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

Report of the Panel

(Continued)

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

3.26 In its Second Submission, the United States raised a new defence. The United States claimed that section 129(c)(1) does not mandate a violation of the provisions of the AD Agreement, the SCM Agreement, the GATT 1994 and the WTO Agreement cited by Canada.

3.27 Canada suggests that, even if the Panel were to accept the United States' description of its laws, section 129(c)(1) would continue to mandate that the United States violate its WTO obligations in certain significant circumstances.

3.28 There are four key points that are relevant to the mandatory/discretionary doctrine in WTO and GATT jurisprudence and practice:

(a) first, a member may challenge another Member's measure "as such", independent of any particular application of that measure;

(b) second, a measure that is challenged "as such" is not inconsistent with a Member's WTO obligations unless it mandates that the Member take action inconsistent with those obligations;

(c) third, a Member's measure need not mandate a violation in all circumstances to be inconsistent, as such, with that Member's WTO obligations; rather, it is sufficient that the measure mandate a violation in some circumstances; and

(d) fourth, where the parties have disputed whether a measure mandates a violation of WTO rules, the practice of WTO panels has been to first determine the Member's obligations under the WTO Agreement and thereafter to determine whether the measure at issue contains sufficient discretion such that a violation of the Member's WTO obligations is not mandated in any circumstances.¹⁴

3.29 The mandatory nature of section 129(c)(1) can be demonstrated by considering two classes of cases - that is, methodology cases (those cases in which the implementation by the United States of an adverse DSB ruling does not require that the Department of Commerce revoke an antidumping or countervailing duty order but instead requires the Department of Commerce to make some change or amendment, such as a change in its methodology) and revocation cases (cases in which implementation of an adverse DSB ruling requires the Department of Commerce to revoke an antidumping or countervailing duty order).

3.30 Canada notes that the United States has not claimed that section 129(c)(1) would in no circumstances have the effect of precluding its implementation of the DSB ruling with respect to prior unliquidated entries. Indeed, the United States has conceded that prior unliquidated entries are subject to "potential duty liability" notwithstanding the revocation of an antidumping or countervailing duty order with respect to future entries.

3.31 The United States argues that section 129(c)(1) would not preclude the Department of Commerce from making final duty liability determinations in an administrative review on a basis consistent with a DSB ruling in methodology cases, even insofar as the determinations would apply to prior unliquidated entries. However, the US claim that the Department of Commerce has "administrative discretion" to change its interpretation is inconsistent with US principles of statutory construction, as well as the wording of the SAA.

3.32 As Canada understands US principles of statutory construction, the issue of whether the limitation in section 129(c)(1) could be nullified or ignored by the Department of Commerce in a subsequent administrative review would ultimately be decided by the US courts, and not by the Department of Commerce. As US courts have explained, a court "cannot presume that Congress intended [one result] with one hand, while reducing it to a veritable nullity with the other".¹⁵ For this reason, US courts would be unlikely to afford deference to the Department of Commerce's interpretation of section 129(c)(1) in a subsequent administrative review. Although "[j]udicial deference to agency [Department of Commerce] interpretation is normally justified by the agency's expertise in the regulated subject matter [if the] issue is a pure question of statutory construction [it is an issue] for the courts to decide".¹⁶

3.33 The United States also argues that section 129(c)(1) has no effect with regard to any determinations made in another "segment" of the proceeding, particularly the definitive determination of duty liability made following an administrative review. However, this argument is contrary to the US principles of statutory construction.. Section 129(c)(1) states that determinations under section 129 shall apply with respect to entries on or after the Implementation Date. This would appear to preclude the Department of Commerce from taking action after the Implementation Date under section 129 consistent with a new determination in a subsequent separate segment of the proceeding with respect to prior unliquidated entries. Further, this argument is inconsistent with the SAA which states clearly, at page 1026, that the DSB ruling will not be implemented with regard to prior unliquidated entries.

