DS: Russia — Anti-Dumping Duties on Light Commercial Vehicles from Germany and Italy
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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(as cited in request for consultations)
|Request for Consultations received:|
|Panel Report circulated:||27 January 2017|
|Appellate Body Report circulated:||22 March 2018|
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Summary of the dispute to date
The summary below was up-to-date at
Complaint by the European Union.
On 21 May 2014, the European Union requested consultations with the Russian Federation with respect to the levy of anti-dumping duties on light commercial vehicles from Germany and Italy by the Russian Federation pursuant to Decision No. 113 of 14 May 2013 of the College of the Eurasian Economic Commission.
The European Union claims that the measures are inconsistent with:
- Articles 1, 2.2, 2.3, 2.4, 3.1, 3.2, 3.4, 3.5, 4.1, 6.2, 6.4, 6.5, 6.5.1, 6.8, 6.9, 6.10, 9.2, 9.3, 12.2, 12.2.2, 18.4 and Annex II of the Anti‑Dumping Agreement;
- Article VI of the GATT 1994.
Panel and Appellate Body proceedings
On 15 September 2014, the European Union requested the establishment of a panel. At its meeting on 26 September 2014, the DSB deferred the establishment of a panel.
At its meeting on 20 October 2014, the DSB established a panel. China, India, Japan, Korea and the United States reserved their third-party rights. Subsequently, Brazil, Turkey and Ukraine reserved their third-party rights.
On 8 December 2014, the European Union requested the Director-General to compose the panel. On 18 December 2014, the Director-General composed the panel.
On 11 June 2015, the Chair of the panel informed the DSB that the panel's work had been delayed as a result of a lack of available experienced lawyers in the Secretariat and that it does not expect to issue its final report to the parties before the end of 2016.
Following the resignation on 1 December 2015 of the Chair and a member of the panel, the Director-General on 11 December 2015 appointed a new Chair and a new member of the panel.
- The European Union challenges the imposition, by the Russian Federation, of anti-dumping duties on certain light commercial vehicles (LCVs) from Germany and Italy. The measure at issue is Decision No. 113 of 14 May 2013 of the Board of the Eurasian Economic Commission (EEC), including annexes, notices and reports of the Department for Internal Market Defence of the EEC (DIMD) and any amendments.
- At issue is the DIMD's definition of the domestic industry, the DIMD's selection of investigation periods, and the DIMD's determinations on price suppressive effects, injury and causation. The European Union also challenges certain procedural aspects of the underlying investigation concerning confidential treatment of information, provision of non-confidential summaries of information treated as confidential, and the disclosure of essential facts.
- The Russian Federation requested that the Panel reject the European Union's claims in this dispute in their entirety.
Claims concerning the definition of the domestic industry
- The European Union claimed that the DIMD did not conduct an objective examination based on positive evidence. This is because it defined the domestic industry as consisting of one producer, Sollers, which accounted for about 87.8% of total domestic production of the like product during the POI and excluded a known producer, GAZ, from the definition of the domestic industry. The exclusion of GAZ from the domestic industry led to a risk of materially distorting the injury analysis and resulted in the violation of Articles 3.1 and 4.1.
- The Panel found that the DIMD defined the domestic industry as Sollers only after it received Questionnaire responses from both Sollers and GAZ. In this way, the DIMD risked materially distorting its own injury analysis and therefore acted inconsistently with Article 4.1. Because the DIMD made its injury and causation determinations on the basis of information related to an improperly defined domestic industry, the DIMD also acted inconsistently with Article 3.1, as a consequence of its breach of Article 4.1.
Claims concerning the selection of periods of investigation
- The European Union claimed that by selecting “non-consecutive periods of non-equal duration” for the examination of the trends for the domestic industry, the DIMD's injury determination was not based on an objective examination of positive evidence, contrary to Article 3.1 of the Anti‑Dumping Agreement. In the light of the alleged breach of Article 3.1, the European Union also made consequential claims under Articles 3.2, 3.4, and 3.5.
