TWN Info Service on WTO and Trade Issues (Sept11/01)
24 September 2011
Third World Network

DSB adopts panel ruling in US-Vietnam shrimp dispute
Published in SUNS #7212 dated 5 September 2011

Geneva, 2 Sep (Kanaga Raja) -- The WTO Dispute Settlement Body (DSB) on Friday adopted the report of the panel that had found that the United States had acted inconsistently with its WTO obligations in its imposition of anti-dumping measures on imports of certain frozen warm-water shrimp from Vietnam.

In a ruling issued on 11 July, the panel had recommended that the United States bring its measures into conformity with its obligations under the Anti-Dumping Agreement and the GATT 1994.

In other actions, China has appealed an earlier panel ruling that had found that export restraints that it has imposed on certain important raw materials were inconsistent with its obligations under the WTO.

That ruling amongst others found that China's invocation of the General Exception provisions of GATT 1994 is limited by the terms of Paragraph 11.3 of its Accession Protocol.

The panel had acknowledged that by this ruling, China is in a position unlike that of most other WTO Members who are not prohibited from using export duties, either via the terms of their respective accession protocols or their membership to the WTO at the time of its inception.

However, based on the text of the protocol, the panel had said that it can only assume that this was the intention of China and the WTO Members when negotiating China's Accession Protocol. The situation created by this provision taken in isolation may be perceived as imbalanced, but the panel had said it can find no legal basis in the Protocol or otherwise to interpret Paragraph 11.3 of China's Accession Protocol as permitting resort to Article XX of the GATT 1994. (See SUNS #7185 dated 7 July 2011 for details of the panel ruling.)

According to information posted on the WTO's website, on 31 August, China notified the DSB of its decision to appeal the panel ruling, which was issued on 5 July.

As a result of its decision to appeal the panel ruling, this item, which was scheduled for adoption, was removed from the agenda of the meeting of the DSB on Friday.

The panel ruling in the US-Vietnam shrimp dispute is yet another in a long series of rulings against the US over its continued use of zeroing methodology in anti-dumping investigations, reviews and levy of duties on this basis.

The dispute concerned the imposition of anti-dumping duties in US proceedings on shrimp. The US Department of Commerce (USDOC) initiated the original investigation in January 2004, issued an anti-dumping duty order in February 2005, and has since undertaken periodic reviews and a sunset review.

The US practices challenged by Vietnam included: (a) The USDOC's use of zeroing in the calculation of dumping margins; (b) The application of a "country-wide rate" based on adverse facts available to certain Vietnamese exporters or producers that could not establish that they act independently from the Vietnamese Government in their commercial and sales operations; ( c) The USDOC's limitation of the number of exporters or producers selected for individual investigation or review.

Vietnam had also made claims with respect to the "all others" rate applied by the USDOC in the second and third administrative reviews, as well as with respect to the USDOC's "zeroing methodology", as such. (See SUNS #7189 dated 13 July 2011 for details of the panel ruling.)

In its statement at the DSB on Friday, Vietnam, welcoming the adoption of the panel report, said that it expects a prompt and full implementation of the DSB's recommendations by the US.

In its statement at the DSB, with respect to the "zeroing" claims at issue in the dispute, the US noted that in one context, the panel simply adopted the reasoning of the Appellate Body in some prior disputes, and in another context, relied on different reasoning that was also problematic.

According to the US, although the panel quoted the text of the relevant Agreement provisions, the panel did not undertake any assessment of the ordinary meaning of that text, in its context, and in light of the object and purpose of the Anti-Dumping Agreement, as provided for in the Dispute Settlement Understanding (DSU).

The US said that it has made very clear its significant concerns with the Appellate Body's evaluation of "zeroing" in past disputes. "We believe that those reports, as well as the current panel report, go beyond what the text of the agreements provides and what negotiators agreed to in the Uruguay Round."

The US further said that as it had previously explained to the DSB, the US Department of Commerce has announced a proposal to change the calculation of weighted average dumping margins and assessment rates in certain anti-dumping proceedings.

In an intervention, the European Union welcomed the panel's findings that the use of zeroing by the US in administrative reviews is inconsistent with Article 2.4 of the Anti-Dumping Agreement and that the zeroing methodology of the US, which is still being applied in every case, is in breach of Article 9.3 of the Anti-Dumping Agreement and Article VI: 2 of the GATT 1994.

The EU particularly welcomed the panel's conclusion that the Appellate Body has previously found that zeroing is "inherently inconsistent" with the "fair comparison" requirement of Article 2.4 and the panel's decision to adopt this reasoning as its own.

"This is yet another demonstration that the WTO-inconsistency of zeroing has now been definitively decided and that the United States should take immediate steps to abandon this practice and to bring itself into conformity with its WTO obligations," said the EU.

Meanwhile, under other business, the Chair of the DSB, Ambassador Elin Johansen of Norway, announced that she had received four nominations for two positions on the Appellate Body.

According to trade officials, the four candidates are: Manzoor Ahmad of Pakistan, Ujal Singh Bhatia of India, and Thomas Graham and John Doyle Greenwald of the United States.

A deadline of 31 August had been set for Members to nominate candidates for the two positions.

The two Appellate Body members that have announced their intention to step down after their terms expire on 10 December 2011 are Jennifer Hillman of the United States and Lilia Bautista of the Philippines.

The DSB Chair said that the selection committee - consisting of the Director-General, the DSB Chair, and the Chairs of the General Council, the Goods Council, the Services Council and the TRIPS Council - will interview these candidates and hear comments from Members in September and October.

According to trade officials, the DSB Chair will meet with the selection committee in the week of 12 September to come up with a timetable for the interviews etc.

According to the DSB Chair, the selection committee will make a recommendation to the DSB by 10 November, in order for the DSB to make a final decision on 21 November. +