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WORLD TRADE
ORGANIZATION

WT/DS221/R
15 July 2002

(02-3841)

  Original: English

UNITED STATES - SECTION 129(c)(1) OF THE
URUGUAY ROUND AGREEMENTS ACT
 


Report of the Panel



 

The report of the Panel on United States - Section 129(c)(1) of the Uruguay Round Agreements Act is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 15 July 2002 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/452). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.

Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.

TABLE OF CONTENTS

  1. PROCEDURAL BACKGROUND
     
  2. FACTUAL ASPECTS 
  1. SECTION 129 OF THE URAA
     
  2. THE RETROSPECTIVE DUTY ASSESSMENT SYSTEM OF THE UNITED STATES
  1. MAIN ARGUMENTS OF THE PARTIES
  1. CANADA 
  1. Introduction
     
  2. Description of Section 129(c)(1) of the URAA
     
  3. Section 129(c)(1) is Inconsistent with the United States' Obligations Under the AD Agreement, the SCM Agreement, Article VI of the GATT 1994 and Article XVI:4 of the WTO Agreement

(a) Antidumping Cases

(b) Subsidy Cases

  1. Section 129(c)(1) Mandates a Violation of the WTO Obligations of the United States
     
  2. The Principle of Prospective Compliance 
     
  3. Differences Between Prospective and Retrospective Duty Assessment Systems 
     
  4. Date of Definitive Duty Determination and Not Date of Entry of Imports is the Operative Date for Determining Compliance 
     
  5. Conclusion 
  1. UNITED STATES 
  1. Introduction
     
  2. Description of Section 129(c)(1) of the URAA 
     
  3. Canada Has Failed to Establish that Section 129(c)(1) Mandates Action Inconsistent with WTO Rules

(a) Canada Must Establish that Section 129(c)(1) Mandates Action that is Inconsistent with the United States' WTO Obligations

(b) The Meaning of Section 129(c)(1) Is a Factual Question That Must Be Answered by Applying US Principles of Statutory Interpretation 

(c) Canada Misinterprets What Section 129(c)(1) Actually Requires

(d) Conclusion

  1. Section 129(c)(1) Is Consistent with the DSU, Which Requires Prospective Remedies When a Measure is Found Inconsistent with WTO Obligations

(a) The Principle of Prospective Remedies in the Dispute Settlement Process

(i) Textual Analysis of the DSU 

(ii) Panel and Appellate Body Clarification of the DSU

(b) The Date of Entry is the Operative Date for Determining whether Relief is "Prospective" or "Retroactive" 

(i) Using the Date of Entry as the Basis for Implementation is Consistent with the AD and SCM Agreements 

(ii) Using the Date of Definitive Duty Determination as the Basis for Implementation Could Lead to Unexpected Results 

(c) There Should be No Distinction Between Members with Retrospective Duty Assessment Systems and Members with Prospective Duty Assessment Systems 

(i) Canada's Position is Based on Artificial Distinctions Between Retrospective Duty Systems and Prospective Duty Systems 

(ii) The WTO Obligations that Apply to Members with Retrospective and Prospective Systems are the Same 

(iii) Canada is Seeking to Create an Obligation for Members with Retrospective Systems to Provide a Retroactive Remedy in Cases Involving Antidumping and Countervailing Duty Measures 

(d) Conclusion

  1. Conclusion 
  1. MAIN ARGUMENTS OF THE THIRD PARTIES 
  1. EUROPEAN COMMUNITIES 
  1. The principle of prospective compliance 
     
  2. The temporal scope of the principle of prospective compliance 
  1. JAPAN 
  1. INTERIM REVIEW 
  1. BACKGROUND
     
  2. COMMENTS BY CANADA
  1. Terms of reference
     
  2. Burden of proof
  1. COMMENTS BY THE UNITED STATES
  1. FINDINGS
  1. MEASURE AT ISSUE 
     
  2. CLAIMS AND ARGUMENTS OF THE PARTIES AND ANALYTICAL APPROACH OF THE PANEL 
  1. Arguments of the parties 
     
  2. Evaluation by the Panel
  1. CANADA'S PRINCIPAL CLAIMS 
  1. Actions identified by Canada as required and/or precluded by section 129(c)(1) 
     