3.34 The Department of Commerce, by complying with an adverse DSB ruling with respect to definitive duty determinations made after the Implementation Date for prior unliquidated entries, would materially undermine the wording in section 129(c)(1) and the SAA, which affirms that determinations to implement DSB rulings have prospective effect only. It seems unlikely that the US Congress would have created the limitation in section 129(c)(1) merely to permit the temporary retention of excess cash deposits that would be returned at the end of the administrative review process. Finally, the US assertion that the Department of Commerce could circumvent the limitation in section 129(c)(1) by using its 'administrative discretion' has not been tested in the US courts or in the Department of Commerce's administrative practice.

3.35 In revocation cases, a revocation of an order pursuant to section 129 will apply only to entries imported on or after the Implementation Date. The United States will retain the cash deposits with respect to the prior unliquidated entries, which will continue to be the subject of an administrative review. In conceding these points, the United States nevertheless argued that while the treatment to be accorded to prior unliquidated entries in a subsequent administrative review is uncertain, section 129(c)(1) nonetheless does not mandate treatment inconsistent with the United States' WTO obligations.

3.36 In cases in which compliance with a DSB ruling requires the Department of Commerce to revoke an order, the United States will be acting inconsistently with its WTO obligations by retaining cash deposits and holding administrative reviews of prior unliquidated entries. Further, even if the Department of Commerce, at the conclusion of the administrative review, were to terminate the order and return the cash deposits for entries (which is not provided for under US law), the United States will have acted inconsistently with its obligations under the AD Agreement and the SCM Agreement.

3.37 The United States has effectively conceded that, in cases in which compliance with a DSB ruling results in a new negative injury determination by the ITC, section 129(c)(1) precludes all but the occasional possibility of "accidental compliance". In a negative injury case, the antidumping or countervailing duty order would be revoked for all entries on or after the Implementation Date, but not for prior unliquidated entries. Based on the ITC determination, the Department of Commerce would terminate the order and issue instruction ending the requirement for cash deposits and bonds with respect to future entries but, because of section 129(c)(1), cash deposits for prior unliquidated entries would be retained. The United States provided no justification for making this distinction in a determination made by the Department of Commerce after the Implementation Date.

3.38 Further, the United States did not claim that section 129(c)(1) would never preclude the Department of Commerce from making determinations in administrative reviews consistently with the DSB ruling. Rather, the United States made a narrower claim that it is not obliged to implement a DSB ruling with respect to substantive duty determinations made after the Implementation Date with respect to prior unliquidated entries and, further, that section 129(c)(1) does not mandate a violation of its WTO obligations.

3.39 However, the US argument that section 129(c)(1) does not mandate violations of its WTO obligations is based on the United States' erroneous interpretation of its WTO obligations. The AD Agreement, the SCM Agreement, the GATT 1994, the WTO Agreement and the DSU do not authorize violations of the sort to which the United States tries to claim a right in defence of section 129(c)(1). Neither the DSU nor the principle of prospective compliance excuse the United States from complying with an adverse DSB ruling in determining duty liability after the Implementation Date with respect to prior unliquidated entries.

3.40 At most, the United States has asserted that the Department of Commerce might have some flexibility in circumventing the limitation in section 129(c)(1) in certain cases (for example, a change of interpretation of US law for other reasons, such as a direction from a US court). However, even if the Panel were to accept this US argument, section 129(c)(1) still mandates violations of the WTO obligations of the United States by (i) requiring the Department of Commerce to retain cash deposits and to conduct administrative reviews in circumstances inconsistent with the obligations of the United States under the AD Agreement and the SCM Agreement; and (ii) precluding the Department of Commerce from making final duty determinations consistent with the United States' WTO obligations as found by the DSB with respect to prior unliquidated entries.

5. The Principle of Prospective Compliance

3.41 The fundamental issue in this case is what constitutes prospective compliance. Canada and the United States agree on the principle of prospective implementation of DSB rulings, but disagree on the meaning and application of prospective implementation in this case. In particular, Canada and the United States disagree whether the principle permits a Member to take WTO inconsistent actions after the Implementation Date.

