WORLD TRADE
ORGANIZATIONWT/DS136/AB/R
WT/DS162/AB/R
28 August 2000
(00-3369)
Original: English
UNITED STATES – ANTI-DUMPING ACT OF 1916
AB-2000-5
AB-2000-6
Report of the Appellate BodyWT/DS136/AB/R
WT/DS162/AB/R
Page i
I. Introduc tion................................................................................................................. ........... 1
II. Arguments of the Participants  and Third Part icipants  ...........................................................4
A. Claims of Error by the United States – Appellant .................................................... 4
1. Claims Against the 1916 Act as Such ..........................................................4
2. Applicability of Article VI of the GATT 1994 and the
Anti-Dumping Agreement   to the 1916 Act ..................................................6
3. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement  .......7
B. Arguments by the European Communities – Appellee/Third Participant  .................8
1. Claims Against the 1916 Act as Such .......................................................... 8
2. Applicability of Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   to the 1916 Act.......................................................................... 9
3. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement  .....10
C. Arguments by Japan – Appellee/Third Participant  ................................................10
1. Claims Against the 1916 Act as Such ........................................................10
2. Applicability of Article VI of the GATT 1994 and the
Anti-Dumping Agreement   to the 1916 Act ................................................11
3. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement  .....11
D. Claims of Error by the European Communities and Japan – Appellants  ...............12
1. Third Party Rights ......................................................................................12
2. Conditional Appeals ...................................................................................12
E. Arguments by the United States - Appellee ..............................................................13
1. Third Party Rights ......................................................................................13
2. Conditional Appeals ...................................................................................13
F. Arguments by India and Mexico - Third Participants  ............................................14
1. India............................................................................................................ 14
2. Mexico .......................................................................................................15
III. Issues Raised in  these Appeals ............................................................................................ 15
IV. Claims Against the 1916 Act as Such.................................................................................. 16
A. Jurisdiction of the Panel to Hear Claims Against the 1916 Act as Such  ................16
B. Mandatory and Discretionary Legislation .............................................................. 24WT/DS136/AB/R
WT/DS162/AB/R
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V. Applicability of Article VI of the GATT 1994 and the
Anti-Dumping Agreement  to the 1916 Act.......................................................................... 29
VI. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement  and Article XVI:4 of the  WTO Agreement  ..............................37
VII. Third Pa rty Rights......................................................................................................... ....... 38
VIII. Articles III:4 and XI of the GATT 1994 and Article XVI:4 of the
WTO Agreement.................................................................................................................. . 40
IX. Findings and Conclusions....................................................................................................  41WT/DS136/AB/R
WT/DS162/AB/R
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WORLD TRADE ORGANIZATION
APPELLATE BODY
United States – Anti-Dumping Act of 1916
United States,  Appellant/Appellee
European Communities,  Appellant /Appellee/Third
ParticipantJapan,  Appellant/Appellee/Third Participant
India,  Third Participant
Mexico,  Third ParticipantAB-2000-5 and AB-2000-6
Present:
Lacarte-Muró,  Presiding Member
Ehlermann,  Member
Feliciano,  Member
I. Introduction
1. The United States, the European Communities and Japan appeal from certain issues of law
and legal interpretations in the Panel Reports, United States – Anti-Dumping Act of 1916, complaint
by the European Communities (the "EC Panel Report") 1 and  United States – Anti-Dumping Act
of 1916, complaint by Japan (the "Japan Panel Report").2  These Panel Reports were rendered by two
Panels composed of the same three persons.3  The two Panel Reports, while not identical, are alike in
all major respects.
2. The Panel was established to consider claims by the European Communities and Japan that
Title VIII of the United States Revenue Act of 1916 (the "1916 Act") 4 is inconsistent with United
States' obligations under the covered agreements.  The 1916 Act allows, under certain conditions,civil actions and criminal proceedings to be brought against importers who have sold foreign-produced goods in the United States at prices which are "substantially less" than the prices at whichthe same products are sold in a relevant foreign market.
5
                                                     
1WT/DS136/R, 31 March 2000.
2WT/DS162/R, 29 May 2000.
3As the composition of both Panels was identical, we will refer to the Panels as "the Panel".
4Act of 8 September 1916, 39 Stat. 756 (1916); 15 U.S.C. § 72.
5Relevant factual aspects of the 1916 Act are set out at paras. 2.1 - 2.5 and 2.13 - 2.16 of the EC Panel
Report, and at paras. 2.1 - 2.5 and 2.14 - 2.16 of the Japan Panel Report.  Relevant portions of the 1916 Act arealso reproduced in this Report, infra , para. 129.WT/DS136/AB/R
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3. The European Communities claimed that the 1916 Act is inconsistent with Articles VI:1
and VI:2 of the   General Agreement on Tariffs and Trade 1994   (the "GATT 1994"), Articles 1, 2.1,
2.2, 3, 4 and 5 of the  Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994   (the " Anti-Dumping Agreement ") and Article XVI:4 of the  Marrakesh Agreement
Establishing the World Trade Organization   (the " WTO Agreement ").  In the alternative, the
European Communities claimed that the 1916 Act is inconsistent with Article III:4 of theGATT 1994.  Japan claimed that the 1916 Act is inconsistent with Articles III:4, VI and XI of theGATT 1994, Articles 1, 2, 3, 4, 5, 9, 11, 18.1 and 18.4 of the  Anti-Dumping Agreement   and
Article XVI:4 of the  WTO Agreement .
4. In the EC Panel Report, circulated to Members of the World Trade Organization (the "WTO")
on 31 March 2000, the Panel concluded that:
(i) the 1916 Act violates Article VI:1 and VI:2 of the GATT
1994;
(ii) the 1916 Act violates Articles 1, 4 and 5.5 of the
Anti-Dumping Agreement;
(iii) the 1916 Act violates Article XVI:4 of the Agreement
Establishing the WTO;
(iv) as a result, benefits accruing to the European Communities
under the WTO Agreement have been nullified or impaired.
6
5. In the Japan Panel Report, circulated to Members of the WTO on 29 May 2000, the Panel
concluded that:
(i) the 1916 Act violates Article VI:1 and VI:2 of GATT 1994;
(ii) the 1916 Act violates Articles 1, 4.1, 5.1, 5.2, 5.4, 18.1 and
18.4 of the Anti-Dumping Agreement;
(iii) the 1916 Act violates XVI:4 of the Agreement Establishing
the WTO; and
(iv) as a result, benefits accruing to Japan under the WTO
Agreement have been nullified or impaired.7
                                                     
6EC Panel Report, para. 7.1.
7Japan Panel Report, para. 7.1.WT/DS136/AB/R
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6. In both Panel Reports, the Panel recommended th at the Dispute Settlement Body (the "DSB")
request the United States to bring the 1916 Act in to conformity with its obligations under the
WTO Agreement .8
7. On 29 May 2000, the United States notified the DSB of its intention to appeal certain issues
of law covered in the EC Panel Report and the Japan Panel Report and certain legal interpretations
developed by the Panel, pursuant to paragraph 4 of Article 16 of the  Understanding on Rules and
Procedures Governing the Settlement of Disputes  (the "DSU"), and file d two Notices of Appeal
pursuant to Rule 20 of the  Working Procedures for Appellate Review  (the " Working Procedures ").
In view of the close similarity of the issues raised  in the two appeals, it was decided, after consultation
with the parties, that a single Division would hear and decide both appeals.  On 8 June 2000,the United States filed one appellant's submission for both appeals.
9  On 13 June 2000, the European
Communities and Japan filed a joint other appellants' submission in respect of both appeals.10  O n
23 June 2000, the European Communities and Japan each filed an appellee's/third participant's
submission11, and the United States filed an appellee's submission.12  On the same day, India and
Mexico each filed a third participant's submission.13
8. The oral hearing in the two appeals was held on 19 July 2000.  The participants and third
participants presented oral arguments and responded to questions put to them by the Members of theDivision hearing the appeals.
                                                     
8EC Panel Report, para. 7.2;  Japan Panel Report, para. 7.2.
9Pursuant to Rule 21 of the  Working Procedures .
10Pursuant to Rule 23(1) of the  Working Procedures .
11Pursuant to Rules 22 and 24 of the  Working Procedures .  The European Communities is an appellee
in dispute WT/DS136 and a third participant in dispute WT/DS162.  Japan is an appellee in dispute WT/DS162
and a third participant in dispute WT/DS136.
12Pursuant to Rule 23(3) of the  Working Procedures .
13Pursuant to Rule 24 of the  Working Procedures .  India is a third participant in both disputes.  Mexico
is a third participant in dispute WT/DS136, but not in dispute WT/DS162.WT/DS136/AB/R
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II. Arguments of the Participants and Third Participants
A. Claims of Error by the United States – Appellant
1. Claims Against the 1916 Act as Such
(a) Jurisdiction of the Panel to Hear Claims Against the 1916 Act as
Such
9. The United States argues that the Panel erred in failing to dismiss the claims raised by the
European Communities and Japan under Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   for lack of jurisdiction.  In each dispute, the complaining party invoked the jurisdiction of
the Panel pursuant to Article 17 of the  Anti-Dumping Agreement .  However, when Article 17 of the
Anti-Dumping Agreement   is invoked as a basis for a panel's jurisdiction to determine claims made
under that Agreement, it is necessary for the complaining party to challenge one of the three types ofmeasure set forth in Article 17.4 of that Agreement, i.e., a definitive anti-dumping duty, a provisionalmeasure or a price undertaking.  In the view of the United States, a Member wishing to challengeanother Member's anti-dumping law as such must wait until one of the three measures referred to inArticle 17.4 is also challenged.
10. The United States considers that this rule is clearly established by the text and context of
Article 17.4 of the  Anti-Dumping Agreement , as well as by the Appellate Body Report in
Guatemala – Anti-Dum ping Investigation Regarding Po rtland Cement from Mexico  ("Guatemala –
Cement
 ").14  In the present cases, the complainants only challenged the 1916 Act as such, and did not
challenge any measure of the type identified in Arti cle 17.4.  For this reason alone, according to the
United States, the Panel's findings must be vacated for lack of jurisdiction.
11. The United States also contends that the Panel erred in finding that it had jurisdiction to
consider claims under Article VI of the GATT 1994.  The United States considers that Article VI ofthe GATT 1994 and the  Anti-Dumping Agreement  form part of an inseparable package of rights and
obligations and that, based on the reasoning of the Appellate Body in  Brazil – Measures Affecting
Desiccated Coconut
 15, one part of such a package cannot be invoked independently of the other.  The
United States thus concludes that, since the Panel did not possess jurisdiction to consider theAnti-Dumping Agreement  claims, and since Article VI cannot be invoked independently of the
Anti-Dumping Agreement , it follows that the Panel also lacked jurisdiction to consider claims under
Article VI of the GATT 1994.
                                                     