  2. Meaning and scope of section 129(c)(1)

(a) Examination of the URAA 

(b) Examination of section 129(c)(1) as interpreted by the SAA

(i) Arguments of the parties 

(ii) Evaluation by the Panel 

  1. Whether section 129(c)(1) requires and/or precludes any of the actions identified by Canada 
     
  2. Whether section 129(c)(1) has the effect of requiring and/or precluding any of the actions identified by Canada

(a) Section 129(c)(1) as enacted

(i) Arguments of the parties

(ii) Evaluation by the Panel

Methodology cases 

Revocation cases 

Conclusion 

(b) Statement of Administrative Action

(i) Arguments of the parties

(ii) Evaluation by the Panel

(c) Application of section 129(c)(1) to date 

(i) Arguments of the parties

(ii) Evaluation by the Panel

(d) Conclusion

  1. Whether section 129(c)(1) mandates the United States to take any of the actions and/or not to take any of the actions identified by Canada 
     
  2. Whether the actions identified by Canada, if taken or not taken, would infringe the WTO provisions that it has invoked 
     
  3. Overall conclusion with respect to Canada's principal claims
  1. CANADA'S CONSEQUENTIAL CLAIMS
  1. CONCLUSION 


I. PROCEDURAL BACKGROUND

1.1 On 17 January 2001 Canada requested consultations with the United States pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereafter the "DSU"), Article XXII of the General Agreement on Tariffs and Trade 1994 (hereafter the "GATT 1994"), Article 30 of the Agreement on Subsidies and Countervailing Measures (hereafter the "SCM Agreement") and Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereafter the "AD Agreement") regarding section 129(c)(1) of the US Uruguay Round Agreements Act (hereafter the "URAA")1 and the Statement of Administrative Action (hereafter the "SAA")2 accompanying the URAA.3

1.2 Consultations were held in Washington, D.C., on 1 March 2001, but did not lead to a mutually satisfactory resolution of the matter.

1.3 On 24 July 2001, Canada requested the Dispute Settlement Body (hereafter the "DSB") to establish a panel pursuant to Articles 4 and 6 of the DSU, Article XXIII of the the GATT 1994, Article 30 of the SCM Agreement and Article 17 of the AD Agreement. Canada's panel request referenced only section 129(c)(1) of the URAA as the measure at issue. Canada claimed that section 129(c)(1) of the URAA is inconsistent with Articles VI:2, VI:3 and VI:6(a) of the the GATT 1994; Articles 10, 19.4, 21.1, 32.1 and 32.5 of the SCM Agreement; Articles 1, 9.3, 11.1, 18.1 and 18.4 of the AD Agreement; Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization (hereafter the "WTO Agreement"); and Articles 3.2, 3.7, 19.1, 21.1 and 21.3 of the DSU.4

1.4 At its meeting on 23 August 2001, the DSB established a panel pursuant to the request of Canada, in accordance with Article 6 of the DSU. The panel was established with standard terms of reference. The terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by Canada in document WT/DS221/4, the matter referred to the DSB by Canada in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.5

1.5 On 30 October 2001 the Panel was constituted as follows:

Chairperson: Ms. Claudia Orozco
Members:
Mr. Simon Farbenbloom
Mr. Edmond McGovern6

1.6 Chile, the European Communities, India and Japan reserved their rights to participate in the panel proceedings as a third party. The European Communities and Japan presented arguments to the Panel.

1.7 The Panel met with the parties on 18 and 19 February 2002 as well as on 26 March 2002. It met with the third parties on 19 February 2002. The Panel issued its interim report to the parties on 22 May 2002. The Panel issued its final report to the parties on 12 June 2002.

II. FACTUAL ASPECTS

2.1 This dispute concerns section 129(c)(1) of the URAA (hereafter "section 129(c)(1)").

2.2 This part of the Panel report reproduces relevant portions of section 129 of the URAA and, because section 129(c)(1) operates in the context of the US system of retrospective assessment of antidumping or countervailing duties, provides a description of the basic features of that system.

A. SECTION 129 OF THE URAA

2.3 Section 129 of the URAA is entitled "Administrative Action Following WTO Panel Reports". It has five subsections, viz., subsections (a) through (e). Subsections (a) through (d) are reproduced below in relevant part.7

(a) ACTION BY UNITED STATES INTERNATIONAL TRADE COMMISSION.-

(1) ADVISORY REPORT.- If a dispute settlement panel finds in an interim report under Article 15 of the Dispute Settlement Understanding, or the Appellate Body finds in a report under Article 17 of that Understanding, that an action by the International Trade Commission in connection with a particular proceeding is not in conformity with the obligations of the United States under the Antidumping Agreement, the Safeguards Agreement, or the Agreement on Subsidies and Countervailing Measures, the Trade Representative may request the Commission to issue an advisory report on whether title VII of the Tariff Act of 1930 or title II of the Trade Act of 1974, as the case may be, permits the Commission to take steps in connection with the particular proceeding that would render its action not inconsistent with the findings of the panel or the Appellate Body concerning those obligations. The Trade Representative shall notify the congressional committees of such request.

