DISPUTE SETTLEMENT

DS: United States — Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea

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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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Korea.

On 22 December 2014, Korea requested consultations with the United States regarding certain anti‑dumping measures on oil country tubular goods (OCTG) from Korea and the investigation methodology underlying such measures.

Korea claims that these are inconsistent with:

  • Articles 2.2, 2.2.2, 2.2.1.1, 2.3, 2.4, 6.2, 6.4, 6.9, 6.10, including Articles 6.10.1 and 6.10.2, and 12.2.2 of the Anti-Dumping Agreement; and
     
  • Articles I and X:3 of the GATT 1994.

On 8 January 2015, Turkey requested to join the consultations. On 14 January 2015, the Russian Federation requested to join the consultations. On 15 January 2015, Ukraine requested to join the consultations.

On 23 February 2015, Korea requested the establishment of a panel. At its meeting on 10 March 2015, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

At its meeting on 25 March 2015, the DSB established a panel. Canada, China, the European Union, India, the Russian Federation and Turkey reserved their third-party rights. Subsequently, Mexico reserved its third-party rights.

On 13 July 2015, the parties agreed on the composition of the panel. On 16 January 2016, the Chair of the panel informed the DSB that the beginning of the Panel's work had been delayed as a result of a lack of available experienced lawyers in the Secretariat. The panel thus expected to issue its final report to the parties before the end of 2016.

On 15 September 2016, following the resignation of the Chair of the panel, the parties agreed on a new Chair.

On 19 December 2016, the Chair of the panel informed the DSB that following an additional delay as a result of the need to appoint a new Chair of the panel and due to the complexity of the issues raised by the parties in this dispute, the panel expected to issue its final report to the parties by June 2017.

On 14 November 2017, the panel report was circulated to Members.

This dispute concerned anti-dumping measures imposed by the United States on oil country tubular goods (OCTG) imported from Korea following an investigation by the United States Department of Commerce (USDOC), as well as the WTO-consistency of certain provisions of US anti-dumping law. In making its findings, with respect to the anti-dumping measures on OCTG, the Panel limited its review to the original determination of the USDOC, finding a new determination of the USDOC in this regard, which was challenged by Korea, but issued after panel establishment, to be outside its terms of reference. The Panel also found aspects of several claims made by Korea to be outside its terms of reference, and rejected them.

WTO-consistency of US laws on normal value calculation

Korea claimed that US domestic regulation (viability test), which prohibited the USDOC from using third-country market sales as a basis for determining normal value unless certain conditions were met, was “as such” inconsistent with Article 2.2 of the Anti-Dumping Agreement. Korea also claimed that the USDOC's application of the viability test in the OCTG investigation was inconsistent with Article 2.2 of the Anti-Dumping Agreement. The Panel rejected Korea's claims, finding that Article 2.2 does not preclude an investigating authority from establishing its own criteria for choosing between the use of third-country sales and constructed normal value for the determination of normal value.

Profit determination

Korea claimed that the USDOC's failure to use actual data of the Korean respondents to determine their constructed value (CV) profit rate, even though their actual home market and third-country market profit data was available on the record of the investigation, was inconsistent with the chapeau of Article 2.2.2 of the Anti-Dumping Agreement. The Panel upheld Korea's claim that the USDOC failed to determine CV profit using the respondents' actual data pertaining to home market sales, finding that the USDOC had no basis for not using data pertaining to those sales as a basis for determining CV profit. Having concluded that the USDOC had no basis to reject the actual data pertaining to domestic sales of the like product, the Panel did not find it necessary to resolve the question whether the USDOC should have determined CV profit on the basis of the profit derived by the Korean respondents from third-country markets in order to comply with the chapeau of Article 2.2.2 and, therefore, exercised judicial economy on that claim.