14Appellate Body Report, WT/DS60/AB/R, adopted 25 November 1998.
15Appellate Body Report, WT/DS22/AB/R, adopted 20 March 1997.WT/DS136/AB/R
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(b) Mandatory and Discretionary Legislation
12. The United States requests the Appellate Body to reverse the Panel's analysis and findings
regarding the distinction between mandatory and discretionary legislation.  If the Panel found, or theAppellate Body finds, that the 1916 Act is ambiguous, then, the United States submits, the Panel
should have asked, and the Appellate Body should ask, whether there is an interpretation of the
1916 Act that would permit the United States to act in conformity with its WTO obligations.  Instead,
according to the United States, the Panel interpre ted and applied the distinction between mandatory
and discretionary legislation in a way that has no ba sis in existing WTO/GATT jurisprudence, erred in
treating the distinction as a "defence", and erre d in its treatment of United States' municipal law
relevant to this issue.
13. As regards the nature of the mandatory and discretionary legislation distinction, the United
States considers that the Panel based its approach on a "gross misreading" of the panel report inUnited States - Measures Affecting the Importation, Internal Sale and Use of Tobacco
("United States – Tobacco ").
16  Contrary to the Panel's finding, whether or not a law has been applied
in the past does not determine the applicability of the distinction between mandatory and discretionarylegislation.  The United States also asks the Appell ate Body to reject the Panel's finding in the Japan
Panel Report that Article 18.4 of the  Anti-Dumping Agreement  renders the distinction between
mandatory and discretionary legislation "irrelevant".  The cases cited by the Panel, EC –
Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan  ("European Communities –
Audio Cassettes ")
 17 and  United States – Definition of Industry Concerning Wine and Grape Products
("United States – Wine and Grape Products ")  18, do not support such a conclusion.  Furthermore, the
United States contends, the ordinary meaning and context of Article 18.4 demonstrate that this
provision does not modify or otherwise limit the distinction between mandatory and discretionarylegislation.
14. The United States also underlines that there is no legal basis for the Panel's finding that the
distinction between discretionary and mandatory legislation is a "defence" which the United Statesbore the burden of proving.  The burden of proving that a measure is inconsistent with a WTOprovision rests with the complaining party, which must demonstrate that the law in questionmandates  a violation of the relevant provision.  Since the European Communities and Japan have not
met the burden of proof, properly applied, the United States asks the Appellate Body to reverse the
Panel's findings that the 1916 Act violates the provisions at issue in this dispute.                                                     
16Panel Report, adopted 4 October 1994, BISD 41S/131.
17Panel Report (unadopted), ADP/136, circulated 28 April 1995.
18Panel Report, adopted 28 April 1992, BISD 39S/436.WT/DS136/AB/R
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2. Applicability of Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   to the 1916 Act
15. The United States claims that the principal substantive error made by the Panel was its finding
that Article VI of the GATT 1994, as interpreted by the  Anti-Dumping Agreement , applies to the
1916 Act.
16. According to the United States, this finding is erroneous because it is based on an erroneous
test for determining the applicability of Article VI.  The correct analysis, in the view of the United
States, is that for a Member's law to fall within the scope of Article VI, it must satisfy two criteria.
First, the law must impose a particular type of border adjustment measure, namely, duties on animported product.  Second, the duties imposed by the Member's law must specifically target"dumping" within the meaning of Article VI:1.  C onsequently, the United States concludes, if the
Member's law imposes a type of measure other than duties, or if it does not specifically targetdumping, it is not governed by Article VI.
17. The United States submits that, with respect to dumping, Article VI of the GATT 1994 simply
provides Members with a right to use anti-dumping duties, and then sets forth rules regulating themanner in which Members may exercise this right.  Article VI does not attempt to regulate other types
of measure that a Member may want to take in order to counteract dumping, as that task is left to other
GATT provisions, including Article III:4 of the GA TT 1994.  The United States considers that the
ordinary meaning of the terms used in Article VI – and, in particular, Article VI:2 – as well as thelimited role of Article VI within the GATT framework, Articles 1 and 18.1 of the  Anti-Dumping
Agreement , the panel reports in  Japan – Trade in Semi-Conductors  ("Japan – Semi-Conductors ")
  19
and  EEC – Regulation on Imports of Parts and Components   ("EEC – Parts and Components ")  20 and
the negotiating history of Article VI, confirm such  an interpretation of the scope of Article VI.
18. According to the United States, the word "may" in Article VI:2 of the GATT 1994 confirms
that Article VI provides a right that Members woul d not otherwise have – the right to impose duties –
but does not contain any prohibition on the use of other types of measure.  Article 1 of the
Anti-Dumping Agreement  means that a Member's actions are governed by Article VI and the
Anti-Dumping Agreement  if a Member is applying one of the specified measures to counteract
dumping, i.e., anti-dumping duties, provisional measures or price undertakings.  Article 18.1 of theAnti-Dumping Agreement  and its footnote 24 also make clear that when specific action taken against
dumping is in the form of anti-dumping duties, provisional measures or price undertakings, such
                                                     
19Panel Report, adopted 4 May 1988, BISD 35S/116.
20Panel Report, adopted 16 May 1990, BISD 37S/132.WT/DS136/AB/R
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action must comply with Article VI, as interpreted by the  Anti-Dumping Agreement , but that when
specific action against dumping takes another form, such action is governed by the provisions of theGATT 1994  other than  Article VI.
19. The United States claims that the Panel engaged in a flawed analysis of the scope of
Article VI and, as a result, erroneously conclu ded that Article VI of the GATT 1994 and the
Anti-Dumping Agreement  apply to  all  anti-dumping measures.  The United States reasons that,
when the correct test is applied, it is clear that Article VI does not apply to the 1916 Act.  The UnitedStates underscores that the 1916 Act does not impose any type of border adjustment, much less duties,on imported products:  it is an internal law.
20. The United States adds that the 1916 Act is also not subject to Article VI because it does not
specifically target "dumping" within the meaning of Article VI:1.  Although one element of a1916 Act claim is the existence of a price difference between two national markets, the United Statesargues that this element alone is not sufficient under the 1916 Act.  Rather, the United States
contends, such a price difference is simply one indicator, or supporting evidence, of the possible
existence of the activity which the 1916 Act does target, i.e., predatory pricing by the importer in theUnited States' market, which consists of sales at predatorily low price levels with the intent to destroy,injure, or prevent the establishment of an American industry or to restrain trade in or monopolize aparticular market.  According to the United States , the existence of such predatory intent is the
primary indicator of the anti-competitive conduct which is targeted by the 1916 Act, as the UnitedStates' courts have held.
3. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement
21. The United States observes that the Panel found that the 1916 Act violates various substantive
and procedural requirements of Article VI of the GATT 1994 and the  Anti-Dumping Agreement .  The
United States requests the Appellate Body to reverse these findings as they were all based on the
Panel's erroneous view of the scope of Article VI and the  Anti-Dumping Agreement .
22. The United States reiterates that the Panel found support for its broad view of the scope of
Article VI in Article VI:1 even though the actual text of this provision does not address the issue ofwhether Article VI regulates all actions against dumping, or only the imposition of anti-dumpingduties.  The United States recalls that, on its interpretation of Article VI:2 of the GATT 1994 andArticles 1 and 18.1 of the  Anti-Dumping Agreement , a Member may take specific action against
dumping – other than the imposition of anti-dumping duties – so long as such action is in accordancewith, or consistent with, the provisions of the GATT 1994 other than Article VI.  If the AppellateWT/DS136/AB/R
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Body accepts this interpretation, it follows that Article VI does not apply to the 1916 Act, the claims
made by the European Communities and Japan under the various provisions of Article VI and theAnti-Dumping Agreement  must fail, and the Panel's findings of violations of those provisions must be
reversed.  In addition, the United States submits, since the Panel's findings of violation of
Article XVI:4 of the  WTO Agreement   are based on its findings of violation of Article VI, the
Appellate Body must also reverse the findings of violation of Article XVI:4.
B. Arguments by the European Communities – Appellee/Third Participant
1. Claims Against the 1916 Act as Such
(a) Jurisdiction of the Panel to Hear Claims Against the 1916 Act as
Such
23. The European Communities requests the Appellate Body to reject the United States'
arguments on the issue of jurisdiction on the basis that this ground of appeal is both untimely andunfounded.  The United States could have and should have raised this objection before the interimreview stage of the panel proceedings in the case brought by the European Communities.  Interimreview is only intended to allow review of "precise  aspects" of the report and not the presentation of
new arguments.  The European Communities relies in particular on the principle that procedural
objections must be raised in a timely manner and in good faith, as confirmed by the Appellate Body in
Korea – Definitive Safeguard Measure on  Imports of Certain Dairy Products   ("Korea – Dairy
Safeguards ")
 21 and United States – Tax Treatment for "Foreign Sales Corporations"   ("United
States – FSC ").22
24. The European Communities also argues that the jurisdictional arguments of the United States
are misconceived since Article 17.4 of the  Anti-Dumping Agreement   only applies to proceedings
involving the imposition of the measures identified in that provision and does not generally shelteranti-dumping legislation from scrutiny under the dis pute settlement mechanism.  Even if it did, the
legislation would still have to comply with Article XVI:4 of the  WTO Agreement , which has also
been invoked in this proceeding and is properly before the Appellate Body.
(b) Mandatory and Discretionary Legislation
25. In relation to the issue of the relevance and meaning of the alleged distinction between
mandatory and discretionary legislation in WTO law, the European Communities contests that any
                                                     
21Appellate Body Report, WT/DS98/AB/R, adopted 12 January 2000.
22Appellate Body Report, WT/DS108/AB/R, adopted 20 March 2000.WT/DS136/AB/R
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such general principle exists and refers the Appellate Body to the report of the panel in  United
States – Sections 301-310 of the Trade Act of 1974   ("United States – Section 301 ").23
26. The European Communities also considers that the existing GATT and WTO case law clearly
demonstrates that the alleged distinction between  mandatory and discretionary legislation would in
any event not protect the 1916 Act from review in dispute settlement proceedings.
2. Applicability of Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   to the 1916 Act
27. On the central question of the scope of application of Article VI of the GATT 1994, the
European Communities supports the view of the Panel that Article VI recognizes the existence of aspecific problem in international trade – dumping – and establishes a specific discipline which mustbe followed by WTO Members in dealing with it.  This discipline applies to rules and measures takenthereunder, which, viewed objectively, deal with dumping.  The discipline is not limited to ruleswhich provide for the imposition of duties at the frontier.
28. The European Communities bases its interpretation of the scope of Article VI of the
GATT 1994 on the text of Article VI itself, as well as on Articles 1 and 18.1 of the  Anti-Dumping
Agreement .  In particular, Article VI:1 establishes that Article VI applies to measures which:  (i) are
targeted at imports;  and  (ii)  provide a remedy against trading practices defined by reference to price
discrimination in the form of lower prices in the im porting country than those in the country of export.
When Article VI:2, on which the United States relies, is read in the context of Article VI:1, it is clearthat the word "may" simply means that the imposition of duties is optional, and that the amount of anysuch duty may not be greater than the margin of dumping.  Furthermore, according to the EuropeanCommunities, Article 18.1 of the  Anti-Dumping Agreement  and footnote 24 make clear that "specific
action" against dumping may only be taken in accordance with Article VI, but this does not preventthe application of safeguard measures or countervailing duties (pursuant to and in conformity withArticles XIX and VI of the GATT 1994, respectively) to conduct which may also involve dumping.
29. The European Communities considers that the arguments made by the United States on
appeal mischaracterize the Panel's findings, and find no support in the text or context of Article VI,Articles 1 or 18.1 of the  Anti-Dumping Agreement , or the panel reports in  Japan – Semi-Conductors
or  EEC – Parts and Components .  The European Communities cautions that the arguments of the
United States as regards the scope of Article VI of the GATT 1994 would eviscerate the disciplines ofArticle VI and allow Members easily to circumvent their WTO obligations by modifying theirlegislation to provide for fines instead of anti-dumping duties.
                                                     