[…]

(4) COMMISSION DETERMINATION.- Not- withstanding any provision of the Tariff Act of 1930 or title II of the Trade Act of 1974, if a majority of the Commissioners issues an affirmative report under paragraph (1), the Commission, upon the written request of the Trade Representative, shall issue a determination in connection with the particular proceeding that would render the Commission's action described in paragraph (1) not inconsistent with the findings of the panel or Appellate Body. The Commission shall issue its determination not later than 120 days after the request from the Trade Representative is made.

(5) CONSULTATIONS ON IMPLEMENTATION OF COMMISSION DETERMINATION.- The Trade Representative shall consult with the congressional committees before the Commission's determination under paragraph (4) is implemented.

(6) REVOCATION OF ORDER.- If, by virtue of the Commission's determination under paragraph (4), an antidumping or countervailing duty order with respect to some or all of the imports that are subject to the action of the Commission described in paragraph (1) is no longer supported by an affirmative Commission determination under title VII of the Tariff Act of 1930 or this subsection, the Trade Representative may, after consulting with the congressional committees under paragraph (5), direct the administering authority to revoke the antidumping or countervailing duty order in whole or in part.

[…]

(b) ACTION BY ADMINISTERING AUTHORITY.-

(1) CONSULTATIONS WITH ADMINISTERING AUTHORITY AND CONGRESSIONAL COMMITTEES.- Promptly after a report by a dispute settlement panel or the Appellate Body is issued that contains findings that an action by the administering authority in a proceeding under title VII of the Tariff Act of 1930 is not in conformity with the obligations of the United States under the Antidumping Agreement or the Agreement on Subsidies and Countervailing Measures, the Trade Representative shall consult with the administering authority and the congressional committees on the matter.

(2) DETERMINATION BY ADMINISTERING AUTHORITY.- Notwithstanding any provision of the Tariff Act of 1930, the administering authority shall, within 180 days after receipt of a written request from the Trade Representative, issue a determination in connection with the particular proceeding that would render the administering authority's action described in paragraph (1) not inconsistent with the findings of the panel or the Appellate Body.

(3) CONSULTATIONS BEFORE IMPLE-MENTATION.- Before the administering authority implements any determination under paragraph (2), the Trade Representative shall consult with the administering authority and the congressional committees with respect to such determination.

(4) IMPLEMENTATION OF DETERMINATION.- The Trade Representative may, after consulting with the administering authority and the congressional committees under paragraph (3), direct the administering authority to implement, in whole or in part, the determination made under paragraph (2).

(c) EFFECTS OF DETERMINATIONS; NOTICE OF IMPLE-MENTATION.-

(1) EFFECTS OF DETERMINATIONS.- Determinations concerning title VII of the Tariff Act of 1930 that are implemented under this section shall apply with respect to unliquidated entries of the subject merchandise (as defined in section 771 of that Act) that are entered, or withdrawn from warehouse, for consumption on or after-

(A) in the case of a determination by the Commission under subsection (a)(4), the date on which the Trade Representative directs the administering authority under subsection (a)(6) to revoke an order pursuant to that determination, and

(B) in the case of a determination by the administering authority under subsection (b)(2), the date on which the Trade Representative directs the administering authority under subsection (b)(4) to implement that determination.

(2) NOTICE OF IMPLEMENTATION.-

(A) The administering authority shall publish in the Federal Register notice of the implementation of any determination made under this section with respect to title VII of the Tariff Act of 1930.

(B) The Trade Representative shall publish in the Federal Register notice of the implementation of any determination made under this section with respect to title II of the Trade Act of 1974.