Korea claimed that the USDOC's reliance on an impermissibly narrow definition of the “same general category of products” in concluding that it could not determine CV profit under Article 2.2.2(i), and in concluding that it could not calculate the profit cap required by Article 2.2.2(iii), was inconsistent with Articles 2.2.2(i) and (iii) of the Anti-Dumping Agreement. The Panel upheld Korea's claim, finding that the USDOC defined the same general category of products more narrowly than the like product by excluding from that definition, OCTG not used for down hole applications, which was part of the like product as defined by the USDOC. The USDOC, therefore, had no proper basis for its conclusions that it could not determine CV profit under Article 2.2.2(i) and calculate the profit cap required by Article 2.2.2(iii).

Korea claimed that the USDOC acted inconsistently with Article 2.2.2(iii) of the Anti-Dumping Agreement because the USDOC failed to calculate and apply a profit cap as required by that provision, and as a consequence, acted inconsistently with Article 2.2 of the Anti-Dumping Agreement by failing to use a reasonable amount for profits in the construction of normal value for the Korean respondents. The Panel agreed with Korea, concluding that the USDOC acted inconsistently with Article 2.2.2(iii) because it had failed to calculate and apply a profit cap, which is mandatory under that provision. The Panel further considered that the USDOC's determination that no profit data pertaining to the same general category of products was available could not justify that failure because the USDOC had erroneously defined the same general category of products. The Panel also concluded that in the absence of a profit cap, the profit that the USDOC determined was not a “reasonable amount” within the meaning of Article 2.2 of the Anti-Dumping Agreement.

Construction of export price

Korea claimed that the USDOC acted inconsistently with Article 2.3 of the Anti-Dumping Agreement because it constructed the export price of an exporter, without properly considering whether the export price was unreliable because of association between the exporter and the importer or a third party. The Panel found that Korea had not shown that the USDOC's conclusions on association were improper, or that it had erred in not considering evidence regarding the reliability of the export price.

Cost calculations

Korea claimed that the USDOC acted inconsistently with Article 2.2.1.1 of the Anti-Dumping Agreement because it rejected the price paid by an exporter for certain steel coils, an input used in the production of OCTG, on the ground that this exporter had an association with its steel coils supplier. Korea argued that the USDOC's conclusion regarding affiliation was improper, but the Panel rejected this argument. The Panel focused on whether the rejection of this price was done in accordance with the second sentence of Article 2.2.1.1. The Panel found that it was, considering the USDOC had properly found association between the exporter and its supplier, and then conducted an arm's length test to consider the reliability of the purchase prices of steel coils. The Panel found that Korea had not shown why this type of enquiry was not permitted under Article 2.2.1.1, or how the USDOC had acted inconsistently with this provision, and rejected Korea's claim.

Procedural claims challenging the conduct of the USDOC

Korea claimed that the USDOC's failure to notify the Korean respondents, until its final determination, that it had accepted the Tenaris financial statements on the record was inconsistent with Article 6.2 of the Anti-Dumping Agreement. The Panel rejected Korea's claim, finding that Korea had not demonstrated that the absence of a notification from the USDOC, until its final determination, that it had accepted the Tenaris financial statements on the record prevented the Korean respondents from launching a full scale argument and submitting rebuttal facts.

Korea claimed that the USDOC's failure to notify the Korean respondents, until its final determination, that it had accepted the Tenaris financial statements on the record and that it was using these statements in determining CV profit was inconsistent with Article 6.4 of the Anti-Dumping Agreement. The Panel rejected this claim, finding that Korea had not established that the USDOC, in not notifying the Korean respondents, until its final determination that it had accepted the Tenaris financial statements on the record, and that it was using that data for determining CV profit, had acted inconsistently with Article 6.4.

Korea claimed that the USDOC's failure to disclose that it had accepted the Tenaris financial statements on the record and that it had relied on those statements in determining CV profit was inconsistent with Article 6.9 of the Anti-Dumping Agreement. The Panel disagreed with Korea, finding that neither the USDOC's decision to accept the Tenaris financial statements on the record, nor its reliance on those statements to calculate CV profit, could be understood to constitute essential facts within the meaning of Article 6.9, and the USDOC was therefore under no obligation to disclose them.   

