World Trade

Organization

 

 

WT/DS217/AB/R
WT/DS234/AB/R

16 January 2003

 

(03-0209)

 

 

 

Original:                                    English

 

 

 

                                                                       

 

 

 

UNITED STATES – CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000

                                         

                                            [Edited AB Report]

 

 

 

                                                                       AB-2002-7

 

 

 

 

 

 

                                                               Report of the Appellate Body

 

 

 

 

 

Introduction.

The United States appeals certain issues of law and legal interpretations developed in the Panel Report,  United States – Continued Dumping and Subsidy Offset Act 2000  (the "Panel Report"). 

On 12 July 2001, Australia, Brazil, Chile, the European Communities, India, Indonesia, Japan, Korea and Thailand requested the establishment of a panel to examine the WTO-consistency of the United States Continued Dumping and Subsidy Offset Act of 2000 (the "CDSOA").   At its meeting of 23 August 2001, the Dispute Settlement Body (the "DSB") established the Panel.

The United States appeals certain issues of law and legal interpretations developed in the Panel Report,  United States – Continued Dumping and Subsidy Offset Act 2000  (the "Panel Report"). 

In the Panel Report, circulated to the Members of the World Trade Organization (the "WTO") on 16 September 2002, the Panel found that the CDSOA is inconsistent with Articles 5.4, 18.1 and 18.4 of the  Anti-Dumping Agreement;  Articles 11.4, 32.1 and 32.5 of the  SCM Agreement;  Articles VI:2 and VI:3 of the GATT 1994;  and Article XVI:4 of the  WTO Agreement. 

The Panel concluded that the CDSOA nullifies or impairs benefits accruing to the Complaining Parties under the  Anti-Dumping Agreement, the  SCM Agreement  and the GATT 1994 to the extent that the CDSOA is inconsistent with those agreements.  Consequently, the Panel recommended that the DSB request the United States to bring the CDSOA into conformity with its obligations under the  Anti-Dumping Agreement,  the  SCM Agreement  and the GATT 1994. 

Factual Background.

The CDSOA was enacted on 28 October 2000 as part of the Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act, 2001.  The CDSOA amended Title VII of the Tariff Act of 1930 (the "Tariff Act"), entitled "Countervailing and Antidumping Duties", by adding a new Section 754 entitled "Continued Dumping and Subsidy Offset".  

The CDSOA provides that the United States Commissioner of Customs ("Customs") shall distribute, on an annual basis, duties assessed pursuant to a countervailing duty order, an anti-dumping duty order, or a finding under the United States Antidumping Act of 1921, to "affected domestic producers" for "qualifying expenditures".  An "affected domestic producer" is defined as a domestic producer that:  (a) was a petitioner or interested party in support of the petition with respect to which an anti-dumping duty order, a finding under the Antidumping Act of 1921,  or a countervailing duty order has been entered;  and (b) remains in operation.  The term "qualifying expenditures" refers to expenditures on specific items identified in the CDSOA, which were incurred after the issuance of the anti-dumping duty finding, or order or countervailing duty order.  Those expenditures must relate to the production of the same product that is subject to the anti-dumping or countervailing duty order, with the exception of expenses incurred by associations which must relate to the same case. 

The CDSOA, together with its implementing regulations issued by Customs, provides that Customs shall establish a special account  and  a clearing account with respect to each countervailing duty order, anti-dumping duty order, or a finding under the Antidumping Act of 1921.  All anti-dumping and countervailing duties assessed under such orders or findings are first deposited into a "clearing account".   Transfers from "clearing accounts" to "special accounts" are made by Customs throughout the fiscal year.   Such transfers are made only after the entries  in question that are subject to a countervailing duty order or an anti-dumping order or finding have been properly "liquidated".   Thus, when, and only when, the entries have been liquidated, will the proceeds be transferred to a special account.  Only once there are funds in a special account (not a clearing account), can distributions to domestic producers under the CDSOA be made.   Therefore, if liquidation of entries has been enjoined, for instance, by a court—perhaps pending judicial review of the determination of dumping or countervailable subsidization—or if liquidation of entries has been suspended due to an administrative review of those entries, the relevant special account will be empty and no distribution can be made to domestic producers under the CDSOA. 

Pursuant to the CDSOA, Customs shall distribute all funds (including all interest earned on the funds) from the assessed duties received in the preceding fiscal year (and contained in the special accounts) to each affected domestic producer based on a certification by the affected domestic producer that it is eligible to receive the distribution and desires to receive a distribution for qualifying expenditures incurred since the issuance of the order or finding.   Funds deposited in each special account during each fiscal year are to be distributed no later than 60 days after the beginning of the following fiscal year.   There is no statutory or regulatory requirement as to how a disbursement is to be spent.  The Panel found that CDSOA distributions to "affected domestic producers" made as of December 2001 totalled over $206 million. 

Issues Raised in This Appeal.

1.                  The following issues are raised in this appeal:

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

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

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

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

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

 

Findings and Conclusions.

For the reasons set out in this Report, the Appellate Body:

upholds the finding of the Panel, in paragraphs 7.51 and 8.1 of the Panel Report, that the CDSOA is a non-permissible specific action against dumping or a subsidy, contrary to Article 18.1 of the  Anti-Dumping Agreement  and Article 32.1 of the SCM Agreement;

consequently upholds the Panel's finding, in paragraphs 7.93 and 8.1 of the Panel Report, that the CDSOA is inconsistent with certain provisions of the  Anti-Dumping Agreement  and the SCM Agreement  and that, therefore, the United States has failed to comply with Article 18.4 of the  Anti-Dumping Agreement, Article 32.5 of the SCM Agreement  and Article XVI:4 of the  WTO Agreement;

upholds the Panel's finding, in paragraph 8.4 of the Panel Report, that, pursuant to Article 3.8 of the DSU, to the extent that the CDSOA is inconsistent with provisions of the  Anti-Dumping Agreement  and the  SCM Agreement,  the CDSOA nullifies or impairs benefits accruing to the Complaining Parties under those Agreements;

reverses the Panel's findings, in paragraphs 7.66 and 8.1 of the Panel Report, that the CDSOA is inconsistent with Article 5.4 of the  Anti-Dumping Agreement  and Article 11.4 of the  SCM Agreement;

rejects the Panel's conclusion, in paragraph 7.63 of the Panel Report, that the United States may be regarded as not having acted in good faith with respect to its obligations under Article 5.4 of the  Anti-Dumping Agreement  and Article 11.4 of the SCM Agreement; and

rejects the claim of the United States that the Panel acted inconsistently with Article 9.2 of the DSU by not issuing a separate panel report in the dispute brought by Mexico.

The Appellate Body  recommends  that the DSB request the United States bring the CDSOA into conformity with its obligations under the  Anti-Dumping Agreement,  the  SCM Agreement,  and the GATT 1994.

Signed in the original at Geneva this 17th day of December 2002.