(d) OPPORTUNITY FOR COMMENT BY INTERESTED PARTIES.- Prior to issuing a determination under this section, the administering authority or the Commission, as the case may be, shall provide interested parties with an opportunity to submit written comments and, in appropriate cases, may hold a hearing, with respect to the determination.8

2.4 Under Section 129, the United States Trade Representative (hereafter the "USTR") may request the US International Trade Commission (hereafter the "ITC") or the US Department of Commerce (hereafter the "Department of Commerce") to take action "not inconsistent" with a panel report only if such action is in accord with US antidumping or countervailing duty law.9 Section 129 does not apply in cases where implementation of an adverse DSB ruling requires a change in US antidumping or countervailing duty statutes.

B. THE RETROSPECTIVE DUTY ASSESSMENT SYSTEM OF THE UNITED STATES

2.5 In a US antidumping or countervailing duty investigation, the Department of Commerce determines whether the imports under investigation are being dumped or subsidized and the ITC determines whether the dumped or subsidized imports cause or threaten to cause material injury. If the final determinations of the Department of Commerce and the ITC establish that the imports under investigation are being dumped or subsidized and are causing (or threatening to cause) injury, the Department of Commerce issues an antidumping or countervailing duty order instructing the US Customs Service to (i) assess antidumping or countervailing duties on completion of a future administrative review and (ii) require the payment of a cash deposit of estimated duties on all future entries of the relevant product.10

2.6 The United States employs a "retrospective" duty assessment system under which definitive liability for antidumping or countervailing duties is determined after merchandise subject to an antidumping or countervailing duty measure enters the United States. The determination of definitive duty liability is made at the end of "administrative reviews" which are initiated by the Department of Commerce each year on request by an interested party (such as the foreign exporter or the US importer of the imports), beginning one year from the date of the order. In addition to calculating an assessment rate in respect of the entries under review, administrative reviews also determine the cash deposit rates for estimated antidumping or countervailing duties that will be required as a security on future entries, until subsequent administrative reviews are conducted with respect to those entries.

2.7 An administrative review entails a substantive legal and factual analysis of whether imports of the product during the period of review were dumped or subsidized and, if so, to what extent.11 The facts pertaining to entries during the period under review are investigated for the first time during an administrative review. The law applied in an administrative review is the law as interpreted by the Department of Commerce at the time that it makes its administrative review decision. The Department of Commerce's interpretation of the underlying antidumping or countervailing duty laws or regulations may be different from the interpretation it applied in the original investigation or in previous administrative reviews.

2.8 At the conclusion of the administrative review, the Department of Commerce instructs the US Customs Service to assess definitive antidumping and countervailing duties in accordance with the determination of the Department of Commerce. To the extent that the definitive duties owed are less than the level of the cash deposits paid as security, any excess plus interest is returned to the importer. To the extent that the definitive liability is greater than the cash deposits, the importer must pay that additional amount.

III. MAIN ARGUMENTS OF THE PARTIES

3.1 The main arguments, presented by the parties in their written submissions, oral statements, and in their written replies to written questions, are summarized below.

A. CANADA

3.2 This section summarizes the main arguments of Canada, i.e., the complaining party in this case.

1. Introduction

3.3 Canada considers that the measure at issue in this dispute -- section 129(c)(1) of the URAA -- is inconsistent with the obligations of the United States under Article VI of the GATT 1994, the AD Agreement, the SCM Agreement, and the WTO Agreement.

3.4 The effect of section 129(c)(1) on imports subject to potential duty liability requires an understanding of certain procedural aspects of the US system of antidumping and countervailing duty assessment. Accordingly, Canada first discusses the US duty assessment system in order to provide context for understanding section 129(c)(1). Canada subsequently addresses the operation and substantive requirements of section 129(c)(1).

2. Description of Section 129(c)(1) of the URAA

3.5 Section 129 of the URAA sets forth procedures under US law for the United States to comply with adverse DSB rulings concerning its obligations under the Agreement on Safeguards, the AD Agreement and the SCM Agreement in cases in which implementation can be achieved by administrative action without the need for statutory amendment.

3.6 Where a DSB ruling finds that an action by the ITC contravenes the obligations of the United States under the AD Agreement or the SCM Agreement, the USTR, pursuant to section 129(a)(1), "may request the Commission to issue an advisory report on whether Title VII of the Tariff Act of 1930 […] permits the Commission to take steps […] that would render its action not inconsistent with the findings of the panel or the Appellate Body". If the ITC issues a report confirming that it can rectify its actions in accordance with US law, section 129 then authorizes the USTR to request that the ITC issue a new determination to bring its actions into conformity with the findings of the DSB ruling. Absent such direction from the USTR, the ITC has no independent authority to revise its determination to make it "not inconsistent with" an adverse DSB ruling. In making its new determination, the ITC could (i) issue a new affirmative injury finding, or (ii) issue a new negative injury determination (finding no injury to a domestic industry) depending on which result was required to achieve compliance with the DSB ruling. Where the ITC makes a negative injury finding, under section 129(a)(6) the USTR may direct the Department of Commerce "to revoke the antidumping or countervailing duty order in whole or in part".

