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Complaint by the European Communities.
On 30 June 1998,
the EC requested consultations with the US in respect of the alleged
imposition of countervailing duties on certain hot-rolled lead and bismuth
carbon steel (leaded bars) from the UK. The EC asserted that the US
imposed countervailing duties of 1.69 per cent on United Engineering
Steels Ltd (UES) for the review period 1 January 1994 to 31 December 1994,
and of 2.4 per cent for the review period 1 January 1995 to 20 March 1995,
on the basis of subsidies which had been granted to British Steel
Corporation (BSC). The EC also contended that the US imposed
countervailing duties on British Steel plc (BSplc) / British Steel
Engineering Steels LTD (BSES) for the review period 1 January 1996 to 31
December 1996 on the basis of subsidies granted to BSC before its
privatization in 1988. The EC alleged that these impositions of
countervailing duties constitute a violation of Articles 1.1(b), 10, 14
and 19.4 of the Subsidies Agreement.
On 14 January 1999, the EC requested the establishment
of a panel. At its meeting on 1 February 1999, the DSB deferred the
establishment of a panel.
Panel and Appellate Body proceedings
Further to a second request to establish a panel
by the EC, the DSB established a panel at its meeting on 17 February 1999.
Brazil and Mexico reserved their third-party rights. On 16 March 1999, the
Panel was composed. The report of the panel was circulated to Members on
23 December 1999. The panel found that by imposing countervailing duties
on 1994, 1995 and 1996 imports of leaded bars produced by UES and BSES
respectively, the US violated Article 10 of the Subsidies Agreement. In
reaching this conclusion, the panel noted that the presumption of “benefit” flowing from untied, non-recurring
contributions” even after changes in ownership was rebutted in the
circumstances surrounding the changes in ownership leading to the creation
of UES and BSplc/BSES respectively, inter alia, because the change
in ownership involved the payment of consideration for the productive
assets etc. acquired by those entities from BSC. According to the panel,
the US should therefore have examined whether the production of leaded
bars by UES and BSplc/BSES respectively, and not BSC, was subsidized.
On 27 January 2000, the US notified its intention to
appeal certain issues of law and legal interpretations developed by the
panel. The report of the Appellate Body was circulated to Members on 10
May 2000. The Appellate Body upheld all of the findings of the panel that
were appealed but on one point corrected the reasoning of the panel.
The DSB adopted the Appellate Body report and the panel report, as
upheld by the Appellate Body report, on 7 June 2000.
Implementation of adopted reports
DSB meeting on 5 July 2000, the United States announced that it
considered to have implemented the recommendations of the DSB with
regard to the case concerning its countervailing duty order on certain
hot-rolled lead and bismuth carbon steel products originating in the
As a follow-up to this case, the EC has filed a new
complaint against the US continued application of countervailing duties
based on the “change of ownership” methodology. For further
information, see WT/DS212.
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