3.42 Canada is not seeking to have the Department of Commerce apply new section 129 determinations to liquidated entries.¹⁷ This would be asking the United States to undo definitive duty determinations; clearly, this would be the retroactive application of an adverse DSB ruling. Rather, Canada considers that the principle of prospective implementation requires that definitive duty determinations made by a Member after the date established under the DSU for implementation of an adverse DSB ruling must be consistent with that ruling.

3.43 The United States argued that it is entitled to make determinations after the Implementation Date on a basis inconsistent with an adverse DSB ruling if those determinations affect prior unliquidated entries. By maintaining that the date of entry governs the application of the new WTO-consistent determinations of the ITC or the Department of Commerce, the United States claims the right to conduct administrative reviews and to make final legal determinations of duty liability for prior unliquidated entries on a WTO inconsistent basis for months, and perhaps years, after the Implementation Date.

3.44 Canada sees no basis for this in the DSU or in the GATT/WTO tradition of prospective implementation. Section 129(c)(1) prevents the Department of Commerce from applying new section 129 determinations to prior unliquidated entries, which, as discussed above, violates the United States' obligations under Article VI of the the GATT 1994, the AD Agreement and the SCM Agreement, as well as Article XVI:4 of the WTO Agreement.

3.45 In support of its position, the United States relied on various DSU provisions, cases and statements. However, none of these support the US proposition that prospective compliance is defined in terms of date of entry of imports, or the US argument that determinations made by the Department of Commerce after the Implementation Date are excused from compliance with an adverse DSB ruling with respect to prior unliquidated entries.

3.46 The principles enunciated in the report of the Appellate Body in Brazil - Export Financing Programme for Aircraft - Recourse by Canada to Article 21.5 of the DSU¹⁸ are relevant. In that proceeding, Brazil argued that it should be free to continue to provide export subsidies on exports of aircraft made after the Implementation Date to the extent that it was implementing legal commitments entered into before the Implementation Date to provide subsidies on exports after the Implementation Date. The Appellate Body clearly stated that the issuance of bonds after the end of the reasonable period of time, on the same terms and conditions which had been previously found inconsistent with the SCM Agreement, was not consistent with Brazil's obligation to withdraw the illegal subsidies.¹⁹

3.47 In this case, the United States is trying to justify WTO inconsistent action that it will take after the Implementation Date on grounds that the trade affected by its actions (namely, the prior unliquidated entries) occurs before the Implementation Date. Canada submits that this dispute presents a more serious case of infringement of WTO obligations than in Brazil - Aircraft (Article 21.5 - Canada) because new legal acts by the Department of Commerce and the ITC are at issue. Canada also submits that the reasoning in Brazil - Aircraft (Article 21.5 - Canada) applies in this case, and that the right claimed by the United States to conduct administrative reviews and make definitive legal determinations after the Implementation Date with respect to prior unliquidated entries has no basis in the WTO Agreement or any of the covered agreements.

3.48 In Canada's view, the principle of prospective implementation does not justify the United States making legal determinations after the Implementation Date on a WTO inconsistent basis. The logical outcome of prospective implementation of an adverse DSB ruling in a retrospective duty assessment system is for the United States to apply new section 129 determinations to all prior unliquidated entries as well as future entries.

3.49 The principle of prospective implementation does not justify the United States continuing to make definitive duty determinations after the Implementation Date in respect of prior unliquidated entries on a WTO inconsistent bases for months, or perhaps years, after the date on which it purportedly brought its measure into conformity with its WTO obligations. The United States has attempted to portray itself as the victim in this case. However, the United States is not being deprived of a right under the DSU or any other WTO agreement. Instead, the United States is seeking additional rights not provided in the WTO Agreement or the covered agreements, including the DSU.

3.50 In response to question 71 from the Panel, Canada suggested that the United States cannot apply a WTO-consistent methodology to prior unliquidated entries after the Implementation Date without refunding excess cash deposits. If the United States were to fail to refund excess cash deposits, the United States would violate both its domestic law and its WTO obligations.