- The Panel found that the DIMD did not compare or contrast half-year data with full calendar year data, nor did the approach of DIMD of splitting the investigation period have the intent or the effect of “artificially creating” negative trends. The Panel found that the European Union's argument that the DIMD accepted the periods of investigation proposed by the Applicant is not supported by the record. Furthermore, the European Union had not established that the DIMD failed to explain its selection of the periods. For those reasons, the Panel concluded that the European Union had failed to establish that the DIMD acted inconsistently with Article 3.1 by the alleged use of “non-equal and non‑consecutive” period in its injury and causation analyses.
Claims concerning price suppressive effects
- The European Union claimed that the DIMD acted inconsistently with Articles 3.1 and 3.2 by failing to make an objective examination of the price suppressive effect of dumped imports based on positive evidence.
- The Panel found that the DIMD acted inconsistently with Articles 3.1 and 3.2 by failing to taken into account the impact of the financial crisis in determining the appropriate rate of return in its consideration of price suppression. However, the European Union did not establish that the DIMD acted inconsistently with Articles 3.1 and 3.2 because the DIMD “mixed up” data expressed in USD and RUB without any explanation in its consideration of price suppression. In addition, the European Union did not establish that the trends in dumped import prices and domestic prices called into question the “explanatory force” of dumped imports for price suppression, that the DIMD should have analysed whether the market would accept additional domestic price increases, that the DIMD failed to examine whether any price suppression was the effect of competitive pressure exerted by the other domestic producer, that the DIMD failed to examine the relevance of the 2009 increase in customs duties on imported LCVs from 10% to 25%, and that the DIMD did not demonstrate that the alleged price suppression was “to a significant degree”.
Claims concerning the state of the domestic industry
- The European Union claimed that the DIMD's examination of the impact of the dumped imports on the state of the domestic industry does not constitute an objective examination based on positive evidence.
- The Panel found that the European Union did not demonstrate in what way the identified discrepancy brought into question the probative value of the evidence actually relied upon by the DIMD or the reasonableness and objectivity of the determination based on that evidence. A lack of consistency in the selection of beginning or ending points in an end-point to end-point comparison does not in itself gives rise to an inconsistency with Articles 3.1 and 3.4. On the facts of this case, the European Union did not demonstrate that the DIMD acted inconsistently with Articles 3.1 and 3.4 by failing to systematically compare data for 2011 with data for 2008 for all economic indicators. The European Union also did not demonstrate that DIMD failed to base its evaluation on an objective examination of the evidence concerning the domestic industry's profit/profitability during the POI, that the DIMD assumed that the exceptional positive developments in the domestic industry during 2009 could continue during 2010-2011 without more explanation, and “base[d] its conclusions on a comparison between these two time periods”, and that the DIMD failed to consider two sets of facts and arguments relevant to the state of the domestic industry that were before it. Concerning the European Union's argument that the DIMD failed to examine all relevant factors under Article 3.4, the Panel found that the DIMD examined the return on investments, actual and potential effects on cash flow, and the ability to raise capital or investments, but failed to examine the magnitude of the margin of dumping.
Claims concerning causation
- The European Union claimed that the DIMD acted inconsistently with Articles 3.1 and 3.5 by failing to properly establish a causal link between the dumped imports and the alleged injury, and by failing to conduct a proper non-attribution analysis of factors other than the dumped imports that were known to the DIMD and that were injuring the domestic industry at the same time as dumped imports. The European Union further argues that, insofar as the DIMD relied on its price suppression analysis in determining causation, that inadequate analysis also undermined the causation analysis.
- The Panel found that the DIMD acted inconsistently with Articles 3.1 and 3.5 insofar as it relied on price suppression in its causation determination. However, the Panel found that the European Union did not establish that the causation determination of the DIMD was one that a reasonable and objective investigating authority could not have reached on the basis of the evidence and arguments before it. Concerning the DIMD's non-attribution analysis, the Panel found that the European Union did not establish that the DIMD's non-attribution analysis of the termination of the licence agreement and the competition from GAZ was inconsistent with Articles 3.1 and 3.5. The Panel found, however, that by failing to address PCA's argument regarding the possible cause of Sollers' low capacity utilisation during the period of consideration in its non‑attribution analysis, the DIMD acted inconsistently with Articles 3.1 and 3.5.
