Panel establishment

DS420: United States — anti-dumping measures on corrosion-resistant carbon steel flat products from Korea

The DSB established a panel following Korea’s first time request (WT/DS420/5) to review anti-dumping measures imposed by the US on steel products from Korea. The US did not object to the establishment of the panel, referring to the bilateral procedural agreement with Korea (WT/DS420/6).

Korea explained that consultations with the US, requested on 31 January 2011, allowed for a better understanding of the parties’ positions but failed to resolve the dispute. Korea noted that the US announced it would no longer use zeroing in annual reviews and welcomed the US efforts (see also disputes DS322, DS350 and DS294 below). Korea regretted that the US plans did not go far enough to fully address its concerns. Korea noted that zeroing in administrative reviews had repeatedly been found inconsistent with the WTO Anti-dumping Agreement and that the US was expected to amend the methodology accordingly.

The US said that its Department of Commerce published on 14 February 2012 a modification to its procedure regarding the use of zeroing in anti-dumping reviews. The US said that this modification would address the matter covered in Korea’s panel request. The US added that the process of modifying its methodologies to respond to DSB rulings on zeroing had been completed and, therefore, moving forward with this dispute served no purpose.

The EU, Japan, China, Norway and Mexico reserved their third-party rights.

 

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Implementation

DS322: United States — measures relating to zeroing and sunset reviews

The US submitted its status report (WT/DS322/36/ADD.29) on the implementation of the DSB recommendations. The US informed WTO members that it had signed a Memorandum of Understanding (MOU) with Japan to resolve this dispute (WT/DS322/44).

The US recalled that in December 2010, its Department of Commerce announced a proposal to implement the DSB rulings regarding zeroing by changing the calculation of weighted average dumping margins and assessment rates in certain anti-dumping proceedings. The US informed the DSB that its Department of Commerce had finalised the proposal and published a final modification on 14 February 2012. The US said that the final modification would apply to all reviews initiated after publication as well as on-going ones for which the preliminary determination was issued 60 days or more after publication.

The US added that the MOU provided that the US would take actions to meet Japan’s concerns, including by revising its calculation methodologies and that Japan would withdraw its retaliation request (WT/DS322/23 and WT/DS322/24) by 6 August 2012. The US said that in response to a joint request of the parties, the arbitrator had continued the suspension of its work on Japan’s retaliation request, up to 20 August 2012. The US emphasized that it would continue to press in on-going WTO negotiations for affirmation that zeroing was consistent with WTO rules. 

Japan said that the MOU concluded with the US set forth parameters and a timeframe that must be fulfilled, and included a number of steps the US must take to achieve a mutually agreed solution to this dispute. Japan expected that all steps of action in the MOU would be fulfilled and executed by the US. Japan would continue to monitor any developments closely to this end and reserved its right to initiate a compliance proceeding (Article 21.5 of the Dispute Settlement Understanding (DSU)) with respect to the final modification adopted by the US. Japan recalled that seven years had passed since this dispute was initiated on 24 November 2004.

  

DS350: United States — continued existence and application of zeroing methodology  and  DS294: United States — laws, regulations and methodology for calculating dumping margins (“zeroing”)  

The US submitted its status reports (WT/DS350/18/ADD.26 and WT/294/38/ADD.20) on the implementation of the DSB recommendations and informed the DSB that it had signed a  Memorandum with the European Commission on both on-going disputes DS350 and DS294 (WT/350/20 and WT/DS294/43). The US mentioned the final modification changing the calculation of weighted average dumping margins and assessment rates in certain anti-dumping proceedings and referred to its statement in the item above (DS322).

The US said that the Memorandum provided that the US would take actions to address the EU’s concerns by revising its calculation methodologies and that the EU would withdraw its retaliation request in dispute DS294 (WT/DS294/35) and would take no further actions in relation to the disputes DS350 and DS294. The US added that in response to a joint request of the parties, the arbitrator had continued the suspension of its work, on the EU’s retaliation request in DS294, up to 28 June 2012.