3.51 First, under US law, cash deposits are considered as security against the final determination of liability. Where the final duty liability is less than the cash deposit, the difference must be refunded under US law. Sections 1671f and 1673f of the Tariff Act of 1930 provide for the refund of estimated antidumping and countervailing duty deposits which are in excess of the final determined duty liability.

3.52 Second, if the Department of Commerce was able to apply a new, WTO-consistent methodology to prior unliquidated entries which resulted in a final antidumping or countervailing duty that is lower than the cash deposits collected on the prior unliquidated entries, the United States would be required under WTO law to refund the excess cash deposits.²⁰ If the United States did not refund the excess cash deposits, the United States would violate its WTO obligations, in particular Article VI:2 and Article VI:3 of the GATT 1994, Articles 1 and 18.1 of the AD Agreement and Articles 10, 19.4 and 32.1 of the SCM Agreement.

3.53 Canada recalls that, in its view, the final legal determinations of duty liability established by the Department of Commerce after the Implementation Date must be in conformity with the adverse DSB ruling. The consequence of this is that, once the final amount of duty liability of entries has been established in an administrative review, any excess cash deposits collected in respect of those entries must be refunded by the United States. This is also consistent with the principle of prospective implementation of DSB rulings as applied by the Appellate Body in Brazil - Aircraft (Article 21.5 - Canada).

3.54 In response to question 74 from the Panel, Canada expressed the view that in certain situations section 129(c)(1) results in the retention by the Department of Commerce of cash deposits for prior unliquidated entries in circumstances in which such retention is not justified in whole or in part. That is, the operation of section 129(c)(1) results in the retention by the Department of Commerce of cash deposits for prior unliquidated entries notwithstanding that (i) the ITC or the Department of Commerce makes a new determination which results in a revocation of the original antidumping or countervailing duty order, or (ii) the Department of Commerce makes a new determination amending the original antidumping or countervailing duty determination, which may result in a lower final antidumping duty or countervailing duty being assessed against those entries.

6. Differences Between Prospective and Retrospective Duty Assessment Systems

3.55 The United States argued that "[r]ecognizing the date of entry as the controlling date for determining the scope of a Member's implementation obligations in all cases avoids creating differences [between prospective and retrospective duty assessment systems] that are not contemplated in the Agreements".²¹ However, Canada notes that the fact that the date of entry is the relevant date under a prospective duty assessment system for the purposes of determining final duty assessment is irrelevant to this case. Under the US retrospective duty assessment system, the end of the administrative review process is the relevant date for the purposes of determining final duty assessment.

3.56 Prospective and retrospective duty assessment systems are different approaches to determining antidumping and countervailing duty liability under the AD Agreement and the SCM Agreement. These differences give rise to certain advantages and disadvantages unique to each system. However, regardless of whether a Member chooses a retrospective or prospective duty assessment system, the Member must abide by its WTO obligations. The provisions of the AD Agreement, the SCM Agreement and the GATT 1994 are equally applicable to retrospective and prospective duty assessment systems. A Member must accept the consequences of whichever duty assessment system it chooses to adopt. A Member cannot argue, as the United States has done, that its retrospective duty assessment system permits it to make final duty determinations without regard to an adverse DSB ruling, in violation of its WTO obligations.

3.57 The United States asserted that Canada was advocating that Members with retrospective duty assessment systems be treated less favourably than Members with prospective duty assessment systems. The United States also stated that Canada was arguing that, unlike Members with retrospective duty assessment systems, "Members with prospective systems do not have an obligation to apply adverse DSB recommendations and rulings when conducting [�] reviews of pre-implementation entries."²²

3.58 However, the United States has deliberately misconstrued Canada's argument. Canada is not arguing for a "special rule" in which only a Member with a retrospective duty assessment system must make determinations after the Implementation Date consistent with its WTO obligations. Canada accepts that a Member with a prospective duty assessment system has the same obligation. It is Canada's position that, notwithstanding the temporal differences in the making of substantive duty determinations under a retrospective or a prospective duty assessment system, where a Member has agreed to implement an adverse DSB ruling, it must make all subsequent substantive duty determinations in accordance with that ruling following the expiration of the reasonable period of time.²³