23Panel Report, WT/DS152/R, adopted 27 January 2000.WT/DS136/AB/R
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3. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement
30. Since the European Communities believes that the Panel correctly interpreted the scope of
Article VI of the GATT 1994 and the  Anti-Dumping Agreement , the European Communities asks the
Appellate Body also to uphold the Panel's related conclusions that the 1916 Act violates Article VI:1and VI:2 of the GATT 1994 and Articles 1, 4.1, 5.4, 5.5, 18.1 and 18.4 of the  Anti-Dumping
Agreement .
31. The European Communities reasons that when an  anti-dumping law, which falls within the
scope of application of Article VI of the GATT 1994 and the  Anti-Dumping Agreement , allows the
imposition of sanctions other than duties, this is a breach of the discipline established by Article VI ofthe GATT 1994 and the  Anti-Dumping Agreement .  Likewise, if such a law provides for imposition
of measures on the basis of criteria which do not fulfil the substantive requirements of the discipline,or pursuant to procedures which do not respect its procedural requirements, such measures alsoconstitute breaches of the discipline.  The European Communities contends that the 1916 Actbreaches the discipline in all three respects.
C. Arguments by Japan – Appellee/Third Participant
1. Claims Against the 1916 Act as Such
(a) Jurisdiction of the Panel to Hear Claims Against the 1916 Act as
Such
32. Japan argues that the Panel correctly concluded that it had jurisdiction.  According to Japan,
nothing in the text of Article 17 of the  Anti-Dumping Agreement   or its context takes away the well-
established GATT/WTO right to challenge facially inconsistent legislation.  Article 17.4 is a specialand additional rule listed in Appendix 2 to the DSU.   According to Japan, Article 17.4 is an exception
to the general rule contained in Article 17.1 of the  Anti-Dumping Agreement   and, by its terms,
Article 17.4 establishes special rules that apply only to challenges of actions taken by anti-dumpingauthorities.
(b) Mandatory and Discretionary Legislation
33. According to Japan the Panel correctly concluded that, in light of Article 18.4 of the
Anti-Dumping Agreement , the distinction between mandatory and discretionary legislation is not
relevant in this dispute.  In any event, Japan contends, the 1916 Act is mandatory in character.  Whenits substantive elements are established, the remedies (fines and/or imprisonment) prescribed by theWT/DS136/AB/R
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1916 Act must be imposed.  Japan submits that the Panel also correctly concluded that the burden of
proof was properly on the United States to substant iate its claim that the 1916 Act was not mandatory.
2. Applicability of Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   to the 1916 Act
34. In Japan's view, the Panel correctly concluded that the proper basis for applicability of
Article VI of the GATT 1994 is the type of conduct addressed, not the remedies applied to theconduct.  By its terms, the object of Article VI is to counteract "dumping".  Japan underscores that
anti-dumping duties are the instrument, not the object of Article VI.
35. Japan believes that its interpretation is supported by the plain meaning of Article VI, as well
as Articles 1 and 18.1 of the  Anti-Dumping Agreement .  Japan also expresses concern that Members
could easily circumvent WTO obligations if a Member could escape Article VI simply by enactinglegislation providing for fines and/or imprisonment rather than anti-dumping duties.
36. Japan agrees with the Panel that the 1916 Act falls within the scope of Article VI of the
GATT 1994.  On its face, the 1916 Act addresses the same type of price discrimination as Article VI.The existence in the 1916 Act of certain additional requirements, which make the imposition ofmeasures to counteract dumping more difficult than required by Article VI, do not make the Act fall
outside the scope of Article VI.  According to Japan, the historical context, legislative history and
United States' case law regarding the 1916 Act all support this conclusion.
3. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement
37. Japan argues that since the Panel correctly determined that Article VI of the GATT 1994 and
the  Anti-Dumping Agreement   were applicable to the 1916 Act, its findings and conclusions regarding
violations of the GATT 1994 and  Anti-Dumping Agreement   provisions also were correct.  In
particular, the Panel correctly concluded that anti-dumping duties are the only permissible remedy tocounteract dumping.  The text of Article VI:2 of the GATT 1994 explicitly and unambiguouslyestablishes that anti-dumping duties are the only authorized remedy for dumping, and Article 18.1 andfootnote 24 of the  Anti-Dumping Agreement  confirm this conclusion.  Japan adds that this conclusion
is further supported by the object and purpose of Article VI:2, as well as by the negotiating history.WT/DS136/AB/R
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D. Claims of Error by the European Communities and Japan – Appellants
1. Third Party Rights
38. The European Communities and Japan contend that the Panel erred in not granting enhanced
third party rights to Japan in the case brought by the European Communities, and in not granting
enhanced third party rights to the European Communities in the case brought by Japan.  They ask the
Appellate Body to reverse the Panel's findings and reasoning in this regard, in particular with respectto the proper interpretation of Article 9.3 of the DSU and the appropriate standard for evaluatingwhether enhanced third party rights should be granted.  The European Communities and Japan stressthe similarity between the present cases and  EC Measures Concerning Meat and Meat Products
(Hormones)  ("European Communities – Hormones ").
24
39. According to the European Communities and Japan, in  European Communities – Hormones
the Appellate Body identified three conditions for the granting of enhanced third party rights to aMember involved in a related dispute:  (i)  the two proceedings deal with the same matter;  (ii)  the
same panelists serve in both disputes;  and  (iii)  the proceedings are held concurrently.  They add that,
even if the treatment of the European Communities and Japan as third parties was simply a matter ofthe Panel's discretion under Article 12.1 of the DSU, such discretion should have been exercised onthe basis of the principles reflected in Articles 9 and 10 of the DSU, taking account of the need torespect due process.
2. Conditional Appeals
(a) Articles III:4 and XI of the GATT 1994
40. If the Appellate Body finds the United States' arguments on the scope of Article VI of the
GATT 1994 admissible and well-founded, then the European Communities and Japan request theAppellate Body to find that the 1916 Act violates Articles III:4 and XI of the GATT 1994.  TheEuropean Communities and Japan incorporate by reference and to the extent necessary the argumentsthat they developed before the Panel in this regard.
(b) Article XVI:4 of the  WTO Agreement
41. Should the Appellate Body find the United States' arguments regarding the Panel's
jurisdiction and the "non-mandatory" character of the 1916 Act to be admissible and well-founded,the European Communities and Japan ask the Appellate Body to find that the 1916 Act violates
                                                     
24Appellate Body Report, WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998.WT/DS136/AB/R
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Page 13
Article XVI:4 of the  WTO Agreement .  The European Communities and Japan incorporate by
reference and to the extent necessary all the arguments that they developed before the Panel in thisconnection.
E. Arguments by the United States – Appellee
1. Third Party Rights
42. The United States urges the Appellate Body to affirm the Panel's decision to deny enhanced
third party rights to the European Communities and Japan.  As a preliminary matter, the United Statescontests the claim of the European Communities and Japan that they were "prejudiced" by suchdenial, given that they prevailed on every substa ntive argument on which the Panel made findings.
43. The United States contends that the Panel's denial of enhanced third party rights was correct
as a matter of law.  In the view of the United States, Articles 9.2 and 9.3 of the DSU are of noassistance to the European Communities and Japan.  Rather, as the Panel correctly noted and as theAppellate Body found in  European Communities – Hormones , the question of whether to grant
enhanced third party rights is a matter within the sound discretion of a panel.  Unlike that case, these
proceedings did not involve the consideration of complex facts or scientific evidence or a jointmeeting of the parties.  There were no "concurrent deliberations" as that term was used in the contextof  European Communities – Hormones .  Furthermore, the granting of enhanced third party rights in
these proceedings might have prejudiced the United States.  In view of these circumstances, theUnited States considers that the Panel correctly denied enhanced third party rights to the EuropeanCommunities and Japan.
2. Conditional Appeals
(a) Articles III:4 and XI of the GATT 1994
44. The United States submits that the Appellate Body lacks the authority to consider the claims
by the European Communities and Japan under Articles III:4 and XI of the GATT 1994.  First, theEuropean Communities cannot request the Appellate Body to make any findings regarding Article XIof the GATT 1994 since that provision was not included in the European Communities' request for apanel.  Second, the Panel made no factual or legal findings relating to the claims under Article III:4and XI of the GATT 1994.  As the facts relevant to the assessment of these claims were disputed
before the Panel, the United States concludes that the limits on appellate review contained in
Article 17 of the DSU prevent the Appellate Body from making any determinations of the claimsunder Articles III:4 and XI of the GATT 1994.WT/DS136/AB/R
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Page 14
(b) Article XVI:4 of the  WTO Agreement
45. Should the Appellate Body reach this issue, the United States requests the Appellate Body to
affirm the Panel's conclusion that the 1916 Act only violates Article XVI:4 of the  WTO Agreement  to
the extent that the 1916 Act violates Article VI of the GATT 1994.
F. Arguments by India and Mexico - Third Participants
1. India
(a) Jurisdiction of the Panel to Hear Claims Against the 1916 Act as
Such
46. India argues that the Panel correctly assumed jurisdiction in these disputes.  The United
States' argument amounts to a contention that a Member's anti-dumping law  as such  may not be
challenged.  If accepted, this position would deprive Article 18.4 of the  Anti-Dumping Agreement  of
any meaning or legal effect, and allow a Member to maintain a WTO-incompatible law with impunityas long as none of the measures referred to in Article 17.4 of the  Anti-Dumping Agreement  were
adopted.  India considers that the Panel correc tly held that the Appellate Body ruling in
Guatemala – Cement  applies only if the dispute is related to the initiation and conduct of an
anti-dumping investigation, and does  not  exclude review of anti-dumping laws  as such .
47. India also considers that the reasoning in  India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products
 25 is sufficient to dispose of the United States' argument that it is the
interpretation by the United States' courts of the 1916 Act that is dispositive of the nature of the Actand whether it is mandatory or discretionary.
(b) Applicability of Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   to the 1916 Act
48. India does not accept the United States' contention that the 1916 Act is an anti-trust rather
than an anti-dumping law.  The 1916 Act clearly addresses transnational price discrimination andtargets imported products sold in the United States.  This is entirely consonant with the definition ofdumping in Article VI of the GATT 1994.  India underlines that Article VI applies whether the
dumping is limited, sporadic, frequent or systemic.  Accordingly, the 1916 Act cannot escape the
disciplines of Article VI simply because it requires the prohibited conduct to be "common andsystematic".  India therefore agrees with the Panel that Article VI establishes that anti-dumping dutiesare the sole means authorized to deal with dumped imports.
                                                     
25Appellate Body Report, WT/DS50/AB/R, adopted 16 January 1998, paras. 65 - 66.WT/DS136/AB/R
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Page 15
2. Mexico
49. Mexico argues that the Panel correctly concluded that the key to the applicability of
Article VI of the GATT 1994 to the 1916 Act is whether that law objectively addresses "dumping"within the meaning of that ar ticle, that the 1916 Act does address such "dumping", and that
anti-dumping duties are the sole remedy authorized under Article VI of the GATT 1994.
III. Issues Raised in these Appeals
50. The following issues are raised in these appeals:
(a) Whether the Panel erred in its assessment of the claims against the 1916 Act as such,
in particular:
(i) in concluding that it had jurisdiction to consider claims that the 1916 Act as
such is inconsistent with United Stat es' obligations under Article VI of the
GATT 1994 and the  Anti-Dumping Agreement ;  and
(ii) in its interpretation and application of the distinction between mandatory and
discretionary legislation;
(b) Whether the Panel erred in concluding that Article VI of the GATT 1994 and the
Anti-Dumping Agreement   apply to the 1916 Act;
(c) Whether the Panel erred in concluding:
(i) in the EC Panel Report, that the 1916 Act is inconsistent with Articles VI:1
and VI:2 of the GATT 1994, Articles 1, 4 and 5.5 of the  Anti-Dumping
Agreement  and Article XVI:4 of the  WTO Agreement ;  and
(ii) in the Japan Panel Report, that the 1916 Act is inconsistent with Articles VI:1
and VI:2 of the GATT 1994, Articles 1, 4.1, 5.1, 5.2, 5.4, 18.1 and 18.4 of the
Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement ;
(d) Whether the Panel erred in refusing to grant "enhanced" third party rights to Japan in
the case brought by the European Communities, and to the European Communities inthe case brought by Japan;  and
(e) If the Appellate Body were to reverse the Panel's findings that Article VI of the
GATT 1994 and the  Anti-Dumping Agreement  apply to the 1916 Act, whether theWT/DS136/AB/R
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Page 16
Appellate Body can or should find that the 1916 Act is inconsistent with Articles III:4
and XI of the GATT 1994; and, if the Appellate Body were to reverse the Panel'sfindings on jurisdiction or on the distinction between mandatory and discretionarylegislation, whether the Appellate Body can or should find that the 1916 Act is
inconsistent with Article XVI:4 of the  WTO Agreement .
IV. Claims Against the 1916 Act as Such
A. Jurisdiction of the Panel to Hear Claims Against the 1916 Act as Such
51. With respect to its jurisdiction to examine the claims of the European Communities and
Japan, the Panel found that:
…  Article 17 of the Anti-Dumping Agreement does not prevent us
from reviewing the conformity of laws as such under the
Anti-Dumping Agreement.  The same applies, a fortiori , with respect
to Article VI of the GATT 1994. … 
26
52. The United States appeals the Panel's finding that it had jurisdiction to consider the claims
that the 1916 Act as such is inconsistent with Article VI of the GATT 1994 and the  Anti-Dumping
Agreement .
53. In its appellee's submission, the European Communities argues that the United States' appeal
relating to the Panel's finding on jurisdiction should be rejected because the United States' objection tothe Panel's jurisdiction was both not timely raised before the Panel and not well founded.  In the casebrought by the European Communities, the United  States did not raise this objection to the
jurisdiction of the Panel until the stage of interim review.  The Panel stated that "there would be a
number of reasons to reject the US argument as untimely."
 27  The European Communities agrees and
argues before us that the jurisdictional objection by the United States could have and should havebeen raised before the interim review stage of the proceedings before the Panel.  The EuropeanCommunities invokes the principle that procedural objections must be made in a timely manner and ingood faith and refers in this respect to the Appellate Body Reports in  Korea – Dairy Safeguards
 28
and  United States – FSC . 29
                                                     