The EU said that the roadmap agreed with the US set out the steps the US would take to ensure full compliance. The EU said that the US committed to conduct reviews of certain anti-dumping orders that would not be covered by the new methodology and expected those reviews to be completed by mid-June 2012 and zeroing to be removed from all dumping margin calculations. The EU hoped and expected that the satisfactory completion of all steps under the roadmap would effectively bring the zeroing disputes to an end.

 

DS382: United States — anti-dumping administrative reviews and other measures related to imports of certain orange juice from Brazil  

The US presented a status report (WT/DS382/10/ADD.2) on the implementation of the DSB ruling in this dispute. Referring to the modification to its procedures regarding zeroing in anti-dumping reviews, published on 14 February 2012 (see details above in DS322, DS350 and DS294), the US said it was currently in the process of arranging discussions with Brazil on this issue.

Brazil said it was still analysing the newly published legislation and reviewing whether it would be sufficient to comply with the DSB recommendations.

 

DS396 and DS403: Philippines — taxes on distilled spirits  

On 20 January 2012, the DSB adopted the panel and Appellate Body reports which reviewed the Philippines’ tax regime on distilled spirits.

According to the WTO rules (Article 21.3 of the Dispute Settlement Understanding), the Philippines has 30 days after the adoption of the reports to inform the DSB of its intentions regarding implementation.

The Philippines informed the DSB that it would need a reasonable period of time to implement the DSB ruling and was already engaged in discussions with the EU and the US on this issue.

The US and the EU stood ready to discuss a reasonable period of time with the Philippines.

 

Adoption of reports

DS394, DS395 and DS398: China — measures related to the exportation of various raw materials  

The DSB adopted the panel and Appellate Body reports (WT/DS394/R — corr.1 and add.1, WT/DS394/AB/R, WT/DS395/R — corr.1 and add.1, WT/DS395/AB/R, WT/DS398/R — corr.1 and add.1, WT/DS398/AB/R) which reviewed China’s export restrictions on raw materials.

The US said that Chinese export restraints on the industrial raw material inputs had created significant unfair advantages for Chinese users of these inputs over their foreign competitors. According to the US, these Chinese export restraints also put economic pressure on foreign competitors to move their operations and technologies to China. The US said that in addition to the products covered in this dispute, China currently maintained export duties on over 350 products. The US looked forward to China’s elimination of these duties. The US concluded that all WTO members were bound together through a global interdependence in the trade of raw materials. The US added that China’s policies had caused massive distortions and harmful disruptions in supply chains throughout the global marketplace.

The US referred to a procedural issue in relation to article 17.5 of the DSU and added that it was not desirable for the Appellate Body to provide less transparency for members on the circumstances leading to consideration by the DSB of a report circulated outside the 90-day period. Seven WTO members supported the US comments on this issue.

The EU welcomed the findings of the report. The EU believed that the rulings were of systemic importance and in the interest of all WTO members, as all countries were interdependent in terms of their raw materials supplies and global production chains.

The EU recalled that Chinese export restrictions had significantly distorted the market and had created competitive advantages for the Chinese manufacturing industry to the detriment of foreign competitors. The EU added that these policies had put pressure on foreign producers to move their operations and technologies to China, as companies outside China were either cut off supplies or had access only at much higher prices than companies in China. The EU said that export restrictions were not the appropriate tool to promote a cleaner and sustainable production of raw materials and added that these aims could not be used as a pretext to pursue protectionist industrial policies. The EU believed that the report’s clear findings had an effect beyond the products at issue and expected China to revisit its overall restrictions regime.

Mexico said that restrictions imposed unduly by China on its raw materials seriously affected the competitiveness of Mexican steel producers which had difficulties in competing with the Chinese steel producers, unduly benefiting from China’s industrialisation policies. According to Mexico, as a result of those restrictions, the prices of raw materials increased abroad and were reduced in China. Mexico said that Chinese producers were able to export finished products at prices that Mexican products had difficulties to compete with. Mexico recalled that, according to China’s WTO accession conditions, China committed to eliminate all export fees and charges except for export duties applied to 84 products (Annex VI of China’s Protocol of Accession).  Mexico hoped that China would reconsider its tariff policy through which it continued to maintain export duties on a large quantity of products, the majority of which were not listed as an exception in China’s Protocol of Accession.