3.59 The United States also incorrectly implied that Canada would not implement an adverse DSB ruling in making a duty determination after the expiration of the reasonable period of time.²⁴ Canada considers that a Member, whether employing a prospective or retrospective duty assessment system, is not required to undo final duty determinations made before the expiration of the reasonable period of time. However, a redetermination made after the Implementation Date must be made in conformity with the DSB ruling notwithstanding that the redetermination would affect entries subject to a final determination made prior to the expiration of the reasonable period of time.²⁵

7. Date of Definitive Duty Determination and Not Date of Entry of Imports is the Operative Date for Determining Compliance

3.60 The United States argues that the date of entry of imports -- and not the date of the definitive duty determination -- is the operative date for determining prospective compliance. In essence, the United States argues that, having been found by the DSB to have violated its WTO obligations, it should be allowed to make duty determinations after the Implementation Date in a WTO inconsistent manner.

3.61 The United States appeared to imply that the Department of Commerce's final determination of duty liability on imports was akin to a clerical act. This argument, however, disregards the importance of the administrative review process, which involves hearings, briefs and legal determinations. First, the law applied by the Department of Commerce in the administrative review process will reflect changes in policies and legal principles between the time of the original entry of imports and the time that the Department of Commerce makes its final definitive duty determination for those imports. Second, the substantive methodology used by the Department of Commerce in making its final definitive duty determination may be quite different from that applied in the original investigation or in previous administrative reviews.

3.62 The United States also attempted to minimize the significance of the legal and factual distinctions between cash deposits and definitive duty determinations.²⁶ However, under US law, the publication of an antidumping or countervailing duty order is merely the first step toward the final assessment of duties to be collected; the final assessment of those duties takes place in a subsequent administrative review where the final liability for payment of duties is determined and liquidation is carried out. Accordingly, the date of the definitive duty determination -- and not the date of entry of imports -- is the operative date for determining whether a Member with a retrospective duty assessment system has complied with its WTO obligations.

8. Conclusion

3.63 Therefore, for the reasons set out above, Canada requests that the Panel:

(a) find that section 129(c)(1) of the URAA is inconsistent with:

(i) Article VI:2, VI:3 and VI:6(a) of the GATT 1994,

(ii) Articles 1, 9.3, 11.1 and 18.1 and 18.4 of the AD Agreement,

(iii) Articles 10, 19.4, 21.1, 32.1 and 32.5 of the SCM Agreement, and

(iv) Article XVI:4 of the WTO Agreement, and

(b) recommend that the United States bring section 129(c)(1) of the URAA into conformity with the SCM Agreement, the AD Agreement, the GATT 1994, and the WTO Agreement.

B. UNITED STATES

3.64 This section summarizes the main arguments of the United States, i.e., the responding party in this case.

1. Introduction

3.65 In this dispute, Canada challenges section 129(c)(1) of the URAA as inconsistent with the WTO obligations of the United States. This provision of US law was enacted with the specific purpose of enabling the United States to implement WTO panel or Appellate Body decisions which find that the United States has taken antidumping or countervailing duty actions inconsistent with the AD Agreement or the SCM Agreement. Consistent with well-established GATT and WTO practice, section 129(c)(1) provides for such implementation on a prospective basis.

3.66 Canada is seeking to require the United States to provide retroactive relief in cases involving antidumping and countervailing duty measures, despite the widely accepted principle that the dispute settlement process established in the DSU provides for prospective remedies. It is doing so by attempting to exploit the fact that the United States uses a "retrospective" system for calculating the amount of liability that an importer must pay when it imports merchandise that, at the time of entry, is subject to an antidumping or countervailing duty order.

3.67 Nothing in the text of the WTO agreements requires anything other than prospective implementation of adverse WTO panel or Appellate Body reports (hereafter "adverse WTO reports"). Just as importantly, nothing in the Agreements requires Members to apply adverse WTO reports not only to entries that take place after implementation, but also to entries that took place prior to implementation. Section 129(c)(1) is fully consistent with the WTO obligations of the United States. It ensures implementation of adverse WTO reports on a prospective basis, consistently with the United States' WTO obligations.