26EC Panel Report, para. 5.27.  See also Japan Panel Report, para. 6.91.
27EC Panel Report, para. 5.19.
28Appellate Body Report, s upra , footnote 21, paras. 127 - 131.
29Appellate Body Report, s upra , footnote 22, para. 166.WT/DS136/AB/R
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54. We agree with the Panel that the interim review was not an appropriate stage in the Panel's
proceedings to raise objections to the Panel's jurisdiction for the first time.  An objection tojurisdiction should be raised as early as possible and panels must ensure that the requirements of dueprocess are met.  However, we also agree with the Panel's consideration that "some issues of
jurisdiction may be of such a nature that they have to be addressed by the Panel at any time."
30  We do
not share the European Communities' view that objections to the jurisdiction of a panel areappropriately regarded as simply "procedural objections".  The vesting of jurisdiction in a panel is afundamental prerequisite for lawful panel proceedings.  We, therefore, see no reason to accept theEuropean Communities' argument that we must reject the United States' appeal because the UnitedStates did not raise its jurisdictional objection before the Panel in a timely manner.
55. The United States appeals, on the basis of the wording of Article 17.4 of the  Anti-Dumping
Agreement  and our Report in  Guatemala – Cement,  the Panel's finding that it had jurisdiction to
examine the 1916 Act as such.  According to the United States, Members cannot bring a claim of
inconsistency with the  Anti-Dumping Agreement  against legislation as such independently from a
claim of inconsistency of one of the three anti-dumping measures specified in Article 17.4, i.e., adefinitive anti-dumping duty, a price undertaking or , in some circumstances, a provisional measure.
The United States contends that:
[When a Member has] a law which [provides for the imposition of]
duties to counteract dumping and, under the Anti-Dumping
Agreement , if [another Member wishes] to challenge that law, then
[the other Member must] wait until one of the three measures
[referred to in Article 17.4 of the Anti-Dumping Agreement ] is in
place.
31
                                                     
30EC Panel Report, para. 5.17.  We note that it is a widely accepted rule that an international tribunal is
entitled to consider the issue of its own jurisdiction on its own initiative, and to satisfy itself that it hasjurisdiction in any case that comes before it.  See, for example, Case Concerning the Administration of the
Prince von Pless (Preliminary Objection)  (1933) P.C.I.J. Ser.  A/B, No. 52, p. 15; Individual Opinion of
President Sir A. McNair, Anglo-Iranian Oil Co. Case (Preliminary Objection)  (1952) I.C.J. Rep., p. 116;
Separate Opinion of Judge Sir H. Lauterpacht in Case of Certain Norwegian Loans (1957) I.C.J. Rep., p. 43;
and Dissenting Opinion of Judge Sir H. Lauterpacht in the Interhandel Case  (Preliminary Objections)  (1959)
I.C.J. Rep., p. 104.  See also M.O. Hudson, The Permanent Court of International Justice 1920-1942
(MacMillan, 1943), pp. 418-419; G. Fitzmaurice, The Law and Procedure of the International Court of Justice ,
Vol. 2 (Grotius Publications, 1986), pp. 530, 755-758; S. Rosenne, The Law and Practice of the International
Court (Martinus Nijhoff, 1985), pp. 467-468; L.A. Podesta Costa and J.M. Ruda, Derecho Internacional
Público,  Vol. 2 (Tipográfica, 1985), p. 438; M. Diez de Velasco Vallejo, Instituciones de Derecho International
Público  (Tecnos, 1997), p. 759.  See also the award of the Iran-United States Claims Tribunal in Marks &
Umman v. Iran, 8 Iran-United States C.T.R., pp. 296-97 (1985) (Award No. 53-458-3);  J.J. van Hof,
Commentary on the UNCITRAL Arbitration Rules: The Application by the Iran-U.S. Claims Tribunal(Kluwer, 1991), pp. 149-150;  and Rule 41(2) of the rules applicable to ICSID Arbitration Tribunals:
International Centre for Settlement of Investment Disputes, Rules of Procedure for Arbitration Proceedings
(Arbitration Rules).
31United States' response to questioning at the oral hearing.WT/DS136/AB/R
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Page 18
56. Since, in the present cases, the European Communities and Japan did not challenge a
definitive anti-dumping duty, a price undertaking or a provisional measure, the United States
concludes that the Panel did not have jurisdiction to examine the 1916 Act as such.  Moreover, theUnited States contends that if the 1916 Act as such cannot be challenged under the  Anti-Dumping
Agreement , it cannot be challenged under Article VI of the GATT 1994 because Article VI and the
Anti-Dumping Agreement   are an inseparable package of rights and obligations.
57. In examining the legal basis for the Panel's jurisdiction to consider the claims of inconsistency
made in respect of the 1916 Act as such, we begin with Article 1.1 of the DSU, which states, inrelevant part:
The rules and procedures of this Understanding shall apply to disputes
brought pursuant to the consultation and dispute settlement provisions
of the agreements listed in Appendix 1  to this Understanding (referred
to in this Understanding as the "covered agreements").  (emphasis
added)
For the DSU to apply to claims that the 1916 Act as such is inconsistent with Article VI of the
GATT 1994 and the  Anti-Dumping Agreement , a legal basis to bring the claims must be found in the
GATT 1994 and the Anti-Dumping Agreement , respectively.
58. We note that in the present cases, the European Communities and Japan both brought their
claims of inconsistency with Article VI of the GATT 1994 and the  Anti-Dumping Agreement
pursuant to Article XXIII of the GATT 1994 and Article 17 of the  Anti-Dumping Agreement .
32
59. Articles XXII and XXIII of the GATT 1994 serve as the basis for consultations and dispute
settlement under the GATT 1994 and, through incorpor ation by reference, under most of the other
agreements in Annex 1A to the  WTO Agreement .33  According to Article XXIII:1(a) of the
GATT 1994, a Member can bring a dispute settlement claim against another Member when itconsiders that a benefit accruing to it under the GATT 1994 is being nullified or impaired, or that theachievement of any objective of the GATT 1994 is being impeded, as a result of the failure of that
other Member to carry out its obligations under that Agreement.
60. Prior to the entry into force of the  WTO Agreement , it was firmly established that
Article XXIII:1(a) of the GATT 1947 allowed a Contracting Party to challenge legislation as such,
                                                     
32WT/DS/136/2, 12 November 1998; WT/DS162/3, 4 June 1999; and WT/DS162/3/Corr.1,
10 February 2000.
33We note, however, that, as discussed in our Report in Guatemala – Cement , the Anti-Dumping
Agreement  does not incorporate by reference Articles XXII and XXIII of the GATT 1994:  Appellate Body
Report, supra, footnote 14, para. 64 and footnote 43.WT/DS136/AB/R
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Page 19
independently from the application of that legislation in specific instances.  While the text of
Article XXIII does not expressly address the matter, panels consistently considered that, underArticle XXIII, they had the  jurisdiction  to deal with claims against legislation as such.
34  I n
examining  such claims, panels developed the concept that mandatory and discretionary legislation
should be distinguished from each other, reasoning that only legislation that mandates a violation of
GATT obligations can be found as such to be inconsistent with those obligations.  We consider theapplication of this distinction to the present cases in section IV(B) below.
61. Thus, that a Contracting Party could challenge legislation as such before a panel was well-
settled under the GATT 1947.  We consider that the case law articulating and applying this practiceforms part of the GATT  acquis  which, under Article XVI:1 of the  WTO Agreement, provides
guidance to the WTO and, therefore, to panels and the Appellate Body.  Furthermore, in Article 3.1 ofthe DSU, Members affirm "their adherence to the principles for the management of disputesheretofore applied under Articles XXII and XXIII of GATT 1947".  We note that, since the entry into
force of the  WTO Agreement , a number of panels have dealt with dispute settlement claims brought
against a Member on the basis of its legislation as such, independently from the application of thatlegislation in specific instances.
35
62. Turning to the issue of the legal basis for claims brought under the  Anti-Dumping Agreement ,
we note that Article 17 of the  Anti-Dumping Agreement  addresses dispute settlement under that
Agreement.  Just as Articles XXII and XXIII of the GATT 1994 create a legal basis for claims indisputes relating to provisions of the GATT 1994, so also Article 17 establishes the basis for disputesettlement claims relating to provisions of the  Anti-Dumping Agreement .  In the same way that
                                                     
34See, for example, Panel Report, United States – Taxes on Petroleum and Certain Imported
Substances   ( "United States – Superfund "), adopted 17 June 1987, BISD 34S/136;  Panel Report, United
States – Section 337 of the Tariff Act of 1930 , adopted 7 November 1989, BISD 36S/345;  Panel Report,
Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes   ("Thailand – Cigarettes "), adopted
7 November 1990, BISD 37S/200;  Panel Report, United States – Measures Affecting Alcoholic and Malt
Beverages   ( "United States – Malt Beverages "), adopted 19 June 1992, BISD 39S/206;  and Panel Report,
United States – Tobacco , supra , footnote 16.  See also Panel Report, United States – Wine and Grape Products ,
supra , footnote 18, examining this issue in the context of a claim brought under the Tokyo Round Agreement on
Interpretation and Application of Articles VI, XVI and  XXIII of the General Agreement of Tariffs and Trade .
35See, for example, Panel Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/R, WT/DS10/R,
WT/DS11/R, adopted 1 November 1996, as modified by the Appellate Body Report, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R; Panel Report, Canada – Certain Measures Concerning Periodicals,
WT/DS31/R, adopted 30 July 1997, as modified by the Appellate Body Report, WT/DS31/AB/R;  Panel Report,European Communities – Hormones , WT/DS26/R, WT/DS48/R, adopted 13 February 1998, as modified by the
Appellate Body Report, supra , footnote 24;  Panel Report, Korea – Taxes on Alcoholic Beverages , WT/DS75/R,
WT/DS84/R, adopted 17 February 1999, as modified by the Appellate Body Report, WT/DS75/AB/R,
WT/DS84/AB/R; Panel Report, Chile – Taxes on Alcoholic Beverages , WT/DS87/R, WT/DS110/R, adopted
12 January 2000, as modified by the Appellate Body Report, WT/DS87/AB/R, WT/DS110/AB/R; Panel Report,United States – FSC, WT/DS108/R, adopted 20 March 2000, as modified by the Appellate Body Report, supra ,
footnote 22;  and Panel Report, United States – Section 110(5) of the US Copyright Act,  WT/DS160/R, adopted
27 July 2000.WT/DS136/AB/R
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Page 20
Article XXIII of the GATT 1994 allows a WTO Member to challenge  legislation   as such, Article 17
of the  Anti-Dumping Agreement   is properly to be regarded as allowing a challenge to legislation as
such, unless this possibility is excluded.  No such express  exclusion is found in Article 17 or
elsewhere in the  Anti-Dumping Agreement .
63. In considering whether Article 17 contains an  implicit  restriction on challenges to
anti-dumping legislation as such, we first note that Article 17.1 states:
Except as otherwise provided herein, the Dispute Settlement
Understanding is applicable to consultations and the settlement of
disputes under this Agreement.
64. Article 17.1 refers, without qualification, to "the settlement of disputes" under the
Anti-Dumping Agreement .  Article 17.1 does not distinguish between disputes relating to
anti-dumping legislation as such and disputes relating to anti-dumping measures taken in theimplementation of such legislation.  Article 17.1 therefore implies that Members can challenge theconsistency of legislation as such with the  Anti-Dumping Agreement   unless this action is excluded
by Article 17.
65. Similarly, Article 17.2 of the  Anti-Dumping Agreement  does not distinguish between
disputes relating to anti-dumping legislation as such and disputes relating to anti-dumping measurestaken in the implementation of such legislation.  On the contrary, it refers to consultations withrespect to "any matter affecting the operation of this Agreement".
66. Article 17.3 of the Anti-Dumping Agreement  states, in wording that mirrors Article XXIII of
the GATT 1994:
If any Member considers that any benefit accruing to it, directly or
indirectly, under this Agreement is being nullified or impaired, or that
the achievement of any objective is being impeded, by another Member
or Members, it may, with a view to reaching a mutually satisfactoryresolution of the matter, request in writing consultations with the
Member or Members in question. …
67. In our Report in  Guatemala – Cement , we described Article 17.3 as:
… the equivalent provision in the  Anti-Dumping Agreement  to
Articles XXII and XXIII of the GATT 1994, which serve as the basis
for consultations and dispute settlement under the GATT 1994 …
36
                                                     
