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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Joint complaint by Canada and Mexico.

On 21 December 2000 and 21 May 2001 respectively, the complainants requested consultations with the US concerning the amendment to the Tariff Act of 1930 signed on 28 October 2000 with the title of “Continued Dumping and Subsidy Offset Act of 2000?(the “Act? usually referred to as “the Byrd Amendment? According to the complainants the Act is inconsistent with the obligations of the United States under several provisions of the GATT, the AD Agreement, the SCM Agreement, and the WTO Agreement. In particular, the Act is alleged to be inconsistent with the obligations of the United States under: (i) Article 18.1 of the ADA in conjunction with Article VI:2 of the GATT and Article 1 of the ADA; (ii) Article 32.1 of the SCM Agreement, in conjunction with Article VI:3 of the GATT and Articles 4.10, 7.9 and 10 of the SCM Agreement; (iii) Article X(3)(a) of the GATT; (iv) Article 5.4 of the ADA and Article 11.4 of the SCM Agreement; (v) Article 8 of the ADA and Article 18 of the SCM Agreement; (vi) Article 5 of the SCM Agreement; and (vii) Article XVI:4 of the Marrakesh Agreement establishing the WTO, Article 18.4 of the ADA and Article 32.5 of the SCM Agreement.

On 12 July 2001, the complainants in dispute WT/DS217 requested the establishment of a panel. At its meeting on 24 July 2001, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

Further to a second request to establish a panel by the complainants, the DSB established a panel at its meeting on 23 August 2001. Argentina; Canada; Costa Rica; Hong Kong, China; Israel; Norway and Mexico reserved their third-party rights.

On 10 August 2001, Canada and Mexico requested the establishment of a panel. At its meeting on 23 August 2001, the DSB deferred the establishment of a panel. Further to a second request to establish a panel by Canada and Mexico, the DSB established a panel at its meeting on 10 September 2001. The DSB also agreed, in accordance with Article 9 of the DSU, that the panel established to examine the complaint by Australia, Brazil, Chile, EC, India, Indonesia, Japan, Korea and Thailand (WT/DS217) on 23 August 2001 would also examine the complaint by Canada and Mexico (WT/DS234).

On 15 October 2001, all 11 complainants requested the Director-General to determine the composition of the Panel. On 25 October 2001, the Panel was composed. On 17 April 2002, the Chairman of the Panel informed the DSB that the Panel would not be able to complete its work in six months since the parties were given the maximum amount of time for preparing submissions and oral statements. The Panel expected to complete its work by July 2002.

On 16 September 2002, the Panel Report was circulated to Members. The Panel concluded that the CDSOA was 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 Subsidies Agreement, Articles VI:2 and VI:3 of the GATT 1994, and Article XVI:4 of the WTO Agreement. The Panel rejected the complaining parties?claims that the CDSOA was inconsistent with Articles 8.3 and 15 of the Anti-Dumping Agreement, Articles 4.10, 7.9 and 18.3 of the Subsidies Agreement, and Article X:3(a) of the GATT 1994. They also rejected Mexico’s claim that the CDSOA violated SCM Article 5(b). The CDSOA is a new and complex measure, applied in a complex legal environment. In concluding that the CDSOA was in violation of the abovementioned provisions, the Panel had been confronted by sensitive issues regarding the use of subsidies as trade remedies. If Members were of the view that subsidisation is a permitted response to unfair trade practices, the Panel suggested that they clarify this matter through negotiation. Pursuant to Article 3.8 of the DSU, the Panel concluded that to the extent that the CDSOA was inconsistent with the provisions of the Anti-Dumping Agreement, the SCM Agreement, and the GATT 1994, the CDSOA nullified or impaired benefits accruing to the complaining parties under those agreements. 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 of 1994 by repealing the CDSOA.

On 18 October 2002, the United States notified its decision to appeal to the Appellate Body certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel. On 13 December 2002, the Appellate Body informed the DSB that it was not able to circulate the Report within 60 days from the appeal and that the Report was to be circulated no later than 16 January 2003. On 16 January 2003, the Appellate Body circulated its Report. The Appellate Body:

• upheld 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 upheld 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;
   
• upheld 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;
   
• reversed 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;
   
• rejected 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
   
• rejected 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 recommended 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. Further to Canada’s request, the DSB adopted the Appellate Body Report and the Panel Report, as modified by the Appellate Body, at its meeting on 27 January 2003.

 

Implementation of adopted reports

On 14 March 2003, the complainants requested arbitration under Article 21.3(c) of the DSU to determine the reasonable period of time for implementation by the US of the DSB recommendations. On 24 March 2003, the complainants requested the Director-General to appoint the arbitrator in consultation with the parties pursuant to footnote 12 of the DSU. On 4 April 2003, the Director-General appointed an Arbitrator. On 13 June 2003, the Arbitrator issued its award to the parties. The Arbitrator concluded that the “reasonable period of time?for the United States to implement the DSB’s recommendations and rulings should be 11 months from the date of the DSB’s adoption of the Panel and Appellate Body Reports in this dispute. The reasonable period of time will therefore expire on 27 December 2003.