3.68 In any event, there is no need for the Panel to determine what constitutes "prospective" implementation in disputes involving antidumping and countervailing duty measures. Regardless of whether there is an obligation to implement adverse WTO reports with respect to entries that occurred prior to implementation, Canada, as the complaining party in this dispute, must establish that section 129(c)(1) would preclude the United States from doing so. Canada has failed to meet its burden of proof.

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

3.69 As previously noted, section 129 was enacted with the specific purpose of enabling the United States to implement WTO panel or Appellate Body decisions which find that the United States has taken actions inconsistent with the AD Agreement or the SCM Agreement. Section 129 provides the basic legal provisions through which the United States would make and implement new antidumping or countervailing duty determinations consistent with an adverse WTO report.

3.70 Section 129(c)(1), the specific provision that Canada is challenging, provides an effective date for new determinations by the Department of Commerce or the ITC which implement adverse WTO reports. Specifically, section 129(c)(1) provides that such determinations "shall apply with respect to unliquidated entries of the subject merchandise [ ] that are entered, or withdrawn from warehouse, for consumption on or after" the date on which the USTR directs the Department of Commerce to revoke an antidumping or countervailing duty order or implement the new Department of Commerce determination.

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

3.71 Canada has challenged section 129(c)(1) "as such." Accordingly, the burden is on Canada to demonstrate that section 129(c)(1) mandates WTO inconsistent action. If section 129(c)(1) does not mandate such action or preclude WTO-consistent action, there is no need for the Panel to determine the meaning of "prospective" implementation in WTO disputes involving antidumping and countervailing duty measures, because even if Canada is correct in asserting that the legal situation in effect at the time of the "final" determination controls, section 129(c)(1) does not mandate how the Department of Commerce must make such determinations.

3.72 It is well established under GATT and WTO jurisprudence that legislation of a Member violates that Member's WTO obligations only if the legislation mandates action that is inconsistent with those obligations or precludes action that is consistent with those obligations. If the legislation provides discretion to administrative authorities to act in a WTO-consistent manner, the legislation, as such, does not violate a Member's WTO obligations. The Appellate Body has explained that this concept "was developed by a number of GATT panels as a threshold consideration in determining when legislation as such -- rather than a specific application of that legislation -- was inconsistent with a Contracting Party's GATT 1947 obligations."²⁷

3.73 Canada has not identified a scenario, and the United States is not aware of a scenario, particularly in light of this abstract case, in which section 129(c)(1) would mandate WTO inconsistent action or preclude the United States from acting in a WTO-consistent manner.

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

3.74 The meaning of section 129(c)(1) as a matter of US law is a factual question that must be answered by applying US principles of statutory construction. In this regard, US courts and agencies must recognize the longstanding and elementary principle of US statutory construction that "an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains".²⁸ While international obligations cannot override inconsistent requirements of domestic law, "ambiguous statutory provisions [�][should] be construed, where possible, to be consistent with international obligations of the United States."²⁹

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

3.75 Canada has failed to establish a prima facie case that section 129(c)(1) mandates action inconsistent with the AD Agreement, the SCM Agreement, or the GATT 1994, or precludes action consistent with those provisions.

3.76 Canada's failure to meet its burden of proof arises from its misinterpretation of the term "determination" as that term is used in section 129(c)(1). When the term is properly understood, it becomes clear that section 129(c)(1) only addresses the application of the particular determination issued under the authority of section 129(c)(1) to entries made after the date of implementation, and only with respect to that particular segment of the proceeding.³⁰ Section 129(c)(1) does not address what actions the Department of Commerce may or may not take in a separate determination in a separate segment of the proceeding, and thus does not mandate that the Department of Commerce take (or preclude it from taking) any particular action in any separate segment of the proceeding. This point applies in both of the scenarios that Canada has identified -- "methodology" cases and "revocation" cases.