36Appellate Body Report, supra , footnote 14, para. 64.WT/DS136/AB/R
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68. Article 17.3 does not explicitly address challenges to legislation as such.  As we have seen
above, Articles XXII and XXIII allow challe nges to be brought under the GATT 1994 against
legislation as such.  Since Article 17.3 is the "equiva lent provision" to Articles XXII and XXIII of the
GATT 1994, Article 17.3 provides further support for our view that challenges may be brought under
the  Anti-Dumping Agreement  against legislation as such, unless such challenges are otherwise
excluded.
69. As indicated above, the United States bases its objection to the Panel's jurisdiction on
Article 17.4 of the  Anti-Dumping Agreement   and our Report in  Guatemala – Cement .
70. Article 17.4 of the  Anti-Dumping Agreement  provides:
If the Member that requested co nsultations considers that the
consultations pursuant to paragraph 3 have failed to achieve a mutually
agreed solution, and if  final action   has been taken by the administering
authorities of the importing Member to levy  definitive anti-dumping
duties  or  to accept price undertakings , it may refer the matter to the
Dispute Settlement Body ("DSB").  When  a provisional measure has a
significant impact  and the Member that requested consultations
considers that the measure was taken contrary to the provisions of
paragraph 1 of Article 7, that Member may also refer  such matter  to
the DSB.  (emphasis added)
We note that, unlike Articles 17.1 to 17.3, Article 17.4 is a special or additional dispute settlement
rule listed in Appendix 2 to the DSU.
71. In  Guatemala – Cement , Mexico had challenged Guatemala's  initiation   of anti-dumping
proceedings, and its  conduct   of the investigation, without identifying any of the measures listed in
Article 17.4.  We stated that:
…  Three types of anti-dumping measure are specified in Article 17.4:
definitive anti-dumping duties, the acceptance of price undertakings,
and provisional measures.  According to Article 17.4, a "matter" maybe referred to the DSB  only if  one of the relevant three anti-dumping
measures is in place.  This provision, when read together with
Article 6.2 of the DSU, requires a panel request in a dispute brought
under the  Anti-Dumping Agreement  to identify, as the specific
measure at issue, either a definitive anti-dumping duty, the acceptanceof a price undertaking, or a provisional measure.  … (original
emphasis)WT/DS136/AB/R
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… We find that in disputes under the  Anti-Dumping Agreement
relating to the initiation and conduct of anti-dumping investigations , a
definitive anti-dumping duty, the acceptance of a price undertaking or
a provisional measure must be identified as part of the matter referred
to the DSB pursuant to the provisions of Article 17.4 of theAnti-Dumping Agreement   and Article 6.2 of the DSU.
37  (emphasis
added)
72. Nothing in our Report in  Guatemala – Cement   suggests that Article 17.4 precludes review of
anti-dumping legislation as such.  Rather, in that case, we simply found that, for Mexico to challenge
Guatemala's initiation and conduct of the anti-dumping investigation, Mexico was required to identifyone of the three anti-dumping measures listed in Article 17.4 in its request for establishment of apanel.  Since it did not do so, the panel in that case did not have jurisdiction.
73. Important considerations underlie the restriction contained in Article 17.4.  In the context of
dispute settlement proceedings regarding an anti-dumping investigation, there is tension between, onthe one hand, a complaining Member's right to seek redress when illegal action affects its economicoperators and, on the other hand, the risk that a responding Member may be harassed or its resourcessquandered if dispute settlement proceedings could be initiated  against it in respect of each step,however small, taken in the course of an anti- dumping investigation, even before any concrete
measure had been adopted.
38  In our view, by limiting the availability of dispute settlement
proceedings related to an anti-dumping investigation to cases in which a Member's request forestablishment of a panel identifies a definitive anti-dumping duty, a price undertaking or a provisional
measure
39, Article 17.4 strikes a balance between these competing considerations.
74. Therefore, Article 17.4 sets out certain conditions that must exist before a Member can
challenge action taken by a national investigating authority in the context of an anti-dumpinginvestigation. However, Article 17.4 does not address or affect a Member's right to bring a claim ofinconsistency with the  Anti-Dumping Agreement   against anti-dumping legislation as such.
75. Moreover, as we have seen above, the GATT and WTO case law firmly establishes that
dispute settlement proceedings may be brought based on the alleged inconsistency of a Member'slegislation as such with that Member's obligations.  We find nothing, and the United States hasidentified nothing, inherent in the nature of anti-dumping legislation that would rationally distinguish                                                     
37Appellate Body Report, supra,  footnote 14, paras. 79 - 80.
38An unrestricted right to have recourse to dispute settlement during an anti-dumping investigation
would allow a multiplicity of dispute settlement proceedings arising out of the same investigation, leading torepeated disruption of that investigation.
39Once one of the three types of measure listed in Article 17.4 is identified in the request for
establishment of a panel, a Member may challenge the consistency of any preceding action taken by an
investigating authority in the course of an anti-dumping investigation.WT/DS136/AB/R
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Page 23
such legislation from other types of legislation fo r purposes of dispute settlement, or that would
remove anti-dumping legislation from the ambit of the generally-accepted practice that a panel mayexamine legislation as such.
76. Our reading of Article 17 as allowing Members to bring claims against anti-dumping
legislation as such is supported by Article 18.4 of the  Anti-Dumping Agreement .
77. Article 18.4 of the  Anti-Dumping Agreement  states:
Each Member shall take all necessary  steps, of a general or particular
character, to ensure, not later than th e date of entry into force of the
WTO Agreement for it, the conformity of its laws, regulations andadministrative procedures with the provisions of this Agreement as they
may apply for the Member in question.
78. Article 18.4 imposes an affirmative obligation on each Member to bring its legislation into
conformity with the provisions of the  Anti-Dumping Agreement   not later than the date of entry into
force of the  WTO Agreement  for that Member.  Nothing in Article 18.4 or elsewhere in the
Anti-Dumping Agreement  excludes the obligation set out in Article 18.4 from the scope of matters that
may be submitted to dispute settlement.
79. If a Member could not bring a claim of inconsistency under the  Anti-Dumping Agreement  
against legislation as such until one of the three anti-dumping measures specified in Article 17.4 had
been adopted and was also challenged, then examination of the consistency with Article 18.4 ofanti-dumping legislation as such would be deferred, and the effectiveness of Article 18.4 would bediminished.
80. Furthermore, we note that Article 18.1 of the  Anti-Dumping Agreement  states:
No specific action against dumping  of exports from another Member
can be taken except in accordance with the provisions of  GATT 1994,
as interpreted by this Agreement.
81. Article 18.1 contains a prohibition on "specific action against dumping" when such action is
not taken in accordance with the provisions of the GATT 1994, as interpreted by the  Anti-Dumping
Agreement .  Specific action against dumping could take a wide variety of forms.  If specific action
against dumping is taken in a form other than a form authorized under Article VI of the GATT 1994,as interpreted by the  Anti-Dumping Agreement , such action will violate Article 18.1.
40  We find
nothing, however, in Article 18.1 or elsewhere in the Anti-Dumping Agreement , to suggest that the
                                                     
40See infra , paras. 122-126.WT/DS136/AB/R
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consistency of such action with Article 18.1 may only be challenged when one of the three measures
specified in Article 17.4 has been adopted.  Indeed, such an interpretation must be wrong since itimplies that, if a Member's legislation provides for a response to dumping that does  not  consist of
one of the three measures listed in Article 17.4, then it would be impossible to test the consistency of
that legislation, and of particular responses thereunder, with Article 18.1 of the  Anti-Dumping
Agreement .
82. Therefore, we consider that Articles 18.1 and 18.4 support our conclusion that a Member may
challenge the consistency of legislation as such with the provisions of the  Anti-Dumping Agreement .
83. For all these reasons, we conclude that, pursuant to Article XXIII of the GATT 1994 and
Article 17 of the  Anti-Dumping Agreement , the European Communities and Japan could bring dispute
settlement claims of inconsistency with Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   against the 1916 Act as such.  We, therefore, uphold the Panel's finding that it had
jurisdiction to review these claims.
B. Mandatory and Discretionary Legislation
84. In the proceedings before the Panel, the United States invoked the distinction between
mandatory and discretionary legislation
41 to make two types of argument:
… the 1916 Act is non-mandatory legislation within the meaning of
the GATT/WTO practice essentially because (i) with respect to both
civil and criminal proceedings, US courts have interpreted in the pastand/or could in the future interpret the 1916 Act in a manner
consistent with the WTO obligations of the United States and (ii) the
US Department of Justice has discretion to initiate or not criminal
proceedings under the 1916 Act.
42
85. With respect to the first of these arguments, the Panel concluded:
The question whether the 1916 Act could be or has been interpreted in
a way that would make it fall outside the scope of Article VI is …
simply a question of assessing the current meaning of the law.43
                                                     
41While the Panel used the phrase "non-mandatory legislation" to describe legislation that does not
mandate a violation of a relevant obligation, we prefer the phrase "discretionary legislation".
42EC Panel Report, para. 6.82.  See also Japan Panel Report, para. 6.95.
43EC Panel Report, para. 6.84.  See also Japan Panel Report, para. 6.97.WT/DS136/AB/R
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86. As regards the second argument made by the United States, the Panel found:
… the discretion enjoyed by the US Department of Justice to initiate a
case under the 1916 Act should not be interpreted as making the1916 Act a non-mandatory law.
44
87. On appeal, the United States asks us to reverse the Panel's interpretation and application of
the distinction between mandatory and discretionary legislation.
88. As indicated above, the concept of mandatory as distinguished from discretionary legislation
was developed by a number of GATT panels as a threshold consideration in determining whenlegislation as such – rather than a specific application of that legislation – was inconsistent with aContracting Party's GATT 1947 obligations.
45  The practice of GATT panels was summed up in
United States – Tobacco  46 as follows:
… panels had consistently ruled that legislation which mandated action
inconsistent with the General Agreement could be challenged as such,whereas legislation which merely gave the discretion to the  executive
authority  of a contracting party to act inconsistently with the General
Agreement could not be challenged as such;  only the actual application
of such legislation inconsistent with the General Agreement could be
subject to challenge.
47  (emphasis added)
89. Thus, the relevant discretion, for purposes of distinguishing between mandatory and
discretionary legislation, is a discretion vested in the  executive  branch  of government.
90. The 1916 Act provides for two types of actions to be brought in a United States federal court:
a civil action initiated by private parties, and a criminal action initiated by the United States
Department of Justice.  Turning first to the civil action, we note that there is no relevant discretion
                                                     
44EC Panel Report, para. 6.169.  See also Japan Panel Report, para. 6.191.
45The reason it must be possible to find legislation as such to be inconsistent with a Contracting Party's
GATT 1947 obligations was explained as follows:
[the provisions of the GATT 1947] are not only to protect current trade but also to
create the predictability needed to plan future trade.  That objective could not beattained if contracting parties could not challenge existing legislation mandatingactions at variance with the General Agreement until the administrative actsimplementing it had actually been applied to their trade.
 