3.7 Where the DSB ruling finds that an action by the Department of Commerce is not in conformity with the obligations of the United States under the AD Agreement or the SCM Agreement, the USTR, pursuant to section 129(b)(1), must consult with the Department of Commerce and the relevant congressional committees on the matter. Section 129(b)(2) requires that, upon the request of the USTR, the Department of Commerce shall issue a new, WTO-consistent determination. Thereafter, pursuant to section 129(b)(4), the USTR may direct the Department of Commerce to implement, in whole or in part, its new determination.

3.8 Implementation of the new Department of Commerce antidumping or countervailing duty determination could result in (i) a new affirmative determination, or (ii) revocation of the original order if the Department of Commerce made a finding that there was no dumping or subsidization to support the original order. A new affirmative determination would set a new cash deposit rate for future entries. Revocation of an order would occur where the new determination results in negative findings with respect to dumping or subsidies to be offset. A new order would reflect any new cash deposit rate established.

3.9 The effect of section 129(c)(1) is that an original order is revoked or amended with respect to new entries imported into the United States on or after the date USTR directs implementation of a new determination (hereafter the "Implementation Date") but not in respect of prior unliquidated entries (that is, imports that entered the United States prior to the date on which the USTR directs implementation of a new determination pursuant to section 129(a)(6) or section 129(b)(4) of the URAA and in respect of which the Department of Commerce has not made a definitive determination of liability for antidumping or countervailing duties and directed the US Customs Service to liquidate those entries). Furthermore, with respect to new affirmative determinations, the new cash deposit rate will only be applied to future entries.

3.10 The Statement of Administrative Action ("SAA"), which accompanies the URAA, explains the result in greater detail. It states:

"[…] subsection 129(c)(1) provides that where determinations by the ITC or Commerce are implemented under subsections (a) or (b), such determinations have prospective effect only. That is, they apply to unliquidated entries of merchandise entered, or withdrawn from warehouse, for consumption on or after the date on which the Trade Representative directs implementation. Thus, relief available under subsection 129(c)(1) is distinguishable from relief available in an action brought before a court or a NAFTA binational panel, where, depending on the circumstances of the case, retroactive relief may be available. Under 129(c)(1), if implementation of a WTO report should result in the revocation of an antidumping or countervailing duty order, entries made prior to the date of Trade Representative's direction would remain subject to potential duty liability."12

3.11 The SAA specifically addresses the situation where an antidumping or countervailing duty order is revoked based on a new determination by either the Department of Commerce or the ITC (i.e, based on negative injury, dumping or subsidy findings). It explains that "if implementation of a WTO report should result in the revocation of an […] order, [unliquidated] entries made prior to the date of [the USTR's] direction [to implement] would remain subject to potential duty liability."13 Thus the SAA confirms that: (1) the administrative review procedure for prior unliquidated entries will continue pursuant to an order that was found not to have been supported by WTO-consistent affirmative determinations of injury, dumping or subsidization and has been revoked; and (2) duty liability for these entries will be determined by the Department of Commerce without regard to the new WTO-consistent determination.

3.12 In some circumstances, following an adverse DSB ruling, the new determination may reflect a revised methodology (e.g., for calculating dumping duties or measuring a subsidy) and a new margin of dumping or rate of subsidy. Unless the final results of an administrative review for prior unliquidated entries establish duty liability at or below the rate established in the new determination, the United States would subject importers to greater liability than would be due under the new determination.

3.13 This necessarily means that the US Customs Service will retain certain cash deposits made by an importer pending an administrative review and that prior unliquidated entries will remain subject to excessive liability in a subsequent administrative review notwithstanding that there is no basis under the AD Agreement or the SCM Agreement for the Department of Commerce to take action against entries based upon an order which has been revoked or amended.

