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US Revokes Countervailing Duties On Steel Imports From UK, Not Others

by Chakravarthi Raghavan

Geneva, 5 July 2000 -- The United States told the Dispute Settlement Body (DSB) of the WTO that it had already implemented a panel ruling on some steel exported by privatized steel producers in the UK, but would not commit itself to rescinding similarly, 20 other WTO illegal investigations and duties against other exporters.

The US Ambassador Mrs Rita Hayes said the countervailing duty orders— imposed on imports of certain speciality steel, hot-rolled lead and bismuth steel bars, produced and exported by a formerly publicly-owned steel producer—had been rescinded pending an administrative review.

Since the US had already implemented the ruling, the subject should not figure on the agenda of future WTO/DSB meetings under the regular item of ‘surveillance’ rulings and DSB recommendations.

The special meeting of the DSB had been convened to hear the action proposed by the United States to implement the ruling (of a panel and Appellate Body) and recommendations adopted by the DSB on 7 June.

After the European Union and Brazil criticised such a stand, the US Ambassador Rita Hayes said that the US Commerce Department and the International Trade Commission were reviewing the procedures in investigations on imports of subsidised products, and that the views at the DSB would be conveyed to Washington.

The EC had pointed out that while the US had implemented the ruling in respect of the one case that had figured in the panel proceedings, there were some 20 similar duties or investigations—where the state support or subsidy provided to a public enterprise that was subsequently privatized is being considered a continuing export subsidy.

The United States however argued that the ruling of the Appellate Body applied only to that particular case. The Commerce Department in Washington, she said, was reviewing the procedures.

Brazil pointed out that at the time the DSB adopted the reports of the panel and Appellate Body, it had expressed its keen interest in the way the US was planning to implement the findings and recommendations. Like the privatizations at issue in the US-EC dispute (over British steel), Brazil had privatized all its flat-rolled steel producers in early 1990s. And like the British steel privatization, this had resulted in arms-length, fair-value sales of the shares of three companies to private owners. In the CVD proceedings in the US against British and Brazilian steel mills, the US Commerce Department had found no reason to question the arm’s-length, fair value nature of the privatization transactions.

While the privatization of British steel resulted from a combination of asset sales and share sales, the Brazilian privatization was entirely by sales of shares in the companies - a process that ensured the highest possible degree of transparency and market responsiveness.  Hence, the findings and recommendations of the panel and the Appellate Body in the US-EC British steel dispute applied in full force to the US Commerce Department’s analysis of the privatization of Brazilian steel mills.

“There simply are no meaningful factual or legal distinctions between privatization of the Brazilian mills and privatizations at issue in the dispute with EC...The only consequential distinction (between the two) ... is that Brazil had not yet requested consultations or the establishment of a panel to address the US Commerce Department’s treatment of the Brazilian privatization in the CVD proceedings.”

It was therefore with surprise and disappointment that Brazil heard the US statement (that the ruling applied only to the particular case) that it had rescinded the orders against the British steel, and that the subject should no longer figure on the DSB agenda. Brazil was absolutely certain that the US was fully aware that the imposition of countervailing duties on imports from privatized Brazilian mills was a practice squarely in violation of the Subsidies and Countervailing Measures agreement. The reports adopted by the DSB on 7 June left no margin for doubts. The US was also fully aware of the time and resources required by a new dispute, even if the complaining party was sure it was litigating a clear winner. As a developing country, Brazil would deeply regret if WTO members opt to impose such a burden on other parties, for whatever reason.

Brazil was still hopeful that the US had not yet exhausted its implementation measures with the steps announced at the DSB and that it would proceed to adjust its CVD practices to conform to the recommendations adopted.

The US said that the Commerce Department and the ITC were reviewing their procedures in relation to the administrative review of the existing orders and duties.-SUNS4703

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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