Panel Report, United States – Superfund , supra , footnote 34, para. 5.2.2.
46Panel Report, supra , footnote 16.
47Ibid., para. 118, referring in footnote to:  Panel Report, United States - Superfund , supra , footnote 34,
p. 160;  Panel Report, EEC - Parts and Components , supra , footnote 20, pp. 198-199;  Panel Report, Thailand -
Cigarettes , supra , footnote 34, pp. 227-228;  Panel Report, United States - Malt Beverages , supra , footnote 34,
pp. 281-282 and 289-290;  Panel Report, United States - Denial of Most-Favoured Nation Treatment as to Non-
Rubber Footwear from Brazil , adopted 19 June 1992, BISD 39S/128, p. 152.WT/DS136/AB/R
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accorded to the executive branch of the United St ates' government with respect to such action.48
These civil actions are brought by private parties.  A judge faced with such proceedings must simply
apply   the 1916 Act.  In consequence, so far as the civil actions that may be brought under the
1916 Act are concerned, the 1916 Act is clearly mandatory legislation as that term has been
understood for purposes of the distinction between mandatory and discretionary legislation.
91. The Panel, however, examined that part of  the 1916 Act that provides for criminal
prosecutions, and found that the discretion enjoyed by the United States Department of Justice toinitiate or not to initiate criminal proceedings does not mean that the 1916 Act is a discretionary law.
49  
In light of the case law developing and applying the distinction between mandatory and discretionarylegislation
50, we believe that the discretion enjoyed by the United States Department of Justice is not
discretion of such a nature or of such breadth as to transform the 1916 Act into discretionarylegislation, as this term has been understood for purposes of distinguishing between mandatory anddiscretionary legislation.  We, therefore, ag ree with the Panel's finding on this point.
92. In any event, we note that, on appeal, the United States does not directly challenge the Panel's
finding that the discretion to enforce the 1916 Act enjoyed by the United States Department of Justicedoes not mean that the 1916 Act is discretionary legislation, but instead takes issue with severalaspects of the reasoning employed by the Panel in reaching this conclusion.  First, according to theUnited States, the Panel erred by "creating" a rule that the mandatory/discretionary distinction canapply only if the challenged legislation has never been "applied".  In response to our inquiries at theoral hearing, the United States identified the follo wing statement by the Panel as "creating" such a
rule:
The question whether there could be a possibility to interpret the
1916 Act in the future so that it would fall outside the scope of
Article VI would be relevant, according to the United States –
Tobacco  case, only if the 1916 Act had not yet been applied.
51
93. Review of the context in which the above passage appears in the Panel Reports reveals that
the Panel did not, as the United States argues, find that the distinction between mandatory anddiscretionary legislation is only relevant if the challenged legislation has never been applied.  Rather,
                                                     
48The Panel noted that the United States did not allege that any discretion of the executive branch of
government in relation to the civ il proceedings would make the 1916 Act discretionary.  EC Panel Report,
footnote 350 to para. 6.82;  Japan Pane l Report, footnote 482 to para. 6.95.
49EC Panel Report, para. 6.169;  Japan Panel Report, para. 6.191.
50See, in particular the reasoning in the Panel Report, United States – Malt Beverages , supra ,
footnote 34, para. 5.60.
51EC Panel Report, para. 6.89;  Japan Panel Report, para. 6.103.WT/DS136/AB/R
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in response to the United States' argument that the circumstances of the present cases resemble those
in  United States – Tobacco , the Panel noted that these cases are factually different from  United
States – Tobacco , where no implementing measures had been adopted and the law had never been
applied, and reasoned that "[t]hese differences have implications for the burden of proof."  52  We see
no  finding   by the Panel that the distinction between mandatory and discretionary legislation is
relevant only if the challenged legislation has never been applied.
94. The United States also takes issue with the Panel's identification and application of the burden
of proof, in particular the Panel's statement that:
… the United States, as the party having raised this  defence , failed to
supply convincing evidence that the 1916 Act should be considered as
"non-mandatory legislation" within the meaning of GATT 1947/WTO
practice.53  (emphasis added)
95. According to the United States, the Panel erred in characterizing the distinction between
discretionary and mandatory legislation as a "defence" which the United States bore the burden ofproving.
96. In our Reports in  United States – Measure Affecting Imports of Woven Wool Shirts and
Blouses from India
 54 and  European Communities – Hormones 55, we found that a complaining
Member bears the burden of bringing forth sufficient evidence and legal argument to demonstratethat,  prima facie , another Member's measure is inconsistent with a relevant obligation of that other
Member under the covered agreements.  Once the complaining Member has done so, the burden shifts
to the defending Member to introduce evidence and legal argument sufficient to rebut the  prima
facie  case.
97. Our examination of the Panel Reports shows that the Panel correctly articulated
 56 and
applied57 the burden of proof in the cases before it.  The Panel, in its analysis, found that the European
Communities and Japan had satisfied their respective burdens of proof by establishing a  prima facie  
case that the 1916 Act is, on its face, inconsistent with Article VI of the GATT 1994 and theAnti-Dumping Agreement.   Having so found, the Panel went on to examine the arguments and
evidence presented by the United States to rebut this  prima facie   case.  One such argument made by
                                                     
52EC Panel Report, paras. 6.86 - 6.87;  Ja pan Panel Report, paras. 6.100 - 6.101.
53Japan Panel Report, para. 6.192.  See also EC Panel Report, para. 6.170.
54Appellate Body Report, WT/DS33/AB/R, adopted 23 May 1997, pp. 14 - 17.
55Appellate Body Report, supra , footnote 24, para. 109.
56EC Panel Report, paras. 6.37 - 6.38;  Japan Panel Report, paras. 6.24 - 6.25.
57EC Panel Report, paras. 6.86 - 6.90;  Ja pan Panel Report, paras.  6.100 - 6.104.WT/DS136/AB/R
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the United States was that the 1916 Act is discretionary legislation.  The Panel found that the United
States did not supply persuasive evidence in support of this argument.  We are satisfied that, in thesecases, the Panel correctly identified and applied the burden of proof.
98. The United States further claims that, in the Japan Panel Report, the Panel wrongly
concluded, based on the reasoning of the panel in the unadopted  European Communities – Audio
Cassettes   panel report, that:
… to the extent that Article 18.4 requires the conformity of the
1916 Act with the Anti-Dumping Agreement as of the date of entry
into force of the WTO Agreement for the United States, the notion of
mandatory/non-mandatory legisl ation is no longer relevant  in
determining whether the Panel can or cannot review the conformity of
the 1916 Act with the Anti-Dumping Agreement.
58  (emphasis added)
99. We note that answering the question of the con tinuing relevance of the distinction between
mandatory and discretionary legislation for claims brought under the  Anti-Dumping Agreement
would have no impact upon the outcome of these appeals, because the 1916 Act is clearly not
discretionary legislation, as that term has been understood for purposes of distinguishing between
mandatory and discretionary legislation.  Therefore, we do not find it necessary to consider, in thesecases, whether Article 18.4, or any other provision of the  Anti-Dumping Agreement , has supplanted
or modified the distinction between mandatory and discretionary legislation.
 59  For the same reasons,
the Panel did not, in the Japan Panel Report, need to opine on this issue.60
100. Lastly, we note that, before the Panel and before us, the United States invoked the distinction
between mandatory and discretionary legislation to argue that the 1916 Act cannot be mandatorylegislation because United States' courts have interpreted or may interpret the 1916 Act in ways that
would make it consistent with the WTO obligations of the United States.  As we have seen, in the case
law developed under the GATT 1947, the distinction between mandatory and discretionary legislationturns on whether there is relevant discretion vested in the  executive branch   of government.  The
United States, however, does not rely upon the discretion of the executive branch of the United States'government, but on the interpretation of the 1916 Act by the United States' courts.  In our view, thisargument does not relate to the distinction between mandatory and discretionary legislation.
                                                     
58Japan Panel Report, para. 6.189.
59We note that in a recent case, a panel found that even discretionary legislation may violate certain
WTO obligations.  See Panel Report, United States – Section 301 , supra , footnote 23, paras. 7.53 - 7.54.
60We note that, in the EC Panel Report, the Panel reached the same results as in the Japan Panel Report
without making any finding that the notion of mandatory/discretionary legislation "is no longer relevant".WT/DS136/AB/R
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101. On this point, we agree with the Panel that the question whether the 1916 Act could be or has
been interpreted by the United States' courts in a way that would make it fall outside the scope ofArticle VI of the GATT 1994 is a matter of determ ining the meaning of the law in order to examine
its consistency with the United States' obligations.
61  We review, to the extent that it is relevant in
these appeals, the Panel's assessment of the meaning and consistency of the 1916 Act in the following
sections of this Report.
102. As a result of the above reasoning, we uphold, to the extent that we have found it necessary to
consider the issue, the Panel's interpretation and application of the distinction between mandatory anddiscretionary legislation.
V. Applicability of Article VI of the GATT 1994 and the  Anti-Dumping Agreement  to the
1916 Act
103. The Panel found that Article VI of the GATT 1994 and the  Anti-Dumping Agreement   apply
to the 1916 Act.  With respect to the applicability of Article VI to the 1916 Act, the Panel concluded:
Having interpreted Article VI of the GATT 1994 in accordance with
the Vienna Convention, we have reached the conclusion that the rules
and disciplines of that article apply to laws that address "dumping" as
defined in Article VI:1.  Having examined the text of the 1916 Act,
we have found that the transnational price discrimination test
incorporated in that law falls within the definition of "dumping" of
Article VI:1 of the GATT 1994. …
62
The Panel further concluded that:
… the applicability of Article VI to the 1916 Act also implies the
applicability of the Anti-Dumping Agreement to the 1916 Act.63
104. The United States appeals these findings.  According to the United States, Article VI of the
GATT 1994 applies to a law of a Member only when two criteria are satisfied:  first, the law mustimpose anti-dumping duties and, second, it must "specifically target" dumping within the meaning ofArticle VI:1.  The United States emphasizes that  the 1916 Act does not impose anti-dumping duties –
it provides for imprisonment, the imposition of fines or an award of treble damages.  Moreover, the
United States argues that the 1916 Act does not "specifically target" dumping, but rather predatory
pricing.  The United States, therefore, maintains that Article VI and, by implication, theAnti-Dumping Agreement , do not apply to the 1916 Act.
                                                     