China said that, for the purpose of protecting the environment and exhaustible natural resources, its government reinforced its administration on certain resource products in the recent years, especially on the high-pollution, high energy consuming and resource dependent products. China said that the WTO rules allowed a member to take necessary means to realize its policy objectives such as protection of the exhaustible resources and the environment. China added that it would further assess the panel and Appellate Body rulings and would apply reasonable policies to administer resource products in accordance with WTO rules so as to realize sustainable development.

 

DS405: European Union — anti-dumping measures on certain footwear from China  

The DSB adopted the panel report (WT/DS405/R) which examined anti-dumping measures imposed by the EU on Chinese footwear.

China said it was pleased that the anti-dumping measures challenged were no longer in force and that it prevailed on several key legal claims raised in this dispute. China urged the EU to take the necessary positive steps to ensure prompt and full compliance with the findings in the report. China hoped that the EU’s termination of  anti-dumping duties on footwear challenged in this dispute would mark, once and for all, the permanent end of over 16 years of trade-distorting protection of its footwear industry at the expense of Chinese producers. China also urged the EU to modify its anti-dumping practice accordingly so as to avoid similar violations in future investigations.

The EU regretted that Article 9.5 of its anti-dumping regulation was found by the panel to be WTO illegal as such and as applied in the original investigation. The EU was pleased that the panel rejected almost the entirety of the great number of claims of WTO inconsistency advanced by China. The EU mentioned that the measure at issue in this dispute expired on 31 March 2011.

 

DS415, DS416, DS417 and DS418: Dominican Republic — safeguard measures on imports of polypropylene bags and tubular fabric 

The DSB adopted the panel reports (WT/DS415/R, WT/DS416/R, WT/DS417/R, WT/DS418/R and add.1) which reviewed the safeguard measures imposed by the Dominican Republic on imports of plastic bags and tubular fabric.

The Dominican Republic voiced its disappointment about the panel findings. The Dominican Republic made legal comments on the findings of the panel and said that the safeguard measure allowed for the national production to modernise and face the increase of imports.

El Salvador, Guatemala, Costa Rica and Honduras welcomed the findings of the panel and made legal comments on the panel report. All four co-complaints urged the Dominican Republic to repeal the safeguard measure promptly, as their industries suffered considerable losses.

 

Other business: Appellate Body members selection process

The DSB chair, Ambassador Elin Østebø Johansen (Norway), reminded WTO members that Appellate Body member Shotaro Oshima had expressed his intention to resign from his position (WT/DSB/56), leaving a vacancy to be filled in the Appellate Body. Ambassador Johansen also reminded members that Appellate Body member Yuejiao Zhang, whose mandate would expire on 31 May 2012, expressed her willingness to be reappointed for a second four-year term. 

The DSB agreed the following proposal laid down by Ambassador Johansen regarding the appointment/reappointment process:

• to launch as from 22 February 2012 the selection process for appointment of a new member of the Appellate Body for the position currently held by Mr. Shotaro Oshima;

• the replacement for Mr. Oshima be appointed for a four-year term beginning 1 June 2012 or as soon thereafter as possible;

• to set a deadline of 30 March 2012 for members’ nominations of candidates for Mr. Oshima’s position;

• to establish a Selection Committee, as is customary practice based on the procedures set forth in document WT/DSB/1, which would consist of the Director-General and the 2012 Chairpersons of the General Council, Goods Council, Services Council, TRIPS Council and the DSB, and would be Chaired by the 2012 Chair of the DSB;

• the Selection Committee to conduct interviews with candidates in April 2012 to hear the views of WTO members in the first half of May 2012, and to make its recommendation to the DSB by 11 May 2012, if possible, so that the DSB can take a final decision at its regular meeting on 24 May 2012;

• to ask the DSB Chair to carry out consultations on the possible reappointment of Ms. Yeujiao Zhang, who is eligible for reappointment for a second four-year term beginning on 1 June 2012, and who has expressed her interest and willingness to be reappointed.

 

Next meeting

The next regular meeting of the DSB will be held on 23 March 2012.