Claims regarding the USDOC's decision to not individually examine all exporters

Korea claimed that the USDOC acted inconsistently with Article 6.10 of the Anti-Dumping Agreement in connection with its conclusion that and explanation why it would be impracticable to examine all the known exporters, and why it was limiting its examination to two exporters. Korea also claimed that the USDOC acted inconsistently with Article 6.10.2 of the Anti-Dumping Agreement in connection with its conclusion that and explanation why it would be unduly burdensome to individually examine voluntary respondents. The Panel rejected both claims on the ground that Korea had not shown an error in the conclusions reached by the USDOC in this regard.

Public notice

Korea claimed that the USDOC acted inconsistently with Articles 12.2.2 of the Anti-Dumping Agreement because it failed to give reason for the rejection of several relevant arguments made by the exporters in the underlying investigation. The Panel rejected these claims, albeit on different grounds. With respect to certain claims, the Panel found that Korea had failed to demonstrate a violation of Article 12.2.2 as the USDOC's explanation made it clear how the arguments were rejected, whereas with respect to others, the Panel found that Korea had not shown why the concerned arguments were relevant, or had otherwise failed to make a prima facie case of violation.

Administration of US laws in the OCTG investigation

Korea claimed that the USDOC acted inconsistently with Article X.3 (a) of the GATT 1994, as it failed to administer its laws and regulations in a uniform and reasonable manner, alleging in particular that certain procedural laws were differently applied in the underlying investigation from certain parallel investigations on OCTG. The Panel rejected these claims, finding that Korea had not shown that such a differential treatment was, in fact, made, and thus not established the factual basis of its claim. The Panel also rejected, on the same grounds, Korea's claim under Article I.1 of the GATT 1994, that arose from the same factual basis as its claim under Article X.3(a) of the GATT 1994.

The Panel exercised judicial economy with respect to a number of claims, including consequential claims raised by Korea under Articles 1 and 9.3 of the Anti-Dumping Agreement.

However, the Panel rejected Korea's consequential claim under Article 18.4 of the Anti-Dumping Agreement, as it depended on a finding that the United States' “viability test” was inconsistent with Article 2.2 of the Anti-Dumping Agreement. The Panel also rejected Korea's consequential claim under Article VI of the GATT 1994, as Korea did not identify which specific aspect of this provision had been violated, and under Article XVI.4 of the WTO Agreement, as it depended on a violation under Article VI of the GATT 1994.

At its meeting on 12 January 2018, the DSB adopted the panel report.

 

Reasonable period of time

At the DSB meeting on 9 February 2018, the United States informed the DSB of its intention to implement the DSB's recommendations and rulings and that it would need a reasonable period of time to do so.

On 26 February 2018, Korea and the United States informed the DSB they had agreed that the reasonable period of time to implement the DSB's recommendations and rulings would be 12 months. Accordingly, the reasonable period of time was set to expire on 12 January 2019. On 11 January 2019, Korea and the United States informed the DSB they had agreed to modify the previously notified reasonable period of time, which was set to expire on 12 July 2019.

 

Proceedings under Article 22 of the DSU (remedies)

On 29 July 2019, Korea requested the authorization of the DSB to suspend concessions or other obligations pursuant to Article 22.2 of the DSU on the grounds that the United States had failed to comply with the DSB's recommendations and rulings within the reasonable period of time. On 8 August 2019, the United States objected to Korea's proposed level of suspension of concessions pursuant to Article 22.6 of the DSU.

At the DSB meeting on 9 August 2019, the Chair of the DSB took note that the matter raised by the United States had been referred to arbitration pursuant to Article 22.6 of the DSU.

 

 

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