On 14 January 2004, the DSB was informed that the United States had mutually agreed to modify the reasonable period of time with Thailand, Australia and Indonesia, respectively, so as to expire on 27 December 2004.

 

Proceedings under Article 22 of the DSU (remedies)

On 15 January 2004, on the grounds that the US had failed to implement the DSB recommendations and rulings within the reasonable period of time, Brazil, Chile, the EC, India, Japan, Korea, Canada and Mexico requested the DSB authorization to suspend concessions pursuant to Article 22.2 of the DSU. On 23 January 2004, the US requested, in accordance with Article 22.6 of the DSU, that the matter be referred to arbitration, since the US objected to the level of suspension of concessions proposed by the foregoing parties. At its meeting on 26 January 2004, the DSB decided to refer the matter to arbitration.

On 31 August 2004, the arbitrator circulated its decisions. The arbitrator determined:

• It rejects the position of Brazil, Canada, Chile, the European Communities, India, Japan, Korea and Mexico that the level of suspension of concessions or other obligations should be equivalent to the disbursements made by the United States under the measure at issue, i.e., CDSOA. The Arbitrator considered that this interpretation was not supported by the terms of Article XXIII of GATT 1994 or the DSU. The Arbitrator found it appropriate to rely on the economic effect of the measure, as was done in previous Article 22.6 arbitrations.
   
• The Arbitrator applied an economic model aimed at assessing the effect of disbursements under the CDSOA on exports of the above-mentioned Members to the United States, and thus came up with a coefficient which, multiplied by the amounts disbursed by the United States under the CDSOA in relation to anti-dumping or countervailing duties collected on imports from each of the those Members, gives an assessment of the economic effect of the CDSOA on exports from each of those Members for a given period.
   
• The Arbitrators?decisions do not provide for an actual, single value of trade not to be exceeded by the above-mentioned Members when suspending concessions or other obligations vis-?vis the United States. The awards allow those Members to suspend concessions or other obligations up to a maximum value of trade to be calculated by multiplying the published amount of disbursements under the CDSOA for a given year by the coefficient calculated by the Arbitrator.

On 10 November 2004, Brazil, the European Communities, India, Japan, Korea, Canada and Mexico requested authorization to suspend concessions or other obligations under Article 22.7 of the DSU. At its meeting of 26 November 2004, the DSB authorized the suspension of concessions. On 6 December 2004, Chile requested authorization to suspend concessions or other obligations under Article 22.7 of the DSU. At is meeting of 17 December 2004, the DSB authorized the suspension of concessions.

On 23 December 2004, 7 and 11 January 2005, Australia, Thailand and Indonesia, respectively, reached Understanding with the United States with respect to this dispute. At its meeting of 25 January 2005, the DSB agreed to take note of these Understandings.

On 29 April 2005, the European Communities and Canada notified the DSB that they were suspending, as of 1 May 2005, the application of concessions and related obligations under GATT 1994 on imports of certain products originating in the United States of America. The notifications from the European Communities and Canada say that, for the first year, an ad valorem additional duty of 15 per cent will be imposed on certain products originating in the United States of America, which would cover, over one year, a total value of trade that does not exceed US$ 27.81 million (in respect of the European Communities) and US$ 11.16 million (in respect of Canada) respectively.

On 18 August 2005, Japan notified the DSB that they were suspending, as of 1 September 2005, the application of concessions and related obligations under GATT 1994 on imports of certain products originating in the United States. The notification from Japan states that, for the first year, an ad valorem additional duty of 15 per cent will be imposed on certain products originating in the United States, which would cover, over one year, a total value of trade that does not exceed US$ 52.10 million.

At the DSB meeting on 17 February 2006, the United States stated that the US Congress had approved the Deficit Reduction Act on 1 February 2006 and the President had signed the Act into law on 8 February 2006 bringing the US into conformity with its WTO obligations. Australia; Brazil; Canada; Chile; Indonesia; Hong Kong, China; India; Japan; Korea; Mexico; Thailand and the European Communities welcomed the recent steps taken by Congress towards the repeal of the CDSOA but disagreed with the United States that it had brought its measures fully into conformity with the DSB’s recommendations and rulings.

On 28 April 2006, 19 April 2007 and 3 April 2008, the European Communities notified the DSB of the new list of products on which the additional import duty would apply, prior to the entry into force of a level of suspension of concessions. On 22 August 2006, 23 August 2007 and 29 August 2008, Japan notified the DSB of the new list of products on which the additional import duty would apply, prior to the entry into force of a level of suspension of concessions.