3. Section 129(c)(1) is Inconsistent with the United States' Obligations Under the AD Agreement, the SCM Agreement, Article VI of the GATT 1994 and Article XVI:4 of the WTO Agreement

(a) Antidumping Cases

3.14 Section 129(c)(1) of the URAA violates Articles 1, 9.3, 11.1 and 18.1 of the AD Agreement and Articles VI:2 and VI:6(a) of the GATT 1994 by requiring the Department of Commerce to make administrative review determinations and to assess antidumping duties on prior unliquidated entries after the Implementation Date notwithstanding that the elements needed for the United States to make a finding of injurious dumping and to levy duties as provided in the original determination are no longer present.

3.15 Article VI:2 states that "[i]n order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product […]". Thus, the imposition of antidumping duties exceeding the margin of dumping is inconsistent with Article VI:2. Article VI:6(a) precludes the levying of antidumping duties absent a determination that the imports concerned cause or threaten to cause material injury or materially retard the establishment of a domestic industry.

3.16 Article 1 of the AD Agreement requires that antidumping measures must meet the dumping and injury conditions of Article VI of the GATT 1994 and must be applied "pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement." Consequently any antidumping duty must only be applied in those circumstances in which injury, dumping and causation determinations necessary to impose that duty are made in accordance with the AD Agreement. This requirement is supported by Article 9.1 of the AD Agreement which states that the "decision whether or not to impose an anti-dumping duty" and the "decision whether the amount of the anti-dumping duty to be imposed shall be the full margin of dumping or less" are left to the discretion of the Member. Article 18.1 states that "[n]o specific action against dumping of exports from another Member can be taken except in accordance with the provisions of the GATT 1994, as interpreted by this Agreement." As Article VI is the only provision in the GATT 1994 that specifically addresses dumping actions, both Articles 1 and 18.1 of the AD Agreement preclude a Member from taking action against dumping except in accordance with Article VI.

3.17 Accordingly, Articles 1 and 18.1 of the AD Agreement and Article VI:2 and VI:6(a) of the GATT 1994, read together with Article 9.1 of the AD Agreement, preclude a Member from (i) applying antidumping duties in the absence of a finding of injurious dumping in accordance with the provisions of the AD Agreement, and (ii) taking action against imports from another Member in an amount in excess of an amount equal to the margin of dumping determined in accordance with the AD Agreement. These provisions are violated by section 129(c)(1) by its requirement of the continued application (to prior unliquidated entries after the Implementation Date) of antidumping duty orders that have been either amended or revoked by the Department of Commerce. Where the Department of Commerce implements a new determination by revoking an order imposing potential duty liability on imports under section 129(a)(6) or under section 129(b)(4), it does so because the ITC made a negative injury determination or the Department of Commerce concluded that no dumping existed. In such circumstances, Articles 1 and 18.1 preclude the United States from applying a duty pursuant to the original determination because the requirements of Article VI:2 and VI:6(a) are not met. Similarly, if the Department of Commerce, in implementing a new determination pursuant to section 129(b)(4), were to amend an order imposing potential duty liability, it would do so because the new determination has established that the margin of dumping is lower or higher than the margin of dumping as established in the original determination. In such a situation, Articles 1 and 18.1 preclude the United States from taking "specific action against dumping" pursuant to the original determination because the requirement in Article VI:2 that the duty not exceed the margin of dumping is not met.

3.18 Article 9.3 states in part that "[t]he amount of anti-dumping duty shall not exceed the margin of dumping as established under Article 2" of the AD Agreement. Thus, Members may not impose duties that exceed the margin of dumping.

3.19 Article 11.1 states that "[a]n anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury". Accordingly, unless a Member can establish that the dumping in respect of which the antidumping duty was imposed continues to cause injury, there is no basis for that Member to continue to impose the duty.

(b) Subsidy Cases

3.20 Section 129(c)(1) of the URAA also violates Articles 10, 19.4, 21.1 and 32.1 of the SCM Agreement, as well as Articles VI:3 and VI:6(a) of the GATT 1994, by requiring the Department of Commerce to make determinations regarding subsidization and impose final countervailing duties on prior unliquidated entries after the Implementation Date notwithstanding that the elements needed for the United States to make a finding of injurious subsidization and to levy duties as provided for in the original determination are no longer present.

3.21 Article VI:3 of the GATT 1994 provides that "[n]o countervailing duty shall be levied on any product […] in excess of an amount equal to the estimated bounty or subsidy determined to have been granted." Pursuant to Article VI:6(a), a Member shall levy a countervailing duty on imports only if it determines "that the effect of the […] subsidization […] is such as to cause or threaten material injury to an established domestic industry, or is such as to retard materially the establishment of a domestic industry".

