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See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European
Communities.
On 10 November 2000, the EC requested consultations with the
US in respect of countervailing duties imposed by the US on imports of
certain corrosion-resistant carbon steel flat products (“corrosion
resistant steel”), dealt with under US case number C-428-817. This
dispute related, in particular, to the final results of a full sunset
review of the above measure, carried out by the US Department of Commerce
(“DOC”) and published in the US Federal Register No. 65 FR 47407
of 2 August 2000. In this decision, the DOC found that revocation of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. The EC considered that this
finding is inconsistent with the obligations of the US under the SCM
Agreement and, in particular, in breach of Articles 10, 11.9 and 21
(notably 21.3) thereof.
Panel and Appellate Body proceedings
On 5 February 2001, the EC requested further
consultations. As the consultations failed, a panel was established by the
DSB on 10 September 2001 further to the request of the EC. Japan and
Norway reserved their third-party rights. On 18 October 2001, the EC
requested the Director-General to determine the composition of the Panel.
On 26 October 2001, the Director-General composed the Panel. On 12 April
2002, the Chairman of the Panel informed the DSB that the Panel would not
be able to complete its work within six months due to the parties’ wish to
use the maximum time periods prescribed in Appendix 3 of the DSU. The
Panel expected to complete its work by July 2002.
On 3 July 2002, the Panel circulated its report to
Members. The Panel concluded that:
- US CVD law and the accompanying regulations are
consistent with Article 21, paragraphs 1 and 3, and Article 10 of the SCM
Agreement in respect of the application of evidentiary standards to the
self-initiation of sunset reviews;
- US CVD law and the accompanying regulations are inconsistent
with Article 21.3 of the SCM Agreement in respect of the application of a
0.5 per cent de minimis standard to sunset reviews, and therefore violate
Article 32.5 of the SCM Agreement and, consequently, also Article XVI:4 of
the WTO Agreement;
- the United States, in applying a 0.5 per cent de
minimis standard to the instant sunset review, acted in violation
of Article 21.3 of the SCM Agreement;
- US CVD law and the accompanying regulations and
statement of policy practices are consistent with Article 21.3 of the SCM
Agreement in respect of the obligation to determine the likelihood of
continuation or recurrence of subsidisation in sunset reviews; and
- the United States, in failing to determine properly
the likelihood of continuation or recurrence of subsidisation in the
sunset review on carbon steel, acted in violation of Article 21.3
of the SCM Agreement.
The Panel recommended that the DSB request the United
States to bring its measures mentioned in paragraphs (b), (c) and (e) into
conformity with its obligations under the WTO Agreement.
One member of the Panel dissociated himself from the
Panel assessment relating to the US CVD law as such and as applied in the
sunset review on carbon steel in respect of application of a de minimis
standard to sunset reviews. This member did not share the view of the
majority of the Panel that the silence in Article 21.3 of the SCM
Agreement as to the applicability of a de minimis standard to sunset
reviews means that this standard applies to sunset reviews. Accordingly,
and contrary to the Panel’s above findings, this member concluded that:
- US CVD law and the accompanying regulations are consistent
with Article 21.3 of the SCM Agreement in respect of the application of a
0.5 per cent de minimis standard to sunset reviews; and
- the United States, in applying a 0.5 per cent de
minimis standard to the instant sunset review, did not act in
violation of Article 21.3 of the SCM Agreement.
On 30 August 2002, the US notified its decision to
appeal to the Appellate Body certain issues of law covered in the Panel
report. The Report was circulated to Members on 28 November 2002. The
Appellate Body:
- upheld Panel findings relating to the Panel’s terms of
reference; the consistency of United States law with obligations relating
to the self-initiation of sunset reviews by domestic authorities; and the
consistency of United States law with obligations relating to the
determination to be made in a sunset review;
- reversed the Panel’s interpretation of Article 21.3 of
the Agreement on Subsidies and Countervailing Measures as regards de
minimis subsidization in sunset reviews. Accordingly, the Appellate Body
also reversed the related Panel findings that United States law, as such
and as applied, were inconsistent with that provision.
On 19 December 2002, the DSB adopted the Appellate Body Report and the
Panel Report, as modified by the Appellate Body Report.
Implementation of adopted reports
The US had fully implemented the DSB’s
recommendations and rulings on 1 April 2004 by revoking the
countervailing duty order on corrosion-resistant carbon steel flat
products from Germany.
At the DSB meeting on 20 April 2004, the United
States informed that the US had fully implemented the DSB’s
recommendations and rulings.
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