61EC Panel Report, para. 6.84;  Japan Panel Report, para. 6.97.
62EC Panel Report, para. 6.163;  Japan Panel Report, para. 6.182.
63Japan Panel Report, para. 6.184.  See also EC Panel Report, para. 6.165.WT/DS136/AB/R
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105. Article VI of the GATT 1994 concerns "dumping".   "Dumping" is defined in Article VI:1 of
the GATT 1994 and further elaborated in Article 2 of the Anti-Dumping Agreement .  The first
sentence of Article VI:1 defines "dumping" as conduct:
… by which products of one country are introduced into the
commerce of another country at less than the normal value of the
products …
106. The second and third sentences of Article VI:1 state:
For the purposes of this Article, a product is to be considered as being
introduced into the commerce of an importing country at less than its
normal value, if the price of the product exported from one country toanother
(a) is less than the comparable price, in the ordinary course of
trade, for the like product when destined for consumption in the
exporting country, or,
(b) in the absence of such domestic price, is less than either
(i) the highest comparable price for the like product for
export to any third country in the ordinary course oftrade, or
(ii) the cost of production of the product in the country of
origin plus a reasonable addition for selling cost and
profit.
Due allowance shall be made in each case for differences in
conditions and terms of sale, for differences in taxation, and for other
differences affecting price comparability.
Article 2 of the  Anti-Dumping Agreement   further elaborates the definition of "dumping" in
Article VI:1 by setting out detailed rules for the determination of dumping.
107. We note that, under Article VI:1 of the GATT 1994 and Article 2 of the  Anti-Dumping
Agreement , neither the intent of the persons engaging in "dumping" nor the injurious effects that
"dumping" may have on a Member's domestic industry are constituent elements of "dumping".
108. With regard to "dumping", Article VI of the GATT 1994 states, in relevant part:
1. The Members recognize that dumping … is to be condemned
if it causes or threatens material injury to an established industry in the
territory of a Member or materially retards the establishment of a
domestic industry.  …WT/DS136/AB/R
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2. In order to offset or prevent dumping, a Member may levy on
any dumped product an anti-dumping duty not greater in amount than
the margin of dumping in respect of such product.  …
109. Whether Article VI of the GATT 1994 is applicable to the 1916 Act depends, first of all, on
whether Article VI regulates all possible measures Members can take in response to dumping.  If
Article VI regulates  only  the imposition of anti-dumping duties and neither prohibits nor regulates
other measures which Members may take to counteract dumping, then, since the 1916 Act does notprovide for anti-dumping duties, Article VI would not apply to the 1916 Act.
110. Article VI:1 of the GATT 1994 makes clear that dumping is "to be  condemned  if it causes or
threatens material injury". (emphasis added)  However, Article VI:1 does not address the remediesthat Members may take against dumping.
111. Remedies are addressed in Article VI:2 of the GATT 1994.  The only type of measure that
Article VI:2 explicitly authorizes Members to impose "in order to offset or prevent dumping" is ananti-dumping duty.  However, Article VI:2 does not specify that Members may impose only
anti-dumping duties in order to offset or prevent dumping.
112. In arguing that Article VI of the GATT 1994 regulates only the imposition of anti-dumping
duties and does not apply to other measures taken to counteract dumping, the United Statesemphasizes that Article VI:2 states that Members " may  levy on any dumped product an anti-dumping
duty …". (emphasis added).  For the United States , the verb "may" indicates that while Members
"may" choose to impose anti-dumping duties and thereby be bound by the rules of Article VI,Members may also choose to impose other types of anti-dumping measures, in which case they arenot bound by the rules of Article VI.
113. We agree with the first part of the United States' argument, namely, that the verb "may"
indicates that it is permissive, rather than mandatory, to impose anti-dumping duties.  However, it isnot obvious to us, based on the wording of Article VI:2 alone, that the verb "may" also implies that aMember is permitted to impose a measure other than an anti-dumping duty.
114. We believe that the meaning of the word "may" in Article VI:2 is clarified by Article 9 of the
Anti-Dumping Agreement   on the "Imposition and Collection of Anti-Dumping Duties".  Article VI of
the GATT 1994 and the  Anti-Dumping Agreement   are part of the same treaty, the WTO Agreement .
As its full title indicates, the  Anti-Dumping Agreement   is an "Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994".  Accordingly, Article VI must be
read in conjunction with the provisions of the  Anti-Dumping Agreement , including Article 9.WT/DS136/AB/R
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115. Article 9 of the  Anti-Dumping Agreement  states in relevant part:
It is desirable that the imposition [of an anti-dumping duty] be
permissive in the territory of all Members, and that the duty be lessthan the margin if such lesser duty would be adequate to remove the
injury to the domestic industry.
116. In light of this provision, the verb "may" in  Article VI:2 of the GATT 1994 is, in our
opinion, properly understood as giving Members a choice between imposing an anti-dumping duty
or not , as well as a choice between imposing an anti-dumping duty equal to the dumping margin or
imposing a lower duty.  We find no support in Article VI:2, read in conjunction with Article 9 of theAnti-Dumping Agreement , for the United States' argument that the verb "may" indicates that
Members, to counteract dumping, are permitted to take measures other than the imposition of
anti-dumping duties.
117. As a result of the above reasoning, it appears to us that the text of Article VI is inconclusive
as to whether Article VI regulates all possible measures which Members may take to counteractdumping, or whether it regulates only the imposition of anti-dumping duties.
118. As we have stated, Article VI of the GATT 1994 must be read together with the provisions of
the  Anti-Dumping Agreement .  Article 1 of that Agreement provides:
An anti-dumping measure shall be applied only under the
circumstances provided for in Article VI of GATT 1994 and pursuantto investigations initiated and conducted in accordance with the
provisions of this Agreement.  Th e following provisions govern the
application of Article VI of GATT 1994 in so far as action is taken
under anti-dumping legislation or regulations.
119. The first sentence of Article 1 states that "an anti-dumping measure" must be consistent with
Article VI of the GATT 1994 and the provisions of the  Anti-Dumping Agreement .  However, as the
United States concedes, the meaning of an "anti-dumping measure" in this sentence is "notimmediately clear".
64  The United States argues, on the basis of the history of this provision, that the
phrase "anti-dumping measure" refers only to definitive anti-dumping duties, price undertakings and
provisional measures.  However, the ordinary meaning of the phrase "an anti-dumping measure"
                                                     
64United States' appellant's submission, para. 85.WT/DS136/AB/R
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Page 33
seems to encompass all measures taken against dumping.  We do not see in the words "an
anti-dumping measure" any explicit limitation to particular types of measure. 65
120. Since "an anti-dumping measure" must, according to Article 1 of the Anti-Dumping
Agreement , be consistent with Article VI of the GATT 1994 and the provisions of the  Anti-Dumping
Agreement , it seems to follow that Article VI would apply to "an anti-dumping measure", i.e., a
measure against dumping.
121. We consider that the scope of application of Article VI is clarified, in particular, by
Article 18.1 of the  Anti-Dumping Agreement .  Article 18.1 states:
No  specific action against dumping  of exports   from another Member
can be taken except in accordance with the provisions of GATT 1994,
as interpreted by this Agreement.  (emphasis added)
122. In our view, the ordinary meaning of the phrase "specific action against dumping" of exports
within the meaning of Article 18.1 is action that is  taken in response to situations presenting the
constituent elements of "dumping".  "Specifi c action against dumping" of exports must, at a
minimum, encompass action that may be taken  only  when the constituent elements of "dumping" are
present.66  Since intent is not a constituent element of "dumping", the  intent  with which action
against dumping is taken is not relevant to the determination of whether such action is "specific action
against dumping" of exports within the meaning of Article 18.1 of the  Anti-Dumping Agreement.
123. Footnote 24 to Article 18.1 of the  Anti-Dumping Agreement  states:
This is not intended to preclude action under other relevant provisions
of GATT 1994, as appropriate.
We note that footnote 24 refers generally to "action" and not, as does Article 18.1, to "specific action
against dumping" of exports.  "Action" within the m eaning of footnote 24 is to be distinguished from
"specific action against dumping" of exports, which is governed by Article 18.1 itself.
                                                     
65We consider that the second sentence of Article 1 merely indicates that the  Anti-Dumping
Agreement   implements only those provisions of Article VI of the GATT 1994 that concern dumping, as
distinguished from the provisions of Article VI of the GATT 1994 that concern countervailing duties imposed tooffset subsidies.
66We do not find it necessary, in the present cases, to  decide whether the concept of "specific action
against dumping" may be broader.WT/DS136/AB/R
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Page 34
124. Article 18.1 of the  Anti-Dumping Agreement  contains a prohibition on the taking of any
"specific action against dumping" of exports when such specific action is not "in accordance with theprovisions of GATT 1994, as interpreted by this Agreement".  Since the only provisions of theGATT 1994 "interpreted" by the  Anti-Dumping Agreement   are those provisions of Article VI
concerning dumping, Article 18.1 should be read as requiring that any "specific action against
dumping" of exports from another Member be in accordance with the relevant provisions of Article VI  of the GATT 1994, as interpreted by the  Anti-Dumping Agreement .
125. We recall that footnote 24 to Article 18.1 refers to " other  relevant provisions of GATT 1994"
(emphasis added).  These terms can only refer to provisions other than the provisions of Article VIconcerning dumping.  Footnote 24 thus confirms that the "provisions of GATT 1994" referred to inArticle 18.1 are in fact the provisions of Arti cle VI of the GATT 1994 concerning dumping.
126. We have found that Article 18.1 of the  Anti-Dumping Agreement   requires that any "specific
action against dumping" be in accordance with the provisions of Article VI of the GATT 1994
concerning dumping, as those provisions are interpreted by the  Anti-Dumping Agreement .  It follows
that Article VI is applicable to any "specific action against dumping" of exports, i.e., action that istaken in response to situations presenting the constituent elements of "dumping".
127. We now turn to the question whether the 1916 Act provides for "specific action against
dumping" of exports from another Member and, t hus, falls within the scope of application of
Article VI of the GATT 1994.
128. As mentioned above, the United States contends that the 1916 Act does not fall within the
scope of application of Article VI of the GATT 1994 because it does not "specifically target"
dumping.  According to the United States, the activity targeted by the 1916 Act is "predatory pricing;
that is, sales at predatorily low price levels with  the intent to destroy, injure, or prevent the
establishment of an American industry, or to restrain trade in or monopolize a particular market."
 67
Although one element of liability under the 1916 Act is the existence of price differences betweennational markets, this element is, according to the United States, "simply one indicia of whether theU.S. importers pricing practices are predatory in nature."
 68
                                                     
67United States' appellant's submission, para. 133.
68Ibid.WT/DS136/AB/R
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129. The 1916 Act states in relevant part:
It shall be unlawful for any person importing or assisting in importing
any articles from any foreign country into the United States,commonly and systematically to import, sell or cause to be imported
or sold such articles within the United States at a price substantially
less than the actual market value or wholesale price of such articles, at
the time of exportation to the United States, in the principal markets of
the country of their production, or of other foreign countries to whichthey are commonly exported after adding to such market value or
wholesale price, freight, duty, and other charges and expenses
necessarily incident to the importa tion and sale thereof in the United
States:  Provided , That such act or acts be done with the intent of
destroying or injuring an industry in the United States, or ofpreventing the establishment of an industry in the United States, or of
restraining or monopolizing any part of trade and commerce in such
articles in the United States.
Any person who violates or combines or conspires with any other
person to violate this section is guilty of a misdemeanour, and, onconviction thereof, shall be punished by a fine not exceeding $5,000,
or imprisonment not exceeding one year, or both, in the discretion of
the court.
Any person injured in his business or property by reason of any
violation of, or combination or conspiracy to violate, this section, may
sue therefor in the district court of the United States for the district in
which the defendant resides or is found or has an agent, withoutrespect to the amount in controversy, and shall recover threefold the
damages sustained, and the cost of the suit, including a reasonable
attorney's fee.
69
130. On the basis of the wording of the 1916 Act, it is clear that the 1916 Act provides for civil and
criminal proceedings and penalties when persons import products from another country into the
territory of the United States, and sell or offer such products for sale at a price less than the price for
which the like products are sold or offered for sale in the country of export or, in certain cases, a thirdcountry market.  In other words, in the light of the definition of "dumping" set out in Article VI:1 ofthe GATT 1994, as elaborated in Article 2 of the  Anti-Dumping Agreement , the civil and criminal
proceedings and penalties contemplated by the 1916 Act require the presence of the constituentelements of "dumping".  The constituent elements of "dumping" are built into the essential elementsof civil and criminal liability under the 1916 Act.  The wording of the 1916 Act also makes clear thatthese actions can be taken  only  with respect to conduct which presents the constituent elements of
"dumping".  It follows that the civil and crimin al proceedings and penalties provided for in the
                                                     
69Supra , footnote 4.WT/DS136/AB/R
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Page 36
1916 Act are "specific action against dumping".  We find, therefore, that Article VI of the
GATT 1994 applies to the 1916 Act.
131. We note that the United States places much emphasis on the "intent" requirement of the
1916 Act, i.e., the stipulation that dumping is "unlawful" when it is:
… done with the intent of destroying or injuring an industry in the
United States, or of preventing the establishment of an industry in the
United States, or of restraining or monopolizing any part of trade and
commerce in such Articles in the United States.70
132. This requirement of intent to destroy, injure , or prevent the establishment of an American
industry, or to restrain or monopolize any part of trade, does not affect the applicability of Article VIof the GATT 1994 to the 1916 Act.  As already noted, action may be taken under the 1916 Act only
when the constituent elements of dumping are present.  The fact that an importer can only be found to
have violated the 1916 Act when the sales of dumped products in the United States were carried outwith a certain intent does not mean that the actions under the 1916 Act are not "specific action againstdumping".  Proof of a requisite intent under the 1916 Act only constitutes an additional requirementfor the imposition of the civil and criminal penalties set out in that Act.  Even if the 1916 Act allowedthe imposition of penalties only  if the intent proven were an intent to monopolize or an intent to
restrain trade (i.e., an "antitrust"-type intent), this would not transform the 1916 Act into a statutewhich does not provide for "specific action against dumping", and, thus, would not remove the1916 Act from the scope of application of Article VI.
133. For all these reasons, we agree with the Panel's conclusion that Article VI of the GATT 1994
applies to the 1916 Act.  We also agree with the Pa nel that, having regard to the relationship between
Article VI and the  Anti-Dumping Agreement , "the applicability of Article VI to the 1916 Act also
implies the applicability of the Anti-Dumping Agreement" to the 1916 Act.
71
                                                     
