DISPUTE SETTLEMENT: DISPUTE DS405

European Union — Anti-Dumping Measures on Certain Footwear from China


This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Current status  back to top

 

Key facts  back to top

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 28 October 2011

  

Summary of the dispute to date  back to top

The summary below was up-to-date at
See also: One-page summary of key findings of this dispute

Consultations

Complaint by China. 

On 4 February 2010, China requested consultations with the European Union concerning three EU measures in connection with the imposition of anti-dumping duties on imports of certain leather footwear from China.  In particular, China is challenging as WTO-inconsistent Article 9(5) of the Basic EC Anti‑Dumping Regulation, which provides that, in cases involving imports from NME countries, the anti‑dumping duty shall be specified for the supplying country concerned and not for each individual supplier.  According to China, applicable WTO rules require that an individual margin and duty be determined and specified for each known exporter and producer and not for the supplying country as a whole.  China states that the Basic Regulation provides that an individual duty will only be specified for exporters that demonstrate that they fulfil the criteria set forth in Article 9(5), the Individual Treatment rules, and is therefore inconsistent with various provisions of the WTO Agreement, China's Protocol of Accession, the GATT 1994, and the Anti-Dumping Agreement.   China is also challenging as WTO-inconsistent the Review and Definitive Regulations imposing anti-dumping duties on imports of certain footwear from China, and various aspects of the expiry and original determinations and investigations underlying those regulations.

China and the European Union held consultations on 31 March 2010.  These consultations failed to resolve the dispute.  On 8 April 2010, China requested the establishment of a panel. At its meeting on 20 April 2010, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

At its meeting on 18 May 2010, the DSB established a panel.  Australia, Brazil, Colombia, Japan, Turkey, the United States and Viet Nam reserved their third-party rights.  On 23 June 2010, China requested the Director-General to compose the panel.  On 5 July 2010, the Director-General composed the panel.

On 8 April 2011, the Chairman of the panel informed the DSB that due to the great number of claims and arguments involved in the dispute, as well as the length of the submissions presented by the parties, the panel would not be able to complete its work within the time frame originally contemplated (i.e. June 2011).      Absent any further delays beyond the control of the panel, the panel expected to issue its final report to the parties by July 2011.  The panel issued its report to the parties on 27 July 2011.

On 28 October 2011, the panel report was circulated to Members.

Summary of key findings

In sum, the Panel found Article 9(5) of the Basic AD Regulation inconsistent with the European Union's WTO obligations, and that the European Union had acted inconsistently with the AD Agreement in some aspects of the original investigation and expiry review, but rejected the bulk of China's specific claims of violation in connection with the original investigation and expiry review, and resulting Definitive and Review Regulations.  More particularly:

  • The Panel concluded that Article 9(5) of the Basic AD Regulation was “as such” inconsistent with the European Union's obligations under Articles 6.10, 9.2 and 18.4 of the AD Agreement, Article I:1 of the GATT 1994, and Article XVI:4 of the WTO Agreement, and that the application of Article 9(5) of the Basic AD Regulation in the footwear original investigation was inconsistent with Articles 6.10 and 9.2 of the AD Agreement.
     
  • The Panel found that the European Union acted inconsistently with Article 2.2.2(iii) of the AD Agreement with respect to the determination of the amounts for SG&A and profit for one producer-exporter in the original investigation, and that the European Union acted inconsistently with its obligations under Articles 6.5 and 6.5.1 of the AD Agreement with respect to the confidential treatment, or the non-confidential summarization, of certain information in the original investigation and the expiry review.
     
  • The Panel found that that China had not established that the European Union acted inconsistently with:
     
    1. Article 6.10.2 of the AD Agreement in the examination of individual treatment requests of four Chinese producers in the original investigation;
       
    2. Articles 2.4 and 6.10.2 of the AD Agreement, Paragraph 15(a)(ii) of China's Accession Protocol, and Paragraphs 151(e) and (f) of China's Accession Working Party Report, in the examination of certain Chinese producers' applications for market economy treatment in the original investigation;
       
    3. Article 6.10 of the AD Agreement in selecting the sample for the dumping determination in the original investigation;
       
    4. Article 11.3 of the AD Agreement in the procedure for and selection of Brazil as analogue country in the expiry review;
       
    5. Articles 2.1 and 2.4 of the AD Agreement and Article VI:1 of the GATT 1994 in the procedure for and selection of Brazil as analogue country in the original investigation;
       
    6. Article 11.3 of the AD Agreement with respect to the PCN system used in the expiry review;
       
    7. Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994 with respect to the PCN system used, and the adjustment for leather quality made, in the original investigation;
       
    8. Article 2.6 of the AD Agreement, read together with Articles 3.1 and 4.1 of the AD Agreement, with respect to the scope of the product under consideration, or the like product;
       
