DISPUTE SETTLEMENT

DS: United States — Countervailing Measures on Certain Pipe and Tube Products (Turkey)

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 Turkey

On 8 March 2017, Turkey requested consultations with the United States with respect to countervailing measures imposed by the United States on certain types of pipe and tube products from Turkey.

Turkey claimed that the measures appear to be inconsistent with:

  • Articles 1.1(b), 2.1(c), 2.4, 10, 12.7, 14(d), 15.3, 19.4, 32.1 of the SCM Agreement; and
     
  • Article VI:3 of the GATT 1994.

 

Panel and Appellate Body proceedings

On 11 May 2017, Turkey requested the establishment of a panel. At its meeting on 22 May 2017, the DSB deferred the establishment of a panel.

At its meeting on 19 June 2017, the DSB established a panel. Brazil, Canada, China, the European Union, Japan, Kazakhstan, Korea, Mexico, the Russian Federation, Saudi Arabia, and the United Arab Emirates reserved their third-party rights.

On 4 September 2017, Turkey requested the Director-General to compose the panel. On 14 September 2017, the Director-General composed the panel.

On 6 March 2018, 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 lawyers in the Secretariat. The Chair also informed the DSB that it expected to issue its final report to the parties in the second half of 2018. In its communication, the Chair also informed the DSB that the report would be available to the public once it was circulated to the Members in all three official languages, and that the date of circulation depends on completion of translation.

On 18 December 2018, the panel report was circulated to Members.

This dispute concerned countervailing duty measures that the United States imposed on Turkish imports of certain oil country tubular goods (OCTG), welded line pipe (WLP), heavy walled rectangular welded carbon steel pipes and tubes (HWRP), and circular welded carbon steel pipes and tubes (CWP). Turkey also challenged the WTO-consistency of certain alleged practices by the United States Department of Commerce (USDOC) and the United States International Trade Commission (USITC).

Public body determinations

This was the first dispute to address the issue of whether an investigating authority may, consistent with Article 1.1(a)(1) of the SCM Agreement, establish that an entity is a public body through establishing a “chain” of governmental control attributing the actions of that entity to the government. The Panel accepted, as a matter of law, that an investigating authority could make a public body determination on the basis of such a “chain” of governmental control. The Panel considered, however, that the USDOC had failed to establish, as a matter of fact, that governmental involvement in the Turkish military pension fund Ordu Yardimlasma Kurumu (OYAK) provided a basis for establishing that two Turkish hot-rolled steel producers owned and controlled by OYAK constitute public bodies. The Panel declined to address Turkey's separate claim that the USDOC had determined that Turkish pension fund OYAK was itself a public body, and that such determination was inconsistent with Article 1.1(a)(1) of the SCM Agreement.

Claims in relation to the benefit determination in the OCTG proceeding

Turkey raised “as such” and as applied claims concerning an alleged practice followed by the USDOC of systematically rejecting in‑country prices as benchmarks in assessing whether a good is provided for less than adequate remuneration based solely on evidence of government control of a substantial portion or majority of the market. Regarding Turkey's “as such” claim, the Panel found insufficient evidence of the existence of the alleged practice and rejected Turkey's claim. The Panel otherwise declined to make findings regarding Turkey's as applied claim, finding that the challenged OCTG final benefit determination no longer had legal effect at the time of the Panel's establishment.

Specificity determinations

Turkey claimed that the USDOC acted inconsistently with Articles 2.1(c) and 2.4 of the SCM Agreement in each of the challenged proceedings because in each case the USDOC failed to consider the extent of diversification of economic activities within Turkey and failed to properly evaluate the length of time in which the alleged subsidy programme related to the provision of hot-rolled steel had been in operation. The Panel upheld Turkey's claims.

Resort to the use of facts available

Turkey claimed that the USDOC's selection of facts available in the OCTG, WLP, and HWRP investigations was inconsistent with Article 12.7 of the SCM Agreement. For each of the investigations, the Panel found that the USDOC failed to engage in a process of reasoning and evaluation in selecting facts as a “reasonable replacement” for the missing necessary information.

Cumulative assessment of injury effects

Turkey also raised “as such” and as applied claims under Article 15.3 of the SCM Agreement concerning the cumulative assessment of the effects of subsidized imports in assessing injury in original investigations and sunset reviews. The Panel upheld Turkey's claims that the USITC follows a practice of cumulatively assessing the effects of subsidized imports with those of dumped, non‑subsidized imports from all countries in original investigations, if petitions were filed on the same day and if such imports compete with each other and the like domestic product in the United States. However, the Panel rejected that the requirements of Article 15.3 apply in the context of likelihood‑of‑injury determinations, and dismissed Turkey's claims concerning sunset reviews.

Other claims

The Panel found additional consequential violations of Articles 10 and 32.1 of the SCM Agreement and exercised judicial economy with respect to Turkey's claims that the USDOC acted inconsistently with Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994.

On 25 January 2019, the United States notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 30 January 2019, Turkey notified the DSB of its decision to cross-appeal.

On 25 March 2019, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, 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 size of the Panel record and the complex issues appealed. The Appellate Body also noted the backlog of appeals pending with the Appellate Body at present, and the fact that all appeals filed since 1 October 2018 were composed of the same three remaining Appellate Body Members. The Appellate Body indicated that, as communicated to the participants, it would not be possible to staff this appeal for some time, and expressed appreciation for the participants' understanding. The Appellate Body informed the DSB that the Appellate Body would communicate appropriately with participants as soon as it knew more precisely when the Division can schedule the hearing in this appeal.

 

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