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See also: One-page summary of key findings of this dispute
Complaint by Japan.
On 18 November 1999, Japan requested consultations with the United States in respect of the preliminary and final determinations of the US Department of Commerce and the US International Trade Commission on the anti-dumping investigation of Certain Hot Rolled Steel Products from Japan issued on 25 and 30 November 1998, 12 February 1999, 28 April 1999 and 23 June 1999. Japan considered that these determinations are erroneous and based on deficient procedures under the US Tariff Act of 1930 and related regulations. The Japanese complaint also concerned certain provisions of the Tariff Act of 1930 and related regulations. Japan claimed violations of Articles VI and X of the GATT 1994 and Articles 2, 3, 6 (including Annex II), 9 and 10 of the Anti-Dumping Agreement.
On 11 February 2000, Japan requested the establishment of a panel. At its meeting on 24 February 2000, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
Further to a second request to establish a panel by Japan, the DSB established a panel at its meeting on 20 March 2000. Brazil, Canada, Chile, the European Communities and Korea reserved their third-party rights. On 9 May 2000, Japan requested the Director-General to determine the composition of the panel. On 24 May 2000, the panel was composed.
The panel report was circulated on 28 February 2001. The panel concluded as follows:
- The United States acted inconsistently with Articles 6.8 and Annex II of the AD Agreement in its application of “facts available” to Kawasaki Steel Corporation (KSC), Nippon Steel Corporation (NSC) and NKK Corporation;
- Section 735(c)(5)(A) of the Tariff Act of 1930, as amended, which mandates that USDOC exclude only margins based entirely on facts available in determining an all others rate, is inconsistent with Article 9.4 of the AD Agreement, and that therefore the US has acted inconsistently with its obligations under Article 18.4 of the AD Agreement and Article XVI:4 of the Marrakesh Agreement by failing to bring that provision into conformity with its obligations under the AD Agreement; and
- The United States acted inconsistently with Article 2.1 of the AD Agreement in excluding certain home-market sales to affiliated parties from the calculation of normal value on the basis of the “arm’s length” test. In addition, in light of the findings above, the panel concluded that the replacement of those sales with sales to unaffiliated downstream purchasers was inconsistent with Article 2.1 of the AD Agreement.
- With respect to those of Japan’s claims not addressed above the panel concluded: (1) that the claim was not within its terms of reference (“general practice” concerning adverse facts available; “general practice” of excluding certain home-market sales from the calculation of normal value), or (2) that, in light of considerations of judicial economy, it is neither necessary nor appropriate to make findings.
On 25 April 2001, the United States notified its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the panel. The Appellate Body circulated its Report on 24 July 2001. In this regard, the Appellate Body upheld the panel’s findings except for the following:
- It reversed the panel’s finding regarding the inconsistency with Article 2.1 of the Anti‑Dumping Agreement of the United States’ methodology for calculating the normal value as regards the using of certain downstream sales made by an investigated exporters’ affiliates to dependent purchasers;
- It found that there was insufficient factual record to allow completion of the analysis of Japan’s claim under Article 2.4 of the Anti-Dumping Agreement that the US did not make a fair comparison in its use of downstream sales when calculating normal value;
- It reversed the panel’s finding that the United States did not act inconsistently with the Anti-dumping Agreement in its application of the captive production provision in its determination of injury sustained by the US hot-rolled steel industry;
- It reversed the panel’s finding that the USITC demonstrated the existence of a causal relationship, under Article 3.5 of the said agreement, between dumped imports and material injury to that industry; but found that there was insufficient factual record to allow completion of the analysis of Japan’s claim on causation;
The DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report, on 23 August 2001.
Reasonable period of time
On 20 November 2001, Japan requested that the reasonable period of time for implementation of the DSB’s recommendations be determined by binding arbitration under Article 21.3(c) of the DSU. Pending the appointment of the arbitrator, Japan and the United States agreed to extend the time-period for the issuance of the award of the arbitrator insofar as the 90 day-period from the adoption of the DSB's recommendations and rulings foreseen in Article 21.3 (c) was about to expire. They agreed that the award of the arbitrator is to be made no later than 19 February 2002. On 19 February 2002, the arbitrator circulated his award. The arbitrator concluded that the reasonable period of time for implementation by the United States of the DSB’s recommendations was 15 months from 23 August 2001, i.e. it expired on 23 November 2002.
On 22 November 2002, the United States requested the DSB to modify the reasonable period of time. The United States proposed that the reasonable period of time be modified so as to expire on 31 December 2003, or on the date on which the first session of the next US Congress adjourns, whichever was earlier. The United States believed that such an extension of time would promote a principal aim of the dispute settlement system, which is to provide mutually satisfactory solutions to disputes. At the DSB meeting of 28 November 2002, the United States stated that it was consulting with Japan and had sought its agreement to extend the reasonable period of time in this case to 31 December 2003 or the end of the first session of the next Congress, whichever is earlier. At its meeting on 5 December 2002, the DSB agreed to the request by the United States for an extension of the reasonable period of time for the implementation of the recommendations and rulings of the DSB in this dispute to 31 December 2003.
On 21 November 2003, the United States notified the DSB that it proposed that the reasonable period of time for implementation of the recommendations and rulings of the DSB be modified so as to expire on 31 July 2004, and that it was consulting with Japan regarding this proposal. At its meeting on 10 December 2003, the DSB agreed to the request by the United States for an extension of the reasonable period of time for the implementation of the recommendations and rulings of the DSB.
On 30 July 2004, the United States notified the DSB that it proposed that the reasonable period of time for implementation of the recommendations and rulings of the DSB be modified so as to expire on 31 July 2005, and that it had consulted with Japan regarding this proposal. At its meeting on 31 August 2004, the DSB agreed to the request by the United States for an extension of the reasonable period of time for the implementation of the recommendations and rulings of the DSB.
Implementation of adopted reports
On 7 July 2005, the parties to the dispute informed the DSB of an Understanding that Japan retains its right to be granted DSB authorization to suspend concessions or other obligations pursuant to Article 22.6 of the DSU at any future date and the United States will not seek to block Japan’s request for DSB authorization on the grounds that such DSB action would not be within the time period set out in the first sentence of Article 22.6 of the DSU.
Following the second extension of the reasonable period of time which ultimately expired on 31 July 2005 (see above), the United States recalled, in its successive status reports that on 22 November 2002, the US Department of Commerce issued a new final determination in the hot-rolled steel anti-dumping duty investigation that implements the recommendations and rulings of the DSB with respect to the calculation of anti-dumping margins in that investigation and that on 19 May 2005, legislation was introduced in the US House of Representatives that would implement the DSB's recommendations and rulings with respect to the US anti-dumping duty statute and stating that the US Administration will continue to work with Congress to enact this legislation. No further actions were notified to the DSB.
The United States, in compliance with Article 21.6 of the DSU, continued to report periodically on its status of implementation. At the DSB meeting on 24 May 2011 the United States stated that with respect to the DSB's recommendations and rulings that had not already been addressed by the US authorities, the US Administration would work with the US Congress with respect to appropriate statutory measures that would resolve this matter. Japan took note of the US report that the United States had taken certain measures to implement part of the DSB's recommendations in November 2002. As for the remaining part of the DSB's recommendations, Japan hoped that the United States would soon be in a position to report to the DSB on more tangible progress. Japan called on the United States to fully implement the DSB's recommendations in this long-standing dispute without further delay.
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