    9. Articles 3.1 and 6.10 of the AD Agreement and Article VI:1 of the GATT 1994 in the procedure for and selection of the sample for the injury analysis in the original investigation and the expiry review;
       
    10. Article 11.3 of the AD Agreement in the procedure for and selection of the sample for the injury determination in the expiry review;
       
    11. Article 3.3 of the AD Agreement in making a cumulative assessment in the original investigation;
       
    12. Article 11.3 of the AD Agreement in finding likelihood of continuation or recurrence of injury in the expiry review;
       
    13. Articles 3.4, 3.1 and 3.2 of the AD Agreement in the evaluation of injury indicators in the original investigation;
       
    14. Articles 3.5 and 3.1 of the AD Agreement in determining causation in the original investigation;
       
    15. Article 6.1.1 of the AD Agreement and Paragraph 15(a) of China's Accession Protocol in allowing less than 30 days to respond to the MET/IT claim forms in the original investigation;
       
    16. Article 6.1.2 of the AD Agreement with respect to certain questionnaire responses in the expiry review;
       
    17. Article 6.4 of the AD Agreement, and as a consequence or independently, Article 6.2 of the AD Agreement, with respect to certain information in the original investigation and expiry review;
       
    18. Article 6.5 of the AD Agreement, and as a consequence or independently, Article 6.2 of the AD Agreement, in the confidential treatment of certain information in the original investigation;
       
    19. Article 6.5.1 of the AD Agreement, and as a consequence or independently, Article 6.2 of the AD Agreement, in connection with the non-confidential summarization of certain information in the original investigation;
       
    20. Article 6.5.2 of the AD Agreement, and as a consequence, Article 6.2 of the AD Agreement, with respect to certain information in the non-confidential questionnaire responses of the sampled EU producers in the original investigation;
       
    21. Article 6.5 in the confidential treatment of certain information in the expiry review;
       
    22. Article 6.5.1 of the AD Agreement in connection with the non-confidential summarization of certain information in the expiry review;
       
    23. Article 6.5.2 of the AD Agreement with respect to certain information in the expiry review;
       
    24. Article 6.2 of the AD Agreement with respect to certain information in the expiry review;
       
    25. Articles 3.1 and 6.8 of the AD Agreement in not applying facts available in the expiry review;
       
    26. Article 6.9 of the AD Agreement with respect to the time provided for submission of comments on the Additional Final Disclosure in the original investigation;
       
    27. Article 12.2.2 of the AD Agreement in connection with the information and explanations provided in respect of specific issues in the original investigation and expiry review; and
       
    28. Articles 3.1, 3.2, 9.1 and 9.2 of the AD Agreement with respect to the imposition and collection of anti-dumping duties in the original investigation.
       
  • The Panel had first considered, and for the most part rejected, the European Union's preliminary objections to China's claims.  In addition, the Panel concluded that Article 17.6(i) of the AD Agreement does not impose any obligations on the investigating authorities of WTO Members in anti-dumping investigations that could be the subject of a finding of violation, and therefore dismissed all of China's claims of violation of Article 17.6(i).  The Panel applied judicial economy with respect to some of China's claims regarding all three measures.
     
  • The Review and Definitive Regulations having expired as of 31 March 2011, the Panel concluded that there was no basis for a recommendation to “bring the [expired] measure[s] into conformity” under Article 19.1 of the DSU.  With respect to Article 9(5) of the Basic AD Regulation, the Panel recommended that the European Union bring this measure into conformity with its obligations under the WTO Agreements.  The Panel declined to make a suggestion on how the DSB recommendations and rulings may be implemented by the European Union.

On 6 December 2011, China and the European Union requested the DSB to adopt a draft decision extending the 60-day time period stipulated in Article 16.4 of the DSU, to no later than 22 February 2012. At its meeting on 19 December 2011, the DSB agreed that, upon a request by China or the European Union, the DSB, shall no later than 22 February 2012, adopt the panel report, unless the DSB decides by consensus not to do so or China or the European Union notifies the DSB of its decision to appeal pursuant to Article 16.4 of the DSU.

At its meeting on 22 February 2012, the DSB adopted the panel report.

 

Reasonable period of time

At the DSB meeting of 23 March 2012, the European Union informed the DSB that it intends to implement the DSB recommendations and rulings in a manner that respects its WTO obligations and would need a reasonable period of time to do so. On 23 May 2012, China and the European Union informed the DSB that they had agreed that the reasonable period of time for the European Union to implement the DSB recommendations and rulings shall be 7 months and 19 days from 22 February 2012.

At the DSB meeting on 17 December 2012, the European Union informed the DSB that it had adopted the measures necessary to comply with the DSB recommendations and rulings before the expiry of the reasonable period of time.  China did not agree that the European Union had fully implemented the DSB recommendations and rulings.

 

Implementation of adopted reports

On 25 October 2012, China and the European Union informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.

 

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