Claims concerning the confidential treatment of information
- The European Union claimed that confidential treatment by the DIMD of certain information submitted by interested parties was inconsistent with Articles 6.5 and 6.5.1 because, with respect to each item of information in question, one or more of the following occurred:
- the DIMD failed to require a showing of good cause for confidential treatment;
- the DIMD did not assess whether the cause shown was sufficient to warrant the confidential treatment;
- there was no “meaningful” summary of the confidential information submitted; or
- no explanation of why a summary was not possible was provided.
- The Panel found that in respect of certain items of information treated as confidential by the DIMD at issue in this dispute, the European Union demonstrated that the submitters of that information did not show good cause for confidential treatment. On that basis, in respect of all the information at issue, treated as confidential by the DIMD, the DIMD did not act consistently with Article 6.5. The Panel did not find it necessary to address the claims of the European Union under Article 6.5.1 to resolve this dispute.
Claims concerning disclosure of essential facts
- The European Union claimed a violation of Article 6.9 on the basis that the DIMD failed to inform interested parties of essential facts under consideration concerning all aspects of the decision to impose the definitive measure. The Panel found that the DIMD did not act inconsistently with Article 6.9 by not informing all interested parties of certain information, but acted inconsistently with Article 6.9 by failing to inform all interested parties of the rest of the information at issue.
On 20 February 2017, the Russian Federation notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 27 February 2017, the European Union notified the DSB of its decision to cross-appeal.
On 13 April 2017, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. The Appellate Body also informed the DSB that the circulation date of the Appellate Body report in this appeal would be communicated to the participants and third participants after the oral hearing. On 8 March 2018, the Appellate Body informed the DSB that its report in this appeal would be circulated no later than 22 March 2018.
Definition of domestic industry:
Russia argued that the Panel erred in its interpretation and application of Articles 3.1 and 4.1 of the Anti-Dumping Agreement because an injury determination would be inconsistent with Article 3.1 if an investigating authority were to rely on deficient information provided by domestic producers. To Russia, producers that provided deficient information cannot be included in the definition of domestic industry under Article 4.1. The Appellate Body did not consider that Article 3.1 allows investigating authorities to leave domestic producers of the like product out of the definition of domestic industry because of alleged deficiencies in the information submitted by those producers. The Anti-Dumping Agreement sets out tools to address the inaccuracy and incompleteness of information. To the Appellate Body, the Panel's interpretation does not create a conflict between the obligations in Article 3.1 and Article 4.1. The Appellate Body thus upheld the Panel's finding that the DIMD acted inconsistently with Articles 3.1 and 4.1 of the Anti-Dumping Agreement in its definition of “domestic industry”.
In relation to Russia's challenge to the Panel's findings that the DIMD acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to take into account the impact of the financial crisis in determining the rate of return used to construct the target domestic price, the Appellate Body noted that, as acknowledged by the DIMD, the performance of the domestic industry in 2009 was positively affected by the financial crisis. The DIMD, however, did not explain why these extraordinary conditions were not relevant to its counterfactual analysis. Using a higher rate of return for the domestic industry in this counterfactual analysis would lead to a higher probability of finding price suppression. The Appellate Body considered that an investigating authority cannot disregard evidence regarding any particular element that calls into question the explanatory force of dumped imports for significant price suppression. In response to Russia's argument that the Panel incorporated, in its price suppression analysis, the consideration of “all known factors” causing injury within the meaning of Article 3.5, the Appellate Body explained that the inquiries under both provisions have distinct focuses. Article 3.5 focuses on the causal relationship between dumped imports and injury to the domestic industry. In contrast, Article 3.2 focuses on the relationship between dumped imports and domestic prices. The Appellate Body thus upheld the Panel's finding at issue.
In relation to the European Union's claims under Article 11 of the DSU, the Appellate Body faulted the Panel under this provision. This was because the Panel's findings concerning the DIMD's methodology, the long-term price trends, and the degree of price suppression were not coherent and consistent with the Panel's earlier finding that the manner in which the DIMD used the 2009 rate of return to determine the target domestic price was WTO inconsistent.