3.77 This point can be illustrated in "methodology" cases by considering a situation where a Member challenges a final dumping determination in an investigation. If a challenge to such a determination were successful, the Department of Commerce would make the necessary changes in its methodologies and issue a new, WTO-consistent determination. It would then apply that new determination by setting a new cash deposit rate, which would apply to all entries that took place on or after the implementation date. It is this new determination that is the "determination" referenced in section 129(c)(1).

3.78 If a company were then to request an administrative review of what Canada terms "prior unliquidated entries," the Department of Commerce would conduct the administrative review and issue a new determination in that segment of the proceeding. Since the administrative review determination would not be the "determination implemented under section 129(c)(1)," nothing in section 129(c)(1) would preclude the Department of Commerce from applying its new, WTO-consistent methodologies in the administrative review. Canada is simply wrong, as a matter of fact, to claim that section 129(c)(1) would preclude the Department of Commerce from doing so.

3.79 The Department of Commerce has the authority to alter its statutory interpretations or its methodologies used to implement those interpretations, provided that it gives a reasonable explanation for doing so.³¹ In an administrative review, the Department of Commerce would have the authority to alter its statutory interpretation or methodology from one announced prior to the implementation of the WTO panel report, and use the same, WTO-consistent interpretation or methodology adopted in the section 129 determination.³² This would not, however, be an application of the section 129 determination to what Canada has termed "prior unliquidated entries."

3.80 Canada concedes that US administering authorities have the legal ability to change their interpretations or applications of statutes and regulations from one review to another and even that the Department of Commerce could do so in response to a WTO report that did not involve the United States as a party. Canada concludes, however, by stating that the Department of Commerce's ability to alter its interpretations "cannot override a statutory limitation such as section 129(c)(1)."³³ Canada did not identify any statutory or other basis in support of its assertions that a determination implemented under section 129(c)(1) limits the Department of Commerce's discretion in any other segment of the proceeding.

3.81 Indeed, section B.1.c.(2) of the SAA specifically notes that "it may be possible to implement the WTO report recommendations in a future administrative review under section 751 of the Tariff Act [...]". (emphasis added.) This language demonstrates the error in Canada's assertions that section 129(c)(1) would preclude the Department of Commerce from applying a WTO-consistent methodology to what they term "prior unliquidated entries" in a subsequent administrative review.

3.82 Similarly, if the United States were to implement an adverse WTO report by revoking an antidumping or countervailing duty order, section 129(c)(1) would ensure that the revocation would apply to all entries which took place on or after the date of revocation of the order, so the Department of Commerce would instruct the US Customs Service to stop requiring cash deposits as of that date. In any subsequent administrative review, the Department of Commerce would need to decide what to do with respect to entries that took place prior to the date of revocation.

3.83 Canada has not challenged an actual application of section 129(c)(1) in such a scenario, and the Department of Commerce has not addressed such a scenario to date. The only impact of section 129(c)(1), however, is that the Department of Commerce would not determine the fate of those entries in the revocation determination itself. Section 129(c)(1) does not require the Department of Commerce to apply duties to those entries, it does not limit the Department of Commerce's discretion in deciding how to administer the law in separate proceedings with respect to those entries, it does not limit judicial review of the results of those separate proceedings, and it does not limit the Department of Commerce's obligation to implement the results of any such judicial proceedings. Even taking into account the language in the SAA, the most that can be said is that such entries would "remain subject to potential duty liability." Neither section 129(c)(1) itself, nor the provision as interpreted in light of the SAA, mandates any particular treatment of such entries in a separate segment of the proceeding.

(d) Conclusion

3.84 In view of the above, the United States considers that Canada has failed to establish that section 129(c)(1) mandates a breach of any of the provisions of the AD Agreement, the SCM Agreement, or the GATT 1994 that Canada cites or precludes the United States from acting consistently with those provisions.

14 See, for example, Panel Report, United States - Measures Treating Export Restraints as Subsidies ("US - Export Restraints"), WT/DS194/R, adopted 23 August 2001.

