined the relevant measures as “measures to counteract dumping.”171 The Appellate Body referenced “any action…against dumping of exports.”172 Neither imposed any limitation in terms of actions imposed upon imports or importers. Rather, according to the Appellate Body, “specific actions against dumping” include “any…action that is taken in response to situations presenting the constituent elements of ‘dumping’.”173 The Byrd Amendment payments are specific action against dumping 4.892 The United States argues, “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.”174 The United States then argues that “the Panel must look at what the law does, not what its policy purpose is” and urges the panel to reject any consideration of the purpose of the Byrd Amendment.175 The US then makes its most sweeping characterization, stating that the “CDSOA has nothing to do with imported goods or importers.”176 4.893 Brazil asserts that in fact, the relevant inquiry as articulated by the Appellate Body in 1916 Act is whether the action is taken in response to situations presenting the constituent elements of dumping.177 There is no question that the Byrd Amendment mandates an action, specifically the distribution of anti-dumping and countervailing duty revenues to domestic parties that supported the request for the imposition of those duties. 4.894 Is this action “in response to situations presenting the constituent elements of dumping”, Brazil asks? Since the Byrd Amendment payments are only available when an anti-dumping or countervailing duty order is in place, are only available to parties that supported the request for the imposition of those duties; and are only available when specific products are dumped or subsidized and imported into the United States, Brazil finds it is difficult to see how these payments are not in response to a situation presenting the constituent elements of dumping. Indeed, the existence of the constituent elements of dumping is a condition precedent to any payments. 4.895 Brazil asserts that it is true that one could have a situation where payments were triggered by the collection of an anti-dumping or countervailing duty, but the payments are neither “in response to” or “against” dumping. The US flag example is one such situation. Thus, the limitation does not apply to actions that are not against dumping or in response to dumping, but only conditioned on there being revenues from dumping duties. As is clear from Article VI:2, actions against dumping or in response to dumping are actions which seek to “offset or prevent” dumping. Thus, the question is whether the payments under the Byrd Amendment are actions which “offset or prevent” dumping. 4.896 According to Brazil, while the plain language in a statute as to its purpose and the statements of its sponsors as to its purpose may not always be conclusive as to the actual purpose, they certainly are relevant in any evaluation. The United States would have the panel believe that the purpose, both intended and actual, of the Byrd Amendment is a great mystery. However, the purpose is articulated in the title of the legislation itself – the Continued Dumping and Subsidy Offset Act. Thus, the title clearly would lead one to believe that the purpose of the legislation is to “offset” continued dumping and subsidization. 4.897 Similarly, the legislation’s sponsors supported its passage because it would allow parties adversely affected by dumpi |