In relation to the European Union's challenge under Articles 3.1 and 3.2 concerning the question of whether the domestic market could absorb further price increases, the Appellate Body considered that an investigating authority must ensure that its price suppression methodology assesses price increases “which otherwise would have occurred” in the absence of dumped imports. While the Appellate Body found that the Panel did not err in its interpretation, it faulted the Panel for having itself undertaken the assessment of relevant evidence on the DIMD's investigation record. Having reversed the Panel's finding at issue, the Appellate Body completed the analysis and found that the DIMD acted inconsistently with Articles 3.1 and 3.2 by failing to examine evidence relevant to whether the market would accept additional domestic price increases.
Confidential investigation report
The European Union claimed that the Panel acted inconsistently with Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement by basing its evaluation of the European Union's claims concerning certain injury factors on the confidential investigation report without assessing whether that document formed part of the DIMD's investigation record. The Appellate Body considered that, when faced with a claim that a report, or parts of it, on the basis of which an anti-dumping measure was imposed, did not form part of the investigation record, a panel has to take certain steps to assess objectively and assure itself of the validity of such report, or its parts, and whether it formed part of the contemporaneous written record of the investigation. According to the Appellate Body, the Panel did not seek to assure itself that the relevant parts of the confidential investigation report formed part of the investigation record at the time the determination to impose the anti-dumping measure was made. The Appellate Body thus found that the Panel acted inconsistently with Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement.
In relation to the European Union's challenge to the Panel's finding that Article 3.4 of the Anti-Dumping Agreement does not generally require an investigating authority to consider the inventories of a dealer related to a domestic producer, but not itself part of the domestic industry, the Appellate Body considered that, in certain circumstances, evidence concerning a related dealer may be pertinent, in a particular case, to the evaluation of the state of the domestic industry. To the Appellate Body, the degree of proximity in the relationship between different entities is not dispositive of whether evidence relating to the inventory of a related dealer is pertinent to the evaluation of “inventories” for purposes of the injury analysis. The Appellate Body upheld the Panel's finding that the European Union had not established that the DIMD acted inconsistently with Articles 3.1 and 3.4 by not considering the inventories data of the related dealer at issue in the investigation report.
In relation to Russia's appeal concerning the relationship between Articles 6.5 and 6.9 of the Anti-Dumping Agreement, the Appellate Body found that the inquiry under Article 6.9 is separate and distinct from the assessment under Article 6.5. To the Appellate Body, regardless of whether essential facts were properly treated as confidential under Article 6.5, a panel must examine whether any disclosure made — including those made through non-confidential summaries under Article 6.5.1 of the Anti-Dumping Agreement — meets the legal standard under Article 6.9. The Appellate Body thus faulted the Panel for having considered that, where essential facts are not properly treated as confidential in accordance with Article 6.5, this automatically leads to an inconsistency with Article 6.9. The Appellate Body completed the analysis and found that the DIMD acted inconsistently with Article 6.9 by failing to disclose the essential facts in items (d) and (f) to (o) of Table 12 in paragraph 7.278 of the Panel Report.In relation to the European Union's appeal concerning the disclosure of methodologies, the Appellate Body found that certain type of methodologies may be essential facts under Article 6.9 of the Anti-Dumping Agreement, namely those that are necessary for participants to understand the basis of the investigating authority's decision and to defend their interests. With respect to sources of information, the Appellate Body found that, in certain circumstances, knowledge of the data itself may not be sufficient to enable an interested party to properly defend itself, unless that party is also informed of the source of such data and how it was used by the investigating authority. In certain circumstances, the source of the data may be an essential fact under Article 6.9. The Appellate Body thus found that the Panel erred in its interpretation and application of Article 6.9 by considering that methodologies and sources of information cannot qualify as essential facts.
At its meeting on 9 April 2018, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.
Implementation of adopted reports
On 20 June 2018, the Russian Federation informed the DSB that following the expiration of the measures at issue, the Russian Federation had fully implemented the DSB’s recommendations and rulings in this dispute.
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