TWN Info Service on WTO and Trade Issues (Sept10/09)
Panel set in US-Mexico
stainless steel "zeroing" dispute
Geneva, 21 Sep (Kanaga Raja) -- The WTO Dispute Settlement Body (DSB) on Tuesday agreed to establish a panel, at the request of Mexico, to rule on compliance by the United States of an earlier WTO ruling concerning its final anti-dumping measures on stainless steel sheet and strip in coils from Mexico.
Although this was a first-time request by Mexico under Article 21.5 of the Dispute Settlement Understanding, the US did not object to the panel's establishment, as it was entitled to at this instance, on account of a prior sequencing agreement between the two parties.
The European Union,
The dispute concerns the calculation of the margin of dumping by the US Department of Commerce (USDOC) based on the "zeroing" methodology that does not fully reflect export prices that are above normal values.
On 20 May 2008, the
DSB adopted the Appellate Body Report and the Panel Report, as modified
by the Appellate Body Report, in the dispute brought by
In its dispute against the US, Mexico had claimed that "model zeroing in investigations", model zeroing as applied in the original investigation at issue in the dispute, "simple zeroing in periodic reviews", and simple zeroing as applied in the five periodic reviews at issue in the dispute, were inconsistent with the provisions of the Anti-Dumping Agreement and the WTO Agreement.
In its ruling, the panel found that "model zeroing in investigations", is, as such, inconsistent with Article 2.4.2 of the Anti-Dumping Agreement, and that the USDOC acted inconsistently with this provision by using model zeroing in the original investigation at issue.
The panel however found that "simple zeroing in periodic reviews" is not, as such, inconsistent with Articles VI: 1 and VI: 2 of the GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement.
The Appellate Body subsequently upheld the panel ruling that model zeroing in original investigations is, as such, inconsistent with Article 2.4.2 of the Anti-Dumping Agreement.
Reversing the panel's
finding, the Appellate Body however ruled that simple zeroing in periodic
reviews is, as such, inconsistent with Article VI: 2 of the GATT 1994
and Article 9.3 of the Anti-Dumping Agreement. It found that the
In a communication
to the DSB,
In its communication,
On 27 December 2006, the USDOC had published a notice stating its intention to abandon the use of zeroing in average-to-average comparisons in anti-dumping original investigations, pursuant to the recommendations and rulings of the DSB. The final modification became effective for investigations initiated on or after 22 February 2007.
At the DSB meeting
on 20 May 2009, the
With respect to the
five administrative reviews that were challenged "as applied,"
With respect to other
findings and recommendations in the dispute, the
On the DSB recommendations and rulings that the use of simple zeroing in periodic reviews is "as such" inconsistent with Article VI: 2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement, Mexico claims that the United States has taken no steps to eliminate simple zeroing in periodic reviews and has therefore failed to implement the DSB's recommendations and rulings in this regard by the end of the reasonable period of time or thereafter.
On the DSB recommendations and rulings that the United States acted inconsistently with Article VI: 2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement by applying simple zeroing in the five periodic reviews originally at issue in this dispute, Mexico said that the margins of dumping calculated using zeroing in these five periodic reviews continue to have legal effects after the end of the reasonable period of time and have been relied upon by the USDOC in several subsequent closely connected measures, including in the 2005 and 2010 "sunset" reviews, and revocation decisions made in the context of subsequent anti-dumping administrative reviews, including the seventh and ninth administrative reviews.
Also included are the 2005 and 2010 five-year "sunset" reviews of the anti-dumping order on stainless steel sheet and strip in coils from Mexico conducted by the USDOC pursuant to section 751( c) of the Tariff Act of 1930, as amended, in which the USDOC relied upon margins of dumping calculated using simple zeroing.
Mexico also mentioned among the closely connected measures, all other subsequent closely connected measures taken by the United States in relation to the anti-dumping order on stainless steel sheet and strip in coils from Mexico in which the USDOC calculated, or relied upon, margins of dumping calculated using simple zeroing or model zeroing, including the negative "absence of dumping" revocation determinations made in the seventh and ninth administrative reviews.
The Mexican communication said that by failing to take action to bring these measures into compliance as of the end of the reasonable period of time established in this proceeding and by continuing to use simple zeroing in subsequent closely connected measures, the United States has imposed, assessed and/or collected anti-dumping duties in excess of the proper margin of dumping.
The United States thereby improperly imposes duties on the importation of Mexican goods in excess of the duties permitted under the United States' Schedule of Concessions and otherwise nullifies or impairs benefits accruing to Mexico under the covered agreements, said the communication.
In a statement at the
Mexico noted that the DSB has issued multiple binding rulings, including those issued and adopted in the present dispute, declaring that the use by the US of "simple zeroing" to determine the margins of dumping in periodic reviews is contrary to the US' obligations under Article VI: 2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement, both "as such" and "as applied" in the various measures brought before the dispute settlement panels.
In other actions, the
DSB adopted the reports of the panels in the disputes brought by the
In a ruling issued
on 16 August, the panel said that the tariff treatment by the EC and
In a statement at the
First, the report affirms that the scope of the tariff concessions are not dictated by classification technicalities. Both in its findings with respect to products covered by the so-called "Attachment A" of the Information Technology Agreement (ITA), as well as for products covered by "Attachment B", the panel interpreted the terms of the Schedules based on their ordinary meaning in context, in light of the object and purpose of the GATT 1994.
According to the
Second, said the
In its statement, noting that the dispute is about the scope of the tariff concessions on certain IT products assumed by the EU and its Member States in their Schedules of Concessions to the GATT 1994 as a result of the ITA, Japan said that the issue before the panel is whether technological innovations in those products would remove them out of the scope of those EU tariff concessions.
In so finding, said
In its statement, Chinese Taipei said that trade in IT products is of vital importance to it. Such products make up a very significant portion of its international trade. The potential exclusion of important categories of IT products from the tariff concessions as agreed in the WTO Information Technology Agreement is therefore of fundamental concern to its traders and for its economy, added Chinese Taipei.
Chinese Taipei was pleased that the panel has confirmed that the complainants were not obliged to identify all aspects of the products at issue in order to succeed with their "as such" claims, but that the identification of certain characteristics which automatically exclude the products concerned from duty-free treatment was sufficient. The issue was therefore whether it is permissible to exclude certain products from duty-free treatment simply because they have certain identified characteristics.
In its statement, the EU commended the panel on rejecting the over-simplistic reading of its commitments pursuant to the ITA advanced by the complainants and confirming that not all multi-functional copy machines, television set-top boxes and flat panel display devices necessarily fall within the scope of its concessions pursuant to the ITA.
Whether or not a product falls within the scope of a particular concession has to be determined on a case-by-case basis, taking into account all the objective characteristics of a particular product. "This reasoning of the panel is of crucial importance."
On the other hand, the EU said that it is disappointed that the panel has adopted an over-broad reading of certain commitments. Extending commitments in such a way may tend to blur the scope of commitments and hence may make it more difficult for negotiators to agree on new commitments because of the risk that those commitments may be understood in a manner which at least some of the parties did not intend.
The EU remained of the view that it is by negotiation, not by litigation, that the scope of the ITA needs to be extended, and renewed its call for an update of the ITA.
As a result, and despite its reservations concerning certain conclusions of the panel, the EU said that it has decided not to appeal and will instead focus its efforts on implementation and - in the hope other WTO Members will now engage - in negotiations of an updated ITA which will be fit for the 21st century.