3.22 Articles 10 and 32.1 of the SCM Agreement must be read together with Article VI of the GATT 1994. Article 10 of the SCM Agreement provides that "Members shall take all necessary steps to ensure that the imposition of a countervailing duty on any product of the territory of any Member imported into the territory of another Member is in accordance with the provisions of Article VI of the GATT 1994 and the terms of this Agreement […]". Article 32.1 of the SCM Agreement states that "[n]o specific action against a subsidy of another Member can be taken except in accordance with the provisions of the GATT 1994, as interpreted by this Agreement". Thus, Articles 10 and 32.1 of the SCM Agreement and Article VI of the GATT 1994, read together, provide that a Member (i) may only take action if it determines that the effect of subsidization of imports is to cause or threaten to cause material injury to its domestic industry; and (ii) may not take action against imports from another Member in an amount in excess of an amount equal to the subsidy granted to those imports.

3.23 After a Member makes determinations of subsidization and injury, that Member may not levy a countervailing duty in excess of the amount of the subsidy. Article 19.4 of the SCM Agreement states that "[n]o countervailing duty shall be levied on any imported product in excess of the amount of subsidy found to exist, calculated in terms of subsidization per unit of the subsidized and exported product".

3.24 The requirement that the Department of Commerce continue to levy duties pursuant to the original order in administrative reviews also violates Article 21.1 of the SCM Agreement, which provides that "a countervailing duty shall remain in force only as long as and to the extent necessary to counteract subsidization which is causing injury" to a domestic industry. Accordingly, unless a Member can establish that injurious subsidization exists, there is no basis for that Member to continue to impose a duty. In circumstances in which the original order has been revoked, there is no basis on which the Department of Commerce could rule that the continued determinations of subsidization and the assessment of countervailing duties pursuant to that order is necessary, as is required pursuant to Article 21.1 of the SCM Agreement. In other cases, where the Department of Commerce has determined that there is a lower level of subsidization than originally established, section 129(c)(1) prevents the Department of Commerce from taking this new determination into account in respect of prior unliquidated entries.

3.25 Given the violations demonstrated by Canada of GATT Article VI and the provisions cited in the AD Agreement and the SCM Agreement, section 129(c)(1) is also inconsistent with Article 18.4 of the AD Agreement, Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement. These provisions require that a Member's laws be in conformity with its WTO obligations as of the entry into force of the WTO Agreement.



1 Uruguay Round Agreements Act, Pub. L. No. 103-465, section 129(c)(1), 108 Stat. 4838, also codified at 19 U.S.C. 3538 (1994).

2 Statement of Administrative Action, in "Message from the President of the United States Transmitting the Uruguay Round Agreement, Texts of Agreements Implementing Bill, Statement of Administrative Action and Required Supporting Statements", H.R. Doc. No. 103-316, Vol. 1, pp. 656 et seq.

3 WT/DS221/1.

4 WT/DS221/4.

5 WT/DS221/5 (referring to WT/DSB/M/108).

6 Ibid.

7 Subsection (e) amends section 516A of the Tariff Act of 1930 to provide for judicial review by US courts and NAFTA binational panels of new Title VII determinations made by the US Department of Commerce or the International Trade Commission under section 129 that are implemented.

8 Uruguay Round Agreements Act, Pub. L. No. 103-465, section 129(a)-(d), 108 Stat. 4836-4838.

9 See section B.1.(c), third paragraph, of the Statement of Administrative Action, supra, p. 1023.

10 See section 351.211 of the Antidumping and Countervailing Duties Regulations, 19 C.F.R. Part 351 (exhibit CDA-5). Normally, if an administrative review is not requested, the Department of Commerce will instruct the US Customs Service to assess antidumping or countervailing duties at rates equal to the cash deposit of estimated antidumping or countervailing duties required on the relevant entries.

11 In administrative reviews, imports covered by the period under review are imports that entered the United States during the 12 to 18 months prior to the initiation of the review. The Department of Commerce does not issue its final determination in the administrative review until 12 to 18 months after the end of the review period.

12 Statement of Administrative Action, supra, p. 1026 (emphasis added).

13 Ibid.


To continue with 4. Section 129(c)(1) Mandates a Violation of the WTO Obligations of the United States