70Supra , footnote 4.
71EC Panel Report, para. 6.165.  See also Japan Pa nel Report, para. 6.184.  We note that the Panel
frequently referred to the concept of "transnational price discrimination".  It should be stressed that
"transnational price discrimination", i.e., a difference in price between two markets, is a broader concept than
"dumping" as defined in Article VI:1 of the GATT 1994.  Unlike transnational discrimination, "dumping"requires  importation , and a lower price in the  import market   than in the export market or relevant third country
market.  Dumping is always transnational price discrimination, but transnational price discrimination is notalways dumping.  We are, therefore, of the opinion that the Panel's use of the term "transnational pricediscrimination" in its findings is problematic, and deserves specific mention.WT/DS136/AB/R
WT/DS162/AB/R
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VI. Articles VI:1 and VI:2 of the GATT 1994, Certain Provisions of the  Anti-Dumping
Agreement  and Article XVI:4 of the  WTO Agreement
134. With regard to the EC Panel Report, the United States argues that the Panel erred in finding
that the 1916 Act was inconsistent with Articles VI:1 and VI:2 of the GATT 1994, Articles 1, 4and 5.5 of the  Anti-Dumping Agreement   and Article XVI:4 of the  WTO Agreement .  With regard to
the Japan Panel Report, the United States argues that the Panel erred in finding that the 1916 Act wasinconsistent with Articles VI:1 and VI:2 of the GATT 1994, Articles 1, 4.1, 5.1, 5.2, 5.4, 18.1
and 18.4 of the  Anti-Dumping Agreement  and Article XVI:4 of the  WTO Agreement .
135. With the exception of the finding of inconsistency with Article VI:2 of the GATT 1994, the
United States appeals these findings of inconsistency on the sole basis that the 1916 Act does not fallwithin the scope of application of Article VI and the  Anti-Dumping Agreement  and that the Panel,
therefore, erred in making these findings of inconsistency.  These findings of inconsistency, thus,stand or fall along with the Panel's findings regarding the scope of application of Article VI of theGATT 1994 and the  Anti-Dumping Agreement .  Since we have upheld the Panel's conclusion that the
1916 Act falls within the scope of application of Article VI and the  Anti-Dumping Agreement , we
also uphold these findings of inconsistency of the Panel.
136. As regards the Panel's finding that the 1916 Act is inconsistent with Article VI:2 of the
GATT 1994, the United States argues that Article VI:2 only regulates the imposition of anti-dumpingduties, and that other measures to counteract dumping are not addressed by Article VI:2.
137. As we have concluded above, Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   apply to "specific action against dumping".  Article VI, and, in particular, Article VI:2,
read in conjunction with the  Anti-Dumping Agreement , limit the permissible responses to dumping to
definitive anti-dumping duties, provisional measures and price undertakings.  Therefore, the 1916 Actis inconsistent with Article VI:2 and the  Anti-Dumping Agreement   to the extent that it provides for
"specific action against dumping" in the form of civil  and criminal proceedings and penalties.
138. With the caveat that Article VI:2 must be read together with the relevant provisions of the
Anti-Dumping Agreement , we, therefore, agree with the conclusion of the Panel that:
… by providing for the imposition of fines or imprisonment or for the
recovery of treble damages, the 1916 Act violates Article VI:2 of the
GATT 1994.
72
                                                     
72EC Panel Report, para. 6.204;  Japan Panel Report, para. 6.230.WT/DS136/AB/R
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VII. Third Party Rights
139. The European Communities and Japan contend that the Panel erred in refusing to grant
"enhanced" third party rights to Japan in the case brought by the European Communities, and to theEuropean Communities in the case brought by Japan.
140. The rules relating to the participation of third parties in panel proceedings are set out in
Article 10 of the DSU, and, in particular, paragraphs 2 and 3 thereof, and in paragraph 6 ofAppendix 3 to the DSU.
141. Article 10.2 of the DSU states:
Any Member having a substantial interest in a matter before a panel
and having notified its interest to the DSB (referred to in this
Understanding as a "third party") shall have an opportunity to be
heard by the panel and to make written submissions to the panel.
These submissions shall also be given to the parties to the dispute andshall be reflected in the panel report.
142. Article 10.3 of the DSU states:
Third parties shall receive the submissions of the parties to the dispute
to the first meeting of the panel.
143. Paragraph 6 of Appendix 3 to the DSU provides:
All third parties which have notified their interest in the dispute to the
DSB shall be invited in writing to present their views during a session
of the first substantive meeting of the panel set aside for that purpose.
All such third parties may be present during the entirety of thissession.
144. Although the European Communities and Japan invoke Article 9 of the DSU, and, in
particular, Article 9.3, in support of their position, we note that Article 9 of the DSU, which concernsprocedures for multiple complaints related to the same matter, does not address the issue of the rightsof third parties in such procedures.
145. Under the DSU, as it currently stands, third parties are only entitled to the participatory rights
provided for in Articles 10.2 and 10.3 and paragraph 6 of Appendix 3.
146. Article 12.1 of the DSU states:
Panels shall follow the Working Procedures in Appendix 3 unless the
panel decides otherwise after consulting the parties to the dispute.WT/DS136/AB/R
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Page 39
Pursuant to Article 12.1, a panel is required to follow the Working Procedures in Appendix 3, unless
it decides otherwise after consulting the parties to the dispute.
147. In support of their argument that the Panel should have granted them "enhanced" third party
rights, the European Communities and Japan refer to the considerations that led the panel in
European Communities – Hormones   to grant third parties "enhanced" participatory rights, and stress
the similarity between  European Communities – Hormones   and the present cases.
148. The Panel in the present cases gave the following reasons for refusing to grant the European
Communities and Japan "enhanced" participatory rights in the panel proceedings:
… We conclude from the reports in the  EC – Hormones  cases that
enhanced third party rights were granted primarily because of the
specific circumstances in those cases.
We find that no similar circumstances exist in the present matter,
which does  not  involve the  consideration of complex facts or
scientific evidence .  Moreover,  none  of the parties  requested  that
the panels  harmonise their timetables or hold concurrent
deliberations  in the two procedures (WT/DS136 and WT/DS162).  In
fact, the European Communities was not in favour of delaying theproceedings in WT/DS136 and the United States objected to
concurrent deliberations. … (emphasis added)
73
149. In our Report in  European Communities – Hormones ,  we stated:
Although Article 12.1 and Appendix 3 of the DSU do not specifically
require the Panel to grant … ["enhanced" third party rights] to the
United States, we believe that this decision falls within the sound
discretion and authority of the Panel, particularly if the Panel considers
it necessary for ensuring to all parties due process of law.  74
150. A panel's decision whether to grant "enhanced" participatory rights to third parties is thus a
matter that falls within the discretionary authority of that panel.  Such discretionary authority is, ofcourse, not unlimited and is circumscribed, for example, by the requirements of due process.  In thepresent cases, however, the European Communities and Japan have not shown that the Panel
exceeded the limits of its discretionary authority.  We, therefore, consider that there is no legal basis
for concluding that the Panel erred in refusing to grant "enhanced" third party rights to Japan or theEuropean Communities.
                                                     
73EC Panel Report, paras. 6.33 - 6.34.  See al so Japan Panel Report, paras. 6.33 - 6.34.
74Appellate Body Report, supra , footnote 24, para. 154.WT/DS136/AB/R
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VIII.  Articles III:4 and XI of the GATT 1994 and Article XVI:4 of the  WTO Agreement
151. Before the Panel, the European Communities and Japan submitted that the 1916 Act is
inconsistent with Article III:4 of the GATT 1994 and Article XVI:4 of the  WTO Agreement .  Japan
also claimed that the 1916 Act is inconsistent with Article XI of the GATT 1994.  The Panel found
that:
… we are entitled to exercise judicial economy and decide not to
review the claims of [the European Communities and] Japan under
Article III:4 of the GATT 1994.75
…
… we are entitled to exercise judicial economy and decide not to
review the claims of Japan under Article XI.76
152. With respect to the alleged violations of Article XVI:4 of the  WTO Agreement , the Panel
held, in the EC Panel Report:
We therefore find that, by violating Articles VI:1 and VI:2 of the
GATT 1994, the 1916 Act violates Article XVI:4 of the AgreementEstablishing the WTO.
77
In the Japan Panel Report the Panel found:
… that by violating provisions of Article VI of the GATT 1994, the
United States violates Article XVI:4 of the WTO Agreement.78
153. In their joint other appellant's submission, the European Communities and Japan ask us to
rule that the 1916 Act is inconsistent with United States' obligations under Articles III:4 and XI of theGATT 1994 and Article XVI:4 of the WTO Agreement .  With respect to Articles III:4 and XI of the
GATT 1994, their requests are conditioned on our reversal of the Panel's findings that the 1916 Actfalls within the scope of Article VI of the GATT 1994 and the  Anti-Dumping Agreement .  With
respect to Article XVI:4 of the WTO Agreement , their requests are conditioned on our reversal of the
Panel's findings with respect to jurisdiction and the distinction between mandatory and discretionary
legislation.  Since, however, the conditions on which these requests are predicated have not beenfulfilled, there is no need for us to examine the conditional appeals of the European Communities and
Japan.
                                                     
75Japan Panel Report, para. 6.272.  See also EC Panel Report, para. 6.220.
76Japan Panel Report, para. 6.281.
77EC Panel Report, para. 6.225.
78Japan Panel Report, para. 6.288.WT/DS136/AB/R
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154. For these reasons, we decline to rule on the conditional appeals of the European Communities
and Japan relating to Articles III:4 and XI of the GATT 1994 and Article XVI:4 of the
WTO Agreement .
IX. Findings and Conclusions
155. For the reasons set out in this Report, the Appellate Body:
(a) upholds the Panel's conclusion that it had jurisdiction to consider claims that the
1916 Act as such is inconsistent with United States' obligations under Article VI ofthe GATT 1994 and the  Anti-Dumping Agreement ;
(b) upholds, to the extent it found it necessary to consider the issue, the Panel's
interpretation and application of the distinction between mandatory and discretionary
legislation;
(c) upholds the Panel's findings that Article VI of the GATT 1994 and the  Anti-Dumping
Agreement   apply to the 1916 Act;
(d) upholds the Panel's findings in the EC Panel Report that the 1916 Act is inconsistent
with Articles VI:1 and VI:2 of the GATT 1994, Articles 1, 4 and 5.5 of the  Anti-
Dumping Agreement  and Article XVI:4 of the  WTO Agreement ;
(e) upholds the Panel's findings in the Japan Panel Report that the 1916 Act is
inconsistent with Articles VI:1 and VI:2 of the GATT 1994, Articles 1, 4.1, 5.1, 5.2,5.4, 18.1 and 18.4 of the  Anti-Dumping Agreement  and Article XVI:4 of the
WTO Agreement ;
(f) upholds the Panel's refusal to grant "enhanced" third party rights to Japan in the case
brought by the European Communities, and to the European Communities in the casebrought by Japan;  and
(g) declines to rule on the conditional appeals of the European Communities and Japan
relating to Articles III:4 and XI of the GATT 1994 and Article XVI:4 of theWTO Agreement .
156. The Appellate Body  recommends   that the DSB request the United States to bring the
1916 Act into conformity with its obligations under Article VI of the GATT 1994 and the
Anti-Dumping Agreement .WT/DS136/AB/R
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Signed in the original at Geneva this 11th day of August 2000 by:
_________________________
Julio Lacarte-Muró
Presiding Member
_________________________ _________________________
Claus-Dieter Ehlermann Florentino Feliciano
Member Member