15 Katie John v. United States, 247 F.3d 1032, 1038 (9^th Cir. 2001) ("Katie John") citing Johnson v. United States R.R. Retirement Board, 969 F.2d 1082, 1089 (D.C. Cir. 1992), which found that it was "unreasonable to conclude that Congress meant to create an entitlement with one hand and snatch it away with the other". See also American Tobacco Co. v. Patterson, 456 US 63, 71 (April 5, 1982) which stated that "[s]tatutes should be interpreted to avoid untenable distinctions and unreasonable results whenever possible".

16 Katie John at 1038 citing Pension Benefit Guar. Corp. v. LTV Corp., 496 US 633, 651-2 (1990) which stated that "[a]gency expertise is one of the principal justifications behind Chevron defence"; INS v. Cardoza-Fonseca 480 US 421, 446 (1987), which stated that the issue "is a pure question of statutory construction for the courts to decide"; Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 US 837, 843 n. 9, which stated "[t]he judiciary is the final authority on issues of statutory construction; Magana-Pizano v. INS, 200 F.3d 603, 611 n. 11 (9th Cir. 1999), which stated that "[b]ecause the issue presented is a question of pure law and does not implicate agency expertise in any meaningful way, we need not defer under Chevron [�]."

17 That is, entries for which, prior to the Implementation Date, the Department of Commerce made definitive duty determinations and instructed the US Customs Service to liquidate.

18 Appellate Body Report, Brazil - Export Financing Programme for Aircraft - Recourse by Canada to Article 21.5 of the DSU ("Brazil - Aircraft (Article 21.5 - Canada) "), WT/DS46/AB/RW, adopted 4 August 2000, para. 46.

19 The Panel report is also relevant. The Panel stated that "[i]n our view, the obligation to cease performing illegal acts in the future is a fundamentally prospective remedy". See Panel Report, Brazil - Export Financing Programme for Aircraft - Recourse by Canada to Article 21.5 of the DSU ("Brazil - Aircraft (Article 21.5 - Canada) "), WT/DS46/RW, adopted 4 August 2000, as modified by the Appellate Body Report, WT/DS46/AB/RW, para. 6.15.

20 Canada recalls that it is not persuaded that the Department of Commerce could apply a new, WTO-consistent methodology to prior unliquidated entries in an administrative review held after the Implementation Date.

21 US reply to Panel Question 17.

22 US Second Submission, para. 27.

23 Section 76.1 of Canada's Special Import Measures Act (the "SIMA") which provides the authority and procedure for the implementation of adverse DSB rulings, is the Canadian counterpart to section 129 of the URAA. Where section 76.1 of the SIMA has been invoked by Canada to implement a DSB ruling, substantive duty determinations after the expiration of the reasonable period of time would be made in compliance with that ruling.

24 US Second Submission, para. 26.

25 Canada's obligation under Article 9.3.2 of the AD Agreement to make provision for "prompt refund, upon request, of any duty paid in excess of the margin of dumping" is implemented in sections 57 to 59 of the SIMA. These sections provide for a redetermination of final duty liability so as to ensure that any antidumping or countervailing duty collected on goods does not exceed the actual margin of dumping or amount of subsidization for those goods. Section 60 of the SIMA provides that the "excessive" duty is to be returned forthwith to the importer. Unlike section 129(c)(1) of the URAA, there is nothing in section 76.1 or section 57 to 60 of SIMA to prevent Canada from making a redetermination after the expiration of the reasonable period of time which affects entries that occurred before that date.

26 US reply to Panel Question 15.

27 Appellate Body Report, United States - Anti-Dumping Act of 1916 ("US - 1916 Act"), WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, para. 88.

28 Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804).

29 Restatement (Third) of the Foreign Relations Law of the United States, � 114 (1987).

30 Section 351.102 of the Department of Commerce's regulations defines a segment of a proceeding as follows:

(1) In general. An antidumping or countervailing duty proceeding consists of one or more segments. "Seg�ment of a pro�ceeding" or "seg�ment of the proceeding" refers to a portion of the proceeding that is review�able under section 516A of the Act.

(2) Examples. An antidumping or countervailing duty investigation or a review of an order or suspended investigation, or a scope inquiry under � 351.225, each would constitute a segment of a proceeding.